REQUEST FOR TAX RETURN

#1 04-28-2004, 07:45 PM

GREAT FORUM.

I'M KIND OF NEW TO ALL THIS SO I'M LOOKING FOR SOME GUIDANCE.

I JUST RECEIVED A LETTER FROM THE IRS. IT'S A REQUEST FOR TAX RETURN.

BASICALLY THEY WANT ME TO FILE A 1040 FORM AND PAY IF I OWE ANY TAXES OR SHOW THAT I'M NOT REQUIRED TO FILE.

I WANT TO SEND THEM A LETTER SHOWING THAT I'M NOT REQUIRE TO FILE. ANY SUGGESTIONS?

THANKS.

rushpat · #2 04-28-2004, 09:31 PM

We need more info. Did you file? Have you filed in the past, then stopped? Did you communicate with them? Did you try to ask things about liability, etc?

Any detail you can give will help out. Those of us on the forum can then help you more after that.

Also, spend time reading the forum, and go to the Events & Seminars section and listen to the audio, watch the videos.

#3 04-28-2004, 09:48 PM

Well, let's see:

If it's a CP-515, they're alleging the receipt of "information from payees" and other sources, blah blah, "suggesting" you owe a debt, blah blah.....

Start here:

http://www4.law.cornell.edu/uscode/26/6061.html

http://www4.law.cornell.edu/uscode/26/6065.html

All those little w-2's, etc. are, by definition, "information returns.& Betcha never have gotten one that was "signed" AND "verified." Neither has the IRS.

Respond immediately and "ask" to see the information upon which they are basing their allegations.

Over four years later, and I'm still waiting. The war continues....

Begin NOW to read and study the Internal Revenue Manual.& Here's the link:

http://www.irs.gov/irm/index.html

For example, we here all about "substitute returns" prepared by the Secretary. From the I R Manual:
<H3>4.12.1.4.3.2 (05-03-1999)
IRC Sec. 6020(b) </H3>

<LI>Code Section 6020(b) states, "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."
1. <LI>IRC SEC. 6020(b)(2) states "Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes."
 <LI>This is a Substitute for Return</LI>
</LI>

ME again: Yes, that's what it says.& Keep reading (from the Manual):
<H3>4.12.1.17 (05-03-1999)
No Return Secured Agreed Closure IRC 6020(a) </H3>

<LI>If the nonfiler does not provide a delinquent return, all adjustments, tax, and penalties will be proposed on an income tax change report (Form 1902–B or Form 4549). If the nonfiler signs this report, it becomes a return filed by the Service under IRC 6020(a). 
1. 
 <LI>Form 3198, Special Handling Notice, will be attached to the case with notation "IRC 6020(a) Return — Close Disposal Code 08" .
 <LI>If a "dummy/SFR" has not been processed follow procedures to establish the entity on Master File. </LI>
</LI>

Me: That's where I am: Got a Form 4549 I'm dealing with. I guess they "forgot" to mention in the code that if you do NOT sign the crap they send you, nothing means anything. Just know going into this that at every step of the way, they MUST try to get you to "volunteer" information. DON'T DO IT!&

See other posts here at SJ about stuff like "critical reading."& I mean really READ the stuff they send. Pay attention to the "details": signed, unsigned, the date (no kidding--received one letter TWO DAYS before the date that was on the letter!).

It's a war. Treat it as such. They are not your friends and they are not trying to help. They ARE trying to coerce you into waiving your rights, volunteering information that the WILL use against you.

The system of taxation IS voluntary. NEVER forget that.
And now, in essence, having accused you of NOT "volunteering," they are proceeding with "distraint." That's okay. Those are the rules. The only problem, for them, is that "by distraint" means "due process." I think these dumbasses can't even spell "due process."

Randy

Oh, might as well add one more thing to show you just how really screwed up all this is. Okay. TWO things:

1) Let's say you would decide to make an "offer in compromise" one of these days.
<H2>Part 4. Examining Process
Chapter 18. Exam Offer-in Compromise
Section 2. Doubt as to Liability Offers</H2>
<H3>Note:</H3>

Because the role of Examination is generally to make determinations of the correct tax liability, acceptance of such offers in compromise by Examination should be uncommon. (See Section 2.5(2) below.) The extent of any determination of "doubt" should be in keeping with Policy Statement P–4–117, Examination Authority to Resolve Issues.

3. A doubt as to liability offer may not be rejected solely because the Service is unable to locate the taxpayer's return or return information. The taxpayer cannot be required to submit a financial statement for a doubt as to liability offer.

Me: See? They want you to believe you HAVE to file a 1040, but they can NOT require a "financial statement" re "offers in compromise"? What the hell is a 1040 if it's NOT a "financial statement"? Bastards.

And this is just how devious these pricks really are:

5.1.10.2.2 (04-01-2003)
Promoting Public Confidence

3. If a telephone call is placed to a third party only to acquire location information (taxpayer's place of abode and phone number at such place, or place of employment) in connection with the collection of unpaid tax, employees should identify themselves by name only.Employees should not identify themselves by title or as a Service employee unless the third party expressly requests that information. 

When an employee attempts to contact a taxpayer by telephone and someone other than the taxpayer answers the phone, the employee should not identify themselves as a Service employee or state the reason for the attempted contact. However, if the employee seeks information about the taxpayer from the person who answered the phone that may help in determining or collecting the liability, follow third party contact procedures and make a reprisal determination.
<H2>Part 31. Criminal Tax</H2>
<H2>Chapter 3. Criminal Tax Policies and Procedures</H2>
<H2>Section 3. Voluntary Disclosure</H2>
<H3>31.3.3.1 (01-17-1996)
Voluntary Disclosure </H3>

2. Elements of Voluntary Disclosure. A taxpayer's communication will be considered a voluntary disclosure when it is:
<DIR>

a.Truthful;

b.Timely;
A disclosure is timely if it is received before:
i The Service has initiated an inquiry that is likely to lead to the taxpayer, and the taxpayer is reasonably thought to be aware of that investigative activity; or
ii Some event known by the taxpayer occurred, which event is likely to cause an audit into the taxpayer's liabilities;

c.Complete; and,

d.When the taxpayer shows a willingness to cooperate (and does in fact cooperate) with the I.R.S. in determining the correct tax liability. </DIR>

4. The I.R.S.'s voluntary disclosure practice creates no substantive or procedural rights for taxpayers, but rather is a matter of internal I.R.S. practice, provided solely for guidance to I.R.S. personnel.
<H2>Part 25. Special Topics</H2>
<H2>Chapter 1. Fraud Handbook</H2>
<H2>Section 7. Failure to File</H2>

3.If the possibility of fraud exists,
<DIR>

a.DO NOT SOLICIT tax returns. If returns are submitted, they should be accepted; 

b.DO NOT VOLUNTEER ADVICE to the taxpayer concerning any course of action he/she should follow; 

c.DO NOT DISCUSS tax liabilities, penalties, fraud, or referral possibilities with the taxpayer.

ME AGAIN: They've been "soliciting" me for over four years. Guess what? They're including penalties for "fraud." But wait. IF "fraud" is suspected, they should never have "solicited," right? Gee, this is so much fun. One more, and I'll quit:
<H3>25.1.7.4 (01-01-2003)
Development of Fraud </H3>
<DIR>

2.Verify income from all available sources. Methods of income verification include, but are not limited to: </DIR>

<LI>Securing current financial information including checking public records for assets and a physical observation of the taxpayer’s residence, place of business or both. This information will be used to determine whether the taxpayer is prospering and has the ability to pay the taxes, or not complying due to an inability to pay taxes. </LI>

</DIR>

BIG BROTHER IS WATCHING!

Funny, ain't it? They can "verify" my "income," but not the damned "law" that's supposed to make all this "income tax" legal?

These people suck, period.

I'm outta here. Sorry about the not-so-tidy post. This is my personal demon......

Randy

#4 04-28-2004, 10:16 PM

THANKS RANDY.

THEY SENT ME A CP-515 NOTICE LIKE YOU MENTIONED.

I DID CONTRACT WORK AND RECEIVED A 1099 FROM EMPLOYER BUT DID NOT FILE FOR THAT YEAR (2002). I HAD BEEN FILING ON TIME ALL MY LIFE.

I GUESS IT TOOK THEM OVER A YEAR TO FIND OUT THAT I DIDN'T FILE FOR 2002. I KNEW THIS LETTER WAS COMING SOONER OR LATER.

LIKE I SAID. I JUST STARTED THE RESEARCH ON INCOME TAX A COUPLE MONTHS AGO. I'LL FOLLOW YOUR ADVISE AND SEE WHAT HAPPENS.

THANKS AGAIN FOR THE LINKS.

#5 04-28-2004, 10:38 PM

I FORGOT TO MENTION THAT THERE'S A FORM INCLUDED FOR ME TO FILL OUT AND SIGN UNDER PENALTIES OF PERJURY.

IT'S CALLED "INFORMATION ABOUT YOUR RETURN". THEY WANT FOR ME TO COMPLETE AS NECESSARY AND RETURN ENTIRE PAGE.

I CAN SEE WHERE THEY'RE GOING WITH THIS.& &SECTION "A"&SAYS "IF YOU ARE NOT REQUIRED TO FILE, PLEASE COMPLETE THE FOLLOWING:"

THEY WANT ME TO CHECK ONE OF THE OPTIONS UNDER FILING STATUS. THEY WANT FOR ME TO ADMIT THAT I MUST FILE A RETURN. VERY CLEVER ON THEIR PART.

I GUESS I'M NOT SIGNING ANYTHING AND WILL PRESUME THIS PAGE IS NOT NECESSARY TO FILL OUT AND RETURN.

ANY COMENTS? THANKS.

Ice · #6 04-28-2004, 11:27 PM

I remember running across a letter to send to the IRS that explained that the 1040 was for a specific type of "income" (I think for "gift tax") and requests that the IRS give the proper form to file for earnings because you don't want to&commit perjury by claiming that you received "gifts" that you didn't receive&... but I can't remember where I saw that letter.& I thought it was pretty clever.& One thing for sure - it can be used as an immediate response to stay in honor... and it gives them something to think about while you work out your strategy.

&

wirlwind · #7 04-28-2004, 11:39 PM

I also read somewhere that the w-2 form that we get is a tax statement and can be used in place of a 1040.& I'll have to find that.& I also found this letter which addresses the authority of the IRS.& Thought it was interesting.&

Last update: April 18, 2003)

From the desk of
William J. Benson
P.O. Box 550
South Holland, Ill. 60473
March 4, 1996
Mrs. Margaret M. Richardson (note: today, it is Charles Rossotti)
Commissioner of Internal Revenue
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Dear Mrs. Richardson,
Many years ago, I tried to find within the Internal Revenue Code the section which created your agency, the Internal Revenue Service, but I was unable to find it. I then decided to locate other sources of information regarding how the Internal Revenue Service was established and what I found was nothing short of amazing.
In 1972, an Internal Revenue Manual 1100 was published in both the Federal Register and Cumulative Bulletin; see 37 Fed. Reg. 20960, 1972-2 Cum. Bul. 836, a copy of which is attached for your convenience. On the very first page of this statement published in the Bulletin, the following admission was made:
<DIV align=justify>
<BLOCKQUOTE>"(3) By common parlace [sic] and understanding of the time, an office of the importance of the Office of Commissioner of Internal Revenue was a bureau. The Secretary of the Treasury in his report at the close of the calendar year 1862 stated that 'The Bureau of Internal Revenue has been organized under the Act of the last session...' Also it can be seen that Congress had intended to establish a Bureau of Internal Revenue, or thought they had, from the act of March 3, 1863, in which provision was made for the President to appoint with Senate confirmation a Deputy Commissioner of Internal Revenue 'who shall be charged with such duties in the bureau of internal revenue as may be prescribed by the Secretary of the Treasury, or as may be required by law, and who shall act as Commissioner of internal revenue in the absence of that officer, and exercise the privilege of franking all letters and documents pertaining to the office of internal revenue.' In other words, 'the office of internal revenue' was 'the bureau of internal revenue,' and the act of July 1, 1862, is the organic act of today's Internal Revenue Service."</BLOCKQUOTE>This statement, which again appears in a similar publication appearing at 39 Fed. Reg. 11572, 1974-1 Cum. Bul. 440, as well as the current IRM 1100, essentially admits that Congress never created either the Bureau of Internal Revenue or the Internal Revenue Service. To conclude that "Congress thought it had created this agency" is an admission that even the government itself cannot even find anything which created either agency. The only office created by the act of July 1, 1862, was the Office of the Commissioner; neither the Bureau nor the Service was actually created by any of these acts. </DIV>
I have no doubt that when employees of the IRS were researching its origins so that this statement could be included within IRM 1100, those employees must have performed a very thorough investigation. This obviously is the best position that your agency can develop regarding precisely how the IRS came into being. But besides the problem that these acts simply did not create either the Bureau or the IRS is the fact that these acts were repealed by the adoption of the Revised Statutes of 1873. Therefore, it would appear that your agency has never been created by any act of Congress, and this is a serious flaw.
At the state level, it is a well acknowledged rule that a duly constituted office of state government must be created either by the state constitution itself or by some legislative act; see Patton v. Bd. of Health, 127 Cal. 388, 393, 59 P. 702, 704 (1899)("One of the requisites is that the office must be created by the constitution of the state or it must be authorized by some statute"); First Nat. Bank of Columbus v. State, 80 Neb. 597, 114 N.W. 772, 773 (1908); State ex rel. Peyton v. Cunningham, 39 Mont. 197, 103 P. 497, 498 (1909); State ex rel. Stage v. Mackie, 82 Conn. 398, 74 A. 759, 761 (1909); State ex rel. Key v. Bond, 94 W.Va. 255, 118 S.E. 276, 279 (1923)("a position is a public office when it is created by law"); Coyne v. State, 22 Ohio App. 462, 153 N.E. 876, 877 (1926)("Unless the office existed there could be no officer either de facto or de jure. A de facto officer is one invested with an office; but if there is no office with which to invest one, there can be no officer. An office may exist only by duly constituted law"); State v. Quinn, 35 N.M. 62, 290 P. 786, 787 (1930); Turner v. State, 226 Ala. 269, 146 So. 601, 602 (1933); Oklahoma City v. Century Indemnity Co., 178 Okl. 212, 62 P.2d 94, 97 (1936); State ex rel. Nagle v. Kelsey, 102 Mont. 8, 55 P.2d 685, 689 (1936); Stapleton v. Frohmiller, 53 Ariz. 11, 85 P.2d 49, 51 (1938); Buchholtz v. Hill, 178 Md. 280, 13 A.2d 348, 350 (1940); Krawiec v. Industrial Comm., 372 Ill. 560, 25 N.E.2d 27, 29 (1940); People v. Rapsey, 16 Cal.2d 636, 107 P.2d 388, 391 (1940); Industrial Comm. v. Arizona State Highway Comm., 61 Ariz. 59, 145 P.2d 846, 849 (1943); State ex rel. Brown v. Blew, 20 Wash.2d 47, 145 P.2d 554, 556 (1944); Martin v. Smith, 239 Wis. 314, 1 N.W.2d 163, 172 (1941); Taylor v. Commonwealth, 305 Ky. 75, 202 S.W.2d 992, 994 (1947); State ex rel. Hamblen v. Yelle, 29 Wash.2d 68, 185 P.2d 723, 728 (1947); Morris v. Peters, 203 Ga. 350, 46 S.E.2d 729, 733 (1948); Weaver v. North Bergen Tp., 10 N.J. Super. 96, 76 A.2d 701 (1950); Tomaris v. State, 71 Ariz. 147, 224 P.2d 209, 211 (1950); Pollack v. Montoya, 55 N.M. 390, 234 P.2d 336, 338 (1951); Schaefer v. Superior Court in & for Santa Barbara County, 248 P.2d 450, 453 (Cal.App. 1952); Brusnigham v. State, 86 Ga.App. 340, 71 S.E.2d 698, 703 (1952); State ex rel. Mathews v. Murray, 258 P.2d 982, 984 (Nev. 1953); Dosker v. Andrus, 342 Mich. 548, 70 N.W.2d 765, 767 (1955); Hetrich v. County Comm. of Anne Arundel County, 222 Md. 304, 159 A.2d 642, 643 (1960); Meiland v. Cody, 359 Mich. 78, 101 N.W.2d 336, 341 (1960); Jones v. Mills, 216 Ga. 616, 118 S.E.2d 484, 485 (1961); State v. Hord, 264 N.C. 149, 141 S.E.2d 241, 245 (1965); Planning Bd. of Tp. of West Milford v. Tp. Council of Tp. of West Milford, 123 N.J.Super. 135, 301 A.2d 781, 784 (1973); Vander Linden v. Crews, 205 N.W.2d 686, 688 (Iowa 1973); Kirk v. Flournoy, 36 Cal.App. 3d 553, 111 Cal. Rptr. 674, 675 (1974); Wargo v. Industrial Comm., 58 Ill.2d 234, 317 N.E.2d 519, 521 (1974); State v. Bailey, 220 S.E.2d 432, 435 (W.Va. 1975); Leek v. Theis, 217 Kan. 784, 539 P.2d 304, 323 (1975); Midwest Television, Inc. v. Champaign-Urbana Communications, Inc., 37 Ill.App.3d 926, 347 N.E.2d 34, 38 (1976); and State v. Pinckney, 276 N.W.2d 433, 436 (Iowa 1979).
This same rule applies at the federal level; see United States v. Germaine, 99 U.S. 508 (1879); Norton v. Shelby County, 118 U.S. 425, 441, 6 S.Ct. 1121 (1886)("there can be no officer, either de jure or de facto, if there be no office to fill"); United States v. Mouat, 124 U.S. 303, 8 S.Ct. 505 (1888); United States v. Smith, 124 U.S. 525, 8 S.Ct. 595 (1888); Glavey v. United States, 182 U.S. 595, 607, 21 S.Ct. 891 (1901)("The law creates the office, prescribes its duties"); Cochnower v. United States, 248 U.S. 405, 407, 39 S.Ct. 137 (1919)("Primarily we may say that the creation of offices and the assignment of their compensation is a legislative function... And we think the delegation of such function and the extent of its delegation must have clear expression or implication"); Burnap v. United States, 252 U.S. 512, 516, 40 S.Ct. 374, 376 (1920); Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 173 (1926); N.L.R.B. v. Coca-Cola Bottling Co. of Louisville, 350 U.S. 264, 269, 76 S.Ct. 383 (1956)("'Officers' normally means those who hold defined offices. It does not mean the boys in the back room or other agencies of invisible government, whether in politics or in the trade-union movement"); Crowley v. Southern Ry. Co., 139 F. 851, 853 (5th Cir. 1905); Adams v. Murphy, 165 F. 304 (8th Cir. 1908); Scully v. United States, 193 F. 185, 187 (D.Nev. 1910)("There can be no offices of the United States, strictly speaking, except those which are created by the Constitution itself, or by an act of Congress"); Commissioner v. Harlan, 80 F.2d 660, 662 (9th Cir. 1935); Varden v. Ridings, 20 F.Supp. 495 (E.D.Ky. 1937); Annoni v. Blas Nadal's Heirs, 94 F.2d 513, 515 (1st Cir. 1938); and Pope v. Commissioner, 138 F.2d 1006, 1009 (6th Cir. 1943).
Since I have reached the conclusion that the IRS has never been created by Congress, I am asking you to provide to me the citation of any statute which really did create the IRS. Since this is a question of profound national importance, I request that you provide an answer to me within 20 days. Failing a response within that time period, I shall conclude that you cannot find any such statute and shall act accordingly.
& Yours truly,
&
& William J. Benson
&
Donna

#8 04-29-2004, 05:52 AM

[quote= PJT04]

I&GUESS IT TOOK THEM OVER A YEAR TO FIND OUT THAT I DIDN'T FILE FOR 2002. I KNEW THIS LETTER WAS COMING SOONER OR LATER.

Here's what been true in my experience:

IF you've written them anything--anything at all--prior to the alleged non-filing, you're already considered a "tax protestor," "frivilous filer," or "non-filer." Any sort of letter along the lines of "show me the law" is seen not as a genuine search for honest answers to honest questions, but "frivilous" arguments.

Frankly, I'm surprised they got in touch as quickly as they did.

I'LL FOLLOW YOUR ADVISE&

Me? Give advice? No way. Links, absolutely. Comments about how much I hate them all? Every chance I get.

The only "advice" I would ever give in these matters is:

1) Make timely replies. Here in the South, it's simply a matter of common courtesy. After that, of course, it's about demonstrating good-faith in trying to resolve it. (I know "they" don't believe it, but it really is an effort to resolve it!)

2) Mention facts only! "Facts," of course, are things you know from "personal knowledge," things you would swear to in court. You can't "swear" that a section of code "means" anything--that's the stuff of legal debate. You can reference code, court cases, as a "reliance defense."& But they cannot "argue" with your facts.

See? Even that's not advice. That's just the basic stuff of good communication between people.

Keep us informed of what goes on, okay?& And study, study, study. Learn everything you can about your new "enemy."& "How" they operate is everything in these matters (hint hint).....

Randy

#9 04-29-2004, 10:21 AM

THANK YOU ALL FOR THE HELP.

MAYBE YOU ALREADY KNOW ABOUT IT BUT HERE'S SOMETHING THAT I FOUND WHILE DOING RESEARCH. THERE'S A WEB SITE WITH A STREAMLINE PRESENTATION THAT COVERS THE TAX FILING ISSUE.

CHECK IT OUT. http://www.861.info/

IT INCLUDES THIS LETTER WITH SIX QUESTIONS TO THE IRS. I WOULD LIKE TO SEND THEM SOMETHING LIKE THIS. WHAT DO YOU THINK?

&
Mark W. Everson, Commissioner
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC& 20224
&
Dear Commissioner Everson,
For someone to determine his federal income tax liability (if any), he must first determine his taxable income.& Enclosed are six important questions about how to do that properly, according to the law itself.& Though the IRS' stated mission includes helping Americans “understand and meet their tax responsibilities,” the IRS has been very non-responsive—often even insulting and threatening—to those who have asked similar questions in the past.&I do not wish to be insulted, threatened, accused, or ignored.& Instead, I would like you to please provide me with direct, written answers to the enclosed six questions regarding the proper method for determining one's taxable income.& (Citations of law supporting your answers would also be appreciated.)&Thank you for your time.&
Questions Regarding Determining Taxable Income
1) Should I use the rules found in 26 USC § 861(b) and 26 CFR § 1.861-8 (in addition to any other pertinent sections) to determine my taxable domestic income?&
2) If some people should not use those sections to determine their taxable domestic income, please show where the law says who should or should not use those sections for that.&
Reasons for first two questions: The regulations at 26 CFR § 1.861-8 begin by stating that Sections 861(b) and 863(a) state in general terms “how to determine taxable income of a taxpayer from sources within the United States” after gross income from the U.S. has been determined.& Section 1.861-1(a)(1) confirms that “taxable income from sources within the United States” is to be determined in accordance with the rules of 26 USC § 861(b) and 26 CFR § 1.861-8 (see also 26 CFR §§ 1.862-1(b), 1.863-1(c)).& Cross-references under 26 USC § 61, as well as entries in the USC Index under the heading “Income Tax,” also refer to Section 861 regarding income (“gross” and “taxable”) from “sources within U.S.”
3) If a U.S. citizen receives all his income from working within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show his income to be taxable?&
Reason for question: Section 217 of the Revenue Act of 1921, predecessor of 26 USC § 861 and following, stated that income from the U.S. was taxable for foreigners, and for U.S. corporations and citizens deriving most of their income from federal possessions, but did not say the same about the domestic income of other Americans.& The regulations under the 1939 Code (e.g. §§ 29.119-1, 29.119-2, 29.119-9, 29.119-10 (1945)) showed the same thing.& The current regulations at 1.861-8 still show income to be taxable only when derived from certain “specific sources and activities,” which still relate only to certain types of international trade (see 26 CFR §§ 1.861-8(a)(1), 1.861-8(a)(4), 1.861-8(f)(1)).
4) Should one use 26 CFR § 1.861-8T(d)(2) to determine whether his “items” of income (e.g. compensation, interest, rents, dividends, etc.) are excluded for federal income tax purposes?&
Reason for question: The regulations (26 CFR § 1.861-8(a)(3)) state that a “class of gross income” consists of the “items” of income listed in 26 USC § 61 (e.g. compensation, interest, rents, dividends, etc.).& The regulations (26 CFR §§ 1.861-8(b)(1)) then direct the reader to “paragraph (d)(2)” of the section, which provides that such “classes of gross income” may include some income which is excluded for federal income tax purposes.&
5) What is the purpose of the list of non-exempt types of income found in 26 CFR § 1.861-8T(d)(2)(iii), and why is the income of the average American not on that list?&
Reason for question: After defining “exempt income” to mean income which is excluded for federal income tax purposes (26 CFR § 1.861-8T(d)(2)(ii)), the regulations list types of income which are not exempt (i.e. which are subject to tax), including the domestic income of foreigners, certain foreign income of Americans, income of certain possessions corporations, and income of international and foreign sales corporations; but the list does not include the domestic income of the average American (26 CFR § 1.861-8T(d)(2)(iii)).&
6) What types of income (if any) are not exempted from taxation by any statute, but are nonetheless “excluded by law” (i.e. not subject to the income tax) because they are, under the Constitution, not taxable by the federal government?&
Reason for question: Older income tax regulations defining “gross income” and “net income” said that neither income exempted by statute “or fundamental law” were subject to the tax (§ 39.21-1 (1956)), and said that in addition to the types of income exempted by statute, other types of income were excluded because they were, “under the Constitution, not taxable by the Federal Government” (§ 39.22(b)-1 (1956)).&(This is also reflected in the current 26 CFR § 1.312-6.)

#10 04-29-2004, 11:31 AM

IRS, a hopeless agency:

The paragraph below was taken from an opinion letter Guy Curtis, Esq. wrote to his client:

I must tell you that the IRS and Federal courts have taken positions that are in conflict with the opinion of this letter. However, in IRS
pub. No. 17, the IRS cavalierly says that where there is a conflict in the court decisions, the IRS will favor the position of the government, not the taxpayer, even though this policy is a blatant violation of the well established legal principal that in case of any ambiguity of statutory construction, the doubt should be resolved in favor of the taxpayer, not the government. 80e Greyhound Corp. v. U.S., 495 F. 2d 863 (1974).

I cannot tell you not to file a return. As the IRS itself stated, in its publication 21, you must make this decision.

Publication No. 21 "UNDERSTANDING TAXES" (1982) The IRS says that "you must decide whether the law requries you to file a return".