FRN use is not the only income tax nexus.
Quote:
Originally Posted by
David Merrill
Check out the
Diminished Money Counterclaim thread. By notifying the Fed there is really no need to involve the employer at all. And even if redeeming lawful money were to fail to get a Refund you are still better off usually to have a job and career.
David, I don't understand your reasoning that simply notifying the Fed that you are redeeming lawful money makes it unnecessary to involve the employer. Please correct me if I am wrong but my understanding is the following:
Your use of FRN's is only one basis for taxation--a contractual or quasi-contractual one--but it is certainly not the ONLY basis. The use of the SSN and federal "employment" indicated by a W-2, or "trade or business within the U.S." indicated by a 1099 form creates at least TWO other independent nexuses for taxation. Because of these two other nexuses, it does not matter if you demand that your payer pay you in lawful money or if you redeem the payment in lawful money (although I think doing at least the latter is necessary to avoid that particular nexus). The two other nexuses are as follows:
1) The use of the SSN in connection with your work performed connects your payment to the United States through the contractual FICA nexus. By "voluntarily" agreeing to have deductions made and paid into FICA, you are participating in the insurance program under the Federal Insurance Contributions Act. You thereby accept a "benefit" of being one of the "insured" through the United States in bankruptcy, which obligates you as a surety for the U.S. debt and to pay income tax for those "wages"as defined in I.R.C. 3121.
This is, in truth, a compelled contract and compelled benefit. But you have no right to complain if you keep giving "your" SSN to "employers" who demand it from you without at least asking somebody why this is required and at some point recognizing and calling this what it is: threat, duress, coercion and FRAUD. Followed by disputing this "wage" reporting on the basis of said threat duress coercion and fraud.
This dispute of "wage" reporting must be made and resolved FIRST before you can claim you are not subject to income tax, and certainly before you can claim any refund without possibly causing yourself serious problems with auntie--this is where Peter Hendrickson got it wrong and still gets it wrong: he just includes the refund of FICA in the amount he reports for "federal tax withheld" on the 1040, while failing to adequately rebut the W-2 form.
As we all know, though Pete and his followers got 100% refunds for years this way, Pete eventually went to prison for filing false documents. The same thing could happen to lawful money folks who file returns trying to claim a lawful money deduction without recognizing the other nexuses for taxation. Auntie will not explain such nexuses to you. They are contractual--it is assumed you already KNOW. Auntie will simply hammer you with frivolous penalties and perhaps even criminal prosecution for filing "false" documents. I think this lawful money redemption is the real deal. Eventually, therefore, auntie will look for any way to shut it down it by discrediting it publicly--probably by sending somebody (or a few people) to prison who fail to use it properly in dealing with auntie.
PLEASE PLEASE get auntie to update her records first (or at least default auntie) to reflect that you were NOT paid "wages" as defined in Subtitle C, before you go claiming any refund of FICA with auntie. If you are not a "U.S person" the IRS requires that you go to the employer first to claim a refund for excess FICA withholding. If you do not receive such refund, then you may claim a refund from IRS on Form 843. I have no idea if that would work or not. If you are afraid to make the demand for refund from your employer, perhaps you could just tell the IRS that on your 843 form. Otherwise you have to just kiss that money goodbye. But you still don't have to agree to this compelled benefit.
Every time you voluntarily use "your" SSN (which is not "yours" but is property of SSA) you are presumably doing so to receive a federal benefit of some kind, making all payments connected to that number federally taxable, whether you redeem lawful money or not.
2) Your signature on W-4 and/or W-9 along with providing a SSN, creates the presumption that you are engaged in federally privileged "employment" or "effectively connected with a trade or business within the U.S." OR that you have elected to have your payments treated that way (SAME difference as far as auntie is concerned). For most of us, of course, we are not actually federally employed or engaged in a trade or business within the U.S., but are "voluntarily" electing (under duress usually) to have our payments treated as federally connected "wages".) See the voluntary withholding agreement provision under IRC 3402. Who is this provision supposed to be for, if all employers everywhere are already required to withhold tax?
The withholding of income tax from "wages" and reporting of payments as "effectively connected to a trade or business" is based not ONLY on the tax nexus of the transfer of FRN's to you (which can be dealt with by demanding payment in lawful money and/or redeeming in lawful money) but is independently based on the power Congress has always had to lay an excise upon federally-connected privilege (or on anyone who chooses to have their payments treated as such, since Congress cannot impair a "contract" by which you "agree" to allow withholding from your paychecks and "agree" to have it treated as federally connected.
You are presumed to know what it is you are agreeing to when you put your signature to W-4 or W-9 or 1040 for that matter. Why should auntie have to explain it to you? if you don't understand what you are agreeing to then why are you signing it? Oh yeah, because you "have to" to work and have a career. Just like you "have" to file a 1040. Also known as threat duress coercion and FRAUD.
Regardless of what form in which your payment comes to you, the activity that generated the payment is presumed taxable, as measured by the amount of income it produced, solely due to your providing a SSN and agreeing to treat your payments as federally connected. It is "income" on that basis, regardless of what you do with the income after that. They don't care whether you bond your paycheck into the Fed Reserve or not if these other contractual nexuses are in place. The W-2 or 1099 is all the proof they need to presume you received FRN's AND that you received "wages" or other "effectively connected" income.