Against war and the taxes that pay for it

By SmartMoney

For the past 20 years, Larry Rosenwald, an English professor at prestigious Wellesley College in Massachusetts, has been playing hide-and-seek with the Internal Revenue Service.

Each year, Rosenwald and his wife, a self-employed piano teacher, file a tax return but don't pay a portion of their tax bill.

Specifically, they withhold 30% of what they owe. This, according to the War Resisters League, an anti-war activist organization, is the portion of personal income taxes that the government dedicates to military spending. (The official figure is 20%, according to the White House's Office of Management and Budget, based on funds collected through Social Security taxes as well as income taxes.)

"As pacifists, we can't bring ourselves to pay for those expenses freely," explains Rosenwald in a letter that he attaches to the couple's tax return. Instead, he continues, he and his wife will deposit their refused taxes in an account where the interest on the deposit will be used for causes they support through donations to grass-roots organizations that do peace and environmental work.

Usually within a year, the IRS levies Rosenwald's salary or bank account and takes what it is owed plus penalties and interest.

It may not be an efficient way to curb the government's military spending, Rosenwald concedes. But throughout the country there are an estimated 8,000 to 10,000 people who, like him, protest the tax system in the same way.

A long tradition

War tax protesters have been around for decades. The longest publicized streak belongs to 83-year-old Juanita Nelson of Deerfield, Mass., who has been refusing to pay income tax since 1947. But not surprisingly, the numbers -- though always small -- typically grow when the United States is at war.

Since the war in Iraq started in 2003, the number of folks interested in war tax resistance has been on the rise, says Ruth Benn, the head of the National War Tax Resistance Coordinating Committee (NWTRCC), a New York group that since 1982 has worked to coordinate the activities of war tax resisters throughout the country.

Although no hard numbers exist on how many taxpayers are planning or have already become tax resisters since 2003, Benn looks for evidence in the number of visits to the organization's Web site. Though the site used to get just 50 hits a day (before the Iraq war), it's averaged 500 a day since then. During this year's tax season, the site has reached 1,000 hits a day.

There are several approaches to war tax resistance. Some folks refuse to pay a portion of their tax bills. Others, like Benn, refuse their whole tax bill. Most war tax resisters also donate their unpaid taxes to charities, often in organized events on April 15 or whatever date tax day falls on (this year that's April 17).

No one knows for sure just how much tax resisters have refused over the years or how much the IRS has collected from resisters, Benn says. Based on surveys the NWTRCC has done among its members, she estimates that in all, the IRS collects probably half of what war tax resisters don't pay. "I've certainly resisted more than they've ever collected, and I think that's true in terms of all tax resisters as a group," Benn says.

Benn, a resister since 1987, refuses 100% of her taxes. She says that refusing just the portion that equals the government's war spending doesn't guarantee the government won't spend her taxes on war anyway. She avoids IRS collections easier than others because the NWTRCC, where she works part time as a consultant, doesn't honor IRS levies. (Technically, the IRS could try to collect from NWTRCC just like it collects from individuals -- by taking the money out of the organization's bank account -- but that hasn't happened, Benn says.)

As for her other work, which she does on a freelance basis, she says, "The IRS could send a levy, and in that case I'd probably just quit the job and find something else." It's what many war tax resisters do when their salaries get levied, she adds.

Like many war tax resisters, Benn doesn't own any real estate or other large assets and keeps her bank account balances low enough to not collect any interest. (She does this so that the bank doesn't report her accounts to the IRS, making it easier to collect.)

Staying below the radar

Keeping your money "under the mattress" -- in cash and not in the bank -- is one way to avoid the eyes of the IRS, says Frederick Daily, a tax attorney and the author of the book "Stand Up to the IRS."

"I actually tell my clients who owe the IRS to do exactly that," he says. That's not to be confused, though, with lying to the IRS about your assets in the event agents come knocking on your door or summon you to court, he adds. That's illegal.

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