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Oliver Schmidt

Is a "Revocation of Election" legitimate for tax exemption?

So I've been talking with a coworker who claims he hasn't paid any taxes for the past three years. He mentioned filing something called a "Revocation of Election" (ROE) that supposedly makes him exempt from paying taxes altogether. I'm pretty skeptical about this whole thing. He's been doing this for three tax seasons without any issues (yet), and now he's trying to convince me to do the same. The whole thing sounds extremely suspicious to me - like one of those tax protester schemes you hear about. But the fact that he hasn't been audited or gotten in trouble makes me wonder if there's some obscure loophole I don't know about? Has anyone heard of this "Revocation of Election" thing? Is this actually legitimate in any way or is my coworker setting himself up for serious trouble with the IRS? Something about this feels way too good to be true, but I wanted to check before I try to warn him.

Tax professional here. Your instincts are absolutely correct - this is NOT legitimate and your coworker is involved in what's known as a tax protester scheme. A "Revocation of Election" in this context is a completely made-up concept that tax protesters use to claim they're somehow exempt from taxation. The IRS specifically lists these types of arguments as "frivolous tax arguments" and they've been repeatedly rejected by courts. The fact that your coworker hasn't faced consequences yet doesn't mean they won't - the IRS can take several years to catch up with non-filers, but when they do, the penalties and interest can be devastating. These schemes often involve pseudo-legal language and misinterpretations of tax code or the Constitution. People promoting these ideas may sound convincing, but they're selling a dangerous fantasy that can lead to serious legal and financial consequences.

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Thanks for the info! Do you know what specific penalties someone might face for doing this? My brother-in-law is starting to fall for something similar and I want to scare him straight!

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The penalties can be quite severe. First, there's the failure-to-file penalty (5% of unpaid taxes for each month your return is late, up to 25%), plus failure-to-pay penalties and interest that compounds daily. If the IRS determines it's a frivolous tax filing, they can also impose an additional $5,000 penalty for each frivolous submission. In cases of willful evasion, criminal charges are possible with penalties of up to $100,000 in fines and up to 5 years in prison. Plus, the statute of limitations for the IRS to pursue these cases is much longer (or nonexistent) for non-filing or fraudulent situations compared to regular tax returns.

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Did they actually help with the legal aspect of it too? Like did they represent you with the IRS or just advise you on what forms to file?

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I'm in a similar situation but with back taxes for my small business. How long did the whole process take with them? I'm worried about how much time I have before the IRS escalates things.

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After seeing the comment about taxr.ai, I decided to try it for my situation. I was skeptical at first because I'd been avoiding dealing with several years of unfiled taxes from my side business. The service actually helped me understand exactly which years I needed to address and what documentation I needed to gather. The most valuable part was how it analyzed the IRS notices I'd been ignoring and translated all that intimidating legal language into clear action items. I've now filed my back taxes and set up a payment plan. The peace of mind alone was worth it, and the penalties were much less severe than I feared because I voluntarily came into compliance before they took enforcement action.

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How exactly does this service work? Do they just call the IRS for you or something? I don't understand how they can get through when nobody else can.

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Yeah right. Nobody can get through to the IRS these days. If this actually worked, everyone would be using it. Sounds like another scam to me.

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They use an automated system that waits on hold with the IRS for you. When an agent finally picks up, you get a call back so you can speak directly with them. It's like having someone wait in line for you. The reason it works is that their system can stay on hold indefinitely, which most of us can't do with our personal phones. When I used it, I was able to explain my situation to an actual IRS agent who helped set up an installment agreement for my back taxes. They don't talk to the IRS for you - they just get you connected so you can have the conversation yourself.

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Word of warning - my uncle fell for one of those "Revocation of Election" schemes about 5 years ago. The IRS finally caught up with him last year. He now owes over $80,000 in back taxes, penalties and interest. They're garnishing his wages and put a lien on his house. These tax protester schemes WILL catch up to you eventually.

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Do they ever make deals for people to pay less than they owe? My friend owes like $50k and there's no way he can ever pay that much.

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Yes, the IRS does have programs like Offer in Compromise where they might accept less than the full amount owed if someone truly can't pay. But they look very carefully at your assets, income, and expenses to determine what you can actually pay. My uncle tried this route, but because he has decent income and some equity in his home, he didn't qualify. He ended up having to sell his boat and cash out part of his retirement savings to make a dent in what he owed. The IRS then put him on a payment plan for the rest. They're pretty reasonable about payment plans, but they rarely just forgive tax debt entirely unless you can prove serious financial hardship.

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Tell your coworker to google "IRS frivolous tax arguments" and look at the official IRS website. They literally have a whole section dedicated to debunking these exact schemes and warning about the $5,000 penalty for submitting these arguments. Also search for "tax protester cases" to see how many people have gone to PRISON for this stuff!

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My tax professor in college showed us cases where people got 3-5 years in federal prison for promoting these schemes! And those were just the people SELLING the idea, not even the ones following it. Scary stuff.

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Your instincts are spot on - this is absolutely a scam and your coworker is playing with fire. I work in tax compliance and see the aftermath of these schemes regularly. The "Revocation of Election" is complete nonsense with no legal basis whatsoever. The scary thing is that people can get away with it for a few years, which makes them think they're safe. But the IRS has up to 6 years (or indefinitely in cases of fraud/non-filing) to come after you. When they do, it's devastating - we're talking about accumulated interest, failure-to-file penalties, failure-to-pay penalties, plus that $5,000 frivolous filing penalty for each year. I've seen cases where someone owed $15K in actual taxes but ended up owing over $60K after penalties and interest. Your coworker needs to get back into compliance immediately before this gets worse. The longer he waits, the more expensive this mistake becomes.

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This is exactly what I needed to hear! I've been trying to figure out how to approach my coworker about this without coming across as preachy. The numbers you mentioned really put it in perspective - turning a $15K tax bill into $60K+ is absolutely insane. Do you think there's any hope for someone to get penalties reduced if they voluntarily come forward before the IRS catches them? Or is he basically stuck with whatever massive bill has been accumulating? I'm hoping if I can show him there might be some way to minimize the damage by acting now, he might actually listen.

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