Appendix A: Letter to John Knox and Memorandum of Law

Edited in honor of his passing by Mitch Modeleski

                                           c/o USPS P. O. Box 6189 
                                           San Rafael, California 
                                           Postal Code 94903-0189/TDC 
                                           September 23, 1991 
        Mr. John Knox, Director 
        Texas Hill County Patriots 
        Kerrville, Texas Republic 
        Postal Code 78028/TDC 
        Dear John: 
        I am writing to thank you for the time you spent explaining to me 
        your in-depth understanding of federal jurisdiction at the recent 
        Denver Conference on tax and monetary reform. 
        By listening  to you  and Walt  Myers debate  the question in the 
        hotel lobby, I came to believe that you have done a great deal of 
        good research,  John.  I was very rewarded by my decision to stay 
        and pick your brains after Walt walked away. 
        I am also writing this letter to remind you of your offer to send 
        me copies  of the legal briefs you mentioned during our conversa- 
        tion.  Enclosed are 20 FRN's to this end. 
        I am  slowly collecting  substantive papers  on the  questions of 
        federal jurisdiction,  the definitions  of "United States", their 
        implications for  Congressional taxing  powers and  statutes, and 
        their implications for the American economy in general. 
        It is  most intriguing,  for example,  that Alaska became a State 
        when it  was admitted  to the  Union, and  yet the  United States 
        Codes had to be changed because Alaska was defined in those Codes 
        as a  "state" before  admission to the Union, but not afterwards. 
        This apparent  anomaly is  perfectly clear  once  the  legal  and 
        deliberately misleading definition of "state" is understood. 
        Even though  my own  research has  only scratched  the surface of 
        this question,  I now  have ample  reasons to  believe  that  the 
        fluctuating definitions  of  "United  States"  in  Title  26  are 
        likewise intentional  and may  constitute the essential core of a 
        system of  deliberate legal  deception that was fastened upon our 
        entire nation by the year 1913. 
        Notably, Mr. Brushaber was identified in his court documents as a 
        New York  Citizen.    The  Union  Pacific  Railroad  Company  was 
        incorporated by  Congress.   Accordingly, Brushaber  was a  State 
        Citizen identified as a nonresident alien and taxed upon unearned 
        income that derived from a domestic corporation.  He was alien to 
        the jurisdiction  of the corporate United States, and nonresident 
        within that  jurisdiction because  he  resided  within  New  York 
        State.   He derived  income from  a domestic corporation, because 
        the Union  Pacific Railroad Company was incorporated by Congress, 
        i.e., in the District of Columbia. 
        If the  Union Pacific  Railroad Company had not been incorporated 
        by Congress,  it would  have been  a foreign  corporation  (i.e., 
        foreign to  the federal,  corporate United States).  If Brushaber 
        had resided  in the District of Columbia or in some other federal 
        enclave or  possession under  exclusive jurisdiction of Congress, 
        he would  have been a resident alien.  If he had been born inside 
        this exclusive  jurisdiction, or  if he  had been naturalized, he 
        would have been a United States citizen, not an alien, regardless 
        of  where  he  resided.    Note  that  I  have  been  careful  to 
        distinguish a  "United States  citizen" from  a "Citizen  of  the 
        United States";  the former is a person under the jurisdiction of 
        Congress, while the latter is not. 
        It is  quite stunning  how the  carefully crafted  definitions of 
        "United States"  do appear  to unlock a horribly complex statute, 
        and also  expose perhaps  the greatest fiscal fraud that has ever 
        been perpetrated  upon any  people at  any time in the history of 
        the world. 
        I will anxiously look forward to receiving the legal papers which 
        we discussed in Denver. 
        Thanks very much, John, for your significant contributions to our 
        important and difficult search for the truth in this matter. 
        Sincerely yours, 
        /s/ Mitch Modeleski, Founder 
        Account for Better Citizenship 
        copies:  interested colleagues 

        John H. Knox 
        In Propria Persona 
        c/o 111 Stephanie Street 
        Kerrville, Texas Republic 
        Postal Code 78028/tdc 
                        UNITED STATES DISTRICT COURT FOR 
                          THE WESTERN DISTRICT OF TEXAS 
                               SAN ANTONIO, TEXAS 
        JOHN H. KNOX and LOIS C. KNOX  ) 
                         Plaintiffs,   ) 
                                       )   Case No. SA-89-CA-1308 
        vs.                            )   (Consolidated with 
                                       )    SA-89-CA-0761) 
        THE UNITED STATES,             ) 
        HERMAN SILGUERO and            ) 
        DOROTHY SILGUERO,              ) 
                         Defendants    ) 
                        MEMORANDUM IN SUPPORT OF REQUEST 
             Plaintiffs in  the above  entitled  action  are  NONRESIDENT 
        ALIENS with  respect to  the "United  States" as  those terms are 
        defined  in  26  U.S.C.,  and  have  had  no  income  effectively 
        connected to  a trade  or business  within the  "United  States". 
        They COME  NOW to  file this  their Memorandum  in Support  of  a 
        Request  for   the  District  Court  to  Consider  the  Temporary 
        Restraining Order  and the Motion for Injunction and, in support, 
        to show the Court as follows: 
             1.   The issues  as to  whether there are different meanings 
        for the  term  "United  States",  and  whether  there  are  three 
        different "United  States" operating within the same geographical 
        area, and  one "United States" operating outside the Constitution 
        over its  own territory  (in which  it has  citizens belonging to 
        said "United  States"), were settled in 1901 by the Supreme Court 
        in the  cases of  De Lima  vs Bidwell,  182 U.S.  1 and Downes vs 
        Bidwell, 182 U.S. 244.  In Downes supra, Justice Harlan dissented 
        as follows: 
             The idea  prevails with  some -- indeed, it found expression 
             in arguments  at the  bar --  that we  have in  this country 
             substantially or practically two national governments;  one, 
             to be  maintained  under  the  Constitution,  with  all  its 
             restrictions;   the  other  to  be  maintained  by  Congress 
             outside and  independently of that instrument, by exercising 
             such powers  as other nations of the earth are accustomed to 
                                 [Downes supra, page 380, emphasis added] 
        He went on to say, on page 382: 
             It will be an evil day for American liberty if the theory of 
             a government  outside of  the supreme  law of the land finds 
             lodgment in  our constitutional  jurisprudence.   No  higher 
             duty rests  upon this court than to exert its full authority 
             to  prevent   all  violation   of  the   principles  of  the 
                                 [Downes supra, page 382, emphasis added] 
             2.   This theory  of  a  government  operating  outside  the 
        Constitution over its own territory, with citizens of the "United 
        States" belonging  thereto under  Article 4,  Section 3, Clause 2 
        (4:3:2) of the Constitution, was further confirmed in 1922 by the 
        Supreme Court in Balzac vs Porto Rico, 258 U.S. 298 (EXHIBIT #4), 
        wherein that  Court affirmed,  at page 305, that the Constitution 
        does not  apply outside the limits of the 50 States of the Union, 
        quoting Downes  supra and  De Lima supra;  that, under 4:3:2, the 
        "United States"  was given  exclusive power  over the territories 
        and the citizens of the "United States" residing therein. 
             3.   The issue  arose again in 1944, in the case of Hooven & 
        Allison Co.  vs Evatt,  Tax Commissioner  of Ohio,  324 U.S. 652, 
        wherein the  U.S. Supreme Court stated as follows at page 671-672 
        (EXHIBIT #8): 
             The term  "United States"  may be used in any one of several 
             senses.   [1]   It may  be merely  the name  of a  sovereign 
             occupying the position analogous to that of other sovereigns 
             in the  family of  nations.   [2]    It  may  designate  the 
             territory over  which the  sovereignty of  the United States 
             extends,   [3]   or it  may be  the collective  name of  the 
             states which are united by and under the Constitution.1 
                                   [brackets, numbers and emphasis added] 
        1.   See Langdell,  "The  Status  of  our  New  Territories,"  12 
             Harvard Law  Review 365,  371;   see also  Thayer, "Our  New 
             Possessions," 12  Harvard Law  Review  464;    Thayer,  "The 
             Insular Tariff  Cases in  the Supreme Court," 15 Harvard Law 
             Review 164;   Littlefield,  "The Insular  Cases," 15 Harvard 
             Law Review 169, 281. 
        Quoting Fourteen  Diamond Rings  vs United  States, 183 U.S. 176; 
        cf. De Lima vs Bidwell, 182 U.S. 1;  Dooley vs United States, 182 
        U.S. 222;   Faber vs United States, 221 U.S. 649; cf. Huus vs New 
        York &  P.R.S.S. Co.,  182 U.S.  392;   Gonzales vs Williams, 192 
        U.S. 1;  West India Oil Co. vs Domenech, 311 U.S. 20. 
        The Court, in Hooven supra, indicated that this was the last time 
        it would address the issue;  it would just be judicially noticed. 
             4.   The issue  arose in Brushaber vs Union Pacific Railroad 
        Company, 240  U.S. 1.  In that case, the high Court affirmed that 
        the "United  States"  could  levy  a  tax  on  the  income  of  a 
        nonresident alien  when that  income derived  from sources WITHIN 
        the "United States" (i.e. its territorial jurisdiction). 
             5.   Based  upon   the  decision  in  Brushaber  supra,  the 
        Commissioner of  Internal  Revenue,  with  the  approval  of  the 
        Secretary of  the Treasury,  promulgated the  Court's decision as 
        Treasury Decision 2313 (see EXHIBIT #1).  T.D. 2313 declared that 
        Frank R.  Brushaber was  a NONRESIDENT  ALIEN with respect to the 
        "United States".   T.D. 2313 also declared that the Union Pacific 
        Railroad Company  was a  DOMESTIC CORPORATION with respect to the 
        "United States" (i.e. its territorial jurisdiction). 
             6.   The Complaint (EXHIBIT #2) filed by Mr. Brushaber shows 
        that he  was a  nonresident  of  the  "United  States",  residing 
        instead in the State of New York, in the borough of Brooklyn, and 
        a Citizen  thereof, with  his principal  place of business in the 
        borough of  Manhattan.   He owned  stocks and bonds issued by the 
        Union Pacific  Railroad Company,  upon which  a cash dividend was 
        declared to  him by  said company,  a domestic corporation of the 
        "United States".   Union  Pacific was  chartered  by  an  Act  of 
        Congress for the territory of the federal state of Utah, in order 
        to build a railroad and telegraph line and other purposes.  It is 
        a matter of public record that the Union Pacific Railroad Company 
        was a  domestic "United States" corporation, of the federal state 
        of Utah, residing in the District of Columbia, with its principal 
        place of  business in  Manhattan, New York.  It was created by an 
        Act of  the "United  States" Senate  and House of Representatives 
        (under their exclusive authority, granted by the Constitution for 
        the United  States at  1:8:17)  on  July  1,  1862  by  the  37th 
        Congress, 2nd  Session, as  recorded in  the Statutes  At  Large, 
        December 5,  1859 to  March 3,  1863 at  Chapter  CXX,  page  489 
        (EXHIBIT  #3).     Considering  the  foregoing  evidence  of  the 
        diversity of citizenship of the two parties, it is clear that Mr. 
        Brushaber was  a "nonresident  alien with  respect to  the United 
        States", who had income from sources within said "United States". 
        His income  derived from  the Union  Pacific Railroad  Company, a 
        corporate citizen  created by  Congress and  residing WITHIN  the 
        "United States" (i.e. the District of Columbia). (See EXHIBIT #3) 
             ... [A]  domestic corporation  is an artificial person whose 
             residence or domicile is fixed by law within the territorial 
             jurisdiction of  the state which created it.  That residence 
             cannot  be   changed  temporarily   or  permanently  by  the 
             migrations of its officers or agents to other jurisdictions. 
             So long  as it  is an  existing corporation  its  residence, 
             citizenship, domicile, or place of abode is within the state 
             which created  it.   It cannot  reside or  have its domicile 
             elsewhere;   neither can it in legal contemplation be absent 
             from the state of its creation. 
                       [Fowler vs Chillingworth, 113 So. 667, 669 (1927)] 
                                                         [emphasis added] 
             7.   Related cases  are Hylton  vs United  States, 3 U.S. (3 
        Dall.) 171  (1796):   Hylton was  a Congressman;   his salary was 
        income from  sources  WITHIN  the  "United  States".    See  also 
        Springer vs  U.S., 102  U.S. 586  (1881):   Springer, a  Virginia 
        Citizen,  operated   a  carriage  business  in  the  District  of 
             8.   The  first   paragraph  of   the  Secretary's  Treasury 
        Decision (EXHIBIT #1) is quoted here as follows: 
                                   (T.D. 2313) 
                                   Income Tax 
             Taxability of  interest from bonds and dividends on stock of 
             domestic2 corporations  owned by nonresident aliens, and the 
             liabilities of nonresident aliens under Section 2 of the act 
             of October 3, 1913. 
             To collectors of internal revenue: 
                  Under the  decision of  the Supreme Court of the United 
             States in  the case  of Brushaber  vs Union  Pacific Railway 
             [sic] Co.,  decided January 24, 1916, it is hereby held that 
             income  accruing  to  nonresident  aliens  in  the  form  of 
             interest from  the bonds  and  dividends  on  the  stock  of 
             domestic corporations  is subject  to the income tax imposed 
             by the act of October 3, 1913. 
                                            [footnote and emphasis added] 
             9.   The above  decision by  the Secretary  of the  Treasury 
        determined that  a tax  on income  derived from  rents, sales  of 
        property, wages,  professions, or  a trade or business WITHIN the 
        "United States",  was applicable to such "income" when payable to 
        a nonresident alien, i.e. a Union State Citizen. 
        2.   "Domestic" in  the "United  States"  statutes  means  inside 
             D.C., the  possessions, territories,   and  enclaves of  the 
             "United States",  i.e. federal states of which there are 14. 
             (EXHIBIT #5) 
             10.  All income  tax provisions  under 26 U.S.C., subtitle A 
        (an excise  tax on  "income"), are divided between sources WITHIN 
        and WITHOUT  the "United  States".   They are  imposed  upon  the 
        worldwide income  of citizens  of the  "United States" and aliens 
        residing therein,  and upon  nonresident aliens  (of  all  kinds) 
        receiving income  from sources  WITHIN said  "United States"  and 
        WITHIN the  other parts  of the American Empire which fall WITHIN 
        the exclusive  legislative jurisdiction  of the  Congress of  the 
        "United States", pursuant to 1:8:17 and 4:3:2. 
             11.  The Constitution gives to Congress the power to act for 
        the 50  Union States as an international representative and to do 
        so without  (outside) the  boundaries of each of those 50 States. 
        These powers  are expressed  in Article  1, Section  8, Clauses 1 
        thru 16 (1:8:1-16). 
             12.  The Constitution gave to Congress a seat of government, 
        known as  the District  of Columbia.  In time, Congress created a 
        government for  the "District",  and  this  "District"  became  a 
        federal state  by definition.  (For the other federal "states" of 
        the "United  States", see  EXHIBIT #5.)   However,  this  "state" 
        (D.C.) is  not "united"  by or  under the  Constitution  for  the 
        United States of America.  D.C. has never joined the Union. 
             13.  Furthermore, the  Constitution granted  to Congress the 
        authority to  govern the  "District", just as the Legislatures of 
        each of  the several  States of  the Union  govern  their  States 
        within the  geographical limits  of those  States.   As  Congress 
        began to  legislate for the "District", under authority of 1:8:17 
        and 1:8:18, the difference between the citizens of the "District" 
        and the  Citizens3 of  the Union  became apparent,  in  that  the 
        citizens of  the "District" did not possess the right of suffrage 
        or other  rights (see  Balzac supra,  De Lima  supra, and  Downes 
        supra) and  therefore were  not  recognized  as  a  part  of  the 
        Sovereignty of  "We the People".  The Constitution for the United 
        States of  America provided  no means  of taxing these "District" 
        citizens of  the "United  States".  A method of forming municipal 
        governments and  of exercising  taxing power  over these citizens 
        within the  territories of the "United States" was decided by The 
        Insular Cases  (see the Bidwell cases, supra).  "The Constitution 
        was made  for States,  not territories,"  wrote  Daniel  Webster. 
        "... [T]he  Constitution of  the United  States as  such does not 
        extend beyond  the limits  of the  States which are united by and 
        under it  ....", wrote  author Langdell in "The Status of Our New 
        Territories", 12 Harvard Law Review 365, 371. 
        3.   Please  note  that  the  U.S.  Constitution  always  denoted 
             Citizen  and  Person  in  capital  letters  until  the  14th 
             Amendment, wherein citizen and person were not capitalized. 
             14.  The distinction between "citizens of the United States" 
        and "Union  State Citizens"  has been  fully  recognized  by  the 
        Congress and the Courts as follows: 
             We have  in our  political system a government of the United 
             States and a government of each of the several States.  Each 
             one of  these governments  is distinct  from the others, and 
             each has  citizens of  its own  who owe  it allegiance,  and 
             whose rights, within its jurisdiction, it must protect. 
                   [United States vs Cruikshank, 92 U.S. 588, 590 (1875)] 
                                                         [emphasis added] 
             The Federal Government is a "state". 
                         [Enright vs U.S., D.C.N.Y., 437 F.Supp 580, 581] 
             Foreign State.   A  foreign country  or nation.  The several 
             United States  are considered "foreign" to each other except 
             as regards their relations as common members of the Union. 
                       [Black's Law Dictionary, Sixth Edition, page 1407] 
             15.  Congress identifies these citizens of the "District" as 
        "individuals" or  citizens who  reside in the "United States" and 
        who are  subject to  the direct  control of Congress in its local 
        taxing and other municipal laws. 
             16.  In De  Lima supra,  the U.S.  Attorney defined  federal 
        taxes with the following words, at page 99-108: 
             Federal taxation  is either  general or  local.  Local taxes 
             are levied  under Article  1, Section 8, Paragraph 1.  Local 
             taxes are  for  the  support  of  territorial  or  non-state 
        Congress imposed  a federal  excise tax  on the "income" of these 
        citizens or  "individuals" at  26 U.S.C.,  Section 1,  as a local 
             Such taxes  are not  for the  common welfare  of the  United 
             States, but  are to  defray the expense of the government of 
             the locality,  and  in  the  dual  position  which  Congress 
             occupies in  our system,  as Federal Government and as local 
             government for  the territory of the United States not ceded 
             into States  of the Union, it has the power to tax for local 
                                                 [De Lima supra, page 99] 
        Hence the term "from sources WITHIN the United States". 
             General taxes  are of  two kinds,  direct;   and  what,  for 
             brevity may  be called  indirect,  meaning  thereby  duties, 
             imposts, and  excises.  Direct taxes must be laid on all the 
             States alike. 
                                                [De Lima supra, page 100] 
             17.  A Citizen of one of the 50 States, residing therein, is 
        a nonresident  alien with  respect to  this local taxing power of 
        Congress (see Brushaber supra).  Outside the geographical area of 
        the "United  States" (as  that  term  is  defined  at  26  C.F.R. 
        1.911-2(g)), Congress lacks power to support the local government 
        by imposing  a tax  on the  incomes of  nonresident aliens  (ones 
        outside the locality, i.e. Citizens of the 50 States) UNLESS they 
        reside within  that jurisdiction  by  residence,  or  UNLESS  the 
        source of  their income  is  situated  WITHIN  that  geographical 
        territory.   Any income  arising from  sources  therein  must  be 
        withheld at the source by the "withholding agent" (see T.D. 2313, 
        26 C.F.R.  871, and  26 U.S.C.  1461), unless  the  recipient  is 
        engaged in a trade or business therein.  For a full discussion of 
        this local  taxation, see  pages 55  and 99-108 of De Lima supra. 
        For confirmation  of the  domestic municipal  jurisdiction of the 
        "United States", see Downes supra at pages 383-388. 
             18.  Congress has  control of  these "individuals",  whether 
        they  "reside"  WITHIN  the  "United  States"  (i.e.  territorial 
        states, see  EXHIBIT #5)  or WITHOUT  the "United States".  These 
        "individuals" (i.e.  born within  the jurisdiction  of  Congress, 
        such as  a citizen  born in the District of Columbia or in one of 
        the territories),  whether they  reside  within  "United  States" 
        territories,  without   the  "United   States"  in  the  "foreign 
        countries" (as  defined at  26 C.F.R. 1.911-2(h)), or abroad, are 
        still liable for the federal income tax unless they abrogate that 
        citizenship by  naturalization or  otherwise.    (See  26  C.F.R. 
        871-5, -6 and -12 and 1.932-1).  However, at 26 U.S.C. 911(a)(1), 
        Congress has  exempted from  taxation all "foreign earned income" 
        of these  citizen individuals,  except for  Puerto Ricans (see 26 
        C.F.R. 1.932-1(b), IRS Form 2555). 
             19.  Another type  of nonresident  aliens are those citizens 
        of contiguous  countries such as Mexico, Canada and other foreign 
        countries.   These foreigners,  residents or nonresidents (as the 
        case may be), are subject to the tax on incomes received from any 
        place in the American Empire, i.e. in these united States and  in 
        the  "United   States".     A  Union  State  Citizen,  previously 
        nonresident, may  lose his  nonresident status by residing within 
        the territorial  sovereignty of  the "United States" for 183 days 
        (26 C.F.R.  1.871-7(d)(2)) and  thereby becomes  subject  to  the 
        local tax on incomes received from sources within and without the 
        "United States" (i.e. worldwide income). 
                          THE INCOME TAX IS A LOCAL TAX 
                       IMPOSED WITHIN THE "UNITED STATES". 
                          THE DEFINITIONS IN 26 U.S.C.: 
                            THE INTERNAL REVENUE CODE 
             20.  The definitions  used in  26 U.S.C.  are very  clear in 
        defining "State"  and "United  States".  In every definition that 
        uses the  word "include", only the words that follow are defining 
        the term.  For example: 
             21.  26 U.S.C.  3121(e)(1)    State.  --  The  term  "State" 
        includes the  District of  Columbia, the  Commonwealth of  Puerto 
        Rico, the Virgin Islands, Guam, and American Samoa. 
             22.  26 U.S.C.  7701(a)(9)   United States.  --    The  term 
        "United States"  when used  in a geographical sense includes only 
        the States and the District of Columbia. 
             23.  The  federal  government  has  used  these  definitions 
        correctly, but  IRS agents  seem to  assume that they mean the 50 
        States of the Union (America) when they look at the word "States" 
        in 26  U.S.C. 7701(a)(9).   You  cannot use  the common, everyday 
        meaning of  the terms  "United States"  or "State"  when  talking 
        about the tax laws and many other laws that are enacted under the 
        local, municipal authority of the "United States" government. 
             24.  Another example  is the  Omnibus Acts at 86th Congress, 
        1st Session,  Volume 73,  1959, and 2nd Session, Volume 74, 1960, 
        Public Laws  86-70 and  86-624.  These Acts reveal the crafty way 
        in which  the federal  government uses  correct English  and  how 
        Congress  changes   the  meanings  of  words  by  using  its  own 
        definitions.  For example, all the United States Code definitions 
        had to be changed to allow Alaska and Hawaii to join the Union of 
        States united  under the  Constitution.   When Alaska  joined the 
        Union, Congress  added a  new definition of "States of the United 
        States".  This definition had never appeared before, to wit: 
             Sec. 48.  Whenever the phrase "continental United States" is 
             used in  any law of the United States enacted after the date 
             of enactment of this Act, it shall mean the 49 States on the 
             North American  Continent  and  the  District  of  Columbia, 
             unless otherwise expressly provided. 
                                      [cf. 1 USCS 1, "Other provisions:"] 
                                                         [emphasis added] 
        Where is it otherwise expressly provided?  Answer: 
             Sec. 22.   (a)  Section 2202 of the Internal Revenue Code of 
             1954 (relating  to missionaries  in  foreign  service),  and 
             sections 3121(e)(1),  3306(j), 4221(d)(4),  and  4233(b)  of 
             such code (each relating to a special definition of "State") 
             are amended by striking out "Alaska,". 
             (b)  Section 4262(c)(1) of the Internal Revenue Code of 1954 
             (definition of  "continental United  States") is  amended to 
             read as  follows:   "(1) Continental  United States.  -- The 
             term 'continental  United  States'  means  the  District  of 
             Columbia and the States other than Alaska." 
        When Hawaii was admitted to the Union, Congress again changed the 
        above definition, to wit: 
             Sec. 18.  (a)   Section 4262(c)(1)  of the  Internal Revenue 
             Code of  1954 (relating  to the  definition of  "continental 
             United States"  for purposes of the tax on transportation of 
             persons) is  amended to  read as  follows:  "(1) Continental 
             United States. -- The term 'continental United States' means 
             the District  of Columbia  and the  States other than Alaska 
             and Hawaii." 
             25.  They certainly  cannot be the other 48 States united by 
        and under the Constitution, because Alaska and Hawaii just joined 
        them, RIGHT?   The  same definitions apply to the Social Security 
        Acts.   So, what  is left?   Answer:   the  District of Columbia, 
        Puerto Rico,  Guam, Virgin Islands, etc.  These are the States OF 
        (i.e. belonging  to) the  "United States" and which are under its 
        sovereignty.   Do not confuse this term with States of the Union, 
        because the word "of" means "belonging to" in this context. 
             26.  Congress can  also change  the  definition  of  "United 
        States" for  two sentences and then revert back to the definition 
        it used before these two sentences.  This is proven in Public Law 
        86-624, page  414, under School Operation Assistance in Federally 
        Affected Areas, section (d)(2): 
             The  fourth  sentence  of  such  subsection  is  amended  by 
             striking out  "in the  continental United  States (including 
             Alaska)" and  inserting in  lieu thereof "(other than Puerto 
             Rico, Wake  Island, Guam,  or the  Virgin Islands)"  and  by 
             striking out  "continental United  States" in clause (ii) of 
             such sentence  and inserting  in lieu thereof "United States 
             (which for  purposes of  this sentence and the next sentence 
             means the  fifty States and the District of Columbia)".  The 
             fifth sentence of such subsection is amended by striking out 
             "continental" before  "United States"  each time  it appears 
             therein and by striking out "(including Alaska)". 
             27.  This one  section, all  by  itself,  contains  all  the 
        evidence you  need, by  words of  construction, to prove that the 
        term "United  States" on  either side  of these sentences did not 
        mean the 50 States united by and under the Constitution.  If that 
        is not conclusive to you, then see the following: 
             26 C.F.R. 31.3121(e)-1  State, United States, and citizen. 
             (a)  When used  in the regulations in this subpart, the term 
             "State" includes  [in its  restrictive form] the District of 
             Columbia,  the  Commonwealth  of  Puerto  Rico,  the  Virgin 
             Islands, the  Territories of  Alaska and Hawaii before their 
             admission as States, and (when used with respect to services 
             performed after 1960) Guam and American Samoa. 
             (b)  When used  in the regulations in this subpart, the term 
             "United States",  when used  in a  geographical sense, means 
             the several states, (including the Territories of Alaska and 
             Hawaii before  their admission  as States),  the District of 
             Columbia, the  Commonwealth of  Puerto Rico,  and the Virgin 
             Islands.   When used in the regulations in this subpart with 
             respect to  services performed  after 1960, the term "United 
             States" also  includes [in  its  expansive  form]  Guam  and 
             American Samoa  when the  term is  used  in  a  geographical 
             sense.  The term "citizen of the United States" includes [in 
             its restrictive  form] a  citizen  of  the  Commonwealth  of 
             Puerto Rico or the Virgin Islands, and, effective January 1, 
             1961, a citizen of Guam or American Samoa. 
                                                         [emphasis added] 
        Please note  the bolded  terms.   In paragraph  (a),  Alaska  and 
        Hawaii only  fit the  definition of  "State" before  joining  the 
        Union.   That means  the definition of "State" was never meant to 
        be the 48 now 50 States of the Union unless distinctly expressed. 
        If paragraph (b) confuses you, the following is submitted: 
             28.  The word "geographical" was never used in tax law until 
        Alaska and  Hawaii joined the Union, and it is not defined in the 
        Internal Revenue  Code.   So, we must use the definition found in 
        the Standard Random House Dictionary: 
      1.  of or pertaining to geography  2.  of 
             or  pertaining   to  the   natural   features,   population, 
             industries, etc., of a region or regions 
             29.  Were you  born in the "United States"?  The preposition 
        "in" shows  that the "United States" in this question is a place, 
        a geographical place named "United States".  It is singular, even 
        though it  ends in  "s".  It also can be plural when referring to 
        the Union  States which  are places  which  exist  by  agreement. 
        Every human  in a nation is a natural Citizen of a place called a 
        nation, if he was born in that nation.  Those same people must be 
        naturalized (born  again) if  they want  to become  a citizen  of 
        another nation.   Original  citizenship exists because of places, 
        not agreements.   This is jus soli, the law of the place of one's 
        birth (see Black's Law Dictionary, Sixth Edition). 
             30.  Here are  two questions, your own answers to which will 
        solve the  dilemma.   In a geographical sense, where is the State 
        of Texas  located on  the continent?   In  a geographical  sense, 
        where is the "United States" (Congress) located on the continent? 
             31.  Now, since  typewriters were  purchased from  the areas 
        that just  joined the  Union, namely Alaska and Hawaii, according 
        to Title  1, Congress  had to  use a term that is NOT used in the 
        Internal Revenue  Code, in order to buy the same typewriters from 
        the same geographical area: 
             Sec. 45.   Title  I of the Independent Offices Appropriation 
             Act, 1960,  is amended  by striking  out the  words "for the 
             purchase within  the continental limits of the United States 
             of any  typewriting machines"  and inserting in lieu thereof 
             "for the  purchase within  the STATES  OF THE  UNION AND THE 
                                                         [emphasis added] 
        And, for  declarations made  under the  penalties of perjury, the 
        statute at  28 U.S.C.  1746 separately  defines declarations made 
        WITHIN and WITHOUT the "United States" as follows: 
             If executed  WITHOUT the United States:  I declare ... under 
             the laws  of the United States of America that the foregoing 
             is true and correct. 
             If executed  WITHIN  the  United  States,  its  territories, 
             possessions, or  commonwealths:   I  declare  ...  that  the 
             foregoing is true and correct. 
                                                         [emphasis added] 
        The latter  clause above  is the  penalty clause that is found on 
        IRS Form 1040 and similar IRS forms. 
        And, 28 U.S.C. 1603(a)(3) states as follows: 
             (3)  which is  neither a  citizen of  a State  of the United 
             States as  defined in  section 1332(c) and (d) of this title 
             Section 1332(d). The word "States", as used in this section, 
             includes the  Territories, the District of Columbia, and the 
             Commonwealth of Puerto Rico. 
                           Examples of Two Definitions 
                    of the term "United States" in 26 U.S.C. 
                                First Definition 
             32.  26 U.S.C. 7701(a)(9): 
             (9)  United States. -- The term "United States" when used in 
             a geographical  sense  includes  only  the  States  and  the 
             District of Columbia. 
                                Second Definition 
             33.  26 U.S.C. 4612(a)(4)(A): 
             (A)  In general.  -- The  term "United  States" means the 50 
             States, the District of Columbia, the Commonwealth of Puerto 
             Rico, any  possession of the United States, the Commonwealth 
             of the  Northern Mariana Islands, and the Trust Territory of 
             the Pacific Islands. 
                                                         [emphasis added] 
             34.  The Supreme Court stated in Hepburn & Dundas vs Ellsey, 
        6 U.S.  445, 2  Cranch 445,  2 L.Ed  332, that  the  District  of 
        Columbia is not a "State" within the meaning of the Constitution. 
        Therefore, it  is apparent  that the meaning of the term "States" 
        in the  first definition  above can only mean the territories and 
        possessions belonging  to the  "United States",  because  of  the 
        specific mention  of the  District of  Columbia and  the specific 
        absence of  the 50 States (inclusio unius est exclusio alterius). 
        The District  of Columbia  is not a "State" within the meaning of 
        the Constitution  (see Hepburn  supra).  Therefore, the 50 States 
        are specifically  excluded from this first definition of the term 
        "United States". 
             35.  Congress has  no problem naming the "50 States" when it 
        is legislating for them, so, in the second definition of the term 
        "United States"  above, Congress  expressly  mentions  them,  and 
        there is no misunderstanding.  If a statute in 26 U.S.C. does not 
        have a  special "word  of art"  definition for  the term  "United 
        States", then the First Definition of the term "United States" is 
        always used  (see above)  because of  the general  nature of that 
        term as defined by Congress. 
             36.  When citizens or residents of the first "United States" 
        are without  the geographical area of this first "United States", 
        their "compensation  for personal  services actually rendered" is 
        defined as  "foreign earned  income" in 26 U.S.C., Section 911(b) 
        and 911(d)(2), as follows: 
             911(b)  Foreign Earned Income. -- ... 
             (d)(2)  Earned Income. -- 
             (A)  In general.  -- The  term "earned  income" means wages, 
             salaries, or  professional fees,  and other amounts received 
             as compensation for personal services actually rendered, but 
             does not  include that  part of  the compensation derived by 
             the taxpayer  for personal  services rendered  by him  to  a 
             corporation which  represents a  distribution of earnings or 
             profits rather  than a  reasonable allowance as compensation 
             for the personal services actually rendered. 
             37.  A citizen or resident of the first "United States" does 
        not pay a tax on his "compensation for personal services actually 
        rendered" while  residing outside  of the  first "United States", 
        because Congress has exempted all such compensation from taxation 
        under 26 U.S.C., Section 911(a)(1), which reads as follows: 
             911(a)  Exclusion from Gross Income. -- ... [T]here shall be 
             excluded from  the gross  income  of  such  individual,  and 
             exempt from  taxation ...  (1) the  foreign earned income of 
             such individual .... 
             38.  When residing  without (outside)  this "United States", 
        the citizen  or resident  of this  "United States" pays no tax on 
        "foreign earned  income", but  is  required  to  file  a  return, 
        claiming the exemption (see IRS Form 2555). 
             39.  26 C.F.R.,  Section 871-13(c)  allows this  citizen  to 
        abandon his  citizenship or  residence in  the "United States" by 
        residing elsewhere. 
             40.  26 C.F.R.,  Section 1.911-2(g) defines the term "United 
        States" as follows: 
             (g)  United States.  The term "United States" when used in a 
             geographical  sense   includes  any   territory  under   the 
             sovereignty of  the United States.  It includes the states4, 
             [Puerto Rico,  Guam, Mariana  Islands, etc.] the District of 
             Columbia, the  possessions and  territories  of  the  United 
             States, the territorial waters of the United States, the air 
             space over  the United States, and the seabed and subsoil of 
             those submarine  areas which are adjacent to the territorial 
             waters of the United States and over which the United States 
             has exclusive  rights, in  accordance with international law 
        4.   This term  "state" evidently  does not embrace one of the 50 
             States (where  I  am  a  free  inhabitant),  united  by  the 
             Constitution,  because  they  are  separate  governments  or 
             foreign states  with respect  to the  "United States"  (i.e. 
             D.C., its territories, possessions and enclaves). 
        None of  the 50  united States comes under the sovereignty of the 
        "United States",  and subsection (h) defines the 50 States united 
        by the Constitution as "foreign countries": 
             (h)  Foreign country.   The term "foreign country" when used 
             in a  geographical sense  includes any  territory under  the 
             sovereignty of  a government  other than  that of the United 
                                                   [26 C.F.R. 1.911-2(h)] 
        All of  the 50  States are foreign with respect to each other and 
        are under  the  sovereignty  of  their  respective  Legislatures, 
        except where  a power  has been  expressly delegated to Congress. 
        The Citizens  of each  Union State are foreigners and aliens with 
        respect to another Union State, unless they establish a residence 
        therein under  the laws of that Union State.  Otherwise, they are 
        nonresident aliens with respect to all the other Union States. 
             41.  The regulations  at 26  C.F.R., Section 1.1-1(a) state, 
        in pertinent part: 
             (a)  General Rule.   (1)  Section 1  of the  Code imposes an 
             income tax  on the  income of  every  individual  who  is  a 
             citizen or  resident of the United States and, to the extent 
             provided by  Section 871(b)  or 877(b),  on the  income of a 
             nonresident alien individual. 
        26 U.S.C.,  Section 1  imposes  a  tax  on  "taxable  income"  as 
        follows, in pertinent part: 
             There is  hereby imposed  on the taxable income of ... every 
             married individual  ... who  makes a  single return  jointly 
             with his spouse under section 6013 .... 
             42.  The  regulations  promulgated  to  explain  26  U.S.C., 
        Section 1  are found  in 26  C.F.R., Section  1.1-1, and state in 
        pertinent part: 
             (a) General  Rule.   (1) Section  1 of  the Code  imposes an 
             income tax  on the  income of  every  individual  who  is  a 
             citizen or  resident of the United States and, to the extent 
             provided by  Section 871(b)  or 877(b),  on the  income of a 
             nonresident alien individual. 
        Please note that the term "taxable income" is not used as such in 
        the above  statute because  the  "income"  of  those  classes  of 
        individuals mentioned is taxable as "taxable income". 
             Section 1.871   Classification  and manner  of taxing  alien 
             (a)  Classes of  aliens.   For purposes  of the  income tax, 
             alien individuals  are divided  generally into  two classes, 
             namely, resident aliens and nonresident aliens. ... 
             (b)  Classes of nonresident aliens. -- 
             (1)  In  general.     For   purposes  of   the  income  tax, 
             nonresident alien individuals are divided into the following 
             three classes: 
             (i)  Nonresident alien individuals who at no time during the 
                  taxable year  are engaged in a trade or business in the 
                  United States, 
             (ii) Nonresident alien  individuals who  at any  time during 
                  the taxable  year are,  or  are  deemed  under  Section 
                  1.871-9 to  be, engaged  in a  trade or business in the 
                  United States, and 
             (iii) NOT APPLICABLE (concerns residents of Puerto Rico) 
             43.  26 C.F.R., Section 871-13 states as follows: 
             (a)  In general.   (1)   An  individual who  is a citizen or 
             resident of  the United  States  at  the  beginning  of  the 
             taxable year  but a  nonresident alien  at the  end  of  the 
             taxable year, or a nonresident alien at the beginning of the 
             taxable year  but a citizen or resident of the United States 
             at the  end of the taxable year, is taxable for such year as 
             though his  taxable year  were  comprised  of  two  separate 
             periods, one  consisting of  the time  during which  he is a 
             citizen or  resident of  the United  States  and  the  other 
             consisting of  the time  during which he is not a citizen or 
             resident of the United States. 
        It sounds complicated, doesn't it? 
                                NONRESIDENT ALIEN 
             44.  The federal  income tax  is a local tax for the "United 
        States" to  support local  government and,  in  order  to  become 
        liable to  this tax,  a State  Citizen must be a resident therein 
        (i.e. a  resident alien), or receive income from sources therein, 
        or be engaged in a trade or business therein. 
             45.  In 26  U.S.C., Section  7701(b)(1)(A) &  (B),  Congress 
        defined the  statutory difference  between "resident  alien"  and 
        "nonresident alien" as follows: 
             (b)  Definitions of Resident Alien and Nonresident Alien. -- 
             (1)  In general. -- For purposes of this title ... 
             (A)  Resident Alien. -- An alien individual shall be treated 
                  as a  resident of the United States with respect to any 
                  calendar year  if (and  only if)  such individual meets 
                  the requirements of clause (i), (ii), or (iii): 
                  (i)  Lawfully admitted for permanent residence. -- Such 
                       individual is  a lawful  permanent resident of the 
                       United States  at any  time during  such  calendar 
                  (ii) Substantial presence. -- Such individual meets the 
                       substantial presence test of paragraph (3). 
                  (iii) First year election. -- Such individual makes the 
                       election provided in subparagraph (4). 
             (B)  Nonresident Alien.  -- An  individual is  a nonresident 
                  alien if  such individual  is neither  a citizen of the 
                  United States  nor a  resident  of  the  United  States 
                  (within the meaning of subparagraph (A)). 
             46.  Plaintiffs are not "residents" (as that term is defined 
        in the  above statutes)  nor are  they citizens  of this  "United 
        States".   They are nonresident aliens as that term is defined in 
        subsections (B)  and (A)(i),  (ii), and  (iii), and they have the 
        same status as the Plaintiff in Brushaber supra. 
             47.  The following  individuals are required to make returns 
        of income: 
             26 C.F.R.,  Section 1.6012-1.   Individuals required to make 
             returns of income. 
             (a)  Individual citizen or resident. -- 
             (1)  In general.  ... an  income tax return must be filed by 
                  every individual ... if such individual is ... 
                  (i)  A citizen  of the  United States, whether residing 
                       at home or abroad, 
                  (ii) A resident  of the United States even though not a 
                       citizen thereof, or 
                  (iii) An alien bona fide resident of Puerto Rico during 
                       the entire taxable year. 
             48.  John and Lois Knox clearly are not defined in the above 
        statutes, but  they are  defined in the following statute as ones 
        who are not required to make a return. 
             49.  26 C.F.R., Section 1.6013-1 states: 
             (b)  Nonresident Alien.  A joint return shall not be made if 
             either the  husband or  wife at  any time during the taxable 
             year is a nonresident alien. 
        Mr. John  H. Knox  and Mrs.  Lois C.  Knox are nonresident aliens 
        with respect  to the "United States", with no income derived from 
        sources within  the "United  States", except  for John's Military 
        Retirement pay, which is exempt from taxation. 
             50.  26 C.F.R.,  Section 871-7 states, in pertinent part, as 
             Except  as   otherwise  provided   in  Section  1.871-12,  a 
             nonresident alien individual to whom this section applies is 
             not subject  to the  tax imposed  by section  1  or  section 
             1201(b)5 but,  pursuant to  the provision of section 871(a), 
             is liable  to a flat tax of 30 percent upon the aggregate of 
             the amounts determined under paragraphs (b), (c), and (d) of 
             this section which are received during the taxable year from 
             sources within the United States. 
                                                         [emphasis added] 
             51.  Please note  26 C.F.R.,  Section 1.871-4(b),  Proof  of 
        residence of aliens, which establishes a key legal presumption: 
             (b)  Nonresidence presumed.   An  alien by  reason  of  this 
             alienage, is presumed to be a nonresident alien. 
             52.  Further facts  are illustrated  by  the  definition  of 
        "withholding agent" at 26 U.S.C., Section 7701(a)(16): 
             Withholding agent. -- The term "withholding agent" means any 
             person required  to deduct  and withhold  any tax  under the 
             provisions of section 1441, 1442, 1443, or 1461. 
             53.  26 U.S.C.,  Section 1441  refers to  nonresident aliens 
        who receive  income from  sources within  the "United States", as 
        set forth  in Section 871(a)(1).  The other sections do not apply 
        to the Plaintiffs. 
             54.  Your  attention   is  invited  to  26  C.F.R.,  Section 
        31.3401(a)(6)-1(b), which states as follows: 
        5.   Capital gains tax. 
             Remuneration  for  services  performed  outside  the  United 
             States.  Remuneration paid to a nonresident alien individual 
             ... for  services performed  outside the  United  States  is 
             excepted from wages and hence is NOT SUBJECT TO WITHHOLDING. 
             [emphasis added] 
             55.  As a  rule, Military  Retirement Pay  of a  nonresident 
        alien individual  is exempted  from the  income tax at 26 C.F.R., 
        Section 31.3401(a)-1(b)(1)(ii), with the following exception: 
             Where such  retirement pay or disability annuity ... is paid 
             to a  nonresident alien  individual, withholding is required 
             only in the case of such amounts paid to a nonresident alien 
             individual who is a resident of Puerto Rico. 
        and at 26 C.F.R., Section 935-1(a)(3): 
             ... [F]or  special rules  for determining  the residence for 
             tax purposes  of individuals under military or naval orders, 
             see section  514 of  the Soldiers' and Sailors' Civil Relief 
             Act of  19406, 50  App. U.S.C.  574.   The residence  of  an 
             individual, and,  therefore, the  jurisdiction with which he 
             is required to file an income tax return under paragraph (b) 
             of this section, may change from year to year. 
        Section 574(1)  of The  Soldiers' and  Sailors' Relief Act states 
             For the  purposes of  taxation in  respect of  the  personal 
             property, income,  or gross income of any such person by any 
             State, Territory,  possession, or  political subdivision  of 
             any of  the foregoing, or the District of Columbia, of which 
             such person  is not  a  resident  or  in  which  he  is  not 
             domiciled ...  personal property  shall not  be deemed to be 
             located or  present in  or to  have a  situs for taxation in 
             such State,  Territory, possession or political subdivision, 
             or district. 
                                                         [emphasis added] 
             56.  Plaintiffs herein are at an advanced age of 62 and both 
        are in ill health, unable to work or to pay the tax or to sue for 
        a refund.   Lois  has only  one kidney  which does  not  function 
        properly;  complicating this is a lung disease which prevents her 
        from breathing.   She  has been totally disabled since 1981, with 
        no earned  income from  any source  since that  time.   John  has 
        emphysema and  has difficulty  breathing upon exercise.  They are 
        6.   See Exhibit #6 attached hereto and made a part hereof.  
        unable to  pay the  tax and  sue for  refund without the complete 
        destruction of their home, which is combined with their business. 
        The property which is the subject of this case is a one-of-a-kind 
        property which  is, or  would be,  irreplaceable years  down  the 
        road, if  a refund  suit was  won.   The property  has a value of 
        $100,0007 and was allegedly sold for the sum of $16,000.00, which 
        is all  that could  be recovered  in a refund suit as pertains to 
        said  property.    This  creates  an  irreparable  situation  for 
        Plaintiffs.   The tax  with penalties and interest claimed by the 
        government against  both Plaintiffs for 1982 is around $19,000.00 
        and, without  the sale of the business property and home, it will 
        be many  years before  a tax  in this amount can be paid in full. 
        Plaintiffs will  not live  long enough  to prosecute such a suit. 
        Equity and justice require some relief in such a situation. 
             57.  In Botta  vs Scanlon, 288 F.2d 504 (2nd Circuit, 1961), 
        the Court  set forth  the general  exceptions to  the bar  at  26 
        U.S.C., Section 7421, stating (see EXHIBIT #7): 
             "...  [I]t   has  long   been  settled   that  this  general 
             prohibition is  subject to  exception  in  the  case  of  an 
             individual taxpayer against a particular collector where the 
             tax is  clearly illegal or other special circumstances of an 
             unusual character  make  an  appeal  to  equitable  remedies 
             appropriate."   National Foundry  Co. of N.Y. vs Director of 
             Int. Rev., 2 Cir. 1956, 229 F.2d 149, 151. 
        The Court then gave a number of examples, as follows: 
                  "(a) Suits to  enjoin collection of taxes which are not 
             due from  the plaintiff  but, in  fact, are due from others. 
             For example,  see Raffaele vs Granger, 3 Cir. 1952, 196 F.2d 
             620, 622 .... 
                  "(b) Cases in  which plaintiff  definitely showed  that 
             the taxes sought to be collected were "probably" not validly 
             due.   For example,  Midwest Haulers,  Inc. vs Brady, 6 Cir. 
             1942, 128  F.2d 496,  and John  M. Hirst & Co. vs Gentsch, 6 
             Cir. 1943, 133 F.2d 247. 
                  "(c) Cases in  which  a  penalty  was  involved.    For 
             example, Hill  vs Wallace, 259 U.S. 44, 42 S.Ct 453, 66 L.Ed 
             822;  Lipke vs Lederer, 259 U.S. 557, 42 S.Ct. 549, 66 L.Ed. 
             1061;   Regal Drug  Corporation vs Wardell, 260 U.S. 386, 43 
             S.Ct 152,  67 L.Ed  318;  Allen vs Regents of the University 
             System of Georgia, 304 U.S. 439, 58 S.Ct 980, 82 L.Ed 1448. 
        7.   The property had a value of $125,000 two years ago, when the 
             IRS allegedly sold it. 
                  "(d) Cases in which it was definitely demonstrated that 
             it was  not proper  to levy  the tax  on  the  commodity  in 
             question, such  as Miller  vs Standard Nut Margarine Company 
             of Florida, 284 U.S. 498, 52 S.Ct. 260, 76 L.Ed 422. 
                  "(e) Cases  based   upon  tax  assessment  fraudulently 
             obtained by  the tax  collector by  coercion.   For example, 
             Mitsukiyo Yoshimura  vs Alsup,  9 Cir.  1948, 167  F.2d 104" 
             (141 F.Supp. at page 338). 
             [4]  In the  present case,  if any of the plaintiffs are not 
             subject to  any tax  liability, such plaintiff might well be 
             within the  exception stated  in 9  Mertens, Law  of Federal 
             Income Taxation,  Section 49.213,  Chapter 49,  page 226, as 
             follows: ... 
             "[2] It is  equally well  setted [sic] that the Revenue laws 
             relate only  to taxpayers.  No procedure is prescribed for a 
             nontaxpayer where  the Government  seeks to levy on property 
             belonging to him for the collection of another's tax, and no 
             attempt has  been made  to  annul  the  ordinary  rights  or 
             remedies of a non-taxpayer in such cases.  If the Government 
             sought to  levy on  the property  of A  for a  tax liability 
             owing to B, A could not and would not be required to pay the 
             tax under  protest and  then institute  an action to recover 
             the amount  so paid.  His remedy would be to go into a court 
             of competent  jurisdiction and  enjoin the  Government  from 
             proceeding against  his property."  In Tomlinson vs Smith, 7 
             Cir. 1942,  128 F.2d  808 ...  the Court  affirmed an  order 
             granting interlocutory injunction and noted the "distinction 
             between suits instituted by taxpayers and non-taxpayers" (at 
             page 811). 
             Plaintiffs  are  in  no  way  subjected  to  any  derivative 
        liability.   The  procedures  set  forth  in  26  C.F.R.  do  not 
        authorize the Secretary or his delegate to manufacture income and 
        tax it  where a  Person is without the taxable class.  26 C.F.R., 
        Section 871  is unclouded  in that, where there is no income from 
        sources within  the "United  States" by  a nonresident alien, the 
        choice is  delegated to  that Person  by Congress as to whether a 
        return is  to be filed or not (see 26 C.F.R. 1.871-8).  Where the 
        Secretary determines  the existence  of taxable income when there 
        has been  no return,  he should  sign the  substitute return  and 
        assume the responsibility for the determination as required by 26 
        U.S.C. 6020(b)(1).   Treasury  Decision 2313  explains  that  the 
        withholding agent  is responsible  for withholding  the tax  from 
        sources within  the "United States", for filing a Form 1040NR and 
        for paying  over the  tax withheld  from said  nonresident alien. 
        (See Treasury  Decision 2313 and 26 C.F.R. 1.1461-3).  Therefore, 
        no penalties  should accrue  to the Plaintiffs.  Lois K. Knox has 
        no community  property interest in John's Military Retirement Pay 
        and, therefore, no taxable income accrues therefrom. 
             The fact  that  the  Knoxs  were  not  aware  of  the  above 
        information from the early years of their lives and they reported 
        the "earned income" from their labor in the foreign States of the 
        Union as  a local  tax of  the "United  States", does  not change 
        their status  as Citizens  of the  Republic of Union States.  Nor 
        does it  change their  status from  nonresidents  aliens  to  the 
        "individuals" defined  in 26  C.F.R., Section 1.1-1.  Nor does it 
        justify the Secretary's actions taken when he has been repeatedly 
        informed by  the Knoxs  of their  true status.   The Secretary is 
        required to  know the  law he is administering, and to do so with 
        justice and  equity within  the parameters set forth by Congress. 
        Arbitrary actions  are discouraged by the Executive, the Congress 
        and the Courts. 
             WHEREFORE, PREMISES  CONSIDERED, Plaintiffs  pray that  this 
        Court grant a temporary and permanent injunction against the IRS, 
        its employees,  agents, Commissioner  and Attorneys by ordering a 
        cessation of  the  levies  and  seizures  against  all  forms  of 
        property owned  by Plaintiffs;   that the Court order a return of 
        property seized  in the  past, declare  the sale of such property 
        voidable or  void, and order a release of all liens filed against 
        the Plaintiffs.  In the alternative, Plaintiffs request that this 
        case be remanded back to the Administrative Agency for resolution 
        and arbitration.   Plaintiffs  further request the Court to grant 
        such other  and further  relief in law or in equity as Plaintiffs 
        may be entitled. 
             I declare  under penalty  of perjury,  under the laws of the 
        United States of America, that the foregoing is true and correct, 
        to the best of my knowledge and belief, per 28 U.S.C. 1746(1). 
             Executed on this 5th day of September, 1991. 
                                                Respectfully submitted, 
                                                /s/ John H. Knox 

                            [addendum to Knox brief] 
                              ARGUED AND DETERMINED 
                                     in the 
                           SUPREME COURT OF JUDICATURE 
                                     of the 
                                STATE OF INDIANA 
                      at Indianapolis, November Term, 1878, 
                      in the Sixty-Third Year of the State. 
               Daly et al. vs The National Life Insurance Company 
                        of the United States of America. 
                                 [cite omitted] 
        "Foreign Corporation"  Defined. --  The statutes  of  this  State 
        define a  foreign corporation  to be "a corporation created by or 
        under the  laws of  any other  state, government, or country," or 
        one "not incorporated or organized in this State". 
        Same. --  Insurance Company  Created by  Act of  Congress. --  An 
        insurance company  created by  an act  of Congress  is a  foreign 
        corporation subject  to the  requirements of  the statute of this 
        State approved  June 17th, 1852, "respecting foreign corporations 
        and their agents in this State."  1 R.S. 1876, p. 373. 
        Same. --  Congress as a Local Legislature. -- Constitutional Law. 
        -- An  act of  Congress creating a private corporation is the act 
        of Congress as the local Legislature of the District of Columbia; 
        as Congress  can not,  under the  federal  constitution,  as  the 
        Congress of the United States, create a private corporation. 
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