PROOF OF FACTS: Payments to me as a U.S. national are “excluded” from “Gross Income” under I.R.C. 872

By ftsig-admin | January 30, 2026

INTRODUCTION:

The following form on our website takes the position that all earnings of a U.S. national who makes no elections are “excluded”.

Attachment to 1040NR Return for U.S. national filing as a “Nontaxpayer” and Private Party, FTSIG
https://ftsig.org/attachment-to-1040nr-return-for-us-national-filing-as-a-nontaxpayer/

If you would like a PROCESS that applies this article to computing your taxable income as an American national filing as a nonresident alien, see:

Tax Computation Process for Nonresident Alien, FTSIG
https://ftsig.org/tax-computation-process-for-nonresident-alien/
1040-NR Attachment, Form #09.077, Section 2.2.2
https://sedm.org/Forms/09-Procs/1040NR-Attachment.pdf

FACTS:

26 U.S.C. §872 allows payments not from a U.S. source under 26 U.S.C. §861 to be excluded from “gross income”. “Exclusions” are discussed below:
Excluded Earnings and People, Form #14.019
https://sedm.org/Forms/14-PropProtection/ExcludedEarningsAndPeople.pdf
“Taxpayers” need exemptions or deductions (26 U.S.C. §873(b)(3)). “Nontaxpayers” can only use exclusions. Burden of proving earnings are not “excluded” is on the taxing authorities.
When you claim an “exclusion”:
2.1. The burden of proof shifts from YOU proving the NEGATIVE that you it is NOT excluded. and
2.2. The burden shifts to the taxing authority to prove that it ISN’T excluded. Barclay v. First Paris Holding Co, 344 Ark. 711 (2001), Ragland v. Meadowbrook Country Club, 300 Ark. 164 (1989).
26 U.S.C. §1441 and I.R.C. Chapter 3 is the entire basis for all payments that can be reported for nonresident alien aliens:
4.1. It depends entirely upon payment of “foreign income” to the NRA^Aliens(Foreign^P person^PUB) recipient under Article 1, Section 8, Clause 3 as a foreign affairs function and “sovereign power”.
4.2. It implements the provisions of 26 C.F.R. §1.1441-1 and NO OTHER provision of the I.R.C., which limits itself to NRA^Aliens (foreign^P persons^PUB aliens) in 26 C.F.R. §1.1441-1(c)(3). U.S. nationals are NOWHERE mentioned in this regulation.
Third party “lay legal opinions” such as Form 1042s information returns filed against nonresident aliens are also INSUFFICIENT to satisfy the IRS burden of proof that the earnings are NOT “excluded” because:
4.1. They are presumed evidence that the FILER is engaged in the “trade or business” excise taxable franchise but NOT the target. 26 U.S.C. §6041(a) in the case of W-9/U.S. persons which “nonresident aliens” are NOT.
4.2. I.R.C. Chapter 3 withholding and reporting on “nonresident aliens” is fundamentally different from those upon U.S. persons in I.R.C. Chapter 61 in that the filers DO NOT create the presumption of “trade or business” activity by filing.
4.3. The filers are NOT allowed to reach “legal conclusions” as lay parties. They can only report FACTS. They cannot make legal determinations about the status of the RECIPIENT of the payment because that is a LEGAL CONCLUSION and NOT a FACT. Thus, the status of the RECIPIENT is inadmissible as evidence.
4.4. The ONLY “FACT” a payor can realistically report is the amount paid under the Federal Rules of Evidence (FRE).
The following proves that you as an American national are not subject to EITHER I.R.C. Chapter 3 or Chapter 61 withholding or reporting if you make no elections:
HOW TO: Handing reporting and withholding for American nationals filing as “nonresident aliens” not engaged in privileges-no Chapter 3 or Chapter 61 reporting or withholding, but subject to K-1 as foreignS personPRI partners, FTSIG
https://ftsig.org/how-to-handing-reporting-and-withholding-for-american-nationals/
26 U.S.C. §861 is classified as “foreign income” by the title of Subchapter N, Part I:
“26 U.S. Code Subtitle A Chapter 1 Subchapter N Part I – SOURCE RULES AND OTHER GENERAL RULES RELATING TO FOREIGN INCOME“
https://www.law.cornell.edu/uscode/text/26/subtitle-A/chapter-1/subchapter-N/part-I
The fact that you are the TARGET of an information return doesn’t make it a U.S. Source under 26 U.S.C. §861, even if it’s from the United States^G.
8.1. The geographical “United States” is a FACT.
8.2. Whether the privileged ACTIVITY is conducted on that geography is a LEGAL CONCLUSION and NOT a FACT.
8.3. Whether the payment it is from a U.S. source under under 26 U.S.C. §861 requires the COINCIDENCE of a PRIVILEGED activity (a LEGAL CONCLUSION) happening in the geographical geographical United States (a FACT).
Aliens doing business in our country but no present on land protected by the Constitution are privileged regardless of whether they consent under Article 1, Section 8, Clause 3 as a foreign affairs function and a “sovereign power”. The Presence Test in 26 U.S.C. §7701(b)(1) that only applies to NRA^Aliens (foreign^P nationals) is legal evidence of that. That presence test makes them LEGALLY present within United States^SMJ as well and party to federal preemption.
As an American National (“U.S. national” under 22 C.F.R. §51.1 and 8 U.S.C. §1101(a)(22)) protected by the Bill of Rights, you are not subject to the Presence Test and therefore are NON-PRIVILEGED by default. You are therefore NOT subject to federal preemption and remain foreign and private for the purposes of taxation INTERNAL to the COUNTRY “United States*”.
Only through a proprietary process of Merchant/Buyer and offering/bribing you with federal privileges/benefits may you:
11.1. Waive your private/Foreign^S civil status.
11.2. Waive your foreign status under the Minimum Contacts Doctrine by “purposeful availment”.
11.3. Become LEGALLY present but not necessarily PHYSICALLY present. On this site, our symbology means such an election converts you from Presence^GC to Presence^F. See:
Writing Conventions on this Website, Section 9: Types of CIVIL Legal Presence
https://ftsig.org/introduction/writing-conventions-on-this-website/#9._Types
The preferred method for converting your status from Foreign^S Person^PRI to Domestic^S Person^PUB is:
12.1. The “U.S. person” election in 26 U.S.C. §911.
12.2. “Effectively Connecting” in 26 U.S.C. §864(c).
Voluntary pursuit of either of the above two privileges in the case of an American national:
13.1. Is what creates the CIVIL “person” under 26 U.S.C. §6671(b) and 26 U.S.C. §7343 who is the only lawful target of CIVIL or CRIMINAL enforcement respectively. See:
Policy Document: IRS Fraud and Deception About the Statutory Word “Person”, Form #08.023
https://sedm.org/Forms/08-PolicyDocs/IRSPerson.pdf
13.2. The above “person” is engaged in “personal services” to uncle same as a CIVIL “person” under 26 U.S.C. §864(b), which is a platitude describing a VOLUNTEER handling PUBLIC/GOVERNMENT property. See:
Microsoft Copilot: Meaning of civil statutory “services”, FTSIG
https://ftsig.org/microsoft-copilot-meaning-of-civil-statutory-services/
13.3. The property managed by the franchise officer is all property voluntarily associated with the civil “person” using the SSN/TIN PUBLIC/DOMESTIC franchise mark. 26 C.F.R. §301.6109-1(b):
About SSNs and TINs on Government Forms and Correspondence, Form #05.012
https://sedm.org/Forms/05-MemLaw/AboutSSNsAndTINs.pdf
13.4. Donates the property attached to the public to change its absolute ownership from PRIVATE to PUBLIC. See:
Property View of Income Taxation Course, Form #12.046
https://sedm.org/LibertyU/PropertyViewOfIncomeTax.pdf
13.5. By converting ownership of the property from PRIVATE to PUBLIC, removes the property from the protection of organic law attached to the land or to the state it is in, and brings it under federal preemption under Article 4, Section 3, Clause 2.
In the ABSENCE of a VOLUNTARY election of privilege by an American national, all taxes measured by “gross receipts” among those standing on land protected by the constitution are unconstitutional direct taxes in violation of Article 1, Section 9. Clause 4 and Article 1, Section 2, Clause 3.
Constitutional taxation provisions 1:8:1, 1:9:4, 1:2:3, FTSIG
https://ftsig.org/history/constitutional-provisions-123-194/
IRS tries to bypass the PRIVILEGE requirement by PRESUMING that “sources in United States” in 26 U.S.C. §861 is purely geographical so that liability is purely a FACTUAL issue not requiring the non-factual legal determination that you are ALSO privileged and therefore LEGALLY rather than PHYSICALLY present. This presumption violates due process of law and is the main source of IDENTITY THEFT that makes American nationals subject to the income tax as described in:
Identity Theft Affidavit, Form #14.020
https://sedm.org/Forms/14-PropProtection/Identity_Theft_Affidavit-f14039.pdf

STRATEGY FOR DEALING WITH LIKELY IRS RESPONSE:

The only way out of this mess for the IRS is to admit that 26 U.S.C. §871(a) is only on profit, so that it CAN be lawfully imposed on a U.S. national. 26 U.S.C. §871(a) uses the word profit and is the only place in the I.R.C. that does. It would be a reasonable statement to make consistent with the constitutional definition of “income”.

Do you realistically think they will EVER admit this?

NOT!

So IRS are left ONLY to argue and defend the fact that aliens are the only proper party for 26 U.S.C. §871(a) and Schedule NEC. That’s entirely consistent with the layout of the form: ALIEN 26 U.S.C. §871(d) real property elections on the BOTTOM of the form and TREATIES on the top of the form that don’t apply to U.S. nationals. EVERYTHING under 26 U.S.C. §861 and 26 U.S.C. §862 is on “Foreign income” in subchapter N. Look at the title. Otherwise, they would be arguing in favor of an unconstitutional tax on gross receipts. And by “foreign” they mean Foreign^P (NRA^Aliens), not Foreign^S

The Forms W-8 and W-9 are the origin of the authority to report and withhold based on civil status of the party. The requirement for filing EITHER a Form W-8 or a Form W-9:

NRA^Aliens (Foreign^P Persons^PUB): Those who file the Form W-8 are targeted for information returns under 26 U.S.C. §6041(a) as ALIENS only under I.R.C. Chapter 3. They are targeted with the Form 1042 information return. This requirement originates exclusively in 26 C.F.R. §1.1441-1, which is only for aliens per 26 C.F.R. §1.1441-1(c)(3).
U.S. Persons^PUB: Those who ELECT U.S. person^PUB status and file Form W-9 are targeted for reporting under I.R.C. Chapter 61. 26 C.F.R. §1.6041‑1(a)(1) requires reporting for payments made to U.S. persons only. They are targeted with the Form 1099.

Those who submit the W-8 may NOT be targeted for any of the following types of withholding and/or reporting which are part of I.R.C. Chapter 61 applicable only to U.S. persons^PUB. If they are, the reports are presumed FALSE:

Backup withholding under 26 U.S.C. §3406,
Form 1099 reporting.
Form 1042S as a U.S. national in 26 C.F.R. §1.1441-1.

Taxation of NRA^Aliens (foreign^P persons^PUB) is a sovereign power tax on the politically (not civilly) Foreign^P affairs under Constitution 1:8:3. 26 C.F.R. §1.1441-1 is the only method of connecting payments to “trade or business” in the case of an American national filing as a “nonresident alien”.

CHECKMATE!

Posted in Proof of Facts and tagged exclusions