SOURCE:  Dan Meador Yahoo Group

Since locating Public Laws 104-53 & 104-316, I've done some revision on our stipulations list. We have yet to locate the means by which the General Accounting Office authorized the Treasury Financial Management Service to collect debts owing to the United States, and the mechanism by which FMS authorizes IRS to provide certain limited services, but we're working on those particulars. In the meantime, major P.L. 104-316 changes are incorporated in 3300 & 3700 series sections in Title 31 of the United States Code; see particularly, 31 U.S.C. 3702 & 3711. Some of our recent information is incorporated by reference in the following stipulations. Dan Meador

1.     Very few citizens and residents of the United States, domestic corporations, trusts, partnerships, etc., are liable for federal income taxes imposed by Subtitle A of the Internal Revenue Code that require keeping books and records and filing returns. Taxing and liability statutes do not apply to income sources, articles, activities and transactions of the American people and domestic juristic entities other than those who receive income from foreign sources, insular possessions of the United States, and maritime activity regulated by treaty. For reasonably comprehensive treatment of Subtitle A income taxes, see the videotape Theft by Deception by Larken Rose, available via Internet at Also, see the memorandum “Persons Liable for Subtitle A, B & C Federal Taxes & Subject to Subtitle F Collections”, available on Internet at on the research page.

2.     Employment (social welfare) taxes imposed by Chapters 21 & 23 of the Internal Revenue Code are mandatory and elective only in possessions of the United States. See definitions of “State”, “United States” and “citizen” at 26 CFR 31.3121(e)-1. However, Congress has enacted legislation that permits federal employees to participate in these social welfare programs and legislatures of States of the Union have enacted legislation that authorizes state governments to participate in federal social welfare programs. There is no corresponding provision that extends to the private sector in States of the Union. The Constitution of the United States does not authorize Congress to tax one for the benefit of another so social welfare taxes are beyond the scope of constitutionally enumerated powers.

3.     Chapter 24 of the Internal Revenue Code does not impose a tax, but merely authorizes withholding Subtitle A & C income and employment taxes at the source from wages of employees, as defined at 26 U.S.C. 3401(c), by employers, as defined at 26 U.S.C. 3401(d). Chapter 24 withholding at the source provisions are exclusively applicable to governmental entities and government personnel. In order to withhold from wages, the employer must first receive the Form 8655[1] reporting agent certificate from the Treasury Financial Management Service then file the completed form with the Andover office of the Internal Revenue Service. See (11/21/97) of the Internal Revenue Manual, January 1999 edition on CD.

4.     Court documents and published district and circuit court decisions verify that the Internal Revenue Service is agent of the [federal] United States of America, not Government of the United States. (See 26 U.S.C. 7402: “The district courts of the United States at the instance of the United States shall have jurisdiction …” For distinction between the “United States” and the “United States of America” as unique and separate governmental entities, see historical and revision notes following 18 U.S.C. 1001 and Attorney General delegation orders to the Director of the Bureau of Prisons, 28 CFR 0.96 (custody of prisoners of the United States) & 0.96b (transfer of United States of America prisoners to United States custody). See also, 18 U.S.C. 80, 1940 edition.) Court records therefore verify that Internal Revenue Service personnel are agents of a foreign government and Internal Revenue Service claims are made on behalf of a government foreign to the United States.

5.     The Internal Revenue Service, successor of the Bureau of Internal Revenue, was not created via legislation enacted by Congress, as required by Article I 8, clause 18 of the Constitution of the United States[2], so cannot legitimately enforce internal revenue laws of the United States in States of the Union. (See Statement of IRS organization at 39 Fed. Reg. 11572, 1974-1 Cum. Bul. 440, 37 Fed. Reg. 20960, and the Internal Revenue Manual 1100 through the 1997 edition[3]; see also, United States v. Germaine, 99 U.S. 508 (1879); Norton v. Shelby County, 118 U.S. 425, 441, 6 S.Ct. 1121 (1886), and numerous other cases that reinforce the determination “there can be no officer, either de jure or de facto, if there be no office to fill.”)

6.     Internal revenue districts have not been established in States of the Union, as required by 26 U.S.C. 7621 and Executive Order #10289, as amended. Therefore, Internal Revenue Service incursion into States of the Union for purposes authorized by Chapter 78 of the Internal Revenue Code are beyond venue prescribed by law. See also, 4 U.S.C. 72, concerning the requirement for all departments of government to limit operations to the District of Columbia unless authorized to operate elsewhere by statute. The following compliant IRS venue and jurisdiction statements are published in 26 CFR 601.101: “Within an internal revenue district the internal revenue laws are administered by a district director of internal revenue.” Otherwise, “The Director, Foreign Operations District, [now Assistant Commissioner (International)] administers the internal revenue laws applicable to taxpayers residing or doing business abroad, foreign taxpayers deriving income from sources within the United States, and taxpayers who are required to withhold tax on certain payments to nonresident aliens and foreign corporations…”

7.     The Internal Revenue Service is not the “delegate” of the Secretary of the Treasury, as the term is defined at 26 U.S.C. 7701(a)(12)(A). See more complete information concerning authority of the General Accounting Office and the Treasury Financial Management Service below.

8.     The Internal Revenue Service operates in an ancillary or other secondary capacity under contract, memorandum of agreement or some comparable device (5 U.S.C. 552 & 101(a)(3) of P.L. 104-316, 110 Stat. 3826) to provide services under original authority delegated to the General Accounting Office and subsequently to the Treasury Financial Management Service (See pages 345 & 346 of the 2001/2002 edition of the U.S. Government Manual); the contracted or otherwise authorized services extend only to government employees and employers, as defined at 26 U.S.C. 3401(c) & (d). The authorization is essentially intragovernmental in nature; it does not extend to private sector enterprise in States of the Union.

9.     Internal Revenue Service personnel do not have delegated authority to execute Form 1040 (individual), 1041 (trust) and 1120 (business/corporation) income tax returns as substitute returns under authority of 26 U.S.C. 6020(b). See [5.1] 11.9 of the Internal Revenue Manual currently posted on the Internal Revenue Service web page.

10.  Whenever someone subjected to examination challenges or otherwise contests fact and/or law issues, examination officers are required to resolve contested issues, request a national office technical advice memorandum or refer them to the appeals office for resolution. See 26 CFR 601.105 generally and 4.10.8 of the Internal Revenue Manual particularly; see 4.10.7 of the Internal Revenue Manual for elements essential to findings of fact and conclusions of law.

11.  In the event of an examination in which an examination officer concludes that there is an income tax liability, he must issue a 30-day letter that lists particulars of the proposed deficiency. The 30-day letter must also inform the alleged taxpayer of his right to appeal to the examination officer’s superior and to the appeals office. See 26 CFR 601.105(c)(2)(i) & (d)(1)(iv). See particulars concerning the 30-day letter and appeal requirements at 4.10.8 of the Internal Revenue Manual. Per the introduction to 4.10 of the Internal Revenue Manual, procedure prescribed by 4.10.8 is mandatory.

12.  Internal Revenue Service appeals procedure prescribed in 26 CFR 601.106 does not comply with appeals process required by the Administrative Procedures Act at 5 U.S.C. 553 through 557. The IRS administrative appeals hearing is informal; there is no provision for the appeals officer to administer oaths; formal testimony is not taken at IRS appeals hearings; the appeals officer is not vested with subpoena authority; the alleged taxpayer is not afforded the opportunity to cross-examine adverse witnesses placed under oath; and whether or not the Internal Revenue Service is independently represented is elective rather than mandatory. See Federal Maritime Commission v. South Carolina State Ports Authority, et al, No. 01-46, 535 U.S. ___ (2002), decided May 28, 2002, and cases cited therein, for administrative due process requirements. IRS failure to facilitate Administrative Procedures Act requirements for administrative appeals deprives people who have a case or controversy arising under internal revenue laws of the United States of procedural due process rights.

13.  Income tax liabilities must be assessed in compliance with requirements of 26 U.S.C. 6203 and 26 CFR 301.6203-1 before there is a tax liability. On request, the taxpayer against whom income tax liabilities are assessed is entitled to receive the assessment certificate or certificates. The law does not authorize computer-generated or other alternatives. See Huff v. United States of America, 10 F.3d 1440 (9th Cir.,1993): “Generally, courts have held that IRS Form 4340 provides at least presumptive evidence that a tax has been validly assessed under 6203. See Farr, 990 F.2d at 454; Geiselman v. United States, 961 F.2d 1, 5-6 (1st Cir.), cert. denied, 121 L. Ed. 2d 191, 113 S. Ct. 261 (1992); Rocovich v. United States, 933 F.2d 991, 994 (Fed. Cir. 1991) ("Certificates of Assessments and Payments [are] routinely used to prove that a tax assessment has in fact been made."); United States v. Chila, 871 F.2d 1015, 1017-18 (11th Cir.), cert. denied, 493 U.S. 975, 107 L. Ed. 2d 501, 110 S. Ct. 498 (1989); United States v. Miller, 318 F.2d 637, 638-39 (7th Cir. 1963). Here, however, the IRS seeks to rely solely on these forms to prove not only that an assessment had been validly made, but that the taxpayer had been provided with a copy of the assessment as per Treasury Regulation 301.6203-1. We are unaware of any authority indicating that these forms standing alone constitute evidence for the latter proposition. Indeed, no entry on the form contains any information in this regard.”

14.  The Secretary is required to issue 10-day notice and demand for payment after lawful, procedurally proper assessments are made (26 U.S.C. 6303); there is no statutory or regulatory authorization for notice and demand for payment being issued prior to tax liabilities being assessed in compliance with 26 CFR 301.6203-1.

15.  Prior to any adverse action to collect contested delinquent tax debts (properly assessed liabilities), the general agent of the Treasury and the Attorney General must authorize litigation. See particularly, Executive Order #6166 of June 10, 1933, as amended, 5 U.S.C. 5512, and 26 U.S.C. 7401. (Prior to enactment of P.S. 104-316 of October 19, 1996, the General Accounting Office was listed as general agent of the Treasury in notes following 5 U.S.C. 5512, but the General Accounting Office Act of 1996 (110 Stat. 3826) transferred that authority to the Office of Management and Budget (See particularly, 31 U.S.C. 3702(a)(4)). Both GAO and OMB delegated collection of debts to Government of the United States, including tax debts, to the Treasury Financial Management Service. See page 345 & 346 of the 2001/2002 U.S. Government Manual concerning authority of the Treasury Financial Management Service: “FMS is responsible for administering the world’s largest collection system … The Treasury Offset Program is one of the methods used to collect delinquent debt. FMS uses the program to withhold Federal payments, such as Federal income tax refunds, Federal salary payments, and Social Security benefits, to recipients with delinquent debts, including past-due child support obligations and Federal income tax debt.”)

16.  Any statutory lien “arising” under 6321 of the Internal Revenue Code is inchoate (unperfected) until there is a judgment lien secured in compliance with the Federal Debt Collection Procedures Act (See Chapter 176 of Title 28, particularly 28 U.S.C. 3201). Therefore, notices of federal tax lien, notices of levy and other such instruments utilized to encumber and convert private property are uttered instruments unless perfected by a judgment from a court of competent jurisdiction. See also, Fifth Amendment due process clause, clarified by relation-back doctrine (See United States v. A Parcel of Land, Buildings, Appurtenances and Improvements, known as 92 Buena Vista Avenue, Rumson, New Jersey (1993), 507 U.S. 111; 113 S.Ct. 1126; 122 L.Ed. 2d 469).

17.  Assuming the Internal Revenue Service has secured a judgment from a court of competent jurisdiction, the Form 668-B Levy is the proper Internal Revenue Service levy instrument. See IRS Letter Ruling #200123062 of May 2, 2001, and Henderson v. Internal Revenue Service, KTC 1994-486 (S.D. Ind. 1994).

18.  Involuntary garnishment of wages and bank accounts may be executed only as prejudgment and postjudgment remedies in compliance with the Federal Debt Collection Procedures Act, published as Chapter 176 of Title 28. See particularly, Fuentes v. Shevin, Attorney General of Florida, et al, (1972) 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed. 2d 556, detailed by the Supreme Court of the State of Florida decision in Ray Lien Construction, Inc. v. Jack M. Wainwrite, (1977) 346 S.2d 1029, for particulars concerning required notice and opportunity for hearing.

19.  If an “employee”, as defined at 26 U.S.C. 3401(c), voluntarily submits to wage garnishment for satisfaction of a tax debt, the Internal Revenue Service officer or agent responsible for executing the garnishment under the Treasury Offset Program must provide the government employer with a Form 2159 voluntary garnishment agreement signed by the employee and the officer or agent simultaneous with a notice of levy. See 4075.50 of Volume I, Part 3 of the Treasury Financial Manual (Revised under Transmittal letter No. 590 of March 10, 2000). Unless specified otherwise by the employee/payee, the maximum garnishment under the 1997 Taxpayer Relief Act is 15% of net pay. See FMS Fact Sheet, “Continuous Federal Tax Levy Program”, updated February 4, 2002.

20.  All Internal Revenue Service seizures where there is not a judgment lien in place are predicated on the underlying presumption that a drug-related commercial crime specified in 26 CFR 403.38(d)(1) has been committed and that the seized property was being used in connection with or was the fruit of the crime. See particularly, Delegation Order 157, Rule 41 of the Federal Rules of Criminal Procedure, and 26 U.S.C. 7302 (property used in violation of internal revenue laws). The “in rem” action (26 U.S.C. 7323) is admiralty in nature and presumes that there is a maritime nexus. Also see 26 U.S.C. 7327 concerning customs laws.

21.  Collateral issues and procedural essentials (nature & cause of action, standing of the Internal Revenue Service, venue, subject matter jurisdiction generally, and substantive and procedural due process rights) are matters that must be documented in record when challenged. Therefore, the mandate for disclosure falls within substantive and procedural due process rights that cannot be avoided or otherwise passed over through technicalities or silence. U.S. Supreme Court decisions verifying these requirements are too numerous to list in this context.

22.  The Administrative Procedures Act and the Federal Register Act require publication of organizational particulars and procedure in the Federal Register. See particularly, 5 U.S.C. 552. The Internal Revenue Service has failed to comply with these mandates. Therefore, IRS personnel engaged in federal tax administration have a duty to affirmatively resolve organizational and other collateral and procedural issues when they are raised in the administrative forum.

[1] The Treasury Financial Management Service Form 8655 is distinct from the IRS Form 8655 authorization for third-party payroll agents.

[2] Article I 8, clause 18 vests Congress with complete responsibility for facilitating power of Government of the United States via legislation: “[The Congress shall have Power] To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by the Constitution in the Government of the United States, or in any Department or Officer thereof.”

[3] In the historical statement, the Commissioner of Internal Revenue admitted that Congress did not create a Bureau of Internal Revenue via the 1862 act in which the office of Commissioner of Internal Revenue was created, but alleged that Congress intended to create a bureau. In reality, the 1862 legislation created the offices of “assessor” and “collector”, in addition to the office of Commissioner of Internal Revenue. Assessors and collectors were appointed for each revenue district somewhat as U.S. Attorneys are appointed today. Those appointed to these offices continued to collect internal revenue within States of the Union until the Internal Revenue Code of 1954 was implemented. The two offices were administratively abolished via Reorganization Plan No. 26 of 1950. The name of the Bureau of Internal Revenue was changed to Internal Revenue Service via Treasury Order #150-27, which was not published in the Federal Register in compliance with requirements of the Federal Register Act. (See 44 U.S.C. 1501 et seq., particularly 1505(a))

Copyright Chris Hansen

By: Chris Hansen,  858-538-6607,
Last revision: August 14, 2009 08:07 AM
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