Free Republic

what's left in the "cost of living" index these days? cheap crap sold at Walmart still included?

the Fed Reserve's connection to the crash of 1921 and 1929, depression of 1929-39, recession years of 1953, 1957, 1969, 1975 and 1981, and a stock market Black Monday in October, 1987, needs to be more fully understood by millions of American citizens.

too bad our educational system doesn't teach the truth of our economic/financial history, only what "supports" this bizarre system of fiat money that's IN REALITY buying everything from our Congress to world control.

you wrote:
"the best thing Bush could do is get rid of this fossil, He spent the last 3 years promoting inflation (then lauded as "pricing power") and now he's prepared to fight inflation! Greenspan never met a problem that printing money couldn't cure!"

from a speech by G. Edward Griffin on the history of the Fed Reserve System,

"Conclusion number 2 about the Federal Reserve System, a very important thing that we didn't know is the cartel. There's even more to it than that. Perhaps the third ingredient is the most important of all and that is the realization that this cartel went into partnership with the government. Now we have hold of something extremely significant. Cartels often go into partnership with governments because they need the force of law to enforce their cartel agreement but in this case they did it in spades.


Whenever a partnership is formed there has to be a benefit to the partners otherwise they don't form it. So we need to ask the question what is the benefit, the payoff, for these two partners? Why did they go into it? Why did the government go into a partnership like this and why does the banking cartel? In answering those questions we finally come to grips with the reality of what this creature from Jekyll Island is. Let's take a look at that; what's the payoff to these two partners? In order to see that we'll have to examine in some detail the mechanism by which the Federal Reserve System creates money. This is a real interesting study. I call it the "Mandrake Mechanism" named after that comic-book character of the 40s, Mandrake the Magician, who could create something out of nothing and then wave his cape and it was back into the void again. That's a pretty descriptive phrase for the way the Federal Reserve System does it.


Let's take a look at it and see how they create money through the Mandrake Mechanism. I am going to do this in a very simplified form. I want to warn you that it's going to sound like it's too simple. It's not. I'm going to strip out all the banking terminology, all the banker language, all the accounting phrases that need to be defined and speak in very plain English that anybody can understand. It may sound to you as though I've simplified it too much and I want to assure you that in spite of the simple language everything I'm going to tell you is absolutely 100% technically accurate. The other thing I want to warn you about is don't try and make sense out of this because it can't be done; this does not make sense and you'll blow a fuse trying to make it make sense. Just remember that it is a scam and if you keep that fact in mind then you'll have no trouble comprehending what's going on.


Here's how it works. It starts with the government side of the partnership, it starts in Congress which is spending money like crazy. It spends far more money than it takes in. It is spending way beyond its income. How can it do that? Basically this is what happens. Let's say Congress needs an extra billion dollars today so it goes to the treasury and says "we want a billion dollars" and the treasury official says "you guys have got to be kidding, we don't have any money here, you spent it all a long time ago, everything that we've taken in taxes you fellows have spent by March." Congress says "we thought that was true but we thought we'd stop by just in case somebody sent some more in." They get together and they go down the street and they get the idea that we'll borrow the money. So they stop at the printing office and they don't print money at the printing office, they print certificates and they're very fancy things with borders on the edge with an eagle across the top and a seal at the bottom and it says "US Government Bond" or "Note" or "Bill" depending on the length of the maturity of it. If you hold it up to the light it really says "IOU" because that's what it is. They print these things up and it looks very impressive and then they offer them to the private sector; they're hoping that people will come up and loan money to the federal government and a lot of people do and are anxious to lend money to their government. Why? Because they've been told by their investment advisors that that's the most sound investment that you can make. Why? We've all heard that these loans are backed by the full faith and credit of the US government. They're not quite sure what that means but it sure sounds good. I'd like to explain for you who are in doubt what that means. The full faith and credit of the US government means that the government solemnly promises to pay back that loan plus interest if it has to take everything you and I have in the form of taxes in order to do it, it's going to do it. It will take everything we have if necessary to hold its pledge. People don't realize that they're putting themselves on the line, they're going to get their own money back minus a substantial handling fee.


Plenty of money is loaned to the government but never enough. Congress needs more money than that. They say not to worry. They go further down the street to the Federal Reserve building. The Fed has been waiting for them, that's one of the reasons it was created. By the time they get inside the Federal Reserve building the officer of the Fed is opening his desk drawer. He knows they're going to be there and he's ready and he pulls out his checkbook and he writes a check to the US Treasury for one billion dollars or whatever the amount is that they need. He signs the check and gives it to the treasury official.


We need to stop here for a minute and ask a question. Where did they get a billion dollars to give to the treasury? who put that money into the account at the Federal Reserve System? The amazing answer is there is no money in the account at the Federal Reserve System. In fact, technically, there isn't even an account, there is only a checkbook. That's all. That billion dollars springs into being at precisely the instant the officer signs that check and that is called "monetizing the debt," that's the phrase they throw at you. That means they just wrote a check, a big rubber check. If you and I were to do that we would go to jail but they can do it because Congress wants them to do it. In fact, this is the payoff, this is the benefit to the government side of this partnership, this is how the government gets its instant access to any amount of money at any time without having to go to the taxpayer directly and justify it or ask for it. Otherwise, they would have to come to the taxpayer and say we're going to raise your taxes another $3,000 this year and of course if they did that, they would be voted out of office real fast. They like the Mandrake Mechanism because it's a no questions asked source of money. You may have noticed that it's been many years since Congress has even discussed what anything costs, it's not an issue. It doesn't make any difference what the cost is because regardless of the overrun they know they can go down the street to the Federal Reserve and by law the officer has to write that big check and give it to them and they're off and running.


There in a nutshell is the reason the government likes the Mandrake Mechanism--easy instant access to any amount of money of any kind without the taxpayer being involved directly in the loop. But what about the banking side? This is where it really gets interesting. Let's go back to that billion dollar check. The treasury official deposits the check into the government's checking account and all of a sudden the computers start to click and it shows that the government has a billion dollar deposit meaning that it can now write a billion dollars in checks against that deposit which it starts to do real fast. For the sake of our analysis, let's just follow $100 out of that billion in a check that for some reason they write to the fellow that delivers the mail to our door. The postal worker gets a check for $100 and he looks at this thing and he can't imagine in his wildest dreams that that money didn't exist two days ago anywhere in the universe. It's spendable so he wouldn't even care if you told him. He deposits it now into his personal checking account. Now we're finally out of the Federal Reserve and out of the government's check and we're into the private banking system. We're in finally to that part of the partnership which is involved in the cartel. A $100 deposit has now been made in the local bank and the banker sees that and runs over to the loan window and opens it up and says "attention, everybody, we have money to loan, someone just deposited $100." Everyone is overjoyed at that because that's one of the reasons they come to the bank, they come to borrow money. That's a sign of national health if you're in debt so they're anxious to know that the bank has money to loan, they line up for these loans. They heard the banker and they say $100 that's not very much and he says not to worry we can loan up to $900 based on that $100 deposit. How can that be done? It gets complicated the way they do it and I'll tell you in very simple terms. The Federal Reserve System requires that the banks hold no less than 10% of their deposits in reserve. The bank holds 10% of that $100 in reserve, $10, and it loans this first fellow in line $90. What does he do with it? He wants to spend it so he puts it into his checking account. In fact it probably goes directly into his checking account. Let's assume that they gave it to him and he puts it back, when he puts it back it's a deposit isn't it?


Only a $100 deposit but $900 in loans and that deposit is still there. Where did the $900 come from and the answer is the same--there was no money. This springs into existence precisely at the point at which the loan is made. Notice the difference, an important distinction is when the money is created out of nothing for the government it is spent by the government. On the banking side, however, when it's created out of nothing it's not spent by the banks it is loaned by the banks to you and to me and we spend it. Notice that when they loan it to us we have to pay them interest on it. Think about this for a minute. This money was created out of nothing and yet they collect interest on it which means that they collect interest on nothing. Not too shabby! What a concept, why didn't I think of that! I wish I had a magic checkbook like that where I could just write checks all day long and didn't have to have any money any place just checks, loan it to you folks and you're silly enough to pay me interest on it. That's how it works.


Now you see what the benefit is to the banking cartel for being involved in this Federal Reserve System, interest on nothing. The process doesn't end there, however. It has consequences to you and to me. I've heard some people say "isn't that interesting, these fellows are sure smart, I guess they deserve to be rich." It's as though we're out of the loop, it doesn't affect us any, they got rich but we're ok. Well no, they got rich alright but they got it by taking it from us. How does that work? Let's follow this.


This newly created money goes out into the economy and it dilutes down the value of the dollars that were already out there. It's like pouring water into a pot of soup, it dilutes the soup. So by throwing more and more money into the economic soup out there the money gets weaker and weaker and weaker and we have the phenomenon called inflation which is the appearance of rising prices. I emphasis the word "appearance" because in reality prices are not rising at all. What we're seeing is that the value of the dollar is going down, that's the real side of the equation. If we had real money based on gold or silver or anything tangible that couldn't just be created out of thin air, it could be based on microphones, that they couldn't just create with the stroke of a pen, you would see then that prices would remain stable over a long period of time.


To illustrate that point, it's interesting to know that if we had lived in ancient Rome with a one ounce gold coin we would've been able to buy a very fine toga, a hand-crafted belt and a pair of sandals--that was the price in Rome. Today, if we have a one ounce gold coin what can we buy with it? We can go into any men's store and buy a very fine suit, a hand-crafted belt and a pair of shoes. The price of these items hasn't changed in thousands of years when expressed in terms of real money but when expressed in terms of these things we carry around in our pockets called Federal Reserve notes which is not really money at all, fiat money anyway, the prices keep going up and up and up because the value of those units keeps going down and down and down because they keep making more and more and more of them and dumping them into the economic soup.


That's still not the end of the process. We lost some purchasing power through this process called inflation. We lost something and very few people ask the question "who got it"? It's as though nobody got it, we all lost it, it's like it evaporated and went up to heaven somewhere. No, somebody got it. For every loser there's a winner. Or I should say for every fifty losers there's one winner that gets it all. Somebody got it. Who? Those people that got our lost purchasing power are the ones who were right up at the point where the fresh money was injected into the economic pot of soup. The ones that got the money first gained because they had full purchasing power at that instant when the money was created. By the time they spent it and gave it to you and you spent it on something and gave it to him and by the time that it got out to the edge of the pot where most of us are it's diluted. The ones that were right up at the nozzle got our lost purchasing power. Who are they? Obviously the government was up there first. Remember the billion dollar check, the very beginning of this process went to the government and they spent it instantly and that money went out into the economy and that was the beginning of this ripple effect. Who else? The next ones were the people who were up at the loan window. They got the money that was freshly created by the banking system because they were the borrowers. We all know that in times of inflation borrowers gain, this is no mystery. We've been told and advised to borrow money and stay up to the hilt in debt because you borrow in dollars but because of inflation you can pay back with 50 cent pieces.


So everybody knows about this part of it. What they forget is that the alleged benefits of doing this are surrendered to the bank in the form of interest payments. They're really not gaining that much. The gain that they are getting through the inflation process they're having to give to the bank in the form of interest on nothing. And it seems that they're gaining because they have these paper profits. The value of this real estate is going up and up and up or the value of my stock is going up and up and up but it's all paper. As far as purchasing power is concerned it's not going up, up, up at all. Nevertheless they're still having to pay for that illusion in the form of interest payments on nothing.


Then comes the inevitable contraction of the economy. People don't realize that the economy moves traditionally like a sawtooth--it goes up gradually for a long period of time and seems like forever it's going to go up, you can plan on it forever and don't worry about it and then clunk! it falls down very quickly and then it starts the next long climb and people forget that every once in a while it comes down very abruptly. When it contracts people are extended out there and they can't service their debt and make the payments and they lose their assets.


Another interesting thing about this is that when the bank loans you money which it created out of nothing, it cost nothing to make it, it wants something from you. It wants you to sign on the dotted line and pledge your house, your car, your inventory, your assets so that in case for any reason you cannot continue to make your payments they get your marbles, they get all of your assets. They're not going to lose anything on this. Whether it's expansion or contraction, inflation or deflation the banks are covered and we like sheep go right along with it because we haven't figured it out, we don't know that this is a scam. Of course we have no choice either right now because it's all enforced by law. We have no escape. We have no choice but it's even better that we don't understand it because we can't complain about it either. There you have it.


The two groups that got our lost purchasing power--is anyone surprised?--the two members of the partnership, the government and the banking cartel. The two groups that comprise the Federal Reserve System.


This lost purchasing power which is going from us to them is a tax. We don't think of it as a tax but it is. We have no escape from it. In fact, it's more a tax than the income tax or the excise tax which you can escape in one way or another. You can't escape this one. There are no deductions, no exemptions, everyone pays it and it is the most cruel, unfair tax of all because it falls most heavily on those who can least afford to pay it. It falls on those on fixed incomes, those who are retired. Anyone who has saved their money is paying this tax in direct proportion to the degree to which they have been frugal. It's a tax even though we don't think of it as that and it's time to think of it as that. It's a tax that goes from us to the government and to the banking cartel.


Let's summarize. What is the benefit to the members of the partnership? The government benefits because it is able to tax the American people any amount it wishes through a process which the people do not understand called inflation. They don't realize they're being taxed which makes it real handy when you're going for re-election. On the banking side they're able to earn perpetual interest on nothing. I emphasis the word "perpetual" because remember when the loan is paid back it's turned around and loaned out to somebody else. Once that money is created the object of the bank is to stay "loaned up" as they say. In reality the banks can never stay 100% loaned up and that ratio varies a lot but the objective is to stay loaned up to whatever extent is possible. Generally speaking once this money is created in the loan process it is out there in the economy forever, perpetually earning interest for one of the members of the banking cartel which created that money.


There you have in a condensed form a crash course on the Federal Reserve System and I can assure you that you know more about the Federal Reserve than you would probably if you enrolled in a four year course in economics because they don't teach this reality in school."

when will American citizens realize that greenspam isn't doing much of anything for the economy. he's not really even studying late at night pulling economic strings in the backroom, as he's just taking orders from the owners of the fed reserve.

their game is making dough on debt and they don't care who's in the white house.

how many remember the white house saying they will need another $25 billion for Iraq/Afghanistan as they spend over $100 billion. where does that money come from??

why, it comes in part from the fed gov't printing fancy letters on a sheet of paper and calling it a treasury bond. and then the fed reserve writing a check (with nothing in checking account) to the gov't for whatever amount they want.

then taxpayers get stuck paying the interest on fiat money the fed reserve just printed out of thin air!

in any other scenario, greenspam and his bunch would be guilty of passing bad checks and conterfeiting!

you wrote:
that is another issue here - Tenet may know of some attacks coming this summer, and wants to get the hell out of the way now.

I (unfortunately) couldn't agree more. :-(

Don't forget #41 used to be in Tenet's position. There's been rumors that Tenet knows a lot of Bush "stuff" to make sure his position was secure past the clintonoids.

Who knows, maybe if possible terrorist attacks in the U.S. really go bad later this year, GW woouldn't even need the Supreme Court to get him in office this time.

The Constitution would probably be suspended and martial law initiated.

Speaking of our Constitution, didn't GW and Congress just forget using it when they voted a mere "resolution" in Oct 2002 to do a "first strike" in Iraq/Afghanistan?

Would this whole mess be different IF they had deferred to the Constitution?

I agree with much of what you wrote here.

As I learned long ago, there ain't no "federal" in the Federal Reserve System. However, I believe that most citizens, when hearing or reading the financial news, have the mistaken idea that since Bush (or any president) ceremoniously appoints the "fed" chairman, the Federal Reserve must somehow be a federal agency (of some sort).

It was the Congress, though, that permitted the Federal Reserve to change our money system to "federal reserve notes" and take our currency off silver and gold.

As the story goes, in 1920, a $20 gold coin could buy a man a nice custom-made, three piece suit. Today, that same $20 gold coin could do the same. Try buying that with a $20 "federal reserve note" today and see what you end up with!

If you want to see more on how the federal government has financially deceived the citizens of this country, check out the following --

www.861evidence.com

www.861.info (broadband required)

geezer,

i don't even want a red ink repeated response. but you and the irs/treasury have not --

1. shown anyone that I'm aware of -- the specific code where domestic-only income is taxable in the irs code book, i.e., Title 26. you claimed Section 6012 -- a loosely-worded, general section without ANY regulations associated with it to clarify what the statute even means -- such that someone with a life insurance benefit check or a few thousand as a gift -- with your "legal" recommendation might just think they have to "file and pay" on that income using Section 6012, -- when they DON'T in either case!!

2. you and the irs have not been able to intelligently discuss the history of Section 861 and how the section itself was renamed, moved and made well-hidden thousands of pages away from Section 61. Even IF it didn't qualify as the part of Title 26 to use as the section required to determine one's taxable income (if any), why was it moved and renamed other than for DECEIVING the public?? and if not Section 861, which Section describes, "determining taxable income" other than Section 861?? what does the law say here ?? --

“Determination of taxable income. The taxpayer's taxable income from sources within or without the United States will be determined under the rules of Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States.”
[26 CFR § 1.863-1(c)]


you can blow it off, but Section 861 and the associated regulations is where the table of contents (used to) say, "look here" for determining your taxable income.
the "user friendly" feds now call it "miscellaneous matters" and moved it thousands of pages away.

technically, in the congressional changes made in the 1954 code, congress declared "did not change the meaning of the law one bit" (my paraphrase), but they somehow buried it away from Section 61, thousands of pages away from where the average citizen would even know to look.

3. a (more than) friendly reminder that congress does make the law -- NOT the courts.

4. domestic-only income of American citizens IS NOT listed in the written statutes and regulations, yet you (and the feds) make a case for court rulings ONLY -- instead of what the law itself specifically says (or in this case DOESN'T SAY) about domestic-only income.

“In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out.”
[Gould v. Gould, 245 U.S. 151 (1917)]

5. if you think the congress is going to magically change to a "fairer system" like "national sales tax" by the proposing of such in committee by one congressman, maybe we could all get better odds by running out and buying lottery tickets.

geezer,

from Mr. Rose's site www.taxableincome.net where he posted a letter Dr. Clayton sent to Barbara Felker, head attorney over Section 861 - 865 at treasury dept.


Questions submitted to Barbara Felker,
Office of Associate Chief Counsel, Branch 3

By Tom Clayton, MD

6-26-2003

1) Who should and who (if anyone) should not use the rules in 26 USC § 861(b) and the related regulations beginning at 26 CFR § 1.861-8 (in addition to any other pertinent sections) to determine his taxable domestic income?

2) If a U.S. citizen lives and works exclusively within the 50 states, and receives all of his income from within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show such income to be taxable?

3) Should one refer to 26 CFR § 1.861-8T(d)(2) to determine whether the "items" of income he receives (e.g. compensation, interest, rents) are exempt for federal income tax purposes?

4) What is the purpose of the list of non-exempt income in 26 CFR § 1.861-8T(d)(2)(iii), and why is the domestic income of the average American not on that list?

Overview:

The following pages will conclusively document and prove the following points:

Point #1: While there are very broadly worded general statutory definitions of "gross income" and "taxable income" (26 USC § 61, 63)), there are also specific rules for determining when domestic income is taxable, and when foreign income is taxable.

Point #2: Under the geographical "source rules" contained in 26 USC § 861 and following, all income is categorized as either domestic income (income from sources within the United States, mainly per Section 861), or as foreign income (income from sources without the United States, mainly per Section 862). (Section 863 and related regulations give rules for segregating "combination" income—i.e. income partly from within and partly from without the U.S.—into domestic and foreign income.) These geographical "source rules" by themselves do not specify when income is taxable and when it is exempt.

Point #3: There are specific rules (mainly in 26 CFR § 1.861-8) describing when domestic income is taxable (non-exempt), and describing when foreign income is taxable. Those rules only show income to be taxable when derived from certain specific sources and activities, all of which are connected to international or foreign commerce (including, among other things, foreigners receiving income from the U.S., and Americans receiving certain foreign income). Those rules do not show the domestic income of most Americans to be taxable.

These points lead inescapably to the conclusion that tens of millions of Americans are incorrectly reporting their domestic income to be taxable, when their income does not legally constitute "taxable income" according to the law itself. While that conclusion is contrary to "conventional wisdom" (conventional ignorance of the exact wording of the law), it is not only proven by the current income tax statutes and regulations, but is solidly confirmed by more than 80 years of predecessor statutes and regulations.

---

Point #1: While there are very broadly worded general statutory definitions of "gross income" and "taxable income" (26 USC § 61, 63), there are also specific rules for determining when domestic income is taxable and when foreign income is taxable.

Since 1913, Congress has employed a very broadly-worded general definition of "gross income," in order to exert "the full measure of its taxing power" (Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955)). However, the Supreme Court has also stated that "It is elementary law that every statute is to be read in the light of the constitution," and that "However broad and general its language, it cannot be interpreted as extending beyond those matters which it was within the constitutional power of the legislature to reach" (McCullough v. Com. Of Virginia, 172 U.S. 102 (1898)).

The existence of Constitutional restrictions on Congress' ability to tax incomes is plainly manifested in the older regulations implementing Section 22 of the 1939 Code (the statute to which the Glenshaw ruling above referred). The older regulations regarding "excluded" income plainly stated that in addition to the statutory exclusions, certain other types of income were exempt from "gross income" because they were, "under the Constitution, not taxable by the Federal Government" (e.g. 26 CFR § 39.22(b)-1 (1956)).

To address the issue of exempt and non-exempt types of commerce, Congress enacted provisions describing when "income from sources within the United States" was taxable and describing when "income from sources without [outside of] the United States" was taxable. Those provisions were found in Section 217 of the Revenue Act of 1921, in Section 119 of the 1939 Code, and are now in Sections 861 and following of the current code.

In 1939, Section 22 generally defined "gross income" and subsection 22(g) stated: "For computation of gross income from sources within and without the United States, see Section 119." Both the House and Senate reports on the 1954 Code stated that "no substantive change" was made when the old Section 119 (1939) became the new Section 861 and following (except for a special rule about nonresident aliens temporarily in the country).

This again demonstrates the connection between the general definition of "gross income" and the specific rules about when domestic income is taxable and when foreign income is taxable. Inexplicably removed from the GPO version of the IRC in 2001, the USCA and USCS printings of the tax code still contain editorially-supplied cross references under Section 61 referring the reader to Section 861 regarding "Income from sources within the United States," and to Section 862 regarding "Income from sources without the United States."

The following table shows the parallels between the 1939 and current codes:

Issue: 1939 Code Current Code
General definition of "gross income" Section 22 Section 61
Link to within/without rules Section 22(g) cross-ref under 61
Gross income from within U.S. Section 119(a) Section 861(a)
Taxable income from within U.S. Section 119(b) Section 861(b)
Gross income from without U.S. Section 119(c) Section 862(a)
Taxable income from without U.S. Section 119(d) Section 862(b)

Since 1954, the regulations implementing Section 861 have begun by saying that Part I (Section 861 and following) and the regulations thereunder "determine the sources of income for purposes of the income tax" (26 CFR § 1.861-1). One of the earliest official statements by the Treasury Department concerning Section 861 confirmed the purpose of those sections (all emphasis mine):

"Rules are prescribed for determination of gross income and taxable income derived from sources within and without the United States, and for the allocation of income derived partly from sources within the United States and partly without the United States or within United States possessions. §§ 1.861-1 through 1.864. (Secs. 861-864; '54 Code.)" [Treasury Decision 6258]

Of course, not all income from all commerce is taxable. The general statutory definition of "gross income" only gives a broad definition and a list of some of the more common "items" of income (compensation, interest, rents, dividends, etc.). That section does not deal with the geographical origin of income, the location of the recipient, or the type of commerce from which the income derives. Since statutory law is written literally, then these issues must be specifically addressed. And that is exactly what the reader finds. The regulations make it clear that those issues are addressed by Section 861 and following, and related regulations. After saying that Section 861 and following, and related regulations, "determine the sources of income for purposes of the income tax," the current regulations implementing Section 861 state the following:

"The statute provides for the following three categories of income:

(1) Within the United States. The gross income from sources within the United States, consisting of the items of gross income specified in section 861(a) plus the items of gross income allocated or apportioned to such sources in accordance with section 863(a). See Secs. 1.861-2 to 1.861-7, inclusive, and Sec. 1.863-1. The taxable income from sources within the United States, in the case of such income, shall be determined by deducting therefrom, in accordance with sections 861(b) and 863(a), the [allowable deductions]. See Secs. 1.861-8 and 1.863-1.

(2) Without the United States. The gross income from sources without the United States, consisting of the items of gross income specified in section 862(a) plus the items of gross income allocated or apportioned to such sources in accordance with section 863(a). See Secs. 1.862-1 and 1.863-1. The taxable income from sources without the United States, in the case of such income, shall be determined by deducting therefrom, in accordance with sections 862(b) and 863(a), the [allowable deductions]. See Secs. 1.862-1 and 1.863-1.

(3) Partly within and partly without the United States...

(b) Taxable income from sources within the United States. The taxable income from sources within the United States shall consist of the taxable income described in paragraph (a)(1) of this section plus the taxable income allocated or apportioned to such sources, as indicated in paragraph (a)(3) of this section." [26 CFR § 1.861-1]

The point is repeated in a more summarized way in Section 1.861-8 (which the regulation above refers to), which begins as follows:

"Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined." [26 CFR § 1.861-8]

This language concerning the determination of taxable domestic income and taxable foreign income could hardly be clearer. Some insist that most Americans should ignore Section 861 entirely when determining their taxable domestic income, but nothing in the regulations supports such a conclusion, and there are no citations qualifying or contradicting the clear instructions shown above concerning how to determine one's "taxable income from sources within the United States."

(As an aside, 26 CFR § 1.1-1 says that the tax is imposed upon "taxable income," and that U.S. citizens are taxed on their taxable income whether "from sources within or without the United States." Some use this to try to support the claim that all income—domestic and foreign—is taxable for U.S. citizens, and that citizens therefore should ignore Section 861 and following. Not only does this flawed leap of logic ignore the fact that not all income is "taxable income," but it is directly contradicted by 26 CFR § 1.863-1(c), which says that "[t]he taxpayer's taxable income from sources within or without the United States will be determined under the rules of Secs. 1.861-8 through 1.861-14T.")

To summarize, while Sections 61 and 63 give broadly worded general definitions of "gross income" and "taxable income," Section 861 and its regulations (and sometimes Section 863 as well) describe how to determine taxable domestic income, and Section 862 and its regulations (and sometimes Section 863 as well) describe how to determine taxable foreign income.


Point #2: Under the geographical "source rules" contained in 26 USC § 861 and following, all income is categorized as either domestic income (income from sources within the United States, mainly per Section 861), or as foreign income (income from sources without the United States, mainly per Section 862). (Section 863 and related regulations give rules for segregating "combination" income—i.e. income partly from within and partly from without the U.S.—into domestic and foreign income.) These "source rules" by themselves do not specify when income is taxable and when it is exempt.

Part I of Subchapter N contains the "source rules" which describe which income is considered domestic income ("income from sources within the United States") and which income is considered foreign income ("income from sources without the United States"). Section 861 deals with domestic income, Section 862 deals with foreign income, and Section 863 deals with income which comes partly from inside and partly from outside the U.S. (which, under rules of allocation or apportionment is then segregated into "within" and "without" income).

For different kinds of income, different rules are used to determine whether a certain "item" of income is considered domestic or foreign. For example, whether compensation for services is considered to be domestic income or foreign income is determined based on where the services were performed, not on where the payments come from (see Sections 861(a)(3) and 862(a)(3)). Interest, on the other hand, is generally "sourced" based on the location of the investment which produces the interest (see Sections 861(a)(1) and 862(a)(1)). (Other "source rules" exist for other types of income.) Those geographical "source rules" by themselves do not describe which income is exempt or which is taxable; they merely describe whether income is to be considered domestic income or foreign income.

(As an aside, IRS Notice 2001-40 states that "[n]othing in sections 861 to 865 of the Code limits the gross income subject to United States taxation to foreign-source income," as well as stating that "[t]he source rules do not operate to exclude from U.S. taxation income earned by United States persons from sources within the United States." Both statements are true, though somewhat misleading. The geographical "source rules" do not say that any income is exempt—though of course not all income is taxable—but simply distinguish between domestic ("within") income and foreign ("without") income.)

But again, using the misleading and deceptive technique of implying without actually stating, the unstated implication of that non-legally-binding "Notice" is that the domestic income of all Americans is taxable, because the "source rules" in Section 861 do not say they are exempt. By the same faulty logic, one could argue that all foreign income of foreigners must be taxable, because the "sources rules" in Section 862 do not say that it is exempt. Such a line of reasoning is clearly flawed, and is the result of either a gross misunderstanding of the purpose of Part I of Subchapter N, or an intentional effort to mislead the public.)

As shown above, 26 CFR § 1.861-8 begins by saying that "Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States" after domestic "gross income" has been determined. (The section then says that Sections 862(b) and 863(a) generally describe how to determine taxable foreign income.) The so-called "source rules" in Sections 861(a) and 862(a) (and in some cases Section 863 as well) categorize all income (whether taxable or not) as being either domestic or foreign.

Then, in keeping with the general definition of "taxable income" found in 26 USC § 63, Sections 861(b) and 862(b) state that from domestic gross income (861(a)) or foreign gross income (862(a)), one is to subtract the appropriate related deductions, with the remainder constituting taxable domestic income (861(b)) or taxable foreign income (862(b)).

But these general rules are not—and could not be—the final step in determining what is taxable and what is exempt. If these sections were the final step in determining what is taxable, all income—domestic and foreign—received by anyone under any circumstances would be taxable. Besides the obvious fact that this cannot be the case, such a conclusion would nullify any need for "source rules" or for the rest of Subchapter N, or for the rest of the tax code for that matter.


Point #3: There are specific rules (mainly in 26 CFR § 1.861-8) describing when domestic income is taxable (non-exempt), and describing when foreign income is taxable. Those rules only show income to be taxable when derived from certain specific sources and activities, all of which are connected to international or foreign commerce (including, among other things, foreigners receiving income from the U.S., and Americans receiving certain foreign income). Those rules do not show the domestic income of most Americans to be taxable.

The citations provided above under Point #1 show that one's taxable domestic income is to be determined under the rules of 26 USC § 861(b) and 26 CFR § 1.861-8. Those sections—as well as decades of predecessor statutes and regulations—show that all of the following must apply for someone to have "taxable income from sources within the United States":

1) He must receive a taxable "item" of income (e.g. compensation, interest, rents).

2) The "source rules" must categorize the income as domestic income.

3) The income must derive from a "specific source or activity" which is taxable.

While those three criteria are still present in the current regulations, they are far less clear than in the older statutes and regulations. For example, the current Section 861 and following came from Section 217 of the Revenue Act of 1925, which read as follows:

"Sec. 217. (a) In the case of a nonresident alien individual or of a citizen entitled to the benefits of section 262, the following items of gross income shall be treated as income from sources within the United States:

(1) Interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, not including [exceptions]...;

(2) The amount received as dividends (A) from a domestic corporation other than [exceptions]...;

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

(4) Rentals or royalties from property located in the United States or from any interest in such property...; and

(5) Gains, profits, and income from the sale of real property located in the United States.

(b) From the items of gross income specified in subdivision (a) there shall be deducted the [allowable deductions]. The remainder, if any, shall be included in full as net income from sources within the United States." [Section 217, Revenue Act of 1925]

This older wording made it clear that all three criteria had to be met (taxable type of commerce, taxable item, and domestic origin) before that section showed income to constitute taxable domestic income.

For example, that section plainly was not saying that compensation for services performed in the U.S. was taxable for all U.S. citizens—only for citizens who received most of their income from within federal possessions (e.g. Guam, Puerto Rico) and who therefore were "entitled to the benefits of section 262."

(Section 232 of the 1925 Act stated that the rules of Section 217 also applied to foreign corporations, and a domestic corporation "entitled to the benefits of section 262," i.e. domestic corporations receiving most of their income from federal possessions (possessions are technically foreign to the United States). This shows that the only income that can be taxed by Congress must in some way either be derived from or related to certain specific types of foreign or international commerce.)

In 1928, the statute (then Section 119) continued to address the items and geographical origin of income, but the first phrase—dealing with the taxable activities or types of commerce—was removed. However, the related regulations remained virtually unchanged, and still made it plain that domestic income was only taxable for those engaged in certain types of commerce: nonresident aliens and foreign corporations doing business in the U.S., and Americans individuals and companies doing business in federal possessions. See Sections 29.119-1, 29.119-9 and 29.119-10 of the 1945 regulations (Regulations 111).

For example, Section 119(a)(1) from 1939—predecessor of 861(a)(1)—generally said that interest from domestic investments was to be considered domestic income (income from sources within the United States), without specifying when such income was taxable. The related regulations, however, stated that such domestic interest was to be "included in the gross income from sources within the United States, of nonresident alien individuals, foreign corporations, and citizens of the United States or domestic corporations which are entitled to the benefits of section 251" (26 CFR § 29.119-2 (1945)). Clearly domestic interest was not taxable for everyone—only those engaged in the specified types of commerce.

Likewise, Section 29.119-10 of the 1945 regulations said that in the case of those engaged in the specified types of commerce, the types of domestic income listed in Section 119(a) of the statutes was (after deductions) to be included in full as taxable domestic income. Such domestic income was not taxable for all U.S. citizens.

The current regulations under Section 861 while far more voluminous and complicated than their predecessors, lead to the same conclusions. Section 1.861-8 (the primary section for determining one's "taxable income from sources within the United States") only shows income to be taxable when it derives from certain "specific sources or activities," all of which relate to international or foreign commerce.

To have income which is taxable under 26 CFR § 1.861-8, one must receive a "statutory grouping" of gross income, which means income from a specific type of commerce described in one of the various sections throughout Subchapter N. The regulations call those sections "operative sections."

As one example, Section 871(b) of the statutes states that nonresident aliens doing business in the United States "shall be taxable" under Section 1. Section 1.861-8(f)(1)(iv) (shown below) lists Section 871(b) as an "operative section," from which a taxable "statutory grouping" of income can come. So if a nonresident alien receives income from the type of commerce described in that "operative section" (Section 871(b)), then such income is taxable under Section 1.861-8.

As another example, Section 1.861-8(f)(1)(i) (also shown below) addresses foreign tax credits (addressed by Section 901 and following of the statutes), and in that case the "statutory grouping" of gross income is foreign-source income (including that of U.S. citizens). Again, if a citizen engages in that type of commerce (i.e. that "specific source or activity"), then the income he receives from it is taxable under Section 1.861-8.

"The rules contained in this section [26 CFR § 1.861-8] 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." [26 CFR § 1.861-8(a)(1)]

"[T]he term 'statutory grouping' means the gross income from a specific source or activity which must first be determined in order to arrive at 'taxable income' from which specific source or activity under an operative section. (See paragraph (f)(1) of this section.)" [26 CFR § 1.861-8(a)(4)]

"The operative sections of the Code which require the determination of taxable income of the taxpayer from specific sources or activities and which gives rise to statutory groupings to which this section [26 CFR § 1.861-8] is applicable include the sections described below.

(i) Overall limitation to the foreign tax credit…in this case, the statutory grouping is foreign source income...

(ii) [Reserved]

(iii) DISC and FSC taxable income… [international, foreign sales corporations]

(iv) Effectively connected taxable income. Nonresident alien individuals and foreign corporations engaged in trade or business within the United States, under sections 871(b)(1) and 882(a)(1)...

(v) Foreign base company income…

(vi) Other operative sections. The rules provided in this section also apply in determining--

(A) The amount of foreign source items…

(B) The amount of foreign mineral income…

(C) [Reserved]

(D) The amount of foreign oil and gas extraction income…

(E) The tax base for citizens entitled to the benefits of section 931 and the section 936 tax credit of a domestic corporation...;

(F) [deals with Puerto Rico tax credits]

(G) [deals with Virgin Islands tax credits]

(H) The income derived from Guam by an individual…

(I) [deals with China Trade Act corporations]

(J) [deals with foreign corporations]

(K) [deals with insurance income of foreign corporations]

(L) [deals with countries subject to international boycott]

(M) [deals with the Merchant Marine Act of 1936]" [26 CFR § 1.861-8(f)(1)]


If one does not engage in any of those activities, he cannot have a "statutory grouping of gross income," and one who has no "statutory grouping" of income has no taxable income under 26 CFR § 1.861-8. Once again, aside from rules about specific federal possessions, international and foreign sales corporations, and certain foreign tax credits, the list of activities includes the same types of commerce which 80 years of predecessor regulations have included:

1) Certain foreign income of U.S. citizens

(1.861-8(f)(1)(i) above).

2) The domestic income of foreigners

(1.861-8(f)(1)(iv) above).

3) Certain income related to federal possessions (1.861-8(f)(1)(vi)(E) above).


U.S. citizens who live and work exclusively within the 50 states and who receive all of their income from the 50 states have no "statutory grouping," and therefore their income is not shown to be taxable by 26 CFR § 1.861-8 (the section for determining one's "taxable income from sources within the United States"). That being the case, it directly follows that the domestic income of most Americans is not taxable (regardless of what the "conventional wisdom" says), particularly in light of the following:



"In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out. In case of doubt they are construed most strongly against the government, and in favor of the citizen." [Gould v. Gould, 245 U.S. 151 (1917)]

In addition, Black's Law Dictionary (6th Edition) says that the doctrine of "inclusio unius est exclusio alterius" (the inclusion of one is the exclusion of others) means that "where law expressly describes a particular situation to which it shall apply, an irrefutable inference must be drawn that what is omitted or excluded was intended to be omitted or excluded."

geezer,

Dr. Clayton writes at www.861evidence.com --

The Constitution is the document that created the federal government and the founders intended it to be a very limited government with the majority of the powers belonging to the states. The Constitution gives Congress the power to make law only in certain expressly enumerated areas of legal competence known as jurisdiction.

To underscore this concept, the Tenth Amendment states that all powers not specifically delegated to the federal government belong to the states or the people. Since jurisdiction determines WHAT Congress can tax, what taxing jurisdiction is specifically given to Congress by the Constitution?

Article I, Section 8 is the section that specifically lists the activities under federal jurisdiction (all other sections of Article I are either of an organizational nature or expressly limit Congress' power). It gives Congress the "power to lay and collect taxes" but this applies ONLY to matters under federal jurisdiction. The THREE parts of the Constitution that cover taxing jurisdiction are two parts of Article I, Section 8, and one part of Article IV, Section 3.

The two parts of Article I, Section 8 are:

"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;

"To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;" [Article 1, Section 8, in part]

And the one part of Article IV, Section 3 is:

"The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States; and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or of any particular state." [Article IV, Section 3, in part]

So, Article I, Section 8 specifically puts international (foreign) commerce under federal jurisdiction and Article IV, Section 3 specifically gives Congress control of federal possessions (federal possessions are technically foreign to the 50 states).

________________________________________________

So the power to tax together with the clauses giving Congress jurisdiction over international commerce and commerce within federal possessions gives Congress the power to tax incomes from international commerce and income from federal possessions.

[Congress is also given jurisdiction over interstate commerce (among the several states), which is the other "part" of domestic commerce (intrastate commerce), but another part of the Constitution specifically prohibits Congress from taxing "exports" from the states.]

DIRECT AND INDIRECT RULES APPLY AFTER CONGRESS IMPOSES A TAX

The above discussion is critical to understanding WHAT Congress can tax. AFTER Congress imposes a tax within its jurisdiction, there are "rules" about HOW the tax can be imposed. If Congress passes a direct tax, then it must be apportioned (meaning that everyone pays the same amount). If Congress passes an indirect tax, then it must be geographically uniform (the tax has to apply the same in every area that it is imposed).

SUBCHAPTER N, SECTION 861 AND RELATED REGULATIONS

The limited power to tax incomes given Congress by the Constitution only when the incomes fall under Congress' jurisdiction over foreign commerce is exactly what the law shows in Subchapter N, Section 861, which is the section of law that exists to determine whether income BECOMES "taxable income."

26 USC § 861(b) and 26 CFR § 1.861-8(f)(1)(i) shows that the only time that the income of a U.S. citizen is taxable is if it is related to certain specific types of foreign and international commerce. There is NO part of the law that shows the taxation of the purely domestically earned incomes of U.S. citizens (most incomes).

How could such a relatively simple relationship between the Constitution and the correctly written law have been misunderstood by so many people for so long?

THE 16TH AMENDMENT DID NOT PERMIT A DIRECT TAX ON INCOMES

The factor that contributed the most to the widespread misunderstanding of the limited Constitutional authority given to Congress to tax incomes that made most people "assume" that Congress had been given the power to direct tax incomes without apportionment was the 16th Amendment. The legal reason why the 16th Amendment was passed is the opposite of what the government has led the public to believe, particularly the Treasury Department.

The 16th Amendment was passed to correct the Supreme Court's decision in Pollock in 1895, where it had mistakenly concluded that part of the income tax law passed by Congress was a direct tax without apportionment, which the Constitution did not allow, so it threw out the entire tax.

The legal reason that the 16th Amendment was passed was to prevent the courts from ever declaring that an income tax was a direct tax on incomes. But by the time the 16th Amendment was passed, the Supreme Court had "corrected" its mistake. In Brushaber v. Union Pacific (240 U.S. 1) and again in Stanton v. Baltic Mining (240 U.S. 103) , the court made it clear that the income tax is and has always been an indirect "excise" tax which never required "apportionment." In 1916, the Secretary of the Treasury agreed in Treasury Decision 2303:

" The provisions of the sixteenth amendment conferred no new power of taxation , but simply prohibited [Congress' original power to tax incomes] from being taken out of the category of indirect taxation , to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment. " [Treasury Decision 2303]

The misinformation that the 16th Amendment "created" or "permitted" a direct tax on incomes without apportionment has been deliberately perpetrated by Treasury Department lawyers and others in the federal government for over 80 years to make the public "think" that they owed federal income taxes, when the majority of them did NOT (because they did not have foreign source income).

Subchapter N, Section 861 and following completes the "puzzle" that shows that only incomes from foreign commerce are taxable (proving that most Americans have been deceived). The limited scope of the income tax is further confirmed by what else is specifically stated as being taxable in this part of the law. While there are some complicated rules about various foreign tax credits, various federal possessions, etc., the statutes and regulations, past and present, this section of the law also specifically points out the taxation of:

The domestic income of foreigners ( 1.861-8(f)(1)(iv) ).
Certain income related to federal possessions ( 1.861-8(f)(1)(vi)(E) ).
IF NOT THE 16TH AMENDMENT THEN WHAT ACT IMPOSED THE INCOME TAX?

If the 16th Amendment did not permit the direct taxation of incomes without apportionment, and Congress retained the ability to tax incomes within the limitations of the Constitution, and the Supreme Court had thrown out the income tax in 1985 (Pollock), then what Act of Congress "brought back" the income tax?

The "income tax" that we know today was imposed via the Underwood Tariff Act of 1913 (where it is tucked away in Section II). But, even though this statute is generally written to appear to apply to everything under the sun, the subsequent regulations still show that it is entirely dependent on the legal definition of "net income" and what the law means by a taxable "source." And that is ultimately shown in the current Subchapter N, Section 861 (as well as its predecessors, Section 217 before 1928, and Section 119 before 1954).

We have been deceived.

geezer wrote: (actually he didn't write much, just copied a lot of words with the usual red ink)

so here's my four point reply, geezer, without ANY red ink.

1. i believe the 1040 form and instruction book are legally and correctly written. and even though they aren't the written law (no irs publication is law and none carry any legal weight), somebody at the treasury did their job quite well! hey, maybe we agree here??

if you agree, please point out where the 1040 form and booklet mention the domestic income of American citizens.

geezer, "domestic income" ain't printed anywhere in your 1040 form or 1040 booklet.

2. if i go to my city hall and ask them about ordinances concerning "fence heights and regulations" that i can use concerning my own yard, they can (and have) pointed directly to the ordinances and have "shown me the law".

now, if i ask the irs (which i've done on several occasions and to several irs employees), am i not entitled to receive the same, "here's the specific code that answers your questions, sir??"


3. i live in a university town of about 250,000 and there is one local irs office. about 18 months ago, i asked for a meeting with a qualified irs agent to help me on a few specific questions about the code.(questions thatt i've posted here, just to see if the irs agent would or could help me.

well, the agent was polite and listened to my tale of reading the code and regulations over at the university law library after someone suggested that i read the law and regulations for myself.

after reading my short list of questions, the woman became very nervous about trying to address my inquiries. she didn't seem to even get the gist of them as i tried to make it easy for her to ask someone else that she should of had access to. (i mean, she was a special "collection agent" and she was someone out there demanding people's money, certainly she should be or could be the person to "know the law" she thought she was enforcing, or, she could find me qualified help.

don't the treasury boys and girls in dc offer her any help, or, are they just NOT GOING TO ANSWER ANY QUESTIONS whatsoever about Section 861 and the associated Regulations????

i even told her she could send the questions off to the treasury dept and let the lawyers who specialize in Section 861 answer them for her and me.

she nervously asked, "why do you want to know this stuff?" i told her that i had taken the time to read the code myself (by someone else's suggestion) and i didn't see where the regulations listed "domestic income of American citizens" as taxable. so, i figured she or her superiors off in la-la land could help me find the specific code/regulation that does list domestic income as taxable.

she finally blurted out, "well, people gets w-2's and 1099's each year, so they must have taxable income. . ."

that's the best she could come up with.

she later gave me an address in dc to send my questions off to, but she was firm in telling me that she wasn't going to be able to help me any further.

as this meeting ended, she said she "wasn't a tax attorney" and perhaps i should seek the help of an attorney.

to end this story, about 8 months later i received an irs form letter that i guess was generated from my "legal" inquiries. the form letter included phrases like, "people that have used these "frivilous" arguments before have been fined and paid penalities for taxes due. . ."

geezer, i'm sure you'll say this is a "normal" and acceptable response from our federal government when my letter was only asking four or five straight questions from the irs code itself.

the letter was straightforward and polite as possible, but the irs response made to me was threatening and TOTALLY unresponsive to my questions. by the harsh tone of imminent threats, it made me appear to be a criminal for even asking the questions!!

geezer, this is a true story.

and, it's one that's probably been duplicated time after time nationwide by other citizens who've done what i've done -- i've read the law and then asked my government questions.

does this make others out there besides you, geezer, CONFIDENT in the government's revenue collecting services??

4. here's a little something from WorldNetDaily posted back on 5/11/01.

does this make anyone besides you, geezer, confident about the last irs commissioner??

would charles rossotti ever want to end the irs system as we know it??

THE POWER TO DESTROY Reporter targeted by IRS?

Agency circulates in-house memo about 'nasty' journalist

By Julie Foster © 2001 WorldNetDaily.com

What would a person have to do to be labeled "very nasty" by the Internal Revenue Service?

That's exactly what Insight Magazine reporter John Berlau wants to know. WorldNetDaily obtained an e-mail this week that had been forwarded among IRS employees. The memo calls Berlau a "very persistent, very aggressive, very nasty reporter." Terry Lemons, chief of national media relations for the IRS, originated the e-mail.

Formerly of Investor's Business Daily, Berlau has written a series of articles for Insight about conflicts of interest among high-level federal officials, including Treasury Secretary Paul O'Neill and IRS Commissioner Charles Rossotti. But while O'Neill sold off his interests in Alcoa Corp., to the tune of $100 million, Rossotti has kept his stock in American Management Systems -- a company he co-founded with his wife and which has millions of dollars in contracts with the IRS, reported Berlau.

Rossotti was given a last-minute waiver by the Clinton administration, allowing him to keep his shares in AMS, valued between $16 million and $80 million, Berlau wrote. . .

"I don't think I was being nasty. I gave them plenty of time to answer," said Berlau, noting he often asked questions days in advance of his deadlines. "I was doing my job."

geezer wrote:

"Since I'm not a government bureaucrat, not government anything, I do an inconvenient thing and call ty as I see it.

Well DUH, as my daughter would say, Larken Rose is a "tax protester".

---

if you not a card carrying member of the irs thug gang ("don't ask us any legal questions, just pay up because we say so"), then you're probably either a cpa or more likely a tax attorney (making lots of money telling folks "don't believe any of that stuff, it's all nonsense. . .").

maybe you and the daughter need to re-read Mr. Rose's words from his message today --

"Here is what a tax protestor sounds like: "I refuse to pay this tax, because ______________." There are lots of things the blank can be filled in with, like "it's immoral," "it's unconstitutional," "it funds things I don't
like," etc. But whatever is put in the blank, by definition a "tax protestor" is someone who PROTESTS A TAX. And that IS NOT AT ALL WHAT I DO.

The following is NOT what a tax protestor sounds like: "I do not believe that my income is subject to this tax, because ________________." Again, whatever you put in the blank, EVEN IF IT'S AN INCORRECT ARGUMENT, a person
who says that is not a "tax protestor," and characterizing him as one (or parroting someone in government characterizing him as one) is misleading."

---

geezer, you're missing the point here, or maybe you haven't, like i have done, and that's gone out and actually read both Section 861 and the associated Regulations, and i, like many that have bothered to read the actual statutes and regulations, and i do not find the domestic-only income listed in the Regulations.

and then don't forget the Supreme Court --

“In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out.”
[Gould v. Gould, 245 U.S. 151 (1917)]

---

Mr. Rose says over and over again, "don't believe me, go out and read the law for yourselves. . ."

please point out the specific regulation in Section 861 that lists domestic-only income of American citzens as a tax liability.

and if you believe that an American citizen should not be using Section 861 to determine his taxable liablility, please point out the SPECIFIC SECTIONS OF THE CODE that show the domestic-only income of American citizens is taxable.

just once, please.

don't site state appellate board musings or unrelated court rulings -- 'cause neither of 'em write the law!!

is my english clear enough so that even a child can understand??

or should i go by what a state appellate board says? or some tax court judge (who's generally either a retired irs exec or some other retired judge looking for work)??

---

more from Dr. Clayton on the statutorial history of Section 861 at www.861evidence.com --


"In order to get the most out of the prior law, it is helpful to have gone through the sections to understand the basic structure of the law and the basic structure of the deception. As you work your way through the law, always remember that what you do NOT see is just as important as what you DO see.

THE CONSTITUTION AND THE INCOME TAX LAW

1. The Constitution gives Congress jurisdiction only over foreign commerce, therefore Congress can tax incomes ONLY if they are derived from foreign commerce. Foreign commerce that is taxable by Congress is best thought of as transactions that "cross country borders." Transactions that occur completely outside the United States (such as the income of Chinese in China) cannot be taxed by Congress because Congress does not have jurisdiction in any foreign country (the local government has jurisdiction).

This basic principle means that income from INSIDE the United States can be taxed by Congress ONLY when a FOREIGNER receives it because it crosses the border of the United States, putting the transaction under federal jurisdiction. This also means that U.S. citizens living in the United States who receive income from OUTSIDE the United States can be taxed on that income by Congress, because the income crosses the border of the United States.

Domestic commerce refers to transactions that do NOT "cross the borders" of the United States. Therefore, domestic income is NOT taxable if a U.S. citizen or resident alien receives it because it DOES NOT cross country borders and does NOT fall under foreign commerce (Congressional jurisdiction).

It really is that simple.


2.. Since the law is and must be constitutional, Subchapter N, Section 861 and following correctly shows the fundamental Constitutional restriction on Congress' power to tax incomes by showing that the only taxable incomes are ALL related to foreign commerce. Because Congress cannot do so, this part of the law does NOT show the taxation of the domestically earned incomes of U.S. citizens or resident aliens.

PROPAGANDA MASTERPIECE

By far, the biggest propaganda masterpiece of the Treasury Department that has been used for generations to steal from the public is now exposed for all to see. The 16th Amendment did NOT change the Constitutional restrictions on Congress' limited power to tax incomes and did NOT impose a direct tax on incomes without apportionment (which is what the public was led to believe).


IF NOT THE 16TH AMENDMENT, WHAT ACT IMPOSED THE INCOME TAX?

The current (indirect) income tax on foreign commerce was imposed in 1913 as part of the Underwood Tariff Act, Section II. .

PRIOR LAW:

There are two phases that I am working on to show the historical sections of the law. The first (seen here) is to put the prior law in PDF format so that the reader can see the exact wording to see that the truth of the limited scope used to be told more plainly.

In order to outline the words and in the interest of time, this process required OCR (optical character recognition) so that the text, although very accurate, and the format is almost identical to the prior law, it is NOT an "image" of the law exactly as published. The second part will be to put the actual images of the scanned in law as published in GIF files for all the "purists" out there (and I am one).

WHAT TO LOOK FOR:

To determine WHEN income becomes "net income" (currently "taxable income"), it is necessary to find the words that show that the income that is received by the reader is derived from or related to FOREIGN commerce. Recognizing the truth still required the reader to know what to look for:

1. One has to receive an "item" or type of income that may be taxable (life insurance proceeds are not taxable).

2. In order for this income to be taxable, it must be derived from COMMERCE that is taxable by Congress.

WHERE TO LOOK IN THE CURRENT LAW:

In current law in order to have taxable income, these two independent conditions that must be satisfied (the same conditions as in prior law) in order for income to BECOME "taxable income" and where they are located are:

The income must be a taxable "item" (Subchapter B), and
The income must derive from a taxable activity or type of commerce (Subchapter N).

And when the reader arrives at Section 861, 26 CFR § 1.861-8 and following, he finds that the only taxable incomes are those derived from foreign commerce.

THE TRUTH IN THE PRIOR LAW

Unlike the reglations today, the truth in the older law was located in several different places, which made it more likely to be found (provided the reader knew what to look for). The number of STEPS that the reader must take to find out if they have "taxable income" or not in over 60 years of the law are numerous, but they lead to the SAME CONCLUSIONS.

BEFORE 1928:

Before 1954, the word "source" was not used in the way it is today ("specific sources and activities" is the more detailed way the current law refers to the taxable commerce that taxable incomes must be derived from). Instead, the reader was told what COMMERCE was taxable and/or WHO was taxable on income from sources within the United States. But no matter what form the truth took, the law NEVER mentions the purely domestically earned incomes of U.S. citizens (because Congress cannot tax this income).

AFTER 1928:

Up until 1928, the truth of who was specifically taxed and under what circumstances could be found BOTH in the statutes AND the regulations.After 1928, the truth was found only in the regulations, where it remains to this day.

As you look through the sequence beginning where the tax is imposed to the section where income from sources within the United States is discussed, look for specific mention of WHO is taxable on those sources. You will NOT find U.S. citizens with purely domestic income mentioned.

AFTER 1954:

After 1954, the SPECIFIC TYPES OF PEOPLE WITH TAXABLE INCOME (nonresident aliens with domestic income, U.S. citizens with foreign income, individuals and corporations with mostly possessions income) were removed from the law and replaced by more "general" terms. It became impossible for the reader to understand that "taxpayer" did NOT include U.S. citizens with only domestic income WITHOUT examining the prior law.

This was not "accidental." This represents criminal tinkering with the law for the sole purpose to deceive. Treasury Department lawyers realized that unless they did this, the truth would be discovered. So they began to emphasize the generally written statutes (where the truth is nearly impossible to recognize) and engineered an atmosphere where the public relied on "IRS publications," which are NOT evidence of the law.

This made it MORE likely that the truth would NOT be discovered. If the law were to simply explain (as it very nearly did before 1928) that if the reader has income that is derived from an activity that is related to commerce with foreign nations then such income becomes "taxable income" (which it could have easily done), then the deception would not have been possible.

The number of STEPS that the reader must take to find out if they have "taxable income" or not in over 60 years of the law are numerous, but can be boiled down to TWO steps (as above and below), but they lead to the SAME CONCLUSIONS. At the same time, instead of using the word COMMERCE, which the Constitution uses, the law talks about all the things that MAKE UP taxable commerce "implying" everywhere along the way that this included the domestically earned incomes of U.S. citizens without actually stating it.

OVERVIEW OF THE STEPS

A person works and has income. Is it taxable or not? Instead of cutting right the chase and showing the reader Subchapter N, Section 861 where the taxable types of commerce are identified (from which taxable income MUST be derived), the law was written BACKWARDS, with thousands of words as padding, so that the reader would not know WHERE to go next.

Thousands of words in the first part of the law describe the various "types" of income that MIGHT be taxable (compensation for services, interest, dividends, etc.), with various exceptions for different situations that increased over time as Congress continued to attempt to control the population. BUT what was NOT told to the reader was that these incomes were taxable ONLY if they were derived from or related to foreign commerce.

The reader had to find out what the law meant by "taxable income," then what the law meant by "gross income," but the MASTERPIECE of deception was the definition of "gross income" that made it nearly impossible to realize that there was another critical step. Gross income is defined as "all income from whatever source derived, including but not limited to the following items....." This did NOT mean "all income no matter where it comes from," but the reader did not recognize that they had to find out what the law meant by SOURCE.

But there are really only TWO steps; income is received and whether that income is derived from taxable COMMERCE or not. Remember the Constititutional rules above.

STEP ONE STEP TWO
(1924) Section 210

(1939) Section 11

(2004) 26 USC 1
Section 217(b), regulations Articles 324, 325.

Section 119(b), regulations 39.119-9 and 39.119-10.

26 USC § 861(b), regulations beginning at 26 CFR § 1.861-8.


In the current law, the final critical steps are found in 26 USC § 861(b) and the regulations beginning at 26 CFR § 1.861-8 which tells the reader whether or not they have "taxable income" by showing BOTH the commerce and activities that such income must be DERIVED from as well as the incomes that are taxable (all of which are tied to TAXABLE commerce). If their income does NOT fall into these specifically stated categories, then they do not and cannot have "taxable income."

As in the table above, the predecessors of Section 861 and following through history ALL say the same thing; only income related to foreign commerce is taxable. When you look at these sections you will see for yourself how much easier it was to comprehend who was taxed (and therefore who wasn't) in Section 119 in 1939 and Section 217 before 1928.

This is the critical part of the law that everyone (except the Treasury Department lawyers and politicians) overlooked (because they did not know what to look for). So, it takes some doing to wade through all the words, but the fundamental concept will become clear and you will be able to confidently understand the law so that you can correctly show the law that applies to the following situations:

1. If a U.S. citizen receives income from foreign commerce, is it taxable? Yes, it is, (and the law says it at 1.861-8(f)(1)(i)).

2. If a foreigner receives income from sources within the United States, is it taxable? Yes, it is; the income crosses country borders and is therefore considered related to foreign commerce (and the law says it at 1.861-8(f)(1)(iv)).

3. If a domestic corporation receives income from federal possessions, is it taxable? Yes, it is because Congress is given jurisdiction over commerce in federal possessions (and the law says it at 1.861-8(f)(1)(vi)(E)).

4. If a resident alien receives income from sources within the United States, is it taxable? No, it is not; they are taxed just like U.S. citizens living and working in the United States (for such domestic income, the law does NOT SAY THAT IT IS TAXABLE).

5. If a U.S. citizen receives income from sources within the United States, is it taxable? No, it is not; (for such domestic income, the law does NOT SAY THAT IT IS TAXABLE).


1924 1939 1954 (current)
Statute Regulation Statute Regulation Statute Regulation

Taxable income defined 212 21 21 39.21-1 63

Included in gross income 213 31 22(a) 39.22(a)-1 61 1.61-1

Excluded from gross income 213(b) 71 22(b) 39.22(b)-1 101

Determination of Sources 217 119 861, 862, 863

Income from within U.S. 217(a), (b) 119(c),(d) 861

Gross income 217(a) 316 119(a) 861(a)

Domestic interest 217(a)(1) 317 119(a)(1) 39.119(a)-1 861(a)(1) 1.861-2

Domestic compensation 217(a)(3) 319 119(a)(3) 39.119(a)-3 861(a)(3) 1.861-4

Taxable income 217(b) 324, 325 119(b) 39.119-(b)-1 861(b) 1.861-8

Income from outside U.S. 217(c), (d) 119(c),(d) 862

Gross income 217(c) 119(c) 862(a) 1.862-1(a)

Taxable income 217(d) 119(d) 862(b) 1.862-1(b)

Income from partly within
and partly without U.S.
217(e) 327 119(e) 863

---

geezer wrote:

"Actually the government has answered repeatedly in no uncertain terms through Congress, the IRS, DOJ and the Courts.

If people like you and Larkin Rose choose to bury your heads in the sands like an ostrich pretending to look like a bush to avoid circling vultures, you shouldn't be surpise when said vulture choose to roost while sh'ting all over you."

---

if you think answering the folks (concerned citizens) is NOT ANSWERING ONE QUESTION of a one page letter that literally thousands of citizens wrote the irs, treasury dept, doj, U.S. Congress in the past two years -- and, guess what? -- not one letter was answered with anything but a d*mn form letter that insults the citizen asking basic questions of how the law works.

that's great, geezer, if you're satisfied with this kind of response, but i thought i lived in the U.S., not communist china!

it's so-oo-oo convenient for you and other government bureaucrats to label people like Larken Rose a "tax protester". it's almost the same as the feds blowing off the basic questions and just throwing out "that's a frivilous argument", even though the basic questions ARE HOW THE CODE ITSELF works?

again, if feds just held a one hour news conference and pointed everyone to the exact code of where domestic-only income of American citizens is subject to the income tax, maybe, just maybe your hated nemisis, Larken Rose, (and his readers who read the existing written law the same way) would blow away in the wind!!

how can an questions based soley on the written code be "frivilous", geezer? do you have some new legal definition of "frivilous" the average joe wouldn't know?

not especially for you, but here is the most current post from Larken Rose that's quite relevant to the current discussion going on here --

(btw, geezer, you may want to use your expertise to try and get the $2,000 or $10,000 being offered below. and if you ain't an irs tax lawyer yourself, maybe you can convince one to go with you and between the two of you, if nothing else, have a great vacation in Hawaii!!)



Dear Mr. Lum,

In your recent story in the Honolulu Advertiser, you quote the Hawaii state attorney general as saying that Mr. Basuel, now convicted of tax crimes, is a "devotee" of mine. You also quote the attorney general as saying that I'm a tax protestor, and that I'm arguing that wages are not taxable. On the two latter points, the attorney general is either mistaken, or he's lying.
I'm hoping that after seeing that the attorney general misspoke (or lied), at some point you'll have a chance to correct that.

I don't know Mr. Basuel, what he did, or what he argued, so I'm not writing to defend him (or to criticize him). I am, however, hopeful that the Honolulu Advertiser would not knowing let false statements by government officials stand unchallenged.

First of all, I do NOT say that wages can't be taxed. Wages are an "item" of income, which if derived from a taxable source or activity ARE TAXABLE.

In fact, I REFUTE the "wages are not income" claim publicly, as shown here:

http://www.taxableincome.net/articles/othertax/wages.html

But more important is the "tax protestor" label which government officials love to throw at anyone who disagrees with them about the law.

Here is what a tax protestor sounds like: "I refuse to pay this tax, because ______________." There are lots of things the blank can be filled in with, like "it's immoral," "it's unconstitutional," "it funds things I don't
like," etc. But whatever is put in the blank, by definition a "tax protestor" is someone who PROTESTS A TAX And that IS NOT AT ALL WHAT I DO.

The following is NOT what a tax protestor sounds like: "I do not believe that my income is subject to this tax, because ________________." Again, whatever you put in the blank, EVEN IF IT'S AN INCORRECT ARGUMENT, a person
who says that is not a "tax protestor," and characterizing him as one (or parroting someone in government characterizing him as one) is misleading.

With that in mind, are the following the words of a "tax protestor"? (Again, the answer to that question has nothing to do with whether you agree with the legal conclusions or not.)

"I, Larken Rose, have not filed a federal income tax return for 1997 or any subsequent year. This is not because I am protesting any law, or because I do not want to pay my “fair share”; it is because I refuse to be a victim of
the biggest financial fraud in history... As more and more Americans are discovering that the law itself shows that the income of most Americans is not taxable, DOJ and IRS officials are desperately trying to distract from
the issue by dishonestly portraying it as a frivolous “tax protestor” argument, and by trying to silence (via court injunctions) those who publicize the issue."

You may not be aware of the fact that those words appeared in a large paid advertisement in the Honolulu Advertiser--THE PAPER YOU WRITE FOR--on 8/27/02. Here is the entire ad:

http://www.theft-by-deception.com/prosecute.html

The claim that most of us don't owe federal income taxes is of course contrary to "conventional wisdom," and I understand it when people don't bother looking into the issue, thinking it must be nonsense. Maybe a little
incentive will make a second look worthwhile.

I will donate $10,000 to the charity of your choice, if you can get an IRS attorney to agree to let me question him, on the air, for one hour, to ask him basic questions about how the LAW says one should determine his taxable income. He even gets the six main questions ahead of time, which can be seen here:

http://www.taxableincome.net/questions.html

(I would also be asking follow-up questions.)

He doesn't have to "win" any "debate," or convince me or anyone else of anything; he only has to ANSWER QUESTIONS about what the law requires, which is something the IRS should be willing to do for FREE (but isn't).

The rules for the offer are simple, and can be read here (but applying it only to a current IRS attorney, and with the reward being $10K instead of $2K):
http://www.petermacshow.com/challenge

A chance for an IRS expert to publicly correct my (supposed) misconceptions, and at the same time get $10,000 for some worthwhile charity: wouldn't that do wonders to counter the IRS' (well-deserved) reputation as a bunch of
unthinking Gestapo thugs? (I don't know about you, but I consider $10,000 to be a heck of a lot of money.) By the way, if the IRS guy wants to interrogate me afterwards, I'll do it for free, for as long as he wants, and
post it on my own web site.

Hopefully that offer will get your attention. And when the IRS declines the offer (and they will), hopefully you'll wonder why.

Sincerely,


Larken Rose
larken@taxableincome.net
http://www.theft-by-deception.com

(P.S. As a final note, I'm not sure what this sentence from your article means: "Hawaii has excluded the misinterpretation of the code from applicability under state law." My best guess is that that was the attorney
general's convoluted way of saying that the provisions in Section 861 of the Internal Revenue Code do not apply to the Hawaii state income tax anyway, which is true because of Section 235-2.3(b)(26) of the Hawaii Revised Statutes.)

geezer, you're starting to sound like one of those threatening irs form letters that folks get just by asking their government simple, but specific questions about how the law works.

i can only conclude from your voluminous posts that you somehow must be making money off the income tax system. the others i've communicated with that quoted "evans" were tax lawyers! hmm, what say you?

or maybe you're even an irs thug in sheep's clothing??

you need to study the immense amount of communications that Larken Rose has posted on his site, www.taxableincome.net
that he had directly with the irs, the treasury, the doj, and even congress! He even includes transcripts of irs meetings he's had.

now, is the written irs code that screwed up that even the irs thugs can't figure it out and answer a citizen his straightforward questions?? (or get "technical" legal answers from the corrupt treasury dept attorneys who really hide the truth of the law??)

geezer, is that what you like about this country? a citizen or group of citizens can't request and get answers to their serious questions about how the government is working in this area??

even if Larken Rose and all those who agree with most of what he writes are completely wrong and off in left field, where is the government (being the servant they're supposed to be)helping the citizen (the master as citizen) with written answers??? Larken even offers to print any official response he receives from treasury dept, irs commissioner's office, doj, etc.

if the government can simply answer his inquiries, wouldn't that be smart of them to do so that others who read Larken's site would know and then understand??

or, is it just better for our righteous federal government to continue with no responses at all, other than threatening form letters and with the prosecution of those who study and read our law and come to a much different conclusion about their tax liability??

again, i'll ask you, who checks up on the federal government for fraud? themselves?? dan rather?? peter jennings?? larry king??

i won't even ask you about Vernice Kuglin and her case in Memphis. a jury found her "not guilty". i supposed you're gonna say that the fed prosecutor was just an incompetent one who couldn't show the jury the specific irs code that made her liable for her domestic-only income!! hmm??

let me give you some words from Dr. Clayton's www.861evidence.com about the 16th Amendment --



The most widespread misunderstanding of the limited Constitutional authority given to Congress to tax incomes is the mistaken belief that the 16th Amendment gave Congress the power to directly tax incomes without apportionment, when this is specifically prohibited by the Constitution. The legal reason why the 16th Amendment was passed is the opposite of what the government has led the public to believe, particularly the Treasury Department.

THE INCOME TAX IS NOT A DIRECT TAX

What is shocking about this is that both the Supreme Court and Treasury Department published the truth about what the 16th Amendment in 1916. This Amendment was passed to correct the Supreme Court's decision in Pollock in 1895, where it had mistakenly concluded that part of the income tax law passed by Congress was a direct tax without apportionment, which the Constitution did not allow, so it threw out the entire tax.

The legal reason that the 16th Amendment was passed was to prevent the courts from ever declaring that an income tax was a direct tax on incomes. But by the time the 16th Amendment was passed, the Supreme Court had “corrected” its mistake. In Brushaber v. Union Pacific (240 U.S. 1) and again in Stanton v. Baltic Mining (240 U.S. 103) , the court made it clear that the income tax is and has always been an indirect “excise” tax which never required “apportionment.”

In 1916, the Secretary of the Treasury agreed in Treasury Decision 2303:

“The provisions of the sixteenth amendment conferred no new power of taxation , but simply prohibited [Congress' original power to tax incomes] from being taken out of the category of indirect taxation , to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment.” [Treasury Decision 2303]

The misinformation that the 16th Amendment “created” or “permitted” a direct tax on incomes without apportionment has been deliberately perpetrated by Treasury Department lawyers and others in the federal government to make the public “think” that they owed federal income taxes. Subchapter N, Section 861 and following proves that most Americans do NOT owe federal income taxes.

geezer wrote (in part):

"The court is where the rubber meets the road my friend, not the self serving opinions Larkin Rose."

hey, geezer, the written Regulations is where the written law meets the road, imo!!

hey, geezer, since when is the opinion of a state appellate board EQUAL TO written IRS Code?? hmm??

the last time i checked, appellate boards or courts don't make the law, congress does!

now, are state boards or appellate courts trying to change the written law by their (sometimes stupid) opinions??

how can an appellate court call "the 861 argument" frivilous when one uses his analysis and conclusions based on the written law itself??

i like how the courts often use "frivilous argument" as any argument it doesn't want to really address! in this case, it's like the courts are saying "don't read the law, don't ask about the law, don't argue the law, just do as we say because if you don't, we'll shut you up and say, "YOUR STATEMENTS ARE FRIVILOUS!!"

geezer, who checks up on the federal government?? themselves??

does "frivilous" have some legal meaning that is counter to the everyday dictionary meaning? i'm really asking this question because whether it's tax court or some appellate board's opinion the "frivilous argument" is thrown out there like it's some GRAND ANSWER to everyone's question!!

and, geezer, what about the thousands of folks nationwide who have written the treasury, irs, doj, and their elected representatives asking civil polite questions about the irs code? and ALL THAT CITIZENS GET BACK are the typical form letters which DON'T ANSWER ONE QUESTION ASKED, instead threaten that courts have ruled against such "frivilous arguments".

is asking your government questions about how to determine one's taxable income liability a "frivilous argument"?

if you want to know how Larken Rose argues here, e-mail him a larken@taxableincome.net

he has not filed or paid any income taxes on his donestic- only income since 1997. he has told the irs such, met with the irs several times, and the irs didn't even want to go for "technical answers" from treasury dept lawyers to answer his questions about the written code.

imagine that!!

now, if they really wanted to shut him up and put him away,
couldn't they legally do it according to your reasoning? can't they stand on your appellate board's opinions?? can't they shut down his website for giving away untrue lies about the law? how long does it take the treasury dept thugs to "carry out the law??

has any of this happened yet??

i'm sure Larken would want you to print his response to any of your questions in total to this group here.

hey, that's a lot more than the irs and our federal government have done helping the citizens understand the written irs law!

i'll leave you with some kind words from Dr. Clayton's www.861evidence.com --

"The Internet is facilitating the most dramatic change in how Americans view their government and its laws that has occurred in the over 228 years since the founding of this country because they can now see the exact wording of the law free of charge in their own homes. And the unparalleled power of computer "search" engines that can almost instantly examine every word of the law to ensure nothing is "overlooked" has made the standard of proof of what the law requires much more rigorous.

ANYONE who makes an "assertion" that the law requires a person to do something must now PROVE that the law does so by showing the exact "word evidence" that brings the requirement into existence. This applies to the DOJ, IRS, Treasury Department, every other government agency and government employee, and everyone in the private sector who attempts to "tell you" what the law means without showing you where it does so. If the "assertion" is not backed up by solid citations of the written law, then the "assertion" is meaningless until this happens. Using the Internet, one should always look it up to verify that it is true (more about how to do that will be explained later).

Many members of the public are quite capable of understanding the words of the law without a lawyer or accountant "telling them" what it means, once they have been shown how the law is written and organized. But prior to the Internet, most of the public had never seen the law; it was very difficult for a person to verify that what they were being "told" about the law was true. Now that the public has the means to instantly verify exactly what the law says, they are no longer completely "dependent" on attorneys, accountants or government officials to "tell them" what the law requires them to do.

Many mistakes have been made by those who did not understand what the law was saying and in the process came to incorrect conclusions. Most of the public has no idea that the regulations exist or their importance in understanding the law correctly. Those who have misunderstood happen to include all "tax experts," because they missed the most fundamental aspect of tax law (when and how income becomes taxable) by "thinking" that they already knew what the law meant in this regard. Most of the time they "assumed" that all incomes were taxable unless exempted by Congress, (and most of the time they accepted what they were told by their teachers who made the same mistake).

The possibility that their teachers might be wrong just never occurred to them, so they did not question it OR look at the law closely and logically. They did not do what physicist Richard Feynman always did, which was to NOT take anybody's word for anything; he started at the beginning of each topic in physics and proved to himself that it was true.

There have also been plenty of lawyers and accountants with vested interests who told people in the private sector only what they WANTED them to know about the law, or deliberately misquoted or misapplied the law, betting that they would not be found out due to the public's widespread ignorance of the law. The average IRS employee was "victimized" because the Treasury Department lawyers too misled them about the severely limited scope of the law; so most of them have been demanding income taxes without knowing that most Americans do not owe them. As such, this was not criminal misconduct.

But knowing what the law says and deceiving people IS criminal misconduct. As in the movie Dune, "All eyes turned to Arakis," "All eyes turn to the lawyers in the Treasury Department," because they are the biggest criminals of them all. Having written the law correctly, they KNOW and have KNOWN that most of the public has been misunderstanding therefore misapplying the federal income tax law by not understanding the significance of Subchapter N, Section 861 and following.

It is nothing short of incredible that it took the Internet to make it possible for objective and unbiased minds to understand the connection between the Constitutional limitations on Congress' power to tax and where this was located in the law, proving that the federal government has robbed most Americans for generations of money not owed by law. The primary mechanism used to deceive nearly everyone was the "belief" that the 16th Amendment "permitted" Congress to tax all incomes directly without apportionment, which is provably false."

you wrote (a lot of words as usual):

"The Congress can lay & collect the income tax under the Constitution. To believe it chooses not to tax the citizen for as much as it can get away with, is wishfull thinking at best, and a con at it's worst connotation."

geezer, many now believe the congress and feds didn't and couldn't tax the domestic income of American citizens, so the treasury dept lawyers purposely wrote the code in such a confusing manner that the average citizen or tax professional couldn't figure it out!! by doing so, they are illegally "taxing" as much as they can get away with!!

oh, don't forget that life insurance benefits and financial gifts are NOT TAXABLE, right??

so, just show us the specific irs code that mentions that the "domestic income" of Amercian citizens is included as being taxable.

please, get down and very code specific here!!

you want us to follow the law because we are a nation of a constitution and written law now, right??

and for the thousands who have now read and studied the actual irs code and associated regulations and DO NOT FIND the domestic income of American citizens listed, what do you say? can i use this Supreme Court ruling, since you're so fond of quoting various court cases?

“In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out . ” [Gould v. Gould, 245 U.S. 151 (1917)]

Dr. Clayton at www.861evidence.com says it best --

"The "take home" lesson is that one must carefully read all words of the law for any particular topic and NEVER "assume" that the law applies to anything that is not specifically pointed out."

so, geezer, it's WHAT'S NOT LISTED or STATED in the law and associated regulations that has your long-winded justification at odds with the code and above Supreme Court ruling!!

and, it's WHAT'S NOT LISTED or STATED in the law that adds much, much confusion to those citizens wanting to read the law(tax professionals included), who then read Section 61 and stop there.

Dr. Clayton, at his www.861evidence.com continues,

"The hardest thing to "see" is what is NOT THERE. A handful of government lawyers managed to get most people to pay income taxes that they did not owe by deliberately writing and arranging the FIRST part of the law in such a way that everyone would "assume" that all incomes were taxed (unless specifically exempted by Congress). The tax is imposed on the "taxable income" of individuals in Subchapter A, and the "items" of income that may be taxed are found in Subchapter B, all in the first parts of Title 26.

In other words, there are tens of thousands of words in the first part of the law that talk about the various types (items) of income, but nowhere in this part of the law is it shown WHERE the income has to come from in order to be taxed. But thousands of pages deeper into the law is the SECOND part that proves that most incomes are NOT taxed. This is the significance of Subchapter N, Section 861 and following, where the reader is specifically told WHEN income becomes "taxable income."

Another big reason is the fact that the law does not use "commerce," the term used in the Constitution. Instead, the various aspects of how income becomes "taxable income" are discussed, including the type of incomes that can be taxed (Subchapter B), the types of income that are excluded from taxation by Congress (Subchapter B), and the geographical location of the commerce/activity generating the income and who is receiving the income (Subchapter N).
Once the truth was realized, the IRS and the Treasury Department deliberately engaged in "word games" to try and throw the public off, such as saying that domestic sources of income are taxable. What they DID NOT SAY is that domestic sources of income are taxable ONLY IF the income is received by FOREIGNERS (which puts this type of trade or commerce under foreign commerce, since the income crosses country borders).

It is important to keep this type of DECEPTION in mind as you understand how the law tells the reader how to determine taxable income. For example, Subchapter N, Section 861 (1.861-8(f)(1)(iv)) shows that domestic income sources are taxable (income from domestic commerce), but ONLY if a foreigner is receiving the income (because this falls under Congressional jurisdiction, as specifically stated in Article 1, Section 8).

Subchapter N, Section 862 (and Section 861) show that certain foreign income sources are taxable (foreign commerce taxable by tax treaty), but ONLY if a U.S. citizen is receiving the income (because this falls under Congressional jurisdiction, as specifically stated in Article 1, Section 8).

FIRST PART OF THE LAW:

In the first part of the law known as Subchapter A, 26 USC § 1, the reader learns that the "income tax" is imposed on the "taxable income" of individuals.

26 USC § 1 imposes the income tax on “ taxable income .”
What must the reader let the law tell him? What does the law mean by "taxable income"? In the next section, Subchapter B, 26 USC § 63, the reader finds out that "taxable income" is legally defined as "gross income" minus allowable deductions.

26 USC § 63 defines “ taxable income ” as “ gross income ” minus allowable deductions.
What must the reader let the law tell him now? What does the law mean by "gross income"? He has to go backwards (imagine that). In the same section, Subchapter B, 26 USC § 61, the reader finds out that:
26 USC § 61 defines “ gross income ” as “ all income from whatever source derived, including but not limited to the following items....”

Then follows a long list of the types of income that MAY be taxed, such as compensation for personal services, rents, interest, etc.] The "items" of income are defined right here in this section. But there is something else in the definition of "gross income" that the law does NOT define here. What must the reader let the law tell him now?

That's right, what does the law mean by "source"? Once the reader asks this critical but LOGICAL question, they are well on their way to understanding that there MUST be another part of the law that talks about what SOURCES of income are taxable. To review:

Taxable income = gross income minus allowable deductions
Gross income = various types of income from whatever source derived.

Most people have incorrectly "assumed" (or beeen told) that "income" is the same thing legally as "gross income." The "tax professionals" may get a good laugh out of this (thinking that the public just does not have a clue about the law), but most of them have done the same exact thing.

But the Treasury Department regulation writing lawyers get the last laugh because they have managed to deceive all these "experts" about how LIMITED "gross income" really is. That is, how FEW incomes actually BECOME "taxable income" under the law.

The reader will NOT find out what the law means by "source" in these first parts of the law. The law writers did this on purpose. The general definitions in the first parts of the law give the impression that all incomes are taxed because of the fundamental mistake of incorrectly "assuming" that, "all income from whatever source derived" is the same thing as, "all income no matter where it comes from."

SECOND PART OF THE LAW:

Section 861 is the place where the careful reader finds the specific rules that give much detail about what the law means by source and exactly WHICH income SOURCES are taxable and under what circumstances. Section 861 is the section of law the correct application of which the Treasury Department has tried so hard to conceal from the public.

The specific rules that explain why, "all income from whatever source derived" does not mean, "all income no matter where it comes from" are located THOUSANDS of pages away from the first parts of the law in Subchapter N, Section 861 and following and the regulations thereunder. With the exception of one "cross reference" at the bottom of 26 USC § 61 (which was removed in the 2001 GPO and USCA versions of the USC), there is NOTHING in this section of the law that tells the reader that they MUST go to Subchapter N, Section 861 and following to complete the determination of taxable income. Coincidence?

Not surprisingly, the regulations are entitled, "Computation of taxable income from sources within the United States and from other sources and activities." When the reader arrives at the critical regulations beginning at 26 CFR § 1.861-8, he is told WHEN domestic income is taxable and WHEN foreign income is taxable [Section 862 and the other sections in Subchapter N refer back to this critical section].

The reader finds out in Section 861 that income is required to be included as taxable "gross income" ONLY when that income derives from certain SPECIFIC activities or types of commerce. He finds that the only incomes that are taxable are:

1. Certain U.S.-source income of foreigners
2. Certain foreign income of U.S. citizens and corporations
3. Certain other types of income ALL of which are related to international or foreign commerce (including commerce within federal possessions).

In other words, he finds that a U.S. citizen has "taxable income" ONLY if the income is derived from certain types of FOREIGN and international commerce. So, the hardest thing to see is that which is not there. The purely domestic incomes of U.S. citizens living and working exclusively within the 50 states (most incomes) are not shown to be taxable because they are never mentioned.

In other words, in keeping with the principle above, the law does not apply to that which is NOT STATED. This section of the law that exists to specifically point out WHEN domestic income is taxable never mentions that the purely domestic incomes of U.S. citizens (most incomes) are taxable.

For anybody who thinks that this is a "mistake" or "oversight," there are over 80 years of the historical sections of this law (and the purpose of this website) that show that such incomes have NEVER been mentioned. This provides the irrefutable proof that Congress has never been able to tax these incomes under the limits imposed by the Constitution and they DID NOT DO SO.

In order to obtain money from the domestic incomes of U.S. citizens, money that could NOT be had legally under the Constitution, it was necessary to DECEIVE the reader in the first part of the law into assuming that the domestically earned incomes of U.S. citizens were taxed but without actually saying so. Not knowing that there was a second step that showed that most of them did not have taxable income, most citzens would send in money not owed by law, thinking that the law required them to do so (when it did not).

So the CORRECT PATHWAY THROUGH THE LAW IS:

1. 26 USC § 1 imposes the income tax on “ taxable income .”
2. 26 USC § 63 defines “ taxable income ” as “ gross income ” minus deductions.
3. 26 USC § 61 defines “ gross income ” as “ all income from whatever source derived .”
4. 26 USC § 61 cross-reference (under notes at the bottom, which directs the reader to where the law treats income from “ sources ”):

Income from sources -
Within the United States , see section 861 of this title.
Without the United States , see section 862 of this title.

1. 26 USC § 861 and 26 CFR § 1.861 determine the taxable “ sources of income .”

2. 26 CFR § 1.861-8 shows that the taxable “ sources of income ” from within the United States apply only to those engaged in international or foreign commerce (including commerce within federal possessions).

Wow. Simple enough. But let's try something else that is even MORE OBVIOUS. When trying to find something in an organized body of knowledge, isn’t it logical to go to the Table of Contents or the Index first? Although the statutes and regulations are on the Internet, the USC Index is not on the Internet!

If the reader goes to the United States Code (USC) Index and looks up "gross income" OR "deductions" OR "taxable income," they ALL LEAD TO SECTION 861 regarding domestic income (and 862 regarding foreign income). Listing the USC Index references shows ALL of the critically important parts of the law:

· Section 63: Taxable income = gross income -
deductions
· Section 61: Income from sources within U.S., see 861
· USC Index: Gross income, sources within U.S., see 861
· USC Index: Deductions, Taxable income from within U.S., see 861
· USC Index: Taxable income, Sources within U.S., see 861

Therefore, the critical steps in the law that MUST be taken in order to determine if a person has "taxable income" or not can be specifically summarized as follows:

Subchapter A
Tax imposed on"taxable income."
Subchapter B"Items" of incomethat may be taxed.
Subchapter N Determining the taxable"sources" of income.

1. One must receive a taxable "item" of income (e.g. compensation, interest, rents), per 26 USC § 61 and following.

2. The "source rules" must categorize the income as domestic income (per 26 USC § 861(a) and 26 CFR §§ 1.861-2 through 1.861-7).

3. The income must derive from a "specific source or activity" which is taxable (per 26 USC § 861(b) and 26 CFR § 1.861-8 and following).

Aside from rules about specific federal possessions, international and foreign sales corporations, and certain foreign tax credits, the list of activities includes the same types of commerce which 80 years of predecessor regulations have included:

1. Certain foreign income of U.S. citizens (1.861-8(f)(1)(i)).2. The domestic income of foreigners (1.861-8(f)(1)(iv)).3. Certain income related to federal possessions (1.861-8(f)(1)(vi)(E)).

Note the absence of the domestically earned income of U.S. citizens (most incomes). So, to review, the KEY CONCEPT to understand is that Section 861 is only about purely domestic income. If you have domestic income, then you end up in Section 861 to see if the SOURCE of that income is taxable for YOU (domestic income is taxable, but only if received by foreigners).

Section 861 describes (or "allocates") what is to be treated as "within" income (domestic income; the so-called "source rules") just as Section 862 describes (or "allocates") what is to be treated as "without" income (foreign income). Section 863 and its regulations give the "apportionment" rules, which show what to do when income is partially from domestic sources and partially from foreign sources.

The evidence is overwhelming and irrefutable; the regulations beginning at 26 CFR §1.861-8 as well as over 80 years of prior law specifically tell the reader that U.S. citizens are taxed only when they have income from certain types of foreign and international commerce.
The next step is to go to the table that lists the prior sections of law to see for yourself how the truth used to be a whole lot easier to understand.


larken Rose at his www.taxableincome.net states (it's a free download),

"Of course such a claim [domestic income of American citizens being non-taxable] at first sounds absurd, but the evidence does not lie. Here is a very brief summary of the issue:

1) The federal income tax is imposed upon "taxable income" (not all income).

2) "Taxable income" generally means "gross income" minus deductions.

3) "Gross income" is generally defined as "all income from whatever source derived," including compensation, interest, rents, dividends, etc.

Up to this point, the tax professionals agree. It is what comes next that they are either unaware of, or unwilling to accept when they see it in plain English in the law books.

4) Certain sections of the law specifically describe in which situations income from inside the United States is taxable.

5) While those sections show income to be taxable when it derives from certain kinds of international and foreign commerce, they do not show the income of United States citizens living and working only in the 50 states to be taxable.

Amazingly, points 4 and 5 above are specifically and repeatedly stated in the federal income tax regulations, yet most tax professionals simply refuse to believe it. As if that were not bad enough, there is yet another, completely independent way that the regulations prove the truth.

6) The regulations show that the types of income listed in the general definition of "gross income" (such as compensation, interest, rent, etc.) are in some situations excluded for federal income tax purposes.

7) The income tax regulations give a specific list of those types of income which are not exempt (i.e. which are taxable), and while that list includes income derived from certain types of international and foreign commerce, the income of the average American is not listed as being non-exempt (i.e., taxable).

Some tax professionals will eagerly respond to the above by saying "don’t waste time looking into that stuff; it’s all nonsense." Their income, careers, and reputations all depend upon the preservation of "conventional wisdom" concerning the income tax. Most are literally psychologically incapable of even considering the possibility that their assumptions are incorrect. (It is amazing to watch how some of these so-called "experts" respond when they are faced with what the income tax statutes and regulations actually say, as shown below.)

While so-called "tax experts" are likely to suggest that you just accept on faith that they know best about tax law, we at this site do not suggest that anyone just "take our word" for anything. Ours is a system of written law, where the words of the law tell you what the law requires of you. We believe that the readers of this site are competent enough to examine the evidence for themselves to determine what the law requires of them. (In fact, the law requires you personally to determine what you owe.)"

"For example, in all three major printings of Title 26 (the “United States Code,” the “United States Code Annotated,” and the “United States Code Service”), Section 61 itself has cross-references similar to the following:
“Sec. 61. Gross income defined... gross income means all income from whatever source derived...

Income from sources -
Within the United States, see section 861 of this title.
Without the United States, see section 862 of this title.”
So the section which generally defines “gross income” specifically refers to 26 USC § 861 regarding income from “sources” within the United States. A similar reference is also found in the indexes of the United States Code, which (although they vary somewhat in the exact wording) have entries such as:
“Income tax
Sources of income
Determination, 26 § 861 et seq…
Within the U.S., 26 § 861”
Again, income from “sources” within the United States is specifically dealt with by Section 861, and “determination” of sources of income is also dealt with by Section 861 and the following sections.
(It should be mentioned that neither the cross-references nor the indexes are technically the law, but they are indications of how the law works. Unless someone wants to claim that they are incorrect, they are still interesting indicators. And, as will be shown, they are not necessary for proving the relevance of 26 USC § 861 anyway.)
Sections 79, 105, 410, 414 and 505 each identify Section 861 as the section which determines what constitutes “income from sources within the United States,” and Section 306 even uses the phrase “part I of subchapter N (sec. 861 and following, relating to determination of sources of income).”
As shown, 26 USC § 861 and following (which make up Part I of Subchapter N of the Code) are very relevant to determining what is considered a “source of income,” and Section 861 in particular deals within income from “sources” within the United States. Not surprisingly, Section 861 is entitled “Income from sources within the United States,” and the first two subsections are entitled “Gross income from sources within United States” and “Taxable income from sources within United States.” Section 861 is also the first section of Subchapter N of the Code, which is entitled “Tax based on income from sources within or without the United States.” Clearly this is relevant to a tax on “income from whatever source derived.”


heck, geezer, not that an irs 1040 booklet is "the law" in any legal stretch, but have you noticed that it's "correctly" worded for NOT MENTIONING domestic income of American citizens? have you studied your 1040 book recently? what sayeth you, geezer??

look, so why doesn't the treasury, doj, irs just hold a very short conference this week or next and explain to all those who read and studied the actual code and associated regulations and have written thousands of very polite letters asking those in DC to explain the law so that people in question can determine their tax liability, if any?? hmm??. . .

and while you're at it, just tell us the reasoning for all the renaming and moving of Section 861 over the years? was it or is it intended deception by the treasury dept lawyers or did it just happen that way?

have you ever studied the regulation history of Section 861 going back to the early 1920's? and then have you seen what the congress said in 1954, (paraphrased) "nothing has changed the meaning of the law as we made these other revisons".

if not, see www.861evidence.com for a detailed look.

so why is Section 861 now over a thousand pages away from where it started out and the section that used to be called "determining taxable income" is now renamed "miscellaneous matters"? intended deception by the feds, sir?? hmm??. . .

and while you're at it, just for the public record, would you please answer with as much detail as you want (a book of words for you is acceptable), but just answer the following questions with as much specific IRS CODE in your answers as you can. this is an open book test, so get your irs code book and regulations out and tell us --

1) Who should and who (if anyone) should not use the rules in 26 USC §861(b) and the related regulations beginning at 26 CFR § 1.861-8 (in addition to any other pertinent sections) to determine his taxable domestic income?

2) If a U.S. citizen lives and works exclusively within the 50 states, and receives all of his income from within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show such income to be taxable?

3) Should one refer to 26 CFR § 1.861-8T(d)(2) to determine whether the “items” of income he receives (e.g. compensation, interest, rents) are excluded for federal income tax purposes?

4) What is the purpose of the list of non-exempt income in 26 CFR §1.861-8T(d)(2)(iii), and why is the domestic income of the average American not on that list?


Constitutionally yours!

you wrote:
"I am very much in favor of repealing the income tax and going to a national sales tax. Have you been following the progress of these bills? Any change they might actually get out of committee and come up for a vote?"

Look, without a constitutional amendment, there ain't gonna be no national sales tax or flat tax. Period. It's not just a simple fix by the pols going to Capitol Hill and voting for a flat tax or national sales tax.

And in a constitutional amendment process, state-by-state, that might just bring out a bunch of illegalities the IRS, Congress, DOJ and Treasury have been involved in for over 80 years. I'm calling it, "Defrauding the average American of his domestic-only earned income."

Who, btw, investigates the federal government for fraud? If you thought that they police themselves, you are in for a rude awakening.

And, why do you think they would vote themselves out of all that "illegal" income tax money they've been collecting for the past eight decades!?!

Now, the fine folks in DC aren't gonna do that now, are they?!?


Read the following (all from www.861evidence.com) if you want to know how our system of a constitution and written law works --

BASIC STRUCTURE OF STATUTORY LAW THE CONSTITUTION:

The Constitution is the fundamental legal document that gives Congress the power to make laws. It is also the document that limits what Congress can do. This aspect of the Constitution is critical to understanding why the federal income tax law is much more limited than the public has been led to believe. If the Constitution does not allow Congress to tax a certain area then it cannot do so.

As can see in more detail here, the constitutional limits on Congress' power to tax is the reason WHY the law was deliberately written and arranged in such a way to deceive most readers into "thinking" that they owed federal income taxes in order to get them to turn over money not owed by law. At the same time, the fact that the law is and must be constitutional is the reason why the truth of the limited scope had to be put in the law, but in a location where few knew to look (Subchapter N, Section 861 and following).

The fundamental constitutional limits on Congress' power to tax are hard to recognize in the written law for two basic reasons:

1. If the Constitution PERMITS it, then it DOES APPEAR in the law.

2. If the Constitution DOES NOT PERMIT it, then it DOES NOT APPEAR in the law.

Stated another way, these principles are that the law does NOT (and cannot) apply to anything that is NOT specifically pointed out, and the law MUST specifically point out who it applies to and under what circumstances. The reader must NEVER "assume" that the law applies to something without being able to SHOW the exact words that make it so.

This was expressed by the Supreme Court in Gould v. Gould:

“In the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out . ” [Gould v. Gould, 245 U.S. 151 (1917)]

The law must (and does) specifically point out who it applies to and under what circumstances, but the reader has to know what to look for and where to look. The take home point is that the hardest thing to "see" is that which is NOT THERE; the taxation of the purely domestically earned incomes of U.S. citizens does not appear in the law.

STATUTES AT LARGE:

The law passed by Congress is known as statutory law. It is a self-contained but GIGANTIC sea of words. Like any large body of written knowlege, it must be organized in some manner so that the reader can find individual topics. That organizational structure has been defined by Congress, beginning with the Statutes at Large (SAL), which are the laws passed by Congress in the order in which they come before Congress.

Even at this stage, Congress has stated that the various "organizational" elements such as tables of contents, titles of sections, etc., are NOT the law; only the TEXT is the law. The titles may give an indication of what a section is about, but must NOT be relied on as evidence of what the law does or does not require (26 USC § 7806(b)).

UNITED STATES CODE:

The problem with the SAL was that it was not organized according to subject matter. Congress then authorized the creation of the United States Code (USC), which is a compilation of the law organized by subject matter. In nearly every instance, the words of the law contained in the SAL are identical to the words of the law contained in the USC. As a practical matter, it is much easier to look up the law using the USC.

But the words contained in the SAL (and the USC) are often written using "general" language, therefore there is the possibility of misunderstanding the words which can then lead to misapplying the law. The wording of a statute may give the IMPRESSION that the scope of the statute is very broad, when the true scope of the statute (under the limits of the Constitution) can be much narrower. How does the reader know the EXACT application of the statutes?

CODE OF FEDERAL REGULATIONS:

To solve this problem, Congress authorized the creation of the Code of Federal Regulations (CFR), which are detailed explanations of the correct application of the statutes. These explanations are written by the executive branch agencies that enforce the law. In the case of federal taxes, the lawyers in the Treasury Department are given that responsibility. These lawyers KNOW the limits of the law imposed by the Constitution better than anyone else, which means that they know the correct application of the law better than anyone else. Not unexpectedly, the REGULATIONS are the "official interpretation" of the statutes and are BINDING on the IRS and public:

"Income Tax Regulations The Federal Income Tax Regulations (Regs.) are the OFFICIAL TREASURY DEPARTMENT INTERPRETATION of the Internal Revenue Code" [IRM § 4.10.7.2.3.1]
"Authority of the Regulations The Service IS BOUND BY THE REGULATIONS." [IRM § 4.10.7.2.3.4]

SUPREME COURT DECISIONS:

We are now at the final element of what is known as "evidence of the law." The Supreme Court is the ONLY court that has the power to change the laws passed by Congress. Most of the time, this is because Congress attempts to do something that the Constitution does not permit them to do. Supreme Court decisions that affect the tax law are ALREADY INCORPORATED into subsequent versions of the law so it is not necessary to read those decisions except as an academic exercise. In fact, there has been much confusion by people who have attempted to read and understand these decisions, because they are written using what is known as "dicta," (opinions of the judges that may NOT be part of the final conclusions) that makes their true LEGAL meaning difficult to ascertain.

JUDGES DO NOT MAKE OR INTERPRET STATUTORY LAW

As you can see from the above, the statutes and regulations COMPLETE the written law. This means that the reader can rely on the published law in nearly every circumstance; certainly the circumstances of the average American.

As shown above, decisions of courts BELOW the level of the Supreme Court do NOT change the law. Contrary to common "belief," judges do NOT decide what statutory law "means." Because of the regulations, there is almost never a reason for a judge to "interpret" statutory law. It is only on very rare occasion that the regulations are thrown out by a court, but the court had better have very good reasons why this is done because the regulations go through a very exacting process to make CERTAIN that they reflect the correct application of the law. The lawyers that write the law know the correct application of the law better than anyone; the problem is that (before the Internet), they have always been able to "work (HIDE) behind the scenes."

In other words, although not formally stated to be binding on the courts, as a practical matter the courts MUST defer to the regulations. Even the Supreme Court agrees that it is almost always the job of Treasury, and not the courts, to determine how the tax laws are to be administered:

"[We] do not sit as a committee of revision to perfect the administration of the tax laws. Congress has delegated to the Commissioner, not to the courts, the task of prescribing "all needful rules and regulations for the enforcement" of the Internal Revenue Code. 26 U.S.C. 7805 (a). In this area of limitless factual variations, "it is the province of Congress and the Commissioner, not the courts, to make the appropriate adjustments."... The role of the judiciary in cases of this sort begins and ends with assuring that the Commissioner's regulations fall within his authority to implement the congressional mandate in some reasonable manner." [ U.S. v. Correll, 389 U.S. 299 (1967)]

Statutory law must tell the reader exactly what it means. There is nothing "intuitive" about the law. This would be a disaster, because one person's intuition may not be the same as someone else. These fundamental properties of statutory law are critical to being able to "prove" that the law requires (or does not require) a person to do something. One must NEVER "assume" that the law applies to anything; one must let the law tell them what it means.

The significance of this simple rule cannot be overstated; most people have "assumed" (or been "told") that all incomes were taxed. But it was the inability to find the specific words that stated that the domestic incomes of U.S. citizens were taxed that raised the red flag that there was a deception. The specific words that would prove that the domestically earned incomes of U.S. citizens are taxed are MISSING from the law. And the absence of the word EVIDENCE in the law for over 80 years proves that most incomes have NEVER been taxed.

So the Internet has changed the standard of proof, particularly for the public. It is no longer adequate for a government official to "assert" that the law requires something. They must now show the exact words that create that requirement; that is, the WORDS of that are the EVIDENCE of what the law requires.

THE TIRES MEET THE ROAD IN THE REGULATIONS:

The tires meet the road in the regulations. In order for statutory law to be understood correctly, the statutes MUST be read IN THEIR ENTIRETY with the related regulations. If the law refers to other sections, then those sections MUST be read IN THEIR ENTIRETY to completely understand the correct application of the law. Therefore, to find out who owes taxes, the reader must consult:

1. The STATUTES found in Title 26 (Internal Revenue Code) of the United States Code.

2. The REGULATIONS found in Title 26 (Internal Revenue) of the Code of Federal Regulations.

The next topic to cover is the basic STRUCTURE of the DECEPTION in the law: BASIC STRUCTURE OF THE DECEPTION

(see www.861evidence.com for more)

you wrote:

"The real question is whether or not she has any tax liability. If the IRS can't show a law which proves that she has tax liability, then maybe she will win the final round. But I think that has been tried before, people saying that wages are not income, for example. But wages have been considered income all the way back to when the first income tax was collected, so there is alot of history and precedent here."

Read the case, bub, Ms. Kuglin didn't claim that wages are not income nor does a careful reading of the law say that "domestic income" of U.S. citizens is taxable. The law, not your untrue statement, has always said that.

The only history and precedent one can point to is the crooked irs regulation lawyers writing and, over many decades, renaming parts of the code so that the average citizen can't figure it out. On that, there's plenty of precedent and history.

Read and study www.861evidence.com if want to gain true understanding of the issue.

In essence, the law and associated regulations state that income is taxable IF AND ONLY IF you (1) live in a U.S. Possession (2) are a U.S. citizen but make your money OUTSIDE of the U.S. (3) your are a foreign alien working in the U.S. This is not a creative interpretation of the law, it is what the law has stated for over 80 years.


Treasury dept. lawyers have now moved Subchapter N, Section 861, thousands of pages away from where one would think it should be and they've renamed it "miscellaneous matters".

None of that is actually illegal, it's just grossly deceptive.

The income tax laws ARE valid and constitutional.

It is the gross misrepresentation and misapplication of the law by the feds and your elected officials that is the national fraud.

you wrote:

"The Seventeenth Amendment to the U.S. Constitution:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived. . ."

The word "source", buster, is the legal meaning, not the common use of the word. Same is true for the word "firearm". See what Larken Rose (www.taxableincome.net) says here --

"As a good example, 26 USC § 5841 states that “[t]he Secretary [of the Treasury] shall maintain a central registry of all firearms in the United States which are not in the possession or under the control of the United States.” The law has a far more limited application than this section by itself would seem to imply. In 26 USC § 5845(a) it is made clear that the term “firearm” in these sections does not include the majority of rifles and handguns (while the term “firearm” in basic English obviously would), but does include poison gas, silencers and land mines. The average citizen reading the law will naturally tend to assume that he already knows what the words in the law mean, and may have difficulty accepting that the legal meaning of the words used in the law may bear little or no resemblance to the meaning that those words have in common English. For example, reading the phrase “all firearms” in Section 5841 in a way that excludes most rifles and handguns is contrary to instinctive reading comprehension. (But any lawyer reviewing Sections 5841 and 5845 would confirm that such a reading would be absolutely correct.) Reading one section of the law without being aware of the legal definitions of the words being used can give an entirely incorrect impression about the application of the law."

And, if you can read a few more words of truth and understanding, from Dr. Tom Clayton at his www.861evidence.com site,

"The income tax is imposed on “income from whatever source derived” (minus deductions). The mere receipt of income, by itself, is not (and could not be) the subject of this excise tax. It is the “source” which is the subject of the tax, and the amount of income received from that “source” is what is used to determine the amount of tax due. So, in order for an "item" of income to be taxable, it must come from a taxable "source" (see below).

OVERVIEW OF STATUTES AND REGULATIONS:

The statutes passed by Congress are often written using "general" language, which makes it possible for the precise meaning and application of the law to be misunderstood. In order to make sure that the public understood the correct application of the law (before there could be any enforcement for failing to do what the law required) Congress authorized the executive branch agencies that enforce the law (such as the Treasury Department) to create regulations.

The process of writing the statutes and regulations is quite precise. These "related" regulations are "supposed" to give the public more detailed explanations of the statutes so that they understand the correct application of the law. And that is what most of them do, with some exceptions (when stealing with no basis in law is what is desired). For federal taxes, career lawyers write the regulations.

The income tax is imposed on the "taxable income" of individuals. What the law writers managed to conceal was that there are multiple steps in the law that the reader must take to find out IF their income becomes "taxable income" or not. Not knowing this, the reader did not know that:

In order for income to become "taxable income," it must be derived from a taxable "source."

Since they MUST state the truth, the law writers had three options:

Put the words that show the truth to the reader where nobody knows to look, or

Use words that are deliberately convoluted so that although they tell the truth it is almost impossible for the average reader to understand what the correct conclusions are.

Do both.

They did both. Although the linguistic "art" of deception in Section 861 and following is quite advanced in the current law, the final conclusions are the same as in earlier times. But historically, the sections of this part of the law were written in such a way that the truth was much easier to see and understand. The problem was that most people never saw the law. Over time, it became the near exclusive playground of highly paid "experts," instead of being a place where the public could easily see what the law did or did not require them to do.

The truth that the incomes of most Americans are not (and have never been) taxed under federal law was hidden in the regulations under Subchapter N, Section 861 and following, using convoluted words and terms not found in the statutes under a topic deliberately entitled, "miscellaneous matters." This virtually guaranteed that most readers would ignore, overlook, or misunderstand the correct application of this part of the law (if they ever got to see it, when most did not).

The current technically correctly written regulations under 26 CFR § 1.861-8 that show the limited scope of the tax that are critical to correctly understanding who has "taxable income" or not were expanded and made almost impossible to understand in 1978. Yet, they remain the FINAL STEP in correctly determining who has "taxable income" or not (therefore who may owe federal income taxes or not after allowable deductions).

For most Americans, Subchapter N, Section 861 is THE critical part of the income tax law, because this is where DOMESTIC income is treated. But as shown above, the hardest thing to see in the law is that which is NOT SPECIFICALLY POINTED OUT. The rules (regulations) beginning at 26 CFR § 1.861-8 tell the reader quite specifically WHEN domestic income is taxable and WHEN foreign income is taxable. What do those rules say?

The only situations in which DOMESTIC income is taxable is when FOREIGNERS receive the income because this is specifically mentioned in the law (1.861-8(f)(1)(iv)).


The only situations in which FOREIGN income is taxable (for individuals) is when U.S. citizens receive the income because this is specifically mentioned in the law (1.861-8(f)(1)(i)).


In other words, the ONLY U.S. citizens with "taxable income" are those who have certain types of income related to foreign and international commerce. Why? Because that is what the law specifically points out. This makes it clear why those rules do NOT show that the domestic incomes of U.S. citizens earned ONLY from within the 50 states (most incomes) are taxed because they are NOT mentioned in the law.

Since the law does not lie and the evidence will not go away, it is only a matter of time before the public understands the evidence in the law that proves that they have been deceived, which will alter forever how Americans view their government and its laws. The key to ending this deception is mass education of the public. Help us spread the word!"

it's truly amazing that the author of this news article, like most from the establishment press, refer to many Americans who simply want the government to "follow the law" as "tax protesters".

these same reporters could not sight the exact portion of the Code that shows where American citizens "who live and work in the U.S." are required to file and pay. and, so even though the feds have been politely asked in the past 4-5 years in thousands of letters to explain their legal position, we are just supposed to blindly follow their (illegal) directives, well, because the feds say so.

many Amercians are learning how the Code was so deceptively written by treasury dept lawyers, who to this day, will not explain their own Regulations.

it is the Regulations that show Americans who "live and work exclusively in the U.S." that their domestic income is NOT LISTED as one of the items used to determine one's taxable income -- if any. and, as any attorney should know, if the law doesn't specifically state it, it ain't to be considered part of the law!!

this is not the result of a poorly written law, but the extreme limits our Constitution put on Congress to tax. Congress did not and could not tax the incomes of most Americans. that would be considered a "direct tax" which the Constitution forbids!

if my state wants to tax me, fine. but the feds can only legally use "indirect taxes" on me. if i choose not to drive my car as often as i do, i could pay less gasoline taxes as a form of "indirect taxes". same on alcohol and tobacco "indirect taxes".

what incomes the feds can tax is (1) the incomes of people who live in American Possessions (2) resident foreign aliens (3) Americans who make their money outside the U.S. as in any foreign transactions. we might as well throw in the 12 million plus "illegal aliens" as those who pay (they don't file obviously).

the fed govt is so-oo-oo big, it's out of control.
many Americans feel it is their duty as citizens to cut the feds down to size and make them accountable to the laws on the books.

again, the domestic income of most Americans is simply not taxable by the law as it is written.

the deceptive treasury dept lawyers never must have never thought the internet would come around 8 decades after they wrote the Regulations -- which are to be treated the same as the statutes themselves.

the feds have continued the great deception on most American citizens.

this is what the Simkanin trial is (hopefully) bringing out.

if we are to be a country of written law and a constitution, may the truth win out!!

watch what you say/think.

read "farewell america: the plot to kill jfk"

the fbi banned this book for decades because it showed many corporate/political connections to jfk's assassination.

a read now may surprise you.

I'm glad you've at least identified yourelf as someone who makes money advising people on income tax matters.

For those who want to read it, here is Larken Rose's own words on this matter. The first "answer" you listed was definitely no IRS answer to one's using of Section 861 to determine his "taxable income". The second "answer" you listed was nothing more than an IRS presswire, which I assume you should know carries no legal weight whatsoever.

Here's Larken from a letter to IRS official Patrick Meehan on October 28, 2003. All of this is listed on his website, www.taxableincome.net

"My Position
Once again, I will state, for the record, the legal basis for my conclusions and my actions:

1) I believe that I should use the rules of 26 USC § 861(b) and 26 CFR § 1.861-8 to determine my taxable domestic income.

I believe this, because the government’s own law books say so. For example, the regulations at 26 CFR § 1.861-8, entitled “Computation of taxable income from sources within the United States and from other sources and activities,” begin by stating quite clearly that Sections 861(b) and 863(a) describe in general terms “how to determine taxable income of a taxpayer from sources within the United States” after domestic “gross income” has been determined. (It then states that 862(b) and 863(a) tell how to determine taxable foreign income.) This is explained in more detail at 26 CFR § 1.861-1, which says that 26 USC § 861(b) and 26 CFR § 1.861-8 (and sometimes 863 and its regulations) are to be used to determine one’s “taxable income from sources within the United States.” In addition, 26 CFR § 1.863-1(c) states that one’s taxable income “from sources within or without the United States” is to be determined under the rules of 26 CFR § 1.861-8 and following. (See also Treasury Decision 6258.)

---

To: Patrick L. Meehan (10/28/03)
From: Larken Rose
Page 3

Those citations are legally binding on me and the IRS. I am not at liberty to disregard them, even if I wanted to (and I do not want to). The IRS’ own law books require me to use those sections to determine my “taxable income from sources within the United States,” so I do.

2) I believe that my income, as a U.S. citizen living and working exclusively in the 50 states, is not taxable under 26 USC § 861(b) and 26 CFR § 1.861-8.

Again, I believe this because the government’s own law books prove it. While the general language of 26 USC § 861 merely describes what types of income are considered domestic income (“income from sources within the United States”), including domestic wages (which I receive), both the current regulations and over 80 years of predecessor statutes and regulations make it clear that such domestic income is taxable only when it derives from the specific types of commerce enumerated in what is now Subchapter N of the Internal Revenue Code. For example, Section 217 of the Revenue Act of 1921 (statutory predecessor of Section 861) obviously meant that those types of domestic income (including domestic wages) were taxable for nonresident aliens, and for certain Americans who received most of their income from federal possessions (such as Guam or Puerto Rico). Section 217 was obviously not saying that such income was taxable for all U.S. citizens. After 1928, when Section 217 became Section 119, and no longer mentioned those specific types of commerce, the related regulations continued to show that domestic income (including domestic wages) was still only taxable when received by those engaged in certain types of commerce (e.g. foreigners doing business in the U.S., or Americans doing business in federal possessions). See sections 29.119-1, 29.119-2, 29.119-9, 29.119-10 from “Regulations 111” (1945).

The current regulations, while unnecessarily complex and convoluted (by design), still show that one can only have “taxable income from sources within the United States” if he has a “statutory grouping” of gross income, meaning income from one of the specific types of commerce described in the “operative sections” throughout Subchapter N. (See 26 CFR §§ 1.861-8(a)(1), 1.861-8(a)(4), 1.861-8(f)(1).) Those “specific sources or activities” which generate taxable “statutory groupings” of gross income include certain foreign income of U.S. citizens (1.861-8(f)(1)(i)), U.S.-source income of nonresident aliens and foreign corporations (1.861-8(f)(1)(iv)), income related to federal possessions (1.861-8(f)(1)(vi)), and several other international or foreign matters. However, in keeping with 80 years of predecessor statutes and regulations, the list does not include the income that the average U.S. citizen receives from working within the 50 states (e.g. the income my wife and I receive).

If there is a particular portion of the law that describes when domestic income is taxable, and that portion of the law does not show my domestic income to be taxable, is it not reasonable for me to conclude that my income is not taxable? According to Black’s Law Dictionary (6th Edition), the doctrine of “inclusio unius est exclusio alterius” dictates that “where law expressly describes a particular situation to which it shall apply, an irrefutable inference must be drawn that what is omitted or excluded was intended to be omitted or excluded.” The Supreme Court also says that when reading tax laws, we are not to assume the tax applies to matters “not specifically pointed out” (Gould v. Gould, 245 U.S. 151 (1917)). So, as instructed, I assume that the law specifies what it applies to, and applies to nothing other than what is specified. I therefore must conclude that my income is not subject to the federal income tax. (As you know, “conventional wisdom” does not impose legal requirements; only the law itself does. If the law itself does not tax my income, “conventional wisdom” is irrelevant.)

---

To: Patrick L. Meehan (10/28/03)
From: Larken Rose
Page 4

In addition to the explanation above, there is yet another, independent way, using the government’s own law books, of proving that my income is not subject to the tax:

3) It is my belief that the “items” of income listed in the general statutory definition of “gross income” are not always taxable, but are sometimes excluded from tax.

The income tax statutes have always included a very broad general definition of “gross income” (e.g. 26 USC § 61) which lists the more common “items” of income which may be taxable, such as compensation, business income, interest, rents, royalties, etc. However, in addition to some income being specifically exempted by statute, the older regulations defining “gross income” made it plain that other types of income were also excluded from tax (notwithstanding the broad general definitions) because those types of income were, “under the Constitution, not taxable by the federal government” (26 CFR § 39.22(b)-1 (1956)). The older regulations defining “net income” (now “taxable income”) also said that income exempted by statute or by “fundamental law” (the Constitution) was exempt from tax, and “should not be included in the return of income” (Treasury Decision 3640).

Current law proves the same thing. Again, 26 USC § 61 gives a very broad general definition of “gross income,” and lists some common “items” of income (compensation, interest, dividends, etc.). The regulations state that those “items” make up “classes of gross income” (26 CFR § 1.861-8(a)(3)), and that such “classes of gross income” are not always taxable, but are in some cases excluded for federal income tax purposes (26 CFR § 1.861-8(b)(1)).

(Many other citations show that it is a mistake to rely only on the general definitions of “gross income” and “taxable income” (26 USC §§ 61, 63) to determine what is taxable. For example, under “gross income,” “deductions,” and “taxable income,” the indexes of the United States Code contain entries directing the reader to Section 861 regarding income from sources within the United States. Similarly, in the USCS printing of the Code, and in the USC and USCA printings up until 2001, cross-references under Section 61 refer to Section 861 regarding “Income from sources within the United States.” This is probably based on Section 22(g) of the 1939 Code, where, under the section generally defining “gross income,” the reader was referred to Section 119 (predecessor of the current 861 and following) regarding “Computation of gross income from sources within and without the United States.”)

4) It is my belief that the income tax laws, past and present, describe the types of commerce from which the “items” of income must derive in order to be taxable, and that the taxable types of commerce all relate in some way to international trade.

In addition to saying that some income was exempt from tax due to the Constitution itself, the older regulations defining “gross income” clearly said that income which U.S. citizens receive from foreign commerce “must be included in their gross income” (e.g. 26 CFR § 39.22(a)-1 (1956)). (This is in keeping with Peck v. Lowe (247 U.S. 165 (1918)), which stated that Congress could “undoubtedly” impose an income tax on the foreign income of Americans.) Those regulations also mentioned income which certain foreigners receive from doing business in the U.S., and the income of people doing business in federal possessions, but they did not mention the domestic income of the average U.S. citizen.

---

To: Patrick L. Meehan (10/28/03)
From: Larken Rose
Page 5

The current regulations agree. After saying that the “items” of income listed in Section 61 are not always taxable, they direct the reader to 26 CFR § 1.861-8T(d)(2), which gives a list of those types of commerce, income from which is not exempt (i.e. which is taxable). Again, that list includes certain foreign income of U.S. citizens, the domestic income of certain foreigners, and certain income of international sales corporations and possessions corporations. Again, conspicuously absent from the list is the domestic income of the average American. (Interestingly, even the instruction booklet for the Form 1040 says that if you are a U.S. citizen, you must report income you receive from outside of the United States, but does not say the same about a citizen’s domestic income.)

Again, under the principles mentioned above, if the regulations state that the “items” of income are sometimes excluded, and then give a list of the types of commerce, income from which is not excluded (i.e. income from which is taxable), one should not assume that the tax covers matters “not specifically pointed out.” On the contrary, an “irrefutable inference must be drawn” that what is not listed is exempt. Because the regulations (past and present) specifically state that income from certain international and foreign commerce must be included as taxable “gross income,” but do not say the same of purely domestic income, it follows that when income derives from purely domestic commerce, it is not subject to the tax.

(Again, points 3 and 4 independently prove the same thing that points 1 and 2 prove.)

Numerous additional citations support my conclusions, some of which are addressed in the enclosed video. For brevity I did not include all such citations here, but they can be found in my “Taxable Income” report, which can be downloaded at http://www.taxableincome.net.

Government Response
Many in government, probably including yourself, would like me to change my mind, and decide that my income is taxable after all. So what has the government presented that would give me (or anyone else) any reason at all to doubt the above conclusions?

1) In between insults and veiled threats, several government form letters, which the IRS admits carry no legal weight, briefly touch on Section 861, mainly mischaracterizing the issue, often making accurate but misleading statements (such as saying that the “source rules” in 861 and 862 do not exclude the domestic income of Americans), while carefully avoiding addressing the specifics (such as the enclosed questions). Should a legally worthless form letter that evades the issue have convinced me that my conclusions are incorrect?

2) Various IRS and DOJ “press releases” (which also carry no legal authority) have slandered, insulted, and accused anyone who brings up the issue as being a “tax cheater,” a “scam artist,” or a “tax protestor,” and warned of possible civil or criminal penalties (all while avoiding the substance of the issue, of course). Should someone calling me names and threatening me have convinced me that my conclusions are incorrect?

3) The IRS and DOJ have celebrated the fact that they have (by grossly misapplying 26 USC § 6700) silenced several groups and individuals via court injunctions from talking about this issue. Again, the substance of the issue was usually evaded, and often in their haste to silence those individuals, both the DOJ and the presiding judges made provably false claims about the law. Should blatant censorship have convinced me that my conclusions are incorrect?

---

To: Patrick L. Meehan (10/28/03)
From: Larken Rose
Page 6

4) The “Tax Court” (a glorified administrative board, whose “rulings” are not binding on the public, the IRS, or any real court) has repeatedly insulted and fined anyone who brings up the issue there. Such “rulings” always evade the specifics of the issue, and make numerous provably false assertions. Should non-binding assertions, or efforts to fine someone for mentioning a certain section of law, have convinced me that my conclusions are incorrect?

5) When over one hundred letters were sent to Barbara Felker, an IRS attorney specializing in Section 861 and its regulations; when over one hundred letters were sent to Jim South, one of the IRS employees orchestrating the IRS’ nationwide response to those who mention 861; when over one hundred letters were sent to Congressmen across the country, with copies to Charles Rossotti, former IRS Commissioner; when over six hundred letters were sent to Pam Olson, Assistant Secretary of the Treasury (Tax Policy); when well over one thousand letters were sent to Mark Everson, IRS Commissioner, and well over one thousand letters were sent to John Snow, Secretary of the Treasury, all asking a few specific questions (much like those enclosed) about how to properly determine one’s taxable income, none of those people answered any of the questions. Is that why I should doubt my conclusions?

Or maybe it was because the local IRS employees admitted to being unfamiliar with the citations I showed them, and admitted that they were not sure of their own position on the specifics. Or maybe I should have changed my mind after watching (in person) half a dozen other IRS employees at different offices fumbling around, unable to decide what their own position was. The entire IRS, top to bottom, for over five years, has adamantly refused to even decide whether I should be referring to Section 861 and its regulations or not.

Has it never occurred to anyone in government that maybe they should just provide me with legally-binding citations of law which disprove my conclusions? The problem is that they cannot do it, because my conclusions are correct, and the law agrees with me. That is why, instead of behaving like law administrators and enforcers, they behave like extortionists, constantly resorting to harassment, insults, threats, censorship, persecution, and terrorism of anyone who mentions this issue. If you really wish to change my mind, you will need to use evidence and logic. Terrorism is not going to do it.

Regarding the Grand Jury

In keeping with the government’s shady tactics, I suspect that your pitch to any grand jury will omit a lot of “inconvenient” evidence about what I have been doing and saying. You can probably “spin” your way into getting a grand jury indictment, especially if they never hear from me. (I hear it is quite easy to have just about anyone indicted for just about anything.)

I hereby request that the enclosed copy of this letter, and one of the two enclosed copies of my “Theft By Deception” video, be given to the grand jury (if any) currently investigating this matter. If there is a pending grand jury investigation, I also hereby request an opportunity to testify in person before that grand jury as soon as possible.

---

To: Patrick L. Meehan (10/28/03)
From: Larken Rose
Page 7

When someone does exactly what the government’s own law books require him to do, and is completely open and public about his actions and the reasons for those actions, do you really think the proper response is to send armed agents to invade his home, and to secretly “investigate” him, as a first step towards possibly trying to put him in prison? You think the way to prove me wrong is not by honestly addressing the issue (which the entire government seems scared to death of doing), but by trying to have me thrown in jail for believing what I see with my own eyes? I simply cannot comprehend a sane person, particularly an American, thinking that way. But if being put on trial is what I have to go through to publicly expose this monumental fraud, then that is what I will do. To choose any other path would be to betray my family, my country, and the truth, and that is something I will not do.

As for what other people think, I know several thousand people who would like to know the truth, but who do not want federal storm-troopers terrorizing them. So, just to make sure that they are obeying the law, and doing what Patrick Meehan, U.S. Attorney thinks they should be doing (lest they incur your wrath), I am suggesting to them that they all ask you the questions about how they should determine what they owe. If you are qualified to “investigate” and prosecute people for breaking the law, then surely you must be able to tell people how to obey the law (i.e. how to determine their taxable income).

So, Mr. Meehan, are you someone who enforces the law, or are you just a hired thug? Your response (or lack of response) will soon answer that. If you do not understand how the tax laws work, you have no business trying to enforce them. With that in mind, I hereby request that you provide me with direct, written answers to the enclosed six questions concerning the proper way to determine my taxable domestic income.

Sincerely,

_____________________________________
Larken Rose
[Address redacted]"

hmm, it's only my opinion, but guys that quote www.quatloos.com act like their either tax lawyers or tax accountants trying to justify their incomes -- or, if not indirectly connected through their incomes, they're connected directly to the irs.

i've read the website. and the arguments follow very closely what the "conventional wisdom" tax lawyer types put out. the people that write on that site only put out warnings, day and night, night and day, that someone will be fined, jailed, etc. by the god-almighty irs even if they seek questions.

forget having irs public meetings to discuss and answer such questions that the public may have. no. no, that's not needed when threats, fines, jail work better.

if all the stuff used on www.quatloos.com was true to the written law, how come the irs doesn't use any of it in it's
answers to the public.

if fact, the people at www.quatloos.com probably like the idea that the irs is not being accountable to the American people.

sorry, i'm suspicious of anyone who quotes from www.quatloos.com as many of you are suspicious of larken rose.

but, then, i've talked to larken on many occasions, and i know a lot more about who he is, whether he's right or wrong. i don't know a damn thing about you guys, and like i said, i'm supicious of anyone quoting from www.quatloos.com

ok, since you won't view the video or read the website, i'll include larken rose's opening comments. be sure to read all seven points. and, i'm sure you'll disagree.

also, you haven't commented on why the irs simply won't answer basic questions. the government is us, so what gives?

here's larken --

"Conventional wisdom," even when provably incorrect, is a very powerful thing. People often find it uncomfortable to question things they have always taken for granted. The sky is blue; one plus two equals three; and most Americans owe federal income taxes. Everyone knows that.

Contrary to what "everyone knows," the truth of the matter is this: Congress could not, and did not, impose a tax on the income of most Americans, because of the strict limits on federal power imposed by the Constitution. Instead, they imposed a far more limited income tax, applicable primarily to income from certain types of international and foreign commerce, but wrote the law in such a way that it could easily be misinterpreted. The law itself is perfectly valid and constitutional; it is simply being misrepresented and misapplied by the tax professionals and government officials. As a result, tens of millions of Americans now make payments to the IRS based on the false assumption that they are just paying "their taxes." In reality they are being defrauded via the myth that the income of most Americans is taxable.

Of course such a claim at first sounds absurd, but the evidence does not lie. Here is a very brief summary of the issue:

1) The federal income tax is imposed upon "taxable income" (not all income).

2) "Taxable income" generally means "gross income" minus deductions.

3) "Gross income" is generally defined as "all income from whatever source derived," including compensation, interest, rents, dividends, etc.

Up to this point, the tax professionals agree. It is what comes next that they are either unaware of, or unwilling to accept when they see it in plain English in the law books.

4) Certain sections of the law specifically describe in which situations income from inside the United States is taxable.

5) While those sections show income to be taxable when it derives from certain kinds of international and foreign commerce, they do not show the income of United States citizens living and working only in the 50 states to be taxable.

Amazingly, points 4 and 5 above are specifically and repeatedly stated in the federal income tax regulations, yet most tax professionals simply refuse to believe it. As if that were not bad enough, there is yet another, completely independent way that the regulations prove the truth.

6) The regulations show that the types of income listed in the general definition of "gross income" (such as compensation, interest, rent, etc.) are in some situations excluded for federal income tax purposes.

7) The income tax regulations give a specific list of those types of income which are not exempt (i.e. which are taxable), and while that list includes income derived from certain types of international and foreign commerce, the income of the average American is not listed as being non-exempt (i.e., taxable).

look, i'm not a lawyer, just a hard working citizen. but i do know how to read.

if you want a free copy of larken rose's taxableincome report, you can download it at www.taxableincome.net

if you want me to send you the $20 video (if you promise to watch it), i will. it may answer your questions about why MOST people have overlooked Subchapter N, which is where one should look for how to determine one's taxable income.

once again, the tax code Title 26 is designed to be as confusing as possible. much legalese has been added over the years to really confuse and baffle citizens who try to read the law for themselves. the truth is still there, but the lawyers have played such a game with the code and regulations with the renaming and moving of sections so that they can say (maybe to themselves), "the truth is there. you out there just have to figure it out."

and now thanks to the internet, many have helped tremendously with the research that's been done to -- not find a loophole -- but figure out what the words of the law actually say.

curiously, even the feds own printing of the regulaitons on the internet conveniently leaves off parts of the table of contents where in the original written regs it says, "determination of income within the U.S."

curious, curious. oh gee, it must have just been an internet file printing problem by the feds, right?

and, don't forget that virtually all of our elected Congress do not read the laws they are passing. they just take their political bosse's queue as to how to vote. same with the income tax laws. if you write any of them and ask the basic questions, ALL you will get is a form letter back treating you like you are a criminal. same with the irs, treas dept, doj.

you wrote in response:

"Sorry, but the law disagrees with you."

first, most Americans know that life insurance benefits and monetary gifts up to certain amounts are not taxable.

so for people to say "all income is taxable for all Americans" -- this has no basis in law at all.

if you could point to the citation that backs up your claim that the tax court uses the law when they rule against an American citizen who's only income is domestically generated, i might start thinking your way. however, the irs does not want anyone even looking at section 861 and it's associated regulations (even though the law has repeatedly told people to look in section 861). because the law does not list the income of American citizens who "live and work in the U.S.", and the irs, treas dept., doj won't even answer anyone who even asks the simple question, "is this where i look to determine my taxable income?" -- what is that all about?? what the hell are they hiding? can't they just answer by saying, "if you live and work in the U.S., you need to be looking . . .here. . ."

but they don't, because there ain't anywhere in the written law that they can point to!

again, i ask, are we a nation of laws?

isn't it convenient that the irs code is over 15,000 confusing pages ("by design" no doubt) and they've moved sections around (especially the 861 sections), the irs lawyers renamed sections to confuse anyone trying to read the law, and then they won't answer the most basic questions about where to look to determine one's taxable income.

the regulations are actually written by treas dept lawyers and the history of the 861 regulations show nothing has changed over the last 80 years to change their meaning. so, the regulations are there to say "in plain language" what the law means. so, if they change section names and move stuff a thousand pages away from where it should be, but the law doe not change in meaning at all, isn't that one of the biggest deceptions out there?? is this "by design"?

SHOULDN'T AMERICAN CITIZENS BE OUTRAGED?

isn't the misrepresentation and misapplication of the income tax law the basis for our federal government being "way too big, bloated, wasteful and out of control???

in 1916, the Supreme Court in the Gould vs. Gould case, and particularly in reference to tax laws, said, "if something isn't listed in the law, you cannot assume that it's supposed to be in the law".

so, if the domestic income of U.S. citizens is NOT LISTED in the law and associated regulations as something that's taxable, why should anyone who takes the time to read the law assume that it is? and why oh why can't the irs, treas dept, doj answer the simple questions?? and, if you simply ask them the four questions below, you're gonna be treated like a tax protester or a lawbreaker.

what happened to that friendly irs mission statement printed inside the 1040 booklets? i guess that must be bogus lies too.

and are far as voting in those who will reform or repeal the system, what politician is gonna want to give up his/her power of not wanting all that income tax money coming in? hell, they can't even clean up campaign finance reform. do prisoners ever reform the jail?

if you want a list of specific questions to ponder (that the irs and treas dept and doj and your elected policitians WILL NOT answer), give this a look. if you try h&r block or your local tax accountant, be prepared for them to say, ""don’t waste time looking into that stuff; it’s all nonsense." their income, careers, and reputations ALL DEPEND upon the PRESERVATION of "conventional wisdom" concerning the income tax. most are literally psychologically incapable of even considering the possibility that their assumptions are legally incorrect. it is amazing to watch how some of these so-called "experts" respond when they are faced with what the income tax statutes and regulations actually say. (i know, 'cause i've done it.)

look, i'll dare you to read and study the law and then post your answers to the following. and also ask your local tax expert to supply answers while your'e at it.

1) Who should and who (if anyone) should not use the rules in 26 USC §861(b) and the related regulations beginning at 26 CFR § 1.861-8 (in addition to any other pertinent sections) to determine his taxable domestic income?

2) If a U.S. citizen lives and works exclusively within the 50 states, and receives all of his income from within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show such income to be taxable?

3) Should one refer to 26 CFR § 1.861-8T(d)(2) to determine whether the “items” of income he receives (e.g. compensation, interest, rents) are excluded for federal income tax purposes?

4) What is the purpose of the list of non-exempt income in 26 CFR §1.861-8T(d)(2)(iii), and why is the domestic income of the average American not on that list?

you're right in that tax court is a corrupt fixed cesspool with no jury and one judge to determine such matters.

no tax court judge will read or follow the law and just fine folks with the bogus "frivilous" penalty.

"frivilous" means in this case "with no legal basis". so, it's the tax court with judges (who are nothing more than ex-irs employees or politically connected hack lawyers) that use "frivilous" arguments.

educate the masses, use the video, and the people can change this morally corrupt tax system by demanding our appointed fed officials and our elected officials follow the law.

what will happen when zillions of people find out that the irs, doj, treasury dept. and of course the crooked politicians aren't following the law or their own regulations!

we are supposed to be a nation of laws and a constitution, right?

go to www.theft-by-deception pay a low $20 to learn what you and most American citizens who "live and work exclusively in the U.S." don't know -- the income tax laws and regulations DON'T APPLY.

If you're a legal alien, make money in a U.S. possession, make money in foreign transactions, you must file and pay.
hell, if your one of the millions of illegal aliens, you have to pay!

But as the $20 video so clearly points out, the law and the associated regulations do not include the income of most Americans (unless you fall into one of the catagories above).

The 120,00 plus irs employees are both ignorant of the law and the irs cheifs are working in conjunction with the doj and our crooked politicians to keep their multi trillion dollar heist coming in.

there will never be a so-called national "flat tax" without a constitutional amendment. and that may just expose how the feds have been misrepresenting and misapplying the laws on the books!

the words of the law and the associated regulations mean what they say. so pay your $20 and teach yourself how to read the law. you might just walk away with a different opinion of your federal government.

". . .He is seeking unspecified damages from Ashcroft, the Department of Justice, the FBI and other current and former FBI and Justice officials. . ."


my granny had a real nack of getting a "certain feeling" about someone and she was proved right many times -- according to my parents. she could pick out a bully or a scoundrel from a distance.

i have similar feelings towards ashcroft, louie freeh (ex clinton aide blumenthal charged that former fbi director louis freeh "has a lot of responsibility to bear" for leaving America vulnerable to the 9/11 attacks.)and current fbi director mueller. all of them conveniently offer alibi's for each other in many of America's news dramas, where a careful reading of the Constitution might prove them all to be bastard scoundrels.

i thought i gave them all ample time and opportunity to prove their ethics and morality in their jobs.

with ashcroft, i'm afraid my local library might be forced to give a wandering fbi agent a list of books i've checked out just because they now can, and, i wrote a letter to ashcroft earlier this year asking him to uphold the oath of his office and our Constitution. And all this is thanks to the hastily passed patriot act which ashcroft is charged to enforce.

check www.theft-by-deception and read larken rose's letter to john ashcroft for a real eye opener!!

apparently the voters in missouri knew a lot more than bush even wanted to know! maybe it's just bush's new version of "don't ask, don't tell".

hatfill should sue the doj and fbi 'til the cows come home and get his reputation's money's worth.

you wrote:

>The courts have ruled repeatedly that wages are subject to income tax.

The courts do not determine what the law is, and we are a nation supposedly under our Constitution and under the laws AS WRITTEN.

It's a national surprise to most Americans that the Internal Revenue Code and associated regulations have consistently shown that for an American citizen who "lives and works exclusively within the United States", that person does not have to file or pay "income taxes"!

The history of the Code and the associated regulations have remained consistently true for the past eight decades.


Crooked and deceptive Treasury Dept. lawyers just hid the truth of the Code by moving sections around and adding so much legalese that the average citizen can't read the law and figure it out themselves. The truth is still there though and the truth has been re-discovered in the past 5-6 years, and, with the internet leveling the playing field, many Americans are seeing how they have been victims of irs mis-representation and mis-application of the written Code.

The Code was deceptively designed that way so you couldn't figure out what the law says.

It is this GROSS misrepresentation and mis-application of the law for the irs and politicians who love to spend our money that DOES NOT legally belong to them, as well as tax attorneys, H&R Block, and apparently cpa's like you who make a fat, fat income from all the filing of "income tax" forms for Americans who "live and work exclusively within the U.S.". Once people know the truth of the law, why would they ever need your services again, unless they own a corporation?

Asking a typical cpa about the "income tax" Code and what part of the Code one should look at to determine his "taxable income" is almost as bad as asking a barber if one needs a haircut.

If your cpa license is worth more than toilet paper, please give the audience here a detailed response to the following four questions.

I dare you to show what you really know on this subject.

Any non-specific answers to any of these four questions don't qualify for anything but a show of your ignorance of the internal revenue Code and this national fraud.


1) Who should and who (if anyone) should not use the rules in 26 USC §861(b) and the related regulations beginning at 26 CFR § 1.861-8 (in addition to any other pertinent sections) to determine his taxable domestic income?

2) If a U.S. citizen lives and works exclusively within the 50 states, and receives all of his income from within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show such income to be taxable?

3) Should one refer to 26 CFR § 1.861-8T(d)(2) to determine whether the “items” of income he receives (e.g. compensation, interest, rents) are excluded for federal income tax purposes?

4) What is the purpose of the list of non-exempt income in 26 CFR §1.861-8T(d)(2)(iii), and why is the domestic income of the average American not on that list?

>Ms. Kuglin, are you aware that the U.S. government taxes individual income?


hey, 1rudeboy, i want to determine my taxable income, if any, for the money i've received by living and working exclusively in the the U.S.. what exact sections of the irs Code do i use to figure my tax liability??

don't throw out the stupid answer, "the entire irs Code book", 'cause that fully exposes your DUMB ignorance.

the correct answer can be determined by answering the four questions listed below, questions the irs won't give you answers to -- answers which American citizens certainly deserve correct answers to given (1) the irs Code as written, (2) the oath of office the irs employees take, and (3) the mission statement of the irs itself.

you might as well throw our Constitution in the garbage, because the feds/irs ain't using it here on income taxes!

imagine that, a citizen wants to determine his or her tax liability, and the irs won't tell them what exact part of the law and associated regulations to look at!!

yeh, 1rudeboy, the government "taxes individual income", but the law and associated regulations truthfully show that those who "live and work exclusively in the U.S." don't have to file or pay! the law shows, and only shows, that those who are legal (or illegal) aliens, those who derive income from working outside the U.S, those who make income from foreign sources or those who work in a U.S. possession like Puerto Rico or Guam -- these people, and these people ONLY, are liable for filing and paying the "income tax"..

then, and only then, do the legal and Constitutionally written irs Codes apply and those people listed above have to "file and pay".

so what's been going on here in the U.S. for decades is the irs has been MISREPRESENTNG and MISAPPLYING the LEGAL laws that are already "on the books".

without being liable for an "income tax" (if you live and work exclusively in the U.S.), can you imagine having an extra 25% or more of income every year?? would you purchase more cars, housing, washers/dryers, clothing, books, food, entertainment, travel, etc.?? how 'bout investing some more of that extra money in the stock market so companies could expand their products and services and thus create American jobs?!!

hmm, NOT COLLECTING that ILLEGAL "income tax" from most of us sounds better and better for this country all the time!! just don't ask you local politician! they will squack loudly and warn of national disasters happening every five minutes if they can't continue to spend your "income tax" dollars. they can't breathe or live a day without collecting money from special interest groups AND spending your money!

the joke is, the fed government doesn't even need our "income tax" dollars! between motor fuel taxes, telephone taxes, electric taxes, natural gas taxes, excise taxes, the "income tax" just allow them to more totally control your pocketbook, control every small nuance of your financial life, and then spend, spend, spend their illegal heist on the goofy prgrams they spend it on.

i.e., the fed dept of Education has done a marvelous job on raising the reading and math skills of students nationwide, now haven't they?!? (cough, cough, choke) hey, maybe people are now smart enough to read hillary's book?! so, do we really need to spend hard earned "tax" dollars on an overblown, unaccountable, inept fed dept of Education??

how 'bout the three BILLION the feds sent to Haiti in the past ten years?!? has it done a marvelous job at helping the poverty of "the people" of Haiti?? and certainly not a dollar of the $3 BILLION went to the dictator and his corrupt henchmen now did it?!?

can you think of any other goofy fed spending, possibly with your "income tax" dollars??

wouldn't this country be much better off if the fed govt was much smaller in size and more accountable for the legal taxes they can "legally" collect?

if so, then have the feds follow the law as written and they will become smaller like the Founding Fathers envisioned!!!!!

learn the issues and the law as written, contact your representatives in small groups and demand answers and accountability.

what the feds/irs do with collecting the "income tax" from most Americans is more than 180 degrees in the opposite direction that our Founding Fathers dreamed of for this country.

to make "income taxes" legal for the irs to collect from American citizens who "live and work exclusively in the U.S.", a Constitutional Amendment would have to be passed.

any pol who talks the silly talk of replacing the irs with a "natinal sales tax" WITHOUT the mention of a Constitutional Amendment being required, that pol is ignorant of the law and pulling your leg and putting the Chinese wool over your head!! and that's why "national sales tax" won't happen either. same with the "flat tax" BS talk.

and through that timely procedure of creating a Constitutional Amendment, many citizens might find that the irs has been illegally collecting "income taxes" from most Americans. whoa, that might just create a big problem now wouldn't it!! so, the irs/feds just say " let's just keep things as is".

try reading the U.S. Constitution and find out for yourself.

because the deceptive and crooked treas dept lawyers made it possible to hide the truth for the past 8 decades by moving sections of law around and adding so much damn legalese, that the average citizen who tries to figure it out, can't.

virtually all irs employees are not shown the law, they are just told to "do things this way, and don't ask any questions". they somehow have confused anyone who simply asks the irs any questions of the law as written, and then considers them as "tax protesters".

don't count on h&r block to show you, they don't keep a copy of the irs code book in any of their offices!! but, they will give you the big invoice for their services after "doing things the way they are told".

try it and find out for yourself.

don't count on your elected reprentatives to show you, because they are very ignorant of the law and would rather worry about spending your "income tax" dollars and furthering their careers. they will send you a form letter if you write them and they will treat you like a "tax protester" if you simply ask for clarification of the irs Code as it's written!!

try it and find out for yourself.

don't count on most tax lawyers and tax accountants to answer the following four questions about the irs Code, answers that are necessary to determine one's taxable liability. these people are mostly very ignorant of the law itself and make a VERY good income doing your taxes. they'll just sluff the serious topic off and say, "oh, that doesn't apply to you. you shouldn't even be looking there unless you want to end up getting fined and/or sent to jail." and, anyway, why would they be interested in giving up all that income??

try it and find out for yourself.

here's the four questions that the irs CAN'T ANSWER (because you're probably talking to someone who's ignorant about the law as written) or WON'T ANSWER(same ignorance, or wants to hide the truth).

try it and find out for yourself, 1rudeboy.


1) Who should and who (if anyone) should not use the rules in 26 USC §
861(b) and the related regulations beginning at 26 CFR § 1.861-8 (in
addition to any other pertinent sections) to determine his taxable domestic income?

2) If a U.S. citizen lives and works exclusively within the 50 states, and receives all of his income from within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show such income to be taxable?

3) Should one refer to 26 CFR § 1.861-8T(d)(2) to determine whether the
“items” of income he receives (e.g. compensation, interest, rents) are
excluded for federal income tax purposes?

4) What is the purpose of the list of non-exempt income in 26 CFR §
1.861-8T(d)(2)(iii), and why is the domestic income of the average American
not on that list?

The internet has finally leveled the playing field and for all those who have studied diligently the irs code book and the associated regulations, like Ms. Kuglin and her attorneys undoubtedly have, they have uncovered the truth.

Ms. Kuglin's case shows the collecting of "income taxes" from most Americans is the fraud of all frauds!!!!


If you like, try www.theft-by-deception.com if you want a truthful, clear, easy-to-follow, legal and colorful video presentation of how irs crooked lawyers have twisted the law and hidden the truth of the matter. And I've got nothing to to gain at all by recommending this other than a bunch more citizens can gain some important insight into this issue.

Actually, the irs "income tax" code book and associated regulations as written are completely VALID and CONSTITUTIONAL!

So you might be saying, "what's your beef here then?"

Forget all the tax protester theories you may have heard about "wages are not income", the 16th Amendment wasn't ratified correctly, issues about being a member of a "sovereign state", that stuff's WAY off the mark!

(read on if you want the big secret revealed!)

IMO, the "system" has grown to become as corrupt as a clinton $3 bill! And that's a "his" or "her" $3 bill!!

In order to fool everyone, including most irs employees, the "system" devised a jungle of legalese that hides the truth. The "income tax" law still shows us the truth (with careful study), the irs and treas dept. talking heads, and many in the fed govt, including your and my representatives, have allowed the "system" to cheat us citizens, fine us citizens, send us to jail, punishes us citizens for crimes we unknowingly didn't commit!!

The irs commissioner and past commissioners should be jailed for grossly misrepresenting and misapplying the irs code which is the law!!

The simple truth of the existing irs codes has finally been uncovered and it CLEARLY and UNDOUBTEDLY shows that for U.S. citizens who live and work exclusively within the U.S., THERE AIN'T NO DAMN LAW OF ANY SORT that says we have to pay "income taxes".

HOWEVER, if you're a legal (or illegal) alien, have a job outside the U.S. (which includes U.S. territories), have a job where you earn part within the U.S. and part outside the U.S., you have to follow the irs codes, no doubt. That's how the code and it's associated regulations are written.

BUT, again, if you live and work exclusivley within the U.S., you have to do nothing as far as filing and paying.

The internet has finally leveled the playing field and for all those who have studied the law and the associated regulations diligently in the past really dozen years or so, those who believe this country need to start following the laws AS WRITTEN, and that starts with the irs itself.

It's the fraud of all frauds!!!!

I'm watching Hannity and Colmes and Greta tonight to see how they cover this milestone story.



p.s. don't ask your tax accountant or tax lawyer for the truth on this, as most simply don't know, and the very few that do may not tell you the whole story here. (Some HAVE been extremely helpful in shining the light on this national fraud, which also includes ex-irs agents). Most tax people have been making a fat living off of the ignorance of themselves and their clients!!

The theft-by-deception video would be a great "gift" for your tax adviser -- just don't trust his or her response unless they can show you the actual law about people who live and work exclusivley within the U.S.!!!!!!!!!!!!!!!!

national retail sales tax ideas don't live up to the steep limits the U.S. Constitution puts on Congress to collect such a tax. same with the flat tax some pols like to talk up. the pols must be dumb and dumber, or totally deceptive with such banter. treasury dept lawyers who specialize in section 861 of the irs regulations know better and that's why you ain't never gonna see any of this.

in fact, treasury dept lawyers who know section 861, know deep down that most Americans whose income is domestic only, the irs code doesn't apply!! only if there is foreign income, part foreign and part domestic income, you are a legal (or for that matter, illegal) alien, or you live in a self-governing commonwealth like puerto rico, do American citizens owe ANY federal income tax.

again, the treasury dept's own irs laywers, especially the ones that specialize in irs code section 861, know the truth, and they should be held to the ethical, moral and legal requirements of their legal profession to tell American citizens the truth. but they remain silent, having millions of citizens pay into something the LAW says they don't owe! and the associated regulations were written by the treasury dept.'s own lawyers and have remained truthful for over 80 years -- even though much, much legalese has been used to hide the truth -- it's still there -- it is the law!!

you can write the following treasury dept lawyer who does specialize in section 861 at --

Barbara Felker, Chief, Branch 3
Office of Associate Chief Counsel (International)
1111 Constitution Avenue NW
CC:INTL:B03/Rm 4555
Washington, DC 20224

ask her these four questions and make sure you sent it certified so she can't claim to have not received it. even though in the irs mission statement they are to (my paraphrase) "help Americans understand the tax laws", she remains completely slient on this crucial issue. she knows the truth and won't live up to her oath of office.

here's the four essentials every citizen has a right to know the irs answers to --

1) Who should and who (if anyone) should not use the rules in 26 USC §861(b) and the related regulations beginning at 26 CFR § 1.861-8 (in addition to any other pertinent sections) to determine his taxable domestic income?

2) If a U.S. citizen lives and works exclusively within the 50 states, and receives all of his income from within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show such income to be taxable?

3) Should one refer to 26 CFR § 1.861-8T(d)(2) to determine whether the “items” of income he receives (e.g. compensation, interest, rents) are excluded for federal income tax purposes?

4) What is the purpose of the list of non-exempt income in 26 CFR §1.861-8T(d)(2)(iii), and why is the domestic income of the average American not on that list?


the irs code and associate regulations are completely valid and constitutional, it's just the fraudulent mis-representation and mis-application of the laws that are already on the books!!

yep, we've been suckered for over 80 years by a crooked system that has been able to hide the truth in the legalese that complicates the public's understanding.

fornunately for us, the internet has leveled the playing field, and more and more people are studying the written irs statutes and regulations and discovering the truth.

see www. taxableincome.net for a fuller discussion or www.theft-by-deception.com if you want to see the connection between irs statutes, regulations and the Constitution in a fabulous truthful video.

p.s. i have absolutely nothing to do with the wonderful, graphical, easy-to-understand, educational $20 video available for those interested in finding out the truth of this most important matter at www.theft-by-deception.com.

maybe sharkster geragos thought he was gonna be defending drooler larry king for his endorsements of garleek. they both have bad breath on my tv!

the conspiracy theorist, sherman skolnick, says george bush sr. and saddam were "business partners" 25-27 years ago when bush was cia chief. (see skolnick's site www.skolnicksreport.com and read "the overthrow of the american republic" part 23, dated 12/20/02. and that bush was instrumental in installing saddam.

bush supposedly flooded iraq and the mid-east with counterfeit money made by master "cutters", so good, a lot of this phony money would pass through the fed reserve banks undetected.

if less than half of his theories are true (not much way to know), scholnick wouldn't be at all surprised at finding huge sums of u.s. "money" in iraq.

fred:

Cadee is looking better and better, especially nice with $60k in her pocketbook.

will this end up on jerry springer tv with a show about the parent who kills his kids to get at "their" money????

say hi to ethel!

"She wasn't gettin' anything out of me; she wasn't going to break me, no way."

So, he is saying there is something there to get, if only someone could break him?

how 'bout a citizen's vigilante group "stretching" it out of him??

condidit ain't never gonna tell Americans the truth. no way. that's the first rule he learned in con's grise.

Especially with Phil Gramm leaving

don't i recall correctly that gramm's wife was a board member for enron? and isn't she finance savvy enough to be a truly responsible corporate board member and know what the hell was going on with enron??

maybe ph-phil(er) saw problems with a campaign that was going to play out his wife's involement with enron.

or do all pols who leave office just assume Americans are dumb enough to believe the oft stated routine that "i want to spend more time with my family. . ."??

Not sure about this instance but in most hearings where a senator "testifies" as a "courtesy" he/she is not required to take an oath to tell the truth."

the senate (lack of) ethics committee is kinda like that out-of-town aunt that babysits once or twice a year -- not much discipline at all if really needed.

i wonder if the (lack of) ethics committee cares more about Torch or their next free meal or exotic trip somewhere.

If he didn't, how can Chang be in prison for giving them?

toricelli should be a poster boy for honest-to-goodness campaign finance reform. again, don't expect the prisoners to reform the prison, as in doing the right and honorable thing. they are as phony as three dollar bills.

remember this cast of characters in the senate are, for the most part, the same beltway boys and girls that let clinton off the hook during his impeachment trial.

toricelli must practice his phony smile in front of a mirror for hours a day -- just to get that 20 second tv news shot!

how dumb are nj voters anyway??

"steal a little and they throw you in jail, steal a lot and they make you king"

the (s)hallowed halls of this house are full of monsters and freaks. how 'bout some honest-to-goodness campaign finance reform to throw the "real" bastards out?!?

i still think a citizens' vigilante group could "stretch" the truth out of condidit -- maybe after the nov elections. wouldn't it be stunning to see such a video on fox news?!! larrythefallenking would drool over his own softballs!

the federal government has gotten out of control, imo, in large part, by hoodwinking the American public into thinking that so-called "income tax" on an individual's paycheck is legal and constitutional. if you don't believe that, then show all of us the law in the irs code book. be very specific here now with your answer. irwin schiff will pay you $50,000 for showing us the law!!(he is credible enough to at least get appearances on hannity&colmes -- last one april 15th) many brave, patriot citizens like Bob Schulz and Larken Rose WANT TO CHANGE AMERICA FOR THE BETTER, that is, in part, get the fed govt to follow our constitution!

as an aside, the fed govt's lack of scrutiny or control of corporations like global crossing, enron, worldcom, etc., may be the undoing of our entire economy! the SEC is a BIG JOKE and NOT WORTHY of INVESTIGATING ANYTHING, including itself! the lack of meaningful investigatory actions by the SEC (what are they really doing with our tax dollars???) could be held responsible, in part, imo, for the lack of confidence in investors and the BIG collapse in the stock market-- there is a whole lot of trouble in this country because of the love of greed, power and money, and the rich and powerful protecting themselves. martha stewart, anyone?

the average American doesn't know that much of what the fed govt engages in is built on phony lies and NOT the constitution. PRE or POST 9/11, THE FEDS CAN'T EVEN FIGURE OUT HOW TO PROTECT OUR BORDERS with the MILITARY LIKE OUR CONSTITUTION SAYS THEY ARE TO DO -- it must not be politically correct for the BORDER POLITICIANS !!

how 'bout the IRS CAN"T EVEN INVESTIGATE JESSE JACKSON'S NOT-FOR-PROFIT ORGANIZATIONS or INVESTIGATE the RED CROSS --that's one of the IRS' main purposes and controls, ain't it??!! or is it just out there to put fear in the small guy???

that some patriots like Schulz (www.givemeliberty.org) or Rose or Schiff want our school children and citizens to study hard the U.S. Constitution and their own state constitutions to understand how to make this country better. this study would also show what wool is being pulled over citizen's eyes -- what the feds do "illegally" on so-called "income taxes". watch bill o'reilly regularly. watch hannity & colmes regularly. see if you think the feds are doing a great job with the tax dollars they collect now. see if there is any govt waste out there. how's your state govt doing with your tax dollars? talk to your neighbors and see if they feel more secure about terrorism now. ask them if they know what the feds are doing SPECIFICALLY to secure our borders. many are waking up to the fact that much of what the fed govt does is based on phony lies, deceit and political correctness -- and damn the Constitution if necessary.

if you think national retail sales tax is going to happen (it will not -- mark these words) or, if it were "legal" (it is not -- please use your misplaced constitutional quotes and ask your questions directly to Larken Rose on his www.taxableincome.net site and make sure you take his 10 question test for all citizens -- tax professionals, accountants and tax lawyers included. what i suggest for you is getting excited about SERIOUS campaign finance reform instead of national retail sales tax banter -- there isn't one congressman in 2002 proposing it or even talking about this illegal concept. hold local citizen meetings, like we have done, and demand true campaign finance reform of your representatives!!

when the truth about what goes on with our tax dollars is out there in big enough numbers, then maybe true reform can start to happen. pols will listen to "numbers" of citizens. otherwise, they ain't gonna do anything for the small guy -- unless it's getting their picture in the paper smiling and holding a flag at the local parade. as the old poli sci prof said years ago, "politicians are 98% symbolic and 2% substance." he may have understated this a bit!! many pols run scared of citizen's groups who shine flashlights on their activities. true campaign finance reform is a BIG START to what is wrong in washington. mccain-feingold is only a SMALL START to what's really needed.

i have not heard Bob Schulz (www.givemeliberty.org)or Larken Rose (www.taxableincome.net) at all talk about "no taxes and no government". you will have to find the quotes from these individuals to back up your argument that this is true. if you are calling these brave men who are willing to stand up and seriously question our govt something other that patriots, then we differ more than night and day.

as much as you'd like to rave about "national retail sales tax" ideas, this ain't constitutional and simply will not fly. some pols like to talk the talk, but this concept can't and shouldn't happen. what citizens need to study is how crooked and deceitful the irs/doj/treas/congress/fedrese rve has been in hoodwinking the American public on so-called "income taxes". try www.taxableincome.net if you want to understand why "national retail sales tax" just ain't gonna see the light of day.

praise be to Les Kinsolving at worldnetdaily.com for at least asking the right questions of the Bush admin!!

as more people investigate, as more people tell their families and friends and associates, as more people demand of their elected representatives to explain in full the "law", or lack thereof, that the irs has been using to collect "income taxes" by taking money out of their paychecks via the W-4 form, the more the "king has no clothes".

the fed government is out of control because they have taken all this money in and have literally squandered it. has the fed dept of education done ANYTHING to raise literacy rates in any of our largest cities? has the ins done it's job in light of 9/11 and now we see in post 9/11?? has the fbi protected us well against terrorism in the past decade?? how 'bout the cia?? please raise your hands!

irwin schiff says our military, highways and basic social programs can be taken care of without one penny of "income tax" money.

how 'bout corporate farmers being given over $35 billion of our taxpayer money -- that is really nothing more than welfare -- in the latest farm bill. usda and a vote-grubbing congress out-of-control?? this makes urban welfare cheating a real non-issue.

somehow average Americans have been abandoned and left "unrepresented".

investigate for yourself, find the true essense of the story here -- for example, see www.givemeliberty.org -- and tell this story even to one person at a time!

ain't that how the original revolution started -- unfair taxes??

sorry, my html coding must be faulty here. just try this site manually! www.worldnetdaily.com/news/article.asp?ARTICLE_ID=27920

for all those seeking more truth on the "income tax" subject, read what the site that o'reilly writes for is reporting! www.worldnetdaily.com/news/article.asp?ARTICLE_ID=27920

for all those seeking more truth on the "income tax" subject, read what the site that o'reilly writes for is reporting! www.worldnetdaily.com/news/article.asp?ARTICLE_ID=27920

www.taxableincome.net is a real site and always working from any internet connection i go to. maybe your pc is bugged by the irs?! if so, now i know what rossotti is doing with his time. he sure ain't investigating the 9/11 charities like o'reilly keeps calling for. rossotti claims he "doesn't have the manpower". huh?? how hard is it to investigate a couple of not-for-profits who have failed miserably to distribute more than half the billions of $$ hard-working Americans have donated? shouldn't their not-for-profit status be called into question here?? ain't that rossotti's job?? what the heck is he doin' then besides harrassing individuals and families while collecting his BIG paycheck?? is this incompetence and fraud at it's worst or what?!?

btw, here's but two questions from rose larken's site that you can't sign unto. the rest of the test is plainly out there. all emphasis in the citations has been added. if you want to give frivolous answers, fine. otherwise, give us your "best" legal, accounting and/or official irs answers you can muster and i'll forward your answers to larken's site for grading! good luck to all who take this seriously!

1. "gross income" is generally defined as "all income from whatever source derived" (26 usc 61). in light of the following, do section 861 and following, and the regulations thereunder, determine what constitutes a "source" of income for purposes of the income tax? (if your answer is "no", please explain the meaning of the following citation, showing supporting citations for your positiion.)

"determination of sources of income - table of contents -

sec 1.861-1 income from sources within the United States. (a) catagories of income. part 1 (section 861 and following), subchapter n, chapter 1 of the code, and the regulations thereunder determine the sources of income for purposes of the income tax." [26 cfr 1.861-1]

2. are 26 usc 861(b), and the related regulations in 26 cfr 1.861-8, the sections to be used to determine taxable income from sources within the United States? (if your answer is no, please give some citation supporting your claim, and explaining why the clear citations below do not mean what they say.)

"determination of taxable income. the taxpayer's taxable income from sources within or without the United States will be determined under the rules of sec. 1.861-8 through 1.861-14t for determining taxable income from sources within the United States. [26 cfr 1.863-1(c)]

"sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined." [26 cfr 1.861-8]

"the taxable income from sources within the United States. . .shall be determined by deducting therefrom, in accordance with sections 861(b) and 863(a), [allowable deductions]. [26 cfr 1.861-1]

"sec 1.861-8 [is the section] for determining the taxable income from sources within the United States." [26 cfr 1.862-1]

"rules are prescribed for determination of gross income and taxable income derived from sources within and without the United States...1.861-1 through 1.864 (sec. 861-864; '54 code.)" treasury decision 6258

"secs. 1.861-1 to 1.863-5 [give the principles] for determining the gross and the taxable income from sources within and without the United States." [26 cfr 1.863-6]

26 usc 861(b) is entitled "taxable income from sources within the United States," and clearly state how to determine what "shall be included in full as taxable income from sources within the United States." The corresponding regulations in 26 cfr 1.861-8 are entitled "computation of taxable income from sources within the United States *and from other sources and activities." (the portion of the title after the asterisk was added in 1978.)

lawyamike, are you a bona fide tax attorney or just a runof themill ambulance chaser?? in either case, please try www.taxableincome.net and take the nine question test mr. larken poses for anyone who wants to truly understand the limitations the Constitution put on the "taxing" powers of congress. even the former head of the irs under clinton was quoted in the san diego union in 1997 as saying "income tax" was "voluntary compliance". her words not mine. irwin schiff advertises the $50,000 prize for anyone able to show the law. he claims he couldn't advertise on his site "why pay income taxes when no law says you have to?" or he'd be shut down for mail fraud in a ny minute. what's the problem here, the irs too busy investigating jesse jackson???

if requesting formal wording and punctuation makes you more comfortable about your agruments for a national sales tax, then stop reading my "rants". i suppose if people want to feel noble and patriotic about being illegally defrauded of their money every year, that's their choice, too. but to condemn someone for not being duped and extorted is just a bit twisted. i won't go into the detail here about mis-placed national sales tax concepts and why this can't and won't happen legally. i'll advise anyone who wants the truth here to study hard what larken rose has to say at www.taxableincome.net. study his "taxable income" report. also, make sure you or your tax professional take his nine question test to see if you really understand the Constitutional limitations there are on "taxing". you might just learn a thing or three.

the national sales tax is NOT SUPPORTED by our Constitution, so unless an Amendment is voted on, that concept wouldn't be legal either. pols love to talk that talk, BUT, national sales tax ain't never gonna happen without an Constitutional Amendment being passed. . .mark these words if you want. . . if being "unpatriotic" is not paying so-called "income taxes" where there's no law that specifies that individuals must pay an "income tax", or a Constitution that forbids "income taxes", but does mean being hoodwinked and feared into volunteering to send my dollars to the feds that completely mis-spend it, then you can call me unpatriotic. btw, you give up your 4th and 5th Amendment rights by volunteering your signed tax return. i don't think i am unpatriotic -- in fact just the opposite. i don't like my real estate taxes, but i pay because it's legal. i don't like the taxes on all the gasoline i have to purchase, but it's legal. same with telephone taxes, electric, natural gas, and water taxes. in fact i'm way overtaxed before i back out of my driveway!! i recall bill o'reilly ranting about the three billion $$ that we sent to Haiti during the clinton years. the gao cannot account for this money!!! or he has ranted about the dept of education and the hundreds of millions that again the gao cannot account for. read martin l. gross's books like "the tax racket: government extortion from a to z" or "the government racket:2000 and beyond" and it will open your eyes as to how much waste there actually is out there. and you know what, no one in government is interested in looking out for us by being fiscally responsible with our tax dollars. my "extra dollars" found from not paying so-called "income taxes" go to my church and favorite charities. and not all charities are responsible, so the list is a short one. that's how i'm being patriotic -- not bowing to "laws" that don't exist and -- using the greek word "econos" -- i'm keeping my own house in order. i'm not counting on the feds to do the same with their house and my money. plenty of taxes i pay each year go to the feds without a penny of it being so called "income taxes".