Taxes are Illegal?

The man sitting across my desk had been a client for years. He had come in to tell me that he would not be using my services ever again.

“Why?”, I asked.

He had found a lawyer who had told him that income and social security taxes were illegal. All my former client needed to do was file some forms with the government and he would effectively “untax” himself.
“Anyone can do it,” my client told me. “It is just that the government has everyone believing that taxes are required. All you need to do is file the proper forms, and you won’t ever have to pay taxes again. And it is perfectly legal.”

Unfortunately I never saw him again so I have no idea how the whole scheme worked. But every year I have people tell me that taxes are illegal, or unconstitutional, or only for corporations. And every year I tell them that the IRS has said over and over again that taxes are legal, and constitutional, and for everyone with income.

I was looking at a website today, that will sell you a package to “untax” yourself for the small sum of $700. The package will include all the forms you need to send to the government so you will never have to pay income taxes or social security taxes again.

Judging from the page and pages of double speak, the main argument of this website, is that paying taxes is voluntary. They also state that the 16th amendment was never properly ratified, and that wages are not taxable because they are not defined as “income” in the IRS tax code.

Before you fall for this type of scam, please take a moment to read what the IRS has to say about these frivolous tax arguments(pdf file).

If you don’t like reading IRS documents I’ll sum it up for you here. Taxes are legal, the 16th amendment was properly ratified, and wages are income under the law. You can’t avoid taxes by declaring you are not a citizen, by filing any type of “untaxing” paperwork, or by submitting a zero income tax return.

If you choose to use any of these arguments on your tax return the IRS can impose a $5,000 penalty for preparing a frivolous tax return in addition to any other fines or penalties that may be due for underpayment of tax and failing to file a tax return.

The Top Tax Protester, Where Is He Now?

Irwin Schiff is arguably the most prominent tax protester in the United States. He is the author of two books, has presented seminars and appeared on national television promoting his ideas about the legality of the income tax. Most if not all of the tax protester arguments you will hear today originated with Irwin Schiff.

Today Irwin Schiff is a guest of the United States government, serving over 12 years for his 2005 conviction for filing false tax returns, assisting in the preparation of false tax returns filed by other taxpayers, conspiring to defraud the United States, and income tax evasion. He has also been ordered to pay over $4 million in back taxes, fines and penalties.

If You Told People The Truth About Income Taxes You Would Be Out Of A Job

I can’t tell you how many times I have had people tell me that I must know that paying taxes is illegal, and the only reason I don’t tell people is that I would be out of a job. If only it were true. The truth is, if I knew a way that people could legally earn income without paying taxes, I would be more than happy to share it with all my customers, and I am sure they would be more than happy to pay for that information. In fact, I would be the most popular tax adviser in my state.

Are You Still Asking- Where is My Stimulus Payment?

Click here to go to the IRS Stimulus Page

Have you filed your 2007 tax return, (even if you don’t normally file),  waited at least 6 weeks, yet you still haven’t received your stimulus payment? It sure could come in handy this time of year!  What should you do?

First, check this Stimulus Payment Calculator to make sure you qualify. Some of the reasons you might not qualify are covered in this post,  Where’s My IRS Stimulus Payment?.  If all these things check out, it could be that you are one of the 279,000 taxpayers who had their stimulus payment check returned by the US Postal Service.  Apparently, IRS stimulus checks worth over $163 million have been returned by the postal service as being undeliverable.  That is in addition to the $103 million in refund checks that were returned.

If you think you might be one of those 279,000 taxpayers who’s check was returned by the postal service you need to update your address right away.  The stimulus checks must be sent before December 31, 2008. The IRS is recommending that you update your address by November 28, 2008 to insure that they receive their stimulus payment.  You can update your address by filing form 8822.  You only need to file the form one time and the IRS will send both your stimulus payment and any tax refunds that you are due.

But what happens if you are too late, and you don’t get your stimulus payment this year, are you out of luck?  The good news is that if you qualify for the IRS economic stimulus payment, and you don’t get it this year, you can take it as a credit on your 2008 income tax return that you will file in early 2009.

The Sky is Falling

Well, maybe not the sky. But with the Dow Jones Industrial down 23% in just a week and a half it sure seems like it.  World financial markets are reeling, banks are failing, and the US government must think that money grows on trees, because the government’s response to the problem is to throw money at it. One question I have for all the Senators and Congressmen, “Where do you think all this money is coming from?” Either the printing presses are rolling and you are printing more money, or you expect to take it out of my pocket.  I don’t like either option.

The news media is busy feeding the flames of panic. I quit watching. I just couldn’t stand another breathless, busty  blond, eyes wide with excitement, telling me about the future horrors if the current crisis is allowed to continue without someone doing something.  Oh yes honey, the horrors. You probably won’t be able to get a new Lexus this year!  You might even have to go to only once a week manicures! Whatever will we do! And what really gets my goat is the amnesia the media seems to have.  It doesn’t seem all that long ago that the crisis was rapidly rising oil prices. Yesterday it was reported that adding to the crisis, is the rapidly falling price of crude oil. Hmmm?  Seems to me that should be a good thing.  I certainly don’t mind that it is costing me $5 less to fill up my tank than it did just a few months ago.

I’d like to inject just a little bit of sanity into the mix.

Continue reading “The Sky is Falling”

How To Get Out of Debt and Become Debt Free Forever

Table of contents for Debt Free Forever

  1. How To Get Out of Debt and Become Debt Free Forever
  2. Debt Free Forever – Adding Up The Debt
  3. Debt Free Forever – The Credit Card Pay Off Plan
  4. How To Get Out of Debt – Debt Free Forever

This is the first post in a series that will explore how you can become debt free, and stay debt free forever. Future posts will talk about when you should and should not use credit cards for purchases. Why you should care about your credit score, how to save money on every day expenses, will credit repair companies help you or hurt you and much more. Make sure to subscribe to our feed so you don’t miss a single installment of this series.

The United States is in a debt crisis. A 2.57 trillion dollar crisis in 2007 according to the Federal Reserve. The average American household caries $8,565 in credit card debt. What makes this particularly scary is that many consumers are not getting over the heads in debt from frivolous spending. As salaries and wages haven’t kept up with rising costs, consumers are turning to their credit cards to make ends meet.

Many people are aware of the problem and would like to become debt free. But they don’t know how. Schools don’t teach finances, and with the amazing amount of both good and bad information on the internet it is hard to know where to turn. In fact, it is easy to get ripped off and end up even worse than before.

In this series I am going to give you a basic financial education and step by step directions that will help you get debt free, and stay debt free forever. You won’t need to buy anything, you won’t need to hurt your credit rating or declare bankruptcy. Each post will talk in depth about a specific credit or money topic. Then I’ll give you an assignment to work on. Stick with me, and you will become debt free forever!

Now here is your first assignment.

Assignment One: Make a Commitment
Let me be honest. This isn’t going to be easy, and you are going to make plenty of mistakes along the way. So you need to make a commitment. A strong commitment to do what it takes, and to keep doing what it takes, until you reach your goal. So today I’d like you to set the goal of becoming debt free, with the commitment to do the assignments exactly as they are assigned. And if you make a mistake and fall off the wagon, make a commitment to get right back up, brush yourself off, and get back with the program. Making a public commitment makes you more accountable, so feel free to post here if you will work with me to become debt free forever!

Being a Millionaire, Not What it Used To Be

Everyone wants to be a millionaire, right? To join the ranks of that exclusive club, whose members have proved to the world that they have made it. Well, maybe not so exclusive. According to CNN.com the number of millionaires in the world has grown to over 10 million! And the worldwide number of super-rich, those with more than 30 million dollars in assets, has grown to over 100,000.

Most of the new millionaires are coming from countries with fast emerging economies, India, China and Brazil. But the United States is still home to the highest number of millionaires.

But of course, a million dollars isn’t what it used to be. Thanks to inflation, a million dollars today is only equal to $783,000 in 1998 dollars, and a pitiful $568,000 in 1988 dollars.

It is interesting to look at where the millionaires are putting their money today. For the most part they are not investing in Forex, Real Estate, or other fast money schemes. With today’s economy millionairs are putting 40% of their assets in those “save and boring” investments, money market funds, bonds, and preferred stocks.

Would you like to join the millionaire club? You are most likely to get there not by winning the lottery or finding the perfect get rich quick scheme. The best way to get there, make saving a priority, spend less than you earn, own your home, and avoid consumer debt.