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18123Re: [tips_and_tricks] Re: IRS Substitute For Return authority

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    Nov 29, 2010
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      See comments interspersed in the text below.

      On Sun, Nov 28, 2010 at 6:27 PM, Patrick McKEE <paradoxmagnus@...> wrote:

      According to the IRS regulations, the income tax is IMPOSED upon the “taxable income” of certain INDIVIDUALS.


      26 CFR 1.1-1  Income tax on individuals.

      (a) General rule. (1) Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States and, to the extent provided by section 871(b) or 877(b), on the income of a nonresident alien individual. For optional tax in the case of taxpayers with adjusted gross income of less than $10,000 (less than $5,000 for taxable years beginning before January 1, 1970) see section 3. The tax imposed is upon taxable income (determined by subtracting the allowable deductions from gross income). The tax is determined in accordance with the table contained in section 1. See subparagraph (2) of this paragraph for reference guides to the appropriate table for taxable years beginning on or after January 1, 1964, and before January 1, 1965, taxable years beginning after December 31, 1964, and before January 1, 1971, and taxable years beginning after December 31, 1970. In certain cases credits are allowed against the amount of the tax. See part IV (section 31 and following), subchapter A, chapter 1 of the Code. In general, the tax is payable upon the basis of returns rendered by persons liable therefor (subchapter A (sections 6001 and following), chapter 61 of the Code) or at the source of the income by withholding. For the computation of tax in the case of a joint return of a husband and wife, or a return of a surviving spouse, for taxable years beginning before January 1, 1971, see section 2. The computation of tax in such a case for taxable years beginning after December 31, 1970, is determined in accordance with the table contained in section 1(a) as amended by the Tax Reform Act of 1969. For other rates of tax on individuals, see section 5(a). For the imposition of an additional tax for the calendar years 1968, 1969, and 1970, see section 51(a).



      Here are the DEFININTIONS of some words that people may want to keep in mind.


      INDIVIDUAL - 1 obsolete : INSEPARABLE, 2 a : of, relating to, or distinctively associated with an individual <an individual effort> b : being an individual or existing as an indivisible whole c : intended for one person <an individual serving>, 3 : existing as a distinct entity : SEPARATE, 4 : having marked individuality <an individual style>, synonyms see SPECIAL, CHARACTERISTIC




      LIABLE - 1 a : obligated according to law or equity : responsible b : subject to appropriation or attachment, 2 a : being in a position to incur —used with to <liable to a fine> b : exposed or subject to some usually adverse contingency or action <watch out or you're liable to fall>



      NOTICE - 1 a  : a notification or communication of a fact, claim, demand, or proceeding, see also process service;  The requirements of when, how, and what notice must be given to a person are often prescribed by a statute, rule, or contract. b  : awareness of such a fact, claim, demand, or proceeding



      REQUIREMENT - something required: a : something wanted or needed : necessity <production was not sufficient to satisfy military requirements> b : something essential to the existence or occurrence of something else : condition <failed to meet the school's requirements for graduation>



      REQUIRE - 1 a : to claim or ask for by right and authority b archaic : request, 2 a : to call for as suitable or appropriate <the occasion requires formal dress> b : to demand as necessary or essential : have a compelling need for <all living beings require food>, 3 : to impose a compulsion or command on : compel, 4 chiefly British : to feel or be obliged —used with a following infinitive <one does not require to be a specialist — Elizabeth Bowen>



      So WHO are those INDIVIDUALS that are LIABLE for INCOME TAX & thus are REQUIRED to file a return?


      26 USC 6001. Notice or regulations requiring records, statements, and special returns

      Every person liable for any tax imposed by this title, or for the collection thereof, shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary may from time to time prescribe. Whenever in the judgment of the Secretary it is necessary, he may require any person, by notice served upon such person or by regulations, to make such returns, render such statements, or keep such records, as the Secretary deems sufficient to show whether or not such person is liable for tax under this title. The only records which an employer shall be required to keep under this section in connection with charged tips shall be charge receipts, records necessary to comply with section 6053 (c), and copies of statements furnished by employees under section 6053 (a).



      26 USC 6011. General requirement of return, statement, or list

      (a) General rule

      When required by regulations prescribed by the Secretary any person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations.




      The Secretary has made no substantive regulation in Part 1 of 26 CFR requiring anyone to make a return. 

      Did the IRS INITIALLY give us NOTICE that we were an INDIVIDUAL REQUIRED to either FILE a RETURN or otherwise make a DETIRMINATION that we are LIABLE for INCOME TAX & thus SUBJECT to WITHHOLDING?


      26 CFR 31.6001-6   Notice by district director requiring returns, statements, or the keeping of records.

      The district director may require any person, by notice served upon him, to make such returns, render such statements, or keep such specific records as will enable the district director to determine whether or not such person is liable for any of the taxes to which the regulations in this part have application.





      31.0-1   Introduction.

      (a) In general. The regulations in this part relate to the employment taxes imposed by subtitle C (chapters 21 to 25, inclusive) of the Internal Revenue Code of 1954, as amended. References in the regulations to the “Internal Revenue Code” or the “Code” are references to the Internal Revenue Code of 1954, as amended, unless otherwise indicated.


      (b) Division of regulations. The regulations in this part are divided into 7 subparts. Subpart A contains provisions relating to general definitions and use of terms, the division and scope of the regulations in this part, and the extent to which the regulations in this part supersede prior regulations relating to employment taxes...Subpart E relates to the collection of income tax at source on wages under chapter 24 of the Code. Subpart F relates to the provisions of chapter 25 of the Code which are applicable in respect of the taxes imposed by chapters 21 to 24, inclusive, of the Code. Subpart G relates to selected provisions of subtitle F of the Code, relating to procedure and administration, which have special application in respect of the taxes imposed by subtitle C of the Code. Inasmuch as these regulations constitute Part 31 of Title 26 of the Code of Federal Regulations, each section of the regulations is preceded by a section symbol and 31 followed by a decimal point (§31.). Sections of law or references thereto are preceded by “Sec.” or the word “section”.


      [T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 8723, 62 FR 37492, July 14, 1997]


      Or did people merely ASSUME that they were LIABLE FOR INCOME TAX IMPOSED UNDER SUBTITLE A & either FILE a return and/or ask for WITHHOLDING which is for LIABILITY FOR INCOME TAX IMPOSED UNDER SUBTITLE A & it is collected at the source?

         Correct.  26 CFR Part 31 deals only with Employment Taxes and Collection of Taxes at the Source.  It does not relate in any way to Income Tax considered in the ordinary sense.  There is no statement of liability for the income tax per se except in 26 CFR 1.1-1, but, as I explained in a post yesterday, that regulation is not substantive and does not have the force of law.  Moreover, there is no district directory anywhere who can perform the function.  All district directors and their districts were disestablished back in 2001.                   


      26 USC 3402. Income tax collected at source

      (a) Requirement of withholding

      (1) In general

      Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary. [REST OMITTED]

      …Definition of wages for COLLECTION OF INCOME TAX AT SOURCE

      3401. Definitions

      (a) Wages
      For purposes of this chapter, the term “wages” means all remuneration (other than fees paid to a public official) for services performed by an employee for his employer, including the cash value of all remuneration (including benefits) paid in any medium other than cash

        But what is an employee?

                     (c) Employee
      For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term “employee” also includes an officer of a corporation.

        What does "includes" or "including" mean when used in Title 26?  This definition is from 26 USC 7701, which applies to all parts of Title 26:

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

      How are those terms defined in the well-known Black's Law Dictionary?

      Expressio unius est exclusio alterius.A maxim of statutory interpretation meaning that the expression of one thing is the exclusion of another.Burgin v. Forbes, 293 Ky. 456, 169 S.W.2d 321, 325; Newblock v. Bowles, 170 Okl. 487, 40 P.2d 1097, 1100.Mention of one thing implies exclusion of another.When certain persons or things are specified in a law, contract, or will, an intention to exclude all others from its operation may be inferred.Under this maxim, if statute specifies one exception to a general rule or assumes to specify the effects of a certain provision, other exceptions or effects are excluded.”

      What have courts said about "includes" and "including?"

      Includes is a word of limitation.Where a general term in Statute is followed by the word, ‘including’ the primary import of the specific words following the quoted words is to indicate restriction rather than enlargement.” [Powers ex re. Covon v. Charron R.I., 135 A. 2nd 829, 832 ]

      "It is axiomatic that the statutory definition of the term excludes unstated meanings of that term.  Colautti v. Franklin, 439 U.S. 379

      "Include or the participial form thereof, is defined to comprise within’; ‘to hold’; ‘to contain’; ‘to shut up’; and synonyms are  ‘contain’; ‘enclose’; ‘comprehend’; ‘embrace’.”  [U.S. Supreme Court, Montello Salt co. v. Utah, 221 U.S. 452, at 455, 466.]

      “This fact only underscores our duty to refrain from reading a phrase into the statute when Congress has left it out. " '[W]here Congress includes particular language in one section of a statute but omits it in another ..., it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.' " Russello v United States, 464 US 16, 23, 78 L Ed 2d 17, 104 S Ct. 296 (1983)

      Rules of Statutory Construction for tax laws:  "expressio unius, exclusio alterius":  if one or more items is specifically listed, omitted items are purposely excluded.  See Becker v. United States, 451 U.S. 1306 (1981)

      [Federal Tax Research: Guide to Materials and Techniques, Copyright 1990, Fifth Edition

      “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, at 153 (1917)]

      And what is an employer?

        (d) Employer
      For purposes of this chapter, the term “employer” means the person for whom an individual performs or performed any service, of whatever nature, as the employee of such person

      Consequently, if "employees" are officers, employees or elected officials, etc. as defined above and "includes" is a restrictive term as the Supreme Court has repeatedly ruled, and if "wages" means remuneration paid to employees, apparently the vast majority of people do not earn "wages."  And if an "employer" is the person for whom "employees" perform services, then "employers" are by necessity the federal government, state governments, county governments, city governments and any of their agencies or instrumentalities.  Consequently, though various businesses are commonly called employers, they are not "employers" in the sense of the legally defined term, and they do not pay "wages."

      n) Employees incurring no income tax liability

      Notwithstanding any other provision of this section, an employer shall not be required to deduct and withhold any tax under this chapter upon a payment of wages to an employee if there is in effect with respect to such payment a withholding exemption certificate (in such form and containing such other information as the Secretary may prescribe) furnished to the employer by the employee certifying that the employee—

      (1) incurred no liability for income tax imposed under subtitle A for his preceding taxable year, and

      (2) anticipates that he will incur no liability for income tax imposed under subtitle A for his current taxable year.

      The Secretary shall by regulations provide for the coordination of the provisions of this subsection with the provisions of subsection (f).




      26 CFR 31.0-2 General definitions and use of.

      (a) In general. As used in the regulations in this part, unless otherwise expressly indicated--
      (1) The defined in the provisions of law contained in the regulations in this part shall have the meanings so assigned to them.

      (e) Subpart E. As used in Subpart E of this part, unless otherwise expressly indicated, tax means the tax required to be deducted and withheld from wages under section 3402 of the Code.

      [T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 6606, 27 FR 8516, Aug. 25, 1962; T.D. 6658, 28 FR 6631, June 27, 1963; T.D. 6983, 33 FR 18013, Dec. 4, 1968; T.D. 7280, 38 FR 18369, July 10, 1973]




      31.0-3   Scope of regulations.


      (d) Subpart E. The regulations in Subpart E of this part relate to the withholding under chapter 24 of the Code of income tax at source on wages paid after 1954, regardless of when such wages were earned. The regulations in Subpart E of this part include provisions relating to the definition of terms applicable in the determination of the tax under chapter 24 of the Code, such as “employee”, “employer”, and “wages”. (For prior regulations on similar subject matter, see 26 CFR (1939) Part 406 (Regulations 120).)


      [T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 6744, 29 FR 8305, July 2, 1964; T.D. 8723, 62 FR 37493, July 14, 1997]





      Exemption from federal income tax withholding. Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. See the Form W-4 instructions for more information. However, the wages are still subject to social security and Medicare taxes. See also Invalid Forms W-4 on page 17.  IRS Publication 15, (Circular E), Employer’s Tax Guide, page 15




      Patrick in California

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