Tax Resistance

For the last year, I’ve been contemplating not paying my taxes. It’s mostly a thought experiment at this point in time. I have too many things going on in my life that depend on me not having issues with the IRS and being labeled a criminal. (Because, no matter what, the IRS will always find you.) I’m guessing there’s a bunch of folks like me that are asking these questions too. Or at least that’s what my feed on Threads suggests.

Ok, so I’ve finally gotten around to talking about taxes! (Yeay).

This article is in no way serving to encourage folks to participate in tax evasion, which is illegal. But we can look at forms of tax avoidance used to legally perform tax resistance.

Let’s do a quick differentiation between tax avoidance and tax evasion. Then I’ll tell you what I’m doing and share some strategies I found when looking into it.

The IRS defines tax avoidance as “an action taken to lessen tax liability and maximize after-tax income.” It is legal. Most small business owners practice this in one form or another. It’s the act of mitigating tax liability through planning and utilizing tax deductions. Conversely, tax evasion is illegal. It involves underreporting or not reporting income to the IRS. It’s a deliberate choice to withhold what is legally due to the federal government. (Tax evasion has it’s role in tax resistance, but I’m not in any way promoting this as it is illegal.)

Of course, if you don’t really view the government and it’s spending habits as legitimate, then you might not think that the governement has a right to your tax money. This is generally defined as tax resistance. Tax resistance is a form of activism. It’s an act of withholding taxes, through legal or illegal means, as a form of protest.

Here’s one way that almost all of this do this already. We practice tax avoidance by mitigating our tax liability. No one wants to pay more than our fair share in taxes. Entrepreneurs use expenses to claim deductions on their taxes. Remember the basic formula discussed in one of my previous articles? Gross Income - Expenses = Net Income. One of the uses for this formula is to make your Net Income reported smaller so that you don’t have to pay in as much at Year End. So you spend money upgrading your office equipment, advertising, engaging with a business coach and/or you give your employees a raise. These are all ways to invest in your business and to avoid paying more in taxes. Charitable giving is often deductible too, but make sure those donations are going to a 501c3, or it won’t count. If you have kids, you can claim a deduction for them. You may be able to add your minor children to payroll. You can invest in a retirement plan; there are deductions associated with that.

I’ve made small changes to my budget to invest in my business and maximize deductions. I increased the amount of money I pay my son through payroll. I increased my advertising budget. I budgeted for charitable contributions, and I’m making sure that I’m prioritizing paying out the total budgeted amount on a monthly basis. The added benefit of this is that you can use those contributions to invest in causes that are participating in resistance and building economic growth for marginalized communities. I invested a modest amount in my retirement. Reach out if you need a referral to a fantastic financial advisor; mine is amazing.

I would have filed an extension, but didn’t this year due to our move abroad. I often use extensions as a strategy to mitigate stress, for myself, my clients and their tax preparers. You don’t have to file until 10/15 and there are generally no penalties for extensions. And often, you don’t have to make payments until the 10/15 date. You can apply for a payment plan with the IRS. Here’s thelink. Filing an extension and then putting any money owed on a long term payment plan is a strategy that I’ve seen floating around online. This can be effective when used as a collective action. If we’re all delaying payment on our taxes, they’ll have less money to spend on militarization against our neighbors.

There might be exceptions or penalties that I’m not aware of, so check in with a value aligned cpa to be sure.

If you have W2 income, the taxes don’t have to be withheld from your paycheck. You can change your W4 so that there isn’t any withholding. It would be a good idea to take the amount that would normally be withheld and put it into a high yield savings account. You can pair this with an extension and payment plan to delay the federal government’s access to your money. I’ve also seen a suggestion to direct those funds to a charitable contribution instead. The added benefit of that being it would be a tax write off, so it may reduce your tax liability at Year End.

You can look into it a little more by going toWar Resister’s Leagueand the National War Tax ResistanceCoordinating Community.

Interested in learning ways you can tailor your business spending to reduce tax liability? I offer consulting services. These are two hour sessions, designed to cater to your specific needs in your business and to help you reach your goals. You can sign up for a session using the calendar at the bottom of myhomepage