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Date: Fri, 14 Nov 1997 06:13:26 -0800
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From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: Who is Liable? (fwd)
<snip>
>
> Who Is Liable?
>
> by Lowell ("Larry") H. Becraft, Jr.
>
>
>The 1954 Internal Revenue Code (Title 26 United States Code) imposes a tax
>upon various objects and then makes various persons liable for the
>collection and payment of the tax.
>
>How the system operates is made clinically clear in Subtitle D and E of the
>Internal Revenue Code (IRC).
>
>In Section 4071(a), a tax upon certain tires is imposed, and in Section
>4071(b), the manufacturer, producer, or importer of the tires is made liable
>for the tax.
>
>In Section 4161, a tax is imposed upon sport fishing equipment and in
>Section 4162(c), the retailer of such equipment is made liable.
>
>Section 4371 imposes a tax upon foreign insurance instruments and Section
>4374 makes liable anyone who makes, signs, issues, or sells the instruments.
>
>In addition to these expressly cited taxes, the IRC imposes many others and,
>except for the tax on income imposes by Sections 1 and 11, there are always
>provisions in the IRC stating that some class of person is liable for
>payment of the tax.
>
>For the convenience of the reader who wants to check the IRC for a better
>understanding of these facts, the table below lists sections of the IRC that
>impose income taxes and the related sections stating who is liable for
>payment of each tax.
>
>
> Tax Imposed by Section: Liability for Payment:
>
> 4971(a), (b) 4971(a), (b)
> 4973(a) 4973(a)
> 4974(a) 4974(a)
> 4975(a), (b) 4975(a), (b)
> 4978(c) 4978(c)
> 4986(a) 4986(b)
> 4995(a)(1)(A) 4995(a)(1)(B)
> 5001(a)(1), (3) 5005
> 5041 5043
> 5051 5054, 5061
> 5701 5703
> 5811(a) 5811(b)
> 5821(a) 5821(b)
> 871(a) 1461
> 1 none
> 11 none
>
>The sections listed on the last two lines of the table are all part of
>Subtitle A, which contains the sections of the IRC that relate to income
>tax. Note that there is no section of the Internal Revenue Code imposing a
>liability (requirement) for payment of the tax imposed on income Sections 1
>and 11.
>
>Section 1 imposes a tax on taxable income of (possessed by) individuals, and
>Section 11 imposes a tax on taxable income of (possessed by) corporations,
>but there is no provision in Subtitle A or elsewhere in the IRC that imposes
>a liability (requirement) upon anyone for payment for either tax.
>
>Section 871 of Subtitle A imposes a tax on the total amount received in the
>form of interest, dividends, rents, salaries, wages, premiums, etc., from
>sources within the United States by nonresident alien individuals.
>
>Section 881 of Subtitle A imposes a tax on the amount received from sources
>within the United States in the form of interest, dividends, rents,
>salaries, wages, premiums, etc., by a foreign corporation.
>
>There is, however, no section of Subtitle A making such nonresident alien
>individuals or foreign corporations liable for payment of the tax.
>
>The liability for paying the taxes imposed by Sections 871 and 881 is
>imposed in Section 1461, which states that the person (individual, trust,
>estate, partnership, association, company, or corporation) required to
>deduct and withhold those taxes is "made liable for the tax."
>
>Other than Section 1461, there is no section that imposes any liability on
>anyone for payment of any tax under Subtitle A.
>
>Therefore, unless individuals are acting as agents of government by
>withholding money from nonresident aliens or foreign corporations, there is
>no requirement for them to pay the tax on income and therefore no
>requirement for them to file returns.
>
>
> Benefits Available to Aliens
>
>The purpose of the tax return is to enable the alien to claim benefits of
>deductions and credits against taxes already withheld by the withholding
>agent -- that individual, partnership, corporation, trust, bank, etc.,
>having custody, control, receipt, disposal, or making payment of income
>items. The return is required of the alien only in the sense that his
>failure to file will result in the denial of benefits to him.
>
>The explanation of this fact is detailed at Section 874(a):
>
> A nonresident alien individual shall receive the benefit of the
> deductions and credits allowed him in this subtitle only by filing or
> causing to be filed with the Secretary a true and accurate return ...
> (b) The benefit of the deduction for exemptions under section 151 may
> ... be received by a nonresident alien individual entitled thereto, by
> filing a claim therefore with the withholding agent.
>
>There is no such benefit available to United States citizens except those
>having income derived from sources in possessions of the United States
>[Title 26 USC 931(f)] and in Guam [Section 935(b)]. There is no statutory
>provision for a United States citizen to file a return on income derived
>from sources within the United States. If Subtitle A of Title 26 should in
>fact apply to United States citizens having income derived from sources
>within the United States, such citizens would be denied equal protection
>under a law that benefits only (a) aliens and foreign corporations having
>income from sources within the United States and (b) United States citizens
>having income from Guam and United States possessions.
>
>Indeed, if one such excluded United States citizen -- driven, say, by
>patriotic fever -- should crave paying income taxes in spite of there being
>no legal duty, but wished to moderate his passion by claiming benefits of
>deductions, he would have to make his claim under a statute applicable only
>to nonresident aliens. In other words, to enjoy deductions while
>patriotically paying income taxes, he must either give up his United States
>citizenship and declare himself an alien, or make the false claim that his
>income was earned in a posession of the United States. In the one case he
>surrenders the world's most valuable legal posession, in the other he
>perjured himself.
>
>
> Withholding Agents
>
>Liability is imposed when the nonresident alien individual files his claim
>for benefits of deductions and allowances (his return) directly with the
>Secretary or causes the exemption claim to be filed by the withholding agent
>per Section 874. When filing directly, the alien makes himself
>constructively liable for the truth and accuracy of his return. When
>causing the return to be filed under Section 874, the alien causes the
>liability for the withholding agent. (The withholding agent is the only
>citizen of the United States domiciled in the United States who may have
>income derived from sources within the United States who is required to file
>a return under Subtitle A, but it is not his return that must be filed, it
>is the return of the alien whose income items he controls.)
>
>The actual imposition of statutory liability for a tax on income occurs in
>Subtitle A of Title 26 at Section 1461:
>
> 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 persons for the amount of any payments
> made in accordance with the provisions of this chapter.
>
>The purpose of Section 1461 is to assure that the withholding agent for
>nonresident aliens and foreign corporations timely and properly collects,
>deducts allowances and exemptions from gross income, administers benefit of
>deductions, and pays over to the Secretary those amounts of tax withheld.
>The government indemnifies the withholding agent from any demands the alien
>or foreign corporation might make upon him for a refund.
>
>Once made liable, the withholding agent (or the alien, if he takes it upon
>himself to claim benefits by filing a return or exemption claim) become
>subjects to the rules and regulations of the Secretary, as set forth in
>Section 6001:
>
> 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 ...
>
>The party made liable for the tax or its collection -- more often the
>withholding agent agent than the alien -- is then required by the
>Secretary's regulations to make a return or statements, as fixed at Section
>6011:
>
> When required by regulations prescribed by the Secretary any persons
> made liable for any tax imposed by this title, or for the collection
> thereof, shall make a return or statement ...
>
>Finally, the base rate at which a return must be filed is established at
>Section 6012:
>
> Returns with respect to income taxes under Subtitle A shall be made by
> the following: (1)(A) Every individual having for the taxable year a
> gross income of $1,000 or more ...
>
>Criminal liability attaches upon the alien when he files his own return and
>attempts to lie or cheat the government out of its lawful revenues. This is
>tax evasion, a felony punished under Section 7201 of Title 26 USC. But if
>he merely fails to file a return, willfully or otherwise, he hurts no one
>but himself. He forfeits his right to claim benefits or deductions which he
>is required to do if he wants the benefits. Hence, the "requirement" to
>file. Only under the most perverted administration would the government
>want an alien imprisoned for failing to demand money from the Treasury!
>
>The willful failure to file a return becomes criminal when done by the party
>the alien has caused to file a return, namely, the withholding agent. The
>agent's failure to file is considerably more serious than the alien's, for
>the agent's failure not only denies benefits to the alien and betrays the
>fiduciary interest, but it also deprives the government of its lawful
>revenues.
>
>The statute punishing the withholding agent made liable by the alien for
>making returns and paying the tax withheld is Section 7203 of Title 26 USC:
>
> Any person required under this title to pay any estimated tax or tax,
> or required by this title or by regulations made under authority
> thereof to make a return, keep any records, or supply any information,
> who willfully fails to pay such estimated tax or tax, make such return,
> keep such records, or supply such information, at the time or times
> required by laws or regulation, shall, in addition to other penalties
> provided by law, be guilty of a misdemeanor and, upon conviction
> thereof, shall be fined not more than $10,000 or imprisoned not more
> than one year, or both, together with the costs of prosecution.
>
>
> Income Tax as a Direct Tax Not to be Laid Upon Inland Income of U.S.
> Citizens
>
>There is no responsibility to suggest why the internal revenue laws do not
>impose a tax on the inland incomes of United States citizens, but there is a
>need to offer the following suggestions to support the inescapable finding
>that they do not.
>
>As was made clear in Senate Joint Resolutions 165 proclaiming on February 3,
>1983 that 1983 was "The Year of the Bible", the founders of the United
>States were deeply motivated by Biblical conviction and principle. They
>were not establishing a Roman or Babylonian empire, but a Christian
>republic, in which no tax was collected, except by the citizen's direct
>representative whose duties were subject to review every two years. The
>Constitution of the United States of America provides in Article 1, Section
>8, clause 1; and the 16th Amendment that only:
>
> Congress shall have the power to lay and collect taxes ...
>
>
>Yet taxes imposed under Title 26 are collected not by Congress but by the
>Secretary of the Treasury, an executive officer under Article 2, Section 2,
>clause 2 of the Constitution.
>
>The executive department has no more constitutional authority to collect a
>tax than it has to lay a tax on the people of the United States.
>
>It might be argued that Congress has power to delegate the collection
>authority. That power was proposed in convention at Philadelphia on
>September 14, 1787. The proposition was that Congress, already authorized
>to lay and collect, be given power to delegate the collection process "by
>joint ballot" to a Treasurer (69th Congress, 1st Session, House Document No.
>398: `Documents Illustrative of the Formation of the Union of the American
>States', pp. 722, 723).
>
>Mr. Rutledge [sic] of South Carolina moved to strike out this power and let
>the Treasurer be appointed "in the same manner with other officers", i.e. by
>the President, pursuant to Article 2, Section 2, clause 2. The
>Massachusetts deputies, Gorham and King, opposed the motions, arguing the
>the people were accustomed to treasurers being appointed by legislatures.
>General Pinckney, also of South Carolina, stated that the Treasurer was
>appointed by the legislature in his state, too, but that "The consequence is
>that bad appointments are made and the legislature will not listen to the
>faults of their own officer." Gouverneur Morris of Pennsylvania agreed that
>denying Congress the power to delegate to a Treasurer the authority for
>collecting taxes would cause the Treasurer to be "more narrowly watched, and
>more readily impeached."
>
>The motion to deny Congress the power to appoint a Treasurer was approved.
>The nation's tax collector would be appointed "in the same manner with other
>officers," by the President, with the advice and consent not of Congress,
>but of the Senate alone.
>
>Any attempt by the President or his officer to collect a tax from a United
>States citizen would be a violation of the citizen's right to tax collection
>by elected representative, unless the citizen had brought himself into a
>class over which the executive department could constitutionally exercise
>jurisdiction. That class was the alien national.
>
>The Supreme Court has never failed to declare that the income tax is an
>indirect excise tax (see Springer v. United States, 102 US 586; Brushaber v.
>Union Pacific Railroad Co., 240 US 16; Stanton v. Baltic Mining Co., 240 US
>112). Excise taxes are:
>
> ... taxes laid upon the manufacture, sale or consumption of commodities
> within the country, upon licensed to pursue certain occupations and
> upon corporate privileges. Flint v. Stone Tracy Co., 220 US 110.
>
>If the Constitution prohibits taxes collected from United States Citizens by
>any department of government but the legislature, and if the income tax is
>collected by the executive department (which department is authorized to
>enforce the law of nations), then an income tax collected by the Secretary
>of Treasury can only be an excise laid upon an alien's privilege of pursuing
>an occupation or otherwise deriving gain within the United States while
>remaining loyal to his foreign sovereign; or upon a foreign-based United
>States citizen's privilege of enjoying income from sources without the
>United States.
>
>If the Founding Fathers of this nation were, as the Congress jointly
>resolved in 1983, motivated by Scripture, we would expect them to pattern
>their systems of excises and duties after the Bible. And so they did:
>
> ... What thinkest thou, Simon? of whom do the kings of the earth take
> custom or tribute? of their own children, or of strangers?
>
> Peter saith unto him, Of strangers. Jesus saith unto him, Then are the
> children free. [Matthew 17:25}
>
>
>-----
>
>Larry Becraft is an attorney from Huntsville, Alabama.
>
>This article is the result of Mr. Becraft, after a conversation with Leo
>Masters. It was put into its present form by F. Tupper Saussy and edited by
>John Sasscer. It is reprinted from `Reasonable Action', the newsletter of
>Save-A-Patriot Fellowship.
>
>All who read this article are cautioned not to run down to the courthouse
>and submit these findings of law and fact. In most cases it would not help
>due to the fact that prior actions were not based on this knowledge, and it
>would most likely just create bad case law that can be used against others.
>
>[Reprinted from `Freedom League Newsletter', Aug/Sept 1987]
>
<snip>
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Paul Andrew Mitchell, Sui Juris : Counselor at Law, federal witness 01
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