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Title: Westminster man told to stop running tax scheme
Source: Baltimore Sun
URL Source: http://www.baltimoresun.com/news/lo ... story?coll=bal-local-headlines
Published: Dec 4, 2006
Author: AP
Post Date: 2006-12-04 18:32:27 by Starwind
Ping List: *unUsual Suspects*     Subscribe to *unUsual Suspects*
Keywords: Kotmair, Save-A-Patriot Fellowship
Views: 3044
Comments: 200

A Westminster man has been barred by a federal judge from running a scheme in which he promised to help members avoid paying federal taxes, the U.S. Department of Justice announced today.

The "Save-A-Patriot Fellowship" run by John Baptist Kotmair Jr. falsely advised that clients didn't have to pay taxes and could legally withdraw from the Social Security system, U.S. District Judge William Nickerson said in his ruling. Despite legal action by the U.S. Justice Department, Kotmair's organization continued to file frivolous protest letters with the Internal Revenue Service on behalf of more than 800 clients and showed "no inclination ... to cease their activities," Nickerson noted.

Nickerson's order, issued last week, permanently bars Kotmair and his organization from representing or assisting anyone in corresponding with the IRS, or preparing court filings relating to income taxes. Kotmair and his organization must also notify all individuals involved in the scheme of the injunction and provide the Justice Department with the names of the customers, their e-mail addresses and telephone and Social Security numbers.

The injunction also must be posted prominently on the organization's Web sites for a year, and fraudulent promotional materials must be removed from the sites.

Poster Comment:

Kotmair's defense and taxation arguments were inane to put it charitably. His website (where he's to post the injunction) is at http://save-a-patriot.org/

Stupid tax-protestors and their schemes just muddy the water for legitimate tax-protest arguments. Kotmair, Schiff, Schultz, Rose all will become boilerplate examples of tax schemes which will be used unfairly to broad-brush and defeat otherwise legitimate arguments, rasing the cost and complexity to properly take on the IRS.

I cite Joe Banister as an example of how to do it right, intelligently, and the above tax schemes just make it difficult if not impossible for people like Banister to prevail honestly on the merits. Subscribe to *unUsual Suspects*

Post Comment   Private Reply   Ignore Thread  

Begin Trace Mode for Comment # 143.

#2. To: Starwind (#0) (Edited)

Stupid tax-protestors and their schemes

Many of these "stupid tax protestors" are correct in their assertions. They have researched extensively and know the law. That matters not to the government. They can't let this information become known, let them win, and, of course, are going to make examples of them to scare anyone who may be considering not filing. In the courtroom, the judge's totally ignore the law and, worse, insure that the jury never knows it either. Their job is to protect the corrupt system. See Aaron Russo's Freedom To Fascism to see it in practice. Joe Banister and several other former IRS Agents and many in the Tax Honesty Movement are featured in the film.

christine  posted on  2006-12-04   18:53:17 ET  Reply   Untrace   Trace   Private Reply  

Many of these "stupid tax protestors" are correct in their assertions. They have researched extensively and know the law.

The ones I've listed do not. They haven't a clue. They think they do, but they seemingly can not (or will not) read what the law or code says, or understand court procedures, or how tax accounting is done and how accountants are limited and what lawful means are available to reduce tax liabilities. The "stuff" posted on most tax-protestor websites is some of the most assinine "legal" tripe I've read in years.

That matters not to the government. They can't let this information become known, let them win, and, of course, are going to make examples of them to scare anyone who may be considering not filing. In the courtroom, the judge's totally ignore the law.

Judges can be forced to address the law, but defendants have *no* leverage if their own arguments are incorrect or unsubstantiated on the law. Yes, the system is unfair and the government will indeed pull every trick possible. Yes, the government is trying to supress much of the so-called "information" proclaimed by tax-protestors, but not because the government is afraid of it, no. The government is trying to supress it because most of it is just plain wrong and many naive people are being hurt by it as well as tax revenues potentially taking a big hit if some of these illegal schemes were adopted en- mass, and the resulting prosecutions would further clog up the courts, to no good outcome.

There is a reason most tax-protestors represent themselves. They don't listen to their lawyers or accountants and end up postitioning themselves behind a legal eightball which has no legitimate defense, and most competent lawyers won't touch the tax-protestors "arguments" with a ten-foot pole.

It is said don't go into a gunfight armed with a pocket knife. The mistakes happen long before that. If all one understands is pocket knives, one would do well to listen to the advice of professional gunfighters.

Starwind  posted on  2006-12-04   19:10:01 ET  Reply   Untrace   Trace   Private Reply  

the IRS code is not the law.

watch Freedom To Fascism. it addresses everything i said above much better. listen in particular to the testimony of the several former IRS agents and the one female juror of the case featured in the film. btw, you wanna see stupid? look at the former IRS commissioner, whose name escapes me at the moment, Russo interviews.

christine  posted on  2006-12-04   19:21:38 ET  Reply   Untrace   Trace   Private Reply  

the IRS code is not the law.

Laws as passed by Congress are published as Statutes at Large.

The phrasing used by Congress is codified and becomes part of the United States Code. At this stage, it is a positive law as specifically contained in the Statutes at Large. It is Non-Positive law as it is contained in the United States Code. What is in the United States Code should be an accurate reflection of the positive law contained in the Statutes at Large. If there is any variance between the two, the text in the Statutes at Large is the controlling language.

The codified version of the law includes all amendments and revisions. Sometimes Congress acts to adopt the codified version and make it the positive law.

While Title 26 of the United States Code is "non-positive law," that designation does not effect the "legality" of the provision except that any variance with the text appearing in the Statutes at Large would be controlling.

The Internal Revenue Code of 1954 was passed by both houses of Congress as House Resolution 8300, and was signed by President Eisenhower on August 16, 1954, at about 9:45 a.m., becoming Public Law 83-591. The Internal Revenue Code is now known as the "Internal Revenue Code of 1986" as a result of changes made by Public Law 99-514.

The imposition of the Income Tax appears at Title 26, United States Code, Section 1.

Link

--------------------------------------------------------------------------------

United States Code
TITLE 26 - INTERNAL REVENUE CODE
SUBTITLE A - INCOME TAXES
CHAPTER 1 - NORMAL TAXES AND SURTAXES
SUBCHAPTER A - DETERMINATION OF TAX LIABILITY
PART I - TAX ON INDIVIDUALS

--------------------------------------------------------------------------------

U.S. Code as of: 01/22/02
Section 1. Tax imposed

(a) Married individuals filing joint returns and surviving spouses

There is hereby imposed on the taxable income of -

(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and

(2) every surviving spouse (as defined in section 2(a)), a tax determined in accordance with the following table:

[snip]

The legislative history of this income tax law is provided below:

Link

Section 1 - Notes

SOURCE

(Aug. 16, 1954, ch. 736, 68A Stat. 5; Pub. L. 88-272, title I, Sec. 111, Feb. 26, 1964, 78 Stat. 19; Pub. L. 89-809, title I, Sec. 103(a)(2), Nov. 13, 1966, 80 Stat. 1550; Pub. L. 91-172, title VIII, Sec. 803(a), Dec. 30, 1969, 83 Stat. 678; Pub. L. 95-30, title I, Sec. 101(a), May 23, 1977, 91 Stat. 127; Pub. L. 95-600, title I, Sec. 101(a), Nov. 6, 1978, 92 Stat. 2767; Pub. L. 97-34, title I, Secs. 101(a), 104(a), Aug. 13, 1981, 95 Stat. 176, 188; Pub. L. 97-448, title I, Sec. 101(a)(3), Jan. 12, 1983, 96 Stat. 2366; Pub. L. 99-514, title I, Sec. 101(a), title III, Sec. 302(a), title XIV, Sec. 1411(a), Oct. 22, 1986, 100 Stat. 2096, 2218, 2714; Pub. L. 100-647, title I, Secs. 1001(a)(3), 1014(e)(1)-(3), (6), (7), title VI, Sec. 6006(a), Nov. 10, 1988, 102 Stat. 3349, 3561, 3562, 3686; Pub. L. 101-239, title VII, Secs. 7811(j)(1), 7816(b), 7831(a), Dec. 19, 1989, 103 Stat. 2411, 2420, 2425; Pub. L. 101-508, title XI, Secs. 11101(a)-(c), (d)(1)(A), (2), 11103(c), 11104(b), Nov. 5, 1990, 104 Stat. 1388-403 to 1388-406, 1388-408; Pub. L. 103-66, title XIII, Secs. 13201(a), (b)(3)(A), (B), 13202(a), 13206(d)(2), Aug. 10, 1993, 107 Stat. 457, 459, 461, 467; Pub. L. 104-188, title I, Sec. 1704(m)(1), (2), Aug. 20, 1996, 110 Stat. 1882, 1883; Pub. L. 105-34, title III, Sec. 311(a), Aug. 5, 1997, 111 Stat. 831; Pub. L. 105-206, title V, Sec. 5001(a)(1)-(4), title VI, Secs. 6005(d)(1), 6007(f)(1), July 22, 1998, 112 Stat. 787, 788, 800, 810; Pub. L. 105-277, div. J, title IV, Sec. 4002(i)(1), (3), Oct. 21, 1998, 112 Stat. 2681-907, 2681-908; Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(b)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-604; Pub. L. 107-16, title I, Sec. 101(a), (c)(1), (2), title III, Secs. 301(c)(1), 302(a), (b), June 7, 2001, 115 Stat. 41, 43, 54; Pub. L. 108-27, title I, Secs. 102(a), (b)(1), 104(a), (b), 105(a), title III, Secs. 301(a)(1), (2)(A), (b)(1), 302(a), (e)(1), May 28, 2003, 117 Stat. 754, 755, 758, 760, 763.)

AMENDMENT OF SECTION

For termination of amendment by sections 107 and 303 of Pub. L. 108-27, see Effective and Termination Dates of 2003 Amendment note below.

For termination of amendment by section 901 of Pub. L. 107-16, see Effective and Termination Dates of 2001 Amendment note below.

REFERENCES IN TEXT

The enactment of this clause, referred to in subsec. (h)(13)(A)(iii), means the date of enactment of Pub. L. 105-206, which was approved July 22, 1998.

AMENDMENTS

2003 - Subsec. (f)(8)(A). Pub. L. 108-27, Secs. 102(b)(1), 107, temporarily substituted "2002" for "2004". See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (f)(8)(B). Pub. L. 108-27, Secs. 102(a), 107, temporarily inserted table item relating to years 2003 and 2004. See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(1)(B). Pub. L. 108-27, Secs. 301(a)(1), 303, temporarily substituted "5 percent (0 percent in the case of taxable years beginning after 2007)" for "10 percent". See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(1)(C). Pub. L. 108-27, Secs. 301(a)(2)(A), 303, temporarily substituted "15 percent" for "20 percent". See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(2). Pub. L. 108-27, Secs. 301(b)(1)(A), (B), 303, temporarily redesignated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows:

"(A) Reduction in 10-percent rate. - In the case of any taxable year beginning after December 31, 2000, the rate under paragraph (1)(B) shall be 8 percent with respect to so much of the amount to which the 10-percent rate would otherwise apply as does not exceed qualified 5-year gain, and 10 percent with respect to the remainder of such amount.

"(B) Reduction in 20-percent rate. - The rate under paragraph (1)(C) shall be 18 percent with respect to so much of the amount to which the 20-percent rate would otherwise apply as does not exceed the lesser of -

"(i) the excess of qualified 5-year gain over the amount of such gain taken into account under subparagraph (A) of this paragraph; or

"(ii) the amount of qualified 5-year gain (determined by taking into account only property the holding period for which begins after December 31, 2000),

and 20 percent with respect to the remainder of such amount. For purposes of determining under the preceding sentence whether the holding period of property begins after December 31, 2000, the holding period of property acquired pursuant to the exercise of an option (or other right or obligation to acquire property) shall include the period such option (or other right or obligation) was held." See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(3). Pub. L. 108-27, Secs. 302(e)(1), 303, temporarily amended heading and text of par. (3) generally. Prior to amendment, text read as follows: "For purposes of this subsection, the term 'adjusted net capital gain' means net capital gain reduced (but not below zero) by the sum of -

"(A) unrecaptured section 1250 gain; and

"(B) 28-percent rate gain." See Effective and Termination Dates of 2003 Amendment note below.

Pub. L. 108-27, Secs. 301(b)(1)(B), 303, temporarily redesignated par. (4) as (3). Former par. (3) temporarily redesignated (2). See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(4) to (7). Pub. L. 108-27, Secs. 301(b)(1)(B), 303, temporarily redesignated pars. (5) to (8) as (4) to (7), respectively. Former par. (4) temporarily redesignated (3). See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(8). Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (10) as (8). Former par. (8) temporarily redesignated (7). See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(9). Pub. L. 108-27, Secs. 301(b)(1)(A), (C), 303, temporarily redesignated par. (11) as (9) and struck out heading and text of former par. (9). Text read as follows: "For purposes of this subsection, the term 'qualified 5-year gain' means the aggregate long-term capital gain from property held for more than 5 years. The determination under the preceding sentence shall be made without regard to collectibles gain, gain described in paragraph (7)(A)(i), and section 1202 gain." See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(10). Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (12) as (10). Former par. (10) temporarily redesignated (8). See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(11). Pub. L. 108-27, Secs. 302(a), 303, temporarily added par. (11). See Effective and Termination Dates of 2003 Amendment note below.

Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (11) as (9). See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (h)(12). Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (12) as (10). See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (i)(1)(B)(i). Pub. L. 108-27, Secs. 104(a), 107, temporarily substituted "($12,000 in the case of taxable years beginning after December 31, 2004, and before January 1, 2008)" for "($12,000 in the case of taxable years beginning before January 1, 2008)". See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (i)(1)(C). Pub. L. 108-27, Secs. 104(b), 107, temporarily amended heading and text of subpar. (C) generally. Text read as follows: "In prescribing the tables under subsection (f) which apply with respect to taxable years beginning in calendar years after 2000 -

"(i) the Secretary shall make no adjustment to the initial bracket amount for any taxable year beginning before January 1, 2009,

"(ii) the cost-of-living adjustment used in making adjustments to the initial bracket amount for any taxable year beginning after December 31, 2008, shall be determined under subsection (f)(3) by substituting '2007' for '1992' in subparagraph (B) thereof, and

"(iii) such adjustment shall not apply to the amount referred to in subparagraph (B)(iii).

If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50." See Effective and Termination Dates of 2003 Amendment note below.

Subsec. (i)(2). Pub. L. 108-27, Secs. 105(a), 107, temporarily amended table generally. Prior to amendment, table read as follows:

DEFINITIONS

Pub. L. 105-277, div. J, title IV, Sec. 4001(a), Oct. 21, 1998, 112 Stat. 2681-906, provided that: "For purposes of this title [amending this section, sections 51, 56, 67, 68, 86, 135, 137, 163, 172, 219, 221, 264, 351, 368, 408A, 469, 873, 954, 2001, 2031, 6015, 6103, 6159, 6311, 6404, 6693, 7421, 7443A, 7491, 9503, and 9510 of this title, and sections 401 and 407 of Title 42, The Public Health and Welfare, enacting provisions set out as notes under this section, sections 51, 67, 68, 86, 172, 833, 6103, and 9503 of this title, and section 401 of Title 42, and amending provisions set out as notes under sections 6601 and 7508A of this title] -

"(1) 1986 code. - The term '1986 Code' means the Internal Revenue Code of 1986.

"(2) 1998 act. - The term '1998 Act' means the Internal Revenue Service Restructuring and Reform Act of 1998 (Public Law 105-206) [see Tables for classification].

"(3) 1997 act. - The term '1997 Act' means the Taxpayer Relief Act of 1997 (Public Law 105-34) [see Tables for classification]."

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 3, 15, 23, 24, 25A, 32, 41, 42, 55, 59, 63, 68, 132, 135, 137, 146, 162, 163, 179, 213, 219, 220, 221, 223, 301, 306, 453A, 460, 468B, 511, 512, 513, 584, 641, 646, 685, 691, 702, 774, 854, 857, 871, 876, 877, 891, 904, 911, 936, 962, 1022, 1260, 1291, 1301, 1398, 1446, 2032A, 2503, 2631, 3402, 3406, 4001, 4261, 6014, 6015, 6039F, 6103, 6242, 6323, 6334, 6428, 6601, 6652, 6655, 6867, 7430, 7518, 7519 of this title; title 7 section 940d; title 46 App. section 1177.

Public Law 108-27 of 2003 is linked and quoted in part below:

Link [PDF]

Link [TEXT]

[DOCID: f:publ027.108]

[[Page 751]]

JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003

[[Page 117 STAT. 752]]

Public Law 108-27

108th Congress

An Act

To provide for reconciliation pursuant to section 201 of the concurrent resolution on the budget for fiscal year 2004. <>

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, <>

SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

(a) Short Title.--This <> Act may be cited as the ``Jobs and Growth Tax Relief Reconciliation Act of 2003''.

(b) Amendment of 1986 Code.--Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

[snip]

SEC. 102. ACCELERATION OF 15-PERCENT INDIVIDUAL INCOME TAX RATE BRACKET EXPANSION FOR MARRIED TAXPAYERS FILING JOINT RETURNS.

(a) In General.--The table contained in subparagraph (B) of section 1(f )(8) (relating to applicable percentage) <> is amended by inserting before the item relating to 2005 the following new item:

"2003 and 2004............................. 200''.

(b) Conforming Amendments.--

(1) Section 1(f)(8)(A) is amended by striking ``2004'' and inserting ``2002''.

(2) Section 302(c) of the Economic Growth and Tax Relief Reconciliation Act of 2001 <> is amended by striking ``2004'' and inserting ``2002''.

(c) Effective Date.--The <> amendments made by this section shall apply to taxable years beginning after December 31, 2002.

As reflected in the United States Code, 26 USC 1, subparagraph (B) of section 1(f)(8):

http://caselaw.lp.findlaw.com/scripts/ts_search.pl?title=26&sec=1

(B) Applicable percentage

For purposes of subparagraph (A), the applicable percentage shall be determined in accordance with the following table:
For taxable years beginning..... The applicable
in calendar year - ............. percentage is -
2003 and 2004 .................. 200
2005 ........................... 180
2006 ........................... 187
2007 ........................... 193
2008 and thereafter ............ 200.

The codified version is non-positive law. However, this does not mean that the provision is not positive law. Public Law 108-27 of 2003 IS positive law. All of the other listed Public Laws from which the codified version is derived are equally POSITIVE LAW.

The codified law is a more readable version of the text passed by Congress, with amendments incorporated into the text rather than existing as separate documents. The only time the content of the U.S. Code is not reflective of positive law is when it fails to accurately reflect the text authorized by the original positive law published in the Statutes at Large.

The Tax Law and the Amendments thereto were passed by Congress and enacted as positive law.

The courts have said this:

"Indeed, as we have repeatedly held, the entire Internal Revenue Code was validly enacted by Congress and is fully enforceable." United States v. McDonald, 919 F.2d 146 (10th Cir. 1990); [United States v.] Studley, 783 F.2d [934] at 940 [9th Cir. 1986].

"Congress's failure to enact a title into positive law has only evidentiary significance and does not render the underlying enactment invalid or unenforceable. See 1 U.S.C. § 204(a) (1982), (the text of titles not enacted into positive law is only prima facie evidence of the law itself). Like it or not, the Internal Revenue Code is the law, and the defendants did not violate Ryan's rights by enforcing it." Ryan v. Bilby, 764 F2d 1325, 1328 (9th Cir. 1985).

"The petitioner's argument that the Internal Revenue Code was not enacted by Congress is equally meritless. The Internal Revenue Code of 1954 was enacted by the 83rd Congress on August 16, 1954 (ch. 736, 68A Stat. 3) and has been amended by Congress with some frequency since that time." Urban v. Commissioner, T.C. Memo. 1991-220, affd. per curiam, 964 F.2d 888 (9th Cir. 1992).

The claim that "Title 26 was not enacted into 'positive law,' has been rejected as 'frivolous,' 'baseless,' 'specious,' and 'preposterous.' See United States v. Hooper, No. 93-35565, 1995 WL 792039, at *1 (9th Cir. Dec. 11, 1995) ('frivolous'); United States v. Zuger, 602 F.Supp. 889, 891-92 (D.C.Conn.1984), aff'd, 755 F.2d 915 (2d Cir.) (table), 'specious'); accord, Young v. Internal Revenue Service, 596 F.Supp. 141, 149 (N.D.Ind.1984) ('preposterous'); Sloan v. United States, 621 F.Supp. 1072, 1076 (N.D.Ind.1985), aff'd in part and appeal dismissed, 812 F.2d 1410 (7th Cir.1987) (table) (litigants advancing 'frivolous' arguments such as assertions that the Internal Revenue Code is not positive law subjected to sanctions under Rule 11, FED. R. CIV. P.); Hackett v. Commissioner of Internal Revenue, No. 85-1558, 1986 WL 16862, at *1 (6th Cir. April 21, 1986) (appeal of dismissal of petition challenging tax deficiency assessment describing 'positive law' argument as 'frivolous')." United States v. Maczka, 957 F.Supp. 988, 991 (W.D.Mich. 1996).

"In his opposition, Plaintiff asserts that 'Title 26 U.S.C. (including section 6321) has not been enacted into positive law, and is not the law, but is only prima facie evidence of the law.' ... Congress' failure to enact a title into positive law has only evidentiary significance and does not render the underlying enactment invalid or unenforceable. See 1 U.S.C. section 204(a). 'Like it or not, the Internal Revenue Code is the law'. Ryan v. Bilby, 764 F.2d 1325, 1328 (9th Cir. 1985); see also United States v. Zuger, 602 F.Supp. 889, 891-92 (D. Conn. 1984)

('holding that the failure of Congress to enact a title as such and in such form into positive law . . . in no way impugns the validity, effect, enforceability, or constitutionality of the laws as contained and set forth in the title'), aff'd. without op., 755 F.2d 915 (2d Cir.), cert. denied, 474 U.S. 805 (1985); Young v. IRS, 596 F.Supp. 141, 149 (N.D.Ind. 1984) (asserting that 'even if Title 26 was not itself enacted into positive law, that does not mean that the laws under the title are null and void'). Plaintiff's positive law argument is without merit." Bilger v. United States, 87 AFTR2d Par. 2001-468, No. CIV F 00-6486 OWW JLO (U.S.D.C. E.D.Ca. 1/9/2001).

nolu_chan  posted on  2006-12-05   5:22:23 ET  Reply   Untrace   Trace   Private Reply  

The claim that "Title 26 was not enacted into 'positive law,' has been rejected as 'frivolous,' 'baseless,' 'specious,' and 'preposterous.'

Clearly, the claim that Title 26 has not been enacted into "positive law" is true. The claim is, therefore, neither frivolous, baseless, specious or preposterous. Whoever composed the annotations should be more accurate in summations.

Neil McIver  posted on  2006-12-05   13:09:19 ET  Reply   Untrace   Trace   Private Reply  

Clearly, the claim that Title 26 has not been enacted into "positive law" is true. The claim is, therefore, neither frivolous, baseless, specious or preposterous. Whoever composed the annotations should be more accurate in summations.

(litigants advancing 'frivolous' arguments such as assertions that the Internal Revenue Code is not positive law subjected to sanctions under Rule 11, FED. R. CIV. P.); Hackett v. Commissioner of Internal Revenue, No. 85-1558, 1986 WL 16862, at *1 (6th Cir. April 21, 1986) (appeal of dismissal of petition challenging tax deficiency assessment describing 'positive law' argument as 'frivolous')." United States v. Maczka, 957 F.Supp. 988, 991 (W.D.Mich. 1996).

Unless the litigant provides a showing that the United States Code is inaccurate in its presentation of the underlying positive law, assertions that the U.S. Code is not positive law are rightfully considered a frivolous waste of the court's time.

http://caselaw.lp.findlaw.com/scripts/ts_search.pl?title=1&sec=204

United States Code
TITLE 1 - GENERAL PROVISIONS
CHAPTER 3 - CODE OF LAWS OF UNITED STATES AND SUPPLEMENTS; DISTRICT OF COLUMBIA CODE AND SUPPLEMENTS

U.S. Code as of: 01/3/05

Section 204. Codes and Supplements as evidence of the laws of United States and District of Columbia; citation of Codes and Supplements

In all courts, tribunals, and public offices of the United States, at home or abroad, of the District of Columbia, and of each State, Territory, or insular possession of the United States -

(a) United States Code. - The matter set forth in the edition of the Code of Laws of the United States current at any time shall, together with the then current supplement, if any, establish prima facie the laws of the United States, general and permanent in their nature, in force on the day preceding the commencement of the session following the last session the legislation of which is included: Provided, however, That whenever titles of such Code shall have been enacted into positive law the text thereof shall be legal evidence of the laws therein contained, in all the courts of the United States, the several States, and the Territories and insular possessions of the United States.

(b) District of Columbia Code. - The matter set forth in the edition of the Code of the District of Columbia current at any time shall, together with the then current supplement, if any, establish prima facie the laws, general and permanent in their nature, relating to or in force in the District of Columbia on the day preceding the commencement of the session following the last session the legislation of which is included, except such laws as are of application in the District of Columbia by reason of being laws of the United States general and permanent in their nature.

(c) District of Columbia Code; citation. - The Code of the District of Columbia may be cited as "D.C. Code".

(d) Supplements to Codes; citation. - Supplements to the Code of Laws of the United States and to the Code of the District of Columbia may be cited, respectively, as "U.S.C., Sup. ", and "D.C. Code, Sup. ", the blank in each case being filled with Roman figures denoting the number of the supplement.

(e) New edition of Codes; citation. - New editions of each of such codes may be cited, respectively, as "U.S.C., ed.", and "D.C. Code, ed.", the blank in each case being filled with figures denoting the last year the legislation of which is included in whole or in part.

nolu_chan  posted on  2006-12-05   14:03:02 ET  Reply   Untrace   Trace   Private Reply  

Good posts, nolu_chan.

Neil, I alluded somewhere up thread that the purpose of courts was to adjudicate disputes at law between two or more parties.

Aside from constitutional issues, the courts are generally not the place to argue what the law ought to be. They are generally the place to argue whether the law "as-is" was in fact followed or not.

If one does not like the law as-is, one needs to work through congress and elections, constitutional conventions to get the law changed so as to read and mean what one might like it to be. In which case you and Kotmair, et.al. would be appreciative (I assume) that the same court procedures that today weigh the evidence against the law as-is would in the future weigh that evidence against the new law as-is and not as-was or as-might-be.

The point being, ignoring what the law actually is, or imagining one can waltz into court and argue the position that the established law isn't really established, had better be armed to the teeth with substantive filings and proof, to show major errors in how the law was written or enacted, and not mere wishful reinterpretations based on cherry-picking from Black's Law Dictionary and ignoring caselaw, court procedures, regulations and law.

nolu_chan's posts demonstrate the legislative and case history of the tax code and the basis on which courts have previously, ad-nauseum, weighed arguments against the law as-is and found repeatedly that it has the weight of law, and tax-protestors ought simply to get over it and move on to more productive avenues of change.

Kotmair's strategic error was to dismiss that the law as written wasn't applicable to him or his fellowhsip. His tactical error was to go into court ill prepared to argue his strategy.

By ignoring or arguing that somehow Title 26 isn't really law, or to think that courts will continue to entertain such arguments, is to repeat Kotmair's mistakes.

The point of establishing law (what the congress and executive do) is to make known rules by which we all live, whether we agree or not. If we disagree, take it up with the congress. If we don't abide by established law, then expect the courts to narrowly focus on what the law is and what the evidence is compared to the law.

The courts will not (forever) entertain arguments that the law isn't really what the law is, and they will quickly move on to trying the evidence and granting summary judgement.

Starwind  posted on  2006-12-05   14:56:54 ET  Reply   Untrace   Trace   Private Reply  

This page gives a pretty good historical summary of federal taxation.

http://civil-liberties.com/pages/taxationtale.htm

For authoritative law on the subject, the US Constitution is the supreme law of the land and provides for all taxes to be either direct or indirect, each of which comes with its own requirements and restrictions. Case "law" or case "history" as I choose to call it, under the Supreme Court cases of Brushaber vs Union Pacific RR and Stanton vs Baltic Mining, provided that the 16th amendment did not confer upon congress any new power of taxation, but merely qualified the answer to the question of the nature of the income tax as falling into the indirect category. It is not an exception to the direct tax that can be imposed without apportionment, it's instead an indirect tax, an excise to be precise. These cases have never been overturned, but are indeed ignored by today's lower courts.

If you do decide to watch FtF, you'll see an interview with former IRS Comissioner Rosotti who is asked about these SC decisions. I don't recall his exact words, but he says that they simply don't apply anymore, and it's not because they've been overturned because they haven't. It is that particular attitude which the tax-honesty movement encounters both within the courts and in the mainstream. We've all been brought up, myself included, believing that income taxation, as commonly applied, is necessary and essential to preserving freedom and our countries infrastructure, but most of us have never challenged that notion. I no longer believe either to be the case.

nolu_chan's posts demonstrate the legislative and case history of the tax code and the basis on which courts have previously, ad-nauseum, weighed arguments against the law as-is, and found repeatedly that it has the weight of law and tax-protestors ought simply to get over it and move on to more productive avenues of change.

If you are suggesting that we should just forget about the Constitutional provisions re: taxes and the current SC rulings in the Brushaber & Stanton decisions and pretend they don't exist because that is what the lower courts do, then on a pragmatic level, you may be right. But it is not SAPF or Kotmair that is ignoring these precedents. It is the lower courts. If there is a mistake being made by SAPF/Kotmair, it is the notion that meaning of the Constitution cannot change without an amendment, or at the very least, an SC ruling on what it means. And that's a mistake I would stand with him in making.

Neil McIver  posted on  2006-12-05   16:08:39 ET  Reply   Untrace   Trace   Private Reply  

This page gives a pretty good historical summary of federal taxation.

http://civil-liberties.com/pages/taxationtale.htm

From the cited/linked A Fairy Tale of Taxation

1895: In Pollock vs Farmers’ Loan & Trust Co, the Supreme Court rules that general income taxes are unconstitutional because they are unapportioned direct taxes. To this day, the ruling has not been over-turned.

Pollack was nullified by the Sixteenth Amendment to the Constitution.

The matter went back and forth until it was resolved by the Sixteenth Amendment.

Amendment XVI

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

From American Constitutional Law, Third Edition, Volume One, by Laurence H. Tribe, at page 843:

Article I, § 9, also states that "[n]o Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census." Article I, § 2, provides that "direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Num­bers." A direct tax is one imposed upon property as such, rather than on the performance of an act. Because of the impractical apportionment requirement attaching to direct taxes, the fate of federal income taxation in the nineteenth century turned on the content the Supreme Court gave to the distinction between direct and indirect taxes. In Springer v. United States, the Court held a Civil War income tax to be an indirect excise tax. But in Pollock v. Farmers' Loan & Trust Co., a majority of the Justices ruled that, insofar as the source of income is property, an income tax is a direct tax, and is therefore invalid unless apportioned. By 1911, however, the Supreme Court had again reversed direction, holding in Flint v. Stone Tracy Co. that a tax on corporations measured by income was not a direct tax but an excise tax on the privilege of doing business in the corporate form. The confusion was put to an end in 1913 with the ratification of the Sixteenth Amendment, which pro­vides: "Congress shall have power to lay and to collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

[boldface added, footnotes deleted]

From A Practical Companion to the Constitution, by Jethro K. Lieberman, at page 55:

APPORTIONMENT OF TAXES.

* * *

Very early on, the Supreme Court indicated that it would read the clause narrowly. In 1796 the Court sustained a tax on carriages without regard to the census or apportionment, holding that such a tax is an "excise" or "duty," not a direct tax. [1115] But nearly a century later the Supreme Court, against the weight of its precedents, declared that a federal tax on income derived from real estate and personal property was a direct tax, and that the Income Tax Act of 1894 was unconstitutional because it did not apportion. [1887] That decision was overruled by the adoption of the SIXTEENTH AMENDMENT, which expressly permits Contress to tax incomes without apportionment. Since then the Court has not struck down any federal tax as violating the apportionment clause and has upheld several taxes against such a challenge, including the federal estate tax [1687] and the federal gift tax. [284]

[FOOTNOTES abbreviated to show case citation only]

[1115] Hylton v. U.S., 3 U.S. (3 Dall.) 171 (1796)

[1887] Pollack v. Farmer's Loan & Trust Co., 157 U.S. 429 (1895), 158 U.S. 601 (rehearing) (1895).

[1687] New York Trust Co. v. Eisner, 256 U.S. 345 (1921)

[284] Bromley v. McCaughn, 280 U.S. 27 (1928)

From Constitutional Law, Principles and Policies, Second Edition, by Erwin Chemerinsky, at page 270-1:

Direct and Indirect Taxes

Article I, §2, of the Constitution states that "direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers." Article I, §9, provides that "[n]o Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census." In its initial cases considering these provisions, the Court narrowly defined what is a direct tax and thus accorded Congress broad authority to impose various kinds of taxes. Under the earlier cases, direct taxes seemed limited to taxes on real property; therefore, all other taxes could be imposed by Congress without concern about apportion­ment among the states. For example, in Hylton v. United States, in 1796, the Court held that a federal tax on carriages was indirect and therefore did not need to be apportioned among the states. [12]

In Veazie Bank v. Fenno, in 1869, the Court upheld the constitutionality of a federal tax on state bank notes. [13] The Court concluded that this was an indirect tax and declared that "direct taxes have been limited to taxes on land and appur­tenances, and taxes on polls, or capitation taxes." [14] The Court repeated this view in Springer v. United States, where the Court upheld the constitutionality of the Civil War Income Tax. [15]

However, in Pollock v. Farmer's Loan & Trust Co., the Court, by a 5 to 4 margin, declared unconstitutional the federal income tax. [16] The Court explained that be­cause the income tax collected revenue gained from property, among other sources, it was a direct tax and had to be apportioned among the states. In 1913, eighteen years after Pollock, the Sixteenth Amendment was ratified to overturn that decision and to allow a federal income tax. The Sixteenth Amendment pro­vides: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

The Court eventually abandoned the distinction between direct and indirect taxes. [17] In Flint v. Stone Tracy Co., the Court upheld the Corporation Excise Tax of 1909, which imposed a tax on corporations doing business in states or territories. [18] Similarly, the Court upheld taxes such as those on estates [19] and gifts. [20] The constitutional provisions quoted above, requiring apportionment of direct taxes, seem limited, at most, to taxes on real property. In other words, unless Congress were to create a national property tax, all other taxes are very lokely to be deemed indirect and threfore are constitutional even without apportionment among the states.

[12] 3 U.S. (3Dall.) 171 (1796).

[13] 75 U.S. (8 Wall.) 533 (1869).

[14] Id. at 544.

[15] 102 U.S. (12 Otto) 586, 602 (1880).

[16] 157 U.S. 429 (1895).

[17] But see Eisner v. Macomber, 252 U.S. 189 (1920) (stock dividents are not income prior to their sale or conversion and therefore are not taxable without apportionment).

[18] 220 U.S. 107 (1911)

[19] Bank & Trust Co. of New York v. Eisner, 256 U.S. 345 (1921)

[20] Bromley v. McCaughn, 280 U.S. 124 (1929)

From Constitutional Law, Fourth Edition, by John E. Nowak and Ronald D. Rotunda, at page 188-9:

The sixteenth amendment, which permits imposition of a federal income tax without apportionment among the states, was necessitated by the five to four decision in Pollack v. Farmer's Loan & Trust Co. [2] Forty-two years later, with its decision in New York ex rel. Cohn v. Graves, [3] the Court in effect overruled Pollack and in so doing rendered the sixteenth amendment redundant.

[2] 157 U.S. 429, 15 S.Ct. 673, 39 L.Ed. 759 (initial decision), 158 U.S. 601, 15 S.Ct. 192, 39 L.Ed. 1108 (decision on rehearing) (1895)(t5ax upon income from real and personal property held invalid in the absence of apportionment.)

[3] 300 U.S. 308, 57 C.Ct. 466, 81 L.Ed. 666 (1937) (sustaining New York income tax on income derived by New York resident from New Jersey real estate).

From Constitutional Law, National Power and Federalism, Second Edition, by Christopher N. May and Allan Ides, at page 29:

First, the people may register their disagreement with the Court by amending the Constitution. While this is a difficult feat to accomplish, it has occurred four times in our history. The Eleventh Amendment overturned Chisholm v. Georgia, 2 U.S. (2 Dall.) 419 (1793), which had allowed a state to be sued in federal court without its consent. The Fourteenth Amendment reversed Dred Scott v. Sandford, 60 U.S. (19 How.) 393 (1857) and its holding that former slaves and their descendants could not be citizens of the United States. The Sixteenth Amendment overturned Pollock v. Farmers' Loan & Trust Co., 157 U.S. 601 (1895), which had barred the federal government from collecting an income tax that was not apportioned among the states. And the Twenty-Sixth Amendment rejected Oregon v. Mitchell, 400 U.S. 112 (1970), which had held that states could deny persons 18 to 21 years old the right to vote in state elections.

From Pollack (rehearing) at 635:

We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such.

From the cited/linked A Fairy Tale of Taxation

January 24, 1916: In Brushaber vs. Union Pacific Railroad, the Supreme Court ruled: that the 16th Amendment doesn’t over-rule the Court’s ruling in the Pollock case which declared general income taxes unconstitutional; The 16th Amendment applies only to gains and profits from commercial and investment activities: The 16th Amendment only applies to excises taxes; The 16th Amendment did not Amend the U.S. Constitution; The 16th Amendment only clarified the federal governments existing authority to create excise taxes without apportionment.

January 24, 1916: In Brushaber vs. Union Pacific Railroad, the Supreme Court ruled: that the 16th Amendment doesn’t over-rule the Court’s ruling in the Pollock case which declared general income taxes unconstitutional;

Pollack did NOT declare general income taxes unconstitutional. Explicitly, Pollack did not even consider anything but tax on income derived from real estate and from invested personal property and explicitly said it did not comment on income from gains or profits from business, privileges, or employments.

From Pollack (rehearing) at 635:

We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such.

The 16th Amendment applies only to gains and profits from commercial and investment activities: The 16th Amendment only applies to excises taxes;

[Sixteenth Amendment] The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

The Sixteenth Amendment explicitly authorizes taxes, without apportionment, upon incomes from whatever source derived.

The 16th Amendment did not Amend the U.S. Constitution; The 16th Amendment only clarified the federal governments existing authority to create excise taxes without apportionment.

This author seriously (?) purports that an Amendment to the Constitution did not amend the Constitution. Froot Loops.

From the cited/linked A Fairy Tale of Taxation

1913: With the ratification of the 16th Amendment, Congress creates the federal internal income tax

Brushaber states that the 16th Amendment returned the income tax to an "indirect tax."

http://laws.findlaw.com/us/240/1.html

BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)

[T]he contention that the Amendment treats a tax on income as a direct tax although it is relieved from apportionment and is necessarily therefore not subject to the rule of uniformity as such rule only applies to taxes which are not direct, thus destroying the two great classifications which have been recognized and enforced from the beginning, is also wholly without foundation since the command of the Amendment that all income taxes shall not be subject to apportionment by a consideration of the sources from which the taxed income may be derived forbids the application to such taxes of the rule applied in the Pollock Case by which alone such taxes were removed from the great class of excises, duties, and imposts subject to the rule of uniformity, and were placed under the other or direct class. This must be unless it can be said that although the Constitution, as a result of the Amendment, in express terms excludes the criterion of source of income, that criterion yet remains for the purpose of destroying the classifications of the Constitution by taking an excise out of the class to which it belongs and transferring it to a class in which it cannot be placed consistently with the requirements of the Constitution. Indeed, from another point of view, the Amendment demonstrates that no such purpose was intended, and on the contrary shows that it was drawn with the object of maintaining the limitations of the Constitution and harmonizing their operation. We say this because it is to be observed that although from the date of the Hylton Case, because of statements made in the opinions in that case, it had come to be accepted that direct taxes in the constitutional sense were confined to taxes levied directly on real estate because of its ownership, the Amendment contains nothing repudiation or challenging the ruling in the Pollock Case that the word 'direct' had a broader significance, since it embraced also taxes levied directly on personal property because of its ownership, and therefore the Amendment at least impliedly makes such wider significance a part of the Constitution, - a condition which clearly demonstrates that the purpose was not to change the existing interpretation except to the extent necessary to accomplish the result intended; that is, the prevention of the resort to the sources from which a taxed income was derived in order to cause a direct tax on the income to be a direct tax on the source itself, and thereby to take an income tax out of the class of excises, duties, and imposts, and place it in the class of direct taxes.

Stanton states that the 16th Amendment returned the income tax to an "indirect tax" where it inherently belonged.

http://laws.findlaw.com/us/240/103.html

STANTON v. BALTIC MINING CO, 240 U.S. 103 (1916)

The contention is that as the tax here imposed is not on the net product, but in a sense somewhat equivalent to a tax on the gross product of the working of the mine by the corporation, therefore the tax is not within the purview of the 16th Amendment, and consequently it must be treated as a direct tax on property because of its ownership, and as such void for want of apportionment. But, aside from the obvious error of the proposition, intrinsically considered, it manifestly disregards the fact that by the previous ruling it was settled that the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment by a consideration of the sources from which the income was derived,-that is, by testing the tax not by what it was, a tax on income, but by a mistaken theory deduced from the origin or source of the income taxed.

nolu_chan  posted on  2006-12-06   7:04:46 ET  Reply   Untrace   Trace   Private Reply  

Pollack was nullified by the Sixteenth Amendment to the Constitution.

I've looked through your cites but found no evidence to support this claim.

From American Constitutional Law, Third Edition, Volume One, by Laurence H. Tribe, at page 843:

In response, there was indeed confusion as to whether the income tax should be considered a direct or indirect tax. The Pollack and Flint cases were in regard to two separate taxes and they came to separate conclusions. There is no dispute here that the 16th amendment clarified that a tax on income was an indirect tax, but that does not mean that the Pollack case was overturned. Independent, non-judicial authors merely claiming such does not carry legal weight and certainly are not up to the standard of SC precedent.

From A Practical Companion to the Constitution, by Jethro K. Lieberman, at page 55:

[...] That decision was overruled by the adoption of the SIXTEENTH AMENDMENT, which expressly permits Contress to tax incomes without apportionment.

The author gave no evidence or support for this claim.

Since then the Court has not struck down any federal tax as violating the apportionment clause and has upheld several taxes against such a challenge, including the federal estate tax [1687] and the federal gift tax. [284]

That's perfectly understandable, as the income tax is indirect required to follow the rule of uniformity, and not direct, requiring apportionment. The 16th amendment would have blocked any such challenges.

From Constitutional Law, Principles and Policies, Second Edition, by Erwin Chemerinsky, at page 270-1:

[...] In 1913, eighteen years after Pollock, the Sixteenth Amendment was ratified to overturn that decision and to allow a federal income tax.

This is bunk as, again, there's no support for the claim that the 16th overturned Pollack.

The Court eventually abandoned the distinction between direct and indirect taxes.

This is serious bunk. The Constitution has never lost that distinction, and there's no SC case that supports the claim.

In other words, unless Congress were to create a national property tax, all other taxes are very lokely to be deemed indirect and threfore are constitutional even without apportionment among the states.

Correct, but as an indirect tax, the tax is not upon money, which would be direct, but upon certain activities that might generate the income, as Flint makes clear: "In other words, the tax is imposed upon the doing of business of the character described, and the measure of the tax is to be income..." The money generated is merely the measure by which the tax is computed, and not the subject of the tax itself. The same applies today, such that any income generated outside of a taxable activity is not income taxable. (That is, within the states of the union).

From Constitutional Law, Fourth Edition, by John E. Nowak and Ronald D. Rotunda, at page 188-9:

The sixteenth amendment, which permits imposition of a federal income tax without apportionment among the states,

No, it does not. At least not in the conventional definition of the word "permits". The 16th qualifies the income tax as indirect, and as an indirect, shows that congress always had that power.

...was necessitated by the five to four decision in Pollack v. Farmer's Loan & Trust Co. [2] Forty-two years later, with its decision in New York ex rel. Cohn v. Graves, [3] the Court in effect overruled Pollack and in so doing rendered the sixteenth amendment redundant.

Here's a link to the Graves case: http://supreme.justia.com/u s/300/308/case.html

It had nothing to do with federal taxation. It addressed the question of whether NY could tax someone on income derived from property in NJ. Obviously federal constitutional restrictions on direct/indirect taxation do not apply to states, so the entire case is completely removed from the issue of federal taxation. I challenge you to read it and show me where it says Pollack was overturned.

From Constitutional Law, National Power and Federalism, Second Edition, by Christopher N. May and Allan Ides, at page 29:

The Sixteenth Amendment overturned Pollock v. Farmers' Loan & Trust Co., 157 U.S. 601 (1895), which had barred the federal government from collecting an income tax that was not apportioned among the states.

Bunk. The SC stated that congress always had the power to tax incomes based on the rule of uniformity. The 16th merely clarified that income taxes would always be considered indirect.

[From the tax tale site] January 24, 1916: In Brushaber vs. Union Pacific Railroad, the Supreme Court ruled: that the 16th Amendment doesn’t over-rule the Court’s ruling in the Pollock case which declared general income taxes unconstitutional;

Pollack did NOT declare general income taxes unconstitutional.

On this I'll agree, though it was considered unconstitutional insofar as it was construed as a direct tax without apportionment. I'll take this moment to say that I did not pen the site and do take certain exception to wordings. I offered it as a general summary on the history of income taxation.

The Sixteenth Amendment explicitly authorizes taxes, without apportionment, upon incomes from whatever source derived.

Not true. It does not authorize anything. Remember it does not confer any new powers of taxation, but merely confines the power to tax income, which it always had, to the indirect class.

The 16th Amendment did not Amend the U.S. Constitution; The 16th Amendment only clarified the federal governments existing authority to create excise taxes without apportionment.

I agree this is penned incorrectly. Yes it amended the Constitution. Of course it did. What it did not do is grant any new taxing power to congress.

In summary, I don't think any of your numerous citations support the claims that Pollack was overturned or that there is no longer any Constitutional distinction between direct and indirect taxes.

Care to try again?

Neil McIver  posted on  2006-12-06   9:11:55 ET  Reply   Untrace   Trace   Private Reply  

Pollack was nullified by the Sixteenth Amendment to the Constitution.

I've looked through your cites but found no evidence to support this claim.

POLLOCK v. FARMERS' LOAN & TRUST CO., 157 U.S. 429 (1895)

But the acceptance of the rule of apportionment was one of the compromises which made the adoption of the constitution possible, and secured the creation of that dual form of government, so elastic and so strong, which has thus far survived in unabated vigor. If, by calling a tax indirect when it is essentially direct, the rule of protection could be frittered away, one of the great landmarks defining the boundary between the nation and the states of which it is composed, would have disappeared, and with it one of the bulwarks of private rights and private property.

We are of opinion that the law in question, so far as it levies a tax on the rents or income of real estate, is in violation of the constitution, and is invalid.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Obviously, Pollock ruled that taxes on income from property (rents, real estate) was in reality an unapportioned direct tax and therefor unconstitutional, whereas the 16th amendment specifically removes taxes on income from any source from the apportionment requirement regardless of being construed direct, or indirect.

It is on that basis that the 16th amendment overruled Pollock.

Note further that Pollock was a narrow ruling to begin with and reinforced congress' authroity to levy taxes provided they were direct and apportioned or indirect and uniform. But the 16th amendment broadened that authority to remove the apportionment test on income from any source.

[...] That decision was overruled by the adoption of the SIXTEENTH AMENDMENT, which expressly permits Contress to tax incomes without apportionment.

The author gave no evidence or support for this claim.

It [16th Amendment] does not authorize anything. Remember it does not confer any new powers of taxation, but merely confines the power to tax income, which it always had, to the indirect class.

Oh please Neil, which part of "The Congress shall have power" ... " to tax incomes, from whatever source" ... "without apportionment ... census or enumeration" do you not get? That is precisely the tax-protestor mindset that keeps shooting itself (and the rest of us) in the foot.

By the way, I'm sure the preponderance of this kind of literature about the income tax is what plagues the current judicial mindset and goes a long way to explaining why lower court cases go the way they often do. Most have, of course been schooled with such literature.

Oh, I assure you the preponderance of established case law "plagues" the current judicial mindset, and absolutely do lower courts anticipate Appellate and Supreme reviews, as do lawyers and litigants. That is the way the system is supposed to work. The system is not supposed to just keep circling endlessly and repetitously re-arguing established facts anew everytime someone reasserts a discredited belief. It isn't an internet discussion forum.

Our mindsets are supposed to be "plagued" by what has been legislated, ajudicated, written down for all to read. Why, they even go so far as to teach that in law school and drive it home in internships. The hubris.

Would that such an understanding likewise "plague" the tax-protestor mindset, in futile hope they'd do their homework better and stop mucking it up for the rest of us.

Starwind  posted on  2006-12-06   13:18:07 ET  Reply   Untrace   Trace   Private Reply  

Obviously, Pollock ruled that taxes on income from property (rents, real estate) was in reality an unapportioned direct tax and therefor unconstitutional, whereas the 16th amendment specifically removes taxes on income from any source from the apportionment requirement regardless of being construed direct, or indirect.

That's not what the SC said it did. The SC said the 16th merely qualified the income tax as an indirect tax. They were quite plain about that.

But the 16th amendment broadened that authority to remove the apportionment test on income from any source.

It did not broaden any authority whatsoever, as it conferred no new powers of taxation. The SC declared that it merely ensured that income taxation was to always be considered an indirect tax and weighed as such with the rule of uniformity, and never to be weighed as a direct tax as a tax upon property requiring apportionment. Again, the SC was plain about this.

The author presumed his readership would in fact compare the language of the 16th amendment text against the opinion in Pollock (granted, a lot to presume these days). A review of Brushaber and Stanton rulings (already cited above) reinforces the caselaw viewpoint that the 16th amendment overruled Pollock.

One might well consider the 16th amendment in a vacume and make this observation. Indeed were I to do so I'd conclude the same thing. However, the 16th amendment is not the only Constitutional provision to discuss taxation, and therein lies the trap you fall into. The 16th *must* be taken in context with the rest of the Constitution which prescribes that direct taxes must be apportioned, and indirect must be uniform, and it's on that basis that the SC declared that the 16th clarified the income tax falling into the indirect class and did not confer any new taxation powers, did not create an exception to the direct tax requirement, and did not create a new 3rd tax classification beyond direct and indirect. I'm not making this up, Star. That's what they said.

Oh please Neil, which part of "The Congress shall have power" ... " to tax incomes, from whatever source" ... "without apportionment ... census or enumeration" do you not get?

I guess the same part the USSC didn't get in Brushaber & Flint. If you want to declare those decisions overturned or wrong, you are free to take that position.

Neil McIver  posted on  2006-12-06   15:48:44 ET  Reply   Untrace   Trace   Private Reply  

That's not what the SC said it did. The SC said the 16th merely qualified the income tax as an indirect tax. They were quite plain about that.

Ok, then, please cite the specific ruling wherein SCOTUS so states. I'd appreciate both the case, and a direct quote on which I can search.

It did not broaden any authority whatsoever, as it conferred no new powers of taxation. The SC declared that it merely ensured that income taxation was to always be considered an indirect tax and weighed as such with the rule of uniformity, and never to be weighed as a direct tax as a tax upon property requiring apportionment. Again, the SC was plain about this.

Again, please cite the specific ruling wherein SCOTUS so states. I'd appreciate both the case, and a direct quote on which I can search.

The 16th *must* be taken in context with the rest of the Constitution which prescribes that direct taxes must be apportioned, and indirect must be uniform, and it's on that basis that the SC declared that the 16th clarified the income tax falling into the indirect class and did not confer any new taxation powers, did not create an exception to the direct tax requirement, and did not create a new 3rd tax classification beyond direct and indirect. I'm not making this up, Star. That's what they said.

And again, if you would please cite the specific ruling wherein SCOTUS so states. I'd appreciate both the case, and a direct quote on which I can search.

Starwind  posted on  2006-12-06   17:19:16 ET  Reply   Untrace   Trace   Private Reply  

That's not what the SC said it did. The SC said the 16th merely qualified the income tax as an indirect tax. They were quite plain about that.

Ok, then, please cite the specific ruling wherein SCOTUS so states. I'd appreciate both the case, and a direct quote on which I can search.

I think all three of my statements are adequetly supported by the Brushaber and Stanton cases which Nolu already posted in #77 above which I'm copying here.

http://laws.findlaw.com/us/240/103.html

STANTON v. BALTIC MINING CO, 240 U.S. 103 (1916)

The contention is that as the tax here imposed is not on the net product, but in a sense somewhat equivalent to a tax on the gross product of the working of the mine by the corporation, therefore the tax is not within the purview of the 16th Amendment, and consequently it must be treated as a direct tax on property because of its ownership, and as such void for want of apportionment. But, aside from the obvious error of the proposition, intrinsically considered, it manifestly disregards the fact that by the previous ruling it was settled that the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment by a consideration of the sources from which the income was derived,-that is, by testing the tax not by what it was, a tax on income, but by a mistaken theory deduced from the origin or source of the income taxed.

And here's Brushaber, also copied for my own convenience sake from Nolu's #77

http://laws.findlaw.com/us/240/1.html

BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)

[T]he contention that the Amendment treats a tax on income as a direct tax although it is relieved from apportionment and is necessarily therefore not subject to the rule of uniformity as such rule only applies to taxes which are not direct, thus destroying the two great classifications which have been recognized and enforced from the beginning, is also wholly without foundation ...

Neil McIver  posted on  2006-12-06   19:28:47 ET  Reply   Untrace   Trace   Private Reply  

Ok, I'll try to step us thru this:

Your post #100 took exception with my post #85 and your followup post #107 cited Brushaber and Stanton as the SC rulings in support of your exception to my post#85, to wit:

Obviously, Pollock ruled that taxes on income from property (rents, real estate) was in reality an unapportioned direct tax and therefor unconstitutional, whereas the 16th amendment specifically removes taxes on income from any source from the apportionment requirement regardless of being construed direct, or indirect.

That's not what the SC said it did. The SC said the 16th merely qualified the income tax as an indirect tax. They were quite plain about that.

I think all three of my statements are adequetly supported by the Brushaber and Stanton cases

What I said was:

the 16th amendment specifically removes taxes on income from any source from the apportionment requirement regardless of being construed direct, or indirect.

I said the 16th amendment prevents income taxes from being subject to the apportionment requirement, regardless of being construed direct or indirect. I did not say or imply the 16th amendment moved income taxes from indirect to direct.

Moreover, your statement (underline mine):

16th merely qualified the income tax as an indirect tax.

is not entirely correct since obviously the purpose of the 16th Amendment as affirmed by both Brushaber and then Stanton was to prevent income taxes (whether sourced from direct ownership or from indirect events/usage) from being subject to the apportionment criteria The 16th Amendment did not merely "qualified the income tax as an indirect tax", it further changed income taxes from being subjected to the apportionment test regardless of their source.

Perhaps these are distinctions without a difference, but I don't see that my statement was in error, or that your stated exception to it was entirely correct.

You also excerpted the 2nd sentance from my paragraph, and then took exception to that excerpt:

Note further that Pollock was a narrow ruling to begin with and reinforced congress' authroity to levy taxes provided they were direct and apportioned or indirect and uniform. But the 16th amendment broadened that authority to remove the apportionment test on income from any source.

It did not broaden any authority whatsoever, as it conferred no new powers of taxation. The SC declared that it merely ensured that income taxation was to always be considered an indirect tax and weighed as such with the rule of uniformity, and never to be weighed as a direct tax as a tax upon property requiring apportionment. Again, the SC was plain about this.

Obviously the "authority" to which I referred and to which you excepted refers to the prior sentance wherein I alluded to congress' authority to levy taxes provided they were direct and apportioned or indirect and uniform. My second sentance then said that authority was broadened to remove the apportionment test on income from any source.

I will agree the 16th Amendment did not confer "new powers of taxation" as SCOTUS had by then already recognized (as per Brushaber):

That the authority conferred upon Congress by 8 of article 1 'to lay and collect taxes, duties, imposts and excises' is exhaustive and embraces every conceivable power of taxation has never been questioned, or, if it has, has been so often authoritatively declared as to render it necessary only to state the doctrine. And it has also never been questioned from the foundation, without stopping presently to determine under which of the separate headings the power was properly to be classed, that there was authority given, as the part was included in the whole, to lay and collect income taxes.

But the amendment clearly and indisputably broadened Congress' existing authority to remove the apportionment test on income from any source:

This is the text of the Amendment:

'The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.'

It is clear on the face of this text that it does not purport to confer power to levy income taxes in a generic sense,-an authority already possessed and never questioned, -or to limit and distinguish between one kind of income taxes and another, but that the whole purpose of the Amendment was to relieve all income taxes when imposed from apportionment from a consideration of the source whence the income was derived.

I didn't say the 16th Amendment gave congress new taxation authority, but only the authority to broaden income taxation by removing the apportionment test.

Much of this is the aftermath and debris of your arguing that the 16th Amendment did not overrule Pollock, which position you repeat in the following exchange:

[...] That decision was overruled by the adoption of the SIXTEENTH AMENDMENT, which expressly permits Contress to tax incomes without apportionment.

The author gave no evidence or support for this claim.

The author presumed his readership would in fact compare the language of the 16th amendment text against the opinion in Pollock (granted, a lot to presume these days). A review of Brushaber and Stanton rulings (already cited above) reinforces the caselaw viewpoint that the 16th amendment overruled Pollock.

It [16th Amendment] does not authorize anything. Remember it does not confer any new powers of taxation, but merely confines the power to tax income, which it always had, to the indirect class.

Oh please Neil, which part of "The Congress shall have power" ... " to tax incomes, from whatever source" ... "without apportionment ... census or enumeration" do you not get? That is precisely the tax- protestor mindset that keeps shooting itself (and the rest of us) in the foot.

In the above exchange you persist in arguing (your statements in italics) that somehow the author had to support or give evidence that the 16th Amendment expressly permits Congress to tax incomes without apportionment, which the language clearly does, and which SCOTUS affirmed in both Brushaber and Stanton.

You said the 16th Amendment does not authorize anything (it obviously does authorize levying income taxes without regard to source and without applying the apportionment test) and that the 16th Amendment merely confines the power to tax income, which it always had, to the indirect class flies in the face of your argument that Pollock was not overruled by the 16th! If Pollock were not overruled by the16th Amendment, income taxes would be unconstitutional unapportioned direct taxes.

Lastly, your 3rd exception (which you assert is supported by both Brushaber and Stanton) was:

The 16th *must* be taken in context with the rest of the Constitution which prescribes that direct taxes must be apportioned, and indirect must be uniform, and it's on that basis that the SC declared that the 16th clarified the income tax falling into the indirect class and did not confer any new taxation powers, did not create an exception to the direct tax requirement, and did not create a new 3rd tax classification beyond direct and indirect. I'm not making this up, Star. That's what they said.

You can't argue this both ways. You can't argue Pollock was not overruled by the 16th and simultaneously argue the 16th merely confines the power to tax income, which it always had, to the indirect class.

One of these things is not the same.

Ergo, the 16th conferred no new tax powers, did not broaden any taxing authority, only classified the income tax as always to be a indirect tax, and did not create any new class of taxation. I believe this covers all the points I made that you wanted SC support for.

Well, that wasn't your entire argument. You seem to overlook the specifics of the language of the 16th Amendment, insofar as you invaribly decline to acknowledge that it removed the apportionment tests on income taxes regardless of their source and it doesn't specifically place income taxes into either direct or indirect classes. It is silent on the issue of in which class an income tax may be. And I've yet to see you acknowledge that Pollock was overruled by the16th Amendment.

Do you agree the 16th amendment removed the requirement to test income taxes, regardless of source, by apportionment?

Do you agree the 16th amendment overrulled Pollock?, If not, what provisions of Pollock are still in effect and as of what date?

Starwind  posted on  2006-12-06   22:19:43 ET  Reply   Untrace   Trace   Private Reply  

Thanks for composing this. I think part of our difference might be just implied assumptions about verbage used, but not all.

I said the 16th amendment prevents income taxes from being subject to the apportionment requirement, regardless of being construed direct or indirect. I did not say or imply the 16th amendment moved income taxes from indirect to direct.

I believe I understood your statement here correctly but disagree anyway. When you say "prevents income taxes from being subject to the apportionment requirement" I take issue because it implies that there are no requirements whatsoever. The rule of uniformity has requirements/restrictions of its own. So for me it's important to be clear that the income tax is an indirect tax. True, apportionment is not a needed factor in ensuring an income tax is constitutional, but that's because income taxes are not direct taxes.

It seems you've stated a belief that the 16th simply removed the apportionment requirement, but I don't think that's a correct statement. In qualifying the income tax as indirect, which the SC did, apportionment is no longer a consideration. Maybe this is semantics to you?

Moreover, your statement (underline mine):

16th merely qualified the income tax as an indirect tax.

is not entirely correct since obviously the purpose of the 16th Amendment as affirmed by both Brushaber and then Stanton was to prevent income taxes (whether sourced from direct ownership or from indirect events/usage) from being subject to the apportionment criteria The 16th Amendment did not merely "qualified the income tax as an indirect tax", it further changed income taxes from being subjected to the apportionment test regardless of their source.

Well, prior to the 16th, there was uncertainty whether the income tax was a direct or indirect tax. So when you say it "changed the income taxes from being sujected to the apportionment test", I think this is automatic with it being classed as indirect. But your implication, if I'm understanding you right, that it removed the apportionment requirement without replacing it with requirements that apply to all indirect taxes (i.e. uniformity) is in error. As an indirect tax, the income tax cannot be imposed on property as tax on property is characteristic of a direct tax.

You also excerpted the 2nd sentance from my paragraph, and then took exception to that excerpt:

Note further that Pollock was a narrow ruling to begin with and reinforced congress' authroity to levy taxes provided they were direct and apportioned or indirect and uniform. But the 16th amendment broadened that authority to remove the apportionment test on income from any source.

It did not broaden any authority whatsoever, as it conferred no new powers of taxation. The SC declared that it merely ensured that income taxation was to always be considered an indirect tax and weighed as such with the rule of uniformity, and never to be weighed as a direct tax as a tax upon property requiring apportionment. Again, the SC was plain about this.

Obviously the "authority" to which I referred and to which you excepted refers to the prior sentance wherein I alluded to congress' authority to levy taxes provided they were direct and apportioned or indirect and uniform. My second sentance then said that authority was broadened to remove the apportionment test on income from any source.

But what you're saying, or maybe strongly implying here, is that whereas before, the income tax as an unapportioned direct tax was unconstitutional, the 16th made the same thing constitutional. I believe that is wrong because the effect of the 16th was to force all income taxes to be construed as indirect taxes.

An analogy might be all foods falling into one of two classes of perishable and nonperishable, and all perishable food must be kept in the frig, and non-perishable must be kept in the pantry. And there might be confusion as to whether, say, a poundcake falls into the perishable or nonperishable class, and therefore, whether it should be kept in the frig or pantry (we can do a christmas analogy, right?). Along comes the 16th declaring that congress shall have the power to store pound cakes without refrigeration. The SC considers the amendment in light of the current kitchen rules (constitution) and finds that the effect of the 16th is that all poundcakes are always to be considered non-perishable, and therefore subject to all the food storage/handling rules applicable to nonperishable foods.

Carrying over your statement about income taxes no longer being subject to apportionment to this analogy would be a statement that pound cakes no longer need to be stored in the frig. But I take issue with that because as stated, it implies that pound cakes are both perishable and yet don't have to be stored/handled as a non-perishable food, which would make it a unique 3rd class of food. (Which as a holiday aside, many may argue about pound cakes). I mean, of course it doesn't go in the frig. In fact it's no longer permitted there since it's non-perishable. For me, the proper thing to say, in light of the Brushaber/Stanton decisions, is that pound cakes are non-perishable, and as such, are necessarily burdened with all the restrictions (and benefits) of nonperishable foods. With non-perishables, we no longer even talk about the frig. With the income tax, because of the 16th, we no longer talk about apportionment.

(Watch for my upcoming book: Your Christmas Season Guide to Income Taxes").

You obviously recognize indirect taxes as subject to the rule of uniformity as you've stated plainly. Do you recognize that income taxes are indirect?

But the amendment clearly and indisputably broadened Congress' existing authority to remove the apportionment test on income from any source:

'The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.'

It is clear on the face of this text that it does not purport to confer power to levy income taxes in a generic sense,-an authority already possessed and never questioned, -or to limit and distinguish between one kind of income taxes and another, but that the whole purpose of the Amendment was to relieve all income taxes when imposed from apportionment from a consideration of the source whence the income was derived.

I didn't say the 16th Amendment gave congress new taxation authority, but only the authority to broaden income taxation by removing the apportionment test.

Well, my understanding is that it acheived this end by being categorized as an indirect tax, not by simply removing the apportionment requirement, as that would have made no statement about whether the income tax is direct or indirect, and Staton in particular made clear that income taxes were indirect. And I think it should be recognized that "broadening authority" of a tax by removing a test would certainly be conferring additional taxing power, which the SC said the 16th did not do.

Much of this is the aftermath and debris of your arguing that the 16th Amendment did not overrule Pollock, which position you repeat ...

The author presumed his readership would in fact compare the language of the 16th amendment text against the opinion in Pollock (granted, a lot to presume these days). A review of Brushaber and Stanton rulings (already cited above) reinforces the caselaw viewpoint that the 16th amendment overruled Pollock.

I don't see how. Unless it overruled it in the sense that, whereas Pollock construed the tax before them as direct being imposed without apportionment and therefore unconstitutional, in light of the 16th the tax should have been considered as indirect and therefore constitutional. I don't have a problem with that, so long as it's not construed as overruling the notion that direct taxes must be apportioned. I believe they must have been then and still must be today. But it would have made a difference in 1895 how that tax was imposed and applied due to restrictions on indirect taxes.

In the above exchange you persist in arguing (your statements in italics) that somehow the author had to support or give evidence that the 16th Amendment expressly permits Congress to tax incomes without apportionment, which the language clearly does, and which SCOTUS affirmed in both Brushaber and Stanton.

I think the point of contention has been addressed above in this post. Let me know otherwise.

You said the 16th Amendment does not authorize anything (it obviously does authorize levying income taxes without regard to source and without applying the apportionment test) and that the 16th Amendment merely confines the power to tax income, which it always had, to the indirect class flies in the face of your argument that Pollock was not overruled by the 16th!

By "not authorize anything" I was echoing the SC ruling that it "conferred no new powers of taxation". I'm aware of what the plain reading of the 16th implies, but it's meaning cannot be taken in isolation apart from the taxing provisions in the Constitution. The Brushabor/Stanton decisions did this, resulting in the "conferred no new powers" finding.

If Pollock were not overruled by the16th Amendment, income taxes would be unconstitutional unapportioned direct taxes.

Okay, then my statement above may well be where we can find agreement. That is, that the 16th could be considered to overrule Pollock *insofar* as it (Pollock) held that income taxes were direct taxes, but not so far as direct taxes must be apportioned. The former overruled but the latter not. Do we agree on this?

Well, that wasn't your entire argument. You seem to overlook the specifics of the language of the 16th Amendment, insofar as you invaribly decline to acknowledge that it removed the apportionment tests on income taxes regardless of their source and it doesn't specifically place income taxes into either direct or indirect classes.

The apportionment issue is addressed above. That the 16th doesn't specifically, or I'll choose the word explicitly, ID income as either direct or indirect, I'll agree. I do believe it results in income taxes falling into the indirect class out of consideration of it's relation to the rest of the Constitution as per Brushaber.

Do you agree the 16th amendment removed the requirement to test income taxes, regardless of source, by apportionment?

As per above, I feel a yes/no answer would not do the question justice due to implications, but would choose yes if forced to, with reservations.

Do you agree the 16th amendment overrulled Pollock?, If not, what provisions of Pollock are still in effect and as of what date?

I think that's addressed above.

Neil McIver  posted on  2006-12-07   6:08:15 ET  Reply   Untrace   Trace   Private Reply  

Let me preface my remarks by stating for the record my revulsion at the malignant cancer the tax code has become and the way it (in subserviance to the government's indebtness and fiscal irresponsibility) has metastisized through the law and twisted the constitution beyond recognition by the framers. I don't like it. I don't agree with it. But to prevail against it, one must recognize its strengths as well as weaknesses. It is imperative to understand what the law is as written and enforced.

At this juncture, our key difference seems to be more than semantic.

You seem of the opinion that the 16th Amendment did not change the law, such that an income tax may not be an unapportioned direct tax, and you assert an income tax may only be an "unapportioned" indirect tax, and you somewhat grudingly acknowledge that is "regardless of source" but you rely on an argument from silence; that being that because the 16th Amendment did not specifically move income tax from the indirect class to the direct class, you conclude from that silence that the "without apportionment and "without regard to source" language (which is clearly present - i.e. not silent) can not likewise permit a "direct" income tax on the owner ship of property.

The 16th Amendment is in essence an "end-run" around the direct/indirect classifications. Such classes no longer matter for income taxing purposes because the "source" whence the income is derived no longer matters and specifically apportionment regarding said sources no longer matters, and the only remaining matters are uniformity and the meaning of "income".

EISNER v. MACOMBER , 252 U.S. 189 (1920)

The Sixteenth Amendment must be construed in connection with the taxing clauses of the original Constitution and the effect attributed to them before the amendment was adopted. In Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601, 15 Sup. Ct. 912, under the Act of August 27, 1894 (28 Stat. 509, 553, c. 349, 27), it was held that taxes upon rents and profits of real estate and upon returns from investments of personal property were in effect direct taxes upon the property from which such income arose, imposed by reason of ownership; and that Congress could not impose such taxes without apportioning them among the states according to population, as required by article 1, 2, cl. 3, and section 9, cl. 4, of the original Constitution.

Afterwards, and evidently in recognition of the limitation upon the taxing power of Congress thus determined, the Sixteenth Amendment was adopted, in words lucidly expressing the object to be accomplished:

'The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.'

As repeatedly held, this did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the states of taxes laid on income. Brushaber v. Union Pacific R. R. Co., 240 U.S. 1, 17-19, 36 Sup. Ct. 236, Ann. Cas. 1917B, 713, L. R. A. 1917D, 414; Stanton v. Baltic Mining Co., 240 U.S. 103, 112 et seq., 36 Sup. Ct. 278; Peck & Co. v. Lowe, 247 U.S. 165, 172, 173 S., 38 Sup. Ct. 432.

A proper regard for its genesis, as well as its very clear language, requires also that this amendment shall not be extended by loose construction, so as to repeal or modify, except as applied to income, those provisions of the Constitution that require an apportionment according to population for direct taxes upon property, real and personal. This limitation still has an appropriate and important function, and is not to be overridden by Congress or disregarded by the courts.

In order, therefore, that the clauses cited from article 1 of the Constitution may have proper force and effect, save only as modified by the amendment, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not 'income,' as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form. Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.

[snip]

After examining dictionaries in common use (Bouv. L. D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton's Independence v. Howbert, 231 U.S. 399, 415, 34 S. Sup. Ct. 136, 140 [58 L. Ed. 285]; Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185, 38 S. Sup. Ct. 467, 469 [62 L. Ed. 1054]), 'Income may be defined as the gain derived from capital, from labor, or from both combined,' provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case, 247 U.S. 183, 185, 38 S. Sup. Ct. 467, 469 (62 L. Ed. 1054).

Brief as it is, it indicates the characteristic and distinguishing attribute of income essential for a correct solution of the present controversy. The government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word 'gain,' which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. 'Derived-from- capital'; 'the gain- derived-from-capital,' etc. Here we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and coming in, being 'derived'- that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal- that is income derived from property. Nothing else answers the description.

The same fundamental conception is clearly set forth in the Sixteenth Amendment-'incomes, from whatever source derived'-the essential thought being expressed with a conciseness and lucidity entirely in harmony with the form and style of the Constitution.

Now, for the record, the Eisner opinion went on to rule that a stock dividend (receipt of additional paper stock shares as a distribution of capitalized profits, which is not the same as a cash dividend) was *not* taxable as income:

We are clear that not only does a stock dividend really take nothing from the property of the corporation and add nothing to that of the shareholder, but that the antecedent accumulation of profits evidenced thereby, while indicating that the shareholder is the richer because of an increase of his capital, at the same time shows he has not realized or received any income in the transaction.

[snip]

Yet, without selling, the shareholder, unless possessed of other resources, has not the wherewithal to pay an income tax upon the dividend stock. Nothing could more clearly show that to tax a stock dividend is to tax a capital increase, and not income, than this demonstration that in the nature of things it requires conversion of capital in order to pay the tax.

Throughout the argument of the government, in a variety of forms, runs the fundamental error already mentioned-a failure to appraise correctly the force of the term 'income' as used in the Sixteenth Amendment, or at least to give practical effect to it. Thus the government contends that the tax 'is levied on income derived from corporate earnings,' when in truth the stockholder has 'derived' nothing except paper certificates which, so far as they have any effect, deny him present participation in such earnings. It contends that the tax may be laid when earnings 'are received by the stockholder,' whereas he has received none; that the profits are 'distributed by means of a stock dividend,' although a stock dividend distributes no profits; that under the act of 1916 'the tax is on the stockholder's share in corporate earnings,' when in truth a stockholder has no such share, and receives none in a stock dividend; that 'the profits are segregated from his former capital, and he has a separate certificate representing his invested profits or gains,' whereas there has been no segregation of profits, nor has he any separate certificate representing a personal gain, since the certificates, new and old, are alike in what they represent-a capital interest in the entire concerns of the corporation.

The point of Eisner in our discussion is the definition of "income" without regard to source which includes a gain on property owned, property which except for the 16th Amendment would have otherwise been exempt from direct income taxation.

This is no trivial or semantic distinction. While "paper" gains such as stock dividends via stock-splits remain non-taxable (because though recognizable, absent a sale they are not realized) realized gains such as interest on bonds (property owned), rent (from property owned) are taxed as income without regard to their source (property owned is in the direct class) and without regard to apportionment.

Worse, the Alternative Minimum Tax has in some instances pre-empted the "recognized but unrealized" aspect of "paper" gains, and consequently income taxes on exercise of stock options (whereby one pays money to take possession of an otherwise unsold paper asset), and other tangible assets are now also taxed as income - all by the definition of income set forth in Eisner enabled by the 16th Amendment's removal of consideration of "source" from which income is derived.

Were it not for the 16th Amendment's overruling of Pollock, income or gain derived from ownership of property would not be taxable.

Starwind  posted on  2006-12-07   13:05:43 ET  Reply   Untrace   Trace   Private Reply  

Let me preface my remarks by stating for the record my revulsion at the malignant cancer the tax code has become and the way it (in subserviance to the government's indebtness and fiscal irresponsibility) has metastisized through the law and twisted the constitution beyond recognition by the framers. I don't like it. I don't agree with it.

I certainly have no love for any tax that is imposed upon labor. Those who compare it to slavery are correct as it creates a "You work for me or you will die" mandate, since one must work in order to live. A tax on the efforts expended by one in order to live is slavery, albeit not 100% slavery as the person from whom tax is extracted is permitted to retain some of his labor for his own benefit. But then again, even slaves in the ordinary sense were allowed to eat some of the food they grew too and spend time providing for their own clothing and shelter needs or if they had that provided to them, compensatet for that expense from whatever labor they did expend, so even they were not 100% slaves either. The difference between that slavery and the slavery that exists today under the income tax as usually applied is only a difference in percentage with the added consideration that today's slaves are allowed to decide what labor they will do.

You'll have no dispute from me that regardless of its history or how we got to where we are to today, the end result is complete disaster and something the framers, had they foreseen what would come, would have taken any steps to avoid. They may well have taken pride in seeing the USA grow to the size it has, but would nonetheless have completely disowned it for what it has become. If the intent of the law is the force of the law, then the intent of the Constitution, at least in its original form, has been completely misconstrued today.

But to prevail against it, one must recognize its strengths as well as weaknesses. It is imperative to understand what the law is as written and enforced.

This is true.

It may not be worth laboring this matter further. One problem with taxing income is defining the word "income" which neither the Constitution nor the tax code ever does.

The early 1900's were not good times. I theorize that was in part due to it being run by a generation that did not know the nature of the war between the states or understand the concept of state sovereignty. They embraced a lot of things they should not have embraced, like a central bank.

Neil McIver  posted on  2006-12-07   15:20:04 ET  Reply   Untrace   Trace   Private Reply  

One problem with taxing income is defining the word "income" which neither the Constitution nor the tax code ever does.

Just to be clear, it is defined. See EISNER v. MACOMBER , 252 U.S. 189 (1920) in my post #110 above, definition is underlined and in boldface, and see the consequent elaboration of income definitions in Title 26 in nolu_chan's post #95. And yes, Title 26 is law.

The IRS invariably attempts to expand the definitions, most recently attempting to include compensation for damage awards (05-5139 Murphy v IRS, wherein the government lost on appeal and is seeking a re-hearing and Murphy is objecting and SCOTUS has already denied cert to one other appellant based on Murphy) and these definitions do evolve, but make no mistake, they are defined.

It may not be worth laboring this matter further.

Seemingly not.

I will at some point post my thoughts on Banister, as requesed.

Starwind  posted on  2006-12-07   16:14:26 ET  Reply   Untrace   Trace   Private Reply  

Just to be clear, it is defined.

A couple SC decisions do define it, including Flint, I think it is, which defines income as gains, profits and so forth (but not including wages). Title 26 does define "Gross Income" in terms of "income", and "Taxable income" in terms of "Gross Income" but does not define the single word "income" alone. In my previous claim I said the Constitution nor the IRC defined income, which excludes SC decisions, and I'll stick to that. Whether a trade of labor for something of equal value constitutes gain is one point of contention as arguably there is no profit or gain when one makes an equal value trade.

I will at some point post my thoughts on Banister, as requesed.

Thank you. I would appreciate seeing that, as so far as I know, Banister's position largely overlaps that of SAPF. The first chapter of Banister's report, BTW, can be downloaded from his site, http://freedomabovefortune.com. He does solicit information in exchange for this download, but he says compliance is voluntary.

Neil McIver  posted on  2006-12-07   17:12:51 ET  Reply   Untrace   Trace   Private Reply  

A couple SC decisions do define it, including Flint, I think it is, which defines income as gains, profits and so forth (but not including wages). Title 26 does define "Gross Income" in terms of "income", and "Taxable income" in terms of "Gross Income" but does not define the single word "income" alone.

You are perhaps thinking of Glenshaw which affirms the Title 26 definitions:

COMMISSIONER v. GLENSHAW GLASS CO., 348 U.S. 426 (1955)

The sweeping scope of the controverted statute is readily apparent:

"SEC. 22. GROSS INCOME.

"(a) GENERAL DEFINITION. - `Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service . . . of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. . . ." (Emphasis added.)[Footnote 4]

This Court has frequently stated that this language was used by Congress to exert in this field "the full measure of its taxing power." Helvering v. Clifford, 309 U.S. 331, 334; Helvering v. Midland Mutual Life Ins. Co., 300 U.S. 216, 223; Douglas v. Willcuts, 296 U.S. 1, 9; Irwin v. Gavit, 268 U.S. 161, 166. Respondents contend that punitive damages, characterized as "windfalls" flowing from the culpable conduct of third parties, are not within the scope of the section. But Congress applied no limitations as to the source of taxable receipts, nor restrictive labels as to their nature. And the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted. Commissioner v. Jacobson, 336 U.S. 28, 49; Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87-91. Thus, the fortuitous gain accruing to a lessor by reason of the forfeiture of a lessee's improvements on the rented property was taxed in Helvering v. Bruun, 309 U.S. 461. Cf. Robertson v. United States, 343 U.S. 711; Rutkin v. United States, 343 U.S. 130; United States v. Kirby Lumber Co., 284 U.S. 1. Such decisions demonstrate that we cannot but ascribe content to the catchall provision of 22 (a), "gains or profits and income derived from any source whatever." The importance of that phrase has been too frequently recognized since its first appearance in the Revenue Act of 1913[Footnote 5] to say now that it adds nothing to the meaning of "gross income."

[snip]

It therefore cannot be said with certitude that Congress intended to carve an exception out of 22 (a)'s pervasive coverage. Nor does the 1954 Code's[Footnote 9] legislative history, with its reiteration of the proposition that statutory gross income is "all-inclusive,"[Footnote 10] give support to respondent's position. The definition of gross income has been simplified, but no effect upon its present broad scope was intended.[Footnote 11] Certainly punitive damages cannot reasonably be classified as gifts, cf. Commissioner v. Jacobson, 336 U.S. 28, 47-52, nor do they come under any other exemption provision in the Code. We would do violence to the plain meaning of the statute and restrict a clear legislative attempt to bring the taxing power to bear upon all receipts constitutionally taxable were we to say that the payments in question here are not gross income. See Helvering v. Midland Mutual Life Ins. Co., supra, at 223.

Whether a trade of labor for something of equal value constitutes gain is one point of contention as arguably there is no profit or gain when one makes an equal value trade.

I think your real issue is that the government, law, and courts have always held that human labor has no basis, i.e., its cost to the worker is presumed zero, and hence 100% of what the worker receives as income is not offset by any basis or cost to the worker of doing the work. If a basis were recognized for human capital, then that basis could be used to reduce the taxable portion of the wage - it wouldn't be 100% gain. The difference between the human capital basis and the wage paid would be the smaller taxable portion. But a basis in human capital is yet to be recognized, but the Murphy case I linked above may begin to open a crack in that position.

In my previous claim I said the Constitution nor the IRC defined income, which excludes SC decisions, and I'll stick to that.

Well, sincerely Neil, you can stick to that story but it won't change what you'll face in court. The Constitution, as meta-law, doesn't define common terms; it doesn't define "arms" or "assembly" or "press" or "freedom", or "religion", "imports", "exports", "duties"... etc. These are all terms with common law definitions. To expect or require the Constitution to define them is unrealisitic. And as mentioned and cited repeatedly above, the laws, rulings, and tax code do define income, gross income, etc.

You have the last word, I'm really trying to just let this go :)

Starwind  posted on  2006-12-07   18:47:01 ET  Reply   Untrace   Trace   Private Reply  

It sounds like the case you cite was only challenging whether punative awards were taxable without bringing to question the issue of the nature of the income tax as direct or indirect or with it's related limitations. Yes courts will only address points of contention before them. They will rarely make rulings in favor of one party or the other that were not raised by either, such as striking down a harsh sentence as violative of the 8th amendment that bars excessive penalties when the defense didn't even think to ask for it.

Brushaber/Stanton declare the income tax as indirect and as indirect it has limitations. If there are no limitations then why haven't those cases been overturned somewhere along the way? (That's a rhetorical question).

I think your real issue is that the government, law, and courts have always held that human labor has no basis, i.e., its cost to the worker is presumed zero, and hence 100% of what the worker receives as income is not offset by any basis or cost to the worker of doing the work.

Clearly the cost to provide labor is not zero. One expends calories to work which come from food we eat, and food comes at a price -- They didn't let me out of the supermarket without paying the last time I asked them. That doesn't even count the cost of cleaning work clothes and the cost of shelter within to rest in preparation for each day's work. Certainly if I were to build a robot that could do manual labor and started a business in sending it out to do work, It's recognized I would be able to deduct the full cost of maintenence needed to service the robot. Yet somehow the maintenence of natural persons that do the same thing are not deductable? No, labor clearly does not come at zero cost. No, I don't have a court case handy to back me up on that but it should instead be clear by the law of common sense.

But a basis in human capital is yet to be recognized, but the Murphy case I linked above may begin to open a crack in that position.

Any reprieve that can be obtained would be welcomed.

Well, sincerely Neil, you can stick to that story but it won't change what you'll face in court.

Certainly anyone taking on the IRS with positions I've outlined will have an uphill battle, but even these particular arguments aside, there are plenty more procedural issues which the routinely IRS fails to comply with in their procedures. Examples: Seizing one's bank account with a notice of lien instead of a lein: Failing to sign Substitute for Return for non-filers (All tax returns must be signed by someone to be executable, but IRS personel routinely execute unsigned SFR's in order to create an assessment) -- Accusing a non filer in criminal court of violating a penalty statute rather than the statute that requires him to file (one I did mention above); Failing to issue proper delegation of authority to IRS personel who summon persons to appear before them. Those off the top of my head, and I'm not even in to it as much as some are.

The things that take place in the courtroom are dubious as well. I think in Irwin Schiff's trial the jury asked the judge for a copy of the law which required him to file and the judge told them he wouldn't give it to them. For some reason they convicted him anyway. In the FtF DVD, a juror from another tax case describes the same thing happening, only they acquitted, and she described the judge as giving a rather livid reaction at the verdict. I've seen a copy of a pre-trial order denying defendants in a willfull failure to file tax case the ability to give any meaningful defense at all, including evidence related to the "willfulness" to commit a crime in not filing, which the SC has ruled must be present as one of the 3 necessary elements in sustaining a conviction.

That's why I say the courts today are pretty crooked.

I hear what you're staying, Star. You are basically echoing what pretty much any IRS/DOJ agent would say about income taxes, and doing so while lothing the income tax system. My take is this: If you are right and the 16th permitted congress to take a portion of any and every transaction ever made (given that every transaction at every level is income to at least one party, and since income doesn't have to be received in the form of money, argably every transaction is income to every party and if that sounds like I'm stretching things, consider what sales tax is) then this republic is already dead, and died for good in 1913. Because the power to tax is indeed, the power to destroy, and congress has it within it's legal means to destroy every person in the entire country.

You have the last word, I'm really trying to just let this go :)

I'm also trying to let it go and I was going to hold you to that but then ended up ranting too long. I'll let you have the mic as long as you promise not to post any more court case opinions or IRC references. How's that sound? ;^)

You are a tough guy, Star. Definitely gave me a run for my money. (No pun intended).

Neil McIver  posted on  2006-12-08   4:01:54 ET  Reply   Untrace   Trace   Private Reply  

Having reviewed again Banister's case, I'm less impressed than I was, but regardless he did set a better example than do most 'Tax Protesters'.

Banister's biggest "mistake" (not entirely his fault) seems his taking on Walter Thompson as a client. Thompson is a loose cannon and it was largely Thompson's actions that dragged Banister into the gunsights of the IRS. Yes, the IRS was undoubtedly disapproving of Banister's viewpoints all along, but it was Thompson's irresponsible acting on those viewpoints that was the genesis of Banister's lawsuits.

Here is my synopsis of the Banister/Thompson episode:

1993-99 Banister was IRS CID
1999 Feb - Banister resigns from IRS
2000 Jan 11 Thompson send copies of prepared '96 '97 '98 returns to Banister
2000 Feb - Mar Thompson/Banister file Thompson's "861" amended returns for '96, '97, '98
2000 April 30 Banister letter to IRS re Disallowance of Thompson '98 amended return
2000 May 25 Banister letter to IRS re Disallowance of Thompson '96 amended return
2000 May 25 Banister letter to IRS re Disallowance of Thompson '98 [sic] amended return
2000 July 21 "all hands" meeting Thompson notifies not withholding payroll taxes
2000 Aug 22-27 Banister/Thompson emails re 1997 disallowance
2000 Aug 27 Banister letter to IRS for due process hearing
2000 Sep 7 Thompson email to Banister re memo for "all hands" meeting
2000 Oct 11 "all hands" meeting Thompson says he'll not withhold, Banister presents his research about not withholding
2000 Sep-Dec Thompson fails to withhold payroll taxes
2001 Thompson fails to withhold payroll taxes
2002 Thompson fails to withhold payroll taxes
2003 Mar 19 IRS begins disbarrment of Banister
2003 Jul 21 Complaint to enjoin Thompson
2003 Sep 12 Thompson enjoined & sanctioned
2004 Aug 11 Thompson previously had violated injunction and orders after being jailed & released twice
2004 Nov 18 Indicted

Count 1 against Thompson & Banister - Conspiracy 2000 Jan 1 - 2003 Jan 15 (Thompson & Banister acquitted)
Count 2 against Thompson - Dec 31, 1996 false return, claimed refund $28,161 (Thompson convicted)
Count 3 against Thompson - DEC 31, 1997 false return claimed refund $39,711 (Thompson convicted)
Count 4 against Thompson - DEC 31, 1998 false return, $0 AGI & $0 due (Thompson convicted)
Count 5 against Banister - DEC 31, 1996 false Thompson return, $0 AGI & $0 due (Banister acquitted)
Count 6 against Banister - DEC 31, 1997 false Thompson return, $0 AGI & $0 due (Banister acquitted)
Count 7 against Banister - DEC 31, 1998 false Thompson return, $0 AGI & $0 due (Banister acquitted)
Count 8 against Thompson - 2000 Sep 30 taxes of $14,965.90 (Thompson convicted)
Count 9 against Thompson - 2000 DEC 31 taxes of $20,930.77 (Thompson convicted)
Count 10 against Thompson - 2001 Mar 31 taxes of $20,378.04 (Thompson convicted)
Count 11 against Thompson - 2001 Jun 30 taxes of $16,724.61 (Thompson convicted)
Count 12 against Thompson - 2001 Sep 30 taxes of $17,898.96 (Thompson convicted)
Count 13 against Thompson - 2001 DEC 31 taxes of $12,857.95 (Thompson convicted)
Count 14 against Thompson - 2002 Mar 31 taxes of $16,788.30 (Thompson convicted)
Count 15 against Thompson - 2002 Jun 30 taxes of $16,902.17 (Thompson convicted)
Count 16 against Thompson - 2002 Sep 30 taxes of $16,890.52 (Thompson convicted)
Count 17 against Thompson - 2002 DEC 31 taxes of $21, 883.06 (Thompson convicted)

2005 Jan Thompson convicted & sentenced to 6 years
2005 Jun 23 Banister acquitted

What Banister "did right" was his methodology of filing amended returns and seeking refunds based on his stated legal argument attached to those returns. Whether, in Banister/Thompson, the IRS could have been forced to prove the "861 argument" that was the basis for those returns was frivolous will never be known. Thompson shot themselves both in the foot, several times.

All could be litigated, maybe even won, depending on the quality of Banister's research and preparation, but when Thompson prematurely stopped withholding employees' taxes based on that as yet unproven "861 argument", that escalated everything. Then when Thompson failed to abide by injunctions and orders, that was the last straw for the IRS & government. The criminal indictment followed and Thompson was convicted because (absent a prevailing decision on the "861 argument") he demonstrably evaded taxation. Thompson's actions were ill-advised and pre-empted getting a well- prepared "861 argument" defense presented.

Banister, OTOH, was working through the legal procedures when Thompson's actions exhausted what little patience the courts have left on these matters. Banister, it seems, was properly filing amended returns based on his theories and working through the IRS processes anticipating (ultimately, I would presume) for Thompson to litigate against the IRS in District/Supreme court for refunds. Banister was following established procedure, albeit for claims the IRS and courts todate deem to be frivolous, but if one is to get a fair hearing, that is the route to take. Banister, it seems, represented himself as having 16th Amendment and "861" theories and offered his assistance and advice (and ultimately expert testimony) through the court proceedures which, given the IRS moves to disbar him, was about all he legally could do. Everything else was on Thompson (including following Banister's advice), but Thompson it seems had no grasp of how to prevail in court.

In hindsight, what Banister should have done, is carefully seek out a sophisticated, wealthy and receptive client, plan a legal strategy that forces the IRS/ government to rely on legal cites that can be impeached by legal cites/evidence derived from Banister's research, and then builld a "test case" that can get to the Supreme court, assuming the IRS doesn't back out or dodge the bullet. Admittedly, Banister is not in control of his clients, but I find it hard to believe he didn't recognize the problems brewing in Walter Thompson. I gather from testimony that Banister was being careful to distance himself from Thompson's actions when Thompson decided to stop withholding his employee's payroll taxes - failure to withhold is a major, major, major no-no.

Now while I agree with Banister's tactical approach to dealing with IRS procedures, I don't agree that on the merits he would likely have proven his argument and prevailed in getting the refunds.

Which brings me to my last criticism of Banister. That to date, he's not made his research "Investigating The Federal Income Tax - Preliminary Report" freely available. Though I would commend him for the cites he does provide (that is the right approach to persuading people to adopt his point of view), he does not go far enough in making all of it readily available for examination. His allegations all pivot on the 16th Amendment not being ratified, which proof he withholds unless you send him $20.

Now, I don't deny him the $20 so much, as I am just very suspicious of any obstacles placed in front of anything that purports to be a long-suppressed "truth" about the 16th Amendment never having been ratified, which revelation would have to be an upheaval of the IRS and government to the benefit of the common man.

I'm also reluctant these days to "research" something in hardcopy print or video/audio format. I want to do computer searches for words and phases, and even copy & paste them into search engines and notes. Having seen (and wasted time on) so much crap that purports to be an exposé, I no longer have patience with anything that lacks all the earmarks of legitimate research (readily available, peer review, cites, analysis of competing theories and analysis of likely objections/arguments). Beyond Banister and his controversial subject matter, in other areas I also object when what might be otherwise legitimate research is offered only as a printed book for sale. While I admit to being spoiled by the immediacy of downloading off the internet, information as portentous as proving the 16th Amendment was not ratified ought to be freely disseminated, IMO.

I can understand and am sympathetic to Banister's financial situation and his desire to recoup legal expenses. But as a Christian, I am a bit surprised that he doesn't trust God more and just give away his proof and let the chips fall where they may. Again, normally I would not expect people to give away their work product. But in this specific case I personally draw an exception regarding genuine proof that the 16th Amendment was not ratified.

Consequently, I doubt it really is proof else we'd have heard the rumblings by now, and I'm not willing to waste $20 plus waste time only to find it's just another unsubstantiated claim. I'm happy to be proven wrong by someone else, I'm just unwilling to spend the time & money again myself, when it has been such a repetitively fruitless exercise to date.

Starwind  posted on  2006-12-09   16:35:52 ET  Reply   Untrace   Trace   Private Reply  

In hindsight, what Banister should have done, is carefully seek out a sophisticated, wealthy and receptive client, plan a legal strategy that forces the IRS/ government to rely on legal cites that can be impeached by legal cites/evidence derived from Banister's research, and then builld a "test case" that can get to the Supreme court, assuming the IRS doesn't back out or dodge the bullet.

It should be remembered that the IRS has a lot of control over what tax issues get heard by higher courts. First of all, the IRS can be very choosey over who they take to court, and I understand they will decline to do so unless they think they have a 90%+ chance of conviction. Being well-known increases your chances due to the PR factor.

And if the IRS loses a case, such as a trial court case, then it's usually over. If they win, then the defendants might appeal on up the ladder, but such appeals often not even heard. I think what defendants might be arguing is carefully considered prior to trial to avoid having some chink in their armor get passed up to higher courts. And then the supremes only hear 1% of the cases appealed to them and I hear that lately the percentage is droping further.

Thompson's actions when Thompson decided to stop withholding his employee's payroll taxes - failure to withhold is a major, major, major no-no.

One of the charges against SAPF in 93 was failure to withhold. SAPF won while admitting that no withholding was being done for the staff.

Which brings me to my last criticism of Banister. That to date, he's not made his research "Investigating The Federal Income Tax - Preliminary Report" freely available.

I used to feel that way when I first started investigating, but there's a real compelling reason why benefit of a doubt should be granted. Simply put, the playing field is not level between the tax-honesty movement and the government. The reason is money. IRS/DOJ personnel get paid and paid well to go around raiding peoples homes, garnishing wages, cleaning out bank accounts, trying people and putting them in jail. They get paid to do all that.

The tax-honesty movement, so called, on the other hand, has no such payroll. Those who research do so unpaid while doing something else for a living and it takes a *lot* of time, as this thread pretty much shows. Those who decide to get involved and exercise their rights under the law as they understand it do so at a risk, and most of those end up taking a hit financially just because it's much harder to get a job without an SSN or without withholding. So it's really an economic necessity for those people, like Bill Benson who traveled to every one of the states that supposedly approved the 16th to determine from those state records that it really wasn't passed. John Kotmair has been in court and been to jail and returned to fight another day. Banister no longer has his IRS job. These people need funds just to get by and if someone is honest enough to be researching the subjects, it's economical for them to purchase the materials rather than do all that homework on their own.

I can understand and am sympathetic to Banister's financial situation and his desire to recoup legal expenses. But as a Christian, I am a bit surprised that he doesn't trust God more and just give away his proof and let the chips fall where they may.

My take: That's between him and God and it's not for me to be surprised. He's entitled to compensation for his work. Nothing against you if you don't want to buy it. I've not bought his either. Then again, I've been in the movement longer than he has.

Bill Benson's "The Law that Never Was" also covers the ratification problem with the 16th. I don't know how much that costs. I've not read that either

Neil McIver  posted on  2006-12-10   6:13:04 ET  Reply   Untrace   Trace   Private Reply  

One of the charges against SAPF in 93 was failure to withhold. SAPF won while admitting that no withholding was being done for the staff.

I may just go dig that case out and see what the rulings were.

I've not bought ["Investigating The Federal Income Tax - Preliminary Report"] either. Bill Benson's "The Law that Never Was" also covers the ratification problem with the 16th. ... I've not read that either.

Somewhere along the way I got the impression that you were persuaded/convinced the 16th Amendment was not ratified. Not having read what is purported to be the best research on that theory, on what research do you base your belief, or do I misunderstand your belief as to 16th Amendment ratification?

Starwind  posted on  2006-12-10   10:44:22 ET  Reply   Untrace   Trace   Private Reply  

[Neil McIver #122 to Starwind] One of the charges against SAPF in 93 was failure to withhold. SAPF won while admitting that no withholding was being done for the staff.

[Starwind #124] I may just go dig that case out and see what the rulings were.

In the case, Save-a-Patriot Fellowship v. United States, the US had seized, for payment of taxes owed by Kotmair personally, $44,115 in U.S. currency from one location in a safe and $377 in currency from another location of the same safe. Also seized were "Various numismatic coins and items found in the safe and elsewhere in the Residence."

It was also alleged that a vial of Holy Qettoret was seized. Holy Qettorett was said to be "The sacred substance used in the Temple prior to its destruction and, some believe, necessary to sanctify the Temple upon its reconstruction so that the Messiah can perform prophesied miracles upon his/her return." The Court decided that Plaintiff "had not established that the substance had been taken by the I.R.S."

Court found that $384 cash, the $210 of money orders and $ 40 of Susan B. Anthony Dollars found at the Office were, when found, property of the SAP Fellowship which had not yet been mingled with Kotmair's personal assets. The Court entered a judgment in favor of Plaintiff SAPF for $634 plus interest.

The Court wrote that the $44,115 was considered lost to SAPF when it was commingled with funds of Kotmair for his personal use, and that the action for recovery for these funds had been filed after the time allowed by statute had tolled.

As the seizure was against Mr. Kotmair personally, and $634 was shown not to have been commingled with the personal funds of Kotmair, that $634 was returned to SAPF. SAPF did not recover the $44,115.

[EXCERPT]

THE COURT: We are trying to get an understanding of when something belongs to you and when it doesn't. When it belongs to [the SAP Fellowship], so I just want you to try and help me understand that. If you go to the grocery store and you buy Wheaties [with fellowship funds], when is it yours, after you eat it or . . .

Kotmair: That is a hard question to answer.

THE COURT: That is why we ask it.

Kotmair: If the energy from it goes to the Fellowship, and it does, I would say it is to the benefit of the fellowship.

The Court declines to follow the "logic" of Kotmair's position or to dwell upon the point in the digestive process at which Kotmair would agree that the I.R.S. could effect collection. Rather, the Court must conclude that once Kotmair takes Fellowship funds for personal use, those funds can no longer be found to be Fellowship property immune from levy for Kotmair's tax liabilities.

The Court finds from the evidence that the SAP Fellowship obtained, and had ownership of, the cash and money orders it received for memberships and the sales of goods, and, possibly services. If the Fellowship had established that Kotmair's possession of particular assets was solely as Fiduciary for the SAP Fellowship the ownership could remain in the Fellowship. However, at such point as Kotmair took the assets and did not place them in a location [n23] that was exclusively used for the maintenance of Fellowship assets, the ability of the SAP Fellowship to establish ownership in this case was lost. In the context of this case, once the cash and money orders were taken from the office and placed in something other than a Fellowship depository, the funds were available for the immediate personal use of Kotmair, mingled with his own assets, and no longer had the character of Fellowship assets sufficient to avoid levy.

In this case, the cash and money orders that had been removed from the office prior to the raid were found in the Residence in various locations, none of which have been established to be exclusive association depositories. However, the Court finds that the $ 384 of cash, the $ 210 of money orders and $ 40 of Susan B. Anthony Dollars found at the Office were, when found, property of the SAP Fellowship which had not yet been mingled with Kotmair's personal assets. Accordingly, the Court concludes that the SAP Fellowship has carried its burden of proof and proven ownership with regard to these assets found in the Office, but not as to the cash and money orders found in the Residence.

MEMORANDUM OF DECISION IN THE CASE

COUNSEL: For SAVE-A-PATRIOT FELLOWSHIP, an unicorporated association, plaintiff: George E. Harp, Law Office, Shreveport, LA.

For UNITED STATES OF AMERICA, defendant: Lynne A. Battaglia. Beverly Moses Katz, U.S. Department of Justice, Washington, Dc.

JUDGES: Marvin J. Garbis, United States District Judge

OPINIONBY: Marvin J. Garbis

OPINION: MEMORANDUM OF DECISION

This case was tried before the Court without a jury. The Court has heard the evidence, reviewed the exhibits, considered the materials submitted by the parties and had the benefit of the arguments of counsel. The Court now issues this Memorandum of Decision as its findings of fact and conclusions of law in compliance with Rule 52(a) of the Federal Rules of Civil Procedure.

I. BACKGROUND

At all times relevant to this case, the Save-A-Patriot Fellowship ("the SAP Fellowship") has been based in a rented facility at 12 Carroll Street ("the Office") in Westminster, Maryland. Mr. John B. Kotmair, Jr. ("Kotmair"), was the founder and is the leader (called the "Fiduciary"), of the SAP Fellowship, Kotmair resides at 2911 Groves Mill Road ("the Residence") in Westminster, Maryland.

On December 10, 1993, the Internal Revenue Service ("I.R.S.") executed search warrants at the Office and the Residence in connection with an investigation of Kotmair. The execution of the search warrants resulted in litigation by Kotmair seeking the return of a vial of Holy Qettorett [n1] allegedly seized by the I.R.S. in the raid. Kotmair v. United States, MJG-94-447. The Court decided, in the Kotmair case, that the Plaintiff had not established that the substance had been taken by the I.R.S. [n2]

The instant case, which involves subject matter more mundane than Holy Qettorett, is brought by the SAP Fellowship. In the December 10, 1993 raid, the I.R.S. seized at the Office various documents, computer disks, files, papers, and other materials relating to the operations of the SAP Fellowship. There was also seized at the Office $ 384 of currency, 40 Susan B. Anthony dollars, and 5 money orders valued at $ 210. [n3]

At the Residence the I.R.S. seized various papers and the following items:

1. The sum of $ 44,115 of U.S. currency found in one location in the safe.

2. The sum of $ 377 of U.S. currency found in another location in the safe.

3. Various numismatic coins and items found in the safe and elsewhere in the Residence.

The items seized in the raid were taken by the Criminal Investigation Division of the I.R.S. for use in a criminal investigation. On December 22, 1993, the I.R.S. Collection Division served a Notice Of Levy on the Criminal Investigation Division so as to take the $ 44,115 in currency for application to the outstanding tax liabilities of Kotmair. On September 2, 1994, the Collection Division levied upon the remainder of the above-mentioned seized property for application to the tax liabilities of Kotmair.

The SAP Fellowship filed this law suit on March 29, 1995, a date beyond the nine month limitation period [n4] following the December 22, 1993, levy but within nine months of the September 2, 1994, levy. By Memorandum and Order of May 10, 1996, this Court dismissed the Plaintiff's claim as to the $ 44,115 in currency due to the expiration of limitations. There remained for trial the SAP Fellowship's claim to the assets levied upon on September 2, 1994.

II. NATURE OF THE CASE

As stated in Saltzman, "IRS Practice and Procedure," P 15.07[2][a] (2nd ed. 1991):

HN1 In general, if a levy has been made on property . . . any person other than the taxpayer [against whose tax liability the levy was made] who claims (1) an interest in or lien on the property and (2) that the property was wrongfully levied upon by the Service may bring a civil action directly against the United States in federal district court."

HN2 The statutory authority for a wrongful levy action is provided by Section 7426 of the Internal Revenue Code. See 26 U.S.C. § 7426. In a wrongful levy action the underlying assessment against the taxpayer (here Kotmair) is "conclusively presumed to be valid." § 7426(c) Hence, the only issue in the case is whether or not the subject property is the property of the wrongful levy claimant (here the SAP Fellowship).

III. DISCUSSION

A. The SAP Fellowship Activities

The SAP Fellowship has been proven to exist, have members, and to function. The organization has assets, leases property, has a defined membership, publishes a newsletter, and has produced at least one video tape program, twelve hours of "Just The Facts." [n5]

There is no doubt that Kotmair is the major figure in the SAP Fellowship. As far as the Fellowship is concerned, he is, as Theodore Roosevelt aspired to be [n6], the corpse at every funeral, the bride at every wedding and the baby at every christening."

The SAP Fellowship operates without any written governance structure or financial records. Operating assets, such as files, equipment etc. are located at the Office. Money, money orders, and other valuables are received at the Office, but not kept there. Kotmair is free to, and does, take funds from the SAP Fellowship for personal use. However, the evidence does not disclose that Kotmair maintained a high standard of living or that such funds as were accumulated were necessarily his personal hoard. [n7]

The SAP Fellowship describes itself [n8] in the following terms:
The SAP Fellowship is a national organization of American patriots who have joined together to resist the illegal actions of the IRS and other government agencies who would attempt to deceive the public.

The evidence, including testimony and a recent (Fall of 1996) membership newsletter, "Reasonable Action," establishes that the SAP Fellowship has organizational activities, including the providing of "information" regarding tax procedures [n9], views on the U.S. Constitution, and similar matters. The Fellowship offers for sale, or in its lingo "exchange for FRNs" [n10], various publications as well as video tape programs and audio recordings. The material includes its own publications, an 1828 dictionary [n11], a deposition of an F.B.I. Agent and a tape of the motion picture "Harry's War" [n12] in which a citizen victimized by unscrupulous I.R.S. employees obtains an armored vehicle and takes on, and wins over to his viewpoint, the U.S. Army.

The Fellowship also offers the written works of Irwin A. Schiff who calls himself "America's leading untax expert." [n13] Schiff can be viewed as a "prophet" of the tax protester movement and a "guru" for Kotmair. Although convicted of tax felonies [n14] and out of step with legal reality (as seen by federal judges), Schiff presents a most entertaining view of the tax law. He has been described by Judge Guerfein of the Second Circuit [n15] in the following terms:

[Schiff] was in the insurance business. He also fancied himself a "constitutionalist", an extremist who reserved the right to interpret the decisions of the supreme court as he read them from his layman's point of view regardless of and oblivious to interpretations of the judiciary. One can describe his attitude either as contumacious of governmental authority for the purpose of advancing the common weal, or as that of a clever faker who used his own distortions of the Constitution as a flimsy excuse for failing to pay his income taxes.

In addition to affording its membership access to the philosophy of Irwin Schiff and his disciples, the Fellowship offers a program by which, supposedly [n16]:

Fellowship members pledge to reimburse other members for losses of cash or property incurred from illegal confiscation by the IRS and/or their nasty little brothers in state governments. This is done by spreading the reimbursement costs to all members.

Essentially, when a member suffers a "qualified" loss of property or freedom, he/she submits a claim to the SAP Fellowship which, after validation, supposedly results in reimbursement for civil losses (to a $ 150,000 maximum) and a stipend of $ 25,000 per year of incarceration. The payments are to be made by the membership directly to the validated claimant or the claimant's family.

A civil claim is validated:
. . . only after S.A.P. has determined that a judgment [**11] does exist and that the claimant, to the best of his ability, dragged the plunderers through every agency and court proceedings feasibly possible, using delaying tactics in each and everyone.

A criminal claim is validated:
. . . only after S.A.P. has determined that the claimant member is actually incarcerated and is given physical proof that said member, to the best of his/her ability, resisted and delayed the tyrants at every step through the criminal investigation and all other agency and court proceedings feasibly possible.

The Fellowship also conducts activities for its "Independent Representatives." [n17] For example, in October of 1996, the Fellowship offered a series of seminars for members, a Saturday night meeting open to the public, a Sunday social and, as a highlight of the function, the wedding of two of the Independent Representatives. [n18]

B. The SAP Fellowship Is An Unincorporated Association

The Government contends, at the threshold, that the SAP Fellowship is not an organization at all, but is solely a name used by Kotmair for his own "sole proprietorship" operation. The Court does not agree, even though it is readily apparent that Kotmair is the major figure in the Fellowship.

As noted above, the evidence established that there is an organization and not simply an operation by Kotmair personally. The SAP Fellowship, and not Kotmair personally, leased the Office. There are members, other than Kotmair, who engage in Fellowship activities. This Court observes, also, that the I.R.S. itself, quite appropriately, returned to the Office the operating assets seized from the Office (other than cash and numismatic items). These assets, at least some of which had more than nominal value, were simply (and correctly) assumed to be Fellowship property, as distinct from Kotmair's personal property.

The Government's arguments regarding the absence of a written instrument of governance is noted but, in the context of this case, is not determinative. Moreover, the absence of records and record keeping, while significant in terms of the ability of the SAP Fellowship to carry its burden of proof does not overcome the evidence establishing that there is an actual unincorporated association distinct from its members.

In sum, the Court finds as a fact that the SAP Fellowship is an unincorporated association (not just an alter ego or sole proprietorship of Kotmair), has members, and does things through persons in addition to Kotmair.

C. An Unincorporated Association In Maryland Can Own Property

The Government's second line of defense is that even if the evidence established that the SAP Fellowship is recognized as an unincorporated association, such an entity cannot own property as a matter of law.

There is little precedent -- in Maryland law or elsewhere -- regarding property ownership by unincorporated associations. Presumably, those organizations that have significant assets find it beneficial to formalize their status, as a corporation, trust or other entity. However, the Court can take judicial notice of the fact that there are a multitude of unincorporated associations that function in spite of their informality. For example, there are many PTA's and other affiliations of persons with common interests that have not formalized their existence. Who would, sensibly, argue that a PTA treasury cannot be the property of the PTA?

While the situation may be different in some other jurisdictions [n19]

HN3 in Maryland the legislature has recognized that an unincorporated association can own property in its own right. [n20]

The Maryland Code, HN4 Md. Cts. & Jud. Proc. Code Ann. § 6-406 provides:
An unincorporated association . . . or other group which has a group name may sue or be sued in the group name on any cause of action affecting the common property, rights and liabilities of the group.

Moreover, HN5 Md. Cts. & Jud. Proc. Code Ann. § 11-105 provides:
In any cause of action affecting the common property, rights and liabilities of an unincorporated association, or other group which has a recognized group name, a money judgment against the group is enforceable against the assets of the group as an entity, but not against the assets of any member.

This Court concludes that, as a matter of law, an unincorporated association in Maryland can own property.

The Government's reliance upon Bourexis v. Carroll County, 96 Md. App. 459, 625 A.2d 391 (Md. App. 1993), is misplaced. The Maryland Court of Appeals did not hold that an unincorporated association cannot own property. Rather, it held that in Bourexis, in which there was no evidence offered as to the "governance, powers, financing, or property" of the organization, there was "nothing to show it [was] an entity that may be sued. Id. At 395.

For reasons stated herein, this Court concludes that the SAP Fellowship is an unincorporated association and, as such, is legally capable of owning property. It is, therefore, necessary to determine the extent to which the SAP Fellowship has carried its burden of proving that it owned the property at issue.

D. What Did The Fellowship Prove It Owned?

The SAP Fellowship chose not to maintain any bank accounts or even maintain records of its finances. That decision may well be consistent with the group's philosophy. [n21] The absence of bank accounts or records may also, whether as a deliberately sought "benefit" or not, make it more difficult for law enforcement to investigate its activities. Whatever the reasons for an absence of records -- be they philosophical or otherwise -- the decision has a price which goes beyond the inability to earn interest on bank deposited funds. That price certainly includes the inconvenience that results when the Fellowship finds itself involved in a legal proceeding in which it has the burden of proof.

In this case, had the SAP Fellowship had its own bank account in which it maintained its funds it might have little problem in prevailing as to those funds. [n22] Similarly, although perhaps less conclusively, had the SAP Fellowship maintained records of its funds and had Kotmair as Fiduciary keep the association funds completely separate from his own, the Fellowship would have at least a possibility of carrying its burden of proof. However, the Fellowship presents no records whatsoever. Nor does the evidence establish that its funds were maintained separately from those of Kotmair. And, most significantly, there is no evidence from which the Court can determine at what point after Fellowship funds leave the Office in the possession of Kotmair that they cease to be held exclusively as the property of the SAP Fellowship.

The record establishes that Kotmair was entitled to, felt free to, and did, take funds from the Fellowship and use them for his personal sustenance. Kotmair espouses a doctrine that would have funds that he takes to spend for personal use remain the property of the SAP Fellowship. Indeed, in the world according to Kotmair, if he uses Foundation funds for his food, the Foundation ownership extends to the food even as it proceeds through his digestive system. For example: THE COURT: We are trying to get an understanding of when something belongs to you and when it doesn't. When it belongs to [the SAP Fellowship], so I just want you to try and help me understand that. If you go to the grocery store and you buy Wheaties [with fellowship funds], when is it yours, after you eat it or . . .

Kotmair: That is a hard question to answer.

THE COURT: That is why we ask it.

Kotmair: If the energy from it goes to the Fellowship, and it does, I would say it is to the benefit of the fellowship.

The Court declines to follow the "logic" of Kotmair's position or to dwell upon the point in the digestive process at which Kotmair would agree that the I.R.S. could effect collection. Rather, the Court must conclude that once Kotmair takes Fellowship funds for personal use, those funds can no longer be found to be Fellowship property immune from levy for Kotmair's tax liabilities.

The Court finds from the evidence that the SAP Fellowship obtained, and had ownership of, the cash and money orders it received for memberships and the sales of goods, and, possibly services. If the Fellowship had established that Kotmair's possession of particular assets was solely as Fiduciary for the SAP Fellowship the ownership could remain in the Fellowship. However, at such point as Kotmair took the assets and did not place them in a location [n23] that was exclusively used for the maintenance of Fellowship assets, the ability of the SAP Fellowship to establish ownership in this case was lost. In the context of this case, once the cash and money orders were taken from the office and placed in something other than a Fellowship depository, the funds were available for the immediate personal use of Kotmair, mingled with his own assets, and no longer had the character of Fellowship assets sufficient to avoid levy.

In this case, the cash and money orders that had been removed from the office prior to the raid were found in the Residence in various locations, none of which have been established to be exclusive association depositories. However, the Court finds that the $ 384 of cash, the $ 210 of money orders and $ 40 of Susan B. Anthony Dollars found at the Office were, when found, property of the SAP Fellowship which had not yet been mingled with Kotmair's personal assets. Accordingly, the Court concludes that the SAP Fellowship has carried its burden of proof and proven ownership with regard to these assets found in the Office, but not as to the cash and money orders found in the Residence.

The evidence regarding the numismatic items is not sufficient to permit any finding for the SAP Fellowship. There are references in the evidence to some association receipts of numismatic items. But, there is an absence of specific evidence relating to any particular item sufficient to carry the burden of proof. Moreover, the evidence is not adequate to establish that any of the numismatic items were maintained in a location that can be found to be a Fellowship depository. There was no record of which items belonged to the association. And, there was nothing, not even a sign, a label, a wrapping, or anything else that would indicate that the ownership of the items was other than that of Kotmair in whose home the items were found. Accordingly, the Court cannot find for the plaintiff with regard to the numismatic coins and items.

IV. COSTS AND LEGAL FEES

The history of this case, and the related litigation, leads the Court to address the matter of costs and legal fees at this point to avoid further proceedings. The Court has found for the plaintiff in part and the Defendant in part. Therefore, the parties shall bear their own respective costs.

To the extent that the plaintiff has prevailed, the Government had a reasonably justified position. Accordingly, there shall be no award of legal fees.

V. CONCLUSION

For the foregoing reasons:

1. The Court determines that the Plaintiff, the SAP Fellowship, is entitled to recover the $ 384 in currency, $ 40 in Susan B. Anthony Dollars, and $ 210 in money orders seized from the Office and levied upon to satisfy the tax liabilities of Kotmair on September 2, 1994.

2. Judgment shall be entered by separate Order [**22] awarding the Plaintiff a recovery of $ 634, plus interest thereon as provided by law, the parties to bear their own respective costs.

SO DECIDED this 18th day of December, 1996.

Marvin J. Garbis

United States District Judge

JUDGMENT

This action came on for trial before the Court on September 20, 1996, Honorable Marvin J. Garbis, United States District Judge presiding. On this date, the Court has issued its Memorandum of Decision in this case.

In view of the foregoing, Judgment is hereby entered in favor of Plaintiff SAVE-A-PATRIOT FELLOWSHIP against Defendant United States of America in the total amount of $ 634.00 plus interest as provided by law, the parties to bear their own costs.

SO ORDERED this 18th day of December, 1996.

Marvin J. Garbis

United States District Judge

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

n1 The sacred substance used in the Temple prior to its destruction and, some believe, necessary to sanctify the Temple upon its reconstruction so that the Messiah can perform prophesied miracles upon his/her return.

n2 In the Kotmair case, the Plaintiff presented the testimony of Professor Vandyl Jones who claimed to be the original for "Indiana Jones." Professor Jones, was, in fact, searching for the Ark of the Covenant and actually found the ancient "factory" at which the Israelites manufactured and stored Holy Qettorett for Temple use. He found stored there a large quantity of "Holy Qettorett mix" needing only the addition of Sodom Salt and other ingredients. Dr. Jones entrusted a small vial of the substance to a "follower" of Kotmair, Scott Hucklebee, who brought it to America. However, the Court did not find that the vial was in the Residence at the time of the raid. Also, there was a sufficient supply left in Israel for use if, and when, needed so that the loss of the Hucklebee vial would not cause irreparable harm.

n3 In the search warrant return this is described as "APPLICATION & 4 MO - $ 175." The $ 210 value is found because it is used in the parties' Joint Statement of Facts.

n4 26 U.S.C. § 6532(c)(1).

n5 That is the "facts" according to the Fellowship as led by Kotmair.

n6 As stated by Alice Roosevelt Longworth, Theodore Roosevelt's daughter.

n7 The SAP Fellowship claims that the $ 44,115 "hoard" was set aside for Fellowship use, noting that it has engaged in expensive activities, such as the production of the "Just The Facts" video tape. The Court makes no finding as to this contention in view of the denial of the claim for these funds on limitations grounds.

n8 See the SAP Fellowship Program Agreement.

n9 For example, a "press release" stating that a Washington State attorney had concluded that the I.R.S. has no authority to seize property in that state for income tax liabilities of "most citizens." This conclusion, it is said, was presented to, and not refuted by, the Washington State Bar Association and Attorney General.

n10 Presumably Federal Reserve Notes since the Fellowship has an unorthodox view of "dollars."

n11 Useful, presumably, in supporting arguments as to the original meaning of words in the Constitution and related documents.

n12 The Court notes that the actor Edward Herrman played the role of a grass roots tax protestor in "Harry's War" and, more recently, the role of the President of the United States in "Pandora's Clock."

n13 See the dust jacket to Irwin A. Schiff How Anyone Can Stop Paying Income Taxes (Freedom Books 1982).

n14 United States v. Schiff, 801 F.2d 108 (2nd Cir. 1986), cert denied. 480 U.S. 945, 94 L. Ed. 2d 789, 107 S. Ct. 1603 (1987)

n15 Schiff in United States v. Schiff, 612 F.2d 73, 75 (2nd Cir. 1979) (reversing conviction of tax crimes and remanding for new trial).

n16 The Court is not finding that the program operates as asserted, but only that such a program is presented to members.

n17 Presumably, its membership or a class of members.

n18 Kotmair's role in the nuptials is not specified.

n19 For decisions holding that an unincorporated association cannot own property, see Krumbine v. Lebanon County Tax Claim Bureau, 541 Pa. 384, 663 A.2d 158, 160 (Pa. 1995) (real property); Rock Creek Gardens Tenants Assoc. v. A.M. & L.A. Ferguson, 404 A.2d 972 (D.C. App. 1970) (per curium) (real property); United States v. Thevis, 474 F. Supp. 134, 138 (N.D. Ga. 1979); Libby v. Perry, 311 A.2d 527, 531-32 (Me. 1973). But See Loving Saviour Church v. United States, 556 F. Supp. 688, 690 (D.S.D. 1983) (holding that an unincorporated association is a legal entity and therefore can own property).

n20 Compare, Motta v. Samuel Weiser, Inc., 768 F.2d 481, 485-86 (1st Cir. 1985) (stating that "courts may determine that ownership vests in the individuals who comprise the organizations.")

n21 The Fellowship appears to have a distrust of banks.

n22 Compare Arth v. United States 735 F.2d 1190, 1193 (9th Cir. 1984), in which the claimant's funds were deposited into the taxpayer's account and were held to have properly been levied upon.

n23 Be it an office, a safe, a designated part of a safe, or other container plainly labeled to show Fellowship ownership and rigorously kept as Fellowship property.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

nolu_chan  posted on  2006-12-14   23:58:19 ET  Reply   Untrace   Trace   Private Reply  

One of the charges against SAPF in 93 was failure to withhold. SAPF won while admitting that no withholding was being done for the staff.

It would seem there was no such charge, nor would it seem SAPF won. Loosing some $44K in a siezure due to co-mingling of assets resulting from deliberate election to not keep records or funds separate (leaving SAPF defenseless against protection of its membership's assets) can hardly be declared a victory.

If you're certain a charge of failure to withhold taxes was made, could you please post some documentation (a copy of an indictment for instance)? Something other than Kotmair's assertions.

Starwind  posted on  2006-12-15   11:21:22 ET  Reply   Untrace   Trace   Private Reply  

If you're certain a charge of failure to withhold taxes was made, could you please post some documentation (a copy of an indictment for instance)? Something other than Kotmair's assertions.

I will look into the actual charges more formally and let you know. It is/was my impression that that was one of the charges.

As for SAPF winning, we do consider the ruling a victory. Yes, 44k was lost but that was solely because it was deemed to be Kotmair's money and not SAPF's. It must be remembered that the IRS went into the office with guns and took just about everything that wasn't nailed down, and that they wanted to shut the operation down, and they failed to do so. They were forced to bring it all back. Remember also that the IRS first appealed the matter and then moved to have their own appeal dismissed with prejudice, which it was. If the IRS won, why would they have appealed?

The gist of it was that Garbis ruled SAPF had a right to exist, and everything that was deemed to have been taken from SAPF was returned. In light of what could have happened, we consider that a victory. Obviously the monetary loss is unfortunate, but that notwithstanding.

Neil McIver  posted on  2006-12-15   15:10:19 ET  Reply   Untrace   Trace   Private Reply  

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