02-14-2009, 03:35 PM
Harry Reid's widely distributed "Voluntary Tax" Comments
Harry Reid saying taxes are voluntary is right as was his comparison with some European countries. But then he got off on the wrong track trying to define the voluntary system we do have.
We are talking about semantics and different uses of the word "Voluntary." It's not Harry Reid that came up with the saying that we have a voluntary system of compliance, but it has been part of our tax laws for decades. Voluntary system of compliance means that you volunteer the information to the IRS every year. It also means that you are free to arrange your affairs as you choose to maximize your deductions and alter your taxes. The payment is not voluntary.
Even the Supreme Court says "Our tax system is based upon voluntary assessment and payment and not upon distraint." (Flora v. United States, 362 U.S. 145, 175. - 1960).
This is better explained in Helvering v. Mitchell, (which was cited in the Flora decision), as follows:
“In assessing income taxes, the Government relies primarily upon the disclosure by the taxpayer of the relevant facts. This disclosure it requires him to make in his annual return. To ensure full and honest disclosure, to discourage fraudulent attempts to evade the tax, Congress imposes sanctions. Such sanctions may confessedly be either criminal or civil.” Helvering v. Mitchell, 303 U.S. 391, 399 (1938).
But it's a voluntary system of compliance in which you volunteer your information each year. You volunteer your income, your deductions, your capital gains, etc, and turn that information over to the IRS. The IRS can challenge that amount by audit.
As opposed to other countries, where they tell you what you owe and there is no tax return. Or in Germany all returns are subject to 100% audit. If you don't file a return by the due date, the tax authorities WILL be knocking on your door!
In the U.S. If you don't file a return when it’s due the IRS will file one for you using the information that they have available. In nearly all cases, that will result in a much higher tax liability than you would have faced had you done it yourself. The IRS doesn't have proof of your marital status, number of dependents, or most of the information on itemized deductions and the various credits that you may be entitled to so their calculations will be as high as the law allows.
However, if the IRS instructs you to file a tax return then it becomes mandatory. It is also mandatory that you properly complete all tax forms accurately to the best of your ability. It is also mandatory that you pay the required taxes when they are due.
I have a special interest in this since I come from a CPA firm background and specilaized in taxes at the old "Big 8" CPA firm Touche Ross, before their merger decades ago.
Harry Reid saying taxes are voluntary is right as was his comparison with some European countries. But then he got off on the wrong track trying to define the voluntary system we do have.
We are talking about semantics and different uses of the word "Voluntary." It's not Harry Reid that came up with the saying that we have a voluntary system of compliance, but it has been part of our tax laws for decades. Voluntary system of compliance means that you volunteer the information to the IRS every year. It also means that you are free to arrange your affairs as you choose to maximize your deductions and alter your taxes. The payment is not voluntary.
Even the Supreme Court says "Our tax system is based upon voluntary assessment and payment and not upon distraint." (Flora v. United States, 362 U.S. 145, 175. - 1960).
This is better explained in Helvering v. Mitchell, (which was cited in the Flora decision), as follows:
“In assessing income taxes, the Government relies primarily upon the disclosure by the taxpayer of the relevant facts. This disclosure it requires him to make in his annual return. To ensure full and honest disclosure, to discourage fraudulent attempts to evade the tax, Congress imposes sanctions. Such sanctions may confessedly be either criminal or civil.” Helvering v. Mitchell, 303 U.S. 391, 399 (1938).
But it's a voluntary system of compliance in which you volunteer your information each year. You volunteer your income, your deductions, your capital gains, etc, and turn that information over to the IRS. The IRS can challenge that amount by audit.
As opposed to other countries, where they tell you what you owe and there is no tax return. Or in Germany all returns are subject to 100% audit. If you don't file a return by the due date, the tax authorities WILL be knocking on your door!
In the U.S. If you don't file a return when it’s due the IRS will file one for you using the information that they have available. In nearly all cases, that will result in a much higher tax liability than you would have faced had you done it yourself. The IRS doesn't have proof of your marital status, number of dependents, or most of the information on itemized deductions and the various credits that you may be entitled to so their calculations will be as high as the law allows.
However, if the IRS instructs you to file a tax return then it becomes mandatory. It is also mandatory that you properly complete all tax forms accurately to the best of your ability. It is also mandatory that you pay the required taxes when they are due.
I have a special interest in this since I come from a CPA firm background and specilaized in taxes at the old "Big 8" CPA firm Touche Ross, before their merger decades ago.