Sometimes, Americans get the silly idea that the words “legal tender” on American coins mean legal tender. Then they try this stunt. They pay workers in silver coins at face value. This reduces the workers’ income tax bracket.
The employer who tries this is risking a prison sentence.
Variations of this story have been published repeatedly over the last half century.
This one involves a man named Robert Kahre, He is in a federal prison today.
Kahre was convicted in 2009 of conspiracy to defraud the Internal Revenue Service, tax evasion and hiding assets. But his real crime was something far more serious in the eyes of the IRS and federal prosecutors. Kahre paid his employees as independent contractors rather than salaried employees and he paid them in gold and silver coin.
By doing so, he brought unwelcome attention to the ongoing official debasement of our money supply. This action is what brought the full might of the federal government crashing down upon him. . . .
When Kahre offered to pay his workers in gold and silver, the legal tender laws should have considered those coins at face value. This means that an employee receiving 50 American Eagles annually would be making only $2,500 at face value. Therefore, the employee’s wages would fall below the threshold of reportable income.
Of course, the IRS takes umbrage at the thought of someone earning roughly $83,000 in Federal Reserve notes and not paying what the tax collectors consider their “fair share.” But there remains the issue of legal tender laws that clearly state that those Eagles are worth $50 face value.
If the federal government makes gold and silver coins that are legal tender, then why punish those who use them at face value? So which standard are we to follow? For that matter, why are there two different standards in the first place?
These troublesome questions are likely what prompted federal prosecutors to go after Kahre with a vengeance.
A federal SWAT team crashed through the gate of Kahre’s business with an armored vehicle and held Kahre’s employees at gunpoint for hours when the feds made their move. Kahre was charged with 49 counts of failure to collect or pay employment taxes, four counts of tax evasion, two counts of attempting to interfere with IRS laws and a single count of wire fraud. An uninformed jury convicted him on the judge’s instructions and he was sent to prison for 15 years and ordered to pay millions of dollars to the IRS.
He will be in prison for a long time.
The United States of America is supposedly a nation of laws. But it is not when these laws challenge the collection of taxes.
You had better be aware of what you are dealing with before you try to escape paying taxes by a legal technicality.