Section 1 of the Internal Revenue Code clearly imposes a taxable income tax on individuals, inheritances and trusts, as determined by the tables set forth in that section. In the United States, paying taxes is not voluntary. Rather, it's the way people file their own taxes. The tax code operates under a voluntary compliance system.
Some taxpayers have used the voluntary nature of the tax system to back up their claims that they don't have to pay taxes at all. However, it is not the payment of the tax itself that is voluntary. Voluntary taxation is a theory that states that taxation must be a voluntary act. According to the theory, people should have the option of paying taxes rather than having their government force them to pay taxes.
According to this theory, people would control how much they pay and where they spend it. The theory is part of objectivist politics and of many libertarian ideologies. Proponents of some studies say that people will donate to the government and pay voluntary taxes to support specific functions. There is no mention that filing an income tax return in and of itself is voluntary anywhere in the IRS Tax Code.
Reid says several times that the tax system is voluntary, but obviously the interviewer is right to point out that, through the income tax system, the government unintentionally receives money from taxpayers. Residents who failed to file tax returns or pay taxes were prosecuted and convicted of tax offenses. If you don't file a tax return, the IRS will file a replacement return based solely on the information you have, which means you probably won't receive the benefit of any deduction and end up paying more taxes than you should. So, when the IRS refers to voluntary compliance with income tax laws, it just means that (a) our tax system depends on the individual taxpayer making the initial determination of how much they owe and filing a return showing this amount (rather than the government doing it for each person) , and (b) most people fulfill this responsibility without the personal and individualized coercion imposed on them by the government.
If you've fallen behind on paying taxes due to a natural disaster, a recession in your business, or changes in tax laws, don't give up. While you may be able to get a deduction here or there that is in a gray area and can argue that you have complied with all applicable tax laws, the taxes you are legally required to pay are described in the IRC. In the United States, income tax is a statutory tax that, assuming certain requirements are met, must be paid. By generating income as a citizen, you consider them reliable to pay taxes on that income, since they voluntarily perform work or services for a paying entity.
So what does the IRS mean when it says it's based on “voluntary compliance”? As the IRS explains, the term refers to our system that allows taxpayers to initially determine the correct amount of taxes and complete the appropriate returns, rather than having the government determine taxes for them from the start.
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