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Another Instance Of The Law Being Properly Upheld


The buoyant reader of ‘Cracking the Code’, who received the refund displayed below was required by New Jersey to explain why he was amending his original return and claiming the refund.  His succinct explanation will be of interest to others.  Here is what he said (followed by the state’s response):


Explanation of Changes in 2002 NJ-1040X Amended Return


Line 14:  The change from $21,994.00 to $0 reflects the change made in my Substitute W-2 (the attached Form 4852), which was submitted with my 2002 Federal Income Tax Amended Return.  Since New Jersey has an information sharing arrangement with the Internal Revenue Service, I am compelled to share the substitute W-2 with the State of New Jersey.  If the State of New Jersey compiles wage information on line 14 from W-2 information returns and personal affidavits (signed 1040’s) from citizen-filers, then the taxes calculated on this amended return are also affected.  I received nothing of what the Federal Internal Revenue Statutes define as wages for the taxable year 2002, nor did I engage in any trade of business with the Federal Government, except for the interest gained from deposits held in a national bank.


Lines 26, 27 and 29:  The total income figure was changed from $22,873.00 to $879.00 to reflect the proper understanding that I received no wages, as defined by Federal Statutes, for the year 2001.  The remaining total reflects the interest received from a National Bank, which the Supreme Court has maintained is a Federal instrumentality whose interest is taxable income.


Lines 35, 37, 38, 40, and 42:  These changes reflect the outcome of NJ tax calculations after the New Jersey Gross Income figure was changed to accurately reflect the correct reporting of income on my Substitute W-2 (attached Form 4852).


A (Very) Brief Analysis For The Benefit Of Those Who Have Not Yet Read ‘Cracking the Code’:


Prior to the filing of the documents to which the explanation above refers, the state will have presumed the existence of a legal liability on this American-- based upon a W-2 apparently submitted to it by a payer alleging the payment to this man of $21,994 in "wages as defined at 26 USC 3401 and 3121".  Judging from the nature of his correction, it would appear that the payer misrepresented this man's simple non-federally-connected earnings to be such "wages".  That W-2 evidence having now been rebutted by a correcting Form 4852, New Jersey has quietly and properly abandoned that presumption, and has consequently returned the money which it had previously been keeping against that presumed liability.