|INSTRUCTIONS: 4.9. Ensure Your Employer Reports the Correct Amount on Your W-2 as "wages"|
|TABLE OF CONTENTS:
Example completed forms:
If your employer has withheld federal taxes from your pay, then chances are they have reported this fact to the IRS and your state on a form W-2. A very important step is to ensure that they report the correct numbers on this form in Block 1 under “Wages, tips, other compensation”. Most of you who have worked for an employer are aware of the report of income paid to you on the IRS Form W-2. This section covers legal facts about the IRS W-2 form that you must be made aware of immediately.
The term “Wages”, as most terms in the Internal Revenue Code, has a very specific legal definition within the Code and is found in 26 U.S.C. §3401(a). Because this term is defined in the code, you can assume by the rules of statutory construction that the commonly understood definition does not apply. “Wages” is not a term to be taken lightly. Listing any amount for “Wages” in Block 1 of the W-2 implies that you are a "public officer" within the United States government, in fact, pursuant to 26 U.S.C. §6041.
The Internal Revenue Code states that what you are receiving is simply “remuneration”, which is not intended to have “Income taxes” withheld from it... who shall you believe in order to confirm this, the Secretary of the Treasury and the published tax laws or your ignorant tax preparer who has never even seen or read the law?
For decades employers have operated under a false presumption that they should withhold from and report ALL remuneration paid to their employees as if the amounts were "Wages/compensation". In fact, they have been doing so wrongly because they were mislead by fraudulent IRS publications which the federal courts have routinely refused to punish the IRS for. The IRS’ own Internal Revenue Manual confirms that you can’t rely on these publications and by implication, any of the forms they publish or the terms they use on the forms!
"IRS Publications, issued by the National Office,
explain the law in plain language for taxpayers and their advisors...
While a good source of general information, publications should not
be cited to sustain a position."
Keep in mind once again that all IRS forms fall into the category of "IRS publications"! The question then is:
“If we can't trust IRS forms, why then are we filling them out and signing under penalty of perjury that what we entered is consistent with them?”
The federal courts have also repeatedly stated that the IRS cannot be held responsible for statements they make to you or following the procedures contained in 26 CFR Part 601. See the following link for more information about this:
Another question also comes to mind:
“How is it that the Department of Injustice can prosecute what it calls ‘scam artists’ and 'tax cheats' for publishing allegedly false information in books and ban those books as ‘unprotected commercial speech’, like they did with Irwin Schiff’s Federal Mafia book on April 7, 2003, and yet at the same time hypocritically not be held responsible for the fraudulent and downright harmful information that the IRS puts in ITS publications?”
Beats us! As a matter of fact, we assert that this type of hypocrisy violates the Constitution, where it says in Article 1, Section 9, Clause 8 that:
No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.
In effect, what the government has done is refused to live by the same rules that its citizens have to abide by, which makes it above the law and in effect, a “monarch”. That is tyranny, in fact.
The research exposed here reveals that there is no legal or statutory basis for why your employer should feel obligated to report any of the money you earn as “wages” if you did not elect to have taxes taken out of your paycheck. We go into this further in Federal and State Tax Withholding Options for Private Employers, Form #09.001. Furthermore, only the foreign earned income of U.S. Citizens over $70,000 is included in the definition of “gross income” under Section 911 so that there is no reason why most Americans would need to withhold federal income taxes from their pay to begin with.
This is the position of the Secretary of the Treasury in the regulations, and it must certainly be correct as the Congress has stated in 26 U.S.C. § 3401(a)(8)(A)(i) that the only remuneration paid by employers to be defined as "wages" are the amounts included in gross income under 26 U.S.C. §911. It is apparent that only the mis-application of the legal definition of "wages" by employers has caused the W-2 forms to be reporting incorrect amounts to the IRS, when such a claim is completely without legal foundation.
This 'error' in application of the law must be known about by some lawyer or Official with the IRS, but has obviously been overlooked (unquestionably by accident) and perpetuated in the Tax Profession as well as our educational institutions, to not only draw Americans living and working in states of the union into subjection to the 'Income Tax', but also give the CPA's, accountants, and Tax Attorneys in this country a multitude of potential clients.
The false and fallacious claims on this W-2 form are the beginning of so many problems for the average American, such as assessments, which cause deficiencies, liens and then levies. Even the IRS' Criminal Investigative Division (CID) uses these forms sent to the IRS to claim that "gross income" was made, thus returns were to be filed.
Before you file your first Request for Refund (see sections 18.104.22.168 and 9.9.1), you will need to formally request that your employer provide correct W-2’s that accurately reflect your earnings in a way that is consistent with the tax laws. The notification should be via Certified Mail with Return Receipt Requested. This letter is very important in establishing your prima facie case against federal income tax liability, which is the next step in the tax freedom process that includes the Request for Refund letter. It will also be used to demonstrate your good faith efforts to resolve federal income tax issues at the lowest administrative level before escalating the matter into court. If you have to go to court, the jury and the judge will both respect that you are doing your best to take the least resistance/cost administrative path, especially if the award of attorney fees has been requested against you by the other side (IRS/DOJ). You may use the sample letter provided in Section 9.8.3 and entitled: “Letter to Employer Requesting Accurate W-2’s”.
The letter should establish the following things:
In the Internal Revenue Code (also known as Title 26 of the U.S. Code, or 26 U.S.C for short) there are many definitions that are limited in their applications by words such as "for purposes of this chapter", "for purposes of this subchapter" and "for purposes of this subpart".
In contrast, Section 1402 contains definitions of terms upon which there is no such limitations upon their application, so the definitions therein apply throughout the entire Code. Section 1402(d) of the IRC states as follows:
"Sec. 1402(d). Employee and wages.
The term "employee" and the term "wages" shall have the same meaning as when used in Chapter 21 (sec. 3101 and following, relating to the Federal Insurance Contributions Act).
Note the absence in this Code definition of any words of limitation such as "for purpose of this chapter" or "for purposes of this subchapter." The definition means, therefore, that whenever and wherever the terms "employee" and "wages" are used anywhere throughout the Code, their applications are limited to those people involved in activities within the four island possessions, the same as in Chapter 21, the FICA tax chapter.
The Internal Revenue Code chapter which relates to withholding is Chapter 24, titled "COLLECTION OF INCOME TAX AT SOURCE". It is extremely important to note that this chapter contains no section imposing any tax. Rather, the entire chapter is written to establish and authorize provisions for withholding of tax merely as a method for the payment of taxes which may be imposed in other sections of the Code.
Whenever a tax is imposed, there is always a section containing words such as "there is hereby imposed a tax...". But in Chapter 24, no such wording exists in any section; so clearly the entire chapter merely sets forth the procedures for collecting taxes imposed elsewhere in the Code by the withholding methods described in the Code sections of the chapter.
"Sec. 3401(c). Employee.
For purposes of this chapter, the term "employee" includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia or any agency or instrumentality of any one or more of the foregoing. The term "employee" also includes an officer of a corporation.
It is revealing that this definition includes the term "State" which is defined in Code section 7701(a)(10) as the District of Columbia (only). Remember that "includes," as a word used in laws, is a word of confinement, not enlargement according to the Supreme Court in Montello Salt v. Utah, 221 U.S. 452 (1911).
"The determining word is, of course the word 'including.' It may have the sense of addition, [221 U.S. 452, 465] as we have seen, and of 'also;' but, we have also seen, 'may merely specify particularly that which belongs to the genus.' Hiller v. United States, 45 C. C. A. 229, 106 Fed. 73, 74. It is the participle of the word 'include,' which means, according to the definition of the Century Dictionary, (1) 'to confine within something; hold as in an inclosure; inclose; contain.' (2) 'To comprise as a part, or as something incident or pertinent; comprehend; take in; as the greater includes the less; . . . the Roman Empire included many nations.' 'Including,' being a participle, is in the nature of an adjective and is a modifier."
"...The court also considered that the word
'including' was used as a word of enlargement, the learned court being
of opinion that such was its ordinary sense. With this we cannot concur.
It is its exceptional sense, as the dictionaries and cases indicate.
We may concede to 'and' the additive power attributed to it. It gives
in connection with 'including' a quality to the grant of 110,000 acres
which it would not have had,-the quality of selection from the saline
lands of the state. And that such quality would not exist unless expressly
conferred we do not understand is controverted. Indeed, it cannot be
Hence this definition limits the application of the term employee to those working for the Federal government, for the District of Columbia, for U.S. possessions, and officers or a government owned corporation.
Section 3401(d) identifies the "employer" as one for whom the "employee" works. This means that the meaning of the term "employer" is limited to those entities listed in Section 3401(c)--the U.S. government, District of Columbia, etc.
The term "employer" does not apply to any non-government employer or business. On the basis of these definitions alone, most of the nation's population is not subject to the withholding provisions in this chapter. In addition to those limitations on the application of the term "employee" shown above, Section 1402(d) limits the application of the term "employee" and the term "wages" to activities within the four island possessions only.
Therefore, the withholding provisions of Chapter 24 can apply only to those working for the Federal government or the District of Columbia, etc. within these four Island possessions--not within the fifty states of the union.
IR Code Section 3402(a)(1) contains tricky wording which could readily lead businesses and individuals into erroneously believing that they are required to deduct and withhold taxes from the pay of these they hire. It is worded as follows:
"Section 3402. Income tax collected as source.
(a) Requirement of withholding.
(1) In general. Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary. Any tables or procedures prescribed under this paragraph shall...
Note that this Section 3402(a)(1) says that the "employer" (Federal government, District of Columbia, etc) shall deduct and withhold from "wages" a tax determined in accordance with the Secretary's tables and computational procedures.
We previously showed that the meaning of the term "wages" is limited by Section 1402(d) to payments for activities occurring within the four island possessions only, the same as provided in Chapter 21 imposing the so-called Social Security (FICA) tax.
These "tables and procedures" are authorized to be provided by the Secretary under Section 3402(p)(3):
"Sec. 3402(p)(3). Authority for other voluntary withholding.
The Secretary is authorized by regulations to provide for withholding-
(A) from remuneration for services performed by an employee for the employee's employer which (without regard to this paragraph) does not constitute wages, and
(B) from any other type of payment with respect to which the Secretary finds that withholding would be appropriate under the provisions of this chapter, if the employer and employee, or the person making and the person receiving such other type of payment agree to such withholding. Such agreement shall be in such form and manner as the Secretary may by regulations prescribe. For purposes of this chapter (and so much of subtitle F as relates to this chapter), respect to which such agreement is made shall be treated as if they were wages paid by an employer to an employee to the extent that such remuneration is paid or other payments are made during the period for which the agreement is In effect.
Note that the Secretary is authorized to provide for withholding by issuing tables computational procedures, and other instructional material on withholding that apply to only those who have voluntarily agreed to withholding. An agreement exists only when an individual who is hired voluntarily requests that money be deducted and withheld from his pay for payment of taxes and the one for whom he works completes the agreement by his voluntary act of collecting money as an unpaid tax collector for the government.
Despite the general mistaken belief that the deduction and withholding of money for taxes is required by law, a simple reading of this Code section shows that such is not the case. Mandatory withholding would conflict with two key provisions in the U.S. Constitution: the Fifth Amendment right to due process states that no person shall be deprived of property (having his pay withheld) without due process of law (a ruling by a court) and the Thirteenth Amendment prohibition against slavery or involuntary servitude, such as being forced to be an unpaid worker (slavery) or an unpaid Federal tax collector.
The use of the words "the person making" and "the person receiving such other type of payment" in 26 U.S.C. §3402(p)(3) relates to non-federal employers and employees who voluntarily "agree to such withholding". Federal regulation (CFR) Number 31.3402(p)(1) states:
Sub-Section 31.3402(p)-1 Voluntary withholding agreements. (T.D. 7096, filed 3-17-71; emended by TD 7577, filed 12-19-78).
(a) In general. An employee and his employer may enter into an agreement under section 3402(p) to provide for the withholding of income tax upon payments of amounts described in paragraph (b)(1) of Sub-Section 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.
(b) Form and duration of agreement.
(1)(i) Except as provided in subdivision (ii) of this subparagraph, an employee who desires to enter into an agreement under section 3402(p) shall furnish to his employer with Form W-4 (Employee's Withholding Allowance Certificate) executed in accordance with the provisions of section 3402(f) and the regulations thereunder. The furnishing of such Form W-4 shall constitution request for withholding.
(ii) in the case of an employee who desires to enter into an agreement under section 3402(p) with his employer, if the employee performs services (in addition to those to those to be the subject of the agreement the remuneration for which is subject to mandatory income tax withholding by such employer, or if the employee shall furnish the employer with a request for withholding which shall be signed by the employee, and shall contain-
(a) The name, address, and social security number of the employee making the request,
(b) The name and address of the employer.
(c) A statement that the employee desires withholding of Federal Income tax, and, if applicable, of qualified State individual income tax (see paragraph (d)(3)(i) of Sub-Section 301.6361-1 of this chapter (Regulations on Procedure and Administration), and
(d) If the employee desires that the agreement terminates on a specific date, the date of termination of the agreement. If accepted by the employer as provided by subdivision (iii) of this subparagraph, the request shall be attached to, and constitute part of, the employee's Form W-4. An employee who furnishes his employer a request for withholding under this subdivision shall also furnish such employer with Form W-4 if such employee does not already have a Form W-4 in effect with such employer.
(iii) No request for withholding under section 3402(p) shall be effective as an agreement between the employer and employee until the employer accents the request by commencing to withhold from the amounts with respect to which the request was made.
Note the wording in sub-sections (b)(1)(ii) and (iii) of this regulation: "...an employee who desires to enter into an agreement" and "request for withholding", "desires withholding" and "mutually agree upon", all of which clearly and unambiguously show the voluntary nature of the entire withholding system.
The significance of a Form W-4 "Employee's Withholding Allowance Certificate" is clearly explained in this regulation which states:
"The furnishing of such Form W-4 shall constitute a request for withholding,"
Regulation Section 31.3402(p)(2) states:
Sec. 3402(p)(2). An agreement under section 3402(p) shall be effective for such period as the employer and employee mutually agree upon. However, either the employer or the employee may terminate the agreement prior to the end of such period by furnishing a signed written notice to the other. Unless an employer and employee agree to an earlier termination date, the notice shall be effective with respect to the first payment of an amount in respect of which the agreement is in effect which is made on or after the first "status determination date (January 1, May 1, July 1, and October 1 of each year) that occurs at least 30 days after the date on which the notice is furnished. If the employee executes new Form W-4, the request upon which an agreement under section 3402(p) is based shall be attached to, and constitute a part of, such new form W-4.
This regulation states that the agreement "shall be effective for such period as the employer and employee mutually agree upon", and that either the employer or the employee "may terminate the agreement prior to the end of such period by furnishing a signed written notice to the other."
Because employers have possession and control over their employee's earnings before the money is paid over to the employees, the key to the operation of the illegal withholding scam is the deception and intimidation of the employers to withhold money from their employees' pay even if their employees object to the withholding.
Most employers, as well as their accountants and attorneys, have never studied the IR Code carefully enough to understand its complexity. They are not aware of the geographical and other limitations in the Social Security (FICA) tax and upon the withholding provisions in Chapter 24 of the IR Code. They do not understand (as explained earlier in this article) that the FICA tax and the withholding provisions apply only within Puerto Rico, the Virgin Islands, Guam and American Samoa; that under Chapter 24 withholding is not mandatory for either the employer or the employee, and that the withholding provisions apply only to cases where both the employer and the employee voluntarily agree to the withholding.
If a non-government employer considers not withholding when his employees demand their full pay and consults his accountant, tax lawyer or the IRS about the matter, his attention is usually called to IR Code Section 3403. This section is a psychological bombshell designed to intimidate the non-government employer into ignoring and defying any employee's refusal to agree to withholding. IR Code Section 3403 states:
Sec. 3403. Liability for tax.
The employer shall be liable for the payment of the tax required to be deducted and withheld under this chapter, and shall not be liable to any person for the amount of any such payment.
This section usually erroneously convinces non-government employers that they are personally liable to pay to the IRS the amount the withholding tables specify even if they do not withhold the money from their employees pay.
Non-government employers rarely understand that the term "employer” as defined in the withholding provisions means only Federal Government related agencies and instrumentalities (listed in 26 U.S.C. Section 3401(d), see section 22.214.171.124 of the Great IRS Hoax for further details).
Even then withholding applies only within the four island possessions and then only when there is a voluntary mutual agreement for withholding requested by the "employee" and agreed to by the "employer". Because of these facts there is no way a non-government employer within the fifty states of the union can be required to withhold tax under IR Code Chapter 24. He cannot be "liable" for payment of the tax unless he voluntarily acts as an unpaid tax collector for the government. As we discussed in section 126.96.36.199 of the Great IRS Hoax about "Withholding agents", your typical private or commercial employer can't legally even be classified or ordered to act as a withholding agent as per the definition of "withholding agent" found in 26 U.S.C. Sec. 7701!
Many will make the conclusion in reading 26 U.S.C. §3402(n) that they can claim that they did not have a Subtitle A income tax liability for the prior year, and do not expect to have one for the next year, and thus they should be able to inform inform the private employer that they are are not subject to withholding via a simple letter. This does not mean that they are "exempt", however! The term "exempt individual" has a very specific legal definition found in 26 U.S.C. §7701(b)(5) that does not describe most Americans. This very fact is often used by the IRS to try to illegally penalize persons who submit the W-4 Exempt form, in fact. The use of the W-4 Exempt form therefore very often causes more problems and hardship than many people can endure. This is due to the fact that the legal term "Exemption" implies a status given by an authority over the one seeking "Exemption". In Black’s Law Dictionary 5th Edition the first two words in the definition of "Exempt" are, "To release".
In order for someone to be released from something they must first be subject to it. Therefore, if one indeed has a release from the law administered by the IRS, then the IRS will be in possession of such a release. Correct? If you are outside the jurisdiction of the IRS and the Internal Revenue Code to begin with as a “nonresident alien”, then it makes no sense to declare yourself as “exempt”, in fact!
What happens when you make a claim, of being released or relieved from a liability which you never legally had, to a powerful and legally ignorant bureaucracy such as the IRS? What happens when they do not find any criteria in the administrative record supporting your claim to be released from withholdings, as you have filed returns of "Gross income" for prior years, like the years you were a student who could claim "EXEMPT" and filed returns to get more money back? How can you be released from a tax and withholding thereof on “gross income” you have never legally earned?
This is exactly why the W-4 exempt procedure alone is a failure when recognized by the IRS! The key is that before you stop withholding, you must establish a basis for reasonable belief and an administrative record at the IRS that shows that you do not owe income taxes. You can do this by, for instance, including the basis for your belief that you do not owe and doing it BEFORE you stop withholding. Without a basis for belief or prima facie evidence supporting that belief, the IRS has no choice but to assume that you continue to be liable for taxes because of your previous behavior of filing tax returns and of paying taxes. Until told otherwise, they have to continue to assume that you are liable for paying tax.
The IRS also plays games with the W-4 Exempt trick used by tax freedom advocates. With a W-4 that does not say exempt, it is effective indefinitely and never expires. However, W-4 Exempt forms expire annually on February 15, and must be “renewed” by the employee. This is done by filling out another W-4 Exempt form. If the employee doesn’t fill out another form, then they are told by the IRS to continue to withhold at the single rate with no exemptions. We presume that they do this so that they can keep track of you and where you are and your status, since it is likely that if you are filing exempt, then you probably also aren’t filling out tax returns. They want to “track you” with their big computer database and they can do it better if you have to keep sending them new forms every year, because they will find you by looking where the forms came from. That very fact, by the way, is why you should fill out “Fifth Amendment” under your address and social security number on that form whenever you submit it. On the other hand, if you didn’t claim exempt and authorized withholding, then you are probably filing 1040 tax returns to get your refund, so they can track you that way. They want to keep the data in their computer fresh, so they can use it to harass you if they wrongfully decide you need to “pay up.”
It therefore appears that our ignorance of the law has gotten us into a trap of not being able to easily establish the actual and legal truth behind our earnings and legal status.
The reality is that the law allows anyone to make a proper legal claim to stop withholding, but we must use the correct form, and it’s not the W-4! The correct form is the W-8 or W-8BEN for most Americans. Yet, many "tax protesters" made use of the W-4 Exempt to escape from the withholding trap. Subsequently, the IRS has assumed regulatory authority to question all "EXEMPT" W-4’s as well as those claiming over 9 deductions, despite there being no provision of law in the statutes in Chapter 24 allowing for such actions by the IRS.
In a document known as the “Croasman Memorandum”, a meeting is documented that happened in 1973 that reveals the internal discussion of the IRS regarding the Exempt W-4 tactics employed at that time. In this document you will see that the IRS knew then that it needed legislation enacted in order to take the course of action that it sought. But guess what???... you've got it!... they never had any enabling statutory language enacted for them to be authorized and sanctioned by law to make any regulations to authorize that their determinations regarding W-4 forms.
This is an important fact as in many cases handled by the state of California Franchise Tax Board, they help us on this position as they have repeatedly cited this following portion of case law, which shows that the IRS and the Secretary of the Treasury Department cannot write a statute to expand its specific purpose:
"The provisions of the act are unambiguous, and its direction specific, there is no power to amend it by regulation." Koshland v Helvering, 298 U.S. 441 (1936), 80 L. Ed 1268 56 S.Ct. 7678.
(Courtesy of the California FTB)
To this day, the only person with the authority to make any determination about a W-4 form, according to 26 U.S.C. §3402, is the employer having to determine marital status when not claimed. The employee is the one who determines everything else on the form.
So, even to this day, despite the lack of statutory sanction, every employer is told by IRS instructions, set forth in fraudulent IRS publications, to send every Exempt W-4 or every W-4 claiming over 9 deductions to the IRS. Almost all of the decisions regarding these types of W-4’s are made by the Detroit Computing Center, Questionable W-4 Program, despite there being no statutory authority for them to make, and inform employers, of such decisions. The only statutory authority that can be found at this time is given to the local District Director pursuant to 26 U.S.C. §7512, and its Regulations at 26 CFR § 301.7512.
In these sections of law, it is plainly set forth that the District Director is the only person with the sole authority to order an “employer” (a federal employer, in fact) to withhold certain taxes, including the taxes withheld under §3402 (see 26 CFR § 301.7512-1(a)(1) & (b)), from a worker. This can only be done by a letter of Notice (see 26 CFR § 301.7512-1(d)) from the Director himself, hand delivered by an internal revenue officer or employee. However, we wish to emphasize that since an "employer" is someone who has "employees" (who by the way are all federal elected or appointed officials) as defined in 26 U.S.C. §7701, then most non-governmental businesses don't even qualify as employers in the sense it is defined in the Internal Revenue Code, and therefore are NOT subject to the jurisdiction of the District Director!
This is really interesting, as the criminal penalties set forth in 26 CFR § 301.7512-1(f), cannot apply to any employer until the District Director sends his letter to them and that letter is hand delivered. These are the specifications of the law, and they obviously leave the employer out of the loop as to making any legal determinations of the status or correctness of the claims of the worker, and lay all such responsibility upon the local District Director, who will be solely and legally responsible for his legal determinations, not the IRS Computing Center in Detroit.
Nevertheless, and despite the limitations of the letter of the law as enacted by your Congress, the IRS justifies its actions by application of baseless Regulations promulgated by the Secretary of the Treasury, without foundational authority in the language of the statute, and thus the IRS Computing Center in Detroit Michigan will deny a person's claim of "EXEMPT" or their deductions, and often send out a false W-4 penalty letter with a penalty of $500. Keep in mind that under the U.S. Constitution in Article 1, Section 9, Clause 3, the IRS cannot legally penalize a person without a court hearing. But they can in fact penalize the government’s own “employees”, and that is exactly what you declare yourself to be when you submit the W-4, which once again is the WRONG form for most Americans.
If this were not enough of an affront to the Rule of Law in this nation, it must be noted that the IRS admits plainly and openly that there is no administrative appeal remedy at law............ Without any legal recourse, many who have followed the law to release themselves from withholding are permanently trapped at the maximum withholding rate of "Single O", de facto penalty for trying to assert their legal rights to all of their money. Likewise, if an employee does not provide a W-4 to their employer or they submit an invalid W-4 (see 26 CFR § 31.3402(f)(5)-1), then they also are trapped by the IRS at the single zero rate as per 26 CFR § 31.3402(f)(2)-1(a). This little problem is being approached as it is a clear denial of Due Process of law which is to be protected by the 5th and 14th Amendments, and our right to redress of grievance against any determinations made by the government, that effect the life liberty or property of the individual, pursuant to the 1st Amendment. The easy way to avoid all these conflicts is to use the correct form, which is the W-8BEN, or to submit a personal letter claiming not that you are exempt, but that you are not subject to the withholding, didn’t earn any taxable income last year, and don’t expect any for the coming year.
Had the law been followed by the employer, the person would not only have no withholdings taken from their pay, there would also be no returns sent to the IRS claiming that they effectively earned any "Wages, tips, or other compensation” in Block 1 of the W-2 form. This would have set the person free of all IRS filing and assessment woes, as the IRS computer would have no data entered into it to be manipulated by the employees in charge of the much defamed Assessment and Collection Divisions.
For decades employers have operated under an established custom to withhold from and report ALL remuneration paid to Americans as if the amounts were "wages/compensation". However, there is no legal or statutory justification in this custom, since only the foreign earned income of “U.S. Citizens” (which most Americans technically are NOT) over $70,000 is included in the definition of gross income under Sec. 911. This is confirmed in the Constitution under Article 1, Section 8, Clause 3, which authorizes the U.S. government to tax and regulate only foreign and interstate commerce. That is to say, the Constitution authorizes Congress to tax “income” derived only from commerce that is external to states of the union. This is also confirmed in the Federalist Paper #45 and talked about in section 5.2.3 of the Great IRS Hoax if you want to check it out.
Even if we did earn “gross income” as legally defined, we must still have a voluntary withholding agreement in place in order to earn “wages” as legally defined in 26 CFR §31.3401(a)-3(a):
26 CFR Sec. 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 (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 Sections 31.3401(c)-1 and 31.3401(d)-1 for the definitions of "employee" and "employer".
If we don’t have such an agreement in place or if we submitted a W-8BEN form to stop withholding, then the employer:
When we try to approach our employers about correcting the amount of “Wages, tips, and other compensation” reported in Block 1 of the W-2 form, many employers will claim that the law requires them to make the report as they have. This kind of response simply reveals their ignorance, and when you press them for the law, they will give you a blank stare and look at you like an alien. The way to deal with this is to try to educate them. When they won’t cooperate, then elevate it to the corporate counsel. When that won’t work, you have to submit an IRS form 4852 with your tax return instead of the W-2 provided by your employer. This form is a Substitute W-2, and allows you to specify corrected amounts on the erroneous report provided by your employer.
When the IRS is confronted with the 4852 Form they inform the employer, the employer fails to check the facts of the law supporting their claim and confirms the W-2 claim numerically. So, the IRS may return to the individual submitting the 4852 and say something similar to the quote:
"We cannot change our... (position)...without a corrected statement from them (the third party employer/payor)."
You must keep in mind that the W-2 form is simply hearsay evidence which is inadmissible in court unless validated with an affidavit and unless it is completely consistent with the law. Typically, the affidavit that does this is your signature at the bottom of the tax return. Why do you help the government this way, because you aren’t obligated to? The IRS also does not have the authority to make such a determination as that above, and the federal courts have said that you can’t rely on ANYTHING they say anyway, so does it matter whether they say they can’t change their position? See:
This clearly demonstrates that all of our individual problems begin with these erroneous third party reports. How do we stop these erroneous reports? This has to be done by first informing the employer/payor of the erroneous claims that they have made, and the erroneous nature of the claims. Question #9 on the 4852 Form asks the person filing the form what they had done to get a correction. If we have a paper trail showing that we tried to correct the W-2 amount it and they refused anyway, then we can defend our position with evidence.
Since this W-2 Form is informing the recipient and the IRS of the amount of Subtitle C Employment Taxes withheld, these forms would appear to be prima facie evidence of “gross income”, despite the fact that the copy of the W-2 sent to the worker does not have to be executed under penalty of perjury as required by 26 CFR §1.6065-1. However, employment taxes under Subtitle C of the Internal Revenue Code are entirely different from Income taxes under Subtitle A. In fact, the IRS’ own 6209 manual at the beginning of Chapter 4 classifies employment withholding classes in tax class 5, which means they are “gifts”, which means they are “donations” and not “taxes”! If these Subtitle C employment taxes had been associated with Subtitle A personal income taxes, they would instead have fallen into tax class 2, which is the class reserved for ! See section 5.6.8 earlier for further details on this scam with employment taxes. See the link below to download your own copy of the IRS 6209 Manual:
The information on the W-2 form is also, by the way, reflected on the corresponding 940 series and 1120 returns of the employers and payors, therefore, in substance these claims are made under penalty of perjury, in a not so direct way. In addition, there is a very common presumption that amounts claimed to be “wages”, “tips” etc. on these forms are expected to be entered onto the first line of the 1040 Income Tax Return and then signed under penalty of perjury. At that moment you mistakenly signed the tax return under penalty of perjury claiming that the content was true, the “gifts” and “donations” documented on incorrect W-2’s provided by your employer are then magically transformed into “gross income” and under 26 U.S.C. §6151 and 26 CFR §1.6151, you then become responsible to pay the tax indicated on this incorrect return that you voluntarily submitted. Of course, we know from reading Chapter 5 that the only way these “gifts” could technically be “gross income” is if you were a "public officer" of the United States government, and by submitting the W-4 form, that is exactly what you declared yourself to be! Look in the upper left corner of the form. The title says “Employee’s Withholding Allowance Certificate”. That word “employee” is defined in 26 CFR 31.3401(c )-1 as an elected or appointed officer of the United States government.
When you discover that you have not been receiving 'wages' all of these years, what strategy do you use to rightfully demand a refund of all the taxes withheld? You must once again:
Some employers can be very obstinate in denying requests by employees to correct their W-2’s. These employers have been operating in total disregard of the law for so long that they simply can’t accept the reality of what the law says, and seldom are they even interested in what the law says. Why? Here are some very good reasons:
For these reasons and many others, most employers will simply deny your request to correct your W-2’s and try to discredit you by saying “you don’t’ know what you are talking about,” as a way to keep themselves out of trouble. They may also threaten you with disciplinary action if you continue to push your stance, even though it is founded in law. They may treat the issue of you refusing to provide social security numbers the same way. The only recourse when backed into a corner like this by your employer is to pursue the following options, listed in decreasing order of risk and confrontation:
1. Sue them for misapplying the tax laws (the most confrontational approach), thereby forcing them to correct their approach. This is costly and could cause you to be terminated from the company.
2. File an IRS Form W-4E to make yourself exempt from paying income taxes, so the income they report is irrelevant and won’t appear on a W-2. This is a less confrontational approach. However, before you do this, you must ensure that you establish a prima facie case against your income tax liability as we discuss in the next section, or the IRS will come back and tell your employer to ignore your W-2E and withhold at the single-zero rate, which will circumvent this approach.
3. Let them do what they want but ensure that you document your concerns and requests completely and provide the documentation when you file for your income tax refunds:
3.1. Send to your employer a certified letter documenting their misapplication of the tax laws and misreporting of “gross income” on your W-2 and ask them formally to fix it in writing. In the letter, ask them for a formal written response to your concerns so you have a paper trail you can use as evidence.
3.2. Submit a copy of the letter along with an IRS Form 4852 with your next tax return which corrects the amounts reported on the W-2 provided by the ignorant and uncooperative employer.
The approach we have taken of those presented above is item 3, because it is the least confrontational and involves the least risk, but also has a history of being effective with the IRS.
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