“Tax Court Is for Withholding Agents”




Dan Meador


(no date)



One of the critical IRS omissions is the 30-day notice prior to the supposed notice of deficiency, which isn't really a notice of deficiency.  We located particulars of the 30-day letter in 26 CFR §§ 601.105 and 601.106, so will be able to strengthen our version.  Also, the IRS jurisdictional statement is in 26 CFR 601.101;  and, as I suspected, the "transferee" who has standing to petition in U.S. Tax Court is the withholding agent designated per 26 U.S.C. §§ 1441 through 1461.


In sum, the whole IRS notice of deficiency business is a scam;  the Letter 531(DO) is a fraud.  People get suckered into filing in Tax Court where the Internal Revenue Code actually prescribes a very narrow U.S. Tax Court jurisdiction.  It's simply another instance of, "Come sit beside me," said the spider to the fly.  People routinely get hammered in Tax Court because the Tax Court is prevented from looking behind the alleged liability.  The reason, of course, is because the liability is actually a third-party liability.  In the meantime, the IRS appeals office retains jurisdiction for four months even after there is a "docketed" case in Tax Court.  However, to the best of my knowledge, IRS never provides notice that the appeals office retains jurisdiction so there is another element of fraud.


One of the major projects Marcia and I have been working on is the common law "retraxit".


Luis Ewing is responsible for background research relating to the retraxit.  It goes hand-in- hand with "stipulations by tacit procuration."


Effect is the legal equivalent of, "Speak now or forever hold your peace."


The question then arises, "What do we have evidence to prove?"


Here is a short list of items I believe we can prove:


1.  After exhaustive study of internal revenue laws of the United States, a consortium of researchers have concluded that very few citizens and residents of the United States and domestic corporations, partnerships, etc., are liable for federal income taxes that require keeping books and records and filing returns.  Taxing and liability statutes do not apply to income sources and activities of the American people and domestic juristic entities other than those who receive income from foreign sources, insular possessions of the United States, and maritime activity regulated by treaty or trade agreement.  See the Good Faith and Reasonable Cause Standard at 26 CFR 1.6664-4 and the Substantial Authority Standard at 26 CFR 1.6662-4.  For reasonably comprehensive treatment of subtitle A income tax, see the videotape Theft by Deception by Larken Rose, available via Internet at www.theft-by-deception.com.


2.  Court documents and published district and circuit court decisions verify that the Internal Revenue Service (“IRS”) is agent of the [federal] United States of America, not Government of the United States (See 26 U.S.C. 7402:  “The district courts of the United States at the instance of the United States shall have jurisdiction .…”)  For distinction between the “United States” and the “United States of America” as unique and separate governmental entities, see historical and revision notes following 18 U.S.C. 1001 and Attorney General delegation orders to the Director of the Bureau of Prisons, 28 CFR §§ 0.96 and 0.96b.  Until proven otherwise, IRS personnel will be considered and treated as hostile agents of a foreign government and all IRS claims will be construed as claims of a government foreign to the United States and States of the Union.


3.  The IRS operates in an ancillary or other secondary capacity under contract, memorandum of agreement or some comparable device to provide services under original authority delegated to the Treasury Financial Management Service or some other bureau of the Department of the Treasury, and that such services extend only to government employees and employers, as defined at 26 CFR 3401(c) and (d).  The authorization is essentially intra-governmental in nature;  it does not extend to private sector enterprise in States of the Union.


4.  The IRS is not the “delegate” of the Secretary of the Treasury, as that term is defined at 26 U.S.C. 7701(a)(12)(A).


5.  Income tax liabilities must be assessed in compliance with requirements of 26 U.S.C. 6203 and 26 CFR 301.6203-1 before there is a tax liability.  On request, the taxpayer against whom income tax liabilities are assessed is entitled to receive the assessment certificate or certificates.


6.  Prior to any adverse action to collect contested delinquent tax debts (properly assessed liabilities), the current general agent of the Treasury and the Attorney General must authorize such action.  See particularly, Executive Order #6166 of June 10, 1933, as amended, 5 U.S.C. 5512, and 26 U.S.C. 7401.  (The General Accounting Office is listed as general agent of the Treasury in notes following 5 U.S.C. 5512, but appears to have delegated certification of obligations to Government of the United States, most probably to the Treasury Financial Management Service, or a subdivision thereof.)


7.  Any statutory lien “arising” under section 6321 of the Internal Revenue Code is inchoate (unperfected) until there is a judgment lien secured in compliance with the Federal Debt Collection Procedures Act (see Chapter 176 of Title 28, particularly 28 U.S.C. 3201).  Therefore, notices of federal tax lien, notices of levy and other such instruments utilized to encumber and convert private property are uttered instruments unless perfected by a judgment issued by a court of competent jurisdiction.  See also the Fifth Amendment Due Process Clause, clarified by relation-back doctrine (see United States v. A Parcel of Land, Buildings, Appurtenances and Improvements, known as 92 Buena Vista Avenue, Rumson, New Jersey (1993), 507 U.S. 111;  113 S.Ct. 1126;  122 L.Ed.2d 469).


8.  All IRS seizures where there is not a judgment lien in place are predicated on the underlying presumption that a drug-related commercial crime specified in 26 CFR 403.38(d)(1) has been committed and that the seized property was being used in connection with or was the fruit of the crime.  See particularly Delegation Order 157, Rule 41 of the Federal Rules of Criminal Procedure, and 26 U.S.C. 7302 (property used in violation of internal revenue laws).  The “in rem action is admiralty in nature (see 26 U.S.C. 7323) and presumes that there is a maritime nexus.  See 26 U.S.C. 7327 concerning customs laws.


9.  Internal revenue districts have not been established in States of the Union, as required by 26 U.S.C. 7621 and Executive Order #10289, as amended.  Therefore, IRS incursion into States of the Union for purposes authorized by Chapter 78 of the Internal Revenue Code are beyond venue prescribed by law.  See also 4 U.S.C. 72.


10.  Collateral issues (nature and cause of action, standing of the IRS, venue and subject matter jurisdiction generally) are matters that must be documented in record when challenged.  Therefore, the mandate for disclosure falls within substantive rights that cannot be avoided or otherwise passed over through procedural technicalities or silence.  U.S. Supreme Court decisions verifying these requirements are too numerous to list in this context.


11.  The Administrative Procedures Act and the Federal Register Act require publication of organizational particulars and procedure in the Federal Register.  See particularly, 5 U.S.C. 552.  The IRS has failed to comply with these mandates.  Therefore, IRS personnel engaged in federal tax administration have a duty to affirmatively resolve organizational and other collateral issues and procedural issues when they are raised in the administrative forum.


12.  IRS personnel acts not authorized by law and omission of duties imposed by law are criminal in nature (26 U.S.C. 7214(a)(1), (2) and (3)), and whether knowingly or unknowingly, IRS personnel operating in States of the Union, except with the possible exception of authority for enforcing drug-related customs laws, are involved in a seditious conspiracy and racketeering enterprise.  Where IRS personnel operate under color of authority of the United States, when in reality they are agents of a government foreign to the United States, offenses may be construed as treason and conspiracy to commit treason.


13.  There are essentials to any case or controversy, whether administrative or judicial, arising under the Constitution and laws of the United States (Article III, Section 2, U.S. Constitution, Arising Under Clause).  See Federal Maritime Commission v. South Carolina Ports Authority, 535 U.S. 732 (2002), decided March 28, 2002.  The following elements are essential:


1.  When challenged, standing, venue and all elements of subject matter jurisdiction, including compliance with substantive and procedural due process requirements, must be established in record;


2.  Facts of the case must be established in record;


3.  Unless stipulated by agreement, facts must be verified by competent witnesses via testimony (affidavit, deposition or direct oral examination);


4.  The law of the case must affirmatively appear in record, which in the case of a tax controversy necessarily includes taxing and liability statutes with attending regulations;


5.  The advocate of a position must prove application of law to stipulated or otherwise provable facts;  and,


6.  The trial court, whether administrative or judicial, must render a written decision that includes findings of fact and conclusions of law.


Once we had the Federal Maritime Commission v. South Carolina Ports Authority case, Marcia and I wound up re-reading requirements for administrative due process in 5 U.S.C. §§ 553 through 559, and IRS procedural regulations in 26 CFR §§ 601.101 through 601.106;  § 601.105 deals with examination and § 601.106 deals with appeals.  Aside from getting reinforcement for limited U.S. Tax Court jurisdiction, we found that IRS appeals procedure do not comply with Administrative Procedures Act requirements for administrative due process.  Therefore, IRS is not in compliance with the Administrative Procedures Act and the Federal Register Act.  That's another item that we will add to the list of things we can absolutely prove.


IRS appeals conferences are informal.  The supposed appeals officer isn't authorized to administer oaths.  There is no provision for subpoena authority, so the right to confront adverse witnesses is denied.  IRS may or may not be represented at an appeals conference, so the conference is not an adversarial proceeding before an impartial trier of fact.  And, of course, neither examination nor appeals officers issue a statement of fact and law prior to hearings.  There are other defects in IRS appeals process prescribed by 26 CFR 601.106, but these are some of the more essential omissions.


The list above represents essentials of what I already have before the IRS Chief Counsel.  I believe there are 24 particulars in that letter.  I will need to add the deficiency in administrative due process and U.S. Tax Court jurisdiction.


Early in the year, I concluded that the Administrative Procedures Act provides the litigation track we need to use to resolve some of these issues.  Since March, I've been framing what I want to litigate.  I believe the stipulation by tacit procuration will strengthen the position.


When the notion that IRS operates in admiralty jurisdiction was introduced in the research discussion group, a few people in the group completely rejected the notion.  However, in the last year, we have traced both admiralty and "at law" procedure.  In order to encumber or convert private assets in an "at law" civil action, IRS must utilize the Federal Debt Collection Procedures Act in Title 28;  the Fifth Amendment is a complete bar against government taking assets without a judgment from a court of competent jurisdiction.  Relation-back doctrine, which Jack Cohen first unearthed, is the missing link.


Everything on the criminal side proceeds in admiralty.  IRS jurisdiction is controlled by 26 CFR 403.  Any time there is a seizure, there is always an underlying presumption that one of the drug-related commercial crimes listed at § 403.38 has been committed and that the property was used in conjunction with or was the fruit of the crime.


This is where Troy Coffee of Kentucky came into the picture.  He went to the Internal Revenue Manual and the United States Attorney's Manual to verify that all functional departments of the IRS are under jurisdiction of the Assistant Commissioner (International).  In the U.S. Attorney's Manual, all jurisdiction falls within special territorial and maritime jurisdiction, 18 U.S.C. 7.  Troy has allegedly stopped criminal investigations and summonses issued by CID agents.


In our review of Part 601 regulations, we found that § 601.101 specifies the obvious:  IRS personnel may inquire about tax liabilities within internal revenue districts.  We know that the Secretary of the Treasury has never established internal revenue districts within States of the Union.  Everything else falls within jurisdiction of the foreign director -- Americans living abroad, nonresident aliens with income from within the United States, withholding agents, etc.  The list is approximately the same as Larken Rose presented in his film “Theft by Deception.”


The key question:  Has the Secretary of the Treasury established internal revenue districts in States of the Union, as required by 26 U.S.C. 7621 and Executive Order #10289?  If not, IRS "venue" (territorial jurisdiction) is governed by 4 U.S.C. 72:  Departments of the government may operate in the District of Columbia, and not elsewhere, except as specifically authorized by statute.  Per 3 U.S.C. 301, the president may delegate authority for whatever power he has vested in him by statute.  He authorized the Secretary of the Treasury to establish internal revenue districts via E.O. #10289.  The Secretary has established customs collection houses, per 19 CFR 101, but has never created internal revenue districts for general administration of internal revenue laws of the United States inside States of the Union.


Here is where other research is important:  Larry Becraft has done an excellent job of listing cases in which courts of the United States and the several States have ruled that unless the legislative authority created a department, office or whatever, there is no authority.  Or, as Ralph Winterrowd puts it, there must be an office to fill before there can be an officer.  Since Congress did not create the IRS, as required by Article I, Section 8, Clause 18 of the Constitution, IRS cannot be a legitimate agency of the United States in the Constitutional context, which applies to States of the Union.  If you look at the definition of "delegate" of the Secretary at 26 U.S.C. 7701(a)(12)(A), you will find that only legitimate offices and agencies of the United States, i.e. Government of the United States, may enforce internal revenue laws.  However, there is an exception at 26 U.S.C. 7701(a)(12)(B).  Agencies of insular possessions can be designated as "delegate" in other insular possessions for purposes of enforcing Chapters 1, 2 and 21 of the Internal Revenue Code.


In 1862 legislation, in which Congress created the original Commissioner of Internal Revenue, the bill also created the offices of "assessor" and "collector".  Via Reorganization Plan #26 of 1950, Harry Truman unilaterally abolished those two offices.  He didn't have that authority.  Only the legislative branch can abolish what it creates.  Congress never created the office of "Revenue Officer", CID agent, or any other office in the IRS other than the Commissioner of Internal Revenue and a few attorney positions.


The missing link, I am convinced, is the Treasury Financial Management Service and/or one of its subdivisions.  Sean O'Hara, Jack Cohen and others in their working group have pioneered in this area via the Treasury Financial Management Manual, posted on the Financial Management Service web page.  Although I haven't had a great deal of time to track the matter down, I ran across something in the Internal Revenue Manual that suggests that the Treasury Financial Management Service has to approve and enforce garnishments and the like.  Hopefully we have someone in the background working on this line.


This brings us to what I believe is a tremendously important subject:  How do we defend against IRS criminal investigations, seizures, prosecution, etc.?


Here I believe several of our researchers, including Ewing, Coffee, Brad Barnhill, John Jennings and sundry others, are at the verge of cracking the nut.  The two key "legal" instruments they have worked with are:  (1) a demand for a bill of particulars, and (2) the offer of proof.  The common law retraxit and stipulation by tacit procuration may be useful.


In the "civil" forum, the "saving to suitors" clause might be useful;  see at 28 U.S.C. 1333(1).  It may also be useful in the criminal.


This overview is intended to bring people up to speed on approximately where we are with research and procedural development.  As we have more capable people exchanging research and procedure, we're enjoying more success and see a glimmer of hope that the federal income tax scam will be exposed sufficiently to put an end to it.




Dan Meador