More History of the Freedom Movement 

      Another great freedom fighter who was instrumental in the beginning of the Anti-IRS fight is Floyd Wright.  Floyd went into real estate after college and he discovered the extent of the corruption in our economic system.  He started studying the law and discovered the problems with the federal income tax.  The government attacked Floyd criminally but eventually declined further prosecution in his case.  Floyd believes that the lack of the perjury line may have been instrumental in the Justice Department's decision since he had marked out the perjury line on the return that he filed.

      James Walter Scott was another early tax rebel.  In 1973, he was tried and convicted in Fresno, California for failure to report his income or to pay taxes.  He was president of the National Tax-Rebellion Committee and in the early 70s he was probably the most articulate tax rebel in the United States.  His main crime was that he organized a nation-wide tax resistance movement and he persuaded other people to follow his lead.  The feds considered him to be very dangerous and they didn't spare any expense in his conviction.  There were 35 federal agents in his court criminal trial.  Scott was found guilty of tax evasion and he was sentenced to prison.  He went underground and traveled through the United States using various aliases.  He was eventually apprehended and spent a year at the Lompoc Penitentiary in California. 

      Probably the most famous tax rebel of all time is Irwin Schiff. Irwin started out in the movement in 1974.  In 1982 he published a best seller: How Anyone Can Stop Paying Income Taxes.  The government eventually indicted Irwin and he spent several years in prison for tax evasion.  Since his release from prison, he has once again achieved a great deal of notoriety for his ideas regarding the tax system.

      Armen Condo was another early patriot who made a very big splash in the Freedom Movement in the early 1908s.  He pioneered the use of the exempt W-4 Form as a means of stopping income tax deductions.  He started an organization called the Your Heritage Protection Association, YHPA and by July 1979 he had 5,000 members in southern California.  By 1982, the membership exceeded 25,000.  He published a newsletter, Your Heritage News, to promote his tax philosophy.  In January of 1982 the YHPA held a conclave in Long Beach, California with an attendance of 6,000; but about that time Condo was indicted by the Feds and convicted on 41 counts of tax evasion and mail fraud and he was sentenced to eight years of prison. 

More on Family Limited Partnerships

      We have discussed family limited partnerships in previous newsletters because they are one of the more effective ways of protecting assets.  Family limited partnerships are expressly authorized by Internal Revenue Code Section 704.  There are several advantages of a FLP.  The IRS cannot take an asset out of a FLP, they have to get a charging order against the FLP and they cannot take the asset until the FLP sells the asset.  The limited partners are generally not held liable beyond their investment for the liabilities and obligations of the partnership.  The general partner(s) manage and direct the partnership and they make all the business decisions.  Section 704 of the Internal Revenue Code gives tax advantages.  Income is allocated among the limited partners in proportion to their percentage of ownership. 

      If you want to set up a FLP, you must check out the following: Is there a state statute that provides for the formation of a family limited partnership?  Can you be sure that your partnership complies with the statutory requirements?  If you can answer "yes" to both of the above questions, then you are in a good position to think about the formation of a family limited partnership.  In a FLP, the general partner has all the rights and powers of a partner in a general partnership.  He has full control with unlimited liability.  He is an agent of the partnership and he has a fiduciary duty to the partnership and the limited partners.  A limited partner has no right to take part in the control or management of the partnership and he has limited liability unless he takes part in the control or management.  He is not an agent of the partnership and he does not have a fiduciary duty to the partnership. The limited partnership concept provides asset protection and tax saving advantages.  It is worth consideration.

Transaction Codes on the Individual Master File

      It is very important to get a copy of your Individual Master File if you are contemplating bankrupting taxes.  There are various codes on the IMF.  The "150" code is generally the assessment date, but if a person has not filed a return or filed a late return the "150" may apply too the 6020(b) return which does not count for purposes of the bankruptcy court.  The code "610" stands for a remittance with a return but it may also stand for a return filed by the IRS.  Code 460 stands for an extension of time for filing and code 480 shows that an offer in compromise is pending.  A code 481 shows the offer in compromise was rejected and a code 482 shows that it was withdrawn.  A code 582 shows that a tax lien was filed.  The Individual Master File or IMF is also known as the MFT-30 transcript. 

Important Bankruptcy Issue

      It is very important to note that even though a debt is non-dischargeable under the Bankruptcy Code, if it is listed as dischargeable in the bankruptcy and the creditor fails to file an action to determine dischargeability within the time allowed, the debt might be discharged anyway.   See In rePrice, 871 F.2d 97 (9th Cir. 1989).  The court stated at p. 98 "Thus, while certain debts are not dischargeable in bankruptcy, it is incumbent on the creditor to institute an action to have the debt declared exempt from the bankruptcy proceedings, provided that he has notice or actual knowledge that the debtor is in bankruptcy.  If the creditor fails to act, the debt is discharged.