Supreme Court rules severance payments are taxable

[aGameOfThrones]

WASHINGTON (Reuters) - The U.S. Supreme Court ruled on Tuesday that taxes are due for Social Security and Medicare on severance packages paid to workers who are laid off involuntarily, overturning a lower court ruling that could have triggered a wave of payroll tax refund requests from U.S. businesses.

In a win for the Obama administration and the U.S. Internal Revenue Service, the court voted 8-0 that Quality Stores Inc., a defunct Midwest-based retailer, and its employees are not entitled to tax refunds totaling about $1 million.

The tax refund at issue was small, but the IRS said the stakes in the case were huge because, if Quality Stores had won, thousands more refund claims could have resulted, possibly totaling as much as $1 billion.

The dispute centered on whether severance paid to involuntarily terminated workers was taxable under the Federal Insurance Contributions Act tax, or FICA, which helps pay for Social Security retirement pensions and Medicare health insurance for the aged. FICA tax is paid by a company and its employees.

In September 2012, the 6th U.S. Circuit Court of Appeals ruled that Quality Stores' severance payments to former employees were not wages and so were not taxable under FICA.

http://news.yahoo.com/supreme-court-says-severance-payments-taxable-142117425--finance.html

[ClydeCoulter]

One comment:


I Can Powerbelch The Alphabet 23 hours ago
Does that mean golden parachute severance packages will be found in offshore banks in the near future?


But, FICA taxes are only held up to a certain amount, so those "golden parachute" severance packages would be out of reach anyway.

[jkr]

w0r
on
poverty


AND more monies 4 them!

[oyarde]

The supreme court sucks.

[Ronin Truth]

I wonder what law that decision was based on. :confused:

[angelatc]

I like the spin on this:


The tax refund at issue was small, but the IRS said the stakes in the case were huge because, if Quality Stores had won, thousands more refund claims could have resulted, possibly totaling as much as $1 billion.


When there's a chance they might have to return some money to us, suddenly a billion is a lot of money.

[Sonny Tufts]

I wonder what law that decision was based on. :confused:

Section 3121 of the Internal Revenue Code. The Court's opinion can be read here: http://www.supremecourt.gov/opinions/13pdf/12-1408_6468.pdf

[Weston White]

Of course they purposefully ignore or left out that for most Americans participation in those sordid social justice programs is entirely voluntary to begin with, e.g., 42 USC § 405(c)(2)(B)(i).

[Sonny Tufts]

Of course they purposefully ignore or left out that for most Americans participation in those sordid social justice programs is entirely voluntary to begin with, e.g., 42 USC § 405(c)(2)(B)(i).

Payroll taxes are voluntary only in the sense that one volunteers to work at a job in which the compensation one receives is included in the definition of "wages" for FICA purposes. The taxes are due whether or not one ever collects Social Secutity benefits.

[Danke]

This is only for "employees" with activities connected to a federal privilege.

Look up the definition of "employee."

[DamianTV]

Supreme Court: All your EVERYTHING are belong to us!

To pay any tax on anything that you own destroys the entire idea of being able to own anything at all. Tax is Rent to the Govt.

[Sonny Tufts]

This is only for "employees" with activities connected to a federal privilege.

Look up the definition of "employee."

I have, and you are misunderstanding the definition, which is in no way restricted to employments with a governmental connection. The definition of "employee" for FICA purposes includes "any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the staus of an employee" (IRC § 3121(d)(2)). There's no requirement of a federal privilege.

I suspect your'e thinking of the definition of "employee" for income tax withholding purposes, which wasn't involved in the Quality Stores case. But even that definition isn't restricted to government-privilege situations. The claim that a federal privilege is required is frivolous and has been rejected by every court that has had to waste its time listening to it. One court called the argument "inane" and "a preposterous reading of the statute".

Since you're doubtless a disciple of the Cracking the Code scam, you should read the recent decision that went to great lengths to show the utter absurdity of its arguments: http://www.ustaxcourt.gov/InOpHistoric/WaltnerMemo.Buch.TCM.WPD.pdf

Incidentally, your quote from Federalist 15 refers to the old requisition system under the Articles of Confederation; it doesn't refer to current law. Hamilton was illustrating the weakness of the old system. Here's the entire context:


The great and radical vice in the construction of the existing Confederation is in the principle of LEGISLATION for STATES or GOVERNMENTS, in their CORPORATE or COLLECTIVE CAPACITIES, and as contradistinguished from the INDIVIDUALS of which they consist. Though this principle does not run through all the powers delegated to the Union, yet it pervades and governs those on which the efficacy of the rest depends. Except as to the rule of appointment, the United States has an indefinite discretion to make requisitions for men and money; but they have no authority to raise either, by regulations extending to the individual citizens of America. The consequence of this is, that though in theory their resolutions concerning those objects are laws, constitutionally binding on the members of the Union, yet in practice they are mere recommendations which the States observe or disregard at their option.

It was because of this "great and radical vice" that the power to tax was and is completely different under the Constitution.

[HOLLYWOOD]

Let me know when we're at 100%... owe your life to Fascist company store

[Weston White]

(In response to one truly inane poster.)

No, that is an entirely incorrect assertion, volunteers are not normally paid money for serving pro bono, so taxation in such instances is not whatsoever a concern (with exception now to the ACA); and hence the use of the word “volunteer”. Employees work in exchange for a livelihood, as an available means of basic survival and comfort, there really is nothing volunteer about it.

In asserting that working as a means of providing for the necessities of life is voluntary, you might as well be asserting that to breathe or express human emotion, feeling, or thought is also voluntary. Hell, you might as well assert that because you had cooperated with an armed robber that had a firearm planted square against the temple of your head you were not actually robbed because you had reacted “voluntarily”!

Taxation is a power provided to the government as a means of supporting its essential operations, not as a means to prop up the beggaring masses it has so intently made downtrodden through domination and subjugation. America is not communitarian, we are not all about egalitarianism, which itself is epically unattainable.

Again, participation in national entitlement programs, are for most Americans intended to be voluntary, e.g., acquiring a SSN is voluntary, filing a W-4 for withholding is voluntary (see: 42 USC § 405(c)(2)(B)(i); 26 CFR §§ 31.6011(b)-2(b)(1)(iv),(c)(2)(i), 301.6109-1(c),(d)(1),(d)(3)(i), et seq; 26 USC § 3402(p)(3)(B); and as detailed at the top of the IRS 843 Form (http://www.irs.gov/pub/irs-pdf/f843.pdf)).

Further noteworthy is the near singular context of 26 CFR § 601.104(2) – ‘Collection functions’, in-part: “The tax withheld is allowed as a credit in payment of the tax imposed on such nonresident alien individuals and foreign corporations.” No place else is there any mention of withholding upon other than “such nonresident alien individuals” that is addressed.

26 USC § 7701(a)(16), therein providing only a very narrow definition of: “The term “withholding agent” means any person required to deduct and withhold any tax under the provisions of section 1441, 1442, 1443, or 1461.”

i. Ibid, § 1441 ‘Withholding of tax on nonresident aliens’
ii. Ibid, § 1442 ‘Withholding of tax on foreign corporations’
iii. Ibid, § 1443 ‘Foreign tax-exempt organizations’
iv. Ibid, § 1461 ‘Liability for withheld tax’

Also (discounting any reference to the “861 Argument”), the entirety of 26 USC, Chapter 1, Subchapter N — ‘Tax Based on Income From Sources Within or Without the United States’ provides only for a narrow context to sources existing within the United States.

Consequently, it is interesting to note that IRS Form W-8BEN (http://www.irs.gov/pub/irs-pdf/fw8ben.pdf) informs readers who are a U.S. Citizens or other U.S. Persons to instead use IRS Form W-9 (http://www.irs.gov/pub/irs-pdf/fw9.pdf), which is a request for a TIN (and in certain cases does not require certification).

Certainly, while governments may establish such social justice programs to the benefit of its diverse populations, it cannot make them mandatory; any participation in them has to remain entirely voluntary. For example (i.e., merely one of many such examples) in Carter v. Carter Coal Co., 298 U.S. 238, 289 (1936) the concern of coercing consent is addressed: “It is very clear that the “excise tax” is not imposed for revenue, but exacted as a penalty to compel compliance with the regulatory provisions of the act. The whole purpose of the exaction is to coerce what is called an agreement -- which, of course, it is not, for it lacks the essential element of consent. One who does a thing in order to avoid a monetary penalty does not agree; he yields to compulsion precisely the same as though he did so to avoid a term in jail.

The exaction here is a penalty, and not a tax, within the test laid down by this court in numerous cases.”

And thusly, this is the dirty little secret that was so obviously covered up by the Court in the National Federation of Independent Business et al. v. Sebelius case. Justice Roberts should at the very least resign in disgrace.

In a recent article I wrote (Investigating the Scheme of “Social Justice” by Government (http://www.community.defendindependence.us/viewtopic.php?f=87&t=620&sid=417ddb90527154c2d383360cfd3dd39f)), I showed (in using just a basic example—and just imagine the lifelong savings potential for individuals if the IRS’ bunk withholdings scheme were removed from the picture and the free-markets were permitted to work, albeit through very limited regulations) that it would be much more beneficial for individuals to implement their own private means of saving for retirement than depending only upon the (now largely uncertain) programs being proffered by the government.

[oyarde]

I wonder what law that decision was based on. :confused:

The lower court got it right .

[Sonny Tufts]

In asserting that working as a means of providing for the necessities of life is voluntary, you might as well be asserting that to breathe or express human emotion, feeling, or thought is also voluntary.

Mr. White, it was you who asserted that Social Security was voluntary in a thread dealing with FICA taxes, thereby suggesting that the payment of such taxes is voluntary. It isn't, unless you say that you volunteer to work at a job paying statutorily-defined wages.


Further noteworthy is the near singular context of 26 CFR § 601.104(2) – ‘Collection functions’, in-part: “The tax withheld is allowed as a credit in payment of the tax imposed on such nonresident alien individuals and foreign corporations.” No place else is there any mention of withholding upon other than “such nonresident alien individuals” that is addressed.

You didn't look very far. IRC Section 3102 requires the employer to withhold the FICA tax from the employee's wages, and it's not limited to noresident alien employees.


Certainly, while governments may establish such social justice programs to the benefit of its diverse populations, it cannot make them mandatory; any participation in them has to remain entirely voluntary. For example (i.e., merely one of many such examples) in Carter v. Carter Coal Co., 298 U.S. 238, 289 (1936) the concern of coercing consent is addressed: “It is very clear that the “excise tax” is not imposed for revenue, but exacted as a penalty to compel compliance with the regulatory provisions of the act. The whole purpose of the exaction is to coerce what is called an agreement -- which, of course, it is not, for it lacks the essential element of consent. One who does a thing in order to avoid a monetary penalty does not agree; he yields to compulsion precisely the same as though he did so to avoid a term in jail.

The exaction here is a penalty, and not a tax, within the test laid down by this court in numerous cases.”

And thusly, this is the dirty little secret that was so obviously covered up by the Court in the National Federation of Independent Business et al. v. Sebelius case. Justice Roberts should at the very least resign in disgrace.

Mr. White, if you would take the time to read the Quality Stores case you'd discover that it didn't deal with participation in the Social Security system, but rather with a tax whose validity was upheld long ago in Charles C. Steward Machine Corp. v. Davis, 301 U.S. 548 (1937), a case decided a year after the Carter Coal decision.

[Danke]

A Brief B u t Brig ht Illumination Of The Truth About The Income Tax THE NATURE AND LIMITS OF THE “INCOME TAX” are not the consequence of the structure of the law or definitions therein-- it is, in fa ct the other way around. How ever, because that structure and those definitions are carefully designed to conform and confine the tax to its proper nature and limits, understanding the very easily comprehended former brightly illuminates the more difficult latter (a concise presentation of which ca n be found within this document ; see ‘ Cracking the Code- The Fascinating Truth A b o u t Taxation In America ’ for a comprehensive treatment). I’m going t o briefly discuss two definitions in US income tax law-- those give n by statute to the terms “wages” and “trade or business”. Between th em these two terms are integral to the vast majority of all “income-receipt” al legations made about Americans. Understanding these definitions will make clear th at the receipts of most Americans don’t fall within either of these classes. Si mple logic recognizes that beca use receipts that DO fall within these special classes are distinguished in the law as being subject to the tax, those receipts that DON’T fa ll within the m are not s u bject. As Black’s Law Dictionar y puts it in it s 6 th edition: “Inclusio unius est exclusio alte r i us. The i n clusio n o one is the exclusion of another. The certai n desi gnati o n of one person is an a b sol u te exclusio n o al l ot hers. . .. T h is doctrine decrees that where law expressly desc ribes [a] partic ular situati o n t o which it shall apply, an irrefuta ble inference must be drawn tha what is omitted or e x cluded wa s intended t o be om itted or excluded.” f f t *** LET’S FIRST TAKE A LOOK at “ w ages”-- a term presented at 26 USC § 3401(a) and provided with a c o m p ound def i niti on: Sec. 3401. - Definitions (a) Wa ges For pur p os es of this c h apter, the term ''wag es'' means all remunerati on (other than fees paid to a publ ic of ficia l ) fo r services performed by an employee for his employer,... (c) Employ ee 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 instrumenta lity of any one or more of the foregoing. The term “employee” also includes an officer of a corporation. 1 , t 1 These cororations are US “corporate” agencies or in strumentalities, as defined in § 207 of the Public Salary Tax Act of 1939: “ a corporate a g ency or instr u mentality is one (a ) a majority of the sock of which is own e d by or on behalf of the Ur (b) th e power to appoint or s e lect a majority of th e board of dire tor s of which

cont: http://losthorizons.com/Documents/BriefAndBright.pdf

[Root]

So the government ruled in favor of the government because it might cost the government money they don't have.

Just-us

[Weston White]

Mr. White, it was you who asserted that Social Security was voluntary in a thread dealing with FICA taxes, thereby suggesting that the payment of such taxes is voluntary. It isn't, unless you say that you volunteer to work at a job paying statutorily-defined wages.

Again, for most Americans, participation in governmental entitlement programs is VOLUNTARY. Which is why its respective statutory laws have provided escape hatches (as I had referenced in my above post—it is just that IRS employees are no longer being properly trained on such matters, instead everything not status quo is now deemed ‘frivolous’) for qualifying individuals not desiring to PARTICIPATE.

And furthermore, this is the very reason as to why there is a constant theme to the (otherwise unnecessary) definitions within Subtitle C and Section 7701, which make explicit reference to certain classes of employees, such as: federal employees, military, sailors, corporate officers, railroad workers, etc.


You didn't look very far. IRC Section 3102 requires the employer to withhold the FICA tax from the employee's wages, and it's not limited to noresident alien employees.

Sure, it is not limited to only that class of employee, but it is limited to only those either made liable or who are otherwise in willful agreement to participate in IRS withholdings (e.g., through the filing of an IRS W-4 Form). The statute is a requirement upon employers to cooperate in the withholding process (and punishable under 26 USC Sec. 7202), not an employer’s employees.

But that is all beside the point, which is that as I had shown in my above post, this is a reoccurring theme all throughout the IRC; and moreover and that the regulations only makes mention of that limited class, while failing to address even a single word of the much larger class of employees. For example in the regulations general procedure rules, under the heading “introduction”, it merely glosses over most everything, except for this tidbit:


“The Director, Foreign Operations District, administers the internal revenue laws applicable to taxpayers residing or doing business abroad, foreign taxpayers deriving income from sources within the United States, and taxpayers who are required to withhold tax on certain payments to nonresident aliens and foreign corporations, provided the books and records of those taxpayers are located outside the United States.”

Now that is indeed interesting. Especially, being that the class of nonresident aliens and foreign corporation is already being addressed in 26 CFR §§ 1.871-1, 1.1441-0, et seq. So why is that—and only that—special and very limited class is the only one being addressed within the general procedural rules?


Mr. White, if you would take the time to read the Quality Stores case you'd discover that it didn't deal with participation in the Social Security system, but rather with a tax whose validity was upheld long ago in Charles C. Steward Machine Corp. v. Davis, 301 U.S. 548 (1937), a case decided a year after the Carter Coal decision.

Well, I am certainly glad that I had mentioned that was merely just one of many other similar cases, for example:

City of Boerne v. Flores, 521 U.S. 507, 518-519 (1997): “It is also true, however, that “[a]s broad as the congressional enforcement power is, it is not unlimited.” Oregon v. Mitchell, supra, at 128 (opinion of Black, J.). … Legislation which alters the meaning of the Free Exercise Clause cannot be said to be enforcing the Clause. Congress does not enforce a constitutional right by changing what the right is. It has been given the power “to enforce,” not the power to determine what constitutes a constitutional violation. …”

City of Mobile v. Bolden, 446 U.S. 55, 76 (1980): “It is of course true that a law that impinges upon a fundamental right explicitly or implicitly secured by the Constitution is presumptively unconstitutional. ” REAFFIRMED in Harris v. McRae, 448 U.S. 297, 312 (1980).

Shapiro v. Thompson, 394 U.S. 618, 631 (1969) quoting in-part from United States v. Jackson, 390 U.S. 570, 581-582 (1968):


“If the provision had no other purpose or effect than to chill the assertion of constitutional rights by penalizing those who choose to exercise them, then it would be patently unconstitutional. . . . Whatever might be said of Congress’ objectives, they cannot be pursued by means that needlessly chill the exercise of basic constitutional rights. … The question is not whether the chilling effect is “incidental”, rather than intentional; the question is whether that effect is unnecessary, and therefore excessive.”
See additionally: Shelton v. Tucker, 364 U. S. 479, 488-489 (1960); United States v. Robel, 389 U.S. 258, 262-265, 268 (1967).

Miranda v. Arizona, 384 U.S. 436, 491 (1966): “Where rights secured by the Constitution are involved, there can be no rulemaking or legislation which would abrogate them.”

[Sonny Tufts]

the regulations only makes mention of that limited class, while failing to address even a single word of the much larger class of employees...So why is that—and only that—special and very limited class is the only one being addressed within the general procedural rules?


It isn't. Really, Mr. White, if you're going to post excerpts from ther regulations you need to learn how to do thorough legal research instead of cutting and pasting irrelevent things and not even bothering to cite the specific reg that you're quoting. Reg. §31.3102-1 provides in part:


(a) The employer shall collect from each of his employees the employee tax with respect to wages for employment performed for the employer by the employee.
The employer shall make the collection by deducting or causing to be deducted the amount of the employee tax from such wages as and when paid. (For provisions relating to the time of such payment, see § 31.3121(a)–2.) The employer is required to collect the tax, notwithstanding the wages are paid in something other than
money, and to pay over the tax in money.
http://www.gpo.gov/fdsys/pkg/CFR-2012-title26-vol15/pdf/CFR-2012-title26-vol15-sec31-3102-1.pdf

If you're suggesting that only nonresident aliens are subject to FICA taxes, by all means show us some authority for this astonishing claim.

[Sonny Tufts]

Mr. Danke, Cracking the Code is a scam perpetrated by a two-time loser who served over two years in prison as a result of acting on his bogus theories. His arguments have a 100% loss record in court, and several of the suckers who have bought his nonsense have served time as well. Many more have ended up facing tax deficiencies, penalties, and interest. One of these was Steven T. Waltner, who recently lost a case in which he was found liable for a $2500 penalty (the court was lenient -- the idiot could have been fined $25,000) for making the frivolous CtC arguments. In the decision, the judge accurately described the scam:


Cracking the Code is written by Peter Eric Hendrickson. Nowhere in his book does Mr. Hendrickson set forth his credentials, other than on the back cover where he vaguely identifies himself as “researcher, analyst and scholar”. Add to that felon and serial tax evader...

...the book [Cracking the Code] is largely an exercise in twisting the meaning of words into what the author wants them to mean, even if statutes, regulations, and case law define those words otherwise.

Having spent the immediately preceding chapter misinterpreting the word “including”, the author turns to the same Latin phrase discussed above and then
proceeds to misinterpret it. Indeed, courts have repeatedly explained that phrase, and the author’s views simply do not withstand scrutiny. The faulty conclusions that the author reaches are laughable and have been rejected elsewhere:

• Because one Code section defines the term “employee” to include government employees,55 someone who does not work for the government is not included in the definition of an employee. This proposition was rejected in United States v. Latham, 754 F.2d 747, 750 (7th Cir. 1985).

• Because one Code section defines the United States to include the U.S. territories,56 the fifty States are not included in the definition of United States. This proposition was rejected in Wnuck v. Commissioner, 136 T.C. 498, 504 (2011)...

The positions advocated in Cracking the Code have routinely been rejected, with its author being criminally convicted and its adherents being sanctioned.

Waltner v. Commissioner, T.C. Memo. 2014-35 (2014)
http://www.ustaxcourt.gov/InOpHistoric/WaltnerMemo.Buch.TCM.WPD.pdf


For a good summary of the utter failure of Cracking the Code, please see http://tpgurus.wikidot.com/peter-hendrickson

[Weston White]

It isn't. Really, Mr. White, if you're going to post excerpts from ther regulations you need to learn how to do thorough legal research instead of cutting and pasting irrelevent things and not even bothering to cite the specific reg that you're quoting. Reg. §31.3102-1 provides in part:


http://www.gpo.gov/fdsys/pkg/CFR-2012-title26-vol15/pdf/CFR-2012-title26-vol15-sec31-3102-1.pdf

If you're suggesting that only nonresident aliens are subject to FICA taxes, by all means show us some authority for this astonishing claim.


My goodness, what Starbucks didn't award you an executive's discount today? laff

1. I was not quoting anything from §31.3102-1, but 26 CFR § 601.104(2) as per my original post. Merely pointing out the gross ambiguity of the IRC at virtually every turn.

2. And still again you (and I emphasize purposefully) miss the original point.

3. Again I am, and have been asserting that most Americans are not legally required to participate in any Subtitle C taxes.

[Weston White]

1. Tax Court cases are inadmissible as evidence, unless it pertains to the original parties involved.

2. Less than 2% that file in Tax Court win their case and nearly all of those wins are attributed solely to administrative errors on the part of the IRS.

3. It is not very honest to point to pro per court case after pro per court case as evidence favoring one's own argument. Such cases outgun and outplay the non-attorney long before they are even filed.

4. It is apparent that Henrickson did everything he possibly could to lose his last criminal case. Including not fighting duplicate criminal charges for each of his five counts and basically filing motion after motion arguing over the definition of a 'person'.

BTW, since you are so up-to-date on "scam artists", what ever happened to Dave Champion? I am not certain but it seems that he is back doing his radio show, has a new Website up, and still has his book about taxation for sale. Was his criminal case dropped... yet again? If so, that is what, the third or fourth time now? Oh, wait did all they do to him is injunct (http://www.davechampionshow.com/media/Public%20Reply%20to%20Injunction.pdf) him from providing his tax/trust services to clients? (And a big shout out to "Thomas Chung" (http://www.davechampionshow.com/media/031113868464.pdf)!)

[Sonny Tufts]

Again I am, and have been asserting that most Americans are not legally required to participate in any Subtitle C taxes.

And you are profoundly wrong.


1. Tax Court cases are inadmissible as evidence, unless it pertains to the original parties involved.

Hogwash. That is true of Summary opinions (those involving $50K or less where the Taxpayer elects to have the case heard in a certain manner), but not Regular or Memorandum decicions, either of which can be cited by the Government or the Taxpayer. Don't bother citing the IRS Manual -- not only are the courts not bound by it, the IRS does in fact cite TC decisions in its arguments. The Manual simply says that if the IRS wants to, it can take a position in one case that lost in a TC case involving a different party. But I can tell you from experience that if there's a TC case in the Taxpayer's favor squarely on point, in most cases the field examiner will concede the issue, and the matter will never go to trial.


2. Less than 2% that file in Tax Court win their case and nearly all of those wins are attributed solely to administrative errors on the part of the IRS.

Source, please?

[Danke]

The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

http://losthorizons.com/Documents/AnExciseTaxIsAPrivilegeTax.pdf

[Sonny Tufts]

The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

Not quite. While excises include privilege taxes, they aren't limited to privilege taxes but include other kinds, including the income tax. Two examples, which Hendrickson won't touch with a ten foot pole, should illustrate this pretty clearly:

1. Gift taxes are excises, but no privilege is involved. That is, unless you think that giving away your own private property is a privilege.

2. The income tax applies to income received from illegal activities such as embezzlement, drug dealing, and extortion, which are the direct opposite of governmental privileges.

You should note Hendickson's dishonesty in the material at the link you posted. He quotes as follows:


"...the requirement to pay [excise] taxes involves the use of privilege." Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

The only problem is that the Supreme Court didn't say this -- it's a phony quote typical of scammers like Hendrickson. The Court was referring only to certain taxes upon corporations, and not all excise taxes. Hendrickson's insertion of "excises" in the quote is typical of his fraudulent presentation. The actual quote is:


The tax under consideration, as we have construed the statute, may be described as an excise upon the particular privilege of doing business in a corporate capacity, i. e., with the advantages which arise from corporate or quasi corporate organization; or, when applied to insurance companies, for doing the business of such companies. As was said in the Thomas Case, 192 U. S. supra, the requirement to pay such taxes involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking. If business is not done in the manner described in the statute, no tax is payable.

His citation of state court cases is equally pathetic, since they deal with state law and have no bearing on federal tax statutes.

[Danke]

" requirement to pay such taxes involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking. If business is not done in the manner described in the statute, no tax is payable. "

Kinda says it right there.

[DamianTV]

Secret Persuasion Mind Trick

http://www.youtube.com/watch?v=ydchCy5WF_I&feature=player_detailpage

So is this how Income Tax got started? Fast forward a bit and ask where we are today, at the small sign, the big sign, or paint your entire house sign?

[Danke]

Secret Persuasion Mind Trick

So is this how Income Tax got started? Fast forward a bit and ask where we are today, at the small sign, the big sign, or paint your entire house sign?

http://www.losthorizons.com/comment/WasGrandpaReallyaMoron.pdf

[Sonny Tufts]

" requirement to pay such taxes involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking. If business is not done in the manner described in the statute, no tax is payable. "

Kinda says it right there.

Sure does...IF you're talking about a tax that applies only to corporations, such as the one involved in the Flint case. If you're talking about the income tax, though, the quoted material is irrelevant because the Supreme Court stated on several occasions that the tax involved in that case wasn't an income tax, but rather a special tax on the privilege of using the corporate form for doing business.

[Sonny Tufts]

http://www.losthorizons.com/comment/WasGrandpaReallyaMoron.pdf

More lies from Hendrickson. A tax on wages and personal earnings is not and never has been a direct tax under the Constitution. He's too dishonest to mention that a tax on such income was found to be in the nature of an excise or duty and was upheld by a unanimous Supreme Court in 1881.

[LibForestPaul]

More lies from Hendrickson. A tax on wages and personal earnings is not and never has been a direct tax under the Constitution. He's too dishonest to mention that a tax on such income was found to be in the nature of an excise or duty and was upheld by a unanimous Supreme Court in 1881.

What is all this quoting law and opinions? There have been may rulings, and many laws, enacted by numerous regimes throughout history. Why do I care what a court decides? I know what is just and I know what is unjust. I know what violates natural law, and what does not.
Theft of persons money for living is unjust, illegal, and immoral.
Stripping Jews of property, not right.
Runaway slave laws, bad.
Violence against women voting, immoral.
Redistributing wealth at the barrel of a gun, illegal.

[Danke]

More lies from Hendrickson. A tax on wages and personal earnings is not and never has been a direct tax under the Constitution. He's too dishonest to mention that a tax on such income was found to be in the nature of an excise or duty and was upheld by a unanimous Supreme Court in 1881.

What?! You obvious never read much from Peter Henderickson. He has never stated the income tax is a direct tax.

[Teenager For Ron Paul]

This came to mind.....

https://www.youtube.com/watch?v=Pzr6wk7FVXE

[Weston White]

What nothing to add about Mr. Champion? That is okay, a sore-spot upon you Triskelion types I am certain—perfectly understandable.


And you are profoundly wrong.

Well, I for one am very pleased to be the first, then, to inform you that the legislative history and statutory tax code for the Revenue Act of 1913 states otherwise (i.e., much of the withholding scheme was enacted merely as a forced loan to be repaid back at the end of the tax-year through the filing of a claim of refund).


Hogwash. That is true of Summary opinions (those involving $50K or less where the Taxpayer elects to have the case heard in a certain manner), but not Regular or Memorandum decicions, either of which can be cited by the Government or the Taxpayer. Don't bother citing the IRS Manual -- not only are the courts not bound by it, the IRS does in fact cite TC decisions in its arguments. The Manual simply says that if the IRS wants to, it can take a position in one case that lost in a TC case involving a different party. But I can tell you from experience that if there's a TC case in the Taxpayer's favor squarely on point, in most cases the field examiner will concede the issue, and the matter will never go to trial.

Hogwash, it is not so much. Aside from the obvious point that unless one is actually in Tax Court themselves arguing about the rules of that administrative tribunal, exceptions and whatnot, a taxpayer is not going to cite to other Tax Court cases when otherwise being heard in a district or circuit court upon the merits of their core tax related matters—for they would instead cite to the more persuasive or binding source that was likely depended upon in the other Tax Court case in the first.

The U.S. Tax Court (26 USC § 7441) is the equivalent of an alternative dispute resolution (ADR) by magistrate, it not an Article III judiciary (which under our U.S. Constitution provides the only means for which Americans may seek adjudicated due process), but a medium of convenience designed to realign the agenda of the IRS. By the by, the IRS can pretend all day long that the Taxpayer Advocate Service (TAS) is independent from itself , but at the end of the day that notion is mere propagandist tomfoolery, similarly to the situation proffered by its so-called U.S. Tax Court. While Tax Court cases may be relied upon frequently after having been appealed (under 26 USC § 7482), it remains that they are otherwise inconsequential until then.


IRM at 4.10.7.2.9.8(1-3) — ‘Importance of Court Decisions’:
(3) Decisions made by lower courts, such as Tax Court, District Courts, or Claims Court, are binding on the Service only for the particular taxpayer and the years litigated. Adverse decisions of lower courts do not require the Service to alter its position for other taxpayers.


26 USC § 7463(b) Finality of decisions
A decision entered in any case [i.e., not exceeding $50,000 within a single tax-period] in which the proceedings are conducted under this section shall not be reviewed in any other court and shall not be treated as a precedent for any other case.

* Noting that Tax Court disputes involving individual filers and sums larger than $50,000 within a single year is highly unlikely, and more to the point, in such instances those individuals are already likely facing criminal charges so application of the statutory exception would be few and far between.


Source, please?

I am not finding that article now, I had come across a few weeks back; however, I did find this one that based on figures from the TAS, stating the figure of won cases at 14% (which is still a very low figure, especially when in consideration that when there is existing doubt, courts are to find in favor of the 'taxpayer' and not the government; and there is plenty of doubt (intentionally) riddled all through the IRC, for example, when I read penal codes, health and safety codes, or vehicle codes (which involve just as many variables as when it comes to matters involving taxation) they are very clear and easily understandable, unlike the IRC):

http://www.pappastax.com/taxpayers-lose-86-of-tax-court-cases/

And you just have to love the convenience in this warped logic:


“ Performance Measure 3: Success Rate for Criminal Tax Cases

FY 2012 Target: 95%

Although many of these cases are difficult to prosecute, the Division has maintained a conviction rate at or greater than 95%. In FY 2012, the Division’s conviction rate was 98% in tax cases.”

http://www.justice.gov/jmd/2014justification/office/tax-justification.docx

(Now after thinking about it, perhaps I had confabulated the DOJ’ tax case losses with Tax Court ‘taxpayer’ case wins?)

[Weston White]

Two examples, which Hendrickson won't touch with a ten foot pole, should illustrate this pretty clearly:

1. Gift taxes are excises, but no privilege is involved. That is, unless you think that giving away your own private property is a privilege.

2. The income tax applies to income received from illegal activities such as embezzlement, drug dealing, and extortion, which are the direct opposite of governmental privileges.

No gift taxes are actually in form a class of ad valorem duty taxes (gift taxes are born from succession duties, which is intended to prevent the prior giving away of all personalty prior to one’s death so as to avoid taxation), and in each case the privilege that is involved is either the willful acceptance of property that realizes one a gain or the free transmission of such gain from one individual unto another. However, the issue with present day gift and succession taxes is that the tax is not upon the property itself and yet the imposition of the actual sums to be taxed is directly relative to the value of the property in transmission, so technically that is not actually the case any longer and calls into question the legitimacy of such modes of taxation. And to further note, even criminals are permitted to deduct many of the costs associated with their unlawful entrepreneurship, such as their principal.


The only problem is that the Supreme Court didn't say this -- it's a phony quote typical of scammers like Hendrickson. The Court was referring only to certain taxes upon corporations, and not all excise taxes. Hendrickson's insertion of "excises" in the quote is typical of his fraudulent presentation. The actual quote is: ...

1. It is not a phony quotation it is from the headnotes (which serve as an accurate case summary made by that reporter, but should not be relied upon as evidence in a court of law) of that very case. The only one here that is dishonest is you. From Flint v. Stone Tracy Co., 220 U.S. 107, 110 (1911):


Indirect taxation includes a tax on business done in a corporate capacity; the difference between it and direct taxation imposed on property because of its ownership is substantial, and not merely nominal.

Excises are taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations and upon corporate privileges; the requirement to pay such taxes involves the exercise of the privilege, and if business is not done in the manner described, no tax is payable.

The only limitations on the power of Congress to levy excise taxes are that they must be for the public welfare and must be uniform throughout the United States; they do not have to be apportioned.

2. Which is reference to the Pollock decision, although quoting from Thomas v. United States, 192 U. S. 363, 370 (1904), in supra, at 151:


And in the same connection the Chief Justice, delivering the opinion of the court in Thomas v. United States, 192 U. S. 363, in speaking of the words "duties," "imposts," and "excises," said:

"We think that they were used comprehensively, to cover customs and excise duties imposed on importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the like."

Duties and imposts are terms commonly applied to levies made by governments on the importation or exportation of commodities. Excises are "taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges."

3. And more from Thomas v. United States, 192 U.S. 363, 370 (1904) addressing constitutional taxation in general (i.e., the distinction between business income, or constitutional income, and personal income, or a means of competency or livelihood or to otherwise acquire private property and personal comfort):


There is no occasion to attempt to confine the words duties, imposts, and excises to the limits of precise definition. We think that they were used comprehensively to cover customs and excise duties imposed on importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the like.

Taxes of this sort have been repeatedly sustained by this Court, and distinguished from direct taxes under the Constitution.


His citation of state court cases is equally pathetic, since they deal with state law and have no bearing on federal tax statutes.

Certainly that is not the case for the matters also concerning state income taxation; or when the state case in reference has itself back-quoted from one or more federal cases; or when the underlying principle is itself related to both the state and federal taxes in question, which as it just so happens, state income taxation is largely interrelated to federal income taxation.


More lies from Hendrickson. A tax on wages and personal earnings is not and never has been a direct tax under the Constitution. He's too dishonest to mention that a tax on such income was found to be in the nature of an excise or duty and was upheld by a unanimous Supreme Court in 1881.

See it states it right here (U.S. Constitution, A.I,S.9,C.4):


No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.

Now if capitation taxes have not always included personal or poll taxes—being derivative to capital (which is precisely what wages and personal earnings is), then the added safeguard of “other direct tax” most certainly has. At any rate, at least 248-years of ever increasing empirical evidence provides otherwise. (Hell, even Karl Marx disagrees with you.)

Yet the most pervasively tyrannical aspect of your vastly thoughtless progressiveness is that, if performed by apportionment, each and every adult man and woman in America would be expected for each passing year to forfeit to their government $10,000 of their own private finances. That is utterly insane and incomprehensible, it is inexcusably sickening.

As an added bonus, this www.taxhistory.com article addresses many intriguing aspects: A Question of What is "Taxable" Income? (http://www.taxhistory.com/taxhistory.html)

Goodness me, manifesting the Springer case (Who by the way was an attorney and politician, so double-offensive.) yet again—speaking of being “equally pathetic”...

[Weston White]

Secret Persuasion Mind Trick

So is this how Income Tax got started? Fast forward a bit and ask where we are today, at the small sign, the big sign, or paint your entire house sign?

Nice point. And I think we have since succeeded onto "the let us ram this very large sign and post straight up your bum until you die" stage.

[Carson]

One comment:



But, FICA taxes are only held up to a certain amount, so those "golden parachute" severance packages would be out of reach anyway.

Figures.

[Sonny Tufts]

unless one is actually in Tax Court themselves arguing about the rules of that administrative tribunal, exceptions and whatnot, a taxpayer is not going to cite to other Tax Court cases when otherwise being heard in a district or circuit court upon the merits of their core tax related matters—for they would instead cite to the more persuasive or binding source that was likely depended upon in the other Tax Court case in the first.

A taxpayer will cite a TC case that's in his favor even if he's in District Court (although if there is such a case he made a mistake by not going to the Tax Court in the first place).


The U.S. Tax Court (26 USC § 7441) is the equivalent of an alternative dispute resolution (ADR) by magistrate, it not an Article III judiciary (which under our U.S. Constitution provides the only means for which Americans may seek adjudicated due process)

You have no clue. The main advantage of going to Tax Court is that you don't have to pay the deficiency first. If you want to litigate ion District Court or the Court of Federal Claims, you do.




You're so wrong it's pathetic. If there's a TC case on point, you will likely win the issue either at the field agent level or at worst at IRS Appeals.


[quote]14% (which is still a very low figure, especially when in consideration that when there is existing doubt, courts are to find in favor of the 'taxpayer' and not the government

Mr. White, your ignorance of basic tax law is amazing. It is the taxpayer who has the burden of proof in a civil tax matter.

[Sonny Tufts]

No gift taxes are actually in form a class of ad valorem duty taxes (gift taxes are born from succession duties, which is intended to prevent the prior giving away of all personalty prior to one’s death so as to avoid taxation), and in each case the privilege that is involved is either the willful acceptance of property that realizes one a gain or the free transmission of such gain from one individual unto another. However, the issue with present day gift and succession taxes is that the tax is not upon the property itself and yet the imposition of the actual sums to be taxed is directly relative to the value of the property in transmission, so technically that is not actually the case any longer and calls into question the legitimacy of such modes of taxation. And to further note, even criminals are permitted to deduct many of the costs associated with their unlawful entrepreneurship, such as their principal.

Still clueless. First of all, the gift tax is an excise, and it's completely constitutional.


Whatever may be the precise line which sets off direct taxes from others, we need not now determine. While taxes levied upon or collected from persons because of their general ownership of property may be taken to be direct, Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 , 15 S. Ct. 673; Id., 158 U.S. 601 , 15 S. Ct. 912, this court has consistently held, almost from the foundation of the government, that a tax imposed upon a particular use of property or the exercise of a single power over property incidental to ownership, is an excise which need not be apportioned, and it is enough for present purposes that this tax [the federal gift tax] is of the latter class. Bromley v. McCaughn, 280 U,S. 124, 136 (1929)

Second, while criminals may deduct their associated expenses (except for drug dealers -- they can only deduct their cost of goods sold, which is a sore point in those states that have legalized pot), you missed the point. There is no privilege involve in illegal activity, yet income earned from such activity is taxable, showing that Hendrickson is wrong.

[Sonny Tufts]

What?! You obvious never read much from Peter Henderickson. He has never stated the income tax is a direct tax.

Then what would he call an unapportioned tax on non-federally privileged income?

[Weston White]

A taxpayer will cite a TC case that's in his favor even if he's in District Court (although if there is such a case he made a mistake by not going to the Tax Court in the first place).

Then in such a case any prosecutor will easily be able counter it with a higher legal authority (e.g., appellate or USSC/SCOTUS). And the stats clearly show that the U.S. Tax Court is not favorable to those challenging the IRS, even when it comes to purely administrative concerns the Tax Court seems barely willing to throw the petitioner a bone.

At any rate (after doing a bit of hunting around), there appears to be three classes of authority provided by the U.S. Tax Court:

1. Decision, as a legal authority—when the case involves a sufficiently important legal issue or principle (new or unusual point of law).
2. Memorandum, as a lesser legal authority—where the law is settled or factually driven (does not involve a novel legal issue).
3. Summary (Small Case Procedure), as a persuasive authority—where case is directly on-point.



You have no clue. The main advantage of going to Tax Court is that you don't have to pay the deficiency first. If you want to litigate ion District Court or the Court of Federal Claims, you do.

Many of the civil statutes involved with why one would petition in the Tax Court still requires the petitioner to pay a percentage up front, which I believe is 15% (e.g., that is $1,500 per tax-year for a now common fine of $10,000 per individual—the IRS has gone completely out of control with its unjust civil penalties, which in effect precludes the individual’s rightful access to due process and availability to seek redress; and yes, even in Tax Court).

The benefits of filing in a district trail court include: access to a jury trial; a judge that is not so blinded by that box encompassing their own “tax professional” predominance; and when on appeal from a district court, the higher court will likely exhibit less favoritism toward the decision at bar that it otherwise likely would due to the expressed “specialized” nature of the U.S. Tax Court.


You're so wrong it's pathetic. If there's a TC case on point, you will likely win the issue either at the field agent level or at worst at IRS Appeals.

So what are you saying that the IRS acknowledges TC cases, while outright ignoring USSC cases?


IRM at 4.10.7.2.9.8 — ‘Importance of Court Decisions’:

2. Certain court cases lend more weight to a position than others. A case decided by the U.S. Supreme Court becomes the law of the land and takes precedence over decisions of lower courts. The Internal Revenue Service must follow Supreme Court decisions. For examiners, Supreme Court decisions have the same weight as the Code.

Perhaps if you are being represented by a known tax law firm, otherwise the IRS is going to pin you up against a boulder and afterward drop its full weight onto your shoulders.

Also, you should realize that most all civil penalties issued by the IRS are handled through its Automated Collections Program (ACP), there is no field agent or other such contact person any longer, it is all just digitally timed automation commenced by paper-pushers and letter-carriers from various states (e.g., UT, TX, and CA).


Mr. White, your ignorance of basic tax law is amazing. It is the taxpayer who has the burden of proof in a civil tax matter.

Not so when there exists, for example, a “reasonable dispute with respect to any item of income reported on an information return filed by a third party”; i.e., 26 USC § 6201(d) – ‘Assessment authority’, 26 USC § 6703(a) – ‘Rules applicable to penalties under’, 26 USC § 7491(a)(1),(c) – ‘Burden of proof’, Coffin v. United States, 156 U.S. 432, 453-460 (1895). Although it is a lower standard than in criminal cases (i.e., burden of proving “beyond a reasonable doubt”), there still is a presumption of innocence in civil cases (i.e., burden of proving a “preponderance of evidence” or such is “more likely than not”)—individual innocence is an essential element within the course of the due process of law.

Consequently, your notion entirely violates the presumption of innocence for it is the IRS imposing the assertion of wrongdoing, yet compelling the ‘taxpayer’ to become an embattled petitioner in court (Ei incumbit probatio, qui dicit, non qui negat; cum per rerum naturam factum negantis probatio nulla sit—“The proof lies upon him who affirms, not upon him who denies; since, by the nature of things, he who denies a fact cannot produce any proof”).


Still clueless. First of all, the gift tax is an excise, and it's completely constitutional.

Actually, if you would like to get really technical, gift taxes fall within the class of transfer taxes, along with other similar taxes that are imposed on the passing of title or possession of property, including reality and estates (e.g., legacy, inheritance, or succession duties) taxes. Further noting that the term ‘gift tax’ appears to be fairly new term (I could not locate its mention anywhere within my Third Ed. of Black’s Law) that as stated above derives from the concept of succession duties; however, prior to, such taxes were likely referred to as transfer taxes (as they alternatively still are by the IRS).

Transfer taxes, or specifically, gift taxes, are more correctly described as an ad valorem tax (i.e., impositions based primarily on the value of qualifying reality or personalty) than an excise tax. For example, a stamp duty is with the class of an ad valorem transfer tax. While on the other hand excise taxes are more consumption based and largely pertain to internal commodities or public privileges sought by businesses, professionals, and entrepreneurs, such as “sin” taxes.

So far as it is pertinent to taxation, the use of the term ‘duty’ in its strict sense infers a customs tax (i.e., duties on imports or exports), while in a more general sense it is synonymous with the imposition of indirect—ad valorem—taxes; while bearing on the free and nonessential exercise of human rights without regard to the financial aspects of the tax itself, such as an automotive registration duty (and more to the point, in this sense ‘duty’ correlates something that is to be owed or a debt to be paid).

Realistically however, duties, excises, and imposts are all parallel classifications of indirect taxation, functioning as near-synonyms; and thus, ultimately making such distinctions a minor concern.

The only person raising such questions about this specific method of taxation is you (in my earlier response to you, I was merely addressing a potential concern in the technique for determining the sum). Gift taxes are constitutional and correct as an indirect tax.


Second, while criminals may deduct their associated expenses (except for drug dealers -- they can only deduct their cost of goods sold, which is a sore point in those states that have legalized pot), you missed the point. There is no privilege involve in illegal activity, yet income earned from such activity is taxable, showing that Hendrickson is wrong.

No, you are missing the point, you are fixated upon only the illegal act itself, blocking all else from your narrow-minded view. The privilege involved, which is to be indirectly taxed, is their profits. The source involved is the selling of their illicit contraband and the corollary financial increase is the money derived from the conversion of that source through its purchase by their customers.


Then what would he call an unapportioned tax on non-federally privileged income?
Why that would be an indirect tax of course.