Definition of income

[Patriotdiscussions]

Nonresident aliens and dual-status aliens. These rules also apply if you were a nonresident alien or a dual-status alien and both of the following apply.
You were married to a U.S. citizen or resident alien at the end of 2013.
You elected to be taxed as a resident alien. See Pub. 519 for details.

Wow. We stand in awe of your ability to find IRS publications on the internet.

Is there some reason you think we would be impressed with this?



Under what circumstances can someone living on top of a mountain in Tibet who is not a United States citizen, has never been a United States citizen, and has never been to the United States, and has no relatives or friends in the United States, and doesn't even know how to find the United States on a map, be subject to the U.S. federal income tax?

Cite the Internal Revenue Code provisions, Einstein.

First off, before ANY part of the is would have jurisdiction they would need to have meet the minimum contacts doctrine. If they don't, the IRS or the courts don't have jurisdiction.

[Patriotdiscussions]

You elected to be taxed as a resident alien.

There is no point where you can elect to be taxed. Either you have taxable income, no matter the source or the situation, or you don't. If you do then you have a tax liability. If you don't, then you don't. The only way you construe that statement to be even partly correct is in the sense that, since you are not a resident and you elected to come to this country and/or make money in this country, you have elected to become taxed by the US government. You do not even have to be in the country to have a tax liability.

Be sure to let the IRS know they made a mistake then.

[JamesVincent]

Nonresident aliens and dual-status aliens. These rules also apply if you were a nonresident alien or a dual-status alien and both of the following apply.
You were married to a U.S. citizen or resident alien at the end of 2013.
You elected to be taxed as a resident alien. See Pub. 519 for details.

Wow. We stand in awe of your ability to find IRS publications on the internet.

Is there some reason you think we would be impressed with this?



Under what circumstances can someone living on top of a mountain in Tibet who is not a United States citizen, has never been a United States citizen, and has never been to the United States, and has no relatives or friends in the United States, and doesn't even know how to find the United States on a map, be subject to the U.S. federal income tax?

Cite the Internal Revenue Code provisions, Einstein.

First off, before ANY part of the is would have jurisdiction they would need to have meet the minimum contacts doctrine. If they don't, the IRS or the courts don't have jurisdiction.

Has absolutely nothing to do with the question. And no one said courts, said subject to US Federal Income Tax. Minimum contacts does not apply.

[Patriotdiscussions]

Only way they would be liable is if they sold products or services in the states, again subject to the min contact doctrine.

[JamesVincent]

Wrong. Already told you minimum contact does not apply, stop harping on it. Minimum contact is a legal doctrine, nothing to do with taxes.

[Patriotdiscussions]

Wrong. Already told you minimum contact does not apply, stop harping on it. Minimum contact is a legal doctrine, nothing to do with taxes.

No shit Sherlock, but if the courts do not have jurisdiction then what the IRS says does not mean shit.

[LPC]

Wrong. Already told you minimum contact does not apply, stop harping on it. Minimum contact is a legal doctrine, nothing to do with taxes.

No shit Sherlock, but if the courts do not have jurisdiction then what the IRS says does not mean shit.

"Minimum contact" is a standard for state courts asserting in personam jurisdiction over a person in another state. But taxes don't require in personam jurisdiction to be assessed or collected.

The Supreme Court has held that Congress has the power to impose an income tax on citizens of the United States living outside of the United States earning income outside of the United States. Cook v. Tait, 265 U.S. 47 (1924). Now, you're right that as a practical matter it's going to be difficult to enforce such a tax in the absence of either (a) property within the jurisdiction of the United States against which the tax liability can be enforced, or (b) a treaty allowing the IRS to use the courts of a foreign country to collect the tax, but those are different issues.

But Congress also has the power to tax incomes originating from with the United States regardless of the residence or citizenship of the recipient of the income. And that tax will be collectible because the source of the income will be within the jurisdiction of the courts of the United States and so the tax can be collected from the source. See, e.g., Commission v. Wodehouse, 337 U.S. 369 (1949).

[Cpt Banjo]

… readers familiar with American legal mores will not be surprised to find that numerous taxpayers, domestic and foreign, whose positions left them no other issue, have sought refuge in the Constitution. The most commonly asserted grounds are failures of jurisdiction, confiscation, unequal treatment, denials of due process of law, or a medley of such grounds. At some point, virtually every clause of the Constitution has been invoked as invalidating some aspect of taxation. Seekers of constitutional protection from the U.S. taxing power have not, however, enjoyed the same success as other aspirants. The courts have taken the taxing power, within its stated limits, at face value and have almost invariably upheld the validity of federal taxes, whether imposed on United States persons or foreign persons. For example, in Ross v. Commissioner a U.S. tax was upheld on dividends received by a Canadian citizen from a Canadian corporation, which itself had no activity in the United States (but did receive U.S.-source dividends from U.S. corporations). The tax statute in force at the time (which has since been changed on this point) clearly purported to reach Ross's income, and the court found this to be dispositive. The result in Ross was severe because several layers of tax were imposed on the same income as it moved from entity to entity, but the decision in the case was both inevitable and sound.

The power of the United States to tax incomes would be, if exercised to the fullest, essentially coextensive with the power to collect. The widely used term "jurisdiction" to tax is somewhat misleading in this regard. Probably the only requirement of any "connection" with the United States as a prerequisite of taxation is whatever is necessary to give the U.S. Treasury something to take hold of. Once past this threshold, the short answer to the objection that the United States "cannot" impose a tax is that it just did.

This does not mean that foreign persons must live in constant fear of overreaching by the U.S. tax authorities. The United States imposes income taxes well within the limits of its power, having discovered, like most other countries, that it does not pay to bear too heavily on the economic activity of those who are free to take it elsewhere. In a broad sense this is true even of the taxation of U.S. citizens, but is more obvious in the treatment of foreign persons, who will find it relatively easier, once bitten, not to offer the U.S. Treasury a second chance. In its actual operation, U.S. taxation of foreigners balances thirst for revenues with the goal of fostering the highest levels of economic activity within the United States. Taxation is frequently thought a deterrent to the latter, and the U.S. tax laws accordingly do not extend U.S. taxation to anywhere near its theoretical reach.

Joseph Isenbergh, International Taxation, (Aspen 2003) (footnotes omitted)

[jg]

You elected to be taxed as a resident alien.

There is no point where you can elect to be taxed. Either you have taxable income, no matter the source or the situation, or you don't. If you do then you have a tax liability. If you don't, then you don't. The only way you construe that statement to be even partly correct is in the sense that, since you are not a resident and you elected to come to this country and/or make money in this country, you have elected to become taxed by the US government. You do not even have to be in the country to have a tax liability.

Be sure to let the IRS know they made a mistake then.

Again (similar to when you thought "these rules" meant the entire tax code) what you claim is a mistake is apparently being misread or misconstrued.

The election is "to be taxed as a resident alien". This is not an election to be taxed or to not be taxed. This is an election of how to be taxed or the status under which one is taxed: as a resident. Absent such an election the taxpayer is taxed as a nonresident alien, as previously mentioned.

Reading is fundamental.

[Famspear]

First off, before ANY part of the is [sic] would have jurisdiction they would need to have meet the minimum contacts doctrine. If they don't, the IRS or the courts don't have jurisdiction.

Dear "Patriotdiscussions": Because my colleagues have already corrected you about this foolishness, I won't go into as much detail as I normally do -- when I see this kind of nonsense.

Lucky you!



As others have explained, the concept of minimum contacts relates to the issue of whether a court has personal jurisdiction over a defendant in a civil case (a non-criminal case) in the United States. This concept has nothing to do with whether a non-resident alien who has never been a United States citizen, has never been to the United States, etc., etc., is subject to U.S. federal income tax.

The IRS is not a "court." The IRS does not need to have "jurisdiction" in the sense of personal jurisdiction over a defendant in a civil case.

And, the non-resident alien we're talking about is not a defendant in a civil case in the United States. Whether he or she has minimum contacts with a given State in the United States is not a question that is material to the concept of how that person is subject to the U.S. Federal income tax. The non-resident alien is not in court.

The tax protester materials you have been reading are obviously full of this kind of silly stuff. You people throw technical terms around -- terms like "jurisdiction" and "minimum contacts," but you don't understand them.

And you still haven't come up with the correct answer.



EDIT: But, I do want to give "Patriotdiscussions" some credit here. He is at least trying to answer the question.

Many of the people who come here to challenge us want to ask lots of questions, and expect us to answer them all -- as though we somehow owe them a duty to jump through hoops, but they don't want to be challenged by having to answer OUR questions.

So, let's give Patriotdiscussions credit where credit is due.

[Famspear]

This was the question I posed:

Under what circumstances can someone living on top of a mountain in Tibet who is not a United States citizen, has never been a United States citizen, and has never been to the United States, and has no relatives or friends in the United States, and doesn't even know how to find the United States on a map, be subject to the U.S. federal income tax?

The answers are found (in part) in Internal Revenue Code section 871 and in subsection (d) of section 2 of the Internal Revenue Code. (Section 877 applies to nonresident aliens, but not to the specific fact pattern in my question, since section 877 involves a FORMER U.S. citizen who has become a nonresident alien.)

Example under section 871: a "nonresident alien individual" living in Tibet who has never been a U.S. citizen, and who has never even visited the United States, etc., etc., could still own stock in a corporation located within the United States. He could have bought the stock in Tibet, through his broker in Tibet. This nonresident alien individual could thereby receive income from a source within the United States -- for example, in the form of dividends from that corporation, where the received amount is "not effectively connected with the conduct of a trade or business within the United States." The tax rate would be 30%, and would be imposed on the amount received. See section 871(a)(1)(A).

[JamesVincent]

1042-S form, isn't it?

[Famspear]

1042-S form, isn't it?

I had to look that up. Looks like Form 1042-S is filed by the person withholding the tax (and in certain cases even if a tax was not withheld).

The person filing Form 1042-S must also furnish a copy to the recipient of the income (e.g., the nonresident alien individual).

The nonresident alien individual may have to file federal income tax return -- Form 1040NR or Form 1040NR-EZ.

[ArthurWankspittle]

Under what circumstances can someone living on top of a mountain in Tibet who is not a United States citizen, has never been a United States citizen, and has never been to the United States, and has no relatives or friends in the United States, and doesn't even know how to find the United States on a map, be subject to the U.S. federal income tax?

I didn't put in a reply or it would have spoiled all the fun you were having, but my guess was he was made a beneficiary (possibly involving the creation of a trust) by a US resident in their will. Given a sufficient monetary value of the inheritance, I can't imagine it is wholly tax free.

[Famspear]

Under what circumstances can someone living on top of a mountain in Tibet who is not a United States citizen, has never been a United States citizen, and has never been to the United States, and has no relatives or friends in the United States, and doesn't even know how to find the United States on a map, be subject to the U.S. federal income tax?

I didn't put in a reply or it would have spoiled all the fun you were having, but my guess was he was made a beneficiary (possibly involving the creation of a trust) by a US resident in their will. Given a sufficient monetary value of the inheritance, I can't imagine it is wholly tax free.

Generally the beneficiary of a will would receive the property without federal income tax, but that's because of Internal Revenue Code section 102(a): "Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance."

But, if the decedent's estate took a long while to administer, an income-producing property held in the estate (or in a testamentary trust set up under the will) could generate income for either the estate, or the trust, or (if the income was distributed from the estate or trust to the beneficiary) to the beneficiary.

[jcolvin2]

This was the question I posed:

Under what circumstances can someone living on top of a mountain in Tibet who is not a United States citizen, has never been a United States citizen, and has never been to the United States, and has no relatives or friends in the United States, and doesn't even know how to find the United States on a map, be subject to the U.S. federal income tax?

The answers are found (in part) in Internal Revenue Code section 871 and in subsection (d) of section 2 of the Internal Revenue Code. (Section 877 applies to nonresident aliens, but not to the specific fact pattern in my question, since section 877 involves a FORMER U.S. citizen who has become a nonresident alien.)

Example under section 871: a "nonresident alien individual" living in Tibet who has never been a U.S. citizen, and who has never even visited the United States, etc., etc., could still own stock in a corporation located within the United States. He could have bought the stock in Tibet, through his broker in Tibet. This nonresident alien individual could thereby receive income from a source within the United States -- for example, in the form of dividends from that corporation, where the received amount is "not effectively connected with the conduct of a trade or business within the United States." The tax rate would be 30%, and would be imposed on the amount received. See section 871(a)(1)(A).

Article 9 of the US-China Tax Treaty limits the tax on dividends to 10%.

[Famspear]

Article 9 of the US-China Tax Treaty limits the tax on dividends to 10%.

Boy, everything I know about tax treaties would easily fit in a small Dixie cup.

[Gregg]

Do you have anything new? Anything to surprise us, maybe make us doubt what generations of judges and legislators, from the founders on, have said? Or should we just stamp your forehead QUATLOOSER CLONE #4735 and release you back into the wild?

I was going to say we should start calling obstinate, thick headed and baiting assholes "Hamsters" in honor of our most annoying non-declared incompetent to stand trial poster, because eventually we're gonna run out of numbers.

[LPC]

Article 9 of the US-China Tax Treaty limits the tax on dividends to 10%.

Boy, everything I know about tax treaties would easily fit in a small Dixie cup.

And Tibet is in China?

Who knew?

[Famspear]

Most Honorable Letter from Chinese Tax Bureaucrat in Beijing
To Most Honorable Resident of Tibet Holding Investments in America
On Occasion of Imposition of Yankee Tax

'Though America never you've met,
We are forced to inform -- with regret --
That you gotta pay taxes,
So, face what the facts is!
Pay up, over there in Tibet!

But, because of an Income Tax Treaty,
Yankee Taxes won't be quite as meaty.
If you let me explain:
There's no need to complain;
Taxes go to assist all the needy.

Yes, the money that you might have spent
Will come back to us -- here is your hint:
We will get it all back,
If we just stay on track
So, just smile and pay up, there, Oh Gent!