Income and Compensation Defined

[Duke2Earl]

No I'm not going to answer your silly question. It is a totally nonsense question. It doesn't matter the tiniest single bit if you are a 3401 employee, a 3231 employee, or any other kind of employee. If you have received compensation for services, you are subject to income taxes. PERIOD!!!

You are fully entitled to your delusions but that also makes no difference to the outcome. Maybe you can get the cell next to your guru.

[Quixote]

And why doesn't anyone just answer the question detailed below: Why am I a 3401 employee but not a 3231 employee?

Because the answer is irrelevant to the issue under discussion on this thread.

[John J. Bulten]

Hee hee hee Duke. Of course if I received compensation I'm subject to tax on the income derived from that compensation. Since you (and Quixote) find 3401 employee so irrelevant (and thereby yield me that point), would you mind citing a case showing that compensation derives income without resorting to a term of art such as 3401 "employee" (or Kowalski "wages", or the like)?

As for everyone else, would you give me an honest answer? It seems to me that honest, even-tempered answers include at least:
- OK, you're not a 3401 employee (but it doesn't matter).
- OK, I don't know if you're a 3401 employee (but it doesn't matter).
- OK, I admit your question is logical (but I still think you're a 3401 employee).

Is there anyone who will publicly question the majority report that it's unamendably established that I'm a 3401 employee, that my question is thoroughly illogical, and that everyone can see how beautiful the emperor's clothes are?

1. If a party meets the description of "employee" in 26 USC 3121(d)(2) but does not meet any of the explicit descriptions of "employee" specifically listed in 26 USC 3231(b), is that party a 3231(b) employee? Remember jkeeb answered an implied "no" by saying, "You are not an employee under IRC 32xx"; and remember the subsection includes the clause, "The term 'employee' includes an officer of an employer", and IRC inclusion is somewhat expansive.

2. If a party meets the description of "employee" in 26 USC 3121(d)(2) but does not meet any of the explicit descriptions of "employee" specifically listed in 26 USC 3401(c), is that party a 3401(c) employee? Remember you answered an implied "yes" by saying on your FAQ, "'Employee' includes what you would normally think of as employees" (link above); and remember the subsection includes the clause, "The term 'employee' also includes an officer of a corporation", and IRC inclusion is somewhat expansive.

3a. If you do not answer no to 1, where has anyone authoritative ever held similarly, i.e., stating that common-law employees are in themselves subject to Railroad Retirement?

3b. Or, if you answer no to 1 but do not answer no to 2, by what rationale do you answer the two cases differently, i.e., rejecting the implicit application of your FAQ statement above to 3231(b)?

3c. Or, if you answer no to both, by what rationale do you retain your FAQ statement, i.e., maintaining a contradiction?

[Nikki]

Are you specifically ignoring the other threads which point out your guru's amazing win (he escaped without sanctions) on the very topics you are espousing?

Are you actually trying to make a point, or are you just trying to amass evidence for your "honest belief" defense at your trials?

[Joey Smith]

The social security number has nothing (nada, zed, zip, zilch) to do with the liability to pay taxes, any more than not having a driver's license allows you to run red lights.

You are still liable to pay taxes on your income even if you do not have an SSN, just as you must still obey the traffic laws even if you are driving without a license.

To claim that there is no tax liability because you don't have a SNN is an incredibly stupid and totally false argument. However, it is one that TPs buy into time after time after time.

You've obviously never read 3121 or 3401

Only according to you, for what that is worth (which of course is nothing). Nobody who matters believes this, and the courts certainly do not believe this.

[Duke2Earl]

No... I'm not playing at all. I'm not yielding you any points. You are simply wrong.... and no, I don't want to discuss it. The amounts you are paid by your employer are fully taxable no matter what it says in the FICA statutes. Nothing there affect taxability under the income tax system in the slightest. If you perform any services for another party and are paid with anything of value, you have taxable income for federal income tax purposes. And all your bullcrap will not change that. As your holy guru just found out, your (and his) assertions are simply preposterous.

[John J. Bulten]

No... I'm not playing at all. I'm not yielding you any points. You are simply wrong.... and no, I don't want to discuss it. The amounts you are paid by your employer are fully taxable no matter what it says in the FICA statutes. Nothing there affect taxability under the income tax system in the slightest. If you perform any services for another party and are paid with anything of value, you have taxable income for federal income tax purposes. And all your bullcrap will not change that. As your holy guru just found out, your (and his) assertions are simply preposterous.

Why Duke, of course an "employer" pays taxable amounts. But you don't really want to enlarge "taxable income" [you mean "gross"] to any services for anything of value and reinvoke the question of Congress's jurisdiction over Transylvania. And you probably want to question your allegiance to a position which you hold "no matter what it says in the FICA statutes", as that might be regarded as evidence you are espousing a position which has no basis in law. I suppose it's possible one of us is an IRS plant who is now greedily punching the buttons to send you one of those $5,000 penalty letters. Don't you implode on me too.

I haven't seen the court's ruling on Pete or its Quatloos thread (though I've looked). Could Nikki or someone link it?

Also, I was holding out on Banjo's cites until I had a free moment:

Considering that the tax on Mr. Springer's salary was upheld by the Court and considering that the 1913 Act provided for tax withholding at the source on wages and salaries, it's a good bet that Congress thought of them as income.

IIRC, whichever tax law applied to Springer, and the 1913 Act, used phrases like "income derived from salaries"; because wages and salaries are sources. And even you just used the word "source" to refer unconsciously to wages and salaries, which give rise to the phrase "withholding at the source". (Because of the custom definition and accounting of "wages", however, it qualifies as income as well as source.) Congress's thoughts are determined by its words when they are clear: the tax is on income, not on sources.

Since Congress has been specifically delegated the power to tax, the 10th Amendment is irrelevant, and as Dan has pointed out, the "tax" in Bailey wasn't a bona fide tax but a penalty.

Since Congress has been specifically delegated the power to tax with two qualifications, the 10th Amendment is relevant in determining cases in which the qualification of apportionment is required. Your other point does not vitiate my point that Bailey still says that the word "tax" (in context an excise) cannot apply to subjects reserved by the 10th to the States [or to the People by implication].

News flash: the Declaration is not and never has been the law. Apparently Bulten is oblivious to the fact that my "inalienable" right to transfer my own property can be taxed without apportionment. See Bromley v. McCaughn, 280 U.S. 124 (1929) .... Fernandez v. Weiner, 326 U.S. 340 (1945)

New cites to me. So transfer of property is excisable and alienable. Where'd you get the idea that I said transfer of property was the inalienable part of the right to property?

I don't ignore the decision, just the unconstitutional/creative interpretation.

Which doesn't make the decision any less the law. Bulten sounds like the mid-50's segregationists who refused to acknowledge the legality of the Brown decision.

I think there the segs disagreed with the Court itself. I am disagreeing with the Court's interpreters, but never (to my knowledge) with the Court.

[Nikki]

Try looking with your eyes open, even though that violates all of your Tax Evader standards.

at http://quatloos.com/Q-Forum/viewtopic.p ... highlight=

You know how Hendrickson likes to point out that the government has not prevailed on the merits in one of the cases against his followers?

Well, the court entered summary judgment in favor of the United States. The order and judgment are below.

http://www.cheatingfrenzy.com/fergusono.pdf
http://www.cheatingfrenzy.com/fergusonj.pdf

Where did that rim-shot icon go?

[John J. Bulten]

OK, replied on that thread. Still looking for the full text.

[natty]

I think there the segs disagreed with the Court itself. I am disagreeing with the Court's interpreters, but never (to my knowledge) with the Court.

No court has ever held that taxation on income of any type is a Direct Tax, yet that is the hidden premise within all of your arguments. You admit that you get paid for your work, therefore, you realize an accession to wealth which is income by any definition and clearly taxed by Congress.

[Quixote]

... would you mind citing a case showing that compensation derives income without resorting to a term of art such as 3401 "employee" (or Kowalski "wages", or the like)?

I already did. I can't take credit for finding it, though. It's straight from Dan's FAQ.

“One’s gain, ergo his ‘income,’ from the sale of his labor is the entire amount received therefor without any reduction for what he spends to satisfy his human needs.”
Reading v. Commissioner, 70 T.C. 730, 734 (1978), affd. 614 F.2d 159 (8th Cir. 1980).

[John J. Bulten]

No court has ever held that taxation on income of any type is a Direct Tax, yet that is the hidden premise within all of your arguments. You admit that you get paid for your work, therefore, you realize an accession to wealth which is income by any definition and clearly taxed by Congress.

Thanks, natty, but no. Taxation on "income" is indirect because income can be taxed by excise. Taxation on the source of income, e.g., pay-for-work, would be direct and must be apportioned, so such taxation may not reach the sources. It is tautological that Congress cannot indirectly tax any accessions to wealth which they cannot indirectly tax.

Sorry, Quixote, I generally ignore cites with "TC" in them. Intended to ask for USSC cites. Do you have the 8th circuit context by any chance?

[LPC]

Sorry, Quixote, I generally ignore cites with "TC" in them. Intended to ask for USSC cites.

“[T]he earnings of the human brain and hand when unaided by capital ... are commonly dealt with as income in legislation.” Stratton’s Independence, Ltd. v. Howbert, 231 U.S. 399, 415 (1913).

“There is no doubt that the statute could tax salaries to those who earned them....” Lucas v. Earl, 281 U.S. 111, 114 (1930).

“[The tax code] is broad enough to include in taxable income any economic or financial benefit conferred on the employee as compensation, whatever the form or mode by which it is effected.” C.I.R. v. Smith, 324 U.S. 177 (1945).

“[T]he premise that personal injury awards cannot involve gain is obviously false, since they often are intended in significant part to compensate for the loss of gain, e. g., lost wages. (Citation omitted.) Since the gain would have been income, surely at least that part of a personal injury award that replaces it must also be income.” Lukhard v. Reed, 481 U.S. 368, 375 (1987), (plurality opinion of Justice Scalia, joined by Rehnquist, White, and Stevens, Blackmun concurring in the result; footnote omitted).

“The definition of gross income under the Internal Revenue Code sweeps broadly. Section 61(a), 26 U.S.C. 61(a), provides that ‘gross income means all income from whatever source derived,’ subject only to the exclusions specifically enumerated elsewhere in the Code. As this Court has recognized, Congress intended, through 61(a) and its statutory precursors, to exert ‘the full measure of its taxing power,’ [citation omitted] and to bring within the definition of income any ‘accessio[n] to wealth.’ [citation omitted] There is no dispute that the settlement awards in this case [for ‘back wages’ to compensate for sex discrimination] would constitute gross income within the reach of 61(a).” United States v. Burke, 504 U.S. 229, 233 (1992). Later in the same opinion, the Supreme Court referred to the compensation received by the taxpayers as “the wages properly due them - wages that, if paid in the ordinary course, would have been fully taxable.” 504 U.S. at 241.

"It [I.R.C. section 104, relating to compensation for personal injuries] also excludes from taxation those damages that substitute, say, for lost wages, which would have been taxed had the victim earned them.” O’Gilvie v. United States, 519 U.S. 79 (1996).

“Even if we suppose that strike benefits are made to compensate in a sense for the loss of wages, the principle of payments in compensation does not apply because the thing compensated for, the wages, had they been received, would have been included in gross income.” United States v. Kaiser, 363 U.S. 299, 311 (1960).

Do you have the 8th circuit context by any chance?

Sure. What Quixote cited:

“One’s gain, ergo his ‘income,’ from the sale of his labor is the entire amount received therefor without any reduction for what he spends to satisfy his human needs.”

Reading v. Commissioner, 70 T.C. 730, 734 (1978), affirmed 614 F.2d 159 (8th Cir. 1980).

The 8th Circuit opinion affirming Reading was per curiam, and the complete text is as follows:

Taxpayers brought suit in the United States Tax Court contesting a deficiency assessment of $ 2,486.45 by the Commissioner for their 1975 federal income taxes. The deficiency assessment was based on (1) disallowing itemized deductions for housing, food, schooling, and medical expenses (not otherwise deductible under 26 U.S.C. § 213) because those expenses were nondeductible personal living or family expenses under 26 U.S.C. § 262, and (2) a determination that taxpayers owed self-employment taxes on reported self-employment income.

Before the Tax Court taxpayers conceded the disallowed deductions were for living or family expenses but they contended that by disallowing deductions for those expenses Congress exceeded its authority to lay and collect income taxes under the sixteenth amendment, and that income means the gain or income received less the expense of living. The Tax Court rejected taxpayers' claims but redetermined the deficiency to be $ 2,468.29, and on January 25, 1979, the court entered its decision for the Commissioner. On appeal taxpayers claim they had no income, for income tax purposes, and on appeal they challenge the constitutionality of the tax laws and Tax Court.

The standard of review on appeal from the Tax Court is whether the Tax Court's factual findings are clearly erroneous (See, e.g., Commissioner v. Duberstein, 363 U.S. 278, 291, 80 S. Ct. 1190, 4 L. Ed. 2d 1218 (1960); Smith v. Commissioner, 608 F.2d 321, at 322 (8th Cir. 1979)), and "findings of fact are not clearly erroneous unless the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Smith v. Commissioner, supra, 608 F.2d 321, at 323, Citing United States v. United States Gypsum Co., 333 U.S. 364, 394-95, 68 S. Ct. 525, 92 L. Ed. 746, Rehearing denied, 333 U.S. 869, 68 S. Ct. 788, 92 L. Ed. 1147 (1948). The findings of the Tax Court that all except $ 78 1 of the claimed deductions were not expressly deductible under the 1954 Internal Revenue Code and were thus nondeductible under 26 U.S.C. § 262, and that taxpayers owed self-employment income tax on their self-employment income was correct. We have repeatedly rejected attacks on the constitutionality of the income tax laws; taxpayers claims of unconstitutionality are without merit, and thus we adopt the well reasoned decision of the Tax Court filed August 21, 1978.

It is so ordered.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

1. $ 78 for state gasoline tax was not otherwise claimed as a deduction and was held by the Tax Court to be deductible as a tax expense under 26 U.S.C. § 164.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

Some others:

“[W]e have [repeatedly] held that wages are within the definition of income under the Internal Revenue Code and the Sixteenth Amendment, and are subject to taxation.” Denison v. Commissioner, 751 F.2d 241, 242 (8th Cir.1984) (per curiam), cert. denied, 471 U.S. 1069, 105 S.Ct. 2149, 85 L.Ed.2d 505 (1985); United States v. Gerads, 999 F.2d 1255 (8th Cir. 1993), cert. den. 510 U.S. 1193 (1994).

"Taxpayers' argument that compensation for labor is not constitutionally subject to the federal income tax is without merit. There is no constitutional impediment to levying an income tax on compensation for a taxpayer's labors. [Citations omitted] Furthermore, § 61(a) of the Code defines gross income as "all income from whatever source derived, including . . . compensation for services." In sum, the sixteenth amendment authorizes the imposition of a tax upon income without apportionment among the states, and under the statute, the term "income" includes the compensation a taxpayer receives in return for services rendered. Taxpayers' argument that wages received for services are not taxable as income is clearly frivolous." Funk v. Commissioner, 687 F.2d 264, 265 (8th Cir. 1982), affirming T.C. Memo. 1981-506.

[.]

Geez, Dan, I don't think that will be enough. Nothing is ever enough for John J. Bulshite.

[Nikki]

Dan:

Not a single one of those cases are apposite since they all fail to mention John Bulten, Cracking The Code, and Congressional jurisdiction over Transylvania.

[Cpt Banjo]

Taxation on the source of income, e.g., pay-for-work, would be direct and must be apportioned, so such taxation may not reach the sources.

The Supreme Court held in the Springer case that a tax on pay-for-work was an indirect tax, so once again you make inane claims with no legal support.

[natty]

Taxation on "income" is indirect because income can be taxed by excise. Taxation on the source of income, e.g., pay-for-work, would be direct and must be apportioned, so such taxation may not reach the sources. It is tautological that Congress cannot indirectly tax any accessions to wealth which they cannot indirectly tax.

Yes, yes, you believe YOUR income can not be taxed without apportionment. But why? Whether or not you believe YOUR income is property does not preclude the fact that YOUR income was first INCOME. Whether or not you consider YOUR "pay-for-work" a source does not preclude the fact that YOUR pay was first derived from your work/labor (which clearly meets the definition of income "taxable by excise"). The courts have not distinguished between one type of income and another. ALL income is taxable without apportionment.

[Duke2Earl]

No... I'm not playing at all. I'm not yielding you any points. You are simply wrong.... and no, I don't want to discuss it. The amounts you are paid by your employer are fully taxable no matter what it says in the FICA statutes. Nothing there affect taxability under the income tax system in the slightest. If you perform any services for another party and are paid with anything of value, you have taxable income for federal income tax purposes. And all your bullcrap will not change that. As your holy guru just found out, your (and his) assertions are simply preposterous.

Why Duke, of course an "employer" pays taxable amounts. But you don't really want to enlarge "taxable income" [you mean "gross"] to any services for anything of value and reinvoke the question of Congress's jurisdiction over Transylvania. And you probably want to question your allegiance to a position which you hold "no matter what it says in the FICA statutes", as that might be regarded as evidence you are espousing a position which has no basis in law. I suppose it's possible one of us is an IRS plant who is now greedily punching the buttons to send you one of those $5,000 penalty letters. Don't you implode on me too.

What part of I don't play word games don't you get? Oh... that must be all you can do. The only one taking a position that has no basis in law is you. And yes, I specifically meant that if a person provides any services for anyone (statutory employer or not) and receives compensation (money or anything else of value) for those services, THAT COMPENSATION IS INCOME FOR FEDERAL INCOME TAX PURPOSES. And I do specifically know the meanings of gross income and taxable income. Is that clear enough for you? I hope you enjoy your coming days in court. And, no, I don't work for the government.

[Demosthenes]

Thread's too long. Start a new one.