 Ed and Elaine Brown of New Hampshire
In fact, one's legal obligation to pay "income" tax is dependent on two things. (1) That "income" was earned, and "income" is a specific legal term (not "all that comes in"). (2) Was an "information return" created and filed with the IRS about an individual, reporting payment(s) made to that individual?
The use of an "information return" (typically a 1099, W-2 or K-1 form) does two things: (1) It reports an amount of money paid, and (2) it characterizes the legal nature of that payment, meaning that it testifies that the named individual received payment as an exercise of federal privilege. Whether the latter is true or not doesn't matter in the eyes of the IRS: As long as information returns are filed about you, a PRESUMPTION is made that you owe tax on that "income."
"Income/wages/employee/employer [and] U.S. trade or business" are LEGAL terms, as defined by the Internal Revenue Code. They are not just words from the English language. If you are truly an "employee," you will owe a tax on your "income." What that boils down to is the determination of the SOURCE of your earnings. If they are federally connected -- that is, if the federal government participates in the creation of your monetary receipts (e.g., if its FDIC protection insures your savings bank account), it demands and is entitled to a portion of your "income." This is called an "excise tax." Always remember, the "income" tax is an excise tax, not a direct tax. (Note that your annual interest "income" is reported by the bank on a 1098 form -- another type of "information return." It is sent to both you and the government as a report testifying that you made a certain amount of "income" by way of an exercise of federal privilege.)
So where's the law? The law is those particulars. "Income" as defined in the Code is taxable by law. And "information returns" constitute legal testimony that an individual or entity received a payment that is taxable by law. Aaron Russo's famous film America: Freedom or Fascism may have opened eyes, but it was absolutely wrong on the issue of income tax. Although Russo was eventually made aware (by Pete Hendrickson) that there IS a legal basis for paying "income" tax, he said it was too late to re-edit the film. Becoming as popular as it did, Russo's film has unfortunately spread the myth that "there is no law that says we have to pay income tax."
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Last Updated on Friday, 09 January 2009 14:32 |
