The movement claim that ordinary Americans living in the fifty states are 'nonresident aliens' for IRC purposes is unsupported
The movement proposition
A central conclusion of The Federal Zone (Mitchell, 1992; 11th ed. 2001) and dozens of derivative texts in the alternate-tax tradition is that ordinary U.S. citizens living in the fifty states are “nonresident aliens” for purposes of the Internal Revenue Code. The argument is built up through reinterpretations of the IRC’s definitions of “United States,” “State,” and “includes,” combined with selected readings of Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916). The operative move is the placement of ordinary Americans into the IRC’s nonresident-alien cell — taxable, on the argument’s account, only on U.S.-source income or income effectively connected with a U.S. trade or business under § 871, rather than on worldwide income under § 1.
If the move were correct, the practical conclusion would follow directly: most ordinary income earned by Americans in the fifty states (wages, business income, investment income from domestic sources notwithstanding the foreign-tax-treaty machinery) would fall outside the IRC’s reach for residents-in-fact, and tax liability would attach only by way of voluntary filing.
What the IRC’s text actually says
The IRC’s definition of “nonresident alien” sits at 26 U.S.C. § 7701(b)(1)(B):
“An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States (within the meaning of subparagraph (A)).”
The “neither…nor” construction is conjunctive in standard English and in standard statutory interpretation. To fall within the category defined, an individual must satisfy both negatives:
- Not a citizen of the United States, AND
- Not a resident of the United States under the lawful-permanent- resident test, the substantial-presence test, or the first- year election (§ 7701(b)(1)(A) + (3) + (4)).
A U.S. citizen necessarily fails the first conjunct. The nonresident-alien category is closed to U.S. citizens by the statutory definition’s own terms. No reading of “United States,” “State,” “includes,” or Brushaber — even granted maximum charity — can change the express text of the IRC’s definition of “nonresident alien.”
The supporting regulation, 26 CFR § 1.1-1(b), states the positive corollary directly:
“All citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States.”
Citizens are taxed worldwide — wherever resident. The IRC’s geographic structure does not have an exit-by-residency for citizens.
What the paired finding on 14A citizenship adds
A natural follow-up question to § 7701(b)(1)(B)’s “citizen of the United States” requirement: does the IRC use “citizen” in its ordinary 14A/INA sense, or is there a parallel narrower citizenship category that ordinary Americans could occupy while declining to be “citizens of the United States” for IRC purposes? The paired citizenship-and-naturalization finding treats that question. The verdict there is foreclosed: the operative move (decline 14A citizenship for IRC purposes) is closed by Afroyim v. Rusk, 387 U.S. 253 (1967), and uniform federal-court construction of § 7701(b).
The combined effect: § 7701(b)(1)(B)’s “citizen of the United States” tracks ordinary 14A/INA citizenship. The first conjunct forecloses U.S. citizens from the nonresident-alien cell. The movement claim that ordinary Americans are nonresident aliens fails at the IRC’s plain statutory text, on grounds the upstream definitional moves cannot reach.
The two structural authorities
The non-availability of the nonresident-alien cell to U.S. citizens rests on two independent grounds:
The express statutory definition at § 7701(b)(1)(B). Added to the IRC by the Deficit Reduction Act of 1984. Conjunctive “neither…nor” language. Excludes citizens by its own text.
The implementing regulation at 26 CFR § 1.1-1(b). “All citizens of the United States, wherever resident…are liable to the income taxes imposed by the Code.” Citizens taxed worldwide. No territorial exit.
The two operate together. The statute defines who is not a nonresident alien (citizens, by exclusion); the regulation states the positive rule for citizens (worldwide income, wherever resident).
Why “unsupported” rather than “foreclosed”
The Adverse Review verdict taxonomy reserves “foreclosed” for arguments with a real doctrinal seed that has been definitively closed by binding authority — primary-source support exists for the argument’s premises, but the modern courtroom door is closed. “Unsupported” is the verdict for arguments whose premises lack support from the outset.
The movement claim treated here is unsupported in the latter sense. § 7701(b)(1)(B)’s “neither…nor” conjunctive text is dispositive against the claim from the outset; the claim never had a basis in the IRC’s operative text. The supporting moves the claim relies on (the territorial reading of “United States,” the restrictive reading of “includes,” the specialized reading of “citizen,” and the reinterpretation of Brushaber) all fail on their own terms — see the Phase 1 foundation essay, the Brushaber essay, and the paired citizenship finding. None supplies the constructionist seed that “foreclosed” would require.
A pre-1984 statutory-history argument might have a thin seed in the scattered pre-§ 7701(b) administrative and statutory materials governing alien residency. That seed, even granted charity, cannot reach across the 1984 enactment of § 7701(b) to displace the express conjunctive text. The IRC’s current statutory definition is the operative law, and it leaves no room for the move.
Verdict
Unsupported. The movement claim that ordinary Americans living in the fifty states are nonresident aliens for IRC purposes has no support in the operative statutory text. 26 U.S.C. § 7701(b)(1)(B)’s express conjunctive “neither a citizen of the United States nor a resident of the United States” excludes U.S. citizens from the nonresident-alien cell by its own terms. 26 CFR § 1.1-1(b) confirms the worldwide-tax rule for citizens “wherever resident.” The territorial-volunteer reading at the heart of The Federal Zone fails at this single statutory provision, regardless of what conclusions are reached on upstream interpretive questions about “United States,” “State,” “includes,” or Brushaber.
This finding pairs with the concept page on “nonresident alien” in the IRC (which develops the textual analysis at length), the Brushaber essay (which addresses the case-law reinterpretation that the territorial-volunteer reading depends on), and the citizenship-foreclosure finding (which addresses the parallel-citizenship sub-move).