Health Care, Inheritance, and Miscellaneous Questions

Recent questions to the war tax resistance hotline (aka, the NWTRCC office, 800-269-7464) have been about inheritance and health care. It just so happens that we have updated the booklet in our Practical War Tax Resistance Series  that deals with these topics. Look for #7, Health Care and Income Security for War Tax Resisters.

Practical 7 - 2015 final.inddAs anyone who has applied knows, the Affordable Care Act (“Obamacare”) has not made shopping for health insurance easy for those of us not covered by an employer, Medicare, or other plan.

In addition, what makes it hard to counsel war tax resisters is that the options vary from state to state. Luckily we do have a network of counselors and contacts who can be called on to respond to questions unique to a certain state.

We’ve written about this whole health insurance puzzle over the last few years because of the key role the IRS plays in it. The 1040 now includes lines related to insurance coverage and forms for calculations related to the “premium tax credit” (subsidy) at the end of the year. It is through information provided on the 1040 that the IRS tracks who has health insurance, who qualifies for exemptions, and who will be penalized for not having insurance.

Today a call came from someone who files her taxes but does not have health insurance. In June she got a letter from the IRS demanding payment for $230 — her penalty for not having health insurance. She asked if there is a network of health insurance resisters, people like her who are angry about being forced to buy insurance from a big corporation or pay a penalty if they refuse. At a NWTRCC meeting a few years ago many expressed political problems with the ACA, mostly because of the role big insurance corporations played in creating the legislation, but we have not been part of a wider resistance.

Since the law was enacted some in our network who were already out of the system (non-filers, off-the-grid) have stayed out. Others have found tax benefits to having insurance through the Marketplace. They qualified for the premium tax credit and manage it in a way that reduces their income tax owed at the end of the year — another way to refuse to pay for war. Stories like these are in Practical #7.

This booklet also includes information about inheritances, with stories about how war tax resisters have talked with family members about potential inheritance and the problems of having money when you have a tax debt. In addition, there’s information about Social Security, retirement accounts, and thoughts on income security beyond the working years.

Please note that we are always collecting stories — war tax resistance information is not based on the letter of the law or what the IRS says, it’s based on what happens with real people in our network. Look at the stories in Practical #7 and those in the other Practicals, and consider sending a story for our publications to help add to our body of knowledge.

—Post by Ruth Benn

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A Success Story: Combining War Tax Resistance Tactics

I came across this story in the NWTRCC newsletter archives and was reminded of the conversations we had at the May 2015 conference in Milwaukee, where many of Anonymous’ war tax resistance tactics were discussed. I’ve added links to updated NWTRCC resources.

-Erica

from the February 1998 issue of More Than a Paycheck

A Success Story

by Anonymous

Filing tax returns may make it easier for the IRS to collect refused taxes. But it doesn’t make collection inevitable. For the last decade I’ve been filing legitimate 1040s each year, each with a letter explaining why I’m sending the amount on the “Amount You Owe” line to a peace and justice group instead of to the IRS. In ten years, the IRS hasn’t seized a penny. Recently about $8,000 passed the ten-year statute of limitations and became permanently uncollectable, so I’m claiming success!

The method works for me because my lifestyle makes me almost uncollectable. I don’t own much property (will the IRS come and tow my bicycle?). I don’t have or need a credit card. I live alone and like living simply.

But this isn’t a story of how the IRS ignored me because I had no money. Twice I’ve inherited a sum over $100,000. Divestment from the stock market created high capital gains taxes, and I couldn’t leave money in conventional investments or the IRS could have collected easily. But there’s a lot to be said for sudden wealth. In my case, being “rich” has made it, paradoxically, very easy not to pay for war. I can reduce my wages below the exempt amount on a wage levy. And my investments don’t need to be liquid or high-yield. For example, I’ve made zero-interest loans to community loan funds (Ed. Note: see Preparing for the Possibility of Collection in Practical WTR #3) that help create affordable housing. This way, no information goes to the IRS.

Recently I’ve set up a “gift annuity” retirement plan with a large, socially responsible organization that supports my war tax resistance. This is a terrific, little-known way to keep large sums safe from collection. The organization will accrue the money, giving neither me nor (we hope) the IRS any access to it, till I reach a certain age; then they’ll pay me an annuity till I die; anything left over is theirs to keep. I even get to claim a large charitable-gift tax deduction right away!

I’ve also given away a lot of the money outright to good causes – the ultimate way to prevent collection, if you can afford it. Now I get by, with my retirement secured, from paycheck to paycheck on the income that’s exempt from my latest wage levy. For a year or two in between inheritances, the IRS actually put me on “temporarily uncollectable” status and ignored me.

stuffed-mailboxLately I’ve started my own computer consulting business on the side. If it takes off, the IRS should find my next 1040s interesting. It may seem silly, when I’m this uncollectable, to tempt fate by filing the forms each year. But I find it helps me witness to law-abiding citizens when I can say I’m cooperating with the IRS in every way that doesn’t violate my principles. More importantly, if I didn’t file and if the IRS did find my money, they could conceivably seize many times what I owed. (Ed. Note: Even those who file can accumulate large amounts of penalties and interest. Penalties for fraud are the ones that accumulate the fastest but if a non-filer is public about their position they can avoid fraud penalties.) Finally, since I’m not likely to face serious fraud or evasion charges when I’ve filed legally, I feel free to do whatever it takes to prevent collection – for example, switching temporary bank accounts to change investments without a paper trail.

Over the years the IRS has tried hard to collect my taxes. They’ve sent levies to quite a few places where I no longer had money – bank accounts and other conventional investments and even a trust fund. They’ve never levied any of my alternative investments. I’ve gotten plenty of Notices of Intent to Levy, public liens on my assets (my credit rating must be a disaster!), a succession of wage levies, lots of phone calls from agents, and an occasional request to call an agent or come in for a visit. I’ve politely cooperated with everything except paying or helping the IRS collect. The agents have ranged from mildly threatening to openly supportive of my position, once I explain it. During the last few months before the statute of limitations expired on the $8,000, I kept expecting the IRS to stop being so polite and do something serious to collect. Nothing happened.

Well, maybe I’ve just been lucky all these years. But my sense is that filing 1040s and not paying can be a workable strategy even for someone who’s determined to keep large sums permanently out of the war chests.

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Closing the Chapter, But Not the Book

by Elizabeth Boardman

Kudos to Quaker attorney Bob Kovsky of San Francisco, who worked for seven years on a legal suit I brought against the IRS claiming that as a Quaker, I was subject to misdirection, threat and harassment by the IRS when I honestly and openly followed the precepts of my Christian church in refusing voluntarily to pay for war. The case moved back and forth between district and appellate courts for years. Always rejected out of hand, no court hearing was ever scheduled. Bob and I have finally laid down this effort.

There have been positive effects, however. During this period, the IRS had threatened several other Quakers (including Steve Leeds and Vickie Aldrich) with a “frivolous filing fee” or actually fined them as much as $5,000. Eventually, in early 2014, the IRS clarified for its own staff and for the tax-paying public that forthright and timely filers with deep-rooted religious or conscientious objection to paying for war and the killing of other humans should not be threatened or penalized as “frivolous.” NWTRCC shared this news widely among resisters.

For me, giving up the struggle in the courts involves “closing the chapter but not the book,” as my colleague in war tax resistance, Ruth Paine, put it. Along with others in NWTRCC, I see recent wins for religious freedom in the Supreme Court as possible precedents for war tax resisters to build on. The success of plaintiffs in the Hobby Lobby case, in Holt vs. Hobbs, and in similar cases may indicate that this conservative court respects some kinds of law-challenging decisions when they are based in solid religious faith and practice.

But the road is not yet clear for religious tax resisters. Conscientious resisters to mandatory military enlistment have been offered “alternative service” options since World War II or earlier. Those conscientiously opposed to war taxes need a similar “alternative tax” option. The Peace Tax Fund campaign has tried for years to get Congress to offer such an alternative. Perhaps this is the historical moment for some new ideas and energy in that campaign. I am hoping others will join me in seeking out the opportunities.

Contact Elizabeth at eboardman AT sbcglobal DOT net.

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