MarcD - I know a man who is going to prison sometime very shortly for refusing to pay federal income taxes. I agree that this is rare but in one case I know of that is what is happening. This man believed he didn't have to file or pay.
MarcD - In the former post I was quoting someone on the tax statement and responding to some of the points in their post.
OK, so here again is a case of not filing. Would he be going to prison if he filed and then did not pay? As far as I know, he would not. As I said in the last post, they can make his life pretty miserable. But a jail sentence isn't one of the things the government can do for non payment of taxes. Which is actually a pretty logical thing, if you think about it. According to law, we all have to file. That's pretty clear, and whether it is right or wrong is never an issue with law. But what happens when a person files and can not pay even if willing? I heard (don't know if it's true) about a guy that worked for MSFT. He left the company, and exercised his stock options. I don't remember the numbers, but I think he got something like $500K for them. He took the money to a broker. Bought other stock on margin. (I guess internet stocks). So he lost all his equity, and ended up with a debit to the brokerage. Meanwhile, his profit from his MSFT options were taxable.(his losses, well like everyone, he gets to write off $3500 year). Bottom line is he owed the brokerage house something like $40K which he had no way of paying, but worse, he owed capital gains taxes on his realized gains on MSFT. Something like $100k or so, if I remember the story (which would sound about right). But the money was gone before he could file (let alone pay). So he owes the government and he owes the brokerage. Is he a criminal? Did he do anything wrong other than use poor judgement? (and take what turned out to be bad advice)? So he is screwed. He is broke. Worse, he is in debt. But still, he broke no laws. How can he pay the taxes? Would sending him to prison help anyone? Or any cause? Would it even serve to set an example? Hell, he was "investing in America". What could be more patriotic? So here is a real life example of what is possible. And a good example of WHY no one is sentenced to prison for not paying taxes. The government stands a chance of getting at least some of their money back if he works and they attach his income. They stand no chance of getting their money if they put him in prison. He becomes a cost to the government; a liability in prison. He is an "account receivable" if he is free to try and earn a living. And most importantly, he is not a criminal. Prisons are places for criminals, not people who are broke or unlucky. MarcD
MarcD - As far as I know, and I'm not a CPA or tax lawyer, you are correct about not going to prison for not paying taxes. As you said not filing is another issue and can perhaps be reason for incarceration. When I have resided in other countries we were advised by attorneys to always file each year and vote in the presidential elections to show intent to retain our US citizenship. So filing can be a pretty serious thing. As I said before I was quoting from and responding to Rearden who said you might be hauled off, I never have held that position personally..