By Frederick Mann
© Copyright 1993 Terra Libra Holdings, ALL RIGHTS RESERVED.

This report is intended purely as a communication of information in accordance with the right of free speech. Readers are advised to pay all legal taxes imposed by legitimate governments. This report does not constitute legal or tax advice. Anyone seeking legal or tax advice should consult a competent professional. Neither the author nor the publisher assumes any responsibility for the consequences of anyone acting according to the information in this report.

In order to legally and safely beat the IRS it is necessary for you to adopt a certain frame of mind. You need to have a certain independence of mind. You need to be able to read the U.S. Constitution for yourself. You need to be able to recognize how the Supreme Court "judges" and other politicians routinely violate the Constitution. You need to realize that practically all lawyers and accountants are handmaidens of the "terrocrats" - terrorist bureaucrats or coercive government agents. If you cannot already think for yourself, you need to learn to do so. You need to be able to think and do what is contrary to the entrenched among your family and friends. You need to become the authority of your own life.

It may also be necessary for you to come to the conclusion that paying taxes is in principle immoral - that one of the most moral things you can do is to stop paying all taxes you can legally get away with. The issue of the morality or immorality of taxes is covered in Report #TL16: Tax Education for Everyone.

Before telling you about the secrets of the IRS, I feel I need to prepare you - present you with some vital "counter-propaganda."

The Development of Consciousness
I grew up in Zululand, part of Natal Province, South Africa, on a farm, with black servants and farm workers. The first settlement of whites in southern Africa occurred over three hundred years ago, at the southern tip of Africa, called the Cape of Good Hope. It was a Dutch colony. Later the British grabbed it. Similar to the North American migration from East to West, in southern Africa there was a migration from South to North called the "Great Trek." Some of the "Trekkers" established little "Boer" republics. "Boer" is the Dutch and Afrikaans word for farmer. Afrikaans (derived from Dutch) is the language of about 60% of the whites in South Africa. My great-great grandfather was President of one of the "Boer" republics. Another of these republics was called "Republiek Vryheid" - "Freedom Republic."

A much larger republic was also formed, called the "Orange Free State." Its constitution was closely copied from the U.S. Constitution. Just like the U.S. Constitution didn't recognize "non-whites" as human beings, the Orange Free State Constitution didn't either. Just like in North America whites hunted native Americans, whites in southern Africa hunted native Africans.

One Afrikaans word for native Africans is "naturel" ("native"); another is "skepsel" ("creature"). The most derogatory is "kaffer" ("infidel"). These words are no longer acceptable. My grandfather was a Senator and Chairman of the "Naturelle-Sake Kommissie" ("Native Affairs Commission"). That is the equivalent of the Chairman of a Congressional Committee that overseas the "Bureau of Indian Affairs." My grandfather was considered very wise and knew exactly what had to be done about the "Swart Gevaar" ("Black Danger"). My grandmother taught black children the three Rs and religion in her own farm school. Her mission was to "civilize the savages." One day a black maid licked one of my grandmother's spoons. My grandmother gave the maid a tongue lashing for "contaminating a white spoon" - then gave the spoon to the maid to keep, because it was "no longer fit for white use!"

When I was about seventeen I got engaged in a conversation with a black man. Suddenly, as if hit by a sledgehammer, I realized that I was talking to a Human Being! Up to that time I had unconsciously assumed that blacks were "inferior creatures" - kind of sub-human.

Steve Biko was the founder of the "Black Consciousness" Movement in South Africa. Biko recognized that the biggest problem was that blacks in their own consciousness regarded themselves as "inferior creatures." The culture we grew up in - the language we used - planted the notion in the minds of whites that they were "superior beings," and in the minds of blacks that they were "inferior creatures." Practically all whites and blacks were subconsciously enculturated in this manner. Biko recognized this phenomenon and advocated that blacks had to free their consciousness from the "inferior-creature" shackles. Biko became world-famous and was visited by people like Bobby Kennedy. Biko was also the greatest threat to white government in South Africa. The police effectively murdered him. The murder was "whitewashed."

A few years before Biko's death I started reading books about freedom, books critical of government, books alleging that inflation was something done by government, books about secret conspiracies that were the real government behind the scene.

One such book was How I Found Freedom in an Unfree World by Harry Browne. It had a profound effect on my consciousness. This and other books - particularly The Discovery of Freedom by Rose Wilder Lane - eventually led me to discover that I was a free and sovereign individual. Steve Biko was also a major inspiration in the development of my consciousness.

Soon after Biko's murder I left South Africa. Since then I have lived as a free sovereign individual in several countries. In Brussels, Belgium I came across The Cinderella Complex: Women's Fear of Independence by Collette Dowling. The theme is that in their consciousness women tend to regard themselves as "inferior slave creatures." This inferiority is mostly subconscious and culturally imposed. Men regard themselves as "superior master beings."

I also met an American woman, a teacher at the American School in Brussels. As a result of discussing politics and education with her I came up with the term "cattle mentality." Subconsciously this teacher regarded herself as a "cow" owned by the government. The government had a right to milk her, to build fences to confine her, to tell her what she was allowed to eat and what not. Like a cattle herder, the government also had a duty to look after her and feed her. And it was her duty to "educate" the "calves" under her care with the "cattle mentality." Of course, her "calves" had to be forced into "schools" and taught what the government dictated.

In America today, we see on TV and read in the papers daily, of business leaders begging big-daddy government for protection against big-bad-wolf unfair foreign competition, or big-daddy government must do this or that to help us poor helpless little creatures.

Inferiority mentality may be the subconscious basis behind the demand for "affirmative action" - "I am inferior and therefore I can't be or don't deserve to be hired on my own merits; therefore I want big-daddy government to force someone to hire me. The free sovereign individual wants a job on the basis of voluntary cooperation. Both he or she and the employer seek to gain from the association. The sovereign individual believes he or she has something to offer and can find an employer willing to hire him or her on the basis of his or her abilities. The free sovereign individual says, "I don't care how much people discriminate against me. I will find a job or start my own business."

Much of feminism also seems to be based on the inferiority mentality - "As a woman I am inferior and therefore I want big-daddy government to force someone to give me "equal treatment."" The free sovereign woman says, "I don't care how much people discriminate against me. I will find a job in a business where women have the same status as men, or start my own business. I will persuade women investors to invest in businesses that discriminate in favor of women."

Consider the possibility that when women or minority members run to big-daddy government for special favors, they become "double slaves" - slaves of their oppressors as well as slaves of government.

The free sovereign individual does not stoop to beg for special favors. He or she asserts his or her freedom, sovereignty, and personal power. The free sovereign individual has a reality-based pride - "I am the master of my fate, the captain of my ship of destiny!"

The main purpose of the IRS, FDA, USDA, OSHA, and other "terrocrat" agencies is to impose the helpless-slave or cattle mentality with an iron-grip. The idea that the IRS collects money to run the government is mistaken. In the January 1946 issue of the magazine American Affairs, Beardsley Ruml (Chairman of the Federal Reserve Bank of New York) wrote an article "Taxes for Revenue Are Obsolete," which starts with these words:

"The superior position of public government over private business is nowhere more clearly evident than in government's power to tax business."

Under the heading "What Taxes Are Really For," Ruml writes:

"Federal taxes can be made to serve four principal purposes of a social and economic character. These purposes are:

  1. As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;
  2. To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;
  3. To express public policy in subsidizing or in penalizing various industries and economic groups;
  4. To isolate and assess directly the costs of certain national benefits, such as highways and social security."

The de facto constitution is a phantom called "public policy," which is whatever the Federal Reserve bankers and other thieves decide it is, from day to day.

The Sovereign Individual Paradigm
(Acknowledgment: Some of the information under this heading comes from The Federal Zone: Cracking the Code of Internal Revenue by Mitch Modeleski.)

To be fully human, I believe, includes that one discovers that one is a free sovereign individual. The following comparison is adapted from a presentation by Martin J. "Red" Beckman:

Majority Rule Democracy     Constitutional Republic

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

 Elite Cartel                [Creator]

 Majority Mob                Individual

 President                   Constitution

 Congress                    President

 Bureau- and Terrocrats      Congress

 Case and Statute Law        Case and Statute Law

 Corporations                Public Servants

 Individual                  Corporations

In a majority mob-ruled democracy, the real sovereign rulers form an elite cartel or conspiracy. To a large extent they dictate public opinion through their control of the media and by forcing children into "schools" for brainwashing. The majority mob appoints a minute percentage of the government, thereby creating the illusion of "democracy." Most of the key bureau- and terrocrats are appointed by the elite cartel. Case and statute law are "manufactured" to serve the special interests of the elite cartel. Next in the "democratic" pecking order come the corporations who beg and bribe for special favors. And at the bottom we find the individual.

This is the feudal system of modern America. Individuals are regarded by the "powers that be" as cattle. In the consciousness of the elite, individuals are cattle to be corralled, herded, and milked. In the consciousness of brainwashed American individuals, they are cattle to be corralled, herded, and milked. They accept their lot with hardly a moo. This is the phenomenon that Steve Biko identified. This is why Biko was the man most dangerous to the economic and political elite in South Africa. This is why Biko had to be murdered.

The U.S. was established as a Constitutional Republic. For theists, the Creator forms the top rung of the ladder. For others, the individual is supreme and sovereign.

The Constitution, as a contract between individuals, is below the individual. The individual is senior to the U.S. Constitution. The following Supreme Court case illustrates individual sovereignty:

"Sovereignty itself is, of course, not subject to law, for it is the author and source of law; but in our system, while sovereign powers are delegated to the agencies of government, sovereignty itself remains with the people, by whom and for whom all government exists and acts. And the law is the definition and limitation of power. It is indeed, quite true, that that there must always be lodged somewhere, and in some person or body, the authority of final decision; and in many cases of mere administration the responsibility is purely political, no appeal except to the ultimate tribunal of the public judgement, exercised either in the pressure of opinion or by means of the suffrage. But the fundamental rights of life, liberty, and the pursuit of happiness, considered as individual possessions, are secured by those maxims of constitutional law which are the monuments showing the victorious progress of the race in securing to men the blessings of civilization under the reign of just and equal laws, so that, in the famous language of the Massachusetts Bill of Rights, the government of the commonwealth "may be a government of laws and not of men." For, the very idea that man may be compelled to hold his life, or the means of living, or any material right essential to the enjoyment of life, at the mere will of another, seems to be intolerable in any country where freedom prevails, as being the essence of slavery itself." Yick Wo vs. Hopkins, 118 U.S. 356, 370 [emphasis added].

The people - individuals - are supreme and sovereign. The very idea that the life or property of an individual is subject to the will of another is the essence of slavery. The military draft - including compulsory registration for the draft - is intolerable and the essence of slavery. All taxes - taking people's property by force - compelling people to hold the means of living at the will of another - are intolerable and the essence of slavery. Forcibly incarcerating children in government "schools" is intolerable and the essence of slavery.

The principle of individual sovereignty is also embodied in the American system of trial by jury. If our judges were not corrupt, they would inform every jury that the individual jurors are the sovereigns who have the final say regarding both law and fact. It is both the right and the duty of each juror to judge both fact and law. If one of the twelve jurors says, "Not guilty; it is a bad law," that's it. Congress may pass a law, the President may sign it, but the individual juror has the power to nullify that law - at least in a specific case. If sufficient jurors nullify a particular law, it becomes unenforceable and is either repealed or simply ignored. The important principle is that the individual is senior to both Congress and the President.

Thomas Jefferson regarded jury nullification - the jury's right and duty to judge the law - as the most important check on government. He described the jury as "the only anchor ever imagined by man by which a government can be held to the principles of its constitution."

The Constitution grants certain powers to Congress and imposes certain limits on these powers. The Bill of Rights attempts to safeguard certain individual rights. Remember, "the law is the definition and limitation of power," as stated in the above Supreme Court case. When you study the Declaration of Independence and the Constitution (which includes the Bill of Rights), it will become clear what an amazing and daring system our Founding Fathers tried to create - a society where the individual is supreme and sovereign.

Underneath the Constitution come the President, Congress, Statute Law, Public Servants, and Corporations.

In modern feudal America, the political system created by our Founding Fathers has been turned upside down. Practically everything the federal government does is unconstitutional and criminal. Irwin Schiff wrote The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes, the back cover of which states:


What is Coercion?
My dictionary (Webster's New Collegiate) defines "coerce" as:

  1. To restrain or dominate by nullifying individual will;
  2. To compel to an act or choice;
  3. To enforce or bring about by force or threat.

Coercion is the overwhelming of the will of another by force or threat of force. Examples of coercion:

Ayn Rand made the crucial qualification of the initiation of violence or threat of violence. As long as someone has done nothing to harm others or violate their rights, no one has the right to initiate violence or the threat of violence against them.

There is a common-law principle that states that for there to be a crime, there has to be a victim. Without a victim there is no crime. There can be no "victimless crimes." There is also a principle which states that for a contract to be valid it has to be intentionally, voluntarily, and expressly entered into. Attempting to force people to do something when they haven't committed a crime or entered into a contract to do it, is coercion.

Many Americans are blind to subtle violence, subtle coercion. They don't recognize the government requirement that people register their cars as coercion or violence. If you don't register your car, a policemen will pull you over. If you resist his unwarranted coercion, he will physically attack you, and may shoot and kill you. They don't recognize forcing children into schools as coercion or violence. Many parents don't recognize the coercion they perpetrate against their own children as violence.

American culture - as in the rest of the world - teaches that the big and strong, especially those with guns, get their way through violence. Children must obey their parents because their parents are big, strong, and violent. Subjects must obey their government because their government is big, strong, and violent.

Coercion or violence is the hallmark of feudal society. Voluntary cooperation is the essence of a free society. The following Supreme Court case, comparing Europe to America, illustrates the contrast:

"In Europe, the executive is almost synonymous with the sovereign power of a State... Such is the condition of power in that quarter of the world, where it is too commonly acquired by force or fraud, or both, and seldom by compact [voluntary agreement or contract]. In America, however, the case is widely different. Our government is founded upon compact. Sovereignty was, and is, in the people." Glass vs. The Sloop Betsey, 3 Dall 6 (1794) [emphasis added].

What is Evil?
A friend and I were discussing the case of Dick Quinn who describes in his book Left for Dead how his doctor subjected him to useless double-bypass surgery instead of a vastly more effective natural remedy. I contended that the doctor was evil in not even considering natural alternatives. My friend said the doctor was brainwashed in medical school, didn't know anything about "natural remedies," and anyway the FDA effectively outlaws natural remedies. I said that the doctor was evil for not knowing alternative remedies and even considering them. We looked up "evil" in the dictionary: "Something that causes harm; something that brings sorrow, distress, or calamity."

The doctor who kowtows to the AMA and FDA, doesn't question what he or she learned in medical school, doesn't find out what is being done in Europe and other parts of the world, in my opinion, practices evil. Whatever you do that causes harm, sorrow, distress, or calamity, is evil - whether done knowingly or unknowingly, intentionally or unintentionally.

With another friend I discussed judges. I said that judges who didn't inform juries properly were evil and corrupt. My friend said that most judges were brainwashed in law school - as described by Gerry Spence in With Justice for None: Destroying an American Myth - where they didn't learn the Constitution and common law. I said that it was evil for a judge to swear an oath to uphold the Constitution without studying it and common law (the law of the land) thoroughly - whatever the "teachers" said in law "school." For a judge to not know the law is both evil and corrupt.

The greater the evil, the more blind we tend to be to it, the more difficult it is to confront. This made it possible for Hitler to do what he did. A basic reason why health care costs are soaring is because individuals in general can't confront the evils of our medical "profession" - see Report #TL09: How to Achieve Superhealth and Report #TL09A: AIDS - Bad Science or Hoax? A basic reason why the national debt has soared above $4 trillion is because individuals in general can't confront the evils of government - and the IRS brainwashes and terrorizes them into financing the evils...

I'm not suggesting that ignorance is evil in itself, or that all ignorance is evil. I do say that for a doctor or a judge to not acquire easily available information relevant to their professions is evil - particularly if the ignorance results in harm.

What Nietzsche Said About the State
"There are still peoples and herds somewhere, but not with us, my brothers: here there are states.
The state? What is that? Well then! Now open your ears, for now I shall speak to you of the death of peoples.
The state is the coldest of all cold monsters. Coldly it lies, too; and this lie creeps from its mouth; 'I, the state, am the people.'
It is a lie! It was creators who created peoples and hung a faith and a love over them: thus they served life.
It is destroyers who set snares for many and call it the state: they hang a sword and a hundred desires over them.
Where a people still exists, there the people do not understand the state and hate it as the evil eye and sin against custom and law.
I offer you this sign: every people speaks its own language of good and evil: its neighbor does not understand this language. It invented this language for itself in custom and law.
But the state lies in all languages of good and evil; and whatever it says, it lies - and whatever it has, it has stolen.
Everything about it is false; it bites with stolen teeth. Even its belly is false.
Confusion of the language of good and evil; I offer you this sign of the state. Truly, this sign indicates the will to death! Truly, it beckons to the preachers of death!
Many too many are born: the state was invented for the superfluous!
Just see how it lures them, the many-too-many! How it devours them, and chews them, and re-chews them!
... It would like to range heroes and honorable men about it, this new idol! It likes to sun itself in the sunshine of good consciences - this cold monster!
It will give you everything if you worship it, this new idol: thus it buys for itself the luster of your virtues and the glance of your proud eyes.
It wants to use you to lure the many-too-many. Yes, a cunning device of Hell has here been devised, a horse of death jingling with the trappings of divine honors!
Yes, a death for many has here been devised that glorifies itself as life: truly a heart-felt service to all preachers of death!
I call it the state where everyone, good and bad, is a poison-drinker: the state where everyone, good and bad, loses himself: the state where universal slow suicide is called - life."
Friedrich Nietzsche, 1884

Typically, in the history classes taught in the last generation in America, when Nietzsche is discussed, he is depicted as the forefather of Hitler's Nazi ideology. Nothing could be further from the truth. Nietzsche was probably the most penetrative philosopher and psychologist there has ever been. He saw right through the falsehoods on which the state rests. Fifty years before Hitler came to power he was already disgusted at what he saw happening in Germany. He predicted that Germany would suffer a horrible calamity. He was so disgusted that he renounced his German roots and became a Swiss citizen.

The Nazis did take some of Nietzsche's statements out of context and used them as slogans. But to teach that Nietzsche inspired the Nazis is pure brainwashing. Nietzsche clearly saw what a destructive disaster the state was and expressed his view in unequivocal terms. Maybe that is why government monopoly schools try so hard to discredit him.

Government as Bribery
In The Arizona Republic of January 27, 1993 there appeared an article by Kim Sue Lia Perkes under the headline, "Senate chief gets flak on law-firm job":

"State Senate President John Greene, who has pledged to work to restore trust in Arizona's political system, is drawing fire from some Democratic senators for accepting a position at a law firm that does a lot of lobbying.

"Maybe there isn't anything illegal in the position he has taken, but it's sad," said former Senate President Pete Rios, D-Hayden. "It brings into light an appearance of impropriety."

But Greene, R-northeast Phoenix, said he sees no problem with his new job with Phoenix-based Fennemore Craig.

"I'm trying to earn a living as a lawyer at one of the reputable law firms in town," Greene said Tuesday. "I think that being a lawyer I get picked on more. This is a citizen legislature. Every person who is down here that works has a potential for conflict."

On Jan. 1, Greene became a salaried employee at the law firm, which has 117 registered lobbyists at the state Capitol. Fennemore Craig's clients include utility companies, construction firms, banks and hospitals. Among the most notable are Anheuser-Busch, McDonald's Corp., Phelps Dodge Corp., American Telephone & Telegraph Co. and Dial Corp, Greene's former employer.

"I would guess a third to a half of the legislation that goes through this place will affect this firm," said Assistant Senate Minority Leader Lela Alston, D-northwest Phoenix.

Greene said he will adhere to state conflict-of-interest laws and to Senate rules on conflict of interest, which prohibit lawmakers from voting on measures that would directly benefit them. But Greene said he will go a step further: He won't vote in cases that only may appear improper.

However, Greene added, that would not apply to legislation sought by Fennemore Craig lobbyists on a "global issue."

For example, a lobbyist from Fennemore Craig has been pushing a bill package that, among other things, would put curbs on lawsuits. The package is sponsored by Greene, who described it as a "global issue" that does not create a conflict of interest.

The package could benefit Fennemore Craig's clients, but it would not benefit the law firm, Greene said.

"I could make an argument that every citizen on the Earth will benefit (from this package)," he said.

Sen. Stan Furman, D-Glendale, said he believes that Greene is ethical but has made a poor decision. "I don't question his ethics at all, but I don't understand his failure to understand public perception," Furman said. "This is a firm intensely involved in lobbying down here."

Greene got his job after having lunch with one of Fennemore Craig's top lobbyists, Michael Green. At that time, the lawmaker was the incoming Senate president and was working for Dial Corp. Greene was Dial's chief tax counsel for 11 years until he decided to run for the Senate in 1990. After winning a seat, he left the company as a full-time employee but contracted with Dial to handle its legal work on corporate benefits.

Sen. Chuck Blanchard, D-central Phoenix, said he does not see a problem with Greene's arrangement. Blanchard, an attorney at Brown & Bain, another law firm involved in lobbying, chided his fellow Democrats during a meeting Tuesday." [emphasis added]

The Best Kept Secrets of the IRS

A Call to Action
Practically everything the Federal Government does is evil, unconstitutional, criminal, and highly destructive. The IRS Gestapo plays a major role in keeping the criminal terrocrats in power. The IRS needs to be eliminated. In the words of Attorney Donald W. MacPherson, "The Beast must be destroyed." What Federal Government we need (if any) can be financed through voluntary exchange for valuable products and services produced, augmented by voluntary contributions.

Please do your patriotic duty. Finance yourself - and worthy causes and institutions of your choice. Are you going to stay in the cattle herd - or join the human race of free sovereign individuals?


1. Is it possible for Americans to legally stop paying income taxes?
It is possible for most Americans to legally stop paying both federal and state income taxes. This applies to most Americans who live and work in the 50 States. It does not necessarily apply to Americans working for the federal government, or those who work in federal military installations. The central issue here is federal jurisdiction which is covered under question #3.

However, anyone who has entered into a contract with the IRS to pay them, has to fulfill that contract. By sending a 1040 tax return to the IRS, you enter into a contract with them.

2. Do all Americans have to file 1040 returns? If not, which Americans have to file?
Not all Americans have to file. Americans living and working outside federal jurisdiction (basically in the 50 States) don't have to file. Those subject to federal jurisdiction (Washington DC, federal military installations, and U.S. territories like Puerto Rico, Guam, American Samoa, and the Virgin Islands) probably have to file. Once any American has filed a 1040 return, he or she has to continue to file, unless he or she takes special measures to revoke the "election" to pay income taxes. See question #4.

3. What does the U.S. Constitution say about federal jurisdiction and how does this affect who is subject to federal income tax?
Two clauses in the Constitution define federal jurisdiction:
(a) Article I, Section 8, Clause 17: "The Congress shall have the power to exercise exclusive legislation, in all cases whatsoever, over such district (not exceeding ten miles square) as may, by cession of particular States, and the acceptance of Congress, become the seat of the Government of the United States; and to exercise like authority over all places purchased by the consent of the Legislature of the State in which the same shall be, for the erection of forts, magazines, arsenals, and other needful nuildings... "
(b) Article IV, Section 3, Clause 2: "The Congress shall have the power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States... "

I've got news for you, folks: The territorial and legislative jurisdiction of the U.S. Congress extends to the ten square miles of Washington DC, military installations where States have explicitly ceded authority to the federal government, and U.S. Territories such as Puerto Rico, Guam, American Samoa, and the Virgin Islands. In accordance, IRS income taxes apply (if they apply at all) to people who live and/or work in these areas, or who work for the federal government.

4. Does the Internal Revenue Code specifically tell you how to terminate or revoke your "election" to pay federal income tax?
Section 6013(g)(4) states the following: "TERMINATION OF ELECTION. - An election under this subsection shall terminate at the earliest of the following times: (A) REVOCATION BY TAXPAYERS. - If either taxpayer revokes the election, as of the first taxable year for which the last day prescribed by law for filing the return of tax under chapter 1 has not yet occurred."



5. Why, in its literature, does the IRS consistently say that the federal income tax is based on "self-assessment and voluntary compliance?"
IRS literature often uses the terms "self-assessment" and "voluntary compliance." The reason for this is that senior IRS personnel know that the law does not require most Americans to file income tax returns. The income tax does not apply to most Americans unless they voluntarily enter into a contract with the IRS. By filling out, signing, and filing an income tax return you voluntarily enter into a contract with the IRS. Once you have entered into such a contract it is not easy to get out of it. Tax abatement service companies provide the expert support to terminate the contract.

Like all government agencies, the IRS has a mission. Its mission as published in the Federal Register of March 25, 1974, includes: "The mission of the Service is to encourage and achieve the highest degree of voluntary compliance... " Do IRS Commissioners agree with the voluntary nature of federal income tax?

During the Eighty-Third Congress in 1953, Dwight E. Avis, head of the Alcohol and Tobacco Tax Division, Bureau of Internal Revenue, testified before the Ways and Means Committee, "Let me point this out now: Your income tax is 100 percent voluntary tax, and your liquor tax is 100 percent enforced tax. Now, the situation is as different as night and day."

The tax return for a manufacturer of tobacco products says, "The information is mandatory by statute. (26 USC 5061, 5703)." All mandatory tax returns mention penalties for not filing, for example, the Alcoholic Beverage Tax Return states, "... punishable upon conviction by a fine of not more than $100,000.00... " Check your 1040 for the statute that says you must file, and the penalty for not filing - you won't find them.

Congress has a legal research branch called the Congressional Research Service. A letter, dated June 26, 1989, from the office of Senator Daniel K. Inouye in Hawaii to a tax consultant Fred Ortiz states, that based on the research performed by the Congressional Research Service, "there is no provision which specifically and unequivocally requires an individual to pay income taxes." [Emphasis added]

Let me cite three court cases that seem to support the notion that the federal income tax is voluntary:

The Fifth Amendment to the U.S. Constitution states, "No person shall... be compelled in any criminal case to be a witness against himself." However, the Supreme Court has ruled:

6. What is the significance of the 1991 Supreme Court case, Cheek vs. U.S.?
Cheek v. U.S. (No. 89-658; 1991 U.S. Lexis 348; 1991 WL 422 [U.S.]) This Supreme Court case represents a major turning point for those seeking to defend their rights against the IRS. Prior to this case, many courts applied the so-called "Cooley rule," which was effectively used to prevent people from entering evidence for their own defence in tax cases. Typically, prosecutors would file preliminary ("in limine") motions prohibiting defendants from entering evidence to defend themselves. Thus most tax prosecutions occurred in farcical kangaroo courts where the defendants were not allowed to defend themselves!

The Cheek decision changed that. Among other things it found:
(a) Defendants may enter evidence in their defense.
(b) Defendants can provide a "good faith" defense: if they sincerely believed (no matter how irrational the belief) that they didn't have to file and pay income tax, then they can't be guilty of a crime.

7. What is the significance of the 1991 Fifth Circuit Court of Appeals case, Ramon/Dolores Portillo vs. Internal Revenue?
Ramon and Dolores Portillo v. Commissioner of Internal Revenue. (932 F.2d 1128 [5th Cir., 1991]) The Cheek case was a severs blow to the IRS in criminal cases. The U.S. Court of Appeals of the Fifth Circuit likewise dealt a severe blow to the IRS in civil cases. The court effectively found that in the case of an IRS assessment of tax deficiency, the burden of proof shifts to the IRS. In other words, they have to prove that you owe them money.

8. Is the IRS as vicious as portrayed in the popular media, or is it really a paper tiger?
According to tax attorney Donald W. MacPherson (Tax Fraud & Evasion: The War Stories - one of the best tax books I know of - phone 1-800-BEAT-IRS for free brochures on his books and services):

"Once you get past all of the tax statutes passed by Congress, the rules of evidence and of criminal procedure, interpretation by the courts of the laws and the rules, you are left with human drama. Conflict. IRS special agent versus citizen target. Justice Department prosecutor versus defense attorney. The final arbitrator of this combat is the jury of twelve. That which is public record is but one-tenth of the story. The flesh and blood war stories are intended to cut through the legalese to the end that you will be brought to understanding, and through understanding harbor fear no longer. Nor will the Monster, discovered as a paper tiger, any longer intimidate you, the sovereign citizen, the master. Beastmaster...

Failure to file an income tax return, failure to pay income taxes, and attempted income tax evasion are not crimes in this country. Not yet anyway. For those acts (or failures to act) to constitute a crime, one first must act with specific intent to violate the law; knowing what the law forbids or requires, one must set out with the specific purpose to violate the law. Willfulness. Specific criminal intent. Ignorance of the law is an excuse. Congress has declared that the tax laws are so complex that ignorance of the law is a defense so far as it goes to the citizen's state of mind; or, in other words, so far as it tends to negate willfulness.

Second, the government must assemble evidence and prove beyond a reasonable doubt to the satisfaction of twelve jurors that you intended to violate the law. If good faith belief or misunderstanding or reliance on the advice of counsel is raised, then the government must, in effect, prove beyond a reasonable doubt that you did not believe in good faith or did not in good faith rely on the advice of your attorney or accountant. At least some federal appellate courts hold that the belief or misunderstanding is subjective not objective. This nuance means, in the final analysis, that it is not even relevant whether what you believed was right or wrong, or whether the jury determines it was reasonable or unreasonable for you to so believe what you claim you believed. All that matters is whether you in fact believed it. Put another way, the government must, then, prove beyond a reasonable doubt that you did not believe what you claim you believed.

Is it any wonder then the fine-tune processing by IRS and Justice Department of criminal tax cases? After two years of investigation by the IRS special agent of the Criminal Investigation Division (CID) and review by his supervisor, plus further review by chief of CID and IRS District Director, the case then goes to the office of District Counsel, the IRS lawyers, for review. Then to Justice Department in Washington, D.C. for review where it may remain for another year or two. Then back to the local U.S. Attorney for further fine-tuning and additional investigation, if necessary, and the ultimate prosecution by way of grand jury indictment or, in the case of misdemeanor rather than felony, by a charging paper signed by the U.S. Attorney, called an "Information." A long, arduous pipeline. For the Beast can ill afford to lose criminal tax cases. If IRS cannot succeed in putting behind bars those it believes to be tax cheats, what then the impact upon the remaining one hundred million and our system based upon "voluntary compliance?"

... Just how far can you push IRS and not be prosecuted? What are the "limits of the tax law?" What must the IRS prove? The answers are found in the criminal tax cases that are won! The proof is in the pudding. If an Arkansas woman who did not file a tax return for eighteen years beat IRS at criminal charges, by what should you feel intimidated?

Consider this analogy: you go to a haunted house as a child and under cover of darkness are frightened by ghosts and goblins. Your imagination runs wild while at the house, and later you attempt, without success, to stave off recurring nightmares. In an effort to put the matter to rest, your parents take you during daylight hours back to the haunted house and show you the tricks of the trade. The props used. That goblin was but one-sixteenth inch cardboard. Cardboard which even as a child, you could rip apart with your bare hands. Don't you feel silly? The nightmares go away...

The paper tiger. The bureaucrat, also known as the bureaurat. If the IRS agent was truly competent and was not lazy, why had he not struck out for business on his own? Coffee and cigarettes and federal service retirement pay? The paper tiger exposed by the light of day. But who would dare to turn on the switch, or open the curtain, for this vampire Monster to be exposed to sunlight?"

Note: Mr. MacPherson wrote the above before the Supreme Court Cheek decision and the Fifth Circuit Portillo decision. These two decisions have greatly strengthened the position of the non-taxpayer.

9. Who are the people who have most to fear from the IRS?
Those who file tax returns are most at risk. Because of the ambiguities of the Internal Revenue Code it is impossible to file a tax return without the IRS being able to nail you for filing a false return or committing perjury.

High-profile people like Leona Helmsley, Willie Nelson, and the late Red Foxx, who can be nailed as examples - providing wide media exposure.

People who use IRS-handmaiden lawyers and/or accountants to assist them in their tax affairs.

Tax protestors who stop filing and/or paying without properly terminating their contracts with the IRS.

The people who have least to fear from the IRS are those who have never entered into a contract with the IRS, those who know the weaknesses of the IRS, those who have properly "untaxed" themselves under the guidance of a competent tax abatement service company, and those who have organized their personal affairs so they don't own any assets and don't have any bank accounts the IRS or other government looters can seize.

It is important that you appreciate that the Internal Revenue Code is so complex and convoluted that nobody can understand it. This means that whatever tax return you file can be "proved" by the IRS to constitute fraud and perjury.

"Well, it's a system so utterly complex and ultimately inexplicable that half the time the tax professionals themselves aren't sure what the rules are - a system that even Albert Einstein is said to have admitted he couldn't begin to fathom. You know, it's said that his hair didn't look that way until after he experienced his first tax form." - Ronald Reagan, 1985.

Every year since 1987 Money magazine has run a contest in which 50 tax preparers complete the federal income tax return for a hypothetical family. In 1988 there were ten correct returns, in 1989 two, in 1990 one, and in 1991 zero. For the 1991 tax year the "target tax" was $26,619 - the tax amount for a correct tax return. Not one of the professional tax preparers got it right. At the low extreme, one tax preparer calculated the tax due as $16,219. She spent 25 hours on the job and charged a fee of $750. At the high extreme, another professional tax preparer calculated the tax due as $46,564. It took him 40 hours and he charged $3,000.

The contestants presumably fancied themselves as expert tax preparers, and did their utmost to win first prize. They consisted mostly of professional CPAs and former IRS agents. If you take your papers and records to two "professional tax preparers," one might calculate your tax as $16,000, and the other as $46,000! Need I say any more?

Note that if you had hired any of these professionals to prepare your tax return, the result could have been prosecution for fraud and perjury. Not one of them got it right

10. What happens to the money the IRS collects? Where does your tax money go?
Have you ever looked at the endorsement on the back of a check you paid to the IRS, when the bank returned it to you? Usually you will find "FRB" stamped on the back of the check. "FRB" stands for "Federal Reserve Bank." The scam operated by the IRS is second only to the "Federal Reserve" scam. The Federal Reserve System is owned by private bankers, mostly European. There is nothing "federal" about it and it has no "reserves." Federal Reserve Banks are private banks. The Federal Reserve scam is exposed in detail in my book The Economic Eape of America: What You Can Do About It.

The taxes you pay to the IRS don't go to the government, but to the Federal Reserve bankers. Furthermore, I have read in several places that the IRS itself is a private company incorporated in Delaware in 1933. But I don't know if this is fact or fiction.

11. Which 6 books should you read in order to understand the IRS and to safely beat it? (Where can you get them?)
(a) Congressman George Hansen: To Harass Our People: The IRS and Government Abuse of Power (Positive Publications, Box 23560, Washington DC 20024).
(b) Donald W. MacPherson: Tax Fraud & Evasion: The War Stories (phone 1-800-BEAT-IRS).
(c) Mitch Modeleski: The Federal Zone: Cracking the Code of Internal Revenue (Account for Better Citizenship, c/o PO Box 6189, San Rafael, California Republic, PZ 94903-0189/TDC).
(d) Irwin A. Schiff: The Biggest Con: How Government is Fleecing You (Freedom Books, 60 Skiff St #300, Hamden, CT 06517).
(e) Irwin A. Schiff: The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes (Freedom Books, 60 Skiff St #300, Hamden, CT 06517).
(f) Alan Stang: Tax Scam: How the IRS Swindles You and What You Can Do About It (Mount Sinai Press, Research Publications, PO Box 84902, Phoenix, AZ 84902).

12. Is it possible for an informed citizen to legally and safely run rings around the IRS?
Yes. The informed citizen can beat the pants off the IRS. The best strategy might be to simply "disappear" as far as the IRS is concerned - see Report #TL16C: U.S. Tax Abatement Services. For extra safety it is advisable to use Trusts to safeguard assets. You may also want to use alternative banking services, as they become more available and more practical.

"Your mind will muse on the terror: "Where is the one who counted? Where is the one who weighed the tribute? Where is the one who counted the towers?" No longer will you see the insolent people, the people of an obscure speech that you cannot comprehend, stammering in a language that you cannot understand." -Isaiah 33, verses 18-19.

"To lay with one hand the power of government on the property of the citizen, and with the other to bestow it on favored individuals... is nonetheless robbery because it is done under the forms of law and is called taxation." U.S. Supreme Court - Loan Association v. Topeka (1874). "In a recent conversation with an official at the Internal Revenue Service, I was amazed when he told me that, "If the taxpayers of this country discover that the IRS operates on 90% bluff, the entire system will collapse."" Senator Henry Bellmon, 1969.

Other reports in this series:
#TL16 - #TL16A - #TL16B - #TL16C - #TL16D - #TL16E - #TL16F - #TL16G
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