Tax Protestors and Penalties: Ensuring Perceived Fairness and Mitigating Systemic Costs

Abstract:     
The United States enjoys a very high rate of "voluntary" tax compliance. Reasons for tax compliance are complex and can include motivations like feelings of personal integrity and patriotism.

Tax avoidance is a serious problem that can undermine tax compliance and confidence in the tax collection system. Tax avoidance can also lead to anger among compliant taxpayers about bearing the burden of paying for government services which is unequally assumed by compliant taxpayers. As a result, consequences for tax avoidance must be severe.

Among those who do not pay tax are those who engage in so-called "tax protestor" behavior, which is often spread through seminars and the Internet. These individuals base the legitimacy of their nonpayment of taxes on a variety of arguments that the government does not have the power to collect taxes or does not have the power to collect taxes from the group of people to which they belong.

While it is easy to group "tax protestors" together and simply dismiss their behavior as illegal tax avoidance, such an approach does not fully resolve the problem. This approach may result in some inarticulate taxpayers being grouped with tax protestors causing their claims to be ignored. Thus, simply dismissing all potential "tax protestors" undermines confidence in the tax system.
This Article argues that current law does not adequately deter tax avoidance by these individuals or compensate the system for frivolous positions. However, labeling the arguments as "frivolous" does not solve the problem, nor does barring the users from entering the court system. Those defending their non-payment taxes through arguments that fall squarely in the realm of frivolous tax protestor positions should be required to pay for not just some, but rather for all of the costs incurred by the entire tax system, including the courts, in the collection of their tax liabilities.

Number of Pages in PDF File: 57

Accepted Paper Series