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There are and have been various individuals and groups that question the legitimacy of United States federal income tax. One such group [1] argues that the 16th AmendmentAmendment XVI (the Sixteenth Amendment of the United States Constitution, authorizing income taxes in their present form, was ratified on February 3, 1913. It states: The Congress shall have power to lay and collect taxes on incomes, from whatever source to the United States ConstitutionLaw for the United States of America The Constitution of the United States is the supreme law of the United States of America and is the oldest written national constitution still in force. It was completed on September 17, 1787, with its adoption by the was not approved by the requisite number of States, and therefore never came into effect. The IRS maintains that the argument that the Sixteenth Amendment was "never ratified" has been adequately reviewed by the courts [2] and found to be a frivolous argument. In one case [3] a certain Mr. Miller relied upon the work of William Benson and "Red" Beckman called The Law That Never Was ( 1985). The Seventh Circuit Court of Appeals (Miller v. United States, 868 F.2d 236 ( 1989) found Mr. Miller and the book's arguments to be flawed and imposed sanctions for having advanced a "patently frivolous" argument. Mr. Miller was not represented by a lawyer. The penalties included a payment of $1,500 in attorneys' fees, double costs and another $1,500 in damages.
Another group claims the existing law demands income tax only from federal employees and residents of US territories. Their argument does not rely on nonpassage of the 16th Amendment, but does suggest it.[4] They have asked the IRS and other authorities to cite the laws requiring others to pay income tax. This group claims never to have received an answer. But a recent judge and jury were unsatisfied with the answers, too.[5][6][7]
A somewhat incidental claim of tax protesters is that the IRS is not a federal agency, under the terms of federal law. Some claim it is a Puerto Rican trust[8]. There is a former "Revenvuer" that holds the same position[9]. Once again, in the document noted in the preceding paragraph, the IRS states that this is not true, citing relevant case law such as Salman v. Dept. of Treasury, 899 F. Supp. 471 (D. Nevada, 1995).
The position of the IRS based upon legal precedents is that these and other arguments are frivolous and if adopted by taxpayers may subject them to penalties if they use such reasoning as the basis of their failure to file tax returns. As it was stated in the Arkansas District Court case of United States v. Rempel 87 A.F.T.R.2d (RIA) "It is apparent ...that the [defendants] have at least had access to some of the publications of tax protester organizations. The publications of these organizations have a bad habit of giving lots of advice without explaining the consequences which can flow from the assertion of totally discredited legal positions and/or meritless factual positions."
Other occasionally encountered claims from tax protesters include the notion that U.S. currency is valueless or unauthorized by the Constitution because it is fiat money untied to the gold standard. Others claim that wages are not income because labor is exchanged for them. All courts that have considered these positions have rejected them, and most have imposed sanctions on those who raise these as well.
The next largest tax is social security tax. This tax is 6.2% of an employees' income paid by the employer, and 6.2% paid by the employee. Self-employed people are responsible for both halves of the social security tax. This tax is paid only on the employee's first $87,000 of income, but that threshold increases every year, and has been increasing faster than inflation.
There is a medicare tax, 1.45% of the employee's income paid by the employer, and 1.45% by the employee. This is used to pay for medical care for qualifying persons, usually people over the age of 65.
Dividend and interest income is not subject to social security or medicare taxes.
The U.S. has an income tax to support unemployment insurance. This is 1.2% of the first $7,000, but coordinated with state unemployment agencies and taxes in such a way that most employees are not double taxed in states that have unemployment insurance.
The U.S. also has a tax to pay for retraining of displaced workers, but it is only 0.1% of the first $7,000 of income, and it is assessed only on employers.
Employers pay these taxes directly to federal banks, which use it to retire short-term treasury debt. For this reason, most employers maintain an account at a federal bank.
The U.S. also maintains federal excise taxes on gasoline and other fuels used by vehicles. At this time (???), they are $0.183 per gallon ($0.05/L) for gasoline. Higher profile excise taxes exist on distilled spirits, tobacco products, and some firearms.
The government tracks tax payment by an account number and payment date. For the IRS, the account number is a social security number (or tax ID number assigned by the IRS if the individual does not have a social security number), or for corporations, partnerships or other synthetic persons, an employer ID number.
For more information, including tax and report calendars, information about forms, filing addresses and other information, see IRS Publication 15, circular E, "Employer's Tax Guide", available for free from http://www.irs.gov/forms_pubs/pubs.html
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