But what does the case really mean?
There is a story circulating about an Oregon man who beat the IRS in court over his refusal to pay income taxes until the federal government stops funding abortions. As you might imagine, as a taxpayers’-rights advocate, I’ve been asked what the case really means.
Court documents indicate that the headlines are misleading. This story warrants full and proper analysis, so here we go.
Michael Bowman is adamantly anti-abortion. On the premise that the federal government is funding the abortion industry — either directly or indirectly — he has refused to file tax returns or pay income taxes since 1997. He is not motivated by an anti-tax or anti-IRS ideology per se; nor is he necessarily anti-government. Indeed, he loves America. He is simply a Christian taking a stand against funding abortion.
Due to Mike’s impressive string of non-filing, the IRS prepared substitutes for returns (SFRs) for the years 1999–2001, 2008, and 2009. The agency then pursued civil collection of the resulting assessments. On two occasions in November 2013, Mike phoned the IRS’s revenue officer assigned to his case and left phone messages stating that he would not pay the taxes because it interfered with his right to practice his Christian religion. He even made a video in 2015 in which he asserted that his constitutional right to practice his religion trumps his legal obligation to pay taxes.
Here’s where many of the news stories go off the rails. Mike didn’t sue the federal government for the legal right not to pay taxes. Nor, for that matter, was the case a civil suit against Mike to collect the taxes. Rather, the federal government charged Mike with crimes. They accused him of felony tax evasion under code §7201 and four misdemeanor counts of willful failure to file tax returns under §7203. That is remarkably different from a civil lawsuit over whether one can be forced to fund abortion with one’s tax dollars if one is religiously opposed to such a practice.
In court Mike won on an important point. But the win had nothing to do with Mike’s underlying claim to a First Amendment right not to pay taxes so long as the government’s spending offends his religious beliefs.
Section 7201 of the tax code is the so-called evasion statute. It declares that any person who “willfully attempts in any manner to evade or defeat a tax” is guilty of felony. It has long been settled law that to support a conviction under §7201 there must be evidence of an affirmative act carried out by the accused intended to deceive or mislead the IRS in the assessment or collection process. The oft-cited and well-established Spies v. United States decision stands for the proposition that a mere failure to act — failure to file or failure to pay — standing alone, does not rise to the level of a felony.
In order to support a felony conviction, there must be an affirmative act — an act of commission versus one of omission. Spies and the long train of cases following Spies refer to potential affirmative acts supporting fraud or evasion as “badges of fraud.” Without proof beyond a reasonable doubt of some affirmative act the purpose of which is to facilitate the evasion of tax, there can be no felony. (For a more thorough discussion of this, see chapter 3 of my book, How to Get Tax Amnesty.)
Badges of fraud are affirmative acts calculated to deceive or mislead the tax collector. Examples of such conduct include:
- Hiding income through the use of “nominees,”
- Using two sets of books,
- Demanding only cash for payment of services,
- False statements in filed tax returns, such as underreporting income or claiming bogus deductions,
- Titling assets in the names of third parties to hide them from the government,
- Concealing or destroying records,
- Having checks for payment of goods or services made payable to others to avoid third-party reporting, or
- The use of false names or dummy entities (corporations or LLCs) to hide income.
Mike was not accused of doing any of these things. Rather, the IRS’s only claim of “evasive” conduct is the fact that Mike cashed his own checks at his bank, rather than depositing the checks to his account. Mike’s attorney argued, and the court agreed, that such conduct did not rise to the level of evasive conduct required to support a conviction under §7201. The court dismissed the felony charge from the indictment.
The anti-abortion defense played no role whatsoever in the argument that succeeded in getting the felony charge dismissed. And importantly, Mike still faces four counts of failure to file tax returns. Each count carries a potential penalty of up to one year in prison and a $25,000 fine. These are misdemeanor charges, not felonies, but they are nevertheless very serious.
The question for Mike going forward is whether his anti-abortion stance will serve as a sufficient defense to acquit him of the charges. Unfortunately, that is not likely. All the government has to prove is that: a) the defendant was required to file, b) the defendant did not file, and c) the failure was “willful.” The first two elements are easy: Mike admits to them. As to the third element, willfulness exists if the accused voluntarily and intentionally violated his known legal duty to file the return — and civil disobedience, even if carried out in good faith, is the very embodiment of the concept of willfulness. That is, you know what the law requires but you refuse to follow the law due to a conscientious objection (and perhaps videotape yourself saying so).
The long history of civil disobedience, both in this country and throughout the free world, teaches that criminal convictions always precede social change. That Mike is standing tall for his anti-abortion beliefs is laudable. As Christians, we need to push back against the rising tide of social chaos and cultural degeneration. But beware. If you opt for a course of overt civil disobedience, you are inviting criminal sanctions. Count the cost before you act (or fail to act). A more effective approach is to follow the formula I represent in my book, Salt and Light.