Federal Income Tax: Voluntary?

I know this has to have been discussed previously on this board, but I cannot for the life of me find anything on it here.

A coworker has been going on and on about the fact that he hasn’t had to pay his FIT taxes for the past 8 years. He fills out a form with the payroll department at the beginning of each year and signs it thereby indicating that he will not incur any tax liabilities for that year. Then the payroll department stops deducting this (FIT) from his check every payday. He claims that paying your FIT is a voluntary thing and cites this book The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes and this site: http://www.paynoincometax.com/ as his reasons for doing so.

My question: Is this for real? Is the Federal Income Tax a voluntary tax that the IRS wants you to believe is non-voluntary? I should also add that we are in no way talking about state taxes, which obviously are not voluntary.

You can declare yourself exempt with payroll and they will not take any taxes out of your paycheck. That does not mean that you don’t have to file Federal tax forms or pay Federal taxes. If your co-worker isn’t bullshitting you, he’s in a heap of trouble if he gets caught despite what some lame book tells him.

Show him this. One question: if it’s “obvious” that state taxes aren’t voluntary, why isn’t it obvious that federal taxes aren’t voluntary?

Paying Federal Income Tax is voluntary only in the sense that earning income to begin with is voluntary.

There have been tax-dodging schemes ever since 1913 when the FIT was first put in place. Every one of them has failed. Don’t do it - it’s not worth going to prison for. See here for a simple overview of most of the arguments.

Zev Steinhardt

Damn! Beaten by one minute with a link to the same site!

Zev Steinhardt

Not to put too fine a point on it - but I wouldn’t take tax advice from someone whose mailing address is a federal prison.

Is U.S. income tax invalid because Ohio wasn’t legally a state when the 16th amendment was ratified?

Although the great Cecil doesn’t specifically address whether or not income tax is “voluntary”, the article makes it fairly clear that it isn’t.

Related thread from CoCC: Income Tax Ratification

On preview: Beaten to the punch by, like, a gazillion people. Oh well.

And here’s something Cecil said about the issue:


Here are some relevant sections from the IRS’ website. Please note that these are from their “Criminal” section which gives you some idea of how the feds view these schemes.

“It’s voluntary!”:


Tax scams in general:


Years ago I worked with a guy who never paid taxes, didn’t have a driver’s license and so forth, claiming that he’s a “sovereign citizen” or something and thus he isn’t subject to those inconveniences because he doesn’t want to be. I saw that one on a list of arguments that has been rejected all the way up the line including by the S.C.

I haven’t heard anything from that guy in while…

What your friend did wasn’t to exempt himself from paying federal income tax – what he did was exempt himself from federal income tax WITHHOLDING.

I’m not sure how legal that is, in itself, but there are plenty of times when no money will be withheld from your paycheck (legally). You are still obligated to pay the entirety of your income tax when tax season rolls around, and moreover, if you do not have income tax withheld, you are legally obliged to file your income tax quarterly.

If you do not pre-pay some percentage of your total tax (90%?), you are subject to additional penalties for not pre-paying.

This view was highly touted in the 70’s by a segment of libertarian tax rebels (as they styled themselves). I believe the key, if challenged by the IRS, was to send them a notarized statement that you did not incur any tax liability, so that it would be up to them to prove that you did. If you were not noisy and public about your success (so went the theory), the IRS wouldn’t take the trouble to prosecute.

The IRS will prosecute high profile people to scare everyone else off.

Sounds like he’s mis-stating question #7 on the W-4 form (pdf file) and claiming EXEMPT status. He may not be earning enough anyways and he does qualify (with Earned Income Credit) or he just doesn’t file his taxes every year assuming that he is “EXEMPT” from paying them. Ah…Foolish Mortal! They will catch up with him eventually.

You would probably be fine the first year you tried this, however on year number 2 if you owed more than 1000 to the IRS last year you are required to make quarterly payments on your owed income this year. Failing to do so incurs penalties and interest on the amount owed ever before you file on Apr 15.

Whether you owe anything or not, you virtually always have to file your taxes. When I (American citizen) was living abroad as a full-time student who wasn’t earning any money, I still had to file my federal income tax forms. When my husband (non-US citizen) moved to the States but still worked for a British company on an Isle of Man-registered ship in international waters and was paid in pounds sterling and filed his UK taxes, he STILL had to file (and pay, d’oh!) his US federal income tax. (We had to get an accountant to research that one, though.)

A, uh, friend, told me that you are fine even if you miss 10 out of 16 quarterly payments over four years. Tracking down deadbeats doesn’t seem to be high on their list of priorities, and it’s pretty dang hard to remember to file quarterly, except for the payment due on April 15th (which accounts for 4 of his payments).

Here’s a great site:

The answer is- your friend is heading for a HUGE tax bill, if not jail.

Even I have to file federal taxes, and my overseas income is exempt. I have interest and investment income and a million other little things that are taxable.

While it is true that the odds are a nonfiler will not be caught in any given year the chance is cumulative. Eventually the odds will bite you. When they do, you will find that you will have to pay up for all those years of living free and easy.

That is going to hurt, real bad.

Is your friend Richard Hatch?

Does your, uh, friend pay more than $1000 on his tax bill in April?

My understanding is that you only need to file quarterly, really, if your tax due in April on your W-2 is going to total over $1000 or more. The first year that happens is not a problem, but after that you may be penalized. For a long time I just had extra money withheld by my part-time employers to cover the tax on my home income.

I myself started paying quarterly taxes this year. Though, I do write it on a calendar and haven’t found it particularly hard to remember when they are due.

I can’t remember, but probably. The unwithheld income was $15,000 worth of fellowship income (for a single person with no dependents and no deductions). He had $5,000 worth of regular W-2 income (withheld at the normal rate), so roughly should have owed $2,000 total tax with $600 or so withheld.

It was definitely a Bad Thing To Do[sup]TM[/sup]. He’s very sorry, and (inadvertently) attempted to return the interest lost to the IRS with 700% penalty the following year by forgetting to subtract the standard deduction from his income, but the nice folks at the IRS spotted his error and refunded him $700.

Little harm, no foul, eh?