The truth and nothing but the truth.greenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
So, you want to know the truth about America's tax laws and income tax system. This document contains the absolute truth about the tax system. A truth that our government prays you will never learn, or even become aware of. The truth is; United States citizens are not subject, under the letter of the law, to the payment of income taxes on domestic income, and are not required by law to file a Form 1040 for the purpose of reporting, or paying the income tax on, their own domestic income. The truth is the IRS has been a fraudulent and illegal operation for over 60 years. The truth is the IRS routinely violates the Law, the Regulations and the United States Constitution. The IRS is an operation that is more representative of the Gestapo than the American Constitution, routinely trampling the rights of innocent citizens. The IRS is the most un-American agency in the country today.
The truth is that America's tax system is based on voluntary compliance and self assessment, and that's right from the IRS itself, which we'll see later. But what does that actually mean, and why do they say that? "Voluntary compliance and self assessment" Did you know that you "comply voluntarily" ?
You see in America, under the law, the citizens are free, and FREE means not taxed, except when done lawfully. If you don't believe me, let's look and see what the tax laws actually say. Before we begin, I would just like to point out that I am not trying to tell anyone what they personally should do in the future. I'm simply going to show you what the law actually says about income taxes, how those laws are supposed to be applied, and then given what the law actually does say, what it is possible to legally do under those laws.
The Constitution of the united States of America, the Supreme Law of the Land, establishes a limited federal government in America, representative of WE THE PEOPLE. Wherein the Federal government is forever bound as the SERVANT of the PEOPLE, never to become their master. In this context, "Limited" means "bound by law"! The IRS has turned this relationship upside down, effectively enslaving the People to the existing political system and parties, denying the People their FREE CHOICE ,and effectively creating a political system where it is virtually impossible to object to the activities of our supposedly representative government.
Most Americans fear the IRS out of ignorance of the law. This information has been assembled in an effort to help all American citizens overcome their own unfounded, hysterical fears of the IRS by making them knowledgeable about the law imposing income taxes, and how those laws affect you, the American citizen.
At the end of this document there is an e-mail source, in order for you to obtain practical information on what you can do to stop paying taxes for which you are not lawfully obligated.
THE CODE HAS BEEN BROKEN
The Paperwork Reduction Act Notice of 1980 is the key to exposing and understanding the truth about America's tax laws. The truth has been in print (the code) since 1916, and reaffirmed in print as recently as 1985, when the IRS complied with the mandates of the Paperwork Reduction Act by providing to the Office of Management and Budget (OMB) the Table shown in 26 CFR 602.101. The IRS cannot ask you for more information than this Table shows is required, in association with any demand for information made under any given code section from Title 26 (the Internal Revenue Code). (In an effort to reduce paperwork and the administrative costs associated with its maintenance.)
The following chapters, all showing the actual legal code sections that the IRS itself cites, should serve as proof beyond any reasonable doubt what-so-ever that the income tax laws are being intentionally misapplied to all American citizens. To understand just how important the Paperwork Reduction Act is to the tax laws, keep in mind that since 1980 the IRS has been required by law to provide a notice of it (Notice 609) with every single piece of correspondence they issue to individuals. You can find a complete copy of this notice on Page 1 of any Form 1040 Tax Instruction Booklet, but the IRS wont tell you about the Table in the Code of Federal Regulations where you can look up the information collection requirements of any given code section.
United States Code Annotated - General Index
The United States Code is voluminous and very complex. Let's start at the beginning. Here, in the General Index for the United States Code Annotated from 1994, under the major heading Citizenship, we try to find an entry for Income Tax. But we only find:
Illegitimate Children 8 1409
Immigration, this index
Citizens by foreign governments 22 1732
Detention of citizens prohibited except by Act of Congress 18 4001
Generally 8 1401
Where is income tax? There is nothing listed or shown for Income Tax in the General Index under 'Citizenship'. It would be there between 'Imprisonment' and 'Indians' if it existed. It's not listed. There are no income tax code statutes shown here in the General Index as being applicable under 'Citizenship' because, as you will see, the income tax does not apply to a citizen's domestic income earned by right, and the law accurately records that fact.
Here, in the General Index again, we see the entries for Citizens under the major heading Income tax.
INCOME TAX, Cont'd.
About to depart from U.S., waiver of requirements as to termination of taxable year 26 USC 6851 Living abroad, exclusion of earned income and foreign housing costs from gross income 26 USC 911
How many code sections are shown here as being applicable to citizens under income tax? There are two sections, and they both have to do with what? They both have to do with FOREIGN countries. So, here in the General Index Annotated, we immediately get our first indication that the income tax laws may be substantially different than what we have been led to believe is true by our government. Furthermore, if one looks up "Income Tax" under the major heading of "Aliens" in the General Index Annotated , one will find nine pages of code sections listed as being applicable, eight of those pages relate to income tax sections relevant to nonresident aliens.
Income Duty of 1861
Most people in America believe that income taxes first started in America between 1913 and 1916. That is not correct. Income tax first appeared in the law at the beginning of the Civil War, in 1861. The text of the law read:
SEC. 89. And be it further enacted, That for the purpose of modifying and reenacting, as hereinafter provided, so much of an act, entitled "An act to provide increased revenue from imports to pay interest on the public debt, and for other purposes," approved fifth of August, eighteen hundred and sixty-one, as relates to income tax;...
The first income tax was an incomeDUTY, imposed as a duty on foreign IMPORTS, as a FOREIGN TAX. Duties are collected at the Ports of Entry to a nation, THEY ARE NOT IMPOSED ON DOMESTIC ACTIVITIES.
A Note From the Commissioner
If we look at what the IRS tells us today about income taxes on the first page of the Form 1040 Tax Instruction Booklet from 1994, we find a "Note From the Commissioner", which is usually one of the first things in the booklet. This one is from Margaret Richardson, the current Commissioner of the IRS. It states in part:
Thank you for making this nation's tax system the most effective system of voluntary compliance in the world. The key to maintaining that system is ensuring that you are treated fairly and equitably, that your privacy is protected, and that our tax system is as simple and understandable as possible....
Margaret Milner Richardson
The first sentence here is:
"Thank you for making this nation's tax system the most effective system of voluntary compliance in the world."
There it is! Voluntary Compliance. Why do they say that? What does that mean? And how does it effect you, a sovereign American Citizen? We will come back to those questions in a bit, but I would point out here that this opening statement is not unusual. Nearly every instruction booklet from past years has opened with some variation of this statement from the Commissioner.
The next thing we're going to take a look at is the Privacy Act & Paperwork Reduction Act, Notice 609, which is required by law to be supplied to you by the IRS with any correspondence you receive from the IRS. It states in pertinent part:
Privacy Act and Paperwork Reduction Act
The Privacy Act of 1974 and Paperwork Reduction Act of 1980 say that when we ask you for information, we must first tell you our legal right to ask for theinformation, why we are asking for it, and how it will be used. We must also tell you what could happen if we do not receive it and whether your response is voluntary, required to obtain a benefit, or mandatory under the law.
This notice applies to all papers you file with us, including this tax return. It also applies to any questions we need to ask you so we can complete, correct, or process your return; figure your tax; and collect tax, interest, or penalties.
Our legal right to ask for information is Internal Revenue Code sections 6001, 6011, and 6012(a) and their regulations. They say that you must file a return or statement with us for any tax you are liable for. Your response is mandatory under these sections.........
We ask for tax return information to carry out the tax laws of the United States. We need it to figure and collect the right amount of tax............
If you do not file a return , do not provide the information we ask for, or provide fraudulent information, the law says that you may be charged penalties and, in certain cases, you may be subject to criminal prosecution..........
Please keep this notice with your records. It may help you if we ask for other information. If you have questions about the rules for filing and giving information, please call or visit any Internal Revenue Service office.
In the third paragraph it states:
"Our legal right to ask for information is Internal Revenue Code Sections 6001, 6011 & 6012(a) and their regulations. They say that you must file a return or statement with us for any tax you are liable for."
Now does that say you have to file a return for taxes that you are not liable for? No! Does it state who is liable ? No! Does it even state what liability is ? No! And that raises the legal questions, what is liability, and who is liable?
Now keep in mind that this does not actually say that this is their right to ask you (the citizen) for information. It doesn't actually say from whom information may be requested, it just establishes that a legal right to request information does exist. But from whom may information actually be requested under these laws? Well, they cite three code sections in this notice, what do they say ?
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. The only records which an employer shall be required to keep under this section in connection with charged tips shall be charge receipts, records necessary to comply with section 6053(c), and copies of statements furnished by employees under section 6053(a).
Notice that the first three words in this code section are:
"Every person liable". Does this code section actually establish liability or, does it simply list the consequences of being liable, leaving the reader to "assume" that he or she is in fact made liable elsewhere in the Code. Indeed it does not establish liability, it merely lists the consequences of being liable. It is interesting to note, that the second sentence here says: "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."
Have you ever received notice from the Commissioner? Are you sure that you're required to make such returns, render such statements or keep such records? Which records, which statements, and which returns are required ?
Do you see in the third sentence where it refers to "employers". Does this code section apply to employers? Are employers liable for tax ? (see Section 3403 Liability for Tax)
Section 6011 was the next section cited in Notice 609 by the IRS as their right to request information, and it says:
6011. General requirement of return, statement, or list.
(a) General rule.
When required 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...........
The first sentence states in pertinent part:
"... any person made liable..."
Does this code section actually make anyone liable, or again, does it just list the consequences of being made liable, leaving the reader to assume or presume, again, that liability exists, or is actually established elsewhere in the code? Neither of these code sections, 6001 nor 6011, actually establish liability. They simply establish the consequences of being liable, or being made liable. So, we're going to look for Code sections that do state some person is liable, or made liable for the payment of the tax, that would trigger the filing requirements established by these sections.
The last section referenced by the IRS in Notice 609, as their right to ask for information, Section 6012, states in pertinent part:
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:
(1)(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, is not a surviving spouse,
is not a head of a household 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 household 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 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 such 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.
Clause (iv) shall not apply if for the taxable year such spouse makes a separate return or any other taxpayer is entitled to an exemption for such spouse under section 151(c).....
This section states : "Returns with respect to income taxes under Subtitle A shall be made by the following:"
and Subsection (1)(A) says,
"Every individual having for the taxable year..."
So, the filing requirement identified here is being established for "individuals". Now, where is the tax imposed on individuals that would correspond to this filing requirement, and what is the exact legal nature of the specific requirement that is established by this section, under that section (the imposing statute)? This Code section would appear to be properly related to individuals and their corresponding filing requirement, but what are its legal limitations, as recorded in the law?
Structural Organization of Title
First, a short explanation regarding the organization of the Tax laws in the United States Code. The tax law of the United States of America is in Title 26 of the United States Code (Internal Revenue Code). Title 26 is broken into a number of Subtitles, each Subtitle being a distinct and separate section of the law as the table below shows:
Tax or Topic Subtitle Chapters Sections Income Taxes A 1 to 6 1 Estate & Gift Taxes B 11 2001 Employment Taxes C 21 to 25 3101 Miscellaneous Excises D 31 to 47 4041 Alcohol, Tobacco and Certain Other Excises E 51 to 54 5001 Procedure and Administration F 61 to 80 6001 Joint Committee on Taxation G 91 to 92 8001 Financing Presidential Election Campaigns H 95 to 96 9001 Trust Fund Code I 98 9500
This examines the laws under Subtitle A Income taxes, Subtitle C Employment taxes, and Subtitle F Procedure and Administration, which applies and implements the other Subtitles under the law. The code sections we just looked at 6001, 6011 and 6012 are all from Subtitle F. Income taxes are in Subtitle A, consisting of chapters 1 6 of Title 26, Employment taxes are in Subtitle C, consisting of chapters 21 - 25.
It is important to understand that each Subtitle establishes a distinct and separate program, or "tax", with its own individual authority to administer within that Subtitle, over its code sections. These authorities do not automatically cross over into the other Subtitles and cannot be invoked as an authority in the other Subtitles unless it is shown as applicable within the law and its provisions (regulations).
Each Subtitle imposes its own tax, and establishes the groups of persons subject to that tax, within that specific subtitle. Just because one group of people is subject to one tax under one subtitle, does not necessarily imply that group is automatically also subject to the taxes imposed by other subtitles. To demonstrate this point one could ask "Do you pay Subtitle E taxes?". For most people, the answer is a resounding "NO". Why not, you may ask, isn't everyone subject to the law? The answer, of course, is that the group of persons subject to Subtitle E taxes are those people who engage in the manufacture and sale of alcohol and tobacco products.
As you will see, the group of people who are subject to the Subtitle C Employment Tax laws are those people who have voluntarily chosen to participate in the Social Security program. Who then, is the subject of the Subtitle A Income Tax laws, and what exactly is the true nature of this tax and its associated filing requirements? Well, Section 6012 said:
"... with respect to income taxes under Subtitle A ...",
and we are looking for the Code section where the income tax is imposed on individuals, so, we go to Title 26, Subtitle A, Chapter 1, Section 1, which states:
TITLE 26 INTERNAL REVENUE CODE (IRC)
SUBTITLE A INCOME TAXES
Chapter 1. NORMAL TAXES AND SURTAXES
Subchapter A. Determination of Tax Liability
PART 1. Tax On Individuals
1. Tax Imposed.
(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 32,450 15% of taxable income Over 32,450 but not over 78,400 4,867.50, plus 28% of the excess over 32,450. Over 78,400 17,733.50, plus 31% of the excess over 78,400
(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: Not over 26,050 15% of taxable income Over 26,500 but not over 67,200 3,907.50, plus 28% of the excess over 26,500 Over 67,200 15,429.50, plus 31% of the excess over 67,200
(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) of 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 19,450 15% of taxable income Over 19,450 but not over 47,050 2,917.50, plus 28% of the excess over 19,450 Over 47,050 10,645.50, plus 31% of the excess over 47,050
(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, tax determined in accordance with the following table:
If taxable income is: The tax is: Not over 16,225 15% of taxable income Over 16,225 but not over 39,200 2,433.75, plus 28% the excess over 16,225 Over 39,200 8,866.75, plus 31% of the excess over 39,200
(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 3,300 15% of taxable income Over 3,300 but not over 9,900 495 , plus 28% of the excess over 3,300 Over 9,900 2,343 plus 31% of the excessover 9,900
(f) Adjustments ...........
Does all of this look familiar? It should, this is the Income Tax you probably pay every April 15th of every year and it sure looks like everyone has to pay, doesn't it?
But wait, notice that the language in each of the paragraphs of this section reads in the form:
"...there is hereby imposed on the taxable income ... a tax ...". (emphasis mine)
Notice that in all of these paragraphs the tax is not actually imposed on the individual him or herself, it is imposed on the taxable income of the individual. So, that leads to the question, what is taxable income? What everybody in America apparently does: is assume that they have taxable income, and then assume that they have liability for tax, and then they assume that Form 1040 is the correct form to file to satisfy that liability for tax on taxable income that they have as individuals, So they fill out Form 1040 and send it in to the IRS to pay the tax. But, is that the correct and proper legal procedure to follow under the law? Certainly that is what the IRS tells us to do, but what does the law actually say? What information is legally required from U.S. citizens to satisfy this liability for tax on taxable income established in Chapter 1, Section 1, by the (income) tax imposed?
For the answer to that question we must go back to the Paperwork Reduction Act. The Paperwork Reduction Act effectively says that the United States government cannot require, or collect, more information from citizens than is absolutely necessary to satisfy the requirements of the law. And under this Act, which was passed in 1980, the IRS was required to file with OMB, the Office of Management and Budget, a list of all the code sections that required information to be collected from individuals, together with the cross-referenced list of forms to be used to satisfy those legal information collection requirements for any given code section.
This table is incorporated into this law in the Code of Federal Regulations in 26 C.F.R. 602.101, whose introduction states that the purpose of this regulatory section is to comply with the legal requirements imposed on the government by the Paperwork Reduction Act. The IRS itself prepared and supplied this Table to OMB. It took the IRS five years to comply with the mandate of this Act to document the specific filing requirements associated with any given section, and after you see the table you will understand why the IRS did not want to release this information for over five years.
It states in pertinent parts:
PART 602 - OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT
Section 602.101. OMB Control numbers.
(a) Purpose.. This part collects and displays the control numbers assigned to collections of information in Internal Revenue Service regulations by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1980. The Internal Revenue Service intends that this part comply with the requirements of .... (OMB regulations implementing the Paperwork Reduction Act), for the display of control numbers assigned by OMB to collections of information in Internal Revenue Service regulations....
26 CFR (4-1-94 Edition)
CFR part or section where Current
identified and described OMB Control Number
1.1-1 .................................. 1545-0067
1.23-5 ................................. 1545-0074
In the portion of the table reproduced above, the left hand column shows the code section (where the income tax is imposed, Chapter 1 Section 1, designated here in the table as 1.1-1), and the right hand column shows the OMB Document Control Number (DCN) assigned to the information collection request (the form), that is required by the code section to satisfy its legal requirements. Note that there is only one form shown here as being required by the law that imposes the income tax, and note that the form that is to be used to satisfy the requirements of this code section, where the income tax is imposed, carries OMB DCN 1545-0067. Also note that the same form is required by Regulation 1.6012-0, which corresponds to the individual's filing requirement established in Section 6012, which has already been reviewed.
It should be noted that 6012 (from Subtitle F - Procedure and Administration) is used to enforce all of the individual filing requirements established and imposed in the other Subtitles, but it does not expand or establish any new or additional requirements in association with any given section. So, while 1.6012-1 can be used to enforce (and require) the use of Form 1040 in association with those sections that actually do require it (1.23-5 etc.), IT DOES NOT AND CANNOT EXPAND THE REQUIREMENT OF SECTION 1, as shown in the table. It can enforce the requirement shown, but it cannot expand that requirement for section 1.
So, if Form 1040 is the proper form for United States citizens to file to satisfy their liability on taxable income, under the law, as listed by the IRS; that OMB Document Control Number, 1545-0067, will show up on the top of a Form 1040.
Department of the Treasury - Internal Revenue Service
Form 1040 U.S. Individual Income Tax Return 1993
For the year Jan 1-Dec 31, 1993, or other tax year beginning, 1993 ending ,19
| OMB No. 1545-0074
Here is the reproduced top portion of a Form 1040 from 1993, and there in the upper right hand corner, it says OMB No. 1545- 0074. Does that number match the number shown in the table as being required by the code section that imposes the tax? No! It's the wrong number! The Table in the Code of Federal Regulations shows that the law requires the form with OMB Document Control Number 1545-0067, not 1545-0074.
It's probably worth saying that 1545 is the prefix assigned by OMB to all IRS documents. But OMB Document Control Number 1545-0074 is assigned to Form 1040, and the form required by the law carries DCN 1545-0067. So what form does carry the OMB Document Control Number 1545-0067?
Form 2555 Foreign Earned Income |OMB No. 1545-0067
For Use by U.S. Citizens and Resident Aliens Only 1993
Here, you see at the top of the form, in the upper right hand corner it says: OMB No. 1545-0067. Now that matches the entry in the CFR Table! And what is the title of this form? Form 2555 Foreign Earned Income! And what does it say underneath the title?
"For Use by U.S. Citizens and Resident Aliens Only"
Now does Form 1040, say anything about who is supposed to use it ? No, it doesn't! But Form 2555 Foreign Earned Income states who is supposed to use it, "U.S. citizens and resident aliens only". This is the form that's listed in the law as being required to satisfy the information reporting requirements associated with the individual's liability for income tax on "taxable income", imposed by Section 1 in Chapter 1, the income tax, and, it is the same form shown as being required under Section 6012, which was cited by the IRS itself in Notice 609.
I'll mention that here again, under the law, we find that the income tax, for citizens, appears to be related only to foreign income; the tax is imposed not upon the citizen but upon any foreign earned income of the citizen. Remember we started with the General Index for the United States Code Annotated and found that under Income Tax, under Citizens, it only referenced foreign countries, and here again, we find that the only form required under the law, only reports foreign income. The law is consistent so far, isn't it? It doesn't agree with what we are told to believe by the IRS, but it agrees with itself, without contradiction, doesn't it?
So what is the proper legal use of Form 1040? The next document will help explain things.
TREASURY DECISION 2313
Office of Commissioner of Internal Revenue
Washington, D.C., March 21, 1916
To collectors of internal revenue:
Under the decision of the Supreme Court of the United States in the case of Brushaber v. Union Pacific Railway Co., decided January 21, 1916, it is hereby held that income accruing to nonresident aliens in the form of interest from the bonds and dividends on the stock of domestic corporations is subject to the income tax imposed by the act of October 3, 1913.
Nonresident aliens are not entitled to the specific exemption designated in paragraph C of the income-tax law, but are liable for the normal and additional tax upon the entire net income "from all property owned, and of every business, trade, or profession carried on in the United States," computed upon the basis prescribed in the law.
The responsible heads, agents, or representatives of nonresident aliens, who are in charge of the property owned or business carried on within the United States, shall make a full and complete return of the income therefrom on Form 1040, revised, and shall pay any and all tax, normal and additional, assessed upon the income received by them in behalf of their nonresident alien principals.
The person, firm, company, copartnership, corporation, joint-stock company, or association, and insurance company in the United States, citizen or resident alien, in whatever capacity acting, having the control, receipt, disposal, or payment of fixed or determinable annual or periodic gains, profits, and income of whatever kind, to a nonresident alien, under any contract or otherwise, which payment shall represent income of a nonresident alien from the exercise of any trade or profession within the United States, shall deduct and withhold from such annual or periodic gains, profits, and income, regardless of amount, and pay to the office of the United States Government authorized to receive the same such sum as will be sufficient to pay the normal tax of 1 per cent imposed by law, and shall make an annual return on Form 1042. (emphasis added)
This is the only place that I have ever been able to find the proper explanation, actually, any explanation what-so-ever from the United States government, for the proper use of Form 1040. Treasury Decision 2313, handed down in 1916, instructs the collectors of the Internal Revenue on how to implement the income tax laws as imposed under the 16th Amendment. This Treasury Decision is the result of a Supreme Court ruling, referenced in the first paragraph as "Brushaber v. Union Pacific Railway Co.", which was decided January 21, 1916, and from which
"... it is hereby held that the income accruing to nonresident aliens in the form of interest from the bonds and dividends on the stock of domestic corporations is subject to the income tax imposed by the act of October 3, 1913."
The second paragraph states:
"Nonresident aliens are not entitled to the specific exemption designated in paragraph C of the income-tax law, but are liable for the normal and additional tax upon the entire net income from all property owned, and of every business, trade, or profession carried on in the United States," computed upon the basis prescribed in the law."
Now, the first paragraph says that nonresident aliens are subject to the tax. The second paragraph says that nonresident aliens are liable for the tax and that they are not allowed to claim the exemption designated as paragraph C. That implies that citizens are allowed to claim the exemption in paragraph C, and that citizens are not liable for the tax, because they are not subject to the tax, because it was not specified in paragraph one that citizens are subject. Now let's read the third paragraph, and keep in mind that we are going to look for a Paragraph C in the United States Code that exempts citizens from income tax. The third paragraph states:
"The responsible heads, agents, or representatives of nonresident aliens, who are in charge of the property owned or business carried on within the United States, shall make a full and complete return of the income therefrom on Form 1040, revised, and shall pay any and all tax, normal and additional, assessed upon the income received by them in behalf of their nonresident alien principals."
Now there's the proper legal use of Form 1040. It is to be used by United States citizens to report the income of his or her foreign principals. It is not to be used to report the citizen's own personal domestic income. Again, this is the only place where I have ever seen a legal explanation from the government for the proper legal use of Form 1040, and now I think you know why. Form 1040 is to be used by withholding agents to report the income of foreign principals. It is not to be used by U.S. citizens to report their own income, and that's why voluntary self assessment and voluntary compliance are so important to the IRS. Because the current mythical system doesn't work unless the citizen voluntarily MISAPPLIES the law and uses the wrong form mistakenly, to voluntarily assess his own domestic income for income tax. This Treasury Decision references the Supreme Court decision Brushaber v. Union Pacific Railroad Co., so it is time to step back, and get a little background information. The first thing we're going to do is look at what the Constitution says about taxation. The limitations in the Constitution restricting the direct taxation of individuals and their property are found in Article 1 in two different sections. Both sections specifically restrict the Federal government as to how it may lay direct taxes on the citizens. Article 1, Section 2, Clause 3 states:
"Representative and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers"
and Article 1, Section 9, Clause 4 states:
"No capitation or other direct tax shall be laid, unless in apportionment to the Census or enumeration herein before directed to be taken."
These basic sections of the Constitution have never been repealed or amended. The Constitution still forbids the direct taxation of individuals, their property, and their rights, unless the tax is apportioned to the State governments for collection.
In 1895, Congress tried to pass an Act that imposed income taxes on the interest and dividends of U.S. citizens on deposit in U.S. banks. This Act was immediately struck down in Pollock vs Farmer's Loan and Trust Co. (157 US 429), wherein the Supreme Court ruled that it is unconstitutional to impose an income tax on the interest and dividends of United States citizens on deposits in U.S. banks. The court ruled that the tax was unconstitutional because it was a direct tax that was not apportioned as required by the Constitution. This decision has never been overturned.
Then, in 1913 Congress passed the 16th Amendment which says,
"Congress shall have power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."
So that changed everything, right? Well no! That is not what the Supreme Court ruled. What the Supreme Court ruled, in Brushaber vs Union Pacific R.R. Co. and in Stanton vs Baltic Mining Co., is that since the provisions of Article I, requiring that direct taxes be apportioned, were not repealed, they are still in full force and effect. And, that since the language of the 16th Amendment specifies that the income tax is to be a tax without apportionment, then it cannot be a direct tax, because otherwise the Constitution would inherently contradict itself, which cannot be allowed to happen. Article I cannot prohibit direct taxation unless apportioned, while the 16th Amendment grants the power to lay direct taxes without apportionment, because then the Constitution would inherently contradict itself and could no longer serve as a valid foundation for our Law. So, to specifically prevent the Constitution from contradicting itself, the Supreme Court ruled that since the 16th Amendment provides for an income tax without apportionment, then the income tax cannot be a direct tax.
But, there are only two major classes of taxation authorized in the Constitution; direct taxes and indirect taxes So, if the income tax cannot be a direct tax, then it must be an indirect tax. Indirect taxes are classified into three minor categories in the Constitution: imposts, duties and excises. If you remember, the income tax started in 1861 as an Income Duty, imposed only on foreign imports, so obviously it was contained and allowed within the Constitutional category of duties. As a duty it was only imposed on the flow of foreign goods into America, NOT DOMESTIC GOODS, NOR DOMESTIC INCOME.
Obviously today, the income tax is not currently being enforced as a duty, so the questions are: "Did the 16th Amendment create a new congressional power to tax directly?", and; "How did the 16th Amendment change the income tax?".
The answer to the first question was supplied by the Supreme Court in Stanton v. Baltic Mining Co., 240 US 112 (1916), stating:
"...by the previous ruling, it was settled that the provisions of the 16th Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being TAKEN OUT of the category of indirect taxation to which it inherently belonged.." (emphasis added)
The Supreme Court clearly states that the 16th Amendment did not create a new power to tax the People in a direct fashion without apportionment, AS IS FRAUDULENTLY CLAIMED BY THE IRS. So, if it is NOT A DIRECT TAX then it is still an indirect tax, but, possibly, no longer a duty. Then; "What kind of tax is the income tax now?"
In the "previous ruling" referenced above, Brushaber v. Union Pacific R.R. Co. 240 US 1 (1916), the court stated:
"...taxation on income was in its nature an excise ..." ,and "...taxes on such income had been sustained as excises in the past...".
The Court ruled that the 16th Amendment effectively transformed the income tax from an indirect duty to an indirect excise. It is not a direct tax without apportionment. And, if we examine the law closely, that is exactly what we find; that the income tax is imposed and applied under the law, as an indirect excise.
So, what is an excise tax ? Fortunately, the Supreme Court used to know what it was doing, and both of these decisions, Brushaber and Stanton, refer you to another case handed down five years earlier, Flint vs Stone Tracy Co. 220 U.S. 107 (1911), in which the Supreme Court ruled that excise taxes are:
"...taxes laid on the manufacture, sale or consumption of commodities within the country, upon licenses to pursue certain occupations and upon corporate privileges; the requirement to pay such taxes involves the exercise of the privilege and if business is not done in the manner described no tax is payable...it is the privilege which is the subject of the tax and not the mere buying, selling or handling of goods."
The Supreme Court effectively establishes with this ruling that excise taxes are manufacturing taxes, sales taxes, and taxes on privileges. Privileges in the form of either licenses to pursue certain occupations, corporate privileges, and any other privileges granted to the individual by the government as well. One of these other privileges, is the privilege of being protected by the United States government in a foreign country under a tax treaty. The government normally would have no jurisdiction or ability to protect you or your business interests in a foreign country, but because of the existence of the tax treaty with that foreign government, your business is protected by the U.S. government outside their jurisdictional boundaries (the United States). In other words you would be receiving a benefit from the government wherein the government could legally expect reciprocity in the form of a legitimate tax. That benefit, namely protection, being afforded by the tax treaty, is construed to be a privilege granted to you by the government; and therefore, the income earned in that foreign country under the tax treaty, is privileged income and subject to the income tax.
And that is why the General Index shows that there are only two code sections that apply to citizens, both having to do with foreign countries. And that is why the form that is actually required by the law is Form 2555 -Foreign Earned Income. Because that is the privileged income that you have as "taxable income", upon which you have liability to satisfy. And that is the only filing requirement that you have as an individual American citizen under the law!!! If you have no foreign earned income under tax treaties and no foreign principals to whom money is paid, then you don't have to file anything under the letter of the law because other income, domestic income, is earned by right, not privilege. It is a long and well established rule of law that the government cannot tax your rights, nor may it tax the proceeds derived from the simple exercise of those rights, and the law accurately reflects and captures that Constitutional truth. It is the IRS that ignores the truth, ignores the law, ignores the implementing regulations and tramples your citizen's rights into the mud, because, as you will see, their actions are certainly not supported by the law, or even properly, legally authorized under it.
There is no requirement to file a Form 1040 reporting your own domestic income because the form is only supposed to be used by non-resident aliens and those U.S. citizens who serve as "agents" to aliens, and have foreign principals to whom monies are being paid. As the "agents" for those foreign principals they are required to deduct and withhold and pay the income tax, not on their own income, but on the income of the foreign principals, who do not possess the same rights as a citizen.
-- jabberwocky. (firstname.lastname@example.org), August 13, 2000
The moron level seems especially high today. Is it close to the full moon?
-- Jim Cooke (JJCooke@yahoo.com), August 13, 2000.
disprove it---cooke man!
-- al-d. (email@example.com), August 13, 2000.
Jim yep, I believe there was one last nite...
And who said only the freaks come out at nite?
-- consumer (firstname.lastname@example.org), August 13, 2000.
One does not have to disprove what hasn't yet been proven. If you think that 40 paragraphs of bullshit proves anything then my previous question about morons should be right up your alley.
-- Jim Cooke (JJCooke@yahoo.com), August 13, 2000.
It's probably the Coronal Mass Ejections that we have been getting hit with for the past couple of days.
-- Sky Watcher (SW@nasa.con), August 13, 2000.
Dear cooke-monster,yu think yu know it all--na na na na na NA NA! I AM NOT A TROLL-I HAVE A SOUL!! love thy-neighbor---don't be such a ninny! am i spelling-better?---i,m taking-lessons at =boks! do you have guacamole--between your legs??
-- al-d. (email@example.com), August 13, 2000.
Al, Cooke gets a little testy when he's shook. Go easy on him. He scrolled down 40 paragraphs, 4 times and then hyperventilated to let us know he's still with the "program."
-- KoFE (your@town.USA), August 15, 2000.
Kofe: ROFLMAO,. too funny.
(walks over bends down and gently whispers in al's ear "hey al, you ok dude?) :-) I'd give him mouth to mouth, but nah....4get bout it.
-- consumer (firstname.lastname@example.org), August 16, 2000.