Posted by CP on September 30, 1998 at 12:38:09:
In Reply to: Trespass protection is forfeited during commission of fraud or crime. posted by , on September 30, 1998 at 10:14:24:
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Gross Income
Claims are Thurston's research findings applying to Citizens living and working domestically.
He insists that you take this information to a 'competent' attorney for verification.
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Edited on 09/16/98
Everyone earns Gross Income,
correct?
Let's take a second
look...
1. Determine positively if your 'income'
from 'anywhere & everywhere' is in
fact 'Gross Income'.
2. If you are not receiving 'Gross
Income', then examine the legal steps
needed to correct your situation.
'Income Tax' and 'wages' apply only to those who have earned
'Gross Income'...
if your income is not Gross income, then what is it? It is 'exempt'...
Let's determine whether your 'income' is in fact 'Gross Income' as
outlined by the Congress and the Secretary of the Treasury:
First, we are going to show you the definition of 'Gross Income' per
Section 61 which is the standard definition referred to by the
professionals.
We will then view the 16th Amendment and conclude that it is accurate.
The Federal Regulation that states where the infamous and until
recently, low profile, 'list of sources' can be found.
Then we will show you the 'list of sources' admitted by the Secretary of
the Treasury and the Congress.
For good measure, we'll examine the definition of 'exempt income'
which applies if your earnings are not 'gross income'!
Ready? Let's go!
Let's look at the definition of Gross Income:
Section 61 of the Internal Revenue Code defines "Gross income" as:
IRC Section 61
(a) GENERAL DEFINITION.
Except as otherwise provided in this subtitle, gross income means all income
from whatever source derived, including (but not limited to) the following
items:
(IMPORTANT NOTE: The list below is comprised of 'items' as stated
above, not 'sources'... don't give up yet... the below 'items' must
originate from the listed 'source' to be 'items' of 'Gross Income'.)
Here are the 'items':
(1) Compensation for services, including fees, commissions, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6i) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent;
(15) Income from an interest in an estate or trust. 1.861-8(a)(4):
Good, we know about these 'items'... we grew up hearing these
'items' repeated through the years as they are components of
gross income, right? These above items have been indicated by
amateurs and tax professionals alike to be 'sources'... they are not
sources.There is a difference between 'items' and 'sources'. Again,
these are 'items' of gross income only when they 'derive from'
specifically listed sources. It gets easier...
We also know that the 16th Amendment specifies the authority of
the Congress to tax... Let's look:
The Constitution of the United States Of America
Amendment XVI.
"The Congress shall have power to lay and collect taxes on incomes, from
whatever source derived, without apportionment among the several States,
and without regard to any census or enumeration."
(emphasis added)
So far, so good.. we agree with this.
Now let us dispose of this matter of 'sources' which keeps
'popping up' whenever we look at a definition or description of
'Gross Income'..
Do our law books tell us where we can clarify this 'source' stuff??
Indeed they do!... sources are described by the Secretary of the
Treasury in the Code of Federal Regulations and are the legally
binding definition of 'sources' that must apply to income for it to be
classified as 'Gross Income'..
Look below at CFR § 1.861- 8(a):
Code of Federal Regulations § 1.861- 8(a):
"...The rules contained in this section apply in determining taxable income of
the taxpayer from specific sources and activities under other sections of the
Code referred to in this section as operative sections. See paragraph (f)(1) of this
section for a list and description of operative sections." (Emphasis added)
The Federal Regulations make reference to 'sources' within the
United States.. below are the only sources listed from which
income must derive in order for it to be taxable for the purpose of
the Income Tax.
Code of Federal Regulations 1.861-8(f)(1)
(i) Overall limitation to the foreign tax credit.
(ii) [Reserved]
(iii) DISC and FSC taxable income. (note: DISC is Direct International Sales Corp, and FSC is a
Foreign Sales Corp)
(iv) Effectively connected taxable income. Nonresident alien individuals and
foreign corporations engaged in trade or business within the United States,...
(v) Foreign base company income.
(vi) Other operative sections.
(A) "...foreign source items of tax..."
(B) "...foreign mineral income..."
(C) [Reserved]
(D) "...foreign oil and gas extraction income..."
(E) "...citizens entitled to the benefits of section 931 and the section 936 tax
credit..."
(F) "...residents of Puerto Rico..."
(G) "...income tax liability incurred to the Virgin Islands..."
(H) "...income derived from Guam..."
(I) "...China Trade Act corporations..."
(J) "...income of a controlled foreign corporation..."
(K) "...income from the insurance of U.S. risks..."
(L) "...international boycott factor...attributable taxes and income under section
999..."
(M) "...income attributable to the operation of an agreement vessel under
section 607 of the Merchant Marine Act of 1936..."
Which of the above 'sources' does your employee's,
and/or your 'income', 'items' or 'wages' derive from?...
Interesting... isn't it?
The above list explains clearly your 'gross income' involvement in
light of the fact that the U.S. Supreme Court has determined that the
Congress acts intentionally and purposely in the inclusion or
exclusion of something in a law. Or simply, if a particular source is
not on the list, then it is effectively 'excluded' from the Income Tax
Act and subsequently the legal definition of 'Gross Income'.
The above list/regulation can be described simply as a 'fence'. The U.S.
Congress gave the Secretary the task to encircle and delineate the only area
from which 'Gross Income', and hence 'taxable income', can be derived or
accepted from... and the Secretary published his understanding of what was
expected of him in the regulations. The above list is in fact the only definition
of 'sources' anywhere in the regulations. 'Whatever' is within the fence is
'allowed' to be listed as 'Gross Income'. If it is not within the confines of the
Secretary's 'fence' or 'regulation', it is 'exempt'.
Some with a vested interest in taking care of your money for you, will argue that
the phrase 'whatever sources' in the 16th Amendment means 'any and all
sources'... yes again, we AGREE that it does.. 'any and all 'sources' within the
list! The Secretary has defined them, then Congress agreed with the
Secretary! And they are restricted to the above list, as it is the only list which
defines sources! An entry for Citizens with domestic income does not exist on
this list!
Remember from Law 101 that the power of the Congress and the
authority it gives to the Executive Branch is limited to the contents
of the law.
Let's put it still another way...
It is not always what is in a law that is important. Frequently what is
not stated in a law is equally important.
Especially if you're assuming something is in a law (something
the U.S. Supreme Court does not have authority to do), when it
clearly is not there.
1.) Section 61 states that gross income is from 'sources' which are taxable.
2.) 26 USC § 861(a), states that the following items of gross income shall be
treated as income from sources within the United States, and does not define
the 'specific sources' of income from within the U.S., that are taxable.
3.) 26 CFR § 1.861 and following, are the Regulations promulgated by the
Secretary of Treasury to implement 26 USC § 861, and prove that the items of
gross income discussed in 26 USC § 861, are applicable only to foreigners and
U.S. Citizens living abroad.
Additionally, all of the regulations applicable to 26 USC § 864,
Definitions, are directed only to nonresident aliens and foreign
corporations.
Significantly, the only application of the federal income
tax upon the income of U.S. Citizens in existence is with
respect to:
(1) a U.S. Citizen's foreign earned income, and
(2) the income of U.S. Citizens living abroad.
In good faith, let's take a look at 861. When you examine 861's regulations, you
find the admission in 1.861-8 (a)(4), that income must come from a specific
source to be taxable. If you examine the sources in 1.861-8 (f)(1), you will find
that the domestic sources are plainly applicable to non-resident aliens and
foreign corporations. The others listed are foreign sources that U.S. citizens
would definitely be taxed upon. There is no direct mention of U.S. sources
where U.S. Citizens can earn 'gross income'.
To wrap up this thesis, of the five sources listed in (f)(1), four of them are
repeated as non-exempt income pursuant to 26 CFR § 1.861-8 (T)(d)(2)(iii). And
pursuant to 1.861-8 (T)(d)(2)(ii)(A), all income that is exempt, excluded (not
listed), or eliminated from the law, is exempt income.
Now the nay-sayers will say that these exclusions only apply to 861. So the next
question is the same question we started with before getting into this regulation.
And the question is, where are the other U.S. sources listed that are applicable
to U.S. citizens living and working within the U.S.?
Since the law is so plainly structured to be taxing foreigners, and foreign earned
income, we must have some specific citation of law, specifically taxing U.S.
citizens on their domestic source income, as the Secretary has made the list of
U.S. sources that are taxable in 26 U.S.C. § 861, applicable only to foreigners.
This legal fact fills in a lot of missing pieces in the income tax puzzle, yet the
tax professionals we have encountered do not think so. Still, they refuse to
answer the next haunting question: Why is it that the conventional school of
thought believes that they can render an Act of Congress, The Paperwork
Reduction Act of 1980, superfluous and of no legal effect, when we point out that
the only form required to be filed by U.S. Citizens, pursuant to section 1.1-1 of
the Code of Federal Regulations, is the 2555 foreign earned income form?
Try as one may, attempting to pass off § 61 defining "Gross income" as the
section of Code as the law taxing all U.S. citizens on their U.S. source income,
even if the income cannot be deemed to be from taxable sources, is dishonest
in light of the construction of the statute. Since 26 CFR §§ 1.861-8 (f)(1) and -8T
(d)(2)(iii) state plainly the taxable sources which a U.S. Citizen must have, to
make income "Gross income" and thus "taxable income" (the latter being taxed
in § 1). Is it any wonder that the proper Form to be filed, pursuant to Section 1 of
26 U.S.C. and 26 CFR by a U.S. Citizen is the 2555 Foreign Earned Income form?
Added support below...
'Exempt Income'
26 CFR § 1.861-8T(d)(2)(ii)(A)
"In general. For purposes of this section, the term "exempt income"
means any income that is in whole or in part, exempt, excluded,
or eliminated for federal income tax purposes." (Emphasis added)
"Exclusion" which is defined in Black's Law Dictionary,
in part, as follows:
'Denial of entry or admittance.'
Isn't it fascinating that right after the Secretary stated this, he
plainly listed income not exempt from taxation here as follows:
26 CFR § 1.861-8T(d)(2)(iii)
(iii) Income that is not considered tax exempt.
The following items are not considered to be exempt, eliminated,
or excluded income and, thus, may have expenses, losses, or other
deductions allocated and apportioned to them:
(A) In the case of a foreign taxpayer (including a foreign sales
corporation (FSC)) computing its effectively connected income,
gross income (whether domestic or foreign source) which is not
effectively connected to the conduct of a United States trade or
business;
(B) In computing the combined taxable income of a DISC or FSC
and its related supplier, the gross income of a DICS or a FSC;
(C) For all purposes under subchapter N of the Code, including the
computation of combined taxable income of a possessions
corporation and its affiliates under section 936(h), the gross income of
a possessions corporation for which a credit is allowed under section
936(a); and
(D) Foreign earned income as defined in section 911 and the
regulations thereunder (however, the rules of section 1.911-6 do not
require the allocation and apportionment of certain deductions, including
home mortgage interest, to foreign earned income for purposes of
determining the deductions disallowed under section 911(d)(6)).
NOTE: The only income above related to U.S. Citizens is
(D)
This is of further importance as the definition of "wages" in § 3401(a) to be
withheld from in accordance with § 3402, excludes all remuneration paid to
U.S. Citizens by employers, except income which is deemed to be gross
income under § 911, or other income related to foreign and U.S. possession
sources.
This law confirms our position, in simple terms according to
Black's Law Dictionary, that if the income in question comes from a
source 'excluded' from the law, and thus not mentioned within the
law as being taxable, it cannot then meet the source requirements
of § 861, its regulations, and thus section 61(a) to be "Gross
income", and is by definition EXEMPT.
This is a prime example of what we mean by the
statement that... What is not within a law is just as
important as what is!
A simple 'rule of thumb' to remember about the tax code:
The entire topic of 'The Income Tax', and the statutes regarding it, are built
chiefly around the foundation of 'Gross Income' as defined in § 61 of the
Internal Revenue Code... and that our laws mean what they say.
In the Members Hall we will have complete pre-written letters
and a myriad of other tools for our members to utilize based upon
the above approach.
************
The article below is the origin of the Taxgate
site.
It is also the 'beginning of the end' for most 'income taxes'
collected, the withholdings from remuneration alleged to be
"wages", as well as those who 'allowed' the subject of 'Taxgate' to
originate at all!
It is the culmination of decades of research, and the effort of many people
who have struggled to find and expose the truth of the Internal Revenue laws.
Here we seek to make the essence of the income tax law simple, for the
common man to understand, and thus increase numbers of the
knowledgeable, in the public at large.
All theories and constitutional arguments ever postulated by any seeker of truth in the
Internal Revenue laws will be revealed to the reader as an obfuscation or diversion, some
just as sinister as the publications of the IRS and words of discouragement from lawyers.
The simple truth of the law is that the entire 'income tax' is
apparently built around the taxation of "gross income" as defined in
§ 61 of the Internal Revenue Code.
The simple truth revealed in the law supports the fact that the
income tax is constitutional, but fails to address the fact that it has
just not been properly applied by all of its users.
The essence of what is revealed in this article has been applied to State as
well as Federal income tax matters, as the States with income tax laws have
invariably created their income tax laws to be wholly dependent upon the
Federal definition of what is "Gross income". Also, this information is
paramount to any IRS action whether it be a civil action where the IRS claims
money is owed, as "Gross income" was earned, a Criminal Matter where the
IRS claims that there was a willful failure to file an income tax return on "gross
income" (but fails to prove gross income), as well as wage withholding.
By now you should have read the LAW101 section of this site (if you have not please do
so now) and understand that the law means what it says. From that article you should also
see that what a law does not say is just as important as what a law does say, as
the law specifically legislates only over that which is mentioned in the law.
For far too long we have allowed the law to be read to, and by, us with built-in
assumptions, and presumptions of the status quo, to support the actions of
the status quo. If such childlike trust and acceptance of the way things are
seen by the majority and those alleged to be the most learned of our society
were to always be correct, then the Earth would still be flat by all printed
accounts.
This is neither doing service to the welfare of the people, nor the rule of law as enacted by
the Congress. Here we will demonstrate to you the actual law, that most people say is too
complicated, or have just presumed to be too complicated, for someone to understand.
It is widely accepted by the courts, and most Americans who will comprise a jury, that in
1913 the U.S. Congress enacted the 16th Amendment to lay a tax upon incomes from
"…whatever source derived…" In the case of James v. U.S. the U.S. Supreme Court has
determined that the Amendment means exactly what it says, and that the "source" is
important.
The same phraseology is applied in 26 United States Code (Internal Revenue Code) § 61(a),
which defines the "Gross income, which is ultimately taxed as "Taxable income" (26 U.S.C.§
63) in 26 USC § 1, and a return is required to be filed on, as set forth in 26 § 6012, to the effect
that the actual statute states that "gross income" is income from whatever 'source' derived.
This is also confirmed by the U.S. Supreme Court in the case of U.S. v. Burke as the Court
again has included the stipulation of "source" in its legal determination that all of the words
in the law exist within the law with purpose and authority.
Before we continue, we must examine the legal definition of "source" as set forth in Black’s
Law Dictionary. The legal definition reveals that a "source" is not a thing, but is a place or
circumstance.
It is at this point that the first crucial error is made by the reader of the law, as the reader
usually does not understand that the law means exactly what it says, and is not subject to
anyone’s interpretation, as even the U.S. Supreme Court lacks any such power. The error is
caused by one reading the remainder of § 61(a), before the list of the items 1 to 15. These
items 1 through 15 have been read by millions to be "sources" of "gross income" when in
fact, as set forth in the rules promulgated by the Secretary of the Treasury in 26 CFR §
1.861-8(a)(3) these items listed are not "sources" as set forth under the law but are merely
"items".
Most accountants refuse to even see the word "source" in the law and thus avoid its very
significance. This was done by one accountant recently, despite his pointing out that the
word "source" reportedly appears 214 times in the United States Code. Such an approach
renders the word "source", as employed by the Congress, superfluous (of no effect) in the
face of the fact that the law states that ‘items’ come from a ‘source’.
(There is only one small point upholding the accountant's position that items are sources,
and that is the words of § 861 (no small insignificant point) which plainly state that the items
listed within § 861 are to be treated as "sources" in regards to the U.S. What was telling
about this point was redirected by the Secretary in the regulations, as the only places where
the Secretary stated who had to be earning the U.S. source income, to have income subject
to the income tax, always referred to foreigners only.)
In our search for ‘sources’ we came upon 26 CFR § 1.861, the Regulation for § 861 Sources of
Income from within the United States. This was the only section of law addressing U.S.
source income and we hoped to find the taxable U.S. sources here. In the process we
learned that we were further correct, as our understanding of the law is supported by the
next rule as shown in 26 CFR §1.861-8(a)(4). This law states that in order to have taxable
income, one must have items of gross income from a taxable "source" as listed in 26 CFR
§1.861-8(f)(1). This next law lists all of the taxable ‘sources’ from which one must have
items of income in order to have a taxable income for the purpose of the federal income tax.
Upon review of this list, it should be clear to most U.S. Citizens that they never made any
gross income as they never made any income from any of the taxable sources as set forth
under 26 CFR § 1.861-8(f)(1).
Now, for the doubters in the crowd, it has been set forth by the Secretary of
the Treasury in the Code of Federal Regulations at 26 CFR § 1.861-8(a)(1) that
these are the rules that his office has set forth to be used for the purpose of
determining income which is taxable for the purposes of the federal income
tax.
Follow this next point...
The Congress wrote in the Amendment "…whatever source derived…",
after which, the Secretary made a list of specific "sources" in the Code of
Federal Regulations, the Regulation was then published in the Federal
Register for correction before becoming the law as agreed to between the
Congress and the Administration. Therefore, it is plain to see the legal fact that
the Secretary has limited the taxable sources to those that are clearly listed
in 26 CFR § 1.861-8(f)(1) for the law means exactly what it says, and the
Congress has not protested the Secretary’s actions.
Furthermore, the Secretary has set this fact into stone, so to speak. The fact that 26 CFR 1.861
sets forth the rules for determining taxable income for the income tax, this section of the
regulations is the only such rule, there are no others. So, it is equally revealing in the
Temporary Regulation of 26 CFR § 1.861-8T(d)(2)(ii)(A) that "exempt income" means
income which is "excluded" from the law, and that § 1.861-8T(d)(2)(iii) lists the "Income that
is not considered tax exempt". Between these two sections of regulations and § 1.861-8(f)(1),
that which is to be taxed is by law very limited.
Black’s Law Dictionary 6th Edition plainly states what the legal
definition for an exclusion is. Therefore, that which is denied entry
under the law is "exempt income", at least in accordance with the
instructions given to the IRS by the Secretary of the Treasury.
This idea goes along with the premise of American law, that we are not an
Executive Monarchy where the government can claim authority over whatever
it wishes without regard to law, but that each and every action of the
government shall be well grounded in legal and statutory merit.
Here you have it. In the most simplistic terms, available and free to all. The root
of the 'income tax' is in "gross income" as defined by law. The root of "Gross
income" is a specific taxable source as set forth in the law. Exempt income is
income which is "exempt" (an exemption is made or given) "eliminated" (was
there, but is no longer, as it was repealed), or "excluded" (denied entry or
admittance into the law). Non exempt, as set forth in the Secretary’s rules, is
that income earned by foreigners here in the U.S. and foreign earned income
by U.S. Citizens residing in the US, or income earned in the US but the Citizen
has a foreign tax home.
Can you see how the claim that all U.S. Citizens are not subject to
the income tax is legally incorrect? If a U.S. Citizen has 'income' from
a listed 'source', then you do have a U.S. Citizen who has income subject to
the 'income tax'.
Can you see how the claim that 'the income tax' is 'unconstitutional'
is legally incorrect? The 'income tax' is perfectly constitutional... but it
is limited in its application.
The facts reveal that most American’s income has always been "exempt income" as
defined by the Secretary of the Treasury's interpretation of the statutes enacted by the U.S.
Congress. There is not much else to say about it as the Congress did not object to the
Secretary's regulations.
Since we U.S. Citizens, having been so long intimidated by the volumes and volumes of
words which make up all of the internal revenue laws (26 USC and CFR), abided in a belief
that the government would do us no wrong, and were terrified of the idea that we could
have been acting incorrectly under a law for so long. We have not seen this simple truth, that
there are no U.S. taxable sources for U.S. Citizens living and working in the U.S.
We say this with renewed vigor, as our position (even before the addition of
the 3401(a) information) has recently undergone scrupulous examination by
two CPA’s, one also being a Professor. Both were asked to provide citations
for the taxable U.S. sources, for U.S. Citizens living and working in the U.S., as
the Secretary had set forth rules regarding Foreign income and Foreigners.
They have not bothered; or more likely, are simply unable to provide the law.
Our position is that such a law doesn't exist.
Did the Secretary fail to provide such rules, or did he not have a
statute to begin with?
It is very important to understand that if a Society which presumes that there are things
within a law, it is not only what a law says that is important, but also what it does not
say. For what a law legislates over is included in the law, that which the law does not
legislate over is excluded from the law.
Now the truth behind the income tax is revealed. Now, you can take a simple stand to tell the
truth to the IRS when they ask you to make a claim against yourself, that you had made
"Gross income"
Now with the addition of the § 3401(a)(8)(A) information, you can properly inform your
employer, or all of your payers, that they do not have any duty to claim that you are paid
"Gross income" when you are not paid "Gross income" as defined by law, and you did not
earn "wages" to be withheld from in accordance with § 3402.
For those who join our association, you will receive access to all of our strategies using the
legal definition of "Gross income" for the Administrative handling of State tax matters,
Federal Civil matters, Federal Criminal matters, and setting up your case by first informing
your employer/payor that the remuneration paid to you is not included in the definition of
"Wages" in § 3401(a)(8)(A). This is designed to cast great doubt upon their claims/returns
stating under penalty of perjury, that you had "wages" and thus "Gross income".
In the Members Hall we will have complete pre-written letters
and a myriad of other tools for our members to utilize, based upon
the above approach.