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 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.

Here, in the General Index again, we see the entries for Citizens under the major heading Income tax.

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:

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?

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....

_________________________________________________

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.

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



_________________________________________________________________

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.

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.

Now, the reason why these facts are so little known in America, and in the legal community itself, is that if you just look up the Brushaber vs Union Pacific R.R. Co. decision and read it quickly it appears that the Supreme Court tells the U.S. citizen (Brushaber) that the tax is constitutional and he has to pay it. It reads as if the citizen is being told by the Court that he has to pay the income tax. But, the fact of the matter is Frank Brushaber was the U.S. agent for a group of foreigners who had stock in the Union Pacific Railroad. Under the 16th Amendment he (Brushaber) and the Union Pacific Railroad were both made withholding agents and were both ordered by the government to deduct, withhold and pay over the income tax to the government, on the foreigners' income from the stock.

Now, Frank Brushaber filed this suit on behalf of his foreign principals, who had no standing as foreigners in the U.S. courts to file themselves, and that is why Brushaber's name is on the decision. The foreigners lost the suit. The foreigners were essentially told by the courts that it was a privilege to be allowed to have access to the United States marketplace and earn income there. That privilege is granted by the U.S. government, which is given, in the Constitution, full authority over foreigners in America and foreign affairs with other nations. The Court determined that it is the U.S. government that allows foreigners the privilege of earning money in America, therefore; any income that they earn under that extended privilege is taxable income, and the citizen who acts as the foreigner's agent has to withhold and pay the income tax to the federal Government. In this case the citizen essentially got told by the court that you have to pay the tax because you're the withholding agent for these foreigners upon whom the income tax is imposed.

But the decision simply isn't written up so that it's clear about the circumstances of the case. You have to research it thoroughly. If you just look it up, it looks like the U.S. citizen, Frank Brushaber, gets told by the government, "the tax is Constitutional, and you have to pay it", and the IRS has found it very easy to deceive the American people as to the true nature of this Supreme Court decision because of the way this decision is written. In fact, if you call the IRS and ask them why the income tax is Constitutional, they will answer that the Supreme Court ruled it was Constitutional in Brushaber v. Union Pacific Railroad Co. But they won't tell you that this was a case about the taxation of foreigners, AND HAS ABSOLUTELY NOTHING TO DO WITH THE DIRECT TAXATION OF CITIZENS, as fraudulently claimed by the IRS for over 60 years.

Finally, from the Congressional Research Service in 1979:

This same view was reiterated by the Court in Stanton v. Baltic Mining Co. (1916) in which the court stated that the:
"Sixteenth 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." 240 U.S. 112 (1916)

Therefore, it is clear that the income tax is an "indirect" tax of the broad category of "Taxes, Duties, Imposts and Excises," subject to the rule of uniformity, rather than the rule of apportionment......

Chapter 79, from Subtitle F Procedure and Administration, contains many of the legal definitions for the terms used in Title 26.

7701 Definitions.

(a). When used in this Title, where not otherwise
distinctly expressed or manifestly incompatible with
the intent thereof--

(1). Person - The term "person" shall be construed to
mean and include an individual, a trust, estate,
partnership, association, company or corporation.

(16). Withholding Agent. - The term "Withholding
Agent" means any person required to deduct and withhold
any tax under the provisions of sections 1441, 1442,
1443, or 1461."

First note that the word "person" is not restricted to meaning just people. For purposes of the application of the tax laws, "person" means any entity subject to the tax laws. But, nevertheless, it appears as though a withholding agent can definitely withhold tax, can't he? Well, let us look at what is truly authorized by these Code Sections referenced here in the definition. The first thing to point out is that all of the code sections that start with `14' are in Chapter 3 of Title 26. Chapter 3 is titled:

(b) Income items. ...

Section 1441 only authorizes withholding from nonresident aliens.

1442 . Withholding of tax on foreign corporations.

(a) General rule. In the case of foreign corporations
subject to taxation under this subtitle, there shall be
deducted and withheld at the source in the same
manner and on the same items of income as is provided
in Section 1441 a tax equal to 30% thereof. ....

(b) Exemption. Subject to such terms and conditions
as may be provided by regulations prescribed by the
Secretary, subsection (a) shall not apply in the case
of a foreign corporations engaged in trade of
business in the United States if the Secretary
determines that the requirements of subsection (a)
impose an undue administrative burden and that the
collection of the tax imposed by section 881 on such
corporation will not be jeopardized by the exemption.

(c) Exception for certain possessions corporations.
For purposes of this section, the term "foreign
corporation" does not include a corporation created or
organized in Guam, American Samoa, the Northern
Marianna Islands, or the Virgin Islands or under the
law of any such possession if the requirements of
subparagraphs (A),(B), and (C) of section 881(b)(1)
are met with respect to such corporation.

Section 1442 only authorizes the withholding from foreign corporations.

1443 Foreign Tax Exempt Organizations

(a) Income subject to section 511. In the case of
income of a foreign organization subject to the tax
imposed by section 511, this chapter shall apply to
income includible under section 512 in computing its
unrelated business taxable income, but only to the
extent and subject to such conditions as may be
provided under regulations prescribed by the Secretary.

(b) Income subject to section 4948. In the case of
income of a foreign organization subject to the tax
imposed by section 4948(a), this chapter shall apply,
except that the deduction and withholding shall be at
the rate of 4 percent and shall be subject to such
conditions as may be provided under regulations
prescribed by the Secretary.

Section 1443 only authorizes the withholding from foreign tax exempt organizations.

The last section referenced in the definition of a Withholding Agent, 1461, states:

1461 Liability for withheld tax.

Every person 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.

Section 1461 says withholding agents are made liable for the payment of taxes they withhold from individuals (foreigners). Well, what do you know? Here is a code section where someone is made liable for such tax. And who is made liable? The withholding agents are made liable for the tax, and that triggers the filing requirements of 6011. Remember 6011, we were looking for someone who was made liable for payment of the tax, and here it is. 6011 is the filing requirement for withholding agents, not citizens, or even individuals. Withholding agents are made liable in Section 1461 for the payment of taxes withheld, and that liability triggers the filing requirements associated with and under Section 6011. And who are Withholding agents authorized to withhold income taxes from? Foreigners, and foreigners only. And what else does 1461 also say, that they are :

"indemnified against the claims and demands of any
person for the amount of any payment made in accordance
with the provisions of this chapter".

And what Chapter is this from? Chapter 3 - Withholding from Foreigners. And that means that if they wrongfully withhold from someone other than a foreigner, like a citizen, they're not indemnified from claims against them for wrongful withholding. So, U.S. citizens who have income tax wrongfully withheld from them, can sue the withholding agent to have those moneys returned.

Who are the withholding agents? Well, your bank is a withholding agent, your stock broker is a withholding agent, your employer is NOT a withholding agent. Your employer is your employer and employers are defined for purposes of implementing the employment taxes imposed in Subtitle C, and they don't have anything to do with income taxes under Subtitle A, other than the fact that they are apparently authorized to withhold income taxes at the source which we are going to look at in a minute. It is clear that withholding agents can only withhold from foreigners, and that they are only indemnified for withholding under Chapter 3, which, as we have seen, is only from foreigners.

We have just examined the complete legal authority of a "Withholding Agent" to withhold income taxes and, as you can see for yourself, there is no authority anywhere in the law for a withholding agent to withhold income tax from a U.S. citizen. WHY? Because the tax is not imposed on the domestic income of citizens earned by right!

Remember the mysterious paragraph C, that nonresident aliens cannot claim, referenced in the third paragraph of Treasury Decision 2313. Here is Section 6654 - Failure by individual to pay estimated income tax. Take careful note of paragraph (e)(2)(C).

6654. Failure by individual to pay estimated income tax.

(a) Addition to the tax. In the case of any
underpayment of estimated tax by an individual, except
as provided in subsection (d), there shall be added to
the tax under chapter 1 and the tax under chapter 2 for
the taxable year an amount determined at an annual rate
established under section 6621 upon the amount of the
underpayment (determined under subsection(b)) for the
period of the underpayment (determined under subsection

(c)).

.....

(e) Exceptions.

(1) Where tax is small amount ......

(2) Where no tax liability for preceding taxable year.

No addition to tax shall be imposed under subsection (a)
for any taxable year if -

A) the preceding taxable year was a taxable year of 12 months,

B) the individual did not have any liability for tax the preceding
taxable year, and

C) the individual was a citizen or resident of the United States
throughout the preceding taxable year.

(3) Waiver in certain cases ...

When you file a Form 1040, what you are actually doing is paying estimated income tax. And this Section, 6654, addresses the failure by an individual to pay estimated income tax. Subsection (e) addresses the exceptions for that failure. Within subsection (e), Subsection (2) provides that where there is "no tax liability for preceding taxable year" then "No addition to tax shall be imposed under subsection (a) for any taxable year if" the conditions in subparagraph (A),(B)and (C) are met.

Remember that citizens don't have any liability for tax on domestic income, according to the Paperwork Reduction Act tables in the Code of Federal Regulations relating to the tax imposed and the liability established under Chapter 1 Section 1 - Tax Imposed. It is nonresident aliens who are liable according to Treasury Decisions 2313.

Now let's look at conditions (A) and (B) as well. (A) says, "the preceding taxable year was a taxable year of 12 months". Well, just about everyone satisfies that condition, and (B) says: "the individual did not have any liability for tax for the preceding taxable year". We've seen that all citizens who do not have foreign earned income or foreign principals satisfy this condition, and then we have, again, (C) "the individual was a citizen or resident..." . Citizens and residents aliens are excepted from the failure to pay. Here is the mysterious paragraph C referenced in Treasury Decision 2313, excepting citizens from the failure to file and pay estimated income tax.

If you still are skeptical and don't believe me, here's Section 1.1441-5 from The Code of Federal Regulations.
26 C.F.R. 1.1441-5 Claiming to be a person not subject
to withholding.

(a) Individuals. For purposes of chapter 3 of the code
an individual's written statement that he or she is a
citizen of the United States may be relied upon by the
payer of the income as proof that such individual is a
citizen or resident of the United States. This
statement shall be furnished to the withholding agent
in duplicate. An alien may claim residence in the
United States by filing form 1078 with the withholding
agent in duplicate in lieu of the above statement.

(b) Partnerships and Corporations. .....

This corresponds to Section 1441 of the United States Code which we reviewed earlier. It clearly states:

"For purposes of chapter 3 of the Code an individual's
written statement that he or she is a citizen or
resident of the United States may be relied upon by the
payer of the income as proof that such individual is a
citizen or resident of the United States."

And therefore, is not subject to the withholding of income taxes. This is confirmed in Publication 515, the instruction booklet from the IRS, to the employer, on how to implement the withholding regulations. In the section of this booklet titled "WITHHOLDING EXEMPTIONS AND REDUCTIONS" it states,

WITHHOLDING EXEMPTIONS AND REDUCTIONS

You should withhold any required tax if facts indicate
that the individual, or the fiduciary, to whom you are
to pay the income is a nonresident alien. However, the
alien may be allowed an exemption from withholding or a
reduced rate of withholding as explained here.

Evidence of Residence. If an individual gives you a
written statement stating that he or she is a citizen
or resident of the United States, and you do not know
otherwise, you do not have to withhold tax. An alien
may claim U.S. residence by filing with you, Form 1078,
Certificate of Alien Claiming Residence in the United
States...

Why? Because as we have seen, under the law, the tax is not imposed on the domestic income of citizens, or resident aliens as it turns out, and therefore there is no need to withhold from those persons, as the instructions accurately point out.

That brings us to Section 3402 Income Tax Collected at
Source. This is where most employers believe they're authorized
to withhold income tax from citizens.


3402. Income tax collected at source

(a) Requirement of withholding.

(1) In general.

Except as otherwise provided in this section, every
employer making payment of wages shall deduct and
withhold upon such wages a tax determined in
accordance with tables or computational procedures
prescribed by the Secretary....

(n) Employees incurring no income tax liability Not
withstanding any other provisions of this section an
employer shall not be required to deduct and withhold any
tax under this chapter upon a payment of wages to an
employee if there is in effect with respect to such payment
a withholding exemption certificate furnished to the
employer by the employee certifying that the employee -

(1) incurred no liability for income tax imposed under
subtitle A for his preceding taxable year, and

(2)anticipates that he will incur no liability for
income tax imposed under subtitle A for his current taxable year.....

(p) Voluntary withholding agreements. The Secretary is
authorized by regulations to provide for withholding -

(1) from remuneration for services performed by an
employee for his employer which does not constitute wages, and

(2) from any other type of payment with respect to which the
Secretary finds that withholding would be appropriate under
the provisions of this chapter, if the employer and
the employee, or in the case of any other type of payment the
person making and the person receiving the payment, agree to
such withholding. Such agreement shall be made in such form
and manner as the Secretary may by regulations provide.
For purposes of this chapter (and so much of subtitle F as
relates to this chapter) remuneration or other payments with
respect to which such agreement is made shall be treated as
if they were wages paid by an employer to an employee to the
extent such remuneration is paid or other payments are made
during the period for which the agreement is in effect ...


As you can see in Subsection (a) it says: "every employer making payment of wages shall deduct and withhold upon such wages a tax...". If one does not read this whole section carefully, it appears that employers are authorized to withhold income taxes from your wages. But after reading subsections (n) and (p) carefully it is clear that if you tell your employer that you have no liability, with a Statement of Citizenship as referenced in 26 CFR 1.1441-5, and that you will not volunteer to agree to such withholding, then the employer is not required to withhold tax, and in fact has no legal authority left in the law, under which withholding could be legally authorized.

Now, what's really happening in the work place? "Voluntary withholding agreements" under subsection (p), that's what's really happening. When you file a W-4 with your employer, and specify the number of deductions you are claiming on it, you are voluntarily authorizing your employer to withhold income taxes from you. Naturally, he honors your voluntary request. But, if you gave him a statement of citizenship instead of a W-4, he would not have any legal authorization at all, anywhere in the law, to withhold any taxes from you. And the employer is instructed not to withhold income taxes under such circumstances in Publication 515.

To see that Section 3402 - Income tax collected at source isn't really a legal authority to withhold income tax (rather, it is an authority to withhold employment tax) on "wages" (Even Section 61 doesn't include "wages"), one need only look as far as Section 7806.

Section 7806 - Construction of Title.

(a) Cross references. The cross references in this
title to other provisions of law, where the word "see"
is used, are made only for convenience, and shall be
given no legal effect.

(b) Arrangement and classification. No inference,
implication, or presumption of legislative construction
shall be drawn or made by reason of the location or
grouping of any particular section or provision or
portion of this title, nor shall any table of contents,
table of cross references, or similar outline,
analysis, or descriptive matter relating to the
contents of this title be given any legal effect. The
preceding sentence also applies to the side notes and
ancillary tables contained in the various prints of
this Act, before its enactment into law.


As you can see the descriptive title of Sec. 3402. Income Tax Collected at Source, HAS NO LEGAL EFFECT! The actual legal authorities established by the law are the limited authorities established by the actual wording of the code section paragraphs. (That is why I'm showing you the actual code sections here. Can your accountant do this with his claims? How about your lawyer? I would like to meet anyone in the country who can rebut this presentation of law, which is why you need to know about this.) Section 3402 authorizes the collection of employment taxes on WAGES, not the collection of income taxes on INCOME.

A W-4 is the "voluntary agreement" referenced in subsection (p) of 3402. Through its execution, you voluntarily create "taxable income" in your name for Social Security purposes, and further request the withholding of income tax from your wages when you specify a number of deductions to be taken.

A Statement of Citizenship may serve as the "withholding exemption certificate" referenced in subsection (n) of 3403.

Wages
20 CFR 404.1041 Wages.


(a) the term "wages" means remuneration paid to you as
an employee for employment unless specifically
excluded....

(b) if you are paid wages it is not important what they
are called. Salaries, fees, bonuses and commissions on
sales or on insurance premiums are wages if they are
paid for employment.....

20 CFR 404.1003 Employment.

Employment means, generally any service covered by
social security performed by an employee for his or
her employer...


20 CFR 404.1004 What work is covered as employment.

(a) General requirements of employment. Unless
otherwise excluded..., the work you perform as an
employee for your employer is covered as employment
under social security if one of the following
situations applies:

(1) You perform the work within the United States...

(2) You perform the work outside the United States and
you are a citizen or resident...


OK. Is that all clear? Maybe this will help:

20 CFR 404.1001 Introduction

(a)(1) In general, your social security benefits are
based on your earnings that are on our records... you
receive credit only for earnings that are covered for
social security purposes. The earnings are covered
only if your work is covered. If you are an
employee.....Some work is covered by Social Security
and some work is not. Also, some earnings are covered
by social security and some are not. It is important
that you are aware of what kinds of work and earnings
are covered so that you will know whether your earnings
should be on our records.

(2) If you are an employee, your covered work is called
"employment."...

(3) If your work is "employment" your covered earnings
are called "wages".


I'm sorry, ISN'T THIS WHERE WE STARTED with WAGES. Don't you just love circular legal definitions that define themselves with references to variations of themselves? I mean, I hope you don't just think I'm making this up on my own. I couldn't dream this stuff up, ever.

If you have given a Social Security number to your "employer" on a W-4 you have "wages", and you are an "employee" m and your work is called "employment". If you do not participate in Social Security or choose to NOT provide your social security number, then you are NOT "legally" an "employee", and you just have earnings, NOT "wages", and you just have a job not "employment", and you have a boss, not an "employer". Your employer became an "employer", when he voluntarily applied for an EIN (employment identification number) to participate in the Social Security system as a WITHHOLDER OF EMPLOYMENT TAXES (employer) under subtitle C. These definitions (descriptive paragraphs) are in Title 20 - Education, because just like public schooling, Social Security is VOLUNTARY, not mandatory (one can choose a private school, and one can choose a private retirement program, if he wishes).

As a final point it should be noted that 404.1001(a)(5)(b) also states:

"...We generally do not include rules that are seldom used..."

LIKE CITIZENS THAT DON'T PARTICIPATE IN SOCIAL SECURITY !


3406. Backup Withholding.

(a)Requirement to deduct and withhold.

(1) In general. In the case of any reportable
payment, if -

(A) the payee fails to furnish his TIN to the
payor in the manner required,

(B) the Secretary notifies the payor that the TIN
furnished by payee is incorrect,

(C) there has been a notified payee under-
reporting described in subsection (c), or

(D) there has been a payee certification failure
described in subsection (d), then the payor shall
deduct and withhold from such payment a tax equal to 31
percent of such payment.

(2) Subparagraphs (c) and (d) of paragraph (1)
apply only to interest and dividend payments.
Subparagraphs (C) and (D) of paragraph (1) shall apply
only to reportable interest or dividend payments .....

and,

3451. Income Tax Collected at Source on Interest, Dividends and Patronage Dividends.

(a) Requirement of withholding. Except as otherwise
provided in this subchapter, the payor of any interest,
dividend or patronage dividend shall withhold a tax
equal to 10 percent of the amount of the payment.

(b) Special Rules.

(1) Time of Withholding. Except as otherwise provided
in this subchapter, for the purposes of this subchapter-

(A) any payment of interest, dividend, or patronage
dividend shall be treated as made, and

(B) the tax imposed by this section shall be
withheld, at the time of such interest, dividend, or patronage dividend is paid or credited.


So if anyone tries to backup withhold from your SALARY OR WAGES, you ask him where that's authorized in the law, because these sections ONLY APPLY TO INTEREST AND DIVIDENDS.

There is NO authority, anywhere in the law, to backup withhold income tax from the wages or earnings of a United States citizen, only foreigners. If you have given a statement of citizenship to an broker (agent), that agent cannot even backup withhold from your interest and dividends legally because the Statement of Citizenship relieves the agent from the duty of withholding income tax from that person !

The following Code section, 6041, is where the reporting of income on a Form 1099 originates. It states, in pertinent parts:


6041. Information at source.

(a) Payments of $600 or more. All persons engaged in a
trade or business and making payment in the course of such
trade to another person, of rent, salaries, wages, premiums,
annuities, compensations, remunerations, emoluments, or other
fixed or determinable gains, profits and income (other than
payments to which section 6042(a)(1), 6044(a)(1), 6047(e),
6049(a), or 6050(N)(a) applies, and other than payments with
respect to which a statement is required under the authority
of section 6042(a)(2), 6044(a)(2), or 6045), of $600 or more
in any taxable year, or, in the case of such payments made by
the United States, the officers or employees of the United
States having information as to such payments and required to
make returns in regard thereto by the regulations, hereinafter
provided for, shall render a true and accurate return to the
Secretary, under such regulations and in such form and manner
and to such extent as may be prescribed by the Secretary,
setting forth the amount of such gains, profits and income,
and the name and address of the recipient of such payment

........

(c) Recipient to furnish name and address. When necessary
to make effective the provisions of this section, the name and
address of the recipient of income shall be furnished upon
demand of the person paying the income. (emphasis added)


Now, do you see any requirement to provide an SSN, or any other number, to a payor who will be reporting your earnings on a Form 1099, INSTEAD of on a Form W-2 ? No, its not there.

As stated, this is the code section where the use of the Form 1099 originates (reporting payments to individuals NOT "covered" by Social Security). Carefully note that this reporting requirement DOES NOT REQUIRE a Social Security number, a TIN, or any other number from the individual. This section ONLY requires the NAME and ADDRESS of the recipient. So give your clients (and/or your employer) your name and address on a Statement of Citizenship ( as specified in C.F.R. 1.1441-5 Claiming to be a Person Not Subject to Withholding), refuse to supply a social security number on a W-4 (because it is voluntary), and tell them to report your earnings on a Form 1099 instead of on a Form W-2 using your name and address as specified in the United States Code. Does that really sound so tough? Without a SSN on the Form 1099, the IRS computers will not recognize that income as "taxable income", and consequently, will never try to collect tax on it. In fact there is some question as to whether these reports, without SSNs, ever even get entered into the IRS computer systems because without an SSN, or some other number, the record will never "link" to any "person" for reporting or auditing purposes by the IRS, and therefore is useless information that can never be utilized by the "system". Why bother enter it?

If your employer (or his lawyer) is worried about IRS penalties, show them:

Sec. 6724. Waiver; definitions and special rules.

(a) Reasonable cause waiver. No penalty shall be imposed
under this part with respect to any failure if it is shown
that such failure is due to reasonable cause and not to
willful neglect.


This shows that your employer and clients cannot be penalized
by the IRS if you have provided the correct documentation when making your requests (see C.F.R. 1.1441-5 Claiming to be a Person Not Subject to Withholding). Certainly, being relieved of the duty of withholding tax (Publication 515) under the presentation of Statement of Citizenship is "reasonable cause".

It is interesting to note that section 3403 - Liability for Tax, states:

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. (emphasis added)


There you go, the employer is liable! The employers are liable, and that triggers the filing requirements of Section 6001 , remember, where "Every person liable...". It's the employers who are liable, and the withholding agents who are made liable, and both of those sections, 6001 and 6011, establishing the associated filing requirements, are there so that the government can prosecute anyone who withholds income taxes and doesn't pay them over to the Federal Treasury. Remember that Section 6001 referenced "employers" in its third sentence? This is why, according to Section 3403 "THE EMPLOYER SHALL BE LIABLE", not the individuals. And, of course, Section 6001 relates to those "persons" who are liable - the employers.

These are the only code sections in existence that establish liability for the payment of income tax, other than the limited liability for foreign earned income imposed and established by Chapter 1, Section 1 - Tax imposed (the income tax), which we have already examined. There are no other Code Sections anywhere in the United States Code that establish liability for payment of the income tax. And as you have seen, what the U.S. citizens are liable for is the payment of income tax on privileged (under tax treaties) foreign earned income, not domestic income earned by right.It is Voluntary.

"You are among the millions of Americans who
comply with the tax law voluntarily."

(1992 Form 1040 Tax Instruction Booklet)

"Two aspects of the Federal Income Tax system, voluntary
compliance with the law and self-assessment of tax, make it
important for you to understand your rights and responsibilities
as a taxpayer. Voluntary compliance places on the taxpayer
the responsibility for filing an income tax return. You must
decide whether the law requires you to file a return. If it
does, you must file your return by the date it is due." (IRS


Publication 21)

"The IRS's goal is to increase the rate at which taxpayers
voluntarily pay their taxes from the current 82.3% to 90% by
2001." (The Washington Post front page Dec. 2, 1993 - "IRS Hopes
Change")

"Each year American taxpayers voluntarily file their tax returns
and make a special effort to pay the taxes they owe." (Johnie
M. Walters IRS Commissioner, 1971 Form 1040 Booklet)

"Our tax system is based on individual self-assessment and
voluntary compliance." (Mortimer Caplin, IRS Commissioner, 1975

IRS IR Audit Manual)

"The mission of the service is to encourage and achieve the
highest possible degree of voluntary compliance." (Donald C.

Alexander, IRS Commissioner, Federal Register, March 1974)

"The IRS's primary task is to collect taxes under a voluntary
compliance system. (Jerome Kurtz IRS Commissioner, 1980 IR
Annual Report)

"We have a voluntary compliance system." (Fred Goldberg, IRS
Commissioner, Nightline with Ted Koppel, Apr.13, 1990)

and finally, from the Supreme Court of the United States of
America, the highest authority in the land:

"Our system of taxation is based on voluntary assessment and
payment, not upon distraint (force)." (United States v. Flora,
362 US 145 (1958))


This is a whole page full of statements that the IRS has made, in public, to the media and the People, regarding the "true nature of our tax situation". The sources are quoted. In these, the IRS repeatedly states over and over again that citizens comply with the tax laws voluntarily, and that our tax system is based on voluntary compliance and self assessment, and now you know why. Because if the citizen does not voluntarily comply, and through his own ignorance of the law, misapply the code and use the wrong form, the whole system fails. And that's why they say it's voluntary, because under the law, it is. And, if you do comply voluntarily, then they can use against you the information that you provided on the Form, because the courts have ruled that when you perform a voluntary self assessment (file a Form 1040), you establish the liability for payment of the tax necessary for the IRS to collect and enforce the amount assessed.

But there is no statutory liability imposed on citizens for the payment of income tax on domestic income, only foreign income under tax treaties. You, the citizen, create your own liability for the income tax that grants the IRS the jurisdictional authority to enforce and collect the numbers you show on your return when you voluntarily perform that self assessment using the wrong form. And, it doesn't matter that you misapplied the law or used the wrong form; you establish the liability voluntarily with the assessment, and it is then legal, and you owe it. You have to pay it, and they can enforce it if you don't. And if they find anything incorrect or fraudulent on the return, they can assess penalties and interest because the assessment was incorrect or not done properly.

I don't know if anybody noticed, but if you look back to the table in 26 CFR 602.101, where we saw the OMB Document Control Numbers required by Section 1.1-1, on the next line 1.23-5 appears, which does require the form numbered 1545-0074, Form 1040. Some of you may have noticed this and thought I was trying to slip one by you. So, here's 1.23-5.


26 CFR 1.23-5 Certification Procedures.

(a) Certification that an item meets the definition of
an energy-conserving component or renewable energy
source property. Upon request of a manufacturer of an
item....the Assistant Commissioner shall certify ...
that :

(1) the item meets the definition of insulation (see

........

This is from the Code of Federal Regulations, and it starts:

"Certification procedures. (a) Certification that an
item meets the definition of an energy-conserving
component or renewable energy source property..."


Section 1.23-5 is the renewable energy resource credit. If you want to claim this deduction, or that credit, you have to file Form 1040, because it's the proper legal vehicle or mechanism through which that deduction is claimed. And there are a lot of other deductions and credits and legal reasons why Form 1040 would be required. If you want to claim a refund, you have to file Form 1040, because that's the established legal mechanism through which a citizen claims a refund. If you want to claim certain credits, or take certain deductions, you have to file Form 1040 because that is the legal mechanism through which those credits and deductions are claimed. But, if all you want to do is satisfy the liability for tax on taxable income that you as a citizen have, without claiming any deductions, or taking any credits, then the only form that you are required to file is Form 2555, not Form 1040. Because Form 2555 is the only form required by law, the proper vehicle for you to use to satisfy the liability you have for income tax as an individual citizen, according to the law. So, how does the IRS get away with doing what they have been doing for so long?

Remember that if you want to claim a refund, you MUST file a Form 1040 because it is the legal mechanism through which a refund is claimed!! This is why they deceptively withhold from you when you are young and start working at your first job. You are young and naive, and know nothing about the tax law and they take advantage of your ignorance and withhold more than is necessary. You are gradually conditioned, or programmed, to file a return TO GET A REFUND, NOT to pay the tax. Then when you get older, you've been filing the Form 1040 all your life, so you continue doing what you did all along, ignorantly; because you are no longer filing to get a refund, NOW YOU'RE FILING TO PAY A TAX THAT YOU ARE NOT LIABLE BY LAW TO PAY !

IF ALL YOU WANT TO DO IS SATISFY YOUR LIABILITY, YOU DO NOT USE FORM 1040.

CITIZENS USE FORM 2555 to satisfy liability! At least that's what the law says! That's because, as far as individuals are concerned,

THE INCOME TAX IS STILL JUST A FOREIGN TAX !

I know old habits are hard to break, and that all of this information doesn't agree with what you have been told to believe all of your life, and in fact, doesn't seem possible, but keep reading because the truth is far stranger than fiction and the law records the truth.

Remember earlier, the question was raised: "What is taxable income? Section 63 is the code section that the IRS claims establishes what "taxable income" is. It states:

63. Taxable income defined

(a) In general. Except as otherwise 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

...........

The IRS claims that since the definition of "taxable income" references "gross income" (defined in Section 61), then everything that anybody makes that is listed in Section 61 is taxable income and must be reported. That is the complete and
total argument that the IRS makes in its demand for income taxes.
Section 61 states:

61. Gross income defined.

(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).

So, "gross income" is defined as:

"compensation for services, gross income derived from
business, gains derived from dealings in property,
interest, rents, royalties, dividends, alimony,
annuities, income from life insurance, pensions, income
from discharge of indebtedness, distributive share of
partnership..."


You can see that the definition of gross income has all of these things listed. But, I would like you to remember that in 1895 the Supreme Court ruled in Pollock v Farmers Loan & Trust Co. that it is unconstitutional to impose an income tax on the interest and dividends of U.S. citizens on deposit in U.S. banks. Both of those items are listed here in section 61. Interest is number (4) and Dividends is number (7). And the Supreme Court further ruled in Stanton v Baltic Mining Co. in 1916, that no new power of taxation was conferred by the 16th Amendment.

So, if it was unconstitutional before the 16th Amendment, and no new power was conferred by it; How can Section 61 be constitutional when it states that interest and dividends are part of gross income and will be taxed? Well, we have to look at what the law shows for how Section 61 is supposed to be implemented and applied.

This version of Section 61 that is shown above is from the CURRENT 1986 version of the Code. The PREVIOUS version of the Code is from 1954. This Section, 61, is nearly identical in both versions, except for the following footnote shown in the 1954 version:

"Source: Sec. 22(a), 1939 Code, substantially unchanged"


For some reason the footnote was dropped when the law was recodified in 1986. It is not known why the footnote was dropped in 1986, but it is very important because, as you can see, the footnote identifies the source of Section 61 as being Section 22(a)in the 1939 code, the last codified version previous to the 1954 version. Being able to research the source of a law is very important to determining how that law is supposed to be properly applied under the law. Without a review of the source materials it is very difficult to accurately determine how a law was ORIGINALLY intended to be applied, and the courts, of course, only have authority over the law, under, and to the extent of, its original intent. So we go to Section 22(a)in the 1939 code, and we see that the format has changed, but indeed, the substance is pretty much the same as in 1986.


SEC. 22. GROSS INCOME.

(a) General Definition.-"Gross Income" includes gains,
profits, and income derived from salaries, wages, or
compensation for personal service ... of whatever kind
and in whatever form paid, or from professions,
vocations, trades, businesses commerce or sales, or
dealings in property, whether real or personal, growing
out of the ownership or use of or interest in such
property; also from interest, rent, dividends,
securities, or the transaction of any business carried
on for gain or profit, or gains or profits and income
derived from any source whatever....


But it's very important to understand how Section 22 was implemented and applied in 1939 in order to understand how Section 61 is supposed to be applied today. The two sections are inextricably linked in such relevant fashion, and the answer to our question of how Section 61 can be Constitutional, given the Pollock decision, can only be found by a thorough examination of this relationship.

As you can see here, from the Code of Federal Regulations, Index of Parallel Tables - 1991 enabling regulations for the 1939 code sections, it clearly shows that Section 22, under the 1939 code, was implemented under Title 26, Part 519.


CFR INDEX PARALLEL TABLE

1991 Enabling sections

_____________________________________

26 U.S.C. (1939 I.R.C.)

         22 ........................................... 26 Part 519

         40 ........................................... 26 Part 1

         62 ............................................26 Parts 509,513,514,520,521

         143-144 ................................... 26 Part 521

         ....


The next table reveals what Part 519 is:


CHAPTER 1 - INTERNAL REVENUE SERVICE

DEPARTMENT OF THE TREASURY

(Parts 500 to 529)

____________________________________________

SUBCHAPTER G - Regulations Under Tax Conventions

Part

500 [Reserved]

501 Australia .........................

502 Greece ............................(x)

503 Germany ...........................(x)

504 Belgium ...........................

505 Netherlands .......................

506 Japan .............................

507 United Kingdom ....................

509 Switzerland .......................(x)

510 Norway ............................

511 Finland ...........................

512 Italy .............................

513 Ireland............................(x)

514 France ............................(x)

515 Honduras ..........................

516 Austria ...........................(x)

517 Pakistan ..........................(x)

518 New Zealand .......................

519 Canada ............................

520 Sweden ............................(x)

521 Denmark............................(x)


Part 519 is the Canadian Tax Treaty. What Section 61 actually defines, under the letter of the law; are the sources of taxable income under the foreign tax treaty with Canada. It does not define the domestic sources of taxable income. It defines the Canadian sources, under the Canadian Tax Treaty.

The countries shown in the table with an '...(x)' (ed.'s addition) are the countries with whom America has current tax treaties, in effect today (1996). However, since the Canadian Tax Treaty expired in 1993, Part 519 is now shown as reserved for future use in this Table, and Section 61 no longer has any legitimate application within Title 26 (IR Code) for the purpose of defining what gross income is (except, perhaps, under other tax treaties).

But, most citizens are ignorant of the law, they're ignorant of the application of the law, they're ignorant of the history of the law and these Court rulings, and the IRS relies on and takes advantage of that ignorance. The IRS relies on your ignorance, and your wrongfully self assessing the tax by using the wrong form. And legitimately, under the law, that's not the way the law is actually applied, nor was it ever intended to be applied in such fashion.

The IRS claims that Section 6201 grants them the authority to assess income taxes. It states:

6201. Assessment authority.

(a) Authority of Secretary. The Secretary is
authorized and required to make the inquiries,
determinations, and assessments of all taxes imposed by
this title, or accruing under any former internal
revenue law, which have not been duly paid by stamp at
the time and in the manner provided by law. Such
authority shall extend to and include the following:


        (1) Taxes shown on return. The Secretary shall assess
         all taxes determined by the taxpayer or by the
         secretary as to which returns or lists are made under this
         title.

        (2) Unpaid taxes payable by stamp.

         (A) Omitted stamps. ...

         (B) Check or Money Order not duly paid. ...

        (3) Erroneous income tax prepayment credits. ....

.........
(b) Amount Not To Be Assessed.

        (1) Estimated income tax. No unpaid amount of estimated income tax
         required to be paid under section 6654 or 6655 shall be assessed.....


Are income taxes paid by stamp? No! Now, are you beginning to understand why the IRS wants you to voluntarily file a return? Because subparagraph (a)(1) here gives them the authority to assess taxes shown on returns. But, let's suppose you don't file a return; what authority is left? Well, Subsections 2 and 3 are left. "(2) Unpaid Taxes Payable By Stamp." Again, are income taxes payable by stamp? No, they're not. And (3): "Erroneous Income Tax Prepayment Credits". That's it. That's the true extent of the authority to assess taxes under the law 1- Taxes shown on returns (done voluntarily), 2 - unpaid taxes payable by prepayment credits (withheld taxes). So where is the legal authority to assess income taxes not shown on a return? (for individuals who do not file).

Now, it's interesting to note, down at the bottom of 6201, it also states "(b) Amount Not To Be Assessed. (1) Estimated income tax. No unpaid amount of estimated income tax required to be paid under section 6654 or 6655 shall be assessed". Remember, 6654 (e)(2)(C), your exception to the failure to file? Right here under 6201 their claimed authority, it states that if 6654 applies, no unpaid amount of estimated income tax is required to be paid. If there is no return, the IRS has no legal authority to assess income taxes, and surprisingly enough, they admit that, so they claim Section 6020 applies. The IRS claims that Section 6020 allows them to prepare and file a Form 1040 return for those individuals who refuse to do so voluntarily. It states:

6020. Returns prepared for or executed by Secretary.

(a) Preparation of return by Secretary. If any person
shall fail to make a return required by this title or
by regulation prescribed thereunder, but shall consent
to disclose all information necessary for the
preparation thereof, then, and in that case, the
Secretary may prepare such return, which being signed
by such person, may be received by the Secretary as the
return of such person.

(b) Execution of return by Secretary.

(1) Authority of Secretary to execute return. If any
person fails to make any return required by any
internal revenue law or regulation made thereunder at
the time prescribed therefor, or makes, willfully or
otherwise, a false or fraudulent return, the Secretary
shall make such return from his own knowledge and from
such information as he can obtain through testimony or
otherwise.

(2) Status of returns. Any return so made and
subscribed by the Secretary shall be prima facie good
and sufficient for all legal purposes. (emphasis added)


As you can see Subsection (a) says:

"If any person shall fail to make a return required by this title or by regulations prescribed thereunder, but shall consent to disclose all information necessary in that case, the Secretary may prepare such return...".


Subsection (a) requires consent from the citizen. So the IRS claims that Subsection (b) is what applies. Subsection (b) says:

"if a person fails to make any return required by any
internal revenue law or regulation made thereunder at
the time prescribed therefor, or makes, willfully or
otherwise, a false or fraudulent return, the Secretary
shall make such return from his own knowledge and from
such information as he can obtain through testimony or
otherwise."


Here, the Secretary is authorized, in fact required, to file forms for individuals if they fail to do so. So, if the Secretary was required; why do they charge citizens with the failure to file ? The only requirement that can be found in the law is for the Secretary. It's the secretary that fails the requirement to file the assessment forms, not the citizen. Also note that the Secretary must sign (subscribe) the return for it to be valid (prima facie).

So, the IRS claims that 6020(b) authorizes them to file a Form 1040 for a citizen who refuses to do so voluntarily. However, the Internal Revenue Manual, in Chapter 5200, addresses the proper legal use and invocation of 6020(b). It states:


5290. Refusal to file - IRC 6020(b) Assessment Procedure.

5291. Scope

(1) This procedure applies to employment, excise and
partnership returns .... the following returns will be
involved:


(a) Form 940 - Employer's Annual Federal Unemployment Tax Return

(b) Form 941 - Employer's Quarterly Federal Tax Return

(c) Form 942 - Employer's Quarterly Tax Return for Household Employees

(d) Form 943 - Employer's Annual Tax Return for Agricultural Employees

(e) Form 11-B - Special Tax Return - Gaming Devices

(f) Form 720 - Quarterly Federal Excise Tax Return

(g) Form 2290 - Federal Use Tax Return on Highway Motor Vehicles

(h) Form CT-1 - Employer's Annual Railroad Retirement Tax Return

(i) Form 1065 - U.S. Partnership Return of Income


It clearly states that:

"This procedure applies to employment, excise and partnership tax returns".


Does that say that 6020(b) applies to individual return? No, it doesn't. It applies to employment excise and partnership tax returns. And look at what forms it states they are authorized to file under 6020(b):

" Form 940 ... 941 ... 942 ... 943 ... 11-B ... 720 ...

2290 ... CT-1 ... and ... 1065"


End of list. Is Form 1040 listed here? No, it is not! Form 1040 is not one of the forms that the IRS is actually authorized to file under Section 6020(b), according to the Internal Revenue Manual itself! 6020(b) is authorized only for employment, excise & partnership tax returns.

Why? Because, the tax is not imposed in a direct fashion on the domestic income of U.S. citizens. And, again in the Internal Revenue Manual (IRM), at 5293.1 it states:

Returns Prepared Under IRC 6020(b)

5293.1

General.

(1) If the taxpayer fails to file employment,
excise and partnership tax returns by the specified
date, the return should be prepared under the authority
of IRC 6020(b).....


Does that say individual returns? No! Again it emphasizes employment, excise and partnership returns only, not individual returns.


Finally at IRM 5293.1(7) it states:


(7) In unable to locate situations when the
proprietors, partners or responsible officers and
assets cannot be located and:

(a) when their SSNs can be determined process the
returns and follow the guidelines in IRM 5263 for returns
without full payment; or

(b) when their SSNs cannot be determined, close the
delinquency using TC (transaction code) 593 with the
proper closing code. (see the guidelines in IRM
5235(2)(c).


Now, what do Social Security numbers have to do with delinquencies under Subtitle A? Why would they close a delinquency simply because there is no Social Security number for the individual? Why is a Social Security number necessary to have an income tax delinquency ? Social security numbers, under the law, have nothing at all to do with income taxes! They are only to be used for the administration of the Subtitle C - Employment Tax laws contained in chapters 21 through 25. The improper use of 6020(b) can be further exposed by a review of Sections 6061 and 6065.

6061. Signing of returns and other documents. Except
as other wise provided by sections 6062 (Signing of
corporation returns) and 6063 (Signing of partnership
returns) , any return, statement, or other document
required to be made under any provision of the internal
revenue laws or regulations shall be signed in
accordance with forms or regulations prescribed by the
Secretary.

6065. Verification of returns. Except as other wise
provided by the Secretary, any return, declaration,
statement, or other document required to be made under
any provision of the internal revenue laws or
regulations shall contain or be verified by a written
declaration that it is made under the penalties of
perjury.

Section 6061 states:


"Any returns, statements or other documents required to
be made under any provision of the internal revenue
laws or regulations shall be signed in accordance with
forms or regulations".

And Section 6065 states:

"any return declaration, statement, or other document
required to be made under any provision of the internal
revenue laws or regulation shall contain or be verified
by a written declaration that it is made under the
penalties of perjury".

Furthermore, Section 6020 subsection (b)(2) stated:

"Any return so made and subscribed by the Secretary
shall be prima facie good and sufficient for all legal
purposes."

I have never seen a substitute Form 1040, prepared by the IRS, that was either signed, or sworn to. Obviously that would be a violation of these laws. The IRS is required by law to sign these documents, but they refuse to do so, because they know they're acting outside the authority authorized under the law and actually contained within the Revenue Manual. They know that if they sign the documents, they will assume the liability for the wrongful claims made on them. They do not want to do that, so they refuse to sign. They fill it all out and send it to you, for you to sign. They refuse to validate their own work with a signature as required under the law, but they demand that you, the citizen, honor this fraudulent work with payment, without anyone from the government ever validating it for you or swearing that it's true. It is a violation of the law, but the citizens generally accede to the demands, and out of ignorance, they comply. But the fact of the matter is: the law supports you, the citizen, and does not support the United States government.

Finally the Delegation Orders actually filed at the District offices, delegating the Authority to prepare and execute returns under 6020(b) read:


INTERNAL REVENUE SERVICE

SOUTHWEST REGION

Order No.

DD-OKC-150, Rev. 5

OKLAHOMA CITY DISTRICT

CR: SD-61


DELEGATION ORDER

Date of issue: Nov 27 1987

Effective Date: Nov 27 1987

Subject:



AUTHORITY TO EXECUTE RETURNS

Authority is redelegated to Revenue Officers, GS-9 and
above to prepare and execute the following returns on behalf of
the District Director under Section 6020(b) of the Internal Revenue
Code.

         Form 940, Employer's Annual Federal Unemployment Tax Return;

         Form 941, Employer's Quarterly Federal Tax Return;

         Form 942, Employer's Quarterly Tax Return for Household Employees;

         Form 943, Employer's Annual Tax Return for Agricultural Employees;

         Form 11-B, Special Tax Return - Gaming Services;

         Form 720, Quarterly Federal Excise Tax Return;

         Form 2290, Federal Use Tax Return on Highway Motor Vehicles;

         Form CT-1, Employer's Annual Railroad Retirement Tax Return; and

         Form 1065, U.S. Partnership Return of Income


This authority may not be redelegated.


This order supersedes Delegation Order DD-OKC-150 (Rev. 4) dated

December 13, 1984

Reference: Treasury Regulations 301.6020-1(b)

Commissioner Delegation Order No. 182 (rev. 1)
IRM 5292
K. J. Sawyer

District Director


This list agrees completely with the Forms shown as authorized under 6020(b) in the Internal Revenue Manual itself. The IRS cannot produce a delegation order for any district in the country authorizing the preparation or execution of a Form 1040. Although this Delegation Order is for Oklahoma City, the Orders for the other District Offices are exactly the same.

So, how does the IRS get away with the fraud that they have been perpetrating on the American People. WE ARE IGNORANT. Amazingly enough, the IRS computer systems have been properly programmed and will not trigger or initiate a collection action against a citizen of the United States of America, UNLESS THEY ARE FED FRAUDULENT INFORMATION by an IRS employee.

This is, of course, exactly what the IRS does! If you have ever received a letter from the IRS you can look and see, usually in the upper right hand corner area, what the CP number of the letter is. CP stands for Computer Paragraph. All of the IRS's collection correspondence is generated by computers and under the Paperwork Reduction Act all of it must be documented and properly authorized. The Internal Revenue Manual contains an explanation relating the proper legal use of each of these CP codes and corresponding letters. The Manual clearly shows that the letters generated by the computers that relate to individuals carry a TWO DIGIT CP CODE. The Manual further shows that all BUSINESS accounts are addressed with letters that use a THREE DIGIT CP CODE. All of the three digit CP Code Letters ARE RESERVED FOR USE WITH BUSINESSES. It is the those Business letters that individuals wrongfully receive that threaten enforced collection of the income tax. If you have one, see what the CP Code on your letter is. If it carries three digits: you are the victim of IRS FRAUD and EXTORTION.

What the IRS illegally does is post a code on your Individual Master File (IMF) in the computer, that deceives the computer into believing that YOU ARE A BUSINESS instead of an individual. That fraudulent entry is used by the computer systems to wrongfully trigger a collection action against a citizen, which action is, in reality, reserved for use ONLY against businesses, because the computer knows that citizens are not actually liable.

THE IRS MUST DEFRAUD ITS OWN COMPUTER SYSTEM TO INITIATE A COLLECTION ACTION AGAINST A CITIZEN. ONCE THAT FRAUDULENT BUSINESS CODE IS ILLEGALLY POSTED ON YOUR IMF, THAT IMF, THE IRS'S OWN DOCUMENT, CAN BE USED AS PRIMA FACIE EVIDENCE IN COURT AGAINST THEM TO EXPOSE THE FRAUDULENT AND ILLEGAL NATURE OF THEIR ACTIVITIES AND ACTIONS.

If you are ignorant, and unaware of the fraud that they have committed you will not be able to stop their illegal theft of your property, perpetrated under this fraudulent deception of their own computer systems.

After the IRS illegally makes up a return that they illegally refuse to sign, and fraudulently deceive the computers into initiating the correspondence related to a collection action, they illegally create a deficiency within that return.

6211. Definition of a deficiency.

(a) In general. For purposes of this Title in the case
of income, estate, and gift taxes imposed by subtitles
A and B and excise taxes imposed by chapters 41, 42,
43, and 44, the term "deficiency" means the amount by
which the tax imposed by subtitle A or B, or chapter
41, 42, 43, or 44, exceeds the excess of -

(1) the sum of

         (A) the amount shown as the tax by the taxpayer upon his return,

         if a return was made by the taxpayer and an amount was
         shown as the tax by the taxpayer thereon, plus

         (B) the amounts previously assessed (or collected without
         assessment) as a deficiency, over -

(2) the amount of rebates, as defined in subsection (b)(2), made....


This section clearly states:

"... in the case of income, estate, and gift taxes imposed by Subtitles A & B ... "

Deficiencies are clearly based on Subtitle A and Subtitle B taxes (and the excise taxes in Chapters 41, 42, 43 & 44 - Subtitle D). So why is the IRS using the record of earnings collected under Subtitle C Employment Taxes when calculating deficiencies?? The IRS is wrongfully and illegally using the record of earnings created under the Subtitle C Employment Tax laws, for Social Security purposes and foreigners, to demand that you, the citizen, pay income tax on those domestic earnings. And that record of earnings comes not from any income tax withholding requirement under Subtitles A or B, it comes from the employment taxes imposed in Subtitle C. The record of earnings belonging to the citizen is coming from their voluntary participation in the social security program; whereby a social security number is provided to an employer on a W-4, who then withholds the taxes on wages for social security purposes under Subtitle C authorizations. We've already seen that income tax can only be withheld from foreigners, not from citizens, unless it is requested on a Form W-4 (where you specify deductions)!

Then the IRS takes that Subtitle C information and wrongfully and illegally uses it to demand Subtitle A Income taxes on those Subtitle C records of earnings. But this code section, 6211 states that a deficiency can only be based on Subtitle A and Subtitle B requirements, not Subtitle C. So the IRS is in violation of the law to claim that there is a deficiency based on that record of earnings. But that's what they do and they will continue to do it as long as you allow a record of earnings to accumulate under your name and social security number. As long as payers have your social security number and make reports to the IRS using that social security number the IRS is going to wrongfully and illegally use the information created under those subtitle C regulations to demand that you pay income taxes imposed under Subtitle A on foreigners. After fraudulently creating a deficiency the IRS wrongfully claims a lien on property.

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. (emphasis added)


The IRS refuses to say how, or under what code section, they have determined that individual citizens are LIABLE for tax on DOMESTIC income, THEY JUST PRETEND you are, and hope you don't know any better! The next thing the IRS tri