A. The Voluntary Nature of the Federal Income Tax System
- Contention: The filing of a tax return is voluntary. Some taxpayers assert that they are not required to file federal tax returns because
the filing of a tax return is voluntary. Proponents of this contention
point to the fact that the IRS tells taxpayers in the Form 1040
instruction book that the tax system is voluntary. Additionally, these
taxpayers frequently quote Flora v. United States, 362 U.S. 145, 176
(1960), 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) of the Internal Revenue Code. See also Treas. Reg. §
Any taxpayer who has received more than a statutorily determined
amount of gross income in a given tax year is obligated to file a
return for that tax year. Failure to file a tax return could subject
the non-compliant individual to civil and/or criminal penalties,
including fines and imprisonment. In United States v. Tedder, 787 F.2d
540, 542 (10th Cir. 1986), the court stated that, "although Treasury
regulations establish voluntary compliance as the general method of
income tax collection, Congress gave the Secretary of the Treasury the
power to enforce the income tax laws through involuntary collection. .
. . The IRS' efforts to obtain compliance with the tax laws are
entirely proper." The IRS warned taxpayers of the consequences of
making this frivolous argument in Rev. Rul. 2007-20, 2007-1 C.B. 863
and in Notice 2010-33, 2010-17 I.R.B. 609.
Relevant Case Law:
Helvering v. Mitchell, 303 U.S. 391, 399 (1938) – the Supreme Court
stated that "[i]n assessing income taxes, the Government relies
primarily upon the disclosure by the taxpayer of the relevant facts. .
. . in his annual return. To ensure full and honest disclosure, to
discourage fraudulent attempts to evade the tax, Congress imposes
[either criminal or civil] sanctions."
United States v. Tedder, 787 F.2d 540, 542 (10th Cir. 1986) – the
Tenth Circuit upheld a conviction for willfully failing to file a
return, stating that the premise "that the tax system is somehow
'voluntary' . . . is incorrect."
United States v. Richards, 723 F.2d 646, 648 (8th Cir. 1983) – the
Eighth Circuit upheld a conviction and fines imposed for willfully
failing to file tax returns, stating that the claim that filing a tax
return is voluntary is "an imaginative argument, but totally without
United States v. Hartman, 915 F. Supp. 1227, 1230 (M.D. Fla. 1996) –
the court held that "[t]he assertion that the filing of an income tax
return is voluntary is . . . frivolous." The court noted that I.R.C. §
6012(a)(1)(A), "requires that every individual who earns a threshold
level of income must file a tax return" and that "failure to file an
income tax return subjects an individual to criminal penalty."
United States v. Drefke, 707 F.2d 978 (8th Cir. 1983); United States
v. SchulzPDF, 529 F. Supp. 2d 341 (N.D.N.Y. 2007); Foryan v.
Commissioner, T.C. Memo. 2015-114, 109 T.C.M. (CCH) 1591 (2015); Jones
v. Commissioner, T.C. Memo. 2014-101, 107 T.C.M. (CCH) 1495 (2014).
- Contention: Payment of federal income tax is voluntary. In a similar vein, some argue that they are not required to pay federal
taxes because the payment of federal taxes is voluntary. Proponents of
this position argue that our system of taxation is based upon
voluntary assessment and payment. They frequently claim that there is
no provision in the Internal Revenue Code or any other federal statute
that requires them to pay or makes them liable for income taxes, and
they demand that the IRS show them the law that imposes tax on their
income. They argue that, until the IRS can prove to these taxpayers'
satisfaction the existence and applicability of the income tax laws,
they will not report or pay income taxes. These individuals or groups
reflexively dismiss any attempt by the IRS to identify the laws,
thereby continuing the cycle. The IRS discussed this frivolous
position at length and warned taxpayers of the consequences of
asserting it in Rev. Rul. 2007-20, 2007-1 C.B. 863 and in Notice
2010-33, 2010-17 I.R.B. 609.
The Law: The requirement to pay taxes is not voluntary. Section 1 of
the Internal Revenue Code clearly imposes a tax on the taxable income
of individuals, estates, and trusts, as determined by the tables set
forth in that section. (Section 11 imposes a tax on corporations'
Furthermore, the obligation to pay tax is described in section 6151,
which requires taxpayers to submit payment with their tax returns.
Failure to pay taxes could subject the non-complying individual to
criminal penalties, including fines and imprisonment, as well as civil
In United States v. Drefke, 707 F.2d 978, 981 (8th Cir. 1983), the
Eighth Circuit Court of Appeals stated, in discussing section 6151,
that "when a tax return is required to be filed, the person so
required 'shall' pay such taxes to the internal revenue officer with
whom the return is filed at the fixed time and place. The sections of
the Internal Revenue Code imposed a duty on Drefke to file tax returns
and pay the appropriate rate of income tax, a duty which he chose to
ignore." Id. (emphasis omitted).
Although courts, in rare instances, have waived civil penalties
because they have found that a taxpayer relied on an IRS misstatement
or wrongful misleading silence with respect to a factual matter, there
have been no cases in which the IRS's lack of response to a taxpayer's
inquiry has relieved the taxpayer of the duty to pay tax due under the
Relevant Case Law:
United States v. Schiff, 379 F.3d 621, 631 (9th Cir. 2004) – the Ninth
Circuit affirmed a federal district court's preliminary injunction
barring Irwin Schiff, Cynthia Neun, and Lawrence N. Cohen from selling
a tax scheme that fraudulently claimed that payment of federal income
tax is voluntary. In subsequent criminal trials, Schiff, Neun, and
Cohen were convicted of violating several criminal laws relating to
their scheme. See 2005 TNT 206-18. Schiff received a sentence of more
than 12 years in prison for tax evasion and was ordered to pay more
than $4.2 million in restitution to the IRS; Neun received a sentence
of nearly 6 years and was ordered to pay $1.1 million in restitution
to the IRS; and Cohen received a sentence of nearly 3 years and was
ordered to pay $480,000 in restitution to the IRS. See Professional
Tax Resister Sentenced to More Than 12 Years in Prison for Tax Fraud.
Keenan v. Commissioner, 233 F. App'x 719, 720 (9th Cir. 2007) – the
Ninth Circuit stated that "assertions that the tax system is
voluntary" are frivolous.
Banat v. Commissioner, 80 F. App'x 705, 706–07 (2d Cir. 2003) – the
Second Circuit upheld $2,000 in sanctions against a taxpayer because
his argument that "the payment of income taxes was voluntary" was
"contrary to well-established law and thus was frivolous."
United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993) – the
Eighth Circuit stated that the "[taxpayers'] claim that payment of
federal income tax is voluntary clearly lacks substance" and imposed
sanctions in the amount of $1,500 "for bringing this frivolous appeal
based on discredited, tax-protester arguments."
Wilcox v. Commissioner, 848 F.2d 1007, 1009 (9th Cir. 1988) – the
Ninth Circuit rejected Wilcox's argument that payment of taxes is
voluntary for American citizens and imposed a $1,500 penalty against
Wilcox for raising frivolous claims.
United States v. SchulzPDF, 529 F. Supp. 2d 341, 357–58 (N.D.N.Y.
2007) – the court permanently barred Robert Schulz and his
organizations, We the People Congress and We the People Foundation,
from promoting a tax scheme that helped employers and employees
improperly stop tax withholding from wages on the false premise that
federal income taxation is voluntary.
Jones v. Commissioner, T.C. Memo. 2014-101, 107 T.C.M. (CCH) 1495
(2014) – the court imposed several sanctions of $25,000 against a
taxpayer who argued, amongst other frivolous arguments, that "the
Internal Revenue Code does not establish any liability for the payment
of Federal income tax."
Schiff v. United States, 919 F.2d 830 (2d Cir. 1990); United States v.
Berryman, 112 A.F.T.R.2d (RIA) 2013-6282 (D. Colo. 2013); United
States v. Sieloff, 104 A.F.T.R.2d (RIA) 2009-5067 (M.D. Fla. 2009);
United States v. Melone, 111 A.F.T.R.2d (RIA) 2013-1369 (D. Mass.
2013); Foryan v. Commissioner, T.C. Memo. 2015-114, 109 T.C.M. (CCH)
1591 (2015); Horowitz v. Commissioner, T.C. Memo. 2006-91, 91 T.C.M.
(CCH) 1120 (2006).
- Contention: Taxpayers can reduce their federal income tax liability by filing a "zero return." Some taxpayers attempt to reduce their
federal income tax liability by filing a tax return that reports no
income and no tax liability (a "zero return") even though they have
taxable income. Many of these taxpayers also request a refund of any
taxes withheld by an employer. These individuals typically attach to
the zero return a "corrected" Form W-2 or another information return
that reports income and income tax withholding, relying on one or more
of the frivolous arguments discussed throughout this outline to
support their position.
The Law: A taxpayer that has taxable income cannot legally avoid
income tax by filing a zero return. Section 61 provides that gross
income includes all income from whatever source derived, including
compensation for services. Courts have repeatedly penalized taxpayers
for making the frivolous argument that the filing of a zero return can
allow a taxpayer to avoid income tax liability or permit a refund of
tax withheld by an employer. Courts have also imposed the frivolous
return and failure to file penalties because these forms do not
evidence an honest and reasonable attempt to satisfy the tax laws or
contain sufficient data to calculate the tax liability, which are
necessary elements of a valid tax return. See Beard v. Commissioner,
82 T.C. 766, 777–79 (1984). The IRS warned taxpayers of the
consequences of making this frivolous argument in Rev. Rul. 2004-34,
2004-1 C.B. 619. Furthermore, the inclusion of the phase "nunc pro
tunc" or other legal phrases on a return, has no legal effect and does
not serve to validate a zero return. See Rev. Rul. 2006-17, 2006-1
C.B. 748; Notice 2010-33, 2010-17 I.R.B. 609.
Relevant Case Law:
Kelly v. United States, 789 F.2d 94, 97 (1st Cir. 1986) – the First
Circuit held that the taxpayer's failure to report any income from
wages, the "unexplained designation of his Form W-2 as 'Incorrect',
and his attempt to deduct as a cost of labor expense on Schedule C an
amount almost identical to the amount of wages on Form W-2"
established that his position (that compensation for his labor was not
"wages" or taxable income) was both incorrect and frivolous.
Sisemore v. United States, 797 F.2d 268, 270 (6th Cir. 1986) – the
Sixth Circuit upheld the assessment of a frivolous-return penalty on
taxpayers because "their amended return [showing no income] on its
face clearly showed that their assessment of their taxes was
substantially incorrect and that their position on the matter [that
their wages were zero because received in equal exchange for their
labor] was frivolous."
Olson v. United States, 760 F.2d 1003, 1005 (9th Cir. 1985) – the
Ninth Circuit held that the district court properly found the taxpayer
liable for a penalty for filing a frivolous tax return because he
listed his wages as zero and attempted "to escape tax by deducting his
wages as 'cost of labor' and by claiming that he had obtained no
privilege from a governmental agency[.]"
Davis v. United States Government, 742 F.2d 171, 172 (5th Cir. 1984) –
the Fifth Circuit held as clearly frivolous the taxpayers' reasons
("rejected . . . time and time again") for reporting no wages and no
gross income, when they had received over $60,000 in earnings or other
compensation as evidenced by the Forms W-2 attached to their Form
United States v. Lovely, 420 F. Supp. 3d 398, 408 (M.D.N.C. 2019) –
holding a taxpayer liable for civil penalties because his "primary
claim—that as a matter of law he made zero taxable income despite
being employed—is incorrect as it is established beyond doubt that
employees must generally pay federal income tax on their salaries."
United States v. Melone, 111 A.F.T.R.2d (RIA) 2013-1369 (D. Mass.
2013) – the court held that the taxpayer, who filed "zero returns,"
falsely asserting he made no income, was liable for civil penalties.
United States v. Ballard, 101 A.F.T.R.2d (RIA) 1241, (N.D. Tex. 2008)
– the court permanently enjoined a tax return preparer from engaging
in further tax return preparation or tax advice because he prepared
federal income tax returns for customers that falsely showed nothing
Bonaccorso v. Commissioner, T.C. Memo. 2005-278, 90 T.C.M. (CCH) 554
(2005) – the taxpayer filed zero returns based on the argument that he
found no Code section that made him liable for any income tax. The
court held that the petitioner's argument was frivolous, citing to
section 1 (imposes an income tax), section 63 (defines taxable income
as gross income minus deductions), and section 61 (defines gross
income). The court also imposed a $10,000 sanction under section 6673
for making frivolous arguments.
United States v. Schiff, 544 F. App'x 729 (9th Cir. 2013); Leyva v.
Commissioner, 483 F. App'x 371 (9th Cir. 2012); United States v.
Cohen, 262 F. App'x 14 (9th Cir. 2007); United States v. Conces, 507
F.3d 1028 (6th Cir. 2007); United States v. Schiff, 379 F.3d 621 (9th
Cir. 2004); United States v. Rickman, 638 F.2d 182, 184 (10th Cir.
1980); United States v. Nichols, 115 A.F.T.R.2d (RIA) 2015-1971 (D.
Wash. 2015); United States v. Hill, 97 A.F.T.R.2d (RIA) 2006-548 (D.
Ariz. 2005); Little v. United States, 96 A.F.T.R.2d (RIA) 2005-7086
(M.D.N.C. 2005); Schultz v. United States, 95 A.F.T.R.2d (RIA)
2005-1977 (W.D. Mich. 2005); Smith v. Commissioner, 121 T.C.M. (CCH)
1195 (T.C. 2021), appeal dismissed, No. 21-71138, 2021 WL 6200759 (9th
Cir. Oct. 12, 2021); Waltner v. Commissioner, T.C. Memo. 2015-146,
T.C.M. (RIA) 2015-146 (2015); Hill v. Commissioner, T.C. Memo.
2014-101, 108 T.C.M. (CCH) 12 (2014); Shirley v. Commissioner, T.C.
Memo. 2014-10, 107 T.C.M. (CCH) 1057 (2014); Waltner v. United States,
98 Fed. Cl. 737 (2011); Oman v. Commissioner, T.C. Memo. 2010-276, 100
T.C.M. (CCH) 548 (2010); Blaga v. Commissioner, T.C. Memo. 2010-170,
100 T.C.M. (CCH) 91 (2010).
- Contention: The IRS must prepare federal tax returns for a person who fails to file. Proponents of this argument contend that section
6020(b) obligates the IRS to prepare and sign under penalties of
perjury a federal tax return for a person who does not file a return.
Those who subscribe to this contention claim that they are not
required to file a return for themselves.
The Law: Section 6020(b) merely provides the IRS with a mechanism for
determining the tax liability of a taxpayer who has failed to file a
return. Section 6020(b) does not require the IRS to prepare or sign
under penalties of perjury tax returns for persons who do not file,
and it does not excuse the taxpayer from civil penalties or criminal
liability for failure to file.
Relevant Case Law:
Jahn v. Commissioner, 431 F. App'x 210, 212 (3d Cir. 2011) – the Third
Circuit held that even if the IRS prepares a return under section
6020(b), this "does not relieve the nonfiling taxpayer of his duty to
file . . . and does not equate to a filed return unless signed by the
taxpayer." The court found arguments to the contrary frivolous.
United States v. Cheek, 3 F.3d 1057, 1063 (7th Cir. 1993) – the
Seventh Circuit upheld the district court's instruction to the jury
that the defendant's belief that section 6020 permitted the Secretary
of the Treasury to prepare a tax return for a person did not negate
"in any way" the defendant's obligation to file a tax return.
In re Bergstrom, 949 F.2d 341, 343 (10th Cir. 1991) – the Tenth
Circuit recognized that "[c]ourts have held that 26 U.S.C. § 6020(b)
provides the IRS with some recourse if a taxpayer fails to file a
return as required under 26 U.S.C. § 6012, but that it does not excuse
a taxpayer from the filing requirement."
Schiff v. United States, 919 F.2d 830, 832 (2d Cir. 1990) – the Second
Circuit rejected the taxpayer's argument that the IRS must prepare a
substitute return pursuant to section 6020(b) before assessing
deficient taxes, stating that "[t]here is no requirement that the IRS
complete a substitute return."
Moore v. Commissioner, 722 F.2d 193, 196 (5th Cir. 1984) – the Fifth
Circuit stated that "section [6020(b)] provides the Secretary with
some recourse should a taxpayer fail to fulfill his statutory
obligation to file a return, and does not supplant the taxpayer's
original obligation to file established by 26 U.S.C. § 6012."
Stewart v. Commissioner, T.C. Memo. 2005-212, 90 T.C.M. (CCH) 269
(2005) – the court found that the IRS need not prepare a substitute
return in order to determine a deficiency for a taxpayer who has not
filed a return for the year at issue.
United States v. Barnett, 945 F.2d 1296 (5th Cir. 1991); Smith v.
Commissioner, 118 T.C.M. (CCH) 208 (T.C. 2019), aff'd sub nom. Smith,
v. Commissioner, No. 20-70698, 2022 WL 576011 (9th Cir. Feb. 25,
- Contention: Compliance with an administrative summons issued by the IRS is voluntary. Some summoned parties may assert that they are not
required to respond to or comply with an administrative summons issued
by the IRS. Proponents of this position argue that a summons thus can
be ignored. The Second Circuit's opinion in Schulz v. IRS, 413 F.3d
297 (2d Cir. 2005) ("Schulz II"), discussed below, is often
inappropriately cited to support this proposition.
The Law: A summons is an administrative device with which the IRS can
summon persons to appear, testify, and produce documents. The IRS is
statutorily authorized to inquire about any person who may be liable
to pay any internal revenue tax, and to summon a witness to testify or
to produce books, papers, records, or other data that may be relevant
or material to an investigation. I.R.C. § 7602; United States v.
Arthur Young & Co., 465 U.S. 805, 816 (1984); United States v. Powell,
379 U.S. 48 (1964). Sections 7402(b) and 7604(a) of the Internal
Revenue Code grant jurisdiction to district courts to enforce a
summons, and section 7604(b) governs the general enforcement of
summonses by the IRS.
Section 7604(b) allows courts to issue attachments, consistent with
the law of contempt, to ensure attendance at an enforcement hearing
"[i]f the taxpayer has contumaciously refused to comply with the
administrative summons and the [IRS] fears he may flee the
jurisdiction[.]" Powell, 379 U.S. at 58 n.18; see also Reisman v.
Caplin, 375 U.S. 440, 448–49 (1964) (noting that section 7604(b)
actions are in the nature of contempt proceedings against persons who
"wholly made default or contumaciously refused to comply" with an
administrative summons issued by the IRS). Under section 7604(b), the
courts may also impose contempt sanctions for disobedience of an IRS
Failure to comply with an IRS administrative summons also could
subject the non-complying individual to criminal penalties, including
fines and imprisonment. I.R.C. § 7210. While the Second Circuit held
in Schulz II that, for due process reasons, the government must seek
judicial review and enforcement of the underlying summons and to
provide an intervening opportunity to comply with a court order of
enforcement before seeking sanctions for noncompliance, the court's
opinion did not foreclose the availability of prosecution under
Relevant Case Law:
Schulz v. IRS, 413 F.3d 297, 304 (2d Cir. 2005) ("Schulz II") – the
Second Circuit upheld its prior per curiam opinion, reported at Schulz
v. IRS, 395 F.3d 463 (2d Cir. 2005) ("Schulz I"), and held that, based
upon constitutional due process concerns, an indictment under section
7210 shall not lie and contempt sanctions under section 7604(b) shall
not be levied based on disobedience of an IRS summons until that
summons has been enforced by a federal court order and the summoned
party, after having been given a reasonable opportunity to comply with
the court's order, has refused. The court noted that "[n]either this
opinion nor Schulz I prohibits the issuance of pre-hearing attachments
consistent with due process and the law of contempts."
United States v. Becker, 58-1 U.S.T.C. ¶ 9403 (S.D.N.Y. 1958) – when
Becker failed to produce certain books and records specified in an IRS
summons, claiming that they had been destroyed by fire, the court
found, based upon the evidence (including the fact that some of the
specified books were subsequently produced in compliance with a grand
jury subpoena), that Becker willfully and knowingly neglected to
produce information called for by a summons in violation of section
United States v. Sanders, 110 A.F.T.R.2d (RIA) 2012-5910 (S.D. Ill.