| 1939: Removed References to Nonresident Aliens from the Definition of "Gross Income" | |||||||||
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SOURCE: The Great IRS Hoax book, Section 6.3.11. As shown above, some very telling phrases simply vanished from the regulations in 1954. But it was not only the regulations that lost some honesty along the way. The statutes found in the Revenue Act of 1921 show why the regulations said what they said up until 1954. But just as happened with the regulations, a telling phrase that existed in 1921 is no longer found in the statutes. The current Section 861 and its predecessors have remained basically the same for more than 70 years. The text begins “The following items of gross income shall be treated as income from sources within the United States:” The section then lists “items” of income (interest, dividends, compensation for labor, rents and royalties, etc.). In 1921 the section was very similar, but it began “That in the case of a nonresident alien individual or of a citizen entitled to the benefits of section 262, the following items of gross income shall be treated as income from sources within the United States:...” (While Section 217 itself mentions only individuals, Section 232 of the Act states that “[i]n the case of a foreign corporation or of a corporation entitled to the benefits of section 262 the computation shall also be made in the manner provided in section 217.” As the current regulations and historical regulations state, the section is applicable to nonresident aliens, foreign corporations, and citizen or domestic corporations which receive much of their income from within federal possessions.) 1921 Code 1939 Code Current Code
Although it is obvious to whom this section applied in 1921, some may question whether this is at all relevant to current law. Treasury Decision 8687, in discussing what the regulations under the current 26 U.S.C. §863 should say (regarding sales of natural resources), specifically refer to Section 217 of the 1921 Code in trying to determine the “legislative intent” of Congress.
This Treasury Decision, passed in late 1996, confirms that Section 217 of the Revenue Act of 1921 is the predecessor of the current Part I of Subchapter N, and shows that the IRS still refers to the 1921 Code to determine the proper application of the current Code. The Internal Revenue Manualshows that the courts, as well as the IRS, considers legislative history when determining the correct application of the law. “The courts give great importance to the literal language of the Code but the language does not solve every tax controversy. Courts also consider the history of a particular code section...” [Internal Revenue Manual, (4.2)7.2.1.1] When the phrase disappeared from the statutes after 1921, the application of the law did not change. What changed was how easily the truth could be found. |
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Last revision: August 14, 2009 08:07 AM |
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