Captain America and Taxes

Today’s post is a quick one in response to this question from ldycemn:

Since cap was frozen…should he have to pay a fine for not filling?

This seems like an appropriate question for this time of year, and luckily it has a pretty simple answer: no.  Not everyone has to file a tax return, particularly those with incomes below a certain threshold.  The filing requirements change with some frequency, but as far as I can tell there has always been a threshold.  Since Steve Rogers wasn’t earning any money after he was frozen (since he was presumed dead), he wouldn’t have to file.  If he received backpay after being thawed out then he would have to pay taxes on that backpay, but that would be based on the tax laws when he was thawed, not the years during which he was frozen.

29 responses to “Captain America and Taxes

  1. But, surely, he would have to pay taxes for the income earned the year of his freezing? If, for example, he were frozen March 1st, 1945, then he would owe taxes income earned in January and February of 1945. Those taxes would be due in 1946, but Cap wouldn’t have paid them, being frozen in ice.

    • That’s true, except that he was presumed dead. That means that his estate would be responsible for filing a final tax return (if one was required), but that would be on his estate, not him.

      • Also, even if his estate outright failed to file, isn’t there about a six year statute of limitations for unpaid taxes? Since he was frozen for a couple decades (and those without income), it would seem he’d be off the hook as of circa 1952.

      • And if his estate failed to file taxes, could that come back on him once he was thawed? Cap had no control over the estate (being functionally dead to the State of New York, as well as to the rest of the world), so he couldn’t ensure that his executor properly filed, but the executor was acting in Cap’s name. So putting aside the statute of limitations issue (presumably whatever the SoL is , it’s less than 70 years), is the estate considered a continuation of the decedent, or is it a separate legal entity? And would Cap have a potential civil suit against this hypothetical non-filing executor for failure to exercise a fiduciary duty?

  2. Out of idle curiosity, if he had investments, assuming that they hadn’t been seized due to him being declared dead after being missing for some period of time, would he still be liable for taxes on that income if it were sufficient to exceed the threshold?

    • I believe it is not a matter of them being seized but of being transferred automatically to his estate at the time he was declared dead. Ideally, those investments would then be transferred fairly swiftly from his estate to his heirs or devisees and the estate as an entity would cease to exist.

      If for some reason the estate remained in existence long enough for it to matter then, I believe, the estate itself would be responsible for the taxes on the income which was paid to it.

      • The question of whether he’d be able to get the assets back is always an interesting one as well (and not new in popular entertainment.)

        While we don’t usually distribute assets or consider people dead for probate purposes if they have, say, a cardiac arrest and are then revived, technically Cap was about as close to dead as you can get for decades. Any assets would have been distributed and it would have been subsequent to his for-all-practical-intents-and-purposes very real death.

        I have no idea what the statute of Quiet Repose is in NY, but assuming he even cared, I’m not sure public policy would be well served by allowing him to try to reclaim them after that long.

  3. In a related vein: here’s a challenge for anyone conversant in Alpha Flight continuity and Canadian tax law: what would James “Guardian” Hudson’s situation be?

  4. Even if Steve Rogers did owe taxes on back pay, and even if he was assessed a penalty by the IRS, he could ask for a waiver by filling out a form (http://www.irs.gov/pub/irs-pdf/f843.pdf). His extenuating circumstances are compelling…

  5. Terry Washington

    As Cap was never formally discharged from the US Army in 1945, it would seem that his back pay accumulated( bureaucracy as always plays a part) and in a story I remember, even though he was a humble private by the 1980s it had reached well over( I presume) a million dollars. As he had no dependents, he chose to use his windfall to set up the Stars And Stripes emergency telephone hotline!

  6. Could you perhaps expand on how being erroneously ruled dead and subsequently found to be alive would play out?

    I believe the assumption is that Cap would be entitled to back pay… but is that necessarily true? I mean… he’s got the spectre of a UCMJ offense of “missing movement” (dude’s been AWOL for quite some time, at a minimum, so article 86 might be in play, too.) so his pay might not have been accruing while he was away.

    I assume any of his personalty is long since disposed, and for sure any realty would have been. (Even had the estate wanted to delay distributing it hoping for his return, property taxes would have been due and the estate had limited or no sources of funds to pay them. (I believe Cap had official domicile in NY, which (if I recall) did not recognize a post-mortem right of publicity, so even if Cap, rather than the government, were getting royalties for any kind of Cap merchandise, they wouldn’t get anything after Steve was pronounced dead.

    But… when he turns up alive, is he entitled to collect royalties for Cap merchandise that use his likeness? What about during the period when he was officially dead?

    Does Cap have to worry about “up or out” regulations? He way above the zone for promotion to major.

    Is Steve eligible for VA programs (since he didn’t complete his tour). How about Social Security, since he’s over 80 years old… but only paid into the system during the war. I assume he IS eligible for Medicare… does this mean that the Avengers, as his current employer, don’t have to offer him healthcare coverage (Related note: say, who IS their workmen’s comp provider?)

    Does Cap’s age have any affect on whether or not he can be recalled to active duty?

    • Terry Washington

      I doubt if he can be accused of deliberate desertion as he had not INTENDED to be frozen and placed in a state of suspended animation between 1945 and 1964 and anyway his services to America both during WW II and as an Avenger are so great that only the most hard-hearted of Presidents would refuse to pardon him on both grounds( alleged desertion as well as unpaid back taxes).
      Terry

      • James Pollock

        “only the most hard-hearted of Presidents would refuse to pardon him on both grounds( alleged desertion as well as unpaid back ”

        I suppose that might depend on said President’s opinion of the Superhero Registration Act, which Rogers both defied and urged others to defy.

        “I doubt if he can be accused of deliberate desertion”
        I’m pretty sure you mean to say he can’t be convicted (and I agree, but it is by no means certain.) He absolutely can be accused.

    • I’m fairly certain that Cap would count as an MIA soldier if he turned up alive at some point so being considered AWOL would be a stretch. By all accounts he went missing while actively deployed to a combat zone. Unless a soldier can be confirmed dead they are technically MIA.

      • James Pollock

        You’re assuming that the court martial has access to Marvel back issues. (in other words, WE know what happened, but can Cap prove it?)

      • Bill Robelen

        James,
        It is my understanding that the government would have to prove that Captain Rogers left of his own accord. If a soldier is on a combat mission and goes missing, he is presumed MIA. It would be up to the government to prove that he intentionally left without orders to do so. Furthermore, the people judging him would be line officers of equivalent rank or higher. These officers would have to be in the line of command, not JAG officers, medical, or chaplains. Also, it is my understanding that Rogers is a commissioned officer; he is always referred to as Captain Rogers. A private would not be put in command of any troops for a mission, but it is quite conceivable that a captain (in Army ranks, an O-3, or the third level of officer) would be put in command of a small group of special forces.

      • Terry Washington

        CAPTAIN Rogers??? I always thought Steve was a lowly Private!!!

      • James Pollock

        “It is my understanding that the government would have to prove that Captain Rogers left of his own accord.”

        Well, they have to prove the elements of the offense. Intent isn’t an element for article 86 (AWOL) (well, it is for some variations on the offense).

        If you use the cinematic version of events, Cap left the theatre of operations on his own authority. I don’t know the details of the comics version.

        For article 87 (Missing Movement) the government would have to prove neglect or design. I think he might be charged, if he had a commanding officer who didn’t like him or wanted to make an example of him, but I don’t think he’d be convicted (is it “neglectful” to get yourself frozen in a block of ice? It was on Futurama, but Cap’s story is different, I think.)

        “Furthermore, the people judging him would be line officers of equivalent rank or higher. These officers would have to be in the line of command”
        Some career officers might resent Rogers, particularly the way he was bumped up to Captain (See, for example, resistance to Chuck Yeagar in the Air Force officer corps).

        ” A private would not be put in command of any troops for a mission”
        Not completely true. A private can command a detachment. It would be unusual, but not unheard-of, for a private to command troops in combat.

  7. I’m sure Cap would get an “icy” reception at the IRS office in Washington…
    icy, get it? get it?

  8. He wouldn’t be able to pay…
    Because all of his assets were frozen!
    Thank you, I’ll be here all week.

  9. Actually, assuming they buy his story, his status is changed retroactively from KIA to MIA by the military (if it ever left MIA), so he would then receive pay for the entire period. Sicne the pay wasn’t given to him until he was recvovered, taxes would be withheld at that time in the appropriate amounts.

    Also, before anyone says it, you can be declared KIA without a body if it appears likely you died as a result of military action. His situation certainly would seem to qualify.

    • Terry Washington

      In a 1980s story, Cap discovered that he had several millions dollars worth of accumulated back pay by the Army which the DOD paid him and which he used to set up the Stars And Stripes hotline(he had no dependents and lives gratis in Avengers Mansion)

  10. Wide And Nerdy

    Drawing on my experience as a state collector (won’t say which state and bear in mind that I’ve not been a collector for five years anyway nor should my statements be taken as any authority) and assuming that federal tax collectors operate under similar guidelines:

    Even if he somehow had taxable income, while he might possibly be fined by some automated system, a conversation with a collector along with some kind of official letter or documentation would almost certainly result in a waiver of those fines and the collector would work with Rogers to determine a reasonable payment schedule for actual back taxes (not sure how interest would be settled in this case but probably in Rogers’ favor). And if the first collector he dealt with wasn’t so reasonable he’d have solid grounds for appeal. At least, thats how it was where I worked.

  11. Prisoners of war can easily be accused of desertion and treason. Bergdahl from Afghanistan, currently. A Garwood from Vietnam.

    So, all which is needed for Captain America to be declared a deserter is to disbelieve the tall tale about having been frozen and surviving.
    Assuming that he is accepted as a good faith MIA, and gets his back pay… What happened to the seniority and promotion of US officers who were captured in Vietnam in 1964…1965, and only returned to service when released in 1973?

    • I don’t think Cap has much to worry about in this respect. I once read a story in which he received millions of dollars in back pay as he was never formally mustered out of the US Army when WWII ended(had he been either a deserter or a traitor he would never been have eligible for this windfall)in Sept. 1945.
      Anyway given his services to the US and the world the President( any President) could easily pardon him for having failed to file tax returns since 1945!

    • a) Cap was thawed out by the US military- it’s not in dispute that he was frozen. ( as for taxes, individuals can choose to pay taxes on either an accrual basis ( when the income is earned) or on a cash basis ( when the income is actually received) so, since Cap didn’t receive his back pay until he was unfrozen, he pays taxes that tax year, no penalty. And even the most strict auditor is going to accept “It was physically impossible for me to meet the filing deadline” if you can prove it.
      b) generally, the desertion is separate from you being a prisoner of war- in Bergdahl’s case, he is alleged to have deserted THEN been captured by the Taliban.(incidentally, the taboo against desertion is so strong that Bergdahl needs a security detail to prevent him being attacked by fellow soldiers due to him being thought to have deserted. ( I say thought to because it’s far from clear what actually happened). As for Gardwood, he was alledgedly a collaborator with the Vietcong, but his only actual conviction was for communicating with the emem and attacking another POW, he was found not guilty of desertion. In short, being MIA is not automatically desertion. Steve Rogers would have a defense against a charge of desertion that when the plane went down, he was physically unable to return to his unit, or an allied unit. (basically, the last thing he knew before he woke uo post-thawing out was the plane going down)

  12. Were the prisoners of Vietnam War paid for the time in captivity?
    Were the taxes assessed one-time, for the back pay for the whole time of captivity, or over the time they were in captivity? Getting back pay for 8 years, for a soldier captured early on in 1964 and released in 1973, would bump the recipient to a high income bracket and eat away the windfall in high tax rates!

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