Internal Revenue Code Citations
Requiring Payment of Income Tax

(Code excerpts, provided by CCH — Standard Federal Tax Reports, as of 1995)

Note: Internal Revenue regulations governing practices of the IRS agents are created by the IRS itself. But the Internal Revenue Code is different; it is a law of the federal government — passed by Congress, like any other federal law. Anyone who says that there is no law requiring the payment of income tax is ignoring the fact that the Internal Revenue Code is a law passed by Congress.

It is also incorrect to believe that the income tax code applies only to selected people or to selected geographical areas of the United States — or that income isn't defined in federal law. All these topics are covered in the Internal Revenue Code, a federal law passed by Congress and amended nearly every year.

You might decide to refuse to pay tax as a protest; that's your decision. But if you refuse to file or pay because you believe there is no law requiring you to do so, you're sadly mistaken.

What follows are relevant passages from the Internal Revenue Code spelling out who must pay, how income is defined, what must be paid, and what the penalties are for failure to do so.

Who Must Pay Income Tax

[Ά 36442] PERSONS REQUIRED TO MAKE RETURNS OF INCOME

Sec. 6012 [1986 Code].

(a) GENERAL RULE. — Returns with respect to income taxes under subtitle A shall be made by the following:

(I)(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount, except that a return shall not be required of an individual —

(i) who is not married (determined by applying section 7703), is not a surviving spouse (as defined in section 2(a)), is not a head of a household (as defined in section 2(b)), and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual,

(ii) who is a head of a household (as so defined) and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual, . . .

What Is Income?

[Ά 5502] GROSS INCOME DEFINED

Sec. 61 [1986 Code].

(a) GENERAL DEFINITION. — Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;

(2) Gross income derived from business;

(3) Gains derived from dealings in property;

(4) Interest;

(5) Rents;

(6) Royalties;

(7) Dividends;

(8) Alimony and separate maintenance payments;

(9) Annuities;

(10) Income from life insurance and endowment contracts;

(11) Pensions;

(12) Income from discharge of indebtedness;

(13) Distributive share of partnership gross income;

(14) Income in respect of a decedent; and

(15) Income from an interest in an estate or trust.

(b) CROSS REFERENCES. —

For items specifically included in gross income, see part II (sec. 71 and following).

For items specifically excluded from gross income, see part III (sec. 101 and following).

.01 Amended by P.L. 98-369.

.10 Committee Reports on P.L. 98-369 (Deficit Reduction Act of 1984) are at 1984-3 CB 420.

.20 Committee Reports on 1954 Code Sec. 61 as originally enacted were reproduced at 571 CCH Ά 601.20.

Regulations

[Ά5503] § 1.61-1. Gross income. —

(a) General definition. Gross income means all income from whatever source derived, unless excluded by law. Gross income includes income realized in any form, whether in money, property, or services. Income may be realized, therefore, in the form of services, meals, accommodations, stock, or other property, as well as in cash. Section 61 lists the more common items of gross income for purposes of illustration. For purposes of further illustration, § 1.61-14 mentions several miscellaneous items of gross income not listed specifically in section 61. Gross income, however, is not limited to the items so enumerated.

(b) Cross references. Cross references to other provisions of the Code are to be found throughout the regulations under section 61. The purpose of these cross references is to direct attention to the more common items which are included in or excluded from gross income entirely, or treated in some special manner. To the extent that another section of the Code or of the regulations there under, provides specific treatment for any item of income, such other provision shall apply notwithstanding section 61 and the regulations there under. The cross references do not cover all possible items. . . . 

(a) IN GENERAL. — Except as provided in subsection (b), for purposes of this subtitle, the term "taxable income" means gross income minus the deductions allowed by this chapter (other than the standard deduction).

(b) INDIVIDUALS WHO DO NOT ITEMIZE THEIR DEDUCTIONS. — In the case of an individual who does not elect to itemize his deductions for the taxable year, for purposes of this subtitle, the term "taxable income" means adjusted gross income, minus —

(1) the standard deduction, and

(2) the deduction for personal exemptions provided in section 151.

(c) STANDARD DEDUCTION. — For purposes of this subtitle —

(1) IN GENERAL.-Except as otherwise provided in this subsection, the term "standard deduction" means the sum of —

(A) the basic standard deduction, and

(B) the additional standard deduction.

(2) BASIC STANDARD DEDUCTION. — For purposes of paragraph (1), the basic standard deduction is —

(A) $5,000 in the case of —

(i) a joint return, or

(ii) a surviving spouse (as defined in section 2(a)),

(B) $4,400 in the case of a head of household (as defined in section 2(b)),

(C) $3,000 in the case of an individual who is not married and who is not a surviving spouse or head of household, or

(D) $2,500 in the case of a married individual filing a separate return.

(3) ADDITIONAL STANDARD DEDUCTION FOR AGED AND BLIND. — For purposes of paragraph (1), the additional standard deduction is the sum of each additional amount to which the taxpayer is entitled under subsection (f).

(4) ADJUSTMENTS FOR INFLATION. — In the case of any taxable year beginning in a calendar year after 1988, each dollar amount contained in paragraph (2) or (5)(A) or subsection (f) shall be increased by an amount equal to —

(A) such dollar amount, multiplied by

(B) the cost-of-living adjustment determined under section l(f)(3) for the calendar year in which the taxable year begins, by substituting "calendar year 1987" for "calendar year 1992" in subparagraph (B) thereof.

(5) LIMITATION ON BASIC STANDARD DEDUCTION IN THE CASE OF CERTAIN DEPENDENTS. — In the case of an individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, the basic standard deduction applicable to such individual for such individual’s taxable year shall not exceed the greater of — . . . 

Adjusted Gross Income

[Ά 6002] ADJUSTED GROSS INCOME

ADJUSTED GROSS INCOME DEFINED

Sec. 62 [1986 Code].

(a) GENERAL RULE.-For purposes of this subtitle, the term "adjusted gross income" means in the case of an individual, gross income minus the following deductions:

(1) TRADE AND BUSINESS DEDUCTIONS. — The deductions allowed by this chapter (other than by part VII of this subchapter) which are attributable to a trade or business carried on by the taxpayer, if such trade or business does not consist of the performance of services by the taxpayer as an employee.

(2) CERTAIN TRADE AND BUSINESS DEDUCTIONS OF EMPLOYEES. —

(A) REIMBURSED EXPENSES OF EMPLOYEES. — The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer. The fact that the reimbursement may be provided by a third party shall not be determinative of whether or not the preceding sentence applies.

(B) CERTAIN EXPENSES OF PERFORMING ARTISTS. — The deductions allowed by section 162 which consist of expenses paid or incurred by a qualified performing artist in connection with the performances by him of services in the performing arts as an employee.

(3) LOSSES FROM SALE OR EXCHANGE OF PROPERTY. — The deductions allowed by part VI (sec. 161 and following) as losses from the sale or exchange of property.

(4) DEDUCTIONS ATTRIBUTABLE TO RENTS AND ROYALTIES. — The deductions allowed by part VI (sec. 161 and following), by section 212 (relating to expenses for production of income), and by section 611 (relating to depletion) which are attributable to property held for the production of rents or royalties.

(5) CERTAIN DEDUCTIONS OF LIFE TENANTS AND INCOME BENEFICIARIES OF PROPERTY. — In the case of a life tenant of property, or an income beneficiary of property held in trust, or an heir, legatee, or devisee of an estate, the deduction for depreciation allowed by section 167 and the deduction allowed by section 611.

(6) PENSION, PROFIT-SHARING AND ANNUITY PLANS OF SELF-EMPLOYED INDIVIDUALS. — In the case of an individual who is an employee within the meaning of section 401(c)(l), the deduction allowed by section 404.

(7) RETIREMENT SAVINGS. — The deduction allowed by section 219 (relating to deduction for certain retirement savings).

(8) CERTAIN PORTION OF LUMP-SUM DISTRIBUTIONS FROM PENSION PLANS TAXED UNDER SECTION 402(d). — The deduction allowed by section 402(d)(3).

(9) PENALTIES FORFEITED BECAUSE OF PREMATURE WITHDRAWAL OF FUNDS FROM TIME SAVINGS ACCOUNTS OR DEPOSITS. — The deductions allowed by section 165 for losses incurred in any transaction entered into for profit, though not connected with a trade or business to the extent that such losses include amounts forfeited to a bank, mutual savings bank, savings and loan association, building and loan association, cooperative bank or homestead association as a penalty for premature withdrawal of funds from a time savings account, certificate of deposit, or similar class of deposit.

(10) ALIMONY. — The deduction allowed by section 215.

(11) REFORESTATION EXPENSES. — The deduction allowed by section 194.

(12) CERTAIN REQUIRED REPAYMENTS OF SUPPLEMENTAL UNEMPLOYMENT COMPENSATION BENEFITS. — The deduction allowed by section 165 for the repayment to a trust described in paragraph (9) or (17) of section 501(c) of supplemental unemployment compensation benefits received from such trust if such repayment is required because of the receipt of trade readjustment allowances under section 231 or 232 of the Trade Act of 1974 (19 U.S.C. 2291 and 2292).

(13) JURY DUTY PAY REMITTED TO EMPLOYER. — Any deduction allowable under this chapter by reason of an individual remitting any portion of any jury pay to such individual’s employer in exchange for payment by the employer of compensation for the period such individual was performing jury duty  . . . 

Tax Rates Imposed

[Ά3160] TAX IMPOSED [ON INDIVIDUALS]

Note: The rates below were those in effect before the recent tax cut.

Sec. 1 [1986 Code].

(a) MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES. — There is hereby imposed on the taxable income of —

(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and

(2) every surviving spouse (as defined in section 2(a)),

a tax determined in accordance with the following table:

If taxable income is:

The tax is:

Not over $36,900

15% of taxable income.

Over $36,900 but not over $89,150

$5,535, plus 28% of the excess over $36,900.

Over $89,150 but not over $140,000

$20,165, plus 31% of the excess over $89,150.

Over $140,000 but not over $250,000

$35,928.50, plus 36% of the excess over $140,000.

Over $250,000

$75,528.50, plus 39.6% of the excess over $250,000.

(b) HEADS OF HOUSEHOLDS. — There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table:

If taxable income is:

The tax is:

Not over $29,600

15% of taxable income.

Over $29,600 but not over $76,400

$4,440, plus 28% of the excess over $29,600.

Over $76,400 but not over $127,500

$17,544, plus 31% of the excess over $76,400.

Over $127,500 but not over $250,000

$33,385, plus 36% of the excess over $127,500.

Over $250,000

$77,485, plus 39.6% of the excess over $250,000.

(C) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS). — There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table:

If taxable income is:

The tax is:

Not over $22,100

15% of taxable income.

Over $22,100 but not over $53,500

$3,315, plus 28% of the excess over $22,100.

Over $53,500 but not over $115,000

$12,107, plus 31% of the excess over $53,500.

Over $115,000 but not over $250,000

$31,172, plus 36% of the excess over $115,000.

Over $250,000

$79,772, plus 39.6% of the excess over $250,000.

(d) MARRIED INDIVIDUALS FILING SEPARATE RETURNS. — There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse under section 6013, a tax determined in accordance with the following table:

If taxable income is:

The tax is:

Not over $18,450

15% of taxable income.

Over $18,450 but not over $44,575

$2,767.50, plus 28% of the excess over $18,450.

Over $44,575 but not over $70,000

$10,082.50, plus 31 % of the excess over $44,575.

Over $70,000 but not over $125,000

$17,964.25, plus 36% of the excess over $70,000.

Over $125,000

$37,764.25, plus 39.6% of the excess over $125,000.

(e) ESTATES AND TRUSTS. — There is hereby imposed on the taxable income of-

(1) every estate, and

(2) every trust,

taxable under this subsection a tax determined in accordance with the following table:

If taxable income is:

The tax is:

Not over $1,500

15% of taxable income.

Over $1,500 but not over $3,500

$225, plus 28% of the excess over $1,500.

Over $3,500 but not over $5,500

$785, plus 31% of the excess over $3,500.

Over $5,500 but not over $7,500

$1,405, plus 36% of the excess over $5,500.

Over $7,500

$2,125, plus 39.6% of the excess over $7,500.

Penalties for Nonpayment

40,370] FAILURE TO FILE TAX RETURN OR TO PAY TAX

Sec. 6651 [1986 Code).

(a) ADDITION TO THE TAX. — In case of failure —

(1) to file any return required under authority of subchapter A of chapter 61 (other than part III thereof), subchapter A of chapter 51 (relating to distilled spirits, wines, and beer), or of subchapter A of chapter 52 (relating to tobacco, cigars, cigarettes, and cigarette papers and tubes), or of subchapter A of chapter 53 (relating to machine guns and certain other firearms), on the date prescribed therefore (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional. month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate;

(2) to pay the amount shown as tax on any return specified in paragraph (1) on or before the date prescribed for payment of such tax .(determined with regard to any extension of time for payment), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount shown as tax on such return 0.5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 0.5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate; or

(3) to pay any amount in respect of any tax required to be shown on a return specified in paragraph (1) which is not so shown (including an assessment made pursuant to section 6213(b)) within 10 days of the date of the notice and demand therefore, unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount of tax stated in such notice and demand 0.5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 0.5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate.

In the case of a failure to file a return of tax imposed by chapter 1 within 60 days of the date prescribed for filing of such return (determined with regard to any extensions of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, the addition to tax under paragraph (1) shall not be less than the lesser of $100 or 100 percent of the amount required to be shown as tax on such return.

(b) PENALTY IMPOSED ON NET AMOUNT DUE. — For purposes of —

(1) subsection (a)(1), the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed on the return,

(2) subsection (a)(2), the amount of tax shown on the return shall, for purposes of computing the addition for any month, be reduced by the amount of any part of the tax which is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed on the return, and

(3) subsection (a)(3), the amount of tax stated in the notice and demand shall, for the purpose of computing the addition for any month, be reduced by the amount of any part of the tax which is paid before the beginning of such month. . . . 

[Ά 42,015] WILLFUL FAILURE TO FILE RETURN, SUPPLY INFORMATION, OR PAY TAX

Sec. 7203 [1986 Code). Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution. In the case of any person with respect to whom there is a failure to pay any estimated tax, this section shall not apply to such person with respect to such failure if there is no addition to tax under section 6654 or 6655 with respect to such failure. . . .