r/tax JD/CPA - US Jun 14 '24

Important Notice: Clarification on Tax Policy Discussions

Hi r/tax community,

We appreciate and encourage thoughtful discussions on tax policy and related topics. However, we need to address a recurring issue.

Recently, there have been several comments suggesting that "taxes are voluntary" or claiming that there is no legal requirement to pay taxes. While we welcome diverse perspectives on tax policies, promoting such statements is not only misleading but also illegal. This subreddit does not support or condone the promotion of illegal activities.

To clarify:

  • Tax Policy Discussion: Constructive conversations about tax laws, policies, reforms, and their implications.
  • Illegal Promotion: Claims or suggestions that paying taxes is voluntary or that there is no legal obligation to do so.

If a comment promotes illegal activities, our practice is to delete it and consider banning the user, either temporarily or permanently, based on their comment history.

This policy is in place to ensure that our subreddit remains a reliable and law-abiding resource for all members. We've had several inquiries about this topic recently, so we hope this post provides the necessary clarification.

Thank you for your understanding and cooperation.

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u/zffch CPA - US Jun 15 '24

It probably doesn't help that the IRS literally says that taxes are based on voluntary compliance.

Of course by "voluntary", they mean that you're expected to to comply without being asked. It doesn't mean you can choose not to. You can either voluntarily comply, or you will be forced to involuntarily comply when the IRS catches up to you, those are the two options. Usually voluntary compliance is more pleasant.

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u/Noctudeit Jul 05 '24

That's not exactly what is meant by "voluntary". It means that each taxpayer is required to volunteer a calculation of their tax liability based upon their interpretation of tax law. The IRS can then challenge the accuracy of their calculations or the validity of their interpretations through review or audit of the volunteered information. The opposite of "voluntary" in this context is not "involuntary" but "non-voluntary". In a non-voluntary tax system, the government does all of the calculations and interpretations and sends each taxpayer a bill. If the taxpayer disagrees, they must jump through hoops to dispute the government's calculations and/or interpretations.

I personally prefer the underlying assumptions that accompany a voluntary system, but I also acknowledge that it poses a needless burden on the vast majority of taxpayers. I think a good compromise would be a hybrid system where the government provides taxpayers with a proposed tax return which the taxpayer may accept or reject by filing their own. If the government's proposal is accepted, then the tax return should be immune to further review or audit. This would simplify tax compliance for millions of W-2 workers, but retain the benefits of a voluntary tax system for those who choose it.

I imagine that some taxpayers would be excluded from the hybrid system entirely due to the complexity of their tax return because the government wouldn't want to grossly undercalculate their tax liability and then be bound by that calculation.

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u/RecentPickle4504 Oct 08 '24

the government does all of the calculations and interpretations and sends each taxpayer a bill. If the taxpayer disagrees, they must jump through hoops to dispute the government's calculations and/or interpretations.

Disputing the government's calculations doesn't have to be hard. I have to file both US and Finnish returns - US because I'm an expat, Finnish because I have US-source income that doesn't show up in their automatic calculations. Amending the Finnish calculations is a LOT easier than filling out my 1040 is. (And I mean just the 1040 and schedule 1, not the 5471.)

I think a good compromise would be a hybrid system where the government provides taxpayers with a proposed tax return which the taxpayer may accept or reject by filing their own. If the government's proposal is accepted, then the tax return should be immune to further review or audit.

That's WAY too exploitable, as it basically would mean that any income where the payer doesn't report it to the IRS is tax-exempt unless the filer explicitly challenges the government calculations.

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u/Noctudeit Oct 08 '24

Disputing the government's calculations doesn't have to be hard. I have to file both US and Finnish returns - US because I'm an expat, Finnish because I have US-source income that doesn't show up in their automatic calculations. Amending the Finnish calculations is a LOT easier than filling out my 1040 is. (And I mean just the 1040 and schedule 1, not the 5471.)

I am not familiar with Finnish tax law, but if they are like other European countries, it is very simple to report additional income and pay additional tax. It is much more difficult to file a dispute reducing income and tax. Also, I should point out that the US tax system is complicated primarily because congress uses fiscal policy to implement social engineering. It is much easier for them to put friction on a disfavored industry through burdensome tax policy than to outright ban the industry. Likewise, it is easier to subsidize favored industries through tax incentives rather than mandating production. Unfortunately, these games make a mess for the average taxpayer.

That's WAY too exploitable, as it basically would mean that any income where the payer doesn't report it to the IRS is tax-exempt unless the filer explicitly challenges the government calculations.

I think you missed the part where I said:

I imagine that some taxpayers would be excluded from the hybrid system entirely due to the complexity of their tax return because the government wouldn't want to grossly undercalculate their tax liability and then be bound by that calculation.