Welcome To              TaxHistory.com
 
Historical Perspectives on the Federal Income Tax











1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Cover Page
Summary
Table Of Contents
CRS-13


8.   DO WE HAVE A VOLUNTARY TAX SYSTEM?

We do not have a voluntary tax system in the sense that payment of taxes is optional. There are specific provisions of law which require the payment of income taxes. There are civil and criminal penalties for failing to pay these taxes or file the required returns. Several rather tenuous arguments have been put forward to support the contention that paying income tax is optional.

First, statements by many, including some by past IRS Commissioners, have been taken out of context to support this position. The phrase "voluntary tax system" is commonly used in discussion of our tax compliance system. The United States does have a system of collecting taxes that depends to a certain extent upon voluntary compliance. Although this country does have withholding on certain types of income, much of the income tax revenues come from tax on other sources of income (such as interest, dividends, self-employment, etc.) where the individual must supply the information for the system to function efficiently. Supplying this information is not voluntary in the meaning of optional. However, if a large percentage of the citizenry did not report their income, our system of collection would not work efficiently, leading to the often misunderstood statement that we rely upon voluntary compliance in our tax system.

Another argument which purports to support the optional nature of our tax system is based upon the Privacy Act notice contained in the IRS 1040 Form. The Privacy Act of 197443 requires, among other things, that each agency soliciting information from the public state the authority which authorizes the solicitation, whether the disclosure requested on the form is mandatory or voluntary, and the effect of not providing the information. The Privacy Act notice in the IRS 1040 Form instruction booklet does not use the word mandatory. Therefore, the argument is put forth that filing the return is voluntary.

The Privacy Act notice in the IRS 1040 Form instruction booklet states that the authority to seek the information is found in IRC § 6001 and 6011 and their regulations; that one must file a return, show a Social Security Number, and fill in all parts of the form that apply; and that a criminal or civil penalty may result from failure to do so. The Federal courts have specifically found that use of the word "mandatory" is not required and that the notice in the 1040 Form meets the requirements of the Privacy Act.44

Another semantic argument put forth in this area revolves around the use of the word “liable” in tax acts. The contention is made that the income tax statute does not use the magic words “individual is made liable” and therefore an individual is not liable for income taxes. The Federal courts have not had

CRS-14

much time for this argument, characterizing it as "arrogant sophistry"45, and "blatant nonsense."46 The first description is perhaps the most apt. The proponent of this argument has set up a standard that all taxes must meet. The income tax does not meet this standard. He, therefore, concludes there is something wrong with the income tax. The problem is not in the income tax, but in the standard. There is no requirement in fact or law that a tax act must use the proponent's magic words.

The Federal income tax is imposed, in IRC § 1, on the taxable income of every individual. Taxable income is defined in IRC § 63. Every individual whose gross income exceeds specified amounts is required to file an income tax return under IRC § 6012. Gross income is defined in IRC § 61. When a return is required by the IRC, the person required to make such return is required, without assessment or notice and demand of the Secretary, to pay such tax to the internal revenue officer with whom the return is filed under IRC § 6161. These sections, working together, make an individual liable for income taxes.


43 Pub. L. No. 93-579, 88 Stat.1896, 93rd Cong., 2nd Sess. (1974).

44 See, for example, United States v. Wilber, 696 F.2d 79 (8th Cir.,1982).

45 See, Donelin v. Comm, T.C. Memo. 1984-131, and Schiff v. Commr., T.C. Memo. 1884-223.

46 See, Newman v. Schiff, 778 F.2d 460 (8th.Cir.1985).
 


For questions about the material on this site or for problems concerning the mechanics of this site contact info@taxhistory.com
Like the new site? Let us know! Don't like it Let us know that too