Frivolous position: Taxpayer is not a “citizen” of the United States, and thus is not subject to the federal income tax laws

SOURCE: https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-arguments-section-i-a-to-c#contentionc1

IRS STATEMENT:

C. The Meaning of Certain Terms Used in the Internal Revenue Code

1. Contention: Taxpayer is not a “citizen” of the United States and thus is not subject to the federal income tax laws.

Some individuals argue that they have rejected citizenship in the United States in favor of state citizenship; therefore, they are relieved of their federal income tax obligations. A variation of this argument is that a person is a free born citizen of a particular state and thus was never a citizen of the United States. The underlying theme of these arguments is the same: the person is not a United States citizen and is not subject to federal tax laws because only United States citizens are subject to these laws.

The Law: The Fourteenth Amendment to the United States Constitution defines the basis for United States citizenship, stating that “[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” The Fourteenth Amendment therefore establishes simultaneous state and federal citizenship. Claims that individuals are not citizens of the United States but are solely citizens of a sovereign state and not subject to federal taxation have been uniformly rejected by the courts. The IRS has warned taxpayers of the consequences of making this frivolous argument. Rev. Rul. 2007-22, 2007-1 C.B. 866; Notice 2010-33, 2010-17 I.R.B. 609.

In a variation of this argument, taxpayers argue that although they are citizens of the United States, for the purposes of the Internal Revenue Code they are non-resident aliens and are subject to taxation only on income that is connected with the conduct of a trade or business. The Eleventh Circuit rejected this contention as frivolous.

Relevant Case Law:

Taliaferro v. Freeman, 595 F. App’x 961, 962 (11th Cir. 2014) – the Eleventh Circuit upheld the lower court’s dismissal of Mr. Taliaferro’s complaint seeking to enjoin the IRS from collecting taxes assessed against him. The court rejected as meritless his argument that, despite his U.S. citizenship, he is, “for purposes of the tax code, a nonresident alien who is subject to taxation only on income that is connected with the conduct of a trade or business.”

United States v. Bowden, 402 F. App’x 967 (5th Cir. 2010) – in denying an appeal of a sentence for tax evasion, the Fifth Circuit rejected the taxpayer’s argument that he was a sovereign and not subject to the laws of the United States.

United States v. Drachenberg, 623 F.3d 122, 125 (2d Cir. 2010) – the Second Circuit affirmed Drachenberg’s conviction for tax evasion and conspiracy to defraud the United States and rejected his argument that the federal courts lacked jurisdiction because he was not a citizen of the United States.

Upton v. IRS, 104 F.3d 543, 545 (2d Cir.1997) – the Second Circuit characterized taxpayer’s argument that he was a citizen of a state and therefore not a citizen of the United States as “barely worth a footnote.”

United States v. Hilgeford, 7 F.3d 1340, 1342 (7th Cir. 1993) – the Seventh Circuit rejected “shop worn” argument that defendant is a citizen of the “Indiana State Republic” and therefore an alien beyond the jurisdictional reach of the federal courts.

United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993) – the Eighth Circuit rejected the Gerads’ contention that they were “not citizens of the United States, but rather ‘Free Citizens of the Republic of Minnesota’ and, consequently, not subject to taxation” and imposed sanctions “for bringing this frivolous appeal based on discredited, tax-protester arguments.”

United States v. Sloan, 939 F.2d 499, 500 (7th Cir. 1991) – the Seventh Circuit affirmed a tax evasion conviction and rejected Sloan’s argument that the federal tax laws did not apply to him because he was a “freeborn, natural individual, a citizen of the State of Indiana, and a ‘master’ – not ‘servant’ – of his government.”

United States v. Ward, 833 F.2d 1538, 1539 (11th Cir. 1987) – the Eleventh Circuit found Ward’s contention that he was not an “individual” located within the jurisdiction of the United States to be “utterly without merit” and affirmed his conviction for tax evasion.

Wells v. United States, 129 A.F.T.R.2d 2022-609 (Fed. Cl. 2022) – the court dismissed the taxpayer’s argument that she is a sovereign citizen and “not subject to United States taxation,” as “frivolous” and “clearly baseless.”

Waltner v. Commissioner, T.C. Memo. 2014-35, 107 T.C.M. (CCH) 1189 (2014) – the court dismissed the possibility of being a citizen of a state but not the United States as “nonsensical” and “backwards; one cannot be a citizen of a State without also being a citizen of the United States. Indeed, citizenship in the United States is ‘paramount and dominant’ over State citizenship.”

Kay v. Commissioner, T.C. Memo. 2010-59, 99 T.C.M. (CCH) 1236 (2010) – the court imposed a $500 penalty under section 6673(a) against James Kay for raising frivolous arguments in the proceeding, including that he “was not born a [U.S.] taxpayer” and that the United States may not tax him because “the United States is a corporation” to which he holds no “allegiance.”

Other Cases:

United States v. Sileven, 985 F.2d 962 (8th Cir. 1993); Nevius v. Tomlinson, 113 A.F.T.R.2d 2014-1872 (W.D. Miss. 2014); O’Driscoll v. IRS, No. CIV. A. 91-2074, 1991 WL 133417 (E.D. Pa. July 16, 1991); Bruhwiler v. Commissioner, T.C. Memo. 2016-18, 111 T.C.M. (CCH) 1071 (2016); Carlson v. Commissioner, T.C. Memo. 2012-76, 103 T.C.M. (CCH) 1408 (2012); Callahan v. Commissioner, T.C. Memo. 2010-201, 100 T.C.M. (CCH) 225 (2010); Rice v. Commissioner, T.C. Memo. 2009-169, 98 T.C.M. (CCH) 40 (2009); Knittel v. Commissioner, T.C. Memo. 2009-149, 97 T.C.M. (CCH) 1837 (2009); Bland-Barclay v. Commissioner, T.C. Memo. 2002-20, 83 T.C.M. (CCH) 1119, 1121 (2002); Marsh v. Commissioner, T.C. Memo 2000-11, 79 T.C.M. (CCH) 1327 (2000); Solomon v. Commissioner, T.C. Memo. 1993-509, 66 T.C.M. (CCH) 1201, 1202-03 (1993).

REBUTTAL:

SOURCE: Rebutted Version of the IRS Publication: “The Truth About Frivolous Tax Arguments”, Form #08.005, Section C.1; https://sedm.org/Forms/08-PolicyDocs/friv_tax_rebuts.pdf

There are TWO types of “citizens”, and the IRS in its TYPICAL DECEPTIVE fashion is equivocating here on WHICH of the two they are referring to so that everyone falsely believes they are the same and thus cannot escape tax obligations:

  1. POLITICAL Citizen* by virtue of birth or naturalization. This is referenced in 26 C.F.R. §1.1-1(c).
  2. CIVIL/DOMICILED Citizen**+D by virtue of DOMICILE within the exclusive jurisdiction of the national government. This is referenced in 26 C.F.R. §1.1-1(a)

The IRS’ statement is clearly referring to item 1 above and NOT item 2 above because they refer to birth or naturalization. That is also why they refer to “citizens” in the title instead of “citizens of the United States**”. We therefore agree with the IRS on this subject.  It is ludicrous to claim that POLITICAL “citizen*” status identified in 8 U.S.C. §1401 or 26 C.F.R. §1.1-1(c) is the origin of our tax liability.  Instead, the origin of the authority of the government to impose an income tax is EITHER:

  1. A VOLUNTARY choice of “domicile” within the exclusive jurisdiction of Congress in the federal zone or
  2. A VOLUNTARY “election” (consent) to be treated “AS IF” one is a TERRITORIAL/DOMICILED “citizen* of the United States**” in 26 C.F.R. §1.1-1(a), also called a “U.S. person” in 26 U.S.C. §7701(a)(30).

BOTH of the above elections are effectively made merely by filing the WRONG tax return form, the 1040, in the case of most Americans.  Quit jumping off the cliff like lemmings, people!  In fact, its even UNLAWFUL to do so!  By “unlawful” we mean NOT EXPRESSLY AUTHORIZED by law, rather than EXPRESSLY PROHIBITED by law.  See for yourself:

There is NO LAW that permits an American National as a Nonresident Alien to Elect to be a U.S. person if they are NOT married to one, SEDM
https://sedm.org/there-is-no-law-that-permits-an-american-national-as-a-nonresident-alien-to-elect-to-be-a-u-s-person-if-they-are-not-married-to-one/

Mere “nationality” alone or even Fourteenth Amendment POLITICAL citizen* status is ALSO not the origin of the status of “citizen of the United States” tax status in 26 C.F.R. §1.1-1(a) or “U.S. person” tax status in 26 U.S.C. §7701(a)(30), because 26 U.S.C. §873(b)(4) recognizes the ability of “nationals of the United States” such as POLITICAL/CONSTITUTIONAL citizens under EITHER the Fourteenth Amendment or 8 U.S.C. §1401 to claim “nonresident alien” status under 26 U.S.C. §7701(b)(1)(B). You might therefore reasonably ask what exactly IS the origin of the obligation to pay income tax? The presentation below answers this question:

How American Nationals Volunteer to Pay Income Tax, Form #08.024
https://sedm.org/Forms/08-PolicyDocs/HowYouVolForIncomeTax.pdf

Note also that mere physical presence alone within the exclusive jurisdiction of Congress on federal territory is ALSO INSUFFICIENT in the case of an American National to create an income tax obligation because American Nationals are NOT subject to the presence test in 26 U.S.C. §7701(b).  Domicile is not a function of mere physical presence, nor can it be imposed upon ANYONE against their will without violating the Thirteenth Amendment prohibition against involuntary servitude.

Below is what the U.S. Supreme Court held on this subject of VOLUNTARY DOMICILE as the origin of income tax liability:

“Thus, the Court has frequently held that domicile or residence, more substantial than mere presence in transit or sojourn, is an adequate basis for taxation, including income, property, and death taxes. Since the Fourteenth Amendment makes one a citizen of the state wherein he resides, the fact of residence creates universally reciprocal duties of protection by the state and of allegiance and support by the citizen. The latter obviously includes a duty to pay taxes, and their nature and measure is largely a political matter. Of course, the situs of property may tax it regardless of the citizenship, domicile, or residence of the owner, the most obvious illustration being a tax on realty laid by the state in which the realty is located.” 

[Miller Brothers Co. v. Maryland, 347 U.S. 340 (1954) ]

Domicile is a choice of allegiance and political association.  The First Amendment gives us a right to freely associate and makes it illegal to be compelled to politically associate with any group.  Therefore, one’s choice of domicile is voluntary.  Because domicile is the origin of the government’s authority to impose an income tax, then all income taxes are voluntary.  If we want to unvolunteer, we simply abandon our domicile and disassociate with the government by exercising our First Amendment rights.  This is exhaustively explained in the informative article below, which also explains what affect that change of domicile has on our citizenship status:

Why Domicile and Becoming a “Taxpayer” Require Your Consent, Form #05.002
https://sedm.org/Forms/05-MemLaw/Domicile.pdf

However, most freedom advocates, in their legal ignorance, do not understand the interaction of domicile with POLITICAL citizenship and come to the definitely false conclusion that being a POLITICAL “citizen” alone is what made them a “taxpayer”.  In fact, aliens with a domicile in the United States are called “residents” and “residents” can also be “taxpayers”.  Below is a table summarizing the interaction of one’s citizenship and domicile that is very revealing:

Table 1: Effect of domicile on citizenship status

 CONDITION
DescriptionDomicile WITHIN
the FEDERAL ZONE and located in FEDERAL ZONE		Domicile WITHIN
the FEDERAL ZONE and temporarily located abroad in foreign country		Domicile WITHOUT the FEDERAL ZONE and located WITHOUT the FEDERAL ZONE
Location of domicile“United States” per
26 U.S.C. §§7701(a)(9) and (a)(10), 7701(a)(39), 7408(d)		“United States” per
26 U.S.C. §§7701(a)(9) and (a)(10), 7701(a)(39), 7408(d)		Without the “United States” per 26 U.S.C. §§7701(a)(9) and (a)(10), 7701(a)(39), 7408(d)
Physical locationFederal territories, possessions, and the District of ColumbiaForeign nations ONLY (NOT states of the Union)Foreign nations states of the Union Federal possessions
Tax Status“U.S. Person” 26 U.S.C. §7701(a)(30)“U.S. Person” 26 U.S.C. §7701(a)(30)“Nonresident alien individual” if a public officer in the U.S. government. 26 C.F.R. §1.1441-1(c)(3)(ii) “Non-resident NON-person” if NOT a public officer in the U.S. government
Tax form(s) to fileIRS Form 1040IRS Form 1040 plus 2555IRS Form 1040NR: “alien individuals”, “nonresident alien individuals” No filing requirement: “non-resident NON-person”
Status if DOMESTIC “national of the United States*”“national and citizen of the United States** at birth” per 8 U.S.C. §1401 and “citizen of the United States**” per 8 U.S.C. §1101(a)(22)(A) if born in on federal territory. (Not required to file if physically present in the “United States” because no statute requires it)Citizen abroad
26 U.S.C. §911 (Meets presence test)		“non-resident” if born in a state of the Union 8 U.S.C. §1408, 8 U.S.C. §1452, and 8 U.S.C. §1101(a)(22)(B)if born in a possession.
Status if FOREIGN “national” pursuant to 8 U.S.C. §1101(a)(21)“Resident alien” 26 U.S.C. §7701(b)(1)(A)“Resident alien abroad”
26 U.S.C. §911 (Meets presence test)		“Nonresident alien individual” if a public officer in the U.S. government. 26 C.F.R. §1.1441-1(c)(3)(ii) “Non-resident NON-person” if NOT a public officer in the U.S. government

NOTES:

  1. “United States” is defined as federal territory within 26 U.S.C. §§7701(a)(9) and (a)(10), 7701(a)(39), and 7408(d), and 4 U.S.C. §110(d).  It does not include any portion of a Constitutional state of the Union.
  2. The “District of Columbia” is defined as a federal corporation but not a physical place, a “body politic”, or a de jure “government” within the District of Columbia Act of 1871, 16 Stat. 419, 426, Sec. 34.    See:  Corporatization and Privatization of the Government, Form #05.024; http://sedm.org/Forms/FormIndex.htm.
  3. “nationals” of the United States of America who are domiciled outside of federal jurisdiction, either in a state of the Union or a foreign country, are “nationals” but not “citizens” under federal law.  They also qualify as “nonresident aliens” under 26 U.S.C. §7701(b)(1)(B) if and only if they are engaged in a public office.  See sections 4.11.2 of the Great IRS Hoax, Form #11.302 for details.
  4. Temporary domicile in the middle column on the right must meet the requirements of the “Presence test” documented in IRS publications.
  5. District of Columbia, Puerto Rico, and the territories and insular possessions of the United States in the above table.
  6. The term “individual“ as used on the IRS Form 1040 means an “alien“ engaged in a “trade or business“.  All “taxpayers” are “aliens” engaged in a “trade or business”.  This is confirmed by 26 C.F.R. §1.1441-1(c)(3), 26 C.F.R. §1.1-1(a)(2)(ii), and 5 U.S.C. §552a(a)(2).  Statutory “U.S. citizens“ as defined in 8 U.S.C. §1401 are not “individuals“ unless temporarily abroad pursuant to 26 U.S.C. §911 and subject to an income tax treaty with a foreign country.  In that capacity, statutory “U.S. citizens“  interface to the I.R.C. as “aliens” rather than “U.S. citizens” through the tax treaty.

From the above table, we can see that those with a domicile in the federal zone include both CIVIL/DOMICILED “citizens**+D” and “residents”.  Collectively, this group of people are called “inhabitants” and “U.S. persons” in 26 U.S.C. §7701(a)(30).  A human being can live somewhere and not have a domicile there, and when they do this, they are called “transient foreigners”.  Within the Internal Revenue Code, they are called “nonresident aliens”.

It is impossible for a “transient foreigner” to be a “taxpayer” under Subtitle A of the I.R.C. if he properly fills out all IRS Forms to accurately reflect his status.  If a person is born in the United States, then he is a “national”.  If he has a domicile in the “United States”, then he becomes a “citizen”.  If he abandons his domicile in the federal zone, then he becomes a “national but not a citizen” under federal law, and is described in 8 U.S.C. §1101(a)(21) as a person owing allegiance to a legislatively but not constitutionally foreign “state”.  This is the status of humans born within a state of the Union at birth.  If you would like to learn more about this subject of citizenship of persons domiciled in states of the Union, see:

Why You are a “national”, “state national”, and Constitutional but not Statutory Citizen, Form #05.006
http://sedm.org/Forms/FormIndex.htm

A person who is a “transient foreigner” and a “nonresident alien” earns no “gross income” and therefore could only put “0” on a tax return for “Income”:

Title 26: Internal Revenue
PART 1—INCOME TAXES
nonresident alien individuals
§ 1.872-2  Exclusions from gross income of nonresident alien individuals.

(f) Other exclusions.

Income which is from sources without [outside]  the United States [District of Columbia, see 26 U.S.C. §7701(a)(9) and (a)(10)], as determined under the provisions of sections 861 through 863, and the regulations thereunder, is not included in the gross income of a nonresident alien individual unless such income is effectively connected for the taxable year with the conduct of a trade or business in the United States by that individual. To determine specific exclusions in the case of other items which are from sources within the United States, see the applicable sections of the Code. For special rules under a tax convention for determining the sources of income and for excluding, from gross income, income from sources without the United States which is effectively connected with the conduct of a trade or business in the United States, see the applicable tax convention. For determining which income from sources without the United States is effectively connected with the conduct of a trade or business in the United States, see section 864(c)(4) and §1.864–5.

If an ignorant employer who refused to recognize the status of a “transient foreigner” as a “nonresident alien” not engaged in a trade or business and maliciously filed an information return, such as a W-2 or 1099 against that person, then:

  1. The false return could easily be corrected.  See:
    1.1. Correcting Erroneous Information Returns, Form #04.001
    http://sedm.org/Forms/FormIndex.htm
    1.2. Correcting Erroneous IRS Form W-2’s, Form #04.006:
    http://sedm.org/Forms/FormIndex.htm
    1.3. Correcting Erroneous IRS Form 1042s, Form #04.003
    http://sedm.org/Forms/FormIndex.htm
    1.4. Correcting Erroneous IRS Form 1098’s, Form #04.004
    http://sedm.org/Forms/FormIndex.htm
    1.5. Correcting Erroneous IRS Form 1099’s, Form #04.005
    http://sedm.org/Forms/FormIndex.htm
  2. The private employer could be prosecuted for a minimum of $5,000 for filing a false information return under 26 U.S.C. §7434.

Those who want to educate their private employers about how to properly complete information returns can provide them with the following free resources:

  1. Federal Tax Withholding, Form #04.102
    http://sedm.org/Forms/FormIndex.htm
  2. Demand for Verified Evidence of “Trade or Business” activity: Information Return, Form #04.007
    http://sedm.org/Forms/FormIndex.htm

Those wishing to pursue the nonresident alien tax status are invited to read:

  1. Nonresident Alien Position Course, Form #12.045
    https://sedm.org/LibertyU/NRA.pdf
  2. Non-Resident Non-Person Position, Form #05.020
    https://sedm.org/Forms/05-MemLaw/NonresidentNonPersonPosition.pdf
  3. Property View of Income Taxation Course, Form #12.046
    https://sedm.org/LibertyU/PropertyViewOfIncomeTax.pdf