Tax Protester Told to Stop Giving Advice

Associated Press ^ | Mon, Jan. 13, 2003 | MARC LEVY

[heyhey]

HARRISBURG, Pa. - A tax protester who allegedly promotes a bogus legal loophole to convince people they owe no taxes was ordered by a federal judge to stop the practice and turn over his clients' records.

The order came Friday in the government's effort to force Thurston Bell of Hanover to stop giving clients allegedly false tax advice and charging large fees for filing tax returns.

[mvpel]

Ah but compensation for services or labor is expressly included,

Geezer, compensation for services or labor is an ITEM of income, not a SOURCE of income. I'm not arguing that compensation for services or labor is not expressly included.

Your point on 26 USC 7701(c) is a good one, let me research that a bit.

[Poohbah]

Geezer, compensation for services or labor is an ITEM of income, not a SOURCE of income.

Sorry, kiddo--that "What-is-the-meaning-of-is" s**t doesn't fly in court.

[mvpel]

Then we do not live under the rule of law, but under a tyranny of the judiciary.

And claiming that trying to understand the meaning and legal import of the term "operative sections which require the determination of taxable income" is comparable to Clintonian weaselling about the word "is" constitutes a reach in my book.

[ancient_geezer]

Try to understand - a source of income is distinct from an item of income. Section 61 lists items of income, not sources.

Try to understand, the source is irrelavent as regards the United States citizen unless it is expressly excluded by statute or Court ruling.

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955).

• "Congress applied no limitations as to the source of taxable receipts, nor restrictive labels as to their nature."

COOK v. TAIT, 265 U.S. 47 (1924)

• "[T]he principle was declared that the government, by its very nature, benefits the citizen and his property wherever found, and therefore has the power to make the benefit complete. Or, to express it another way, the basis of the power to tax was not and cannot be made dependent upon the situs of the property in all cases, it being in or out of the United States, nor was not and cannot be made dependent upon the domicile of the citizen, that being in or out of the United States, but upon his relation as citizen to the United States and the relation of the latter to him as citizen."

 

26 USC 7805(a) Rules and regulations
(a) Authorization - … the Secretary [of the Treasury] shall prescribe all needful rules and regulations for the enforcement of this title [Title 26]…" [26 USC § 7805]

Thus under amplifying Treasury regulations for 26 USC 1, 26 CFR 1.1-1(a),(b)

Sec. 1.1-1 Income tax on individuals.

(a) General rule. (1) Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States and, to the extent provided by section 871(b) or 877(b), on the income of a nonresident alien individual.

(b) Citizens or residents of the United States liable to tax. In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States.

Furthermore, the statutes themselves deny this usage of this maxim, which is merely a convention not a constitutional mandate.

26 USC 7701. Definitions

"(c) Includes and including The terms ''includes'' and ''including'' when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined."

[Poohbah]

Then we do not live under the rule of law, but under a tyranny of the judiciary.

Sorry. Reread the statute C-A-R-E-F-U-L-L-Y. "The following ITEMS of income SHALL BE TREATED AS SOURCES" makes it pretty clear that for the purposes of that section of the code, "items" and "sources" are semantically identical--and that such is the legislative intent.

And claiming that trying to understand the meaning and legal import of the term "operative sections which require the determination of taxable income" is comparable to Clintonian weaselling about the word "is" constitutes a reach in my book.

You are explicitly NOT trying to understand--you are deliberately acting as stupid as possible. Problem is, it only works ONCE.

[ancient_geezer]

compensation for services or labor is an ITEM of income, not a SOURCE of income. I'm not arguing that compensation for services or labor is not expressly included.

"It is an item of gross income treated as income from sources". The exchange( of comepensation for labor) is the source of income( compensation). Got it?

Sec. 861. Income from sources within the United States
(a) Gross income from sources within United States
The following items of gross income shall be treated as
income from sources within the United States:

(3) Personal services
Compensation for labor or personal services performed in the United States;

Wake up friend, you are so attached to your conclusion, that you cannot perceive the reality staring you in the face.

[mvpel]

Geezer, under the Melton rubric, a court ruling that I am required to register my Glock 30 with the Secretary of the Treasury under 26 USC 5841 would go something like this:

The jury heard not only the United States' evidence against the defendant, but also the defense that he believed that his Glock 30 was not a "firearm" for the purposes of the registration requirement. The jury rejected the excuse, however, and convicted him on nearly all counts.

• [Subtitle E]"Section 5841 of the Internal Revenue Code imposes a requirement that the Secretary shall maintain a registry of all firearms. 26 USC 5841(a)

The duty to register his firearm is therefore manifest on the face of the statutes "without any resort to IRS rules, forms or regulations."

They stopped short in their parsing of definitions, just as I did here.

[ancient_geezer]

Then we do not live under the rule of law, but under a tyranny of the judiciary.

Seems to me you are leaving out the Constitutional authority granted to Congress, which the Judiciary is bound by.

Constitution for the United States of America:

• Article VI: "This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding."

• Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
  to pay the debts and provide for the common defense and general welfare of the United States;
  but all duties, imposts and excises shall be uniform throughout the United States; "

• Article I Section 8: "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof."

FindLaw: U S v. GOLDENBERG, 168 U.S. 95,103 (1897)

"The primary and general rule of statutory construction is that the intent of the lawmaker is to be found in the language that he has used. He is presumed to know the meaning of words and the rules of grammar.

FindLaw: RODGERS v. U S, 185 U.S. 83 (1902)
"The primary rule of statutory construction is, of course, to give effect to the intention of the legislature."

FindLaw: S.E.C v. C. M. JOINER LEASING CORP., 320 U.S. 344,351 (1943)

"... courts will construe the details of an act in conformity with its dominating general purpose, will read text in the light of context and will interpret the text so far as the meaning of the words fairly permits so as to carry out in particular cases the generally expressed legislative policy.

[beachn4fun]

Not every one pays taxes. Many who live in the US don't pay taxes.

[mvpel]

Sorry. Reread the statute C-A-R-E-F-U-L-L-Y. "The following ITEMS of income SHALL BE TREATED AS SOURCES" makes it pretty clear that for the purposes of that section of the code, "items" and "sources" are semantically identical--and that such is the legislative intent.

Oh give me a flippin' break, Poohbah!! Take your own advice, for crying out loud!

The following items of gross income shall be treated as income from sources within the United States

The following ITEMS shall be treated AS INCOME, not "AS SOURCES."

[Destructor]

"True Conservatives, would be rooting for people to get around the IRS, not attacking them for it. There's nothing noble about taxation. It is in fact, evil."

It's obvious that Patrick Henry is not a true conservative. He is probably an employee of the IRS that is hiding behind the name of a great man.

[Poohbah]

But your correction does not make it any easier for you. Remember, you only get ONE get-out-of-jail-free pass using the Cheek defense, and you still owe taxes, interest, and penalties!

[mvpel]

It is an item of gross income treated as income from sources". The exchange( of comepensation for labor) is the source of income( compensation). Got it?

The item of income (compensation for labor) must derive from a source that is either within or without the US. The item is not the source. You are conflating items and sources.

[Poohbah]

Actually, most of the "tax protestors" who push this stuff are IRS informants, buying their way out of prison and debt on the backs of their fellow Americans.

All PatrickHenry is doing is telling you that jumping off of a tall building does NOT make you able to fly.

[ancient_geezer]

They stopped short in their parsing of definitions, just as I did here.

Problem is you are bound by the Court's rulings, The Courts are bound by the Congress' intent, and all are bound by the Constitution.

Now, show that it is not the intent of Congress to extract every penny it can get away from you under the Constitution, you might have an argument. Until then, you are stuck with the rulings as they stand until you can convince the Congress to change the statute to state something more to your liking.

Good Luck. I suggest, John Linder's bill which offers a comprehensive statute to kill all income and payroll taxes outright, and provide a retail sales tax in it's stead:

H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org

[ancient_geezer]

The item of income (compensation for labor) must derive from a source that is either within or without the US. The item is not the source.

Take your sob story to a judge!

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955).

• "Congress applied no limitations as to the source of taxable receipts, nor restrictive labels as to their nature."

 

The following is extacted from the state appellate decision where the the appellate board, California Board of Equalization, analyzes the arguments based on the 26 USC 861 and related treasury regulations as they apply to the federal tax system those portions of the IRC Title 26 the California income tax law includes by reference.

I highly recommend reading the opinion in full for it provides a very clear insight as to how both state and federal appellate judges construe the Federal Income Tax code and treat several common tax protest arguments that are frequently offered by defendants.

It is guaranteed that if one cannot clearly and completely refute this analysis in judicial review, the 861 "sources" argument will completely fail.

As regards 861 "sources" argument Meyers v CBOE

(pdf document) 2001 SBE 001, pages 8-11:

"Income “Sources.” Appellant’s primary contention relies on his misapplication of IRC section 861 and its implementing regulations (most specifically, Treasury Regulation section (Regulation) 1.861-8(f)(1)). Appellant contends that “gross income” (apparently for both federal and state tax purposes) is limited to income from an obscure list of “operative sections” listed in Regulation 1.861-8(f)(1). This contention is groundless and frivolous. To better understand this contention we will briefly review a few IRC sections and regulations. California Revenue and Taxation Code (R&TC) section 17071 defines “gross income” by reference to IRC section 61 “except as otherwise provided.” Section 61 defines “gross income” as follows:

“Except as otherwise provided in this subtitle [Subtitle A—Income Taxes], gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) 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; and
(15) Income from an interest in an estate or trust.”

(Emphasis added.)

For federal purposes, IRC section 1 imposes a tax on the taxable income of every individual who is a citizen or resident alien of the United States. One of its implementing regulations provides, in part, as follows:

“In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States. . . . As to tax on nonresident alien individuals, see sections 871 and 877.”

(Treas. Reg. § 1.1-1(b); emphasis added.) Thus, for a citizen or a resident alien it will normally not matter whether a source of income is from within the United States or without—since both are subject to the federal income tax unless specifically provided elsewhere in the code (such as the “foreign earned income” discussed above).

Nonresident aliens and foreign corporations have special provisions for federal income tax purposes. For example, IRC section 871 imposes “a tax of 30 percent of the amount received from sources within the United States by a nonresident alien individual . . . [on income other than capital gains].” (Emphasis added.) One of the implementing regulations for IRC section 871 provides, in part, as follows:

“For purposes of the income tax, alien individuals are divided generally into two classes, namely, resident aliens and nonresident aliens. Resident alien individuals are, in general, taxable the same as citizens of the United States; that is, a resident alien is taxable on income derived from all sources, including sources without the United States.”

(Treas. Reg. § 1.871-1(a); emphasis added.) Once again, it is clear that citizens and resident aliens are taxable on income from all sources, both within and without the United States.

For some purposes (such as taxing the income of nonresident alien individuals and foreign corporations), it is necessary to know whether a source of income is from within or without the United States. (See Int.Rev. Code, § 871, supra.) IRC sections 861 through 865, together with their implementing regulations, provide the bases for making this determination— for federal income tax purposes. IRC section 861 provides the criteria for determining which portions of various income items are from “sources” within the United States, and IRC section 862 does the same for “sources” of income without the United States. (IRC sections 863–865 provide additional rules—including for the apportionment and allocation of income to sources within or without the United States.)

The regulations under IRC section 861 assist in determining whether income is from a source within or without the United States—including situations where income comes partly from within and partly from without the United States—and where it is necessary to allocate and apportion deductions. It is here that appellant makes his primary error. Appellant completely misapplies Regulation 1.861-8, subsections (a)(1) and (f)(1). He concludes that these relatively obscure portions of the regulations suddenly change the whole definition of taxable income for citizens and resident aliens to include only income from the list of “operative sections” in subsection (f)(1) of this regulation. This defies logic and the clear purpose of IRC section 861. Subsection (a)(1) of the regulation states that it applies to the determination of taxable income “from specific sources and activities under other sections of the Code, referred to in this section as operative sections.” The list of “operative sections” in subdivision (f)(1) does not include IRC sections 61 and 63. Therefore, rather than limiting either “gross income” under section 61 or “taxable income” under section 63, this regulation has only the very limited application defined therein. Indeed, Regulation 1.861-8(g) provides a number of examples of how section 861 should be applied. (See Treas. Reg. § 1.861-8(g), examples 17-22 and 25-33.) These examples show how to determine whether an item of income (sometimes in very complex factual situations) is from a source within or without the United States. Sometimes the examples use terms such as “domestic” or “U.S.” source, or “foreign” source, instead of “within” or “without.” But they all clearly apply only to the determination of whether an item of income is from “within” or “without” the United States.

Finding as regards IRS agreeing with appellant's theories:

(pdf document) 2001 SBE 001, page 12:

8. Actions of the Internal Revenue Service. Appellant contends that the IRS agrees with his theories. In support of this contention, appellant provides copies of correspondence between the IRS and appellant, as well as between the IRS and Bosset Partners Marketing, Inc. Included are copies of checks purporting to be refunds of employment taxes initially paid to the IRS by the employer and then refunded after the employer sent the IRS a statement that the withholdings had been in error. We have been provided copies of these documents many times in the past, from many different appellants. Indeed, they seem to have been widely distributed. Although we do not know all of the circumstances of the cited transactions, they clearly do not establish that the IRS agrees with appellant’s contentions. Furthermore, this Board has a duty to apply the law as it is written without regard to whether the IRS, or any other entity, has been misinformed or is in error. (See Appeal of Der Weinerschnitzel International, Inc., Cal. St. Bd. of Equal., Apr. 10, 1979.) Penalties and Fees

[Poohbah]

Sources of income are not taxed; the income ITSELF is taxed.

[Destructor]

"Actually, most of the "tax protestors" who push this stuff are IRS informants, buying their way out of prison and debt on the backs of their fellow Americans. All PatrickHenry is doing is telling you that jumping off of a tall building does NOT make you able to fly."

The fact remains the Income Tax is unjust, and should be done discarded. I applaud the the efforts of those that are trying to un-do it! I don't expect a pseudo-conservative to understand this sentiment!

[mvpel]

You still haven't come to what a "source" of income is, or acknowledged that there is an exhaustive list of operative sections that require determination of taxable income.

26 USC 7701(c) provides:

(c) Includes and including
The terms ''includes'' and ''including'' when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.

But the term "operative sections which require the determination of taxable income" does not have anything else "otherwise within its meaning," which is why I contend that there are no other "operative sections which require the determination of taxable income."

And the pattern of the courts has been to make blanket assertions about tax-related arguments, rather than to examine and refute them. Larken Rose is still waiting for the IRS to answer a few simple questions about Section 861, and has been for years now, and has been blocked at every turn in his attempts to solicit technical advice directly from the IRS headquarters on this issue -- "it's frivolous, so bugger off," has been the essence of their replies.

[William Terrell]

Nonresident aliens who do not have receive income from any source inside the United States. In other words, if you live in Pakistan, are not a US citizen, and do not receive income from any source within the United States, you don't owe US income taxes.

No, Bells strategy is that if you're an American, working domestically for a domestic company, you're not liable for income tax, because the CFR states that only noncitizens working in the US constitute the source of revenue that the 16th amendment cites.

The complete explanation treatise tracing the law back to the CFR is here, here and here. I posted it some time back to see if anyone out here coulds spot any flaw in it. No one has to date. But then no one wants to read it. It's not an easy read.

I did not write the treatise.