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Hello! I just did 15 months in federal prison for failure to file my income tax forms. I did this on purpose for 16 years, as I was a war tax protester. It was my civil disobedience in the face of a corrupt and criminal system. The Federal judicial system is no joke, and not very fun. There is no innocent until proven guilty. Anyway, I found out a few things going through that process...
1) It is illegal to NOT file an income tax form (1040). DUH. You can be put in prison for this, if you are hard-headed like I am. I talked to the IRS in person three times, twice with regular IRS employees, then with IRS CID agents (CPA's with badges and guns). So, you can see they gave me plenty of chances. Not filing your income tax is one of the few federal misdemeanors, meaning I went to a real federal prison surrounded by real felons, and I was there for the equivalent of a traffic ticket. I was the only person in that prison with a misdemeanor. There were 1600 other inmates in the Big Spring FCI with me. Pretty crazy, huh?
2) It is illegal to CHEAT or LIE on your IRS 1040 form. ALSO DUH. This is a felony, and gets 5 years every time they charge you for it. So this one is a big NO-NO.
3) Here's the kicker... It is NOT ILLEGAL to not pay. Yes, you read that correct. If you can't pay for whatever reason they will NEVER throw you in prison. They will never charge you with a crime that would bring you into a real court. An "Administrative" court, MAYBE. That said... Yes, they may attach liens to your real estate (including your residence) and levy your bank account and try to take your property, and attach your wages, but they will NEVER put you in prison. And all that stuff has to be in your name for them to take it. They cant take stuff that doesn't belong to you....
Yeah, I didn't know this either. No one told me until I got into the federal judicial system. My lawyer told me this while I was preparing my case. He says very few people know about this. Remember, there is no debtors prison in the USA!
READ AGAIN - NO DEBTORS PRISON IN USA
Well, there is for dead-beat dads that owe child support. But not for income tax! Or any other tax.
So here are some ideas to ponder:
So what does that mean? If you are looking to minimize your personal tax debt and liability, you will need to do some things. Well, first of all... Just be 100% honest and file the paper work. Be diligent about it too, because you're gonna save A LOT of money on taxes for just a little time in paperwork... And at the end of the year, if you can't pay, dont worry! After a few years of not paying, with all the interest and penalties the sum gets quite literally ridiculous. But remember, there is always the Offer in Compromise program, which is you basically telling the IRS that you can't pay, even worse can never pay and then offer them say 5% of the tax bill, and then you get a clean slate! YES THIS WORKS! Every day of the week.
For the best protection for your assets and to generate any real lasting wealth, you need to learn about LLC's. They're cheap and easy to set up. YOU NEED TO LEARN ABOUT THIS! Not just for tax benefits, but in our litigious society, its critical knowledge to protect yourself.
The remedy is that you never own anything again. You may control it and use it, BUT NEVER OWN IT. The IRS cannot take from you that which you do not own. Simple. They can't take the house my neighbor owns because I owe the IRS!
All your real property goes into LLC's like cars and real estate. The IRS cannot attach liens to property that you don't own. You can even open bank accounts with LLC's. And you can get an EIN for the LLC. All online. Cheap. Easy. Fast.
If you own a small business, you have the business make all the income. Make sure you file all the paperwork and returns and DON'T CHEAT or LIE. The LLC gets the tax bill, and pays what it can, whatever you feel is appropriate. If the debt becomes unmanagable in a few years, uou will eventually shut it down and do an offer in compromise or allow the IRS to seize anything in the LLC's name. Not YOU! And if the LLC receiving the payments owns nothing? Well nothing will be seized! Yes that is CORRECT.
If you are an employee, you need to change to be an independent contractor for your old employer. Your old boss is now your client, and pays the FULL AMOUNT of your paycheck, no taxes removed as a CONTRACTOR in the name of the LLC. The LLC receives this money, and pays all your expenses. And the LLC pays you minimum wage, as its sole employee. You can set up a series of these LLC's and this is all 100% completely legal. And you will save a BOATLOAD on taxes. And its more private as well! The LLC assumes the tax liability. You will need to send in the quarterly reports, and file the returns, but if at the end of the year, if you can't pay the tax bill, SO WHAT? They will not put anyone in prison for that! EVER!!!
Businesses fail every day. The current money system, businesses are almost set-up for failure. Thats OK, all the government wants is to document it in their systems! That's all they want is to be informed. Kept in the loop. Anything in that LLCs name are the only items liable for attachment for that LLC's tax liability. If you make less than the federal minimum income, you personally will pay very little if any tax.
Your LLC's pay the majority of your bills for you. Like big businesses that pay expense accounts for business people. Little businesses can do it to. Every day of the week. Making less than minimum wage is a GREAT IDEA, right? You will still file a personal 1040, but you will pay very little OR ZERO taxes. Just for doing the paperwork the right way.
Now you know why these CEO's give themselves salaries of $1 per year! LOL!
You should NEVER co-mingle funds, ie: write checks directly to yourself from the LLC. Always send bills and receipts if transferring funds between LLC's, just like a regular business. Keep all these records, just like a regular business. In fact, it is a regular business. This is how business works in this country.
And now you know the dirty little secret that keeps business running in America. Only wage-slaves pay taxes, didn't you know that? Business pay very little, or if you're smart, NO TAXES.
America is about BUSINESS.
Time to start your own business as an LLC, yeah?