Appendix A
Letter to John Knox:
1929 - 1992
-and-
Memorandum of Law by John Knox:
edited in honor of his passing
by
Paul Andrew Mitchell, B.A., M.S.
Counselor at Law, Federal Witness
and Private Attorney General
Reader's Notes:
c/o general delivery
San
Rafael, California
Postal
Code 94901/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 conversation. 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/ Paul Andrew Mitchell, 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
v. ) (Consolidated with
) SA-89-CA-0761)
THE UNITED STATES, )
HERMAN SILGUERO and )
DOROTHY SILGUERO, )
)
Defendants )
MEMORANDUM IN SUPPORT OF REQUEST
FOR THE DISTRICT COURT TO CONSIDER THE T.R.O.
AND INJUNCTION DENIED BY THE MAGISTRATE
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 v. Bidwell, 182 U.S. 1 and Downes v. 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 exercise.
[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 Constitution.
[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 v. 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. v. 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]
Quoting Fourteen Diamond Rings v. United States,
183 U.S. 176; cf. De Lima v. Bidwell, 182 U.S.
1; Dooley v. United States, 182
U.S. 222; Faber v. United States,
221 U.S. 649; cf. Huus
v. New York & P.R.S.S. Co., 182 U.S. 392; Gonzales v. Williams,
192 U.S. 1; West India Oil Co. v. 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 v. 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 v. Chillingworth,
113 So. 667, 669 (1927)]
[emphasis added]
7. Related
cases are Hylton v. 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 v. U.S., 102 U.S.
586 (1881): Springer, a Virginia
Citizen, operated a carriage business in the District of Columbia.
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 v. 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.
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.
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 v. Cruikshank,
92 U.S. 588, 590 (1875)]
[emphasis added]
The Federal
Government is a "state".
[Enright
v. 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 governments.
Congress imposed a federal excise tax on the
"income" of these citizens or "individuals" at 26
U.S.C., Section 1, as a local tax:
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 purposes.
[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".
PLAINTIFFS ARE STRANGERS TO THIS LOCALITY.
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
U.S.C.S. 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."
WHAT ARE 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:
ge.o.graph.i.cal 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 DISTRICT OF COLUMBIA OF ANY TYPEWRITING
MACHINES".
[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 v. 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:
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 ....
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 States.
[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 individuals
(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 year.
(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 follows:
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:
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 that:
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 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.
AUTHORITY FOR THE COURT TO ISSUE THE INJUNCTION
57. In
Botta v. 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. v. 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 v. 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. v. Brady,
6 Cir. 1942, 128 F.2d 496, and John M. Hirst & Co. v. Gentsch, 6
Cir. 1943, 133 F.2d 247.
"(c) Cases in which a penalty was involved. For example, Hill v. Wallace, 259 U.S. 44, 42 S.Ct
453, 66 L.Ed 822; Lipke v. Lederer, 259 U.S. 557, 42 S.Ct.
549, 66 L.Ed. 1061; Regal Drug Corporation v. Wardell,
260 U.S. 386, 43 S.Ct 152, 67 L.Ed
318; Allen
v. Regents of the University System of Georgia, 304 U.S. 439, 58 S.Ct 980, 82 L.Ed 1448.
"(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 v. 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 v. 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 v. 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]
CASES
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. v. 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.
#
# #
Reader’s Notes:
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.
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)
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.
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).
5. Capital gains tax.
6. See Exhibit #6 attached hereto and made a
part hereof.
7. The property
had a value of $125,000 two years ago, when the IRS allegedly sold it.