Bankruptcy and Taxes:

Watch OUT!

      Yes, you must watch out if you are preparing for a bankruptcy. The IRS is striking out harder and harder at individuals who discharge taxes.  You must be sure to follow the rules very, very carefully. 

      You can discharge taxes in a Chapter 7 Bankruptcy if the taxes are three years old, if you have filed the returns at least two years preceding the filing of the bankruptcy.  The taxes must have been assessed 240 days prior to the filing of the bankruptcy.  Also, you cannot discharge taxes in a Chapter 7 if the court takes the position that you have committed fraud.  Currently, the IRS is claiming that individuals who have filed exempt W-4 forms have committed fraud and it is likely that the courts will support their position. 

      Tragically, there are currently many individuals around the country who are stopping withholding through the use of exempt and inflated W-4 Forms.  These individuals are going through a process of "untaxing" which is a concept that does not work; but the gurus selling these "untaxing" programs are selling ideas that didn't work twenty years ago and that still will not work today.  Please be aware of the fact that if you are an employee and you eliminate withholding, the IRS may eventually garnish your wages for taxes plus interest. You will not be able to effectively use a Chapter 7 Bankruptcy to escape the problem because the IRS will maintain that you filed a fraudulent form. 

      If you file returns after the IRS has filed a return for you, the IRS may try to claim that you cannot satisfy the two-year rule.  However, you must file to get the two-year period running.  The IRS cannot refuse to permit you to do this.  See Phillips v. Commissioner, 86 TC 433 (1986); Millsap v. Commissioner, 91 TC 58 (1988). Remember that mere testimony that the debtor mailed the return may not be enough to overcome the I.R.S. claim that no return was received; it may require a  retur receipt or some other proof of mailing. In re O'Neill, 134 B.R. 48 (M.D.Fla 1991).  The three-year rule, the 240-day rule, and the two-year rule have all been held tolled during the time the debtor was in bankruptcy. See Matter of Stoll, 132 B.R. 782 (N.D.Ga. 1990).

Ruminations on our Current Political and Economic Situation

      Let's first take a look at thinking of several famous thinkers in the arena of government and economics.

"Nothing appears more surprising to those who consider human affairs with a philosophical eye than the easiness with which the many are governed by the few and the implicit submission with which men resign their own sentiments and passions to those of their rulers. When we inquire by what means this wonder is effected, we shall find that, as force is always on the side of the governed, the governors have nothing to support them but opinion.  It is, therefore, on opinion only that government is founded, and this maxim extends to the most despotic and most military governments as well as to the most free and most popular."--David Hume, Of the First Principles of Government (1758).

      Eric Fromm commented on our society:

"This is a society which needs to make man fit in a complicated and hierarchically organized system of production with a minimum of friction. It creates the organization man, a man without conscience or conviction, but one who is proud of being a cog, even if it is only a small one, in a big and imposing organization.  He is not to ask questions, not to think critically, not to have any passionate interests, for this would impede the smooth functioning of the organization.  But man is not made to be a thing, he is not made to shun asking questions.  Hence, in spite of 'job security,' 'old age pensions,' and the satisfaction of belonging to a large and 'nationally known' outfit, man is disquieted and not happy."

      H. L. Mencken, a famous critic of government made the following observation:

      "Governments, whatever their pretensions otherwise, try to preserve themselves by holding the individual down...Government itself, indeed, may be reasonably defined as a conspiracy against him.  Its one permanent aim, whatever its form, is to hobble him sufficiently to maintain itself."

As you can see, we have the thoughts of three famous thinkers about the dilemma that we face at this time in our country.  The current Anti-IRS activity in the country is a case in point.  When even a few people get the information and motivation to organize and protest, the feeling of powerlessness begins to fade. Hume was well aware that force is on the side of the people and when enough people wake up and realize that filing tax returns is voluntary, the governors will no longer have opinion on their side.  Fromm knows very well that people have the ability to challenge the status quo and that given enough dissatisfaction, they will do so. Mencken knows that the purpose of the IRS is to hobble the population and keep it in its place to perpetuate its own survival.

      It is important for our leaders to keep us isolated and cleansed of information in order for them to maintain their control.  The Worldwide Web may be the greatest factor in history in the liberation of humanity from tyrannical government practices.  Now, for the first time in history, it is possible for anyone at any place to search for and obtain information on virtually any subject and the nature of man is certain to conflict more and more with the nature of government as this mountain of accessible information grows.

      People are subjected to massive thought control from the day they are born. We have all been programmed to accept the Federal Income Tax situation without questioning.  But we can change and we can ask questions and seek answers; and this is what the IRS, as the enforcement arm of a tyrannical government must fear.  With knowledge comes power and as the knowledge base against the income tax continues to grow, the IRS will find increasing difficulty in dealing with the fact that millions of individuals have ceased to voluntarily file tax returns.  The future should be quite exciting so hang in there and keep learning and studying and help to raise the consciousness of others.