The below page is not the research of taxtruth4u but that of Patti Maher. Her contact information is at the bottom of this page if you wish to ask questions regarding this research. Nor is the below tax advice. Any actions taken as a result of the below information is the sole responsibility of the party taking those actions.  

Subject: Millions of nontaxpayers!?!?

A little stressed about how much you might have paid in taxes last year?  How much did you really owe? Did you know that federal tax law is much simpler than you thought despite the myth that most people believe if you make any money at all you always have a legal obligation to send in a 1040? Most hear the message resistance is futile and give away their hard earn pay simply out fear and lack of knowledge of the facts? Millions of intelligent people have already discovered the truth about "nontaxpayers"...Isn't it your turn?..

Here is a letter from the IRS simplifying who really has a legal obligation below:

Seems simple enough right? Let's look at this Privacy Act response from the IRS above a little closer as it is unusually honest. Proof IRC Subtitle A federal income tax is an excise tax only on activities in connection with a "trade or business"

I bet you think you are involved in some type of "trade or business" as described in the above letter right? Read it again carefully. Well, The only thing that matters when we describe the term "trade or business" when it relates to tax code is how the Internal Revenue Code defines what is says it's limited to...so let's start with the VERY IMPORTANT LEGAL DEFINITION from the tax code of: “trade or business"

26 U.S.C. §7701(a)(26)  

"The term 'trade or business' includes [is limited to] the performance of the functions of a public office."

"Includes is a term of limitation....is a term to indicate restriction rather than enlargement."  Powers ex re. Covon v. Charron R.I., 135 A. 2nd 829,832

and ....

"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." Supreme Court -Gould v. Gould 245 U.S. 151(1917)United States v. Wigglesworth, 2 Story, 369, Fed. Cas. No. 16,690; American Net & Twine Co. v. Worthington, 141 U.S. 468, 474 , 12 S. Sup. Ct. 55; Benziger v. United States, 192 U.S. 38, 55 , 24 S. Sup. Ct. 189.

Don't feel alone when this does NOT describe your occupation! It's as simple as that. Need more proof? Okay, but one more technical matter before we get to the good stuff...and this is also important to remember about federal officials since the federal income tax has been around along time


Title 4 USC Sec. 111. Same; taxation affecting Federal employees; income tax

(a) General Rule. - The United States[Federal Government] consents to the taxation of pay or compensation for personal service as an officer or employee of the United States, a territory or possession or political subdivision thereof, the government of the District of Columbia, or an agency or instrumentality of one or more of the foregoing, by a duly constituted taxing authority having jurisdiction, if the taxation does not discriminate against the officer or employee because of the source of the pay or compensation.

Ever wonder how you can make a "return" of income to the federal government if it didn't come from them in the first place? Don't you need to recieve something before you return it? Although the next response(link below) from the IRS is full of half-truths(lies) about a few technical areas but notice the part we have highlighted as they have again have been a little too honest about the fact that their is no law requiring anyone to file a 1040 and the only persons that can legally be levied are officers or employees of the federal government.

So who is the taxpayer and who is the nontaxpayer?

        "The taxpayer-- that's someone who works for the federal government but doesn't have to take the civil service examination."

-- President Ronald W. Reagan

26 USC §7701(a)(14) - The term ''taxpayer'' [different from tax payer] means any person subject to any internal revenue tax. 

"The revenue laws are a code or system in regulation of tax assessment and collection. They relate to taxpayers, and not to nontaxpayers. The latter are without their scope. No procedure is prescribed for nontaxpayers, and no attempt is made to annul any of their rights and remedies in due course of law. With them [nontaxpayers] Congress does not assume to deal, and they are neither of the subject nor of the object of the revenue laws".
Economy Plumbing and Heating Co. v. United States, 470 F. 2d 585 (1972)

THE GOOD NEWS for "nontaxpayers" is one must be engaged in a “trade or business“ to be a taxpayer, which is defined as “the functions of a public office”, within the “United States“, which is defined as the District of Columbia, in order to earn “gross income”.  This is because:

     One must be engaged in a “public office” in the District of Columbia in order to earn “gross income” as a natural person.  “Gross income” that meets this criteria is described in the code simply as “income effectively connected with a trade or business from sources within the United States”. 

This is confirmed by 26 U.S.C. §7701(a)(31), which says that an estate that is in no way connected with a "trade or business" and whose sources of income are outside the United States[District of Columbia] may not have its earnings identified as "gross income" and is a "foreign estate", which means it is not subject in any way to the provisions of the Internal Revenue Code:

TITLE 26 > Subtitle F > CHAPTER 79 > Sec. 7701.

Sec. 7701. - Definitions

(a)(31) Foreign estate or trust

(A) Foreign estate

The term ''foreign estate'' means an estate the income of which, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income under subtitle A.

These critical facts are very carefully concealed by the IRS in their publications to hide the true nature of the income tax and instead to make it appear as an “unapportioned direct tax” upon persons living in states of the Union.  If the American people understood on a large scale:

1.  That the I.R.C. Subtitle A income tax was an “excise tax” upon privileged "taxable activities" only.

2.  Exactly what activity was being taxed.

3.  That the IRS has no jurisdiction within states of the Union against anyone who does not sign a private agreement with the government by submitting a W-4 or a 1040 tax return.

. . .then they would exit the tax system en masse by simply avoiding the activity or avoiding to volunteer to submit forms declaring they want their "wages" to be treated the same as federal employees.  All excise taxes are "avoidable" by avoiding the taxed activity, and therefore they are completely "voluntary".  Therefore, the IRS and our public dis-servants have a vested interest in hiding and concealing the true nature of the income tax as an “excise tax” in order to maintain revenues from the income tax. 

The IRS has, with the implicit collusion and approval of the Congress and the Treasury Department, tried to do the following within their deceptive publications:

1. Taken great pains to hide and obfuscate the fact that Subtitle A of the Internal Revenue Code is an indirect excise tax upon licensed, privileged activities.  They have done this by burying the sordid truth deep in regulations that they hope people will never read and which have been carefully obfuscated over the years to make them virtually unintelligible for the average American.

2.  Confuse the meaning of the term “trade or business” in their publications so that everyone thinks they meet this criteria.

3.  Create a false and unsupportable presumption that all people and all earnings within states of the Union are connected with a “trade or business in the United States".

4.  Create the illusion and deception that IRC Subtitle A describes a direct, unapportioned tax upon natural persons that cannot be avoided or shifted. 

  False IRS presumptions that must be rebutted

How can we know if the IRS thinks we are involved in a “trade or business”?  Here is how:

1.  Only people who are engaged in a “trade or business” are subject to the graduated rate of tax.    See 26 U.S.C. §871(b)

2.  All income from within the District of Columbia, which is the “United States“ under the I.R.C. section 7701(a)(9) and (a)(10), must be treated as “effectively connected with a trade or business in the United States”, according to 26 U.S.C. §864(c )(3). That’s right: it is a “privilege” under 26 U.S.C. §864(c)(3) to simply “live” and earn “income” in the District of Columbia.  Here is what it says:

TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter N > PART I > § 864

§864. Definitions and special rules

(c) Effectively connected income, etc.

(3) Other income from sources within United States

All income, gain, or loss from sources within the United States (other than income, gain, or loss to which paragraph (2) applies) shall be treated as effectively connected with the conduct of a trade or business within the United States.

3.  Only people who are engaged in a “trade or business“ can claim deductions on their “return”.  Otherwise, they can't.  See 26 U.S.C. §162 for proof.

4.  Only people who are engaged in a “trade or business“ can owe a tax and therefore be the target of a Substitute For Return (SFR), which is an assessment that in most cases is illegally executed by the IRS.

5.  Only people who file a 1040  can be connected to a "trade or business within the “United States".

6.  Only people who complete, voluntarily sign, and submit a W-4 and thereby identify themselves as federal "employees" can be connected to a "trade or business".  26 CFR 31.3401(c)-1 identifies all federal "employees" as "public officers".  All "public officers" are by definition engaged in a "trade or business".

7.  Those who receive Social Security Benefits.  26 U.S.C. §861(a)(8) says that Social Security benefits received must be included in “gross income” from “sources within the United States”.  Indirectly, they also must be saying that such earnings are to be treated as “effectively connected with a trade or business”, because 26 U.S.C. §7701(a)(31) says that if these earnings were not connected with a trade or business, then they cannot be reported as "gross income" and are part of a “foreign estate” not subject to the code.

The "trade or business" requirement also extends to nearly all other types of payment reporting within the I.R.C. Although publications are not law, here are just a few examples:

1.  IRS Publication 334 entitled Tax Guide for Small Businesses, Year 2002, p. 12 says:

"Form 8300.  You must file form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions.  Cash includes U.S. and foreign coin and currency.  It also includes certain monetary instruments such as cashier's and traveler's checks and money orders.  Cash does not include a check drawn on an individual's personal account (personal check).  For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business)

http://famguardian.org/TaxFreedom/Forms/IRS/IRSPub334.pdf

2.  IRS Publication 583 entitled Starting a Business and Keeping Records, Rev. May 2002, p. 8 says:

"Form 1099-MISC”.  Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your trade or business. These payments include the following..."

http://famguardian.org/TaxFreedom/Forms/IRS/IRSPub583.pdf

3.  IRS Form 1099-MISC Instructions, 2005, p. 1 says:

"Trade or business reporting only.  Report on Form 1099-MISC only when payments are made in the course of your trade or business.  Personal payments are not reportable..." 

http://famguardian.org/TaxFreedom/Forms/IRS/IRSForm1099Inst.pdf

 We also know that private employers are NOT required to act as withholding agents, by the admission of the IRS' own Internal Revenue Manual:

5.14.10.2  (09-30-2004)
Payroll Deduction Agreements

2.  Private employers, states, and political subdivisions are not required to enter into payroll deduction [withholding] agreements. Taxpayers should determine whether their employers will accept and process executed agreements [W-4 withholding]before agreements are submitted for approval or finalized.

[http://www.irs.gov/irm/part5/ch13s10.html]

How the scam affects you and some things to do about it

If you are not engaged in a “trade or business”, then you aren’t even mentioned in the I.R.C. as a subject for any Internal Revenue tax.  Nearly all Americans living in states of the Union are “nonresident” to the "domestic" U.S. government in D.C., and so the above provision for "nontaxpayers" must apply to you.  To summarize if you have no “sources of income” connected with a public office in the District of Columbia, then you:

1.  Are not engaged in an excise taxable activity under the I.R.C. subtitle A.

2.  Don’t earn any “gross income” but have a "foreign estate" under 26 USC 7701(a)(31)

3.  Have no taxable “sources of income” identified in 26 CFR §1.861-8(f)(1).

4.  Are a “nontaxpayer” not subject to the I.R.C.  All portions within the I.R.C., IRS publications, and the Internal Revenue Manual that refer to “taxpayers” don’t refer to you and can safely be disregarded and disobeyed.

5.  Cannot file an IRS form 1040 under penalty of perjury now, because EVERYTHING that goes on that form is treated as “effectively connected with a trade or business”. 

6.  Cannot lawfully have any CTR’s, or Currency Transaction Reports, prepared against you by any financial institution. 

7.  Cannot lawfully have form 8300 filed against you by anyone.  See IRS Publication 334 entitled Tax Guide for Small Businesses, p. 12 above.

8.  Cannot lawfully have form 1099-MISC filed against you.  See IRS Pub 583, Starting a Business and Keeping Records, p. 8 above.

9.  Are not subject to withholding if you earn no income from the District of Columbia or are not engaged in a "trade or business".

 Important implications of the scam

Now that we completely understand how Subtitle A of the Internal Revenue Code works as an indirect excise tax upon a voluntary and avoidable taxable activity called a "trade or business" within the District of Columbia, this explains the reason why proponents of the 861 Position have been so vehemently hated and attacked by the government and the IRS.  What they are doing, in most cases without even realizing it, is using the regulation at 26 CFR §1.861-8(f)(1) to draw attention to the fact that the federal income tax is in fact an indirect excise tax, and that the "taxable activities" are all enumerated individually  in this regulation and nowhere else in either the I.R.C. or the Treasury Regulations. This regulation also happens to be the only regulation that describes exactly how to apply earnings from each enumerated "taxable activity" to the process of computing one's tax liability. Is it any surprise that the government doesn't want evidence like this in the hands of people? This interferes with their "voluntary compliance" efforts and exposes their willful and malicious fraud for what it is, and this is why they don't like it. 

Understanding the "trade or business" scam fits together all the pieces of the puzzle scattered throughout this article and explain them in such a cohesive way that it is impossible to argue with.  It is far more than simply a "theory", but a fact you can verify yourself by reading the IRS Publications, the code, the Constitution, and the Treasury Regulations.  All of them agree with this article. Unfortunately, Congress and the IRS have been less than forthright in the administration and recordkeeping of its collection activities. If you are ready to actively pursue a good faith effort in administratively establishing that you may be a nontaxpayer by asking some simple questions to verify claims of liability, lawful assessment etc., we can assist you in that research using the Freedom of Information Act requests to obtain/decipher your Master file records as well as research/verify collection letter inquiries. Although we do not give legal or tax advice ..all decisions start with obtaining all the facts first. For more information on how we may be able to help you and be able to take advantage of our April discounted prices, please fill out a FREE consultation request at the site: www.imfdecoder.com/patti .  

Patti Maher

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877 432 4130