Thursday, April 15, 2010



There Is No Law

Every tax law must clearly and plainly identify three things:
1) The subject of the tax;
2) The amount of the tax; and
3)The persons or entities liable for the tax.
Even a cursory review of other tax laws, including all other federal tax laws (see list), makes it obvious that these three elements of any tax law must be present before any of us can determine that we owe a tax on what and for how much.
The income tax law, however, is the only instance where there is no clear liability provision applicable to those the IRS claims are liable for the tax.  Although partners are called liable for taxes on partnerships, that “liability” is only in their “individual capacity”, and there is no provision making them liable in their “individual capacity.” The only clear liability provision is § 1461, which specifically assigns liability for the tax to those required to withhold taxes on Nonresident Aliens and Foreign Corporations! Are you required to withhold taxes on a nonresident alien? A foreign corporation?
While 26 U.S.C. § 3403, which is not part of the income tax law, does require employers to withhold income tax owed by their employees, there is no law that makes the employee liable for the tax in the first place.
Thus, THERE IS NO LAW making the typical working American liable for any income tax.
But you don’t have to take our word for it. You can check this for yourself! Search the Internal Revenue Code for “liable”, then search for “must pay”, “obligated to pay”, then search for “responsible for payment” or any other configuration of words that would designate who is liable for the income tax. You will find plenty of liability provisions for other taxes, but not for the income tax. (See compilation of liability provisions)
So, do you owe an income tax? Are you among those required by law to pay an income tax?
All tax laws must be interpreted literally, what lawyers call “strict construction”. You have a right to insist that the government obey the law and in the case of tax laws, the letter of the law. ACCORDING TO THE INTERNAL REVENUE CODE unless you are withholding taxes on a nonresident alien or a foreign corporation, YOU ARE NOT LIABLE FOR AN INCOME TAX!
To learn more about this important TRUTH, read “The Memorandum”.

What Is Income?

Contrary to what the IRS would have you believe, “income” is NOT everything that “comes in.” The Code does not define income. It defines gross income as “income” derived from whatever source, including compensation for services, but that is not the same as defining income as being 100% of all compensation for services.
The Supreme Court has held that it and it alone can define “income” because Congress may not define Constitutional terms. Otherwise, it could define “speech” as “pig-Latin” and any other speech would no longer be protected by the Constitution.
So, what is “income”? The Supreme Court has defined income as gain, profit, derived from capital, labor or both combined. It has also given us some rules for determining what is and is not income:
Rule No. 1: What comes in is NOT “income”, but “gross receipts”, and in order to determine if there is any income in what comes in we must first deduct from those gross receipts the value or cost of whatever was given in exchange for it because income is only the gain or profit from the conversion of capital.
U. S. Supreme Court in Doyle v. Mitchell Brothers Co., 247 U.S. 179, 38 S.Ct. 467 (1918)
If you receive wages or a salary or are paid fees for your personally rendered services, your labor, how much do you deduct from those earnings in order to determine whether you have any income? What was your cost? A part of your life? Your labor? Your skill? Your knowledge? You can’t say how much that is worth in dollars? Then let’s look at the next rule:
Rule No. 2: In order for there to be income it must be DERIVED from, that is SEPARABLE from, that portion of gross receipts that represents the investment or property given in exchange for those gross receipts. If it cannot be separated, distinguished, from the capital and spent or used without injuring the capital portion, then THERE IS NO INCOME.
U. S. Supreme Court in Eisner v. Macomber, 252 U.S. 189, 40 S.Ct. 189 (1920)
So, can you separate the portion of your earnings that represents your labor and your time from a specific, identifiable portion that you can regard as profit? No? Then according to the Supreme Court, YOUR EARNINGS ARE NOT AND CANNOT BE REGARDED AS INCOME and should be excluded from your gross income (26 CFR § 1.861-1)!

What Is Exempt?

The taxing authority of the federal government extends ONLY to any activity over which it has authority to exercise control, and any activity outside that authority is “exempt” from taxation by the federal government.
U S. Supreme Court in McCulloch v. Maryland, 17 U.S. 316 (1819)
The federal government is forbidden by the Constitution to regulate or abridge the exercise of a fundamental right, those rights that are included in the “right to life, liberty and the pursuit of happiness.” Among those fundamental rights are your right to freedom of speech, to worship as you choose and your right to earn a living for yourself and your family through any lawful occupation.
U. S. Supreme Court in Butchers' Union Co. v. Crescent City Co., 111 U.S. 746, 4 S.Ct. 652 (1884); Yick Wo v. Hopkins, 118 U.S. 356 (1886); Truax v. Raich, 239 U.S. 33 (1915); Coppage v. Kansas, 236 U.S. 1; Adams v. Tanner, 244 U.S. 590, 37 S.Ct. 662 (1917); Meyer v. Nebraska, 262 U.S. 390, 43 S.Ct. 625 (1923); and many other cases.
Because the power to tax is the power to destroy (Chief Justice John Marshall in McCulloch v. Maryland, above), and because the federal government does not have the right to restrict, much less destroy, your fundamental rights, the exercise of a fundamental right, such as your freedom of speech, your freedom of religion and your freedom and right to earn a living through any lawful occupation is EXEMPT from taxation by the federal government!
U. S. Supreme Court in Grosjean v. American Press Co., 297 U.S. 233 (1936); and, again, in Murdock v. Pennsylvania, 319 U.S. 105 63 S.Ct. 870 (1943); and, again, in Jones v. Opelika, 316 U.S. 584, 56 S.Ct. 444 (1943); Follett v. McCormick, 321 U.S. 573 64 S.Ct. 717 (1944); and Harper v. Virginia Bd. Of Elections, 383 U.S. 663, 86 S.Ct. 1079 (1966).
The law, as it is written, instructs us to EXCLUDE EXEMPT INCOME (26 CFR § 1.861-8T), so even if part of your personal earnings can be separated as profit “derived from compensation for services”, that exempt income should be excluded from your gross income.

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