Federal Income Tax Legality, Part 1: Voluntary Nature

At times, you may hear about various groups and individuals who argue that the federal government and Internal Revenue Service (IRS) do not have the right to require those in the United States to pay federal income tax or to use approaches such as tax liens to collect those taxes.  They believe the Sixteenth Amendment does not give the federal government the power to levy tax.  What are the various reasons that some people believe federal income tax is illegal?  And do any of these arguments have validity?

Tax Preparation

Tax Preparation (Photo credit: agrilifetoday)

Following is the first in a series of articles dedicated to explaining the various arguments against the payment of federal income tax and whether these arguments have any merit.

Establishment of Federal Income Tax System

The Sixteenth Amendment to the United States Constitution established the right of the federal government to levy a federal income tax.  The Sixteenth Amendment reads as follows:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

The Sixteenth Amendment went into effect on February 3, 1913.

First Argument Against: Voluntary Nature

Even with the Internal Revenue Code created based on the authority of the Sixteenth Amendment, their are many who do not believe the authority is valid.  The arguments against the legality of federal income tax fall into five broad categories.  The first of these categories relates to the “voluntary” nature of the federal income tax system.

Filing a federal income tax return is voluntary.

This argument claims that the filing of a federal income tax return is voluntary.  The IRS uses the word “voluntary” in the instructions of Form 1040.

However, various court cases have ruled that the word “voluntary” in context of filing a federal income tax return simply means that the individual taxpayer has the right to determine the amount of tax that he owes and to file a federal income tax return for that amount.  The alternative would be for the IRS to simply dictate to every taxpayer the amount of tax they owe.

Paying federal income tax is voluntary

This argument states that the payment of federal income tax is voluntary.  As the federal income tax system is voluntary in nature, then the payment of federal income tax is voluntary, as there is no law that specifically requires that people pay federal income tax.

But contrary to this argument, various sections of the Internal Revenue Code clearly state that the payment of taxes is not voluntary but rather is required.  And the Internal Revenue Code has the power of law to enforce the payment.

A “zero return” reduces tax liability

Another approach to not paying federal income tax is to file a tax return reporting no income and requesting refund of any taxes withheld by their employer, even though the taxpayer does have income defined as taxable per the Internal Revenue Code.

However, the Internal Revenue Code defines what constitutes income and courts have supported that filing a tax return reporting no income is not a legal method for avoiding federal income tax.  Taxpayers who file such returns that are considered frivolous are also subject to penalties and interest on the unpaid tax liability.

The IRS is responsible for preparing returns for taxpayers who do not

Some believe the wording of the Internal Revenue Code creates an obligation for the IRS to file a tax return for anyone who does not file a return.  Therefore, anyone who does not file a return is not subject to penalties and interest.

However, the wording in the Internal Revenue Code merely allows the IRS to prepare a federal income tax return for someone who does not prepare one; it does not free taxpayers from filing a federal income tax return themselves or clear them of penalties and interest in the event they do not file a federal income tax return.

Responding to an IRS administrative summons is voluntary

This argument puts forth that the IRS does not have the authority to summon a taxpayer in the event they do not file a federal income tax return.  Therefore, the taxpayer can ignore such a summons.

However, the IRS is authorized by statute to use a summons to call witnesses or obtain documentation related to the filing and payment of federal income tax.  Courts have supported the use of an administrative summons by the IRS.

Tax Attorney Information

If you are behind on paying your federal income tax or need help in resolving a federal tax issue related to any matter, you should seek the help of a tax attorney.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.