7

I've heard that while the 16th Amendment gave the U.S. Congress the authority to enact laws for the application of an income tax on US citizens, but I've also heard that there is currently no law on the books today that levies such a tax.

The last income tax enacted by Congress was the "Victory Tax Act of 1942", which was repealed in 1944.

Is this true? Is there an income tax related act of the US Congress that is enforce today?

What laws require a U.S. citizen (or resident, for tax purposes) to pay their income taxes, and what may be the consequences of not doing so?

  • 2
    I think this may be off-topic because it is about politics and the law, not personal finance. Consider politics.stackexchange.com – Chris W. Rea Jan 20 '15 at 3:47
  • 8
    @ChrisW.Rea This specific question should probably stay here. There are a lot of people who spread around this kind of dis-information as a matter of ideology. While they themselves are obviously crazy, people who might believe them are not necessarily. – littleadv Jan 20 '15 at 5:30
  • 1
    @littleadv I can see your point if we look at the question more along the lines of "Do I really need to pay the income tax I owe?" as opposed to an invitation to a lengthy discussion about the law's legitimacy. – Chris W. Rea Jan 20 '15 at 13:27
  • @littleadv Alright -- I'll go further and suggest that this question be our canonical question on the subject, at least with respect to the U.S. I've added a community wiki answer with pointers to other places on the Stack where this has been addressed at length. (I'm relieved I no longer possess a binding force-close vote, or I might've had to, uh, clean up my own mess. Been there, done that :) – Chris W. Rea Jan 20 '15 at 13:45
26

No, it is not true. That is one of the many "conspiracy theorists'" claims to not pay taxes, and is considered as frivolous (i.e.: punishable by very harsh penalties and criminal prosecution).

Specifically to your question, the current Federal income tax framework was laid down in 1986, with the Tax Reform Act of 1986. It is codified under the title 26 of the US Code. It is usually referred to as the "Internal Revenue Code", or IRC.

  • 1
    Do you know if anyone has challenged the legitimacy of taxing imputed income [e.g. saying that if someone lends money at too low an interest rate, they may be required to pay income tax on the interest they "should have" earned by charging a higher rate]? The Sixteenth Amendment allows taxation of income derived from any source, but can income which was never produced really be said to derive from any source other than the imagination of those wishing to tax it? – supercat Jan 20 '15 at 17:49
  • supercat: I don't have a citation, but common sense says that if anyone ever succeeded that would be aVERY well known fact, so... – keshlam Jan 20 '15 at 18:39
  • 1
    @supercat the imputed income provisions are there to prevent shifting of income, gift tax avoidance, and other things. I don't know if they were challenged all the way to SCOTUS, but I don't see any valid claim against them. Essentially, you're taxed on income you would have gotten had you not consciously decided to forgo it, which is in line with the constructive receipt doctrine. – littleadv Jan 21 '15 at 4:09
  • @littleadv: As I understand it, the tax rules do not merely presume that one could have gotten the income had one not decided to forgo it, but they asses tax even in some cases where a taxpayer could show that it would have been impossible or unprofitable to collect the income in question. Further, while I'm aware that one of the purposes of imputed income rules is to prevent efforts at evading tax-based social engineering, such social engineering is not in and of itself an enumerated power. I don't think the necessary and proper clause should--outside of political considerations--... – supercat Jan 21 '15 at 16:06
  • 1
    @supercat you're confused. You think this is a discussion forum. It is not. – littleadv Jan 21 '15 at 16:12
13

To supplement @littleadv's answer, I discovered that our friends at both Skeptics Stack Exchange and Politics Stack Exchange have also addressed this question — at least a few times that I could find.

Please refer to:

  1. Skeptics SE: Was the 16th Amendment (income tax) improperly ratified?

    ... with an accepted answer posted by Money's own @DJClayworth.

  2. Skeptics SE: Has income tax been found unconstitutional by a court?

    ... which also mentions the useful IRS page The Truth About Frivolous Tax Arguments. I also highlight the mention to this valuable FAQ mentioned by @Paul, who also participates here at Money, in a comment on the accepted answer:

    For more information on bad legal arguments, see Tax Protester Legal FAQPaul Jan 7 '14 at 6:29

  3. Politics SE: Constitutionality of the Income Tax.


A Friendly Reminder

I'll add that Money SE is best suited for practical questions relating to an individual's personal finances. While "find ways to [...], minimize taxes, [...]" is specifically mentioned as on-topic, a key word there is "minimize", not "evade". While questions here can overlap with legal or political issues, the focus at Money SE remains on the practical.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.