Self Employment: An Effective Path For War Tax Refusal

| Resist!

Many people want to refuse payment of Federal income taxes because of conscientious objection to military spending. Rather than pay military taxes, war tax refusers contribute directly to social needs that are often neglected by government.

The Internal Revenue Service continually tightens and improves its computerized system to withhold, assess and collect taxes. This system is based on mandatory reporting by businesses and institutions that make any kinds of income payments to individuals. Each year it seems more difficult to prevent assessment and collection of taxes, particularly for people who work for wages and salaries.

While it tightens its system for taxing reported income, the IRS seems less able to notice or tax income payments that don’t get reported in its automated systems. The human beings at IRS are watching computer screens. If it doesn’t show up there, they usually don’t know it exists. People who hope to prevent collection of military taxes over an extended period of years may be more successful if they get their income from sources that are not monitored and controlled by the IRS. That means self-employment, cooperative ventures with other war tax refusers, employment by small businesses or organizations that are willing to make payments outside of the IRS reporting system, or learning to fit one’s income pattern into complex IRS regulations in such a way that war taxes will not be claimed or can not be effectively collected. Fortunately small business opportunities for self-employment and cooperative work are varied and numerous.

One purpose of this pamphlet is to discuss strategies for structuring self-employment in order to avoid paying military taxes. Some of the strategies covered in this pamphlet are not legal. Civil disobedience should be a conscious, as well as a conscientious choice. Readers who have any doubts or concerns about the legality of particular actions, or their likely or potential consequences, should consult an experienced war tax counselor or attorney.

The second purpose of this pamphlet is to describe how some military tax refusers have discovered and developed their abilities to make a living as self-employed people in a variety of areas.

Two Basic Strategies

In this section we’ll discuss two divergent income and reporting strategies that are used to avoid paying military taxes through self-employment.

  1. Using one strategy, most of your income comes directly from individuals not required to report, or businesses that choose to ignore reporting requirements. You do not file returns and do not report your income. If you get income at taxable levels, this route is illegal, but it can work effectively in practice.
  2. In the second strategy, much of your income may come from other businesses and organizations that report these payments to the IRS, as required by law. You may file returns, but resist the payment of military taxes; you may ignore filing requirements, and wait to see whether the IRS discovers you and pursues you effectively; or you may structure your income and economic status in such a way that you can file returns, but no military taxes will be due.

STRATEGY #1 — Income from sources that do not report it to the IRS

If most of your income is for goods or services provided to individuals or businesses that don’t report these payments to the IRS, the records at the IRS won’t show the taxable income you receive. A number of self-employment businesses typically provide services to customers of this type. These include:

  • building tradespeople specializing in residential repairs and remodeling,
  • housekeeping, home child care and elderly care, when these services are provided for individuals who prefer not to be bothered with IRS-mandated record keeping and reporting,
  • some kinds of therapists and counselors in private practice,
  • music tutors, artists and craftspeople who market directly to the consumers through advertising, word of mouth, art fairs and festivals.

In this type of business it is feasible to go on for years, getting substantial income, without ever reporting income to the IRS. The IRS won’t know about your taxable income, unless there is someone who knows about your war tax refusal and wants to report you. This could be for vindictive personal reasons, or a sense of civic responsibility; or it could be for the little known reward of up to 10% that the IRS will pay for original information leading to collection of taxes on unreported income.

If you get much of your income from one source that pays you “under the table” and ignores IRSreporting requirements, it is possible that these payments could at some time be discovered in anIRS audit of the payor, and that could lead to IRS enforcement action against you.

Some contributors to this pamphlet have been publicly active as war tax refusers for many years. We have earned substantial taxable income from a variety of occupations, without filing income tax returns. In many cases the IRS has seldom or never learned about our income or tried to assess taxes on it.

A person who gets taxable income and doesn’t file returns can take some long term precautions that will make it difficult for the IRS to find out that there was taxable income, or determine the amount of it for a civil claim or a criminal prosecution. These are some precautions that can be taken:

  • accept and encourage payments in cash, or barter arrangements;
  • cash large payment checks at the payor’s bank, rather than depositing them in one’s own account;
  • maintain several checking accounts that don’t pay interest, distribute deposits among them and don’t establish paper trails leading from one account to another;
  • change banks every few years, by withdrawing and depositing in cash, without leaving a paper trail from one bank to the next;
  • be aware that financial institutions are required to report to the IRS any single deposit, withdrawal, or other transaction, or aggregation of transactions in one day, that exceeds $10,000.
  • use appropriate discretion in talking with friends and acquaintances about what you are doing.

This strategy for refusing war taxes is simple: you receive most of your income from sources that don’t report to the IRS; you ignore the reporting requirements of Federal and state taxing agencies; you make your social contribution according to your own conscience. You may keep income records for your own use and your own protection in case you are ever confronted by IRS tax enforcement.

It is illegal to receive taxable income and not file a tax return. The criminal penalty for willfully not filing is up to one year in prison and a $100,000 fine for each offense (a federal misdemeanor). There are other civil and criminal penalties that might apply. Nevertheless, this form of war tax refusal has worked effectively for many people willing to take a modest level of personal risk in the name of conscience. Because it’s done quietly without formal reporting, we can’t estimate the number of those who are doing it, but we know there are many. We do not know of any criminal prosecution of self-employed people in the organized war tax refusal movement for over fifteen years.

STRATEGY #2 — Income from reported sources

If much of your self employment income comes from other businesses and organizations, resisting collection of war taxes is not so simple. It may be difficult to devise a strategy that will work effectively, allowing you to get a livable income without eventual collection of war taxes. Because the intricacies of the law and regulations are complex and specific, we can’t summarize all of them in this pamphlet. The person who wants to devise an effective self-employment strategy in this area will need to be self-educated about laws and regulations that apply to their particular vocational circumstances.

The IRS offers a wide variety of free publications, which contain the IRS interpretation of laws and regulations covering all the issues involved. In this pamphlet we will refer to the most relevant IRSpublications, and summarize a few basic ideas and suggestions derived from reading them.

Many traditional self-employment vocations get most of their income from service or sales to other businesses and organizations. These clients are vulnerable to intrusive regulation and auditing byIRS. Some self-employment businesses are vulnerable to reporting requirements because of licensing or other government regulation.

Vocations in these categories include:

  • freelance writing and editing,
  • bookkeeping, accounting and secretarial services,
  • architects and engineers,
  • lawyers,
  • physicians and dentists whose income comes largely from insurance payments,
  • conventional farming and fishing,
  • moving and trucking,
  • retail stores and service shops,
  • paid organizers and canvassers for social change organizations,
  • salespeople.

For a variety of reasons, many people have used self-employment in small business to avoid paying taxes. As a result, the IRS constantly seeks to weave its net of regulations tighter in order to prevent people from doing this.

If you wish to be self-employed, you may operate as a sole proprietor, or you may incorporate your business under state law and then work as an employee of your own corporation. These options are discussed below.

Sole Proprietors

As a sole proprietor you operate under your own name or an assumed business name. You are supposed to report your business income on Schedule C and other forms that supplement your individual 1040 Income Tax Return. Many sole proprietors have used self-employment to avoid paying taxes. The contractual self-employment relationship can be advantageous to client businesses that use such services, because they can avoid paying employee tax and benefit obligations and avoid much of the record keeping burden involved in hiring wage and salary employees. To prevent sole proprietors and the businesses they work for from using this relationship to avoid federal taxes, the IRS tries to close loopholes and tighten the regulations that define and govern employer, employee and independent contractor relationships.

If your self-employment income comes from other businesses and organizations, most will probably report these payments on IRS Form 1099-MISC, as required by law for payments totaling $600 or more each year. To do this they are required by law to obtain your Social Security number, or theTaxpayer Identification Number (TIN) that is issued to businesses by the IRS. Businesses use IRSForm W-9 to request a taxpayer identification number when they make payments to you. It can be helpful to have Form W-9 with you when you go to a potential employer, if you want to be treated and paid as an independent contractor. If you don’t provide the Social Security number or TINrequested, the payer is required to withhold up to 31% of the payment to cover your potential tax liability.

IRS Publication 15A-Employer’s Supplemental Tax Guide, lists criteria that the IRS uses to determine whether a worker is an employee or a self-employed independent contractor. If you study these criteria, you may design your work life and define your relationship with those you work for so that you will in fact fulfill the criteria for an independent contractor relationship. For example, you may

  • decide where, when, and how you work, without employer training or supervision
  • invest in your own facilities, and have business expenses which are not reimbursed by an employer
  • make a profit or loss
  • be paid by the job, not by the hour, week, or month
  • be available to do the same kind of work for other customers,
  • etc.

Publication 15A also offers examples of traditional self-employment businesses, with interpretations of how self-employment would be typically defined within those vocations.

The IRS also publishes Form SS-8, with nineteen detailed questions that help IRS make a ruling on whether an individual worker is an employee for Federal tax withholding purposes. Either the worker or the employer may file this form to get a ruling from the IRS. By studying the form you can get more insight into how the IRS defines employment and self-employment. Filing the form, however, is not mandatory.

You will see from all of this how the IRS is focused on trying to prevent self-employed sole proprietors from avoiding payment of taxes. An employer might incorrectly classify you as a non-employee, and not withhold applicable income, Social Security, and Medicare taxes. If you subsequently failed to pay these taxes yourself, the employer could be held liable for all of the taxes you did not pay, plus other penalties. Therefore employers are wary about “independent contractor” relationships, in spite of some potential economic advantages for them.

You may properly qualify as a bona-fide self-employed sole proprietor, and the businesses you work for may report their payments on Form 1099-MISC. Even so, if you file a return but refuse to pay the tax, or decide not to file a return, the resulting inquiries or collection pressures from the IRS may intimidate your business customers and cause them to stop using your services.

These pressures from the IRS can cause problems in maintaining a client base. However, IRSenforcement capabilities are variable and unpredictable. They have so many rules that they often lack resources to enforce them. Many sole proprietors who don’t file tax returns get away with it for years, even when much of their income is reported on Form 1099, because the IRS fails to use the information for effective follow up.


Incorporation may solve some of the problems encountered in the self-employed sole proprietor relationship. Under the present law there is no IRS form or reporting system to track payments to corporations for services. Incorporating your self-employment business under state law would release your business customers from the obligation to report to the IRS on payments made to your business.

This is a loophole in the reporting requirements, and we don’t know how long it may remain open. The IRS has sought legislative changes that would extend the 1099 reporting requirement to cover payments to service corporations, but so far Congress has not accommodated their request. Some business customers are not aware of this distinction, and may report payments to small service corporations on 1099-MISC. In presenting your corporation credibly to business customers, a businesslike name, such as Creative Editorial, Incorporated, might be more convincing than a personalized name, such as John Jones Services, Inc.

IRS Publication 334: Tax Guide for Small Businesses and Publication 583: Starting A Business and Keeping Records describe the reporting and taxpaying obligations of several forms of small business organizations, including sole proprietorships, partnerships, and corporations.

According to Publication 542: Corporations, “Each corporation… must file a tax return even if it had no taxable income for the year and regardless of its gross income for the year.” We do not know whether the IRS has any coordinated program with the states to monitor whether all registered corporations are complying with this obligation. Most states require an annual report of some kind from corporations in order to retain the corporate charter, and such reports may ask for an IRS Tax Identification Number.

Apart from the possibility of getting business income that is not reported to the IRS, incorporation of your self-employment business can have practical advantages for structuring your economic life to avoid all Federal income tax obligations. You might be the only employee of your corporation, or it might also employ your spouse, your children, and other relatives and friends. These are some of the ways that a corporation might structure business expenses and payments to meet your needs without creating tax obligations:

  • the corporation could pay direct wage compensation to you at a rate less than the annual personal taxable income ($6800 for a single individual for 1997),
  • pay for comprehensive medical insurance for its employees,
  • fund a pension program for employees,
  • rent or own a storefront for doing business, and the store front might have bath and kitchen facilities for serving customers that you could also use,
  • allow you the use of a sleeping room, in consideration of the security against break-ins and theft that this arrangement would provide, [the IRS might regard the value of this as part of taxable compensation if they knew about it.]
  • own, insure and maintain a vehicle needed for the business,
  • subscribe to periodicals for a reading shelf for customers
  • own a computer and other office equipment,
  • pay all expenses of a telephone.

Resisters should bear in mind that having closely-held corporations pay and deduct what should properly be considered the personal (nondeductible) expenses of its owner-employees is a common, and frequently prosecuted, form of tax evasion among the well-to-do. Unless each expense has a legitimate (“ordinary and necessary”) business purpose, resisters may wish to consider carefully whether the tactics they are using are consistent with their own ethical standards for the conduct of civil disobedience.

Since all net income of a corporation is taxable, the problem for a corporation that intended to avoid payment of taxes for war would be to adjust income and expenses in such a way that there would never be significant taxable income.

This might be done by carefully balancing bids and contracts that would generate profits against those that would yield a loss. You could work at profitable rates for prosperous people, and work at very low rates for people who are poor. An incorporated carpentry business that was showing signs of earning taxable income for a given year could employ jobless people to work on home repair for the poor at very low prices, until the potentially taxable income was used up. A medical clinic could treat poor patients at very low rates. A printing shop could charge bargain prices on bids for struggling peace and justice organizations. If you soaked up excess profits in this way you could plan to have very little taxable income at the end of each tax year.

Another option would be to elect to organize as an S Corporation. This is a form of tax status recognized by the IRS in which the corporation does not pay tax on its income. Instead, income deductions and credits are allocated and passed through to individual shareholders.

These allocations are reported to the IRS on Schedule K-1. Then the shareholders become responsible for reporting these figures on their individual income tax returns and for paying any income tax that is due.

If an S Corporation was structured so that low income members of a family or community were the shareholders of the corporation, the net income of the corporation could be distributed to them as dividends, and no income tax would be due from those whose individual incomes remained below the taxable threshold. In these ways, various corporate structures could be used to provide an adequate standard of living, with basic benefits, while legally avoiding income tax obligations.

Health Care and Retirement Issues

Many self-employed war tax refusers are concerned about how to maintain health care insurance coverage and provide for future retirement income.

If you follow the strategy of getting unreported income and not filing tax returns, you won’t be contributing to the Government Social Security system. However, when you reach retirement age you may be entitled to some level of benefits because of periods in your life when you did work for wages and contribute to Social Security. Even if no Social Security payments were made in your name, under the present system you would be eligible for a minimum level of old age benefits under the S.S.I. and Medicare systems. If you don’t report income and pay taxes, you may want to pay for private medical insurance coverage, and to accumulate adequate savings in some form to provide for your expected needs when illness or age limit your income earning abilities. There are various ways to invest savings to protect them from seizure by IRS and allow the money to help others until you have need for it. One way is to invest in non-profit community development loan funds that do not pay interest to investors. Because no interest payments are being reported, the IRS would not be informed about the location of these investments. Other ways to hold savings are discussed inPractical War Tax Resistance #3: How to Resist Collection.

If you follow the strategy of incorporating and reporting corporate and personal income, the corporation will be withholding and paying Social Security contributions, and may also cover the cost of comprehensive medical coverage and some type of supplemental retirement fund for you. Regulations on retirement plans are complex and we won’t attempt to analyze them here. Be aware that retirement benefits may be taxable as personal income at the time that they are paid out to you.

Partnerships, Worker Cooperatives, and Intentional Communities

Lots of people would like to work as equals with others on shared vocational tasks, using shared resources, in partnerships, worker cooperatives or intentional communities. If such relationships involve an intention to practice war tax refusal it is important that the cooperators share a clear common commitment on how to deal with tax refusal issues. They need to be fully prepared for the risks and consequences if the time comes when they must face enforcement pressures from theIRS.

This pamphlet deals extensively with the methods that individuals and family units can use to refuse war taxes through self-employment. If there is agreement among partners or the principals of an incorporated business, similar tactics can be used to operate the business in such a way as to receive income and not report it, or to structure income and expenses so that no taxes will be due. However, as businesses become larger, involving more workers, it can become increasingly difficult to maintain agreement among the workers about how to handle tax issues, and to avoid disruptive attention from the IRS.

There is a form of corporate status used by religious communities that can be used to avoid having taxable income. This is the type of structure classified by the IRS as a 501(d) corporation. To qualify as a 501(d), the IRS requires you to have a religious basis, combine sources of income, occupy a common piece of property, and have a communal treasury in which everyone has an equal share. The net earnings of the members are aggregated and divided into equal annual pro-rated shares which are reported on Form K-1. The Tax Court has forced IRS to use a fairly broad definition of these criteria, approving the 501(d) application of Twin Oaks, the “Walden” community in Virginia.

This can reduce the reportable income of all members below the taxable threshold. Because a 501(d) is treated like a monastery, with members working for the common good, rather than employees, the K-1 share is also exempt from Social Security and Health Security withholding. The K-1 shares do not reflect what is actually spent for the benefit of various members, but rather reflects the pro-rated paper share of net earnings for each member. Under the Tax Court’s precedent, the “religious” basis could be an ethical commitment by members to share things in common and to refuse to participate in structures of war and violence.

This is a very brief summary of collective approaches to war tax refusal. They require careful research and planning so that members know what they are getting into, and so that the structure can withstand possible scrutiny by the IRS.

Common Areas of Self-Employment

In this section we describe some areas of self-employment, and how tax refusers have developed their ability to make a living in these vocations without paying military taxes. We list a variety of trades and vocations. We briefly discuss learning and entry, equipment and capital, and tax issues specific to particular vocations.

The Building Trades

Carpentry, Electrical, Plumbing, Painting, Sheet Metal, Heating and Air Conditioning, Tiling, Dry Wall Hanging and Taping, Carpet Laying, Roofing.

The building trades is a traditional area of self-employment, in which it can be easy to refuse payment of war taxes and prevent collection of tax claims. Work opportunities and scheduling are flexible. Pay scales are relatively high. The work is useful and necessary to others. Stress can be kept low, and the work can be satisfying for the worker.

Learning and Entry — It’s possible to learn most trades by informal apprenticeship. Willingness to work as a helper for a low rate of pay can make you an attractive employee for small contractors, while you are learning the trade by working with them. The learning process can be accelerated by reading basic textbooks and do-it-yourself books on your trade. In most trades, one or two years of this kind of learning would qualify you to go out on your own, and to pass licensing exams in those trades where licensing may be required.

Equipment and Capital — Having your own basic tools can improve your chances of being hired and retained as a helper in the building trades. Equipment varies from trade to trade, but $500 to $1500 worth of equipment could enable you to be self-employed in some of the trades. As you are learning, build your tool and equipment inventory gradually as needed.

Tax Issues — Many small contractors in the trades like to pay their workers as self-employed sub-contractors, because it cuts down on labor costs and paperwork. The IRS is trying to tighten up on contractors to prevent them from doing this, but many continue to pay their workers as subcontractors without withholding taxes, although more of them now feel compelled to report such payments on the 1099 Form. Once you become genuinely self employed, it becomes quite practical to resist all reporting, filing and collection requirements of the IRS.

Cleaning and Housekeeping Services

House Cleaning, Office Cleaning, Window Washing. Learning and Entry —

Contributors didn’t mention how they learned to do cleaning. Maybe most of us have learned the basics by living in homes that needed to be cleaned and by doing it ourselves. An important element is learning to be very clear from the beginning with clients about what they want done and what you are committed to do. These two things need to be compatible. Reliability and good communication are important to successful relationships with clients. People often begin by working for modest wage rates, often for clients they already know personally. Clientele is built by word-of-mouth and by advertising in local papers. People with experience and a sound client base can readily earn $15 an hour or more.

Equipment and Capital — Equipment costs are minimal. Workers often use tools and equipment owned by their clients.

Tax Issues — Housekeeping services for individual householders are in a special class for tax purposes. Householders are not required by law to withhold income taxes, but they are supposed to report payments and to pay Social Security and Medicare taxes for anyone paid more than $1,000 a year as a household employee. Most clients are happy to ignore this legal requirement because they don’t want to be bothered with the paperwork and reporting. However this became a public issue in 1992 when it was raised in confirmation hearings for several Clinton cabinet appointees. Since then some housekeeping clients have become nervous about not reporting and paying the required Social Security taxes. Other tax issues are similar to those that apply in other areas of self-employment.

Clerical Services

Bookkeeping, Accounting, Secretarial, Typing, Computer, Telephone Answering, Tax Preparation.

A number of these office skills can be combined to provide comprehensive service for other small business clients who don’t want to spend their time on office paperwork.

Learning and Entry — These skills are often learned on the job in wage paying clerical jobs. Community colleges offer courses for formal learning. Entry to self employment is typically achieved by building a clientele gradually through word-of-mouth and local advertising.

Equipment and Capital — A personal computer and printer with adaptable capabilities is basic to this kind of business. A home office is practical. An investment of several thousand dollars would be typical in establishing flexible self-employment capability.

Tax Issues — Much of this kind of work would be done for other businesses. Bookkeeping and accounting would usually involve preparation of tax returns and reporting forms for clients. This is an example of the kind of business in which it might be prudent to incorporate and to operate in a legal manner to avoid tax liabilities. Tax preparers are a special and consistent target of IRS enforcement efforts. However, some people put together a package of clients and services that enables them to work in this area without reporting their income or complying with other IRS requirements.

Home Child Care and Care for the Elderly

You may provide day care for several children in your own home, or you may go to the homes of clients to provide care for small children, or nursing or companionship for elderly clients.

Learning and Entry — Training and certification as a registered nurse or licensed practical nurse enables you to earn higher income in this field. However, there are many opportunities in child care and companionship for the elderly that require little training or experience. Clients are often located through employment agencies and registries that specialize in this kind of placement, for a fee that may be paid by the client or the employee. It is also possible to advertise your services in the local paper. Wealthy clients may pay as much as $500 a week to cover their “at work” hours for a five day week. Registered nurses, when needed, can earn more than that. Other opportunities may involve live-in arrangements, lower compensation, and longer hours of responsibility. Knowledge of the local market and intelligent negotiations will be helpful in avoiding exploitative arrangements.

If you care for several children in your own home, you might be liable to meet strict inspection and licensing regulations of state or local government, which can be costly to meet. However, it is often feasible to operate informally, yet safely for those in your care.

Tax Issues — For an employee in the household of others, tax issues would be similar to those described in the section on Cleaning and Housekeeping Services. Publication 587: Business Use of Your Home, includes tax information for day-care providers. Such providers should be aware that any of their clients who claim a child care credit on their income taxes has to report the taxpayer identification number of the provider to the IRS.

Simple Living on the Land — Gardening for Income

Simple living on the land, combined with sustainable small scale agriculture as a source of income, is an attractive way of life, because it is in harmony with our desire to live on earth without harming others.

Learning and Entry — Many people raised in cities have made the transition to life on the land by reading the generous literature available on homesteading and gardening, and by learning from their rural neighbors. When they don’t have money to buy land with existing housing on it, they often find a few acres to use, on land that is held in community land trusts, or is owned by sympathetic individuals or institutions. People begin by living in primitive housing already on the land and gradually add to it or build their own housing, often without electricity or running water plumbing. They usually garden with organic methods and sell their surplus produce at local farmers’ markets and to local restaurants and groceries. A recent development in this kind of farming is “community supported agriculture”; customers pay the farmer an annual fee for an agreed portion of the produce from the garden; they receive their portion of vegetables and fruits as they mature and are harvested.

Equipment and Capital — This kind of agriculture in our era seems to require the use of an old truck or station wagon at least, some mechanical equipment for tilling the land, and various hand tools. Equipment is often assembled gradually from flea markets and auctions, for a few thousand dollars in total.

Tax Issues — In the 1990’s a small family typically earns from two to fifteen thousand dollars gross from this type of agriculture. They often supplement their cash income through other kinds of part time work in the local community; they raise much of their own food and do many things for themselves that city people would pay to have done. Since most of their income is not reported, they frequently ignore all IRS reporting and payment requirements. They often feel more secure in this if the land that they use is owned by others, with a long term lease granted to the users.

Writing and Editing

Technical Writing, Copy Editing, Translating, Desktop Publishing, Proofreading.

Work of this type has often been done on a freelance basis in the past. The IRS is trying to tighten up on reporting of income paid to freelance writers. It remains an appropriate area for real self-employment, because the work can readily be done at home, according to one’s own schedule, and the work product can be specified and priced by contract.

Learning and Entry — People we consulted in this field have typically gained their knowledge and experience through salaried employment; after some time they gained a network of contacts and knowledge that allowed them to build a client basis for freelance self employment.

Equipment and Capital — Computer and communications equipment might cost several hundred to several thousand dollars, depending on the type of work being done.

Tax Issues — This would be an appropriate field for considering the incorporation option discussed earlier in this pamphlet. Most income in this field would come from publishing corporations. If you work for them as a sole proprietor they would report payments made to you, totaling over $600 in one year, on IRS Form 1099-MISC. Eventual IRS levies might be frustrated by always agreeing in the contract that no payment is due until the work product is delivered, accepted and invoiced, and the client agrees to pay promptly when the invoice is tendered. [This advice on contract terms and invoicing applies equally to any other vocations, such as clerical services, where you typically work for a limited number of long term business clients, who would be reporting to the IRS on Form 1099-MISC.] An IRS levy on forms of income other than wages and salaries is valid only for the amount owed to you at the time the levy is served. If no unpaid invoices are outstanding at the time of levy, the client owes you nothing and need not honor the levy. However, recently the IRS has been trying to treat levies on payments to independent contractors as continuous levies, despite the fact that the law has not changed. Your clients may be confused or intimidated by the IRS into turning over payments and/or discontinuing your services. NWTRCC is looking for a test case on this, so please contact the national office if such a situation arises. Even if prompt payment of invoices protects you from IRS levies, a Notice of Federal Tax Lien might prejudice your ability to collect income in the future from clients who had received notice of the lien.

Other Areas of Self-Employment

Contractual Organizer for Social Justice Organizations

Many social justice organizations and associations have aims and philosophies that are in harmony with the conscience concerns of war tax refusers. Some have been willing to respect the war tax refusal concerns of their paid staff by agreeing to pay for services on a contractual basis, rather than a direct employment basis. This usually requires sensitive negotiations and some restructuring of the way the job is done to reassure some anxious directors that the contractual relationship is legitimate and that the viability or credibility of the organization won’t be threatened by possible tax enforcement problems.

Physicians, Dentists, Nurses, Medical Professionals

4n our society, most medical professionals are employed by institutional employers. If they are self-employed, they get much of their income from government and private insurance carriers. Medical professionals are so well placed to offer valued services direct to the public that they can make a decent living by self-employment in small clinics, if they are willing to work for less and take some risks, outside of the large institutional frameworks. One dentist in Massachusetts, who is a well known war tax resister, has continued to practice dentistry, even though his state license to practice has been suspended because of his refusal to file and pay both Federal and state taxes.

Artists, Musicians, Craftspeople, Creative Writers

Such artists have traditionally been self-employed. They create what they want to and then try to sell more or less of it in order to make a living. If they sell through galleries or publishers and derive continuing income from royalties, they become vulnerable to Form 1099 reporting, seizure of their royalty income, and/or backup withholding. These problems could be met by selling their art directly to the customer, or by selling their rights completely without relying on consignment or royalty arrangements.

Architects and Engineers

Architects and engineers are often self-employed. As with medical professionals, a commitment to war tax refusal could significantly limit the size and types of projects they could work on, and lead them to work for individual homeowners and small businesses rather than large institutional clients.


Small printing shops that cater to alternative movements exist in many communities and provide self-employment for radical printers. This noble tradition goes back to people like Benjamin Franklin, John Peter Zenger and Elijah Lovejoy.

Retail Stores, Restaurants and Repair Shops

These can provide self-employment income, but they tend to get in trouble because local sales tax reporting requirements draw them into mandatory income reporting systems, and their facilities and inventory are vulnerable to seizure. This is an area where the option of incorporating and keeping personal income below taxable levels might work effectively.


Other areas of self-employment used by our associates in the war tax refusal movement have included independent trucking and moving services, taxi driving, counseling, massage therapy, acupuncture, lawn care, fruit picking and pruning, bicycle repair, computer programming, sales, and many others.

Cautions and Disclaimers

The war tax refusal strategies described in this pamphlet have been derived from personal experience, and from interpretations of tax law contained in the IRS publications referred to. Other free publications are listed in IRS Publication 910 — Guide to Free Tax Services, which contains an index to subjects discussed in the publications listed.

The Internal Revenue Code and Regulations, on which these publications are based, can be researched systematically in the Commerce Clearing House Standard Federal Tax Reporter and other loose leaf Federal tax reporting services. Treatises and guidebooks, written at various levels of technical complexity, are also available in most county courthouse and law school libraries, which are generally open to the public. IRS interpretations of the Tax Code and Regulations are sometimes contradicted by Federal courts, when challenged by taxpayers.

Some of the strategies described in this pamphlet are legal, some illegal, and some are of questionable legality. The criminal penalty for most offenses, in the nature of willful failure to file or to pay, is up to one year in prison, plus fines running up to $100,000. It’s up to three years in prison for fraudulent filing and reporting, plus higher fines. The maximum penalty for attempted tax evasion is five years imprisonment. Both actual prison terms and actual fines are governed by strict guidelines, which give primary weight to the dollar amount of taxes evaded. Fines must be mitigated according to ability to pay. High fines are used to get at the assets of wealthy people. Federal fines are owed for at least ten years, and can be for the rest of your life, but it’s not too hard to forestall collection. The writer of this pamphlet has owed over $1500 in criminal fines, some for 35 years, without ever paying any of them. Criminal prosecution of war tax refusers has been very rare.

There are many civil penalties that could be assessed for some of the actions described in this pamphlet, if the IRS catches up with you. Civil penalties plus accumulated interest will typically increase a tax claim to two or three times the amount of the original unpaid tax, by the time the IRSgets around to making a claim.

Information on specific penalties can be found in the Internal Revenue Code and Regulations, or inNWTRCC’s War Tax Resisters and the IRS. When thinking about risks and penalties, it is good to remember that continuing to pay military taxes can be very costly to you and harmful to the future of life on this planet.


Many skills can be adapted and practiced with the goal of self-employment and sustainable war tax refusal. This often involves accepting a lower level of compensation than would otherwise be expected in your profession or vocation. People often find this a positive factor in developing their social and spiritual life. It is an unforeseen benefit from following the leadings of conscience and deciding to do what one believes to be right.

Complex systems of law and computers reach out to grab us and make us involuntary servants of the military spending system. As a result, self-employment for barter, for unreported income, and for income that can be protected from tax collection will become the most practical way to resist military taxes for many people. At the same time we can foster a democratic economic network that will be independent of centralized control by the government and the corporate economic establishment.


— available free from the IRS, 1(800)829-FORM, or on the Internet:

Commerce Clearing House Standard Federal Tax Reporter — available in the business section of many public libraries.

Stand Up To The IRS, by Frederick W. Daily, 3rd Edition, 1996, Nolo Press, 950 Parker Street Berkeley, CA 94710-9867.

War Tax Resistance: A Guide to Withholding Your Support From the Military — available from War Resisters League, 339 Lafayette St., New York, NY, 10012. $17.00 pp.

— (Single copies $1.00 each; Bulk rate 50¢)

WTRs and the IRS — a brief outline of IRS procedures in dealing with war tax resisters — available for $2.50 from NWTRCC.

This brochure was produced by the National War Tax Resistance Coordinating Committee.NWTRCC is a coalition of local, regional, and national groups supportive of war tax resistance. Additional single copies are available for $1.00 each.