Do you understand trust law and the trust created by 7501?

Do you understand trust law and the trust created by 7501?


I'll bet there are several people out there that think they understand trust law and even worse yet they think they understand the law itself but have absolutely no understanding of the roll of equity when dealing with trusts and to add insult to injury think they can beat this trust in a court of blended law and equity without bringing up the 7501 trust in the first place.

First lets ask some who, what, when, where, how, and why questions because if you don't know the questions to ask then how on earth could you answer to it; you are as lost as Alice was in Wonderland.

Who is the grantor?
Who is the trustee?
Who is the beneficiary?
Who is a stranger?
Who is a visitor?
Who is the settler?
What kind of trust is created?
What are the limits of the charters?
What courts have jurisdiction to enforce the trust?
What courts have the power to challenge the trust?
What is the trustee process?
What is the locus?
What is the res?
What are the powers of the grantor?
What are the powers of the visitor?
What are the powers of the beneficiary?
What are the powers of the settler?
What are the powers of the trustee?
What are the powers of a stranger?
When is the trust created?
Where is the trust created?
Where is the locus?
Where is the res?
How is the trust created?
How is the trust changed?
How is the trust enforced?
Why was the trust created?
Why do you want the law?
Why do you want equity?
So now you know some of what to ask before you go to court.

It seems that Dan Meader, Larry Becraft and Ed Revera and other gurus just refuse to discuss "TRUST FUND TAXES" I am now really beginning to wonder just why that is, and you should also; as the subject is well covered on the INTERNAL SERVICE THE DIGITAL DAILY WEB SITE, with the forms and everything else.

I JUST LOVE TO BUST THEIR #%&&S


http://www.irs.gov/businesses/small/...=98830,00.html

Just go to it and type in
"TRUST FUND TAXES"
Now that isn't hard to do is it? I know the gurus out there spend a great deal of time floundering about the governments web sites and related subjects, just how is it that they missed this?

http://www.irs.gov/businesses/small/...=98830,00.html

So lets see just what the IRS has to say about "TRUST FUND TAXES"!



http://www.irs.gov/businesses/small/...=98830,00.html
Business with Employees - Trust Fund Taxes

A trust fund tax is money withheld from an employee's wages (income tax, social security, and Medicare taxes) ( How about that, all three of them are included!) by an employer and held in trust ( I love it, now you are in the world of trust law, which is for a court in equity, as you will see later in this post! ) until paid to the Treasury. ( and even after paid to the treasury, as you will see later in this post. No wonder they don't want to teach equity or create courts of equity.)

When you pay your employees, you do not pay them all the money they earned. ( could they have used a better word than earned? Remember my post on "earnings?

Ballentine"s Law Dictionary
EARNINGS. In a pristine sense, the gains of a person from his services or labor, without the aid of capital. 22 Am J2d Damg sec. 89, 31 Am J2d Exemp sec. 39. In the modern sense and development of the term, it includes profits from the employment of capital, Am J2d Corp sec. 823. The term is equivalent to "income" where used in the limitation of a life estate and a remainder in connection with a provision for the disposition of extraordinary dividends and distribution as between life tenant and remainderman 33 Am J 1st Life Est. sec 378.

THE REST OF THIS POST IS AT THE BOTTOM OF THIS POST:

)As their employer, you have the added responsibility of withholding taxes from their paychecks. The income tax and employees' share of FICA (social security and Medicare) that you withhold from your employees' paychecks are part of their wages ( Gosh I love this, they don't pay you all of your earnings, bet you have the right to recover it. ) you pay to the Treasury instead of to your employees. Your employees trust ( In there own wordt they create a trust relationship between you the employee and your employer, just love it! ) that you pay the withholding to the Treasury by making Federal Tax Deposits . That is why they are called trust fund taxes. ( So now you know, I know, the IRS knows, the congress knows, the federal and state prosicuters know, and the federal and state judges know,!

HOW COME THE GURUS DON'T KNOW?

Through this withholding, your employees pay their contributions toward retirement benefits (social security and Medicare) and the income taxes reported on their tax returns. Your employees' trust fund taxes, along with your matching share of FICA, are paid to the Treasury through the Federal Tax Deposit System. The withheld part of these taxes is your employees' money, ( See they know it is your money! ) and the matching portion is their retirement benefit. ( WHAT? SAY THAT AGAIN; "and the matching portion is their retirement benefit. " I thought that is what they said. The only money that goes to benefits is the EMPLOYERS SHARE.So where does the rest of "YOUR MONEY" go? Ahhhhhhhhh, they don't tell us do they. Well we all know the answer to that!

Ever wonder where congress gets its authority to spend money on things you know it has absolutely no constitutional authority to do so?
Rice v. U S
122 U.S. 611 (1887)

"While Mr. Chase was secretary of the treasury, and for some time afterwards, the money received from captured and abandoned property was merely deposited with the treasurer, and was not technically, in departmental language, 'covered into the treasury,' and so, according to the construction then given by the department, was not subject to the constitutional provision that 'no money shall be drawn from the treasury but in consequence of appropriations made by law.' Const. art. 1, § 9, par. 6. More than two and a half million dollars of it was paid out by Secretaries Chase, Fessenden, and McCulloch, ( Hodges' Case, 18 Ct. Cl. 704,) without any appropriation therefor, when congress interposed and passed the joint resolution of March 30, 1868, No. 25, (15 St. at Large, 251.) That resolution required all moneys received from sales of captured and abandoned property to be paid into the treasury of the United States, and they were thereupon 'covered into the treasury,' and mingled with other public money. No account has since been kept of the same as a separate fund, and as such they are not known except outside of the treasury department. Receipts and expenditures are entered as in other cases, and the statements which, from time to time, have been made, by request, relating thereto, have been taken from the scattered items of receipts and expenditures. Hodges' Case, 18 Ct. Cl. 700. The permanent appropriation for the payment of judgments of this court in captured and abandoned property cases is not chargeable to any fund, but is payable 'out of moneys in the treasury not otherwise appropriated.' Rev. St. § 3689. It is not at all improbable that this legislation, enacted after Secretary Chase had left the department, escaped the observation of the chief justice when he wrote the dicta quoted from his opinion in Klein's Case
AND:
'But the claimant argues that the property received and sold, and the proceeds thereof in the treasury, under the peculiar legislation of the captured or abandoned act of March 12, 1863, (12 St. at Large, 820,) are trust funds, of which the defendants are merely trustees, and are subject to the rules and practice of courts of equity in relation to equitable trusts, one of which is that statutes of limitation do not run as between trustee and cestui que trust.

AND:

While Mr. Chase was secretary of the treasury, and for some time afterwards, the money received from captured and abandoned property was merely deposited with the treasurer, and was not technically, in departmental language, 'covered into the treasury,' and so, according to the construction then given by the department, was not subject to the constitutional provision that 'no money shall be drawn from the treasury but in consequence of appropriations made by law.' Const. art. 1, § 9, par. 6. More than two and a half million dollars of it was paid out by Secretaries Chase, Fessenden, and McCulloch, ( Hodges' Case, 18 Ct. Cl. 704,) without any appropriation therefor, when congress interposed and passed the joint resolution of March 30, 1868, No. 25, (15 St. at Large, 251.) That resolution required all moneys received from sales of captured and abandoned property to be paid into the treasury of the United States, and they were thereupon 'covered into the treasury,' and mingled with other public money. No account has since been kept of the same as a separate fund, and as such they are not known except outside of the treasury department. Receipts and expenditures are entered as in other cases, and the statements which, from time to time, have been made, by request, relating thereto, have been taken from the scattered items of receipts and expenditures. Hodges' Case, 18 Ct. Cl. 700. The permanent appropriation for the payment of judgments of this court in captured and abandoned property cases is not chargeable to any fund, but is payable 'out of moneys in the treasury not otherwise appropriated.' Rev. St. § 3689. It is not at all improbable tha this legislation, enacted after Secretary Chase had left the department, escaped the observation of the chief justice when he wrote the dicta quoted from his opinion in Klein's Case.

'A trust in which the so-called trustee may legally mingle the trust money with his own, employ it for his own use, and himself determine whether he will forever retain it, or will give it to others, is a singular trust, unknown to law or equity, and to which no principles of equity jurisprudence can be found to apply. It is a universal rule of equity that if a trustee mingles trust money with his own, and uses it for his own benefit, he shall account for or pay interest thereon to the cestui que trust. Story, Eq. §§ 1277, 1277a; Perry, Trusts, § 468."


Employment tax deposits are a current expense. Postponing paying them is not ( I did not bold this as I did in other parts, it is bold on the actual IRS site ) the same as making a late payment on your phone bill or to a supplier. Congress has established large penalties for delays in turning over your employment taxes to the Treasury. The longer it takes to pay that money, the more it will cost you. For more information, refer to Publication 15, Circular E, Employer's Tax Guide (PDF).


Is there such a thing as an Employees Tax Guide? Not really but you can type in "Employees Tax Guide" and find:
http://www.irs.gov/taxtopics/page/0,,id%3D16278,00.html

Which says; absolutely nothing about it.

Topic 756 - Employment Taxes for Household Employees

Household employees include housekeepers, maids, babysitters, gardeners, and others who work in or around your private residence as your employees. Repairmen, plumbers, contractors, and other business people who work for you as independent contractors, are not your employees. Household workers are your employees if you control not only the work they do, but how they do it.

If you pay a household employee cash wages of $1,300 or more in the year 2002, you generally must withhold social security and Medicare taxes from all cash wages you pay to that employee. For 2002, the wage threshold for the requirement to withhold social security and Medicare taxes is $1,300. Unless you prefer to pay your employee's share of social security and Medicare taxes from your own funds, ( What, say that again, "Unless you prefer to pay your employee's share of social security and Medicare taxes from your own funds," gosh I love this stuff. To bad the gurus don't read it.) you should withhold 7.65% (6.2% for social security tax and 1.45% for Medicare tax) from each payment of cash wages. Instead of paying this amount to your employee, pay it to the IRS with a matching amount for your share of the taxes. However, do not withhold or pay these taxes from wages you pay to:

your spouse,
your child who is under age 21,
your parent, unless an exception is met; or
an employee who is under age 18 at any time during the year unless performing household work is the employee's principal occupation. If the employee is a student, providing household work is not considered to be his or her principal occupation.

You are not required to withhold Federal income tax from wages you pay a household employee. ( What; say that again; "You are not required to withhold Federal income tax from wages you pay a household employee." I thought they said that. ) However, if your employee asks you to withhold Federal income tax ( please take my money, please, please, pretty please, pretty please with sugar on it. ) and you agree, you will need Form W-4 (PDF), Employee's Withholding Allowance Certificate, and Circular E, Employer's Tax Guide, which has tax withholding tables.

If you withhold or pay social security and Medicare taxes, or withhold Federal income tax, you will need to file Form W-2 (PDF) after the end of the year. You will also need a Form W-3 (PDF). To complete Form W–2 you will need both an employer identification number and your employee's social security number. If you do not already have an employer identification number, call 1–800–829–3676, or visit our web site at www.irs.gov, and order Form SS–4 to apply for one. Refer to Tax Topic 752 and Tax Topic 755 for more information.

If you paid cash wages to household employees totaling $1,000 or more in any calendar quarter of 2001 or 2002, you generally must pay Federal unemployment tax on the first $7,000 of cash wages you pay to each of your household employees in 2002 and 2003.

If you ( Now hold on here, this "you" is the employer. ) must file Form W–2 or pay Federal unemployment tax, you will also need to file a Schedule H, Household Employment Taxes, after the end of the year with your ( This "you" / "your" is the employer, they pretend to change the subject matter in the middle of the paragraph, but it is the "employer not the employee. ) individual income tax return, Form 1040 (PDF). However, a sole proprietor who must file Form 940 (PDF) and Form 941 (PDF), or Form 943 (PDF) for business employees, may include household employee tax information on these forms.

You ( Now hold on here, this "you" is the employer. ) can avoid owing tax with your return if you pay ( not withhold. ) enough Federal income tax before you file, to cover both the employment taxes for your household employee and your income tax. If you ( This "you" / "your" is not the employer? Did they changed subject matter in the middle of the paragraph? No. ) are employed, you can ask your employer to withhold more Federal income tax from your wages during the year. You can also make estimated tax payments to the IRS during the year, or increase the payments you already make. Use Form 1040ES (PDF) to make estimated tax payments.

You may have to pay an estimated tax penalty if you do not prepay your household employment taxes during the year. Refer to Tax Topic 355 Tax Topic 306 .

For more information, refer to Publication 926 (PDF), Household Employer's Tax Guide.


So there you have it right from the horses mouth so to speak.

THE REST OF TE POST ON EARNINGS:

A little trust law you can count on!


"at common law no possibility, right, title, nor choses in action, could be granted or assigned to strangers" Perry on Trusts

Remember my posts on Rowan Companies, Inc. v. U. S. 452 U.S. 247 (1981) See what they said about income and common law.

Remember my post?

Ballentine"s Law Dictionary

EARNINGS. In a pristine sense, the gains of a person from his services or labor, without the aid of capital. 22 Am J2d Damg sec. 89, 31 Am J2d Exemp sec. 39. In the modern sense and development of the term, it includes profits from the employment of capital, Am J2d Corp sec. 823. The term is equivalent to "income" where used in the limitation of a life estate and a remainder in connection with a provision for the disposition of extraordinary dividends and distribution as between life tenant and remainderman 33 Am J 1st Life Est. sec 378.

Rember?

Sec. 3402. - Income tax collected at source

(e) Included and excluded wages

If the remuneration paid by an employer to an employee for services performed during one-half or more of any payroll period of not more than 31 consecutive days constitutes wages, all the remuneration paid by such employer to such employee for such period shall be deemed to be wages; but if the remuneration paid by an employer to an employee for services performed during more than one-half of any such payroll period does not constitute wages, then none of the remuneration paid by such employer to such employee for such period shall be deemed to be wages.

Earnings are not wages!



Remember?

Central Illinois Public Service Co. v. U. S. 435 U.S. 21 (1978) ;
"The income tax issue is not before us in this case.The income tax is imposed on taxable income............... 26 U.S.C. § 1. Generally, this is gross income minus allowable deductions. 26 U.S.C. § 63(a). Section 61(a) defines as gross income "all income from whatever source derived" including, under § 61(a)(1), "[c]ompensation for services ." The withholding tax, in some contrast, is confined to wages, § 3402(a), and § 3401(a) defines as "wages," "all remuneration (other than fees paid to a public official) for services performed by an employee for his employer, including the cash value of all remuneration paid in any medium other than cash." The two concepts-income and wages-obviously are not necessarily the same."

So if you are a common law employee "servant" your "earnings" can not be assigned "WITHHELD" to the feds or the states or anyone else that is a stranger. NEVER SEEN THAT IN ANY GURU'S LETTER TO AN EMPLOYER TO STOP WITHHOLDING HAVE YOU!?!?!?

Eisner v. Macomber
252 U.S. 189 (1920)
"In order, therefore, that the clauses cited from article 1 of the Constitution may have proper force and effect, save only as modified by the amendment, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not 'income,' as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form. Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.

The fundamental relation of 'capital' to 'income' has been much discussed by economists, the former being likened to the tree or the land, the latter to the fruit or the crop; the former depicted as a reservoir supplied from springs, the latter as the outlet stream, to be measured by its flow during a period of time. For the present purpose we require only a clear definition of the term 'income,' [207]

as used in common speech, in order to determine its meaning in the amendment, and, having formed also a correct judgment as to the nature of a stock dividend, we shall find it easy to decide the matter at issue.

After examining dictionaries in common use (Bouv. L. D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton's Independence v. Howbert, 231 U. S. 399, 415, 34 Sup. Ct. 136, 140 [58 L. Ed. 285]; Doyle v. Mitchell Bros. Co., 247 U. S. 179, 185, 38 Sup. Ct. 467, 469 [62 L. Ed. 1054]), 'Income may be defined as the gain derived from capital, from labor, or from both combined,' provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case, 247 U. S. 183, 185, 38 Sup. Ct. 467, 469 (62 L. Ed. 1054).

Brief as it is, it indicates the characteristic and distinguishing attribute of income essential for a correct solution of the present controversy. The government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word 'gain,' which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. 'Derived-from- capital'; 'the gain-derived-from-capital,' etc. Here we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and coming in, being 'derived'-that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal- that is income derived from property. Nothing else answers the description."



Remember my post on "the standard is the Haig-Simons definition of income"?
Bob Jones University v. Simon
416 U.S. 725 (1974)
"The 'by any person' phrase is, however, also a reaffirmation of the plain meaning of the emphasized portion of § 7421(a). In this respect, it is declaratory, not innovative. Cf. Bittker & Kaufman, Taxes and Civil Rights: 'Constitutionalizing' the Internal Revenue Code, 82 Yale L.J. 51, 57, n. 22 (1972). We are aware of the contrary reading of the 'by any person' phrase in McGlotten v. Connally, 338 F.Supp. 448, 453, n. 25 (DC 1972) (three-judge court), but we are of a different view."


Constitutionalizing' the Internal Revenue Code, 82 Yale L.J. 51, 57, n. 22 (1972
"the standard is the Haig-Simons definition of income."

"Personal income may be defined as the sum of (1) the
market value of the right exercised in consumption and (2) the
change in the value of the store of property rights between the
beginning and end of the period in question. footnote 38"



If you haven't figured out that the "income tax" is not an "income tax" but an "income tax" based on the Haig-Simons definition by now you are in deep dodo.

Wow, the most important recent breakthrough in history on income tax, and no responses or views...No wonder the IRS prevails every time...

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U.S. 6th Circuit Court of Appeals
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BELL v. US (01/07/04 - No. 02-3295)
Decedent's voluntary commencement of a contractual relationship with a
bank that limited but did not deprive him of his ability to pay trust
fund taxes, together with his repeated payments to creditors other than
the federal government, constituted a willful failure to pay trust fund
taxes under Internal Revenue Code section 6672(a).

To read the full text of this opinion, go to:
http://laws.lp.findlaw.com/6th/04a0006p.html
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Below is the entire case with some interesting notes:



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see also Hochstein v. United States, 900 F.2d 543, 549 (2d Cir. 1990) (ruling that adverse consequences, such as losing one’s job, “simply are no excuse for failing to collect and pay” trust fund taxes).( THIS MEANS THE PERSON RESPONSIBLE NOT THE EMPLOYEE / SERVANT AS IN "MASTER SERVANT")

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“It is no excuse that . . . the money was paid to suppliers and for wages in order to keep the corporation operating as a going concern — the government cannot be made an unwilling partner in a floundering business.” Brewery, Inc. v. United States, 33 F.3d 589, 593 (6th Cir. 1994) (quotation omitted).
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4 Section 6672 (a) reads:
Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

26 U.S.C. § 6672(a). See also Slodov v. United States, 436 U.S. 238, 245 (1978) (“[A]n employer-official or other employee responsible for collecting and paying taxes who willfully fails to do so is subject to . . . a civil penalty equivalent to 100% of the taxes not collected or paid . . . .”). Criminal penalties are also available but are not at issue in this case.


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The Code requires most employers to withhold Social Security, Medicare, and federal income taxes from their employees’ wages. See 26 U.S.C. §§ 3102, 3402. Section 7501 provides that the withheld money is held in trust for the United States until paid to the Treasury on a quarterly basis. 26 U.S.C. § 7501(a); Slodov v. United States, 436 U.S. 238, 243 (1978). The withholding taxes “are part of the wages of the employee, held by the employer in trust for the government”; the employer, as a function of administrative convenience, extracts money from a worker’s paycheck and briefly holds that money before forwarding it to the IRS. Gephart v. United States, 818 F.2d 469, 472 (6th Cir. 1987). A delinquency in trust fund taxes thus is not simply a matter between the IRS and an employer, but rather involves employee wages. The significant responsibility of Dyac or any other employer is summed up by then-Judge Cardozo’s famous statement that “[a] trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.” Meinhard v. Salmon, 164 N.E. 545, 546 (N.Y. 1928).

AND...THEY CAN'T GET IT FROM YOU!

TITLE 26

Sec. 3509. - Determination of employer's liability for certain employment taxes


(a) In general



If any employer fails to deduct and withhold any tax under chapter 24 or subchapter A of chapter 21 with respect to any employee by reason of treating such employee as not being an employee for purposes of such chapter or subchapter, the amount of the employer's liability for -

(1) Withholding taxes



Tax under chapter 24 for such year with respect to such employee shall be determined as if the amount required to be deducted and withheld were equal to 1.5 percent of the wages (as defined in section 3401) paid to such employee.

(2) Employee social security tax



Taxes under subchapter A of chapter 21 with respect to such employee shall be determined as if the taxes imposed under such subchapter were 20 percent of the amount imposed under such subchapter without regard to this subparagraph.

(b) Employer's liability increased where employer disregards reporting requirements


(1) In general



In the case of an employer who fails to meet the applicable requirements of section 6041(a), 6041A, or 6051 with respect to any employee, unless such failure is due to reasonable cause and not willful neglect, subsection (a) shall be applied with respect to such employee -

(A)

by substituting ''3 percent'' for ''1.5 percent'' in paragraph (1); and

(B)

by substituting ''40 percent'' for ''20 percent'' in paragraph (2).

(2) Applicable requirements



For purposes of paragraph (1), the term ''applicable requirements'' means the requirements described in paragraph (1) which would be applicable consistent with the employer's treatment of the employee as not being an employee for purposes of chapter 24 or subchapter A of chapter 21.

(c) Section not to apply in cases of intentional disregard



This section shall not apply to the determination of the employer's liability for tax under chapter 24 or subchapter A of chapter 21 if such liability is due to the employer's intentional disregard of the requirement to deduct and withhold such tax.

(d) Special rules

For purposes of this section -

(1) Determination of liability



If the amount of any liability for tax is determined under this section -

(A)

the employee's liability for tax shall not be affected by the assessment or collection of the tax so determined,

(B)

the employer shall not be entitled to recover from the employee any tax so determined, and

(C)

sections [1] 3402(d) and section 6521 shall not apply.

(2) Section not to apply where employer deducts wage but not social security taxes



This section shall not apply to any employer with respect to any wages if -

(A)

the employer deducted and withheld any amount of the tax imposed by chapter 24 on such wages, but

(B)

failed to deduct and withhold the amount of the tax imposed by subchapter A of chapter 21 with respect to such wages.

(3) Section not to apply to certain statutory employees



This section shall not apply to any tax under subchapter A of chapter 21 with respect to an individual described in subsection (d)(3) of section 3121 (without regard to whether such individual is described in paragraph (1) or (2) of such subsection)



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I think they are running us in a circle,

and

smiling while they do it.

Are you enjoying your life

while they are smiling

and

laughing at our expense.

I'm not.






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In the United States Court of Appeals
For the Seventh Circuit
No. 00-1102
United States of America,
Plaintiff-Appellee,
v.
Indianapolis Baptist Temple,
Defendant-Appellant.
Argued May 11, 2000--Decided August 14, 2000. Before Coffey, Evans, and Williams, Circuit Judges.
"There are three federal employment taxes - the social security tax, the medicare tax, and the normal income tax. Employers must pay half of the applicable social security and medicare taxes and must withhold from employees' wages the other half of the applicable social security and medicare taxes, as well as all of the applicable normal income tax. 26 USC sec. 3102(a), 3111(a), (b), 3402. Employers are liable for both the taxes imposed directly on them and the taxes they are required to withhold from employees. 26 USC sec. 3102(b), 3111(a), (b), 3403. Since sometime before 1987, IBT has paid none of these taxes."

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No they are not liable for the tax, they are liable only to a penalty EQUAL TO THE TAX see 26 USC 6672,
AND THAT IS A PERSONAL PENALTY. SEE NEXT:

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Slodov v. U. S.
436 U.S. 238 (1978)

The question to be decided is whether, in these circumstances, petitioner is personally liable under § 6672 of the Internal Revenue Code of 1954, 26 U.S.C. § 6672-which imposes personal liability for taxes on "[a]ny person required to collect, truthfully account [241]

for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof . . . "-for the corporations' unpaid taxes withheld from wages prior to his assumption of control.
AND:
Finally, as in this case, the officers or employees of the employer responsible for effectuating the collection and pay-

[245]

ment of trust-fund taxes who willfully fail to do so are made personally liable to a "penalty" equal to the amount of the delinquent taxes. Section 6672 provides,



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Is that what the "law" says?


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3402 (d) Tax paid by recipient
If the employer, in violation of the provisions of this chapter, fails to deduct and withhold the tax under this chapter, and thereafter the tax against which such tax may be credited is paid, the tax so required to be deducted and withheld shall not be collected from the employer; but this subsection shall in no case relieve the employer from liability for any penalties or additions to the tax otherwise applicable in respect of such failure to deduct and withhold

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"the tax so required to be deducted and withheld shall not be collected from the employer;" What is that?
Now that is absolutely not true!

Keep on reading.

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Slodov v. U. S.
436 U.S. 238 (1978)
Once net wages are paid to the employee, the taxes withheld are credited to the employee regardless of whether they are paid by the employer, so that the IRS has recourse only against the employer for their payment.4

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U. S. v. Lee
455 U.S. 252 (1982)
Chief Justice BURGER delivered the opinion of the Court.
In this case appellee failed to pay the employer's portion of the FICA taxes and FUTA taxes and failed to withhold his employee's contributions to the FICA taxes. An employer is liable for payment of the employee's share of FICA taxes whether or not he withholds the required amount of the employee's contribution. 26 U.S.C. § 3102(b). [255]

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But there is more! Someone else besides the employer is personally liable. Check this out.



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Jersey Shore State Bank v. U.S
479 U.S. 442 (1987)
][443]

Syllabus
Section 3505 of the Internal Revenue Code of 1954 (Code) provides that persons such as lenders, who are not employers but who directly or indirectly pay employees' wages, will be personally liable for all or a portion of "a sum equal to" any Social Security and income taxes that are not withheld from the wages and paid to the Government as required by Subtitle C of the Code. Code § 6303(a) requires the Government, within 60 days of making an assessment of unpaid taxes, to notify "each person liable for the unpaid tax" of the amount of the assessment and to make a demand for payment. Without first giving a § 6303(a) notice, the Government brought suit against petitioner in Federal District Court seeking a determination that it was liable under § 3505 for amounts reflecting unpaid taxes required to be withheld from wages paid to employees of a third-party employer. The District Court granted summary judgment for petitioner, holding that a § 6303(a) notice was required. The Court of Appeals reversed.

Held: Section 6303(a) does not require the Government to provide notice and a demand for payment to a lender before bringing a civil suit to collect sums for which the lender is liable under § 3505. Pp. 446-449.

(a) Section 6303(a)'s description of an assessment notice recipient as a person "liable for the unpaid tax" does not clearly include a § 3505 third-party lender, who is liable for all or part of "a sum equal to" the unpaid taxes. P. 446.

(b) Compliance with § 6303(a)'s requirements that the notice "stat[e] the amount" assessed and "deman[d] payment thereof" would frequently have little meaning to lenders in § 3505 cases, since the amount stated and demanded (1) could include the employer's share of unpaid Social Security taxes, for which the lender is not liable; (2) could equal the lender's liability only if the lender provided payroll financing throughout the period covered by the assessment; and (3) would rarely be accurate for a lender liable only under § 3505(b), which limits exposure to 25% of the funds loaned to the employer. Pp. 446-447.

(c) It would not be fundamentally unfair to require the Government to provide § 6303(a) notice to delinquent employers but not to lenders in § 3505 cases, since employers, who are subject to summary collection procedures soon after unpaid employment taxes are assessed, have a far [ Jersey Shore State Bank v. U.S
479 U.S. 442 (1987)
][443]

greater need for such a notice than third-party lenders, upon whom liability can be imposed only after a civil suit. Pp. 447-448.

(d) A third-party lender would not be unfairly prejudiced by lack of a § 6303(a) notice even if, as contended by petitioner, a timely assessment under § 6501(a) would trigger an additional 6-year limitation period under § 6502(a)(1) for a collection suit against the lender, since, as § 3505's legislative history suggests, Congress envisioned a system in which third-party lenders would take their potential § 3505 liability into consideration by including the amount of potential withholding liability in their loans and taking adequate security, and since, even without a § 6303(a) notice, a prudent lender may be alerted to its § 3505 liability at the time it engages in "net payroll financing," e.g., providing funds to the employer for wages but not for withholding taxes. Pp. 448-449.

781 F.2d 974 (CA 3 1986), affirmed.

REHNQUIST, C.J., delivered the opinion for a unanimous Court.

Martin A. Flayhart, Jersey Shore, Pa., for petitioner.

Alan I. Horowitz, Washington, D.C., for respondent.

djQ Chief Justice REHNQUIST delivered the opinion of the Court.

Slodov v. U. S.
436 U.S. 238 (1978)

The question to be decided is whether, in these circumstances, petitioner is personally liable under § 6672 of the Internal Revenue Code of 1954, 26 U.S.C. § 6672-which imposes personal liability for taxes on "[a]ny person required to collect, truthfully account [241]

for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof . . . "-for the corporations' unpaid taxes withheld from wages prior to his assumption of control.
AND:
Finally, as in this case, the officers or employees of the employer responsible for effectuating the collection and pay-

[245]

ment of trust-fund taxes who willfully fail to do so are made personally liable to a "penalty" equal to the amount of the delinquent taxes. Section 6672 provides,


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So lets see if there really is a personal liability for the tax or just maybe there isn't. Lets go to 26 USC 6672. The court wouldn't be smiling at you would it?
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Sec. 6672. - Failure to collect and pay over tax, or attempt to evade or defeat tax


(a) General rule



Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. No penalty shall be imposed under section 6653 or part II of subchapter A of chapter 68 for any offense to which this section is applicable.

(b) Preliminary notice requirement


(1) In general



No penalty shall be imposed under subsection (a) unless the Secretary notifies the taxpayer in writing by mail to an address as determined under section 6212(b) or in person that the taxpayer shall be subject to an assessment of such penalty.

notes:
PUBLIC INFORMATION TO ENSURE EMPLOYEE AWARENESS OF RESPONSIBILITIES AND LIABILITIES UNDER TAX DEPOSITORY SYSTEM

Section 904(b) of Pub. L. 104-168 provided that: ''(1) In general. - The Secretary of the Treasury or the Secretary's delegate (hereafter in this subsection referred to as the 'Secretary') shall take such actions as may be appropriate to ensure that employees are aware of their responsibilities under the Federal tax depository system, the circumstances under which employees may be liable for the penalty imposed by section 6672 of the Internal Revenue Code of 1986, and the responsibility to promptly report to the Internal Revenue Service any failure referred to in subsection (a) of such section 6672. Such actions shall include - ''(A) printing of a warning on deposit coupon booklets and the appropriate tax returns that certain employees may be liable for the penalty imposed by such section 6672, and ''(B) the development of a special information packet. ''(2) Development of explanatory materials. - The Secretary shall develop materials explaining the circumstances under which board members of tax-exempt organizations (including voluntary and honorary members) may be subject to penalty under section 6672 of such Code. Such materials shall be made available to tax-exempt organizations. ''(3) IRS instructions. - The Secretary shall clarify the instructions to Internal Revenue Service employees on the application of the penalty under section 6672 of such Code with regard to voluntary members of boards of trustees or directors of tax-exempt organizations.''


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What? There is no liability for the tax! The liability is "a penalty equal to the total amount of the tax" Not the tax itself just the penalty. Yep that is what it says. But it gets better as you read. Just who are these "EMPLOYEES" that need to be notified? But first........

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Begier v. I.R.S.
496 U.S. 53 (1990)
"§ 7501 creates a trust in an abstract "amount"-a dollar figure not tied to any particular assets-rather than in the actual dollars withheld....

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Could this mean that the "penalty" under 6672 is an abstract penalty?


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U. S. v. Lee
455 U.S. 252 (1982)
Chief Justice BURGER delivered the opinion of the Court.
In this case appellee failed to pay the employer's portion of the FICA taxes and FUTA taxes and failed to withhold his employee's contributions to the FICA taxes. An employer is liable for payment of the employee's share of FICA taxes whether or not he withholds the required amount of the employee's contribution. 26 U.S.C. § 3102(b). [255]



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Slodov v. U. S.
436 U.S. 238 (1978)
Once net wages are paid to the employee, the taxes withheld are credited to the employee regardless of whether they are paid by the employer, so that the IRS has recourse only against the employer for their payment.4




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Well I am glad that is setteled.



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Each employee of employer is credited by government with taxes withheld from his wages, even if they are never remitted to government by employer. Howard v. U.S., C.A.5 (Tex.) 1983, 711 F.2d 729.



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Gosh why are they asking me for the money?



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http://www.supremelaw.org/sls/31answers.htm

If an Act of Congress fails to create a specific liability for any tax imposed by that Act, then there is no liability for that tax. Executive agencies have no authority to cure any such omission by using regulations to create a liability.



“[A]n administrative agency may not create a criminal offense or any liability the is not sanctioned by lawmaking authority, especially a liability for a tax or inspection fee.” See Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 4 L.Ed.2d 127, 80 S.Ct. 144 (1959), and Independent Petroleum Corp. v. Fly, 141 F.2d 189 (5th Cir. 1944) as cited at 2 Am Jur 2d, p. 129, footnote 2 (1962 edition) [bold emphasis added]. However, this cite from American Jurisprudence has been removed from the 1994 edition of that legal encyclopedia.



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No wonder they smile at us. Does 6672 really creat a liability for a tax?


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Maggio v. Zeitz
333 U.S. 56 (1948)
But in affirming the Court said: 'Although we know that Maggio cannot comply with the order, we must keep a straight face and pretend that he can, and must thus affirm orders which first direct Maggio 'to do an impossibility, and then punish him for refusal to perform it."


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This stuff on 6672 will blow your mind below. Keep smiling.

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PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

DONALD PLETT,

Plaintiff-Appellant,

v. No. 98-1752

UNITED STATES OF AMERICA,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Claude M. Hilton, Chief District Judge;

Leonie M. Brinkema, District Judge.

(CA-97-800-A)

Argued: April 6, 1999

Decided: July 23, 1999

Before NIEMEYER, WILLIAMS, and TRAXLER,

Circuit Judges.

26 U.S.C. § 6672(a).

The case law interpreting § 6672 generally refers to the person

required to collect, account for, and remit payroll taxes to the United

States as the "responsible person." See Slodov, 436 U.S. at 246 n.7.

But the "responsible person" is not limited to one person in a com-

pany but rather may include many persons connected with the same

employer. See O'Connor, 956 F.2d at 50; accord Barnett v. Internal

Revenue Service, 988 F.2d 1449, 1455 (5th Cir.) ("There may be --

indeed, there usually are -- multiple responsible persons in any com-

pany"), cert. denied, 510 U.S. 990 (1993); Bowlen v. United States,

956 F.2d 723, 728 (7th Cir. 1992) (stating that§ 6672 casts a "broad

net" over many persons in imposing liability for delinquent payroll

taxes).

To determine who within a company is a "responsible person"

under § 6672, we undertake a pragmatic, substance-over-form inquiry

into whether an officer or employee so "participate[d] in decisions

concerning payment of creditors and disbursement of funds" that he

effectively had the authority -- and hence a duty-- to ensure pay-

ment of the corporation's payroll taxes. O'Connor, 956 F.2d at 51.

Stated differently, the "crucial inquiry is whether the person had the

`effective power' to pay the taxes -- that is, whether he had the actual

authority or ability, in view of his status within the corporation, to pay

the taxes owed." Barnett, 988 F.2d at 1454 (citations omitted). Sev-

eral factors serve as indicia of the requisite authority, including

whether the employee (1) served as an officer of the company or as

a member of its board of directors; (2) controlled the company's pay-

roll; (3) determined which creditors to pay and when to pay them; (4)

participated in the day-to-day management of the corporation; (5)

possessed the power to write checks; and (6) had the ability to hire

3

and fire employees. See O'Connor, 956 F.2d at 51; United States v.

Landau, 155 F.3d 93, 100-01 (2d Cir. 1998); Barnett, 988 F.2d at

1455.

And to determine whether the "responsible person" "willfully"

failed to collect, account for, or remit payroll taxes to the United

States, we inquire whether the "responsible person" had "knowledge

of nonpayment or reckless disregard of whether the payments were

being made." Turpin v. United States, 970 F.2d 1344, 1347 (4th Cir.

1992) (internal quotation marks and citations omitted). A responsible

person's intentional preference of other creditors over the United

States establishes the element of willfulness under§ 6672(a). See

United States v. Pomponio, 635 F.2d 293, 298 n.5 (4th Cir. 1980).

And an intentional preference, in turn, is established by showing that

the responsible person "[knew] of or recklessly disregard[ed] the exis-

tence of an unpaid deficiency." Turpin, 970 F.2d at 1347.



--------------------------------------------------------------------------------


And you thought it was only one person liable? Liable for what? A liability? The employer is liable for a liability of a liability but it is in the abstract amount of a trust that he is expected to withhold when that very act of withholding is an absurdity and un-named multiple persons are liable for this absurd act, the trust, and the penalties.



--------------------------------------------------------------------------------



Slodov v. U. S.
436 U.S. 238 (1978)
Once net wages are paid to the employee, the taxes withheld are credited to the employee regardless of whether they are paid by the employer, so that the IRS has recourse only against the employer for their payment.4

--------------------------------------------------------------------------------

Will someone tell the IRS that and the lower court judges. The message is not getting out.
So the courts keep smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling, and smiling.

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United States v. Munsey Trust Co. 332 U.S. 234 1947)

If the United States were obligated to pay laborers and materialmen unpaid by a contractor, the surety who discharged that obligation could claim subrogation. But nothing is more clear than that laborers and materialmen do not have enforceable rights against the United States for their compensation. Cf. H. Herfurth, Jr., Inc., v. United States, 89 Ct.Cl. 122; see Schmoll v. United States, 63 F.Supp. 753, 105 Ct.Cl. 415, 455; Maryland Casualty Co. v. United States, Ct.Cl., 53 F.Supp. 436, 440. They cannot acquire a lien on public buildings, United States, for Use of Hill, v. American Surety Co., 200 U.S. 197, 203, 26 S.Ct. 168, 170, 50 L.Ed. 437; Equitable Surety Co. v. United States, to Use of W. McMillan & Son, 234 U. S. 448, 455, 34 S.Ct. 803, 805, 58 L.Ed. 1394,

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Where there are insufficient funds to pay employees their net wages and to pay proper withholding taxes, the employer must prefer the United States over his workers and reduce the amount of wages paid by an amount sufficient to leave funds for payment of withholding taxes. Sorenson v. U. S., C.A.9 (Or.) 1975, 521 F.2d 325.

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So why are we having such a hard time with this "Notice of Levy" stuff.

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Sims v. U.S. 359 U.S. 108 (1959) "state employees entitled to payment for services may enforce their rights by mandamus against him. [114]
State ex rel. Board of Governors of West Virginia University v. Sims, 133 W.Va. 239, 55 S.E.2d 505; State ex rel. Board of Governors of West Virginia University v. Sims, 136 W.Va. 789, 68 S.E.2d 489; State ex rel. Board of Governors of West Virginia University v. Sims, 140 W.Va. 64, 82 S.E.2d 321"

How about this! If Dan WAS starting to see the light of "trust fund taxes" under 7501 the writing is on the walls. Who will be next?
_______________

Hi

I'm glad Ron unearthed this case for you. While I appreciate research you've done on trusts & connections to § 7501, there is considerably more to the tax administration scam than the supposed underlying trust liability. Yet there is an amount of validity to your position, too.

There is something of a parallel universe between Subtitles A & B and Subtitle C. The withholding agent (§§ 1441-1461) is ultimately liable for withholding at the source, reporting, and paying income taxes imposed by Subtitle A. He is liable whether he withholds or not. And, of course, he withholds from nonresident aliens and foreign partnerships, corporations, etc., with income from sources within the United States.

In Subtitle C, the government agency disbursement officer (§§ 3403 & 3404) is the person liable, and he is liable whether or not he withholds. As is the case for the withholding agent, he is required to withhold Subtitle A income taxes from nonresident aliens, foreign partnerships, etc. He may serve simultaneously as disbursement officer and withholding agent. Sums withheld from wages as income tax are credited against Subtitle A liabilities; see § 31.

If you will read 26 CFR §§ 1.6001-1 through the end and 31.6001-1 through the end, you will find that the payee and employee aren't required to file returns except to secure refunds. Even then, they are supposed to submit claims to the withholding agent -- employer (disbursement officer) prior to submitting claims to IRS. When I get a few other fires tended I will go back through applicable regulations & get them isolated. I did most of that research prior to my federal holiday and simply haven't gotten back to it yet.

There are several "pivotal" sections in the Internal Revenue Code. One I've hammered on is the requirement for notice via implementing regulations or direct written notice required by § 6001. Another important one I'm currently tracking down is authority of the Secretary to administer internal revenue laws, § 6301. This is important as (1) the Financial Management Service must authorize withholding at the source for purposes of Chapter 24 (I anticipate having the FMS forms in the near future) and IRS must authorize withholding agents for purposes of §§ 1441, et seq. Unless or until authorization is issued by FMS and/or IRS, there is no requirement to withhold.

This is where your "trust" comes into the picture. Where there is an obligation to withhold, the liability exists whether tax was withheld or not. That may be the Catch 22 you've been hunting for.

Dan

----------------------

Sent: Tuesday, October 14, 2003 7:43 AM
Subject: The COURT SAID: "we must keep a straight face and then punish him for refusal to perform it."


Sometimed you can't see the forest for the trees. Well here is a big tree stump I some how sadly missed.
My friend Don Dillon aka Tarheel sent me this on the 7501 trust:
----------

Somehow or other it is important that in:
Begier v. I.R.S.
496 U.S. 53 (1990)
"§ 7501 creates a trust in an abstract "amount"-a dollar figure not tied to any particular assets-rather than in the actual dollars withheld.... Common-law tracing rules, designed for a system in which particular property is identified as the trust res, are thus unhelpful in this special context....The general common-law rule that a trust is not created absent a designation of particular property obviously does not invalidate § 7501's creation of a trust in the "amount" of withheld taxes. The common law of trusts is not binding on Congress. "

This seems to say that there does not need to be any specific identifiable res of the trust---if congress says so.


-----------

So if § 7501 creates a trust in an abstract "amount"-a dollar figure not tied to any particular assets-rather than in the actual dollars withheld... Then how and where is that "abstract "amount" defined? Then how and where is that "abstract "amount" defined?
This is only a guess for now but I think it is in those "withholding tables" issued by the Treasury department for employers to use for withholding. Any comments?
---------

Slodov v. U. S.
436 U.S. 238 (1978)
Once net wages are paid to the employee, the taxes withheld are credited to the employee regardless of whether they are paid by the employer, so that the IRS has recourse only against the employer for their payment.4
footnote 4. See Moore v. United States, 465 F.2d 514, 517 (CA 5 1972); Dillard v. Patterson, 326 F.2d 302, 304 (CA 5 1963); United States Fidelity & Guaranty Co. v. United States, 201 F.2d 118, 120 (CA 10 1952). This at the least is the administrative practice. See Brief for United States 10-11. [244] "

Justice SCALIA, concurring in the judgment. "A trust without a res can no more be created by legislative decree than can a pink rock-candy mountain. In the nature of things no trust exists until a res is identified. Ordinarily the res is identified by the settlor of the trust; in the case of § 7501 it is initially identified (if at all) by the statute, subject ( as I shall discuss) to later reidentification by the taxpayer." AND CONTINUED: "Where, however, the [71] taxes subject to the trust-fund provision are withheld taxes, the statute provides no clear identification."
AND THEN THE TRUTH COMES OUT BY SAYING: "We may have to grapple at some later date with the question whether the lack of immediate identification means that no trust arises, or rather that § 7501 creates some hitherto unheard-of floating trust in an unidentified portion of the taxpayer's current or later-acquired assets. We do not have to reach that question today,"

So when your employer gets that infamous "NOTICE OF LEVY" using the "TRUSTEE PROCESS" / "ADMINISTRATIVE GARNISHMENT" to take your wages / property you do have the right to sue to recover the same as the employees did in:
Sims v. U.S. 359 U.S. 108 (1959) "state employees entitled to payment for services may enforce their rights by mandamus against him. [114]
State ex rel. Board of Governors of West Virginia University v. Sims, 133 W.Va. 239, 55 S.E.2d 505; State ex rel. Board of Governors of West Virginia University v. Sims, 136 W.Va. 789, 68 S.E.2d 489; State ex rel. Board of Governors of West Virginia University v. Sims, 140 W.Va. 64, 82 S.E.2d 321"

It should be noted that the "EMPLOYERS" the Board of Governors acted as relators FOR THE EMPLOYEES, in other words they stood up for their employees right to be paid because they were the ones that violated the 7501 trust not the employees.

But this begs the question of the legality of the "WITHHOLDING" provisions of the IRC and just who is "REQUIRED" and who is not required to "WITHHOLD" in the first place. In Sims the court had the state law to rely on for state employees but where is the state law that a court could rely on for all the other "EMPLOYEES" is the state?

When dealing with the courts keep this tidbit in mind because it seems to be a common practice as both Ken and others have discovered.

Maggio v. Zeitz
333 U.S. 56 (1948)
But in affirming the Court said: 'Although we know that Maggio cannot comply with the order, we must keep a straight face and pretend that he can, and must thus affirm orders which first direct Maggio 'to do an impossibility, and then punish him for refusal to perform it."