Note: This flyer is also available in PDF format. Feel free to download, copy, and distribute (it's intended to be printed as a 12-page 8.5" X 5.5" pamphlet). If you'd like us to send you a PDF with customized local contact info, just let us know!
Introduction
NACC's Conscience and Military Tax Campaign (CMTC) Escrow Account has worked since 1979 to assert U.S. taxpayers' rights of conscience. The account helps to support those who refuse to pay for war and preparations for war, and who wish for their taxes to be used only for peaceful, life-affirming purposes.
NACC maintains an office in Seattle; from which it administers the Escrow Account; makes grants to local, national, and international community groups from the interest accruing to the account; counsels War Tax Resisters and prospective War Tax Resisters; conducts War Tax Resistance workshops; responds to WTR inquiries from the media and the general public; and publishes a biannual newsletter and WTR-related literature. NACC supports passage of the Peace Tax Fund Bill through Congress, and is an affiliate of the National War Tax Resistance Coordinating Committee (NWTRCC), and the War Resisters League (WRL).
NACC's long-run goal is the redirection of Federal spending away from the military and towards the meeting of human needs. War Tax Resistance is a powerful form of nonviolent direct action towards this end. By withholding federal taxes from the Pentagon, Resisters make strong individual and collective statements that at some level of personal risk they refuse to pay for war.
What Is The CMTC Escrow Account?
The CMTC Escrow Account for refused military and war taxes is a program that, since 1979, has allowed War Tax Resisters to set aside refused military taxes. Depositors can retrieve their money at any time (for example, to replace assets seized by the IRS). In the meantime, it is invested in community projects around the country, and interest from the account is used to promote War Tax Resistance and to support peace and social justice activism. The CMTC Escrow Account is the largest and most geographically diverse Alternative Fund in the U.S., holding hundreds of thousands of dollars from hundreds of depositors.
Who Should Consider Using The CMTC Escrow Account?
• Many Resisters deposit the amount resisted -- large, small, or in-between -- every year into the Escrow Account, knowing that it will then be available to them should the IRS successfully levy their bank accounts or garnish their wages. While the resisters would then required to pay interest and penalties out-of-pocket, this amount can often be recovered through the War Tax Resisters Penalty Fund (see below, "What Is The War Tax Resisters Penalty Fund?"). It's worth noting that it may be many years before the IRS begins to attempt to collect the resisted funds, and that its collection process is very costly -- so that the act of Resistance itself places a burden upon the IRS. There is a not-inconsiderable possibility (especially for those choosing to resist small and/or symbolic amounts; such as the Federal Excise Tax from their telephone bills, $10.40, or a percentage of taxes owed) that the IRS will never get around to collecting the resisted funds (see below, "What Are The Current IRS Collection Activity Trends?"). One, of course, shouldn't assume that this will prove to be true in their own individual case.
• The account is quite useful for those willing to go to great lengths to prevent the IRS from collecting. "Hiding" all of one's assets in the account (and/or in similar Alternative Funds or foreign banks), being self-employed or willing to change jobs at a moment's notice, not owning major assets such as houses or cars, and being willing to forego interest from one's assets can make it exceedingly difficult, if not impossible, for the IRS to collect. Note that this level of WTR often requires lifestyle changes and inconvenience. But many resisters feel that the inconvenience is preferable to the alternative: granting tacit consent to the United States' depraved military adventurism and budgeting priorities by helping to provide the requisite financial support allowing the State to enact such policies. NACC is happy to help those willing to take these steps to think through their options.
• Non-Resisters wishing to support community funding and Peace & Justice activities are welcomed to deposit any portion of their savings in the account. All funds are held in socially responsible lending institutions and credit unions throughout the United States, so the money is immediately put to good use assisting low-income and minority communities. Approximately 70% of the interest from the account is granted annually to local, national, and international grassroots organizations working for peace and against war.
For a general discussion of WTR philosophy, methods, and strategies (including methods to prevent taxes from being withheld from one's paycheck), see the NACC pamphlet "War Tax Resistance: How To Stop Paying For Militarism" (also available from the NACC office), the War Resisters League's excellent book War Tax Resistance: A Guide To Withholding Your Support From The Military (most recently updated in 2003, and available for $15 from the NACC office), or the National War Tax Resistance Coordinating Committee's "Practical War Tax Resistance" series of publications (each also available from the NACC office).
Is The CMTC Escrow Account Legal?
The CMTC Escrow Account is a trust fund, and as such it is entirely legal to make a deposit into the account. However, refusing to pay one's taxes is considered illegal by the IRS and by United States courts, and is therefore currently an act of civil disobedience. Proving to the IRS that one has not kept the taxes for oneself, but is instead holding them "in trust" in the CMTC Escrow Account until such time as Federal budgeting priorities are brought into line with one's conscience, does not in the IRS' eyes remove one's tax liability or nullify one's violation of the IRS code in failing to pay.
Despite the fact that the Nuremberg Principles (a part of what is commonly referred to as International Law, which in theory supersedes U.S. domestic law) instruct citizens to "disobey directives of state" which would render them complicit in the commission of "crimes against peace, war crimes, and crimes against humanity", U.S. courts have consistently denied these and similar arguments as defenses in cases involving War Tax Resistance.
Similarly, the U.S. Constitution forbids Congress to pass any law against individual conscience, but no accommodation for taxpayers to avoid paying for war against their consciences has yet been passed or held up as a defense in court. Passage of the Peace Tax Fund Bill would preserve and guarantee the legal right of conscience in regard to taxes, equivalent to the legally recognized right to apply for Conscientious Objector status and thus avoid direct participation in war.
So, the Escrow Account is legal but War Tax Resistance is not. Thousands of people feel that the potential risks (see below, "What Is The IRS Likely To Do...") are a necessary component of helping to build a more peaceful world.
Will I Go To Jail If I Use The CMTC Escrow Account?
You cannot be punished, fined, or jailed for making deposits into the CMTC Escrow Account. Refusing to pay taxes to the IRS is, however, an act of Civil Disobedience, which carries legal risks. While it is very common for people exposed to the idea of War Tax Resistance to assume that they would be sent to jail for refusing to pay Federal Income Taxes, it is in fact very rare for the IRS to use the courts and threat of jail to force payment or punish a War Tax Resister. Since 1948 only sixteen War Tax Resisters have been jailed. These Resisters were not jailed for refusing to pay, but for related reasons (such as contempt of court for refusing to produce records, claiming excessive allowances on W-4 or 1040 forms, or failure to file returns).
Generally speaking, the IRS has been much more interested in collecting the money than in punishment by jail sentences -- although of course this predilection could change. Currently the chances of criminal prosecution are slim. Much more likely are civil penalties and interest, which can over the years add up to more than the original amount of taxes withheld. The magnitude of penalties and interest imposed vary from year to year. Consult with a WTR counselor for details of potential civil and criminal penalties. It helps to have a thorough understanding of the possible consequences of your actions before undertaking Tax Resistance activities.
Where Is The Money Held?
As noted above, deposits are held in fully insured, socially constructive credit unions and savings and loans around the country, meeting the needs of low-income and minority communities. The deposits are held in NACC's name, rather than in the names of individual depositors.
The interest on deposits is used in two ways: About seventy percent of it is granted to commun-ity organizations that strive to meet human needs and work for social justice; and the rest is used by NACC to maintain its office, produce its newsletter, and fund its operations. See here for a list of the most recent grant recipients.
If Congress passes the Peace Tax Fund Bill, it is the intent of NACC, in consultation with depositors, to give that portion of the funds comprised of resisted Federal Taxes to the U.S. Treasury to help start the Peace Tax Fund with.
Can I Get My Money Back?
Yes. You can withdraw your money at any time. Make your request in writing, and NACC will return the amount requested, usually within two weeks. In an emergency, arrangements can be made to return the money more quickly.
Will The IRS Know About My Deposits Into The CMTC Escrow Account?
Deposits into the Account are confidential. The pooled funds are held in NACC's name, rather than in the names of individual depositors. Some do choose to tell the IRS that they have deposited their withheld taxes in the CMTC Escrow Account (making a levy on those funds more likely). If you don't tell the IRS about your deposits, it will not know about them. The IRS could, theoretically, trace the deposits through one's bank -- but this would be costly to the IRS, and isn't very likely (and wouldn't be possible at all for deposits made with personal money orders). It's also possible that the IRS could physically seize NACC's records (and/or those of other Alternative Funds), and thereby learn the details of the Account's depositors. But here again, this would be an expensive undertaking, and likely generate an enormous amount of negative publicity, probably making it more trouble that it would be worth. It may be worth noting that such actions were never undertaken during the Reagan era -- a time of similar paranoia.
What Is The IRS Likely To Do If l Deposit Resisted Taxes Into The CMTC Escrow Account?
While some Resisters have never been contacted by the IRS, anybody engaging in WTR -- whether or not the resisted funds are deposited with CMTC or any other alternative fund -- should expect to be contacted by the IRS once or numerous times regarding the "delinquent" account. Even those engaging in symbolic WTR have been harassed by the IRS. The more information the IRS has about you and your tax obligations, the more likely it is to contact you. Eventually, it may attempt to collect the amount it assesses as due, plus penalties and interest. It collects through levying your bank account, garnishing wages or salary, or seizing property (usually in that order).
Before collection efforts begin you will receive a "Final Notice Before Levy", thirty days after which the IRS is legally entitled to collect. NACC encourages you to consult with a WTR counselor and other Resisters so as to think through your options and priorities before you get to this point, so that you'll be able to act with clarity when the IRS comes knocking. There is no one correct way to react. Some people pay their taxes under protest at this point, some hold out for long periods and then pay, some allow their funds to be seized (and, often, continue to practice WTR even after multiple seizures of funds), and some are able to prevent all collection efforts. Each of these is a viable course of action, and it really helps to think your decisions through in advance and to prepare yourself.
For more information regarding the IRS collections process, contact the NACC office, or see NWTRCC's Practical War Tax Resistance #3: How To Resist Collection, Or Make The Most Of Collection When It Occurs (also available from the NACC office).
What Is The War Tax Resisters Penalty Fund?
The War Tax Resisters Penalty fund was established in 1982 to help Resisters recover interest and penalties paid out to the IRS (whether voluntarily or through collection). It works by dividing the total national interest-and-penalties burden among all those persons who've volunteered to support the fund (there are currently more than 800 supporters), each of whom generally end up paying less than $20 per year.
What Are The Recent IRS Collection Activity Trends?
Since 1980, the number of delinquent accounts has risen from about 2.7% of all individual returns filed to about 6.9% for Fiscal Year 2004: about 9 million delinquent accounts compared with about 131.3 million individual returns filed. (It's not known how many of these delinquent accounts are of War Tax Resisters -- it's estimated that many thousands of people currently undertake WTR of some form.) Of those nine million, about two-thirds are for "returns filed with additional tax due", and about one-third for "returns not filed timely". While the number of levies and property seizures dropped precipitously from 1995 to 2001, they have since been on the rise again (this jibes with anecdotal evidence that the IRS may be increasing the frequency of its levies of War Tax Resisters' bank accounts and wages). Despite this trend, it remains the case that seizures of property are extremely rare (440 for FY 2004), and levies are fairly uncommon when measured against the total number of delinquent accounts (about two million levies in FY 2004) -- again, note that this applies to all delinquent accounts, not merely those of War Tax Resisters. Incidentally, the IRS appears to be much more successful collecting from those who choose to file than from those who choose not to, collecting in FY 2004 about 42% of outstanding funds from the former, and about 16% of assessed outstanding funds from the latter. For more statistics, log on to the IRS website.
Can The IRS Levy The Money I deposit In The CMTC Escrow Account?
Yes, the IRS can levy the money you deposit in the CMTC Escrow Account, but this has happened very rarely and NACC has not received a levy from the IRS since 1988. If you do not inform the IRS of your deposits in the Escrow Account, a levy is highly unlikely. If a levy is made, NACC will act in accordance with the wishes of the depositor in question. The account has, in fact, never turned any money over to the IRS. In a December 1986 suit by the Justice Department against CMTC, adjudicated in Federal District Court in New York, the CMTC Escrow Account was penalized $1,501 for not turning over the money held for a depositor. This penalty has never been collected. NACC has established the Conscience Penalty Fund to cover losses in the event of an IRS seizure for the penalty assessed in 1986 (should it ever be collected) or any penalties which may be assessed at some time in the future. Depositors are free to support the Conscience Penalty Fund or not.
What Is The Conscience Penalty Fund?
NACC has established the Conscience Penalty Fund to cover losses incurred by individuals refusing to cooperate with IRS levies on their deposits in the Escrow Account. It will go into effect only if an IRS seizure occurs against CMTC (in other words, levies against depositors' funds not held in the account would not be eligible). Escrow Account depositors and other supporters finance it on a volunteer basis. Escrow Account depositors are asked in the Escrow Account Agreement (included on the last page of this pamphlet) whether they would like to help support fellow depositors by allowing CMTC to remove 3% or $15 (whichever is less) from their account once per year in the event of an IRS seizure of CMTC Escrow Account funds. This money would be used to mitigate the Resister's loss. Such community solidarity activity enjoys a rich history in the WTR movement (though, as noted, the CMTC has never turned any money over to the IRS).
What Types Of Help And Support Can I Expect From NACC?
The NACC office will gladly provide information, literature, counseling, local contacts, referrals, and ideas for organizing. War Tax Resisters sometimes feel isolated and frightened, so support is very important. We encourage you to join or form a local support group. NACC can help with this process.
Can I At Some Point Convert Escrow Account Deposits Into Donations To NACC?
Yes! If you decide to donate Escrow Account deposits to NACC (for example, if the statute of limitations for IRS collection has run out, and you won't be needing the money), let us know (in writing) the amount and we'll convert the deposit into a donation.
How Do I Make My First Deposit?
Deposits and withdrawals are usually made by mail. We will send you a receipt/balance-slip after every deposit and withdrawal, and an annual statement to check that our information is correct. When sending deposits, please make sure to make them payable to the CMTC Escrow Account rather than to NACC.
You can make your first deposit by filling out and signing the Escrow Account Agreement (PDF, also available in html format), and mailing it together with your check or money order, made out for any amount, to: NACC, 4554 12th Ave. NE, Seattle, WA 98105.
NACC Services
• The Conscience and Military Tax Campaign Escrow Account The nation's largest fund of resisted War Taxes. For more information, see the NACC flyer "Conscience & Military Tax Campaign Escrow Account for Resisted War Taxes". Copies are also available from the NACC office.
• Counseling, Workshops, Literature, and other information to support War Tax Resisters and their allies. Get in touch with the NACC office to set up a presentation for your organization or group of friends, to speak with a WTR counselor, or with any questions regarding Tax Resistance or the CMTC Escrow Account.
• An annual Grant Cycle, allocating most of the interest generated by the CMTC Escrow account to local, national, and international Peace & Justice organizations. To be added to the notifications list for upcoming dates of significance regarding the next grant cycle, pass your e-mail address along to the NACC office. For a list of the most recent recipients, see here.
Other Resources
• The National War Tax Resistance Coordinating Committee, a national coalition of local War Tax Resistance organizations; with a very helpful full-time staffperson, excellent literature, a newsletter, and a national contacts and counselors list. NWTRCC, P.O. Box 150553, Brooklyn, NY 11215; (800) 269-7464.
• The War Resisters League in New York City recently celebrated its 75th anniversary. The WRL publishes War Tax Resistance: A Guide to Withholding Your Support from the Military, a highly recommended, 130-page basic War Tax Resistance handbook (also available for $15 from the NACC office), as well as the annual "Where Your Income Tax Money Really Goes" pie-chart leaflet. War Resisters League, 339 Lafayette St., New York, NY 10012; (212) 228-0450.
• The War Tax Resisters Penalty Fund. Established in 1982 to spread out among the entire WTR community the costs of penalties and interest imposed by the IRS. Each member of the fund generally ends up paying less than $20 per year. WTRPF, P.O. Box 25, North Manchester, IN 46962; (260) 982-2971.
• The National Campaign for a Peace Tax Fund "advocates for U.S. federal legislation enabling conscientious objectors to war to have their federal income taxes directed to a special fund which could be used for non-military purposes only." National Campaign for a Peace Tax Fund and the Peace Tax Foundation, 2121 Decatur Place NW, Washington, DC 20008; (202) 483-3751; (888) PEACE-TAX.
Note: This flyer is also available in PDF format. Feel free to download, copy, and distribute (it's intended to be printed as a 12-page 8.5" X 5.5" pamphlet). If you'd like us to send you a PDF with customized local contact info, just let us know!
The Nonviolent Action Community of Cascadia
4554-12th Ave NE, Seattle, WA 98105. An affiliate of the
War Resisters League and NWTRCC
Tel: (206) 547-0952, Fax: (206) 547-2631. E-mail: nacc (at) drizzle (dot) com