Don’t Argue With The IRS

If you are thinking about arguing with the IRS then you should think again.  The Internal Revenue Service can penalize you if they believe your argument is frivolous.

Frivolous arguments include contentions that taxpayers can refuse to pay income taxes on religious or moral grounds by invoking the First Amendment; that the only “employees” subject to federal income tax are employees of the federal government; and that only foreign-source income is taxable.

The current penalty for frivolous tax returns is $5,000 which increased in 2006 from the previous penalty amount of $500.  This was the same year a popular movie came out, called Freedom to Fascism by Aaron Russo which alleged among other things that income tax is illegal.  The argument used in the movie was that of the tax system being of a voluntary nature.  The IRS includes this argument in their frivolous list.

Some taxpayers assert that they are not required to file federal tax returns because the filing of a tax return is voluntary.  Proponents point to the fact that the IRS itself tells taxpayers in the Form 1040 instruction book that the tax system is voluntary.  Additionally, 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 Law: 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 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).  See also Treas. Reg. § 1.6011-1(a).

The best advice we can give is not to listen to the rumors about taxes and to pay your fair share.  If you are unsure as to whether you are filing correctly, may need to file or not, or believe you are missing out on credits or deductions you should consult a tax professional.