NoSSN - UPDATES:* Indianapolis Baptist Temple

November 14, 2000

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The Tax Freedom 101 Report
*Updates* - *News* - *Information*
The Constitutional Revival Movement's News Source
- November 14, 2000 -
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UPDATES:

* Indianapolis Baptist Temple - Served God not the State!
* Test Your Knowledge with: The Constitutional Quiz Question of the Week!

NEWS:
* OIC's Disrupt IRS
- Tax Freedom 101 Commentary Included

INFORMATION:
* IRS Special Agent Spills the Beans!

Dear Netizen: Do you find the material in The Tax Freedom 101 Report interesting, useful, educational, and enjoyable? You do? Great! Then why don't you recommend this newsletter to a friend or two. They don't have to be a crazed liberty-lovin "radical" like you and me - even raging communists and everyone in between enjoy reading our newsletter! So spread the word... the forward button is just a click away...

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The Stealing of America
This book is the culmination of a twenty five year investigation into computer vote fraud.
Journalists James and Kenneth Collier answer the question.“Why can't we vote the bastards out?”
And the answer is, “Because we didn't even vote the bastards in!”
Get the book and the video documentary at: www.votescam.com

UPDATES:
* Indianapolis Baptist Temple - Served God not the State!
Today is move out day for IBT and the congregation. After a long court battle which is not yet finished over the Church's right to exist without government interference, the Christians at IBT will be forced out as the Supreme Court did not overrule the request for a stay on the lower courts order to vacate the property of IBT. Judge Sarah Evans Baker's decision on how best to settle an alleged IRS debt (now ballooned to 6 Mil.) is to evict and seize the property of IBT and then let the Church sue for the return of its property.

Events leading up to today's eviction action, click here.

Related subject: Does the Church Serve Caesar? (Requires Real Player)

* Test Your Knowledge with: The Constitutional Quiz Question of the Week!
While this weeks question may be opening up old wounds we feel it is important for people to know the Constitutional process for committing troops. When the next President does a similar action (for instance in the Middle East) readers will know why it is in violation of the Constitution.

This week's question: Was President Clinton's conduct in committing American troops to Bosnia in 1996 an impeachable offense?
The answer will be provided next Monday in the TAX FREEDOM 101 Discussion Forum at: www.egroups.com/group/taxfreedom101

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NEWS:
* OIC's Disrupt IRS
- Tax Freedom 101 Commentary Included

Offer In Compromise
By Liz Pulliam Weston,
Times Staff Writer

The IRS' much-touted plan for settling tax debts--a key result of congressional investigations of taxpayer abuses three years ago--is so overwhelmed with applications that the agency is unable to cope. The "offer in compromise" process sometimes takes so long that some tax preparers are advising their clients to file for bankruptcy rather than to attempt to pay any of their tax debt--exactly the result Congress was trying to avoid when it ordered the Internal Revenue Service to reform the program.

"The offer process is broken," Dale Hart, an IRS deputy commissioner, told a group of tax practitioners in Los Angeles last week, adding that the service has been overwhelmed trying to deal with more than 100,000 compromise requests.

At the direction of Congress, the IRS loosened its criteria last year for accepting offers in compromise, which are formal pleas from cash-strapped taxpayers to pay less than they owe--typically 12 cents to 13 cents on the dollar.

The idea was for the IRS to settle up and allow taxpayers who had been hounded for years by collection agents to start over with a clean slate. The taxpayers could regain their financial stability, and the IRS could stop worrying about uncollectable taxes. But the agency failed to add staff to meet the surge in demand, and IRS officials say most offers aren't being handled within the agency's target time frame of six months. Only 40% of offers nationwide are processed that fast, and the rate is probably even lower in Southern California, where the process is particularly popular, IRS spokeswoman Michelle Lamishau said.

Attrition and a tight budget have prevented the IRS from hiring more agents to handle the deluge, she said. The agency got more money from Congress for the new fiscal year, but has no specific plans to boost staffing for the program, Lamishau said. IRS procedures for handling offers in compromise worked fine when only a few cases were considered each year, said Hart, who made her remarks to the UCLA Extension Tax Controversy Institute. But the procedures "don't work when you have a whole lot of [cases]. This huge inventory mushroomed out of nowhere."

For years, the IRS rejected far more applications for offers in compromise than it accepted. The agency typically OKd requests only if it was unlikely that the full amount could ever be collected. But after a series of highly publicized hearings in 1997 and 1998 that detailed a raft of IRS abuses, Congress decided the agency should be more flexible in dealing with taxpayers who were sincerely trying to pay their tax debts.

In the 1998 hearings, the Senate Finance Committee heard testimony that IRS collection agents browbeat some taxpayers for years in cases in which the families had no hope of ever paying off their tax bills. Lawmakers hoped that a more lenient compromise process would prevent some taxpayers from seeking protection in bankruptcy, in which some tax debts can be erased.

Congress also hoped that leniency would result in the government collecting more money. The IRS estimates it was owed $34 billion in back taxes, penalties and interest in 1998, the last year for which figures are available. The resulting IRS Restructuring and Reform Act of 1998 was designed to make it easier for taxpayers to qualify for relief. The act required the agency to consider the taxpayer's financial situation and ability to pay, as well as the odds of collecting the entire bill.

The new law found a ready audience among beleaguered taxpayers. More than 109,000 requests for relief were received nationwide in the fiscal year that ended Sept. 30, up 13% from the year before. IRS officials say the actual increase in taxpayers applying was probably even greater, because in past years many taxpayers applied repeatedly after getting their forms returned to them because of minor errors. For example, Ernest Howard, head of the California Society of Certified Public Accountants' Beverly Hills chapter, said he once had a signed offer rejected because the signature was in black ink and the IRS claimed the form was a photocopy rather than an original.

As part of the agency's reform program, IRS agents are now required to call taxpayers or their preparers or request written information to try to complete the process.

Since the new procedures went into effect, the number of requests actually being considered by the IRS has risen 58%. There has also been a rise in the percentage of offers that are accepted--about 30% of the applications received this year, compared with 22% in 1997. About one in five offers is rejected as an inadequate settlement--about the same as four years ago. However, the amount of money being collected is up only slightly. The IRS accepted offers to repay $316 million of tax debt this year, up 7% from 1997. The number of offers that are withdrawn before the agency can act on them is up to 11%, from 6% four years ago. Taxpayers often withdraw their offers when they've decided to file for bankruptcy instead. Some tax preparers refer their clients to bankruptcy attorneys rather than have them spend time and money pursuing a settlement with the IRS, Howard said. Some clients, already stressed by debt and financial problems, simply don't have the emotional resources to wait, he said. "That's a sad thing," Howard said. "It's not good public policy to force people into bankruptcy because of their taxes." Some tax preparers suspect their peers are to blame or at least part of the overload. So-called offer mills have sprung up that promise to help people negotiate better deals, regardless of whether the taxpayers actually qualify for the program, said John Knight, a former IRS revenue officer now in private practice in Woodland Hills.

"These offer mills just crank 'em out," Knight said. "It plugs up the system." Other experts say the IRS still hasn't liberalized its procedures enough to comply with Congress' original intention. Bruce Strauss, a former IRS division chief who criticized the agency during the Senate finance hearings, said the process of submitting and reviewing offers in compromise is still far too time-consuming. "It's the typical mind-set of the IRS to beat everything to death," said Strauss, who after 31 years with the agency is now an enrolled agent in Jacksonville, Fla. "The objective should be to get people back into the tax system and paying taxes."

Not all tax preparers are irritated by the delays. Robert Leonard, an Encino CPA and tax attorney who submits 50 to 75 offers in compromise each year, said the extra time can be helpful. The IRS' collection efforts stop while an offer is being considered, giving taxpayers breathing room and allowing them to decide what to do next, Leonard said. "The backlog gives us time to prepare the client, to help them adjust to lifestyle changes and to prepare for bankruptcy, if necessary," Leonard said.

[end article]

Tax Freedom 101 Commentary: The above story simply applies to Taxpayers (Please note: Taxpayer, one word). You may ask why an e-newsletter such as this would relay such information to its large readership of non-taxpayers? The old cliche' of "there's more than one way to skin a cat" or should we say "taxpayer" certainly does apply here, and we want our readers to understand that this theft will not and can not continue forever. If anything the above article should provide hope! Why has the Internal Robbery Squad become so overwhelmed with OIC's? Is America gasping for its last breath of air under an increasing tax and debt burden? Is this the only way to relieve the financial pressure, by submitting an OIC in the hopes of paying only pennies on the dollar, or worse having to file for bankruptcy? For taxpayers, evidently so! Whatever happened to "pay your fair share"? Isn't it unjust to relieve one of a debt, and yet not another? Where is the law? Where is justice and fairness? This is just more mounting evidence that the law must be returned to and upheld! The perceived "system" of economic checks and balances as a whole is broke, and will remain that way as long as this slavery is sufferable by the people and accept the yoke of bondage.

The Three Maxims for Tax Freedom!
Rule #1 - Protect Your Property and Earnings! Rule #2 - Get Educated! Rule #3 - Take Action!*
*Have you completed Rule # 1 first? Do you know how to properly protect your property and Income?
If you do know about asset protection and have not taken the steps to protect what is yours
what are you waiting for?! Learn about the "Three Maxims" for Tax Freedom here.

INFORMATION:
* IRS Special Agent Spills the Beans!
The following article titled, "IRS Special Agent Spills the Beans!" came from a past issue of the Reasonable Action newsletter distributed to members of the Save-A-Patriot Fellowship. We are using this article to illustrate and hit home some points made in earlier articles published in this report. These specifically are the October 24th and October 31st editions containing the articles: "The Tale of Two Cites" and "Zero Sum Game".

[Begin Article]

IRS Special Agent Spills the Beans!

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 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.

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."

Wishing you a tax-free day,
The Tax Freedom 101 Staff

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