Not Written for You: The Income Tax Hidden in Plain Sight
Part 10 of 13
Follow the Form
Ask an IRS employee which return a person with income tax liability is expected to file. Without a moment's hesitation, the answer will be Form 1040.
Now ask a different question: where in the statutes or regulations does it say who is to use Form 1040? The answer is that it does not. Neither Title 26 of the United States Code nor its regulations specify who is to file a Form 1040. The statutes are silent. The regulations are silent.
That leaves one authoritative source: Treasury Decisions. And on this subject, the Secretary of the Treasury has spoken eleven times.
What the Secretary Said
There are eleven Treasury Decisions that address who is to use Form 1040: TDs 1928, 1953, 2013, 2090, 2109, 2131, 2313, 2401, 2402, 2815, and 2988. Every one of them says the same thing: Form 1040 is to be used by a nonresident alien with U.S. source income, or by the nonresident alien's domestic agent.
Treasury Decision 2815 states it plainly:
Treasury Decision 2090, in a section entitled "Nonresident Alien Agent," states:
The other nine Treasury Decisions say the same thing, just as clearly.
What the Secretary Did Not Say
In the entire history of the income tax — from 1913 to today — the Secretary of the Treasury has never issued a Treasury Decision stating that an American citizen earning domestic income is to file a Form 1040. Not once. Not in any of the eleven TDs that address the form. Not in any other TD.
Eleven Treasury Decisions say Form 1040 is for nonresident aliens. Zero say it is for domestic-earning American citizens. That is not an ambiguity. It is a pattern sustained across more than a century.
The Title of the Form
The full title of Form 1040 is "U.S. Individual Income Tax Return." Most people assume the word "individual" distinguishes a personal return from a corporate one. But Treasury Decision 1928, which assigns Form 1040 to "individuals," must be read alongside the regulation that defines the term.
The regulation at 26 CFR § 1.1441-1(c)(3) defines "individual" in two parts. Part (i): an alien individual. Part (ii): a nonresident alien individual. This definition appears in the regulations for Chapter 3 — "Withholding of Tax on Nonresident Aliens and Foreign Corporations" — the chapter that specifies in detail who files, who pays, and how the tax is collected. Chapters 1 and 2, which contain only the rules of computation, use the word "individual" without providing a definition. But Chapter 3 is where the Secretary speaks to the operational question — who is to use which return — and it is in that context that "individual" means an alien.
If the Treasury Department had written the title to be accurately descriptive rather than ambiguous, Form 1040 would be called "U.S. Nonresident Alien Income Tax Return." Both titles carry the same legal meaning. One is misleading. The other is not.
Next: The definitions of "State" and "United States" in the tax code do not mean what most Americans assume. Congress knows exactly how to include the fifty states when it wants to — and in the provisions that matter most, it chose not to.
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