Some taxpayers have argued that the Sixteenth Amendment to the United States Constitution was not properly ratified, thus the federal income tax laws are unconstitutional. This argument is based on the premise that all federal income tax laws are unconstitutional because the Sixteenth Amendment was not officially ratified, or because the State of Ohio was not properly a state at the time of ratification. This argument has survived over time because proponents mistakenly believe that the courts have refused to address this issue. The Law: The Sixteenth Amendment provides that Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration. U.S. Const. amend. XVI. The Sixteenth Amendment was ratified by forty states, including Ohio (which became a state in 1803; see Bowman v. United States, 920 F. Supp. 623 n.1 (E.D. Pa. 1995) (discussing the 1953 joint Congressional resolution that confirmed Ohio’s status as a state retroactive to 1803), and issued by proclamation in 1913. Shortly thereafter, two other states also ratified the Amendment. Under Article V of the Constitution, only three fourths of the states are needed to ratify an Amendment. There were enough states ratifying the Sixteenth Amendment even without Ohio to complete the number needed for ratification. Furthermore, the U.S. Supreme Court upheld the constitutionality of the income tax laws enacted subsequent to ratification of the Sixteenth Amendment in Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916). Since that time, the courts have consistently upheld the constitutionality of the federal income tax. Similarly, Robert L. Schulz, along with his organizations, We the People Congress and We the People Foundation, marketed and distributed to customers a fraudulent “Tax Termination Package” supposedly providing a way for taxpayers to legally stop withholding and paying taxes. The scheme was based on a number of false premises, including the claim that the Sixteenth Amendment was not properly ratified. In August 2007, a federal court permanently enjoined Mr. Schulz and his organizations from promoting the scheme. Seehttp://www.usdoj.gov/tax/txdv07595.htm. United States v. Schulz, 529 F.Supp.2d 341 (N.D.N.Y. 2007), aff'd 517 F.3d 606 (2nd Cir. 2008),cert. denied, 129 S.Ct. 435 (2008). n March 2008, a federal court in California permanently barred Steven Hempfling from selling a tax fraud scheme that falsely claims to give customers a legal defense against criminal prosecutions for income tax evasion. The court found that Hempfling sold a “16thAmendment Reliance Program” that falsely promised customers that they could rely on the opinion of an Illinois tax defier, William Benson, to stop filing tax returns and to stop paying federal taxes and avoid being convicted of federal tax crimes. The court also barred Hempfling from selling “how-to” manuals that falsely tell customers that IRS tax liens and levies are invalid and that employers are not required to withhold federal income taxes from employees’ pay. See http://www.usdoj.gov/tax/txdv08250.htm. William Benson wrote the book The Law That Never Was, in which he asserts that the Sixteenth Amendment was not properly ratified. On his website, Benson sold his book, accompanied with excepts from state legislative histories, records from the National Archives, court cases, and other materials, in what he titled a “Reliance Defense Package.” In January 2008, the District Court for the Northern District of Illinois granted a permanent injunction against Benson, barring him from promoting, organizing, or selling the “Reliance Defense Package” or the “16th Amendment Reliance Package” or any other tax shelter, plan, or arrangement. United States v. Benson, 2008 WL 267055 (N.D. Ill. Jan. 10, 2008). The district court, however, did not require Benson to turn over his customer list. In April 2009, the Seventh Circuit Court of Appeals upheld the permanent injunction but reversed and remanded regarding the customer list. 561 F.3d 718 (7th Cir. 2009). The IRS issued Revenue Ruling 2005-19, 2005-1 C.B. 819, which discusses this frivolous argument in more detail, warning taxpayers of the consequences of attempting to pursue a claim on these grounds. Relevant Case Law: Socia v. Commissioner, 23 F.3d 941 (5th Cir. 1994), reh’g denied, 35 F.3d 568 (5th Cir. 1994), cert. denied, 513 U.S. 1153 (1995) – the court held that defendant’s appeals which challenged Sixteenth Amendment income tax legislation were frivolous and warranted sanctions. Miller v. United States, 868 F.2d 236, 241 (7th Cir. 1989) (per curiam) – the court stated, “We find it hard to understand why the long and unbroken line of cases upholding the constitutionality of the sixteenth amendment generally, Brushaber v. Union Pacific Railroad Company . . . and those specifically rejecting the argument advanced in The Law That Never Was, have not persuaded Miller and his compatriots to seek a more effective forum for airing their attack on the federal income tax structure.” The court imposed sanctions on them for having advanced a “patently frivolous” position. United States v. Stahl, 792 F.2d 1438, 1441 (9th Cir. 1986), cert. denied, 479 U.S. 1036 (1987) – stating that “the Secretary of State’s certification under authority of Congress that the sixteenth amendment has been ratified by the requisite number of states and has become part of the Constitution is conclusive upon the courts,” the court upheld Stahl’s conviction for failure to file returns and for making a false statement. United States v. Foster, 789 F.2d 457 (7th Cir. 1986), cert. denied, 479 U.S. 883 (1986) – the court affirmed Foster’s conviction for tax evasion, failing to file a return, and filing a false W-4 statement, rejecting his claim that the Sixteenth Amendment was never properly ratified. Knoblauch v. Commissioner, 749 F.2d 200, 201 (5th Cir. 1984), cert. denied, 474 U.S. 830 (1986) – the court rejected the contention that the Sixteenth Amendment was not constitutionally adopted as “totally without merit” and imposed monetary sanctions against Knoblauch based on the frivolousness of his appeal. “Every court that has considered this argument has rejected it,” the court observed. Stearman v. Commissioner, T.C. Memo. 2005-39, 89 T.C.M. (CCH) 823 (2005), aff’d, 436 F.3d 533 (5th Cir. 2006), cert. denied, 547 U.S. 1207 (2006). – the court imposed sanctions totaling $25,000 against the taxpayer for advancing arguments characteristic of tax-protester rhetoric that have been universally rejected by the courts, including arguments regarding the Sixteenth Amendment. In affirming the Tax Court’s holding, the Fifth Circuit granted the government’s request for further sanctions of $6,000 against the taxpayer for maintaining frivolous arguments on appeal, and the Fifth Circuit imposed an additional $6,000 sanctions on its own, for total additional sanctions of $12,000. www.irstaxattorney.com 888-712-7690