Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.1 6/24/83; site decwrl.UUCP Path: utzoo!watmath!clyde!cbosgd!ihnp4!zehntel!dual!decwrl!dec-rhea!dec-nanook!alpert From: alpert@nanook.DEC Newsgroups: net.taxes Subject: Things IRS Won't Tell You #5 Message-ID: <62@decwrl.UUCP> Date: Tue, 27-Nov-84 22:21:03 EST Article-I.D.: decwrl.62 Posted: Tue Nov 27 22:21:03 1984 Date-Received: Thu, 29-Nov-84 02:32:01 EST Sender: daemon@decwrl.UUCP Organization: DEC Engineering Network Lines: 244 *** Things the IRS won't tell you ******************************* #5 *** Sorry for the delay in getting this out, but things have been rather hectic and these articles take a non-trivial amount of time to prepare. Warning: this note is over 240 lines long. DISCLAIMER: The following information is true to the best of my knowledge, and is presented for informational purposes only. I do not suggest that anyone take any action solely on the basis of these articles, much more detailed information and support is necessary. CREDIT: This note is derived from articles appearing in Vol. 2, #5 (1984) of the "Schiff Report", published by Freedom Books, P.O. Box 5303, Hamden, CT 06518. >>>>>>> FLAME ON! <<<<<< *** The IRS Cannot Legally Assess You *** As we have previously discussed, the IRS Code does NOT establish an income tax liability for anyone. Even if the Secretary *were* authorized to assess an income tax, if no liability is created, no one need pay such an assessment! The key point is that while liablity for other types of taxes are specifically provided for, (pardon the repitition here) NO such liability is established for "income" taxes. For, example: TOBACCO PRODUCTS: Sec. 5703. Liability for tax and method of payment (a) Liability for tax. (1) Original Liability. The manufacturer or importer of tobacco products and cigarette papers and tubes SHALL BE LIABLE for the taxes imposed thereon by Section 5701. ALCOHOL: Sec. 5005. Persons Liable for Tax. (a) General. The distiller or importer of distilled spirits SHALL BE LIABLE for the taxes imposed thereon by section 5001(a). (Note that the use of "SHALL" in the above statutes does not conflict with provisions of the Constitution, therefore the Supreme Court decisions regarding the usage of "SHALL" (which we have discussed in previous articles) do not apply here.) These statutes clearly impose a liability for those types of taxes. However, in regards to "income" taxes, close examination of the Code reveals that not even the assessment of "income" taxes is authorized. To understand this, it is necessary to take a close look at Code section 6201(a), which we previously examined in the first article of this series. When the information in parenthesis is omitted, we have: "The Secretary is authorised ... to make the ... assessments of all taxes ... imposed by this title, or accruing under any former internal revenue law, WHICH HAVE NOT BEEN DULY PAID BY STAMP at the time and in the manner provided by law" It is now clear that this section only authorizes the Secretary to assess taxes which have "not been duly paid by stamp", that is, those exise taxes which are paid by stamp -- alcohol, tobacco, etc. In addition, if you refer back to section 6201(a)(1), the Secretary is given permission to: "assess all taxes determined by the taxpayer or by the Secretary AS TO WHICH RETURNS OR LISTS ARE MADE under this title." The authority of the Secretary to assess is therein limited to ONLY those cases where "returns or lists are made". In other words, if no "returns or lists" are made by the "taxpayer", the Secretary has no authority under this section to assess any tax! This is further confirmed by section 6201(a)(2), the relevant parts of which state: "Whenever any article upon which a tax is required to be paid by means of A STAMP is sold or removed ... without the use of a proper stamp, it shall be the duty of the Secretary ... TO ESTIMATE THE AMOUNT OF THE TAX which has been omitted to be paid and to make assessment therefore upon the persons ... LIABLE for such tax" NOWHERE in all of chapter 63 (which deals with assessments) is there any similar language that grants the Secretary the authority to "estimate" and "make assessments" in connection with "income" taxes when "returns or lists" are not made by the taxpayer! And of course, nowhere in the Code is the word "liablity" used in connection with income taxes as it is used for stamp taxes. Efforts by the government to assess individuals who have not filed are blatantly illegal. You may have also heard of the IRS making a "net worth return". To do this, the IRS estimates an individual's tax "liability" by analyzing theoretical changes in his assets, position, and/or style of living. Can anyone find any section in Chapter 63 of the Code that permits the IRs to make such estimates? No, because "estimates" only apply to a "tax required to be paid by means of a stamp." It is obvious that when we deal with the Federal government we are dealing with liars, bandits, and thieves. *** IRS Code Admits: No one is liable for an income tax *** We have seen that the Code does not establish any liablity with respect to an "income" tax nor establish any requirement that any "return" pertaining to such a tax be filed. The Code even admits this! Naturally, the admission is made grudgingly and in a manner which is difficult to detect. The following Code sections are relevant to this discussion: 6011. General requirement of return, statement, or list. (a) General Rule. When required by regulations prescribed by the Secretary any person MADE LIABLE for any tax imposed by this title, or for the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations. (f) Income, estate, and gift taxes. For REQUIREMENT that returns of income, estate, and gift taxes be made whether or not there is a TAX LIABILITY, see sections 6012 to 6019, inclusive. Sec. 6012 Persons required to make returns of income. (a) General rule. RETURNS WITH RESPECT TO INCOME TAXES UNDER SUBTITLE A SHALL BE MADE BY THE FOLLOWING: (1)(A) Every individual having for the taxable year a gross income of the exemption amount or more, except that a return shall not be required of an individual (other than an individual described in subparagraph (c)) -- ... < There folllows a list of those "not required" to file > ... Our journey begins with code section 6011, entitled "General requirement for return, statement or list". We then go to section 6012, which is entitled "Persons required to make returns of income". The code actually makes a distinction between the "general requirement" to file tax returns and the supposed specific requirement to file tax returns. Why such a distinction? Why wouldn't the "requirement" to file income tax returns be included in the GENERAL "requirement" contained in section 6011? Why are there no specific sections similar to 6012 for tobacco, alcohol, and other exise taxes? In view of section 6011, why was section 6012 necessary? The answer to this riddle is provided in the Code itself. The reason is really quite simple. Section 6011(a) states that "any person MADE LIABLE" for any tax imposed by this title...shall make a return", thus clearly establishing that it only applies to those individuals "made liable" for a tax imposed. If an individual was not "made liable" for a tax, this section would not require him to do anything. Althought the Code does impose a tax on "income" in Section 1 (without ever defining "income"), nowhere does it make anyone "liable" for income taxes and as such, section 6011 cannot possibly require anyone to file an "income" tax return. This is not the case with various exise taxes because liablities for them are clearly defined. If anyone were charged (criminally or civilly) for failure to file a tax return supposedly "required" by section 6011, he could simply state that he had no liability for such a tax. For this reason, the Government came up with section 6012, which does not mention anything about a "liability". Nor does it use the language "required" (we have previously examined the Supreme Court's decision regarding the use of "shall"). It instead lists those who shall be "not required" to file. The interesting thing about this section is that it clarifies the government's intent to deceive the public about this issue! As incredible as it sounds, the Code actually (though reluctantly) admits that this section cannot apply to income taxes and supplies the correct reason. If you examine section 6011(f), you will see that it states "For requirements that returns of income, estate, and gift taxes be made WHETHER OR NOT THERE IS A TAX LIABILITY, see sections 6012 to 6019". Pay particular attention to the phrase "whether or not there is a tax liablity". The authors of the Code obviously didn't want to come right out and say "for requirement that returns of income, estate, or gift taxes, for which there is no liablility, see sections 6012 through 6019"! That would be too blatantly ridiculous even for the IRS! The authors of the Code used the words "whether or not" to both camouflage the meaning of the section and to give the illusion that an income tax liability exists. They obviously counted on the fact that anyone reading the Code would assume that he had an income tax liability and would look to section 6012 for that reason. In this manner, the government has attempted to put a "liability" into section 6012 by misdirection and inference. After, who would file an income tax return if he believed that he was not liable for the tax? The mere fact that section 6011(f) exists at all is proof that the Government knew (when the Code was written) that no one could be "liable" for income taxes and, therefore, no one has to file. They relied on the fact that the taxpayers would overlook the preposterous alternative suggested in Section 6011(f), and that no one would even question the reason for the two separate sections. To prove this, we need only view the absurd situation that Section 6011(f) proposes. In this hypothetical situation, there are two possiblities: 1) an individual has an income tax liability and is required to file, or 2) an individual does not have an income tax liablity and is still required to file. If an individual did indeed have such a liablity, section 6011 would REQUIRE him to file a return. Only those individuals without tax liabilities would have to look to section 6012 for their filing "requirement". Section 6011(f), however, says that individuals in both categories must "see section 6012...". If both possibilities really existed, 6011(f) would instruct only those WITHOUT income tax liabilities to see section 6012, since 6011 by itself would be sufficient if a "liability" existed. This is proof that the authors of the Code knew that no individual would be "liable" for income taxes, and that *everyone* would have to see Section 6012 for their filing "requirement". It is also obvious that if an individual could be "required" to file an income tax return without an income tax liability he could also be "required" to file a tobacco tax return (or any other exise tax return) without having a tobacco tax liability! Would anyone consider filing such returns if they were not manufacturers of these products? Of course not! Why then, doesn't section 6011(f) direct individuals without liabilities for such taxes to see further sections which *might* require them to file such returns? The answer is simple: the Code clearly establishes a liablility to file and pay tobacco, liquor, wagering, and other exise taxes, and only those "made liable" for them need pay them. It would be absurd to suggest otherwise or even attempt to confuse anyone with respect to those liabilities. The reason the Government seeks to confuse citizens with respect to "income" tax "liability" is that the Code does not (and cannot, for Constitutional reasons) legally establish any requirement for either filing tax returns or paying income taxes; it had to concoct sections that would make it *appear* that such requirements esisted. Sections 6011(f) and 6012 were written to create this illusion. <<< FLAME OFF! >>> ========================================================================= In order to preserve Schiff's observations on the Code sections involved, the article on "IRS CODE ADMITS..." has not been materially changed from the original appearing in the Schiff Report. Bob Alpert ...!decwrl!dec-rhea!dec-nanook!alpert