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| Taxation in the United States |
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Tax protester Irwin Schiff, following his criminal conviction for tax fraud that resulted in the imposition of a 13-year prison sentence, released a statement asserting in part that "the entire federal judiciary is involved in a monumental, criminal conspiracy to collect income taxes in violation of law". As of early 2007, Schiff\'s internet web site continues to state: "Since the income tax was repealed in 1954 when Congress adopted the 1954 Code, it is clear that for 50 years federal judges in conspiracy with U. S. Department of Injustice [sic] prosecutors have been illegally and criminally prosecuting people for crimes that do not exist in connection with a tax that nobody owes."See www.paynoincometax.com as retrieved on 15 March 2007.
One tax protester web site, called www.tax-freedom.com, quotes from an article by William Cooper entitled "BATF/IRS - Criminal Fraud", from the publication Veritas (issue no. 6, September 1995), as follows:
Investigation of the alleged Internal Revenue Service and the Bureau of Alcohol, Tobacco and Firearms has disclosed a broad, premeditated conspiracy to defraud the Citizens of the United States of America. Examination of the United States Code, the Code of Federal Regulations, the Statutes at Large, Congressional Record, the Federal Register, and Internal Revenue manuals too numerous to list, reveals a crime of such magnitude that words cannot adequately describe the betrayal of the American people. What we uncovered has clearly been designed to circumvent the limitations of the Constitution for the United States of America and to implement the Communist Manifesto within the 50 States. Marx and Engels claimed that, in the effort to create a classless society, a "graduated income tax" could be used as a weapon to destroy the middle class. [ . . . ] Through the clever use of language, the government promotes the fraud.[1]
Frequent claims in support of the income tax conspiracy include:
Some tax protesters (and occasionally persons brought before courts) have argued that because the titles of court cases identify the parties in all capital letters, the persons thus identified are "fictitious entities". In other words, a court hearing a case titled "STATE v. JOHN Q. SMITH" has no authority over the defendant, "John Q. Smith" because the capitalization of the name means the court is addressing a person who does not exist. Such an argument was made by Eddie Ray Kahn, a co-defendant of Wesley Snipes in the latter\'s high-profile tax evasion case. Kahn "made several missteps and peculiar motions. For example, he sought to be immediately freed because the indictment lists his name in all capital letters, and he claimed U.S. attorneys have no jurisdiction because Florida supposedly was never ceded to the federal government". These motions were denied.Stakes high for Snipes in Florida tax fraud case, MSNBC, January 13, 2008.
No court has ever upheld such an argument. See, e.g. United States v. Frech149 F.3d 1192 (10th Cir. 1998).("Defendants\' assertion that the capitalization of their names in court documents constitutes constructive fraud, thereby depriving the district court of jurisdiction and venue, is without any basis in law or fact"); United States v. Washington947 F.Supp. 87, 92 (S.D.N.Y. 1996).("defendant contends that the Indictment must be dismissed because \'Kurt Washington,\' spelled out in capital letters, is a fictitious name used by the Government to tax him improperly as a business, and that the correct spelling and presentation of his name is \'Kurt Washington.\' This contention is baseless"). See also United States v. Ford2007-2 U.S. Tax Cas. (CCH) paragr. 50,670 (D.N.M. 2007). (taxpayer\'s argument -- that an IRS summons was invalid because the IRS capitalized all the letters in the taxpayer\'s name in the caption of a petition -- was ruled to be frivolous). Similar arguments have been raised unsuccessfully about things such as the presence or absence of a middle name or middle initial.
One group, calling itself "We the People", has stated that government personnel are engaged in a conspiracy in connection with Federal tax forms and "OMB [Office of Management and Budget] control numbers" in connection with a criminal tax case involving a tax protester:
In sum, the PRA [the Paperwork Reduction Act] requires that all government agencies display valid OMB control numbers and certain disclosures directly on all information collection forms that the public is requested to file. [The defendant\'s] sole defense was he was not required to file an IRS Form 1040 because it displays an invalid OMB control number. Government officials knew that if the case went to trial, it would expose the fraudulent, counterfeit 1040. They also must have known that a trial would expose the ongoing conspiracy between OMB and IRS to publish 1040 forms each year that those agencies knew were in violation of the PRA. That would raise the issue that the Form 1040, with its invalid control number, is being used by the Government to cover up the underlying constitutional tort -- that is, the enforcement of a direct, unapportioned tax on the labor of every working man, women and child in America.Retrieved from http://www.givemeliberty.org/ on 17 November 2006.
See also the OMB control number argument.
One convicted tax protester, Edward Lewis Brown has charged that law enforcement officials who surrounded his property in a standoff over his refusal to surrender after his conviction were part of a "Zionist, Illuminati, Free Mason movement," and that the federal government had no jurisdiction in New Hampshire.Kristen Senz, "Ed Brown says Feds have no jurisdiction in New Hampshire," New Hampshire Union Leader, June 8, 2007 [2] The New Hampshire Union Leader also reported that "the Browns believe the IRS and the federal income tax are part of a deliberate plot perpetrated by Freemasons to control the American people and eventually the world."Kristen Senz, "Browns say they will either walk free, or die," New Hampshire Union Leader, June 19, 2007 at [3].
In an interview on February 2, 2007, on the radio show "Constitution for the Defense," Ed Brown is quoted as saying:
The standoff between Brown and law enforcement officials ended with his imprisonment after his arrest in October of 2007.Associated Press, "U.S. Marshal: Convicted Tax Evaders Arrested," Oct. 4, 2007, WCAX-TV Vermont, at [5]Associated Press, "Convicted Tax Evaders Arrested in New Hampshire: Couple who holed up at compound for months taken into custody," Oct. 4, 2007, MSNBC, at [6].CNN.com, "Feds tricked holed-up tax evaders",[7]
Some protesters have argued that Federal Reserve notes (better known as dollar bills) are not actually money, because the Constitution only permits the government to "coin" money, and requires that such money be exchangeable for gold or silver; therefore, printed bills are instead symbols for use in bartering, and being paid in dollars is not the receipt of taxable income. This argument was brought before a court in Wilson v. United States.1998 WL 937356 (D. Colo. 1998). The court responded:
The contention that paper money is illegal has been consistently rejected. … Congress has exercised this power by delegation to the federal reserve system. 12 U.S.C. section 411. Federal reserve notes are legal tender for all debts, including taxes. 31 U.S.C. section 392 [now ]; Milam v. U.S. 524 F.2d 629 (9th Cir. 1974). The United States Constitution, art. 1, section 10, \'prohibits the states from declaring legal tender anything other than gold or silver, but does not limit Congress\' power to declare what shall be legal tender for all debts.\' U.S. v. Rifen, 577 F.2d 1111, 1112 (8th Cir. 1978). Since Congress has done so, there can be no valid challenge to the legality of federal reserve notes. United States v. Anderson, 584 F.2d 369, 374 (10th Cir. 1978).
The argument about whether Federal reserve notes are "money" also ignores the essence of the income tax, which is imposed on "income from whatever source derived," not merely on the receipt of "money."
Other occasionally encountered arguments from tax protesters include the notion that U.S. currency is valueless or unauthorized by the Constitution because the currency is fiat money untied to the gold standard. No court has upheld the validity of that argument.
The argument that Federal reserve notes are not taxable income when paid to a taxpayer because the notes are not gold and silver and may not be redeemed for gold and silver, and variations of this argument, have been officially identified as legally frivolous Federal tax return positions for purposes of the $5,000 frivolous tax return penalty imposed under Internal Revenue Code section 6702(a)., as amended by section 407 of the Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, 120 Stat. 2922 (Dec. 20, 2006). See Notice 2008-14, I.R.B. 2008-4 (Jan. 14, 2008), Internal Revenue Service, U.S. Department of the Treasury (superseding Notice 2007-30). [Note: As of late September 2007, the linked page at the Cornell University Law School web site for section 6702 does not yet reflect the increase in the penalty amount from $500 to $5,000.]
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