A Little IRS History

 

      In 1919, the Commissioner of Internal Revenue was given the responsibility for investigating and enforcing illegal acts relating to the National Prohibition Enforcement Act.  A group was created called the Intelligence Unit.  In 1978, it was renamed again to the Criminal Investigation Division (CID).  The IRS now has a full-fledged criminal investigation arm of the federal government and it uses its power to harass and intimidate the American public at the same time that it requires them to waive their Fifth Amendment rights on tax returns. 

 

      Back in 1943, the Tax Payment Act was passed.  This was the act that authorized the withholding of taxes from wages and salaries.  The W-2 was introduced and employees began the filing of W-4 forms.  Withholding is the machine that waxes the IRS.  In 1996, 35 percent of tax dollars collected by the IRS were collected by wage withholding: over $500 billion in revenue. Most employees just accept and forget the withholding and the IRS continues to clean up.

 

The Collection Division

 

      If you end up owing the IRS money, the Collection Division of the IRS will eventually get your case.  The collection process begins in the collection areas in each of the ten service centers across the country.

 

      The service centers send out a series of notices  called "500 notices" because they are numbered from 501 to 504.  The 504 notice is the final notice from the service center.  The notices are quite effective because in 1993 the 501 letter brought in over $7 billion from the IRS' "customers."

 

      After the IRS finishes with the "500" series, they begin enforced collection.  The Automated Collection System (ACS) takes over next.  The ACS has offices around the country with individuals who are employed to put pressure on the population of delinquent taxpayers.  If ACS does not succeed in chasing down its victims, it refers the case to the local district office for enforcement.  The district office will then send out a revenue officer for a surprise visit to your home or office.  If the revenue officer cannot find assets, he may issue a summons.  It is very important that you know how to handle a summons if you are threatened with this situation.  The IRS can enforce a summons in federal court and you can spend some significant jail time for contempt if you don't handle the situation properly.  There are only two ways to properly handle an IRS Summons.  You can appear and provide the information and testimony requested or you can appear and properly assert the Fifth Amendment.  The IRS may attempt to enforce the summons in the face of the Fifth Amendment but under current case law the IRS cannot prevail if the Fifth Amendment is asserted properly.

 

      A revenue officer can also file a lien against you for a tax debt and they can levy your wages.  Your possessions are no longer yours, they belong to the IRS.

     

The law even allows the IRS to do a jeopardy assessment. A jeopardy assessment is an emergency legal procedure that allows the IRS to seize, at any time, the assets of any individual in the country, if the IRS claims that the individual owes money and they think he might leave the country.  The IRS is exempt from having to obtain a court order before it can disturb your peace and serenity.  Remember this in your dealings with the American Gestapo.  The IRS has unbridled power and they will continue to use it against Americans until that power is taken from them.

The IRS and Nonfilers

 

      Each year millions of people do not file any income tax returns.  It is impossible to know the exact amount of nonfilers but the IRS estimates that it could be about ten million.  As more and more people get upset with the federal tax system, the number of non-filers will probably continue to grow.  The IRS will continue to fight back through the use of their prosecution and levy power but as the system gets more and more complex and as it continues to take a large chunk of the average person's paycheck, the opposition to the system will increase.  The problems will not go away as long as congress continues to shove this ridiculous system down our throats.

 

IRS Fraud Investigations

      Many people are afraid that the IRS might put them in jail for tax crimes.  However, the truthful statistics do not stand up to the rumors that the IRS wants you to believe.  In 1996 for example the Criminal Investigation of the IRS referred over 3,600 cases for prosecution, resulting in over 2,700 sentences; 2,100 received prison terms.  This means that the number of criminal tax cases the IRS gets involved with is rather low.  It is less than .003 percent of the total population of individuals sending in tax returns.  In 1996 there were about 5,000 CID investigations and there were about 209 million tax returns filed.

      The CID can launch investigations against any individual at any time and the information given to the IRS on tax returns can be used in criminal cases against the targets of the investigations. 

 

      The Internal Revenue Manual lists various badges of fraud that the CID looks for in deciding to turn a civil investigation into a criminal investigation.  These indications are: (1) False statements made to the IRS.  (2)  Attempts to hinder examination (asserting a Constitutional right is not an attempt to hinder the examination.) (3) Testimony by employees about the business practices of the individual. (4) Destruction of books and records especially when done soon after an examination was started.  (5) Transfer of assets to hide them from the IRS.