Confused by Taxes? Don't Pay Them!

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Here's an interesting tax story from Memphis:

A federal jury Friday found FedEx pilot Vernice Kuglin not guilty of evading income taxes on $920,000.

The twist? Kuglin has been refusing to pay federal income tax, on purpose, for a decade.

She began to read court documents, legal opinions and the federal tax code.

She said she found what she felt were contradictions. She wanted to know where in the federal tax code it said she was liable for taxes.

Kuglin wrote the Internal Revenue Service twice in 1995 with questions but said she didn't get a response. [?]

Defense attorney Larry Becraft of Huntsville, Ala., said Kuglin decided mandatory payment of income taxes "did not apply to her."

After the verdict Friday, Becraft said the federal tax code is a confusing conglomeration that "at best is a walking due process violation."

He said the average American simply doesn't understand the tax code.

Link via Howard Owens.

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  1. What a great precedent: If you don’t understand the law, you don’t have to follow it. Can’t wait to try it out.

  2. The average person working at the IRS probably doesn’t understand the tax code not to mention the average American. This is definately a welcome ruling but I bet the IRS gets its grubby little hands on her money in the end.

  3. OK, so we’re libertarians. So we hate taxes. We all agree on that.

    But is it really legitimate to go praising people who seek to evade taxes? Like them or not, taxes work by taking from everyone — that means that when Kuglin doesn’t pay his taxes because he’s too busy shitting a libertarian brick about it, I get stuck with the bill. And that’s neither libertarian nor the least bit praiseworthy.

  4. Hal E.,

    I bet even you are guilty of at least one misdemeanor and at least one felony. With the sheer number of piddly laws cooked up everyday (some say 200 pages a day), how CAN you understand them all?

    “There is no way to rule innocent men. The only power government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.” Ayn Rand “Atlas Shrugged”

    -nefarious

  5. Steve, you’re just jealous.

  6. Steve: You are absolutely right.

  7. This is similar to the case of Lloyd Long, also of Tennessee.

    See http://www.civil-liberties.com/cases/long1.html, among others.

  8. Well, most of the IRC doesn’t apply to most Americans, so that helps out right there.

  9. Steve – I agree with you about Kuglin’s specific actions in this case (by the way, I think Kuglin is a woman, not a man), I do not condone people who deliberately avoid paying their share of taxes. But I submit that the larger issue of tax code reform/simplification is a very legitimate one.

  10. “I do not condone people who deliberately avoid paying their share of taxes.”

    You’ve got to be fucking kidding.

    How do you determine this “share”?

    You are blinded by statist zero-sum assumptions.

  11. For all of us that grew up in America, one of the first stories that we are told is the “Sons of Liberty” and their escapades at Boston Harbor in 1773. The Tea Party, we are taught, is a morally correct reaction to the morally incorrect high taxes.

    So, it is only natural for us to seem a little happy when we hear someone beating the tax system now that we are taxpaying adults.

  12. Brady,

    Actually, the “tea party” was in response to taxation without representation, not high taxes per se.

  13. Hmm. Jury nullification in tax evasion cases. Interesting. The whole tax system depends upon 90% of us voluntarily following the tax law (or our best guess at what the law is at the moment) 90% of the time. It falls apart if that number is more like 50% or thereabouts.

  14. Jean Bart:

    You are right, my history was quite out of whack on that post. Damn public education.

  15. I have heard politicians and even the IRS talk about our “voluntary” tax system. Of course that was all a bunch of crap, but maybe not…

  16. Since taxes are an initiation of force, “evading” them should not be considered wrong; in fact, it might even be thought of as a moral duty. It’s refreshing to learn that someone had the courage to resist the IRS and was miraculously able to win, at least for now. Perhaps she will inspire more individuals to fight for freedom.

  17. actually the “tea party” was about the english brining in so much tea they depressed the price until it started cutting into the profits of the tea smugglers (patrick henry, tomas paine, et al). even with the tax the english tea was cheaper than the dutch tea they were smuggling.
    steve – your a moron

  18. A moron I may be, but at least I know when to use “you’re” instead of “your.”

    Bravo.

  19. Acording to the articles I’ve read Kuglin’s argument was “Where does it say I owe taxes?”. The federal prosecutor was UNABLE to point to a page in the tax code and say “Right here”. So the jury said “The state has NOT PROVEN it’s case, you are free to go.” Pretty simple stuff to understand really.

  20. at least i read the articles before posting. you didn’t even know Kuglin was a woman. tomorrow i can correct a typing error but YOU’LL still be a moron.

  21. The income tax and IRS are anathema to a free people governed by rule of law. The point isn’t that, she specifically, couldn’t understand the law. Rather, it’s that tax law is inherently incomprehensible. It is simply not possible to know if you are in violation until you’ve been found guilty. And don’t even get me started on the explicitly unconstitutional powers wielded by the IRS. What all this amounts to is that the income tax and IRS are bureaucratic tools and institutions of oppression.

    When a law goes beyond infringing on inalienable rights and is actually impossible to be in compliance with, it is indefensible. To say that everyone should obey the law and pay their taxes, is to say that it is just for established powers to oppress the people via arbitrary enforcement of uncompliable (it isn’t a legitimate English word but it should be) law. Therefore it is perfectly possible to be an advocate for, rule of law, and still support this, defender of liberty and the verdict in this case.

  22. Nefarious: Yes, I’m sure I’ve broken laws, even ones I didn’t know existed. That doesn’t mean I wouldn’t — or shouldn’t — be convicted for breaking them.

    Personally, I think everyone should have the option of avoiding taxes — as long as they agree to also avoid taking advantage of anything paid for by those taxes. Like paved roads.

  23. Hal
    Well the government recieves money from corporate taxes also, which are passed on to me in the form of higher prices, therefore even if I don’t pay individual taxes I am still supporting the building of roads and have every right to use them.

  24. One of our fellow bloggers tried something similar recently, even engaging in a “death fast.” He’s since given up the fast, and I don’t think his outcome taxwise was as good as the FedEx gal.

  25. Hal,
    I personally think, no one should be given the option of paying taxes, so that they don’t get the idea that they are entitled to things like paved roads.

  26. I almost forgot. Half the price of a gallon of gas is taxes which go towards building and maintaining roads. Which here in Louisiana doesn’t seem to reach it’s destination.

  27. Setting aside the issue of whether or not the IRS taxes us “fairly” or not…

    If one person deliberately avoids paying his/her taxes, all else equal, honest people who willingly pay their taxes end up paying the difference. Someone pray tell me, how is that “fair”?

    I applaud Kuglin’s courage to stand up to the IRS, but I would applaud it moreso if she had tried to get legislators to make meaningful changes to the tax code. I do not, however, applaud simple tax evasion.

  28. Brad, can you name one person that “willingly” pays their taxes? I can’t. Millions pays them begrudgingly, but the ones who pay them willingly are called “suckers”. The government knows this which is why the taxes are withheld from your paycheck, and in many cases estimated for you to pay in advance, rather than asked for at the end of the fiscal year.

    Willing means being given an uncoerced choice, and few people would make the choice to pay for something they aren’t sure returns them anything. Then again, people contribute to the collection plate at church, too, so maybe I’m wrong. Although that’s kind of a poll tax, really.

  29. Brad,
    It is ‘fair’ in the same sense that a baker that refuses to pay protection money to the mob is ‘fair’. You can argue that the other merchants have to make up the difference, but if the baker can keep his money and his legs, then it’s worth celebrating. Perhaps the day may come when none of us will have to pay tribute.

  30. I wonder why that prosecutor had a problem pointing to the US Code TITLE 26–INTERNAL REVENUE CODE, Subtitle A–Income Taxes, CHAPTER 1–NORMAL TAXES AND SURTAXES, Subchapter A–Determination of Tax Liability, PART I–TAX ON INDIVIDUALS – which says:

    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:

    …and so forth.

    The tax code stinks (as a CPA, I have no trouble admitting it), but still, for most people it’s a no-brainer. A $20 tax program does it all if you don’t want to do the calculations yourself.

  31. Pennsylvania recently tried an interesting thing. The (I shit you not) “Tax Me More” program. So, essentially, if you WANT to pay more taxes, knock yourself out.

    I don’t know about you, but I like helping people. How I DON’T going about that is by trusting a state gov’t to spend my money in such a way that it’ll make everything peachy.

    Regardless, it’s still a far more Constitutional measure to ask “pretty please” than saying “stand and deliver”.

  32. “If one person deliberately avoids paying his/her taxes, all else equal, honest people who willingly pay their taxes end up paying the difference.”

    What rot. If I don’t pay my taxes, it does not affect anyone else’s taxes by one red cent. The tax code is not amended because R. C. Dean did not pay his taxes. The IRS does not kick down your door and empty your wallet because R.C. Dean did not pay his taxes.

    As noted above, before you can kvetch about somebody not paying their “fair share” of taxes, you have to define what that fair share is. Since taxes are coerced out of people, I submit that there is no such thing as a fair share, as fairness and coercion have nothing to do with one another.

  33. Wasn’t “taxation without representation” really just a catchy phrase? Seriously. Wasn’t the real issue that taxes were collected here in the states (yes, without representation), but the money collected went back to the homeland? We were getting less out of the deal than we paid in. “Taxation without representation” is a way of expressing outrage with such a system without admitting we just wanted a bigger slice of the pie. If the king sent us 2 cents for every one that was collected, I doubt we would have ever heard the phrase.

    (Someone will let me know if I’m wrong on that…)

  34. I believe a careful reading of the story indicates that Ms Kuglin was only relieved of the charges of evasion, not of the taxes themselves. The evasion is explained by saying “I didn’t understand,” but the tax burden is not. I think the media is merely trying to play up the shock angle of the story as much as possible.

  35. Jough,

    “If the king sent us 2 cents for every one that was collected, I doubt we would have ever heard the phrase. (Someone will let me know if I’m wrong on that…)”

    How can someone tell you if you’re wrong about a hypothetical? Or about what was really going on in the minds of the people who used the phrase?

    Surely, practical concerns are often the motivating factors behind statements of principle, but that doesn’t make the principle irrelevant. Maybe it’s also true that if the colonies had had representation, they wouldn’t have felt quite so ripped off by not getting as much back as they put in. Hell, maybe they wouldn’t have gotten so much less back had they had representation. Alas, we’ll never know any of it….

  36. I remember reading about the “Tax Me More” program, and if I recall correctly, it is privately run and was devised in response to some vocal opponents of a proposed tax cut. Basically, it was an invitation for them to put their money where their mouths were.

    The fund, whose proceeds were given to the government, collected an embarrasingly tiny pittance, I don’t remember the exact amount, but not enough to pay an accountant to tally the numbers.

  37. Izzy
    It seeems to me that section only applies to married people. Plus it just says which table to use to figure your taxes not that you are legally required to pay them in the first place.

  38. Guys! I just realized something!

    I don’t understand drug prohibition at all. It makes no sense to me whatsoever!

    Wish me luck.

  39. Brady, Jean Bart:

    Actually, the Boston Tea Party was a protest against a *corporation*, the British East India Company, which the Brits had granted a monopoly on the supply of tea to the colonies. Of course, I don’t mean to suggest parallel actions against specially privileged corporations today. That would be WRONG!

  40. Here’s a story (in a link from my blog) about a tax court judge who couldn’t figure out what he owed (assuming he wasn’t just a lying sleazebag):

    http://www.advicegoddess.com/archives/000067.html

    It’s why a sales tax makes more sense than an income tax.

  41. I just want to know how you can reconcile having a prohibition on slavery(the 13th amendment) and coercive taxation in the same system. If I have to give the fruits of my labor to someone else under threat of force that is involutary servitude, i.e. slavery. Isn’t slavery outlawed in this country?

  42. fyodor:

    The Boston Tea Party was staged, in part, precisely to prevent the tax revenue from being spent in the colony. The Parliamentary plan was to pay the salaries of the Massachusetts royal governor and judges, so as to make them independent of the General Court’s power of the purse and increase the colonial government’s dependence on Parliament.

    Sam Adams and his cohorts feared the people were unprincipled enough that they would welcome this British assumption of their costs of government. So they deliberately manufactured an incident to goad the Brits into repression, and stir the populace to resistance. Pretty Leninist, huh?

    Of course, nobody in the states today has any compunction at all about accepting intergovernmental grants in aid from the feds to fund state government operations. They just whine about the mandates attached to them.

  43. This isn’t the first time a jury has refused to convict a tax evader who used this excuse. Her victory? She won’t have to go to jail on criminal charges. What she can look forward to?She will still have to pay the taxes, and you can count on the IRS to press hard for civil fraud penalties, which will not be subject to jury nullification.

    Yes, the tax code is a nightmare. No, you can’t opt out. Yes, you can go broke trying; she likely will. Becraft and company won’t get up and brag when that happens.

  44. Pardon me: the prior post should not say “tax evader” as she wasn’t convicted.

  45. Perhaps I can help to clear up some points of confusion about this case. Some people have called the pilot who was the defendant in this case a “tax evader” but the headline of the article linked to above is: “Jury acquits pilot, who questioned IRS, of tax-evasion counts.”
    Now if you have been tried for tax evasion and acquitted that means that you are not a tax evader.

    I first became aware of this story through the following website: http://www.givemeliberty.org/

    And there it is reported that, and I quote: After the jury had been excused the U.S. Attorney reportedly demanded that the Judge order the defendant to file her tax forms, pay her taxes and obey the law. The Judge reportedly replied “Sir, I don’t work for the IRS.”

    This line missing from the article linked to above apparently comes from another version of the same newspaper, written by the same reporter, Shirley Downing.

    The purpose of the criminal trial: Kuglin, 58, was charged with six counts of tax evasion that could have meant up to 30 years in prison and $1.5 million in fines. The government accused Kuglin of filing false W4 forms for the period from 1996 to 2001.

    This means that the jury found in criminal court that Kaglin was not guilty of tax evasion or falsifying her W4 forms, when she reported that she had no taxable income.

    This case then, is not about the pilot’s ignorance of the law, as the title at the head of this web page would imply. This is further demonstrated by the fact that, and I quote:

    Kuglin testified that since 1995, she had sent numerous letters to the IRS requesting that they inform her of what law required her to pay the Individual Income Tax. To this day, she has not received an answer.

    Clearly she was not acquitted because of her ignorance of the law. Rather she has revealed a little-understood point of the tax laws that allows people in her employment situation to legally declare that they have no taxable income.

    Someone used the term “uncompliable” to describe the tax code. I first encountered this concept in the book “The Death of Common Sense, How Law is Suffocating America” by Phillip K. Howard. He gave many examples of contradictory legal requirements in workplace safety and environmental law which left companies with large teams of well educated lawyers in a state of “involuntary noncompliance” with the law. This is certainly true of many areas of law in America today. I recommend this book. Howard is a lawyer, a believer in town meetings, zoning, environmental and other regulatory law. He is a lawyer, and a man who has been very much involved with local politics, and yet he correctly reports on law’s excesses.

    In contradiction to someone above who said that “I’ve broken laws, even ones I didn’t know existed. That doesn’t mean …shouldn’t …be convicted for breaking them.” What it actually means is that we are living not under the rule of law (justice) but under the rule of men (caprice/autocracy) and that the existing legislation is beyond the bounds of reason. It means that existing legislation nullifies the concept of guilt by making it’s opposite, innocence, impossible. Yes, I am afraid it does mean that contradictory law is no law at all.

    I am surprised that many of those who have voiced their opinion that Vernice Kuglin sould pay her taxes anyway, in spite of the finding by the court that she was not legally liable to them, have in their rhetoric leapt from a discussion of the income tax to conclude that someone who does not pay FEDERAL taxes, should not enjoy the benefits provided by local governments using LOCAL TAXES. Do they really not know the differance? Whether you own a home or rent you cannot avoid paying, either directly or indirectly, the property taxes that local governments collect in order to fund their road building, schools and police departments.

    Consider, the benefits people think of when they think about what they are getting for the income taxes they pay, are all provided for instead by sales taxes and property taxes.
    These are, as I have noted, are almost impossible to avoid and that’s without hiring special local tax cops, or forcing you to report on yourself.

  46. Hal, the best response to you was posted on Lew Rockwell’s blog this morning:

    ‘Blame a victim that lives under State rule. Blame him for submitting to theft at the barrel of a gun. Blame him for going along with rule by force. Blame him for keeping honest within a system that’ll destroy his life, take his children, take his possessions, and harass his family if he doesn’t go along. Why don’t we just blame the victim for being born? The old argument that we are “statists” if we use government water, infrastructure, fiat money, or the “government’s” Internet is a loser argument, and it is made on an emotional whim during a quasi-triumphant feeling (that follows on the heels of a scoundrel-like feeling) that helps one to rationalize and overcome that hideous feeling that they really did – at some point – aggressively solicit and pursue the feed line at the pig’s trough like all the rest of the little, do-not Piglets.’

  47. Putting on my CPA-TAX hat for a minute…. Anyone else having trouble finding a cite for this case? I find her 2002 Tax Court case, but nothing with these facts or this attorney. BNA, CCH, both of their subscription online tax services don’t show this yet. Is it real?

    Keep in mind all she won was the criminal charge. The question of whether she owes tax has not been addressed. This decision (if it is real, and not an internet myth) only holds that not paying tax was not a jailable offense. She’s still going to pay the tax.

  48. There’s one little problem with that idea that “if you don’t pay, I have to” – mainly, it’s complete crap. I shall explain it thusly:

    1- If I quit my job and thus stop paying taxes, does that mean you have to pay more? Am I morally abliged to go make money so I can pay taxes so you can pay less? If I pay more taxes than you, are you morally obligated to me in some way to compensate me for lightening your tax load?

    2- The tax codes do not specify an amount to be collected “or else everyone has to pay more.” If the government collects less taxes, it can either raise taxes – which is as likely to get your ass thrown from office as anything else, if you are a politician – or the government must simply do /less/; and less does not mean nothing at all.

    3- “Don’t used paved roads then” is similarly silly, as note how conveniently it doesn’t say “fine, then don’t give wealth-destroying and poverty-promoting subsidies to the agricultural sector” (which are not all independent family farmers – hah, hah, hah), or “fine, then don’t give special tax breaks, government contracts, and sweetheart deals to your politically influential friends.” That and, of course, federal income taxes are not what pays for roads, which is perhaps the most amusing of all.

    4- This all relates to _federal income taxes_, and not simply “taxes”. Big damn difference, though the simple reference sure is popular – and misleading. It doesn’t matter if you don’t pay a dime of federal taxes, because the federal government is still bilking your ass for all sorts of cash both directly (like in excise taxes and such) and all sorts of tariffs, quotas, regulations, laws, etc.

    Oh, the government will get theirs alright – as oh so many countries learn when they massively inflate the currencies to continue covering their crushing budgets.

    I, of course, smartly realize that paying the damn taxes is cheaper than the alternative. Of course, paying for accountants and engaging in endlessly rediculous and contorting tricks to reduce taxes that are actually owed, profitably, actually is profitable, so I will of course do like every other informed person and do it to the full extent of the law – ie, profitability.

    Income taxes don’t just cost us money directly and individually, but they fuck up a great deal of stuff by it being possible to get around them in all sorts of rediculous, labor-wasting, resource-burning ways. Real Estate and international finance are probably the best examples of these effects.

  49. Greystoke, you are kidding yourself. She only avoided a criminal conviction. There is no “little-understood point of the tax laws that allows people in her employment situation to legally declare that they have no taxable income.” You can go here: http://evans-legal.com/dan/tpfaq.html to learn more.

    To say this case reveals anything about the tax law is like saying the O.J. case reveals new insights on our murder statutes, or that O.J. discovered a little-understood point of the murder laws that allow people in his marital situation to legally kill someone.

  50. Greystoke, you are kidding yourself. She only avoided a criminal conviction. There is no “little-understood point of the tax laws that allows people in her employment situation to legally declare that they have no taxable income.” You can go here: http://evans-legal.com/dan/tpfaq.html to learn more.

    To say this case reveals anything about the tax law is like saying the O.J. case reveals new insights on our murder statutes, or that O.J. discovered a little-understood point of the murder laws that allow people in his marital situation to legally kill someone.

  51. I have clicked through to the link you offered for more information Joseph K, and I note, for the benefit of others who may read this that it offers no specific information about the case under discussion, but instead admits to being purely a collection, in the form of a Faq, about one persons opinions of what the tax codes mean in practice. Why do I say opinions? Because it is clearly labled at the top with a disclaimer that it is not legal advice.
    You have not demonstrated that I was wrong.

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