Tax Protester Told to Stop Giving Advice

Associated Press ^ | Mon, Jan. 13, 2003 | MARC LEVY

[heyhey]

HARRISBURG, Pa. - A tax protester who allegedly promotes a bogus legal loophole to convince people they owe no taxes was ordered by a federal judge to stop the practice and turn over his clients' records.

The order came Friday in the government's effort to force Thurston Bell of Hanover to stop giving clients allegedly false tax advice and charging large fees for filing tax returns.

[jennyp]

Patrick, didn't you write an essay on tax protesters a few years ago? Do you still have it?

[Poohbah]

http://www.freerepublic.com/forum/a38cad9c905cc.htm

[ANTIROCKEFELLER]

I am one of those citizens that the IRS labels a PDT (Potentialy dangerous Taxpayer). From personal experience I can state that you will NOT win trying to take on the IRS, because the IRS does NOT follow the law. Bell's position however, is the only one that has been out there for more than a few years and has not been challenged in court by the IRS as far as I know. If you want to get details about the 861 argument, go to Bell's website at www.taxgate.com. In a nut shell the 861 argument is that sec. 861 lists all of the "other sources" of income that produce income that is taxable. The argument is actually very strong.

[SoDak]

I wasn't aware of licensing requirements for dispensing tax advice. Is it against the law for me to do people's taxes for them?

[Poohbah]

I wasn't aware of licensing requirements for dispensing tax advice. Is it against the law for me to do people's taxes for them?

Depends. If you sell your services as a means of avoiding ALL income taxes, based on a frivolous interpretation of the Internal Revenue Code, then you're setting yourself up for fraud charges--and you CAN be legally enjoined from continuing to defraud people.

[jennyp]

Bell's position however, is the only one that has been out there for more than a few years and has not been challenged in court by the IRS as far as I know.

Thanks to Poohbah for the link to the huge Tax Protester FAQ.

AR, I counted 13 decisions regarding § 861 here, along with a clear explanation of why it's a bogus claim. (Unfortunately.) I'd post the explanation here, but it's very long.

[ancient_geezer]

He is right that your wages are exempt and you owe no income tax on them.

Stratton's Independence, LTD. v. Howbert(1913), 231 U.S. 399:

• "'[I]ncome' may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor. As to the alleged inequality of operation between mining corporations and others, it is of course true that the revenues derived from the working of mines result to some extent in the exhaustion of the capital. But the same is true of the earnings of the human brain and hand when unaided by capital, yet such earnings are commonly dealt with in legislation as income."

 

Lane Co. v. Oregon (1868), 74 U.S. [7 Wall.] 71:

• [T]he people, through the constitution of the United States, 'established a more perfect union by substituting a national government, acting, with ample power, directly upon the citizens, instead of the confederate government, which acted with powers, greatly restricted, only upon the states.' In no other way can the supremacy of that constitution be maintained. It creates a government in fact as well as in name, because its constitution is the supreme law of the land, 'anything in the constitution or laws of any state to the contrary notwithstanding;' and its authority is enforced by its power to regulate and govern the conduct of individuals, even where its prohibitions are laid only upon the states themselves.

 

COOK v. TAIT, 265 U.S. 47 (1924)

• "[T]he principle was declared that the government, by its very nature, benefits the citizen and his property wherever found, and therefore has the power to make the benefit complete. Or, to express it another way, the basis of the power to tax was not and cannot be made dependent upon the situs of the property in all cases, it being in or out of the United States, nor was not and cannot be made dependent upon the domicile of the citizen, that being in or out of the United States, but upon his relation as citizen to the United States and the relation of the latter to him as citizen."

 

Lucas v. Earl(1930), 281 U.S. 111:

• "The Revenue Act of 1918 approved February 24, 1919, c. 18, 210, 211, 212(a), 213(a), 40 Stat. 1057, 1062, 1064, 1065, imposes a tax upon the net income of every individual including 'income derived from salaries, wages, or compensation for personal service ... of whatever kind and in whatever form paid,' 213(a). The provisions of the Revenue Act of 1921, c. 136, 42 Stat. 227, 233, 237, 238, in sections bearing the same numbers are similar to those of the above."

• "There is no doubt that the statute could tax salaries to those who earned them "

U.S. v. CONSTANTINE, 296 U.S. 287 (1935)

• " The United States has the power to levy excises upon occupations, and to classify them for this purpose; and need look only to the fact of the exercise of the occupation or calling taxed, regardless of whether such exercise is permitted or prohibited by the laws of the United States or by those of a state. The burden of the tax may be imposed alike on the just and the unjust."

 

Charles C. Stewart Machine Co. v. Davis (1937), 301 U.S. 548:

• The tax, which is described in the statute as an excise, is laid with uniformity throughout the United States as a duty, an impost, or an excise upon the relation of employment.

• "But natural rights, so called, are as much subject to taxation as rights of lesser importance. An excise is not limited to vocations or activities that may be prohibited altogether. It is not limited to those that are the outcome of a franchise. It extends to vocations or activities pursued as of common right."

• Employment is a business relation, if not itself a business. It is a relation without which business could seldom be carried on effectively. The power to tax the activities and relations that constitute a calling considered as a unit is the power to tax any of them. The whole includes the parts. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 267 , 268 S., 53 S.Ct. 345, 349, 350, 87 A.L.R. 1191

House Congressional Record, March 27, 1943, pg. 2580:

• "The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges (the type 3 and 4 taxes) which is measured by reference to the income which they produce. The income is not the subject of the tax; it is the basis for determining the amount of tax."

 

They will not respond becasue they can't prove he is wrong.

Sure they can't. /sarcasm

United States v. Melton, No. 94-5535 (4th Cir. 1996)
ARGUED: Lowell Harrison Becraft, Jr.[one of Schulz & Co. legal beagles], Huntsville, Alabama, for Appellants.

The jury heard not only the United States's evidence against the Meltons, but also the brothers' defense that they believed they were not "persons liable" for federal income tax. The jury rejected the excuse, however, and convicted them on nearly all counts.

• [Subtitle A] "Section 1 of the Internal Revenue Code imposes a federal tax on the taxable income of every individual.
  26 U.S.C. s 1."

• [Subtitle A] "Section 63 defines "taxable income" as gross income minus allowable deductions."
  26 U.S.C. s 63.

• [Subtitle A] Section 61 states that "gross income means all income from whatever source derived," including compensation for services.
  26 U.S.C. s 61.
  
• [Subtitle F] Sections 6001 and 6011 provide that a person must keep records and file a tax return for any tax for which he is liable.
  26 U.S.C. ss 6001
  26 U.S.C. ss 6011.

• Finally, section 6012 provides that every individual having gross income that equals or exceeds the exemption amount in a taxable year shall file an income tax return.
  26 U.S.C. s 6012.

The duty to pay federal income taxes therefore is "manifest on the face of the statutes, without any resort to IRS rules, forms or regulations." United States v. Bowers, 920 F.2d 220, 222 (4th Cir.1990). The rarely recognized proposition that, "where the law is vague or highly debatable, a defendant--actually or imputedly--lacks the requisite intent to violate it," Mallas, 762 F.2d at 363 (quoting United States v. Critzer, 498 F.2d 1160, 1162 (4th Cir.1974)), simply does not apply here.

Each Melton brother had gross income in excess of the amount requiring the filing of a return in each of the years at issue. Therefore, each was a "person liable."

26 USC 7805(a) Rules and regulations
(a) Authorization - … the Secretary [of the Treasury] shall prescribe all needful rules and regulations for the enforcement of this title [Title 26]…" [26 USC § 7805]

Thus under amplifying Treasury regulations for 26 USC 1, 26 CFR 1.1-1(a),(b)

Sec. 1.1-1 Income tax on individuals.

(a) General rule. (1) Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States and, to the extent provided by section 871(b) or 877(b), on the income of a nonresident alien individual.

(b) Citizens or residents of the United States liable to tax. 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.

And in Regard to 26 USC 861

TITLE 26 - INTERNAL REVENUE CODE
Sec. 861. Income from sources within the United States
(a) Gross income from sources(activities) within United States
The following items of gross income shall be treated as
income from sources(activities) within the United States:

(3) Personal services
Compensation for labor or personal services performed in the United States;

EXCEPT that compensation for labor or services
performed in the United States shall not be deemed to be income
from sources within the United States if -

(A) the labor or services are performed by a nonresident
alien individual temporarily present in the United States for a
period or periods not exceeding a total of 90 days during the
taxable year,
(B) such compensation does not exceed $3,000 in the
aggregate, and
(C) the compensation is for labor or services performed as an
employee of or under a contract with

(i) a nonresident alien, foreign partnership, or foreign
corporation, not engaged in trade or business within the
United States, or
(ii) an individual who is a citizen or resident of the
United States, a domestic partnership, or a domestic
corporation, if such labor or services are performed for an office or place of business maintained in a foreign country
or in a possession of the United States by such individual,
partnership, or corporation.
In addition, except for purposes of sections 79 and 105 and
subchapter D, compensation for labor or services performed in the
United States shall not be deemed to be income from sources
within the United States if the labor or services are performed
by a nonresident alien individual in connection with the
individual's temporary presence in the United States as a regular
member of the crew of a foreign vessel engaged in transportation
between the United States and a foreign country or a possession
of the United States.

In Summary, if you are a United States citizen, and receive compensation for labor or services in the United States you are subject to income taxes.

• compensation = item of income
• in exchange for = activity
• service = source.

 

A tax levied as an excise or duty on an activity of commerce, the exchange of labor or services for compensation with another person.

A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856:
WAGES, contract. A compensation given to a hired person for his or her services.

KNOWLTON v. MOORE, 178 U.S. 41 (1900)

• 'indirect taxes are levied upon the happening of an event or an exchange.'

BROMLEY v. MCCAUGHN, 280 U.S. 124 (1929)

• While taxes levied upon or collected from persons because of their general ownership of property may be taken to be direct, Pollock v. Farmers' Loan & Turst Co., 157 U.S. 429 , 15 S. Ct. 673; Id., 158 U.S. 601 , 15 S. Ct. 912, this court has consistently held, almost from the foundation of the government, that a tax imposed upon a particular use of property or the exercise of a single power over property incidental to ownership, is an excise which neet not be apportioned

Tyler v. U.S. 281 U.S. 497, 502 (1930)

• An indirect tax is a tax laid upon the happening of an event,as distinguished from its tangible fruits.

[PatrickHenry]

Patrick, didn't you write an essay on tax protesters a few years ago? Do you still have it?

Loads of them. This thread I started is almost 3 years old, but a lot of the links are still good: ALL "TAX PROTESTER" ARGUMENTS TOTALLY DEBUNKED .

[DAnconia55]

True Conservatives, would be rooting for people to get around the IRS, not attacking them for it.

There's nothing noble about taxation. It is in fact, evil.

[Libertarianize the GOP]

Voluntary Alternatives to Taxation
The Hawaii Reporter ^ | April 16, 2002 (what a date!) | Stuart K. Hayashi
Posted on 01/11/2003 7:34 PM PST by ultimate_robber_baron
Voluntary Alternatives to Taxation
http://www.freerepublic.com/focus/news/821162/posts

[PatrickHenry]

True Conservatives, would be rooting for people to get around the IRS, not attacking them for it. There's nothing noble about taxation. It is in fact, evil.

Of course. But I don't want to see conservatives march into a meat grinder because they've been given horribly bad advice. The only way to fix the system is to abolish the IRS, repeal the Code, and amend the Constitution. It's just foolish to imagine that there's some secret argument you can buy at some seminar that will win for you in court, which is ballyhooed all over the internet, and which Congress somehow never gets around to fixing.

[Cultural Jihad]

This whole issue ignores the crux of our terrible Constitutional crisis: The Missing 13th Amendment specifies that any law written after 1822 by any lawyer is void and invalid. Therefore, traffic stops, the income tax, parking fees, property taxes, Social Security, all illegal! < /sarc>

[weikel]

I'd settle for invaliadating any law enacted after Woodrow Wilson was inaugurated( excepting the Coolidge administration).

[Poohbah]

Is it evil to tell someone up on the high dive, as they're jumping on the board, ready to do a Triple Lundy, that there's no frickin' water in the pool?

[Cultural Jihad]

True Conservatives, would be rooting for people to get around the IRS, not attacking them for it. There's nothing noble about taxation. It is in fact, evil.

And this drivel from a self-professed Libertarian who claims that possession of child pornography should be perfectly legal and protected by the full force of L.P. Brown Shirt law.

[hattend]

"Every time Bell convinces another individual to file false tax returns ... the internal revenue laws are thwarted," Conner said. "The court will not countenance such impropriety."

What the hell does that mean? That Bell is right? If there is a huge loophole in the law complain to Congress, judge.

If he is wrong, the IRS could collect huge fines and late payments, right? What are they squawking about? Hmmm...I need to look this Bell guy up.

[Poohbah]

What the hell does that mean?

It means that when Bell, using his bogus arguments, convinces someone to file a false tax return, the IRS has to go off after the guy filing the return

That Bell is right?

No. It does not mean that at all. It means JUST THE OPPOSITE.

BTW, what's your take on English being the official language of the USA? Oppose, or favor?

If there is a huge loophole in the law complain to Congress, judge.

There isn't. That's why he's saying the laws are THWARTED.

If he is wrong,

He is.

the IRS could collect huge fines and late payments, right?

Yes, they can. Do you think that that is a GOOD THING?

What are they squawking about? Hmmm...I need to look this Bell guy up.

And another guy jumps off the diving board on Bell's statement of "The pool's not empty, it just LOOKS empty."

[PatrickHenry]

What the hell does that mean? That Bell is right?

If I convince you that sex with children is legal, and you go out and seduce a child, the law protecting children has been thwarted. Got it?

[habs4ever]

Gosh,do we know anyone like this??

[PatrioticAmerican]

It sure seems that paragraph 3 CLEARLY states that income from services for labor is taxable.