WHO IS "LIABLE" FOR THE TAX?
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taxes are collected from those who are "liable" for the various taxes
imposed in the Internal Revenue Code. For example, 26 U.S.C. §
7601 commands that the Secretary of the Treasury "canvass" the
various internal revenue districts to located those "liable"
to pay any internal revenue tax:
7601. Canvass of districts for taxable persons and
The Secretary shall, to the extent he deems it
practicable, cause officers or employees of the Treasury
Department to proceed, from time to time, through each
internal revenue district and inquire after and concerning all
persons therein who may be liable
to pay any internal revenue tax, and all persons owning or
having the care and management of any objects with respect to
which any tax is imposed.
are assessed against a taxpayer so liable therefor, the Secretary must give notice
and demand for payment thereof to persons "liable" for the tax:
6303. Notice and demand for tax.
Where it is not otherwise provided by this title, the
Secretary shall, as soon as practicable, and within 60 days,
after the making of an assessment of a tax pursuant to section
6203, give notice to each person liable for the unpaid tax, stating the amount
and demanding payment thereof. Such notice shall be left at the
dwelling or usual place of business of such person, or shall be
sent by mail to such person's last known address.
authorized via 26 U.S.C. § 6321 are filed against persons "liable" for the tax:
6321. Lien for taxes.
If any person liable
to pay any tax neglects or refuses to pay the same after demand,
the amount (including any interest, additional amount, addition
to tax, or assessable penalty, together with any costs that may
accrue in addition thereto) shall be a lien in favor of the
United States upon all property and rights to property, whether
real or personal, belonging to such person.
Secretary is authorized to collect taxes from those identified
as "liable" for
6331. Levy and distraint.
If 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 (and such further sum as shall be
sufficient to cover the expenses of the levy) 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. Levy may be made upon the accrued salary or wages of any
officer, employee, or elected official, of the United States,
the District of Columbia, or any agency or instrumentality of
the United States or the District of Columbia, by serving a
notice of levy on the employer (as defined in section 3401(d))
of such officer, employee, or elected official. If the Secretary
makes a finding that the collection of such tax is in jeopardy,
notice and demand for immediate payment of such tax may be made
by the Secretary and, upon failure or refusal to pay such tax,
collection thereof by levy shall be lawful without regard to the
10-day period provided in this section.
Revenue Code imposes in subtitle C several different types of
employments taxes, and only one party is "liable" therefor: the employer. The
FICA tax is imposed in § 3101, and only the employer is "liable":
3102. Deduction of tax from wages.
imposed by section 3101 shall be collected by the employer of
the taxpayer, by deducting the amount of the tax from the wages
as and when paid. * * *
Indemnification of employer.
required so to deduct the tax shall be liable for the payment of such tax,
and shall be indemnified against the claims and demands of any
person for the amount of any such payment made by such employer.
Retirement Tax is imposed via § 3201, and it is the employer who
is liable therefor:
3202. Deduction of tax from compensation.
The taxes imposed by section 3201 shall be
collected by the employer of the taxpayer by deducting the
amount of the taxes from the compensation of the employee as and
when paid. * * *
Indemnification of employer
Every employer required under subsection (a) to deduct
the tax shall be liable
for the payment of such tax and shall not be liable to any
person for the amount of any such payment.
tax imposed via § 3402 that provides for wage withholding makes
the employer "liable"
3403. Liability for tax.
The employer shall be liable for the payment of the tax required to be
deducted and withheld under this chapter, and shall not be
liable to any person for the amount of any such payment.
And those who
provide pensions, etc, are considered employers who are "liable" for the deferred
wage/income payments they make:
3405. Special rules for pensions, annuities, and certain
other deferred income.
* * *
(1) In general
provided in paragraph (2), the payor of a designated
distribution (as defined in subsection (e)(1)) shall withhold,
and be liable for,
payment of the tax required to be withheld under this section.
And in certain
circumstances, certain third parties are "liable" for employment taxes:
3505. Liability of third parties paying or providing for
payment by third parties
For purposes of sections 3102, 3202, 3402, and 3403, if a
lender, surety, or other person, who is not an employer under
such sections with respect to an employee or group of employees,
pays wages directly to such an employee or group of employees,
employed by one or more employers, or to an agent on behalf of
such employee or employees, such lender, surety, or other person
shall be liable in
his own person and estate to the United States in a sum equal to
the taxes (together with interest) required to be deducted and
withheld from such wages by such employer.
liability where funds are supplied
If a lender, surety, or other person supplies funds to or
for the account of an employer for the specific purpose of
paying wages of the employees of such employer, with actual
notice or knowledge (within the meaning of section 6323(i)(1))
that such employer does not intend to or will not be able to
make timely payment or deposit of the amounts of tax required by
this subtitle to be deducted and withheld by such employer from
such wages, such lender, surety, or other person shall be liable in his own person
and estate to the United States in a sum equal to the taxes
(together with interest) which are not paid over to the United
States by such employer with respect to such wages.
made "liable" for a
tax via an express provision of the Internal Revenue Code is
and E of the Internal Revenue Code impose various excise taxes,
and excellent examples appear in these titles of sections of the
Code that impose taxes and make specific parties "liable" therefor. For
instance, the tax on tires is imposed via § 4071:
4071. Imposition of tax.
and rate of tax.
hereby imposed on tires of the type used on highway vehicles, if
wholly or in part made of rubber, sold by the manufacturer,
producer, or importer a tax at the following rates:
Those "liable" for this tax are
identified in the same section as follows:
(b) Special rule for
manufacturers who sell at retail.
regulations prescribed by the Secretary, if the manufacturer,
producer, or importer of any tire delivers such tire to a retail
store or retail outlet of such manufacturer, producer, or
importer, he shall be liable
for tax under subsection (a) in respect of such tire in
the same manner as if it had been sold at the time it was
delivered to such retail store or outlet. This subsection shall
not apply to an article in respect to which tax has been imposed
by subsection (a).
imposing the gambling tax also identifies who is "liable" for such tax:
4401. Imposition of tax.
There shall be
imposed on any wager authorized under the law of the State
in which accepted an excise tax equal to 0.25 percent of the
amount of such wager.
(c) Persons liable for tax.
who is engaged in the business of accepting wagers shall be liable for and shall pay
the tax under this subchapter on all wagers placed with him.
Each person who conducts any wagering pool or lottery shall be
liable for and shall pay the tax under this subchapter on
all wagers placed in such pool or lottery. Any person required
to register under section 4412 who receives wagers for or on
behalf of another person without having registered under section
4412 the name and place of residence of such other person shall
be liable for and
shall pay the tax under this subchapter on all such wagers
received by him.
connected to this tax on wagers is a tax on those receiving the
wagers as an occupation tax:
4411. Imposition of tax.
There shall be
imposed a special tax of $500 per year to be paid by each person
who is liable for
the tax imposed under section 4401 or who is engaged in
receiving wagers for or on behalf of any person so liable.
shall be applied by substituting "$50" for "$500" in the case of
(1) any person
whose liability for tax under section 4401 is determined
only under paragraph (1) of section 4401(a), and
(2) any person
who is engaged in receiving wagers only for or on behalf of
persons described in paragraph (1).
imposing a tax on crude oil also specifies who is "liable" for that tax:
4611. Imposition of tax.
hereby imposed a tax at the rate specified in subsection (c) on
(1) crude oil
received at a United States refinery, and
products entered into the United States for consumption, use, or
(d) Persons liable for tax.
(1) Crude oil
received at refinery
imposed by subsection (a)(1) shall be paid by the operator of
the United States refinery.
imposed by subsection (a)(2) shall be paid by the person
entering the product for consumption, use, or warehousing.
(3) Tax on
certain uses or exports
imposed by subsection (b) shall be paid by the person
using or exporting the crude oil, as the case may be.
A tax is
imposed on distilled spirits in § 5001:
5001. Imposition, rate, and attachment of tax.
(a) Rate of
hereby imposed on all distilled spirits produced in or imported
into the United States a tax at the rate of $13.50 on each
proof gallon and a proportionate tax at the like rate on
all fractional parts of a proof gallon.
Those who are
"liable" for this
tax are identified in § 5005:
5005. Persons liable
or importer of distilled spirits shall be liable for the taxes
imposed thereon by section 5001(a)(1).
The tax on
wines makes certain parties "liable":
5043. Collection of taxes on wines.
(a) Persons liable for payment.
The taxes on
wine provided for in this subpart shall be paid -
In the case of
wines removed from any bonded wine cellar, by the proprietor of
such bonded wine cellar; except that -
(A) in the
case of any transfer of wine in bond as authorized under the
provisions of section 5362(b), the liability for payment of the tax shall become
the liability of
the transferee from the time of removal of the wine from the
transferor's premises, and the transferor shall thereupon be
relieved of such liability;
(B) in the
case of any wine withdrawn by a person other than such
proprietor without payment of tax as authorized under the
provisions of section 5362(c), the liability for payment of the tax shall become
the liability of such person from the time of the removal of the
wine from the bonded wine cellar, and such proprietor shall
thereupon be relieved of such liability.
In the case of
foreign wines which are not transferred to a bonded wine cellar
free of tax under section 5364, by the importer thereof.
in the case of any wine produced, imported, received, removed,
or possessed otherwise than as authorized by law, by any person
producing, importing, receiving, removing, or possessing such
wine; and all such persons shall be jointly and severally liable for such tax with
each other as well as with any proprietor, transferee, or
importer who may be liable
for the tax under this subsection.
(b) Payment of
The taxes on
wines shall be paid in accordance with section 5061.
parties are made liable
for the beer tax:
5418. Beer imported in bulk.
Beer imported or brought into the United States in bulk
containers may, under such regulations as the Secretary may
prescribe, be withdrawn from customs custody and transferred in
such bulk containers to the premises of a brewery without
payment of the internal revenue tax imposed on such beer. The
proprietor of a brewery to which such beer is transferred shall
become liable for
the tax on the beer withdrawn from customs custody under this
section upon release of the beer from customs custody, and the
importer, or the person bringing such beer into the United
States, shall thereupon be relieved of the liability for such tax.
tax also makes a specific party liable for it:
5703. Liability for tax and method of payment.
(a) Liability for tax.
(1) Original liability.
manufacturer or importer of tobacco products and cigarette
papers and tubes shall be liable
for the taxes imposed thereon by section 5701.
Pursuant to the commands of the federal Privacy Act, the IRS
is required to give a notice (contained in the Privacy Act
Notice or Notice 609) of the various laws that require persons
to supply information to it. The IRS Privacy Act Notice
states: "Our legal right to ask for information is Internal
Revenue Code sections 6001, 6011 and 6012(a), and their
regulations. They say you must file a return or statement with
us for any tax you are LIABLE
for." To determine whether one must file a federal income tax
return, one thus only needs to study these 3 sections of the
The first section states as
6001. Notice or regulations requiring records, statements,
and special returns.
Every person liable for any tax
imposed by this title, or for the collection thereof, shall keep
such records, render such statements, make such returns, and
comply with such rules and regulations as the Secretary may from
time to time prescribe. Whenever in the judgment of the
Secretary it is necessary, he may require any person, by notice
served upon such person or by regulations, to make such returns,
render such statements, or keep such records, as the Secretary
deems sufficient to show whether or not such person is liable
for tax under this title.
section provides as follows:
6011. General requirement of return, statement, or list.
by regulations prescribed by the Secretary any person made liable for any tax
imposed by this title, or with respect to the collection
thereof, shall make a return or statement according to the forms
and regulations prescribed by the Secretary. Every person
required to make a return or statement shall include therein the
information required by such forms or regulations.
"general requirement" for making a tax return is that, first,
one must be liable for a tax. But WHO is LIABLE for the federal income tax? The
federal income tax is found in subtitle A of the Internal
Revenue Code and consists of sections 1 through 1563. You may
download any version of the entire Internal Revenue Code here.
Once downloaded, please search the Code (particularly the first
1563 sections) to determine who is "liable" for the federal income tax. The only
section of the Internal Revenue Code that makes anyone "liable" for the federal
income tax is as follows:
1461. Liability for withheld tax.
required to deduct and withhold any tax under this chapter is
hereby made liable
for such tax and is hereby indemnified against the claims and
demands of any person for the amount of any payments made in
accordance with the provisions of this chapter.
This party is
the withholding agent for nonresident aliens and foreign
corporations; see §
1441 and §
1442. Withholding agents may be individuals,
corporations, estates, trusts, political organizations,
homeowners associations, etc. These are the parties who are
required to make federal income tax returns pursuant to § 6012:
6012. Persons required to make returns of income.
(a) General rule.
Returns with respect
to income taxes under subtitle A shall be made by the following:
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,
(iii) who is a
surviving spouse (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,
(iv) who is entitled
to make a joint return and whose gross income, when combined
with the gross income of his spouse, is, for the taxable year,
less than the sum of twice the exemption amount plus the basic
standard deduction applicable to a joint return, but only if
such individual and his spouse, at the close of the taxable
year, had the same household as their home.
* * *
(2) Every corporation
subject to taxation under subtitle A;
(3) Every estate the
gross income of which for the taxable year is $600 or more;
(4) Every trust having
for the taxable year any taxable income, or having gross income
of $600 or over, regardless of the amount of taxable
(5) Every estate or
trust of which any beneficiary is a nonresident alien;
(6) Every political
organization (within the meaning of section 527(e)(1)), and
every fund treated under section 527(g) as if it constituted a
political organization, which has political organization taxable
income (within the meaning of section 527(c)(1)) for the
taxable year; and
(7) Every homeowners
association (within the meaning of section 528(c)(1))
which has homeowners association taxable income (within
the meaning of section 528(d)) for the taxable year.
(8) Every individual
who receives payments during the calendar year in which
the taxable year begins under section 3507 (relating to
advance payment of earned income credit).
(9) Every estate of an
individual under chapter 7 or 11 of title 11 of the United
States Code (relating to bankruptcy) the gross income of which
for the taxable year is not less than the sum of the exemption
amount plus the basic standard deduction under section
except that subject to
such conditions, limitations, and exceptions and under such
regulations as may be prescribed by the Secretary, nonresident
alien individuals subject to the tax imposed by section 871 and
foreign corporations subject to the tax imposed by section 881
may be exempted from the requirement of making returns under
(b) Returns made by
fiduciaries and receivers.
* * *
Bothke v. Fluor Engineers &
Constructors, 713 F.2d 1405, 1414 (9th Cir.
1983)(“Second, the taxpayer must be liable for the tax. Id. Tax
liability is a condition precedent to the demand. Merely
demanding payment, even repeatedly, does not cause liability.”).
Botta v. Scanlon, 288
F.2d 504, 508 (2nd Cir. 1961)(“However, a reasonable
construction of the taxing statutes does not include vesting any
tax official with absolute power of assessment against
individuals not specified in the statutes as persons liable for
the tax without an opportunity for judicial review of this
status before the appellation of ‘taxpayer’ is bestowed upon
them and their property is seized and sold.”).
See also Fine v. United States,
206 F.Supp. 520 (D. Colo. 1962), and Drake
United States, 355 F.Supp. 710 (E.D. Mo. 1973).