Saturday, July 28, 2007

Um, yes, there is a law that says you have to pay income tax

There's a bit of a buzz going on about the acquittal of Tom Cryer, a Lousiana attorney who had been charged with the federal crime of failing to file his tax returns. Misleading articles, such as "IRS loses challenge to prove tax liability", kindle hopes that someone somewhere has finally convinced a court that we don't have to pay taxes.

A quick look at the Cryer case, however, demonstrates that the government failed to prove the "willful" element of the crime of failure to file. As with all elements of a crime, this must be proved beyond a reasonable doubt. The jury apparently decided that Mr. Cryer's mental state was not criminally willful, perhaps because they were convinced that he had a reasonable belief that he didn't have to file. But the legality of the tax law itself was not at issue in the trial. Cryer's motion to dismiss using that argument was denied before the trial.

But tax protestors everywhere are cheering, shouting "show me the law!" In the interests of public service, I show the law below. It's not as straigtforward as it could be, but it's there. If you earn income, and if it is high enough, you have to file a return. If you have to file a return, you have to pay the tax. Plain language leading to plain duties.

Title 26 United States Code
§ 1. Tax imposed
(a) Married individuals filing joint returns and surviving spouses
There is hereby imposed on the taxable income of -
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)), a tax determined in accordance with the following table: If taxable income is: The tax is:
Not over $36,900 15% of taxable income.
Over $36,900 but not over $5,535, plus 28% of the excess over
$89,150 $36,900.
Over $89,150 but not over $20,165, plus 31% of the excess
$140,000 over $89,150.
Over $140,000 but not $35,928.50, plus 36% of the excess
over $250,000 over $140,000.
Over $250,000 $75,528.50, plus 39.6% of the
excess over $250,000.

. . . .

(c) Unmarried individuals (other than surviving spouses and heads
of households)
There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table:
If taxable income is: The tax is:
Not over $22,100 15% of taxable income.
Over $22,100 but not over $3,315, plus 28% of the excess over
$53,500 $22,100.
Over $53,500 but not over $12,107, plus 31% of the excess
$115,000 over $53,500.
Over $115,000 but not $31,172, plus 36% of the excess
over $250,000 over $115,000.
Over $250,000 $79,772, plus 39.6% of the excess
over $250,000.

Note, a tax is imposed on taxable income. Taxable income is figured out from gross income:

§ 61. Gross income defined
(a) General definition
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
. . . .
§ 63. Taxable income defined
(a) In general
Except as provided in subsection (b), for purposes of this subtitle, the term "taxable income" means gross income minus the deductions allowed by this chapter (other than the standard deduction).
. . . .

So a tax is imposed on taxable income, who has to report this income? This statute tells us that everyone with gross income above a minimum amount has to file:

§ 6012. Persons required to make returns of income (a) General rule
Returns with respect to income taxes under subtitle A shall be made by the following:
(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount. . . .

And finally, some people demand to know where it says that a person with income is liable. The statute below says that if you have to file, you are required to pay whatever you owe as deteremined by properly filling out the return:

§ 6151. Time and place for paying tax shown on returns(a) General rule
Except as otherwise provided in this subchapter, when a return of tax is required under this title or regulations, the person required to make such return shall, without assessment or notice and demand from the Secretary, pay such tax to the internal revenue officer with whom the return is filed, and shall pay such tax at the time and place fixed for filing the return (determined without regard to any extension of time for filing the return).

So the law is there. It says people with income over a certain level (which elsewhere is defined as being over the exemption amounts) have to file their return. If their return indicates taxable income, they have to pay.

So be careful out there. People claiming that there is no law requiring you to pay income tax are either deliberatly not looking or they are deceived.

And, even though Mr. Cryer was found not guilty of a tax crime, I am pretty sure the feds will get their money. Plus interest. Plus penalties. It's not a pleasant scenario.

Monday, July 23, 2007

Just when the slumber was getting pleasant

Suppose there is family down the street with a wayward son or daughter who is just not "right." Suppose this straying child has become enflamed about what is going on in Iraq. And suppose this child sends some internet advice (of a technical nature) to some "freedom fighters" (we would call them insurgents) whom the child has met on an internet board somewhere. And finally, suppose these insurgents actively and violently seek to disrupt our administration's goals in Iraq.

Of course, this is a very bad thing. Dangerous even. The government monitors such things. It even claims the authority to seize all the assets owned by such a wayward soul.

Now suppose in its zeal, the government freezes the bank accounts of the entire family, not just those of the foolish child. The family will not be able buy groceries. They will likely be scared and confused. They probably would be angry at their child too.

But suppose in the mean time you feel sorry for the neighbors and bring over a casserole as they try to sort this all out.

Under an Executive Order dated July 17, 2007, all of your own assets may be blocked and seized too.

"all property and interests in property of the following persons, that are in the United States, that hereafter come within the United States, . . . are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Defense. . . ."

The persons this applies to are those who have been determined (by the government):

"(ii) to have materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, such an act or acts of violence or any person whose property and interests in property are blocked pursuant to this order. . . ."

Of course, good people won't fall under this, right? The government isn't really going to freeze the assets of the neighbors down the street. And if they do, they wouldn't really go after someone who brought them a casserole, right?

Maybe, but the language of the order asserts that very option.

As Han Solo said when things got weird: "I've got a bad feeling about this, Chewey."

Tuesday, July 17, 2007

What you've always suspected

My state's bar association is sponsoring a continuing legal education program about "Lawyers’ Roles in Preparing and Responding to Disasters".

So the secret is out. Lawyers prepare disasters so that you will hire them to fix the aftermath. You'd think the association that requires us to pay dues would not be so open about this.

(For the serious-minded conspiracy afficianados, the program really is meant to be a good thing--the State Bar merely needs a better editor).