The power of the individual is inversely proportional to the power of the Internal Revenue Service.  The IRS is currently at war with self-employed individuals and is out to punish the companies that pay them.  The IRS has attacked thousands of small businesses in the last ten years.  The purpose of this is to put individuals under the control of the withholding of employers.

            The IRS is taking advantage of the confusing Treasury Regulations that define employees.  Small business people can be virtually destroyed by the IRS.  IRS agents are heavy handed in their employment tax audits.  Harvey Shulman, an attorney for the National Association of Commuter Consultant Businesses told the Senate Finance Committee the following:

In almost every employment tax matter of which we are aware the IRS employee has simply visited the technical service offices without any prior appointment.  Instead, the official has advised a receptionist or other employee that he or she is from the IRS and wants to see the firm's owners.  The official has then demanded to see various documents right then and there, including 1099s, W-2s, and sometimes even corporate documents, in many cases from as much as three or four years back...Taxpayers have been told that if they cooperated in providing this information then the IRS official could close the matter and drop the "lead."  When the taxpayers have asked that the IRS officials put these requests for information in writing, the officials have often responded that the taxpayer's refusal to cooperate then and there with an oral request is "suspicious" or otherwise unwarranted and that such refusal itself will require the IRS to open a formal audit.  (U.S. Congress, Senate Finance Committee, IRS Implementation of the Taxpayers' Bill of Rights, p. 131).

            IRS employer classification audits have caused people to lose the business that they built up during their lives, their house and other things they've earned from the fruits of their labor is threatened by the IRS  employment classification audit. 

            Furthermore, the IRS has increasing power to bomb the public with penalties.  The IRS states that "Our system of taxation is based on the willingness of citizens to assess and pay their taxes voluntarily."   (Internal Revenue Service Report.)

            And yet the tax code has become a minefield of penalties.  Money magazine stated "Although the Internal Revenue Manual runs to 260 volumes, tax collectors enjoy tremendous latitude, because courts have ruled over the years that the manual is not the law.  As a result the IRS can flaunt its own rules with impunity.(Denise M. Topolnicki, "Presumed Guilty by the IRS" Money October 1990, p.80).

            David Burnham of A Law Unto Itself:  The IRS and the Abuse of Power, states: "The reality that so many are somehow in violation of a supremely murky law gives the agency and the individual agent an astonishingly free hand to pick and choose their targets."(p.21).

            The IRS has increased its use of force against American citizens in the last fifteen years.  Since 1980, the number of IRS seizures of bank accounts and paychecks has increased four times.  In 1992 the IRS did over 3 million seizures.    The IRS also imposes over one and a half million liens each year, an increase of over 200 percent since 1980.

            The IRS is presumed correct.  That means that the victimized individual must prove that the IRS is incorrect and the IRS takes advantage of their position by sending out bogus statutory notices of deficiency whenever they feel like it.  The current income tax regulations are over 9,000 pages.  Tax laws are so complex that the IRS provides congressmen and their staffs with up to $100,000 of free help each year in filling out their own returns. (Elizabeth McDonald, "How Congress Does Its Taxes," Money, April 1993 p. 96). As the Code gets more and more complicated, it becomes more and more difficult to defend against it.  Since 1976 there have been 138 public laws modifying the Internal Revenue Code.  Since the Tax Reform Act of 1986 there have been 13 public laws changing the code and in 1988 alone there were seven public laws affecting the code

            In recent years the tax codes of the various government agencies have destroyed the possibility of the average individual to ever have financial independence.  If the government announced a program of forced labor and conscripted its citizens to work for a third of the year without compensation, there would be a revolt.  But that is, in effect, exactly what the government has done.  Americans pay many more taxes than they realize.  Actually, a self employed individual in New York City who makes $30,000 a year, faces an income tax rate of 58.3 percent and that does not include sales, property, and other taxes (Andrew Tobias, "New York's Tax Burdens May Drive People Out,"  New York Times, January 30, 1987).

            The average working American will be forced to do 20 years' labor to pay taxes in his or her lifetime.  The federal tax system has turned us all into peasants sharing  our time with our Feudal Lords, the rich 1% that own and control the country.  Workers are giving two pigs to the government for every three pigs they get to keep for themselves. 

            Historian W. H. Chamberlin stated in 1958:

One of the most insidious consequences of the present burden of personal income tax is that it strips many middle-class families of financial reserves and seems to lend support to campaigns for socialized medicine, socialized housing, socialized food, socialized everything.  The personal income tax has made the individual vastly more dependent on the State and more avid for state handouts.  IT has shifted the balance in America from an individual-centered to a State-centered economic and social system. (William Chamberlin, "The Power to Destroy." in Essays on Liberty, Vol. 4 (Irvington-on-Hudson, NY: Foundation for Economic Education. 1958).

            Although the government can seize as much of our property as it wants, there doesn't seem to be any obligation for the government to spend our funds wisely.  The government has the right to imprison people for not paying taxes but it has no duty to spend the money in a moral and just way.  In 1875 the Supreme Court stated:  "To lay with one hand the power of the government on the property of the citizen and with the other to bestow  upon favored individuals, to aid private enterprises and build up private fortunes is none the less a robbery because it is done under the forms of law and is called taxation.  (Savings and Loan Association v. Topeka, 20 Wall. 655, (1875).

     In the case of  Securities and Exchange Commission v. Robert Zimmerman, 854 F. Supp. 896, 1993; the Court made the following instructive comments about the Fifth Amendment.  As you remember, the Tenth Circuit Court of Appeals ruled that Conklin had taken a blanket Fifth Amendment even though he answered all of the government's questions.  Conklin was sanctioned $6,000 for arguing to the Court of Appeals that he did not take a blanket Fifth Amendment because he answered questions. 

     Judge Forrester of the United States District Court for the Northern District of Georgia, Atlanta Division stated in Zimmerman:

     The SEC contends in several motions ...that Zimmerman may not invoke his Fifth Amendment privilege in a blanket fashion and that where he has done so, discovery must be compelled...

     The Fifth Amendment privilege against self-incrimination "protects a person against being incriminated by his own compelled testimony or communica-tions."  Fisher v. United States, 425 U.S. 391, 409, 48 L.Ed. 2d 39, 96 S. Ct. 1569 (1976).  The privilege "can be asserted in any proceeding, civil or criminal, administrative, or judicial, investigatory or adjudicatory."  Kastigar v. United States, 406 U.S. 441, 445, 32 L. Ed. 2d 212, 92 S. Ct. 1653 (1972).  The assertion of the privilege may not be a blanket refusal to produce or to testify.  United States v Argomaniz, 925 F.2d 1349, 1356 (11th Cir. 1991);  United States v. Roundtree, 420 F2d 845, 852 (5th Cir. 1969).

     Zimmerman has not invoked his privilege in a blanket manner.  He has invoked it as a specific response to each question or request propounded by the plaintiff...Further-more, the act of producing documents whose contents might not be privileged would likely be sufficiently testimonial and incriminating in nature to trigger the Fifth Amendment privilege.  United States v. Doe, 465 U.S. 605, 610-12, 79 L. Ed. 2d 552, 104 S. Ct. 1237 (1984); In re Grand Jury No. 86-3 (Will Roberts Corp.), 816 F.2d 569, 571 (11th Cir. 1987).  Zimmerman's specific invocations of the privilege are, therefore, protected....

     As you can see from the discussion in Zimmerman, it is clear that individuals can take the Fifth Amendment as to specific issues and that the Fifth Amendment can be asserted in any proceeding.  Judge Nottingham in the Conklin case ruled that the Fifth Amendment applies only to "compelled testimony."  Of course in the famous Miranda case, the Supreme Court stated that individuals must be given a warning that their statements can be used against them when they are interrogated by the police even in non-compelled situations.  So Judge Nottingham was wrong, the Fifth Amendment applies in even non-compelled situations, and Conklin was sanctioned $6,000 for attempting to get the Court of Appeals to correct Judge Nottingham's error.

     Another instructive case is that of Cooper v. U.S. 834 F. Supp. 669 (D.N.J. 193); In Cooper, the court took the position that the Fifth Amendment privilege extends to the taxpayer's refusal to respond to questions included in the tax return.   Of course in the Conklin case, the court took the position that the Fifth Amendment does not apply to tax returns. 

     The court in Cooper took the position that individuals cannot refuse to file a tax return and they must take the Fifth Amendment as to specific questions on the return. 

...In United States v. Sullivan, 274 U.S. 259, the Supreme Court stated that "if the form of return provided calls for answers that the defendant was privileged from making, he could have raised the objection in the return, but he could not on that account refuse to make any return at all. 

Also in United States v. Edelson, 604 F2d 232, the Court said:

one who uses the Fifth Amendment to protect his refusal to provide the disclosures required in a tax return should confine that use to specific objections to particular questions on the return for which a valid claim of privilege exists.  He may not use the Fifth Amendment to draw a "conjurer's circle" around the obligation to file a return. 

     The Court concludes that individuals cannot refuse to file returns. That is why it is imperative that individuals who decide not  waive their Fifth Amendment Rights on April 15 send the IRS a request for an indefinite extension of time to file a return until the IRS can show them how to file the return without waiving their Fifth Amendment Rights.  They should also attach professional opinion letters that justify their position.  Individuals who request an extension of time to file are not refusing to file returns and they are dealing with the IRS in an upfront manner.

     The bottom line is that the courts are doing everything they can to cloud up the Fifth Amendment problem.  If individuals file tax returns and take the Fifth Amendment, they will waive their Fifth Amendment Rights under the Doe,  case if they admit to having income, because they must have records if they can substantiate an amount of income.  However, if an individual files a return and takes the Fifth Amendment on specific questions on the return, he can be prosecuted criminally for failure to file or he can be fined civilly for taking a frivolous position.  If he contests the issue in Court, the court will fine him for filing a frivolous lawsuit.  Remember that as an added precaution, employees should allow adequate withholding and self-employed individuals should post a bond on their 1099 income especially if they are not judgment proof and they make substantial income.  

     Conklin was fined for raising the Fifth Amendment with a tax return because the Court ruled that the Fifth Amendment only applies to compelled testimony.  Conklin, the Court, opined took a frivolous position because he claimed that income tax returns are compelled testimony.