In September, 2018, I was on the phone with a friend when I performed my normal morning routine of checking my bank account among other things. I was shocked when I saw that my bank account was showing exactly $0.00, when the night before there was at least $60,000 in there. I told my friend that I had to hang up and call my wife at the time and I knew in that moment that my marriage was about to be seriously tested.
It all started in 2012 when the software company that I co-founded became profitable and I now had a tax bill after filing my tax return for the year. At the time, we had been living paycheck to paycheck and all of a sudden, I didn’t have the money to pay the tax bill. At the same time, I was already questioning the concept of the federal income tax and couldn’t understand how it was constitutional to tax the hard-earned money that Americans make. After all, didn’t we start this country in protest of taxes.
These questions, along with my now desperation to figure out how to make this tax bill go away led me down a 10-year journey of study into the realms of contract law, trust law, tax law, US Code, and Uniform Commercial Code. I worked with a handful of mentors as I was seeking to understand everything I could about the financial and legal system that we all operate within.
With all the studying leading up to 2018 when my bank account was levied by the IRS, I still just didn’t feel confident that I knew how the tax system worked and what I needed to do to resolve my tax issues. But, I was determined, because something deep down was telling me or pulling me along that was a knowing that there is something I needed to figure out and that I was on the right path.
For 5 years, between 2013 and 2018 I didn’t have the answer and I didn’t know what to do. And to make matters worse, my company was still profitable, and I still needed to file something to answer for the information returns being filed by my partners for the profits we generated.
In 2015, I met someone in my journey who claimed she knew a “secret” to filing for me that would ensure that my tax liability would be extinguished. She claimed to have filed for 2012 and over the years she claimed to have filed every year for me up to even 2017. Clearly, in 2018, I found out the hard way that she wasn’t actually filing anything. And that was my fault for giving away my power and loosely trusting someone to do it for me instead of learning and taking the action on my own.
2018 was a year of great turbulence as my wife at the time and I scrounged through all of our records and tried to find as many deductions, exemptions and write-offs as we could. In the end, it didn’t change the tax liability much. And to be fair, she did most of the digging and working with the tax accountant to clean it up. I was still focused on finding another solution and did not want to cave and file and pay.
Unfortunately, my life had to take a serious turn for the worse before I was able to find the answer I was looking for. I was able to sell my company in 2020, which was amazing. But, just about all of the money I made from the sale went to paying back all the years of back taxes that I was now on the hook for because I agreed with the information returns filed and chose to file the tax returns, putting me on the hook to pay. Additionally, and most importantly, my marriage came to an end at the same time. Being at rock bottom, I doubled down in resilience to find the answer I was looking for over the last 10 years. I was not about to let all that go to waste for nothing.
And then I finally found the answer. Actually, I had the answer in front me for a couple of years but I didn’t want to believe it. I was sure that it had to be way more difficult and complicated than it should be. But, like all other truths, it is usually simple.
In 2023, when it came time to file my 2022 taxes, I put what I learned to the test. I had seen hundreds of other people find success filing their tax returns based on this simple truth and so I went for it and filed my tax return according to what I now believed was the truth. And I filed with the attitude that I know this is true and I am resolved to stick to my guns if the IRS decided to play games or tell me I was wrong…because I knew I was right.
Everyday I checked the status on my return. I saw that they received it. Then I saw that they were processing it. And then no status change for a month. Then one day, two months or so after I filed it I received an envelope in the mail from the IRS. I remember telling myself, “ok, whatever it is they have to say I am prepared to send as many communications as I need to win because I know I am right and I know the law is on my side.”
When I opened the envelope and read the communication inside, I almost cried with joy. Their communication said that they agreed, and they will be refunding me the full amount of all money that was withheld from my W-2 and that I owed no money on the last bit of money I earned from selling my business.
The truth of the matter is that understanding what is actually a taxable activity is far simpler than I could ever imagine. And I will give you a small hint that will smack you right in the face because it is in the name itself. The Federal Income Tax is just a “Tax on Federal Income” and in my opinion I can happily say that the Federal Income tax laws as they are written are fully constitutional. We have just been misled to believe that they say something other than what they actually say.