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Date: Sat, 22 Nov 1997 16:51:55 -0800
To: (Recipient list suppressed)
From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: No Authority to Assess (fwd)

>IRS Agent Confesses...
>No Authority to Assess!
>| From the "Reasonable Action" Newsletter |
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>!!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!
>IMPORTANT NOTE:  This text makes reference to documents
>that were printed along with the original R.A. article.  
>These are NOT reproduced here.  
>!!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!  !!!!
>Yes -- the truth can leak out even in the
>biased courtrooms of America -- but when IRS employees are
>involved, such honesty comes as quite a shock! Sometimes
>these revelations occur suddenly or unexpectedly during
>cross examination.  The official may be caught off guard
>just long enough to spill the beans or perhaps the official
>may not realize the implications of his own testimony.
>Whatever the reason, the truth is revealed. In this
>particular case the facts were accidentally exposed by an
>IRS employee who had been called upon to answer a few simple
>It is doubtful that this IRS employee fully understood the
>ultimate impact of his statements. IRS personnel sometimes
>suffer from a comprehension-gap concerning the application
>of the law. If they do not understand the structure of the
>Code, they can not possibly understand the limitations of
>the law which they are attempting to enforce. That being the
>case, any given IRS employee may fall prey to the presumption
>that other legal provisions exist to account for actions which
>they do not understand. Ignorance and apathy play an important
>part in perpetuating the problem. For the most part, IRS
>employees simply do what they are told and never question the
>direction of superiors.
>To these employees, the requirement of the law is
>irrelevant. Therefore, the authority for their activity
>rarely figures into the equation. They just assume that
>their actions are legal. Ask any IRS agent to outline the
>limitations of his legal authority to sign a summons and you
>won't get a correct answer. Ask him what provision within
>subtitle F (Administration and Procedure) permits the issuance of
>a summons and the agent will not know. Ask for the delegation
>order to sign a summons and the answer you will hear is... "I'm
>just doing what I was told." It is true that individual IRS
>employees may not fully understand the limitations of the law,
>but their superiors do understand, and the courts and legal
>professionals have an obligation to ensure that the limitations
>of the law are properly enforced. Excuses like "I didn't know" or
>"I'm just following orders" are not acceptable.
>That defense didn't work at Nuremburg, and it is doubtful
>that it will work when IRS employees are eventually
>prosecuted for violating the rights of the victims they have
>plundered. Given the increasing number of what the IRS calls
>"nonfilers," it is only a matter of time before this illegal
>enforcement activity is exposed for everyone to see.
>People are discovering this scheme because the truth is
>leaking out. You can't hide the truth. You may succeed in
>covering it up for a short period of time, but sooner or
>latter the truth will prevail. The disclosure of IRS fraud
>is inevitable. At this very moment it is happening
>throughout the country. The IRS is fully aware of the
>impending demise of their scam. Five years ago Fred
>Goldberg, the Commissioner of the IRS, admitted that there
>were 6 million non-filers. Last month, Shirley Peterson (the
>present commissioner) admitted that the number of non-filers had
>increased to 10 million. That's a substantial increase - - almost
>double what it was 5 years ago. High ranking IRS officials cannot
>help but be worried. With each leak, more and more people learn
>and react to the knowledge that their government is intentionally
>misapplying the law.
>In the case of  United States of America v. William R.
>Lloyd those facts again leaked out. The defendant was on
>trial for tax evasion and the circumstances
>(authority/procedure) to assess became the topic of
>examination. Before he knew it, Special Agent Gary Makovski
>let the cat out of the bag and actually admitted that "If
>no information or a return is filed, the Internal Revenue
>Service cannot assess you..."  To understand why the
>testimony is so significant, it is well worth reviewing the
>constitutional restriction on the power to tax, the actual
>application of the income tax laws,  and the authority to
>assess those who are the subject of the law.
>The general public is unaware that the Internal Revenue Code is
>limited in application. It cannot (per constitutional
>restriction)... does not... and never has been... applied against
>the United States citizen who is living and working within the 50
>states of the union. That individual is neither the subject nor
>the object of the tax -- and neither is his income.
>The application of the tax is limited to and imposed upon
>certain occupations and/or activities. Taxable activities
>presently include the manufacture of certain commodities
>like alcohol, tobacco, or firearms.  An example of a
>privileged occupation might be the practice of law. But, it
>is the privilege associated with the governments permission
>to engage in the activity that is the subject of the tax -
>not the individual -- nor the income -- and even then the
>income is only the "measure" of the tax.
>The income tax laws were never applied against citizens
>themselves, or their occupations in general, because
>Congress was never granted the power to levy a "direct" tax
>against the citizen. The power to levy a direct tax is
>limited to the taxing of state governments only, and
>according to the supreme Court, the 16th amendment merely
>clarified a power that Congress had "from the beginning" to
>levy an "indirect" tax (in the form of an excise) on income
>without apportionment; but this is not the same as, nor did
>it allow for, a "direct" tax on the property or person of
>the U. S. citizen unless apportioned among the states
>according to the formula directed to be taken in Article 1
>Sec. 2  Cl. 3.
>All such "direct" taxes must still be apportioned by the
>census of enumeration and billed to the state governments
>respectively. Yes, the federal government may tax "income,"
>but it cannot tax the person or property of a citizen
>without violating the rule of apportionment concerning
>direct taxes. If it did, it would by virtue of its
>application, create a direct tax in violation of Article 1
>Section 9 Clause 4, and Article 1 Section 2  Clause 3 of the
>Constitution. This is why there is no statutory liability for a
>citizen living and working within the 50 states to pay a federal
>tax on income. And that is why the tax is 100% constitutional.
>The 16th amendment does tend to confuse the average person.
>Most people do not understand the difference between
>"direct" taxation and "indirect" taxation. They assume that
>a "tax on income" is neither. In fact, some law schools
>actually teach that the income tax is (in their own words) a
>"bastard" tax that falls somewhere between direct and indirect.
>That is incorrect. No doubt the contention arises and results
>from a naive belief that the government would not allow the
>intentional misapplication of the tax laws, (when in fact it
>propagates it) and that there must be some other explanation --
>but, it has probably never occurred to those who are of this
>opinion, that the taxes and the resulting social programs
>effectively buy the public vote, and strengthen the political
>establishment that benefits from the misapplication.
>Such opinions exist because people are unaware of supreme
>Court decisions confirming that the tax on income is an
>"indirect" tax in the form of an excise, rather than a
>"bastard" tax that is neither direct nor indirect. It is NOT some
> "unique" tax, that is "direct," and yet not subject to the rule
>of apportionment. It is indirect, and by virtue of this status,
>it cannot be subject to the rule of apportionment just as the
>language of the 16th amendment reads.
>It is therefore not applicable against a citizen living and
>working in the United States of America (50 States).
>Congress has by statute identified the taxable party and/or
>entity. The IRS has provided by regulations the procedure by
>which the U.S. (50 States) citizen claims his/her exemption from
>withholding -- the presentation of a statement of citizenship to
>the employer who retains the original copy and forwards the
>duplicate to the IRS Philadelphia PA with an accompanying letter
>of transmittal.  Congress has directed that those who are liable
>for a tax on income are subject to withholding; has created a
>withholding agent; and, imposed liability for any tax on same.
>The withholding agent must withhold tax from anyone coming under
>the provisions of IRC Code sections 1441, 1442, 1443, and has
>imposed liability on the withholding agent per section 1461.
>Congress has in IRC 1461 also indemnified the withholding
>agent from claims asserted by those identified in IRC
>section 1441, 1442, and 1443 for obeying the appropriate
>statutes. Nevertheless, the citizen is under the protection
>of the Constitution and Congress has been obedient to the
>Constitution by not enacting a liability statute against a
>citizen living and working in the United States of America
>(50 States). 
>The IRS inputs phony entries to its computers
>in a blatant attempt to defraud U.S. citizens. Congress
>acquiesces in this criminal activity by ignoring the pleas
>of the citizens that improper actions of the IRS be
>controlled. Congressman forward to their constituents copies of
>IRS responses to Congressional inquiries and members of Congress
>drop the issue by telling their constituents that "the IRS has
>responded (see enclosed)," but the "see enclosed" they mention is
>a copy of the IRS response to the inquiring member of Congress.
>The constituent is then advised that if their elected official
>"may be of service to them in the future" that the elected
>official should be contacted without hesitation. 
>This "drop issue" letter is
>designed to convey to their constituents the idea that the
>IRS response is to be assumed to be correct. This is the
>heart of the scam. If Congress wanted to exercise control of the
>IRS and keep them obedient to the Constitution a different
>posture would be adopted.
>Most politicians are unaware of the limited application of
>the tax laws anyway, and most legal professionals woefully
>uneducated in such matters; but even assuming that they were
>educated, the income tax serves the political purpose of funding
>programs that buy the public vote, and there is no reason (other
>than morality) for them to rock the ship of state.
>The political machine thus ignores, if not encourages, (by
>default) the routine misapplication and illegal enforcement
>of the tax laws. That is a fact of life -- and that is why
>our struggle has been long and  difficult; but considering
>the increase in the number of so-called "nonfilers,"  that
>struggle may soon be over, and we may yet see the tables
>turned on the illegal activities of an increasingly
>globalist minded government.
>So who is to blame? Are just a few select officials
>responsible, or is the average IRS employee also to blame
>and if so, to what degree? Do the agents themselves know
>what they are doing, or is their training and function
>within the service sufficiently limited to allow for an
>acceptable misunderstanding as to their actual authority?
>Perhaps the truth lies somewhere in between. The instant
>case may shed some light and help us answer this question.
>The fact is, some agents are aware of the limited
>application of the law and some are not -- possibly some
>suspect but go along with policy for the sake of expediency, not
>caring about their moral or legal obligations as long as they do
>what they are told and get a pay check at the end of the week. If
>some agents know and some don't, it is just as certain that this
>education was not included in their training. Those who know,
>probably figured it out on their own, or were made privy to such
>information by a friend or associate who was higher up within the
>If the employee were so inclined, he could put it all
>together and figure out what is happening. Unfortunately,
>most have neither the character or the where-with-all to do
>this, and the hierarchy within the IRS is certainly not
>going to train its personnel in the knowledge that would
>defeat the political objectives of those who appoint them to
>Indeed, to ensure their very existence and preserve their
>employment these IRS officials must "encourage voluntary
>compliance." Were there an honest concerted effort to inform the
>various agents of the limited application of the law, the IRS
>could not expect them to ignorantly misapply its provisions and
>they might be out of a job. Instead, the IRS fosters an
>atmosphere where their agents operate in the dark. The agents
>have a "duty" to know, but end up making incorrect assumptions,
>or they leap to conclusions because of their incomplete
>education. With this in mind we will examine agent Makovski's
>testimony to determine the extent of his actual knowledge and the
>significance of his testimony.
>Mr. Lloyd was on trial for alleged violations of section
>7201 (evasion of taxes). To evade a tax, one must first have a
>"known duty" to file a return and pay a tax. Second, and more
>important as far as evasion is concerned, there must be an
>outstanding "bill" or "assessment" that is due and owing. In the
>case of someone who has not filed, there must be a "presumed
>valid assessment" executed with proper authority by IRS
>personnel, followed by a tax "bill" which must be sent to the
>taxpayer, (notifying the taxpayer of the liability) otherwise,
>there is nothing to evade.
>Now for the facts... Mr. Lloyd did NOT file a return.
>Moreover, he  had NOT received a "bill" or
>"assessment," presumed valid or otherwise. As a United
>States citizen who was not involved in one of the activities
>previously mentioned we can make several presumptions about his
>alleged liability or lack thereof, and the authority for the IRS
>to assess a tax against him; all of which are relevant for
>demonstrating the wrongful prosecution instituted by the IRS, and
>determining agent Makovski's knowledge and intent.
>Given the above facts, and knowing that Lloyd was not
>required to file, (and did not) there would be no authority
>or procedure which would allow the IRS to assess a tax.
>Reprinted below is section 6201. This section is the
>assessment authority found within subtitle F, and it reveals
>something which may not have occurred to those IRS agents who
>simply "do what they are told." Notice that when no return is
>filed, the authority to assess is limited to assessments
>involving stamp taxes. What on earth is this statute referring
>to? Could it be the stamps we see on a bottle of alcohol or a
>pack of cigarettes? When a manufacturer of alcohol or tobacco
>products wishes to sell his goods, he must purchase stamps to pay
>the tax associated with his taxable activity, and then place the
>stamps on the products he sells.
>Did you ever take the time to examine the stamps on a pack
>of cigarettes or a bottle of alcohol? These are the stamps
>that this statute is referring to. They are required for
>those products whose manufacture is the subject of the
>excise. If they fail to pay the stamp tax associated with
>the activity, then 6201(a)(2) provides the authority for the IRS
>to assess a tax.  If the bill remains unpaid, then it could be
>construed as evasion for which the penalty in section 7201 might
>apply. Lloyd was not involved in such activity.
>The remaining provision for assessment authority (section
>6201(a)(1)) pertains only to those individuals who have
>filed returns. The information on that return is subject to
>assessment by virtue of the fact that the return was signed
>under penalty of perjury by the taxpayer who filed it,
>testifying to the fact that a liability, and a requirement
>to file exists; and that the information on the return is
>true and correct. If it is not correct, the authority under
>this section allows for a correction to be made based on the
>information that is given on the return. Under no circumstances
>(except stamps) may the IRS assess a tax without a return being
>filed by the taxpayer himself.
>Therefore, there was no authority to assess Lloyd. Courts
>have held that an unsigned substitute return such as those
>typically filed by the IRS when a 1040 return has not been
>filed "...is no return at all." (Vaira v. C.I.R., 444 F.2d,
>citing Dixon v. Commissioner, 28 T.C. 388); and that, "Since the
>'returns' prepared by the IRS contained no information from which
>a tax could be determined, they were not returns" (U.S. v.
>Verkuilen, 82-2 U.S.T.C., Schiff v. Commissioner, U.S.T.C. 1984
>If a return is not filed, the IRS's only
>recourse is to move for an indictment against the individual who
>is presumably required to file. To do so they must cite the
>section of the law allegedly requiring that person to file.
>Reference may of course be made to the penalty associated with
>having a "known duty to file" and willfully not filing the
>return,  but even then such  penalty is applicable only if a
>person actually believes he has a requirement to file and chooses
>to shirk that duty. Lloyd had not filed a return and there was no
>other provision for assessing a tax against him.
>Since there was no assessment, Lloyd had never received a
>"bill" to evade, so naturally the question arose as to the
>assessment circumstances. To the right is the text of the
>transcript of the agents testimony.  When Makovski was asked
>under what circumstances an assessment was made he explained "two
>ways." He did not say that it was limited to just 2 ways, but it
>wasn't necessary for him to elucidate. The law itself provides
>only 2 ways, and agent Makovski's reference to two circumstances
>would seem to indicate that he had personal knowledge of the 2
>provisions in law. He said...
>"First of all, whenever you file a return yourself"
>(emphasis on 'yourself') "and it is sent to the service
>center..." an assessment is made. He then added "If no
>information or return is filed, the Internal Revenue Service
>cannot assess you anything." To which section under 6201 was he
>referring? Was it subsection (a)(1) or subsection (a)(2), and did
>it suddenly occur to Makovski that there was no authority or did
>he know or suspect all along? He obviously knew enough to answer
>the question!  He knew that Lloyd had not filed a return. He
>investigated Lloyd so he knew that Lloyd was not involved in an
>activity that required the purchase of stamps. He knew that there
>was no assessment. 
>What's more, he knew that Lloyd was on trial for
>allegedly "evading" an "assessment" that did not, and
>could not, by law exist. Therefore he had to know his
>investigation was a fraud. If there was no authority to
>assess Lloyd then how could Makovski investigate an
>"evasion" of an "assessment" that could not possibly exist.
>If a return had been filed, then the story would be
>different. The authority to assess under section (a)(1)
>would have allowed for an "assessment" that could
>conceivably be "evaded," but Makovski knew that Lloyd had
>not filed a return for the years in question. He certainly
>knew from his own criminal investigation that Lloyd was not
>involved in an occupation involving a stamp tax. So what was he
>investigating? If no return was filed, and the authority is
>limited to stamp taxes, then in Makovski's own words "the IRS
>cannot assess you." Agent Makovski not only knew the law, but he
>(accidentally?) told the truth.
>We were informed by attendees of the trial that after
>Makovski's admission the U.S. attorney put her head in her
>hands. The jury must have understood the implication of the
>testimony because it took even less time for the jury to
>acquit Lloyd than it did to pick the jury from the jury
>pool; and, Lloyd received a standing ovation from those in
>the courtroom as the U.S. Attorney slithered out with the
>Judge to avoid talking with the media.
>This case is just one example of the coming deluge of
>opposition to IRS fraud. The public will no longer accept
>this flagrant disregard for the law. What will the
>government do? Find out in the next issue of the Reasonable
>Action where we will look at why the income tax is obsolete
>and review the dangers of proposed alternative forms of

Paul Andrew Mitchell, Sui Juris      : Counselor at Law, federal witness 01
B.A.: Political Science, UCLA;   M.S.: Public Administration, U.C.Irvine 02
tel:     (520) 320-1514: machine; fax: (520) 320-1256: 24-hour/day-night 03
email:   [address in tool bar]       : using Eudora Pro 3.0.3 on 586 CPU 04
website: http://supremelaw.com       : visit the Supreme Law Library now 05
ship to: c/o 2509 N. Campbell, #1776 : this is free speech,  at its best 06
             Tucson, Arizona state   : state zone,  not the federal zone 07
             Postal Zone 85719/tdc   : USPS delays first class  w/o this 08
_____________________________________: Law is authority in written words 09
As agents of the Most High, we came here to establish justice.  We shall 10
not leave, until our mission is accomplished and justice reigns eternal. 11
======================================================================== 12
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