IRS inquiry: Do incorrect 1099s need rebuttal?

[ManOntheLand]

A return is required if I have income above the statutory exemption amount, yes. But I believe these restrictively endorsed checks are not income under the Revenue Acts of Congress. Therefore if I have no statutory income and nothing is withheld from my pay there is no need to file.

You appear to assume the income is what is being taxed. Not so. Income tax is a tax on an activity, measured by the amount of income involved. Restrictively endorsing your paycheck avoids the nexus of bonding FRN's into fractional reserve lending. But when the employer paid you, the transfer of the amount you were paid is a taxable activity to the employer as an excise based on (presumed) federally connected corporate privilege and therefore "income." Your contribution to FICA from your paycheck is another taxable activity, as it is a privilege/benefit to participate in this program, therefore the amount you were paid is "income". Further, the transfer to you of the payment from the employer is a taxable activity of receiving a gain from (presumed) federally privileged "employment". All of these nexuses of taxation make the amounts involved "gross income" before you take your check to the bank.

The FICA is just a ruse of course--its just another income tax, but it is masquerading as an insurance account "for you", so the real tax rate you are paying is obscured. But it all goes to the same place.

If you get 1099 and not a W-2, there is no employment nexus or FICA nexus. But there is another nexus--engaging in a "trade or business within the United States". You are taxed only on "profit" though not gross receipts. Profit or gain is how the Supreme Court defined "income". What they did not spell out clearly is the jurisdictional nexus which must be present (or presumed) for federal taxation. This is because it is presumed you know whether or not you belong in a given jurisdiction--especially federal, as its jurisdiction in the 50 states is exclusively subject matter jurisdiction, based on either the enumerated powers or a contract.

You may have a presumed requirement to file based on any third party reporting that you received above the minimum gross income. This reporting will be presumed correct if you do not make a rebuttal.