Taxing times for 16th Amendment rebels.

reason online.com ^ | 4 2004 | Brian Doherty

[freepatriot32]

The jury sent back a question to the judge asking to see the codes that directly stated Simkanin was required to withhold. (Some of the defendant’s ideas clearly had gotten through.) The judge told them simply to trust him when he said the law required Simkanin to withhold -- essentially directing the verdict,

this fascist judge needs to not only be impeached today he need s to go to prison himself

[WhiteGuy]

Schultz is a true American Patriot.

Bump for freedom to earn !

[ancient_geezer]

Most significantly, a tax honesty true believer named Vernice Kuglin, a vivacious and attractive Federal Express pilot who has a crowd of admirers following her everywhere during the conference, was slammed with criminal charges for failure to file and for tax evasion. She beat the rap in August, acquitted of all charges by a federal jury in Memphis.

LOL, and ordered to pay the tax, as they all are whether or not they win "criminal cases" the responsibility remains to pay the tax.

kuglin_transcript_030808_vol_5

19 MR. MURPHY: Just one thing, to put Ms. Kuglin

20 on notice, she has got to pay taxes, I think the court

21 ought to instruct her that that is the law. She has got

22 to file returns and -- 23 MR. BECRAFT: Your Honor, that is going to be

24 cleaned up totally.

25 THE COURT: Okay. Well, Mr. Murphy is not

777

1 incorrect that it is the law, and I think what he's also

2 saying is there will still be civil penalties.

3 MR. BECRAFT: I expect probably 90-day letters 4 to be coming pretty quick.

5 THE COURT: Okay.

6 MR. BECRAFT: And there's going to be civil

7 proceedings, and she is going to being take

8 responsibility -- she is going to be doing things to

9 respond to all of that like file returns, Your Honor.

10 THE COURT: Well, I'm just the judge here, I'm 11 not the IRS, so I think I'll leave that up to the other

12 folks. Anything -- I asked the government. Anything from

13 the defense?

14 MR. BECRAFT: Your Honor, I think on behalf of

15 all the lawyers, I would like to say that it has been a

16 pleasure to be in your court.

17 THE COURT: Well, thank you. We're going to

18 let everybody be excused.

[Republicus2001]

They will kill him. They always do.

[freepatriot32]

ping

[mvpel]

As usual, the reporter twists and turns and misrepresents the message to the point of incoherence.

They are not claiming that the income tax is "illegitimate," they are saying that it doesn't apply to most American citizens living and working within the 50 states.

[Poohbah]

They are not claiming that the income tax is "illegitimate," they are saying that it doesn't apply to most American citizens living and working within the 50 states.

And they're wrong.

[jonno]

bump

[mvpel]

So section 861 and its regulations doesn't actually apply to determining taxable income from sources within the United States, even though that's what it says it's for?

[Poohbah]

So section 861 and its regulations doesn't actually apply to determining taxable income from sources within the United States, even though that's what it says it's for?

It does apply to determining taxable income from sources within the United States...but it's for one very limited application. Namely, you must be a non-US citizen living outside the United States.

[talleyman]

this fascist judge needs to not only be impeached today he need s to go to prison himself

For upholding the law?

FINAL-REG, TAX-REGS, §601.401. Employment taxes §601.401. Employment taxes

(a) General

(1) Description of taxes. --Federal employment taxes are imposed by Subtitle C of the Internal Revenue Code. Chapter 21 (Federal Insurance Contributions Act) imposes a tax on employers of one or more individuals and also a tax on employees, with respect to "wages" paid and received. Chapter 22 (Railroad Retirement Tax Act) imposes (i) an employer tax and employee tax with respect to "compensation" paid and received,(ii) an employee representative tax with respect to "compensation" received, and (iii) a supplemental tax on employers, measured by man-hours for which "compensation" is paid. Chapter 23 (Federal Unemployment Tax Act) imposes a tax on employers of one or more individuals with respect to "wages" paid. Chapter 24 (collection of income tax at source on wages) requires every employer making payment of "wages" to deduct and withhold upon such wages the tax computed or determined as provided therein. The tax so deducted and withheld is allowed as a credit against the income tax liability of the employee receiving such wages.

IRC, 2004-CODE-VOL, SEC. 3402. INCOME TAX COLLECTED AT SOURCE.

3402(a) REQUIREMENT OF WITHHOLDING. --

3402(a)(1) IN GENERAL. --Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary. Any tables or procedures prescribed under this paragraph shall --

3402(a)(1)(A) apply with respect to the amount of wages paid during such periods as the Secretary may prescribe, and

3402(a)(1)(B) be in such form, and provide for such amounts to be deducted and withheld, as the Secretary determines to be most appropriate to carry out the purposes of this chapter and to reflect the provisions of chapter 1 applicable to such periods.

3402(a)(2) AMOUNT OF WAGES. --For purposes of applying tables or procedures prescribed under paragraph (1), the term "the amount of wages" means the amount by which the wages exceed the number of withholding exemptions claimed multiplied by the amount of one such exemption. The amount of each withholding exemption shall be equal to the amount of one personal exemption provided in section 151(b), prorated to the payroll period. The maximum number of withholding exemptions permitted shall be calculated in accordance with regulations prescribed by the Secretary under this section, taking into account any reduction in withholding to which an employee is entitled under this section.

[mvpel]

Poohbah - can you cite the provision of law or regulation that specifies that section 861 only applies to non-US citizens living outside the United States?

Thanks, I appreciate it!

[talleyman]

US-DIST-CT, [2003-1 USTC ¶50,236], U.S. District Court, Mid. Dist. Fla., United States of America, Plaintiff v. Everte Farnell, Defendant., Injunctions: Tax return preparer: Jurisdiction: Frivolous claims. --, (January 21, 2003)
United States of America, Plaintiff v. Everte Farnell, Defendant.

[EXCERPTS]

U.S. District Court, Mid. Dist. Fla.; 8:02-cv-1742-T-26TBM, January 21, 2003.


PRELIMINARY INJUNCTION


LAZZARA, District Judge: The Court makes the following findings of fact and conclusions of law, and enters this preliminary injunction...

Factual Findings

Both the plaintiff, the United States, and the defendant, Everte Farnell, have had the opportunity to submit evidence and be heard on the United States' preliminary-injunction motion. Based on the evidence, the Court finds as follows:

The US Sources Argument is indistinguishable from the Section 861 scheme, which has been rejected by courts in decisions dating back to 1993.

Everte Farnell promoted and continues to promote the US Sources Argument/Section 861 scheme, a frivolous and unrealistic position which posits that U.S. citizens' domestic income is not subject to the federal income tax. The Section 861 scheme, if employed on a return, requires the taxpayer using the scheme to list fraudulent and false information concerning the amount of income earned, and understates the taxpayer's liability.

Farnell knew or should have known that the Section 861 scheme is frivolous. Specifically: (1) the scheme is unrealistic and baseless on its face, (2) judicial decisions dating back to 1993 have universally rejected the scheme, (3) Farnell knew about several of these decisions, (4) the IRS has published documents describing the invalidity of the scheme, (5) Farnell had received at least one of these IRS publications, (6) IRS agents personally informed Farnell that the Section 861 scheme is frivolous, (7) another return-preparer personally informed Farnell that the Section 861 scheme is frivolous, and (8) Farnell knew that the IRS was investigating him for promoting abusive schemes and knew that the Department of Justice has filed an injunction suit against Thurston Bell, the NITE ringleader and the person with whom Farnell promoted the Section 861 and related schemes, to stop Bell from promoting the scheme.

Farnell is promoting the Section 861 scheme through the mail and in-person. He also promotes a related scheme known as "Third-Party Contracting" over the NITE website at www.nite.org., which purports to allow employees to legally take home all of their pay, tax-free, and which also purports to relieve employers of the requirement of paying federal employment taxes. Farnell further prepares income tax return for paying clients who then falsely claim that their income earned in the United States is non-taxable.

Farnell has repeatedly and willfully failed to list his social security number on federal income tax returns and amended returns he prepares for other taxpayers.

Farnell has repeatedly failed to maintain client lists or the returns of clients for whom Farnell has prepared federal income tax returns. He also failed to provide these records to the IRS when the IRS requested them.

Farnell has repeatedly, willfully and intentionally prepared federal income tax returns for clients stating that the clients' income is zero, and in the process has recklessly and intentionally disregarded IRS rules and regulations.

Farnell has interfered in the IRS's examinations of other taxpayers by attending meetings with the IRS and demanding that the IRS summon witnesses for his clients to cross-examine.

Absent this preliminary injunction, Farnell will continue to promote the Section 861 scheme, "Third-Party Contracting" arrangements, prepare false tax returns, and interfere in the IRS's examinations of other taxpayers using frivolous positions.

If this preliminary injunction is not granted, the United States will suffer irreparable harm. By refusing to list his social security number on returns he prepares for other taxpayers, and by signing in a cursive which is difficult to read, Farnell makes it virtually impossible for the IRS to catch all of the incoming, improper Farnell-prepared returns. Further, the Government will likely need to expend significant resources identifying, reviewing and examining returns and correspondence advocating the frivolous Section 861 scheme. Moreover, there is evidence that some erroneous refunds have already been paid to Farnell's clients. Identifying these persons and prosecuting erroneous refund claims will consume even more resources.

The Section 861 scheme and the related "Third-Party Contracting" arrangement are frivolous. Similarly frivolous are Farnell's claims that the IRS must summon witnesses for his clients to cross-examine in IRS administrative proceedings. The Government, therefore, will likely prevail on the merits.

This preliminary injunction is tailored to prevent Farnell from causing further injury to the United States and the public, and to prevent Farnell from further violating the law. Thus, the threatened injury to the United States outweighs any injury a preliminary injunction might cause.

The public is served by granting this preliminary injunction. If a preliminary injunction is granted, it will help to stem the spread of the frivolous Section 861 scheme and "Third-Party Contracting" arrangements. Farnell's clients will be protected from Farnell's fraudulent scheme and from the tax penalties and other adverse tax consequences resulting from participation in the frivolous schemes.

Conclusions of Law


After considering all evidence and argument submitted, the Court makes the following conclusions of law:

The "US Sources Argument" and the "Section 861 scheme" (which are indistinguishable from each other) are frivolous schemes. Proponents of these schemes, including Farnell, claim that domestically-earned income is exempt from taxation, based on an unrealistic and frivolous interpretation of IRC §§61 and 861- 865 and certain Treasury Regulations, including 26 C.F.R. §§1.861-8(f) and 1.861-8T(d)(2)(ii)(A). These Code sections and regulations do not exempt domestically-earned income from taxation.

The United States has presented the Court with persuasive evidence that Farnell has engaged in conduct subject to penalty under IRC §§6700 and 6701.

Absent this preliminary injunction, Farnell will continue to violate IRC §§6700 and 6701.

Therefore, a preliminary injunction is warranted under IRC §7408.

Farnell has repeatedly violated IRC §§6694(a) and (b), and 6695.

Absent this preliminary injunction, Farnell will continue to violate Sections 6694 and 6695.

Therefore, a preliminary injunction is also warranted under IRC §7407.

Farnell, in addition to the violations noted above, is impeding IRS examinations of other taxpayers by asserting frivolous positions about due process. The evidence therefore shows that a preliminary injunction is appropriate under IRC §7402. Specifically:

(a) The United States and the public will suffer irreparable harm in the absence of this preliminary injunction and that Farnell will suffer little, if any, harm if the preliminary injunction is granted.

(b) The Government has a high likelihood of success on the merits, and Farnell's position is unrealistic and frivolous.

(c) Further, the United States has presented credible evidence that the public interest will be served through granting this preliminary injunction.


ORDER

This Court finds that the United States has presented sufficient evidence to obtain a preliminary injunction, based on the factual findings listed above. Therefore, the Court ORDERS that the defendant, Everte Farnell, and his representatives, employees, agent and all other persons in active concert or participation with Farnell who receive actual notice of this Order are enjoined, until the Court orders otherwise, from:

engaging in activity subject to penalty under IRC §6700, including organizing and/or selling a plan or arrangement (including, without limitation, the U.S. Sources Argument and the Section 861 scheme) and making a statement regarding the excludability of income which constitutes commercial speech that they know or have reason to know is false or fraudulent as to any material matter;

engaging in activity subject to penalty under IRC §6701, including preparing and/or assisting in the preparation of a document related to a matter material to the internal revenue laws that includes a position (including, without limitation, the U.S. Sources Argument and the Section 861 scheme) that they know will result in the understatement of tax liability;

engaging in any other activity subject to penalty under IRC §§6700, or 6701;

engaging in conduct subject to penalty under IRC §§6694 and 6695;

interfering in the IRS's examinations of other taxpayers by taking frivolous positions, including but not limited to making arguments during tax examinations of other taxpayers based on the Section 861 scheme, demanding that the IRS summons witnesses in administrative proceedings, and requesting that clients be allowed to cross-examine witnesses in IRS audits.

engaging in other similar conduct that substantially interferes with the proper administration and enforcement of the internal revenue laws, including engaging in false, deceptive or misleading commercial speech, or engaging in other false speech which is directed to incite the imminent evasion or attempted evasion of federal taxes and is likely to produce such action.


Further, and in addition to the above prohibition against engaging in conduct subject to penalty under IRC §§6700 and 6701, the Court ORDERS that, within 30 days of the date of entry of this order, Farnell must mail (by United States Mail and, if an e-mail address is known, electronic mail) a copy of this order to: (1) every current and/or former for whom Farnell has performed any tax-related service or provided any tax-related advice; and (2) all persons to whom Farnell otherwise sold or distributed any tax-related products, documents, services, or advice.

The Court further ORDERS that Farnell must then, within 31 days of this Order, file with the Court a declaration, executed under penalty of perjury, stating that he has complied with the terms of this order in the immediately preceding paragraph of this Order.

The Court further ORDERS that within 31 days of the date of entry of this Order Farnell shall serve the United States with a list of physical and electronic mail addresses to which he sent a copy of this Order. Farnell shall file a certificate of service with the Court that same day evidencing his compliance with this paragraph of the Order.

The Court further ORDERS that Farnell is ENJOINED from preparing any federal income tax return for any other person (not including himself) until further order of the Court.

The Court further ORDERS that Farnell must, within 10 days of this Order, serve the United States with a list of all persons for whom Farnell has prepared federal income tax returns. Farnell shall file a certificate of service with the Court that same day evidencing his compliance with this paragraph of the Order.

Further, the Court ORDERS that Farnell and his representatives, employees, agents and all other persons in active concert or participation with Farnell who receive actual notice of this Order are enjoined from destroying, dissipating, or altering any documents, including electronic records, that relate in any way to this lawsuit and/or Farnell's clients.

DONE and ORDERED.

[mvpel]

Talleyman - a US District Court assertion that the 861 argument is baseless or frivolous is not a citation of law or regulation showing that §861 only applies to non-US citizens living outside the United States.

The regulations say "Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States" [in 26 CFR §1.861-8(a)(1)], and "The taxpayer's taxable income from sources within or without the United States will be determined under the rules of Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States." [in 26 CFR §1.863-1(c)]

I don't see anything about "non-US citizens living outside the United States" there, and I always thought that I was a "taxpayer" under the law, so I'd honestly appreciate it if someone could point me to the section of the US code or regulations that does say that.

Thanks in advance!

[Poohbah]

Try Treasury Regulation § 1.1- 1(b). It states pretty clearly who is and isn't liable for the income tax. Bottom line: if you are a US citizen, the law can and does impose taxes on your income, whether it is from sources within or without the United States.

[mvpel]

26 CFR § 1.1-1(a) imposes a tax on the "taxable income" of every individual - "The tax imposed is upon taxable income" - and that's meaningless unless you know how to determine what your "taxable income" is.

And as I mentioned above, the regulations say that "Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States" [in 26 CFR §1.861-8(a)(1)], and "The taxpayer's taxable income from sources within or without the United States will be determined under the rules of Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States." [in 26 CFR §1.863-1(c)]

Furhthermore, the tax code jargon for your "non-US citizens living outside the United States" phrase is "nonresident alien individuals," and 26 CFR § 1.1-1(b), to which you refer, says that for these people, you should "see sections 871 and 877," not §861 as you suggest.

I guess I still don't follow your reasoning - I apologize. Could you please refer me to where the law or regulations say that §861 only applies to the income of nonresident alien individuals? I'd really like to know.

[Poohbah]

26 CFR § 1.1-1(a) imposes a tax on the "taxable income" of every individual - "The tax imposed is upon taxable income" - and that's meaningless unless you know how to determine what your "taxable income" is.

Try US Code, Title 26, Subtitle A, Chapter 1, Subchapter B, Part I.

Furhthermore, the tax code jargon for your "non-US citizens living outside the United States" phrase is "nonresident alien individuals," and 26 CFR § 1.1-1(b), to which you refer, says that for these people, you should "see sections 871 and 877," not §861 as you suggest.

As I've already noted in my previous post.

I guess I still don't follow your reasoning - I apologize. Could you please refer me to where the law or regulations say that §861 only applies to the income of nonresident alien individuals? I'd really like to know.

As I've already pointed out, I've acknowledged my error re: §861. However, §861 covers specific issues that do not arise unless you have income that is taxable in multiple countries.

[mvpel]

Try US Code, Title 26, Subtitle A, Chapter 1, Subchapter B, Part I.

Okay, so here's that cite:

Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

So we have here a list of items of income. But what is a "source" of income? Don't we need to know that in order to determine what "gross income" means? 26 USC 5841 says that the Treasury department "shall maintain a central registry of [u]all firearms[/u] which are not in the possession or under the control of the United States" (emphasis added), but the meaning of "all firearms" is limited elsewhere in the law to include landmines and poison gas, but exclude your Grandpa's .22.

The index of the US Code has the following reference:

Income tax
Sources of income
Determination, 26 § 861 et seq...
Within the U.S., 26 § 861

This would seem to be relevant to an effort to determine what a "source" of income is, with respect to 26 USC 61.

However, §861 covers specific issues that do not arise unless you have income that is taxable in multiple countries.

Can you tell me where in the law or regulations it indicates that this is the case, and limits the definition of "taxpayer" that is used in that section? I'd really like to know.

[21st Century Man]

It's whatever the Fed says it is, and you can bet the house on that!

;-)

[Robert_Paulson2]

The reason common folks develop real questions when they actually have to LOOK at what the tax code says, is because it defies all reason.

It is corrupt from the get go.
And those that defend it, live from it, interpret it and enforce it are corrupted by it's underlying immorality...
the process of redistribution of wealth...

getting a bunch of folks together, who are elected, and twisting their arms into passing laws, and rules to take advantage of working folks may be LEGAL, but it is still WRONG.

This is why there is such feverish work going on in Congress, to try and come up with a new, different taxation structure, be it a retail sales tax, a flat tax, a fair tax a value added tax...

every body knows what we have NOW, has some serious moral implications about how we take, what we take and whom we take it from, vs. where we distribute what we have collected at gunpoint from the unwilling.

Some folks say "it's the law", granted.
But sometimes the "law" is wrong.

Tax laws need to be sunset.
We need a new system.

We aren't going to get it... but it still does not change the need for a new system...