December 16, 2003 - admin

Tax protesters and international tax rules

The tax protester universe seems to be organized like this. On one side you have a few cunning hucksters making a ton of money on books, seminars, and tapes. On the other side you have what “Repo Man” described as “ordinary [edited] people.” These are gullible folk that seem to live in wishful thinking land, not reality.

So it is with today’s installment. Here’s the pitch from the hucksters. Section 861 of the Internal Revenue Code says what is TAXABLE. By definition anything not named in Section 861 is NOT taxable. Therefore, you, dear Gullible Buyer of My Books, as a U.S. citizen need not pay tax on income you earn in the U.S.

The number of logical errors in the argument cannot be calculated. Needless to say it is false on several levels: (1) Section 861 applies to nonresidents; (2) citizens and residents incur tax based on other sections of the Internal Revenue Code; (3) Section 861 is not the only way that nonresidents can be taxed by the U.S.

The Tax Division of the Department of Justice is playing bongo drums on two Northern California taxpayers. See the complaints filed against a florist and a travel bag manufacturer. Both are PDFs.

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