My state isn't part of the United States
My state isn't part of the United States
Some schemers claim that their home state isn't really part of the United States, therefore they aren't citizens and don't owe any federal income tax.

The Taxpayer Advocate Service, an independent watchdog arm of the IRS, said that a number of Texas residents have used this argument in order to avoid paying taxes. These residents contend that their state is separate from the rest of the nation and the IRS is unauthorized to impose taxes there.

But it doesn't just happen in Texas. A man from Indiana once claimed that "he is not a citizen of the United States, but rather, that he is a freeborn, natural individual, a citizen of the State of Indiana, and a `master' -- not a `servant' -- of this government," according to federal court documents.

Such claims are always rejected by the IRS. The 14th amendment of the Constitution states that anyone born or naturalized in the U.S. is a citizen of both the country and the state where they reside. And fines for making this argument can range as high as $25,000, depending on the severity of the case and the amount owed.


By Blake Ellis @CNNMoney - Last updated April 06 2012: 8:09 PM ET
Join the Conversation
11 audit red flags

Worried about getting audited? Don't be a prime target. Here's what the IRS looks for and tips to help you avoid getting singled out.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.