NY TIMES: Saying Income Tax Is Illegal
Sunday, 19-Nov-00 13:13:08
November 19, 2000
Saying Income Tax Is Illegal,
Business Owners Quit Paying
By DAVID CAY JOHNSTON
LAKE SHASTA, Calif. Al Thompson squeezed most of his manufacturing
company's 28 employees into a conference room here in October to say he had
good news: Income taxes must be paid by only a few Americans, mostly those
working for foreign-owned companies. So, he told the workers, they would
not have to pay income taxes ever again. His business is exempt, too, he said.
No Social Security or Medicare taxes, either. The company was no longer
withholding taxes from their paychecks, he said, or telling the Internal
Revenue Service how much they made.
Mr. Thompson is part of a tiny but increasingly flamboyant fringe of
American business. Arguing that the federal tax laws do not apply to them,
these small companies are thumbing their noses at the I.R.S. in a very
public way: they have not only stopped withholding taxes and turning them
over to the government, they are also bragging about it on Web sites and
radio talk shows, and organizing seminars to promote the gospel of defiance.
And they are boasting that they must be right because the I.R.S. has not
come after them, even though it knows what they are doing. Mr. Thompson
noted that he had not sent a weekly tax payment to the I.R.S. since July,
yet "I have not been drug off to jail."
Indeed, the I.R.S. has not only failed to pursue these businesses, it has
in some cases given refunds after they claimed they did not owe taxes paid
earlier. In at least two cases, the businesses say they even received
apologetic letters from the I.R.S. for not rescinding penalties and issuing
the refunds sooner.
Many tax experts express astonishment at the idea that the I.R.S. is aware
that legitimate businesses are cheating yet has not even written to ask why
their tax payments stopped, let alone begun action to make them pay. This
undermines the principle on which the American tax system is based, they
say: people who do not pay their taxes will pay the consequences.
How many businesses are taunting the I.R.S. this way is impossible to know.
At least 23, including Mr. Thompson's aviation products company, a Florida
marketing firm and a Texas plastics company, have made their decisions
public. Sixty business owners and their advisers met on the weekend of Nov.
11 in California to plan how to persuade thousands of others to join them.
Over the years, a number of individuals have claimed to be out of reach of
the tax laws, but experts, including four former I.R.S. commissioners, said
this case was different. "This is tremendously significant because we have
never before had responsible parties employers refuse to withhold," said
Sheldon Cohen, a former I.R.S. commissioner. "The system simply cannot work
if they get away with this."
The I.R.S. declined to comment on whether it was pursuing enforcement
actions against the 23 employers, citing a law that protects taxpayer
privacy. But there is no public record showing litigation or enforcement
actions like liens against the companies' assets.
The failure of the I.R.S. to act even against those who openly defy the tax
laws raises questions about the agency's ability to stop tax cheating.
Asked whether the I.R.S. was moving against any such tax resisters, the
senior I.R.S. spokesman, Frank Keith, would say only that "with limited
resources the I.R.S. must often choose which cases to pursue" and that it
focuses on those that will generate the most revenue.
But Jerome Kurtz, another former commissioner, disagreed. "That's a nice
pat line," he said, "but they don't go after only the people with the
highest income. They audit hundreds of thousands of returns under $25,000
that produce little or no revenue and they can take resources from those."
Michael Graetz, a tax policy adviser under President George Bush and now a
professor at Yale, added that he thought it was a big mistake that the
I.R.S. had not moved immediately against these employers. "They have to
act," he said, "or this will get out of hand very, very quickly."
Commissioner Charles O. Rossotti of the I.R.S. has warned Congress that the
agency's enforcement resources have so shriveled that a growing number of
people will think they can get away with not paying taxes, and the tax
collection system will be threatened.
Some years ago, the I.R.S. did pursue organizations that publicly declared
they would not withhold taxes. One prominent case was a church with a
national following, the Indianapolis Baptist Temple.
Unlike churches that accept tax- deductible donations, the church contended
that it answered only to God and not to any government, and therefore it
was not required to withhold taxes from its employees' paychecks. The
I.R.S. demanded payment, and federal judges ruled that the church owed $3.6
million in taxes for 1987 through 1993, plus interest. Federal marshals
seized the parsonage on Nov. 14 and are authorized to seize the church
itself, which members are now occupying in protest.
Since the federal income tax began in 1913 there has been a steady, if
small, current of individuals who assert that the 16th Amendment, which
authorized the income tax, was fraudulently adopted or that no law makes
anyone liable for taxes. The courts have rejected these assertions, and a
few of the most prominent resisters have been sent to prison.
But now the resistance is undergoing a big change. Not just individuals are
refusing to obey the tax laws; so are some business owners, on whom the
government relies to withhold taxes from paychecks.
Irwin Schiff, owner of Freedom Books in Las Vegas and for three decades a
promoter of the idea that the tax laws are a hoax, said he had noticed a
shift five years ago when owners of small businesses began soliciting his
advice on how to drop out of the tax system.
Mr. Schiff and others provided copies of refund checks from the I.R.S. to
small-business owners totaling $620,000. The refunds were for taxes
previously paid and were issued because a tax return was filed reporting
income as "zero" and stating that the previously reported wages were really
untaxable "remuneration." In two cases, the resisters provided copies of
what they said were letters of apology from the I.R.S. and cited them as
evidence that they are right. (Experts say that the refunds and letters
were probably issued in error by processing clerks rushing through
thousands of returns.)
In recent years, Congress has reduced the resources available to the
I.R.S., even as the number of taxpayers and the complexity of the tax laws
have grown. Congress also imposed new rules under the 1998 I.R.S. Reform
and Restructuring Act that make it much more difficult for the agency to
pursue tax cheats.
Under Commissioner Rossotti, enforcement actions have declined sharply as
the agency has focused on what he calls customer service. Seizures of
property have fallen to an expected 156 this year from 10,000 annually in
the early 1990's, and even prominent tax advisers have said that clients
who owe large amounts of taxes are not being forced to pay.
The views of Mr. Thompson, the small-business owner, on the American tax
system are representative of the tax resisters.
His company, Cencal Aviation Products, makes jackets, flight bags and other
accessories for private pilots. Most of his employees sew, pack boxes or
During a two-hour meeting with employees in the company's conference room
in October with a reporter and photographer from The New York Times
permitted to attend, Mr. Thompson introduced his tax adviser, a former
I.R.S. criminal investigator named Joe R. Banister. Income taxes, Mr.
Banister explained, must be paid by only a few Americans, primarily those
at foreign- owned companies.
Several workers expressed delight. Now they could take home enough money to
pay their bills, some said. But two older women gently asked what would
happen if the boss was wrong. What if the Internal Revenue Service came to
seize her car and home, one asked.
"They would have no legal authority to do that," Mr. Thompson said
Earlier that day, Mr. Thompson said his interest was aroused when he
volunteered to help the unsuccessful Congressional campaigns of Devvy Kidd
of Sacramento, a Republican who maintains that the I.R.S. is "a criminal
Early this year Mr. Thompson met Mr. Banister, a hero in tax-protest
circles because he left his $80,000-a- year job as an I.R.S. special agent
last year after concluding that the tax laws do not apply to most Americans.
Mr. Thompson and Mr. Banister, now a certified public accountant in San
Jose, Calif., detailed for employees what they call the 861 position. The
Internal Revenue Code states that taxes apply to all income, except for
exclusions granted by Congress like the tax-exempt interest from municipal
bonds. One section refers to "all income from whatever source derived."
Mr. Thompson and Mr. Banister say that Section 861, and the regulations
that carry it out, define "source" in such a way that the tax laws do not
apply to companies owned by Americans.
Mr. Banister told the employees that once taxes are withheld and reported
to the I.R.S. on a W-2 or 1099 form, the worker "will be bullied" into
wrongly paying taxes.
"But what happens," Mr. Banister asked, "if the person that owns your
company says: `Wait a second. I read the law, and I am not required to give
a W-2.' What's the I.R.S. going to do?"
While Mr. Banister preaches that most Americans need not pay taxes, he has
not followed his own advice. He said in an interview that he had sent his
taxes to the government.
Mr. Rossotti, who runs the I.R.S., said the 861 position was "just plain
nonsense." In 1995 a Tax Court judge rejected a claim based on that
position. Mr. Thompson said that he knew of that case but that the ruling
was from "a kangaroo court."
Mr. Thompson, like the other defiant business owners, has also stopped
paying state income taxes. But he continues to pay other taxes, like
property taxes, he said.
Mr. Rossotti warned that people who are taken in by claims that they are
exempt from taxes "put themselves at terrible risk, both legally and
financially," because the I.R.S. "will take enforcement action to uphold
Yet instead of enforcement, some companies are getting money back from the
Bosset Partners Marketing in Clearwater, Fla., and N.T.D. Electronics of
Huntington Beach, Calif., say that the I.R.S. refunded more than $200,000
of withholding taxes from prior years.
Dick Simkanin of Arrow Custom Plastics in Bedford, Tex., said he was
pursuing $2.9 million in refunds. Mr. Simkanin said he had stopped
withholding income, Social Security and Medicare taxes from his 49 workers'
paychecks last January. Since then he has announced that he will not pay
taxes or file tax returns for himself or his company, and the I.R.S. has
not even called.
"I am not a tax protester," Mr. Simkanin said. "I think we need to pay all
required taxes because obviously the different levels of government need
funding to operate, but when government oversteps its bounds and goes over
the law, that is kind of where you need to put your foot down. I am willing
to pay any tax so long as I am liable."
Mr. Banister, the former I.R.S. agent, said that he had asked his superiors
to show him what law makes an individual or company liable to pay taxes,
but that they had refused and instead demanded that he resign. That
convinced him, he said, that government officials knew that the tax laws
were "a great deceit."
As word spreads over the Internet, on talk shows and at seminars that the
I.R.S. has not acted against the publicly defiant employers, tax resisters
say other employers are dropping out of the tax system as well.
"There are thousands of us," Mr. Thompson said.
NY TIMES: Saying Income Tax Is Illegal
Monday, 20-Nov-00 09:43:50
The David Cay Johnson article supposes to be an objective piece on a "movement" that has gathered considerable momentum since David Bosset reported that he successfully secured refunds from the Internal Revenue Service and effectively checked Bosset Marketing, company employees and contract sales agents out of the Federal income tax system. Unfortunately, it smacks of pending doom for those who are following the Bosset lead and conveys a subliminal message of alternative doom if IRS doesn't put an end to the exodus by prosecuting this new species of tax protester who is otherwise respected as a successful business owner.
The article gives no thought to the notion that the Federal income tax system might be one of the most sinister frauds ever perpetrated against a developed nation. Instead, it tends to politicalize the question, "When is IRS going to flex its muscle to make examples of these people?"
From that perspective, the article is inflamatory rather than objective, and because it gives scant treatment to core issues, leaves readers under the long shadow cast by one of America's most feared Federal agencies. Other than IRS rhetoric bemoaning limited personnel and funding, the article makes no effort to delve into why IRS isn't pursuing aggressive prosecution to nip the exodus in the bud.
Several years ago when I was in the nation's capitol to address farm crisis-related affairs, I needed to distribute a press release for an agriculture coalition. In the course of locating syndicated media bureaus, I found that several are located in the Department of Agriculture building and that staff members know absolutely nothing about agriculture issues. They routinely re-hash USDA reports so in effect saturate the nation with government views and propaganda. In the meantime, the plight of independent American agriculture, which has for all practical purposes been dismantled, is generally undermined.
The Johnson article is true to this course. The spin-doctor effect is potentially dangerous as it fails to address underlying fact or law. It doesn't address the fact that IRS continues to prosecute people who don't have defense positions that might exhonorate them in the eyes of juries. It doesn't discharge the "accident" notion by reviewing the months of administrative haggles these business owners went through prior to securing refunds and/or checking their respective businesses out of the Federal income tax system.
In sum, the Johnson article fails every standard for objective journalism.
NY TIMES: Saying Income Tax Is Illegal
Monday, 20-Nov-00 09:45:49
Income tax was declared unconstitutional in the 1860's and 1890's, and put in as a "voluntary" tax in 1913 at 3% on the wealthy only. "Voluntary" means that you are not obligated (to pay,in this case)! Amendment 16 ALLOWS for an income tax, it does not require one! The US Constitution says that all taxes must be uniform!
An unequal income tax cannot be made uniform, as it does not apply equally to all! Article 1, Section 8, Clause 5, of the US Constitution, gives "Power to Congress to Coin (create) money and regulate the value thereof...!" Under this article, Congress can order the Treasury to create all of the debt free funds necessary to meet the government's needs! The Lincoln administration did this during the tragic Civil War, to meet the needs of the northern war efforts, and after the war, there was NO DEBT, AND NO INTEREST TO PAY ON DEBT!
NY TIMES: Saying Income Tax Is Illegal
Monday, 20-Nov-00 18:24:43
I read your article on income tax, and my experience proves that if you know your stuff, the IRS backs down.
I found a CD-ROM that prints out a cover letter, Sworn Affidavit, and default letter (for 30 days later) that you send to 4 addresses within the Dept of Treasury. The Affidavit claims that the IRS has not performed the functions required by law to make a citizen liable for any tax under 26 USC Subtitle A. It allows the IRS to prove otherwise (burden of proof on THEM.)
The correspondence also requires, under UCC law, that the govt reply within 30 days to the claims of fact, and under such laws (and 5 USC 551(13)) if they don't respond with a request for extension of time, or respond directly controverting your claims, they acquiesce by estoppel. In other words, YOU WIN.
This is a great CD, and at $399, you are in the black in what 2 or 4 weeks? I have not received the money sent in for the last 3 years yet, but I have filed, after the time ran out for them to argue against my Affidavit, for return of those monies, because by definition, my "income" as defined by case law was ZERO.
I highly recommend this CD-ROM called "How to STOP the IRS" by Gene Kernan. It is available at the www.TheAmericanRepublic.com website.
TAX WAR: This a article in USA Today Mar 2, 2001
Friday, 02-Mar-01 13:20:51
Date: Fri, 02 Mar 2001 11:27:47 -0500
From: The Patriot - firstname.lastname@example.org
This a article in USA Today Mar 2 that is from an article from WND named
Activists challenge IRS using agency's rules. This could become a major
stepping stone in the TAX WAR.
Dear We The People
Q. WHAT DO THESE MEN HAVE IN COMMON?
Bosset Marketing Partners, Inc. (Florida)
No Time Delay Electronics, Inc. (California)
Arrow Custom Plastics, Inc. (Texas)
Cencal Aviation Products, Inc. (California)
Batavia Enclosures, Inc. (New York)
A. THEY ARE ALL EMPLOYERS WHO HAVE STOPPED WITHHOLDING TAXES FROM
THEIR WORKERS' PAYCHECKS
They are part of a growing number of employers and workers who
1.THERE IS NO LAW THAT REQUIRES WORKERS, AS U.S. CITIZENS
EARNING THEIR MONEY FROM DOMESTIC COMPANIES, TO PAY INCOME OR
EMPLOYMENT TAXES; NOR TO HAVE THOSE TAXES WITHHELD;
2.THE 16TH AMENDMENT (THE "INCOME TAX AMENDMENT") WAS
FRAUDULENTLY DECLARED TO BE RATIFIED BY THE SECRETARY OF STATE IN 1913.*
Each of the employers has come to these conclusions with the aid
of Certified Public Accountants, attorneys and/or tax researchers.
In 1999, upon consultation with tax researcher Thurston Bell,
David Bosset, a former tax consultant himself, submitted a nine page
legal memorandum to the IRS, arguing that he had erred in 1996
and 1997 in filing 528 W-2s and 1099s, which reported that
workers had earned taxable income. Attached were 528 W-2s and
1099s, corrected to "0."
The local IRS office passed the matter up to the Conflict
Resolution Branch, which determined that Mr. Bosset was correct.
The IRS returned the money that Mr. Bosset had withheld from the
paychecks of his employees. Soon after, other employers around
the country stopped withholding, including those identified above.
Each employer has respectfully presented these arguments to the
IRS (and to their representatives in Congress), asking the
government to review the results of their research and to show
them if they are mistaken. The IRS DID NOT RESPOND, nor did the
IRS SUDDENLY THREATENS "CRACKDOWN"
The IRS on February 10th made public announcements that it would
soon conduct a crackdown on dozens of employers who have
stopped withholding taxes from the money they pay their workers.
The announcement apparently was spurred on by articles in the
New York Times in November that called the employers "tax cheats"
and warned that the trend could spread and cause the tax
system to collapse.
The Times quoted IRS Deputy Commissioner Dale Hart as saying that
the employers' legal rationale is frivolous, has no legal
authority, and has been thoroughly rejected by the courts. The
employers, of course, do not see their arguments as frivolous,
and are unaware of any court case that has addressed or rejected them.
Hart did not offer any code section that would apply
The employers all followed IRS administrative procedures and cite
chapter and verse of the laws and regulations that allow them to
stop withholding. The IRS, after due consideration, refunded
money the employers had withheld from the paychecks of their
employees. This was not the result of a low-level clerical error,
but was based on numerous exchanges through the IRS's Problem
At least one of the employers named in the Times article has
written a letter to the IRS Commissioner requesting a meeting to
the matter. Excerpts from that letter are printed below.
Nick Jesson's (NTD Electronics') demand for dialogue was
UNANSWERED by the IRS, so he is now going public. The IRS's
failure to respond follows a series of attempts to get government
officials, including the IRS, Congress and the White House, to
participate in conferences to publicly explain findings and refute
allegations by numerous tax researchers and former IRS agents
such as the allegations made at the top of this message.
Tax researchers recognize that the actions of the employers are
supported by provisions in the Tax Code. For example: A
withholding agent is only required to withhold from foreigners
(Code Sections 7701, 1461, 1441-3). Tax researchers have noted
for years that a statement of citizenship given to an
employer/withholding agent precludes the withholding of tax, as
there is no authority in the Code to withhold money from a citizen or
resident of the U.S. unless that person authorizes it. If the
worker submits a statement of citizenship, the employer, as a withholding
agent, is relieved of duty to withhold income taxes, since those apply
to nonresident aliens. See our web site.
Tax researchers have asserted there is no law that a U.S. citizen
must have a social security number (SSN) or that an employer must
have an employer identification number (EIN), or that either of
them must participate in the social security program ( i.e.,
employment or FICA taxes under Subtitle C). An employer who does
participate in the social security program is required to give a
W-4 form to a worker, but is not required to get it back, and the
worker is not required to fill it out and return it, unless that
worker wants to participate in the social security program. Absent a W-4
signed by the worker, an employer is not authorized by law to
withhold and submit to the IRS money from the worker for
employment taxes. Further, a person without a SSN number would
have no taxable income. All this has been well-documented and
verified by numerous letters from any number of Social Security
Administration officials. You can check these out on our web site
Section 1441(a) and (b) state that interest, dividends, rent,
salaries, wages, profits, etc., are "income" when received on
behalf of, or paid to, a nonresident alien or other foreign entity.
And courts have ruled that profits of corporations are "income."
But there is no provision in the Code stating that receipts of citizens
or residents of the country are "income." Thus, a citizen's own
receipts are not "gross income" and are not, therefore, "taxable income"
under the Code. Income refers to property derived from activity involving
the exercise of a government-granted privilege.
Section 61 of the Code has the definition of gross income as "all
income from whatever source derived," and then a list of 15
"items." Tax researchers have recognized that the "items" listed are not
the same as "sources" of income that are taxable. The sources are
actually to be found in a more remote part of the Code at Section
861 (or section 1.861-8(f)(1) of the regulations). They consist
of five "foreign" sources. In previous versions of the Code, the
relationship and distinction between the "items" and the
"sources" was not disguised or separated by distance in the Code. This
part of the Code is an important aspect of the position taken by the
employers who have stopped withholding. For more details, see "Connecting
the Dots" on our web site, and especially go to
www.Taxableincome.net for a free download of Larken Rose's
excellent book and/or refer to appropriate chapters of Chris
Hansen's opus magnus at
a free download.
DEAR IRS : WHY DON'T YOU ANSWER? AN EMPLOYER'S LETTER.
Charles O. Rossotti, Commissioner
Internal Revenue Service
1111 Constitution Avenue NW
Washington, D.C. 20224
Dear Commissioner Rossotti:
I am writing to you because I have reason to believe that certain
offices within the Internal Revenue Service are seeking unwarranted
criminal charges both against Nick Jesson of No Time Delay
Electronics for tax evasion and against myself as Founder and
Executive Researcher of the National Institute for Taxation Education
(NITE) for conspiracy to evade taxes.
Both Mr. Jesson and I were given this impression by an article
that appeared in the February 10 edition of the New York Times
("I.R.S. Going After Businesses on Withholding Tax"), in which reporter
David Cay Johnston refers to Mr. Jesson twice, in the context of
quotes by IRS officials such as CID Chief Mark E. Matthews and
Deputy Commissioner Dale Hart. Each of these officials stated
that efforts are being made within the IRS to tighten enforcement, and
Chief Matthews told the Times that "some of the business owners,
as well as the promoters who advise them, will be prosecuted for
tax evasion and other crimes."
I wish for you to know the facts of this issue so that you can
understand that in my work with Mr. Jesson, we have sought
complete compliance with all of the Internal Revenue laws as stated in
the U.S. Code, the Treasury Regulations, and the Internal Revenue
Manual. Furthermore, it has always been our intent to correct any
mistakes of law or fact that we have made and distributed to any
interested parties, as we have engaged in the IRS' administrative
process in order to exhaust all administrative remedy and avail
ourselves of any subsequent judicial hearing of our legal
arguments if necessary.
However, to date the IRS has given us no reason to believe
through Mr. Jesson's correspondences with the agency that Mr.
Jesson or I have misunderstood, misrepresented, or failed to comply
with the law in any way. We have made every effort to comply with the law
and the IRS procedures that we must exhaust before seeking
adjudication of claims. Since the IRS has effectively accepted as
and truthful NITE's arguments as applied by Mr. Jesson, any
attempt to prosecute either myself or Mr. Jesson would not only
outside of the scope of the law but also a clear abuse of
NITE is an educational organization operating under the
protection of the First Amendment guaranty of freedom of speech
freedom of association Since 1997 NITE has been distributing
information regarding the Internal Revenue laws and assisting its
members in complying with the letter of the law and discovering
the long-obfuscated IRS administrative procedures, which are
binding upon the IRS as well as the Citizens.
In the case of Mr. Jesson NITE provided to him information
regarding the U.S. Source Rules as set forth in the Internal
and the process of correcting prior claims made to the IRS
regarding "gross income" paid and reported to the IRS. These are
pertinent facts of Mr. Jesson's case:
On May 10, 2000, following information researched and published
by NITE, Mr. Jesson amended the 1997 returns for No Time Delay
Electronics, Inc. by filing Forms 941C, W-2C and W-3C reflecting
gross income of "0", based on the "source" rules as defined by
Treasury Regulations. These returns were submitted pursuant to 26
C.F.R. §301.6402-2, complying with the only administrative
process available to an employer seeking a Refund of overpayment
of taxes. Had he failed to take this specific action he would be
unable to seek any other remedy in the courts before exhausting
this administrative remedy.
On June 1, 2000 Mr. Jesson received a response letter from the
IRS stating that the agency needed more time to review his case
before making a decision on his Claim for Refund. The letter stated that
no further information would be required of him at that time
while the review was under way.
On July 11, 2000 the IRS completed review of Mr. Jesson's case
and issued four Refund checks in the amounts of $68,244.94,
$61,262.01, $37,373.74, and $48,573.87. These checks were refunds
for employment taxes that were withheld for each quarter of 1997.
Since receiving the refund checks, Mr. Jesson has received no
further correspondences from the IRS of any kind, especially none
stating that the refund was issued mistakenly.
On November 19, 2000 the New York Times printed an article
authored by David Cay Johnston, which referred to Mr. Jesson (not
by name but as owner of NTD Electronics) in the context of tax
cheats who are evading the taxes owed.
Prior to the publication of the article I had a brief
conversation with Mr. Johnston, during which I attempted to
misconception of the substance of my work. Though there was some
reference made to my work through mention of NTD Electronics,
there was no specific mention of myself or of NITE (www.nite.org)
being the source of this effort by employers to apply the U.S.
Source Rules to their determinations of wages and gross income reported
to the IRS.
[Editor's note] The letter goes on to note inaccuracies in the
Times stories by David Cay Johnston and his failure to take
telephone calls from Mr. Jesson or to return them. The letter notes the
article of February 10 juxtaposed statements about Mr. Jesson
with statements by IRS officials who said that business owners are
"scamming their employees" and will be prosecuted for evasion.
The article stated that those who promote tax strategies for
businesses will also be prosecuted. The letter continues
I understand that the IRS should not be held responsible for the
words that Mr. Johnston chooses to write and the New York Times
chooses to publish. I recognize the possibility that the IRS may
have given Mr. Johnston wholly accurate information and that the
blame for the accusatory language lies wholly upon Mr. Johnston
and the New York Times. And it is with this good faith that I
out to the IRS to bring the IRS, NITE and Mr. Jesson into an
exclusive and legitimate face-to-face conversation regarding any
misunderstandings or errors of law that NITE or Mr. Jesson are
holding and availing to the public.
We propose that the IRS, represented by you and/or your
delegates, engage NITE in a public forum and discuss the legality
and legitimacy of the positions that NITE proffers. At this meeting,
we expect that the IRS will either provide pertinent case law
from a court of competent jurisdiction that does not ignore the fact
that the U.S. Source Rules apply to U.S. Citizens, or failing
that will admit publicly that NITE's specific argument of law is correct and
therefore no criminal or civil actions will be brought against
any individual Citizen who proffers NITE's specific argument. At this
meeting you and your delegates would have the opportunity to
refute our argument and we would have an opportunity to engage in
a dialogue with our government regarding our application of the
whole of the Internal Revenue laws and most specifically our
application of the U.S. Source Rules to U.S. Citizens.
[Editor's note] The letter says that Mr. Bell and Mr. Jesson are
prepared to meet for the discussion at any time and place that
will allow for an audience of members of the media and other concerned
citizens, and that it would be desirable to have representatives
of the Justice Department there to save the need for any
follow-up meetings with them. Mr. Bell states that the position
used by Mr. Jesson has never been argued or decided in federal court, and
that so far, no government official has attempted to refute the
specific arguments on which it is based. He continues
This letter is being sent to you directly since your delegates
have made the naked threats of prosecution as contained in the
David Cay Johnston article.
If the intent of your subordinates' comments to David Cay
Johnston was to intimidate and threaten law-abiding citizens and
employers, then the Restructuring and Reform Act of 1998 has
indeed failed to protect taxpayers in the manner that Congress
intended. Nevertheless, we are not intimidated by the lawless
threats of your deputies, as any attempt by the IRS to follow
through with these threats will be reviewed by the Treasury Inspector
General for Tax Administration as well as our elected officials
Presently the record shows that the IRS has not only failed to
refute our position but has even affirmatively offered evidence
that our arguments are correct by refunding over $215,000 to No Time Delay
Electronics. Therefore, until such time as we are shown to our
reasonable satisfaction to be holding mistaken positions, Mr.
Jesson, NITE and I will continue to operate as law-abiding
Citizens within the letter of the law as we have applied.
We expect a response from you within fifteen (15) business days.
Thurston P. Bell
Executive Researcher and Founder
National Institute for Taxation Education
SUMMARY OF THE LETTER
The employers' position is careful to follow the laws and
The applications went through IRS's procedures and were
The NY Times articles were both inaccurate and biased.
Employer Jesson and Thurston Bell requested a meeting with
the IRS to discuss the issues and the IRS did not respond at all.
The IRS has not responded to Mr. Bell's letter. They refused to
deny or respond to former CID investigator Joe Banister's report
that concluded the findings by numerous tax researchers were correct.
They have declined to reply to invitations to five conferences
conducted by We The People Foundation to discuss questions and
issues. (For further details of these attempts, go to our web
We have posed the crucial question: "At what point must continued
evasion be regarded as an admission that the tax researchers
are correct, and that there is no law that requires most citizens
to pay income tax?"
* In 1913, Americans got the federal income tax and a central
bank (the Federal Reserve System). There is evidence in support
of the hypothesis that the income tax was imposed on the American people
so that the owners of the (private) central bank could control
not only our money but our government as well.
SHODDY JOURNALISM: David Cay Johnston and The NY Times become an
Our previous message two weeks ago noted that the NY Times has
assumed the role of cheerleader for the IRS, obviously hoping to
sic 'em onto the employers who have stopped withholding, even
though in accordance with the rules.
In another Times article on February 23, David Cay Johnston
reported that the recent sentencing of a couple for crimes
evasion followed a trial at which defendants' case was based on
Code section 861. Larken Rose, a tax researcher who has studied
and written authoritatively about the 861 position, asked Mr.
Johnston about it, and he acknowledged that the 861 position was
mentioned at the trial and was not an issue adjudicated. This
represents irresponsible and misleading journalism. Check Larken
Rose's website at www.Taxableincome.net for more information
We also have a copy of a very biased, hostile and condescending
letter Mr. Johnston sent to Mr. Jesson two weeks ago in response
Jesson's challenge that Johnston show him the law that makes him
liable, and noting that the California tax board, whose tax rules
are the same as the federal, had recently approved his position.
We'll not print that letter at this time, but it has become
Mr. Johnston has set out upon a one-man crusade, using the NY
Times as his vehicle, against any and all who don't agree with
views on the income tax, even though he acknowledges in the
letter that he hasn't done research on it.
His letter asserts that the issues Jesson has raised have been
judged in tax courts, district courts, and appeals courts and
rejected as without merit. In fact, Thurston Bell's letter above
states that these issues have never been addressed or adjudicated
any court case. Johnston's desire to discredit the employers has
caused him to resort to inaccurate, false and unethical
As further evidence of his unprofessional bias, Mr. Johnston
"pulled the plug" on an interview when the guest interviewee,
Cropsey, J.D., an expert on the 4th Amendment and IRS liens,
began to speak about warrant requirements for federal seizures of
property for income taxes and that IRS seizures had decreased by
98% because they can't get a warrant, since it would require them
to lie under oath that a tax was owed. She said she had never
spoken with a more insolent, biased reporter, who didn't want to
any explanations about the tax laws that he couldn't refute. She
said she had lost a lot of respect for the Times. Check her
It appears to us that there is serious reason to question whether
the readers of the NY Times are well served by David Cay
brand of reporting, since it is biased and incompletely
researched. If you would like to express your opinion about the
articles by David Cay Johnston, you can do so by calling his
superior, Glenn Kramon, Business Editor, at (212) 556-1471.
LATE NEWS: The Texas Incident
Subsequent to the NY Times articles, the IRS contacted Clubb Spa
and Pool, a company in Keller, Texas, just northwest of Dallas,
that had stopped withholding in accordance with the provisions of
the law. The IRS wanted to send a couple of auditors to review
their books and records. On the appointed day, last Friday,
February 23, five people showed up, three of them conspicuously
carrying guns. When asked by company owner, Teri Clubb, who the
armed men were, they refused to disclose their identities. The
company called 911, police officers arrived who told the agents
they'd have to identify themselves or leave. The IRS group left,
(except for one auditor) refusing to give identities. As of this
writing, the police have not provided the owner with a written
If revenue officers are authorized by law (Code section 7608) to
conduct only civil enforcement of alcohol, tobacco, and firearms
regulations, and the Criminal Investigation Division only
authorized to investigate income tax matters involving U.S.
residing in foreign countries and nonresident aliens with U.S.
income (Internal Revenue Manual chapter 1100), one wonders just
what was going on, and under what authority.
Employers have noted that in Texas, as in most states,
garnishment of wages (which is what withholding is, if done
employees permission) requires a court order. In Texas, it is
even written into the state constitution, as well.
This whole incident seems to resemble the old Brown Shirt
intimidation tactics of Nazi Germany. But the owner of one
said, in effect: "This is America. Don't show us your guns; show
us your authority."
This message is part of PROJECT TOTO, a plan to educate millions
of citizens (along with accountants, tax attorneys, legislators,
judges, IRS employees, and prospective jurors) about the true
limited application of the income tax laws, to expose any
operations of the IRS that are unauthorized by law, and to put an end to any
illegal collection of taxes from people who do not owe them. We
want to publish several additional full-page ads in this newspaper,
each of which costs tens of thousands of dollars. Your help is
urgently needed. Please send a donation .In addition, please
order 500 copies of this ad from WTP for $50. Jefferson said it
best, "When the government fears the people, you have liberty. When the
people fear the government, you have tyranny." Sponsored by
We The People Foundation For Constitutional Education, Inc., 2458
Ridge Rd., Queensbury, NY 12804,
(518) 656-3578 Fax (518)656-9724
The Bankruptcy of the United States
The Federal Zone:
Cracking the Code of Internal Revenue
THE IRS FRAUD EXPOSED
THE IRS IS ON THE ROPES AND RUNNING SCARED!
The Day Freedom Broke!
Tax Showdown and guess who refuses to show?
U.S. Taxpayers' Backed IMF Loans
IRS is DEAD
State Income Tax Arguments
IRS ~ Tax Info
The Federal Reserve Is A privately Owned Corporation
"It takes two to speak the truth: one to speak, and another to hear."
-Henry David Thoreau
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Last updated 02/23/2012