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NEWS RELEASE
SOUTH CAROLINA DEPARTMENT OF REVENUE
Public Affairs Office Phone (803) 898-5406
Elizabeth C. Duncan, Public Affairs Director
FOR IMMEDIATE RELEASE
APRIL
26, 2001
Email:
duncane@sctax.org
TAXPAYERS URGED TO BE WARY OF IMPROPER SUGGESTIONS AND FALSE ARGUMENTS ABOUT
THE TAX LAWS OF SOUTH CAROLINA
The South Carolina Department of Revenue is concerned that some taxpayers may
be misled by improper suggestions that they are not required to file tax returns
or pay taxes.
"Some individuals and groups have encouraged others not to comply with
the tax laws of South Carolina," said Betsy Carpentier Director of
the South Carolina Department of Revenue, "they are using false arguments
that have been repeatedly rejected by the courts."
Despite having their arguments rejected by the courts and
incurring penalties for filing frivolous tax returns, promoters of these
arguments continue to lure unsuspecting people into participating in their
schemes.
MYTH : Wages, tips, and
other compensation received for personal services are nontaxable because
the value of the services performed equals that of the wages received.
In other words, the taxpayer has received no gain.
FACT: Taxable income is not limited to gain or
profit. Instead it includes amounts received from wages, tips, and other
compensation. See United States v. Lawson,670 F.2d 923 (1982).
MYTH: Individuals are not persons subject to
taxation because they are "free
born, white, preamble, sovereign, natural, individual common law ‘de
jure’
citizens, etc."
FACT: The courts have consistently and thoroughly rejected this
argument. Both state and federal tax codes include "individuals"
within those subject to taxation. See United States v. Gerads, 999 F.2d
1255 (1993); United States
v. Sloan, 939 F.2d 499 (1991); and United States v. Studley,
783 F.2d 934 (1986).
MYTH: The Internal Revenue Code is invalid because the
sixteenth amendment to the United States Constitution, which
authorizes the imposition of personal income taxes, was not lawfully
ratified.
FACT: The State of South Carolina’s
power to tax is independent of the Constitution of the United States.
Therefore, the validity of the ratification of the sixteenth amendment has no
effect on the constitutionality of South Carolina’s
personal income tax. In any event, courts have long recognized the sixteenth
amendment’s
ratification and validity. United States v. Sitka, 845 F.2d 43 (1988).
MYTH: The Uniform Commercial Code shields one from taxation.
FACT: The Uniform Commercial Code does not exempt anyone from the
payment of taxes.
During the last five years the South Carolina Department of Revenue’s
Criminal Investigations Department has prosecuted 195 individuals for various
tax law violations. Of those 195 cases, one hundred seventeen were for failing
to file income tax returns. The Department of Revenue has not lost any cases
that involved tax protester arguments.
The South Carolina Department of Revenue feels that many unsuspecting
taxpayers are lured into these tax protester schemes because of the formal,
legal language in which these claims are written. We feel it is very important
that taxpayers not be led astray with these false claims and myths.
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