Income Tax Myths
"The income tax is voluntary—even the IRS says so!"
As is demonstrated here, the income tax statutes clearly require the payment of income taxes. There is nothing voluntary about it.
It is true that the IRS itself frequently states that it relies on the “voluntary compliance” of taxpayers. But anyone who relies on that to say that the income tax is voluntary is confusing two different things: the legal duty to pay the tax and the method of enforcing that duty relied upon by the IRS.
The duty to pay the tax is mandatory. It rests on the sections of the tax statutes explained in detail here. Those statutes require the payment of taxes and do not give the taxpayer an option in the matter.
So what does the IRS mean when it says it relies on “voluntary compliance”? As the IRS explains, the term "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."
In other words, the phrase "voluntary compliance" refers to the primary method by which the government enforces the (mandatory) duty to pay taxes. The IRS doesn't compute your tax. It doesn't tell you what you owe. Instead, you compute your own tax and file a return showing what you think you owe. For most people, that's the whole process.
America is a huge country and there are hundreds of millions of people who have a duty to pay taxes. The IRS can’t follow each of us around personally and force us to pay. The system can function only if most people comply with their duty to pay without individualized compulsion. If everyone in the country simultaneously stopped complying with the tax laws, the IRS would be helpless. It doesn’t have the resources to bring 200 million tax prosecutions. So the primary method of tax enforcement used in this country is the fact that most people routinely comply with their mandatory duty to pay their taxes.
So when the IRS refers to "voluntary compliance" with the income tax laws, it only means that (a) our tax system relies on the individual taxpayer to make the initial determination of how much he or she owes and to file a return showing this amount (as opposed to having the government do this for each person), and (b) most people fulfill this responsibility without personal, individualized compulsion brought against them by the government. That's what the IRS calls "voluntary."
In all honesty, the use of the term "voluntary" in this context is confusing. The IRS bears some of the responsibility for the confusion caused by its own use of this misleading term. Taxpayers are not "volunteering" to pay taxes. The payment is "voluntary" only in a Pickwickian sense. The taxpayer pays in order to avoid the civil and criminal penalties that would result from not paying. This contradicts the usual sense of the word "voluntary," of which a dictionary definition would be "acting or done of one's own free will without valuable consideration or legal obligation." Presumably the IRS and other government officials use the term "voluntary compliance" because it makes the tax system sound nice, but it's not an accurate description. A better term might be "routine compliance."
The use of the term "voluntary" can lead to almost comical denials of the basic nature of the tax system, as in this interview by Senate Majority Leader Harry Reid. Reid says several times that the tax system is "voluntary," but obviously the interviewer is correct to point out that, through the income tax system, the government involuntarily takes money from taxpayers.
So when the IRS or another government official refers to the "voluntary" nature of the tax system, it is important to understand the term only in the sense intended. In saying that it relies on "voluntary compliance" with the duty to pay taxes, the IRS just means "most taxpayers pay without our having to take legal action against them individually."
In any event, the duty to pay is mandatory. If the primary method of enforcement of that duty (so-called "voluntary compliance") fails for a particular person, the government hauls out the secondary method of enforcement: a tax prosecution. It can go after the nonpayer in a civil action, or seize assets of the nonpayer, or bring a criminal case that can land the nonpayer in prison.