Presuming that you as a Citizen are earning domestic income, it is probably being reported on the W-2 as 'Wages'.

The term 'Wages', as most terms in the Internal Revenue Code, has a very specific legal definition within the Code. 'Wages' is not a term to be taken lightly.

The tax laws state 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 tax preparer? 

Read below:

For decades employers have operated under an established custom to withhold from and report ALL remuneration paid to U.S. Citizens as if the amounts were "wages/compensation".

The research exposed in the W4 and Gross income articles on this site have revealed, without opposition, that there is no legal or statutory justification in this custom, as only the foreign earned income of U.S. Citizens over $70,000 is included in the definition of gross income under § 911.

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 § 3401(a)(8)(A)(i) that the only remuneration of U.S. Citizens paid by employers to be defined as "wages" are the amounts included in gross income under § 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 to the IRS 'Gross Income', when such a claim is lacking in any legal or statutory merit.

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 the Educational Institutions, to not only draw Citizens living and working in the United States into 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 Investigation Division uses these forms sent to the IRS to claim that "gross income" was made, thus returns were to be filed.

I am more confident in saying this now, especially since the original writing of this Article, a Member of Taxgate called me up and faxed a copy of the IRS Form 4852 to me.  This was earth shaking as I had the idea to inform the IRS of our contentions of factual nature bearing legal and statutory merit, but now I was given the IRS Form and procedure as the tool I needed to project the argument forward into the Administrative Process.

For over 6 months the IRS has received these Forms and refuses to refute them. Instead, what has developed is exactly what I had believed would come forward.

In regards to the claims made by employers on the W-2 Forms and when we seek correction, the employer claims that the law requires them to make the report as they have. Yet, when pressed for the law that supports their determinations about the remuneration, the employer has no response.

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 returns to the individual and says something similar to this quote:

"We cannot change our... (position)...without a corrected statement from them (the third party employer/payor)."

This clearly demonstrates to me that my analysis and conclusion, that all of our individual problems begin with these third party reports, is absolutely correct.

The task before us in this matter is to invalidate and/or 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. This fits right into the form and process of the 4852 Form as question #9 asks the person filing the form what they had done to get a correction.

Since we also have an argument of legal and statutory merit of Code, Regulations, and U.S. Supreme Court Rulings regarding the importance of sources, the 4852 works very well in the plan to present the legal position pursuant to question #8 on the Form.

We now have a means, through IRS forms and procedure to present the fact that we have been reading and obeying the 'law as written'.  We and the employers and payors have 'reasonable cause' to legally not file W-2 (or 1099) returns, without fear of harm... whereas following the mere advice of your tax counselor does not appear to have any legal or statutory merit!

If it did have merit, why is it that no employer or payor can provide any law supporting their determinations as reflected on the return forms?

Since this W-2 Form is informing the recipient and the IRS of the amount of Subtitle C Employment Taxes and Subtitle A Income Taxes withheld, these forms would well appear to be prima facie evidence (despite the fact that the copy of the W-2 sent to the worker does not have to be executed under penalty of perjury, 1.6065-1) of such taxes withheld and taxable earnings paid, as well as the fact that an Income Tax Return needs to be filed.  I say this as the information on this form is 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 to this, the 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 this moment, the information on the W-2 return (or at least the supporting monthly and quarterly returns) submitted by the employer under penalty of perjury is magically transformed from a claim of amounts paid relating to "gross income", to a claim of amounts paid which meet the legal criteria to be defined as 'gross income'!

Therefore, it can be seen how it is that the IRS and an employer both know very well that the amounts that the employer enters onto a W-2 will be presumed to be "gross income", as defined in § 61 of the Internal Revenue Code, and must be refuted as such.  If not, we have no standing to ever claim that one is not subject to the 'income tax', thus the employment of the 4852.

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 can inform the employer that they are exempt on a W-4. This would appear to forbid the employer from having any 'duty' to make a return on a W-2 under § 6051, since they did not have any "Gross income" as defined under 26 U.S.C. § 61(a) and 26 CFR § 1.861 et. seq.

This approach very often causes more problems and hardship than most 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 5^th 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?

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 something you have never earned?

This is exactly why the W4 exempt procedure is a failure when recognized by the IRS!

It appears that our ignorance has gotten us into a trap of not being able to easily establish the actual and legal truth behind our earnings and legal status. With this web site, that is changing...

The reality is that the law allows anyone to make a proper legal claim on the W-4. Yet, many "tax protesters" made use of this law and escaped 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.

Within the Members Hall, and here also, are copies of documents from the 1973 that reveal the internal discussion of the IRS regarding the Exempt W-4 tactics employed at that time.  In these documents 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 (1936) 298 U.S. 441, 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 USC § 3402, is the employer having to determine marital status when not claimed. All you need is the law and a search engine to prove this.

So, even to this day, despite the lack of statutory sanction, every employer is told by IRS instructions, set forth in 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.  This 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 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.

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.

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........... yet.

Without any legal recourse, many who have followed the law to release themselves 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.

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 Amendment, 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.

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 "gross income" as defined by law. 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.

Seeing the pitfalls in the way that the employer is misleading the IRS into misapplying the laws here, upon the employer's testimony, can be very discouraging, when you know the definition of "Gross income". (We have worked to develop a strategy to inform employers to correct their returns, as they are not making accurate claims of "Gross income" pursuant to the rules promulgated by the Secretary.  Nevertheless, not one employer challenged to date, has been reported as responding to our question regarding what law they applied to the Citizens remuneration to make it "wages" or gross income.  To this we can only be patient and wait for the IRS to spring the trap of the law and due process.)

So, considering the employer's testimony, it is not difficult for us to understand how the IRS can make counterclaims against those who make use of the laws in Subtitle C in order to set themselves free of withholdings and reportings, as up until 1997 they have thrown themselves into the hands of the IRS without any way to prove that their pay does not constitute "wages" under § 3401(a). With the employer being no more enlightened, it is then not difficult to understand why there is no appeals process for the workers' claims, as the IRS is seen as the sole authority regarding "wages" as defined by the law, when in actuality, it is the employer who holds all of the power.

In the past, the only strategies which we had were inherited, from those at the vanguard of this fight, and they were very confrontational towards the Social Security Administration by the assertion of one's right as a Citizen to not be compelled into the Social Security Act.

Although completely successful when properly executed by the employer, recent findings in the law have exposed its weak points under the law, and should now strike hard at the obstinate arguments of those employers, who have refused to honor the rights of the Citizen and continue, in most cases, to misapply the law in willful ignorance. This subject is better covered in the W-4 article.

Click on Strategies if you want to make every effort to correct your employers and get all of their erroneous claims of your earning "Gross income", corrected.

Still, it is obvious that something must be done about this, so we have drawn up some "Political Action" letters to root out some answers from the Secretary of the Treasury as to why his Service cannot follow his instructions, why the Commissioner is allowing such flagrant disregard of the agreement between the Secretary and the Congress as to how his Service would conduct itself on this matter, and to your Congressional officials telling them you now know the truth about this and want to know when they are going to do something about it.

And do not forget to make a call to your Congressional Officials on this, as telephone calls are an immediate gauge that their offices respond to, and act upon. 

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?

Click on one of the following for more study:

Gross income   Personal Study

Due Process    LAW 101   W4    1040

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