Top Tax Excuses: Filing a tax return is optional
Filed under: Tax
This post was written as part of a series on tax excuses that don't work.
Not so fast. This lie is based upon an incorrect interpretation of what a "voluntary" tax system is, which is mentioned in some IRS instruction booklets. A voluntary system under the tax laws of the United States doesn't mean that paying taxes is voluntary.
It means that taxpayers "volunteer" their information to the IRS, including how much income they have and the resulting tax due. However, taxpayers are obligated to provide this information. The IRS gives us a chance to correctly report the numbers, and they may later go in and do clean-up via an audit or other inquiry.
But the use of the word "voluntary" doesn't mean you don't have to report your income to the IRS. You do.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.



Reader Comments (Page 1 of 1)
2-29-2008 @ 1:02AM
Bill (Virginia Beach, VA) said...
I wish these boneheads would read and understand their rights before posting NON-factual information about "you have to file taxes". Read this!
According to IRS Code.....
Wages (Section 3401(a)) means all remuneration for service performed by an employee of the Gov’t. Compensation paid to government employees.
GROSS INCOME income which only applies to Gov’t employees.
Employee includes an officer, employee or elected official of the U.S. Gov’t, a Federal (State) or any political subdivison thereof, or the District of Columbia, or an Agency of instrumentality of any one or more of the forgoing...includes an officer of a corporation.
The IRS on Income.
Most people mistakenly believe all moneys received, such as wages, salaries, and tips are income. However, for years IRS Publication 525 entitled Taxable and Nontaxable Income, has acknowledged that wages and salaries are NOT income. PUBLICATION 525 states, Wages and salaries are the main SOURCE of income for most people. In the Court decision of GRAVES vs. People of State of NY ex rel OKEEFE, 59 S. Ct. 595 (1939), the U.S. Supreme Court ruled that a source of income is not income, and the source is not subject to income tax. The U.S. Supreme Court stated; A tax on income is not economically or legally a tax on its source. However, Wages, Salaries, commissions and tips (sources) are considered to be income for an individual when they list them as income on the IRS Tax Return Form. When they sign the tax form under penalty of perjury, they have made a VOLUNTARY OATH that their wages, salary, commissions, and tips listed on the return are income and they are subject to the tax(es).
In the still standing decision of BRUSHABER vs. UNION PACIFIC R.R., 240 US 1, the U.S. Supreme Court ruled the Federal Income Tax is an excise tax under the 16TH Amendment (the income tax amendment.) The Court explained that THE INCOME TAX CAN’T be imposed as a DIRECT Tax (a tax on individuals or property) because the U.S. Constitution still requires that all direct taxes MUST be apportioned among the States. “Apportioned” means laid upon the State Gov’ts in pro-proportion to each state’s population. The Court ruled that income tax can be constitutional only as an INDIRECT (excise) tax…that is, a tax on profits earned by Corporations or Gov’t granted privileges. The Supreme Court stated in order for there to be “income,” there MUST be profits or gains received in the exercise of a government granted privilege. As an example, a lawyer is granted the privilege by Gov’t of being an officer of the Gov’t Court when they represent their clients in litigation.
At law, LABOR is property. The U.S. Supreme Court has identified labor as man’s most precious property. Therefore the exchange of one’s LABOR for wages or salary (which are also property) is considered by law to be an EXCHANGE of properties of equal value in which there is NO gain or profit. Such a property exchange of equal value CAN’T be taxed because there’s no profit or gain. Also, one who works in an ordinary occupation is NOT a recipient of any government granted privilege because he is merely exercising their constitutionally guaranteed right to work and earn a living. Courts have repeatedly ruled that no tax may be placed upon the exercise of rights. Their reasoning was sensible. If the exercise of rights could be taxed, Gov’t could destroy them because excessive rates of taxation.
Items that the law includes in “income” are described in sections of the Code listed under the title – Items specifically included in Gross Income which covers Section 61 through 86. NOWHERE in these Sections, or elsewhere in the IRS Code, is there ANY mention of wages, salaries, commissions, or tips as being “income”. Deceiving and intimidating waitresses, etc. into declaring their tips to be income is a double fraud. First, tips are gifts, not wages; according to the IRS Code (IRSC), gifts are NOT subject to income tax. In fact, even IF tips were considered to be wages, they would still not be “income” and wouldn’t be subject to an income (excise) tax unless one enters them as “income” on a tax return form.
There’s no section in the IRS Code requiring individuals to pay income tax or file income tax returns because the Federal Gov’t has NO constitutional authority to impose any tax directly upon individuals or to require them to involuntarily keep records, make statements, make returns, or perform any acts for the convenience of federal tax collectors. But, if an individual files a return, his voluntary action of signing the form, thereby swearing under penalty of perjury that they owe the tax, this is an acknowledgment under oath that they are subject to the tax (a “taxpayer”) and are therefore subject to the directory statutes of the IRS Code.
SO….why is the IRS coercing people to violate their U.S. Constitutional Rights (16th Amendment) to declare their LABOR as Wages for them?
Reply
2-29-2008 @ 12:41AM
Tracy Coenen said...
Brilliant stuff, Bill. Too bad it's all FALSE.
3-04-2008 @ 2:55PM
Todd said...
I have not studied the IRS code or the constitutional law regarding taxes as I should. However, I have heard the arguments that Bill has stated from other people and I do believe that Tracy has a vested interest in seeing individuals pay income taxes, being a CPA.
Reply
3-04-2008 @ 3:04PM
Tracy Coenen said...
I do not have a vested interest in "seeing individuals pay taxes" because:
1. They don't pay the money to me.
2. I don't want to prepare their tax returns.
So no... no vested interest.