Tax Lawyer's Blog

I’m not sure if I am more amazed by the people who come up with these loopy tax arguments or the people who believe them.

Here is one of the oldies but goodies:

The federal income tax is voluntary. You don’t have to pay it if you don’t want to.

In Flora v. United States the U.S. Supreme Court addressed the issue of when a taxpayer could challenge an assessment in Federal court without first paying the assessment and then suing for a refund. The Flora case allowed taxpayers who had been assessed a payroll tax trust fund penalty to pay a divisible, partial portion of the tax and then sue the United States in Federal court for a refund of the portion paid and an abatement of the entire tax. The case had nothing to do with the federal income tax.

At the end of his opinion, Chief Justice Earl Warren, noted that,

Our system of taxation is based upon voluntary assessment and payment, not upon distraint.

This single sentence serves as the foundation of the “taxes are voluntary, you don’t have to pay them” nutbird crowd.

But, of course, the center cannot hold.

Earl Warren was right, our tax system allows individuals to prepare their own tax returns, determine their own tax liabilities and pay them. The “voluntary” part simply means the government doesn’t do it for you. It does not mean you aren’t required to do it.

Section 1 of the Internal Revenue Code imposes taxes on the income of individuals, estates and trusts and Section 11 imposes a tax on corporate income. Section 6151 of the Code specifically requires taxpayers to submit payment with their tax returns and provides a basis for criminal penalties, including fines and imprisonment, if those taxes are not paid. 

By the way, the word “imposed” is used more than a dozen times in these sections. The word voluntary? Not once.

And, of course, the courts have repeatedly and consistently held that these tax code provisions are constitutional. I guess those judges like paying taxes, too, huh?

Here are three rather well-known and fairly recent cases:

United States v. Drefke, 707 F.2d 978 (1983)
United States v. Tedder, 787 F.2d 540 (1986)
United States v. Richards, 723 F.2d 646 (1983) 

J.D. Obenberger of AdultInternetLaw.com gives a great explanation of the meaning of “voluntary” in relation to the Federal income tax:

Generally speaking, there are two primary income tax collection methods. The first is to simply have the government track all financial transactions and levy a specific tax against individuals, businesses, trusts and so on. The second method is a “voluntary” system wherein the taxpayer maintains the data and reports the information to the relevant tax agencies. In short, the term “voluntary” refers to the fact that taxpayers are allowed to determine the correct amount of tax, submit the information to the federal and state tax agencies, and pay the relevant amount of taxes. This is the system used in the United States and constitutes the “voluntary” payment of taxes. 

Do you think that the millions of tax lawyers, tax accountants, congressmen, Tax Court judges, economists and financial experts who have immersed themselves in the tax law for decades pay taxes because they like it?

He (sadly, it’s almost always a guy) smiles sheepishly, scratches his (usually bald) head and says,

Um, uh, well, I hadn’t thunked of that.

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