Never Fear The IRS Again

Chapter XIV

The Games The IRS Plays

The Internal Revenue Service wants us to play their game, but they do their best to keep the rules of the game a secret from us. Many others before us have discovered this and by doing research they have discovered the IRS has lots of rules (statutes), but they do not have the power to enforce these statutes.

It has been estimated by a former commissioner of the Internal Revenue that there are in excess of thirty million Americans who are non-filers of the Form 1040. Many of these are Americans who just quit filing. There are quite a number who have legitimately quit filing the Form 1040 because they have been sent a 2358C letter by the IRS which states they are not liable to file the Form 1040. They have un-volunteered from the individual income tax by challenging the authority of the IRS to prove they are a taxpayer required to file the Form 1040.

There are several ways to challenge their authority. The most common way in the past was to make an appointment with the IRS, and using material in the IRC books, the person asked the agent if they were liable for 1.1-1 individual income tax as stated in 26 CFR Chapter 1. The agent would say yes you are. The individual would then say how can that be since I have no income that this form covers. In all of the 26 CFR Chapter 1 books through April 1, 1994 it stated that the approved OMB number for 1.1-1 was 1545-0067. Every information gathering form that the federal government uses has to have a number assigned by the Office of Management and Budget (OMB) for that form and it can only have that one number.

This came about when the Paperwork Reduction Act of 1980 has passed. In all the 26 CFR Chapter 1 listings through 4-1-94 the OMB number, as we have stated before was 1545-0067 which is for Form 2555, Foreign Earned Income. Since we all file a Form 1040 for our individual income tax return, don’t you think it is a little strange that they did not list the OMB number of 1545-0074 as the approved form for the individual income tax, since this is the number assigned by the OMB for Form 1040? The reason is that the IRS does not collect individual income tax from us - it goes on their books as an excise tax. We will go into this in a later chapter, but the money is taken in as an excise tax, which they have constitutional authority to collect as long as it is uniform. We do not know a graduated income tax that can be uniform, since different people pay at different rates, but the IRS has been known to stretch a point.

After the IRS agents had been confronted with the information from their own books (26 CFR Chapter 1) they did not have much choice except to issue the 2358C letter.

To prove our point, 1.1-1 is still listed in 26 CFR Chapter 1 dated 4-1-95 for the individual income tax, but in 26 CFR Chapter 1, subpart J they no longer list 1.1-1 with an OMB control number of 1545-0067. We emphasize that there is NO LISTING FOR 1.1-1 whatsoever with any control number assigned. Since every information gathering form has to have an OMB control number, the IRS is violating the law under the Paperwork Reduction Act. The only conclusion we can make of this is that many so called taxpayers confronted the IRS with this information to un-volunteer that the IRS just erased 1.1-1 from the book in subpart J of Chapter 1 to eliminate the use of this tactic to get their 2358C letter.

We have included copies direct from 26 CFR Chapter 1 to show that we have not made this up. It is easy to see that 1.1-1 was listed in Subpart J in the CFR dated 4-1-90, but it is missing from the CFR dated 4-1-95. We have also included a copy of Forms 2555 and 1040 so you can read for yourself the OMB control numbers. You will also note that 1.23-5 is listed with the control number 1545-0074 which is for Form 1040. We have also included a copy of 1.23-5 which is for Certification Procedures. The games the IRS plays could be funny if it were not for the fact it is so serious.

Since the IRS thinks they can take away a means to un-volunteer from the Individual Income Tax, they cannot take away your right to challenge their jurisdiction and authority that makes you a taxpayer, subject to their jurisdiction. We have included a letter as a guide to challenge this authority.

As we stated in an earlier chapter once jurisdiction is challenged - then jurisdiction has to be proven by giving you a statute and an implementing regulation that makes a citizen of the 50 states a taxpayer, subject to their jurisdiction. It is impossible for them to give this to you, consequently, you should receive a letter closing your file. We must tell you, in all honesty, that the IRS does not yield easily and sometimes you must become like a pit bull - you do not let go until they give you what you want. Remember, you have the law and the Constitution in your favor and they do not. In our estimation, they are fighting a losing battle, but they will not surrender without a fight.

Note: Challenging jurisdiction of the IRS is not for the faint of heart, particularly if you owe them money. In all likelihood, they will put great pressure on you by using liens and levies. One consolation is you can now sue them for up to one million dollars for each instance of "abusive tax treatment", if they do apply the pressure.

-- Cookie Monster (cookiemonster@aol.com), January 02, 2001

Answers

DR. EDUARDO M. RIVERA'S REBUTTAL TO THE IRS LEAFLET, "WHY DO I HAVE TO PAY TAXES"?

I have a question of my own. Why didn't the Internal Revenue Service ask, "WHY DO I HAVE TO PAY INCOME TAXES? This is the question we all want answered. The answer to the first question is that we pay indirect taxes every time we spend money. This IRS leaflet is just a collection of self- serving statements that are intended to keep the truth from the public.

Who has to pay federal income taxes? The answer is "Individuals" who are so closely connected to government that income tax returns prepared by them need not be filed. In the Internal Revenue Code (Code, IRC) income tax returns are required to be made and are then referred to as having been filed. Of course, this "magic" can only happen to 'Individuals" who, like federal officials and employees, have contracted with the government to receive public funds, make and file income tax returns in a single act.

Anyone reading the leaflet will learn no more about federal income taxation than was known before the leaflet was read. I hope, however, that my critique of this leaflet will encourage further study of taxation and government, because a reader of the leaflet will soon discover that once again the IRS has failed to disclose why anyone outside government is liable for the federal individual income tax.

THE LEAFLET LISTS 8 FACTS. THESE ARE THE REAL FACTS:

Their #1: The United States Constitution, Article 1 Section 8, Clause 1, states "The Congress shall have the Power to lay and collect Taxes, Duties, Imposts and Excises to pay the Debts and provide for the common Defense and general Welfare of the United States."

#1. This first clause of Section 8, Art. I of the Constitution empowers Congress to tax using the general power of all governments to tax all property and people at so much a head. These are direct taxes:

however, must be apportioned because Congress does not have the power necessary to assess and collect direct taxes among the several sovereign states. Congress may also tax using its power to govern set out in Art. I, Sect. 8, clauses 2 thru 18. Congress must couple an indirect tax with one of its enumerated "powers" in clauses 2-18, otherwise an indirect tax may not be imposed. These are the indirect taxes: imposts, duties and excises. All present possible federal taxes are variations of the one direct and three indirect taxes. A direct federal tax has not been imposed since the Civil War.

Their # 2: The Sixteenth Amendment to the Constitution, ratified on February 3, 1913, states, " The Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration".

#2. The 16th Amendment neither added to nor reduced the original power of Congress to tax as described above. The ostensible purpose of the Amendment was to deter court challenges to indirect income taxes enacted pursuant to any congressional powers to govern. Ironically, all American lawyers are taught the sophistry that the federal income tax is a direct tax exempt from apportionment.

Their # 3: Congress used the power granted by the Constitution and Sixteenth Amendment and made laws requiring all individuals to pay tax.

#3.The federal Constitution is a grant of national power from the people of the states. They retained sufficient power for local rule in their sovereign states. The Constitution does grant local taxing power over government employees and residents of United States property which is exercised in the Code. The Code requires employers of "Individuals" to pay the tax and for "Individuals" to make returns. Because the Code only applies to "Individuals" who contract with the federal government or who live and work on federal property, only they are required to make income tax returns. Treasury Regulations, but not the Code, require that these returns be filed by federal persons and employees. This is a redundancy. As is widely known, the Code does not require the filing of income tax returns. The actual filing of an income tax return is only alluded to in the Code.

Their #4: Congress has delegated to the IRS the responsibility of administering and enforcing these laws known as the Internal Revenue Code. Congress enacts the tax laws, IRS enforces them.

#4. The Secretary of the Treasury was delegated the administration of the Internal Revenue Code. The power to tax cannot be delegated by Congress.

As the income tax is an excise on the receipt of federal funds, the Secretary knows at all times those liable for the tax. The Secretary has the authority to assess a tax already imposed by Congress but cannot impose or assess a tax on one not already liable.

The IRS, as a group of tax collectors, has no responsibilities, only individual duties to collect certified assessed taxes. A tax collector's duty to collect assessed taxes is an ancient one bound by rigid rules and laws. The IRS has no authority over a person not owing a certified assessed tax. Making and filing a 1040 does not impose a tax liability, if one does not already exist. A signed 1040, however, provides the IRS an opportunity to assess a tax when the form is filed with the federal government. Tax returns made by federal workers do not require formal filing since the returns never leave government control. Congress has no power to require a person not liable for a federal tax to file any return.

Their # 5: Courts have historically held there are no Constitutional or legal grounds for failure to file tax returns and failure to pay taxes.

#5. Courts cannot impose taxes nor do they enact penalties for the failure or refusal to pay them. Courts decide particular legal controversies and interpret the law. No court decision has ever imposed a tax. The much cited and celebrated Brushaber case (Brushaber v. Union Pacific R.R. 240 U.S. 1) merely decided that a corporation could voluntarily pay the individual federal income tax which had been imposed on corporations in the 1913 federal income tax restructuring act.

The IRS Restructuring and Act of 1998 requires IRS agents to file tax returns required by the Code or be subject to termination. Filing, however, is required by regulations not the Code. Regulations cannot require something not required by law.

Their #6: The term voluntary compliance means when required and for determining and paying the correct amount of tax.

#6. This is a correct statement. Few people understand that the vast majority have no tax liability or filing requirement.

Their # 7: Failing to file required returns and failing to pay taxes may result in criminal prosecution and/or civil penalties.

#7. Federal employees and federal contractors are subject to withholding so no federal taxes are ever lost. Since the Code cannot and does not require the filing of income tax returns criminal prosecutions should not occur to any person in the private sector not specifically licensed to pay an excise tax. Civil and criminal penalties are applicable only to those who are actually liable for federal taxation.

Their # 8: While taxpayers have the right to contest their tax liabilities in the courts, taxpayers do not have the right to violate and disobey tax laws.

#8. Persons who are not liable for federal income taxes should not have to prove non-liability. There is no presumption of guilt. There is no presumption of income tax liability. The essence of freedom and liberty is the right to be let alone. Because courts know very little about taxation courts should only be used to criminally prosecute government officials and employees who violate the tax laws. Lawful indirect taxes are always passed on to the ultimate consumer so no legitimate business should ever break a tax law to avoid the payment of a tax.

Response to their 'COMMONLY USED FRIVOLOUS ARGUMENTS'

In a free country a person should not be penalized for being fanciful or even silly if the frivolity has nothing to do with a known legal duty or legal obligation. If a person has no obligation to behave or act in a certain way, that person is under no obligation to supply any reason for their behavior. A person without a legal duty to pay a tax can imagine any number of arguments, rationalizations, reasons or excuses for not paying the tax. The truth is no one needs any reason not to pay a tax that is not owed aside from not being liable for the tax. Being frivolous or silly is not an activity that can be made the subject of taxation but isn't this what this IRS leaflet is saying. "WHY DO I HAVE TO PAY INCOME TAXES? Because the IRS says you do.

Courts, judges, attorneys and income tax collectors condemn frivolous arguments because it is a convenient means by which a genuine determination of a tax liability can be avoided. Courts do not have the power to impose taxes only the legislature can do that. Courts can interpret the law but a clear determination of what constitutes a tax liability would seriously decrease tax revenues.

The Truth: Government control of public education and the media have left the people with little more than chronic visceral reactions to the ubiquitous individual federal income tax and an eternal frustration with the national and state government. The Founding Fathers divided government power three ways to prevent those in government from colluding for the purpose of abridging the freedom of the people. The federal income tax can only be imposed on the private sector because men and women in power refuse to obey the law.

THE LAST PANEL OF IRS BROCHURE

The IRS is adopting a twofold approach. At last, the IRS and I agree on two things: assisting former "taxpayers" in the determination of the proper filing status and civil and criminal sanctions against "Individuals" who persist in violating the tax laws." The IRS wants to help you mark a box. I want to help you see and understand why nowhere in the Code is a federal income tax filing requirement imposed. I want you to know and understand the law so no one in or out of government can take your freedom, ever!

REFERENCED MATERIALS:

UNITED STATES CODE ANNOTATED TITLE 26. INTERNAL REVENUE CODE SUBTITLE F--PROCEDURE AND ADMINISTRATION CHAPTER 61--INFORMATION AND RETURNS SUBCHAPTER A--RETURNS AND RECORDS PART II--TAX RETURNS OR STATEMENTS

SUBPART B--INCOME TAX RETURN

§ 6012. Persons required to make returns of income

(a) General rule.--Returns with respect to income taxes under subtitle A shall be made by the following:

(1)(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount, except that a return shall not be required of an individual--

(i) who is not married (determined by applying section 7703), is not a surviving spouse (as defined in section 2(a)), is not a head of a household (as defined in section 2(b)), and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual,

(ii) who is a head of a household (as so defined) and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual,

(iii) who is a surviving spouse (as so defined) and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual, or

(iv) who is entitled to make a joint return and whose gross income, when combined with the gross income of his spouse, is, for the taxable year, less than the sum of twice the exemption amount plus the basic standard deduction applicable to a joint return, but only if such individual and his spouse, at the close of the taxable year, had the same household as their home.

Clause (iv) shall not apply if for the taxable year such spouse makes a separate return or any other taxpayer is entitled to an exemption for such spouse under section 151(c).

(B) The amount specified in clause (i), (ii), or (iii) of subparagraph (A) shall be increased by the amount of 1 additional standard deduction (within the meaning of section 63(c)(3)) in the case of an individual entitled to such deduction by reason of section 63(f)(1)(A) (relating to individuals age 65 or more), and the amount specified in clause (iv) of subparagraph (A) shall be increased by the amount of the additional standard deduction for each additional standard deduction to which the individual or his spouse is entitled by reason of section 63(f)(1).

(C) The exception under subparagraph (A) shall not apply to any individual--

(i) who is described in section 63(c)(5) and who has--

(I) income (other than earned income) in excess of the sum of the amount in effect under section 63(c)(5)(A) plus the additional standard deduction (if any) to which the individual is entitled, or

(II) total gross income in excess of the standard deduction, or

(ii) for whom the standard deduction is zero under section 63(c)(6).

(D) For purposes of this subsection--

(i) The terms "standard deduction", "basic standard deduction" and "additional standard deduction" have the respective meanings given such terms by section 63(c).

(ii) The term "exemption amount" has the meaning given such term by section 151(d). In the case of an individual described in section 151(d)(2), the exemption amount shall be zero.

(2) Every corporation subject to taxation under subtitle A;

-- Cookie Monster (cookiemonster@aol.com), January 02, 2001.

I'm not going to jail because of bad advice

-- Uncle Bob (unclb0b@aol.com), January 02, 2001.

Bob, your link is no good, wanna try again? I know what it's going to say though, cause I've heard these people on the radio. People who tried to stop paying taxes using different methods they learned of in books or internet postings like the one above, and now they're all in deep debt with mounting legal bills and possible jail time. It would cost you more in lawyer bills than you would pay in taxes by the time all is said and done, if you win at all, which no one ever does.

-- kritter (kritter@adelphia.net), January 02, 2001.

Kritter...

It's KD's post below I was referring to:

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=004KRP

Can't get it to link. I am paying and will pay my taxes...not going to visit Robert Downey, Jr. in the hole...

-- Uncle Bob (unclb0b@aol.com), January 02, 2001.