Taxing the Ambassador

This is a weird story. It's about a dentist who has claimed he doesn't have to file taxes because he's "Ambassador and Citizen of the Kingdom of Heaven under its King Jesus the Christ" and therefore has diplomatic immunity from federal jurisdiction. That's pretty nutty and this guy is also a militant anti-tax activist. I'm not opposed to paying taxes. On the contrary, I believe there are things that are only possible if we each chip in: public safety (fire, police, health department), access to health care (aka, Universal Health Care), the social service safety net and much more. I detest seeing my hard earned money used to kill people so Americans can have big cars and Bush, Cheney and Halliburton can get rich, but maybe we'll change that someday.

Having said all that, it is hard not to sympathize with this guy, even if he isn't really an Ambassador from Heaven:

Genard's crusade began after a pharmacy he had opened in 1989 went under. His bank forgave his loan debt, thus making it taxable income in the eyes of the IRS. Genard was outraged by the tax, and "around that time that he stopped filing his taxes," said assistant U.S. Attorney Mark Miller, who prosecuted the case. (New Orleans Times-Picayne)

If I understand this correctly, this guy lost his shirt in his business, the bank let him off the hook for repaying money he didn't have, and then the IRS taxed him on the money he didn't have and he flipped out. And the US attorney decided to prosecute him.

Just because I think taxes are needed (and if politicians weren't so cowardly they'd raise them to pay for things we need and pay back the debt we are incurring with this insane war) doesn't mean it's OK to do things that don't make sense. The guy lost his business. He gets nailed. The law is the law. Big companies declare bankruptcy. They get off the hook. The law is the law.

U.S. Attorney Jim Letten commented: "The verdict sends a strong message to tax protesters that such recalcitrant, illegal and disdainful resistance to the payment of federal income taxes will not be tolerated in the Eastern District of Louisiana. As done in this case, this office will aggressively prosecute tax protesters and tax protester organizations who seek to create and spread misinformation regarding the requirements of paying federal income taxes."

Yeah, I get the message. If you have an army of lobbyists and lawyers you don't have to pay taxes. If you are a nutty dentist driven goofy by some zealous paper pusher, you do. Even when it doesn't make any sense.


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I'm afraid that I'm not as sympathetic as you are. Let's say I have a sum of money and spend every cent of it, not keeping back any for taxes. Then tax time comes around and I get irate because "the IRS taxed [me] on the money [I] didn't have." It's true I no longer have the money, but I DID have the money at one point. It is after all an INcome tax, not a tax on whatever money is left over. The guy had a choice: either arrange to pay back the loan over time, in which case it would not have been income, or accept what was in effect a gift, in which case he owes the IRS because gifts above a certain value are taxed as income. If he decided to accept the gift from the bank and didn't have the money on hand for the taxes, then his next move should have been to work out a payment plan with the IRS. The IRS does do payment plans. So payment plan with the bank or payment plan with the IRS--but no income without paying taxes on it. How is this unreasonable? Personally, I would have chosen a payment plan with the IRS because he would have owed less in taxes than in principle. Now, however, with interest and fines, he may owe more than the original amount of the loan. It is likely, of course, that at the outset of this disaster he received bad advice and did not realize that a forgiven loan would be considered income. He deserves our sympathy for that. But the moment he was advised as to the truth of the matter, he should have started making sensible arrangements instead of retreating into indignation and religious self-righteousness. At that point, he forfeits his claim to sympathy.

Elf Eye: You make a good argument. I am assuming, however, this guy didn't go bust on purpose (i.e., throw his business away or kill it by taking money out of it for unwarranted personal expenses). Then the IRS is just piling on his misfortune. You describe another possible scenario (which I'll bet the Big Boys have already figured a way to exploit). So the problem to me is two-fold: a zero-tolerance policy that won't differentiate these two positions; and two parties (the dentist and the IRS) who polarized their positions and the whole thing spun out of control. It seems to me there should have been some way to avoid the needless expense both the taxpayers and the defendant went through to get to an unsatisfactory end point (where no one benefitted).

Well, it's kind of a tax on phony income. The original "income" was a bank loan, which isn't taxable. The money was spent on keeping his pharmacy running, which is rather the point of the loan. Then the loan is forgiven, which means that the money is being recharacterized. It hadn't been taxable, but now it is.

There's no extra money, and naturally it's all been spent. Hence, a tax on phony income.

However, if the tax didn't exist, all of sudden rich people wouldn't be paid a salary -- instead they'd all be given loans for things, and then the loans would be "forgiven" and poof! tax-free money.

So I'm actually kind of sympathetic to the fellow. He's caught by a law that has to exist, but rather kicks people when they're down.

Back to the future Revere..... It wasnt just the bank thing. He hadnt filed a return in 12 years. Nice. Now he also renounced his citizenship. Renouncing his citizenship he should have just left while the leaving was good. Cant get blood out of a turnip in Liberia either.

On the other hand, he SHOULD have filed personal bankruptcy and then there is nothing that the USGOVT could do. The reason he was prosecuted was that he was trying to evade the income tax. They take a dim view of this in the government for the smple reason that if only 1 million people failed to pay their income taxes it would bring the country to its knees. Oh, they would have to do it in a loud and vocal way, million person march on Washington but down we would go for sure. Its like a big business losing one of its big customers, once you start that ball rolling its very hard to stop.

As for getting rich Revere. A couple of companies were really given the steal and steal big under WJC and "We just gave a Nobel Peace prize to the dog honey", Al Gore.

WorldCom and ENRON rose while on the watch of Clinton/Gore. Did I mention the payo.. excuse me... contributions? WorldCom NEVER filed an income tax report with the IRS. They were simply sending in their EBITDA and that wasnt even on the proper forms. This went on for almost 6 years. ENRON was savaging the people of California as they jacked the rates of cost of electricity as a commodity to the state. It was legal, and our good buddy Bill Richardson who managed to lose dozens of hard drives with nuke technology during a fire at Los Alamos as DOE head, just couldnt seem to recall.

You have heard me say it before Revere, "Embrace the Horror."

Halliburton got hundreds of contracts under Clinton/Gore. Gore's dad sat on the board of Occidental Petroleum. The assertion is that if you are rich and can afford lawyers and contributions you can get off from doing anything including Nicole Brown Simpson. I fully agree.

My problem? I just cant understand the parsing you do between one group and another. My bigger problem? The media that should be hammering the shit out of them all for it and forcing accountability. They dont. The mold it to their agenda and it is generally very leftist.

The guy above is just frustrated. Hell, he will probably commit suicide if Hillary gets in and we get hit with the massive taxes she proposes.

I wouldnt agree with him if he did. But I would understand.

By M. Randolph Kruger (not verified) on 13 Oct 2007 #permalink

Is an income tax constitutional?

The "Federal" Reserve Board is run by private individuals. They print the money and loan it to the US government who in turn pays interest on the money. I doubt if any of the money you pay in income taxes goes toward public safety or access to health care (or the war in Iraq either, fortunately).

By gaudeamus (not verified) on 13 Oct 2007 #permalink

Gaudeamus-You are right. It goes for paying the debts incurred from the sixties forward. When Johnson took office we had a surplus, time to go and buy helicopters with it to send to Vietnam.

Those guys are appointees and they make big bucks on the Board. Have to, else they will invest overseas and tank or raise the market here which has an effect over there.

By M. Randolph Kruger (not verified) on 13 Oct 2007 #permalink

Gaudeamus, regarding the constitutionality of an income tax:

The XVI amendment, in force since 1913: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

This amendment alters this language from Article I Section 9 of the original Constitution: "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken." So folks who claim there is no warrant for the income tax in the Constitution can only do so by ignoring an amendment to that document. Of course, if you going to ignore one amendment, duly passed according to the procedure outlined in the Constitution, I suppose you'd have an argument for tossing out a lot of other stuff, like the right to peaceably assemble, the right to due process, the right to a speedy trial, the right to vote regardless of income (no poll tax), etc.

Randy: I seem to remember there was also a surplus when the current President took over. So Vietnam and Iraq were both very bad. I agree.

EE - If you follow the "Income Tax is unconstitutional" crowd, you'll find out that they claim that the 16th was 1. actually the 17th, and 2. that it was never "legally" ratified. The courts reject both arguments, but the arguments are out there. (Some might say way out there.)

This sounds like the same sort of carp that Kent Hovind pulled. I wouldn't count on the sympathetic story of Genard being true.

The groups challenge the validity of tax laws by attacking the constitutionality of the 16th Amendment, which established the federal government's right to levy taxes, or arguing that income taxes violate one's Fifth Amendment privilege against self-incrimination. That argument was tested and rejected by the Supreme Court in 1976.

So they tried to prove that the constitution is unconstitutional?

By Tegumai Bopsul… (not verified) on 14 Oct 2007 #permalink