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Ever met anyone who thought he didn't have to pay income taxes? Maybe he tried to argue taxes are unconstitutional and there are legitimate ways to avoid paying them.

Don't believe it. Wesley Snipes believed it, and found himself in quite a bit of legal trouble. He's been acquitted of the most serious criminal charges, but that doesn't mean he won't have to pay his taxes. The IRS still intends to go after him for income taxes on tens of millions of dollars, and the interest and penalties associated with those taxes won't be cheap.

This week brings news that Nicholas Cage is joining the ranks of famous tax cheats. The IRS alleges he used his business, Saturn Productions, to write off $3.3 million in personal expenses (all those jet trips and limos) and says he owes $814,000 in taxes and penalties. Cage argues the expenses are all security needs.

You may not have a business you can run personal expenses through. But if you've found a "tax protester" who is selling a kit that will help you "legally" avoid taxes, don't fall for it, or you might end up in a world of legal trouble of your own.

Here are the top ten tax lies. These are excuses tax protesters say you can use to legally avoid paying income taxes. The only problem? They're completely wrong:

The IRS is not an agency of the United States

Wages aren't really income

Income tax laws are unconstitutional

Providing tax information is self-incrimination

My religion prohibits me from paying taxes

A taxpayer isn't really a person

If you're not a citizen, you don't have to pay taxes

You owe no taxes if you file a zero return

Paying taxes is optional

Filing a tax return is optional

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.


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