Synaptic Sparks

Six Questions Explained

Sometime around September of 2003, over one thousand, two hundred (>1,200) people sent six questions to then Secretary of Treasury John Snow and then Commissioner of the IRS Mark Everson. I was one of those twelve hundred people. 

On the Six Questions Ignored page, I presented how the IRS responded to those six questions by ignoring the questions, ignoring the IRS mission statement and violating the IRS Taxpayer Correspondence Policy Statement number 6-12

(Or not, because as a "nontaxpayer" I am outside the jurisdiction of the IRS.)

What follows is the full text of the letter I sent to the IRS Commissioner and the Secretary of Treasury.

September 12, 2003

Mark W. Everson, Commissioner
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC  20224

(Secretary John W. Snow)
(Department of the Treasury)
(1500 Pennsylvania Avenue, NW)
(Washington, DC  20220)

Dear Commissioner Everson,
(Dear Secretary Snow,)

For someone to determine his federal income tax liability (if any), he must first determine his taxable income.  Enclosed are six important questions about how to do that properly, according to the law itself.

Though the IRS’ stated mission includes helping Americans “understand and meet their tax responsibilities,” the IRS has been very non-responsive-often even insulting and threatening-to those who have asked similar questions in the past.

I do not wish to be insulted, threatened, accused, or ignored.  Instead, I would like you to please provide me with direct, written answers to the enclosed six questions regarding the proper method for determining one’s taxable income.  (Citations of law supporting your answers would also be appreciated.)

Thank you for your time.

("§" means section.)

1) Should I use the rules found in 26 USC § 861(b) and 26 CFR § 1.861-8 (in addition to any other pertinent sections) to determine my taxable domestic income?

2) If some people should not use those sections to determine their taxable domestic income, please show where the law says who should or should not use those sections for that.
Reason for first two questions: The regulations at 26 CFR § 1.861-8 begin by stating 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 gross income from the U.S. has been determined.  Section 1.861-1(a)(1) confirms that “taxable income from sources within the United States” is to be determined in accordance with the rules of 26 USC § 861(b) and 26 CFR § 1.861-8 (see also 26 CFR §§ 1.862-1(b), 1.863-1(c)).  Cross-references under 26 USCS § 61, as well as entries in the USC Index under the heading “Income Tax,” also refer to Section 861 regarding income (“gross” and “taxable”) from “sources within U.S.”
3) If a U.S. citizen receives all his income from working within the 50 states, do 26 USC § 861(b) and 26 CFR § 1.861-8 show his income to be taxable?
Reason for question: Section 217 of the Revenue Act of 1921, predecessor of 26 USC § 861 and following, stated that income from the U.S. was taxable for foreigners, and for U.S. corporations and citizens deriving most of their income from federal possessions, but did not say the same about the domestic income of other Americans.  The regulations under the 1939 Code (e.g. §§ 29.119-1, 29.119-2, 29.119-9, 29.119-10 (1945)) showed the same thing.  The current regulations at 1.861-8 still show income to be taxable only when derived from certain “specific sources and activities,” which still relate only to certain types of international trade (see 26 CFR §§ 1.861-8(a)(1), 1.861-8(a)(4), 1.861-8(f)(1)).
4) Should one use 26 CFR § 1.861-8T(d)(2) to determine whether his “items” of income (e.g. compensation, interest, rents, dividends, etc.) are excluded for federal income tax purposes?
Reason for question: The regulations (26 CFR § 1.861-8(a)(3)) state that a “class of gross income” consists of the “items” of income listed in 26 USC § 61 (e.g. compensation, interest, rents, dividends, etc.).  The regulations (26 CFR §§ 1.861-8(b)(1)) then direct the reader to “paragraph (d)(2)” of the section, which provides that such “classes of gross income” may include some income which is excluded for federal income tax purposes.
5) What is the purpose of the list of non-exempt types of income found in 26 CFR § 1.861-8T(d)(2)(iii), and why is the income of the average American not on that list?
Reason for question: After defining “exempt income” to mean income which is excluded for federal income tax purposes (26 CFR § 1.861-8T(d)(2)(ii)), the regulations list types of income which are not exempt (i.e. which are subject to tax), including the domestic income of foreigners, certain foreign income of Americans, income of certain possessions corporations, and income of international and foreign sales corporations; but the list does not include the domestic income of the average American (26 CFR § 1.861-8T(d)(2)(iii)).
6) What types of income (if any) are not exempted from taxation by any statute, but are nonetheless “excluded by law” (i.e. not subject to the income tax) because they are, under the Constitution, not taxable by the federal government?
Reason for question: Older income tax regulations defining “gross income” and “net income” said that neither income exempted by statute “or fundamental law” were subject to the tax (§ 39.21-1 (1956)), and said that in addition to the types of income exempted by statute, other types of income were excluded because they were, “under the Constitution, not taxable by the Federal Government” (§ 39.22(b)-1 (1956)).  (This is also reflected in the current 26 CFR § 1.312-6.)

The request for answers was very specific, especially for those who collect taxes and are thus presumed to know the written words of the tax law. With knowledge of the full text of the letter sent, please re-read the daft reply sent by the IRS.

Dear Taxpayer(s):

This is in reply to your recent correspondence.

Federal tax laws are passed by Congress and signed by the President. The Internal Revenue Service is responsible for administering federal tax laws fairly and ensuring that taxpayers comply with the laws. We do not have authority to change the laws.

The Internal Revenue Service strives to collect the proper amount of revenues at the least cost to the public, and in a fair manner that warrants the highest degree of public confidence in our integrity, efficiency, and fairness. In accomplishing this, we continually strive to help taxpayers resolve legitimate account problems as effectively as possible. While tax collection is not a popular function of government, it clearly is a necessary one. Without it all other functions would eventually cease.

There are people who encourage others to deliberately violate our nation's tax laws. It would be unfortunate if you were to rely on their opinions. These persons take legal statements out of context and claim that they are not subject to tax laws. Many offer advise that is false and misleading, hoping to encourage others to join them. Generally, their advise isn't free. Taxpayers who purchase this kind of information often wind up paying more in taxes, interest, and penalties, including fines and possible imprisonment.

Federal courts have consistently ruled against the arguments you have made. Therefore, we will not respond to future correspondence concerning these issues.

Sincerely yours,

D. L. P.

Operations Manager,
Exam SC Support

Click here to see scanned original

You've read my (and 1,199 other people's) letter and the IRS' non sequitur.

Even those of you wearing the largest set of blinders must be aware that something is going on here that defies rational explanation.

And this is not the only letter I have sent to the IRS where I have received non-responsive replies.

As pointed out in the reasons for question number six above: Older income tax regulations said that neither income exempted by statute “or fundamental law” were subject to the tax and other types of income were excluded because they were, “under the Constitution, not taxable by the Federal Government”.

This strongly implies that there is a Constitutional reason for why what you get paid for working inside the United States is not required to be reported on the Form 1040 and why what you get paid for working inside the United States is not on the list of income that is "not exempt" i.e. "taxable".

Since an implication is an indirect indication, I will provide a direct indication by presenting an examination of the Constitutional issues of taxation.