Quote from ratboy88:
from whatever source... so you go to sources... and it turns out.. they are referring to non resident aliens doing business domestically... or legal citizens doing business with foreign businesses or us possesions like puerto rico.
so... when the browns say they aren't taxable... this explains why. they are none of the above... if ed brown was doing business with a foreign corporation.. then he would oblige the irs and pay taxes.
nice try commie.
"The Office of Management and Budget does not require any form for the income tax imposed by section 1 of the Internal Revenue Code, or identifies section 1 of the Code as applying only to nonresident aliens."
More nonsense.
The actual facts are these:
Under the Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520, the Office of Management and Budget (OMB) is required to number each form required by an agency of the federal government for the collection of information and identify the law or regulation that requires that the form be filed.
Treas. Reg. § 602.101(c) lists various regulations that require returns and the OMB control numbers for the IRS forms required by those regulations.
Form 1040, which is the income tax return for individuals, was assigned OMB Control No. 1545-0074, and is listed as a form required by a number of different regulations, including regulations under section 61 (âGross Income Definedâ), section 63 (âTaxable Income Definedâ), and section 6012 (âPersons Required to Make Returns of Incomeâ), but not section 1 (âTax Imposedâ).
Initially, the information schedule for foreign earned income, Form 2555 (OMB Control No. 1545-0067), was listed as a form required by a number of different regulations, including Treas. Reg. § 1.1-1 (âTax Imposedâ), and Form 2555 was the only form listed for that regulation. However, that listing was deleted in 1994, and Form 2555 is now listed as a form required by section 6012, just like Form 1040.
Because Form 1040 is not listed as a tax form for section 1, but Form 2555 once was, tax protesters concluded that section 1 applies only to foreign income, and so only foreign income is taxable, which is completely wrong.
The cross-reference between Form 2555 and section 1 was wrong from the start, because the Paperwork Reduction Act relates to forms for the collection of information and section 1 is not the section that requires income tax returns. Section 1 of the Internal Revenue Code (and Treas. Reg. § 1.1-1) imposes a tax on taxable income and provides the rates for calculating the tax but does not actually require the collection of any information. The obligation to file a tax return is imposed by section 6012.
The IRS eventually realized that the reference to Form 2555 was inconsistent with other cross-references and in 1994 the listing of OMB numbers for IRS forms was amended by deleting the reference to Treas. Reg. § 1.1-1 and adding OMB Control No. 1545-0067 (Form 2555) to the forms required by Treas. Reg. § 1.6012-1. (Document 94-1253, filed May 24, 1994.)
Of course, the inferences drawn by tax protesters only flow in one direction. To a tax protester, the publication of a cross-reference between section 1 and foreign income is proof that the tax protester is right, but the removal of the cross-reference is not proof that the tax protester is wrong.
So there was once a regulation that stated that a form used to report foreign income was a form required by section 1 of the Internal Revenue Code. Which is meaningless at best.
Only a few court opinions have been found with this argument: