MORE ON THE HISTORY OF THE FREEDOM MOVEMENT

     Vivian Kellems was one of the original leaders of the Freedom Movement.  She first got a lot of attention in 1948 when she refused to collect income taxes from her 100 employees.  The government seized $8,000 from her bank account even though the employees had paid their taxes personally.  Vivian defeated the IRS in a jury trial.  In 1952, Vivian published: Toil, Taxes, and Trouble which described her fight with the IRS.

     However, she did not become a hard-core tax fighter until 1970 when she refused to give the IRS documents.  On December 16, 1969, Judge Canella in the United States District Court ordered her to produce her records and she ignored her ruling. Vivian went to court and argued the Fifth Amendment, and the judge ordered both the government and Vivian to prepare briefs.  The IRS withdrew their enforcement suit and assessed Vivian with a bogus assessment.  Then Vivian refused to produce records or file returns.  She finally died in January 1975 after thirty years of fighting the IRS. The last seven years of her life, she did not file returns.  As you can see, Vivian was struggling with the IRS more than 40 years ago, we can take a lot of inspiration from her as we continue the battle today. 

     Bracken Lee was another great freedom fighter who took the IRS on very early in the history of the income tax.  He was a former governor of Utah and the mayor of Salt Lake. He served as a director of the National Committee to Repeal the Sixteenth Amendment and became a target for IRS retaliation.  He was audited every year from 1935 to 1968.  In 1952 he started withholding and putting a portion of his income tax in trust to challenge the validity of federal loans to nations who were enemies of the American people.  He lost in the courts and the IRS invoked a jeopardy assessment against him.  In 1920 he took large deductions as a result of his wife's illness and the IRS disallowed his deductions.  He challenged the IRS and won.  In 1972 he wrote a letter that included the following statement:

I agree with you concerning the tax burden and its ultimate destruction of this country...I did not run for re-election as Mayor of Salt Lake City because of the feeling that Washington is slowly but surely taking over the operation of the states through the so-called furnishing of tax-dollars from Washington. I retired as Mayor of Salt Lake City on January 3, 1972, and do not again intend to seek public office.

    As you can see, the battle against the IRS has been going on for a long time.  We are the freedom fighters of our generation, but we were not the first.  We must keep the fight going.  The IRS must go.

The Tommy Cryer Victory

            The internet is abuzz with news of the Cryer Criminal Victory.  The fact is that it is always marvelous when a defendant goes to court and wins a criminal case.  It happens about 3 percent of the time.  That is right; the IRS wins 97 percent of these cases.  When the IRS loses a case, the Freedom Movement gets a big shove in the right direction.  The problem is, however, that many of the unscrupulous conmen in the Freedom Movement will use this Cryer Victory to stand for the proposition that it is possible to not pay taxes and have assets. 

            The Cryer Victory does not make new law and it won't change anything in your case.  The Cryer Victory simply means that Tommy Cryer got a jury to believe that he believes that he is not required to file returns.  The IRS can, and will, attack Tommy civilly and will try to get all his assets and garnish his wages in the future.  The agency may give him a summons if it cannot find his assets, and he will probably defeat the IRS on the Fifth Amendment.  However, you have to realize that Tommy Cryer is a very smart and a very brave guy and he had a charismatic, intelligent and well-prepared attorney on his team and he probably spent a lot of money.

            Don't think for one minute that you can justify an exempt W-4 or a Zero Tax Return because Tommy Cryer won his case.  Don't think for one moment that the IRS will go softer on wage levies or seizures of homes and automobiles because Tommy Cryer won his case.

            Be aware of the fact that many of the conmen are going to make a big deal out of this issue.  I am sure to get hundreds of phone calls from people who will tell me that this case means the income tax is dead.  Yes, the charlatans will come out of the woodwork, but please remember, the IRS will be as nasty as ever.  If you are going to challenge the IRS, you must know what you are doing.  If you have a job and assets, please consider the method in my book, it is much safer than filing an exempt W-4 or a zero tax return.

            Tommy and Larry did a great job and deserve a lot of credit.  However, we need dozens of these wins to change consciousness.  Or maybe we just need for Wesley Snipes to win his criminal case and do a movie on it, and the income tax will be in real trouble.

            As long as we have criminals sending the jobs to China, and draining the national treasury for an illegal war in Iraq, don't expect anything to change soon, just keep on keeping on a day at a time and do what you can, and we will end this horrible tax on the wages of the middle class.

The IRS Insists Filing is Voluntary!

            The IRS can make an assessment against any individual who does not voluntarily file a return.  The agency can make up income based on the Bureau of Labor Statistics averages even if they have no proof that an individual earned any income.  Once the IRS invents a bogus amount of income, it can collect the tax it has assessed on that bogus income.  The following text is a direct quote from the text of an IRS Form 886-A, which was mailed out to an individual after a bogus BLS assessment.  Notice how the IRS repeatedly uses the word "voluntary." 

Text from Form 886-A:

FACTS:

            During the tax years shown above, the taxpayer failed to file federal income tax returns.  All attempts to contact taxpayer and allow the taxpayer to file on a voluntary (emphasis added) basis the delinquent tax returns, were unsuccessful.  With no voluntary (emphasis added) compliance, Substitute for Returns (SFR's) were prepared for each delinquent year shown above by the Internal Revenue Service.

            Due to the fact that the Internal Revenue Service has information that supports that the taxpayer was a Self Employed taxpayer during the years in question, the determination of income earned was based on using national average of income levels based on the Bureau of Labor Statistical (BLS) data.  The income levels used in the BLS report are based on the study of national consumer expenditures for the average American consumer.  The amount of income from Bureau of Labor Statistics, including the applicable BLS tables used in computing a base income amount  (1989 is a base year as this is the year the study was made by the Bureau of Labor.)  The non-base years BLS income amounts are based on a computation that takes into account the pertinent inflation factor for the years in question (the inflation factors are from the Bureau of Labor).

LAW:

            Section 61 of the Internal Revenue Code of 1954 and 1986 require that all sources are includable in taxable income.  The reconstruction of a taxpayer's income when adequate records were not either available and/or presented during the examination has consistently been upheld by the courts, Thelma Blevins, (CA-6), 56-2 USTC 10,030, 238 F. 2d 621 and N. Vafano, 47 TCM 1311, Dec. 41, 071(M), TC Memo 1984-135.  The Internal Revenue Service has been granted great latitude by the courts in making determinations of liability, particularly where the taxpayer files no returns and refuses to cooperate in the ascertainment of their income, otherwise "skillful concealment would be an invincible barrier to the determination of tax liability."  United States v. Johnson, 319 U.S. 503, 518.  (end of IRS Form).

            An analysis of the above information should show that the IRS seems compelled to continually use the word "voluntary."  The IRS knows they have a severe Fifth Amendment problem, however they also give a strong show of the incredible strength they have been given by Congress and the courts to take wealth from the American Public based on little or no information.  The moral of this lesson is two-fold. Filing returns is considered by the IRS to be voluntary, or they would not continually refer to filing as voluntary.  If you choose not to volunteer, however, you must either allow withholding on your wages or and make quarterly payments if you are self-employed, or you must be judgment proof.  The IRS can make a bogus assessment against you and proceed to take your assets without a court order.  The courts will support their right to do this.

            Now take a look at the following quote from IRS, Treasury Reg. Section 601.602 PUBLISHED IN THE FEDERAL REGISTER MAY 11TH 1981:

Section 601.602 Tax forms and instructions.

(a) Tax return forms and instructions.  The Internal Revenue Service develops forms and instructions that explain the requirements of the Internal Revenue Code and regulations.  The Service distributes the forms and instructions to help taxpayers comply with the law.  The tax system is based on voluntary compliance (emphasis added), and the taxpayers complete and return the forms with payment of any tax owed.....

            As you can see, the IRS even refers to compliance as "voluntary" in the Treasury Regulations.  Why would the IRS continually refer to the filing of returns as" voluntary?"  They can leave out the word "voluntary" without changing the sentence and it would then be much more clear that filing a return is NOT "voluntary."  Does the IRS use the word "voluntary" to mean "mandatory" or required so that they cannot be accused of requiring us to waive our Fifth Amendment Rights?

Have you ever gone to a club meeting of the good old boys and felt that you were out of place?  If you know the feeling, you will know how it feels to go hang around at Tax Court on the first day of the docket call.  All the District Counsel and the local Tax Attorneys are standing around shooting the bull and being real friendly.

Of course, I have spent a lot of days in the last twenty years hanging around the Tax Court and I always feel out of place for two reasons. First of all, the Tax Court feels like part of the IRS, the feel of it is simply not the feel one would get from a truly unbiased forum.  Secondly the attorneys, the IRS District Counsel, and the judge are acting like they are getting together for a club meeting.

     One gets the idea that the poor "taxpayer" who is the petitioner in the case is just an innocent pawn that is being shoved around a chess board by a high-priced tax attorney and a district counsel attorney.  In the end, it is the innocent "taxpayer" who gets the shaft.  His case will usually result in an out-of-court settlement and the tax attorney will make a bundle. Congress has placed a plethora of new penalties on petitioners and attorneys who challenge issues that the judge doesn't like.  Of course most of those who have been in the Freedom Movement for a while realize that Tax Court is a Scam but the unfairness in the whole process is still a bitter pill to swallow.  The realization that there is no hope for an unbiased forum and that the burden of proof is on the "taxpayer" is a concept that the uninitiated find almost impossible to accept. (Our citizens are taught in school that we live in a free country and that we are innocent until proven guilty!).

     Still, you must be warned, however, that a trip to Tax Court must be carefully considered if you are not judgment proof and if you have received an unreasonable Statutory Notice of Deficiency.

     The moral of the story is that you should learn to defend yourself  You will  find yourself in a much more powerful position should you get your day in Tax Court. Remember that if you have to hire an attorney to fight the IRS for you, you cannot have enough money to fight back.