Employers Can Refuse to Withhold Taxes from Paychecks

In the modern world, many governments have introduced income tax withholding or “pay as you earn.” In such a scheme, it can be difficult for people to resist paying income tax, as the tax has already been paid on their behalf by their employers. In such cases, resisters need their employers to be willing to go out on a limb and resist alongside them.

Today I’ll give some examples of employers who helped their employees resist income tax withholding.

Quaker Meetings

Quaker Meetings (congregations and collections of congregations) have sometimes supported the war tax resistance of their employees by not withholding taxes from their paychecks.

The Philadelphia Yearly Meeting, for instance, has the following policy [excerpts]:

Philadelphia Yearly Meeting of the Religious Society of Friends (Yearly Meeting) has discerned and again affirms that conscientious objection to paying taxes supporting military purposes is an appropriate and traditional individual expression of the Friends Peace Testimony. As a result, Yearly Meeting has a religious duty to refrain from taking action that violates an employee’s expression of conscience in such historic Friends testimonies. …

At the written request of an employee pursuant to this Policy, Yearly Meeting will withhold from an employee’s gross salary or wages, but refuse to forward to IRS, amounts up to but not in excess of the military portion of the federal income tax otherwise due on that employee’s pay. Yearly Meeting, in notifying IRS that it has not remitted a portion of withheld taxes, will disclose and advise IRS of its action, as described [below]…

Yearly Meeting will communicate at least annually with an appropriate office or official of the IRS to explain that, pursuant to this Policy and Yearly Meeting’s core religious principles, it has withheld the full amount of taxes, as indicated by form(s) W-4, from the salaries of certain employees opposed to the payment of taxes for military purposes. Yearly Meeting will further explain that, at the request of each such employee, it has not remitted the portion of the amount withheld which the employee has conscientiously refused to pay, that it has identified the amounts not remitted in its records, and that the amounts not remitted, plus interest, will be paid over to the Treasury of the United States on behalf of the employees at such time as there is assurance that the taxes will not be used for military purposes.

The Meeting was taken to court in for failing to remit $11,224 in taxes from resisting employees. More recently, the Meeting has been pursuing legal arguments in support of its employee Priscilla Adams, who has been resisting war taxes for years with the help of the Meeting. The Meeting was unable to convince a court to order the IRS to respect its conscientious scruples, and the agency ordered to Meeting to garnishee Adams’s salary. The Meeting has continued to refuse.

The London Yearly Meeting for a while withheld a portion of the pay-as-you-earn withholding of some of its employees, hoping to make this a test case that might legalize conscientious objection to military taxation. The courts rejected their arguments, and an appeal to the European Commission of Human Rights also failed, and so the Meeting stopped trying to resist military taxation and now gives war tax resistance only rhetorical support:

Since losing the appeal we have paid in full the income tax collected from our employees. In recent months we have considered whether we can continue to do this, but after very careful consideration have decided that for the time being we must do so. The acceptance of the rule of law is part of our witness, … for a just and peaceful world cannot come about without this. However we do wish to make it clear that we object to the way in which the PAYE [withholding] system involves us in a process of collecting money, used in part to pay for military activity and war preparations, which takes away from the individual taxpayer the right to express their own conscientious objection. This involvement is incompatible with our work for peace.

American Friends Service Committee

During the Vietnam War, the American Friends Service Committee refused to withhold taxes from those of its employees who were refusing to pay taxes. Milton Mayer said, of the Committee’s action:

Under withholding, most of the people who don’t want to buy Mylai have already had it bought for them by April 15. … A few religious organizations — not the churches, of course — have refused to withhold the tax from the pay of their employes who do not want to buy Mylai. The most respectable of them is the American Friends Service Committee, with which I confess to being associated. … But the AFSC has a task force of eighty Philadelphia lawyers, and one of these years a test case will go to Washington. Meanwhile, however, the conscientious citizen who waits for a test case will go on buying Mylai until the whole of Vietnam is a ditch.

The AFSC continues to support tax-resisting employees, and has had mixed luck defending itself in court. According to the NWTRCC pamphlet on Organizational War Tax Resistance:

Employers or other entities which refuse to withhold from the assets of a war tax resister on religious grounds actually have a chance of justifying their actions in court thanks to a case involving the American Friends Service Committee (AFSC) and the IRS. A federal district court ruled that the AFSC and its employees had the First Amendment right not to be required to participate in the withholding system, since the IRS has other methods of satisfying its objectives, such as levies. The decision was overturned by the Supreme Court, but solely on procedural grounds. This position is possibly strengthened by the Religious Freedom Restoration Act (RFRA), passed by Congress in .

The IRS has more recently tried to send what are called “lock-in letters” to the AFSC, demanding that they withhold taxes from their resisting employees at the maximum rate permissible by law.

For a time (and this may still be the case), the AFSC policy was to obey such withholding laws and orders, but to hold back a percentage of the withheld taxes from the government, putting that percentage (a percentage they deemed equal to the percentage of the federal budget spent on the military) into an escrow account.

According to a Treasury Inspector General for Tax Administration report, many employers ignore these lock-in letters. This takes some gumption. The way the law works, if an employer doesn’t comply with the lock-in letter, the employer can become liable for the taxes that the employee isn’t paying.

Mennonite General Assembly

In 1989, the Mennonite Church General Assembly adopted a resolution to “support the Mennonite General Board in establishing a policy that federal income taxes not be withheld from the wages of any of its employees who make this request because of conscientious objection to the use of their taxes for military purposes.”

The General Board, however, balked on establishing such a policy after determining “there was not enough support… to ask church boards to engage in civil disobedience.”

Restored Israel of Yahweh

The small Jehovah’s Witnesses spin-off group called the Restored Israel of Yahweh practices war tax resistance. To help facilitate this, two of them, who ran a construction business, agreed not to withhold taxes from those of their employees who were also members of that denomination.

Those two, along with the company’s bookkeeper, were taken to court and convicted of tax evasion charges, making them, according to one of their lawyers, “the first pacifist tax resisters to be prosecuted and jailed — possibly ever — for felony conspiracy to defraud the U.S. and attempted tax evasion, the most serious criminal charges in the Internal Revenue Code.”

War Resisters League & War Resisters International

In , Ralph DiGia, who was working for the War Resisters League, asked them to stop withholding federal taxes from his paycheck. The League agreed, and some other employees followed DiGia’s lead.

It had taken a lot of work to get the League to adopt a policy of tax refusal. At first, they had refused, with a member of the League’s executive committee saying “the life of the organization is at stake.” War tax resisters responded, saying: “If pacifist organizations, whose business is to create a warless world, are not ready to risk something for war resistance now, when will they be ready?” Another group, the Fellowship of Reconciliation, also refused to challenge the IRS, and some of its employees resigned over the issue.

War Resisters’ International, which is based in London, decided in to hold back a percentage of its employees’s taxes (equivalent, in its view, to the military percentage of the British national budget). The organization takes the position that conscientious objection to military taxation is an unrecognized human right, but a human right all the same, and they intend to assert it.

Collective Impressions

American war tax resister Ed Guinan for a time ran a print shop called “Collective Impressions.” “Most of the workers in the collective were rooted in a Catholic tradition of pacifism,” said Guinan, and so, the company paid its employees’ withholding not to the Internal Revenue Service but directly to the U.S. Arms Control and Disarmament Agency.

The Agency returned the money, saying it could not accept it under such circumstances, whereupon Collective Impressions put the money into an escrow account from which it hoped to eventually be able to pay the money in a way that wouldn’t violate the pacifist beliefs of its employees, and from where it was eventually seized by the government.

Straight Lines, Ltd.

Martin Philips, director of the Welsh jewelry business “Straight Lines” stopped paying the 13.6% pay-as-you-earn withholding to the government for his employees — sending the money instead to the Overseas Development Administration as a protest against government military spending.

The government took Straight Lines to court, and eventually seized money from the company to cover the unpaid taxes.

Vivien Kellems

Soon after income tax withholding was introduced in the United States, ornery industrialist Vivien Kellems decided she was not interested in being the tax collector for her employees’ at the Kellems Cable Grip Manufacturing Company:

The most un-American phrase in our modern vocabulary is “take home pay.” What do we mean, “take home pay”? When I hire a man to work for me we discuss three things: the job to be done, the hours he shall work, and the wages he shall receive. And on Friday when he received that pay envelope, we have both fulfilled our contract for that week. There is no further obligation on either side. The money in that envelope belongs to him. He has worked for it and he has earned it. No one, not even the United States Government, has the right to touch it. Who dares to lay profane hands upon that money, to rudely filch from that free man the fruits of his labor, even before the money is in his own hands. This is a monstrous invasion of the rights of a free people and an outrageous perversion of the spirit of the Constitution. This is the miserable system foisted upon the people of our country by New Deal zealots and arrogant Communists who have wormed themselves into high places in Washington. This system is deliberately designed to make involuntary tax collectors of every employer and to impose involuntary tax servitude upon every employee. We don’t need to go to Russia for slavery, we’ve got it right here.

Paying taxes is a duty, a responsibility and a privilege of citizenship. Without taxes we can have no government. However I do not exercise other duties, responsibilities and privileges of citizenship for my employees. I do not vote for them, I do not form political opinions for them, I do not select a church for them, I do not pay real estate taxes for them. They are all free American citizens, thoroughly capable of performing all of the duties and responsibilities of citizenship for themselves. And so, from this day, I am not collecting nor paying their income taxes for them.

To demonstrate that she wasn’t against her employees paying their taxes, but only opposed to having to do it for them, she organized her employees once per quarter and allowed them, on company time, to fill out their own tax returns and to go down to the post office as a group to purchase money orders and file their own taxes.

The government subjected Kellems to a public smear campaign (which included intercepting and publicizing her love letters), and to legal action. The government won the legal battle, fining Kellems $7,600, whereupon she resumed withholding taxes from her employees’ paychecks.

George Fidenato

George Fidenato is Vivien Kellems reincarnated in today’s Italy. he has been refusing to withhold taxes from his six employees’ paychecks. “I do not want to be the tax collector. I’m not a slave of the state, and wouldn’t want to work for it even if you paid me!” As of this writing he is still pursuing legal appeals.

Indianapolis Baptist Temple

The Indianapolis Baptist Temple started refusing to pay federal taxes in , when pastor Gregory Dixon “decided the church would break all ties with the government and no longer act as its agent in withholding taxes from its employees,” citing Constitutional freedom of religion as his mandate for taking his church out from under Uncle Sam’s thumb. For several years, nothing came of this defiance, but in , the IRS started seeking back taxes, eventually filing liens against the church and against Dixon. The church fought back in court, but lost a series of appeals, finally getting turned down by the U.S. Supreme Court in , whereupon the government seized and auctioned off church property and Dixon himself was fined.

“Texas housewives”

, a group of women the press invariably referred to as the “Texas housewives” refused to withhold and pay social security taxes on the wages of their household help. The women were opposed to government-run social security, and to being enlisted as government tax collectors. They claimed also to be supported in their stand by their employees.

Money was eventually seized from their bank accounts to cover the taxes. They also pursued court appeals to try to get the tax declared unconstitutional, but in they lost their case and began paying the taxes.

The women’s suffrage movement in the United Kingdom

The National Insurance Act of required all workers to pay a portion of their paycheck into a fund for government-run health and unemployment benefits.

Members of the women’s suffrage movement saw this as another tax enacted without their consent, another example of “taxation without representation,” and another opportunity to resist.

Some members of suffrage groups were employers, and some suffrage groups had paid employees. In the Women Writers’ Suffrage League met to ask whether they “should, as a society, resist the new insurance tax and refuse to insure their secretary, with her full consent to their so doing?”

Kate Harvey refused to pay 5 shillings, 10 pence of tax for her gardener — for which she was sentenced to two months in prison.

The Women’s Freedom League refused to pay the tax on their employees — “we refuse to acquiesce in any legislation which controls the resources of women without the consent of women” — but the government seemed unwilling or unable to do more than threaten the group.

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