TREASURY DECISION 2313 INCOME TAXES
Treasury Department 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 decision clearly states "NON-RESIDENT ALIENS" several times !
ARE YOU A NON-RESIDENT ALIEN ?
ARE YOU SUBJECT ?
Paragraph 1 says NON-RESIDENT ALIENS ARE SUBJECT.
Paragraph 2 says NON-RESIDENT ALIENS ARE LIABLE.
It also says nonresident aliens cannot claim the exception in Paragraph C (see Sec. 6654. Failure to Pay Estimated Tax, Exceptions).
US Code Title 26 Internal Revenue
Sec. 6654. Failure to Pay Estimated Tax, Exceptions
Sec. 6654. Failure by individual to pay estimated income tax.
(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 - - 1 - (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. (Hmmmmm!!)
Remember the mysterious Paragraph C referenced in Treasury Decision 2313 ? Who does paragraph C here specify is excepted from the failure to pay estimated tax (file) ? Does that say "CITIZEN or resident" (aliens) ?
Who can claim that exception ? (see C.F.R. 1441-5 Claiming to be a Person Not Subject to Withholding)
Code of Federal Regulations Title 26
26 Code of Federal Regulations Sec. 1.1441-5
Title 26 CHAPTER I
Sec. 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 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. 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. For purposes of chapter 3 of the Code a written statement from a partnership or corporation claiming that it is not a foreign partnership or foreign corporation may be relied upon by the withholding agent as proof that such partnership or corporation is domestic. This statement shall be furnished to the withholding agent in duplicate. It shall contain the address of the taxpayer's office or place of business in the United States and shall be signed by a member of the partnership or by an officer of the corporation. The official title of the corporate officer shall also be given.
(c) Disposition of statement and form. The duplicate copy of each statement and form filed pursuant to this section shall be forwarded with a letter of transmittal to Internal Revenue Service Center, Philadelphia, PA 19255. The original statement shall be retained by the withholding agent.
(d) Definitions. For determining whether an alien individual is a resident of the United States see Sec. 1.871-2. An individual with respect to whom an election to be treated as a resident under section 6013(g) is in effect is not, in accordance with Sec. 1.1441-1, a resident for purposes of this section. For definition of the terms 'foreign partnership' and 'foreign corporation' see section 7701(a) (4) and (5) and Sec. 301.7701-5 of this chapter. For definition of the term 'United States' and for other geographical definitions relating to the Continental Shelf see section 638 and Sec. 1.638-1.
(Approved by the Office of Management and Budget under control number 1545-0795) (Secs. 1441(c)(4) (80 Stat. 1553; 26 U.S.C. 1441(c)(4)), 3401(a)(6) (80 Stat. 1554; 26 U.S.C. 3401(a)(6)), and 7805 (68A Stat. 917; 26 U.S.C. 7805) of the Internal Revenue Code of 1954) (T.D. 6500, 25 FR 12076, Nov. 26, 1960, as amended by T.D. 6908, 31 FR 16773, Dec. 31, 1966; T.D. 7277, 38 FR 12742, May 15, 1973; T.D. 7842, 47 FR 49842, Nov. 3, 1982; T.D. 7977, 49 FR 36834, Sept. 20, 1984; T.D. 8160, 52 FR 33933, Sept. 9, 1987)
Paragraph 3 says FORM 1040 is to be used to report the income of NON-RESIDENT ALIENS, NOT CITIZENS.! While it is true that the citizen does fill out and file Form 1040, HE IS NOT SUPPOSED TO REPORT HIS OWN INCOME ON FORM 1040, JUST THE NONRESIDENT ALIEN'S. And, of course, if he does NOT "represent" any nonresident aliens he has no requirement at all to file a Form 1040.
This of course, agrees completely with the tables in the law showing what form is required from citizens regarding their own income (see 26 CFR 602.101 - The Form Required)!
- 2 - I'll BET YOU THOUGHT THIS TAX APPLIED TO YOU !
IT DOESN'T !
26 CFR 602.101 - The Form Required
The Paperwork Reduction Act was passed in 1980. This act prohibits the government and its agencies from attempting to collect more information than is actually required by the letter of the law.
Under this Act, Section 602.101 was created in the Code of Federal Regulations for Title 26 in 1985, when the I.R.S. finally complied with its mandate to list ALL of the information collection requests (forms) required by any given code section, necessary to satisfy the legal requirements of that code section. This table is the complete legal authority for the IRS to request and demand information from individuals in the United States of America This table was prepared and provided by the I.R.S. itself. 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 602.101 (4-1-94 Edition)
CFR part or section where identified and described Current OMB Control No 1.1-1 ...... 1545-0067 1.23-5...... 1545-0074. 1.6012-0...... 1545-0067 1.6012-1...... 1545-0074
This table clearly shows that the only Form required by Chapter 1, Sec. 1. Tax Imposed (the code section that imposes the income tax) carries the OMB Document Control number 1545-0067.
The OMB Document Control number assigned to Form 1040 is 1545-0074. (You can find the OMB Document Control number in the upper right hand corner of any Form 1040.) According to the law, and the I.R.S.'s own filings with the Office of Management and Budget (OMB), Form 1040 is NOT required from citizens to report their own income !!!
What form is required?
FORM 2555 - FOREIGN EARNED INCOME, carries the OMB Document Control number 1545-0067. Does that help ?
FORM 2555 IS THE ONLY FORM REQUIRED BY LAW, ACCORDING TO THE LAW, TO SATISFY THE INDIVIDUAL'S LIABILITY ESTABLISHED AND IMPOSED IN Sec. 1. Tax Imposed; THE CODE SECTION THAT IMPOSES THE INCOME TAX !
What Form(s), under the Paperwork Reduction Act is/are required to satisfy the liability imposed by this code section ? (see 26 CFR 602.101 - The Form Required)
See Sec. 63. Taxable Income Defined and Sec. 61. Gross Income Defined to see how the IRS claims the laws are applied. BUT THE FILING REQUIREMENTS SHOWN BY THE LAW DO NOT AGREE WITH THOSE CLAIMS !
FORM 2555 STATES RIGHT AT THE TOP, IN BOLD LETTERS: - 3 - "FOR USE BY U.S. CITIZENS AND RESIDENT ALIENS ONLY"
WOULD YOU LIKE TO SEE ONE ? Be sure to check the OMB Document Control Number in the upper right hand corner !
Now compare that with the OMB Document Control number in the upper right hand corner of a FORM 1040
Now you probably noticed that the NEXT LINE IN THE TABLE DOES REQUIRE 1545-0074. It relates to 1.23-5 NOT 1.1 (Chapter 1, Section 1), but what is 1.23-5 ?
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 ......
What 1.23-5 relates to is the Renewable Energy Resource Credit. The table shows that If you wish to claim this credit on your tax return, YOU MUST USE FORM 1040 TO CLAIM THE CREDIT !
And there are a whole lot of other legal reasons why Form 1040 might be required, TO CLAIM CERTAIN DEDUCTIONS, CREDITS OR REFUNDS, BUT NOT TO SATISFY LIABILITY !
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're young and naive, so they withhold more than is necessary; you get to used to filing, TO GET A REFUND, NOT to pay the tax. Then when you get older, you've been filing Form 1040 all your life, so you continue doing what you did all along, IGNORANTLY. Because you're no longer filing to get a refund, NOW YOU"RE FILING TO PAY A TAX YOU'RE 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 !
You may also have noticed that 6012-1 also requires Form 1040, BUT IN ASSOCIATION WITH WHAT TAXING STATUTE. In other words, 26 USC 6012 is an enforcement statute, NOT an imposing statute. It enforces the filing requirement for individuals established by ALL of the different code sections relating to individuals, BUT it does not expand the specific requirements of any given statute. The limitations of those specific requirements are shown in the table from 26 CFR 602.101. While 6012 can be used to enforce the filing requirements of both Section 1 and 1.23-5, it cannot be used to CRISS-CROSS the requirements between sections, which is, of course, exactly what the IRS does.
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
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