IRS Responds To 'Frivolous' Tax Arguments

Each year, it seems, the Internal Revenue Service (IRS) responds to what it calls "frivolous" arguments about taxes. Specifically, a number of citizens try to make the case they aren't required to file, or pay taxes.

The most common argument, the IRS says, is that taxpayers aren't required to file a tax return because doing so is "voluntary." The Supreme Court's opinion in Flora v. United States, 362 U.S. 145, 176 (1960), is often quoted for the proposition that "[o]ur system of taxation is based upon voluntary assessment and payment, not upon distraint."

The IRS says the tax dissidents are completely misinterpreting what the word "voluntary" means in this context. It doesn't mean citizens can choose whether to pay taxes or not.

Definition of ‘voluntary’

"The word 'voluntary,' as used in Flora and in IRS publications, refers to our system of allowing taxpayers initially to determine the correct amount of tax and complete the appropriate returns, rather than have the government determine tax for them from the outset," the tax agency said. "The requirement to file an income tax return is not voluntary and is clearly set forth in sections 6011(a), 6012(a), et seq., and 6072(a)."

For the record, the IRS says, any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return.  Failure to file a tax return could subject the non-complying individual to criminal penalties, including fines and imprisonment, as well as civil penalties. 

To back it up, the IRS points to the Supreme Court ruling, United States v. Tedder, saying the court clearly states, "although Treasury regulations establish voluntary compliance as the general method of income tax collection, Congress gave the Secretary of the Treasury the power to enforce the income tax laws through involuntary collection."

Learning the hard way

There are people in jail who can attest to this. In August 2005, the Justice Department announced that Royal Lamarr Hardy was sentenced to a 156-month prison term for, among other things, selling a tax evasion scheme called the "Reliance Defense" that incorrectly asserted the income tax laws were voluntary.  Hardy was also ordered to pay costs of prosecution in the amount of $59,267.88, and restitution to the IRS for $197,555.

In a similar vein, some argue that they are not required to pay federal taxes because the payment of federal taxes is voluntary.  Proponents of this position have argued that the U.S. system of taxation is based upon voluntary assessment and payment.  They frequently claim that there is no provision in the Internal Revenue Code or any other federal statute that requires them to pay or makes them liable for income taxes, and they demand that the IRS show them the law that imposes tax on their income. 

The stance that is taken is that until the IRS can prove to these taxpayers' satisfaction, which is effectively impossible because they never will be satisfied, the existence and applicability of the income tax laws, they will not report or pay income taxes.  These taxpayers reflexively dismiss any attempt by the IRS to identify the laws, thereby continuing the cycle. 

The law

"The requirement to pay taxes is not voluntary and is clearly set forth in section 1 of the Internal Revenue Code, which imposes a tax on the taxable income of individuals, estates, and trusts as determined by the tables set forth in that section," the IRS says. 

Also, the agency says, the obligation to pay tax is described in section 6151, which requires taxpayers to submit payment with their tax returns.  Failure to pay taxes could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties.

"Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 84-page document, The Truth About Frivolous Tax Arguments.