The IRS and the Computer Age

            Apparently things are not that great for the IRS and their computers.  Over the years the IRS has made many blunders in preparing for the future. Recently, Arthur Gross, a tax official who was investigating the IRS told Congress that many of the IRS' computers are dysfunctional and that few of the IRS computer systems can communicate with each other.  The IRS, furthermore, doesn't have the brainpower to clean up their mess.  During the last 30 years, over a dozen IRS commissioners have served their time as head of the agency.  They have never gotten control of the computer problem.

            Volume of tax returns has increased a great deal during the last 30 years.  Today there more than 206 million returns filed each year.  The IRS has reacted by hiring temporary workers during the tax season.  Private industry has reacted during the same time period by computerizing and hiring less workers.  The IRS is currently losing billions of dollars in revenue each year because they make so many mistakes in connecting individuals with the money they earn. 

            The IRS also has an incredible amount of turnover at the top.  In the last five years, there have been four IRS commissioners.  The pay scale at the IRS falls behind that of private industry for the same skills. 

            In the 1960s, the IRS leaders knew that their computer systems were outdated by newer technology. The IRS started to change its system and contractors began working during the 80s to replace the current computer system with a newer system.  But in 1985 a bunch of computers crashed and sent out millions of incorrect letters.

            In the late 1980s, IRS officials decided that agency officials would handle the job of upgrading the computer system by themselves.  The IRS' goal was to make possible the filing of electronic tax returns by the year 2001.  The 10 years cost in preparing and developing the new computer system would be $8 billion dollars.  The IRS would get about another $40 billion in unpaid taxes. 

            The GAO audited the IRS and figured out that the IRS had spent $145 million on  changing its computer system and would have to spend another $140 million.   Last year the project was scrapped at a cost of $284 million dollars.  At this point the agency has thrown billions down the drain without anything to show for it.  In the meantime, the IRS continues to work toward a paperless tax system with the goal of maintaining a complete accounting of each and every activity of every individual in America.  The IRS wants to achieve total knowledge and control of everyone.  That is quite a goal for the most powerful agency in the most powerful country in the world.  Will Americans get fed up before the beast gets its incredible power and put it out of business?  Only time will tell!

THE WILLFUL FAILURE STATUTE AND THE

BUCKET CARRIERS

             Section 7203 of the Internal Revenue Code reads as follows:

              Any person required under this title to pay any estimated tax, or tax, or required by this title or by regulations made under authority thereof to make a return (other than a return required under authority of Section 6015), keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $10,000.00 or imprisoned not more than one year, or both, together with the costs of prosecution.

            In order to prove this offense, the government must prove three elements:

            (1) A return was required.

            (2) A return was not filed.

            (3) The act was willful.

            At first, it would seem to be difficult for the government to get conviction in the case of an individual who had studied the tax laws and determined that he is not required to file a return.  However, one must be realistic. The juries in this country are made up of individuals who "know they are required" to file a return, even though they have no idea if there really is a law that requires them to file.  Individuals are filing returns because they assume they are required to file and because they are afraid, or because they want a refund.

            Juries are typically made up of individuals who are very compliant; don't think for themselves and who carry their buckets because they think they are required to carry a bucket.  They are "bucket-carriers" and they generally convict individuals who do not file returns.  The reason for this is because individuals on juries simply cannot understand the concept of "willfulness;" they cannot understand the concept that a person could come to the conclusion that he is not required to file a return.  They are filing returns and paying taxes and they are angry that the defendant is not doing the same.

            Quite frankly, winning a 7203 case is not easy (The IRS goes to trial with their best cases and they have over 250 million individuals to choose from).  Therefore, it is imperative that all individuals, whether they file returns or not, seek professional advice to determine if they are liable for the income tax and to determine if they are an individual that is required to file a 1040 return.

            Obviously, not every individual is liable for the income tax and not every individual is required to file a 1040 return.  The law is so difficult and complex and controverted. There is so much prejudice and assumption involved in its enforcement that is very dangerous for an individual to rely on his own understanding.  Professional advice must be obtained from competent attorneys and accountants regarding the filing requirements of each particular individual.  It is the responsibility of the individual to seek out this advice and to inform the IRS that they are relying on the advice of professionals.

            It is also necessary to note that the offense under 7203 does not require that any taxes are due; however, it seems that the government proceeds against only those individuals who allegedly owe tax because they don't want to take a chance of losing a case.

          Need I say more: Whether you file or not, you should take actions based only on the advice of a competent professional; to act otherwise, is to play unwisely with a system of deceit and corruption designed to trap you and terrify you into making decisions that are not required by law. 

Good luck and take actions only after the studied review of professional advice.

BRITISH TAXES CIRCA 1800

     The British were complaining about being denied the rights of Englishmen at the same time that the Americans were complaining of the same procedures.  The British had an excise system.  During the time that the excise taxes were enforced, the 18th Century, the people got pretty upset about the fact that they could not have a jury trial in a tax case.  (See Raymon Turner, "The Excise Scheme of 1773", The English Historical Review (London, 1971 34-57).  The manner in which the English collected the taxes was very brutal and the English exported their same techniques to the Colonies.  Years after the tax, William Blackstone, the great English Judge, said, "the rigour and arbitrary proceedings of excise-laws seem hardly compatible with the temper of a free nation."

The British Excise System tried cases without a jury or even an independent judge.  The issues were tried before the tax commissioners who collected the tax (Doesn't that sound a bit like a Tax Court Judge who is a retired District Counsel and still works for the executive branch).  The British Tax System was outside the Constitution, and it seems as though the American Tax System inherited this propensity from the Brits. One English Scholar (Brewer, "The English State, in Politics and Society, 1988 p. 357) states:

           Yet the trader had little chance of escaping this excise juggernaut. Most excise statutes included a clause specifically denying the right of the accused to use a writ of certiorari to move his case to a higher court.  Once before the commissioners, the defendant had the cards stacked against him.  He was guilty unless he could prove himself innocent...  Even the traditional English stratagem of countersuing officials was rendered more hazardous by the statutory provision of double or triple costs ... In these circumstances it is not surprising that the conviction rate in excise cases was so high:  79% in London and 85% in the country in 1789-90.

             So, as you can see, things have not gotten any better, they have just gotten worse.  Now the IRS uses the same techniques of enforcement but they collect a much larger percentage of the people's income in the process.  Many of us like to think that there is such a thing as progress, but seems that in the area of taxation, that progress is backwards.  Bureaucrats just don't learn, do they!

Never Pay Taxes Again:  The Green Cheese Approach

For the last 25 years I have watched many methods come and go as people attempt to invent new ways to defeat the income tax.  The income tax is very complex and it is taking half of the wealth of the middle class.  There are all kinds of charlatans on the Internet who sell absolute legal gibberish to the people.  There are people that argue they don't have to pay taxes because they are not citizens of the United States since they are citizens of their state.  They argue that they do not have to pay taxes because the OMB Number for the 1040 Form is the wrong OMB Number.  They argue they don't have to pay taxes because Section 861 of the Internal Revenue Code stands for the proposition that they do not have to pay taxes.  They argue that wages are not income and that the 16^th Amendment was not ratified in spite of the fact that three Courts of Appeals have taken the position that it was ratified.   (Although Bill Benson did excellent research on this issue, the courts have soundly rejected it to date.)  They argue that they don't have to pay income taxes because some guru has informed them that the codes on their Individual Master File show they don't have to pay taxes, and the list goes on and on. Some charlatans advise clients to set up a "business" trust that is a "pure" or "common law" trust.  They advise clients that these trusts don't have to pay taxes.  There is no law that supports their contention.  Their clients are left hanging out to dry and are forced to pay back taxes plus horrendous interest and penalties.

The charlatans advise individuals to file exempt W-4 Forms or to inflate withholding or to send magic letters to the employers that will stop withholding. The charlatans mislead the people and do not tell them that the IRS can make an assessment against them under 26 USC 6020(b) and then collect against them.  The charlatans advise people to file claims for a refund arguing their many issues and sometimes the IRS gives refunds.  The IRS then later proceeds against their victims civilly and garnishes wages and in some cases the IRS proceeds criminally.  Individuals who have filed exempt W-4 forms and (or) zero tax returns have been indicted, many have lost property and wages.  The filing of exempt W-4 forms has resulted in divorce and suicide.  You are dealing with a very nasty agency, the IRS.  The IRS has tremendous draconian power.  It pays no attention to the Constitution and the Bill of Rights.  If you want to take on the IRS, you had better have more in your arsenal than a silver bullet package from a conman.

The IRS is gearing up for a big push against the people in the future but the conmen on the Internet are thriving and growing.  Here is how it works.  Some guy sets up a website and he promotes his idea of how to get out of taxes.  He develops a theory based on his alleged understanding of some statute or procedure.  Then he puts together a great website and sits by the phone.  People are cruising the Internet and they see his site.  They are attracted because they see an easy way to get out of paying taxes.  So the conman and the victim meet and the conman spouts his stuff.   It sounds good to the victim because he knows nothing about tax law (neither does the conman, by the way), and the conman tells the victim everything he wants to hear.   So, the victim buys a magic packet with letters and all kinds of great stuff to send off to the IRS. 

Now every once in a while, a conman attracts another conman.  The new conman decides that this is a great way to make money.  All he has to do is tell people what they want to hear.  Everyone hates taxes.  So the new conman buys the package from the first conman and then he modifies it.  He scans it into his computer and moves around stuff and adds graphics and changes some stuff and prints it all up.  Then he puts up a website and he sells his magic.  Most of these packages sell for several thousand dollars. 

These conmen are very creative and some are unbelievably successful.  The IRS will pursue the conmen and every once in a while they will bust one and cart him off to the federal pen for a few years.  But there are always new conmen ready to make a fast easy buck off the greed of the suckers that roam the Internet.  The information of the deflated conman will soon be regurgitated into another website and another packet and a new conman will sell his gibberish to new suckers.

Some conmen have no limits to their cons.  They will not only help you file an exempt or inflated W-4 and get back all your money from the IRS with zero tax returns, but they will invest your money for you in foreign banks and they will pay you 200 percent interest per year.  Of course anyone dumb enough to believe that there is a magic letter that he can send to the IRS that will defeat the most powerful agency in the most powerful country in the history of the world is probably stupid enough to send thousands of dollars to a "bank" in an unstable third world country that pays 200 percent interest a year.  These poor suckers are going to lose all their money and then owe thousands of dollars to the IRS. 

If someone tells you to file an exempt W-4 or a zero tax return or tells you that you can set up a trust to avoid taxes, that person is a conman.

Now that I have exposed all the conmen, let me tell you how to really stop paying income taxes.

There is a way to completely eliminate the payment of income taxes.  There is a magic way to get out of income taxes.  I call this approach the green cheese approach. 

Yes, it is true.  Eaters of green cheese are exempt from paying taxes.  High in the Colorado Mountains live wild sheep.  These sheep eat the green mountain grasses of the high valleys and they produce green milk.  Several years ago I started milking these sheep and I came up with my first batch of green cheese. I sent some of this green cheese to the IRS and they have sworn to leave me alone for the rest of my life.  It appears that bureaucrats are scared to death of green cheese.  This means however, that IRS agents cannot get out of paying taxes because they cannot eat green cheese.  If you are an IRS agent, you must continue to pay taxes.

I did a complete search of the Internal Revenue Code and I discovered that there is no statute that requires a green cheese eater to comply with any government regulations.  That is correct, if you eat green cheese, you don't have to pay taxes and the government cannot assess taxes against you.  You are completely safe.  The IRS won't audit you because they can't stand the smell of your breath.  No judge will give you a subpoena because he will be scared by the green color of your skin. 

If the IRS sends you a letter, all you have to do is to send them a return letter and tell them that you eat green cheese and because of that you are not a taxpayer.  The IRS will go away and will never bother you again. 

I have the secret recipe for green cheese and I can only make a limited quantity of green cheese each year.  However, the good news is that no one can copy my method because it is impossible to chemically analyze the chemical contents of my green cheese.  That means that no conmen can copy my approach.

I have a packet, which I call the "Packet for the New Millenium."  This packet comes with five pounds of green cheese, which is enough to exempt you from income tax for a lifetime.  I have also included a copy of my manual:  "Green Cheese, Good News for You and Bad News for the IRS."   I will also include a copy of my book: Sheep in Wolves Clothing and  my "gold bullet" administrative law letters. The packet will protect you from civil and criminal harassment from the IRS and no federal judge will go near you.  If you send these magic letters to the IRS, they will never harass you again.  This approach has been used for 14 years and the IRS has cried "uncle" in every instance. 

You can also send one of my "gold bullet" employer letters to your boss with four ounces of green cheese and he will immediately stop withholding.  As a matter of fact, I suggest that you give him a pound of green cheese so that he can stop withholding on all his employees.  The pound should be enough to keep the IRS from assessing 941 penalties against him for his whole lifetime.  If he sends in my special claim for a refund letter and rubs a little green cheese on the front page before his signature, he will get a refund of all income taxes that he has paid for his employees for the last ten years.

I have special price on my new millennium packet for 2001. You can get my packet with a lifetime supply of green cheese including my books and gold bullet letters for only $4,999.  (If you believe this then you can invest the money you save in taxes in my bank in Haiti that will give 500 percent interest per year. I also have a special formula of green cheese for $10,000 extra that gives immortality.  I guarantee you will live forever, no one who has eaten my green cheese has ever died).