The Truth About Taxes

Tax Myths Debunked

When it comes to filing your taxes, pulling out a list of excuses will do just about nothing to help you dodge the task. Sure, Uncle Sam may be a fictitious character used to personify the U.S. and its government, but just because he’s not real doesn’t mean taxes aren’t. Obviously.

And even though you take great pride in being a citizen of your hip hometown of Portland, Ore., and dispute any correlation to the country as a whole, you are, indeed, still a U.S. citizen by law. So don’t try that card, either.

In fact, after years and years of hearing -- and enduring -- frivolous tax excuses from individuals hoping for an easy (and less expensive) way out, the Internal Revenue Service set out to separate fact from fiction. Take a look at these 10 common excuses the IRS receives, and find out what the agency really thinks of such drivel.

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The Truth About ... When it comes to filing your taxes, pulling out a list of excuses will do just about nothing to help you dodge the task. Sure, Uncle Sam may be a fictitious character used to personify the U.S. and its government, but just because he’s not real doesn’t mean taxes aren’t. Obviously.

And even though you take great pride in being a citizen of your hip hometown of Portland, Ore., and dispute any correlation to the country as a whole, you are, indeed, still a U.S. citizen by law. So don’t try that card, either.

In fact, after years and years of hearing -- and enduring -- frivolous tax excuses from individuals hoping for an easy (and less expensive) way out, the Internal Revenue Service set out to separate fact from fiction. Take a look at these 10 common excuses the IRS receives, and find out what the agency really thinks of such drivel.

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1. Myth: The fil... Indeed, some taxpayers assert that they are not required to file federal tax returns because the filing of a tax return is “voluntary.” Perhaps the IRS is to blame for the confusion; the agency, after all, tells taxpayers in the Form 1040 instruction book that the filing of a tax return is, well, voluntary.

The Truth/Law: The word “voluntary,” as used in IRS publications, refers to our system of allowing taxpayers initially to determine the correct amount of tax and complete the appropriate returns, says the IRS, rather than having the government determine tax for them from the outset. In other words, taxpayers must work on their individual return or hire an accountant to do so. They certainly can’t opt out.

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2. Myth: Taxpaye... Some taxpayers file a return that reports no income and no tax liability (a “zero return”) even though they have taxable income. These individuals usually attach to the zero return a From W-2 that reports income and tax withholding.

The Truth/Law: There is no authority that permits a taxpayer that has taxable income to report a zero return, and courts have repeatedly penalized taxpayers for making the frivolous argument.

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3. Myth: The IRS... Proponents of this argument believe the IRS is obligated to prepare and sign a return for those who neglect to. In the same vein and similar to other excuses, they believe individuals themselves are not required to file a return.

The Truth/Law:The IRS is in no way required to prepare or sign under penalties of perjury tax returns for individual taxpayers. Taxpayers are not excused from civil penalties or criminal liability for failure to file.

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4. Myth: Only fo... Some individuals argue that the federal income taxes are excise taxes imposed only on nonresident aliens and foreign corporations for the privilege of receiving income from sources within the U.S.

The Truth/Law: According to the IRS, for federal tax purposes, “gross income” means all income from whatever source derived and includes compensation for services.

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5. Myth: Taxpaye... Some individuals argue that they have “rejected citizenship in the United States in favor of state citizenship” and therefore, they are relieved of their federal income-tax obligations, explains the IRS. Another variation of this argument is that the individual is a free born citizen of a particular state and thus was never a citizen of the U.S.

The Truth/Law: The Fourteenth Amendment to the U.S. Constitution defines the basis for U.S. citizenship, stating that “[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” This means that if you live in the U.S., you are a citizen and therefore a taxpayer.

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6. Myth: The Int... Some argue that the IRS is a private corporation because it was not created by positive law, and therefore, does not have authority to enforce the Internal Revenue Code.

The Truth/Law: There is a host of constitutional and statutory authority establishing that the IRS is an agency of the U.S.

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7. Myth: Taxpaye... Some individuals believe they can file claims for refund of the Social Security taxes paid during their lifetime, on the basis that they sought to waive all rights to their Social Security benefits.

The Truth/Law: There is no provision in the Internal Revenue Code, or any other provision of law, which allows for a refund of Social Security taxes paid as a result of the reasons stated above.

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8. Myth: Taxpaye... Some individuals think the fuel credit is applicable to them, even though they are not part of an “off-highway” business.

The Truth/Law: Section 6421(a) allows a tax credit for gasoline purchased and used in off-highway business, but the circumstances that the credit can be used for are specific and limited. Off-highway business is the use of fuel in a trade or business or in an income-producing activity… other than as a fuel in a vehicle registered for use on public highways.

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9. Myth: The Tax... These individuals believe they are excused from any legal recourse coming for the Tax Court, because they do not realize the court’s significance.

The Truth/Law: The U.S. Tax Court is a federal court of record established by Congress under Article I of the U.S. Constitution. Congress created the Tax Court to provide a judicial forum in which affected persons could dispute tax deficiencies prior to payment of the disputed amount, according to the IRS.

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10. Myth: Revenu... Surprisingly, some taxpayers undermine revenue officers’ authority when enforcing the consequences of tax neglect.

The Truth/Law: Section 6331(a) explains: “[i]f any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax ... by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax.”

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What You Didn't ... There's more to the IRS than what meets the eye. Click here to get the truth.