CODE OF FED REGS BREAKDOWN<TITLE <body> <body background="qs_flag.jpe"><body background="papermesh.jpg"><meta http-equiv="Page-Enter" content="revealTrans(Duration=4.0,Transition=0)"> <style fprolloverstyle>A:hover {color: #FF0033} </style> Code of Federal Regulations <p> 31. Parallel Table of Authorities and Rules, portion relating to Title 26 of the United States Code, and Executive Orders, particularly E.O. #6166 and E.O. #10289. The Parallel Table of Authorities and Rules lists U.S.C. sections, Public Laws, Executive Orders and the like in the left column, then general application implementing regulations in the left. If any U.S.C. section, Executive Order, etc., is not listed, they do not have general application to or in the Union of several States. Notes concerning relevance are made in columns. Numerous regulations are listed in this table that are not listed in the Parallel Table of Authorities and Rules as having general application. <p> 32. List of CFR Titles, Chapters, Subchapters, and Parts for 19 CFR з 101. This finding aid is located in the Index Volume of the Code of Federal Regulations. The only regulation the Secretary of the Treasury has enacted under authority of E.O. #10289, relating to establishment of internal revenue districts (26 U.S.C. з 7621), is 19 CFR з 101, which is under jurisdiction of the United States Customs Service. This regulation establishes customs collection offices in the Union of several States. There are no Federal internal revenue districts, as such, in the Union of several States party to the Constitution. <p> 33. 26 CFR з 1.6001-1. This part, at з 1.6001-1(d), states that the district director of an internal revenue district must serve notice on anyone required to keep books and records and file returns. The regulation specifically relates to "normal tax" in subtitle A of the Internal Revenue Code. <p> 34. 26 CFR з 31.3121(e)-1, definitions of "State", "United States", and "citizen". These definitions specifically relate to the family of Social Security taxes, a/k/a, "employment" taxes. These are among the best definitions in the United States Code or the Code of Federal Regulations that demonstrate geographical limitation of Social Security taxes. This has always been a Federal tax limited to territory and insular possessions of the United States. It has never had lawful application in the Union of several States. When reading definitions of "State" and "United States", note movement of Alaska and Hawaii out of the definitions when they were respectively admitted to the Union, then movement of Guam and American Samoa into geographical application of the Social Security Act. The definition of the term "citizen" clearly demonstrates that where the Social Security Act is concerned, geographical citizenship, not Fourteenth Amendment citizenship, is the object of the tax. In other words, an Oklahoma tax does not apply to citizens of Kansas unless they conduct business in Oklahoma. Likewise, for the Social Security tax to apply, one must be a citizen or resident of the District of Columbia, Puerto Rico, the Virgin Islands, Guam or American Samoa. <p> 35. 26 CFR з 31.3121(h)-1, definition of "American employer". This definition rests on definitions at з 31.3121(e)-1. Where the family of the Social Security taxes is concerned, employers qualified to participate, whether public or private, must be connected to the District of Columbia or the four named insular possessions of the United States. This family of taxes does not apply to the Union of several States. <p> 36. 26 CFR з 31.3401(c)-1, definition of "employee". This section identifies those subject to withholding at the source. з 31.3401(c)-1(a) lists officers and employees of U.S. government and governments of territories and insular possessions of the United States. All are engaged in a "United States trade or business", as defined at 26 U.S.C. з 7701(a)(26), and are subject to normal tax prescribed in Subtitle A of the Internal Revenue Code. <p> 37. 26 CFR з 31.3401(d)-1, definition of "employer". The employer employs the employee, as defined at з 31.3401(c)-1 above. <p> 38. 26 CFR з 31.3402(e)-1, "Included and excluded wages." This subpart is included to demonstrate that an "employee" may work in a capacity for an "employer" where he is classified as an "employee" with wages subject to withholding, and may work in a capacity for the employer where his wages are not subject to withholding. This example serves to demonstrate that there are "taxpayers" and "non-taxpayers" - not all earnings are "wages" as defined for purposes of the normal tax imposed by subtitle A of the Internal Revenue Code. The example also demonstrates that for some purposes, "employers" are not employers for purposes of the normal tax imposed by subtitle A. <p> 39. 26 CFR з 3403-1, "Liability for tax." The employer is liable for tax imposed by subtitle A of the Internal Revenue Code. <p> 40. 26 CFR з 31.3404-1, "Return and payment by governmental employer." The withholding agent is ultimately the person liable for keeping books and records, filing returns, and paying the tax. <p> 41. 26 CFR з 31.6001-1, "Records in general." This part is particularly important where it comes to determining what books and records must be kept. Note at з <p> 31.6001-1(d) that an "employee" is not required to keep books and records unless he files for a refund.<p> 42. 26 CFR з 31.6001-6, "Notice by district director requiring returns, statements, or the keeping of records." This subpart corresponds with 26 CFR з 1.6001-1(d). The director must serve notice to anyone required to keep books and records and file returns. It follows that unless or until such notice is served, nobody is required to keep books and records and file returns relating to subtitle A & C taxes. <p> 43. 26 CFR з 31.6011((a)-4, "Returns of income tax withheld." Whoever is responsible for withholding under з 31.3402 (26 U.S.C. з 3402) is required to make the return, as demonstrated supra. <p> 44. 26 CFR з 31.6011(a)-6, "Final returns." An "employer" or other person who cases to pay wages, etc., subject to normal tax imposed by subtitle A is required to make a final return. This subpart is significant in that it doesn't suggest that the employer might be going out of business, it merely states that he will make a final return when he ceases paying wages and the like subject to the normal tax. This subpart reinforces the example above: An employer engaged in enterprise defined as a United States trade or business, and other enterprise which is not defined as trade or business where the Internal Revenue Code is concerned, may discontinue whatever subject trade or business he was engaged in and continue whatever he was doing that is not construed as a trade or business. For example, a U.S. Attorney may lose his position, or a congressman may be defeated. If and when they return to private enterprise, they are no longer engaged in a "trade or business" that is subject to normal tax imposed by subtitle A of the Internal Revenue Code. If this individual, in his capacity as a government officer or employee, were liable for withholding from wages and the like, he would be required to make a final return. <p> 45. 26 CFR з 31.6051-1, "Statements for employees." The employer is required to furnish his employees with W-2 forms and the like. This is the employee's copy of the employer's tax return reduced to individual accounting. While an employee should keep his copy of the W-2, it isn't required, per з 31.6001-1(d), unless he intends to file for a refund. <p> 46. 26 CFR з 31.6205-1, "Adjustments of underpayments." In the event an employer has not withheld a sufficient amount for employee and "income" tax, he is responsible for increasing deductions to compensate. Read з 31.6205-1(c)(4) in particular. Collection of a deficiency is between the employer and the employee, no outside Federal agency is involved. Regardless of whether or not an employer withholds the proper amount from employee wages, the employer is liable for reporting and paying the proper amount of tax. <p> 47. 26 CFR з 31.6361-1, "Collection and administration of qualified State individual income taxes." Again, this is applicable only to Federal agencies. The Buck Act (4 U.S.C. зз 105-111) extends supposed authority for state and local governments to tax Federal employees. However, see definitions at 4 U.S.C. з 111 to find that this authority extends only to territories and insular possessions of the United State, i.e., the District of Columbia, Puerto Rico, etc. It has never applied to the Union of several States even though most state taxes, including sales tax, fuel taxes, income taxes, etc., are predicated on Buck Act authority. Proper implementation of this authority via contractual agreement is reasonably well spelled out in 5 U.S.C. зз 5512-5520a. <p> 48. 26 CFR з 31.6402(a)-2, "Credit or refund of tax under Federal Insurance Contributions Act or Railroad Retirement Tax Act." This subpart explains how the "employer" responsible for withholding is to secure credit or a refund for overpayment of these taxes. Note at з 31.6402(a)-2(b)(2) that the "employee" who claims a refund is to make a statement concerning the over collection, and the employer is to attach the employee's statement to the refund claim. There is no particular form for the employee to make his statement on. <p> 49. 26 CFR з 31.6413(a)-1, "Repayment by employer of tax erroneously collected from employee." Here again, the employee makes his claim to the employer, then the employer makes the appropriate adjustment on subsequent returns. <p> 50. 26 CFR з 31.6413(a)-2, "Adjustment of overpayments." This covers both Social Security and income taxes. <p> 51. 26 CFR з 31.6413(b)-1, "Overpayments of certain employment taxes." Small subpart cites regulations for securing refunds of Social Security and normal taxes.<p> 52. 26 CFR з 31.6413(c)-1, "Special refunds." At з 31.6413(c)-1(a)(2), the subpart specifies that, "For purposes of special refunds of employee tax, each head of a Federal agency or a wholly owned instrumentality of the United States who makes a return pursuant to section 3122 ... is considered a separate employer. For such purposes, the term 'wage' includes the amount which each such head (or agent) determines to constitute wages paid an employee..." Particulars relating to how to file for a special refund are set out in з 31.6413(c)-1(b). Under this particular authority, the claim must be filed on Form 843. <p> 53. 26 CFR з 31.6414-1, "Credit or refund of income taxes withheld from wages." This subpart authorizes recovery by deduction from the standard tax return with a statement relating to the claim attached. <p> 54. 26 CFR з 301.6203-1, "Method of assessment." This regulation authorizes district and regional directors to appoint assessment officers. The assessment officer is then required to make a summary record of assessment, including the seven particulars set out in the regulation. The summary record of assessment must be "verified", the assessment officers signing under penalties of perjury, or the summary record of assessment must issue under department seal. Case discloses that the tax returned form filed by whoever is required to file it is merely an "estimate" of whatever tax is at issue, and that money paid prior to or at the time of filing such return is a deposit against liability. There is no liability to the point the assessment officer completes a procedurally correct summary record of assessment. The director has three years from the date the return is filed to execute the assessment. <p> 55. 26 CFR з 301.6303-1, "Notice and demand for tax." A 10-day notice and demand for payment of tax must be issued to a "taxpayer" after a summary record of assessment has been properly executed. There is no authority for notice and demand to issue prior to an assessment being completed, and one must issue after completion for the tax agency to comply with prescribed procedure. <p> 56. 26 CFR з 301.6365-1, "Definitions". The definitions of "State" and "Governor" are applicable to the subchapter relating to collection of state qualified tax. Here again, the term "State" is limited to possessions of the United States, and in this case, the District of Columbia: "(a) State. For purposes of subchapter E and the regulations thereunder, the term 'State' shall include the District of Columbia, but shall not include the Commonwealth of Puerto Rico or any possession of the United States." <p> 57. 26 CFR з 301.6365-2. "Commencement and cession of applicability of subchapter E to individual taxpayers." Tells when the "Federal" withholding system goes into effect and is terminated. <p> 58. 26 CFR з 301.6401-1 "Amounts treated as overpayments." Section is important to understanding what an "overpayment" is. з 301.6401-1(b) is important for recovery where there was no liability: "(b) An amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid." <p> 59. 26 CFR з 301.6402-2 "Claims for credit or refund." Details what should be included in claims. <p> 60. 26 CFR з 301.6402-3 "Special rules applicable to income tax." In this subpart, it specifies that claims should be made on Forms 1040X where 1040 or 1040A returns have been filed as individual returns; the 1120X should be filed where a corporation has previously filed an 1120. The regulation is reasonably detailed. Regulations through з 301.6402-7 are included and should be studied for particulars relating to refund claims. <p> 61. 26 CFR з 301.7621-1 "Internal revenue districts". The note specifies that Executive Order #10289 is the delegation of authority from the President to the Secretary of the Treasury for establishing revenue districts. By following this up via the Parallel Table of Authorities and Rules, it is found that no Federal internal revenue districts have been established in the Union of several States party to the Constitution. The only regulation for E.O. #10289 is 19 CFR з 101, which authorizes the U.S. Customs Service to establish customs offices in the several States. <p> 62. 26 CFR з 403 "Disposition of Seized Personal Property". The Internal Revenue Service administers this regulation; the Bureau of Alcohol, Tobacco and Firearms operates under a parallel regulation at 27 CFR з 72. Both are for "admiralty" (shoreline) jurisdiction relating to customs laws, the IRS regulation relating to controlled dangerous substances, and the BATF regulation relating to imported guns, alcohol, etc. The exit point in the Internal Revenue Code is 26 U.S.C. з 7327 "Customs laws applicable". Virtually all IRS administrative seizures are based on this regulation and the presumption that a "commercial crime" relating to controlled dangerous substances has been committed. The crimes are listed at з 403.38(d)(1). The regulation also specifies that forfeitures in excess of $2,500 must be adjudicated. <p> 63. 26 CFR з 601.401, in part. Provides information relating to claims. Of significance, з 601.401(d)(4), relating to special refunds of employee social security tax, prescribes the 1040 Form for recovery of overpayment of employment tax where the employee has worked for two or more employers in the course of any given year. This, of course, is voluntary, as people do not have to secure refunds of overpayments. This is the only regulation presently known that prescribes use of the 1040 return form. Use of the 1040X for recovery where a 1040 return has been filed (з 301.6402-2) does not presume that filing a 1040, 1040EZ, or any variation thereof was required. <p> 64. 27 CFR з 250.11 "Definitions." These definitions are particularly important to tying the Internal Revenue Service and the Bureau of Alcohol, Tobacco and Firearms in with the Department of the Treasury, Puerto Rico. IRS is successor of BIR, Puerto Rico via name change in 1953; BATF was split from IRS in 1972. See definitions of "Revenue Agent", "Secretary" and various others. BATF still administers the Federal Alcohol Administration Act of 1935, which was moved under BIR, Puerto Rico administrative jurisdiction via Reorganization Plan No. III of 1940. See definitions at 27 CFR з 1.5. <p> 65. 31 CFR з 0, "Department of the Treasury Employee Rules of Conduct". These regulations are important as they establish rules for compliance, disclosure, etc., for IRS, BATF, and other personnel of agencies construed to be subject to jurisdiction of or part of the Department of the Treasury. These compliance mandates should be incorporated in all administrative interchange with officers and agents of Department of the Treasury agencies. <br><center><applet code="RainbowHR.class" width="400" height="8" vspace="12"> <param name="color" value="606040|A0A090|FFFFE0|A0A090|606040|FFC0FF|806080|FFC0FF"> <param name="speed" value="2"> <param name="repeat" value="2"> </applet> </p></center><br> <center><body BGCOLOR="#ffffff" link="#CC0033" vlink="#333399" alink="#FF0000"  <table WIDTH="96%" BORDER="0" CELLSPACING="5" CELLPADDING="5"> <tr> <td WIDTH="100%"> <p align="center">й Paul Revere <br> Last Updated: <script>  </script> </font></td> </tr> </table> </center><br> <BR><center> <FORM><INPUT TYPE="button" VALUE="Back" onClick="history.go(-1);return true;"> </FORM> </center> </body> </html>