Should you not know justice? - you who hate the good and love the evil, who tear the skin off my people, and the flesh off their bones; who eat the flesh of my people, flay their skin off them, break their bones in pieces, and chop them up like meat in a kettle, like flesh in a caldron.
—Micah 3, verses 1-3.
"Man, biologically considered... is the most formidable of all the beasts of prey, and indeed the only one that preys systematically on his own species. —William James
"The story of the Internal Revenue Service is a history of a tax collection agency drunk with power, ruthlessly smashing dissent among its own personnel and brazenly roughing up taxpayers at will. The IRS defies and intimidates its Congressional creators to go virtually unchallenged in its blatant illegal exercise of awesome powers against the American public...
The violations of the rights of American people today by their own government are ironically parallel to the injustices suffered by the Colonists in the years preceding the Revolutionary War. The Declaration of Independence states that the British King "has erected a multitude of new offices, and sent hither swarms of officers to harass our people, and eat [out] their substance." —Congressman George Hansen, 1980
The income tax is dead. If you are suffering from a jeopardy assessment, or a lien, or a midnight raid, or some other Internal Revenue Service outrage as you read this, you may well find that hard to believe; but, it's true. Indeed, we believe that the present outrages are symptoms of the system's demise. It's dead, but, like the dinosaurs, it has a pea brain and a primitive nervous system, which is taking too long to send the message. It's dead, but doesn't know it; and its death throes make it more dangerous than when it was alive." —Alan Stang, 1988
Nothing in this chapter is to be construed as legal or tax advice. In particular, nothing in this chapter is to be construed as an inducement to not file tax returns, or to not pay federal income taxes. Anyone who crosses the IRS may suffer horrible consequences, as in the tragic case of Robert William Smiley, as recounted in Tax Revolt: The Battle for the Constitution by Martin A. Larson.
On March 4, 1976, Clyde H. Allisan and Ralph W. Foster, two IRS agents, paid Smiley a "friendly visit" in the truck-camper he used as a business office in Salem, Virginia. Ten minutes later Robert Smiley was dead from a bullet wound in the head. The IRS men had departed. Behind Smiley's corpse there was a bullet mark in the wall - but the bullet was never found. At the other end of the camper a gun with no fingerprints was found. $2,000, which Smiley had in his pockets, was gone.
Local police reported the death as a suicide. No autopsy was performed. The IRS agents were neither interviewed nor interrogated. No hearing was held. The only IRS official permitted to discuss the matter said that he knew nothing about the incident. Smiley's close friends declared that the suicide theory was contrary to the known facts and at variance with Smiley's jovial and good-natured character.
A week later five IRS agents seized all the vehicles comprising Smiley's business inventory and sold them. The Treasury Department refused to answer any questions on the matter. They also refused that IRS agents Allisan and Foster, who were with Smiley when he died, be interviewed. Meanwhile, IRS agents continued to harass Smiley's broken-hearted, destitute, ill widow to the point that she attempted suicide on October 23, 1976.
The Spotlight (Washington) was the only publication to cover the Smiley tragedy - in their May 24, June, 14, August 9, November 8 and 15, 1976, and May 30, 1977 issues. No mention appeared in the local media.
OTHER IRS ATROCITIES
In June, 1988 Kay Council of High Point, NC came home one night to find a note from her husband, Alex: "My dearest Kay - I have taken my life in order to provide capital for you. The IRS and its liens which have been taken against our property illegally by a runaway agency of our government have dried up all sources of credit for us. So I have made the only decision I can. It's purely a business decision... You will find my body on the lot on the north side of the house." At the end of a nine-year battle over a disallowed tax shelter, the IRS claimed that the Councils owed $300,000 in taxes, interest, and penalties. When their financial resources were exhausted, Mr. Council committed suicide to provide Mrs. Council with $250,000 insurance money to continue the battle. Ironically, Mrs. Council eventually won a court ruling that she and her husband owed the IRS nothing - the IRS deficiency notice had been sent four months after the statute of limitations had expired. Mrs. Council, 48, said, "I was cheated of growing old with the man I love."
This atrocity story also comes from Tax Revolt: The Battle for the Constitution by Martin A. Larson, who got it from the Rocky Mountain News of May 3, 1979. It is the story of Jasper and Lucille Gates of Denver, CO, which began when they received a letter from the IRS stating that they had overpaid their 1972 tax by $1,197. However, they never received a refund. Instead, in June 1974 they were notified, without explanation, that they owed $4,451. Soon another letter came, claiming the deficiency was $4,206. In October the IRS claimed they owed $13,700, in November it was $15,000. By October 1975 the alleged deficiency had grown to $16,000 - all without explanation. Then in August 1978 the IRS seized their bank accounts worth about $13,000 and their home worth about $100,000. They sold the home for $16,000. Mrs. Gates, in a wheel-chair, was evicted. With the help of sheriff's deputies, the Gates' furniture and personal effects were thrown into the street. When the news media contacted the IRS, the response was that the IRS couldn't comment because of the Privacy Act.
In Tax Revolt: The Battle for the Constitution, Martin A. Larson gives ten other cases of IRS atrocities. Congressman George Hansen, in To Harass Our People: The IRS and Government Abuse of Power, devotes over a hundred pages to IRS terror tactics. In Chapter One, "Acts of Terror," Congressman Hansen describes three cases:
"The "secret police" arm of the IRS is very real and growing in power and ruthlessness... The taxpayers involved in all three cases had legitimate questions regarding the original IRS assessment against them. All these taxpayers tried to obtain reasonable explanations from the IRS... In each instance, the IRS refused to respond... [T]he IRS's attacks on these citizens came, in every example, without due process of law - a sure sign of the emergence of a police state."
The most dramatic example Congressman Hansen relates is that of Donald McGrath. The IRS claimed he owed $39.65. The IRS didn't want to tell him why. Instead they persuaded McGrath's bank to transfer $39.65 from his account to the IRS. From there the story got complex and nasty and ended with McGrath being shot in the head with a 12-gauge shotgun by a sheriff's deputy. He died a week later.
Congressman Hansen also relates the story of Stephen and Mona Oliver of Fairbanks, Alaska, which includes IRS agents smashing the windows of the Oliver's car with Billy clubs:
"After the IRS agents had hurled Stephen from the car, they went after Mona. Several agents dragged her across the broken glass and shoved her onto the pavement, leaving her bruised and bleeding. Even under the authority of a search warrant, what the IRS ruffians did is tantamount to assault and battery. These agents seem to have knowingly committed the crime of assault by using excessive force against non-criminal, nonviolent citizens in a civil matter."
This incident was personally witnessed by tax attorney Donald W. MacPherson and is also described in his Tax Fraud & Evasion: The War Stories:
"In the parking lot was the VW with the Olivers, surrounded by agents and onlookers, including Freeman. The tow truck waited. Freeman was giving verbal abuse to the agents and pointing at them. Photographers and reporters were there, a story in the making. With billy clubs, the agents broke the glass on driver and passenger side of the vehicle and dragged the Olivers out of the vehicle over the glass. Mrs. Oliver was screaming about her heart medication in the glove compartment. Through the struggle, pills were scattered with the glass. Freeman continued his barrage of screams, "Would you look at that? It's the modern-day Gestapo." Photographers took it all in. Mark and I watched, not knowing whether to be enraged or disgusted. Our heads appeared in the back of the nationally-circulated photos... Acts of terrorism such as I found only added to the fuels of fire of the tax rebellion. It proved the tax protesters all too correct and, as well, added to my commitment to defeat the Beast."
On the lighter side, Charles Adams in Fight, Flight and Fraud: The Story of Taxation, describes an IRS special task force organized in the 1970s to crack down on the use of tax havens:
The biggest scandal was the famous "Briefcase Caper." A foreign banker arrived in Miami with a briefcase full of banking records. The IRS boss in Miami decided to ignore normal subpoena procedures and use a female escort to distract the banker with sexual favors while agents stole the briefcase, broke open its lock, and photographed the records. Since the banker and the prostitute enjoyed each other so much, she was then sent to the Bahamas to steal additional banking records in open daylight from the banker's desk."
In Taxscam: How The IRS Swindles You And What You Can Do About It, Alan Stang relates his collection of IRS horror stories:
- In 1983, five IRS thugs raid the home of Vietnam veteran Charles Streich, ostensibly to collect $500. His four-year old son mysteriously gets a bloody nose. They arrest Streich and take his AR-15 rifle. The IRS "doctors" the rifle and it turns up in court with M-16 parts. Streich is convicted of assault and possession of an unregistered machine gun.
- In 1987, with the Collaboration of Post Office officials, IRS agents stole a mortgage check written by Donald Thurow. They altered the check by stamping "Internal Revenue Service" over the payee line, and cashed it.
- In 1984, seven or eight armed IRS agents from Detroit occupied the Engleworld day-care center in Allen Park. They changed the locks, took about 20 children hostage, and locked them up. Because the day-care center's alleged tax liability of $14,000, parents had to pay ransoms before the IRS would release their children. Marilyn Derby, Director of Engleworld said, "It was a very scary situation, like the Gestapo was here. Children were crying. Parents were trembling. I told one woman whose hands were shaking that she shouldn't sign anything she didn't want to. She signed anyway."
- The IRS claimed that Thomas Treadway owed them $247,000 - so they seized his girl friend's farm and bank accounts.
THE IRS AS GESTAPO
In the Introduction of To Harass Our People: The IRS and Government Abuse of Power, Congressman Hansen quotes a former IRS agent:
"I was talking to a lady in an accountant's office Tuesday. She was from Germany and she said to me, 'You know, the IRS is getting just like the Gestapo was in Germany. When it first came out, nobody thought too much about it, but within two or three years when you'd here the name Gestapo, you'd really get a chill.' She said, 'That's the way it is now with the IRS.' I'm not sure she wasn't absolutely right. I think people are afraid."
Congressman Hansen goes on to describe some of the powers of the IRS. Among government agencies, only the IRS has all these powers:
- To attach 100 percent of an alleged tax debtor's wages and/or property.
- To invade a citizen's privacy without any court order.
- To seize property without a court order, based on conjecture.
- To force a citizen to try his case in a special court governed by the IRS (the Tax Court).
- To compel production of documents, records, and other materials without a court order.
- To publish a citizen's alleged debt to the IRS.
- To subject citizens to electronic surveillance without a court order.
- To freely violate a written agreement with a citizen.
- To maintain lists of citizens guilty of no crime for the purpose of monitoring and harassing them.
- To conduct reprisals against citizens and public officials alike.
According to Congressman Hansen, the IRS publicly admits that its purpose is to instill fear into the citizenry as a technique of performing its function of "voluntary compliance" with its Tax Code.
In two chapters - "Education at Gunpoint" and "Armed Raid on St. Anthony" - Congressman Hansen describes how the IRS "educates" its victims in "voluntary compliance." He uses phrases like "armed shakedowns of innocent citizens," "hit lists of citizens," "an agency out of control," and "the IRS considers itself above the law." Congressman Hansen writes:
"As I reached a stoplight I turned to my wife and said, "Warren Bates admitted today that the IRS uses armed agents to go to taxpayers' homes and demand their tax returns. They have lists of people who they claim are violent. I've gone over one of those lists and even called several of the people on it. Most Americans aren't violent, Connie. Their names shouldn't be on a hit list. What in the world is the IRS trying to do? The implication from Bates was that this is becoming standard procedure for the IRS. Can you believe they almost conducted an armed raid on homes in Fremont County - in St. Anthony?
... Over a period of time, I was able to piece together the plan for an armed raid on St. Anthony. As the story fell into place a greater and even more terrifying nightmare unfolded when the magnitude of IRS crimes against the rights of American citizens everywhere began to emerge...
The IRS, armed with an inaccurate and meaningless collection of names amassed by ridiculous methods, but with very deadly weapons, prepared to "educate" the citizens of Fremont County. On November 3, 1975, Howard Martin gave the final go-ahead...
Ostensibly, the specific task of the strike force was "to determine the degree of voluntary compliance, to secure any delinquent returns and to educate the public about tax laws." Apparently, the IRS believes that people learn more easily, volunteer more readily, and pay up more rapidly when they are staring down the barrel of a .38 Special... "
To their credit, some of the IRS agents selected for this raid balked, and the raid was called off.
In a chapter called "The Bounty Hunters" Hansen describes how the IRS treats its own personnel:
- "The IRS goes to extraordinary lengths to determine the "loyalty" of its employees to the corrupt system."
- The IRS uses special recorder spools on which conversations with taxpayers and spoken reports on IRS personnel are recorded. This information is never typed up, hence is not subject to the Freedom of Information Act.
- "Dissent is simply not tolerated by the IRS. Agents are punished for showing any sign of leniency toward taxpayers."
- IRS management sometimes demand that employees who balk at IRS procedures undergo psychiatric or medical treatment.
- "On the other hand, the ruthless pursuer of the taxpayer is promoted."
- Revenue agents are performance rated by the numbers of individuals and businesses they force into bankruptcy. "Taxes, of course, are the first payments made upon a declaration of bankruptcy. Driving individuals and businesses into bankruptcy is not only standard procedure, it is actually organized on a competitive basis between the various IRS districts."
In the chapter called "Rigging Elections" Congressman Hansen says:
"The Internal Revenue Service works diligently to ensure that public officials toe the IRS line. Political leaders are quickly taught that complaints about the IRS are not allowed. The FBI, the CIA, and other agencies of government have been searchingly investigated from time to time... But not the IRS...
Blackmail and extortion are ugly words. But they are the only fair words to describe why IRS is alone among government agencies not being subject to scrutiny. Anyone who complains - anyone - is a candidate for destruction."
Congressman Hansen then continues to describe how in the cases of Senator Ed Long and later Senator Joseph Montoya, the IRS illegally leaked false tax information on them to their opponents during election years, resulting in both cases in their defeat. In 1976 they did the same to Congressman Hansen, however, he was nevertheless re-elected by a narrow margin. An IRS agent involved in the leak later wrote a letter of apology to Congressman Hansen.
Some morsels from subsequent chapters:
- "... [A] farmer was audited because he refused to give the IRS information regarding his neighbor's finances."
- "Special agents aren't auditors, they're a police force."
- IRS agent's arrogance: "You're noncommercial because I define you that way and if you don't like it, sue me."
- "Confiscating a person's wages is another favorite weapon of the IRS."
- "... [T]he IRS pounced upon the victims of the devastating Teton Dam flood - a $400 million disaster in eastern Idaho."
- "IRS officials viewed the reimbursement payments as a literal grab-bag for capital gains taxes."
- "Farmers whose fields had been ruined as potato ground were not allowed to switch their fields to wheat or alfalfa without paying an excessive capital gains tax on the new farm equipment."
- Around 1965 the IRS developed radically new methods of enforcing "voluntary compliance" - including cloak-and-dagger methods to humiliate and destroy taxpayers, opening and monitoring mail, and making lists of people at political rallies.
- "Once you are a taxpayer to the government, and all the more if you are a tax collector, access to your books and records by that government is guaranteed."
- The IRS Tax Court is essentially a kangaroo court. You are assumed guilty, unless you can prove your innocence. The court denies the right to a jury trial. It denies the right to appeal to a higher court. Many of its judges are former IRS employees. The court's decision is final. Refusal to pay taxes assessed by a Tax Court is a felony. To pursue a Tax Court injustice, you have to first pay the court assessment, then sue the government to get your money back.
- Vicious, relentless persecution and prosecution of waiters and waitresses regarding tips.
- "At the time that Bates made his assertion that there was only one violence list, I had three in my possession... Everything that Bates had just told me was a lie."
- The IRS is not "much concerned with such archaic ideas as truth or justice."
- "The rules now in existence and approved at least tacitly by the Congress allow the IRS to assess any amount it chooses against anyone."
- "I have always contended that the Congress, intentionally or not, set up the IRS to be outside the Constitution."
- "... [T]he IRS has recently chosen to pursue and destroy America's private schools."
- Sarcastic bumper sticker: "Fight Organized Crime - Abolish the IRS."
- The number of tax resisters and tax rebels is growing. They regard the government as the enemy of its citizens, and guerilla warfare in tax matters as a legitimate weapon of an occupied people.
- The system guarantees that the middle and poorer taxpayers lose ground faster than the rich - "it is not the rich but the average person who is being fleeced."
- "More than 40 percent of the price of an American-made automobile is tax load. A loaf of bread would cost only a fraction of the current price if the taxes on it were removed."
- "The IRS is now redistributing not accumulated wealth, but income and wages. It is no longer a matter of taking from the rich to give to the poor, but taking from everyone to support the bureaucracy."
- "In the 1930s, members of the Roosevelt administration stated clearly that the social utility of the Internal Revenue Code was more important than its role as a source of revenue."
All Congressman Hansen's allegations are backed by solid evidence, including internal IRS documents received from whistleblowers. He also says:
"The danger of turning the IRS into a "catch-all" enforcement agency for social policy is brought out time and time again in the chapters of this book. This agency is developing awesome powers and admits no limits to what it judges right or wrong. To achieve its goals, it will lie, cheat, blackmail, and subvert the system of Justice."
When prosecuting taxpayers, the prosecutor is routinely and illegally provided with the tax details of all the potential jurors in the jury pool. The tax information is not provided to the defense. This amounts to blatant jury rigging. Says Congressman Hansen: "The IRS tabby cat created to collect taxes in a "voluntary system" has grown into a full-sized saber-tooth tiger."
BUT IS THE IRS REALLY A PAPER TIGER?
According to tax attorney Donald W. MacPherson (Tax Fraud & Evasion: The War Stories - one of the best tax books I know of):
"Once you get past all of the tax statutes passed by Congress, the rules of evidence and of criminal procedure, interpretation by the courts of the laws and the rules, you are left with human drama. Conflict. IRS special agent versus citizen target. Justice Department prosecutor versus defense attorney. The final arbitrator of this combat is the jury of twelve. That which is public record is but one-tenth of the story. The flesh and blood war stories are intended to cut through the legalese to the end that you will be brought to understanding, and through understanding harbor fear no longer. Nor will the Monster, discovered as a paper tiger, any longer intimidate you, the sovereign citizen, the master. Beastmaster...
Failure to file an income tax return, failure to pay income taxes, and attempted income tax evasion are not crimes in this country. Not yet anyway. For those acts (or failures to act) to constitute a crime, one first must act with specific intent to violate the law; knowing what the law forbids or requires, one must set out with the specific purpose to violate the law. Willfulness. Specific criminal intent. Ignorance of the law is an excuse. Congress has declared that the tax laws are so complex that ignorance of the law is a defense so far as it goes to the citizen's state of mind ;or, in other words, so far as it tends to negate willfulness.
Second, the government must assemble evidence and prove beyond a reasonable doubt to the satisfaction of twelve jurors that you intended to violate the law. If good faith belief or misunderstanding or reliance on the advice of counsel is raised, then the government must, in effect, prove beyond a reasonable doubt that you did not believe in good faith or did not in good faith rely on the advice of your attorney or accountant. At least some federal appellate courts hold that the belief or misunderstanding is subjective not objective. This nuance means, in the final analysis, that it is not even relevant whether what you believed was right or wrong, or whether the jury determines it was reasonable or unreasonable for you to so believe what you claim you believed. All that matters is whether you in fact believed it. Put another way, the government must, then, prove beyond a reasonable doubt that you did not believe what you claim you believed.
Is it any wonder then the fine-tune processing by IRS and Justice Department of criminal tax cases? After two years of investigation by the IRS special agent of the Criminal Investigation Division (CID) and review by his supervisor, plus further review by chief of CID and IRS District Director, the case then goes to the office of District Counsel, the IRS lawyers, for review. Then to Justice Department in Washington, D.C. for review where it may remain for another year or two. Then back to the local U.S. Attorney for further fine-tuning and additional investigation, if necessary, and the ultimate prosecution by way of grand jury indictment or, in the case of misdemeanor rather than felony, by a charging paper signed by the U.S. Attorney, called an "Information." A long, arduous pipeline. For the Beast can ill afford to lose criminal tax cases. If IRS cannot succeed in putting behind bars those it believes to be tax cheats, what then the impact upon the remaining one hundred million and our system based upon "voluntary compliance?"
... Just how far can you push IRS and not be prosecuted? What are the "limits of the tax law?" What must the IRS prove? The answers are found in the criminal tax cases that are won! The proof is in the pudding. If an Arkansas woman who did not file a tax return for eighteen years beat IRS at criminal charges, by what should you feel intimidated?
Consider this analogy: you go to a haunted house as a child and under cover of darkness are frightened by ghosts and goblins. Your imagination runs wild while at the house, and later you attempt, without success, to stave off recurring nightmares. In effort to put the matter to rest, your parents take you during daylight hours back to the haunted house and show you the tricks of the trade. The props used. That goblin was but one-sixteenth inch cardboard. Cardboard which even as a child, you could rip apart with your bare hands. Don't you feel silly? The nightmares go away...
The paper tiger. The bureaucrat, also known as the bureaurat. If the IRS agent was truly competent and was not lazy, why had he not struck out for business on his own? Coffee and cigarettes and federal service retirement pay? The paper tiger exposed by the light of day. But who would dare to turn on the switch, or open the curtain, for this vampire Monster to be exposed to sunlight?"
THE TYGER (With acknowledgment and apologies to William Blake)
Tyger! Tyger! burning bright
With thy terror, might, and fright
What immortal hands or eyes
Could expose thy fearful lies?
In what distant deeps or skies
Burns the hot fire of thy eyes?
On what wings dare he aspire?
What the hand dare seize the fire?
And what shoulder, and what art
Could twist the sinews of thy heart?
And what could stop thy heartbeat?
What dread hand? And what dread feet?
What the hammer? What the chain?
In what furnace was thy brain?
What the anvil? What dead grasp
Dare its deadly terrors clasp?
Could our wise Founding Fathers
Arise from their restful graves,
Would they smile their work to see?
Or cackle with deadly glee?
Tyger! Tyger! burning bright
With thy terror, might, and fright
What immortal hands or eyes
Dare expose thy fearful lies?
IS THE FEDERAL INCOME TAX VOLUNTARY?
In the Introduction to To Harass Our People: The IRS and Government Abuse of Power, Congressman George Hansen says that, "the Internal Revenue Service has turned its back on its legal charter as a tax collector in a voluntary compliance program for the United States government." If the federal income tax is indeed voluntary, this would mean that every action taken by the IRS to force those citizens (for whom the tax is voluntary) to file 1040 tax returns and pay taxes, constitutes economic rape. Let us examine the issue.
Like all government agencies, the IRS has a mission. Its mission as published in the Federal Register of March 25, 1974, includes: "The mission of the Service is to encourage and achieve the highest degree of voluntary compliance... " Do IRS Commissioners agree with the voluntary nature of federal income tax?
- "Each year American taxpayers voluntarily file their tax returns and make a special effort to pay the taxes they owe." Johnnie M. Walker, IRS Commissioner, 1971, Internal Revenue 1040 Booklet.
- "Our tax system is based on individual self assessment and voluntary compliance." Mortimer Caplin, IRS Commissioner, 1975 Internal Revenue Audit Manual.
- "In fairness to the millions of taxpayers who voluntarily file, report all their income and pay the tax due... ." Jerome Kurtz, IRS Commissioner, 1979 Internal Revenue Annual Report.
- "The IRS's primary task is to collect taxes under a voluntary compliance system." Jerome Kurtz, IRS Commissioner, 1980 Internal Revenue Annual Report.
- According to Alan Stang (Taxscam: How The IRS Swindles You And What You Can Do About It), Robert J. Brann, Chief of Technical Services Branch, IRS, Washington, D.C., wrote to a "gentleman in New York" on March 11, 1981, "... In carrying out its responsibilities for administering the federal income tax laws, the Service encourages voluntary compliance by taxpayers. Voluntary compliance places on tax payers the initial responsibility for deciding whether under the law they are required to file returns, and the responsibility for paying any tax that may be due... "
- "... Encourage and achieve the highest possible degree of voluntary compliance... " Harold M. Browning, IRS District Director, Hawaii, 1984.
- "Let's not forget the delicate nature of the voluntary compliance tax system... " Lawrence Gibbs, IRS Commissioner, Las Vegas Review Journal, May 18, 1988.
- "We don't want to lose voluntary compliance... We don't want to lose this gem of voluntary compliance." Fred Goldberg, IRS Commissioner, Money magazine, April, 1990.
During the Eighty-Third Congress in 1953, Dwight E. Avis, head of the Alcohol and Tobacco Tax Division, Bureau of Internal Revenue, testified before the Ways and Means Committee, "Let me point this out now: Your income tax is 100 percent voluntary tax, and your liquor tax is 100 percent enforced tax. Now, the situation is as different as night and day."
The tax return for a manufacturer of tobacco products says, "The information is mandatory by statute. (26 USC 5061, 5703)." All mandatory tax returns mention penalties for not filing, for example, the Alcoholic Beverage Tax Return states, "... punishable upon conviction by a fine of not more than $100,000.00... " Check your 1040 for the statute that says you must file, and the penalty for not filing - you won't find them.
Congress has a legal research branch called the Congressional Research Service. A letter, dated June 26, 1989, from the office of Senator Daniel K. Inouye in Hawaii to a tax consultant Fred Ortiz states, that based on the research performed by the Congressional Research Service, "there is no provision which specifically and unequivocally requires an individual to pay income taxes." [Emphasis added]
Let me cite three court cases that seem to support the notion that the federal income tax is voluntary:
- "Our system of taxation is based upon voluntary assessment and payment, not upon distraint [seizure by distress]." Flora v. U.S., 362 U.S. 145, 176 (1959).
- In case of any ambiguity of statutory construction, the doubt should be resolved in favor of the taxpayer, not the government. Greyhound Corp. v. U.S., 495 F. 2d 863 (1974).
- "The taxpayer must be liable for the tax. Tax liability is a condition precedent to the demand. Merely demanding payment, even repeatedly, does not cause liability... For the condition precedent of liability to be met, there must be a lawful assessment, either a voluntary one by the taxpayer, or one procedurally proper, by the IRS. Because this country's income tax system is based on voluntary assessment, rather than distraint [seizure by distress], the Service may assess the tax only in certain circumstances and in conformity with proper procedures." Bothke v. Fluor Engineers & Construction, Inc., Ninth Circuit (1983).
The Fifth Amendment to the U.S. Constitution states, "No person shall... be compelled in any criminal case to be a witness against himself." However, the Supreme Court has ruled:
- The Fifth Amendment "applies alike to criminal and civil proceedings." McCarthy v. Anderson, 266 U.S. 34.
- "There can be no question that one who files a return under oath is a witness within the meaning of the [Fifth] Amendment." Sullivan v. U.S., 15 F2nd 809.
- "The information revealed in the preparation and filing of an income tax return is, for Fifth Amendment analysis, the testimony of a "witness" as that term is used herein." Garner v. U.S., 424 U.S. 648.
HOW THE IRS TRICKS ITS VICTIMS INTO BECOMING "LIABLE"
By filing a 1040 tax return, you voluntarily assess yourself, you acquiesce to IRS jurisdiction, and you become "liable" for federal income tax.
When you open a bank account, on your signature card you sign something like, "Under penalty of perjury I certify that... The number shown on this form is my correct taxpayer identification number." The signature card may also commit you to adhere to all current and future IRS regulations. Simply by opening a bank account you condemn yourself to being a "taxpayer" and you swear that your "social security number" is your "correct taxpayer identification number."
To fully understand whether or not an individual is "liable" for an income tax, we need to make a distinction between "direct" taxes and "indirect" taxes. Article I, Sections 2 and 9 of the U.S. Constitution authorize direct taxes, and Article I, Section 8 authorizes indirect taxes - see Chapter Five.
A direct tax is also called a head tax, poll tax, or capitation. It is a tax on an individual, for example, so many dollars per person per year. The principle of "apportionment," as stated in the Constitution, places the States as buffers between the individual and the federal government. A direct federal income tax would have to be collected by the state governments and handed over to the federal government.
An indirect tax is also called an excise tax. It is a tax on a thing (income), rather than on an individual. The Sixteenth Amendment states, "The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without any regard to any census or enumeration." In fact, the Sixteenth Amendment uses legal sophistry to circumvent the apportionment barrier. It effectively defines the income tax as an indirect tax, rather than a direct tax. The Supreme Court has found:
"... [T]he Sixteenth Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary [absolute] power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged and being placed in the category of direct taxation... ", Stanton v. Baltic Mining Co., 240 U.S. 112.
When you as an end-consumer buy a book, the price you pay to the retailer includes sales tax. The retailer sends the tax you paid to the government. You pay the tax indirectly to the government. The retailer is liable for the tax. To qualify as an indirect tax, the person liable for the tax must be someone other than the ultimate consumer.
In the case of tax on distilled spirits, Internal Revenue Code section 5005 makes the distiller or importer liable. In the case of wine, section 5043 places liability on the proprietor of the bonded wine cellar or on the importer. For cigars and cigarettes, section 5703 makes the manufacturer or importer liable. Section 2502(d) makes the donor (giver) of a gift liable for gift tax, not the receiver. Similarly, section 2002 makes the executor of a will liable for estate tax, not the inheritor.
Because the income tax is an excise tax on a thing (income), and an indirect tax, by definition the ultimate receiver or consumer of the income cannot be liable for income tax on it. In other words, you cannot be liable for income tax on your income. I have a notarized statement from Scott Lewis Rendelman (enrolled to practice before IRS, enrollment number 28753), which states:
"In my extensive research of the Internal Revenue Code, I can say unequivocally and with absolute certainty that nowhere in the Internal Revenue Code is there a section where liability for income tax is established. And furthermore, by definition of an excise tax, if anyone could say for sure that he or she is not liable for the income tax, it is the "ultimate consumer," the person receiving the income."
THEY BEAT THE IRS IN AND OUT OF COURT
This article appeared in August 1991 issue of The Connector:
"Patriot, Tom Hauert - charged with five counts of 7203 willful failure to file returns in March 1990 - put the prosecuting U.S. Attorney on the spot in Federal District Court, Chicago. Ill. At a hearing before the court on October 1st, 1990, Tom stated that he did not understand the charges. Tom read from the Internal Revenue Code the first three words of Section 7203, "Any person required." Then he asked, "How is it established in this section that I am one of those persons required?" The judge read and reread that section, and finally admitted that he understood that Tom was asking for the statute that creates the determination of who is required. The judge said, "Mr. Prosecutor, you can provide a copy of that statute, can't you?" At that point the prosecuting attorney started stammering and stuttering, and said he wasn't familiar with that part of the Code, and the judge told him to find someone to help find it. Well, it's now May 1991... and the government has not provided the information. For ten years Tom wrote many letters to the IRS, asking what statute made him liable? Neither the IRS, nor the government attorney has ever told him or shown him the statute that made/makes him liable. Could it be there is none? That's correct, there isn't any statute that makes a citizen within the fifty states liable. That's why Congress said, "Our tax system is based on voluntary self-assessment." So don't gripe about high taxes if you voluntarily assess yourself."
The following account describes how an employee of the federal government beat the IRS. It also demonstrates how a salaried employee can successfully file a W-4 tax exempt form with his employer, so he receives his salary in full. An article, describing NASA engineer Doug Ross's method for beating the IRS, appeared in the Federal Times of June 3, 1991:
"... [H]e has neither filed nor paid income taxes since 1984. "The system is based on voluntary compliance, and I stopped volunteering," Ross said. Not only has he stopped paying taxes, but Ross is encouraging others, including other federal employees, not to file returns or pay taxes, either. Since 1989, Ross has held seminars on not paying taxes every other Saturday from September to April. "If people don't have control over their financial resources they are essentially slaves and can't prosper in capitalist society," Ross said.
Ross said his inspiration not to pay taxes came when he saw Irwin Schiff on television. Schiff counsels citizens not to pay and has written books... [like] How Anyone Can Stop Paying Income Tax... "I called the IRS and asked questions about it, and they hung up on me. I thought, okay, when the IRS hangs up on you, you must be asking the right questions," said Ross. Ross said he has received innumerable notices of tax liability and penalties from the IRS, but his salary keeps on coming. "They send you notices, but like I tell people, I get junk mail every day... I have no tax liability," Ross said.
So how does he get away with it? Ross said he simply filed a W-4 form with NASA saying he was exempt from taxes, and they have not been withheld since. "When I started, people I work with would say, 'I'll see you in jail.' Now... I tell people I saved another $18,000 this year, I'm single and I make over $50,000 a year... I am a government employee. If I was violating any law my agency would be an accomplice," Ross said."
Our next story is based on an article from the July 1991 issue of the Justice Times. It involves Roy and Dixie Powell who were convicted of "willful failure to file income tax returns" for 1982 through 1984. The Ninth Circuit Court of Appeals reversed the decision in the earlier Arizona District Court trial, because of the defendants' "good-faith belief" that filing tax returns is voluntary and that wages are not income. Because the Powells believed they were not subject to the income tax, they filed W-4 Exempt forms to stop withholding from their pay. The Ninth Circuit decision was based on a Supreme Court decision:
"If the defendant had a subjective good faith belief, no matter how unreasonable, that he was not required to file a tax return, the government cannot establish that the defendant acted willfully." Cheek v. U.S., 111 S.C. 604 (1991).
The Ninth Circuit opinion (No. 90-10060) was filed on June 13, 1991. In addition to overturning the Powells' earlier conviction, the Ninth Circuit Court found that in the earlier trial Judge Alfredo C. Marquez had made several errors:
- He instructed the jury to apply a standard of objective reasonableness as to the interpretation of the law; whereas the crucial issue was the defendants' subjective interpretation of the law.
- He instructed the jury that reliance on federal statute 26 USC 602(b) did not relieve the Powells of filing returns.
- He refused to allow the Powells to introduce the statutes and cases they relied on for their belief.
The irony of the "income tax law" is that it has become such a convoluted mess that there is probably not even one person in the world who can make an objective determination of what it means - except for the verdict: It's all junk!
Your mind will muse on the terror: "Where is the one who counted? Where is the one who weighed the tribute? Where is the one who counted the towers?" No longer will you see the insolent people, the people of an obscure speech that you cannot comprehend, stammering in a language that you cannot understand.
-- Isaiah 33, verses 18-19
THE INCREASING COMPLEXITY OF THE TAX CODE
"Well, it's a system so utterly complex and ultimately inexplicable that half the time the tax professionals themselves aren't sure what the rules are - a system that even Albert Einstein is said to have admitted he couldn't begin to fathom. You know, it's said that his hair didn't look that way until after he experienced his first tax form." - President Ronald Reagan, 1985
Every year since 1987 Money magazine has run a contest in which 50 tax preparers complete the federal income tax return for a hypothetical family. In 1988 there were ten correct returns, in 1989 two, in 1990 one, and in 1991 zero. For the 1991 tax year the "target tax" was $26,619 - the tax amount for a correct tax return. Not one of the professional tax preparers got it right. At the low extreme, one tax preparer calculated the tax due as $16,219. She spent 25 hours on the job and charged a fee of $750. At the high extreme, another professional tax preparer calculated the tax due as $46,564. It took him 40 hours and he charged $3,000.
The contestants presumably fancied themselves as expert tax preparers, and did their utmost to win first prize. They consisted mostly of professional CPAs and former IRS agents. If you take your papers and records to two "professional tax preparers," one might calculate your tax as $26,000, and the other as $46,000! Need I say any more?
The following is from a Libertarian Party flier:
"1040 Federal Income Truth-in-Taxing Forms and Instructions
We know that filling out a Tax Return is not fun, so this year we've made it easier for you. In fact you may even be able to file the new shorter Form 1040EZ, instead of the normal Form 1040 Confession, which we strongly urge you to do, so that we can screw you out of all your deductions.
Although we have never had the proper delegation of authority from the Secretary of the Treasury to require you to file anything, we're at it again by sending you the new forms anyway. You'll be thrilled to see all the clever new ways we've developed to defraud you out of your hard-earned Federal Reserve Notes.
As usual, our instruction booklet is filled with high-sounding, carefully worded, totally indecipherable, bureaucratic semantics. This social jargon was cunningly designed so as to leave you more confused than ever. But don't worry, you can call our new "Confused HOT LINE." You'll be happy to know that the same untrained and uninformed IRS personnel who helped you last year will attempt to answer your questions again this year. Remember, last year we wrong only 39% of the time.
Please remember to report ALL of your taxable income! Why? Because Big Brother is watching YOU! and we're going to make every effort we can to threaten, intimidate and coerce you into giving us your last dime. As you know, the strength of the entire IRS superstructure is based on your being in FEAR of us. (FEAR = False Evidence Appearing Real.) By the way, your tax dollars have paid for that image. You (the American People) have become passive, complacent, extremely gullible, soft and mentally weak. This strong indicator shows us just how effective our social programming has been. As long as you're in FEAR, it makes it easy for us to stimulate you into giving us your money, and terrorize you into giving up your Constitutional Rights. As you can clearly see, eventually we (the IRS) will rule your entire life.
Despite all these deceitful practices, we still receive stupid inquiries from people who want to make an extra voluntary contribution to reduce the Public Debt. If you persist in wanting to contribute to this hopeless cause, just have your employer sign you up on our new FICA Plan II (Financial Independence Crushing Act). We guarantee you that these funds will be used to erode any vestige of your freedoms that you still enjoy.
Each year, millions of Americans voluntarily file their tax returns and make a special effort to pay income taxes they don't really owe. So, as Commissioner, I want to thank you again for your voluntary compliance, voluntary cooperation and voluntary support, as well as your unwavering willingness to continuously allow us to take advantage of you year after year.
Karl Marx, Jr.
(Acting) Commissioner of Internal Revenue"
THE IRS ASSAULT ON RELIGION
Both Martin A. Larson (Tax Revolt: The Battle for the Constitution) and Congressman George Hansen (To Harass Our People: The IRS and Government Abuse of Power) deal with the IRS assault on churches. Congressman Hansen devotes a 60-page special section to the "assault on religion." Both these authors include many gross violations of the First Amendment ("Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.") which supposedly guarantees religious freedom:
- Rescinding churches' tax-exempt status for frivolous reasons - like criticizing public officials.
- Arbitrarily assessing "tax debts" and imposing fines and penalties.
- Sending churches intrusive questionnaires, demanding information to which the IRS has no right.
- Armed raids.
- Illegally seizing and destroying church property.
- After a court found that church property had been illegally seized, not returning all the property - but charging the church for storage!
- Padlocking churches and church schools.
- Jailing ministers and parents for their religious beliefs.
- Turning churches into tax collectors through the unconstitutional social security tax on churches.
- The "public policy" of the government is to impose a "state religion." In my opinion, these are its main elements:
1. The State is God.
2. The State owns its citizens - it may "draft" them like slaves.
3. The State owns the minds of its citizens - it dictates what the young shall be taught and who shall teach them.
4. The State ultimately owns all property - it can take what it likes when it likes.
5. The State must take care of its citizens because they cannot help themselves - this justifies the State taking whatever it likes.
6. Regarding sexual and racial matters - and morality generally - the State dictates what is right and wrong.
7. Fear of the State must be induced by any means to ensure obedience.
8. The State shall be the only god.
IRS REVENGE ON GEORGE HANSEN
In Taxscam: How The IRS Swindles You And What You Can Do About It, Alan Stang describes how the IRS got their revenge on Congressman George Hansen:
"When the State of Nebraska threw pastor Everett Sileven into jail for using "uncertified" teachers in the Faith Baptist Church, in Louisville, George Hansen went there to help. No other national political leaders did so, even after the State Police invaded the Church, where about seventy preachers from around the country were on their knees praying. The police picked the preachers up, carried them out, threw them on the lawn - and padlocked the church. Typically, the Prostitute National Press squelched the story for a long time. Your reporter gave it substantial coverage, in our daily, nationally syndicated, radio news commentary; and was told by many listeners with vehemence that no such outrage had happened or could happen in America."
On April 15, 1987 both Stang and Hansen were back at the Louisville church, attending a conference on liberty. They received a message from Hansen's wife that two U.S. marshalls had arrived at Hansen's home. She told the marshalls that Hansen was flying home from Omaha that night. The marshalls said they would "pick him up and take him home." Other marshalls, without a warrant, arrested Hansen at Eppley Airport in Omaha, and threw him into the Douglas County jail. From there he was flown in chains to Washington, where they booked him into the Alexandria City Jail under the assumed name, "Fred Smith." Neither Hansen, his wife, nor his attorney knew that an assumed name had been used. The purpose of these Gestapo tactics was to prevent Hansen from testifying at the Congressional hearings on the "taxpayers' bill of rights," of which he was the author. According to Stang:
"George was thrown into a dark basement cell full of cockroaches and lice, surrounded by drunks... He had to sleep in a bunk too narrow to contain him, and wear his Omaha coveralls for ten days... George is 6'6" tall, and weighed 270 pounds when the daymare began... Congressman Hansen was imprisoned under a law that contains no criminal penalties."
THE NATURE OF THE IRS BEAST
The Declaration of Independence talks about "swarms of officers to harass our people, and eat out their substance." Thomas Paine and Thomas Jefferson understood that taxation is the modern incarnation of cannibalism -- "eat out their substance." The IRS is a gang of modern cannibals.
To the IRS the U.S. Constitution is a joke. The fear of the IRS is so pervasive that, with the exception of a few individuals, no policeman, judge, politician, or U.S. President will lift a finger to curb the IRS. Like the Gestapo in Nazi Germany, the IRS can do whatever it likes to terrorize, consume, and destroy -- "the power to tax is the power to destroy."
The primary purpose of the IRS is to implement "public policy," which includes converting citizens to the "state religion." The IRS's main weapon is fear. Karl Marx, in The Communist Manifesto, advocated a heavy, progressive income tax and the abolition of private property as essential means for achieving communism - the IRS is a tool for moving the U.S. closer to socialism. Eliminating private schools is also "public policy" -- Marx advocated compulsory state education.
Most bankers, judges, and politicians are in league with the IRS -- a Grand Coalition for Economic Rape. The politicians and bureaucrats create the huge debts, which initiate the issue of currency. The Federal Reserve bankers create the debt-currency which must be repaid. The IRS collects taxes to pay the Federal Reserve Bankers interest and capital. The commercial bankers provide the IRS with information they use to rip off their victims. The judges jail the dissidents.
IRS rape is more than economic. It is also emotional and psychological: induce fear. IRS rape is intellectual: destroy private schools. It is also religious: destroy private churches. IRS rape is also legal rape: subvert and corrupt judges and the legal system. It is also political: destroy public officials who oppose it.
As a nation the U.S. may collapse before the IRS is curbed or abolished. But as an informed individual, your chances of beating them are very high. Tax attorney Donald W. MacPherson (Tax Fraud & Evasion: The War Stories) calculates the chances of an individual being prosecuted in any given year being about 1 in 70,000; and the chances of being jailed at 1 in 146,000. As a general rule, the IRS goes after the "easy pickings." In reality you don't deal with the "IRS monster," but with individual bureaucrats - often not the most competent individuals. Once you know the major weaknesses of the IRS - the soft belly of the monster - you have little to fear. You don't have to passively submit to their economic and other forms of rape. To the informed individual the IRS really is a paper tiger.
"[I]n a recent conversation with an official at the Internal Revenue Service, I was amazed when he told me that, 'If the taxpayers of this country ever discover that the Internal Revenue Service operates on 90% bluff, the entire system will collapse.'" —Senator Henry Bellmon, 1969
"The entire, increasingly rickety, structure is designed to preserve the secret of the "income tax"; which is that - as presently applied to working people - it has been perverted into a direct tax on the source without apportionment. Such a tax is as illegal today as it was when the Founding Fathers wrote the Constitution. That is the secret our friends at I.R.S. are trying to hide." —Alan Stang, 1988
"It is a proven fact: the men and women of the Internal Revenue Service can be beaten. If you remain, in spite of this revelation, fearful, it is your choice. This is not to say you should feel now the expert in tax matters. We have barely scratched the surface. But at the very least, you should have learned that the Bully has a soft belly, an Achilles heel, and is mentally and physically lazy. Not only a coward, he is a paper tiger." —Donald W. MacPherson, 1989
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