IS TAX WITHHOLDING REALLY VOLUNTARY?

The 60 Minutes story that you were part of, Joe, one of the things, well, the main thing that it was really looking at was the withholding of taxes by employers. And so, you know, you've spoken about how when you file a tax return, you're creating an obligation, right? You're creating a contract, a legal agreement with the IRS. But what about when you're just working for somebody, if your employer is withholding taxes, is that the equivalent of creating a contract? And what if you're like a 1099 employee where you're not, there's no withholding of taxes, but you now have an obligation. Do you now have an obligation then to file taxes? I mean, how do these things square up with what you know? Well, the critical junctures right at the beginning for a W-2 worker, and that is when they're asked to fill out a W-4 form. And the W-4 form is what's called a voluntary withholding certificate. And so by the employer, the business owner giving you that form, they're basically saying, okay, here, you know, fill out this form to tell us how much to withhold from your paycheck. Once the withholding occurs, the business owner is required to pay 15.3% like Social Security and Medicare to the government. But the business owner collects one half of that, 7.65% from your paycheck. Then the business owner takes another 7.65% out of their own profit, puts it together to make 15.3% and sends that off to the government. And by the way, when the employer withholds the money from your paycheck, he becomes, she becomes liable to pay that money over to the government. There's no question about that. Once it's withheld, the employer has a requirement by law to forward it to the government. It's basically what they call a trust fund situation. Sure, because you've now withheld that money on behalf of the IRS. Therefore, it's not yours to keep. You now owe it to the IRS. Right. But the, so that, but that an original juncture, the original, you know, why in the road is when you're given the W-4. Now it's called a voluntary withholding agreement for a reason, because it's supposed to be voluntary. Yeah. But if you tell, you know, Google or Apple or, you know, wherever you're going to work, I don't want to fill that out. I don't want to volunteer. They may decide they don't want to hire you even though, you know, and then you're left, well, I'd have to sue them for discrimination. Or that's one of the reasons that I'm not, you know, really like pushing people because there's an apparatus. Laura, as you recognized, you know, earlier in the show, elsewhere in the show that there's a big web that's grown up around this entire process. But just to at least try to explain the way it works, it's that W-4 where you are volunteering to have money taken out of your paycheck. And then that's what authorizes the employer to do so. If you do not volunteer, if a business owner takes money out of your paycheck without your permission, that's called theft. What about a W-2? If you fill out a W-2, are you now making a contract with the IRS? Are you now obligated? Well, the W-4 for that initial that you fill out to get them to withhold, that is basically an agreement between you and the employer. It's an IRS form, but it's not between you and the IRS. It's between you and the place where you work. Then the place where you work, the business owner has like a separate contract with the IRS. And that's where they fill out payroll tax returns and pay over the money that they withheld from your check, plus the money that they have to match. You know, the business owner has to match. Now, a 1099 situation where somebody works as a contractor is somewhat different. I should point out, whether it's 1099 or W-2, the IRS gets a copy. You know, they get a copy. You get a copy, you know, millions of Americans get a W-2 in the mail, like in January after the year is over. Well, one copy goes to you, but another copy goes to the IRS. So even if you don't tell them, the IRS, how much you made, they're going to know. 1099 is the same kind of a situation. The copy goes to you that, hey, we paid you, you know, 30 grand during the year. We paid you 46 grand during the year. But a copy of that 1099 also goes to the IRS. So if you don't tell the IRS on a tax return that you earned that money from that payer, the IRS is going to know anyway. The thing about the 1099, as just another example and adjunct to the belief or the truth, you know, the truth that the income tax is a scam, is that 1099s are really limited to payments relating to an international situation, non-resident aliens. You know, hundreds of millions of 1099s are filed every year with the IRS. But in my view, based on the evidence, the vast majority of them are not required by law. They're basically just sent because the business owner wants to just get the monkey off their back.