Article by Jack Cohen
Let’s take the larger view of “citizenship” and “jurisdiction” and stop nit-picking about United States jurisdiction over us, whether in Title 26 or elsewhere. It’s really quite simple. Very few codes define “citizen”, but several define “United States”. I am especially fond of the following two definitions. Read them carefully, and compare them to 26 USC 7701(a)(9) and (10):
5 USC (Government Organization and Employees) Sec. 7103
TITLE 5 PART III Subpart F CHAPTER 71 (Labor-management relations) SUBCHAPTER I General Provisions
Sec. 7103. Definitions; application
(a) For the purpose of this chapter -
(14) The term ‘State’ means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United States, American Samoa, the Commonwealth of the Northern Mariana Islands, or the Trust Territory of the Pacific Islands. (the Possessions are States, for purposes of Title)
(18) ‘United States’ means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Trust Territory of the Pacific Islands, and any territory or possession of the United States.
Within the United States Codes, the terms “means” and “includes” are used interchangeably.
Title 28, Judiciary and Judicial Procedure
3001 Definitions
(15) “United States” means –
(A) a Federal corporation;
(B) an agency, department, commission, board, or other entity of the United States; or
(C) an instrumentality of the United States.
Ya gotta love ‘em. Title 28 does not include the United States government in its definition of the United States. Here, it is eminently clear that the United States government is not the United States for Title 28 purposes. The definition contains no language limiting or expanding what is stated above.
There is a CANON of federal lawmaking that all federal legislation is territorial, unless a contrary intent appears. Whenever Congress wants to include the States within the scope of its legislation, it must say so, as it did for Title 5. Where laws apply is every bit as important as how they apply.
The people, to whom all authority belongs, have divided the powers of government into two distinct departments, the leading characters of which are foreign and domestic; and they have appointed for each a distinct set of functionaries. These they have made coordinate, checking and balancing each other like the three cardinal departments in the individual States; each equally supreme as to the powers delegated to itself, and neither authorized ultimately to decide what belongs to itself or to its coparcener in government. As independent, in fact, as different nations.” –Thomas Jefferson to Spencer Roane, 1821.
There is another canon that says that all federal legislation, that applies throughout the Union, must be in fulfillment of a constitutional duty. Thus, Congress can regulate the value of coin within a State, but not its commerce or its people, or their property, hence it cannot tax either people or property directly where its jurisdiction is not exclusive. There is still another canon of lawmaking that say that where Congress defines a term in law, the term is being used in a special sense. Thus, when Congress defines United States or State or citizen, it is indicating that the terms are being used differently than we might otherwise expect. The Code does not define income, per se, it defines “gross income” to indicate that the term is being used differently than we might expect. The reason the Code does not define income is that the term is used in the Amendment. Yet another canon teaches us that a term used in the Constitution cannot be defined in the laws; it must have the meaning it had when it was included in the Constitution, so income means the same thing today as it did in 1861, in the first income tax in America. It meant then, and means now, business profit.
The federal government’s duty is to provide for the free flow of commerce between States, and between all of them and the rest of the world. Jefferson, who was wise beyond modern recognition, said that relative to the world, we are one; relative to our domestic relations, we are many, hence our motto, e pluribus unum (and the many are one).
“The best general key for the solution of questions of power between our governments is the fact that ‘every foreign and federal power is given to the Federal Government, and to the States every power purely domestic.’ I recollect but one instance of control vested in the Federal over the State authorities in a matter purely domestic, which is that of metallic tenders. The Federal is, in truth, our foreign government, which department alone is taken from the sovereignty of the separate States.” –Thomas Jefferson to Robert J. Garnett, 1824.
Jefferson talked of our governments as separate departments of a whole. Most of the time, and under most circumstances, the federal government and the State governments exercise powers that are mutually exclusive. Thus, if my land can be taxed by the State, it cannot be taxed by the feds. If the feds lay a direct tax, it must be collected by the State according to the Rule of Apportionment. If the feds lay an indirect tax, such as the tax on gasoline, the States collect it from their merchants (according to the Rule of Uniformity) and pay it over to the feds. This is happening today, folks. The IRS does not collect the “national” federal gasoline tax. That, by itself, should tell us all something about the nature of the IRS and Title 26. If the income tax were a constitutional national indirect tax on corporate profits, it would have to be collected by the States, in the same manner and according to the same rule as the gasoline tax. That should lead us to question the use of the term “internal revenue tax”. “Internal” to what? Is there an “external” tax? Internal, as opposed to what- a general tax, or a national tax?
Those powers granted to the federal government are granted by the States, which would otherwise retain them as national powers. Nations coin their own money and support their own armies. In our case, what the feds provide for the States, such as money and a national defense, are only those items and services that are contemplated as necessary by Article I Section 8 of the Constitution, pursuant to the grants of powers to Congress. Those powers were granted to provide mutual benefit to the States, not to provide a replacement for the King. Ours is a system of dual governments, each sovereign in its own way.
It is said that Congress can tax anything it can regulate, and vice-versa. It can regulate the value of coin, interstate and international commerce, commerce with the Indian Tribes, naturalization and bankruptcy laws and rules for the States, but little else. There are four crimes Congress is authorized to punish- treason, piracy, violation of the laws of nations, and counterfeiting the coin or securities of the United States. All other crimes are violations of States’ rights to maintain peace within, and to exercise its police powers. The United States government has no police powers within a State. There are numerous cases in which the judges said so. The police powers are reserved to the States.
While we are on the subject of police powers, we note that the Constitution denies enforcement powers to the Executive, and reserves them to Congress, using such words as “to define and punish”. Nothing in Article II indicates that the Executive has enforcement powers. Legally, then, only Congress can sue to enforce the collection of taxes. The first collectors of the revenue were created by Congress in the Legislative Branch. Such officers were given capacity to sue and be sued. When our first Congress created the Office of the Secretary of the Treasury, they did not give the Secretary power to collect taxes or to sue, because the Constitution forbids either. Section 6301 of the Code requires the Secretary to collect the internal revenue taxes, but since he lacks capacity to sue and be sued, he cannot enforce the collection thereof. According to the Code, he must refer the case to the Justice Department for enforcement.
Now, the Justice Department is in the Executive Branch.
That Branch lacks capacity to sue and be sued under Article II. Titles 18 Crimes and Criminal Procedure, and 28, Judiciary and Judicial Procedure, apply in the District of Columbia and the possessions, because for those areas, the United States functions like a State government, wherein it exercises broader powers, and is subject to fewer restraints by the Constitution, and not as the government of the Union. See Rule 54 of the Federal (not national) Rules of Criminal Procedure for a list of courts having ORIGINAL jurisdiction to try Title 18 crimes.
On to Title 26.
In 26 CFR 1.1-1(c), it says that any person born or naturalized in the United States (which could be construed to include the 50 States absent other qualifiers) AND SUBJECT TO ITS JURISDICTION (a severe qualifier) is a citizen (for purposes of Title 26). “Subject to its jurisdiction” means NOT subject to the jurisdiction of any Union State. As a citizen of the United States residing in Washington State, I am subject to the exclusive jurisdiction of the State of Washington, not that of the United States, until I enter Fort Lewis or some other federal reservation, located within the State, or engage in some activity over which the United States exercises its sovereignty. Its sovereignty does not extend to how I make my living in Tacoma, unless I am importing or exporting something. Over certain areas, federal and state jurisdictions are sometimes concurrent. For example, Fort Lewis, Washington is on federal soil, ceded to it by the State Legislature, but over which the State exercises concurrent jurisdiction. Even though murder is a federal crime in a federal area, were I to commit murder there, I’d be prosecuted under Washington law by Washington prosecutors. However, the situation is nowhere reversed, where the feds have concurrent jurisdiction with the States outside federal zones. When the feds prosecuted Timothy McVeigh for blowing up a federal building, everyone overlooked the fact that the building was on Oklahoma soil, and not prosecutable by the feds, even if it was their building.
When the law refers to “its” jurisdiction, it is not referring to the Union States, OVER which it exercises very limited jurisdiction, and not general jurisdiction. Title 26 and several others clearly apply where the United States exercises general jurisdiction.
Also overlooked, but highly important, in my view, is what the government puts into its publications. If we look at the publications the government puts out, some of this gets easier to understand. There is vast confusion over withholding taxes, that most workers believe are income taxes, that is comfortably explained in government Pubs. See the 1998 Pub 515 for withholding requirements for withholding agents making payments of certain “items of income” to nonresident aliens. Under the heading of “Evidence of Residence”, it says that if the payee furnishes the payor with a statement, to the effect that he or she is a citizen or resident of the United States, the payor does not have to withhold under the rules explained in 515. This is the only publication that discusses withholding, and, as we know from Subchapter N, certain items of income paid to nonresident aliens is subject to the income tax, and likewise subject to withholding under Chapter 3, Withholding of Income Tax from Nonresident Aliens and Foreign Corporations, beginning at Section 1441.
Now, stop and think. If these taxes apply to nonresident aliens and foreign corporations, and also to citizens, can they apply in the same way? In other words, are Americans and foreigners taxed on the same items of income derived from U. S. sources, wherever or whatever they are? definitely not. Americans have rights that foreigners do not. Because the nature of the income tax is an excise tax on a privilege, it would be absurd to tax rights in the same way as we tax privileges.
I suggest the 1998 publication, because the following words have been omitted from the current publication. It goes on to say, “instead, get Publication 15, Circular E, Employers’ Guide to Withholding.”
Pub 15 obviously has to do with employment taxes. They are not the taxes “imposed” by Subtitle A. Thus, it is most interesting that Pub 15, under General Instructions, shows only two classes of employers: Federal Government Employers, and State and Local Government Employers. It does not suggest any other publication for those who are not government employers. We know this is correct, because Section 3401(c) defines “employee” as someone who works for the government. Pub 15 does not refer one to any other publication, for purposes of withholding, in case one is not a government employer, but it does include the requirements for W-4’s, W-2’s, W-2 G’s, 941’s, 945’s, and 1099’s. There are other Pubs we should glance at. One is Pub 516, U. S. Government Civilian Employees Stationed Abroad. American government employees abroad are most certainly subject to “its” jurisdiction, because they are outside the jurisdiction of any State. These are United States citizens residing abroad, who are subject to “its” jurisdiction.
When one takes up residence in Germany, he is subject to its jurisdiction. One cannot be subject to the jurisdiction of two nations at the same time. Where one is determines who or what has jurisdiction. Our 50 States are independent nations, just as Germany is independent of France. The only time one is subject to the jurisdiction of the United States while residing in a foreign nation (jurisdiction) is when he is employed and being paid by the government.
It is most important for all of us to remember that the IRC came about as the result of tax conventions with foreign nations. It did not arise out of a need to raise revenue, and was not proposed as a revenue measure. Conventions are not treaties, just as regulations are not laws. Whether income is taxable, by virtue of its being derived from a foreign source depends upon whether we have a tax “convention” with them. Any convention, like a treaty, with a foreign nation, is international, not national, or domestic, in scope. The purpose of the first income tax law of the 20th Century was to “equalize tariffs” between Britain and the U. S. The Corporation Excise Tax of 1909 began at Section 38 of “an Act to equalize tariffs…” Britain was at first the only nation from which income from sources without the United States could be derived. Today, we have 74 income, gift, and estate tax “conventions” with foreign countries, which the government refers to as “treaties”.
Even though one works for the American government while residing in Germany, he must pay any German taxes imposed on its residents, including income taxes, if any. Therefore, an Ambassador, who is an appointed official, and an employee under 3401(c), therefore subject to “its” jurisdiction, gets a break on his American Employment tax because he will probably be paying foreign income tax.
Look carefully at Sections 3401 and 3402, and then read the Privacy Act Statement on the back of a W-4. It says that the requirements for the information are 3402(f)(2)(A) and 6109 and their regulations. 6109 regulations show who is required to obtain and furnish a number, and its study is a revelation in itself. The requirements for numbers are imposed on U. S. persons and foreign persons, which is hardly surprising, since we are looking at the regulation of international commerce. 301.6109 (Part 301 is General Procedure) says “every U. S. person who files a return or statement must furnish “its” own taxpayer identification number.” It does not say “his or her” social security number. Thus, the only “persons” who are required to obtain and furnish numbers are persons who may be referred to as “it” rather than as he or she. It also says that “individuals” may use Social Security numbers for employment tax purposes.
Under 301.6109-1(b), Requirement to furnish one’s own number, we find the following interesting description:
“For provisions dealing specifically with the duty of employees with respect to their Social Security numbers, see Sec. 31.6011(b)-2(a) and (b) of this chapter (Employment Tax Regulations).” Part 31 of the Regulations is for Employment Taxes. Income tax regulations are found at Part 1.
Taxpayer numbers for income tax purposes are reserved for entities that can be described as an “it”. Employer numbers and social security numbers are provided for employment tax purposes. 3402 is the section that requires “employers” to obtain W-4’s and withhold taxes from employees. Employers, defined at 3402(d), are those employing the employees enumerated at 3401(c), government employees. Subtitle C is captioned “Employment Taxes and Collection of Income Tax at Source. It begins at Chapter 21, Section 3101, with Social Security. Chapter 24, captioned Collection of Income Tax at Source in the Index, is captioned “Collection of Income Tax at Source on Wages” within the body of the Code.
Section 3402, the second section of the Chapter, says that every employer shall “deduct and withhold “A TAX” in accordance with tables and computational procedures prescribed by the Secretary. Chapter 24 nowhere names the tax, except in its captions. Now look at the tables provided in the 1040 and 1040A instruction books. They are NOT the tables provided in the Code (provided by the law, if you will). Compare the tables at Section 1, for example, to the tables in the 1040A instructions. These are the tables prescribed by the Secretary, and are not the tables provided by the laws that impose income taxes. Surely, there must be a significant difference between a tax whose rate is set by Congress, and a tax whose rate is set by the Secretary.
There is no implementing regulation in Part 1 for employment taxes “imposed” by Subtitle C, Chapter 24, Section 3402. Technically, there is no need for one. Regulations that apply to the public, in any fashion, are required to be published in the Federal Register. The CFR is to the Federal Register what the Codes are to the Statutes. What is published in the CFR as a regulation must be first published in the FR. That there are no regulations in the CFR relating to 3402 means that the tables prescribed by the Secretary under authority of 3402 are not for public consumption, hence are not published in the CFR.
When we put all this together, we see that the “employment” income tax is not a Subtitle A tax at all. The Captions imply that it is an income tax, but calling your daughter China does not make her a place setting or a Chinese person. If it is an income tax, it could safely be called a Subtitle C income tax, but not a Subtitle A income tax.
We really need to know more about our legal history. “Employment Taxes” originated with the Civil Service Retirement Act (1930), not the income tax acts that began in 1909. If we read the Acts imposing other wage taxes, including Social Security, we see that they all apply to employers and employees of one government or another. The 1935 OASDI Act was a grant to “States” to provide for their welfare and retirement programs. The Act itself makes it clear that Social Security taxes are wage taxes on government employees, matched by government employers, intended to defray the expense of providing benefits for them, and were not intended to be revenue-raising measures. The governments involved were the governments of the Territories of Hawaii and Alaska, and the District of Columbia. It was a follow-up to the 1930 Civil Service Retirement Act. The feds were providing retirement benefits to their employees, and the governments of Alaska, Hawaii, and D. C. were political subdivisions of the United States, and they wanted similar benefits. Chapter 21 of the Code does not impose the SS tax- the tax is imposed at Title 42, Public Health and Welfare. In fact, all the taxes “imposed” by Subtitle C are actually imposed elsewhere.
Now that we have separated the two taxes, let’s try putting all this together. We know, or should know by now, that income taxes on nonresident aliens are taxes apply to income they derive (take out of) areas or activites that are subject to the sovereignty, or exclusive legislative jurisdiction, of the United States. The 1913 definition of State or United States still stands today.
“Act of 1913 38 Stat 114-166.
Construction of word “State” or “United States.”
H. That the word “State” or “United States” when used in this section shall be construed to include any Territory, the District of Columbia, Porto Rico, and the Phillipine Islands, when such construction is necessary to carry out its provisions.”
In 1916, Congress “codified” the “internal revenue laws” and altered the definition only to change “section” to “Title”, which Title became Title 26. Ask yourselves, “if the terms State or United States are used interchangeably (separated by “or”) to mean a territory or possession or the District of Columbia, and it apparently must mean that in order for the government to execute the provisions of Title 26, how can the government impose these taxes in States of the Union without violating the rule of construction above? There is no way that we could possibly construe Title 26 to be applicable to the States of the Union, but we could construe it to be applicable in the “States” defined at 3121 of the Code (the possessions and the District). Therefore, State, as used in the Code, unless otherwise specified, means a possession or the district. In those areas, citizens are subject to the jurisdiction, whether exclusive or concurrent with the local governments.
