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DOJ rarely prosecutes those who refuse to honor a levy

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  • dave
    Scroll down to the part in “red” and you’ll see where this attorney admits that the IRS rarely prosecutes those who refuse to levy. This admission could
    Message 1 of 15 , Oct 25, 2009
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      Scroll down to the part in “red” and you’ll see where this attorney admits that the IRS rarely prosecutes those who refuse to levy. This admission could be handy in dealing with your employer as a direct quote.

      http://www.irstax.com/irslevy.htm

      Levy on Third Parties
      By Tony Mankus, Esq.

      A levy on third parties is, in effect, the seizure by the IRS of the taxpayer's property, or rights to property, in possession or control of third parties. Examples include the seizure of the taxpayer's bank accounts held by his bank, earned wages being retained by his employer, accounts receivables in possession of his clients, stocks in possession of his stock broker, etc. The levy on third parties is, by far, the most common form of collection enforcement by the IRS. Two of the most common forms of levies on third parties are levies on bank accounts and levies on wages. First, as a matter of practical reality, these places are usually where many taxpayers have their money. Second, IRS knows which specific bank accounts and employers of the taxpayers to levy on. IRS gets this information from the taxpayer's own tax returns, or other sources. The income tax return has a W-2 form attached to it from the taxpayer's employer. If the taxpayer is an independent contractor, his client sends (or is supposed to send) a form 1099 to the IRS. If any tax is due, the payment is often made with a check drawn on the taxpayer's bank account. IRS records this information in its collection data base. When and if it needs to take enforced collection action against the taxpayer, the IRS simply retrieves it from its data base.

      A levy on third parties is executed by service of form 668-A, Notice of Levy, or form 668-W, Notice of Levy on Wages, Salary and Other Income. Form 668-A is a one-time levy that attaches to all of the funds or property of the taxpayer held by the third party at the time that the 668-A is served. Form 668-W, on the other hand, is a continuous levy on part (albeit a large part) of the funds held and/or to be held by a third party, usually an employer, It remains in force and effect until IRS serves the third party with a Release of Levy, form 668-D.

      What is IRS' authority for the Levy?

      The authority for the levy on third parties comes generally from IRC §6331, the same as the authority for seizure. The Code does not distinguish clearly between a seizure of assets from the taxpayer and the levy of his assets on third parties. Both of them are referred to as "levy". Therefore the 10/30 day notice requirements of IRC §6331(d) also apply to levies on third parties. With regard to the property that is subject to the notice of levy, form 668-A, IRC §6331(b) states, in relevant part, that "a levy shall extend only to property possessed and obligations existing at the time thereof." (Emphasis added) That means that the third party is obligated to send to the IRS only the property (funds) it holds on behalf of or owes to the taxpayer at the time of the service of form 668-A. However, if the IRS does not collect all the money it is owed with the first levy, it can continue to levy repeatedly until it does. IRC §6331(c) states the following:

      (c)SUCCESSIVE SEIZURES.-Whenever any property or right to property upon which levy has been made by virtue of subsection (a) is not sufficient to satisfy the claim of the United States for which levy is made, the Secretary may, thereafter, and as often as may be necessary, proceed to levy in like manner upon any other property liable to levy of the person against whom such claim exists, until the amount due from him, together with all expenses, is fully paid.

      [This section does not, as some revenue officers contend, authorize the IRS to seize property, release it to the taxpayer upon its redemption for value, and then seize it again. IRC §6331(c) states that IRS may seize any other property repeatedly. (Emphasis added)]

      The authority for form 668-W, the continuous levy on wages, salary and other income, comes from IRC §6331(e) which states that, "The effect of a levy on salary or wages payable to or received by a taxpayer shall be continuous from the date such levy is first made until such levy is released under section 6343." (IRC §6343 will be discussed later in this chapter)

      IRC §6334(d) exempts a certain amount from the continuous levy. The amount exempt from each wage or salary payment is the personal exemption amount allowed for the taxpayer under IRC §151(d), divided by the number of paychecks in a year. Thus, if the taxpayer is married and has two children whom he claims on a joint tax return (and the wife does not work), he would be entitled to three exemptions. In 1995, each exemption was worth $2,500.00. (It is adjusted annually for inflation) Therefore he would be entitled to an exemption $144.23 if he gets paid weekly and the levy was served on the employer in 1995. If the wife works and claims one of the children, the husband would only be entitled to two personal exemptions and the amount exempt from an IRS levy would be $96.15 weekly. If he and his wife are divorced and he is paying child support under a court order, the full amount of the child support payment would be exempt from IRS' levy under IRC §6334(a)(8), but he would not be entitled to claim additional exemptions for the children under section 6334(d). He would, however, be entitled to one personal exemption for himself, or $48.07 weekly. [See Treas. Reg. §301.6334 and IRM §5363.3]

      If the husband has more than one job, an IRS levy on just one job would not allow the taxpayer any exemtions if the amount he earns on the other job is at least as much as would be allowed under section 6334. If he earns less on the second job than the amount of the exemption allowed, the exemption would pro-rated to include only the difference between what he earns on the second job and the amount of the allowed exemption.

      If the wife also works and it is a joint tax liability, the IRS may levy on her wages as well. The maximum amount of the exemtion between the two of them will only be $144.23 ($7,500 ¸ 52). It should be noted, however, that IRS generally does not levy on the wages of both spouses, except in the most eggregious cases. [See IRM §5366.3(5)]

      Once IRS form 668-W is served on the employer, the taxpayer has three days to complete part 3 of the form, statement of exemtions and filing status. He then gives it to his employer who withholds accordingly. If he fails or refuses to fill it out, the employer must withhold as if the taxpayer were a married individual filing a separate return. That would entitle him to a personal exemption of $1,250.00 per year in 1995, or $24.03 per week. [See Treas Reg. §301.6334-3]

      If the levy remains in effect from one calander year to another, the employer will continue to withhold the same amount, even though the exemption amount may have increased in the second year due to indexing. However, the taxpayer may submit a new "verified statement" to the employer to change the amount of the exemption. [See Treas. Reg. §§301.6334-3(e) and 301.6334-4] The rationale of the IRS is that forcing the taxpayer rather than the employer to make the adjustment is less burdensome on the employer who is an innocent third party in this matter.

      What property does the notice of levy attach to?

      Other than the property exempt under IRC §6334, the notice of levy attaches to all property or rights to property of the taxpayer in the possession of third parties. IRS can serve notices of levy on any third parties which hold virtually any property, or rights to property, on behalf of the taxpayer to which IRS' lien attaches. Common examples are: levies on accounts receivables of an in-business taxpayer, levies on tenants for rents due a taxpayer/landlord, levies on attorneys who represent taxpayers in a suit which stands a chance to recover money damages, levies on cash loan value of whole life insurance policies owned by the taxpayer, levies on the death benefits of a life insurance policy if the taxpayer is the beneficiary, levies on the annuity payments due the taxpayer, etc.

      At times, questions may arise as to whether the taxpayer is the true owner of the property and, if so, the extent of his rights in the property. For example, if a taxpayer sets up a bank account in trust for his child, the question may arise as to whether the taxpayer or the child is the true owner of the property. If the taxpayer is the true owner, the IRS may serve a notice of levy on the bank and seize the funds in the account. If, on the other hand, the child is the true owner, the IRS' levy does not attach to the funds. Another example is where the taxpayer has a bank account jointly with his spouse. The question may arise as to whether the IRS may seize the funds in the account, or seize only half of them - or perhaps not at all, if the funds were all deposited by the spouse. The issue of title to property and the scope of the IRS’ levy in general will be dealt with more extensively in Chapter 4, "The Federal Tax Lien." The issue of whether and to what extent a levy attaches to property is essentially an issue of whether the federal tax lien attaches to particular property.

      Is any property exempt from levy on third parties?

      The only property or rights to property that is exempt from levy on third parties is that which has been enumerated in §6334 of the IRC. Five of the thirteen exemptions were discussed in Chapter One of this book. They dealt with property that is commonly in the possession of the taxpayer. The other eight, listed below, are usually in the posession of third parties. The relevant sections of IRC §6334 state the following:

      (a)ENUMERATION.-There shall be exempt from levy-

      . . . .

      (4) UNEMPLOYMENT BENEFITS.-Any amount payable to an individual with respect to his unemployment (including any portion thereof payable with respect to dependents) under an unemployment compensation law of the United States, of any State, or of the District of Columbia or of the Commonwealth of Puerto Rico.

      . . . .

      (6) CERTAIN ANNUITY AND PENSION PAYMENTS.-Annuity or pension payments under the Railroad Retirement Act, benefits under the Railroad Unemployment Insurance Act, special pension payments received by a person whose name has been entered on the Army, Navy, Air Force and Cost Guard Medal of Honor roll (38 U.S.C. 562), and annuities based on retired or retainer pay under chapter 73 of title 10 of the United States Code.

      (7) WORKMEN'S COMPENSATION.-Any amount payable to an individual as workmen's compensation (including any portion thereof payable with respect to dependents) under a workmen's compensation law of the United States, any State,the District of Columbia, or the Commonwealth of Puerto Rico.

      (8) JUDGMENT FOR SUPPORT OF MINOR CHILDREN.-If the taxpayer is required by judgment of a court of competent jurisdiction, entered prior to the date of levy, to contribute to the support of his minor children, so much of his salary, wages, or other income as is necessary to comply with such judgment.

      (9) MINIMUM EXEMPTION FOR WAGES, SALARY, AND OTHER INCOME.-Any amount payable to or received by an individual as wages or salary for personal services, or as income derived from other sources, during any period, to the extent that the total of such amountspayable to or received by him during such period does not exceed the applicable exempt amount determined under subsection (d).

      (10) CERTAIN SERVICE-CONNECTED DISABILITY PAYMENTS.-Any amount payable to an individual as a service-connected (within the meaning of section 101(16) of title 38, United States Code) disability benefit under-

      (A) subchapter II, III, IV, V, or VI of chapter 11 of such title 38, or

      (B) chapter 13, 21, 23, 31, 32, 34, 35, 37, or 39 of such title 38.

      (11) CERTAIN PUBLIC ASSITANCE PAYMENTS.-Any amount payable to an individual as a recipient of public assisstance under-

      (A) title IV (relating to aid to families with dependent children) or title XVI (relating to supplemental security income for the aged, blind, and disabled) of the Social Security Act, or (b) State or local government public assistance or public welfare programs for which eligibility is determined by needs or income test.

      (12) ASSISTANCE UNDER JOB TRAINING PARTNERSHIP ACT.-Any amount payable to a participant under the Job Training Partnership Act (29 U.S.C. 1501 et seq.) from funds appropriated pursuant to such act.

      Contrary to popular belief, income from most pensions, including military pension and social security benefits, are not exempt from levy. Neither are Medicare payments, nor dividends from Veteran Administration insurance policies. However, IRS' policy is that these pensions, as well as death benefits and other forms of medical or humanitarian disbursements be levied upon judiciously and only in the most eggregious cases of non-compliance. [See IRM §§536(14) through 536(17)] Pension payments under the Railroad Retirement Act and those designated for Medal of Honor winners are exempt under IRC §6334(a)(6), as are annuities under the Retired Serviceman's Family Protection Plan and the Survivor Benefit Plan.

      The exemptions are few and very specific. As if to emphasize that point, Congress passed §6334(c) which states the following:

      (c) NO OTHER PROPERTY EXEMPT.-Notwithstanding any other law of the United States (including section 207 of the Social Security Act), no property or rights to property shall be exempt from levy other than the property specifically made exempt by subsection (a).

      Sometimes there is confusion and misunderstanding, especially in a bankruptcy setting, between the exemptions granted under IRC §6334 and those granted under §522 and other sections of the Bankruptcy Code. The exemptions under the Bankruptcy Code are broader and include, among other things, a homestead exemption and certain private pension plans. However, IRC §6334(c) makes clear, and IRS takes the position that, it can collect tax liabilities from property that is exempt under the Bankruptcy Code that is not exempt under IRC §6334 - even if the taxes are dischargeable in bankruptcy. (More on this in Chapter )

      It should be noted, however, that while pension or other retirement income is reachable by IRS' levy, the corpus may not be, depending on how the pension is structured. Generally, if the beneficiary cannot take out the corpus in a lump sum, IRS' levy cannot reach it. Some pensions or profit sharing plans provide for a limited access to the corpus in cases of certain enumerated emergencies, such as extreme medical expenses, bills for the purchase or repair of a primary residence, funeral expenses, etc. This makes the situation more ambiguous. Arguably, the corpus is reachable only through a voluntary application of the beneficiary and the IRS cannot administratively compell the beneficiary to apply for a withdrawal - at least not without a court order. Therefore, the corpus should not be reachable by IRS' levy. But this is a gray area of the law that has not been fully explored by the courts. And, since IRS is not aggresively pursuing this avenue, it is likely that the area will remain gray for the forseeable future. [See IRM §536(14).5(4)]

      It is arguable that IRS' levy attaches to an IRA account. An IRA account can be liquidated unconditionally by the owner at any time, provided that he is prepared to pay the taxes on the accrued interest, plus the 10% early withdrawal penalty. When IRS does levy on an IRA account, the insult to injury is that, in paying off an old tax liability, the taxpayer incurs a new one.

      Of course, IRS' lien attaches to the corpus of the pension or profit sharing plan, but that is a passive encumbrance, somewhat analogous to a mortgage on a house. As long as IRS makes no effort to judicially foreclose on its lien the pension should remain intact. (More on this issue in Chapter 4.)

      What is the obligation of the third party who is served with a levy?

      IRC §6332(a) requires the third party to surrender any property of the taxpayer subject to the levy. Generally the property must be surrendered to the IRS immediately, or within a reasonable time. The IRC makes exceptions for banks and insurance companies, however. §6332(c) allows banks 21 days to honor the levy; §6332(b) gives the insurance companies 90 days to comply. The purpose of these statutory delays is not clear. Presumably they give time to the banks and insurance companies to process the paperwork, allow checks on deposit with a bank to clear and, perhaps, provide the taxpayer with an opportunity to work something out with the IRS in the meantime.

      Once the third party honors the levy by surrendering the property to the IRS, he is, pursuant to IRC §6332(e), dicharged from any further obligation to the IRS, to the taxpayer or to any other person with respect to the surrender of such property. That means that, theoretically, he cannot be held liable by the taxpayer, or some other party who claims an interest in the property, for surrendering it to the IRS.

      If the third party refuses to honor the levy, the IRS usually serves a Final Demand, Form 668-C. If the third party still refuses to turn over the property, the IRS may turn the matter over to the U.S. Justice Department for prosecution under IRC §6332(a). If convicted, the third party may be held personally liable for the value of any property not surrendered to the IRS. IRC §6332(d)(1) imposes a personal liability on any person who fails or refuses to honor the levy. The personal liability is equal to the value of the property subject to the levy, plus the costs incurred to enforce such levy and the statutory interest from the date of the levy. §6332(d)(2) imposes an additional penalty of 50% of the amount subject to the levy on the person who refused to honor the levy. §6332(f) defines the term "person" to include an officer or an employee of a corporation or a member or employee of a partnership who is under a duty to honor the levy.

      In reality, few cases are prosecuted by the Justice Department. In part, this is due to the fact that the Justice Department does not have the resources to pursue all the failure to honor levy cases. Another reason is that the third parties may, arguably, have valid defenses. For example, if the third party is an account receivable of the taxpayer, it may claim that the product it purchased from the taxpayer was defective or the work performed by the taxpayer was inadequate or incomplete. Therefore the Justice Department would have to get involved into the contractual relationship between the parties to determine whether its levy against the third party had to be honored. This would be time consuming and, perhaps, not cost effective, especially if the funds at issue are relatively small, as is the case in most levies on third parties.

      These realities have resulted in gamesmanship by some third parties. For example, some accounts receivables refuse to pay the IRS - or the taxpayer. They sense that the taxpayer, who has IRS tax problems, is too weak to sue them and suspect that the government will not pursue them either. So they just keep the money and end up with a windfall. It's a dog-eat-dog world out there and some dogs are bigger, smarter or meaner than others.

      The Justice Department should consider farming out some of the more meritorious failure to honor suits to private attorneys who would pursue the third parties in court for a percentage of the amount collected. There are many hungry young attorneys out there who would be willing to do that. The results, while not pretty, would result in additional funds in the coffers of the U.S. Treasury. Privatization of some aspects of the tax collection process should be explored.

      Of course, the one sure way to avoid a suit by the Justice Department is to get a release of the levy from IRS. IRC §6343 grants authority to the IRS to release the levy. (It's ironic to me that IRS would need such authority. I could see IRS needing the authority to levy, but not authority to release it. If it has the authority to do something, it seems implicit that they would have the authority not to do it, or to undo it once they've done it. It's hard for me to imagine a scenario where a taxpayer, or anybody else, for that matter, would sue the IRS for releasing a levy on grounds that it had no authority to do so. I suppose, from IRS' perspective, it's worried that, if it released levies without explicit authority, Congress might accuse it of not fulfilling its mandate. More likely, it's a commentary on IRS' paranoia that it would feel that it even needs such authority.)

      In 1989, however, Congress modified this section as part of the so-called "Taxpayer Bill of Right" legislation, making it mandatory for the IRS to release the levy under certain conditions. Where before the statute simply made it lawful for the IRS to release a levy, the new statutes directs the IRS to release it, such as when the collection statute expires, when the taxpayer has entered into a payment agreement, or when the levy is creating an economic hardship. However, there is sufficient waffling in the language and in IRS' implementation of the statute so that IRS still uses a lot of discression about when and if the levy will be released. For example, economic hardship is determined by the IRS and, as a practical matter, IRS rarely releases a levy on those grounds.

      I had a case that I thought was a hardship case. It involved a taxpayer who worked two jobs, one as a deliverer of newspapers and the other one as a photographer for a real estate listing service. He was treated as an independent contractor by both of the companies he worked for so that there was no withholding. Every year he ran up tax liabilities due to a failure to make estimated tax payments. IRS served a continuous levy on one of his jobs and kept it on there for over a year. He could not pay his gas bill and the gas company shut it off. When he came to my office he had not taken a bath for weeks, perhaps months, and the smell remained long after he left. His shoes and clothing were worn out and delapidated. He did not have enough money to eat regularly so he ate dog and cat food. He kept three or four cats and several dogs - for companionship, I suppose. (He was not married) Also the roof leaked so that there were pots and pans on the floor and constant dripping when it rained. It was cold and damp there in the winter months and he had no health insurance.

      On top of the levy, the revenue officer seized his home and was preparing to sell it. I prepared a form 911 (to be discussed later) and requested a release of levy on grouds of hardship. The case was refered to the regional office. The regional commissioner wrote me a letter stating that "we are pleased to provide the relief you requested." He went on to state that the sale of the home would be stayed for 10 days during which time the taxpayer is to work out some sort of "alternative arrangement to satisfy the liabilities." The only alternative arrangement available with the IRS that was feasible for the taxpayer was a payment agreement, but since the taxpayer had previously defaulted on one, the revenue officer did not want to grant him another one. (The taxpayer did not want to file Chapter 13 bankruptcy, which would have stopped the IRS. Even if he had wanted to, it's not clear that he could have proposed a feasible plan of reorganization. His disposable income was probably too low to pay the creditors the liquidation equity in his home.)

      So the revenue officer held the sale of the home after the 10 day period expired. No one bid in because the minimum bid he set was too high. Eventually the revenue officer released the home and the levy on the employer, but not before he put the taxpayer through the wringer.

      The IRS releases a levy on third parties by issuing form 668-D. (The release of levy on property seized from the taxpayer is form 668-E) Form 668-D has provisions for a partial release of levy. The IRS can decide to levy a smaller amount than the one they are entitled to. [See IRM §536(13).2]

      © Tony Mankus, Mankus & Marchan, Ltd.

       

    • gary
      Thought this might be interesting. Gary Federal jury finds tax protestor guilty Paul Egan / The Detroit News Detroit -- A federal jury today convicted tax
      Message 2 of 15 , Oct 26, 2009
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        Thought this might be interesting.

         

        Gary

         

        Federal jury finds tax protestor guilty
        Paul Egan / The Detroit News

        Detroit -- A federal jury today convicted tax protester and author Peter Hendrickson on 10 counts of filing false documents.

        Hendrickson, 54, of Commerce Township, author of "Cracking the Code," could face prison when he is sentenced by Chief U.S. District Judge Gerald E. Rosen on Feb. 9. Each count is a three-year felony.

        Hendrickson's trial began last Tuesday on charges he falsely reported zero or nominal income on his 2000 to 2006 tax returns when he actually earned tens of thousands of dollars each year.

        Testifying in his own defense, Hendrickson told jurors that income tax is an excise tax and excise taxes may only be levied upon those who benefit from a government privilege such as a government job.

        But the government called expert witnesses from the Internal Revenue Service who rejected Hendrickson's arguments.

        The jury deliberated less than half a day.

        Hendrickson, who was comforted by his wife Doreen and other family members following the verdict, said he plans to appeal.

        He criticized Rosen for instructing the jurors on what the law said, rather than giving them copies of the relevant statutes to read for themselves.

        "He relieved the prosecution of its burden in this case," Hendrickson said of the judge.

        In 2007, U.S. District Judge Nancy G. Edmunds permanently barred Hendrickson and his wife from filing tax returns on which they falsely reported their incomes as zero. The order came in response to a lawsuit filed against Hendrickson by the U.S. Justice Department. Edmunds found Hendrickson's position on income tax to be "false and frivolous."

        Hendrickson, who remains free on bond to await his sentencing, was convicted in 1992, for failing to file a federal income tax return and for a conspiracy involving a fire bomb placed in a bin at a Royal Oak post office.

        Hendrickson could face sentencing guidelines of 21 to 27 months on the latest convictions, an official said.

        http://www.detnews.com/article/20091026/METRO/910260410/1361/Federal-jury-finds-tax-protestor-guilty

        _,_._,___

      • gary
        Here is a response by Pete. The Truth Gets Mugged (for the moment...) Four hours after being given the following instructions over my strenuous objection and
        Message 3 of 15 , Oct 27, 2009
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          Here is a response by Pete.



          The Truth Gets Mugged (for the moment...)



          Four hours after being given the following instructions over my strenuous
          objection and insistence that the jurors be provided the actual language of
          the statutes, to which the judge replied (in court, but with the jury
          absent) that he wasn't going to let the jurors see that actual language
          because doing so, "might cause them to speculate as to its meaning":




          WAGES DEFINED



          As it relates to the charges in this case, I instruct you that the term
          “wages” means all payments for services performed by an employee for his
          employer. The term wages applies to all employees and is not restricted to
          persons working for the government. 26 U.S.C. § 3401(a); 26 U.S.C. §
          3121(a).




          EMPLOYER DEFINED

          As it relates to the charges in this case, I instruct you that the term
          “employer” means the person for whom an individual performs or performed any
          service, of whatever nature, as the employee of such person . This
          definition applies to all employers, whether private or government. 26
          U.S.C. § 3401(d); 26 U.S.C. § 3121(b).




          EMPLOYEE DEFINED

          As it relates to the charges in this case, I instruct you that the term
          “employee” means any individual who performs services and who has a legal
          employer-employee relationship with the person for whom he performs these
          services. 26 U.S.C. § 3121(d)(2); 26 U.S.C. § 3401(c).



          ...and after the two most attentive jurors-- one of whom had actually asked
          during the trial to see the language of 3401 and 3121, and been rebuffed--
          were bumped as alternates, the jury in my trial came back with guilty
          verdicts on all counts.



          This was also after the prosecution had succeeded in stopping me from
          presenting any revealing special-case victories to the jury by the expedient
          of stipulating, at the judge's direction, that "numerous people have gotten
          refunds by filing returns similar to Mr. Hendrickson's". This didn't stop
          the jurors from learning that 750 such refunds were confirmed with evidence,
          but it did prevent them from learning about those that reflected extended
          contests with the tax agencies before issuing, thus leaving them able to
          harbor the notion that all of these refunds just "slipped through the
          cracks".



          It was also after an extended introduction of documents by a State of
          Michigan "disclosure officer" who ended up being caught out in a couple of
          subterfuges, claiming to have furnished us with a complete copy of the state
          agency's file on me but having left out several "no tax due" notices which I
          happened to have saved (of course) and was able to produce during my own
          testimony. Further, although the "disclosure officer" testified that
          Michigan had made "assessments" concerning Doreen and me, the document she
          ultimately described as the "assessment" on cross-examination proved to be
          merely a form referring to a "proposed adjustment of tax".



          Indeed, included in the document dump provided by the government (about 48
          hours before trial, and a foot thick) was a letter from this same
          "disclosure officer" on which she states, over her signature, that in fact,
          Michigan has never conducted an audit related to me for any of the years
          2000 through 2007. The prosecution didn't introduce this letter into
          evidence, though (no surprise), and unf-rt-nately my team overlooked it until too late to present it to the jury.





          The prosecution also presented a "disclosure officer" from the IRS, who
          bored and bewildered everyone with an hours-long description of my filings
          and various IRS documents. Interestingly, among these documents (but never
          presented to the jury during the trial) were current certificates of
          assessment (as of 9/03/09) for the
          <http://www.losthorizons.com/Newsletter/CriminalAssault/CertsOfAssess.pdf>
          years 2002 through 2006-- every one of which shows $0 assessed for all of
          these years (except for $28.34 for 2003, on an IRA distribution taken that
          year).



          Aside from $20 in 2002, the $286 for that IRS distribution in 2003 and $63
          in 2004 (with a $10,484.47 overpayment showing as acknowledged but not yet
          refunded for that year), all show $0 "income". Again, these are
          certificates of status as of last month...



          The 2005 and 2006 transcripts show "Substitutes for Return" listed as the
          data source based on the fiction that no returns were filed. Those returns
          were introduced in the trial, so I guess that pretense is put to rest, but
          the point here is that even when the 'service' was operating under this
          pretense, it produced $0 assessments for these years (with assessment dates
          of 10/08/07 and 5/19/08, respectively- although also $0 balances, making the
          whole calculating process somewhat obscure at this point, since money was
          withheld from me in both years).



          On another interesting subject, one IRS witness testified that,
          conservatively estimated (her expression), her office alone has seen well
          over 10,000 CtC <http://www.losthorizons.com/Cracking_the_Code.htm>
          -educated filings pass through over the last several years. No wonder they
          so badly want to hang me out to scare others away from CtC.



          CtC <http://www.losthorizons.com/Cracking_the_Code.htm> itself never made
          it to the jury, nor any portions of the book. This was in part, at least,
          just a screw-up on the part of my legal help, who forgot to publish to the
          jury selected chapters that had been prepared as exhibits when the
          opportunity to do so arose.



          That said, it's entirely possible that these might have been disallowed
          anyway, as they contained the language of the statutes that the judge didn't
          wish the jury to see. Consequently, the real unambiguous tragedy there is
          that I hadn't taken the opportunity during my own testimony to discuss the
          nuances of the law in any depth, due to a recommended approach of keeping
          that testimony simple, while relying on the published material to cover the
          details. It was only after the defense had rested that I learned that these
          exhibits had never been offered.



          In the end, the prosecution relied on testimony quoting some
          radical-sounding, out-of-context words I was on record as saying 20 years
          ago, combined with some of more recent vintage taken wildly out-of-context,
          to give the impression that I just have a sustained hatred of the federal
          government and the tax system as a motivation, which, along with my avowed
          expertise on the tax law was used to attack me on the "willfulness" front.
          At the same time the instructions posted above were used to simply dictate
          to the jury its conclusions on the rightness or wrongness of what appears on
          my filings, thus relieving the prosecution of all its burdens in that
          regard.



          These were blended with a largely irrelevant, but mind-numbing five or six
          hours of document-identifications by the "disclosure officers" mentioned
          earlier. These dull, bureaucratic recitals combined to give a sense of
          weight to what was really a pointless exercise in terms of evidentiary
          value, in that these "disclosure officers" were carefully chosen for their
          inability to actually testify as to content of these documents-- that is,
          any and all conclusions or analysis presented ON those documents. This was
          a clever ploy, in that it gave the defense no one to challenge as to any of
          that content (such as to establish that every bit of it was based 100% on
          nothing more than taking as gospel the unsupported claims on the relevant
          W-2s).





          Needless to say, I'm not happy, and my family is in serious distress. But
          we will persevere, and intend to appeal over the matter of the instructions
          above, and other issues, as well.



          You are the ones that make this possible, and I thank all of you from the
          bottom of my heart for your prayers, your kind and heartening words, and
          your support throughout this ordeal so far. I hope that you will continue
          in every respect going forward, and especially keep up your own courage and
          commitment in upholding the rule of law (though I have no fears on that
          score).



          There is an old story that I'm sure you all know, about a group of mice
          being preyed on by a cat. One day, one of the mice has the bright idea of
          hanging a bell around the cat's neck, so that the mice will all hear it
          coming, and thus avoid being consumed. Everyone agrees that the plan is
          brilliant, but then comes the question, "Who will be the one to put the bell
          on the cat (and surely die trying)?" Faced with that, no one acts, and the
          mice go on as abject victims of the hungry cat.



          However, there IS a solution to that conundrum: If all the fellows of the
          mouse doing the belling act together in his support, the cat can be
          overwhelmed and the job can be done.



          In this case, the mice are supposedly free men and women, and the task that
          needed doing was that of pulling back the curtain to reveal a corrupt lie by
          which everyone has already been victimized for decades, and would continue
          to be for decades to come. I stepped forward and pulled back that curtain,
          and now the liars are trying to cut off my hand so that the curtain can drop
          back into place and their exploitations can continue unhindered. I need my
          fellows to help, right now.



          Donations can be made here
          <https://www.paypal.com/xclick/business=phendrickson@...&no_int
          l=1&return=http:/www.losthorizons.com> . Anything that you can afford to
          contribute-- even if it's just $10-- will be helpful and much appreciated.



          Many of you have already contributed to my expenses in dealing with this
          assault on the truth and our rule of law, and I am enormously grateful to
          all who have done so. But just getting to where we are in this affair so
          far, has cost nearly $200,000.00 in legal fees. Much more will be needed
          going forward in pursuing the appeal.



          By the way, an alternative to simple donations that has another, special
          virtue is to purchase copies of CtC to give to friends, family and
          neighbors...



          As it happens, the eleventh edition of CtC is now available, and so, even if
          just a single book is all that you can afford, this is a perfect time to
          give your older edition to someone needing to learn the truth about the tax
          and to give yourself a new copy with all the text upgrades, additional
          authorities and appendix supplements included to one degree or another in
          every new edition. If your budget allows for more, discounts begin with as
          few as six copies. Click here <http://www.losthorizons.com/cc.htm> for
          ordering and discount information.



          Above all, even if helping financially is simply beyond your abilities at
          this time, don't let yourselves be cowed into silence. Lies and corruption
          require darkness to thrive. The light of public awareness is to them as
          daylight is to a vampire.



          However, I simply cannot command the attention of the media. The first
          thing anyone in the media does upon hearing from me is go to Google, and the
          first thing they find is a DoJ press release, or some other
          carefully-crafted, misleading page by an enemy of the truth which
          deliberately excludes all of the legal victories (and the legal shenanigans
          of the opposition), the hundreds and hundreds of practical victories, the
          facts about the disinformation campaigns and the other plain evidence of the
          actual truth of CtC-related events over the years, and which also excludes
          any of the actual content of the relevant law, of course. Typically, the
          matter gets no second look, nor any skeptical investigation of these
          calculated misrepresentations.



          YOU can get more traction, though, because you're not saying, "Hey, look at
          my stuff!" You're saying, "Hey, look at this guy's stuff! I did, and it
          took awhile, but what I learned will blow your socks off, and it's the story
          of the century!"



          So please, stand up, loud and proud. If you are in the media, or know
          anyone who is, please help see to it that informed, honest reporting is done
          about CtC and this current desperate, corrupt assault on the liberating
          truth. And even if you're NOT in the media officially, help me get the word
          into the new media, which matters at least as much. Send me your video
          testimonials.



          "Cowardice asks the question - is it safe? Expediency asks the question -
          is it politic? Vanity asks the question - is it popular?

          But conscience asks the question - is it right? And there comes a time when
          one must take a position that is neither safe, nor politic, nor popular; but
          one must take it because it is right."

          -Dr. Martin Luther King, Jr.



          Why It Matters
          <http://www.losthorizons.com/comment/archives/WhyItMatters.pdf>



          To review this affair in its entirety, please begin at the top of this page
          and read through.



          *People exploited as resources by others while under a delusion keeping them
          from realizing the sordid truth. See 'The Matrix'.





          From: tips_and_tricks@yahoogroups.com
          [mailto:tips_and_tricks@yahoogroups.com] On Behalf Of gary
          Sent: Tuesday, October 27, 2009 12:12 AM
          To: tips_and_tricks@yahoogroups.com
          Subject: [tips_and_tricks] Peter Hendrickson convicted.





          Thought this might be interesting.



          Gary



          Federal jury finds tax protestor guilty
          Paul Egan / The Detroit News

          Detroit -- A federal jury today convicted tax protester and author Peter
          Hendrickson on 10 counts of filing false documents.

          Hendrickson, 54, of Commerce Township, author of "Cracking the Code," could
          face prison when he is sentenced by Chief U.S. District Judge Gerald E.
          Rosen on Feb. 9. Each count is a three-year felony.

          Hendrickson's trial began last Tuesday on charges he falsely reported zero
          or nominal income on his 2000 to 2006 tax returns when he actually earned
          tens of thousands of dollars each year.

          Testifying in his own defense, Hendrickson told jurors that income tax is an
          excise tax and excise taxes may only be levied upon those who benefit from a
          government privilege such as a government job.

          But the government called expert witnesses from the Internal Revenue Service
          who rejected Hendrickson's arguments.

          The jury deliberated less than half a day.

          Hendrickson, who was comforted by his wife Doreen and other family members
          following the verdict, said he plans to appeal.

          He criticized Rosen for instructing the jurors on what the law said, rather
          than giving them copies of the relevant statutes to read for themselves.

          "He relieved the prosecution of its burden in this case," Hendrickson said
          of the judge.

          In 2007, U.S. District Judge Nancy G. Edmunds permanently barred Hendrickson
          and his wife from filing tax returns on which they falsely reported their
          incomes as zero. The order came in response to a lawsuit filed against
          Hendrickson by the U.S. Justice Department. Edmunds found Hendrickson's
          position on income tax to be "false and frivolous."

          Hendrickson, who remains free on bond to await his sentencing, was convicted
          in 1992, for failing to file a federal income tax return and for a
          conspiracy involving a fire bomb placed in a bin at a Royal Oak post office.


          Hendrickson could face sentencing guidelines of 21 to 27 months on the
          latest convictions, an official said.


          <http://www.detnews.com/article/20091026/METRO/910260410/1361/Federal-jury-f
          inds-tax-protestor-guilty>
          http://www.detnews.com/article/20091026/METRO/910260410/1361/Federal-jury-fi
          nds-tax-protestor-guilty

          _,_._,___
        • Patrick M
          To me, A Checklist For A New Warrior reveals the HUGE FLAW in Pete’s thinking. Do I understand that labels and locations can be deceiving, and are
          Message 4 of 15 , Nov 9, 2009
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            To me, A Checklist For A New Warrior reveals the HUGE FLAW in Pete’s thinking.

             

            "Do I understand that labels and locations can be deceiving, and are subordinate to the actual specifications in the statutes?  For instance, do I understand that even though they are listed separately on a W-2 and 4852, amounts withheld under the labels "Social Security and Medicare taxes" are really just specially-named parts of what is called "federal income tax withheld" on a 1040, being merely what has been withheld as deposits against the possibility that I had "income" in the form of "wages" which not only qualify as the "wages" of an "employee" (as defined in 26 USC 3401(c) et seq.) subject to the normal tax, but ALSO qualify as "wages" from "employment" (as defined in 26 USC 3121(b) et seq.) and thus are subject to the FICA surtax as well?"

            http://www.losthorizons.com/TaxTip.htm#Frivolous

             

            The DEFINITION of “wages” for FICA (Medicare & Social Security) in 26 USC 3121(a) is for Chapter 21.

             

            26 USC 3121

            a) Wages

            For purposes of this chapter, the term “wages” means all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash; except that such term shall not include—[rest omitted]

            http://www4.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00003121----000-.html

             

            The DEFINITION of “wages” for WITHHOLDING for income tax in 26 USC 3401(a) is for Chapter 24 & is DEPENDANT on being the DEFINED “employee” in Chapter 24.

             

            26 USC 3401

            (a) Wages

            For purposes of this chapter, the term “wages” means 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 (including benefits) paid in any medium other than cash; except that such term shall not include remuneration paid—

            (c) Employee

            For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of the United States , a State, or any political subdivision thereof, or the District of Columbia , or any agency or instrumentality of any one or more of the foregoing. The term “employee” also includes an officer of a corporation.

            http://www.law.cornell.edu/uscode/26/usc_sec_26_00003401----000-.html

             

            The simple FACT is that IF one claims EXEMPT from FEDERAL INCOME TAX, FICA is STILL DEDUCTED.

             

            So WHY is Pete equating the two & IGNORING his OWN weekly tax tip?

             

            THIS WEEK'S TAX TIP

             

            A helpful summary of certain core "income" tax dynamics

            73 Am Jur 2d § 146 Operation of legislative definitions, generally

            Research References

            West’s Key Number Digest, Statutes 223.1

             

            The lawmaking body’s own construction of its language, by means of definitions of the term employed, should be followed in the interpretation of the act or section to which it relates and is intended to apply.1  By the same token, the courts should not enlarge statutory definitions so as to include a situation or a condition which it might be assumed the legislature would have covered by an enlarged definition if its existence had been contemplated.2  A statutory definition supersedes the common-law,3 colloquial,4 commonly accepted, dictionary or judicial definition.5  In this regard, where statute itself contains a definition of a word used therein, the definition controls, however contrary to the ordinary meaning of the word it may be,6 and the term may not be given the meaning in which it is employed in another statute, although the two may be in pari material.7  Where the legislature has defined words which are employed in a statute, its definitions are binding on the courts since the legislature has the right to give such signification as it deems proper to any word or phrase used by the statute, irrespective of the relationship of the definition to other terms.8  Furthermore, where a word that already has a definite, fixed, and unambiguous meaning is redefined in a statute, the definition must be taken literally by the courts.9

            http://www.losthorizons.com/TaxTip.htm#Frivolous

             

            Especially given WHAT the Court said in his case in 2007.

             

            “Defendants were not entitled to a refund, under any circumstances, of the social security and Medicare taxes that had been withheld from Defendant Peter Hendrickson’s wages during 2002.

            “…Defendants are prohibited from filing any tax return, amended return, form (including, but not limited to Form 4852 (“Substitute for Form W-2 Wage and Tax Statement, etc.”)) or other writing or paper with the IRS that is based on the false and frivolous claims set forth in Cracking the Code that only federal, state or local government workers are liable for the payment of federal income tax or subject to the withholding of federal income, social security and Medicare taxes from their wages under the internal revenue laws (26 U.S.C.);…”

             

            http://www.usdoj.gov/tax/Hendrickson_AmendedJudgPermInj.pdf

             

            Patrick in California

            "We are apt to shut our eyes against a painful truth, for my part, I am willing to know the whole truth, to know the worst & to provide for it."-- Patrick Henry

             

          • John Hill
            Regarding a post made by Patrick M. which in detail covered the definitions of such terms as wages, employee, and made reference to an alleged requirement
            Message 5 of 15 , Nov 9, 2009
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              Regarding a post made by Patrick M. which in detail covered the definitions of such terms as "wages," "employee," and made reference to an alleged requirement of S.S. and Medicare payments even when no federal income tax is due.
               
              Have we already forgotten the basic principle required for any form of taxation?
               
              That basic principle being "THE IMPOSITION OF A TAX." If there is no tax imposed, then there is no liability. "Where in the Internal Revenue Code, or any other code, is there a tax IMPOSED on any activity that I have performed. Or even on any "receipts" that I have taken in? In other words, there must first be a "tax imposed" before any tax is due.
               
              It appears that Patrick M. has deduced that an "income tax" is a "direct tax" and not the "indirect tax" that the Constitution plainly says an "income tax" is and the many court cites that confirm this fact. If MONEY were the "subject of" the tax, then why would IRC section 7701(a)(26) even bother to define the term "trade or business?" Why would Subtitles D & E even exist?
            • Michael
              ... Two things: Firstly, it goes to show that anyone arguing the tax code, in most any court will likely lose, for many reasons, most of which do not relate
              Message 6 of 15 , Nov 10, 2009
              • 0 Attachment
                --- In tips_and_tricks@yahoogroups.com, "Patrick M" <paradoxmagnus@...> wrote:
                >
                > http://www.usdoj.gov/tax/Hendrickson_AmendedJudgPermInj.pdf


                Two things: Firstly, it goes to show that anyone arguing
                the tax code, in most any court will likely lose, for many
                reasons, most of which do not relate to justice.


                Secondly, what kept hitting me is the judge's continual
                reference that employers withheld money "as required by law."

                Does anyone know what the "law" says that employers are
                so "required?" Perhaps I misunderstand, but I thought
                employers withheld on behalf of the IRS, out of misapplication
                of what it thought to be required, but in fact is not.

                Interestingly, the judge ended by acknowledging the "self-
                assessment" aspect but made references to "taxpayers" in
                the statment.

                Cheers,

                mn
              • jerry bell
                Are you a citizen of the united states? Do you know the definition of what a individual is? (30) United States person The term “United States person”
                Message 7 of 15 , Nov 10, 2009
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                  Are you a citizen of the united states?
                  Do you know the definition of what a individual is?
                  (30) United States person
                  The term “United States person” means—
                  (A) a citizen or resident of the United States,
                  What is this telling you?
                  What is the definition or person?
                  If you are a citizen of the united states which is a corporation are you not a employee?
                  United states persons are Federal persons which can be taxed.

                  --- On Mon, 11/9/09, John Hill <otoman@...> wrote:

                  From: John Hill <otoman@...>
                  Subject: Re: [tips_and_tricks] Re: Peter Hendrickson convicted.
                  To: tips_and_tricks@yahoogroups.com
                  Date: Monday, November 9, 2009, 11:44 PM

                   
                  Regarding a post made by Patrick M. which in detail covered the definitions of such terms as "wages," "employee," and made reference to an alleged requirement of S.S. and Medicare payments even when no federal income tax is due.
                   
                  Have we already forgotten the basic principle required for any form of taxation?
                   
                  That basic principle being "THE IMPOSITION OF A TAX." If there is no tax imposed, then there is no liability. "Where in the Internal Revenue Code, or any other code, is there a tax IMPOSED on any activity that I have performed. Or even on any "receipts" that I have taken in? In other words, there must first be a "tax imposed" before any tax is due.
                   
                  It appears that Patrick M. has deduced that an "income tax" is a "direct tax" and not the "indirect tax" that the Constitution plainly says an "income tax" is and the many court cites that confirm this fact. If MONEY were the "subject of" the tax, then why would IRC section 7701(a)(26) even bother to define the term "trade or business?" Why would Subtitles D & E even exist?

                • Jake
                  I must interject that if you read the Hendrickson case, you ll soon find that arguments over the definitions of wages , employee , employer , income et al
                  Message 8 of 15 , Nov 10, 2009
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                    I must interject that if you read the Hendrickson case, you'll soon find that arguments over the definitions of "wages", "employee", "employer", "income" et al are irrelevant & immaterial.  What Hendrickson believed those terms mean & to what/whom they apply would only have been relevant if he'd used the "Cheek defense", which he did not.


                    The Cheek case focuses on "willfulness" & while the lower courts held that Cheek's beliefs with respect to income taxes were not "objectively reasonable" & he was convicted of "willful failure to file" (tax returns, IRC § 7203), the supreme Court held that:


                    "A good-faith misunderstanding of the law or a good-faith belief that one is not violating the law negates willfulness, whether or not the claimed belief or misunderstanding is objectively reasonable."


                    Cheek v. U.S., 498 U.S. 192 (1991).


                    Hendrickson was charged with 10 counts of filing false documents (4 Form 1040's, 6 Form 4852's) under IRC § 7206(1):


                    § 7206. Fraud and false statements
                       Any person who— 
                         (1) Declaration under penalties of perjury 
                    Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter . . .
                    shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution.


                    So the questions to the jury were simple - did he sign those forms under the penalty of perjury & submit them, or not?  And was the information contained in the forms "true & correct as to every material matter", or not?


                    For those not familiar with the 4852 scheme, which I warned people about years ago, the idea is for a person working a "regular job" where they filled out a W-4, taxes are withheld, etc., to submit a Form 4852 substitute for W-2 http://www.irs.gov/pub/irs-pdf/f4852.pdf showing -0- income & claim a refund for taxes withheld by the employer.  The way the (ancient) IRS computer system works, if the forms are filled out right, a refund will usually kick out, but while it may take 2-3 years, sooner of later someone in the Examination Div. is going to go over suspect forms manually - then the trouble starts.  


                    And while courts have held that the IRS cannot get $$$ back if they issued a refund in error, they can sure go after you for submitting false forms.  That's just exactly what they did, I knew that was going to happen sooner or later & now that they've convicted the promoter of the scheme, look for them to go after people who got big refunds using it.


                    So the arguments over whether or not you were an "employee", working for an "employer", earning "wages" which are "income" by your own definitions are irrelevant - unless you can show a "good faith belief" that your definitions are correct.  And by the way, Cheek lost the 2nd time around - all the supreme Court did was to clarify the "willfulness" issue & "willfulness" is defined as "the voluntary, intentional violation of a known legal duty."  Cheek, supra. 


                    If Hendrickson could have successfully argued that he didn't "willfully" file false Forms 1040 & 4852, regardless of what the statutory definitions of the terms argued over are, then he might have made his case, but what it boiled down to is the jury believed that he submitted forms under the penalty of perjury which contained information he knew to be false.  End of story.


                    ~ ~ ~ 


                    --- On Mon, 11/9/09, John Hill <otoman@...> wrote:

                    From: John Hill <otoman@...>
                    Subject: Re: [tips_and_tricks] Re: Peter Hendrickson convicted.
                    To: tips_and_tricks@yahoogroups.com
                    Date: Monday, November 9, 2009, 11:44 PM

                     

                    Regarding a post made by Patrick M. which in detail covered the definitions of such terms as "wages," "employee," and made reference to an alleged requirement of S.S. and Medicare payments even when no federal income tax is due.
                     
                    Have we already forgotten the basic principle required for any form of taxation?
                     
                    That basic principle being "THE IMPOSITION OF A TAX." If there is no tax imposed, then there is no liability. "Where in the Internal Revenue Code, or any other code, is there a tax IMPOSED on any activity that I have performed. Or even on any "receipts" that I have taken in? In other words, there must first be a "tax imposed" before any tax is due.
                     
                    It appears that Patrick M. has deduced that an "income tax" is a "direct tax" and not the "indirect tax" that the Constitution plainly says an "income tax" is and the many court cites that confirm this fact. If MONEY were the "subject of" the tax, then why would IRC section 7701(a)(26) even bother to define the term "trade or business?" Why would Subtitles D & E even exist?

                  • Cactus Charlie
                    Just because Hendrickson was convicted does not mean he is guilty of any crime.  Do not expect to get justice on the district court level.  All you can do
                    Message 9 of 15 , Nov 10, 2009
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                      Just because Hendrickson was convicted does not mean he is guilty of any crime.  Do not expect to get justice on the district court level.  All you can do there is lay the foundation for reversal on appeal.  The government cannot bring a clean case and makes many reversible errors.  It's mostly about procedure on the Constitutional level.  One can be right in the law and still go to prison.  However, the most dangerous appellate court doctrine is that of "harmless error." 

                      Yours For Freedom,



                      Cactus Charlie

                      --- On Tue, 11/10/09, Michael <mn_chicago@...> wrote:
                      Two things: Firstly, it goes to show that anyone arguing

                      the tax code, in most any court will likely lose, for many

                      reasons, most of which do not relate to justice.



                      Secondly, what kept hitting me is the judge's continual

                      reference that employers withheld money "as required by law."
                    • Jake
                        ... reference that employers withheld money as required by law.      Does anyone know what the law says that employers are so required? IRC §
                      Message 10 of 15 , Nov 10, 2009
                      • 0 Attachment


                         

                        > Secondly, what kept hitting me is the judge's continual 
                        reference that employers withheld money "as required by law."
                          >  

                          > Does anyone know what the "law" says that employers are
                        so "required?"


                        IRC § 3402. Income tax collected at source
                          (a) Requirement of withholding 
                             (1) In general 
                        Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary. Any tables or procedures prescribed under this paragraph shall—


                        ~ ~ ~


                        --- On Tue, 11/10/09, Michael <mn_chicago@...> wrote:

                        From: Michael <mn_chicago@...>
                        Subject: [tips_and_tricks] Re: Peter Hendrickson convicted.
                        To: tips_and_tricks@yahoogroups.com
                        Date: Tuesday, November 10, 2009, 10:43 AM

                         



                        --- In tips_and_tricks@ yahoogroups. com, "Patrick M" <paradoxmagnus@ ...> wrote:
                        >
                        > http://www.usdoj. gov/tax/Hendrick son_AmendedJudgP ermInj.pdf

                        Two things: Firstly, it goes to show that anyone arguing
                        the tax code, in most any court will likely lose, for many
                        reasons, most of which do not relate to justice.

                        Secondly, what kept hitting me is the judge's continual
                        reference that employers withheld money "as required by law."

                        Does anyone know what the "law" says that employers are
                        so "required?" Perhaps I misunderstand, but I thought
                        employers withheld on behalf of the IRS, out of misapplication
                        of what it thought to be required, but in fact is not.

                        Interestingly, the judge ended by acknowledging the "self-
                        assessment" aspect but made references to "taxpayers" in
                        the statment.

                        Cheers,

                        mn


                      • Patrick M
                        It appears to me that John is making ASSUMPTIONS & JUMPING to CONCLUSIONS. NOWHERE did I imply the income tax is a direct tax NOR that MONEY was the
                        Message 11 of 15 , Nov 10, 2009
                        • 0 Attachment

                          It appears to me that John is making ASSUMPTIONS & JUMPING to CONCLUSIONS.

                           

                          NOWHERE did I imply the "income tax" is a "direct tax" NOR that MONEY was the "subject of" of the tax NOR that everyone has an income tax LIABILITY.

                           

                          WHAT I did do is CHALLENGE Pete’s EQUATING of the two.

                           

                          SOCIAL SECURITY was enacted in 1935.

                           

                          “On August 14, 1935, the Social Security Act established a system of old-age benefits for workers, benefits for victims of industrial accidents, unemployment insurance, aid for dependent mothers and children, the blind, and the physically handicapped.”

                          http://www.ourdocuments.gov/doc.php?flash=old&doc=68#  

                           

                          Most people did NOT pay INCOME TAX until SEVEN YEARS later in 1942 when the VICTORY ACT temporarily EXTENDED the EXISTING income tax codified in the 1939 INTERAL REVENUE ACT (IRC) to the GENERAL PUBLIC.

                           

                          “The most striking feature of 1939 Federal individual income tax legislation was the enactment of the Pu b lic Salaries Tax Act of 1939. It su b jects to the Federal income tax the wages and compensation of all state and local officers and employees, rega rd less of the nature of their office or employment. In addition, it ena b les state and local governments to impose non-discriminatory taxes on the compensation of all Federal officers and employees. This legislation applies to compensation received after Dec. 31, 1938.

                          Hitherto, b ecause of what were thought to b e constitutional prohi b itions, the Federal income tax did not apply to the compensation of most state and local employees, although it applied to the compensation of all Federal officers and employees. For the same reason state income taxes generally applied to the compensation of state and local officers and employees, b ut not to salaries of Federal officers and employees.”

                          http://encarta.msn.com/sidebar_461501292/1939_Income_Taxation.html

                           

                           

                          "In 1939 only about five percent of American workers paid income tax. The United States ' entrance into World War II changed that figure. The demands of war production put almost every American back to work, but the expense of the war still exceeded tax-generated revenue. President Roosevelt's proposed Revenue Act of 1942 introduced the broadest and most progressive tax in American history, the Victory Tax. Now, about 75 percent of American workers would pay income taxes. Because so many citizens paid the tax, it was considered a mass tax. To ease workers' burden of paying a large sum once a year, and to create a regular flow of revenue into the U.S. Treasury, the government required employers to withhold money from employees' paychecks. Additional taxes were put in place in 1943. By war's end in 1945, about 90 percent of American workers submitted income tax forms, and 60 percent paid taxes on their income. The federal government covered more than half its expenses with new income tax revenue."

                          http://www.irs.gov/app/understandingTaxes/jsp/whys/lp/IWT2L5lp.jsp

                           

                          Medicare & Social Security (FICA) taxes are IMPOSED in 26 USC 3101.

                           

                          26 USC 3101. Rate of tax

                           

                          (a) Old-age, survivors, and disability insurance

                          In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121 (a)) received by him with respect to employment (as defined in section 3121 (b))— [REST OMITTED]

                          http://www.law.cornell.edu/uscode/26/usc_sec_26_00003101----000-.html

                           

                          WITHHOLDING is for INCOME TAX LIABILITY & the REQUIREMENT for it is IMPOSED in 26 USC 3402.

                           

                          26 USC 3402. Income tax collected at source

                          (a) Requirement of withholding

                          (1) In general

                          Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary. [REST OMITTED]

                          n) Employees incurring no income tax liability

                          Notwithstanding any other provision of this section, an employer shall not be required to deduct and withhold any tax under this chapter upon a payment of wages to an employee if there is in effect with respect to such payment a withholding exemption certificate (in such form and containing such other information as the Secretary may prescribe) furnished to the employer by the employee certifying that the employee—

                          (1) incurred no liability for income tax imposed under subtitle A for his preceding taxable year, and

                          (2) anticipates that he will incur no liability for income tax imposed under subtitle A for his current taxable year.

                          The Secretary shall by regulations provide for the coordination of the provisions of this subsection with the provisions of subsection (f).

                          http://www4.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00003402----000-.html

                           

                          The simple FACT is that one can be EXEMPT for INCOME TAX purposes, but are STILL LIABLE for FICA taxes.

                           

                          Exemption from federal income tax withholding. Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. See the Form W-4 instructions for more information. However, the wages are still subject to social security and Medicare taxes. See also Invalid Forms W-4 on page 17.  IRS Publication 15, (Circular E), Employer’s Tax Guide, page 15

                          http://www.irs.gov/pub/irs-pdf/p15.pdf

                           

                          The so-called “income tax” is NOT a “direct tax”, but is an EXCISE tax.

                           

                          INCOME TAX

                          History and Purpose of the Amendment

                          The ratification of the Sixteenth Amendment was the direct consequence of the Court’s decision in 1895 in Pollock v. Farmers’ Loan & Trust Co., 1 whereby the attempt of Congress the previous year to tax incomes uniformly throughout the United States 2 was held by a divided Court to be unconstitutional. A tax on incomes derived from property, 3 the Court declared, was a ‘‘direct tax’’ which Congress under the terms of Article I, § 2, and § 9, could impose only by the rule of apportionment according to population. Scarcely fifteen years earlier the Justices had unanimously sustained 4 the collection of a similar tax during the Civil War, 5 the only other occasion preceding the Sixteenth Amendment in which Congress had ventured to utilize this method of raising revenue. 6

                           

                          During the interim between the Pollock decision in 1895 and the ratification of the Sixteenth Amendment in 1913, the Court gave evidence of a greater awareness of the dangerous consequences to national solvency which that holding threatened, and partially circumvented the threat, either by taking refuge in redefinitions of ‘‘direct tax’’ or, and more especially, by emphasizing, virtually to the exclusion of the former, the history of excise taxation. Thus, in a series of cases, notably Nicol v. Ames, 7 Knowlton

                          v. Moore, 8 and Patton v. Brady, 9 the Court held the following taxes to have been levied merely upon one of the ‘‘incidents of ownership’’ and hence to be excises: a tax which involved affixing revenue stamps to memoranda evidencing the sale of merchandise on commodity exchanges, an inheritance tax, and a war revenue tax upon tobacco on which the hitherto imposed excise tax had already been paid and which was held by the manufacturer for resale.

                           

                          Under this approach the Court thus found it possible to sustain a corporate income tax as an excise ‘‘measured by income’’ on the privilege of doing business in corporate form. 10 The adoption of the Sixteenth Amendment, however, put an end to speculation whether the Court, unaided by constitutional amendment, would persist along these lines of construction until it had reversed its holding in the Pollock case. Indeed, in its initial appraisal 11 of the Amendment it classified income taxes as being inherently ‘‘indirect.’’

                           

                          ‘‘[T]he command of the amendment that all income taxes shall not be subject to apportionment by a consideration of the sources from which the taxed income may be derived, forbids the application to such taxes of the rule applied in the Pollock case by which alone such taxes were removed from the great class of excises, duties, and imports subject to the rule of uniformity and were placed under the other or direct class.’’ 12 ‘‘[T]he Sixteenth Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary 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.’’ 13

                           

                          Income Subject to Taxation

                          Building upon definitions formulated in cases construing the Corporation Tax Act of 1909, 14 the Court initially described income as the ‘‘gain derived from capital, from labor, or from both combined,’’inclusive of the ‘‘profit gained through a sale or conversion of capital assets’’; 15 in the following array of factual situations it subsequently applied this definition to achieve results that have been productive of extended controversy.

                           

                          ANNOTATED CONSTITUTION OF THE UNITED STATES

                           

                          http://www.gpoaccess.gov/constitution/pdf2002/034.pdf

                           

                          EXCISE taxes are also known as PRIVILEGE taxes and are usually on SPECIFIC ACTIVITIES & PRIVILEGES.

                           

                          “Duties and imposts are terms commonly applied to levies made by governments on the importation or exportation of commodities. Excises are 'taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges.' Cooley, Const. Lim. 7th ed. 680.

                           

                          The tax under consideration, as we have construed the statute, may be described as an excise upon the particular privilege of doing business in a corporate capacity, i. e., with the advantages which arise from corporate or quasi corporate organization; or, when applied to insurance companies, for doing the business of such companies. As was said in the Thomas Case, 192 U. S. supra, the requirement to pay such taxes involves the exercise of [220 U.S. 107, 152]   privileges, and the element of absolute and unavoidable demand is lacking. If business is not done in the manner described in the statute, no tax is payable."  FLINT v. STONE TRACY CO., 220 U.S. 107 (1911)

                          http://laws.findlaw.com/us/220/107.html

                           

                           

                          "...Although the Supreme court held this portion of the act to be unconstitutional, it still recognized that the income was is essence an excise tax. The Court said that tax on income from business, privileges, or employments, standing by itself, would be valid as an excise tax; but the tax on investment income was held to be invalid because the Court regarded a tax based on income from property as a tax on the property itself and therefore a direct tax which must be apportioned among the States (Pollock v. Farmers' Loan and Trust Co. (1895), 157 U.S. 429; 158 U.S. 601, 637), So the entire portion of the act relating to income tax was declared invalid. (Fn. 1)

                           

                          There are still those who think that in this case the Court went further than necessary in treating a tax based on income from property as a tax on property itself, and that in any event the excise-tax principle should have been applied to rents and other investment income, as was done under the Civil War acts. In other words, the making and holding of investments, while perhaps not technically a business, is, at least, a kind of activity or privilege which can properly be subjected to an excise tax measured by reference to the income derived therefrom.

                          ...

                          The sixteenth amendment authorizes the taxation of income "from whatever source derived" — thus taking in investment income —"without apportionment among the several States." The Supreme Court has held that the sixteenth amendment did not extend the taxing power of the United States to new or excepted subjects but merely removed the necessity which might otherwise exist for an apportionment among the States of taxes laid on income whether it be derived from one source or another.(Fn. 3.) So the amendment made it possible to bring investment income within the scope of a general income-tax law, but did not change the character of the tax. It is still fundamentally an excise or duty with respect to the privilege of carrying on any activity or owning any property which produces income....

                          The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of the tax."  Congressional Record from March 27, 1943 (page 2580). Mr. F.Morse Hubbard, formerly of the legislative drafting research fund of Columbia University , and a former legislative draftsman in the Treasury Department.

                           

                          Wouldn’t being the STATUTORY “employee” as DEFINED in 26 USC 3401 be an ACTIVITY/PRIVILEGE that could be TAXED via an EXCISE?

                           

                          26 USC 3401

                           (c) Employee

                          For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of the United States , a State, or any political subdivision thereof, or the District of Columbia , or any agency or instrumentality of any one or more of the foregoing. The term “employee” also includes an officer of a corporation.

                          http://www.law.cornell.edu/uscode/26/usc_sec_26_00003401----000-.html

                           

                          Just like any other “individual” who is acting in a FIDUCIARY CAPACITY as agents or officers for another?

                           

                          "But individuals, when acting as representatives of a collective group, cannot be said to be exercising their personal rights and duties nor to be entitled to their purely personal privileges. Rather they assume the rights, duties and privileges of the artificial entity or association of which they are agents or officers and they are bound by its obligations." UNITED STATES v. WHITE, 322 U.S. 694 (1944)

                          http://caselaw.lp.findlaw.com/scripts/printer_friendly.pl?page=us/322/694.html

                           

                          26 CFR 31.0-2 General definitions and use of .

                          (a) In general. As used in the regulations in this part, unless otherwise expressly indicated--
                          (1) The defined in the provisions of law contained in the regulations in this part shall have the meanings so assigned to them.

                          (8) Person includes an individual, a corporation, a partnership, a trust or estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture or other unincorporated organization or group, through or by means of which any business, financial operation, or venture is carried on. It includes a guardian, committee, trustee, executor, administrator, trustee in bankruptcy, receiver, assignee for the benefit of creditors, conservator, or any person acting in a fiduciary capacity.[rest omitted]

                          http://law.justia.com/us/cfr/title26/26-15.0.1.1.1.1.8.2.html

                           

                          And UNFORTUNATELY, IF someone REQUESTS WITHHOLDING or files a return, WOULDN’T the PRESUMPTION most likely be that they have been given LEGAL NOTICE that they are a person who has an INCOME TAX LIABILITY or is REQUIRED to file an income tax return?

                           

                          26 CFR 31.6001-6   Notice by district director requiring returns, statements, or the keeping of records.

                          The district director may require any person, by notice served upon him, to make such returns, render such statements, or keep such specific records as will enable the district director to determine whether or not such person is liable for any of the taxes to which the regulations in this part have application.

                          http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=de87314e866de9fe6728f4c7589924f1&rgn=div8&view=text&node=26:15.0.1.1.1.7.16.6&idno=26

                           

                           

                          26 CFR 1.1-1…In general, the tax is payable upon the basis of returns rendered by persons liable therefor (subchapter A (sections 6001 and following), chapter 61 of the Code) or at the source of the income by withholding. [rest omitted]

                          http://a257.g.akamaitech.net/7/257/2422/12feb20041500/edocket.access.gpo.gov/cfr_2004/aprqtr/26cfr1.1-1.htm  

                           

                          And if people UNDERSTAND a few KEY PRINCIPLES, start READING the DEFINITIONS in Title 26, and ask themselves some questions, they might find some answers.

                           

                            Expressio unius est exclusio alterius.  A maxim of statutory interpretation meaning that the expression of one thing is the exclusion of another.  Burgin v. Forbes, 293 Ky. 456, 169 S.W.2d 321, 325; Newblock v. Bowles, 170 Okl. 487, 40 P.2d 1097, 1100.  Mention of one thing implies exclusion of another.  When certain persons or things are specified in a law, contract, or will, an intention to exclude all others from its operation may be inferred.  Under this maxim, if statute specifies one exception to a general rule or assumes to specify the effects of a certain provision, other exceptions or effects are excluded.” BLACK'S LAW DICTIONARY, Sixth Edition, page 581

                           

                           

                            Inclusio unius est exclusio alterius.  The inclusion of one is the exclusion of another. The certain designation of one person is an absolute exclusion of all others. ... This doctrine decrees that where law expressly describes [a] particular situation to which it shall apply, an irrefutable inference must be drawn that what is omitted or excluded was intended to be omitted or excluded.  BLACK'S LAW DICTIONARY, 6th Edition

                           

                           

                            EJUSDEM GENERIS. Of the same kind, class, or nature.

                            In statutory construction, the "ejusdem generis rule" is that where general words follow an enumeration of persons or things. by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned. Black, Interp. Laws, 141; Cutshaw v. Denver, 19 Colo. App. 341, 75 Pac. 22; Ex parte Leland, 1 Nott & McC. (S. C.) 462; Spalding v. People, 172 Ill. 40, 49 N. B. 993.  BLACK'S LAW DICTIONARY, 2ND EDITION, pages 415.  

                           

                           

                            Noscitur a sociis. It is known from its associates. 1 Vent. 225. The meaning of a word is or may be known from the accompanying words. 3 Term R. 87; Broom, Max. 588.  BLACK'S LAW DICTIONARY, 2ND EDITION, pages 830.

                           

                          Such as the definition of “includes” used in most of the INTERNAL REVENUE CODE is nothing more that a RESTATEMENT of the CANONS of STATUTORY CONSTRUCTION & that what is INCLUDED in who and/or what is being DEFINED is LIMITED to those things which are in the SAME GENERAL CLASS as the ENUMERATED items.

                           

                          26 USC 7701(c) Includes and including

                          The terms “includes” and “including” when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.

                          http://www4.law.cornell.edu/uscode/uscode26/usc_sec_26_00007701----000-.html

                           

                           

                          27 CFR 26.11

                           When used in this part and in forms prescribed under this part, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, terms shall have the meaning ascribed in this section. Words in the plural form shall include the singular and vice versa, and words importing the masculine gender shall include the feminine. The terms ``includes'' and ``including'' do not exclude things not enumerated which are in the same general class.

                           

                          (68A Stat. 917, as amended (26 U.S.C. 7805); 49 Stat. 981, as amended  (27 U.S.C. 205) Aug. 16, 1954, ch. 736, 68A Stat. 775 (26 U.S.C. 6301); June 29, 1956, ch. 462, 70 Stat. 391 (26 U.S.C. 6301))

                           

                          T.D. ATF-48, 43 FR 13551, Mar. 31, 1978]

                           

                           http://a257.g.akamaitech.net/7/257/2422/05dec20031700/edocket.access.gpo.gov/cfr_2003/aprqtr/27cfr26.11.htm  

                           

                           

                          "Plaintiff, accordingly, claims that Mrs. Ham, as the receiver of a one- third portion of Mr. Ham's estate, was not a "beneficiary" within the meaning of § 662. This contention, however, fails. For definition, 26 U.S.C. § 643(c) provides that "the term 'beneficiary' includes heir, legatee, devisee." The word "elector" (of a spouse's share) does not appear, but "includes" is not limiting. Rather, "[t]he terms 'includes' and 'including' . . . shall not be deemed to exclude other things otherwise within the meaning of the term defined." 26 U.S.C. § 7701(c). In light of this we apply the PRINCIPLE that a list of terms should be construed to include by implication those additional terms of LIKE KIND AND CLASS as the expressly included terms."  BRIGHAM v US , No. 97-2436 [EMPHASIS ADDED]

                          http://laws.findlaw.com/1st/972436.html

                           

                          Patrick in California

                           

                          "It ain't what ya don't know that hurts ya. What really puts a hurtin' on ya is what ya knows for sure, that just ain't so." -- Uncle Remus

                           

                          It appears to me that John is JUMPING to CONCLUSIONS.

                           

                          --- In tips_and_tricks@yahoogroups.com , "John Hill" <otoman@...> wrote:

                          >  

                          > Regarding a post made by Patrick M. which in detail covered the definitions of such terms as "wages," "employee," and made reference to an alleged requirement of S.S. and Medicare payments even when no federal income tax is due.

                          >

                          > Have we already forgotten the basic principle required for any form of taxation?

                          >

                          > That basic principle being "THE IMPOSITION OF A TAX." If there is no tax imposed, then there is no liability. "Where in the Internal Revenue Code, or any other code, is there a tax IMPOSED on any activity that I have performed. Or even on any "receipts" that I have taken in? In other words, there must first be a "tax imposed" before any tax is due.

                          >

                          > It appears that Patrick M. has deduced that an "income tax" is a "direct tax" and not the "indirect tax" that the Constitution plainly says an "income tax" is and the many court cites that confirm this fact. If MONEY were the "subject of" the tax, then why would IRC section 7701(a)(26) even bother to define the term "trade or business?" Why would Subtitles D & E even exist?

                           

                        • Patrick M
                          See 26 USC 3102 & 3402. And REALIZE that Pete was NOT convicted of INCOME TAX evasion & the charges MAY actually have had LITTLE to do with INCOME TAX. Peter
                          Message 12 of 15 , Nov 10, 2009
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                            See 26 USC 3102 & 3402.



                            And REALIZE that Pete was NOT convicted of INCOME TAX evasion & the charges
                            MAY actually have had LITTLE to do with INCOME TAX.



                            "Peter Hendrickson, 54, of Commerce Township was found guilty today of
                            making false statements to the IRS by a federal jury in Detroit, United
                            States Attorney Terrence Berg announced today.



                            The jury deliberated for about four hours before returning the verdict,
                            concluding a five-day trial before Chief United States District Judge Gerald
                            Rosen.



                            The 10-count indictment charged that for the calendar years 2000, 2002,2003,
                            2004, 2005 and 2006 Hendrickson filed IRS Form 1040 (income tax returns)
                            and/or IRS Form 4852 (Substitute for Form W-2) stating under penalties of
                            perjury that he had received no wages in those years. The indictment
                            indicated that he had in fact received wages in those years in varying
                            amounts. The evidence produced at trial established that Hendrickson had in
                            fact received taxable wages and that his claims to the contrary were
                            knowingly false. In reaching the verdicts, the jury rejected Hendrickson's
                            defense that he had a good faith belief that his statements regarding his
                            lack of wages were true."



                            http://www.justice.gov/tax/usaopress/2009/phendrickson.pdf



                            Especially IF the "wages" REFERRED to are those for purposes of Social
                            Security & Medicare (FICA).



                            Remember, one can be EXEMPT for INCOME TAX purposes, but STILL be LIABLE for
                            FICA taxes.



                            Exemption from federal income tax withholding. Generally, an employee may
                            claim exemption from federal income tax withholding because he or she had no
                            income tax liability last year and expects none this year. See the Form W-4
                            instructions for more information. However, the wages are still subject to
                            social security and Medicare taxes. See also Invalid Forms W-4 on page 17.
                            IRS Publication 15, (Circular E), Employer's Tax Guide, page 15

                            http://www.irs.gov/pub/irs-pdf/p15.pdf



                            Patrick in California



                            "It ain't what ya don't know that hurts ya. What really puts a hurtin' on ya
                            is what ya knows for sure, that just ain't so." -- Uncle Remus



                            > --- In tips_and_tricks@yahoogroups.com, "Patrick M" <paradoxmagnus@>
                            wrote:

                            > >

                            > > http://www.usdoj.gov/tax/Hendrickson_AmendedJudgPermInj.pdf

                            >

                            >

                            > Two things: Firstly, it goes to show that anyone arguing

                            > the tax code, in most any court will likely lose, for many

                            > reasons, most of which do not relate to justice.
                          • John Hill
                            Jerry Bell Wrote: United states persons are Federal persons which can be taxed. Response: There is no argument regarding this. However, definitions do not
                            Message 13 of 15 , Nov 10, 2009
                            • 0 Attachment
                              
                              Jerry Bell Wrote:

                              United states persons are Federal persons which can be taxed.
                               
                              Response:
                              There is no argument regarding this. However, definitions do not IMPOSE taxes, nor do they necessarily limit those who can be taxed. Example: I am a private sector individual doing contracted work for the federal government, being paid by your tax dollars. Am I a government employee? NOT! Are my receipts taxable? The general consensus is YES since the "receipts" are federally connected. However, after somewhat reading Tommy Cryer's Memorandum, I have to admit that I am unable to connect the dots as to why  the general consensus is correct. I STILL cannot find a tax that is "CLEARLY" imposed in Subtitle A on federally connected dollars. YES, the definition of "trade or business" relates to federally connected dollars. BUT,WHERE IS THE IMPOSITION OF THE TAX IN SUBTITLE A? If there is no "TAX IMPOSED," then there is "NO LIABILITY" for a tax!"


                            • Patrick
                              Maybe there SHOULD be an argument about United states persons are Federal persons which can be taxed . WHAT general consensus are you referring to? And
                              Message 14 of 15 , Nov 11, 2009
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                                Maybe there SHOULD be an argument about "United states persons are Federal persons which can be taxed".

                                WHAT "general consensus" are you referring to?

                                And WHERE did you get these "beliefs" about "federally connected dollars"?

                                It appears to me that those "beliefs" may be confusing you about issues regarding the IMPOSITION of the income tax in 26 USC 1 & the DETERMINATION of LIABILITY for it.

                                So to me it boils down to TWO QUESTIONS:

                                Have you been given the REQUIRED NOTICE that you are a person REQUIRED to file a return?

                                Are you engaged in an ACTIVITY/PRIVILEGE that REQUIRES WITHHOLDING?

                                Patrick in California

                                "It ain't what ya don't know that hurts ya. What really puts a hurtin' on ya is what ya knows for sure, that just ain't so." -- Uncle Remus


                                --- In tips_and_tricks@yahoogroups.com, "John Hill" <otoman@...> wrote:
                                >
                                > Jerry Bell Wrote:
                                >
                                > United states persons are Federal persons which can be taxed.
                                >
                                > Response:
                                > There is no argument regarding this. However, definitions do not IMPOSE taxes, nor do they necessarily limit those who can be taxed. Example: I am a private sector individual doing contracted work for the federal government, being paid by your tax dollars. Am I a government employee? NOT! Are my receipts taxable? The general consensus is YES since the "receipts" are federally connected. However, after somewhat reading Tommy Cryer's Memorandum, I have to admit that I am unable to connect the dots as to why the general consensus is correct. I STILL cannot find a tax that is "CLEARLY" imposed in Subtitle A on federally connected dollars. YES, the definition of "trade or business" relates to federally connected dollars. BUT,WHERE IS THE IMPOSITION OF THE TAX IN SUBTITLE A? If there is no "TAX IMPOSED," then there is "NO LIABILITY" for a tax!"
                                >
                              • Carrol
                                as required by law . This entails ALL of the law, not just title 26. The judge stated Also, as required by law, Mr. Hendrickson s employer issued him a Form
                                Message 15 of 15 , Nov 11, 2009
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                                  "as required by law".

                                  This entails ALL of the law, not just title 26.

                                  The judge stated "Also, as required by law, Mr. Hendrickson's
                                  employer issued him a Form W-2 Wage and Tax Statement that
                                  correctly reported his wages and those withholdings."

                                  Published in 78 FR 7461 and 7461,
                                  is this notice in the Treasury Department System of Records:

                                  "ROUTINE USES OF RECORDS MAINTAINED IN THE SYSTEM, INCLUDING
                                  CATEGORIES OF USERS AND THE PURPOSES OF SUCH USES:

                                  (2) Furnish the Internal Revenue Service and other jurisdictions
                                  which are authorized to tax the employee's compensation with wage and
                                  tax information in accordance with a withholding agreement with the
                                  Department of the Treasury pursuant to 5 U.S.C. 5516, 5517 and 5520,
                                  for the purpose of furnishing employees with Forms W-2 which report
                                  such tax distributions;"

                                  RECORD SOURCE CATEGORIES:
                                  The information contained in these records is provided by or verified by
                                  the subject of the record, supervisors, and non-Federal sources such as
                                  private employers."

                                  Since form W-2 is reporting tax distributions under 5 U.S.C. 5516, 5517
                                  and 5520,
                                  that is what is required by law.

                                  The W-4 form identifies the routine uses of this information:
                                  “Routine uses of this information include giving it to the Department
                                  of Justice for civil an criminal litigation, and to cities, states, and
                                  the
                                  District of Columbia for use in administering their tax laws...”

                                  4 U.S.C. Section 72 states that "all offices attached to the seat of
                                  government
                                  shall be exercised in the District of Columbia, and not elsewhere, except
                                  as otherwise expressly provided by law."

                                  The IRS is not an office, The Commissioner of Internal Revenue holds
                                  that title.
                                  The IRS can only exercise the authority of the Commissioner of Internal
                                  Revenue.
                                  The Commissioner of Internal Revenue is appointed by the President (26
                                  USC 7803), and is the
                                  CEO of the IRS (this established under a Treasury Delegation order).

                                  26 USC 7803:
                                  "(2) Duties
                                  The Commissioner shall have such duties and powers as the
                                  Secretary may prescribe, including the power to--
                                  (A) administer, manage, conduct, direct, and supervise the
                                  execution and application of the internal revenue laws or
                                  related statutes and tax conventions to which the United States
                                  is a party;"

                                  The Secretary has delegated several Taxation authorities to the Commissioner
                                  of Internal Revenue:

                                  TO 150-17 - The Commissioner of Internal Revenue holds competent
                                  authority or taxation authority under agreements with foreign
                                  countries. This
                                  delegated to the IRS under Delegation Order 4-12 published in the IRM
                                  under Section 1.2.43.3.

                                  TO 150-39 - The Commissioner of Internal Revenue holds competent authority
                                  or taxation authority under agreements that are entered into with the
                                  possessions of the United States. This is delegated to the IRS under
                                  Delegation
                                  Order 4-36 published in IRM 1.2.43.11.

                                  4 USC Sect 111 - "The United States consents to the taxation of pay or
                                  compensation
                                  for personal service as an officer or employee of the United States, a
                                  territory or possession
                                  or political subdivision thereof, the government of the District of
                                  Columbia, or an agency
                                  or instrumentality of one or more of the foregoing, by a a duly
                                  constituted taxing authority
                                  having jurisdiction..." The IRS has certification and approval under
                                  IRM section 1.2.40.24,
                                  Delegation order 29 for collections in accordance with the Treasury
                                  Financial Manual. This
                                  delegated to Commissioners, Wage and Investment and Small Business/Self
                                  Employed Divisions;
                                  the Chief Financial Officer; and the field Submission Processing Directors.

                                  "4 USC Sec. 118. Limitations

                                  Sections 116 through 126 of this title do not--
                                  (1) provide authority to a taxing jurisdiction to impose a tax,
                                  charge, or fee that the laws of such jurisdiction do not authorize
                                  such jurisdiction to impose; or
                                  (2) modify, impair, supersede, or authorize the modification,
                                  impairment, or supersession of the law of any taxing jurisdiction
                                  pertaining to taxation except as expressly provided in sections 116
                                  through 126 of this title"

                                  The IRS is using the W-4 information to administer the tax laws of cities,
                                  states and the District of Columbia. The information is shared with
                                  these jurisdictions. The IRS told you that in the fine print
                                  of the W-2 - believe it. The W-4 is for administering
                                  the tax laws of the District of Columbia, cities and states under
                                  5 USC 5516, 5517 and 5520 under withholding agreements.
                                  One of the sources of the information is listed as "non-federal
                                  sources such as private employers". This is stated in the federal
                                  register.

                                  If you received a W-4 from a private employers, this applies to the
                                  one you received. ALL OF THE W-2'S ISSUED IS FOR THIS PURPOSE.

                                  So who are you paying taxes to: which city, state, the District of
                                  Columbia? Which insular possession or foreign country did you
                                  do business in? The 1040 form privacy act notice also lists these 2
                                  additional jurisdictions. They can only yield the authority given to them
                                  under the the laws of the jurisdiction they acting for. 4 USC Section 118
                                  says so. And all of these jurisdictions have agreements which allow the
                                  IRS to step outside of the District of Columbia.


                                  Michael wrote:
                                  >
                                  >
                                  >
                                  >
                                  > --- In tips_and_tricks@yahoogroups.com
                                  > <mailto:tips_and_tricks%40yahoogroups.com>, "Patrick M"
                                  > <paradoxmagnus@...> wrote:
                                  > >
                                  > > http://www.usdoj.gov/tax/Hendrickson_AmendedJudgPermInj.pdf
                                  > <http://www.usdoj.gov/tax/Hendrickson_AmendedJudgPermInj.pdf>
                                  >
                                  > Two things: Firstly, it goes to show that anyone arguing
                                  > the tax code, in most any court will likely lose, for many
                                  > reasons, most of which do not relate to justice.
                                  >
                                  > Secondly, what kept hitting me is the judge's continual
                                  > reference that employers withheld money "as required by law."
                                  >
                                  > Does anyone know what the "law" says that employers are
                                  > so "required?" Perhaps I misunderstand, but I thought
                                  > employers withheld on behalf of the IRS, out of misapplication
                                  > of what it thought to be required, but in fact is not.
                                  >
                                  > Interestingly, the judge ended by acknowledging the "self-
                                  > assessment" aspect but made references to "taxpayers" in
                                  > the statment.
                                  >
                                  > Cheers,
                                  >
                                  > mn
                                  >
                                  >
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