Originally published on Forbes.com Aug 21st, 2013
The IRS is easing up a bit on War Tax Resisters. Unlike other tax protesters, who come up with whacky theories about being “sovereign citizens” or writing “nunc pro tunc” on their returns, War Tax Resisters might prepare their returns as thoroughly as anybody, but refuse to pay all or part of the tax. The IRS considers the position that you don’t have to pay based on conscientious objection to military spending to be frivolous and has been assessing the $5,000 penalty for frivolous tax submissions against War Tax Resisters. Field Attorney Advice 20133303F has modified this position.
Who Is Involved ?
It appears that the ruling was issued to benefit Vicky Aldrich, who wrote about it on her blog MatthewCh5v9 (“Blessed are the peacemakers: for they shall be called the children of God” for the benefit of my readers who have not yet memorized the Bible)
I get a call from one of the people I had spoken with at the IRS suggesting that I file a form 843 asking for a refund and abatement of the penalty. I did so and sent it off to Ogden Utah. Then in January I get a call from a tax advocate who has been assigned to my case who will call occasionally to tell me what is happening in terms of the maze of the IRS offices and where my paper is at. She says it is a long shot that I will get the refund and it could take a couple of years. When she checks in with me in April her tone has changed and she says it has gone to the Chief Counsels office in DC and that she is optimistic of my getting the refund. Then in May we come home the day before I head off to the Friends Peace Team meeting in St. Louis and there is a message on our answering machine that says; ‘the IRS has agreed to drop the penalty, a check will be in the mail this Friday’.
Ms. Aldrich’s blog is mainly a series of letters that her father wrote from Civilian Public Service camps as a WWII conscientious objector, but she sprinkles in some more contemporary matters.
The Ruling
There are some important nuances in the ruling:
If a taxpayer submits a document with a frivolous argument to the IRS, a penalty under section 6702(a) will apply only if the taxpayer files a purported tax return that either does not contain information on which the substantial correctness of the self-assessment may be judged or contains information that on its face indicates that the self-assessment is substantially incorrect. I.R.C. §6702(a)(1).
As explained in legislative history, “the penalty could be imposed against any individual filing a ‘return’ showing an incorrect tax due or a reduced tax due, because of the individual’s claim of a clearly unallowable deduction, such as … a ‘war tax’ deduction under which the taxpayer reduces his taxable income or shows a reduced tax due by that individual’s estimate of the amount of his taxes going to the Defense Department budget, etc. In contrast, the penalty will not apply if the taxpayer shows the correct tax due but refuses to pay the tax .”
The section 6702 penalty should not be assessed against a taxpayer who encloses with, or attaches to, an otherwise accurate and complete tax return documents articulating frivolous arguments. Congress did not intend for the section 6702 penalty to apply in this limited circumstance. In such circumstances, the return does not contain information insufficient to determine the substantial correctness of the self-assessment, or indicate that the self-assessment is substantially incorrect. Instead, the attachments state the grounds upon which the taxpayer is refusing to pay the properly reported tax.
In other words, the return should not be messed with. Don’t add a line to take some sort of war tax deduction or credit. Compute the correct balance due, then don’t pay. There will still be other penalties and interest, but no penalty for frivolousness.
Attorney’s Comment
I had noticed this ruling and was going to write about it, but before I got to it I received an e-mail from Ruth Benn of the National War Tax Resistance Coordinating Committee, which pointed me to Ms. Aldrich’s blog. Ms. Benn also provided a comment from NWTRCC legal advisor, Peter Goldberger:
The General Counsel’s opinion is clearly correct, based on the plain language of the frivolous return penalty statute, as drafted by Congress. The Frivolous Return Program staff at the Ogden, Utah, Service Center have for years unfortunately been ignoring the statutory language and then ignoring the valid appeals and protests that individual taxpayers have filed to challenge them. I think the fact that the FRP has to deal with all manner of illegal tax protesters all day, every day, must have left the Ogden staff jaded to the possibility that some protests are simply not illegal. In fact, the kind of protest letters involved here, even when enclosed with a tax return, may be a constitutionally protected form of “petition” or “exercise of religion” under the First Amendment. This is particularly so in the case of conscience-driven antiwar tax resisters, who tend, as a group, to be honest to a fault, and not to have any design to obstruct or interfere with IRS functions at all.
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