Foreign Government
EDITORIAL: This section is useful in determining when and how you became an instrumentality of any government, not just foreign governments. Throughout this site, we take the position that everyone who owes a civil obligation to any government is an AGENT and representative of that government and a “straw man”.
“An office is a public charge or employment; but, as every employment is not an office, it is sometimes difficult to distinguish between employments which are and those which are not offices…. A public officer is one who has some duty to perform concerning the public; and he is not the less a public officer when his duty is confined to narrow limits, because it is the duty, and the nature of that duty, which makes him a public officer, and not the extent of his authority.’ 7 Bac. Abr. 280; Carth. 479…. Where an employment or duty is a continuing [***65] one, which is defined by rules prescribed by law and not by contract, such a charge or employment is an office, and the person who performs it is an officer….
The above cite is further explored in:
Proof That There Is a “Straw Man”, Form #05.042
https://sedm.org/Forms/05-MemLaw/StrawMan.pdf
You can use these statutory definitions as a PRACTICAL TEST, for instance, to PROVE in court whether you are acting as an agent of the national government in the context of income taxation, which by the way is legislatively foreign with respect to states of the Union and is classified legally as a “foreign corporation” in respect to the exclusive jurisdiction of a constitutional state. If in fact you ARE acting as an agent of the national government as a “taxpayer”, “U.S. person”, “person”, etc., then the only real “taxpayer” is the GOVERNMENT! What could be better than a tax on ONLY people working INSIDE the U.S. Inc federal corporation?
This definition used to be contained in 26 U.S.C. §892(c)(3) but it was subsequently moved to the regulations. Notice also that the ONLY “foreign country” is U.S. possessions.
26 CFR § 1.892-2T – Foreign government defined (temporary regulations).
§ 1.892-2T Foreign government defined (temporary regulations).
(a) Foreign government—
(1) Definition. The term “foreign government” means only the integral parts or controlled entities of a foreign sovereign.
(2) Integral part. An “integral part” of a foreign sovereign is any person, body of persons, organization, agency, bureau, fund, instrumentality, or other body, however designated, that constitutes a governing authority of a foreign country. The net earnings of the governing authority must be credited to its own account or to other accounts of the foreign sovereign, with no portion inuring to the benefit of any private person. An integral part does not include any individual who is a sovereign, official, or administrator acting in a private or personal capacity. Consideration of all the facts and circumstances will determine whether an individual is acting in a private or personal capacity.
(3) Controlled entity. The term “controlled entity” means an entity that is separate in form from a foreign sovereign or otherwise constitute a separate juridical entity if it satisfies the following requirements:
(i) It is wholly owned and controlled by a foreign sovereign directly or indirectly through one or more controlled entities;
(ii) It is organized under the laws of the foreign sovereign by which owned;
(iii) Its net earnings are credited to its own account or to other accounts of the foreign sovereign, with no portion of its income inuring to the benefit of any private person; and
(iv) Its assets vest in the foreign sovereign upon dissolution.
A controlled entity does not include partnerships or any other entity owned and controlled by more than one foreign sovereign. Thus, a foreign financial organization organized and wholly owned and controlled by several foreign sovereigns to foster economic, financial, and technical cooperation between various foreign nations is not a controlled entity for purposes of this section.
(b) Inurement to the benefit of private persons. For purposes of this section, income will be presumed not to inure to the benefit of private persons if such persons (within the meaning of section 7701(a)(1)) are the intended beneficiaries of a governmental program which is carried on by the foreign sovereign and the activities of which constitute governmental functions (within the meaning of § 1.892-4T(c)(4)). Income will be considered to inure to the benefit of private persons if such income benefits:
(1) Private persons through the use of a governmental entity as a conduit for personal investment; or
(2) Private persons who divert such income from its intended use by the exertion of influence or control through means explicitly or implicitly approved of by the foreign sovereign.
(c) Pension trusts—(1) In general. A controlled entity includes a separately organized pension trust if it meets the following requirements:
(i) The trust is established exclusively for the benefit of (A) employees or former employees of a foreign government or (B) employees or former employees of a foreign government and non-governmental employees or former employees that perform or performed governmental or social services;
(ii) The funds that comprise the trust are managed by trustees who are employees of, or persons appointed by, the foreign government;
(iii) The trust forming a part of the pension plan provides for retirement, disability, or death benefits in consideration for prior services rendered; and
(iv) Income of the trust satisfies the obligations of the foreign government to participants under the plan, rather than inuring to the benefit of a private person.
Income of a pension trust is subject to the rules of § 1.892-5T(b)(3) regarding the application of the rules for controlled commercial entities to pension trusts. Income of a superannuation or similar pension fund of an integral part or controlled entity (which is not a separate pension trust as defined in this paragraph (c)(1)) is subject to the rules that generally apply to a foreign sovereign. Such a pension fund may also benefit non-governmental employees or former employees that perform or performed governmental or social services.
(2) Illustrations. The following examples illustrate the application of paragraph (c)(1).
Example 1.
The Ministry of Welfare (MW), an integral part of foreign sovereign FC, instituted a retirement plan for FC’s employees and former employees. Retirement benefits under the plan are based on a percentage of the final year’s salary paid to an individual, times the number of years of government service. Pursuant to the plan, contributions are made by MW to a pension trust managed by persons appointed by MW to the extent actuarially necessary to fund accrued pension liabilities. The pension trust in turn invests such contributions partially in United States Treasury obligations. The income of the trust is credited to the trust’s account and subsequently used to satisfy the pension plan’s obligations to retired employees. Under these circumstances, the income of the trust is not deemed to inure to the benefit of private persons. Accordingly, the trust is considered a controlled entity of FC.
Example 2.
The facts are the same as in Example 1, except that the retirement plan also benefits employees performing governmental or social services for the following non-government institutions: (i) A university in a local jurisdiction; (ii) a harbor commission; and (iii) a library system. The retirement benefits under the plan are based on the total amounts credited to an individual’s account over the term of his or her employment. MW makes annual contributions to each covered employee’s account equal to a percentage of annual compensation. In addition, the income derived from investment of the annual contributions is credited annually to individual accounts. The annual contributions do not exceed an amount that is determined to be actuarially necessary to provide the employee with reasonable retirement benefits. Notwithstanding that retirement benefits vary depending upon the investment experience of the trust, no portion of the income of the trust is deemed to inure to the benefit of private persons. Accordingly, the trust is considered a controlled entity of FC.
Example 3.
The facts are the same as in Example 1, except that employees are allowed to make unlimited contributions to the trust, and such contributions are credited to the employee’s account as well as interest accrued on such contributions. Retirement benefits will reflect the amounts credited to the individual accounts in addition to the usual annuity computation based on the final year’s salary and years of service. A pension plan established under these rules is in part acting as an investment conduit. As a result, the income of the trust is deemed to inure to the benefit of private persons. Accordingly, the trust is not considered a controlled entity of FC.
Example 4.
(a) The facts are the same as in Example 2, except that MW establishes a pension fund rather than a separate pension trust. A pension fund is merely assets of an integral part or controlled entity allocated to a separate account and held and invested for purposes of providing retirement benefits. Under these circumstances, the income of the pension fund is not deemed to inure to the benefit of private persons. Accordingly, income earned from the United States Treasury obligations by the pension fund is considered to be received by a foreign government and is exempt from taxation under section 892.
(b) The facts are the same as in Example 4(a), except that MW is a controlled entity of foreign sovereign FC. The result is the same as in Example 4(a). However, should MW engage in commercial activities (whether within or outside the United States), the income from the Treasury obligations earned by the pension fund will not be exempt from taxation under section 892 since MW will be considered a controlled commercial entity within the meaning of § 1.892-5T(a).
(d) Political subdivision and transnational entity. The rules that apply to a foreign sovereign apply to political subdivisions of a foreign country and to transnational entities. A transnational entity is an organization created by more than one foreign sovereign that has broad powers over external and domestic affairs of all participating foreign countries stretching beyond economic subjects to those concerning legal relations and transcending state or political boundaries.
[T.D. 8211, 53 FR 24061, June 27, 1988; 53 FR 27595, July 21, 1988]