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Sections 1, 61, and 63 impose the tax,
Section 6012 requires you to file a tax return if you have income of more than the exemption amount, and
Section 6151 requires you to pay the tax at the time and place fixed for the filing of your return.

26 U.S.C. § 6012(a)

Returns with respect to income taxes * * * shall be made by the following:
(1)(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount * * *.

PERSPECTIVE ON THE 861 POSITION

The "861 argument" deals with "gross income" from which "taxable income" is derived. One can start with CFR 1.1-1, which tells us that " Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States." That sounds all-encompassing, but two sentences later it says, "The tax imposed is upon taxable income" (i.e., gross income minus deductions). So "income" is qualified to mean "taxable income," which, in turn, depends on what "gross income" is. Incidentally, if one goes to Section 1 of the Code, it says, "There is hereby imposed on the taxable income of..." and it proceeds to identify married individuals, surviving spouses, heads of households, unmarried individuals, estates and trusts. It says "taxable" income right there at the beginning. (Note that there's no information about who is actually liable for payment of the tax, e.g., the payor or the payee.)

The next step is to look at the definition of "gross income," found in IRC 61 or Section 1.61 of the Code of Federal Regulations ("CFR"). CFR 1.61-1(a) defines gross income as "all income from whatever source derived, unless excluded by law." IRC 61 defines gross income as "all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items; (2) Gross income derived from business; (3) Gains derived from dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7) Dividends; (8) Alimony...(15) Income from an interest in an estate or trust.

Tax researchers assert that "items" of income in IRC 61 are not the same as "sources" of income. CFR 1.861-1 says: "Section 861 et seq... and the regulations thereunder, determine the sources of income for purposes of the income tax." The specific sources are listed in CFR 1.861-8(f)(1). They are: (1) overall limitation to foreign tax credit; (2) international and foreign sales corporations; (3) nonresident alien individuals and foreign corporations engaged in trade or business within the U.S.; (4) foreign base company income; and (5) a list of fifteen other operative sections - all foreign. This leads to the conclusion that the term "gross income" does not apply to the income of most citizens but to the incomes of nonresident aliens and U.S. citizens earning money abroad, a conclusion no longer very surprising after considering all the other evidence presented above.

Tax researchers assert that "items" of income in IRC 61 are not the same as "sources" of income. CFR 1.861-1 says: "Section 861 et seq... and the regulations thereunder, determine the sources of income for purposes of the income tax." The specific sources are listed in CFR 1.861-8(f)(1). They are: (1) overall limitation to foreign tax credit; (2) international and foreign sales corporations; (3) nonresident alien individuals and foreign corporations engaged in trade or business within the U.S.; (4) foreign base company income; and (5) a list of fifteen other operative sections - all foreign. This leads to the conclusion that the term "gross income" does not apply to the income of most citizens but to the incomes of nonresident aliens and U.S. citizens earning money abroad, a conclusion no longer very surprising after considering all the other evidence presented above.

(h) Effective dates. In general, the rules of this section, as well
as the rules of Sec. Sec. 1.861-9T, 1.861-10T, 1.861-11T, 1.861-12T,
and 1.861-14T shall apply for taxable years beginning after December 31,
1986. However, see Sec. Sec. 1.861-8(e)(12)(iv) and 1.861-14(e)(6) for
rules concerning the allocation and apportionment of deductions for
charitable contributions. In the case of corporate taxpayers, transition
rules set forth in Sec. 1.861-13T provide for the gradual phase-in of
certain the provisions of this and the foregoing sections. However, the
following rules are effective for taxable years commencing after
December 31, 1988:
(1) Section 1.861-9T(b)(2) (concerning the treatment of certain
foreign currency borrowings),
(2) Section 1.861-9T(d)(2) (concerning the treatment of interest
incurred by nonresident aliens),
(3) Section 1.861-10T(b)(3)(ii) (providing an operating costs test
for purposes of the nonrecourse indebtedness exception), and
(4) Section 1.861-10T(b)(6) (concerning excess collaterilization of
nonrecourse borrowings).

[Revised as of April 1, 2006]

[Revised as of April 1, 2000]

(f) Miscellaneous matters--(1) Operative sections. The operative
sections of the Code which require the determination of taxable income
of the taxpayer from specific sources or activities and which give rise
to statutory groupings to which this section is applicable include the
sections described below.
(i) Overall limitation to the foreign tax credit. Under the overall
limitation to the foreign tax credit, as provided in section 904(a)(2)
(as in effect before enactment of the Tax Reform Act of 1976, or section
904(a) after such enactment) the amount of the foreign tax credit may
not exceed the tentative U.S. tax (i.e., the U.S. tax before application
of the foreign tax credit) multiplied by a fraction, the numerator of
which is the taxable income from sources without the United States and
the denominator of which is the entire taxable income. Accordingly, in
this case, the statutory grouping is foreign source income (including,
for example, interest received from a domestic corporation which meets
the tests of section 861(a)(1)(B), dividends received from a domestic
corporation which has an election in effect under section 936, and other
types of income specified in section 862). Pursuant to sections 862(b)
and 863(a) and Secs. 1.862-1 and 1.863-1, this section provides rules
for identifying the deductions to be taken into account in determining
taxable income from sources without the United States. See section
904(d) (as in effect after enactment of the Tax Reform Act of 1976) and
the regulations thereunder which require separate treatment of certain
types of income. See example 3 of paragraph (g) of this section for one
example of the application of this section to the overall limitation.
(ii) [Reserved]
(iii) DISC and FSC taxable income. Sections 925 and 994 provide
rules for determining the taxable income of a FSC and DISC,
respectively, with respect to qualified sales and leases of export
property and qualified services. The combined taxable income method
available for determining a DISC's taxable income provides, without
consideration of export promotion expenses, that the taxable income of
the DISC shall be 50 percent of the combined taxable income of the DISC
and the related supplier derived from sales and leases of export
property and from services. In the FSC context, the taxable income of
the FSC equals 23 percent of the combined taxable income of the FSC and
the related supplier. Pursuant to regulations under section 925 and 994,
this section provides rules for determining the deductions to be taken
into account in determining combined taxable income, except to the
extent modified by the marginal costing rules set forth in the
regulations under sections 925(b)(2) and 994(b)(2) if used by the
taxpayer. See Examples (22) and (23) of paragraph (g) of this section.
In addition, the computation of combined taxable income is necessary to
determine the applicability of the section 925(d) limitation and the
``no loss'' rules of the regulations under sections 925 and 994.
(iv) Effectively connected taxable income. Nonresident alien
individuals and foreign corporations engaged in trade or business within
the United States, under sections 871(b)(1) and 882(a)(1), on taxable
income which is effectively connected with the conduct of a trade or
business within the United States. Such taxable income is determined in
most instances by initially determining, under section 864(c), the
amount of gross income which is effectively connected with the conduct
of a trade or business within the United States. Pursuant to sections
873 and 882(c), this section is applicable for purposes of determining
the deductions from such gross income (other than the deduction for
interest expense allowed to foreign corporations (see Sec. 1.882-5))
which are to be taken into account in determining taxable income. See
example 21 of paragraph (g) of this section.
(v) Foreign base company income. Section 954 defines the term
``foreign base company income'' with respect to controlled foreign
corporations. Section 954(b)(5) provides that in determining foreign
base company income the gross income shall be reduced by the deductions
of the controlled foreign corporation ``properly allocable to such
income''. This section provides rules for identifying which deductions
are properly allocable to foreign base company income.