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26 U.S.C. Sec. 3401(a):
(a) Wages
For
purposes of this chapter, the term ''wages'' means all remuneration (other
than
fees paid
to a public official) for services performed by an employee for his
employer,
including
the cash value of all remuneration (including benefits) paid in any medium
other than
cash; except that such term shall not include remuneration paid -
(1) for active service
performed in a month for which such employee is entitled to the
benefits
of section 112 (relating to certain combat zone compensation of members of
the Armed
Forces of the United States) to the extent remuneration for such service
is
excludable
from gross income under such section; or
(2) for agricultural labor (as defined in section 3121(g)) unless the
remuneration paid for
such labor
is wages (as defined in section 3121(a)); or
(3) for domestic service in a private home, local college club, or local
chapter of a
college
fraternity or sorority; or
(4) for service not in the course of the employer's trade or business
performed in any
calendar
quarter by an employee, unless the cash remuneration paid for such service
is $50 or
more and such service is performed by an individual who is regularly
employed
by such employer to perform such service. For purposes of this paragraph,
an
individual shall be deemed to be regularly employed by an employer during
a
calendar
quarter only if -
(A) on
each of some 24 days during such quarter such individual performs for such
employer for some portion of the day service not in the course of
the employer's
trade or business; or
(B) such
individual was regularly employed (as determined under subparagraph (A))
by such employer in the performance of such service during the
preceding calendar
quarter; or
(5) for services by a citizen or resident of the United States for a
foreign government or
an
international organization; or
(6) for such services, performed by a nonresident alien individual, as may
be designated
by
regulations prescribed by the Secretary; or
(7) Repealed. Pub. L. 89-809, title I, Sec. 103(k), Nov. 13, 1966, 80
Stat. 1554)
(8)
(A) for services for an employer (other than the
United States or any agency thereof) -
(i) performed by a citizen of the United States if, at the time of
the payment of such
remuneration, it is reasonable to believe that such remuneration
will be excluded
from gross income under section 911; or
(ii) performed in a foreign country or in a possession of the
United States by such a
citizen if, at the time of the payment of such remuneration, the
employer is
required by the law of any foreign country or possession of the
United States to
withhold income tax upon such remuneration; or
(B) for
services for an employer (other than the United States or any agency
thereof)
performed by a citizen of the United States within a possession of
the United States
(other than Puerto Rico), if it is reasonable to believe that at
least 80 percent of the
remuneration to be paid to the employee by such employer during the
calendar
year will be for such services; or
(C) for
services for an employer (other than the United States or any agency
thereof)
performed by a citizen of the United States within Puerto Rico, if
it is reasonable to
believe that during the entire calendar year the employee will be a
bona fide
resident of Puerto Rico; or
(D) for
services for the United States (or any agency thereof) performed by a
citizen of
the United States within a possession of the United States to the
extent the United
States (or such agency) withholds taxes on such remuneration
pursuant to an
agreement with such possession; or
(9) for services performed by a duly ordained, commissioned, or licensed
minister of a
church in
the exercise of his ministry or by a member of a religious order in the
exercise
of duties required by such order; or
(10)
(A) for services performed
by an individual under the age of 18 in the delivery or
distribution
of newspapers or shopping news, not including delivery or distribution
to
any point for subsequent delivery or distribution; or
(B) for services performed by an individual in, and at the time of, the
sale of newspapers
or
magazines to ultimate consumers, under an arrangement under which the
newspapers
or magazines are to be sold by him at a fixed price, his compensation
being
based on the retention of the excess of such price over the amount at
which the
newspapers
or magazines are charged to him, whether or not he is guaranteed a
minimum
amount of compensation for such services, or is entitled to be credited
with
the unsold
newspapers or magazines turned back; or
(11) for services not in the course of the employer's trade or business,
to the extent paid
in any
medium other than cash; or
(12) to, or on behalf of, an employee or his beneficiary -
(A) from or to a trust
described in section 401(a) which is exempt from tax under
section 501(a) at the
time of such payment unless such payment is made to an
employee of the trust
as remuneration for services rendered as such employee and
not
as a beneficiary of the trust; or
(B) under or to an
annuity plan which, at the time of such payment, is a plan described
in section 403(a); or
(C) for a payment
described in section 402(h)(1) and (2) if, at the time of such payment,
it is reasonable to believe that the employee will be entitled to
an exclusion under
such
section for payment; or
(D) under an
arrangement to which section 408(p) applies; or
(13) pursuant to any provision of law other than section 5(c) or 6(1) of
the Peace Corps
Act,
for service performed as a volunteer or volunteer leader within the
meaning of
such
Act; or
(14) in the form of group-term life insurance on the life of an employee;
or
(15) to or on behalf of an employee if (and to the extent that) at the
time of the payment of
such remuneration it is reasonable to believe that a
corresponding deduction is
allowable
under section 217 (determined without regard to section 274(n)); or
(16)
(A) as tips in any
medium other than cash;
(B) as cash tips to an
employee in any calendar month in the course of his employment
by an employer unless the amount of such cash tips is $20 or more;
[1]
(17) for service described in section 3121(b)(20); [1]
(18) for any payment made, or benefit furnished, to or for the benefit of
an employee if at
the
time of such payment or such furnishing it is reasonable to believe that
the
employee
will be able to exclude such payment or benefit from income under section
127
or 129; [1]
(19) for any benefit provided to or on behalf of an employee if
at the time such benefit is
provided
it is reasonable to believe that the employee will be able to exclude such
benefit
from income under section 74(c), 117, or 132; [1]
(20) for any medical care reimbursement made to or for the benefit of an
employee under
a
self-insured medical reimbursement plan (within the meaning of section
105(h)(6));
or
(21) for any payment made to or for the benefit of an employee if at the
time of such
payment
it is reasonable to believe that the employee will be able to exclude such
payment
from income under section 106(b).
IRS Website, Wages Paid to Aliens and Citizens Abroad
Pay that is not wages
Employment for which the pay is not considered wages (for
graduated income tax withholding) includes, but is not limited to,
the following items:
-
Agricultural labor if the total cash wages paid to an
individual worker during the year is less than $150 and
the total paid to all workers during the year is less
than $2,500. But even if the total amount paid to all
workers is $2,500 or more, wages of less than $150 per
year paid to a worker are not subject to income tax
withholding if certain conditions are met. For these
conditions, see
Publication 51 (Circular A), Agricultural Employer's Tax
Guide. For further discussion of withholding and
reporting taxes on foreign agricultural workers in the
United States refer to
Foreign Agricultural Workers.
-
Services of a household nature performed in or about the
private home of an employer, or in or about the
clubrooms or house of a local college club, fraternity,
or sorority. A local college club, fraternity, or
sorority does not include an alumni club or chapter and
may not be operated primarily as a business enterprise.
Examples of these services include those performed as a
cook, janitor, housekeeper, governess, gardener, or
houseparent.
-
Certain services performed outside the course of the
employer's trade or business for which cash payment is
less than $50 for the calendar quarter.
-
Services performed as an employee of a foreign
government, without regard to citizenship, residence, or
where services are performed. These include services
performed by ambassadors, other diplomatic and consular
officers and employees, and nondiplomatic
representatives. They do not include services for a U.S.
or Puerto Rican corporation owned by a foreign
government.
-
Services performed within or outside the United States
by an employee or officer (regardless of citizenship or
residence) of an international organization designated
under the International Organizations Immunities Act.
-
Services performed by a duly ordained, commissioned, or
licensed minister of a church, but only if performed in
the exercise of the ministry and not as an employee of
the United States, a U.S. possession, or a foreign
government, or any of their political subdivisions.
These also include services performed by a member of a
religious order in carrying out duties required by that
order.
-
Tips paid to an employee if they are paid in any medium
other than cash or, if in cash, they amount to less than
$20 in any calendar month in the course of employment
For further discussion about federal income tax
withholding and reporting on payments made to employees of foreign
governments and international organizations refer to
Persons Employed by a Foreign Government or International
Organization. For further discussion about Social Security and
Medicare taxes on payments made to employees of foreign governments
and international organizations refer to
Persons Employed by a Foreign Government or International
Organization - FICA.
Services performed outside the U.S
Compensation paid to a nonresident alien for services performed
outside the United States is not considered wages and is not subject
to graduated withholding or 30% withholding.
26 CFR 31.3401(a)(11)-1: Remuneration other than in cash for
service not in the course of employer's trade or business
Title 26: Internal Revenue
PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
Subpart E—Collection of Income Tax at Source
(a) Remuneration paid in any medium
other than cash for services not in the course of the employer's
trade or business is excepted from
wages and hence is not subject to withholding. Cash
remuneration includes checks and other monetary media of exchange.
Remuneration paid in any medium other than cash, such as lodging,
food, or other goods or commodities, for services not in the course
of the employer's trade or business
does not constitute wages. Remuneration paid in any medium other
than cash for other types of services does not come within this
exception from wages. For provisions relating to cash remuneration
for service not in the course of employer's trade or business, see
§31.3401(a)(4)–1.
(b) As used in this section, the term “services not in the course
of the employer's trade or business” has the same meaning as when
used in §31.3401(a)(4)–1
26 CFR §31.3401(a)-3 Amounts deemed wages
under voluntary withholding agreements
(a) In general.
Notwithstanding the exceptions to the definition of wages specified in
section 3401(a) and the regulations thereunder, the term “wages”
includes the amounts described in paragraph (b)(1) of this section with
respect to which there is a voluntary withholding agreement in effect
under section 3402(p). References in this chapter to the
definition of wages contained in section 3401(a) shall be deemed to
refer also to this section (§31.3401(a)–3).
(b) Remuneration for
services. (1) Except as provided in subparagraph (2) of this paragraph,
the amounts referred to in paragraph (a) of this section include
any remuneration for services performed by an employee for an employer
which, without regard to this section, does not constitute wages under
section 3401(a). For example, remuneration for services
performed by an agricultural worker or a domestic worker in a private
home (amounts which are specifically excluded from the definition of
wages by section 3401(a) (2) and (3), respectively) are amounts with
respect to which a voluntary withholding agreement may be entered into
under section 3402(p). See §§31.3401(c)–1 and 31.3401(d)–1 for the
definitions of “employee” and “employer”.
26 CFR § 31.3402(p)-1 Voluntary withholding agreements.
26 CFR § 31.3402(p)-1 Voluntary withholding agreements.
(a) In general. An employee and his employer may enter into an
agreement under section 3402(b) to provide for the withholding of
income tax upon payments of amounts described in paragraph (b)(1) of
§31.3401(a)–3, made after December 31, 1970. An agreement may
be entered into under this section only with respect to amounts
which are includible in the gross income of the employee under
section 61, and must be applicable to all such amounts paid by the
employer to the employee. The amount to be withheld pursuant
to an agreement under section 3402(p) shall be determined under the
rules contained in section 3402 and the regulations thereunder. See
§31.3405(c)–1, Q&A–3 concerning agreements to have more than
20-percent Federal income tax withheld from eligible rollover
distributions within the meaning of section 402.
5 U.S.C. §8501(2)
"Federal wages"
TITLE 5 >
PART III >
Subpart G >
CHAPTER 85 >
SUBCHAPTER I > § 8501
§ 8501. Definitions
For the
purpose of this subchapter—
(2) “Federal
wages” means all pay and allowances, in cash and in kind, for
Federal service;
Social
Security Program Operations Manual System (POMS), section RS01401.005:
Wages Defined
RS 01401.005 Wages Defined
DEFINITIONS
1.
Wages
Wages means all remuneration for
employment including the cash
value of all remuneration paid in any medium other than cash, unless
specifically excluded under section
209 of the Social Security Act (Act). The name given the payment
is not controlling in determining whether it constitutes wages.
Payments may be paid on an hourly, daily, weekly, biweekly,
monthly, yearly or on a piecework or percentage basis.
2.
Wage exclusions
Wage exclusions are payments that are either totally or partially
excluded from the definition of wages under section
209 of the Act.
3.
Wage Credits
Wage credits are deemed dollar amounts credited to a veteran's
earnings record for active duty prior to 1957 and to the earnings
records of uniformed service members on active duty after 1956.
REFERENCES:
WARNING!: The red
boldfaced and underlined words above are "words of art" defined in the
Classification Act of 1923, 42 Stat. 1488, and they refer ONLY to
federal and not private employment.
The Antelope, 23 U.S. 66; 10 Wheat 66; 6 L.Ed. 268 (1825):
"Every man has a
natural right to the fruits of his own labor, is generally admitted; and
no other person can rightfully deprive him of those fruits, and
appropriate them against his will..."
Commercial League Association of America v. People ex. rel.
Needles, Auditor, 90 Ill. 166 (1878):
"The object of the
statute, no doubt, was to prevent the corporation from making dividends of
profits among the members, as do corporations organized for pecuniary
profit; and while the statute might subserve a useful purpose if construed
in this manner, we fail to perceive any benefit which would result if a
member of the association, who happened to fill an office, should be
deprived of receiving compensation for his labor as an officer.
Compensation for labor can not be regarded as profit, within the meaning
of the law. The word "profit," as ordinarily used, means
the gain made upon any business or investment--a different thing
altogether form mere compensation for labor."
Edwards v. Keith, 231 Fed 1:
"One does not derive income by rendering services and charging
for them."
Conner v. US, 303 F.Supp 1187 (1969) on page 1191:
"If there is no gain there is no income... Congress has taxed
income not compensation."
Wilby v. Mississippi, 47 S 465:
"It certainly was not the intention of the legislature to levy a
tax upon honest toil and labor."
Stapler v. US, 21 F.Supp 737, 739(1937):
"Income is not a wage or compensation for any type of
labor."
U.S. v. Ballard 400 F2d 404 (1976):
"The general term 'income' is not defined in the Internal
Revenue Code."
Spring Valley Water Works v. Barber 33 P 735:
"A right common in every citizen such as the right to own
property or to engage in business of a character not requiring
regulation CANNOT, however, be taxed as a special franchise by first
prohibiting its exercise and then permitting its enjoyment upon the
payment of a certain sum of money."
Tennessee Supreme Court in Jack Cole v. Commissioner MacFarland
337 SW2d 453 (1960):
"The right to receive income or earnings is a right belonging to
every person, and realization and receipt of income is therefore not a
"privilege that can be taxed." [from:Taxation West Key 933]
In this 1960 case, the Tennessee Supreme Court also quoted prior
decisions that defined the term `privilege' in contradistinction to right:
"Legislature ... cannot name something to be a taxable privilege
unless it is first a privilege." "Privileges are special
rights, belonging to the individual or class, and not to the mass;
properly, an exemption from some general burden, obligation or duty; a
right peculiar to some individual or body"
US Supreme Court in McCulloch v. Maryland, 4 Wheat 316:
"If it could be said that the state had the power to tax a
right, this would enable the state to destroy rights guaranteed by the
constitutions through the use of oppressive taxation. ... The power to
tax involves the power to destroy."
U.S. Supreme Court in Butcher's Union v. Crescent City 111
U.S. 746 (1884):
"The property which every man has in his own labor, as it is the
original foundation of all other property, so it is the most sacred and
inviolable. ... to hinder his employing this strength and dexterity in
what manner he thinks proper without injury to his neighbor, is a plain
violation of this most sacred property."
Oliver v. Halstead 86 SE 2d 859 (1955):
"There is a clear distinction between 'profit' and 'wages' or
compensation for labor. Compensation for labor cannot be regarded as
profit within the meaning of the law."
Stratton's Independence v. Howbert, 231
U.S. 309, 45 (1913):
"income ... may be defined as the gain derived from capital or
from labor or from both combined."
The Supreme Court in Eisner v. Macomber,
252 U.S. 189
(1920):
[subsequently reaffirmed in Goodrich v. Edwards, 255 US 527
(1921):]
- "... it becomes essential to distinguish between what is, and
what is not 'income'...
- "Congress may not, by any definition it may adopt, conclude the
matter, since it cannot by legislation alter the Constitution, from
which alone it derives its power to legislate, and within whose
limitations alone, that power can be lawfully exercised...."
- "Income may be defined as gain derived from capital, from labor
or from both combined, provided it be understood to include profits
gained through sale or conversion of capital assets."
In the 1959 Tax Court case Penn Mutual Indemnity Co. v. Commissioner
(32 Tax Court page 681):
"The rule of Eisner v. Macomber has been reaffirmed on so many
occasions that citation of the cases to this effect would be
unnecessarily burdensome. To depart from the rule at this late date
would ignore the sound principles upon which that case was decided and
would throw into confusion the fundamental income tax structure and law
as it has developed in the almost half century which has elapsed since
adoption of the 16th amendment. That there cannot be 'income' without a
'gain' accords with the common understanding of the term, a test of
construction which is particularly appropriate in our system of
self-assessed Federal income tax... Moreover, that which is not income
in fact manifestly cannot be made such by the legislative expedient of
calling it income...."
So. Pacific v. Lowe 238 F. Supp 736, 247
U.S. 330 (1918):
"'income' as used in the statute should be given a meaning so as
not to include everything that comes in. The true function of the words
'gains' and 'profits' is to limit the meaning of the word 'income'.
Laureldale Cemetery Assoc. v. Matthews, 345 A 239, and 47 A.2d 277
(1946):
"Reasonable compensation for labor or services rendered is not
profit."
US Supreme Court in Murdock v. Pennsylvania, 319 US 105, at 113 (1943):
"A state may not... impose a charge for the enjoyment of a right
granted by the Federal constitution."
Magnano Co. v. Hamilton 292
U.S. 40 (1934):
"The power to tax the exercise of a [right] ... is the power to
control or suppress its enjoyment."
President Jefferson, concluding his first inaugural address, March 4,
1801:
"... a wise and frugal government, which shall restrain men from
injuring one another, which shall leave them otherwise free to regulate
their own pursuits of industry and improvement, and shall not take from
the mouth of labor the bread it has earned. This is the sum of good
government… "
Spreckels Sugar Ref. Co. v.
Mclain, 192 U.S. 397; 24 SCt 382 (1904):
"the citizen is exempt from taxation unless the same is imposed
by clear and unequivocal language".
Oregon Supreme Court in Redfield v. Fisher, 292 P 813, pg 819 (1930):
"The individual, unlike the corporation, cannot be taxed for the
mere privilege of existing. The corporation is an artificial entity
which owes its existence and charter powers to the state: but the
individuals' right to live and own property are natural rights for the
enjoyment of which an excise cannot be imposed."
Long v. Ramussen, 281 F 236, 238 (1922):
"The revenue laws are a code or system in regulation of tax
assessment and collection. They relate to taxpayers, and not to
non-taxpayers. The later are without their scope. No procedure is
prescribed for non-taxpayers, and no attempt is made to annul any of
their rights and remedies in due course of law. With them Congress does
not assume to deal, and they are neither of the subject nor of the
object of the revenue law." Reaffirmed in Gerth v. US, 132 F Supp
894 (1955) and in Economy Heating Co. v. US, 470 F2d 585 (1972)
Regal Drug Co v.
Wardell, 260 US 386 (1922):
"Congress may not, under the taxing power, assert a power not
delegated to it by the Constitution."
US Supreme Court in Hurtado v. California, 110
U.S. 516 (1884):
"The state cannot diminish the rights of the people."
Sherar v. Cullen, 481 F.2d 946 (1973)
"... there can be no sanction or penalty imposed upon one
because of his exercise of constitutional rights"
Miller v. US, 230 F.2d 486 (1956)
"The claim and exercise of a Constitutional right cannot thus be
converted into a crime."
"First, wages are income.
Carter v. Commissioner, 784 F.2d 1006, 1009 (9th Cir.1986).
Second, paying taxes is not voluntary. Id. Third, placing the
burden of proof on the taxpayer does not violate due process.
Rockwell v. Commissioner, 512 F.2d 882, 885 (9th Cir.),
cert. denied,
423 U.S. 1015, 96 S.Ct. 448, 46 L.Ed.2d 386 (1975). Finally,
failing to provide a taxpayer with an administrative fact finding
hearing does not violate due process. See
Nunley v. Commissioner, 758 F.2d 372, 373 (9th Cir.1985)
( citing
Cafeteria & Restaurant Workers, Local 473 v. McElroy, 367
U.S. 886, 894-95, 81 S.Ct. 1743, 1748-49, 6 L.Ed.2d 1230 (1961));
see generally
Rockwell, 512 F.2d at 887. Thus, the tax court
appropriately dismissed Wilcox's petition."
[Wilcox v. C.I.R., 848 F.2d 1007 (C.A.9,1988)]
Jer. 22:13:
"Woe to him who builds his house by unrighteousness
And his chambers by injustice,
Who uses his neighbor's service without wages
And gives him nothing for his work,"
[Jer.
22:13, Bible,NKJV]
Haggai 1:6:
"You have sown much, and bring in little;
You eat, but do not have enough;
You drink, but you are not filled with drink;
You clothe yourselves, but no one is warm;
And he who earns wages,
Earns wages to put into a bag with holes."
[Haggai
1:6, Bible, NKJV; MORAL: Don't earn "wages"!]
Romans 4:4:
"Now to him who works, the wages are not counted as
grace but as debt. "[Romans
4:4, Bible, NKJV]
Romans 6:23:
"For the wages of sin is death, but the gift of God is
eternal life in Christ Jesus our Lord." [Romans
6:23, Bible, NKJV]
1 Tim. 5:18:
For the Scripture says, "You shall not muzzle an ox while it
treads out the grain," [ Deuteronomy 25:4] and, "The laborer is
worthy of his wages." [1
Tim. 5:18, Bible, NKJV]
James 5:1-6:
Rich Oppressors Will Be Judged
Danger of Riches; Patience and Prayer
"Come now, you rich, weep and howl for your miseries that are
coming upon you! 2Your riches are
corrupted, and your garments are moth-eaten.
3Your gold and silver are corroded, and their corrosion will
be a witness against you and will eat your flesh like fire. You have
heaped up treasure in the last days. 4Indeed
the wages of the laborers who mowed your fields, which you kept back
by fraud, cry out; and the cries of the reapers have reached the
ears of the Lord of Sabaoth.[a]
5You have lived on the earth in
pleasure and luxury; you have fattened your hearts as[b]
in a day of slaughter. 6You have
condemned, you have murdered the just; he does not resist you. "
[James
5:1-6, Bible, NKJV]
Deut. 24:14-15:
"You shall not oppress a hired servant who is poor and needy,
whether one of your brethren or one of the aliens who is in your
land within your gates. 15Each day you
shall give him his wages, and not let the sun go down on it, for he
is poor and has set his heart on it; lest he cry out against you to
the LORD, and it be sin to you. " [Deut.
24:14-15, Bible, NKJV]
Lev. 19:13:
"You shall not cheat your neighbor, nor rob him. The wages
of him who is hired shall not remain with you all night until
morning. " [Lev.
19:13, Bible, NKJV]
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