Dear Willie:

Dear Willie:

I think I’m pretty well situated now for a reliance defense, as well as being 99 percent judgment proof (all I own is a car), but I’m worried about my early years in the patriot movement.  Back then we didn’t know as much as we do now and the reliance defense was not discussed.  We were still experimenting with such ideas as Fifth Amendment returns and exempt W-4’s.  Advice now is to keep filing until you have advice of counsel not to.  Back then, however, the attitude in many patriot groups was “drop out and fight the fight.  If you’re not with us, you’re against us.

I believed then, as I do now, wholeheartedly in the Constitutional rights of citizens, and I immediately stopped filing.  Then, one of the very first lawyers I consulted is now out of his practice after his conviction in a tax case.  This renders him unusable as a reliance counsel, as I understand it. Now I’m “unprotected” for another few years.

I feel as if my reliance defense is already half eaten away.  Is there anything I can do, or should be doing, to strengthen my case at this time, before the Feds come after me?  (If they ever do.)

Sincerely,

Another Patriot

Dear Patriot:

You have several important concerns.  First of all, remember that the IRS can tow away your car without a court order and they do such things on a regular basis. In order to be truly judgment proof you can’t have any savings or use banks and you must make your living in such a way that the IRS cannot take all or most of your income with a Notice of Levy.  Don’t worry about your real early years in terms of a criminal case.  The statute of limitations on criminal tax stuff is six years. 

You are absolutely correct in your understanding that you must rely on professional advice when you make decisions related to the tax system.  However, the fact that you rely on counsel is not a complete protection against a criminal attack.  The IRS tends to attack individuals who are leaders in the movement or who make lots of money. 

If you want to avoid the possibility of criminal prosecution, you must avoid the use of exempt W-4s and “zero” tax returns.  Also, be sure that you have professional advice for any position that you take.  Believe it or not, the issues that were raised 20 years ago that did not work, are now very popular in the current Freedom Movement.  Many people are currently following the advice of gurus who teach the exempt W-4 and “zero” tax return approach.  Unfortunately, they are headed for big problems in the future.  The IRS likes easy criminal cases and individuals who file government forms make their case much easier.

If you are judgment proof, you know how to handle an IRS summons and you base your actions on professional advice, you are in the best possible position.  Keep in touch.

Willie

A Creative Challenge

        Everyone who files a Federal Tax Return, signs the return under the penalty of perjury. Yet each year, millions of individuals go to professionals to have their returns prepared because they do not understand the contents of the return or how to prepare it.  Any individual who signs a return that he or she does not understand, commits perjury.

              The silver bullet that might destroy the income tax system lies in a challenge to this problem.  Individuals sign returns that they don't understand because they are too afraid not to sign the returns.  Some of these individuals are convicted each year of tax crimes and the information on the returns is used  against them.

              An effective way to challenge the filing "requirement" would be the following:

              An individual who wants to take a front-line approach could take his tax return to a CPA and have it completed. Then he could file the return unsigned with a cover letter that states that he does not understand the return and he cannot sign it under the penalty of perjury or he would be committing perjury.

              The IRS will fine our brave individual $500.00 for filing a frivolous tax return.  He can pay the $500.00 and file an 843 claim for a refund and then he will sue the Gestapo in Federal Court.

              The advantage with this method is that our brave individual doesn't have to understand any intricate theories of law.  He doesn't have to do any complicated research.  All he has to do is raise the issue and take it up to the Circuit Court of Appeals.

              If even one circuit court rules that the position is not frivolous, the income tax is in serious difficulty.  Have we been missing a simple solution to the problem?  What if the court rules that the argument is a frivolous position?  Does that mean that it is assumed that everyone is competent enough to understand the returns and all the information on them?  Such a position could not possibly be taken in any other aspect of competency in society.  Our society does not assume that since one can sign a driver's license application, he understands all the traffic laws.  We give driving tests for certification.  Think about the implications!

              Anyway, let's start raising the issue.  If you would like to challenge the Federal Tax System's alleged filing requirement and you are willing to put some time and energy and a little money into the problem, you may make a very important difference. 

              Let's put this issue into every circuit court in the country.  Let's force some change soon.  The reason that the tax system still exists after a Freedom Movement of more than 20 years is that people are not really willing to litigate and put the energy into changing the system.  If you are involved in this movement to make change, you might really consider an approach as that mentioned above.  There is obviously a severe problem with a tax system that is so incredibly complicated. The alleged "requirement" that individuals who are incapable of understanding and filling out the forms must sign them under the penalty of perjury must be challenged.

              Who is kidding who?  Let’s make some change. Turn over a new leaf and decide right now that you are going to make a challenge in 2008

THE FREEDOM MOVEMENT GOES NUTS

            Each year the IRS prosecutes several hundred individuals criminally who are involved in the Freedom Movement and it proceeds civilly against tens of thousands of others; but incredibly, the Freedom Movement continues to grow at a rapid pace.  Old ideas such as the use of exempt W-4 forms, zero tax returns and "common law trusts, continue to flourish at an unprecedented rate although many will suffer a great deal for their choice.     

            The IRS cannot seem to instill enough fear in the people and the Internet is fueling the fire of tax resistance so fast that there is going to be a great firestorm in the future.  There are probably more people getting into the freedom movement now than there were ten years ago.  The people hate the tax system so much that it cannot survive.  If the IRS escalates to the point that it must in order to protect the income tax, it will simply increase the hate and anger against itself and the writing will be on the wall.  The people will get more and more angry at the horror stories and the IRS will have increased opposition.

            In the meantime, however, it is very important to be careful about the approach that you take to this problem.  Please do your best to develop and fine-tune your baloney detectors.  Anyone who tells you that you can quit paying income taxes and that the IRS will not bother you if you use the magic paperwork they provide, must be questioned strongly.  The IRS is the most powerful agency in the most powerful country in the world and it has unbelievable power to harass and intimidate.  The moral of the story is that you must understand your actions, you will be the one that has to defend them.

            When I tell people about the difficulties in maintaining an extremely hard-core exempt W-4 stance, many of them refuse to believe that the IRS can be as nasty as it is.  The fact is, however, that although an exempt W-4 may seem appropriate to them now, it is the use of the exempt W-4 that has created so much misery in the Freedom Movement.  Right now,  some of the original individuals in this movement are having to struggle to extricate themselves from IRS levies and allegations of fraud because they filed an exempt W-4.

            Recently I had quite a heated discussion with a fellow who is a leader of the Freedom Movement out in California.  He strongly believes in the use of the exempt W-4 and he refuses to listen to any other point of view.  He explained to me that he had received letters from the IRS which state that the individual is exempt and he believes that the IRS cannot prosecute with such a letter in the file.

            Unfortunately he is incorrect.  The IRS can write a letter taking a certain position and then they can come back later and prosecute.  The IRS can easily claim that the conclusions in their letter were based on the submission of false or misleading information.  Remember that the IRS is not the law and a letter from them is not law.  The burden of proof is on you, the individual, it is not on the IRS. 

            The IRS can also deliberately set up a case for criminal prosecution.  There is no doubt that the IRS deliberately refunds money in response to "zero" returns and that the IRS allows exempt W-4s for the purpose of "farming" a criminal case.  One fellow that I spoke with recently was bragging about how he got the IRS to remove a civil penalty for an exempt W-4 and still allow the W-4 exempt.  He had written a letter to the IRS for the individual who got the civil penalty.  I predicted that the IRS deliberately removed the penalty so that it could proceed criminally.  The IRS cannot give a civil penalty and then proceed criminally because they would have a double-jeopardy problem.  Also, the IRS must develop a criminal case over several years.  They cannot prove criminal tax evasion unless they have consistent behavior over several years.  I think the IRS is farming the case in point as a criminal case.  Only time will tell, but in the meantime, the guru I spoke with is bound to get a lot of people into trouble.  Please do not file an exempt W-4 Form.

            This same guru also sets individuals up in "common law" trusts.  These trusts are supposed to have some sort of magic language that exempts them from the filing of returns and the payment of taxes.  The guru argued that the reason that other trusts don't work is because they don't have the magic language that his trust has.  He promised to send more proof of his claims.  Unfortunately the proof has not arrived.

            So, you must put on your "baloney-detector" glasses when you set up a trust.  Be aware that there is not any statute that exempts "common law" trusts from taxes.  And also be aware that the IRS does not pay any attention to common law.  Furthermore, the courts do not pay attention to common law in deciding tax questions.  The courts use statutory law and court decisions under the statutory law.  Common law trusts are not exempt from the filing of tax returns and the payment of taxes by virtue of common law because common law does not apply.  They are not exempt by virtue of statutory law because there are no statutes or court cases that exempt common law trusts from the payment of taxes.  So look before you leap and don't waste your money on junk.