History A tax protester, in the United States, is a person who denies that he or she owes a tax based on the belief that the constitution, statutes, or regulations do not empower the government to impose, assess or collect the tax. The tax protester may have no dispute with how the government spends its revenue. This differentiates a tax protester from a America: Freedom to Fascism America: Freedom to Fascism is a 2006 film by Aaron Russo, which alleges among a variety of claims that income tax is illegal The Law that Never Was The Law That Never Was: The Fraud of the 16th Amendment and Personal Income Tax is a 1985 book by William J. Benson and Martin J. "Red" Beckman which claims that the Sixteenth Amendment to the United States Constitution, commonly known as the income tax amendment, was never properly ratified. In 2007, and again in 2009, Benson's Cheek v. United States Cheek v. United States, 498 U.S. 192 , was a case in which the United States Supreme Court held that a tax protester's belief that he was not violating the Federal tax law based on a misunderstanding caused by the complexity of the tax law itself—if a genuine, good faith, actually held belief—would be a valid defense to charges of tax evasion,

Notable tax protesters Irwin Schiff Irwin A. Schiff is a prominent figure in the tax protester movement. Schiff is known for writing and promoting literature that claims the United States income tax is applied incorrectly. He has lost several civil cases against the federal government and has a record of multiple convictions for various federal tax crimes. Schiff is serving a 13- Richard Michael Simkanin Richard Michael Simkanin is a tax protester serving a prison sentence after having been convicted on twenty-nine counts of United States federal tax crimes Robert Clarkson Robert Barnwell Clarkson was an American tax protester in South Carolina. Clarkson graduated in 1969 from Clemson University with a bachelor of arts degree in economics. He served as a platoon leader in the Vietnam War. Clarkson graduated from South Carolina Law School in 1974 · Tom Cryer Tommy K. Cryer, also known as Tom Cryer , is an attorney in Shreveport, Louisiana who was charged with and later acquitted of willful failure to file U.S. Federal income tax returns in a timely fashion Vivien Kellems Vivien Kellems, was a Connecticut industrialist who fought the U.S. federal government for over 25 years over withholding under 26 USC §3402, and other aspects of income tax in the United States. She was also a fervent supporter of voting reform and the Equal Rights Amendment Wayne C. Bentson Bentson operated Western Information Network and the Bentson Group until May 1997. He represented himself as a tax expert and told his clients that they did not need to pay federal income tax Wesley Snipes Wesley Trent Snipes is an American actor, film producer, and martial artist. He has starred in numerous action-adventures, thrillers, and dramatic feature films and is well known for his role as Blade in the Blade trilogy. Snipes formed a production company titled Amen-Ra Films in 1991 and a subsidiary, Black Dot Media, to develop projects for

Australia There are many forms of taxation in Australia. Individuals and companies in Australia may be required to pay taxes or charges to all levels of government: local, state, and federal governments. Taxes are collected to pay for public services and transfer payments • British Virgin Islands Taxation in the British Virgin Islands is simple by comparative standards; photocopies of all of the tax laws of the British Virgin Islands would together amount to about 200 pages of paper. Taxation in the British Virgin Islands is mostly notable for what is not subject to taxation. The British Virgin Islands has: Canada The level of Taxation in Canada is average among Organisation for Economic Co-operation and Development countries. Approximately 70% of the Canadian government's income comes from taxation, the rest from tariffs, fees, and investments.[citation needed] • China Taxes provide the most important revenue source for the Government of the People's Republic of China. As the most important source of fiscal revenue, tax is a key economic player of macro-economic regulation, and greatly affects China's economic and social development. With the changes made since the 1994 tax reform, China has preliminarily set up • Colombia Taxation in Colombia is determined by the Congress of Colombia, the Departments of Colombia Assemblies and the Municipalities of Colombia councils, which determine what kind of taxes can be levied and which rates can be applied France Taxation in France is determined by the yearly budget vote by the French Parliament, which determines which kinds of taxes can be levied and which rates can be applied • Germany Taxes in Germany—being a Federal Republic—are levied by the Federation , the States (Länder) as well as the Municipalities (Gemeinden). Many direct and indirect taxes exist, whereof income tax and VAT are the most relevant. The German word for tax is die Steuer which originates from the Old High German word stiura meaning help. It should not • Hong Kong Categories: Taxation in Hong Kong | Hong Kong legislation | India Taxes in India are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such the Municipality or the Local Council • Indonesia Indonesian taxation is based on Article 23A of UUD 1945 , where tax is an enforceable contribution exposed on all Indonesian citizens, foreign nationals and residents who have resided for 120 cumulative days within a twelve month period. Indonesia has a stratification of taxation including Income Tax, Local Tax (Pajak Daerah) and Central • Ireland The system of taxation in the Republic of Ireland is broadly similar to the system of taxation in the United Kingdom Netherlands Some of the most important taxes are that of the income tax , the wage withholding tax (Wet op de loonbelasting 1964), the value added tax (Wet op de omzetbelasting 1968) and the corporate tax (Wet op de vennootschapsbelasting 1969) • New Zealand Taxation in New Zealand is collected at a national level by the Inland Revenue Department on behalf of the Government of New Zealand. National taxes are levied on personal and business income, as well as on the supply of goods and services. There is no capital gains tax, although certain "gains" such as profits on the sale of patent Peru The income tax in Peru is collected by the Superintendencia Nacional de Administración Tributaria, best known as SUNAT. This country uses a system of progressive taxation on personal income, and a flat rate tax on business income • Russia The Russian Tax Code is the primary tax law for the Russian Federation. The Code was created, adopted and implemented in three stages. Part One, enacted July 31, 1998, also referred to as the General Part, regulates relationships among taxpayers, tax agents, tax-collecting authorities and legislators: tax audit procedures, resolution of disputes • Singapore Individual income tax in Singapore forms part of two main sources of income tax in Singapore, the other being corporate taxes on companies. Payable on an annual basis, it is currently based on the progressive tax system , with taxes ranging from 0% to 20% since Year of Assessment 2007. The Year of Assessment (YA) is based on the calendar year Switzerland Taxes in Switzerland are levied by the Swiss Confederation, the cantons and the municipalities. Switzerland is sometimes considered a tax haven due to its general low rate of taxation, its political stability as well as the various tax exemptions or reductions available to Swiss companies doing business abroad, or foreign persons resident in • Tanzania In Tanzania the Income Tax Act, 2004 came into effect in July 2004. This act restructured the income tax system in line with modern requirements and repealed the previous Income Tax Act, 1973. Tax is levied on income from employment, income from business and income from investment. Taxable persons include entities and individuals. An entity can be Thailand • United Kingdom Taxation in the United Kingdom may involve payments to a minimum of two different levels of government: The central government and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from United States Taxation in the United States is a complex system which may involve payment to many different levels of government and many methods of taxation. United States taxation includes local government, possibly including one or more of municipal, township, district and county governments. It also includes regional entities such as school and utility, and • European Union Value added tax is similar to a sales tax. It is a tax on the estimated market value added to a product or material at each stage of its manufacture or distribution, ultimately passed on to the consumer. Maurice Lauré, Joint Director of the French Tax Authority, the Direction générale des impôts, was first to introduce VAT on April 10, 1954,

Tax rates around the world Comparison of tax rates around the world is difficult and somewhat subjective. Tax laws in most countries are extremely complex, and tax burden falls differently on different groups in each country and sub-national unit. The lists below give an indication by rank of some raw indicators Tax revenue as % of GDP This article lists countries by total tax revenue as a percentage of gross domestic product for the listed countries. Three sources are used, one for each column. The tax percentage for each country listed in the sources has been added to the chart

Under Section 1031 of the United States ^ b. English is the de facto language of American government and the sole language spoken at home by 80% of Americans age five and older. Spanish is the second most commonly spoken language Internal Revenue Code The Internal Revenue Code is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and (26 U.S.C. The Internal Revenue Code is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and § 1031), the exchange of certain types of property may defer the recognition of capital gains A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor. Conversely, a capital loss arises if the proceeds from the sale of a or losses Capital loss is the difference between a lower selling price and a higher purchase price, resulting in a financial loss for the seller. Pursuant to IRS TAX TIP 2009-35 "If your capital losses exceed your capital gains, the excess can be deducted on your tax return, up to an annual limit of $3,000 ." due upon sale, and hence defer any capital gains taxes otherwise due.

Summary

To qualify for Section 1031 of the Internal Revenue Code The Internal Revenue Code is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and, the properties exchanged must be held for productive use in a trade or business or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code The Internal Revenue Code is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and, though securitized properties are not excluded. The properties exchanged must be "like-kind", i.e., of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. Personal property used predominantly in the United States and personal property used predominantly elsewhere are not like-kind properties.

Real properties generally are of like-kind, regardless of whether the properties are improved or unimproved. However, real property in the United States and real property outside the United States are not like-kind properties.

Taxpayers may wonder whether items such as equipment used on a property are included in the lump-sum sale of the property, and if they are able to be deferred. Under Treasury regulation §1.1031(k)-1(c)(5)(i), property that is transferred together with the larger item of value that does not exceed 15% of the fair market value of the larger property does not need to be identified within the 45 day identification period but still needs to be exchanged for like kind property to defer gain.

Cash to equalize a transaction cannot be deferred under Code Section 1031 because it is not like-kind. This cash is called "boot" and is taxed at a normal capital gains rate.

If liabilities assumed by the buyer exceed those of the seller (taxpayer), the realized gain of the seller will be not only be realized, but recognized as well. If however, the seller assumes a greater liability than the buyer, the realized loss cannot offset any realized and recognized gain of receiving boot such as cash or other personal property considered boot.

Originally, 1031 cases needed to be simultaneous transfers of ownership. But since Starker vs. U.S. (602 F.2d 1341), a contract to exchange properties in the future is practically the same as a simultaneous transfer. It is under this case, decided in 1979, that the rules for election of a delayed 1031 originated. To elect the 1031 recognition, a taxpayer must identify the property for exchange before closing, identify the replacement property within 45 days of closing, and acquire the replacement property within 180 days of closing. A Qualified Intermediary must also be used to facilitate the transaction.

Section 1031 Like-Kind Exchanges

Section 1031(a) of the Internal Revenue Code The Internal Revenue Code is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and (26 U.S.C. The Internal Revenue Code is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and § 1031) states the recognition rules for realized gains (or losses) that arise as a result of an exchange of like-kind property held for productive use in trade or business or for investment. It states that none of the realized gain or loss will be recognized at the time of the exchange.

It also states that the property to be exchanged must be identified within 45 days, and received within 180 days.^[1]

1031(b) states when like-kind property and boot can be received. The gain is recognized to the extent of boot received.

1031(c) covers cases similar to those in 1031(b), except when the transaction results in a loss. The loss is not recognized at the time of the transaction, but must be carried forward in the form of a higher basis on the property received.

1031(d) defines the basis calculation for property acquired during a like-kind exchange. It states that the basis of the new property is the same as the basis of the property given up, minus any money received by the taxpayer, plus any gain (or minus any loss) recognized on the transaction. If the transaction falls under 1031(b) or (c), the basis shall be allocated between the properties received (other than money) and for purposes of allocation, there shall be assigned to such other property, an amount equivalent to its Fair Market Value at the date of the exchange.

1031(e) stipulates that livestock of different sexes do not qualify for like kind exchange.

1031(h)(1) stipulates that real property outside the United States and real property located in the United States are not of like kind.

The sale of the relinquished property and the acquisition of the replacement property do not have to be simultaneous. A non-simultaneous exchange is sometimes called a Starker Tax Deferred Exchange (named for an investor who challenged and won a case against the IRS). See Starker v. United States, 602 F.2d 1341, 79-2 U.S. Tax Cas. (CCH) paragr. 9541, 44 A.F.T.R.2d 79-5525 (9th Cir. 1979).^[2] For a non-simultaneous exchange, the taxpayer must use a Qualified Intermediary, follow guidelines of the Internal Revenue Service The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue. The IRS is responsible for collecting taxes and the interpretation and enforcement of the IRC (Internal Revenue Code), and use the proceeds of the sale to buy more qualifying, like-kind, investment or business property. The replacement property must be “identified” within 45 days after the sale of the old property and the acquisition of the replacement property must be completed within 180 days of the sale of the old property.

Section 1031 is most often used in connection with sales of real property. Some exchanges of personal property can qualify under Section 1031. Exchanges of shares of corporate stock in different companies will not qualify. Also not qualifying are exchanges of partnership interests in different partnerships and exchanges of livestock of different sexes. However, as of 2002 IRS ruling (see Tenants in common 1031 exchange), Tenants in Common (TIC) exchanges are allowed. For real property exchanges under Section 1031, any property that is considered "real property" under the law of the state where the property is located will be considered "like-kind" so long as both the old and the new property are held by the owner for investment, or for active use in a trade or business, or for the production of income.

In order to obtain full benefit, the replacement property must be of equal or greater value, and all of the proceeds from the relinquished property must be used to acquire the replacement property. The taxpayer cannot receive the proceeds of the sale of the old property; doing so will disqualify the exchange for the portion of the sale proceeds that the taxpayer received. For this reason, exchanges (particularly non-simultaneous changes) are typically structured so that the taxpayer's interest in the relinquished property is assigned to a Qualified Intermediary prior to the close of the sale. In this way, the taxpayer does not have access to or control over the funds when the sale of the old property closes.

At the close of the relinquished property sale, the proceeds are sent by the closing agent (typically a title company, escrow company, or closing attorney) to the Qualified Intermediary, who holds the funds until such time as the transaction for the acquisition of the replacement property is ready to close. Then the proceeds from the sale of the relinquished property are deposited by the Qualified Intermediary to purchase the replacement property. After the acquisition of the replacement property closes, the Qualifying Intermediary delivers the property to the taxpayer, all without the taxpayer ever having "constructive receipt" of the funds.

The prevailing idea behind the 1031 Exchange is that since the taxpayer is merely exchanging one property for another property(ies) of “like-kind” there is nothing received by the taxpayer that can be used to pay taxes. In addition, the taxpayer has a continuity of investment by replacing the old property. All gain is still locked up in the exchanged property and so no gain or loss is "recognized" or claimed for income tax purposes.

Boot

Although it is not used in the Internal Revenue Code, the term “Boot” is commonly used in discussing the tax implications of a 1031 Exchange. Boot is an old English term meaning “Something given in addition to.” “Boot received” is the money or fair market value of “Other Property” received by the taxpayer in an exchange. Money includes all cash equivalents, debts, liabilities or mortgages of the taxpayer assumed by the other party, or liabilities to which the property exchanged by the taxpayer is subject. “Other Property” is property that is non-like-kind, such as personal property, a promissory note from the buyer, a promise to perform work on the property, a business, etc.

There are many ways for a taxpayer to receive “Boot”, even inadvertently. It is important for a taxpayer to understand what can result in boot if taxable income is to be avoided.

The most common sources of boot include the following:

• Cash boot taken from the exchange. This will usually be in the form of "Net cash received", or the difference between cash received from the sale of the relinquished property and cash paid to acquire the replacement property(ies). Net cash received can result when a taxpayer is "Trading down" in the exchange (i.e. the sale price of replacement property(ies) is less than that of the relinquished.)

• Debt reduction boot which occurs when a taxpayer’s debt on replacement property is less than the debt which was on the relinquished property. As is the case with cash boot, debt reduction boot can occur when a taxpayer is "Trading down" in the exchange.

• Sale proceeds being used to pay non-qualified expenses. For example, service costs at closing which are not closing expenses. If proceeds from the sale are used to service non-transaction costs at closing, the result is the same as if the taxpayer had received cash from the exchange, and then used the cash to pay these costs. Taxpayers are encouraged to bring cash to the closing of the sale of their property to pay for the following: Non-transaction costs: i.e. Rent prorations, Utility escrow charges, Tenant damage deposits transferred to the buyer, and any other charges unrelated to the closing.

• Excess borrowing to acquire replacement property. Borrowing more money than is necessary to close on replacement property will not result in the taxpayer receiving tax-free money from the closing. The funds from the loan will be the first to be applied toward the purchase. If the addition of exchange funds creates a surplus at the closing, all unused exchange funds will be returned to the Qualified Intermediary, presumably to be used to acquire more replacement property. Loan acquisition costs (origination fees and other fees related to acquiring the loan) with respect to the replacement property should be brought to the closing from the taxpayer’s personal funds. Taxpayers usually take the position that loan acquisition costs are being paid out of the proceeds of the loan. However, the IRS may take the position that these costs are being paid with Exchange Funds. This position is usually the position of the financing institution also. Unfortunately, at the present time there is no guidance from the IRS on this issue which is helpful.

• Non-like-kind property which is received from the exchange, in addition to like-kind property (real estate).

Boot limitations

Exchangers are advised to follow the following guidelines:

1. Always to trade "across" or up, but never trade down in order to avoid receipt of boot, either as cash, debt reduction or both. The boot received can be off-set by qualified costs paid by the Exchanger.

2. Always to bring cash to the closing of the replacement property to cover loan fees or other charges which are not qualified costs. (See above)

3. Not to receive property which is not like-kind.

4. Not to over-finance the replacement property, since financing should be limited to the amount of money necessary to close on the replacement property in addition to exchange funds which will be brought to the replacement property closing.

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