Frivolous Arguments Misinterpretation of the Internal Revenue Code

Some taxpayers make inaccurate interpretations of the Internal Revenue Code, which do not sit well with the IRS and the courts. These are called frivolous arguments by the IRS, unfounded arguments that many have tried to prove correct, but failed. Prior to putting forth your case before the IRS or the court, know about these 4 arguments that are invariably dismissed as frivolous.

1. Taxpayer is not a citizen of the United States and thus is not subject to the federal income tax laws 

Some argue that they have rejected citizenship of the United States in favor of state citizenship. Therefore, they are not required to pay federal income tax. Some state that they are a free-born citizen of a state and thus were never a citizen of the United States. 

This frivolous argument has always been rejected by the courts. The IRS explains the law. The Fourteenth Amendment to the United States Constitution defines the basis for United States 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.’ The Fourteenth Amendment, therefore, establishes simultaneous state and federal citizenship.

2. The United States consists only of the District of Columbia, federal territories, and federal enclaves

Misreading the law, some people state that the United States consists only of the District of Columbia, federal territories, and federal enclaves (e.g., American Indian reservations, military bases, etc.) and does not include the sovereign states. Therefore, if a taxpayer doesn’t live within the United States, he or she is not bound by federal tax laws. 

The law says something else. According to the IRS, The Internal Revenue Code imposes a federal income tax upon all United States citizens and residents, not just those who reside in the District of Columbia, federal territories, and federal enclaves. The Supreme Court has ‘recognized that the sixteenth amendment authorizes a direct nonapportioned tax upon United States citizens throughout the nation, not just in federal enclaves.’

3. Taxpayer is not a person as defined by the Internal Revenue Code, thus is not subject to the federal income tax laws 

Toying with the interpretation of person in the Internet Revenue Code, some” maintain that they are not a person as defined by the Internal Revenue Code, and thus not subject to the federal income tax laws.

This argument has also been uniformly rejected. The IRS explains that the Internal Revenue Code clearly defines ‘person’ and sets forth which persons are subject to federal taxes. Section 7701(a)(14) defines ‘taxpayer’ as any person subject to any internal revenue tax and section 7701(a)(1) defines ‘person’ to include an individual, trust, estate, partnership, or corporation.

4. Only federal government employees are subject to federal income tax

Another frivolous argument that is repeated many times before the IRS and the courts is that the federal government can tax only employees of the federal government. This means that those working in the private sector do not need to pay federal income tax. 

The IRS corrects this misinterpretation: Section 3401(c) defines ‘employee’ and states that the term ‘includes an officer, employee or elected official of the United States . . .’ The word ‘includes’ is a term of enlargement, not of limitation. It makes federal employees and officials a part of the definition of ‘employee,’ which generally includes private citizens.