I’m the research person at my firm so thanks for playing.
I don’t really have time for games right now but if you insist, please refer to IRC section 61, gross income defined. “Except as otherwise defined in this subtitle, gross income means ALL INCOME FROM WHATEVER SOURCE DERIVED, including but not limited to the following items: compensation for services, including fees, commissions, fringe benefits, and similar items, gross income derived from business, gains derived from dealing in property, interest, rent, royalties, dividends, annuities...” the list goes on.
The only thing excluded under this subsection is section 101 death benefits.
IRC 3121 covers the definitions of wages, employment, and employees. Wages are all remuneration for employment, minus anything excepted in this section. Employees are determined under “the usual common law rules.”
Trade or business is clearly defined in Reg section 1.752(b)(10).
Okay, well, I can see you didn't bother to read and understand any of my post linked above.
From its inception the income tax has been an excise that applies only to gains from the profitable exercise of federal privileges (and therefore needn’t be apportioned), as the Pollock court itself noted (here in Justice Field’s separate concurring opinion):
"...in Springer v. U. S., 102 U.S. 586 , it was held that a tax upon gains, profits, and income was an excise or duty, and not a direct tax, within the meaning of the constitution, and that its imposition was not, therefore, unconstitutional."
~Pollock v. Farmer's Loan & Trust, 157 U.S. 429 (1895)
So, yes, Section 61 lays out all the various types of "income" but without the exercise of FEDERAL PRIVILEGE by definition there is no "income" to tax.
Because the income tax is an indirect tax, which means it can be avoided as long as you are not participating in earning "income" by exercising any privilege, the tax is not on the "income" itself but on the ACTIVITY and the "income" is how the amount of the tax is calculated.
This is Taxation 101, but CPAs pretend not to know this.
So it would appear your research is lacking with respect on what is actually SUBJECT to the tax.
Moving on to "wages" as you've missed the boat on this one as well. As the FICA definitions in 3121 are more convoluted let's look at Section 3401, the analysis is the same regardless, and which is more applicable to the gato post as it applies specifically to withholding.
[My comments are in brackets and specifically defined terms per the code are in quotes.]
3401(a) "wages"
"For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official) for services performed by an "employee" for his "employer" ..."
[so by definition, ONLY the remuneration paid by an "employer" to an "employee" is defined as "wages" and therefore EXCLUDES all other remuneration]
3401(d) "employer"
"For purposes of this chapter, the term "employer" means the person for whom an individual performs or performed any service, of whatever nature, as the employee of such person..."
[this one is pretty clear that an employer is defined as the person for whom an "employee" works]
3401(c) "employee"
"For purposes of this chapter, the term "employee" includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term "employee" also includes an officer of a corporation."
[are you an officer, employee or elected official of the "United States" (note this term also has a specific definition), a "State" (ditto), or any political subdivision thereof, or DC, or any agency of any of these? no? how about an officer of a "corporation" (also a specifically defined term)? so how are you an employee exactly?]
Because the term "employee" is specifically defined in the code it CANNOT also mean the common usage of the word. So if you're hung up on the word 'includes' and think it does also mean the same as the commonly used word, let the Supreme Court disillusion you:
"[T]he verb "includes" imports a general class, some of whose particular instances are those specified in the definition." ~Helvering v Morgan's Inc, 293 U.S. 121, 126 fn. 1 (1934)
"[I]ncluding ... connotes simply an illustrative application of the general principle." ~Federal Land Bank of St. Paul v Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1 U.S. (1941)
So, it's pretty clear that withholding only applies to "employees" as specifically defined in the code and if you do not meet that specific definition, which are specific instances of a general class of Federal Employees, YOU ARE NOT AN "EMPLOYEE" AND YOU DO NOT EARN "WAGES." As is perfectly clear from the definition, only those who are paid as a result of the exercise of federal privilege are included.
So, if you received a W-2 alleging you received "wages" when in fact you did not, you simply have to refute the allegations on Form 4852, and correctly reflect $0 as your "wages" on your Form 1040, which is the correct form to request a refund of the amount erroneously withheld.
This is getting long, so I'll show you how you are misled on "trade or business" in a separate reply.
Dawnfrench: have you ever done this? (reported $0 as your "wages" on form 1040) Did you actually receive a refund? I looked up your references (thank you for linking), and they check out. I'm skeptical this actually works.
You’ll wind up with the IRS taking everything you have if you have significant tax liability if you listen to her. Ask a tax attorney what happens in court and what a “frivolous” tax case is. I don’t have time to address this fully right now because I’m busy, but I will after October 15th.
Here, the "licensed CPA" is resorting to threats in an effort to continue the fraud. He's all in because his income is almost entirely derived from the fraud. This is the problem we face as Americans, there are MANY OTHER AMERICANS WHO ARE PROFITING FROM THE FRAUD AGAINST YOU.
Also, notice he has no comment regarding what the LAW ACTUALLY SAYS. Specifically regarding the definition of "frivolous." Once you read and understand that definition and what constitutes frivolous, you will see this is just another tactic to keep you fearful and complicit in the fraud against you.
Also, to add, I told you that I’m busy right now, but just you wait. I will address each of your points after the tax deadline - it will be fairly easy- the IRS has a giant webpage devoted to this stupidity that lists all the court cases and legal statutes. All in one place. We will have so much fun with that.
On the bright side, maybe for anyone naive enough to follow your advice, the tax court is pretty lenient with first time frivolous claims. They usually just give a warning. Unlike for these poor dummies, five years in federal prison tsk tsk:
You are completely ignoring the extensive list of court cases that I posted above showing that you are full of it.
I also do assurance work, which actually has higher profit margins than tax. I just enjoy tax because I am very good at keeping my clients out of trouble and maximizing the amount of income they retain. You are advocating something that has been completely discredited by the courts, which multiple people have gone to jail for (see the above link), and you seem to think it’s cute or something.
Again, those court cases apply to TAXPAYERS. And if you are not, by the definition in the code, a "taxpayer" then all the statutes and court cases do not apply to you. Only if you insist, against the literal definition in the code, on labeling yourself as a "taxpayer" does any of this apply.
Remember folks, Mr. "licensed CPA" has never once addressed the elephant in the room: the income tax is an INDIRECT TAX. "Income" is and only is the result of the exercise of privilege. He has no answer for this. He cannot account for it because he is conveniently not seeing it because his paycheck depends on him not seeing it. Just like everyone paid to push "safe and effective."
Why would they take everything you have? wouldn’t they just not pay in the first place? Or if they did pay, demand the money back with a penalty or something?
I mean that the IRS can take anything and everything you have to satisfy your tax liability. They will garnish your wages, empty your bank accounts, and foreclose on your property, IF you refuse to pay.
If you want proof- this link at the IRS website has an entire list of frivolous arguments and the court cases that go with them. They have put people in jail for promoting and profiting off such schemes, I promise you, if you owe money, the IRS can and will take whatever they are owed and if they want to make an example of you, they will put you in prison - https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-tax-arguments-introduction
I read through that, we’ll see what dawnfrench responds with. My BS meter is high, but I’m investigating because I’ve long believed the government cannot legally tax me, i just lack the power to fight back.
Mr. Research here isn't paying attention to the slippery language being used to accuse a filer of submitting a "frivolous" return. However, as is very clear from a reading of the code Section 6702, following the law is NOT FRIVOLOUS by definition.
And again, notice he is resorting to scare tactics and threats versus an educated understanding about what is SUBJECT to the tax and what isn't, and what the tax law says and what it doesn't.
That's how you and he has been propagandized. Just like "safe and effective" they think if they repeat the lie often enough, you'll believe it. (And they're right.)
The FEAR of an IRS audit is used to shut down your critical thinking skills and make you easier to control. That's their job. And Mr. Researcher here is PROFITING from your fear and ignorance.
Here is positive proof that this analysis is correct - more than a thousand examples of the hundreds of thousands of complete income tax refunds and zero liability admissions being continuously secured from the federal and 38 state and local governments since 2003 by readers of 'Cracking the Code- The Fascinating Truth About Taxation In America'-- Social security and Medicare taxes included:
My clients love me. I know so much about tax law that they pay the least amount they have to legally pay, and they don’t get hit with nastygrams from the IRS full of penalties and interest.
You can do what you want, maybe you don’t make any money so you have no tax liability and so you think this is cute or something. If you have tax liability and don’t pay- let me know how that works out when the IRS levies you bank account and slaps a lien on your property. I think telling other Americans to commit tax fraud is a serious problem. It’s not a very nice thing to do. People are going to get in trouble if they take this ridiculous advice.
NOTICE Mr CPA is using slippery language here. He is absolutely correct that "If you have tax liability and don’t pay" they will be very nasty. But I'm not arguing that point.
But he isn't being honest with you about whether YOU ACTUALLY HAVE A TAX LIABILITY!
All they have is scare tactics. Fear is the mind-killer.
I'm not giving anybody advice. I'm showing them what the CODE ACTUALLY SAYS. Notice also, he has never responded to my posts showing you what the law says. He can't argue that because he knows that IS WHAT IT SAYS.
And I'm also pointing out that the person trying to scare you has a MAJOR CONFLICT OF INTEREST.
Notice the slippery language, "Taxpayers who rely on frivolous arguments to avoid filing returns may be subject to an addition to tax"
"taxpayer" is a defined term in the code, so if you don't meet that specific definition, that doesn't apply to you. Notice how that term is used in nearly every sentence. That is how they keep the fraud going. They want you to assume you are a "taxpayer" when you most likely are not.
Section 1401(a) Old-age, survivors, and disability insurance
"In addition to other taxes, there shall be imposed for each taxable year, on the "self-employment income" of every individual, a tax equal to 12.4 percent of the amount of the self-employment income for such taxable year."
The key term above is "self-employment income," which has a specific definition in Section 1402(b):
"The term "self-employment income" means the "net earnings from self-employment" derived by an individual..."
Which sends you to Section 1402(a) Net earnings from self-employment:
"The term "net earnings from self-employment" means the gross income derived by an individual from any "trade or business" carried on by such individual..."
From the 1/2 post, you can only have "gross income" if you are engaged in the profitable exercise of federal privilege, but in this case it is further defined as from any "trade or business" which is specifically defined.
You'll note that the definition in Section 1402(c) sends you to Section 162 for clarity, but Section 162 uses the term "trade or business" but does not further define it.
For that you have to go to:
Section 7701. Definitions
"(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof-"
As "trade or business" is used in several different sections, but not 'distinctly expressed' elsewhere, the definition here applies to the term used in Section 1402(a).
Section 7701(a)(26) Trade or business
"The term "trade or business" includes the performance of the functions of a public office."
And please refer to the 1/2 post for how the Supreme Court tells you to interpret that pesky word 'includes.'
So, Mr Researcher, explain to us (and your clients who pay you to pretend you don't know what the code says or how to read it), how is it you think that the average self-employed person, who is NOT performing the functions of a public office, is liable for the tax under Section 1401?
I really hope you do come back to this. I fired my CPA because he could not answer my questions and stopped responding, because he was in on the fraud and profiting from it.
Again, tell me how you DO NOT HAVE A CONFLICT OF INTEREST?
I’m the research person at my firm so thanks for playing.
I don’t really have time for games right now but if you insist, please refer to IRC section 61, gross income defined. “Except as otherwise defined in this subtitle, gross income means ALL INCOME FROM WHATEVER SOURCE DERIVED, including but not limited to the following items: compensation for services, including fees, commissions, fringe benefits, and similar items, gross income derived from business, gains derived from dealing in property, interest, rent, royalties, dividends, annuities...” the list goes on.
The only thing excluded under this subsection is section 101 death benefits.
IRC 3121 covers the definitions of wages, employment, and employees. Wages are all remuneration for employment, minus anything excepted in this section. Employees are determined under “the usual common law rules.”
Trade or business is clearly defined in Reg section 1.752(b)(10).
Gotta run! Have a good day.
1/2
Okay, well, I can see you didn't bother to read and understand any of my post linked above.
From its inception the income tax has been an excise that applies only to gains from the profitable exercise of federal privileges (and therefore needn’t be apportioned), as the Pollock court itself noted (here in Justice Field’s separate concurring opinion):
"...in Springer v. U. S., 102 U.S. 586 , it was held that a tax upon gains, profits, and income was an excise or duty, and not a direct tax, within the meaning of the constitution, and that its imposition was not, therefore, unconstitutional."
~Pollock v. Farmer's Loan & Trust, 157 U.S. 429 (1895)
So, yes, Section 61 lays out all the various types of "income" but without the exercise of FEDERAL PRIVILEGE by definition there is no "income" to tax.
Because the income tax is an indirect tax, which means it can be avoided as long as you are not participating in earning "income" by exercising any privilege, the tax is not on the "income" itself but on the ACTIVITY and the "income" is how the amount of the tax is calculated.
This is Taxation 101, but CPAs pretend not to know this.
So it would appear your research is lacking with respect on what is actually SUBJECT to the tax.
Moving on to "wages" as you've missed the boat on this one as well. As the FICA definitions in 3121 are more convoluted let's look at Section 3401, the analysis is the same regardless, and which is more applicable to the gato post as it applies specifically to withholding.
[My comments are in brackets and specifically defined terms per the code are in quotes.]
3401(a) "wages"
"For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official) for services performed by an "employee" for his "employer" ..."
[so by definition, ONLY the remuneration paid by an "employer" to an "employee" is defined as "wages" and therefore EXCLUDES all other remuneration]
3401(d) "employer"
"For purposes of this chapter, the term "employer" means the person for whom an individual performs or performed any service, of whatever nature, as the employee of such person..."
[this one is pretty clear that an employer is defined as the person for whom an "employee" works]
3401(c) "employee"
"For purposes of this chapter, the term "employee" includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term "employee" also includes an officer of a corporation."
[are you an officer, employee or elected official of the "United States" (note this term also has a specific definition), a "State" (ditto), or any political subdivision thereof, or DC, or any agency of any of these? no? how about an officer of a "corporation" (also a specifically defined term)? so how are you an employee exactly?]
Because the term "employee" is specifically defined in the code it CANNOT also mean the common usage of the word. So if you're hung up on the word 'includes' and think it does also mean the same as the commonly used word, let the Supreme Court disillusion you:
"[T]he verb "includes" imports a general class, some of whose particular instances are those specified in the definition." ~Helvering v Morgan's Inc, 293 U.S. 121, 126 fn. 1 (1934)
"[I]ncluding ... connotes simply an illustrative application of the general principle." ~Federal Land Bank of St. Paul v Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1 U.S. (1941)
So, it's pretty clear that withholding only applies to "employees" as specifically defined in the code and if you do not meet that specific definition, which are specific instances of a general class of Federal Employees, YOU ARE NOT AN "EMPLOYEE" AND YOU DO NOT EARN "WAGES." As is perfectly clear from the definition, only those who are paid as a result of the exercise of federal privilege are included.
So, if you received a W-2 alleging you received "wages" when in fact you did not, you simply have to refute the allegations on Form 4852, and correctly reflect $0 as your "wages" on your Form 1040, which is the correct form to request a refund of the amount erroneously withheld.
This is getting long, so I'll show you how you are misled on "trade or business" in a separate reply.
Dawnfrench: have you ever done this? (reported $0 as your "wages" on form 1040) Did you actually receive a refund? I looked up your references (thank you for linking), and they check out. I'm skeptical this actually works.
You’ll wind up with the IRS taking everything you have if you have significant tax liability if you listen to her. Ask a tax attorney what happens in court and what a “frivolous” tax case is. I don’t have time to address this fully right now because I’m busy, but I will after October 15th.
Here, the "licensed CPA" is resorting to threats in an effort to continue the fraud. He's all in because his income is almost entirely derived from the fraud. This is the problem we face as Americans, there are MANY OTHER AMERICANS WHO ARE PROFITING FROM THE FRAUD AGAINST YOU.
Also, notice he has no comment regarding what the LAW ACTUALLY SAYS. Specifically regarding the definition of "frivolous." Once you read and understand that definition and what constitutes frivolous, you will see this is just another tactic to keep you fearful and complicit in the fraud against you.
Also, to add, I told you that I’m busy right now, but just you wait. I will address each of your points after the tax deadline - it will be fairly easy- the IRS has a giant webpage devoted to this stupidity that lists all the court cases and legal statutes. All in one place. We will have so much fun with that.
On the bright side, maybe for anyone naive enough to follow your advice, the tax court is pretty lenient with first time frivolous claims. They usually just give a warning. Unlike for these poor dummies, five years in federal prison tsk tsk:
https://www.justice.gov/archive/opa/pr/2006/February/06_tax_098.html
You are completely ignoring the extensive list of court cases that I posted above showing that you are full of it.
I also do assurance work, which actually has higher profit margins than tax. I just enjoy tax because I am very good at keeping my clients out of trouble and maximizing the amount of income they retain. You are advocating something that has been completely discredited by the courts, which multiple people have gone to jail for (see the above link), and you seem to think it’s cute or something.
Again, those court cases apply to TAXPAYERS. And if you are not, by the definition in the code, a "taxpayer" then all the statutes and court cases do not apply to you. Only if you insist, against the literal definition in the code, on labeling yourself as a "taxpayer" does any of this apply.
Remember folks, Mr. "licensed CPA" has never once addressed the elephant in the room: the income tax is an INDIRECT TAX. "Income" is and only is the result of the exercise of privilege. He has no answer for this. He cannot account for it because he is conveniently not seeing it because his paycheck depends on him not seeing it. Just like everyone paid to push "safe and effective."
Why would they take everything you have? wouldn’t they just not pay in the first place? Or if they did pay, demand the money back with a penalty or something?
I mean that the IRS can take anything and everything you have to satisfy your tax liability. They will garnish your wages, empty your bank accounts, and foreclose on your property, IF you refuse to pay.
If you want proof- this link at the IRS website has an entire list of frivolous arguments and the court cases that go with them. They have put people in jail for promoting and profiting off such schemes, I promise you, if you owe money, the IRS can and will take whatever they are owed and if they want to make an example of you, they will put you in prison - https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-tax-arguments-introduction
I read through that, we’ll see what dawnfrench responds with. My BS meter is high, but I’m investigating because I’ve long believed the government cannot legally tax me, i just lack the power to fight back.
Mr. Research here isn't paying attention to the slippery language being used to accuse a filer of submitting a "frivolous" return. However, as is very clear from a reading of the code Section 6702, following the law is NOT FRIVOLOUS by definition.
And again, notice he is resorting to scare tactics and threats versus an educated understanding about what is SUBJECT to the tax and what isn't, and what the tax law says and what it doesn't.
That's how you and he has been propagandized. Just like "safe and effective" they think if they repeat the lie often enough, you'll believe it. (And they're right.)
The FEAR of an IRS audit is used to shut down your critical thinking skills and make you easier to control. That's their job. And Mr. Researcher here is PROFITING from your fear and ignorance.
Here is positive proof that this analysis is correct - more than a thousand examples of the hundreds of thousands of complete income tax refunds and zero liability admissions being continuously secured from the federal and 38 state and local governments since 2003 by readers of 'Cracking the Code- The Fascinating Truth About Taxation In America'-- Social security and Medicare taxes included:
https://losthorizons.com/BulletinBoard.htm
Dawnfrench:
What do you say in response to this (section C4 it talks about Peter Hendrickson explicitly):
https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-tax-arguments-section-iii#:~:text=of%20tax%20liability.-,I.R.C.,to%20evade%20or%20defeat%20tax.
They wrote a song about this- 🎶 I fought the law, and the law won 🎶
I’m wondering what your clients and fellow Americans would feel about your being complicit in the fraud against them, and having to pay you for it.
My clients love me. I know so much about tax law that they pay the least amount they have to legally pay, and they don’t get hit with nastygrams from the IRS full of penalties and interest.
You can do what you want, maybe you don’t make any money so you have no tax liability and so you think this is cute or something. If you have tax liability and don’t pay- let me know how that works out when the IRS levies you bank account and slaps a lien on your property. I think telling other Americans to commit tax fraud is a serious problem. It’s not a very nice thing to do. People are going to get in trouble if they take this ridiculous advice.
NOTICE Mr CPA is using slippery language here. He is absolutely correct that "If you have tax liability and don’t pay" they will be very nasty. But I'm not arguing that point.
But he isn't being honest with you about whether YOU ACTUALLY HAVE A TAX LIABILITY!
All they have is scare tactics. Fear is the mind-killer.
I'm not giving anybody advice. I'm showing them what the CODE ACTUALLY SAYS. Notice also, he has never responded to my posts showing you what the law says. He can't argue that because he knows that IS WHAT IT SAYS.
And I'm also pointing out that the person trying to scare you has a MAJOR CONFLICT OF INTEREST.
Notice the slippery language, "Taxpayers who rely on frivolous arguments to avoid filing returns may be subject to an addition to tax"
"taxpayer" is a defined term in the code, so if you don't meet that specific definition, that doesn't apply to you. Notice how that term is used in nearly every sentence. That is how they keep the fraud going. They want you to assume you are a "taxpayer" when you most likely are not.
2/2
Let's begin our analysis here with:
Section 1401(a) Old-age, survivors, and disability insurance
"In addition to other taxes, there shall be imposed for each taxable year, on the "self-employment income" of every individual, a tax equal to 12.4 percent of the amount of the self-employment income for such taxable year."
The key term above is "self-employment income," which has a specific definition in Section 1402(b):
"The term "self-employment income" means the "net earnings from self-employment" derived by an individual..."
Which sends you to Section 1402(a) Net earnings from self-employment:
"The term "net earnings from self-employment" means the gross income derived by an individual from any "trade or business" carried on by such individual..."
From the 1/2 post, you can only have "gross income" if you are engaged in the profitable exercise of federal privilege, but in this case it is further defined as from any "trade or business" which is specifically defined.
You'll note that the definition in Section 1402(c) sends you to Section 162 for clarity, but Section 162 uses the term "trade or business" but does not further define it.
For that you have to go to:
Section 7701. Definitions
"(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof-"
As "trade or business" is used in several different sections, but not 'distinctly expressed' elsewhere, the definition here applies to the term used in Section 1402(a).
Section 7701(a)(26) Trade or business
"The term "trade or business" includes the performance of the functions of a public office."
And please refer to the 1/2 post for how the Supreme Court tells you to interpret that pesky word 'includes.'
So, Mr Researcher, explain to us (and your clients who pay you to pretend you don't know what the code says or how to read it), how is it you think that the average self-employed person, who is NOT performing the functions of a public office, is liable for the tax under Section 1401?
I really hope you do come back to this. I fired my CPA because he could not answer my questions and stopped responding, because he was in on the fraud and profiting from it.
Again, tell me how you DO NOT HAVE A CONFLICT OF INTEREST?