Why Do I Have to  

Pay Taxes?

Taxes Benefit Everyone                                                                                                       Know the Law

How are your tax dollars used to benefit the citizens of the                                                                 There have always been individuals who argue 
United States?  Which of these have you or your family                                                                       taxes are illegal. They use false, misleading, 
used lately or will use in the future?                                                                                       or unorthodox tax advice to gain followers. The 
                                                                                                                             courts have repeatedly rejected their arguments 
Income and Outlays: These pie charts show the relative 
                                                                                                                             as frivolous and routinely impose penalties for 
size of the major categories of the federal                                                            income and 
                                                                                                                             raising such frivolous arguments. Make sure you 
outlays through Fiscal YearIncomeFeb. 2020.
                                                                                                      Individual Income Tax  “Know the Law:”
                                                                                                     Social Insurance and    The United States Constitution, Article 1, 
                                                                                                      Retirement             Section 8, Clause 1, states, “The Congress shall 
                                                      Income                                         Corporate Income Tax    have the Power to lay and collect Taxes, Duties, 
                                                                                 Individual Income Tax 
                                                                                                     Deficit                 Imposts and Excises to pay the Debts and 
                                                                                 Social Insurance and
                                                                                 Retirement                                  provide for the common Defense and general 
                                                                                 Corporate Income TaxMiscellaneous           Welfare of the United States.“
                                                                                                      Customs Duties         The Sixteenth Amendment to the 
                                                                                 Deficit
                                                                                                                             Constitution, ratified on February 3, 1913, 
                                                                                                     Excise Tax
                                                                                 Miscellaneous 
                                                                                                                             states, “The Congress shall have the power to 
                                                                                 Customs Duties                              lay and collect taxes on income, from whatever 
                                                                                                      
                                                                                 Excise Tax                                  source derived, without apportionment among 
                                                                                                                             the several States, and without regard to any 
 
                                                                                                                             census or enumeration.”
                                                                                                                             Congress used the power granted by the 
                                                                                                                             Constitution and Sixteenth Amendment, and 
 
                                                                                                                             made laws requiring all individuals to pay tax.
                                                                          
                                                                                                                             Congress has delegated to the IRS the 
                                                      Outlays                                                                responsibility of administering the tax laws 
                                                                                                                             known as the Internal Revenue Code (the Code) 
                                                                          
                                              Outlays                                                                        and found in Title 26 of the United States Code. 
                                                                                                                             Congress enacts these tax laws, and the IRS 
                                                                                                                             enforces them.
                                                                                                      
                                                                                                                             Sources of taxable income are identified in the 
                                                                                                                             Code under Section 61, Gross Income Defined. 
                                                                                                                             The list of sources under this section is not all 
                                                                                                                             inclusive.
        Social Security                       National Defense                   Medicare
                                                                                                                             Section 6702 of the Code authorizes the IRS 
        SocialHealthSecurity           NationalIncome SecurityDefenseMedicareNet Interest
                                                                                                                             to impose a $5000 penalty against persons who 
        HealthVeteran's Benefits       Income SecurityEducation      Net InterestTransportation                              submit frivolous tax returns or other documents.
        Veteran'sOtherBenefits         Education                     Transportation
        Other                                                                                                         
                                                                                                                
     Publication 2105 (Rev. 5-2023)  Catalog Number 23871N  Department of the Treasury  Internal Revenue Service  www.irs.gov

Don’t Fall For These Arguments

While taxpayers have the right to contest their tax      Truth: This argument has been consistently 
liabilities in the courts, taxpayers do not have the     dismissed by the courts. Sources of taxable income 
right to violate and disobey tax laws. Unscrupulous      are identified in the Code under Section 61, Gross 
individuals and promoters advocating willful             Income Defined. Congress has determined that all 
noncompliance with the tax laws have used a variety      income is taxable unless specifically excluded by 
of false or misleading arguments for not filing and      some part of the Code. The list of sources under this 
paying taxes. Here are some of the most common           section is not all inclusive.
arguments:                                               Fictional Legal Basis Myths: Taxpayers are not 
Constitutional Myths: Filing a Form 1040 violates        required to file a federal income tax return because 
the Fifth Amendment right against self-incrimination     the instructions and regulations associated with the 
or the Fourth Amendment right to privacy. Filing also    Form 1040 do not display an OMB control number as 
violates the Thirteenth Amendment right against          required by the Paperwork Reduction Act.
involuntary servitude and First Amendment rights         Truth: The courts have uniformly rejected this 
based on moral or religious beliefs.                     argument on different grounds. Some courts have 
Truth: The courts have consistently held that            simply noted that the PRA applies to the forms 
disclosure of the type of routine financial information  themselves, not to the instruction booklets, and 
required on a tax return does not incriminate an         because the Form 1040 does have a control number, 
individual or violate the right to privacy. Also, courts there is no PRA violation.
have consistently found that the First and Thirteenth    Trusts Myths: Forming a business trust to hold your 
Amendments do not provide rights to refuse to comply     income and assets will avoid taxes. A family estate 
with federal tax laws.                                   trust will allow you to reduce or eliminate your tax 
Internal Revenue Code Myths: The filing and paying       liability.
of tax is voluntary, or the Code doesn’t apply to me     Truth: Establishing a trust, foreign or domestic, for the 
because I am neither a government employee nor a         sole purpose of hiding your income and assets from 
resident of a sovereign state.                           taxation is illegal and will not absolve you of your tax 
Truth: The term voluntary compliance means that          liability.
each of us is responsible for filing a tax return when 
required and for determining and paying the correct      What does the IRS do to address 
amount of tax. The tax law is found in Title 26 of the 
United States Code. Section 6012 of the Code makes       willful noncompliance with U.S. 
clear that only individuals whose income falls below 
a specified level do not have to file returns. While     tax laws?
our tax system is based on self-assessment and 
reporting, compliance with tax laws is mandatory.        1. Encourage taxpayers to self-correct their returns 
State citizenship does not negate the applicability of   and comply with their tax obligations.
the Code on individuals working and residing in the      2. Vigorously apply both civil and criminal sanctions, 
United States.                                           including prosecution and prison sentence against 
Frivolous Credit Myths: African and Native               those who persist in violating the tax laws.
Americans can claim a special tax credit as 
reparations for slavery and other oppressive 
treatment.

Truth: There is no provision in the Code that            Report individuals or companies not complying 
allows taxpayers to claim reparation credits. Unless     with the tax laws to the IRS. For instructions, 
specifically provided for in the Code, no deduction or   visit www.IRS.gov, and at the bottom of the 
credit will be allowed.                                  page, click on “Tax Fraud”, then click on “Tax 
Compensation Myths: Wages, tips, and other                         Scams — How to Report Them.”  
compensation received for personal services are 
not income because there is no taxable gain when a 
person “exchanges” labor for money.