Why Do I Have to  

Pay Taxes?

Taxes Benefit Everyone                                                                       Know the Law

How are your tax dollars used to benefit the citizens of                                     There have always been individuals who argue 
the United States?  Which of these have you or your                                          taxes are illegal. They use false, misleading, 
family used lately or will use in the future?                                                or unorthodox tax advice to gain followers. 
                                                                                             The courts have repeatedly rejected their 
Income and Outlays: These pie charts show the relative 
                                                                                             arguments as frivolous and routinely impose 
size of the major categories of the federal income and 
                                                                                             penalities for raising such frivolous arguments. 
outlays through Fiscal Year Feb. 2020.                     
                                                                                             Make sure you “Know the Law:”
                         Income
                                                           Individual Income Tax
                                                                                             The United States Constitution, Article 1, 
                                                          Social Insurance and               Section 8, Clause 1, states, “The Congress 
                                                           Retirement                        shall have the Power to lay and collect Taxes, 
                         Income                           Corporate Income Tax               Duties, Imposts and Excises to pay the Debts 
                                                          Individual Income Tax 
                                                          Deficit                            and provide for the common Defense and gen- 
                                                          Social Insurance and
                                                          Retirement                         eral Welfare of the United States.“
                                                          Corporate Income TaxMiscellaneous
                                                                                             The Sixteenth Amendment to the 
                                                          Deficit
                                                           Customs Duties                    Constitution, ratified on February 3, 1913, 
                                                          Excise Tax                         states, “The Congress shall have the power to 
                                                          Miscellaneous 
                                                                                             lay and collect taxes on income, from whatever 
                                                          Customs Duties                     source derived, without apportionment among 
                                                           
                                                          Excise Tax                         the sev- eral 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 
                                                                                             responsibility of administering the tax laws 
                         Outlays                          
                                                                                             known as the Internal Revenue Code (the 
                                                           
                                                                                             Code) and found in Title 26 of the United 
                         Outlays
                                                                                             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 
 Social SecurityHealth   National DefenseIncome Security MedicareNet Interest                to impose a $5000 penalty against persons 
 HealthVeteran's BenefitsIncome SecurityEducation Net InterestTransportation                 who submit frivolous tax returns or other 
 Veteran's BenefitsOther Education                Transportation                             documents.
 Other                                                                                      
                                                                               
 Publication 2105 (Rev. 7-2020)  Catalog Number 23871N  Department of the Treasury  Internal Revenue Service  www.irs.gov

Don’t Fall For These Arguments

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