From My Archives: "copy / pastes" I apoligize in advance for the length,
yet all is viable (unless someone notes otherwise)
THIS IS THE ONLY SECTION WHICH
IDENTIFIES WHO IS SUBJECT TO IRS COLLECTION
PROCEDURES. READ FURTHER AND YOU WILL SEE
THREE (3) VERY IMPORTANT POINTS.
Bookmark this link:
http://www.irs.gov/irm/index.html
Internal Revenue Manual (IRM)
Table of Contents
Part 1 Organization, Finance, and Management
Part 3 Submission Processing
Part 4 Examining Process
Part 5 Collection Process
Part 6 Human Resources Management
Part 7 Rulings and Agreements
Part 8 Appeals
Part 9 Criminal Investigation
Part 11 Communications and Liaison
Part 13 Taxpayer Advocate Service
Part 20 Penalty and Interest
Part 21 Customer Account Services
Part 22 Taxpayer Education and Assistance
Part 25 Special Topics
Part 30 Administrative
Part 31 Criminal Tax
Part 32 Disclosure Litigation
Part 33 General Legal Services
Part 34 General Litigation
Part 35 Tax Litigation
Part 39 Technical
Part 42 International
=========================
Part 5. Collection Process
Chapter 1. General Handbook
Section 7. Government Agencies, Federal Employees and
Retirees, Military Personnel and Department of Defense
Employees
[OUR NOTE: THIS IS THE ONLY SECTION WHICH
IDENTIFIES WHO IS SUBJECT TO COLLECTION
PROCEDURES. READ FURTHER AND YOU WILL SEE
THREE (3) VERY IMPORTANT POINTS:
1. Employees VOLUNTEER to have amounts taken from pay;
2. Employers VOLUNTEER to take amounts from pay, ONLY
when the employee gives written CONSENT;
3. Private employers, states, and political subdivisions
are NOT REQUIRED to enter into payroll deduction
agreements.]
Part 5. Collection Process
Chapter 14. Installment Agreements
Section 10. Payroll Deduction Agreements and Direct Debit
Installment Agreements
5.14.10.1 (03-30-2002)
Overview
This chapter provides procedures for processing Payroll
Deduction agreements and Direct Debit installment
agreements. Payroll deduction agreements are those
agreements where employers deduct payments from taxpayer'
s wages, and mail them to the Internal Revenue Service.
Direct Debit Agreements allow the Service to debit
taxpayer's bank accounts.
5.14.10.2 (03-30-2002)
Payroll Deduction Agreements
The use of Form 2159, Payroll Deduction Agreement, should
be encouraged when the taxpayer is a wage earner,
particularly if the taxpayer defaulted on a previous
installment agreement.
Private employers, states, and political subdivisions are
not required to enter into payroll deduction agreements.
Taxpayers should determine whether their employers will
accept and process executed agreements before agreements
are submitted for approval or finalized.
Comptroller General decision B-45105 (signed in 1955)
requires Federal Agencies to deduct and pay over the
amount shown on payroll deduction agreements.
Allow a reasonable period for the employer to complete
the necessary bookkeeping and submit the first payment.
On balance due and ACS accounts, encourage taxpayers to
hand deliver agreements to employers; otherwise mail
agreements to employers. If taxpayers prefer the Service
initiate this contact, it may be made if the taxpayer
received Letter 3164 at least 10 days prior to mailing
Form 2159 to the employer. Ensure Form 12175 is completed
and forwarded to the Third Party Contact Coordinator in
the area or center initiating the contact. Letter 3164
must have been mailed for each module included in the
installment agreement. If Letter 3164 has not been
mailed, the taxpayer may authorize a specific third party
contact if the revenue officer or other contact employee
completes Form 12180 and has it signed by the
taxpayer(s). This form should be kept with the case file
and the case file history should be documented to reflect
the date that the taxpayer provided the authorization. In
processing Payroll Deduction Agreements ensure that all
Third Party Contact guidelines have been observed. See
IRM 5.1.17.
The employer and the taxpayer should sign Form 2159
before submission to the manager for approval.
On ACS accounts, direct employers responses to ACS call
sites, document case files and forward them to call sites
after completing telephone contact.
Ensure TC 971 AC 043 is input on all modules within 24 ho
urs of the taxpayer's request for a payroll deduction
agreement.
If employers must be contacted during Payroll Deduction
Agreements, ensure Letter 3164 was sent previously, and
Form 12175 was completed and properly routed to the Third
Party Contact coordinator. (See (5) above.)
To insure proper remittance and posting, instruct
employers, or request taxpayers advise their employers,
to show taxpayers' names and TINs, tax form(s) and
period(s) on all remittances.
If an employer requests formal notification from the
Collection Field function that a Payroll Deduction
Agreement is ended (because the liability is satisfied or
for any other reason) Pattern Letter 2571C,
Discontinue/Adjust Payroll Deduction, can be sent to the
employer, selecting the appropriate paragraphs. (See
Exhibit 5.14.10-1.) This letter may not be used to
propose termination of agreements.
Use agreement locator number 1109, per Exhibit 5.14.1-2
on Payroll Deduction Agreements. Service Center provides
letters to employers for systemically monitored payroll
deduction agreements based upon input of agreement
locator number 1109.
5.14.10.3 (03-30-2002)
Preparation and Distribution of Form 2159, Payroll
Deduction Agreement
After securing taxpayer signatures on Form 2159, prepare
Letter 2318C to mail or have the taxpayer deliver with
Form 2159 to the employer. (See Exhibit 5.14.10-2.)
Input the correct address on Letter 2318C,and direct the
employer to mail the entire completed Form 2159 to the
originator, otherwise the form's instructions will direct
the employer to mail only Part 1 back to the Service
Center.
Send or give to the taxpayer (to give or mail to the
employer):
Letter 2318C;
Form 2159;
a business reply envelope addressed to the revenue
officer (or other contact employee) to return the signed
Form 2159; and
a business reply envelope addressed accordingly to be
used to mail the first payment.
Note:
Notate the purpose on each envelope, so that Form 2159 is
returned to the appropriate address.
These may be mailed directly to employers if taxpayers
received Letter 3164 or it was sent at least ten days
prior to mailing the 2159. (See 10.2(5) above.) (Also,
see (8) below for cases involving members of the Armed
Forces overseas.) Since final payment dates and amounts
cannot be definitely determined, write the total amount
due (on bal dues included in agreements) on installment
agreements forms (including accruals to the date
agreements are prepared.)
Request taxpayers immediately notify their employers of
payroll deduction requests and the purpose of the two
envelopes.
After taxpayers and their employers have executed the
Forms 2159 and returned them to appropriate contact
employees, cases should be submitted for approval. (See
9.2 above.)
After Form 2159 is approved, return the Employer's Copy
to the taxpayer to give or mail to their employer, unless
the taxpayer received Letter 3164 and at least ten days
have passed since it was mailed to the taxpayer, in which
case the Employer's copy of Form 2159 may be mailed
directly to the employer. (See 10.2(5) above.)
Also, furnish taxpayers with the Taxpayer's Copy of the
assembly. A second Letter 2318C may accompany the
taxpayer's copy, selecting the options regarding
acceptance of the agreement (See Exhibit 5.14.10-2.).
Note the balance due history that a payroll deduction
agreement has been executed. Attach the approved
Acknowledgment Copy to the balance due file and process
the case appropriately.
If a payroll deduction agreement is made with a member of
the Armed Forces overseas, forward the complete assembly
to the taxpayer to give to his or her Commanding Officer
(or mail it directly to the Commanding Officer if letter
3164 was mailed at least 10 days earlier.) (See 10.2(5)
above.) In these cases, the Taxpayer's Copy of the
assembly will be furnished to the taxpayer by the
military establishment. Note the balance due history that
a payroll deduction agreement has been executed. Upon
receipt of the approved Acknowledgment Copy, attach to
the balance due file and process the case appropriately.
QUESTION:
Is the IRS or Government immune from contacting any 3rd
party without my consent?
Are they not violating any exaction laws?
ANSWER: IRS lacks capacity, authority and jurisdiction.
=============================================
Your Name
Your address
Your city, St
Date Return Receipt #_________________________
(Include this number in your correspondence.)
Internal Revenue Service, Collector
for Dept. of the Treasury, Financial Management Services
Ogden, UT 84201
Re: Your Letter #: 3164B (DO) and Notice 1219B Catalog
No. 73243V
Account No. XXX XX XXXX used by the IRS to maintain and
identify its system of records.
1. Cease attempts to contact third parties [15 U.S.C.
Fair Debt Collection Practices Act 1692c(b)]
2. Cease communication with the Requester [15 U.S.C. Fair
Debt Collection Practices Act 1692c(c)]
3. Cease false or misleading representations in order to
disgrace or attempt to obtain information [15 U.S.C.
Fair Debt Collection Practices Act 1692e(7) & (10)]
4. Cease Furnishing Deceptive forms to create the false
belief a debt is owed [15 U.S.C. Fair Debt Collection
Practices Act 1692j]
Dear Collector:
For the record, let's correctly refer to the above-named
person as the Requester, since I am a nonfiler. 26
U.S.C. 7701(a)(14) defines the word 'taxpayer' as a
person subject to any measurable tax derived from a
taxable source (activities, events, commodities).
Documents I have received from FOIA/PA Requests clearly
state no lawful, valid assessment for a tax liability has
ever been imposed upon the Requester. Absent a valid,
procedurally lawful in full compliance with 26 C.F.R.
301.6203-1, no tax is owing. Therefore the Requester is
not a 'taxpayer' either by proof or appointment.
The Requester absolutely refuses to give his/her consent
for your agency to communicate with third parties.
Without the prior consent of the Requester given directly
to the Service, or the express permission of a court of
competent jurisdiction, or as reasonably necessary to
effectuate a post judgment judicial remedy, the IRS MAY
NOT communicate, in connection with the collection of an
alleged debt, with any person other than the Requester,
his/her attorney, or a consumer reporting agency.
You and the Service lack lawful authority to interfere
with the peace and privacy of a natural, private American
who is not subject to your jurisdiction and has no tax
liability or debt owing to the U.S. government.
When you have already contacted third parties regarding
the Requester without my explicit, voluntary, written
consent, please mail me a complete list of the contacts,
together with whatever information you compiled as a
result of the contact. You may be in violation of IRC
6304(c) and subject to civil damages for certain
unauthorized collection actions under IRC 7433 in an
amount equal to the lesser of $1,000,000 ($1000,000 in
the case of negligence) or other sums as noted.
In Radinsky v. United States 622 F. Supp. 412 (D.C. Colo.
1985) the Court stated, "....that the plaintiffs are not
'taxpayers' because no tax has been assessed." Radinsky
distinguishes with specificity and particularity that the
terms 'tax', 'penalty' or 'sum' are not analogous.
Per IRC 6304(a), you are duly advised to cease all
future direct or indirect communication with the 3rd
party contacts. DO NOT contact the Requester's place of
work.
Only 'taxpayers' are subject to or liable for a tax
measured upon income derived from a taxable source as
imposed by the Code. Only 'taxpayers' are under the
jurisdiction of the IRS. I have yet to find any law
requiring the lawful duty to file a return, unless one is
liable for a tax imposed by the code. The Requester has
found no federal tax liability, nor duty to file. The
Requester is outside your venue and you lack subject
matter jurisdiction of the Requester.
Therefore you lack lawful authority to impose any
'discovery' proceedings pursuant to Subtitle F Procedure
and Administration Chapter 78 Discovery of Liability and
Enforcement of Title 7602(c)(1) Examination of books and
witnesses. You also lack lawful authority to impose any
right to ask for 'disclosure' information pursuant to
Subtitle F Procedure and Administration; Chapter 61
Information and Returns; Subchapter A. Returns and
Records; Part 1 Records, Statements, and Special Returns
6001, 6011 and 6012(a).
The Service does not authorize you to contact 3rd parties
to obtain or verify information for persons not under
your jurisdiction. For you to do otherwise, you are
deliberately acting outside the law and invading the
privacy of the Requester and disinterested third parties,
giving the
erroneous impression the Requester owes a debt or may be
in trouble with federal authorities, thus possibly
damaging the reputation and credibility of the Requester,
clearly in violation of 15 USC 1692b of the Fair Debt
Collection Practices Act and IRC 6304.
I declare to the best of my knowledge and belief the
above facts to be true and correct.
Respectfully,
Your name, Requester and nonfiler. All rights reserved.
____________________________ state,
____________________________ county }ss.
On __________, 20_____, before
me,_______________________________, Notary Public,
personally appeared
_____________________________________, who proved to me
on the bases of satisfactory evidence) to be the
man/woman whose name is subscribed to the within
instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by
his/her signature on the instrument the man/woman, or the
entity upon behalf of which the man/woman acted, executed
the instrument.
WITNESS my hand and official seal.
__________________________, Notary Public My commission
expires_________.
Save this for future reference.
Regs, rulings and other IRS documents: what are they
worth?
RIA Practice Alert
IRS issues a wide variety of documents every week. Some
of them (such as regs and rulings) are written for
release to the public. Others (such as general counsel
memoranda) are for IRS's internal use but must be
released under the Freedom of Information Act (FOIA).
Whether written for internal or public use, IRS
administrative pronouncements vary in precedential value
and utility. This Practice Alert provides an overview of
the types of IRS documents that are available to the
public and cited in RIA publications. It explains what
they are, how they're designated in RIA publications,
their weight as authority, and their practical use to tax
professionals and taxpayers. This Practice Alert also
explains which IRS documents are "substantial authority"
for purposes of the accuracy-related penalty.
Regulations. These may be final (no prefix before the
word "Reg."), temporary (designated with the letter T in
the citation), proposed ("Prop Reg"), or proposed
reliance regs (designated as "Prop Reg ... Taxpayers may
rely").
A final reg represents IRS's authoritative explanation
and interpretation of a particular Code provision. Final
regs sometimes are not amended until many years after
enactment of tax laws (or court cases) that affect the
subject of a final reg and, until then, may be of little
use in interpreting a current Code provision.
The precedential value of a final reg depends on whether
it is a legislative or interpretative reg (but the
citations to a reg do not distinguish between the two).
A legislative reg is one mandated by the Code. For
example, Code Sec. 197, dealing with amortizable
intangibles, directs IRS to issue regs "as may be
appropriate to prevent avoidance of the purposes of this
section through related persons or otherwise...." A
legislative reg carries nearly the same weight as the
Code itself. The Supreme Court held in Chevron U.S.A.
Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
843-44 (1984) that "legislative regulations are given
controlling weight unless they are arbitrary, capricious,
or manifestly contrary to the statute." This is commonly
referred to by the courts as "Chevron deference."
An interpretative reg is one issued under the Treasury
Secretary's general authority to issue rules and regs
dealing with the Code. Although not binding on the
courts, interpretative regulations are given deference as
long as they don't misapply or misconstrue a statutory
rule. Interpretative regs can be, and on occasion have
been, invalidated by the courts if they find that IRS did
not correctly interpret the Code.
A temporary reg provides taxpayers with guidance they can
follow pending issuance of final regs, and has the same
precedential value as a final reg. (Temporary regs issued
after Nov. 10, '88 expire three years after their
issuance date , which is why and also must be issued as
proposed regs.)
A proposed reg is issued to give taxpayers and
practitioners notice of how IRS interprets a provision,
and the opportunity to comment on and critique that
interpretation. It has little precedential value. Courts
have said proposed regs "carry no more weight than a
position advanced on brief" and are "suggestions made for
comment; they modify nothing."
Nevertheless, proposed regs are useful for tax planning.
In many cases (although there have been notable
exceptions, e.g., in the passive activity loss area),
final regs follow the broad outline presented in proposed
regs. One court has ruled that where a taxpayer relies on
proposed regs, differing final regs cannot be imposed to
his detriment. This was so even though the proposed regs
were not ones IRS said the taxpayer could rely on.
(Elkins, Paul, (1983) 81 TC 669) However, other courts
have leaned the other way. For example, the Court of
Appeals for the Federal Circuit held that where existing
final regs provided an unfavorable result to a taxpayer
while proposed amendments to those regs indicated a
position more favorable to him, the taxpayer's reliance
on the proposed regs wasn't justified. (Garvey Inc v.
U.S., (1983, Cl Ct) 51 AFTR 2d 83-721, 1 Ct Cl 108, affd
(1984, CA Fed Cir) 53 AFTR 2d 84-776, 726 F2d 1569).
A proposed reliance reg is one which states that
taxpayers may rely on it, with any more stringent
provisions in a later final reg to be effective only
prospectively. These regs can be relied on as if they are
final regs. In an infrequently used variation, IRS states
that it will not challenge tax return positions that are
consistent with a proposed reg.
Revenue ruling ("Rev Rul"). This is an official IRS
interpretation of tax laws, Code provisions and regs, and
usually addresses a specific issue or question (e.g.,
what is a "temporary" work location for purposes of the
business transportation deduction rules). It may arise
from various sources, e.g., private letter rulings to
taxpayers, technical advice to district offices, court
decisions. A Rev Rul's conclusions are limited to the
pivotal facts stated in it. Revenue rulings don't have
the force and effect of regs but may be cited and relied
on. The courts have held that they are merely a statement
of the IRS's litigating and administrative position.
Assuming that the facts and circumstances at issue are
substantially the same as those in a Rev Rul,
practitioners and their clients generally may rely on it
and don't have to ask for a private ruling addressed to
their particular cases. Rev Ruls, like regs, can become
outdated (e.g., by the passage of subsequent legislation,
other rulings or court cases) and may be modified or
distinguished by subsequent rulings.
Revenue Procedure ("Rev Proc"). This is a statement of
practice and procedure. It addresses a broad subject such
as accounting method changes, how to compute depreciation
allowances, or how to obtain innocent-spouse equitable
relief. The precedential value of a Rev Proc is the same
as that of a Rev Rul.
Announcement ("Ann") or Notice ("Not"). These address a
timely topic of wide interest (e.g., extension of the
period in which a Roth IRA can be recharacterized) and
can be relied on and cited as precedent by taxpayers. IRS
is bound to what it says in an announcement or notice to
the same extent it would be with a Rev Rul or Rev Proc.
News release or information release ("IR"). This document
is issued to the press to bring public attention to
general-interest items, rather than items of a technical
nature. IRS's statement of policy in an IR has been held
to bind it in its dealings with taxpayers.
General Counsel Memorandum ("GCM"). This is a legal memo
prepared by the IRS's Chief Counsel's Office in response
to a formal request from within IRS ranks for legal
advice. It can't be used or cited as precedent. Some
courts have held that a GCM can be relied on for
interpretive guidance, but IRS has resisted this
conclusion. IRS stopped issuing GCMs after '95.
Action on Decision ("AOD"). This is a legal memo prepared
by IRS Chief Counsel when IRS loses a court case. It sets
forth the issue, a brief discussion of the facts, and the
reasoning behind the recommendation to acquiesce ("acq")
or nonacquiesce ("nonacq") in (follow or not follow) a
decision, or to acquiesce in result only. IRS says that
an AOD isn't an affirmative statement of its position,
isn't intended to serve as public guidance and can't be
cited as precedent. As a practical matter, acqs or
nonacqs can be relied on (e.g., if the taxpayer's
situation is the same as the one decided in a court case
to which IRS has acquiesced, the taxpayer may assume his
position won't be challenged by IRS).
Private Letter Ruling ("PLR"). In a PLR, IRS's National
Office responds to a taxpayer's request for IRS to state
its opinion on the tax consequences of a particular
transaction. IRS will not issue private rulings in some
areas. Generally, a PLR is binding on a district office
in its determination of the requesting taxpayer's
liability. Because a PLR represents IRS's conclusions as
to the particular transaction described in the ruling
request, one taxpayer can't rely on a PLR issued to
another taxpayer. A PLR may be modified or revoked
retroactively by IRS, unless it is part of a closing
agreement.Although PLRs can't be relied on as precedent,
they have acquired some status in the courts as guides to
how IRS interprets a particular provision.
A request for a private ruling can be withdrawn before
the ruling is finalized (e.g., if it becomes apparent
that IRS will rule adversely). PLRs are an important
research resource for practitioners,because they often
reveal "cutting edge" planning techniques used by other
practitioners and indicate how IRS views them.
Technical Advice Memorandum ("TAM"). In a TAM, IRS's
National Office responds to a request for advice on a
technical or procedural question. Although the District
Director or Chief, Appeals Office determines whether to
request technical advice, a taxpayer may ask that the
examining or appeals officer get technical advice on an
issue. TAMs are cited the same way as private letter
rulings (i.e., with a PLR number), and are similar to
them in their effect, reliability, and use by
practitioners.
Internal Revenue Manual ("IRM"). The IRM contains the
policies, procedures, instructions, and guidelines
governing IRS's organization and operations and covers in
detailed fashion the daily functions of IRS personnel. It
is updated by Manual Supplements. The IRM isn't legally
binding because its provisions are directory and not
mandatory. It is nonetheless an important research
resource topractitioners, e.g., it shows what IRS may be
looking for during an audit.
Guides for auditors. IRS sometimes issues "Market Segment
Specialization" (MSSP) Guides for its field agents and
auditors. Some of them are audit guides covering a
specific industry (e.g., the MSSP Audit Guide for
Independent Used Car Dealers), and others are Reference
Guides (e.g., the MSSP Reference Guide on Passive
Activity Losses). These Guides can't be cited as
authority and can't be relied on by taxpayers.
Nonetheless, they are valuable to practitioners for
planning purposes because they represent IRS's "playbook"
on a particular industry or topic.
Other IRS internal documents. None of the following
documents may be cited or used as precedent, but all of
them are valuable to practitioners in tax planning and
tax controversies because they provide insight into IRS's
current thinking on a particular topic.
... Field Service Advice ("FSA") memoranda are prepared
by IRS's National Office of the Office of Chief Counsel
in response to requests from IRS field personnel for
legal guidance, usually with respect to issues relating
to a particular taxpayer. FSAs usually contain a
statement of issues, facts, legal analysis and
conclusions. The primary purpose of FSAs is to ensure
that IRS field personnel apply the law correctly and
uniformly.
... Chief Counsel Advice memoranda consist of written
advice issued from any national office component of the
IRS Office of Chief Counsel to IRS field personnel. Chief
Counsel Advice encompasses advice or instructions that
convey legal interpretations or positions of the IRS or
the IRS Office of Chief Counsel concerning revenue
provisions or laws relating to the assessment and
collection of any liability under a revenue provision.
RIA publications have described these memoranda in
various ways, depending on how they are described in the
IRS document, itself. Examples: IRS Legal Memorandum
("ILM"), Service Center Advice ("SCA"), or Chief Counsel
Advice, or IRS Technical Assistance ("ITA").
IRS Publications ("IRS Pubs"). Although IRS Pubs are
issued to help taxpayers comply with the tax laws, they
are not precedent. Courts have held that IRS isn't bound
by the literal language of these publications, that they
neither have the force of law nor create any rights, and
that they aren't an authoritative source of income tax
law. Despite these limitations, IRS Pubs are an important
resource because they often explain provisions in greater
detail than other forms of guidance. Sometimes, they
represent the only IRS guidance on a subject until more
formal guidance (e.g., a reg or ruling) is issued on it.
RIA observation: As a practical matter, even though a
position taken by IRS in a Pub may not be cited as
precedent, it is rare that IRS will contest a position
taken by a taxpayer that is identical to that taken by
IRS in the document, at least where the facts are
substantially identical.
Authority of IRS documents for accuracy-related penalty.
Under Code Sec. 6662 , a 20% accuracy-related penalty
applies to substantial understatements of income tax and
underpayments attributable to negligence or disregard of
rules or regulations. Except in the case of tax shelters,
the penalty tax for substantial understatements is
avoided to the extent the understatement is due to the
treatment of an item that is based on substantial
authority, or that was adequately disclosed on the
return. The regs say the "substantial authority standard
is an objective one involving an analysis of the law and
application of the law to relevant facts." Only the
following IRS documents are authority for purposes of
determining whether there is substantial authority for
the tax treatment of an item (some non-IRS documents also
are substantial authority, but are not listed below):
Final and temporary regs, and proposed regs not yet
superseded; Rev. Ruls. and Rev. Procs.; PLRs, TAMs,
AODs, and GCMS after they are released to the public, if
they are dated after Dec. 31, '84. Notice 90-20, 1990-1
CB 328 ) The regs provide that PLRs and TAMs are
authority if issued after Oct. 31, '76, and AODs and GCMs
are authority if issued after Mar. 12, '81 or (for GCMs)
if published in pre-'55 Cumulative Bulletins; and IRS
information or press releases, Notices, Announcements and
other administrative pronouncements published in the IRB.
(Reg. 1.6662-4(d)(3)(iii))
The 20% penalty for negligence or disregard of rules and
regs doesn't apply for a return position that has a
reasonable basis. If a return position is reasonably
based on one of the IRS authorities listed above, the
return position generally will satisfy the reasonable
basis standard even though it may not satisfy the
substantial authority standard. (Reg. 1.6662-3(b)(3))
Subject: Fw: Response to the 3175 form letter ...
All the letters sent to the IRS, in which the sender asks the questions
that Mr. Stouch asked of the IRS, no one has added the following
sentences. The sentences I refer to are usually the last on a bill sent
by a collection agency and are as such:
This is an attempt to collect an obligation. According to Federal Law,
you have 30 days to dispute the validity of this obligation. If you do
not dispute this attempt, it will be assumed that the obligation is
valid and this obligation is due and payable.
I have turned this legal claim around and used it in the following
manner against the 3rd party agency, when the 3rd party doesn't respond
within the prescribed 30 days.
I answer the first attempt letter, from the agency, with the
following:
This is an attempt to collect information pertaining to any obligation
I might have to you. Please provide me with the contract or any other
document that might prove that you have any claim against me. If you
fail to do so within the 30 days prescribed by Federal law, it will be
assumed that there are no documents that prove any obligation I might
have to you. Therefore you will have no legal claim against me that can
be used in any court against me.
This form letter has resulted in several different responses. The most
common is what the IRS does which is no answer. When I get this response
I send a default letter after 45 days which states that it is legally
assumed by Federal Law that no obligation exists. Therefore no further
action can be taken against me. Some times I give them another chance to
present their case which still never happens. This shows my good faith
in attempting to resolve the question. They then have no grounds for
further action and always go away.
This process would be worth a try and could be very damaging to any
prosecution attempts by the IRS when evidence of their acknowledgement
of no obligation would be presented in court. It very well could be that
the sentences that are used by all third party collection agencies could
put a stop to any further collection attempts by the IRS against those
asking the questions.
[to]
Dennis Parizek
Internal Revenue Service
1973 North Rulon White Blvd.
Ogden, Utah 84404
February 17, 2004
Dear Mr. Parizek:
I received your unsigned non-responsive letter of February 5, 2004. (See
attachment)
First, let me correct your misconception of me, who I am, or am not. My
correct name is at the top of this letter, NOT WARREN W. STOUCH. I am
NOT a corporation engaged in any form of interstate commerce,
whatsoever. Additionally, I am not a "Dear Taxpayer" as you so
erroneously presume.
Second, you claim to be responding to my recent correspondence. Which
correspondence would that be???? Your non-responsive letter, answered
nothing. Mr. Parizek, I am requesting that you identify that
correspondence.
Third, I agree Congress passes tax laws, but which ones apply to me?? No
one at the IRS seems to have an answer. Why?
Fourth, This monologue about collecting the proper amount of tax, is
good information. However, again, you have provided no answer to any
specific question, I have asked.
Fifth, Your letter states, that "There are people who encourage others
to deliberately violate our nation's tax laws". What does that have to
do with me in my attempt to get your answers to my inquiries?
Sixth, "Federal Courts, have consistently ruled against the arguments
you have made." Mr. Parizek, You must have me confused with someone
else, I did not make any arguments, I made only inquiries. However, if
you consider those inquiries as arguments, why don't you send me the
specific cites to those court cases you reference. I am specifically
requesting that you address my inquiry on a question by question basis
and respond to me within 30 days of your receipt of this letter of
inquiry.Subject: W-4's - 1040's _ The IRS & April 15th - You Be The Judge
OK, folks- let us now get a grip on this "tax thing." I will
agree that most folks do not understand how they become "taxpayers."
Moreover, most folks don't care! All they worry about is Monday
night football, or where their next joint is coming from... However,
there are some other folks who truly wonder why they cannot provide
for their families, because they are forced to give away most of
their earnings to the government.
This article is dedicated to those folks.
There are several ways to become a taxpayer, and there are
several separate sections in Title 26 of the U.S. Code that govern
different kinds of tax law.
One way to become a taxpayer (under Subtitle A) is to
knowingly become involved in a "taxable activity" that is taxable by
the Federal Government. The Federal government generally has
authority to tax these activities because of the impact these
activities have on interstate or international commerce.
However, most of the people in this country do not come under
that category. Most folks in this country, instead, fall into
the "wage earner" tax trap. The "wage earner" tax trap is what I
will discuss first.
Most folks who are part of the "tax honesty movement" are
pretty sure that the W-4 document creates some liability when it is
completed and submitted to a person's employer. Well, they are
correct; but most folks are wrong as to the exact reason why they are
correct.
First, everyone must realize that the tax laws are legal, and
that our relief is always in the law. So, with that consent in mind,
we must search for our relief in the statutes and regulations that
exist today.
Now, before I go any further, I need to explain something
about the ways in which the Congress and the Secretary of the
Treasury designate who the laws apply to, when they write a law. The
law has to be written in such a manner that it can be interpreted in
only one way. Otherwise, the law is "void for vagueness," and can be
overturned by a judge.
The Secretary of the Treasury knows this, and is VERY careful
to be very precise and explicit in his language. The Secretary can
best complete this task by providing definitions of the terms he
uses. When you read the laws, you will see statutes and regulations
addressed to resident aliens, nonresident aliens, corporations, DISC
corporations, tax exempt organizations, individuals and citizens of
the United States, among others.
One of the most important definitions in the tax law is the
definition of the term, "individual." The definition of this crucial
word, "individual," is located at 26 CFR 1.1441-1(c)(3). When you
find the definition and read it, you will understand that it refers
only to ALIENS - either nonresident aliens, or resident aliens.
The Secretary cleverly uses a common word, but creates a
narrow and specific meaning, to address both of those types of
uncommon (and taxable) persons. With that understanding in mind, how
do you think the Secretary will write a regulation that applies only
to "citizens of the United States?" He will say this: "in the case
of a citizen of the United States...." Now, when the Secretary uses
that specific phrase, you have no doubt who the law governs.
If and when a person starts studying the law, he or she will
find that when government agents write a law, they specifically write
the law to include every person under every circumstance that could
exist. Then the government agency starts to write exemptions from
the law, in order to make the statute or regulation legal.
Sometimes, exemptions are written to exempt some special interest
group that has made election contributions to the political crooks of
this country. For example, just look at the different definitions
of "wages" at 26 USC § 3121 & § 3401.
As everyone knows, the W-4 Form causes the W-2 Form to be
generated. I am first going to address what happens when the W-2 is
issued, and then explain the W-4 Form.
The standard W-2 Form lists two kinds of wages on it. The
first type is Social Security wages, which are defined at 26 USC §
3121. The second kind of wages listed on the W-2 Form are wages that
are defined at 26 USC §3401. Those "wages" are the type of wages
that carry a Subtitle A tax liability- unless you qualify for one of
the exemptions listed at 26 USC §3401 (a)(1) - (21). That's right!
There are 21 exemptions from
the definition of "wages" you can claim, IF your personal situation
falls within one of the exemptions listed there.
The exemption at 26 USC §3401(a)(8)(A)(i) fits my particular
circumstances. I believe it applies to the situation of most [but
not all] other citizens of the United States. The exemption has
several qualifying conditions.
First, you must be a citizen of the United States. Second,
you must NOT work for the Government or any agency thereof. Third,
it must be reasonable to believe that the payment by your employer to
you will be excluded from "gross income" as listed under section
911.
Section 911 is the statute that governs "foreign earned
income." So the money needs to be earned for work performed in one
of the 50 states, and the money must also be received in one of the
50 states. Knowing this simple fact is a wonderful thing, but
applying it in a manner that is legal and does not get you fired from
your employer can be a problem.
Now that you know that there is a statutory exemption that
brings the law into compliance with the Constitution, you have to
claim it in writing, or the government can make several
presumptions.
As I see it, these are the presumptions that must be
overcome. First, if box 1 of the W-2 contains a "wage" amount, the
IRS can presume that the money you made was indeed "wages," not
allowed to be excluded under section 911. Second, if box 1 contained
a "wage" amount, the IRS can presume that you are a United States
government employee, who does not qualify for the wage exemption.
Third, if box 1 contains a "wage" amount, the IRS can presume that
you are NOT a citizen of the United States. All three of these
foregoing conditions each cause some kind
of tax liability, and also triggers a filing requirement under Title
26.
It is important to note that the Subtitle A ("income") tax
has NOTHING to do with any Subtitle C Social Security tax liability.
The two taxes are separate, and have separate exemptions and
different definitions. These taxes are distinct, and DO NOT affect
each other. If anybody wants to argue this point, do it with someone
else, or show me where in Title 26 the Subtitle C Social Security Tax
creates a Subtitle A Income tax liability.
The next step in this process is to make a living. Every
citizen of the United States has the liberty to enjoy the fruits of
his or her labor. I really hate to see someone lose a job that
allows him to feed his family just because that person refuses to
complete a W-4 Form. Maybe after a few people read this discussion,
they will not mind completing the Form, under the proper
circumstances.
If you do not complete a W-4 Form, your employer will be
governed by some statute that doesn't apply to you, and will most
likely take your property (your pay) and give it to the IRS, without
you having any due process at all. So in light of what will happen
if you do not complete the W-4, I always opt to complete it without
alteration.
Completion of the W-4 Form requires your signature, given
under the penalties of perjury. Always remember that you cannot be
COMPELLED to give your signature in this country, especially under
penalty of perjury. So, when an employer tells you that you MUST
complete a W-4 Form or suffer seizure of your property through wage
withholding or worse, maybe even termination of your job, then do
it.
Always remember the law of necessity. It's a very powerful
defense, and has its roots all the way back to the beginning of law.
The law of necessity requires that you be able to feed and provide
for yourself and your family. However, if you qualify for the
exemption in § 3401(a)(8)(A)(i), your personal earnings are exempt
from being classified as "wages" subject to withholding against a
presumed Subtitle A income tax liability which would be due to the
Federal Government.
Like I said before, you cannot be forced to give your
signature and there is legal relief available if you are coerced or
otherwise forced into signing any document. Your relief is to give
notice that the signature was forced, and to declare that the
document you were forced to sign is void as a matter of law.
So, with this information, you now know that you need to do
two things. First, you need to claim your exemption from withholding
on the W4 Form; second, you need to refute the forced signature on
the W-4. You can accomplish both of these goals by attaching to the
W-4 Form a statement that plainly makes these claims. The statement
can be very short and sweet.
There is no need to try to teach anyone (especially your
employer) about the intricacies of federal tax law just cover your
butt. In the event you feel that your employer will be agitated by
your attaching a statement to the W-4 when it is filed with your
boss, then just send the statement to the IRS under separate cover.
{See the example at the end of this article} ALWAYS SEND THIS
STATEMENT VIA CERTIFIED MAIL WITH A
RETURN REQUEST GREEN CARD ATTACHED. NEVER GO CHEAP BY USING REGULAR
MAIL WHEN COMMUNICATING WITH THE IRS. YOU MUST BE ABLE TO SHOW THAT
THE IRS RECEIVED THIS DOCUMENT, AND A GREEN CARD IS THE BEST WAY TO
PROVE THIS.
A short statement of these facts will accomplish a few
different things. First, when your employer sends the "exempt" W-4
to the IRS, it includes the statement claiming the statutory
exemption to which you are entitled. Second, the W-4 Form also
includes a notice that says the W-4 is void as a matter of law.
Now, this procedure serves four purposes. One, the employer
can now give you all your money, except Social Security and other
Subtitle C taxes. Two, (VERY IMPORTANT) you don't have to educate
your employer about anything. Three, the Form cannot be used against
you in court. Four, you can use it to claim your statutory
exemption. If you were a government lawyer, would you want to use
against someone in court, a government Form that carried a statement
on it that said the form had a forced signature and was therefore
VOID? I think NOT.
Now, let me show you the very simple law that the government
uses to allow the W-4 Form to be used against you. When you
voluntarily sign the W-4, with an unrestricted signature, and without
any disclaimer statement, then all the money you make is deemed to be
wages without exception. See 26 CFR Sec. 31.3401(a)-3, which states:
"(a) In general. Notwithstanding the exceptions to the definition of
wages specified in section 3401(a) and the regulations thereunder,
the term "wages" includes the amounts described in paragraph (b)(1)
of this section with respect to which there is a voluntary
withholding agreement in effect under section 3402(p). References in
this chapter to the definition of wages contained in section 3401(a)
shall be deemed to refer also to this section (Sec. 31.3401(a)-3)."
GOT it??? I know it is necessary to reread that section
several times, to understand its real meaning and intent. It says
that, when there is in place a voluntary withholding agreement, all
pay received and reported on that agreement is DEEMED to be (taxable)
wages.
By the time you put this circle jerk together, you will
realize that: when you complete a W-4 Form with an unrestricted
signature, and with no disclaimer, your pay will deemed to
be "wages," no mater what you might say or do, later. So now you can
see WHY you do not ever want to complete an unrestricted W-4 Form.
Moreover, you can also see HOW to complete one in such a way that it
cannot be used against you. So enough about W-4's.
Let us now move on to this "default" argument that I seem to
be hearing about more often. Seems that some folks are saying that
the IRS defaults them in some manner. I will say this about the
supposed "IRS default." The IRS has particular procedures that they
must follow. Everyone who has a tax problem, or even just a curious
interest in the IRS's procedures, should pay particular attention to
this.
The IRS procedures are like a pipeline with several check
valves in it. Once you go past a particular stage of the process,
you cannot go back. The stages of the tax collection process are, in
this order: examination; collection; enforcement.
After your case goes past the examination level, the IRS is
going to attempt to collect whatever was determined at the
examination level. If they cannot collect by letter or threat, then
they will go into the enforcement stage and try to levy wages and
bank accounts, or seize other property to pay the taxes they say you
owe.
Your highest mission should you decide to jerk the IRS's
chain IS TO KEEP YOUR TAX MATTER IN THE EXAMINATION STAGE. I will
show you how to keep your tax case from leaving the examination
stage. It is crucial to not let your situation go on to the
collections stage.
The examination stage is where you have all your
constitutional rights. Now, you are probably rolling on the floor,
because I made that crack about claiming your constitutional rights
against the IRS, but its true. You can, should, and must claim your
rights at this examination stage of the process, if you want to cause
your tax case to remain at the examination stage and be allowed to
refute the governments presumption that your earnings are taxable.
The IRS is required to give you a 30 days notice that they
intend to send you a Notice of Deficiency [NOD]. This letter will
have a short "trigger phrase" that you should look for. It will say
the "proposed changes to your tax and penalties." The
word "proposed" is the trigger. The letter will notify you that you
have 30 days before the NOD will be issued. TAKE NOTE - YOU ARE NOW
IN THE EXAMINATION PHASE AND YOU HAVE ONLY 30 DAYS TO CLAIM YOUR
CONSTITUTIONAL RIGHTS.
Within 30 days, you must ask for an OFFICE (that is to say,
AN EXAMINATION INTERVIEW. This is NOT an "Appeals Due Process
hearing." This step is the one paramount process that almost all
people miss. The regulations give you the right to this OFFICE
interview at 26 CFR 601.105(b)(2)(i). You have the Constitutional
right to be heard, and to dispute a proposed tax liability. That
happens ONLY at the OFFICE (EXAMINATION) interview.
At the same time, you should also request a determination
from the Secretary of the Treasury, concerning your taxpayer status.
These two procedures are crucial, and MUST occur within this narrow,
30 day window.
If you do not ask for these two things, then the examination
officer will make the determination about your so-called liability
and the amount deemed to be owed and will move the matter on to the
collections phase of the process. Now the "check valve" has closed,
and there is NO returning to this stage of the proceeding against
you! THE DETERMINATION HAS BEEN MADE!!!!
If you have requested the office (examination) interview
timely, and the IRS tries to move past this part of the procedure
anyway, then you should exhaust your administrative remedies by going
to the Taxpayer Advocate. In the event that the Taxpayer Advocate
fails to act satisfactorily on your behalf, now your relief is in
District Court.
The issue is the violation of the Administrative Procedures
Act by the IRS agents. There are specific statutes and regulations
that say the IRS cannot move to collections until the Secretary gives
you a determination. The regulations also state clearly that you are
entitled to an office interview. The courts will simply abate all
collection efforts, and order the matter back to the examination
stage.
The IRS routinely fails to inform you of your rights to this
office interview. If agents or public forms even mention an
examination at all, they will try to solicit a mail examination, or a
phone examination. DO NOT AGREE TO THIS TYPE OF EXAMINATION.
The reason you don't want to submit to any examination except
an office examination is found at 26 CFR 601.105(b)(2)(ii).
According to 26 CFR 601.105(b)(2)(ii), you can indicate sums that are
exempt from taxation that are on the return. You can also bring in
witnesses, and cross-examine any IRS witnesses. With 10 days'
advance notice to the IRS, you can make a record of the proceedings,
by audio tape or with a
stenographer.
Those rights are pretty important reasons to demand the
office examination. Until you have the office examination (that you
have requested in a timely manner, of course), you have not had your
administrative due process. The IRS made the rules in order to
comply with the requirements of the constitution and they are bound
by them.
I have never known the IRS to grant this office examination
at the examination level. However, they always want to force you
right into some kind of appeals hearing or "due process hearing."
Just think about this for a moment- the "Appeals" hearing is supposed
to do just that - hear an Appeal- from an Examination hearing. If
there was no Examination hearing, with a decision from an Examination
agent, and a
record to review, it is not procedurally proper for the IRS to jump
right into any Appeals hearing.
Here is what the regulations say about when the appeals
process starts. See 26 CFR 601.105(b)(4);
"At the conclusion of an office or field examination, the
taxpayer is given an opportunity to agree with the findings of the
examiner. If the taxpayer does not agree, the examiner will inform
the taxpayer of the appeal rights."
In the event you do ask for the office examination here is
what the regulations state about that process. See 26 CFR 601.105(b)
(2);
"If the taxpayer requests an interview to discuss the
proposed adjustments, the case is transferred to the taxpayer's
district office. If the taxpayer does not agree to the proposed
adjustments, regular appeals procedures apply."
So, now you can see, from their own rules, that the appeals
process starts AFTER the office examination- IF AND ONLY IF you have
already requested an Examination interview. These are the
regulations published by the Secretary of the Treasury, so the IRS is
absolutely bound by them.
Everyone should see how fundamentally important it is to
claim these office examination interviews. The burden of proof is on
the government at these office examinations, to enter evidence that
what you are doing is taxable- and you can show amounts that are not
taxable. [I will show how to accomplish this step, below.]
Everyone who is being audited by the IRS should jump for
joy. An audit is an office examination! The audit is one of the
only places where the IRS HAS to take testimony. So, if you are
involved in an audit, just give them some testimony. An affidavit is
testimony. If there is no other testimony offered in the matter,
then whatever you truthfully testify in your affidavit must stand as
the record. If you do not agree with the examination officer at the
examination hearing, THEN the appeals process will start. Think
about it....
Now you ask - how does all this information help me?? Well,
the answer is this If you ask for the examination and the status
determination- and do not get either of them, or even one of them-
the IRS CANNOT move you into the collections stage of the process.
You will be in a stand off till they give you your proper and
complete administrative due process. If they do try to move you into
collections, then you will have to inform some IRS agent [the
taxpayer advocate] of the mistake, and identify the errors that the
IRS agents are making. They know the consequences of their actions.
So the upshot is that your tax matter will stay in the examination
stage forever!!!!
The request for an office examination can be used for ANY
situation in which the IRS is attempting to penalize you in any
manner, including declaring your W-4 is invalid under the
Questionable W-4 program.
Always demand the office examination immediately. If the
Appeals process is offered at the same time, then make a protest, and
ask for the Appeals also, in order to preserve your appeals rights.
If the appeals officer gets hold of you before you have had your
office examination, just inform him or her that you have requested
the office examination and have not had it yet. Remind the Appeals
officer that there is no record to appeal, until you do have the
office examination.
If they tell you that you will have to take the appeals
hearing without any Examination hearing, go immediately to the
taxpayer advocate. If the advocate does nothing for you, take the
matter to the District Court under the protection and relief of the
Administrative Procedures Act.See 5 USC §706 for the meat of your
relief.
Everyone has always heard that the W-4 Form is a voluntary
form. Well it certainly is voluntary, and it always will be. Here is
a big hint that will clue you in to the voluntary nature of any
governmental form. If you are "required" to sign it - then it HAS to
be voluntary.
Simple isn't it? But, if you think about it, this makes
perfect sense. 26 USC §3402(p) is the statute that, in its convoluted
way, makes the W-4 a voluntary form.
Now, here is the reason that no government form will ever be
able to interfere with your employment rights. Employment in this
country, under the Constitution, is both a property right and a
liberty. Employment in its purest form is also a contract. Our
highest right under the constitution is the right to contract.
Therefore, the money we make from our employment contract is
also property. As soon as we work, we have a property interest in
the money that we generated from our labor. You will see from
several cases, that I will include at the end of this article, that
the Supreme Court has protected our property rights very well.
However, I cannot resist including this quote from Coppage v. State
Of Kansas, 236 U.S. 1 (1915):
"In all such particulars the employer and the employee have equality
of right, and any legislation that disturbs that equality is an
arbitrary interference with the liberty of contract, which no
government can legally justify in a free land."
So, you can clearly see that the Supreme Court has ruled many
years ago, that neither the United States government (nor any State
government) can, through legislation, interfere with employment
contracts. If some bonehead judge does shove the W-4 down somebody's
throat, then the next question for the Judge is, "Is this a free
land, under the Constitution?"
Now, let us talk about the IRS balancing its books. The IRS
determines your tax responsibilities according to a series of account
balancing procedures. When a particular company with a EIN number
reports that it paid wages on its 941 then an amount is assigned to
that EIN number.
The IRS also gets a copy of the W-2 that the company sends to
you. At the end of the day, all of the wages reported by any
particular EIN holder must be accounted for in one of three ways -
the wages must be reconciled on a 1040 Form, in the examination
phase, or in the collections phase of the tax collection process.
If you become deeply involved into an investigation of the
941 Form, you will find that one of the things that the form is used
for is reporting wage withholding in possessions and foreign
countries by U.S. companies. After all the information is received
from the different government departments that have inputs to the
IRS, the balancing act will start.
When the IRS receives your 1040 with its attached W-2 Forms,
the information is scanned by computers. Then the total reported
wages are tallied up and reconciled against the different EIN numbers
and W-2 copies.
If the IRS receives the W-2 report stating that "wages" were
paid to you, but you have not rebutted that presumption, and/or you
have not reported those numbers on any 1040 Form, then the IRS moves
on the presumption that you did, indeed, receive taxable wages. The
IRS makes one of the three presumptions, mentioned earlier in this
paper, with reference to the "wages" shown in Box 1 on the W-2 Form.
The IRS also has the primary responsibility to collect and
reconcile the Social Security taxes. If the books don't balance, and
you haven't reported the amount of SS taxes withheld from you, the
IRS just simply moves on the information that they do have.
With this information in mind, you can see how important it
is to prevent the IRS from making some presumption that you have
received wages and/or not reported SS withholdings. In order to stop
the IRS from making presumptions that are not correct, you must make
an annual report. The procedure you need use in making this report
will be discussed next.
The subject of reporting to the IRS brings up all kinds of
arguments from all perspectives. I am just going to tell you how I
see the law, and other folks can decide for themselves how they see
it. After all, each person is ultimately responsible for their own
actions.
The subject of reporting ultimately relates back to an
analysis of just who is liable for the tax (income tax, or any other
taxes). I am of the belief that the people or entities that are
liable for the different types of taxes was explained very well
between 1939 and 1953, at 26 USC Chapter 1, Subchapter A, Section 1
through Section 4.
These 4 sections completely explained which "special class"
of taxpayer was subject to different provisions of separate
Supplements. Section 4 spelled it out in a neat nutshell. Each
special class of taxpayers was listed - here is the list.
(a) Estates and Trusts and the Beneficiaries thereof,
(b) Members of partnerships,
(c) Insurance companies,
(d) Nonresident alien individuals,
(e) Foreign corporations,
(f) Individual citizens of any possession of the United States who
are not otherwise citizens of the United States and who are not
residents of the United States,
(g) Individual citizens of the United States or domestic
corporations, satisfying the conditions of section 251 by reason of
deriving a large portion of their gross income from sources within a
possession of the United States,
(h) China Trade Act corporations,
(i) Foreign personal holding companies and their shareholders,
(j) Mutual investment companies.
Incidentally, if you're wondering what happened to these
sections in the present law, you will find that sections 1, 3, & 4
were simply "omitted" and section 2 was moved to 26 USC §7806(a),
when the Tax Code was renumbered in 1954. Now "omitted" is
not "repealed," so I am of the opinion that the statute as it read in
1939 is still in effect, and enforceable. Perhaps the IRS figured
that leaving these sections out would decrease the confusion about
who the tax applied to
[In a pig's eye].
In this list, I do not see any tax liability for a citizen of
the United States who is NOT involved with revenue in some possession
of the United States. I decided to investigate this section 251, to
see where it led. This is a very interesting situation, with
particular reference to a citizen of the United States. Section 251
of the 1939 Code comes forward to Section 931 of the present day
Internal Revenue Code. The regulations at Section 931 are most
revealing.
Now, §4 of the 1939 Code identifies and specifies only
individual citizens of the United States, who have large portions of
their gross income from sources within a possession of the United
States, as being governed by a particular supplement of the 1939
regulations. Therefore, I see no reason, nor can find any law, to
believe that the law has been expanded to include other citizens of
the United States.
I can find no law, anywhere, that has expanded this category,
and the IRS has not come forth with any evidence, either. I am of
the opinion that the current regulations at 26 CFR 1.931-1 constitute
the current filing requirements in the case of a citizen of the
United States.
When you read 26 CFR 1.931-1, you will see very clearly that,
in the case of citizens of the United States, "gross income" means
income from "sources within the United States" and the "sources
within the United States" are clearly defined as sources within the
POSSESSIONS of the United States. The requirements for a tax return
are set out very clearly in this regulation at (4). You can also
see, from the wording
in this regulation, when a citizen is NOT required to file a return:
"(4) Returns. A citizen entitled to the benefits of section 931 is
required to file with his individual return Form 1040 and the
schedule on Form 1040E. If a citizen entitled to the benefits of
section 931 has no income from sources within the United States and
does not receive within the United States any income derived from
sources without the United States, he is not required to file a
return or the schedule on Form 1040E."
After reading this regulation, you can understand how the IRS
makes the presumption that you are earning money in possessions of
the United States when you file a 1040, even though you say you are a
citizen of the United States. If you never read the regulation, you
would not be aware of the definition of "sources within the United
States." 26 CFR 1.931-1 also refers us to Section 861.
The previous paragraphs should give you a hint why federal
judges have consistently ruled against citizens of the United States
who tried to use 26 USC § 861 and its regulations, as some silver
bullet against the IRS.
There is another interesting fact that comes to mind when you
read 26 CFR 1.931-1. The specific definition of Gross Income is
given "in the case of a citizen of the United States" at 26 CFR 1.931-
1.
I believe that the definition of Gross Income at 26 CFR 1.931-
1 would be the superior definition in Title 26, even though a general
definition of Gross Income is given at § 61 of the Internal Revenue
Code (IRC). It seems that citizens of the United States fall under
this specific definition of Gross Income, which also brings the IRC
within its constitutional limits with reference to citizens of the
United States.
The regulations at 26 CFR 1.931-1 refers the reader to IRC §
861 and its regulations. 26 CFR 1.861-4 talks about compensation for
labor. This regulation is so complex that no one human could ever
understand it. However, the Secretary did provide some examples that
are prefaced by this wonderful phrase "(ii) The application of this
subparagraph may be illustrated by the following examples:"
Then the Secretary gives a couple of examples. The only
example that included a citizen of the United States has him living
in a foreign country for the entire taxable year before he came back
to the United States and worked for about 30 days. This is hardly an
example that brings many of us under its guidance.
Next, I am going to discuss the regulation that the IRS is
using to require returns on a 1040 Form, and to collect a tax based
on some gross amount. At the end of 26 CFR 1.931-1, you will find
this little jewel of a statement:
"(f) Allowance of deductions and credits.
Unless a citizen of the United States or a domestic corporation
entitled to the benefits of section 931 shall file or cause to be
filed with the district director a true and accurate return of total
income from all sources within the United States, in the manner
prescribed in subtitle F of the Code, the tax shall be collected on
the basis of the gross income (not the taxable income) from sources
within the United States. If such citizen or corporation fails to
file a necessary income tax return, the Commissioner will cause a
return to be made, including therein all income from sources within
the United States and allowing no deductions or credits (except
credit for tax withheld at source)."
This regulation is a masterful statement. Pay particular
attention to the use of the term "total income," instead of "gross
income." Then, in the very next sentence, the Secretary says he will
collect the tax on the basis of Gross Income from "sources within the
United States" [which was defined in this very regulation as sources
within possessions]. It seems to me that this regulation says that
if you don't report "total income" the Secretary will make the
presumption you have gross income and cause a return to be made. The
return required in this regulation is the 1040. Does the Substitute
For Return program ring any bells??? Does this sound familiar??
This bit of information just gives more support for making a
yearly report to the IRS, that gives the circumstances of all money
received by a citizen of the United States with supporting
information as to where the money came from, where it was received,
and why it is not taxable.
A report of this nature accomplishes several things when it
is written correctly. First, the IRS can balance its books on the
Social Security tax side of the ledger. Second, reporting all the
money you received takes away some of the elements of "tax evasion"
and "willful failure to file."
Next, the report of "total income," as described above,
totally stops the IRS from moving outside the administrative steps of
the examination procedure. Fourth, a properly crafted report will
put much evidence into a case, in the event that the IRS wants to
come after you in court. Fifth, you can establish a "good faith
defense" by asking the IRS to confirm the statute and regulation that
brings your specific situation into a taxable activity.
Now I am going to tell you the proper way in which to claim
your constitutional rights by way of the Internal Revenue Code. OK,
OK, you can stop laughing now. There really is a lawful way to claim
those rights. We can start by looking at 26 USC §7851(b)(1). You
will see that all rights of any provision of the 1939 Internal
Revenue Code have been preserved.
(b) Effect of repeal of Internal Revenue Code of 1939
(1) Existing rights and liabilities
The repeal of any provision of the Internal Revenue Code of
1939 shall not affect any act done or any right accruing or accrued,
or any suit or proceeding had or commenced in any civil cause, before
such repeal; but all rights and liabilities under such code shall
continue, and may be enforced in the same manner, as if such repeal
had not been made.
You can clearly see from this present day statute, that
everyone, still today, has the ability to claim any right that was
accrued due to any provision of the 1939 Code. Well guess what -
Section 19.22(b)-1 is a regulation published by the Secretary of the
Treasury, pursuant to the requirements of the 1939 Code.
You will notice in the older regulations that the Secretary
always printed, just before the regulation, the statutory Code
section or provision that a particular regulation explained or
implemented. Here is the IRC section and it's explanatory
regulation, from the 1939 taxing regulations published by the
Secretary of the Treasury.
[SEC 22. GROSS INCOME]
(b) Exclusion from gross income. - The following items shall not be
included in gross income and shall be exempt from taxation under this
chapter:
[end of statute being explained by the following regulation]
Sec. 19.22(b)-1. Exemptions-Exclusions from gross income.-
Certain items of income specified in section 22 are exempt from tax
and may be excluded from gross income. These items, however, are
exempt only to the extent and in the amount specified. No other
items are exempt from gross income except (1) those items of income
which are exempt from gross income which are, under the Constitution,
not taxable by the Federal Government;...
You can see, from the wording of this regulation, that there
are obviously certain "items of income" that are not taxable by the
Federal Government, under the Constitution. I have personally
checked the existence of this regulation, and have found that it was
included in the regulations published by the Secretary of Treasury
from the early 1920's up until 1949.
In 1949, its existence took a strange turn, and for some
reason it was just dropped from the regulations. Why?? Well, we
just haven't found out yet- but we will. In any event, the right
existed to "exclude from gross income" certain "items of gross
income" which are deductible under the Constitution in 1939. That
right is preserved to this day, and everyone should claim their
constitutional rights to their property [labor].
By now, this research should be making some sense to folks.
I know these are complicated and somewhat arcane concepts. But, as I
said at the beginning of this paper, our relief is in the law. You
should now be able to see why a citizen of the United States should,
indeed, make a yearly report of his/her "total income."
Earlier in this article, I mentioned the need to timely
demand an office interview, at the examination level of the tax
review procedure. Now, I will reveal how you can claim your non-
taxable income through the constitution.
There are two ways to make your claim. First, you make and
file with the IRS a yearly statement that gives a full accounting of
all the money that was received by you, including any taxes that
might have been withheld that year. In that statement, you make your
claim under the constitutional rights of a citizen of the United
States.
The second way to claim the right is at the office interview,
to the examination officer. The examination officer is a really
powerful person in the IRS. They can do most anything, particularly
summoning people, taking testimony, examining evidence and giving
oaths. You can find all IRS employees' authority at Treasury
Decision # 4.
One thing you will notice is that an Appeals Officer cannot
summons anybody to do anything. You have to ask yourself this
question - if the Appeals Officer cannot issue any summons, how can
they obtain testimony? Well, the answer is - they cannot.
They can only review the record. What record?? You will not
make a record if you are not allowed to have the office interview at
the examination level. The office interview (discussed above) is
another procedural step required by the constitution, in order for
you to have your due process of law.
The next thing to know about an examination officer is that
they must take Supreme Court cases and give them the same weight as
they accord to the tax Code in their decisions. You will find that
little tidbit of information in the Internal Revenue Manuel (IRM) at
4.10.7.2.9.8. It says;
"(2) ... The IRS must follow Supreme Court decisions. For examiners,
Supreme Court decisions have the same weight as the Code."
Now you can see how important it is to have the office
interview with the examination officer. The examination officers are
bound by their own IRM instructions to accept the ruling of a Supreme
Court decision that is in your favor. The examination officer is
also bound by the Secretary of Treasury, by way of regulations, to
allow you to have the office interview, and to point out amounts and
items of income that are not taxable.
In the office interview, you also have the ability to claim
all amounts not taxable under the fundamental rights of Liberty and
Property given all citizens of the United States. You have the
ability to use the provisions of the 1939 IRC to make that
Constitutional claim of fundamental rights.
In the event that the IRS steps out of line, or acts out of
sequence in any of these procedures, you have the ability to use the
Administrative Procedures Act, to have the Federal District Court put
the IRS back on track, should the need arise.
My guess is that most working citizens of the United States
will not have any Subtitle A income tax liability, if they understand
that they have been watching too much government sponsored television
for the last 50 years. People need to stop accepting what some brain
dead moronic government employee tells them, and just politely ask
for the law that gives these agents the authority to cause your
property to be taken from you without your due process rights. Guess
what?? There isn't any such law!!!!
The proper way to implement this procedure, in a manner that
does not create presumptions contrary to your particular
circumstances, statutes, or regulations is to file your exempt W-4
[if required] and follow it, before April 15th of the next year, with
the yearly income statement.
Here are some actions I have learned are counterproductive:
· DO NOT try to get a refund based on amounts withheld, while a
W-4 with an unrestricted signature is in effect on you.
· DO NOT try to file a yearly income statement (instead of a
regular 1040 Form) for any year in which a W-4 with an unrestricted
signature is in effect.
Your pay will just be DEEMED to be "wages," [as mentioned above]
which are taxable income.
The IRS will then just make all the legally allowable
presumptions, and sooner or later, they will attempt to come for the
money. Their advances are easy to avoid by using the exact
procedures I have explained, above. However, we all know that the
IRS is not known for living up to the law in all cases. You might
have to take this agency to District Court, in order to have matters
remanded back to the examination stage.
Here, on the pages below, are examples of W-4 attachments
that will disarm the jurat statement of the W-4, and other documents.
To: District Director
IRS
Re:
Forced Filing of W4
This statement is an integral part of this form W4 filed on [DATE
HERE],and must be attached or included with it.
If I refuse to file this W-4 Form, {EMPLOYER} will seize my
property and turn it over to the Internal Revenue Service, without
any due process of law. For this reason, this W4 form is being filed
under threat, duress, and coercion. My signature is NOT freely
given. The jurat statement is null and void due to the forced
signature, and the form is null and void as a matter of law.
Therefore, I do not swear, affirm or acknowledge any statement made
on the attached W4.
The payments paid to me by {EMPLOYER} are not wages, as
defined, subject to Subtitle A income tax. The payments made to me
are statutorily excluded from the definition of wages under 26 USC
3401(a)(8)(A)(i) and 26 USC 911 and their regulations. Because of
this fact, payments made to me are not subject to withholding of any
taxes whatsoever under 26 USC 3402 and 3401.
All forms filed by {EMPLOYER}, that indicate that I have
earned "wages" that are reportable as gross income or that are
subject to Subtitle A withholding or taxation, are incorrect. I will
file corrections to any and all forms that are incorrectly filed if I
am notified of their existence.
The W4 that {EMPLOYER} demanded is a voluntary agreement
under 26 CFR 31.3402(p)(1)(d)(2). I do not wish to volunteer.
{EMPLOYER} refuses to employ any person who does not file a W4 Form.
Therefore, under the law of necessity I was forced to file the W4.
{EMPLOYER} has not provided me any evidence of NOTICE served on him,
in accordance with 26 CFR 31.6001-6, that would require reporting,
statements, or keeping records.
The money paid by {EMPLOYER} is not from a foreign source. I
receive no foreign income or foreign payments from {EMPLOYER}. I
have not claimed a foreign tax home. I am not an alien of any kind.
I am not a British subject. I was born within the geographical
bounds of {BIRTH STATE}. I live within the geographical bounds of
{HOME STATE}. I work and receive my pay in the geographical bounds of
{Your State}. {EMPLOYER} is not a United States government employer.
Because of the foregoing facts and circumstances, any
payments made to me by {EMPLOYER} are excluded from and outside the
Title 26 reporting and withholding regulations.
These statements are made under the penalty of perjury and
are true, correct, and complete to the best of my knowledge.
_______________________
Name Here
Address Here
Notarization jurat from a Notary Public goes here. [This step is
MANDATORY].
HERE IS AN EXAMPLE OF A YEARLY STATEMENT, THIS CAN BE SENT INSTEAD OF
A 1040 FORM...USE WITH CERTIFIED MAIL, RETURN RECEIPT GREEN CARD, OF
COURSE.
To:
United States Department Of The Treasury
Internal Revenue Service
name of the office which would normally accept your 1040 form
address of that office
From:
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
Today's Date
RE: Report and Return verifying non-liability for revenue taxes and
my status for the year [tax year].
This report/return is a declaration, report and return that
gives the Government all information concerning the source and status
of the payments received by me in the year [xxxx]. To the best of my
knowledge, the payments received by me for labor preformed by me in
my private capacity is neither the subject nor object of any tax, and
is exempt from being included in gross income; therefore, the money
is not taxable. I arrived at these conclusions by consulting the
revenue laws and regulations of the United States, and decisions of
the Supreme
Court of the United States. If my understanding of the law is not
correct, please send me immediately the statutes and regulations that
require me to give my personal property to the federal government.
I support the revenue and tax laws of the United States, and
do not dispute their lawfulness, when properly applied.
I realize that members of the general population think they
must file an IRS 1040 Form every year. However, the general
population has not consulted the law published by the Secretary of
the Treasury that defines the term "individual" as used in Title 26.
The definition of "individual" is located at 26 CFR 1.1441-1(c)(3),
and does not include a citizen of the United States who was born
within the geographical boundaries of [your state of birth], or any
other state of the union
for that matter.
The definition of "individual" covers and includes only
either nonresident aliens or resident aliens, and does not include
citizens of the United States born in any of the 50 states of
America. Because of my birthrights, and the facts surrounding the
money I receive from working for a living, I do not find any legal
obligation on my part to file an IRS 1040 form.
Specifically, I have had no foreign-earned income. I am not
an alien of any kind. I was born in [your state of birth] and live
and work within the geographical bounds of [your state]. I have not
been involved in, or had any income from the different taxable
activities listed in Title 26 Subtitle A, nor have I had any income
from the different sources listed in 26 USC 861 and its regulations.
Furthermore, I have not received any income pursuant to any
other Subtitle of Title 2,6 that would require computation of taxable
income, nor do I know of any other laws that would require me to pay
a tax to the United States Federal government, the United States
National government or any other government. I have not received any
Notice from the Secretary of the Treasury notifying me of any
liability or duty, either to file forms or pay money, to any agency
of the United States
Government.
Only gain from excise taxable activities and sources can
create a "taxpayer." or impose the obligation to be legally bound by
Title 26 and its regulations. I have not been involved in any
activities other than common laboring for a living, in my personal,
private capacity, in the pursuit of my constitutionally guaranteed
rights. Moreover, I have not
been served notice by the Secretary of the Treasury to make any
reports, returns or to provide any information, whatsoever, to the
government. I have no relevant information that would be required on
any return designed to generate a revenue tax from a taxable
activity.
My employment, in my private capacity, as a natural man, as
a/an [your craft or trade], in one of the states of the union is a
lawful, innocent and harmless activity. My employment is not subject
to, nor the object of, ANY revenue laws or taxes in the United
States, that I am aware of. In fact, it appears that Congress has
provided a statutory
exemption for the money that I earn in my lawful, innocent and
harmless activity.
Claim of Right
Congress has secured all my rights set forth in the 1939
Internal Revenue Code, and other previous revenue laws, by preserving
those rights in several Statutes in the current Internal Revenue
Code. I claim all rights provided by the 1939 Code, Section 22 and
its supporting regulation at Sec. 19.22(b)-1, which plainly states;
"[C]ertain items of income specified in section 22 are exempt from
tax and may be excluded from gross income. These items, however, are
exempt only to the extent and in the amount specified. No other
items are exempt from gross income except (1) those items of income
which are exempt from gross income which are, under the Constitution,
not taxable by the Federal Government;..."
Every citizen of the United States has the right and liberty
to enjoy the fruits of his common domestic labor. Every citizen's
liberty is protected by the Constitution.
As a native and citizen of [your home state], domiciled in
[your state], I am also a citizen of the United States. Therefore,
the money I earn working for a living in [your state], as a common
laborer, is exempt from being included as gross income, and does not
qualify as gross income.
The 1939 Internal Revenue Code clearly indicates which
citizens of the United States are to be taxed by the Federal
government. At Chapter 1, Subchapter A, Section 4, all the different
entities and individuals subject to the different tax laws of this
country were spelled out very clearly. Individual citizens of the
United States were only mentioned at Section 4(g). In order to be a
citizen who was taxed under the
internal revenue laws, a citizen specifically must receive a large
portion [in excess of 50%] of his gross income from the active
conduct of a trade or business within a possession of the United
States.
Under the current laws of the United States, the rights set
forth for citizens of the United States working in one of the 50
states are very clear. No tax is due on money earned from the active
conduct of a trade or business, unless the citizen earns the money by
working within a possession of the United States.
This claim is further clarified at 26 USC 3401 (a)(8)(A)(i).
This statutory exemption specifically exempts earnings of a citizen
of the United States (other than government employees) from being
classified as "wages" and being included in the computation of gross
income, if the earnings are not governed under IRC Section 911. None
of my pay from common labor was earned under any circumstances that
would invoke IRC
Section 911.
The United States Supreme Court, in several cases, supports
the fact that if and when someone's activities are not taxable under
the law, their status is that of a non-taxpayer. My lawful,
innocent, and harmless common labor in my private capacity is not a
taxable activity under the law of this country.
The courts have ruled that,
"The revenue laws are a code or system in regulation of tax
assessment and collection. They relate to taxpayers and not to non-
taxpayers. The latter are without their scope. No procedure is
prescribed for non-taxpayers, and no attempt is made to annul any of
their rights and remedies in due course of law. With them congress
does not assume to deal, and they are neither of the subject nor of
the object of the revenue laws." Long v. Rasmussen 281 F. 236 at 238
(1922); Economy Plumbing and Heating v. U.S., 470 F.2d 585 at 589
(1972).
The rights referred to in the above paragraph are the
fundamental and unalienable rights bestowed to me at my birth. My
personal liberty is directly impeded and restricted by any attempt of
the IRS, and/or my employer, to convert my lawful, innocent, and
harmless private labor into a taxable activity. The Constitution of
the United States and the United States Supreme Court have protected
my right to work in a lawful,
innocent, and harmless activity without being directly taxed, and
this right is reflected in the basic fundamental law of this
country.
The United States Supreme Court has ruled that:
"included in the right of personal liberty and the right of private
property...partaking of the nature of each...is the right to make
contracts for the acquisition of property. Chief among such
contracts is that of personal employment, by which labor and other
services are exchanged for money or other form of property." Coppage
