I have answered most of the questions posted above, hope this helps. Read, read, read and then read some more. Mostly statutes and regulations, especially the old ones.
Q: Where does the law make me liable to pay an income tax?
A: It most likely doesn’t. The law is very specific as to what it applies to. The IRC spells out exactly what is taxable and what is not. The income that Congress can and cannot tax, as well as the statutes and regulations supporting this have been constant for many decades.
Q: What does it impose a tax on?
A: Taxable income, which is very generally defined in section 63, under the premise that is a general definition and that income, taxable income, gross income etc can be more specifically defined elsewhere in the code and the specific definition always over rides a general one.
Q: Where is taxable income defined?
A: Sections 62 and 63 define taxable income as gross income minus deductions, and section 61 defines gross income as any income from any source, unless specifically excluded by law. [this is actually mostly correct, your income is most likely excluded by fundamental and statutory law. So if you don’t have any gross income, you cant have taxable income]
Q: What items are excluded from gross income?
A: Refer to part II and part III of subchapter B, chapter 1, entitled "Items specifically included in gross income" and "Items specifically excluded from gross income", respectively. [Again, this is mostly correct, but there are other places in the code that discuss this. Along with that you should include basic principles of law, definitions, fundamental law, etc. Most likely you dont have any gross income, so dont worry about what is excluded from it.]
Q: Are wages income?
A: Yes. Section 61 explicitly lists "compensation for services" as a part of gross income, and so have courts repeatedly ruled. [I have never bought into the wages are not income argument. I don’t care whether they are income or not, because I know that my wages are not TAXABLE income. If you desire, look up definitions for words in the sections that you are questioning. Often words dont mean what you think they do.]
Q: Aren't wages a source of income, rather than income itself?
A: Wages are not the source of income, like you are thinking. The source has to do with location and the type of earning. For example, the IRS will most likely tell you that life insurance proceeds are not taxable as income, neither are some grants and many municipal bonds. So there are things that are ‘income from sources’ that are not taxable as income. What the IRS fails to realize (or fails to acknowledge) is simply that the scope of the income tax is very narrow. It is completely legal and constitutional, just grossly mis-applied.
Q: I mean, the law only imposes a tax on income I somehow derive from wages etc., such as by re-investing them; wages themselves are not a part of gross income.
A: Not sure what you are saying here, maybe referring to profit earned, which doesnt really come into play here. If you live and work in a state and your income comes from that state and you don’t have income from a foreign country, you are not a US citizen, etc., your earnings are not taxable. I don’t care if it rental property income or $5 an hour from McDonalds.
Q: Do I get to deduct my living expenses from my income?
A: This is completely irrelevant, you have not gross income and you have no taxable income if certain conditions are met, don’t worry about what you can deduct. It’s like the old joke about the cheap hooker. A man says will you sleep with me for $1000 and the girl says hell yeah I will… He says what about for $10? She says no way, what do you think I am?? He replies, we have already established what you are and what we are doing, now we need to agree on a price!
If you are talking about deductions and credits or hearings or payment plans or any of that crap, you are playing their game by their rules and have most likely already lost. With a few exceptions you are dealing with the crooks, don’t expect them to help you or tell you the truth about anything, especially something that hurts them and helps you.
Q: Exactly who is liable to pay an income tax?
A: Foreigners earning domestic income, US Citizens earning domestic and foreign income, people participating in BATF activity, and a few others and thats about it. There are lots of perfectly legal ways to earn tax free income while living and working in one of the 50 states.
Q: Where does the law demand that I make a return?
A: The law requires you to make a return (think about that word) of income, if you have taxable income that you are due back or if you owe income taxes to the IRS. If you don’t have taxable income and therefore don’t owe any taxes, why in the world would you file an income tax return?? Do some research on the history of a 'return' looking up definitions, etc. It will tell you a lot.
Q: What is the effect of the 16th Amendment?
A: This has been covered to death, but in simple terms it prevented direct taxes from being taken out of the category of apportioned taxes. Indirect taxes are essentially excise or use taxes and this is the category that income taxes and almost all other taxes that we know are in. If you pay ad valorem tax on your vehicle it is a use tax. If you pay tax when you buy beer or cigarettes, that is a use tax, etc. If your income originates from a source that is deemed to be special or privileged activity or it comes from certain sources, then you must pay an activity tax on it. If it does not meet this criteria, then your income is not taxable as income. I dont care personally whether it was ratified correctly or passed or whateve, it gave no new taxing powers to Congress.
Q: Section 1 does not come up in some search; 861 does.
A: Have no idea what this is. You can search the USC 26 here:
http://www.access.gpo.gov/uscode/title26/title26.html
Q: What does section 861 say anyway?
A: Read Larken’s Taxable Income Report if you are interested in this section. I am not going to get into that here.
Q: Some law (or regulation) says that term X "includes" item Y; this means that it doesn't include item Z, otherwise thought of as a part of term X, because it is not listed.
A: All statutes must be read in light of the Constitution and cannot extend beyond the limits of the authority that created them. If Congress doesn’t have the power to tax green frogs kept as pets, but some agency tries to tax your pet green frog, then its very simple to determine whether they have the ability to tax that item or not. The power to lay and collect taxes is granted by the Constitution, but of course there are limits on what can be taxed. Can Congress tax a Frenchman living in an apt in Paris and walking down the street everyday to work at his families bakery?? Of course not.... Statutes typically do not extend to matters not specifically pointed out, which is what I think you are referring to. So if a statutes says green, red, blue and yellow frogs can be kept as pets with a special permit from the Department of Natural Resources, don’t assume that statute also applies to white or brown frogs. If they were to be included, they should have been put on that list.
