Time: Tue Jun 03 10:20:25 1997 by primenet.com (8.8.5/8.8.5) with SMTP id GAA04430 for [address in tool bar]; Tue, 3 Jun 1997 06:03:39 -0700 (MST) Date: Tue, 03 Jun 1997 06:03:04 -0700 To: pmitch@primenet.com From: Paul Andrew Mitchell [address in tool bar] (by way of Paul Andrew Mitchell [address in tool bar]) Subject: SLS: force and effect of regulations in CFR [This text is formatted in Courier 11, non-proportional spacing.] MEMO TO: John Voss, Director, N.C.B.A. other interested parties FROM: John E. Trumane Account for Better Citizenship DATE: June 9, 1992 SUBJECT: Do the regulations in 26 CFR have the force and effect of law? The debate fostered by the claims on N.C.B.A.'s $50,000 Reward appears to have reached the following point of departure: Mr. Conklin has argued that the IRC makes nobody liable for federal income taxes. This argument was defeated by reference to clear sections of the IRC which make "withholding agents" liable for federal income taxes. I do not as yet know if Mr. Conklin is a withholding agent. In a private communication, Mr. Conklin has also argued that the regulations in 26 CFR create no liability because "a regulation cannot exceed the limitations created by the statute." The purpose of the remainder of this memo is to cite some of the case law which is relevant to the questions of validity, and of the legal force and effect, of regulations promulgated by the Secretary of the Treasury. The attached abstracts from American Jurisprudence reveal a substantial body of case law which is not always entirely consistent on this question. For example: A regulation cannot supply omissions of the statute. [2 Am Jur 2d, Section 289] -but- A regulation which fulfills the purpose of the law cannot be said to be an addition to the law. [ibid., Section 300] The following are notable excerpts from the attached Am Jur sections that deal with the effect and validity of rules: Rules, regulations, and general orders enacted by administrative agencies pursuant to the powers delegated to them have the force and effect of law. [page 119] There have been applied to administrative regulations the principles that everyone is presumed to know the law or that ignorance of the law is no excuse, and the courts will take judicial notice of them. [page 120] ... [T]here is no violation of the Federal Constitution in an act of Congress which provides for a defense to an action under the statute based on good faith reliance upon any administrative regulation .... [page 120] Administrative regulations are held to be "laws" for various purposes, including jurisdiction of courts and criminal liability. If Congress imposes criminal sanctions for disobedience of regulations, it can hardly be contended that such regulations are not a "law" for the purposes of the Criminal Code. [page 121] Compliance with valid administrative regulations is compliance with law, as has been held where it was sought to induce actions contrary to the regulations or to impose liability for actions which accorded with regulations. [page 122] Valid administrative rules or regulations are generally regarded as legislative enactments, and have the same effect as if enacted by the legislature. They have the force of a statute and the same effect as if part of the original statute. They become integral parts of the statutes, particularly where they are legislative in nature -- that is, are called for by the statute itself. [page 122] While in the strict sense of the term an administrative regulation is not actually a "statute" but is at most an offspring of a statute, a regulation may be deemed to come within the term "statute." [page 123] ...[R]ules and regulations will be upheld where they are within the statutory authority of the agency and reasonable, ... they must be sustained unless unreasonable and plainly inconsistent with the statute. [page 123] Only when discretion has been arbitrarily exercised, resulting in injustice or unfairness, do the courts intervene to strike down a rule promulgated by the proper agency designed to give appropriate effect to the provisions of the act involved. [page 124] Administrative regulations which go beyond what the legislature can authorize are void and may be disregarded. [page 124] Regulations which are legislative in character should not be overruled by the courts unless clearly contrary to the will of the legislature. [page 124] Thus there are applicable the rules in regard to presumption of validity and partial or entire invalidity; and, just as in individual cases hardship and loss may flow from legislative acts which are nevertheless valid, so administrative regulations may also operate. [page 125] Administrative rules and regulations, to be valid, must be within the authority conferred upon the administrative agency. A rule or regulation which is broader than the statute empowering the making of rules, or which oversteps the boundaries of interpretation of a statute by extending or restricting the statute contrary to its meaning, cannot be sustained. [page 127] They are valid and binding only when they are in furtherance of the intention of the legislature as evidenced by its acts, and a regulation, valid when promulgated, becomes invalid upon the enactment of a statute in conflict with the regulation. However, an administrative regulation will not be considered as having been impliedly annulled by a subsequent act of the legislature unless the two are irreconcilable, clearly repugnant, and so inconsistent that they cannot have concurrent operation. [page 127] Administrative regulations which go beyond what the legislature has authorized, which violate the statute, or which are inconsistent or out of harmony with the statute conferring the power, have been said to be void. [page 128] ... [A]dministrative regulations, to be valid, are required to be appropriate, reasonable, or not inconsistent with law. A rule or regulation which is within the broad rulemaking powers commonly conferred on administrative agencies will be sustained by the courts. [page 128] ... [A] regulation which fulfills the purpose of the law cannot be said to be an addition to the law. Before a rule or regulation may be declared void it must be definitely in excess of the scope of authority, or plainly or palpably inconsistent with law. [page 129] ... [A]n administrative agency may not create a criminal offense or any liability not sanctioned by the lawmaking authority, especially a liability for a tax or inspection fee. [page 129] ... [I]ssuance of regulations is in effect exercise of delegated legislative power. [page 770] Administrative Procedure Act ... and Federal Register Act ... set up procedure which must be followed in order for agency rulings to be given force of law. [page 770] Contents of Federal Register are judicially noticed and may be cited by volume and page number. [page 772] ... [F]ederal courts are required to take judicial notice of contents of Federal Register. [page 772] Code of Federal Regulations being nothing more than supplemental edition of Federal Register, court is entitled to take judicial notice of cited regulation in brief of prosecution[,] and conviction of defendant thereon is not precluded by government's failure to introduce such applicable section in evidence. [page 772] Court was required to take judicial notice of the Federal Register and the Code of Federal Regulations. [page 772] In closing, the following excerpt from an unpublished treatise by attorney Lowell Becraft is extremely relevant to the force and effect of regulations: CONSTRUCTION OF REGULATIONS In 5 U.S.C., section 301, heads of Executive departments are given authority to make and publish regulations. It has been previously demonstrated how the current federal income tax laws in question today relate back to the 1916 income tax act. Section 15 of that act defined the terms "State" and "United States" in clear jurisdictional terms. All income tax acts passed by Congress have authorized the Secretary of the Treasury to promulgate regulations, which he has done since the first income tax act in 1913. All of the income tax regulations published since January 28, 1921, have defined the people subject to the tax as "citizens of the United States subject to its jurisdiction." Thus, this phrase has been a part of the regulations for some 67 years, and applied to the 1918, 1921, 1924, 1926, 1928, 1932, 1934, 1936 and 1938 acts, as well as the 1939 and 1954 Codes. The Secretary of the Treasury and the United States are firmly bound by these prior regulations as well as the current Treasury Regulation 1.1-1(c), which defined the subject of the current tax as a "citizen subject to its jurisdiction." A long line of Supreme Court cases holds that an executive department head such as the Secretary of the Treasury is bound by the regulations he so promulgates and publishes .... And the Supreme Court has found that regulations consistently promulgated in the same language for repeatedly re-enacted laws are very significant. In Old Colony R. Co. v. Commission of Internal Revenue, 284 U.S. 552, 52 S.Ct. 211 (1932), the Supreme Court held that such regulations are given an implied legislative approval: "The repeated re-enactment of a statute without substantial change may amount to an implied legislative approval of a construction placed upon it by executive officers," 284 U.S., at 557 [emphasis added] This brings us to the following regulation; it mentions liability explicitly: In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States. [26 CFR 1.1-1(b)] # # # ======================================================================== Paul Andrew, Mitchell, B.A., M.S. : Counselor at Law, federal witness email: [address in tool bar] : Eudora Pro 3.0.2 on Intel 586 CPU web site: http://www.supremelaw.com : library & law school registration ship to: c/o 2509 N. Campbell, #1776 : this is free speech, at its best Tucson, Arizona state : state zone, not the federal zone Postal Zone 85719/tdc : USPS delays first class w/o this ========================================================================
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