Detecting language using up to the first 30 seconds. Use `--language` to specify the language Detected language: English [00:00.000 --> 00:02.320] Welcome to the show. [00:02.320 --> 00:08.220] Do you know that the income tax is a form-driven administrative process? [00:08.220 --> 00:09.260] More to the point. [00:09.260 --> 00:15.900] Do you know that IRS forms never state their true legal purpose on the form? [00:15.900 --> 00:18.500] Do you think that's just an oopsie? [00:18.500 --> 00:19.500] It's not. [00:19.500 --> 00:25.780] The reason the IRS doesn't state the legal purpose of its forms is if they did, you wouldn't [00:25.780 --> 00:26.780] sign them. [00:26.780 --> 00:33.020] I'm going to prove that to you right now and provide a whiteboard layout to make it so [00:33.020 --> 00:39.300] simple to grasp. [00:39.300 --> 00:50.580] The Doctor Reality Vodcast with Dave Champion. [00:50.580 --> 00:51.580] Let's start with this. [00:51.580 --> 00:55.460] I'm the author of Income Tax Shattering the Mist, the best-selling book in America that [00:55.460 --> 01:00.340] provides mountains of irrefutable proof that Congress has never imposed the income tax [01:00.340 --> 01:03.000] on ordinary hardworking Americans. [01:03.000 --> 01:07.340] Because I know what the law says, I haven't filed or paid a penny of income tax in 31 [01:07.340 --> 01:08.340] years. [01:08.340 --> 01:13.340] Today, I'm going to share some of that irrefutable proof with you. [01:13.340 --> 01:17.860] To make it simple for folks who may have never been exposed to the subject matter before, [01:17.860 --> 01:21.220] today I'm going to stick to a single aspect of tax law. [01:21.220 --> 01:25.180] That aspect is signing a form W-9. [01:25.180 --> 01:28.860] Many of you own your own business or have at some point in time and are familiar with [01:28.860 --> 01:35.140] those who owe you payment for your products or services asking you to furnish a form W-9. [01:35.140 --> 01:38.580] Before we jump in, I want to let you know that what you're going to see today is a [01:38.580 --> 01:42.940] microcosm of the larger truth of the income tax. [01:42.940 --> 01:47.300] Why am I sharing a microcosm rather than giving you the whole enchilada? [01:47.300 --> 01:48.820] The reason for that is twofold. [01:48.820 --> 01:53.300] First, instead of this presentation being 20 or 30 minutes long, it would be more like [01:53.500 --> 01:56.340] 15 or 20 hours long. [01:56.340 --> 02:00.340] Secondly, by keeping it streamlined today, you'll not only leave this presentation with [02:00.340 --> 02:04.540] a complete understanding of what is presented, but you'll likely retain what you learned [02:04.540 --> 02:06.420] for the rest of your life. [02:06.420 --> 02:11.140] Like any adventure into an area of law with which you may not be familiar, we need to [02:11.140 --> 02:16.060] take a moment to familiarize you with a couple of legal terms, what they mean, so that when [02:16.060 --> 02:21.100] you hear them as we proceed, your understanding will be crystal clear. [02:21.100 --> 02:27.580] The first legal fact you need to have under your belt is, what is a W-9? [02:27.580 --> 02:32.980] Of course, the W-9 is a form, but what kind of form? [02:32.980 --> 02:37.980] How has Congress and the Secretary of the Treasury classified the W-9? [02:37.980 --> 02:42.540] Think of it this way, if we were talking about family vehicles, we'd place them in categories [02:42.540 --> 02:46.500] such as coupes, sedans, crossovers, SUVs and pickups. [02:46.500 --> 02:51.260] Similarly, the IRS places its forms within categories. [02:51.260 --> 02:55.860] The category into which Congress and the Secretary of the Treasury have placed the form W-9 is [02:55.860 --> 03:00.540] called a withholding certificate. [03:00.540 --> 03:04.180] Withholding certificate is defined in two separate regulations. [03:04.180 --> 03:07.540] One is shortened to the point, the other is longer because it contains a lot of verbiage [03:07.540 --> 03:10.260] that is superfluous to our investigation today. [03:10.260 --> 03:19.500] The short version is found at 26 CFR 1.1471-1B148 and reads as follows. [03:19.500 --> 03:24.620] The term withholding certificate means a Form W-8, Form W-9, or any other certificate that [03:24.620 --> 03:30.460] under the Code of Regulation certifies or establishes the chapter for status of a payee [03:30.460 --> 03:32.620] or beneficial owner. [03:32.620 --> 03:38.140] The long definition is found at 26 CFR 1.1441-1C16. [03:38.140 --> 03:40.180] I'm going to cut out the superfluous wording. [03:40.180 --> 03:43.820] The superfluous wording doesn't alter the remaining words in any way. [03:43.820 --> 03:48.020] Since you have the citation, you can read the full version for yourself if inclined. [03:48.020 --> 03:51.180] This definition of withholding certificate reads as follows. [03:51.180 --> 03:57.860] The term withholding certificate means a Form W-8, a Form 8233, a Form W-9, or any other [03:57.860 --> 04:03.260] certificate that under the Code of Regulation certifies or establishes the status blah blah [04:03.260 --> 04:04.540] blah. [04:04.540 --> 04:08.940] You may have noticed that both definitions mention the purpose of a withholding certificate [04:08.940 --> 04:15.180] is to quote, establish the status of the person receiving the payment. [04:15.180 --> 04:19.300] Accordingly, the next part of our investigation is to determine what these regulations mean [04:19.300 --> 04:25.420] when they say the purpose of a withholding certificate is to establish the payee's status. [04:25.420 --> 04:33.900] That's easily accomplished because the opening paragraph of 26 CFR 1.1441-1 explains exactly [04:34.420 --> 04:41.620] it reads, quote, This section provides rules for withholding under sections 1.1441, 1.1442, [04:41.620 --> 04:45.780] and 1.1443 when a payment is made to a foreign person. [04:45.780 --> 04:50.180] This section provides definitions of terms used in Chapter 3 of the Internal Revenue [04:50.180 --> 04:52.440] Code and regulations there under. [04:52.440 --> 04:57.580] It prescribes procedures to determine whether an amount must be withheld under Chapter 3 [04:57.580 --> 05:03.380] of the Code and documentation that a withholding agent may rely upon to determine the status [05:03.940 --> 05:10.940] the status of a payee or a beneficial owner as a U.S. person or a foreign person and other [05:10.940 --> 05:16.100] relevant characteristics of the payee that may affect a withholding agent's obligation [05:16.100 --> 05:19.000] to withhold, close quote. [05:19.000 --> 05:25.220] What that paragraph tells us is that determining a payee's status is a relevant aspect to [05:25.220 --> 05:28.500] a withholding agent's obligation to withhold. [05:28.500 --> 05:30.220] So far so good. [05:30.220 --> 05:34.540] But from whom is a withholding agent obligated to withhold? [05:34.540 --> 05:38.820] We can ascertain that by looking at the definition of withholding agent. [05:38.820 --> 05:41.740] Withholding agent is defined in several locations in the statutes and regulations. [05:41.740 --> 05:45.340] The wording varies a bit, but the meaning is the same. [05:45.340 --> 05:49.660] Let's start with the general definition section for the entire tax code, which is found at [05:49.660 --> 05:52.660] 26 USC 7701. [05:52.660 --> 05:57.100] Section 7701A16 defines withholding agent as, quote, [05:57.100 --> 06:02.580] The term withholding agent means any person required to deduct and withhold any tax under [06:02.580 --> 06:08.540] the provisions of section 1441, 1442, 1443, or 1461. [06:08.540 --> 06:09.640] Seems clear. [06:09.640 --> 06:13.740] But to have a functional understanding of that definition, we need to know what sections [06:13.740 --> 06:17.300] 144, 123, and 1461 address. [06:17.300 --> 06:22.860] The first three sections are within subtitle A and is entitled Non-Resident Aliens and [06:22.860 --> 06:24.740] Foreign Corporations. [06:24.740 --> 06:32.800] 1441 is entitled Withholding of Tax on Non-Resident Aliens, 1442 is entitled Withholding of Tax [06:32.800 --> 06:39.840] on Foreign Corporations, and 1443 is entitled Foreign Tax-Exempt Organizations. [06:39.840 --> 06:46.100] Section 1461 is within the next subchapter, which is named Application of Withholding [06:46.100 --> 06:51.220] Provisions and 1461 is entitled Liability for Withheld Tax. [06:51.220 --> 06:56.020] I encourage you to read these sections for yourself, but what they tell us is that 1441 [06:56.020 --> 07:00.780] through 1443 deal exclusively with foreigners, and the fourth section informs us that if [07:00.780 --> 07:06.060] a person is required to withhold income tax from the U.S. source income belonging to a [07:06.060 --> 07:10.900] foreign person, thus being a withholding agent, the withholding agent becomes liable to the [07:10.900 --> 07:13.340] United States government for the amount withheld. [07:13.340 --> 07:15.740] Again, pretty simple stuff. [07:15.740 --> 07:22.540] Another definition of withholding agent is found at 26 CFR 1.1441-7A and reads, For the [07:22.540 --> 07:27.000] purpose of Chapter 3 of the Internal Revenue Code and the regulations under such chapter, [07:27.000 --> 07:31.380] the term withholding agent means any person, U.S. or foreign, that has the control, receipt, [07:31.380 --> 07:37.960] custody, disposal, or payment of any item of income of a foreign person subject to withholding. [07:37.960 --> 07:43.540] The key point in that definition is that withholding agent has possession or control of income [07:44.540 --> 07:46.480] of a foreign person. [07:46.480 --> 07:51.020] For the sake of being thorough, what does subject to withholding mean? [07:51.020 --> 07:58.100] 26 CFR 1.1471-1 informs us that subject to withholding means the withholding required [07:58.100 --> 08:02.580] by Chapters 3 and or 4 of the code. [08:02.580 --> 08:08.020] Chapter 3 is entitled Withholding of Tax on Non-Resident Aliens and Foreign Corporations, [08:08.020 --> 08:14.900] and Chapter 4 of the code is entitled Taxes to Enforce Reporting on Certain Foreign Accounts. [08:14.900 --> 08:20.120] In other words, a withholding agent has absolutely nothing to do with ordinary Americans earning [08:20.120 --> 08:22.020] their own domestic source income. [08:22.020 --> 08:27.820] Rather, a withholding agent is a person who, in certain circumstances, is required to withhold [08:27.820 --> 08:31.460] the tax from U.S. source income belonging to a foreign person. [08:31.460 --> 08:36.580] I presume you noticed the circular nature of how the statutes and regs address these [08:36.580 --> 08:37.580] subjects. [08:37.580 --> 08:45.140] You have to go from one section to another, and then another, and so on, in order to finally [08:45.140 --> 08:48.180] understand what the law really means. [08:48.180 --> 08:52.940] We started with something as simple as into which category has the form W-9 been placed. [08:52.940 --> 08:56.900] But then, because of the circular nature of the statutes and regulations, if we wanted [08:56.900 --> 09:02.180] to have a full understanding of why it matters that a W-9 is a withholding certificate, we [09:02.180 --> 09:07.540] had to learn what is meant by status, which then required us to understand what a withholding [09:07.540 --> 09:08.980] agent is. [09:08.980 --> 09:14.540] You may now better understand why I refer to it as the income tax scam. [09:14.540 --> 09:18.980] Based on what you just experienced, it may not surprise you when I say we're still not [09:18.980 --> 09:24.580] done because you still don't have all the information you need to make proper sense of the W-9 issue. [09:24.580 --> 09:30.940] You may recall that when we were reading the opening paragraph of 26 CFR 1.1441-1, it informed [09:30.940 --> 09:38.260] us that status means whether the payee, meaning the person receiving the payment, is a foreign [09:38.260 --> 09:41.500] person or a U.S. person. [09:41.500 --> 09:47.100] That status determination is important because if the payee is a foreign person, the withholding [09:47.100 --> 09:50.420] agent has one particular legal duty. [09:50.420 --> 09:56.900] If the payee is a U.S. person, then the withholding agent has a different legal duty. [09:56.900 --> 10:02.800] With that said, it is important to remember that the only thing that defines a withholding [10:02.800 --> 10:09.140] agent is having, quote, control, receipt, custody, disposal, or payment of any item [10:09.140 --> 10:13.020] of income of a foreign person. [10:13.020 --> 10:16.780] In other words, whether the person to whom the payment is made is a foreign person or [10:16.780 --> 10:22.180] a U.S. person, the income being paid belongs to a foreign person. [10:22.180 --> 10:27.140] At this point, perhaps we should know who is a U.S. person. [10:27.140 --> 10:31.460] It's likely not who you think, but before we jump into that, please take a moment to [10:31.460 --> 10:36.420] subscribe to the channel and like the presentation so the algorithms will show it to more people. [10:36.420 --> 10:42.760] Also please take the time to repost this presentation everywhere so our fellow citizens can discover [10:42.760 --> 10:43.760] the truth. [10:43.760 --> 10:44.760] Thank you. [10:44.760 --> 10:49.460] So who is this guy called a U.S. person? [10:49.460 --> 10:55.540] The definition of U.S. person appears at 26 U.S.E. 7701A30 and reads, the term United [10:55.540 --> 11:02.900] States person means a citizen or resident of the United States, a domestic partnership, [11:02.900 --> 11:04.900] or a domestic corporation. [11:04.900 --> 11:10.980] But here's the thing, U.S. person is used in many different areas of U.S. law, and in [11:10.980 --> 11:15.260] each area of law, the definition is contextual. [11:15.260 --> 11:18.540] Let's take classified document law. [11:18.620 --> 11:24.420] When U.S. person is used in the context of classified documents law, it differentiates [11:24.420 --> 11:28.820] Americans who may or may not have certain duties concerning classified documents from [11:28.820 --> 11:32.540] foreigners who may be receiving classified documents. [11:32.540 --> 11:38.620] Clearly, U.S. person has a different contextual application concerning classified documents [11:38.620 --> 11:40.620] than it does for income tax. [11:40.620 --> 11:43.460] How about technology transfers? [11:43.460 --> 11:48.300] A U.S. person has a very different legal obligation under the laws that prohibit the transfer [11:48.300 --> 11:50.980] of certain technologies to foreign nations. [11:50.980 --> 11:57.180] Then does U.S. person in tax matters or laws pertaining to classified documents? [11:57.180 --> 12:02.820] So then, what does it mean to be a U.S. person in tax law? [12:02.820 --> 12:04.580] Here's the answer. [12:04.580 --> 12:12.020] Congress placed the term U.S. person into tax law in 1962, in the more than six decades [12:12.020 --> 12:18.940] since the term was introduced, in every statute, every regulation in which it appears, there [12:18.940 --> 12:23.300] has been only one contextual meaning. [12:23.300 --> 12:28.580] Every time U.S. person appears in a statute or regulation, it is addressing U.S. source [12:28.580 --> 12:35.500] income, moving from its U.S. origin point to its foreign owner. [12:35.500 --> 12:40.460] Phrased another way, every time U.S. person appears in a statute or regulation, it is [12:40.460 --> 12:48.740] in context of a U.S. citizen, resident, partnership, or corporation being in the pipeline that's [12:48.740 --> 12:55.100] moving U.S. source income from its origin point to its foreign owner. [12:55.100 --> 13:00.420] This brings us to the whiteboard portion that illustrates how Form W-9 is used in the pipeline [13:00.420 --> 13:03.940] of U.S. source income from its origin to its foreign owner. [13:03.940 --> 13:09.180] A couple of things to keep in mind as you see the visual representation of how it works. [13:09.940 --> 13:17.900] Keep in mind that 26 CFR 1.1441-1C19, which is the definition of payor, says that a payor [13:17.900 --> 13:22.940] quote, generally includes a withholding agent. [13:22.940 --> 13:28.060] In other words, in the vast majority of cases, a person who is a payor is also a withholding [13:28.060 --> 13:29.060] agent. [13:29.060 --> 13:30.940] You'll understand that better in a minute. [13:30.940 --> 13:37.500] Second, Treasury Decision 8881 tells us quote, with respect to any single item of income, [13:37.500 --> 13:42.740] each person that handles the payment is a withholding agent. [13:42.740 --> 13:47.180] In other words, anyone who touches the U.S. source income as it moves through the pipeline [13:47.180 --> 13:51.620] to its foreign owner is viewed by the Treasury Department as a withholding agent. [13:51.620 --> 13:56.660] What Treasury is saying is if you touch U.S. source income flowing to its foreign owner, [13:56.660 --> 14:01.780] then the IRS can hold you responsible for the U.S. income tax required to be withheld. [14:01.780 --> 14:07.340] More pointedly, if there are, as an example, three parties in the pipeline that had the [14:07.340 --> 14:13.420] legal authority to withhold, but none did, the IRS can randomly choose any one of them [14:13.420 --> 14:18.220] from which to demand the unpaid tax because they all knew the withholding was mandatory [14:18.220 --> 14:22.580] yet each withholding agent left the withholding to the other guy. [14:22.580 --> 14:25.700] Both of these will become more clear when you look at the whiteboard. [14:25.700 --> 14:28.720] A quick note about the whiteboard segment. [14:28.720 --> 14:33.100] It may look and sound different from this first part because I'll be experimenting [14:33.100 --> 14:37.060] with a different camera and microphone if you're inclined to give me your feedback [14:37.060 --> 14:41.540] on how the whiteboard segment looks and sounds, leave me a message down in the comments. [14:41.540 --> 14:46.180] With all of that under your belts, on to the whiteboard presentation. [14:48.500 --> 14:50.660] All right, here's the whiteboard. [14:50.660 --> 14:52.740] First of all, I want to apologize. [14:52.740 --> 14:56.100] I have like zero drawing skills. [14:56.100 --> 15:00.900] So yes, I know it looks very childish, but that's not my forte. [15:00.900 --> 15:02.260] So let's talk about this a little bit. [15:02.260 --> 15:05.140] First of all, up at the top, we've got U.S. Person. [15:05.140 --> 15:06.580] We've talked about that. [15:06.580 --> 15:08.100] You should have an idea what that is. [15:09.060 --> 15:10.100] Withholding agent. [15:10.100 --> 15:10.980] We've talked about that. [15:10.980 --> 15:12.500] You should have an idea of what this is. [15:12.500 --> 15:14.260] So what are these three boxes? [15:14.820 --> 15:18.980] We've got foreign person, in other words, somebody outside the United States. [15:19.700 --> 15:23.140] We have a U.S. investment firm. [15:23.860 --> 15:29.940] And here we have the U.S. origin, the place from which the U.S. source income is originating. [15:29.940 --> 15:31.620] So here's the scenario. [15:32.340 --> 15:36.500] This guy, let's say he's a Peruvian billionaire. [15:36.500 --> 15:40.740] So what he does is he contracts with a U.S. investment firm. [15:40.740 --> 15:42.580] He sends them several hundred million dollars. [15:42.580 --> 15:47.380] And he says, I want you to invest this in U.S. corporations that pay dividends. [15:47.380 --> 15:52.020] So the investment firm, then following his instructions, goes ahead and invests. [15:52.020 --> 15:55.220] We're going to call this Apple, the computer company. [15:55.220 --> 16:00.900] So the investment firm, amongst many investments of the Peruvian gentleman's money, [16:00.900 --> 16:02.100] invests in Apple. [16:02.100 --> 16:05.380] So Apple is the U.S. origin. [16:05.380 --> 16:07.860] So Apple pays dividends. [16:07.860 --> 16:12.340] So these dividends go from Apple to the investment firm. [16:12.340 --> 16:16.500] Now, Apple has no idea who actually owes the dividends, right? [16:16.500 --> 16:21.700] But the investment firm does know who the owner is of those dividends. [16:22.260 --> 16:27.300] So Apple is sending it to a U.S. person. [16:27.300 --> 16:33.620] Now, Apple doesn't know because we know U.S. person is somebody who is involved in the [16:33.620 --> 16:41.060] flow of U.S. income, U.S. source income from its origin to its foreign person, right? [16:41.060 --> 16:42.900] However, there's a dynamic going on. [16:42.900 --> 16:47.700] I'm going to do another video on this where I'm going to buttress this with more information. [16:47.700 --> 16:52.900] The way the tax system works today is the government presumes everybody who's receiving [16:52.900 --> 16:55.860] income is a foreigner and then you have to prove you're not a foreigner. [16:55.860 --> 16:58.020] So how upside down and backwards is that? [16:58.020 --> 17:01.700] Nevertheless, when Apple pays this to the investment firm, [17:02.500 --> 17:11.780] Apple is going to demand that the investment firm provide Apple with a W-9 [17:14.420 --> 17:20.100] stating to Apple that the investment firm is a [17:20.100 --> 17:27.940] U.S. person and is therefore involved in the flow of U.S. source income to its foreign person. [17:27.940 --> 17:33.700] So now the investment firm is under instructions from the Peruvian gentleman [17:33.700 --> 17:37.700] to send the dividends to his bank in Peru. [17:37.700 --> 17:44.740] So now the investment firm has to send, oh, wait a second, there's an issue here. [17:44.740 --> 17:45.620] There's an issue here. [17:47.620 --> 17:50.660] That issue is the investment firm. [17:51.540 --> 17:55.620] Remember the section we were talking about where it says a payor, okay? [17:55.620 --> 17:58.900] So Apple is a payor in terms of the investment firm. [17:59.700 --> 18:03.300] The investment firm is the payor in terms of getting the money to the foreign person. [18:03.300 --> 18:07.380] And you remember we talked about where the regulations said that a payor is generally [18:07.380 --> 18:09.060] a withholding agent, okay? [18:09.060 --> 18:14.180] We also talked about on a single payment that anyone who touches the money is a withholding [18:14.180 --> 18:14.580] agent. [18:14.580 --> 18:18.660] So because the dividends belong to the foreign person, [18:19.940 --> 18:24.500] Apple is a withholding agent and a payor, okay? [18:25.700 --> 18:30.660] The investment firm is the payor and the withholding agent. [18:30.660 --> 18:34.340] Now in this case, we have just two domestic corporations. [18:35.380 --> 18:38.340] One of these two has to withhold. [18:38.340 --> 18:43.220] So in this scenario, excuse me, the investment firm is going to withhold. [18:43.220 --> 18:52.900] The withholding is going to take place right here before the money goes offshore to its [18:52.900 --> 18:53.860] foreign owner. [18:54.500 --> 18:58.260] That is a simplistic version of how these things work. [18:58.260 --> 19:05.940] So again, to be clear, Apple is the payor and the withholding agent. [19:05.940 --> 19:10.660] Remember, payor is generally a withholding agent because he's touching the payment. [19:10.660 --> 19:12.340] Apple is touching the payment. [19:13.220 --> 19:14.660] He's a withholding agent. [19:14.660 --> 19:17.940] The investment firm is a payor and a withholding agent. [19:19.300 --> 19:20.660] The withholding is done here. [19:21.380 --> 19:26.260] And so that makes the investment firm liable to the United States government for the amount [19:26.260 --> 19:31.140] of U.S. income tax withheld and then the balance is paid to the foreign person. [19:31.140 --> 19:34.740] Now I want to be clear on something so that you understand thoroughly. [19:35.460 --> 19:40.900] If Apple somehow miraculously was aware that that dividend payment belonged to a Peruvian [19:40.900 --> 19:47.460] gentleman, a non-resident alien or foreign corporation, Apple could withhold here. [19:47.460 --> 19:53.700] So right here, before the money went to the investment firm, Apple could withhold. [19:54.340 --> 20:00.500] And if Apple were to withhold there, it would alleviate the investment firm of having to [20:00.500 --> 20:01.700] fill out a W-9. [20:01.700 --> 20:05.700] It would alleviate the investment firm of the requirement to withhold because the withholding [20:05.700 --> 20:07.300] had already been done. [20:07.300 --> 20:08.180] Make sense? [20:08.180 --> 20:09.780] Now let's take this a little further. [20:10.900 --> 20:15.620] Let's get rid of all this jazz right here. [20:20.740 --> 20:21.700] All right. [20:21.700 --> 20:23.140] Let's look at this a little different way. [20:25.620 --> 20:26.740] Let's say we had. [20:26.740 --> 20:32.500] So now the Peruvian gentleman, when he wants to invest his hundreds of millions of dollars [20:32.500 --> 20:38.500] in U.S. corporations, he does not send that money directly to an investment firm in the [20:38.500 --> 20:42.900] U.S. He sends it to a U.S. law firm with instructions on what he wants done. [20:42.900 --> 20:49.380] Then the U.S. law firm, the U.S. law firm, the U.S. law firm, the U.S. law firm, the [20:49.380 --> 20:55.380] U.S. law firm, the U.S. law firm, the U.S. law firm, the U.S. law firm, the U.S. law [20:56.340 --> 20:57.460] firm sends the money. [20:58.420 --> 21:01.220] They contract with the investment firm to invest the money. [21:01.220 --> 21:03.460] And again, for this scenario, it goes to Apple. [21:03.460 --> 21:06.500] So in this scenario, Apple remains the origin. [21:06.500 --> 21:08.420] Now we have the investment firm. [21:08.420 --> 21:09.940] Then we have the law firm. [21:09.940 --> 21:11.860] Then we have the foreign person. [21:11.860 --> 21:18.020] So as the money, the dividends are paid out from Apple to the investment firm. [21:18.020 --> 21:21.380] Then the investment firm pays the money to the law firm. [21:22.100 --> 21:27.060] Then the law firm pays the money out to the foreign person. [21:27.060 --> 21:31.620] So in each of these circumstances, Apple is the payor. [21:32.340 --> 21:33.940] They are also the withholding agent. [21:34.900 --> 21:40.500] The investment firm is a U.S. person, a payor, and a withholding agent. [21:40.500 --> 21:45.380] The law firm is a U.S. person and a withholding agent and a payor. [21:45.380 --> 21:50.100] Now, again, for the sake of illustration, Apple could do the withholding, [21:50.100 --> 21:51.940] alleviating the burden on these two. [21:52.820 --> 21:54.020] Apple could not do it. [21:54.020 --> 21:57.780] The investment firm could do it, alleviating the burden on the law firm. [21:57.780 --> 22:00.980] Now, typically, these entities aren't going to do it. [22:00.980 --> 22:05.460] They're going to leave it to what I call the last domestic guy with it. [22:05.460 --> 22:08.340] So in this scenario, the last domestic guy with it is the law firm. [22:08.980 --> 22:13.220] So the law firm, then, it receives that dividend as it belonged to the foreign person. [22:13.860 --> 22:19.540] And it's going to conduct the withholding right there, [22:19.540 --> 22:22.980] which makes the law firm liable to the United States government [22:22.980 --> 22:28.500] to file a return and pay over the U.S. income tax owed by the foreign person. [22:28.500 --> 22:32.420] So the law firm withholds, we'll call it 30 percent for the sake of simplicity. [22:32.420 --> 22:35.220] That varies based on tax treaties and other factors. [22:36.100 --> 22:39.060] The law firm withholds 30 percent of the U.S. source income [22:39.060 --> 22:43.060] and then pays the balance of 70 percent to the foreign person. [22:43.300 --> 22:51.060] So, again, U.S. person are the first three. [22:51.540 --> 22:54.660] Withholding agent is the first three. [22:56.660 --> 23:00.820] Payor is the first three. [23:00.820 --> 23:02.580] They all fill the bill. [23:02.580 --> 23:04.100] They're all payors. [23:04.100 --> 23:05.700] They're all U.S. persons. [23:05.700 --> 23:08.660] The only thing, and they're all withholding agent, [23:08.660 --> 23:12.740] the only thing that differentiates is the burden that they want to pay. [23:12.740 --> 23:13.780] They might be under. [23:13.780 --> 23:17.220] So, for instance, if Apple were to do the withholding right here, [23:17.780 --> 23:20.580] the investment firm would not have to furnish a W-9. [23:20.580 --> 23:23.140] The law firm would not have to furnish a W-9 [23:23.140 --> 23:26.500] because although they are in the pipeline of U.S. source income [23:26.500 --> 23:29.940] flowing to the foreign person, the withholding has already been done. [23:29.940 --> 23:34.820] So that then, their status tracking the W-9 generates a 1099, right? [23:34.820 --> 23:38.420] And the 1099 is used so that the United States government [23:38.420 --> 23:43.940] can quite correctly track the money to this moment when somebody, [23:43.940 --> 23:45.780] whether it's this, this, or this, [23:45.780 --> 23:48.980] somebody is required to withhold the U.S. income tax. [23:48.980 --> 23:52.500] The W-9, which then results in 1099s, [23:52.500 --> 23:58.740] are meant to allow the government to do this tracking to determine who, [23:58.740 --> 24:00.100] if I can get this to work correctly, [24:01.220 --> 24:06.740] who actually did the withholding and when. [24:07.140 --> 24:11.220] So if it is, as I say traditionally, the last domestic guy with it, [24:11.220 --> 24:15.700] the W-9-1099 cycle, Apple identifies to the government [24:15.700 --> 24:18.340] that the next person in the pipeline was the investment firm. [24:18.340 --> 24:21.140] The investment firm demands a W-9 from the law firm [24:21.140 --> 24:24.340] and issues a 1099, which the government contracts showing here. [24:24.340 --> 24:26.900] And so this is the last domestic guy with it. [24:26.900 --> 24:31.220] So then the government can hold this guy, the law firm, accountable for. [24:31.780 --> 24:35.220] Now, by the way, let's say this withholding doesn't happen. [24:35.220 --> 24:40.100] Let's say the law firm does not withhold and sends 100% of the foreign person. [24:42.020 --> 24:45.940] The law firm now becomes responsible, becomes liable to the United States government [24:45.940 --> 24:50.500] for the amount of U.S. source income tax it was required by law [24:50.500 --> 24:52.740] to deduct and withhold and pay over to the government. [24:52.740 --> 24:53.860] And it failed to do so. [24:53.860 --> 24:58.820] And under U.S. tax law, the law firm now becomes liable to the United States government [24:58.820 --> 25:00.980] for the amount that it was required, [25:00.980 --> 25:03.860] mandatory language required to withhold and did not. [25:05.380 --> 25:06.580] I hope I said that all clearly. [25:08.660 --> 25:13.380] I hope that visual illustration clarifies the correct use of form W-9 [25:13.380 --> 25:17.300] as well as the role of U.S. persons and withholding agents [25:17.300 --> 25:21.220] and why the W-9 is needed to establish one's status [25:21.220 --> 25:23.380] as discussed in the regulations we looked at earlier. [25:24.100 --> 25:27.060] Now that you know who's to use a form W-9 and why, [25:27.700 --> 25:33.300] let's confirm your new understanding by looking at the instructions on the form. [25:33.380 --> 25:35.940] On page two of the instructions, we find this. [25:36.820 --> 25:43.220] Use form W-9 only if you are a U.S. person. [25:44.340 --> 25:49.060] Now that you know what a U.S. person is, how can you sign a W-9? [25:49.060 --> 25:53.460] In order to establish status, the W-9 must be signed under penalty of perjury. [25:54.020 --> 25:58.820] Knowing what you know now, would you not be committing perjury to sign it? [25:59.620 --> 26:02.500] At some point, as you mull over this presentation, [26:02.500 --> 26:03.940] you might think to yourself, [26:03.940 --> 26:08.420] I now understand the proper role of the form W-9 and I know it has nothing to do with me. [26:08.420 --> 26:11.300] So what form do I use when conducting my business with others? [26:11.940 --> 26:12.980] Good question. [26:12.980 --> 26:16.500] And of course, the only place to get that answer would be the tax code. [26:16.500 --> 26:22.740] So what form or forms do the income tax laws of the United States require a person to use, [26:22.740 --> 26:26.980] sign, furnish, or file concerning his or her domestic income [26:26.980 --> 26:28.740] earned within the 50 states of the union? [26:29.300 --> 26:31.300] Do you have a pen handy to write this down? [26:32.260 --> 26:32.760] Good. [26:33.300 --> 26:37.220] So that you may have an accurate and complete list, write this down. [26:38.500 --> 26:44.500] Write the letter Z followed by the letter E, then R, then O. [26:45.780 --> 26:53.540] That spells zero, which is the number of forms U.S. income tax law requires a U.S. citizen [26:53.540 --> 26:57.940] or resident to use when earning his or her own domestic income within a state of the union. [26:58.900 --> 27:04.420] In all of U.S. income tax law, a U.S. citizen earning his or her own domestic income within [27:04.420 --> 27:13.620] a state of the union is not required to file any income tax forms, none, zip, nada, [27:14.340 --> 27:16.020] because the tax isn't imposed on you. [27:16.660 --> 27:18.820] I'm now going to say something that may shock you. [27:18.820 --> 27:22.900] The information you heard today is just a fraction of the hard-hitting, [27:23.460 --> 27:29.220] indisputable, 100% conclusive evidence you'll find in income tax shattering the miss, [27:29.860 --> 27:34.420] showing that Congress has never imposed the income tax on ordinary hardworking Americans like you. [27:35.060 --> 27:40.980] You can get income tax shattering the miss at drreality.news, drreality.news. [27:40.980 --> 27:43.940] While you're there, have a look at body science. [27:44.500 --> 27:48.660] If you want the same kind of evidence-based breakdown as you've seen today, [27:48.660 --> 27:53.780] but focused on how your body's physiology really works rather than the false establishment [27:53.780 --> 27:58.660] narrative the American people have been fed for 60 years, while you're purchasing income tax [27:58.660 --> 28:00.980] shattering the miss, also grab a copy of body science. [28:01.540 --> 28:05.220] You may have noticed that the health of the American people is in freefall. [28:05.220 --> 28:08.100] 70% of our population is overweight or obese. [28:08.740 --> 28:12.420] Diseases like diabetes and Alzheimer's are exploding. [28:12.980 --> 28:17.140] Obesity in children, which was almost unknown a few decades ago, is now commonplace. [28:17.940 --> 28:24.020] Due to trillion-dollar industries pouring money into bogus research, fake science is everywhere [28:24.020 --> 28:31.700] these days. Corrupt studies are making absurd claims such as that things like salt or red meat [28:32.820 --> 28:34.020] cause type 2 diabetes. [28:35.140 --> 28:38.740] Due primarily to the lies of government and certain industries, [28:38.740 --> 28:41.620] America's health is in the shitter and getting worse every day. [28:42.580 --> 28:47.620] Body science shows you that process, shows you their disinformation. [28:48.260 --> 28:52.580] What will likely shock you is that almost everything you now believe about health and [28:52.580 --> 28:56.820] physiology is not factual. But it's not your fault. [28:57.780 --> 29:03.780] You've been lied to for 60 years about virtually every aspect of human physiology. [29:04.660 --> 29:08.900] That disinformation has led the people of the wealthiest and most technologically advanced [29:08.900 --> 29:15.220] nation on earth to be the sickest people in human history and getting sicker every day. [29:15.860 --> 29:19.460] The good news is all you need to do to see what they've done [29:19.460 --> 29:22.980] and get turned around is read body science. [29:22.980 --> 29:25.860] If you read body science and put into action what you find there, [29:25.860 --> 29:31.540] you will leave the ranks of the misled and sick and become incredibly healthy. [29:32.100 --> 29:34.500] As you might imagine, I practice what I preach. [29:34.500 --> 29:38.500] I haven't filed an income tax return or paid a penny of income tax in 31 years. [29:38.500 --> 29:43.940] I also adhere to everything in body science, and at 64, I'm as healthy as I was in my 20s. [29:44.580 --> 29:48.180] Body science has never gotten anything less than a five-star review, [29:48.180 --> 29:51.140] and readers rave about the fact that they look and feel [29:51.700 --> 29:55.460] decades younger after putting into action what they learned in body science. [29:55.460 --> 29:59.220] And finally, I wrote a 13-page handbook entitled [29:59.860 --> 30:04.660] Business Handbook for Forms W-9, 1099, and U.S. Person [30:04.660 --> 30:12.980] to help business owners explain the legal reality of W-9 to those who may request a W-9 from you. [30:13.620 --> 30:17.940] Knowing the truth doesn't necessarily prepare you to present the facts in a cogent manner [30:17.940 --> 30:20.340] to someone with whom you're conducting business. [30:20.340 --> 30:23.380] You can give the W-9 handbook to the requester, [30:23.380 --> 30:27.300] and it explains the facts in a way perhaps you cannot. [30:27.380 --> 30:32.900] So go to drreality.news and pick up a copy of Income Tax Shattering the Mist, [30:32.900 --> 30:34.900] Body Science, and the W-9 Handbook. [30:35.460 --> 30:39.060] They will be the most fascinating books you have ever read. [30:39.060 --> 30:40.340] You have my word on that. [30:40.340 --> 30:42.740] Also, by purchasing Income Tax Shattering the Mist, [30:42.740 --> 30:47.540] Body Science, and the W-9 Handbook, you help me to continue to be here for you [30:47.540 --> 30:50.660] with these revealing and thought-provoking presentations. [30:50.660 --> 30:54.260] Please share this presentation so that others can learn the truth, [30:54.260 --> 30:55.540] and thank you for being here. [30:55.540 --> 31:05.780] Take care.