Tax Protestor Redux

Was Andrew Joseph Stack, allegedly the man who flew a plane into a building containing IRS offices, a "tax protestor"? Some commenters on Saturday's post say yes, and some news organizations follow suit. But I disagree.

Of course, anyone is free to use any definition they want -- it's not as though these matters are regulated by some Tax Protestor Standards Board -- but in my view Stack lacked the essential qualities I have in mind when I call someone a tax protestor.

Let's consider the things Stack apparently did, as revealed in his alleged suicide note. As I noted on Saturday, he doesn't give all the details, so we don't really know what he did, but apparently he (1) tried to shield his income from taxes by creating a fake church, (2) failed to report distributions from his IRA as income, and (3) failed to report some of his wife's income, allegedly because of mistakes by his accountant. Does that make him a tax protestor?

There's a difference between a tax protestor and an ordinary tax cheat. Lots of people cheat on their taxes. Certainly, not reporting income does not by itself make someone a tax protestor.

In my mind, the first essential element of being what I call a tax protestor is that the person believes, or at least claims to believe, that what he is doing is lawful. Tax protestors claim that they're not evading taxes. They claim that there's no law requiring them to pay taxes, or that the tax law is unconstitutional, or that some obscure section of the tax code makes all domestic income nontaxable, or some such nonsense. So again, just failing to report income (as in items 2 and 3 above) doesn't qualify.

Second, in my view, tax protestor arguments are not just about pushing the envelope with regard to ambiguous loopholes in the tax code. When I call someone a tax protestor, I mean that their argument is so outlandish that no reasonable person could entertain it.

That's why I exclude Stack's escapade with the fake church. That comes closest to the flavor of tax protest -- Stack says he joined "a group of people who were having 'tax code' readings and discussions" and that they "carefully studied" the code and did everything necessary to make it legal not to pay taxes. That's the kind of thing that goes on at the absurd "seminars" offered by prominent tax protestors.

But what's different here is that the position doesn't seem nearly so outlandish as tax protestor positions. Again, it's hard to judge without knowing more detail about what Stack actually did. But churches are tax exempt. And the question of what constitutes a "church" is pretty complicated. The question of what constitutes a genuine religious belief is obviously delicate, and some organizations that initially arose in a secular context have successfully transformed themselves into tax-exempt religions (e.g., the Church of Scientology).

So either Stack believed that he and his buddies could successfully declare themselves to be a religion, or he was deliberately scamming. Either way, it's just not what I would call a tax protestor argument. There's a difference between trying to exploit one of the genuinely ambiguous loopholes in the tax system and having a crazy argument that most people don't have to pay taxes. I would feel the same way about someone who tried to claim most of their home as a home office, or who claimed their hobby expenses as business expenses, or who got involved in some sophisticated but phony tax shelter.

Finally, I would say that Stack's manifesto, and his life story as revealed in it, just don't have anything like the flavor of tax protest. Stack argues about whether it was right for the tax code, as changed in 1986, to forbid companies from treating software engineers such as himself as independent contractors. He says this change in the tax code made it impossible for him to succeed in business. He also says that one year he "decided that it would be irresponsible not to get professional help" with his taxes, so he gave all his information to an accountant and got screwed because the accountant failed to report some of his wife's income.

These are not the actions of a tax protestor. A tax protestor would be saying that income tax is entirely optional, that wages are not income, that you don't have to file because Form 1040 doesn't have an OMB control number, or crazy stuff like that. A tax protestor wouldn't get screwed by an accountant's mistake because a tax protestor wouldn't turn to a real professional for help with his taxes. A tax protestor wouldn't complain that the 1986 tax changes had doomed his business, because a tax protestor wouldn't recognize that there was any obligation to pay taxes to begin with.

As I see it, Stack may have tried to cheat on his taxes with his fake church scam. He may have failed to report income. And he certainly had a lot of disagreements with the tax code. But he's not what I have in mind when I use the term "tax protestor." Of course anyone else can use a different definition. But that's what I mean by the term.

As I remarked on Saturday, this result is somewhat ironic and shows that the term "tax protestor" is not a very good term. Someone who flies a plane into a building to protest his disagreement with income taxes is certainly what you would call a "tax protestor" if you didn't know the meaning that the term has developed. And someone who claims to agree completely with the tax code but who denies that it requires payment of income taxes would better be called a "tax denier." But for whatever reason, the term "tax protestor" has come to mean someone who has an outlandish theory about why the law doesn't require payment of income taxes. Stack may have been a tax cheat, but I wouldn't call him a tax protestor.