Time: Sun Mar 16 13:18:05 1997
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Sun, 16 Mar 1997 12:59:52 -0700 (MST)
Date: Sun, 16 Mar 1997 13:16:53 -0800
To: (Recipient list suppressed)
From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: IRS Agent Spills Beans (fwd)
<snip>
> IRS SPECIAL AGENT SPILLS THE BEANS!
> - STATES UNDER OATH IN SWORN COURTROOM TESTIMONY -
>
>"If no information or return is filed, IRS cannot assess you!"
>
>As part of an ongoing series of reports created to show working
>Americans the truth and facts behind the Internal Revenue Service's
>(IRS) wrongful procedures and illegal misapplication of the law, INFORM
>AMERICA! is pleased to make available to you this reprint from a 1992
>issue of "Reasonable Action", the membership newsletter of the
>Save-A-Patriot Fellowship.
>
>THE BEANS ARE SPILLED
>
>"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! Some- times 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 questions. 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 [Internal Revenue 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 way 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.
>
>YOU CAN'T HIDE THE TRUTH
>
>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 later 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 return is filed, 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.
>
>NOT SO COMMON KNOWLEDGE
>
>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, Section 2, Clause 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
>
>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 in 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 Internal Revenue Code
>sections (IRC) 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. Congressmen
>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 are woefully uneducated in such
>matters; but even assume that 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.
>
>SEE NO EVIL, SPEAK NO EVIL, HEAR NO EVIL
>
>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 IRS. If the employee were so inclined, he could put
>it all together and figure out what is happening. Unfortunately, most
>have neither the character nor 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 office. 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.
>
>EVASION OF WHAT?
>
>Mr. Lloyd was on trial for alleged violations of IRC 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
>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.
>
>TO ASSESS OR NOT TO ASSESS
>
>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. Section 6201 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." 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. 348); 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, 822 U.S.T.C., Schiff v.
>Commissioner, U.S.T.C. 1984 223). 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.
>
>THE CAT SLIPS OUT OF THE BAG
>
>Since there was no assessment, Lloyd had never received a "bill" to
>evade, so naturally the question arose as to the assessment
>circumstances. 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 two ways, but it wasn't necessary for him to elucidate.
>The law itself provides only two ways, and agent Makovski's reference to
>two circumstances would seem to indicate that he had personal knowledge
>of the two 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.
>
>THE ONE HUNDRED YARD DASH
>
>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 taxation."
>
>INTERESTED IN LEARNING MORE?
>
>The Save-A-Patriot Fellowship has offered information since 1982, backed
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>or substance. To date, no one - not a single judge, attorney, CPA or IRS
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> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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>
========================================================================
Paul Andrew, Mitchell, B.A., M.S. : Counselor at Law, federal witness
email: [address in tool bar] : Eudora Pro 3.0.1 on Intel 586 CPU
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