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[00:00.000 --> 00:07.120]  Welcome back to the channel. The inapply named Inflation Reduction Act just passed the House
[00:07.120 --> 00:10.880]  and the Senate and has been sent over to the White House for Biden's signature. By the time
[00:10.880 --> 00:14.880]  you're seeing this, in fact, he may have already signed it. There are many things that we could
[00:14.880 --> 00:19.440]  talk about from the Inflation Reduction Act. However, what I want to discuss with you today
[00:20.080 --> 00:27.280]  is the 87,000 new IRS employees that are funded by that act.
[00:27.280 --> 00:50.160]  Let's start with this. All over social media, we see that this act has funded 87,000 new IRS
[00:50.160 --> 00:59.440]  agents, and that's not factual. It has funded the hiring of 87,000 new IRS employees, not all of
[00:59.440 --> 01:08.000]  whom will be agents. That said, it hardly matters because all 87,000 new IRS employees, of which
[01:08.000 --> 01:14.800]  some will be agents, are going to be tasked with getting as much of your money as possible.
[01:15.440 --> 01:20.000]  Before I get rolling in earnest, you should know that I have studied the IRS and income tax laws
[01:20.960 --> 01:25.520]  decades now, and I'm the author of Income Tax Shattering the Mist. The point being,
[01:25.520 --> 01:31.360]  I have some expertise in this subject matter. Stick with me because in just a moment, I'm going
[01:31.360 --> 01:38.640]  to drop some bombs on you, some knowledge bombs on you that are going to help you avoid what those
[01:38.640 --> 01:45.040]  87,000 new IRS employees are going to do to the American public. We know that these new IRS
[01:45.040 --> 01:50.320]  employees are not going to perform examinations, what the public calls audits. They're actually
[01:50.320 --> 01:54.480]  called examinations within the Internal Revenue Service. They're not going to perform examinations
[01:54.480 --> 02:00.240]  on billionaires or even wealthy people who are not billionaires. The reason is there's absolutely no
[02:00.240 --> 02:04.720]  mileage in doing so because those kind of people can afford top flight attorneys who will tie up
[02:04.720 --> 02:11.280]  the IRS administratively and or judicially for years, and it's not worth the IRS's time to do
[02:11.280 --> 02:16.160]  that provided they're getting a bit of money from the billionaires. Remember,
[02:17.760 --> 02:22.000]  the examiners at the IRS, I don't mean this to be pejorative, it simply is what it is.
[02:22.000 --> 02:28.720]  The IRS examiners are just government functionaries. The highest paid of them,
[02:28.720 --> 02:34.320]  based on seniority, the very highest in the entire IRS is one person who makes,
[02:34.880 --> 02:39.760]  they're not specific about this pay, but somewhere between $92,000 and $96,000 a year.
[02:39.760 --> 02:45.680]  Everybody else makes less. You can imagine suddenly you've got, say, four, five, or six
[02:45.680 --> 02:51.120]  of these guys working on auditing a billionaire. You've got guys that are making $50,000, $70,000,
[02:51.120 --> 02:56.080]  a couple might be making $80,000 a year. They're going after billionaires who are hiring fleets
[02:56.080 --> 03:00.800]  of attorneys who are making a half a million dollars a year. Yeah, the IRS is going nowhere
[03:00.800 --> 03:06.960]  with that. Will the IRS be going after low income earners, people who owe very, very little to the
[03:06.960 --> 03:13.200]  government based on the establishment narrative, or nothing at all? Absolutely not. Again, there's
[03:13.200 --> 03:18.000]  no mileage for the Internal Revenue Service in that. In fact, the Internal Revenue Service
[03:18.000 --> 03:24.640]  actually has a policy that if there's no expectation of getting sufficient additional
[03:24.640 --> 03:31.120]  taxes owed that will cover the time of the examiner and the people in the collection division that
[03:31.120 --> 03:36.320]  will come afterwards to collect the money, if there's not enough there to offset the expense
[03:36.320 --> 03:40.160]  of the examiners in the collection, they don't go after that person. So, no, they're not going
[03:40.160 --> 03:46.400]  after people who have low income. Who then will these 87,000 employees be going after?
[03:47.360 --> 03:53.760]  Who's left? We're not doing the poor and we're not doing the wealthy. Yeah, people like you who are
[03:53.760 --> 03:59.920]  earning a decent living. Perhaps I can help you a bit with that by dropping some facts on you.
[03:59.920 --> 04:04.400]  As a side note, if you want to look up for yourself any of the statutes or the regulations
[04:04.480 --> 04:10.400]  I'm about to mention today, the language is straight out of Cornell Law's website which
[04:10.400 --> 04:16.240]  can be found at law.cornell.edu. All right, so let's get down to business now. First,
[04:17.200 --> 04:26.000]  definitions are absolutely pivotal in tax law. It would be hard to overestimate how crucial
[04:26.000 --> 04:32.560]  definitions are in tax law. Did you know that the Supreme Court has approved, has sanctioned in its
[04:32.560 --> 04:39.840]  rulings, the congressional practice of taking a word which in plain speech we all know the meaning
[04:39.840 --> 04:47.120]  of and redefining that word when used in a statute. So you read through the statute or the regulation
[04:47.120 --> 04:53.120]  and I know what that word means. But unless you go 75 pages further on or further back
[04:53.120 --> 04:59.360]  and find out that Congress has actually given that word a whole different meaning than what's
[04:59.360 --> 05:03.520]  in the English dictionary, you wouldn't know that the impression you're getting as you read
[05:03.520 --> 05:09.840]  the statute of the regulation is false. It is inaccurate and that's a huge tool that Congress
[05:09.840 --> 05:13.840]  uses in tax law. The Supreme Court has said, yeah, that's fine. Second, one of the primary
[05:13.840 --> 05:22.320]  mechanisms that Congress uses to ensure that you don't understand what a statute or regulation means
[05:22.400 --> 05:31.040]  is to employ what a statutory rule of construction called a term of expansion, a term of expansion.
[05:31.040 --> 05:36.560]  Let me explain to you how that little doozy works. In a legal definition, items appearing
[05:36.560 --> 05:44.160]  after the word includes or including, it says includes or including and then there's items
[05:44.160 --> 05:53.440]  after that, those items collectively establish a classification. In other words, the definition
[05:53.440 --> 05:57.360]  is not like the English dictionary where you look it up and they're okay, that's what it means and
[05:57.360 --> 06:06.880]  we're done. That is not how it works at all under this term of expansion. It creates a class of
[06:06.880 --> 06:13.280]  meaning, not a finite definition. Let me give you an example of that. Let's take a hypothetical
[06:13.280 --> 06:19.600]  statute, we'll call it food. So let me read to you from this fictional statute the definition of
[06:19.600 --> 06:29.200]  food. For the purpose of this chapter, the term food includes oranges, peaches, apricots, apples,
[06:29.200 --> 06:36.240]  and strawberries. So what was the classification or in law it's called the class. What was the
[06:36.240 --> 06:42.640]  class established by the words that appeared after includes? Let me read that for you again.
[06:42.640 --> 06:48.320]  For the purpose of this chapter, the term food includes, now pay attention to what comes after,
[06:48.320 --> 06:55.840]  oranges, peaches, apricots, apples, and strawberries. So what is the class? The class is fruit, right?
[06:55.840 --> 07:06.800]  So in our fictional statute, food is defined by Congress as only fruit. You'll remember however
[07:06.880 --> 07:14.640]  that this is a term of expansion. How did this kind of definition using includes or including
[07:14.640 --> 07:20.720]  get that name a term of expansion? I'm going to explain that to you right now. So in the original
[07:20.720 --> 07:25.600]  statute, the items appearing after the word includes were oranges, peaches, apricots, apples,
[07:25.600 --> 07:34.320]  and strawberries. But because the class is fruit and this is a definition that involves a term
[07:34.320 --> 07:44.160]  of expansion, we can add things like grapes, pears, and cherries because they fit the class.
[07:44.160 --> 07:47.680]  So we can add them in. There's nothing wrong with that. The Supreme Court has said that's fine. We
[07:47.680 --> 07:52.480]  can add them in even though they don't appear in the definition because they fit in the established
[07:52.480 --> 07:59.840]  class. That is a term of expansion. Now with my students, I encourage them to refer to this as a
[07:59.840 --> 08:04.960]  term of limited expansion. Now the law industry just calls it a term of expansion, but I always
[08:04.960 --> 08:10.000]  encourage my students to call it a term of limited expansion because that's exactly what it is,
[08:10.000 --> 08:14.720]  right? It's limited to the class. When you tell somebody this is a term of expansion,
[08:14.720 --> 08:20.240]  they imagine they can throw anything they want in there. As an example in our definition of
[08:20.880 --> 08:26.240]  food, which actually is the class of fruit, could we add steak? No, we can't because it doesn't fit
[08:26.240 --> 08:34.080]  the established class. So it's not expansive generally. It's a term of limited expansion.
[08:34.080 --> 08:38.480]  Got it? With that quick lesson under our belt, let's take a look at a section in the tax code
[08:38.480 --> 08:44.160]  that actually employs a term of limited expansion. To do that, we're going to go to the statutes.
[08:44.160 --> 08:51.840]  We're going to go to 26 USC 3401C. Again, this is law.cornell.edu. You can look it up for yourself.
[08:51.840 --> 08:57.120]  Let's see what it says. It says, for the purpose of this chapter, the term employee
[08:58.400 --> 09:04.800]  includes, so we know it's a term of limitation, an officer, employee, or elected official of the
[09:04.800 --> 09:12.800]  United States, a state, or any political subdivision thereof, or the District of Columbia, or any agency
[09:12.800 --> 09:19.440]  or instrumentality of any one or more of the foregoing. Now remember, the class is established
[09:19.440 --> 09:23.200]  by the items listed after the word includes. Let's read that one more time and pay attention.
[09:24.160 --> 09:29.200]  You tell me what the class is. For the purpose of this chapter, the term employee includes
[09:29.760 --> 09:35.760]  an officer or employee or elected official of the United States, a state, or a political subdivision
[09:35.760 --> 09:41.600]  thereof, or the District of Columbia, or any agency or instrumentality of any one or more
[09:41.600 --> 09:50.160]  of the foregoing. So what's the class? Various government workers, right? So you will recall
[09:50.160 --> 09:55.680]  in the fictional definition of food where the established class was fruit, we could not add
[09:55.680 --> 10:00.720]  steak. So taking a look at the definition of employee, which is used in the statute for the
[10:00.720 --> 10:07.040]  purpose of payroll withholding, looking at the definition of employee and the class is
[10:07.760 --> 10:14.400]  various government employees. Can we read into that definition private sector workers?
[10:14.400 --> 10:19.680]  Well, no, absolutely not because there's not even a hint of that in the class established by the
[10:19.680 --> 10:25.440]  items after the word includes. Isn't it fascinating that when you look at the law for yourself,
[10:26.960 --> 10:33.360]  it doesn't say or mean what other people told you it said, does it? Now let's look at people who
[10:33.360 --> 10:36.880]  work for themselves. They own their own business. Now, if you own your own business,
[10:37.680 --> 10:44.800]  you have been asked to submit a Form W-9 to people who pay you time and again, right? So
[10:46.400 --> 10:51.520]  yeah, let's see how the definitions affect that. The first thing we want to know is this thing,
[10:51.520 --> 10:58.720]  Form W-9. How does the Treasury Department classify that? And for that, all we have to do is go to
[10:58.720 --> 11:08.640]  26 CFR, section 1.1471-1B148. Again, you can look that up at law.cornell.edu, and it reads as
[11:08.640 --> 11:17.680]  follows. The term withholding certificate means a Form W-8, Form W-9, or any other certificate
[11:17.680 --> 11:22.400]  that under the code, blah, blah, blah, blah. Okay. The relevant words there being the term
[11:22.480 --> 11:30.240]  withholding certificate means a Form W-8, Form W-9, and then some other extraneous forms that
[11:30.240 --> 11:36.080]  don't matter for the purpose of this discussion. It may strike you as odd that the W-9 is classified
[11:36.080 --> 11:42.080]  as a withholding certificate when you own your own business and people pay you. There
[11:42.720 --> 11:50.640]  is no withholding done, right? So follow along with me now. Various statutes and regs require
[11:50.640 --> 11:59.040]  certain people to submit a withholding certificate, such as a W-9, to a withholding agent.
[12:00.480 --> 12:05.280]  So what is this mysterious withholding agent? For that, we just go back a little bit further
[12:05.280 --> 12:14.800]  in the regs. We go to section 1.1441-7A, which reads, the term withholding agent means any person,
[12:15.440 --> 12:24.000]  U.S. or foreign, that has the control, receipt, custody, disposal, or payment of any item of income
[12:24.000 --> 12:31.520]  of a foreign person. In case you thought you heard that wrong, let me repeat it. The term
[12:31.520 --> 12:37.520]  withholding agent means any person, U.S. or foreign, that has control, receipt, custody,
[12:37.520 --> 12:45.360]  disposal, or payment of any item of income of a foreign person. In other words, in the law,
[12:45.360 --> 12:51.760]  a withholding agent is a person who's handling U.S. source income that belongs to a foreign person.
[12:52.400 --> 12:56.960]  Remember that a form W-9 is a form that certain people are required to furnish to
[12:57.840 --> 13:05.680]  the withholding agent when they receive a payment from that person. So when you submit
[13:05.680 --> 13:12.880]  a form W-9 to somebody who's paying you, you are attesting, under penalty of perjury, no less,
[13:13.600 --> 13:17.520]  that you have determined that the person to whom you're giving the form W-9
[13:18.400 --> 13:24.640]  is a withholding agent, a person who's handling U.S. source income belonging to a foreign person,
[13:24.640 --> 13:32.000]  and that the payment they're making to you belongs to a foreign person. So in your business,
[13:32.000 --> 13:39.040]  when you invoice a customer, is the payment that you get the property of a foreign person?
[13:39.600 --> 13:45.280]  I ask because in law, there's only one purpose for the W-9. We've talked about that. There's only
[13:45.280 --> 13:50.400]  one definition for withholding agent. We've talked about that. So when you take a form,
[13:51.120 --> 13:57.760]  says, when I give this to this guy, I've determined that the income I'm receiving belongs to a foreign
[13:57.760 --> 14:02.880]  person, and he's a withholding agent because there's no other definition for withholding
[14:02.880 --> 14:08.720]  agent. There's no other classification for the form W-9, and there's no other rule under statute
[14:08.720 --> 14:17.920]  or regulations that requires anybody to provide a W-9 except to a withholding agent who is then
[14:17.920 --> 14:25.280]  paying out income belonging to a foreign person. That is the only purpose for a W-9 in U.S. Income
[14:25.280 --> 14:30.320]  tax law. I mentioned I was sharing these facts with you because I want to help you avoid the
[14:30.320 --> 14:35.920]  consequences of what's coming with those 87,000 new IRS employees. So let's switch gears away from
[14:35.920 --> 14:40.320]  the definitions in terms of limited expansion, and let's talk for a moment about part 1100 of
[14:40.320 --> 14:45.920]  the Internal Revenue Manual. Part 1100 of the Internal Revenue Manual details the IRS's
[14:45.920 --> 14:52.800]  organization and staffing. It describes the service's functional responsibilities. That's
[14:52.800 --> 14:57.360]  in quotes. That's their phrase, not mine. Functional responsibilities all the way from the Office of
[14:57.360 --> 15:05.520]  the Commissioner down the org chart. If it's a part of the IRS, there is a functional responsibility
[15:05.520 --> 15:11.760]  written out in part 1100 of the Internal Revenue Manual. This is the functional responsibility
[15:11.760 --> 15:18.800]  description of the Office of the Assistant Commissioner International. Now, before you say
[15:18.800 --> 15:24.160]  that's got nothing to do with me, just hang on, follow me along. Here it is, quote,
[15:24.160 --> 15:28.960]  administers the internal revenue laws and related statutes as they relate to U.S. citizens residing
[15:28.960 --> 15:33.520]  abroad, corporations and businesses whose books and records are maintained outside the U.S.,
[15:33.520 --> 15:38.400]  and non-resident aliens deriving income from sources within the United States, close quote.
[15:39.200 --> 15:43.120]  So far, so good, right? That's exactly what you would expect from the guy who's in charge of
[15:43.120 --> 15:49.120]  things that are international, right? But here's the thing. As we go down, I'm going to share with
[15:49.120 --> 15:55.600]  you here in a minute, as we go down, we find that the IRS's examination division, collection division,
[15:55.600 --> 16:01.520]  and criminal investigation division are components within the Office of the Assistant Commissioner
[16:01.520 --> 16:07.120]  International. Here's the functional responsibility statement for the examination division. Quote,
[16:07.120 --> 16:11.680]  the examination division administers an international examination program involving
[16:11.680 --> 16:18.320]  the selection and examination of all types of federal tax returns filed with the Assistant
[16:19.040 --> 16:25.040]  Commissioner International. In case you were unaware, the collection division doesn't have
[16:25.040 --> 16:30.240]  a job until the examination division is done. The examination division looks at various things and
[16:30.240 --> 16:36.000]  then comes up and says, we say Joe Blow owes X. Only at that time does the file then go over to
[16:36.000 --> 16:40.720]  the collection division, and the collection division actually works on collecting that
[16:40.720 --> 16:48.960]  supposed taxes owed. But as we just discussed, the examination division is a component within
[16:48.960 --> 16:53.200]  the Office of the Assistant Commissioner International, which only has authority over
[16:53.200 --> 16:57.680]  U.S. citizens residing abroad, corporations, and businesses whose books and records are maintained
[16:57.680 --> 17:01.920]  outside the U.S. and non-resident aliens deriving income from sources within the United States.
[17:02.880 --> 17:07.120]  Here's the functional description for the collection division. Quote, executes the full
[17:07.120 --> 17:10.880]  range of collection activities on delinquent accounts, which includes securing delinquent
[17:10.880 --> 17:15.280]  returns involving taxpayers outside the United States and those in United States territories,
[17:15.280 --> 17:19.600]  possessions, and in Puerto Rico, administers the program for mutual collection assistance under
[17:19.600 --> 17:25.200]  tax treaties. Did you hear anything in there about doing anything with citizens of the 50
[17:25.200 --> 17:28.800]  states of the union? And here's a statement of functional responsibilities for the criminal
[17:28.880 --> 17:33.520]  investigation division. Quote, the criminal investigation division enforces the criminal
[17:33.520 --> 17:38.880]  statutes applicable to income, estate, gift, employment, and excise tax laws involving
[17:38.880 --> 17:44.000]  United States citizens residing in foreign countries and non-resident aliens subject to
[17:44.000 --> 17:49.200]  federal income tax filing requirements. Close quote. And of course, that makes perfect sense
[17:49.200 --> 17:53.680]  because the criminal investigation division is shown in part 1100 of the Internal Revenue Manual
[17:53.680 --> 17:57.600]  as being within the Office of the Assistant Commissioner International, just like the
[17:57.600 --> 18:02.960]  examination division and the collection division. When I first read part 1100 decades ago,
[18:03.840 --> 18:10.480]  I thought I was missing something. Part 1100 is pretty long. So after I read it the first time
[18:10.480 --> 18:15.040]  and I saw what I just shared with you, I figured I was missing something, so I read it again.
[18:17.040 --> 18:23.600]  Couldn't find what I was missing, so I read it what would be a third time. Still couldn't find
[18:23.600 --> 18:29.120]  what I imagined was missing. Now I want to remind you this goes from the Office of the Assistant
[18:29.120 --> 18:33.120]  Commissioner all the way down to almost the guy who sweeps the floors. It's very comprehensive,
[18:33.120 --> 18:38.320]  so they didn't just leave something out. And what I was looking for, what I thought I had missed,
[18:38.320 --> 18:41.600]  I was reading through it, I must have just missed it, was the examination division,
[18:41.600 --> 18:46.160]  the collection division, and the criminal investigation division that deals with Americans
[18:46.160 --> 18:53.360]  living in the states of the union earning their own domestic source income. But that's not in there.
[18:54.240 --> 19:00.240]  There is only one examination division, one collection division, and one criminal
[19:00.240 --> 19:06.080]  investigation division, and they are part of the Assistant Commissioner International.
[19:06.720 --> 19:11.680]  Shifting gears to something else. And again, another tool that I'm hoping will help you in
[19:11.680 --> 19:17.280]  the end to avoid the consequences of these 87,000 new IRS employees. Do you remember when Charles
[19:17.280 --> 19:21.760]  Rosati was appointed Commissioner of the Internal Revenue Service? He served as the commissioner
[19:21.760 --> 19:28.400]  from 1997 through 2002. He had absolutely no background in accounting, in taxes, in none of
[19:28.400 --> 19:33.840]  that. So why was he appointed commissioner? He was appointed commissioner because he was considered
[19:33.840 --> 19:41.920]  to be an expert at computer analytics, and he was appointed for the purpose of finding a way to
[19:41.920 --> 19:49.840]  modernize the IRS's ancient computer system. Now they were ancient when he was appointed in 1997,
[19:49.840 --> 19:54.720]  but guess what never happened in Rosati's five years as the commissioner?
[19:56.080 --> 20:04.240]  The IRS's computer system was never updated. Those ancient computing systems were never
[20:04.240 --> 20:11.600]  replaced with modern enterprise-wide computer systems. Why? Because something as complex as
[20:11.600 --> 20:16.640]  the IRS's would have had to have gone out to bid and there would have been these large teams of
[20:16.640 --> 20:22.480]  private sector engineers who would have been working to develop the software necessary to
[20:22.480 --> 20:29.440]  run this new enterprise computing system. Now, in order to get all of that right, to have the
[20:29.440 --> 20:34.640]  software know what is right to do here and wrong to do there and so forth, and be functional to
[20:34.640 --> 20:40.160]  the true role of what the IRS does, the kind of things that you and I have discussed today
[20:40.880 --> 20:48.240]  would have to have been revealed to those overseeing these large teams of software
[20:48.240 --> 20:54.000]  engineers, and the particulars would have had to be handed down to those large teams of software
[20:54.000 --> 20:59.280]  engineers. So those private sector software engineers would have been seeing things like
[20:59.280 --> 21:04.240]  the term employee for the purpose of payroll withholding. The classification is only various
[21:04.240 --> 21:07.920]  government workers. It has nothing to do with people in the private sector. It would have seen
[21:07.920 --> 21:13.360]  things that W9s are actually withholding certificates that are only exclusively in
[21:13.360 --> 21:17.760]  U.S. tax law to be provided to a withholding agent. They then would have seen that withholding agents
[21:17.760 --> 21:22.240]  are only those who have care, custody, control, disposal, et cetera, of U.S. source income
[21:22.240 --> 21:28.960]  belonging to a foreign person and on and on and on. They knew it would have only been a matter of
[21:28.960 --> 21:36.400]  time until one or more of these engineers pulled a Snowden and brought the truth to the American
[21:36.400 --> 21:40.480]  media. And the government couldn't get out of it because it would have been the government's
[21:40.480 --> 21:44.480]  instructions that were given to the people who were running the software engineering teams and
[21:44.480 --> 21:48.800]  then handed down to the engineers so it could be done correctly. This would have been U.S.
[21:48.800 --> 21:54.560]  government documents being taken to the media. Consequently, Rosati did not do any significant
[21:54.560 --> 21:58.080]  upgrades to the IRS's computers. And to this very day, as I'm talking to you right now,
[21:58.080 --> 22:05.280]  the IRS is still limping along on these computer systems that were considered ancient in 1997.
[22:05.840 --> 22:13.840]  And that is why they cannot increase the quality or the workflow of what they do via technology,
[22:14.800 --> 22:23.840]  but instead they need 87,000 employees to do what they wouldn't need 87,000 employees to do if they
[22:23.840 --> 22:31.760]  could upgrade their computer system. Get it? The IRS likes to talk a lot about voluntary compliance.
[22:31.760 --> 22:38.560]  So let me ask you a question. If U.S. tax law requires foreign persons deriving U.S. source
[22:38.560 --> 22:44.640]  income to file and pay U.S. income tax because they have no unalienable right to actually earn
[22:44.640 --> 22:48.560]  any money here within the United States as foreigners, they don't have that right,
[22:48.560 --> 22:56.720]  do you expect them to file and pay voluntarily, i.e. voluntary compliance? Of course you do.
[22:57.680 --> 23:02.560]  As do I. It may surprise you to learn that every single Treasury order issued by the Treasury
[23:02.560 --> 23:07.680]  Department in the history of the income tax since 1913 that talks about who is to use a Form 1040
[23:07.680 --> 23:14.240]  says the person who is to use Form 1040 is a non-resident alien with U.S. source income.
[23:15.760 --> 23:21.280]  I hope you find that shocking. By the way, I should say, again, from 1913 to this very moment
[23:21.280 --> 23:25.040]  when we're talking right here, there is no Treasury order, zero, or Treasury decision,
[23:25.040 --> 23:30.320]  statute, regulation, anything that says you or me, just ordinary people in America earning
[23:30.320 --> 23:36.000]  a living, are to file a 1040. There's not one, but there's nine or 10 Treasury orders specifying
[23:36.000 --> 23:39.920]  that the person who is to use a 1040 is a non-resident alien with U.S. source income.
[23:39.920 --> 23:44.480]  Interestingly, that dovetails perfectly with the Assistant Commissioner International,
[23:44.480 --> 23:50.160]  who within his office has the Examination Division and the Criminal Investigation Division.
[23:50.720 --> 23:59.440]  Are you detecting a theme? Perhaps. Just perhaps. The income tax isn't what you've been told it is.
[23:59.440 --> 24:04.000]  Doesn't apply to the people you've been told it does. But let's continue on. Since you're not a
[24:04.000 --> 24:08.640]  foreign person with U.S. source income, it may surprise you to know that, especially with large
[24:08.640 --> 24:13.360]  investors, oftentimes it's not a one-on-one relationship. In other words, a company in
[24:13.360 --> 24:19.040]  the United States does not immediately pay the foreign person that U.S. source income. A lot
[24:19.040 --> 24:24.960]  of times there's intermediaries in the middle. As an example, let's say a Brazilian investor,
[24:25.520 --> 24:29.680]  he sends money to a U.S. investment firm. Let's say he sends half a million dollars, and he says,
[24:29.680 --> 24:34.800]  I want you to invest this in Apple. So the investment firm, on behalf of the foreign person,
[24:34.800 --> 24:39.600]  invests that money with Apple. Then it comes time, Apple pays the dividends. Apple shoots a check,
[24:39.600 --> 24:46.320]  not to the Brazilian guy. Apple sends the check over to the investment firm. And of course,
[24:46.400 --> 24:55.520]  the investment firm gives Apple a form W-9, and then Apple files a form 1099 saying, hey, man,
[24:55.520 --> 24:59.280]  we sent this money over to the investment firm. So in light of the fact that you already know
[24:59.280 --> 25:03.760]  what a W-9 is and you already know what purpose it serves, then let's go a step further. When
[25:03.760 --> 25:09.760]  Apple sends that 1099 to the IRS saying, hey, man, we sent this income over to the investment firm,
[25:10.720 --> 25:16.480]  what kind of income do you imagine that is? Yes, yes, if you said it is U.S. source income
[25:16.480 --> 25:23.280]  belonging to a foreign person, you would be right, because the investment firm sends the W-9 over
[25:23.280 --> 25:29.840]  to Apple, meaning the investment firm has determined that Apple is a withholding agent,
[25:29.840 --> 25:35.200]  has care, control, custody, disposal, et cetera, of U.S. source income belonging to a foreign
[25:35.200 --> 25:41.920]  person. The investment firm knows that, so it sends the W-9 over, and then Apple sends a 1099
[25:41.920 --> 25:46.960]  to the IRS saying, hey, man, we sent U.S. source income over here to this investment firm. Now,
[25:46.960 --> 25:53.600]  your question might be, why? Why do we want that connection? Why does the IRS want to be able to
[25:53.600 --> 26:00.000]  trace U.S. source income as it goes from U.S. party to U.S. party before it goes to the foreign
[26:00.080 --> 26:05.440]  person? If somebody just paid the foreign investor, or let's say he cashed out and took a profit
[26:06.320 --> 26:10.400]  and just sent the money to the guy in Brazil, what are the odds that the guy in Brazil sitting
[26:10.400 --> 26:14.480]  with the money in his bank in Brazil would pay income tax? Right, pretty slim.
[26:15.360 --> 26:19.760]  The way this works is, as I phrase it in Income Tax Shattering the Mist, to keep it simple for
[26:19.760 --> 26:24.800]  people. I go through the whole law and technical part, but the simple language is U.S. tax law
[26:24.800 --> 26:35.760]  requires the last domestic guy with it to withhold the U.S. income tax. So the investment firm knows
[26:35.760 --> 26:42.320]  that it's got a foreign person invested in Apple, so it sends a W-9 over to Apple because it's
[26:42.320 --> 26:48.160]  telling Apple, you don't need to withhold. Remember I said, it might sound odd to you that W-9
[26:48.160 --> 26:53.120]  classified as a withholding certificate has nothing to do with withholding? Well, here you go. This
[26:53.120 --> 27:00.720]  clarifies this for you. The W-9 tells the IRS and Apple that Apple does not need to withhold
[27:00.720 --> 27:07.760]  because the money is going to yet another U.S. company before it goes to the Brazilian cap,
[27:07.760 --> 27:11.440]  so Apple does not need to withhold anything. That's where the withholding, that's why it's
[27:11.440 --> 27:14.400]  considered a withholding certificate. Did you wrap that all together in your head?
[27:14.960 --> 27:21.040]  And then Apple issues a 1099 concerning the investment firm so that the IRS can track it.
[27:21.040 --> 27:26.080]  Okay, Apple, you paid U.S. as a source income belonging to a foreign person to the investment
[27:26.080 --> 27:29.840]  firm. We know that. We now go talk to the investment firm if we have any question about
[27:29.840 --> 27:35.200]  where the tax is. And of course, in this scenario, there's only three parties, the Brazilian investor,
[27:35.200 --> 27:41.600]  the investment firm, and Apple. So we know the investment firm is the last domestic guy with it.
[27:41.600 --> 27:49.040]  So before the investment firm sends the money offshore to the Brazilian, they have to withhold
[27:49.040 --> 27:53.680]  U.S. income tax. You thought it was all about you and you go to work and earn some money.
[27:54.240 --> 27:58.640]  You thought that's what the income tax was about. You thought that's what payroll withholding was
[27:58.640 --> 28:03.920]  about. You thought that's what the W-9 and 1099 were about. Really? Sorry, no. You believe that
[28:03.920 --> 28:09.680]  because people don't read the law for themselves, but Congress has never imposed the income tax.
[28:09.680 --> 28:14.720]  But again, people, American citizens living here, earning their own domestic source income,
[28:14.720 --> 28:18.000]  just going out and earning a living. Never. That's why these forms that we talked about
[28:18.240 --> 28:23.280]  have absolutely no applicability to you or me. I'll briefly mention that various people in Congress
[28:23.280 --> 28:26.960]  and the Treasury Department are telling the American people, and most especially the media,
[28:26.960 --> 28:31.760]  that really the bulk of these 87,000 new employees for the IRS is going to be going after people
[28:31.760 --> 28:36.240]  involved in crypto. Now, I don't know whether that's actually factual or not. Nevertheless,
[28:37.360 --> 28:44.480]  the rules of cryptocurrency and income tax is exactly what we just talked about
[28:44.480 --> 28:49.360]  during this presentation. The W-9 doesn't change its meaning because it's crypto. The 1099 doesn't
[28:49.360 --> 28:53.760]  change its meaning just because it's crypto. The income tax is still all about U.S. source
[28:53.760 --> 28:57.600]  income belonging to a foreign person and being moved offshore to that foreign person. That's
[28:58.160 --> 29:02.240]  what the income tax is about. I understand that I've covered a lot of material very rapidly today.
[29:02.240 --> 29:05.760]  Of course, this is a video and I don't want it to be hours and hours long, so I hope you understand
[29:05.760 --> 29:10.960]  why I have tried to give you some insights without spending hours and hours and hours
[29:10.960 --> 29:16.080]  detailing everything. Because I gave you bits of the larger story, I understand it's a lot like
[29:16.080 --> 29:20.560]  me handing you a flashlight, putting you in a dark warehouse and telling you to turn on the flashlight.
[29:20.560 --> 29:26.000]  You turn on the flashlight and you can see a small area of this very large warehouse and you cannot
[29:26.000 --> 29:31.760]  see the full picture. You can turn the flashlight on here or you can put it there or you can put
[29:31.760 --> 29:38.000]  it there, but you cannot ever see the entire warehouse because I only gave you a flashlight.
[29:38.000 --> 29:45.040]  Fortunately, you have the ability to flip the switch and turn on every single light in the
[29:45.040 --> 29:52.720]  warehouse and see and understand the entire issue with relative ease. All you have to do
[29:52.720 --> 29:59.680]  is go to drreality.news and pick yourself up a copy of Income Tax Shattering the Miss.
[29:59.680 --> 30:04.240]  Now, I want to stress because this may have sounded today, because I'm again trying to keep
[30:04.240 --> 30:09.440]  this short, may have sounded a little confusing, maybe even seemed a little intimidating. I want
[30:09.440 --> 30:14.560]  to let you know that Income Tax Shattering the Miss is roughly 400 pages, but it is written in
[30:14.560 --> 30:21.840]  a way that every single American can understand. It is absolutely not going to be complex. It's
[30:21.840 --> 30:26.960]  not going to make you feel like perhaps this video did. It's going to all be crystal clear
[30:26.960 --> 30:32.400]  and when you close that final page of Income Tax Shattering the Miss, you're going to know
[30:32.400 --> 30:36.480]  the truth. Now, to be clear, a couple of things are going to happen when you're reading Income
[30:36.480 --> 30:40.560]  Tax Shattering the Miss. First of all, you're going to be angry as hell because you're going
[30:40.560 --> 30:43.600]  to realize the United States government has been committing the largest financial crime in the
[30:43.600 --> 30:48.960]  history of the world and the American people are its victims. Secondly, you will never ever
[30:48.960 --> 30:52.720]  be able to trust the United States government pretty much about anything ever again, so understand
[30:52.720 --> 30:58.560]  that before you read it. However, we're looking at going into a future with 87,000 more IRS
[30:58.560 --> 31:04.880]  employees who are going to be going aggressively after people like you. So really, you have a
[31:04.880 --> 31:16.320]  choice. You can continue to be unformed. You can just be the masses, the sheep, or you can choose
[31:16.320 --> 31:21.760]  to get informed. Now, what you do when you get informed is up to you. I never presume to tell
[31:21.760 --> 31:29.520]  anybody what they should do once they know what the law really says, but I do absolutely, 1000%,
[31:29.520 --> 31:35.120]  want you to have the choice. If you read through this and you say,
[31:36.640 --> 31:49.440]  unbelievable, every word Dr. Champion told me is true. I have now seen the law laid out abundantly
[31:49.440 --> 31:55.840]  and clearly, and there is absolutely no question that every single penny the government has taken
[31:55.840 --> 32:00.560]  from me has been part of the largest financial crime in the history of the world. Once you know
[32:00.560 --> 32:04.960]  that, once you've seen the law and it's super easy to understand how to change it, that's the amazing
[32:04.960 --> 32:12.960]  thing. Sometimes I've used the analogy that the truth is somebody takes a diamond and sets it on
[32:12.960 --> 32:21.360]  the ground, and then a dump truck full of manure backs up and pours like 10 feet of manure on top
[32:21.360 --> 32:27.360]  of the diamond. It doesn't change what the diamond is. It just makes it a lot harder and uglier to
[32:27.360 --> 32:32.240]  get to the diamond, and that's what they've done with tax law. They've made it difficult and ugly
[32:32.240 --> 32:37.520]  to get to that diamond of truth. When you close the final page on income tax shattering, one of
[32:37.520 --> 32:45.680]  the things you're going to say amongst many, I suppose, is, wow, the scam is actually so
[32:46.640 --> 32:52.000]  incredibly simple. Once you understand how simple it is, you also understand how simple it is to walk
[32:52.000 --> 32:58.000]  away, if you so choose. I'm hoping that this has been of help to the non-sheep. You go to
[32:58.000 --> 33:02.240]  DrReality.News, grab yourself a copy of income tax shattering the miss. By the way, while you're
[33:02.240 --> 33:06.640]  there, please pick up a copy of Body Science. It will blow you away in the same sense that income
[33:06.640 --> 33:11.120]  tax shattering the miss has, just on a different issue, human physiology with an emphasis on
[33:11.120 --> 33:15.680]  nutritional physiology. Just like income tax shattering the miss, it will, if you let it,
[33:15.680 --> 33:20.640]  change your life. Also, I've been doing these presentations for, gosh, almost 20 years now.
[33:20.640 --> 33:25.840]  They're always free, and I cover a wide range of issues that require certain technical skills and
[33:25.840 --> 33:33.600]  expertise. If you value this presentation and you want to not be the victims of the new 87,000 IRS
[33:33.600 --> 33:38.640]  employees, by purchasing income tax shattering the miss, or Body Science, or both, you also
[33:38.640 --> 33:50.640]  help me to continue to be here for you. Thanks.