I am not a Tax Lawyer, Nor do I play Dan Evans on the internet.
I am not a Certified Public Accountant, Nor do I play Paul Thomas on the internet.
I am not an Enrolled Agent, Nor do I play Richard Macdonald on the internet.
DO NOT TAKE MY WORD FOR ANYTHING ON THIS PAGE.
Go look it up for yourself.
The first thing to be aware of, is the prerequisite condition before this IRC section or its regulation can be activated. One can not fail to make "any return required" IF a return is not required.
As you read in chapter 7, you are required to report earned income (compensation for labor) from foreign sources. There is NO command to report domestic compensation for labor in the Form 1040 instuctions. As you also read in chapter 7, a Form 1040 is only required for any tax you are liable for.
Thus, the Secretary is only allowed to fill out a form that you would be required to fill out. As chapter 7 and chapter 2 point out, domestic compensation for labor is not statutory gross income that would trigger a requirement to file based upon gross income even if no liability exists.
I state the simple, because the simple is oft-times overlooked: If a return is not required, the Secretary and his delegates are not authorized to execute such a return.
On the last page we learned that only in the case of unpaid taxes payable by stamp, is the Secretary and his delegates authorized to assess taxes based "Upon such information as he can obtain".
On this page, we see that when (and only when) a return is required, the Secretary or his delegate is authorized to make a return. When we find out exactly which returns the Secretary or his delegates are authorized to execute, we will then know exactly which returns are required. As you will discover, this will substantiate the information you read in chapters 2 & 7.
In order to find out exactly which returns the Secretary's delegates are authorized to execute, we need to look at the delegation orders authorizing the delegates to execute specific returns.