Why Does The THM believe that the law imposes no duty to file an income tax return on the typical working American?
The THM's Analysis
As we have seen from our discussion of the THM's quest for any statute imposing liability for the income tax on the typical working American, liability is the determining factor in identifying those required to file income tax returns.
Section 6001 clearly distinguishes between those liable and everyone else. Those liable are required to keep records. Those liable are required to render statements. Those liable are required to make returns. And Treasury regulations, including those providing form, means and manner of filing returns, apply only to those who are liable for a tax. Everyone else, which the THM believes includes the typical working American, is not required to keep records, render statements, make returns or comply with regulations, which would include those regarding form and manner of filing returns.
The IRS's Privacy Act Notice frankly and clearly discloses that the IRS's right to information called for in the Form 1040 is found in IRC Sections 6001, 6011 and 6012 and their regulations and states that "They say you must file a return or statement with us for any tax you are liable for." (emphasis ours, dangling preposition the IRS's)
The THM also knows from our discussion above that liability must be plainly and clearly laid by the strictly construed letter of the law (Gould and Merriam) and that liability cannot be imposed by regulations, which cannot exceed the scope and import of the underlying statute (Calamaro and Water Quality Assn.).
After searching the entire IRC for a statutory imposition of liability for the income tax, the only section that was found is Section 1461, which we have also seen imposes liability for the tax only on those required to withhold taxes from payments to nonresident aliens and foreign corporations. Thus the THM reasonably concludes and believes that the only persons the letter of the law has identified as liable for the income tax are withholding agents for nonresident aliens and foreign corporations, and that, consequently, those withholding agents are the only person's required to file an income tax return.
Thus, the THM also has concluded that the typical working American does not fall into that set of persons upon whom the law imposes a duty to file an income tax return. This is not a tortured and forced interpretation, is it? Is this an irrational or "frivolous" analysis? Could a reasonable man, reading the law in a reasonable way, arrive at a similar conclusion?
The IRS's Response
Again, to be thorough and to be even-handed, we have to include in this compilation the IRS's side of the issue. Also, again, however, that response is telling. The IRS contends in its "The Truth About Frivolous Tax Arguments" publication that:
"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)."
and
" Any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return."
What is missing in this response? We've already seen what the IRS has said about the requirement to file a return in the instructions for the 1040 and its Privacy Act Notice. Is the IRS changing its story?
Is this a misrepresentation by omission? The very code section setting forth the requirement to file a tax return is missing from this statement purportedly about the requirement to file a return. Let's compare this response with the IRS's original (and still currently published) position in its instructions for the Form 1040 (Privacy Act Notice, page 97 of the 2009 1040 instructions) clearly stating something different:
"Our legal right to ask for information is Internal Revenue Code Sections 6001, 6011, and 6012(a), and their regulations. They say that you must file a return or statement with us for any tax you are liable for."
Why is Section 6001 mysteriously omitted in the IRS's "Truth About Frivolous Tax Arguments" when that is the first section cited in its own instructions regarding the requirement to file a Form 1040? What is it about that section that the IRS wants to conceal, or at least ignore?
And the discrepancy continues, progressing from what could be deception by omission to a possible active misrepresentation of the law. The IRS has changed "6001, 6011 and 6012(a)" to "6011(a), 6012(a) and 6072(a)", but it has also changed "you must file a return or statement with us for any tax you are liable for" to "any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return". But these two changes in the IRS's story are not the only conflicts between what the IRS says in the Form 1040 instruction book and what it is saying in this publication purporting to be the "truth".
There is also a more subtle, but equally significant, change which actually can explain, if not reconcile, the two conflicting versions of the IRS's position. In the Privacy Act Notice in the Form 1040 instructions the statement is about "YOU", the person reading the instructions. "You" may be a "taxpayer" or "you" may not be a "taxpayer".
But in its "Truth About Frivolous Tax Arguments" publication it is not "you"—which would include both those who are and are not taxpayers—but only the "taxpayer" whose obligation to file is addressed. A taxpayer, one who is required to pay the tax, would be one liable for the tax, so that statement would only apply to one LIABLE, wouldn't it? The term "taxpayer" is defined as one who is "subject to" a tax (26 USC 7701(a)(14), i.e., a "person liable" for a tax or for the collection thereof (Section 6001). So why is that so important? By using "taxpayer" instead of "you", the statement presumes liability, allowing them to move to the second prerequisite for a filing requirement, income equal to or in excess of the standard exemption, Section 6012.
If the IRS's rebuttal had been directed to "you" instead of the liable "taxpayer", it would have had to leave 6001 in the statement and it would have said your requirement to file a return hinged on whether or not you are liable, not whether or not you had "received more than a statutorily determined amount of gross income". Section 6012, excluding those liable with gross income less than the standard exemption, is the second prerequisite for a requirement to file and would only come into play for those who are liable and, therefore, required by Section 6001 to file a return.
Let's examine the conspicuously omitted section of the code, Section 6001, and see if we can find out why the IRS chose to omit that section by confining its statement to "taxpayers", who are by definition liable for the tax:
"Every person liable for any tax imposed by this title or for the collection thereof shall keep such records, render such statements, make such returns and comply with such rules and regulations as the Secretary may from time to time prescribe."
Both the Privacy Act Notice in the instruction book for the Form 1040 and the mysteriously omitted code section, Section 6001, say that only those LIABLE for a tax are required to file a return.
What about the other sections that are disclosed? What do they really say? Section 6011(a) begins with "When required by regulations . . . ", but who is "required by regulations" to do anything? Section 6001, above, makes it plain as day that only those LIABLE for a tax are obligated to "comply with . . . regulations".
But Section 6011(a) goes on from there to mention a familiar word:
a) General rule — When required by regulations prescribed by the Secretary any person made liable for any tax imposed by this title [which would include the income tax], or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations. (emphasis added)
So who is required to comply with regulations, including those indicating that a Form 1040 should be completed and filed? Only those persons LIABLE for the income tax.
What about the last section cited in the Privacy Act Notice? Section 6012(a) is often referred to by the IRS as the sole basis for being required to file a Form 1040, although we now know that the requirement is actually based on Sections 6001, 6011 AND (not OR) 6012(a). Section 6012(a) actually adds a second precondition for a requirement to file, narrowing, not broadening, that group:
"(a) General rule — Returns with respect to income taxes under subtitle A shall be made by the following:
"(1) (A) Every individual having for the taxable year gross income which
equals or exceeds the exemption amount . . ." (emphasis added)
Notably absent from that section is any requirement to keep records, so how can anyone who kept no records complete a return? Nor does this section make anyone subject to regulations, including those regulations that specify the form, manner and place for filing returns.
Section 6012(a) does not add any "filers" to those LIABLE for a tax, but rather actually excludes those who are liable but have gross income less than the standard exemption. In fact, section 6012 is listed in the index of most IRC publications as "exclusion from requirement to file".
In its response the IRS also adds another section, Section 6072(a), which simply provides that those required to file an income tax return must do so no later than April 15 of each year. That section imposes a duty to file on no one, but it is cited as such by the IRS.
Thus, the IRS has misrepresented the law in an effort to call the THM's conclusions "frivolous". It has said one thing when mandated by Congress to disclose the legal basis for its right to return information and the filing of a return, but when responding to the THM's contention, it limits its response to liable "taxpayers". The Form 1040 instruction book is issued to the general public, taxpayers and non-taxpayers alike, but by restricting their rebuttal to the THM's analysis of the law only to "taxpayers", the IRS bypasses the underlying basic precondition for a requirement to file an income tax return . . . liability for the tax.
Why? Because as clearly established above there is no statute imposing liability for the income tax on working Americans, an issue that we've already seen is admittedly not frivolous and not included on the IRS's official list of frivolous arguments.
When the IRS dodges, bobs and weaves, changing its story when challenged, speaking in terms of "taxpayer" as though that includes the general public but without establishing any liability on the part of the general public, much less working Americans, can one blame the THM for believing that their conclusions must be correct? Can one blame the THM for assigning little or no credibility to the contentions of the IRS?
Who Must File? Conclusion
The THM can find no law making the typical working American liable for the income tax, and, tax laws being strictly construed, concludes that the typical working American is not required by law to keep records, render statements or to comply with regulations, including those designating form and manner of filing returns, and, above all, that he is not required by law to file an income tax return. Is it unreasonable for those in the THM to believe that the law does not obligate them to file income tax returns? Could a reasonable man, examining the letter of the law and seeing the best the IRS has to offer in rebuttal as unfounded and even deceptive, reach a similar conclusion?
Whether one agrees or disagrees with the THM's conclusions it can hardly be said that those conclusions are without any authoritative support, and, seeing the authorities, both statutory and jurisprudential, upon which those beliefs are based, it is at the very least understandable that they could and do honestly and genuinely hold those beliefs. If those beliefs are genuinely held, correctly or incorrectly, then those in the THM are aware of no duty to file or pay income taxes, making their willful and knowing violation of such a duty an impossibility. They are innocent.
Some fun projects for "extra credit":
Project 1
Every employer knows that he is required to withhold income taxes his employees owe to the federal government and pay them in on a regular basis, right? The employer reports his withholding on forms using his Federal Employer's Identification Number ("FEIN" or "EIN"). Where does the employer get that number? By filing Form SS-4, of course. But how many of us have taken a close look at the form? Pull up the SS-4 and see what it says about withholding. Anything there about the typical working American? Who does it mention . . . who does it not mention? Hint: Look at line 15.
Project 2
Find the rule or regulation duly published in the Federal Register fixing the standard exemption as mandated by 26 U.S.C. § 151 and the Administrative Procedures Act.
Project 3
Find the rule or regulation duly published in the Federal Register fixing the tables of tax rates for 26 U.S.C. § 1(a)-(e) as mandated by 26 U.S.C. § 1(f) and the Administrative Procedures Act.
