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Yet Another Tax Protestor Finds Trusts Are No Magic Tax Shield

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Income tax protestors may really believe that they can choose to opt out of the federal government’s income tax system. Some objectors may think they are making an important political point. They keep losing, however, and paying extra taxes and court costs for making arguments that are simply specious.

A case in point: Californian Andy Hromiko. Mr. Hromiko is a computer analyst and programmer, and worked for Duraflame, Inc. and California Cedar Products, Inc. He also was the trustee of MatrixInfoSys Trust, which he apparently set up for the purpose of avoiding payment of income taxes.

When Mr. Hromiko failed to file tax returns from 1994 to 1997 the Internal Revenue Service determined his tax liability for him and sent a bill for about $80,000 in taxes and another $25,000 in penalties and interest. Mr. Hromiko objected, arguing that he had received no income. MatrixInfoSys Trust, he said, had been paid for his services, and so he was not liable for taxes.

The IRS responded in kind. It first determined that MatrixInfoSys Trust was liable for slightly more in taxes and higher penalties, and then brought an enforcement action against both Mr. Hromiko and the trust. One or the other, reasoned the IRS, owed taxes on Mr. Hromiko’s earnings.

Mr. Hromiko responded as organized tax protestors usually do. He argued that the IRS was precluded from suing him because of the doctrine of “unclean hands,” that the tax system itself is illegal, that the government had committed fraud and duress, and a host of other quasi-legal arguments. Mr. Hromiko even went so far as to file a “revocation” of any agreement he might have made with the United States government regarding the Social Security system.

As in every other case involving similar tactics and issues, the court in Mr. Hromiko’s case shot down his arguments summarily. The court found that he earned a wage, and that he owed the tax. Having his wages paid to a trust did not change the fact that he earned the money and the tax was due. There is no clever, magical way to declare oneself independent of the federal tax system.

Mr. Hromiko was ordered to pay the entire tax due plus interest and penalties. In addition the Tax Court decided that his conduct should be separately sanctioned. Mr. Hromiko “has wasted the time and resources of this Court,” wrote the Judge, and he was assessed an additional $12,500 court penalty. MatrixInfoSys Trust v. Commissioner, June 7, 2001.

Bottom line: sham trusts, “constitutional trusts” and similar “tax avoidance” devices do not work. Before considering a trust for tax avoidance purposes seek out a competent legal adviser. Expect him or her to tell you to save your money for the tax man.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.