Tax Protester Statutory Arguments - The 861 Argument

The 861 Argument

The 861 argument refers to Internal Revenue Code section 861, entitled "Income from sources within the United States". This provision delineates what kinds of income shall be treated as income from sources within the United States when taxes are assessed of resident aliens, nonresident aliens, and foreign corporations. The provision does not apply to U.S. citizens, but the language of Section 861 is occasionally cited by tax protesters who claim that the statute excludes some portion of the income of U.S. citizens and resident aliens from taxation under the provisions of the Code.

Courts have uniformly held this interpretation to be incorrect, and proponents of the argument who have used it as a basis for not paying taxes have been penalized and even jailed. For example, actor Wesley Snipes was found guilty on three misdemeanor counts of failing to file Federal income tax returns, although he was acquitted of charges to conspire to defraud the US government. He was sentenced to three years in prison. Snipes has appealed that conviction.)