IRS Is Looking At Trusts

The IRS claims that that Americans owe $345 BILLION in unpaid taxes. Bob Bauman ( makes the obvious point:  “If they’re unpaid, how can the IRS know what they owe?”

Just before April 15 each year the IRS attacks anything that sounds like a tax shelter.  And the press dutifully reports it.  Back on the IRS Hit Parade this year are trusts. According to the IRS, promoters urge taxpayers to transfer assets into trusts for unrealistic tax savings that don’t exist. The IRS claims there are more than 200 active trust investigations underway and three dozen injunctions have been obtained against promoters since 2001. Even so, trusts are legal and a great way to protect your assets, especially offshore trusts.

Also high on the IRS list are frivolous arguments. In my career as a staff member in the U.S. Congress I heard every reason in the world why you don’t have to pay income taxes; some of my favorites are:  Wages are not income; there is no legal definition of a dollar; the income tax is voluntary; filing violates your 4th Amendment right against self-incrimination and your 5th Amendment right to privacy, and — my favorite — the 16th Amendment was signed into law by President Taft who was born in Ohio, but Ohio was never legally admitted into the Union, therefore Taft was not a U.S. citizen and his presidency was illegitimate, thus the income tax is null and void.  (This is based on the curious fact that Congress never passed an act expressly admitting Ohio into the Union until 1953.)   Federal courts have thrown out these and similar arguments so many times that some courts refuse to allow defense lawyers to make them.

The tax code still has plenty of ways you can minimize your taxes without resorting to such ridiculous and disproven claims.  Remember the words of Judge Learned Hand:  “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”

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