Question: Butcher attended meetings of tax protestors for many years in
Butcher attended meetings of tax protestors for many years in which the constitutionality of the federal income tax and its means of collection were routinely challenged. Members of various protest groups were provided with materials to assist them in preparing returns such that little or no tax would be due, e. g., on the basis that only gold-backed or silver-backed currency need be submitted to pay the tax or that a tax bill had originated in the Senate rather than the House of Representatives. Some of the groups maintained that no returns need be filed by individuals at all on the grounds that the current law supporting a federal income tax violates various elements of the U. S. Constitution. The U. S. Tax Court routinely has overturned such means of avoiding the tax, charging that such returns were frivolously filed and charging the protestors with delinquent taxes, interest, and a variety of negligence and other accuracy-related penalties, especially where taxpayers failed to file altogether. The results of these cases never were discussed in the meetings that Butcher attended, though. Thus, although he never joined any of the groups, Butcher felt comfortable with the arguments of the protestor groups and never filed a federal income tax return for himself or his profitable sole-proprietorship carpentry business. When the IRS discovered his failure to file and charged him with tax, interest, and penalties, Butcher went to the tax library and found that judicial precedent and administrative authority were stacked against him. He asked the court for relief from the civil fraud penalties related to his failure to file and failure to pay tax on the basis of his good-faith belief that the tax protestor information he had received was an acceptable interpretation of the law. Under this argument, a taxpayer cannot be found to willfully have failed to file and pay if he or she had a good-faith belief that no such requirement was supported by the Constitution. Should Butcher be required to pay civil fraud penalties?
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