Definition of “Effectively Connected”
SOURCE: The Truth About “Effectively Connecting”, Form #05.056, Section 2; SOURCE: https://sedm.org/Forms/05-MemLaw/EffectivelyConnected.pdf.
“Effectively connected” is only used in the context of “nonresident aliens”. The only position this site takes is the Nonresident Alien Position. The definition of “effectively connected” is as follows:
26 U.S. Code § 864 – Definitions and special rules
(c)Effectively connected income, etc.
(1)General rule
For purposes of this title—
(A) In the case of a nonresident alien individual or a foreign corporation engaged in trade or business within the United States during the taxable year, the rules set forth in paragraphs (2), (3), (4), (6), (7), and (8) shall apply in determining the income, gain, or loss which shall be treated as effectively connected with the conduct of a trade or business within the United States.
(B) Except as provided in paragraph (6) [1] (7), or (8) or in section 871(d) or sections 882(d) and (e), in the case of a nonresident alien individual or a foreign corporation not engaged in trade or business within the United States during the taxable year, no income, gain, or loss shall be treated as effectively connected with the conduct of a trade or business within the United States.
The above statute describes how to determine what IS and is NOT only AFTER YOU AND ONLY YOU DECIDE that you are lawfully engaged in a “trade or business”, meaning “the functions of a public office” in 26 U.S.C. §7701(a)(26). Once that happens, the earnings of the office become PULBLIC property owned and controlled by the government and not you. If this were not the case, congress would be unlawfully regulating and impairing the right of private property and violating the Fifth Amendment Takings Clause in doing so.
The power to “legislate generally upon” life, liberty, and property, as opposed to the “power to provide modes of redress” against offensive state action, was “repugnant” to the Constitution. Id., at 15. See also United States v. Reese, 92 U.S. 214, 218 (1876); United States v. Harris, 106 U.S. 629, 639 (1883); James v. Bowman, 190 U.S. 127, 139 (1903). Although the specific holdings of these early cases might have been superseded or modified, see, e.g., Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964); United States v. Guest, 383 U.S. 745 (1966), their treatment of Congress’ §5 power as corrective or preventive, not definitional, has not been questioned.
[City of Boerne v. Florez, Archbishop of San Antonio, 521 U.S. 507 (1997)]
The above description of “effectively connected” in 26 U.S.C. §864 is not really a definition either, because it doesn’t explain the PURPOSE of “effectively connecting”. That purpose is to donate PRIVATE property to a PUBLIC use, a PUBLIC office, and a PUBLIC purpose through an election. If they told you that was the purpose, you wouldn’t “effectively connect” ANYTHING called “income”!
The above description also does not explain HOW a “nonresident alien” may determine whether they are in fact engaged in a “trade or business”. In fact, unless the nonresident alien is already lawfully elected or appointed into a public office in some OTHER title of the U.S. Code, they cannot unilaterally volunteer into or elect themselves into a public office in order to be so lawfully engaged for tax purposes. That would be the crime of impersonating a public office in violation of 18 U.S.C. §912. There is no provision of the Internal Revenue Code that in fact CREATES any new public offices. Filling out a tax form including a Form 1040-NR doesn’t do it either. BUT, making an ELECTION can ADD to the duties of an EXISTING public office. The U.S. Supreme Court hinted at these inferences when they held that CREATING offices by means OTHER than direct election or appointment can be unconstitutional:
“An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed.
[Norton v. Shelby County, 118 U.S. 425, 442 (1886)]
“Effectively connected income” therefore means PRIVATE earnings DONATED to Uncle Sam. Your homework is to write this 1000 times until you get it:
The phrase “effectively connected to a trade or business within the United States” means no ACTUAL office is required to exist, because it is the status of your PROPERTY and its connection to the GOVERNMENT, and not YOUR status. That “effectively connected” status is a result or “EFFECT” of your consent to convert your otherwise PRIVATE property from PRIVATE to PUBLIC, usually in pursuit of some kind of privilege or public property. Thus, you are PLEDGING your private property as security for public debt in exchange for the privilege sought.
The phrase “trade or business” is also often followed by “in the United States” as in 26 U.S.C. §864(c)(1)(A) above. That “United States” is NEVER used in its geographical sense in 26 U.S.C. §7701(a)(9) and (a)(10), but in its LEGAL and CORPORATE sense or “United States****”, because public offices exist within FICTIONAL governments and corporations, not within PHYSICAL geographies. That is why earnings under 26 U.S.C. §871(b) are taxable WORLD WIDE regardless of where they are EARNED: Because they came from the government ONLY or were at least CONSENSUALLY TREATED as such by you. To be “IN the United States****” in this context in fact means PROPERTY or OFFICES within the U.S. Inc. federal corporation under 28 U.S.C. §3002(15)(A). YOUR connection to the national government as its agent or officer or the connection of your PROPERTY to PUBLIC is created by:
- Your act of consent, whether IMPLIED or EXPLICIT. See:
Invisible Consent, FTSIG
https://ftsig.org/how-you-volunteer/invisible-consent/ - An act of contracting or engaging in commerce with the government. For instance, owners of stock in a privileged government sanctioned public corporation are considered CONTRACTORS of the government. See:
Path to Freedom, Form #09.015, Sections 5.5-5.7
https://sedm.org/Forms/09-Procs/PathToFreedom.pdf - The receipt of government/public property that gives rise to an equitable obligation to use it under the terms of a grant or loan and return it when called to do so by its owner. This includes all civil statutory public benefits, franchises, privileges, licenses, permits, etc. See:
Private Right or Public Right? Course, Form #12.044
https://sedm.org/LibertyU/PrivateRightOrPublicRight.pdf - Being voluntarily engaged in the “trade or business”/public office excise taxable franchise anywhere in the world. 26 U.S.C. §871(b) income is NON-GEOGRAPHICAL and can be earned wherever a public office and the “trade or business” activity is exercised, because the officer is operating in a representative capacity and HIMSELF is a “source within the United States” federal corporation.
In a biblical sense, all the above are described as “playing the harlot”. See:
| Are You “Playing the Harlot” with the Government?, SEDM https://sedm.org/are-you-playing-the-harlot/ |
“Trade or business” is defined and “United States” is defined. The phrase “connected to a trade or business” is not defined, but is self-explanatory. Adding the word “effectively” obviously would not be necessary where there is an ACTUAL connection to a trade or business. Keep in mind, the custom rule for construing a definition that uses the word “includes” DOES NOT allow the meaning of “trade or business” to be expanded beyond the literal performance of the functions of a public office, but does embrace anything in the same general class as a public office or the national government ITSELF. The word “effectively” seems to be added just to make clear that no the status results DIRECTLY from the EFFECT of your CONSENT and CHOICE. See:
| Includes and Including, FTSIG https://ftsig.org/special-language/includes-including/ |
“Effectively connected” is used ONLY in relation to “nonresident aliens”. The term is not used with “United States persons”, because United States person itself IS a “trade or business”. It still need not involve the performance of the functions of a LITERAL public office, though, if you CONSENT to CALL IT “effectively connected”.
People filing the 1040NR naively think that by entering “income” in the “effectively connected” portion of the 1040NR, they are obtaining the ability to REDUCE their tax liability by taking “trade or business” deductions under 26 U.S.C. §162. However, something much more sinister is happening here as you will learn later.