The Internal revenue laws are limited in application.
The Internal revenue laws are limited in application.
The Internal Revenue Code encompasses more than just
"income tax."
The Code is divided into 11 subtitles. The first 5 subtitles
each deal with different categories of taxation.
The last 6 pertain to "Procedure and Administration"
(subtitle F), "Joint Committee On Taxation" (subtitle
G), "Financing The Presidential Election Campaign" (subtitle H),
the "Trust Fund Code" (subtitle I), "Coal Industry
Health Benefits" (subtitle J), and "Group Health
Plan Portability" (subtitle K).
Subtitle "A" is income tax.
Subtitle "C" is employment tax or social security
tax.
Subtitle "A" is in no way related to subtitle C.
The W-2 and 1099 "wage" information commonly reported
by employers is a function of the tax on wages
under subtitle C (not income tax) for the purpose
of building credits towards social security. The tax on wages
has absolutely nothing to do with the tax on income under
subtitle A.
The "income tax" under subtitle A is an "indirect" tax
in the form of an "excise" imposed on certain
"activities" or "occupations" and a liability
to pay the tax must arise from statute.
The only statute under subtitle A (income tax) making
anyone liable is section 1461 which applies to
withholding agents who are required to withhold
only from foreign entities like nonresident aliens and foreign
corporations.
The only requirement for an individual to file a return
under subtitle A (income tax) is section 6012(a).
The Internal Revenue Service identifies the imposition
of the income tax and the type of income that
is considered "taxable income" for the purpose of this filing
requirement in their request to the U.S. government's
Office of Management and Budget (OMB) which must
"approve" the administration and enforcement
of the applicable regulations. Taxable income for the purpose
of this section is limited to certain income that has
been "earned" while living and working in certain
"foreign" countries or territories. According
to the OMB, the return that is required under this section of
the Internal Revenue Code is Form 2555 (not the 1040)
and it is entitled "Foreign Earned Income." According
to the regulations, 26 CFR part 600 to end, the
1040 return is merely a supplemental return or worksheet for
the required Form 2555.
Treasury Decision 2313 clarifies that the Form 1040 individual
income tax return is appropriate for any person
acting as a fiduciary for a nonresident alien
and receiving interest and/or dividends from the
stock of domestic (US) corporations on behalf of that alien.
The income tax under subtitle A is mandatory for those
mentioned above (but only for those to whom it
applies). It is NOT voluntary as some have asserted.
Since the law is limited in application, the question of
whether it is mandatory or voluntary is superfluous.
The question is: to whom, and under what circumstances
is the law applied?
Certain legal requirements with regard to the wage tax
under subtitle C may also be considered mandatory,
but only for the payor of the wages (the employer)
and even then, only if both the employer and the
employee have voluntarily agreed (via application) to participate in
the entitlement program. Since neither can be compelled
to participate, compliance is said to be
voluntary.