Chapter 13: HJR 192

Does Paper Money Have Any Real Value?

By Seth Maynard

The short answer to this question is: “no”. Unfortunately, the United States dollar is backed by no more than a promise to pay and not by any solid, valuable object with real value. Only gold or silver is capable of such a role and it has not played that role since 1933.

According to then-President Franklin Roosevelt:

“All coins and currencies of the United States… shall be legal tender for all debts… taxes, duties, and dues, except gold coins, when below the standard weight and limit of tolerance provided by law for the single piece, shall be legal tender only at valuation in proportion to their actual weight.”

In 1933, House Joint Resolution 192 was passed. The resolution made paper money and coins created by the Federal Reserve legal tender and replaced the gold coin as the legal standard of currency in the United States of America. Gold coins became worth only their actual weight when their weight fell below acceptable limits. Based on this law, debts, liabilities and dues can be paid by paper money with no actual backing standard as gold was no longer its basis. Eventually, this was held as unconstitutional (Perry v. United States, 1935) and was repealed in 1997 (91 Stat. 1229). It was unconstitutional as the Constitution itself issued the gold standard.

The banks should not be handing out loans and worse, earning interest on them, as they truly had no money to lend from the very beginning. There is no real money as the money in circulation actually has no real value in terms of gold or silver. It is no more than a debt which the U.S. government has promised to pay.

Hence, there is currently no way to pay off debts or make payments in the U.S.A. as the dollar has no real value, only a promise that a debt will be paid and the faith people have placed on that promise. This is so because, although the House Joint Resolution 192 was repealed, the government has made no steps to revert to a gold-based monetary standard. To this day, paper money and coins made by the Federal Reserve remain legal tender and gold coins remain unrecognized.

These and many other illusory and possibly damaging unrealities are discussed and addressed by Mike Ioane’s book “Boston Tea Party”. Currently in its third edition, the book takes a look at some questionable government practices and offers means of protecting yourself against them. Not only is it a book, it is a resource filled with actual letters, requests and forms that you can use in these

Chapter 12: Irrevocable Trusts

Why Should You Use an Irrevocable Trust?

By Seth Maynard

A trust is a relationship in which assets or properties are held by one person for another. One kind of trust is a pure trust. It is a contract between private persons. Protected by the constitution, laws cannot contravene on people’s rights to enter into contracts. A pure trust is useful as it is upheld anywhere in the country, it is not dependent on statutory law and it is always valid.

An irrevocable trust is one in which the details cannot be changed or revoked. These, if desired, can only be done with the force of a court order. The grantor of property is liable for less tax than when the trust is of the revocable variety. Moreover, this type of trust provides estate tax savings and protection from those whom you owe.

There are different types of irrevocable trusts. A Charitable Remainder Trust is one in which the principal is eventually turned over to a charity. This occurs after a pre-appointed time period. In the meantime, the beneficiaries receive the income made from the principal. The benefits: no capital gains tax, an income tax deduction, and a reduction of estate taxes as the asset no longer remains a part of the grantor’s estate. There are even subtypes of this kind of trust: a charitable remainder annuity trust, a charitable remainder unitrust, and a charitable pooled income fund. The first subtype makes yearly fixed payments. The second makes yearly payments which are based on a fixed proportion of the trust’s value. A pooled income fund allows contributions from multiple sources, hence the term “pooled”.

A Charitable Lead Trust works in the opposite way. The principal returns to the beneficiaries while the earnings are turned over to the charity. The principal is surrendered after a particular duration. A Family Trust allows married people to increase the amount they can save from estate taxes by up to two times. A Generation-Skipping Trust or Dynasty Trust is a very long-term thinking version. It enables grants to family members two generations removed from the one giving the funds. These are usually the grantor’s grandchildren.

As there are obvious benefits to setting up irrevocable trusts, Mike Ioane created an entire chapter devoted to this topic in his book “Boston Tea Party”. It also includes a full ready- to-use copy of an actual trust agreement, covering all aspects of such a legal document. The chapter describes how to use the document and explains the basic terminology.

Chapter 11: Obtaining Status under the Social Security Program

Nobody Truly is a Citizen or National of the United States

By Seth Maynard

An important determinant of how much tax you owe the government is your status as reported in your Social Security record. Most are unaware that no one is, in fact, a “citizen or national of the United States.” When one applies for a social security number, such as when starting on a new job, one is asked whether he is a citizen or national of the United States, a permanent alien resident, or a nonresident alien authorized to work within a duration of time. Most would naturally think that they are a citizen or national of the United States. Wrong; most people are neither.

You were born here, you might say, and question the validity of the previous statement. Yes, your birth certificate says so – but that does not make you a citizen or national outright either. Well, what does?

People born in the baby boom era who applied for a social security number are deemed as “stateless” or, worse, “alien” if they did not also request for nationality in their application. Everyone else is an “American National”. In United States v. Wong Kim Ark and Perkins v. Elg, a person born in the country becomes a “citizen of the United States”. However, a birth certificate suffices as evidence as to a person’s place of birth but it says nothing regarding federal citizenship.

There is no such thing as a “citizen of the United States”, according to Section 8, Article 1 of the Constitution. A person who is a citizen of any of the member States is, mostly by convenience only, held to be a citizen of the United States. But a non-citizen of any State cannot be a citizen of the United States. It is within the States’ power to naturalize, not the Federal government. Hence, there are really no “citizens of the United States” as there is no federal-only citizen, only State citizens to whom the privileges and protections of the federal law are applied.

The proper status should be “American National”. At the time the constitution was ratified, an “American” was one who was a native of America, as found by the Europeans, or the descendants of Europeans born in America. These are, of course, citizens of their respective States. A “National” is a person attached to his country. As shown in Perkins v, Elg, a person became a citizen of the United States if he was born in the country and he declared his status as being a citizen of the United States.

To see your Social Security application record and to amend it to correct your status, hence, your tax liabilities, you may file a Privacy Act request. As this may end up in your suing the agency and the government when not acted upon by the Social Security Administration, it may be to your best interests to purchase “Boston Tea Party”. This is book by Mike Ioane, contains letters, details and instructions to help ensure that you go through the process properly and finally correct your mistaken status.

Chapter 10: Third Party I.R.S Summons

Quashing a Third-Party I.R.S. Summons

By Seth Maynard

It is possible for the Internal Revenue Service (I.R.S.) to summon you because it wants assurance that the law is not being broken, or simply because its agents suspect that you may be remiss in filing and paying your taxes. This is supported by the decisions made in United States v. Powell and Donaldson v. United States. The I.R.S. is empowered to carry out this summons by Internal Revenue Code (I.R.C.) Sections 7601 through 7655.

The law also recognizes, fortunately, that this process may be abused. In United States v. Powell, supra, 379 U.S. 48 at 57-58, the district court is charged to consider if the investigation, which in this case leads to a summons, has a valid and legitimate purpose and whether or not any documents or materials being demanded are relevant. You, the subject of the summons, may ask about why you are being examined and challenge the purpose and legitimacy of the summons.

To quash this type of summons, several steps need to be taken. First, you may issue a Freedom of Information Act Request to make the I.R.S. justify the reasons why the investigation and summons are being meted out in the first place. After this, you may start preparing for your petition to quash the summons by dropping by the office of the clerk of the United States District Court. A Petition to Quash Internal Revenue Service Summons is accompanied by a Memorandum of Points and Authorities in Support of the Petition to Quash. This latter document enumerates what the I.R.S. has failed to do in terms of proper administrative procedure in instigating an investigation and issuing a summons against you.

In all your dealings with the clerk of the United States District Court, be courteous, patient and considerate. His cooperation and goodwill would be very helpful to your cause. To file your suit against the I.R.S., you would need copies of the following: Summons in a Civil Action, Civil Cover Sheet, Deposition Subpoena, Subpoena in a Civil Action to Produce Documents, and Local Rules of the Court. The clerk can help you with these and may even be good resource for determining rules and anything new about Court practices.

There are a myriad of steps to take with each form, information to fill out, copies to be made and documents to be served. Each has its own rules, format and timing. It would also be necessary for you to become familiar with the Federal Rules of Civil Procedure. It may be quite overwhelming if this is your first time or if the whole process is not easily understandable to you. Michael S. Ioane’s “Boston Tea Party” tackles these details in its 10th chapter. It also has samples of letters and forms; not to mention a list of what you need to check to complete the Memorandum of Points and Authorities in Support of the Petition to Quash.

Do not be an easy victim of a possible abuse of the summons process. Arm yourself with know-how and ready-to-use information to get through this difficult process.

Chapter 9: The First Party I.R.S Summons

Avoiding Self-Incrimination during IRS Summons

By Seth Maynard

You may be summoned by the Internal Revenue Service (I.R.S.) under the power of Internal Revenue Code (I.R.C.) Sections 7601 through 7655. This was previously a power granted to the Alcohol, Tobacco and Firearms Division of the I.R.S. With this summons, the I.R.S. may inquire about the taxes that you owe the government.

Although, in its summons, the I.R.S. does not claim that the investigation they are going to conduct into your affairs is criminal or civil in nature, it is understandable for the person receiving the summons to have a sense of fear that it would all end up in criminal prosecution. The Supreme Court, in fact, has found that the system that the I.R.S.  uses tends to mix criminal and civil elements together. Also, although “routine” tax investigations may begin as a civil procedure, they frequently end up being criminal prosecutions.

You can defend yourself in these instances by invoking your Fifth Amendment rights. This amendment grants the privilege against self-incrimination. A person may not be compelled to provide testimony that would incriminate his own self. This may successfully be used against I.R.S. summons because, as already mentioned above, the possibility of an investigation resulting in criminal liability exists and is real.

The summons requires the production of all documents and records pertaining to any income you may have earned at any time period. These same materials can be quite incriminating. For example, if asked why you failed to file an income tax return, production of documents already proves that taxable income did exist and that you did fail to file a return. Moreover, these documents are usually not privileged, that is, they cannot be protected by an attorney-client relationship. These may be used against you and producing them for the purposes of investigation would likely cause you to end up incriminating yourself.

Because of the potential to incriminate yourself, you may invoke your Fifth Amendment rights. Thus, you may show that you have the documents being “requested” but respectfully decline to produce or verify the same documents because you have a constitutional right to avoid self-incrimination. You may refuse to answer questions regarding income or finances. The summons asked for the documents, not their contents.

There are, of course, letters and requests to be made. In response to the initial request, you may ask the officer issuing the summons to justify the reasons for the inquiry. You may file a Freedom of Information Act request. If all these begin to sound difficult to you, take heart, Michael S. Ioane’s “Boston Tea Party” contains all the letters, requests and guidance you need to successfully protect yourself from self-incrimination. Read it thoroughly and make use of the ready-made material to navigate these potentially dangerous waters.

Chapter 8: Notice of Federal Tax Levy

Releasing a Federal Tax Levy

By Seth Maynard

Your property may be legally seized, or taken, to pay for a debt. This is what is called a “levy” and the government may apply this to your case should you fail to pay for your tax debts. Property is not simply “claimed” or put stakes upon; it is actually taken from you. The Internal Revenue Service (I.R.S.) may sell or keep what it takes. This includes properties you hold, like your car or house, and properties you own but are held by someone else. The latter includes your bank accounts, salary and dividends, to name a few.

The levy is performed after three requirements are satisfied. First, tax should have been assessed and you should have been notified regarding your liabilities. Second, you failed to honor your tax debts. Third, you are sent a Final Notice of Intent to Levy at least 30 days before you are relieved of your property.

This all sounds quite final should you be the recipient of a Final Notice. However, did you know that this Notice is yet another example of an unenforceable government claim?

In reality, the Notice of Levy found in Internal Revenue Code (I.R.C.) Section 6331(a) only applies to special situations involving an employee, officer, or elected official of the United States of America. If you happen to be none of these, the code does not apply to you. No procedure currently exists for this. The “special” situations refer to the levy being applied upon the salary and wages of the types of individuals listed above.

Next, legal precedents found that within its context, the special procedure being applied does not constitute a levy but a set-off. A set-off is a transfer of funds within a government agency. A levy, in this case, is a transfer of funds between government agencies. A Notice of Levy is not enough to seize property, a Warrant of Distraint is necessary. This is because the Notice, established to be noncompliant to the lien-seizure-levy process, creates nothing but an offset.

To obtain a release, a Demand for Release of Notice of Levy must be filed. A sample of this and any other letters and requests you may need to release a federal tax levy can be found in Mike Ioane’s “Boston Tea Party,” currently in its third edition. Put together in a binder, the information, forms and letters are collated and pre-prepared for your convenience.

It is recommended that you meet with the revenue officer to accomplish the release. There are precautions and steps necessary to ensure that you do not find yourself in over your head during this meeting. Michael Ioane’s book will guide you to staging a successful release.

Chapter 7: Notice of Federal Tax Lien

Releasing a Federal Tax Lien

By Seth Maynard

Have you ever received a Notice of Federal Tax Lien? Did you know that you can ask to have it released because it is not enforceable by law?

First things first: what is a federal tax lien? This is a claim that the government can make against your property when you do not pay taxes that you owe. The government essentially puts itself as top priority against anyone else who may also have a claim to your assets. This is how the government protects its interests. This tax lien comes about after the Internal Revenue Service (I.R.S.) assesses what you owe, sends you a bill to inform you how much you owe, and you then fail to pay what you owe in time. The I.R.S files a Notice of Federal Tax Lien.

It was previously mentioned that this notice and hence, the lien itself, is not enforceable. Why is this so? Internal Revenue Code (I.R.C.) Section 6323(a) requires that the notice should contain: the place for filing the notice, the location of the property being subjected to the lien, the form and content of the notice, the indexing required involving real property, and the national filing system in use. Of these five, the Secretary of the I.R.S. has yet to comply with the third: the form and content of the notice.

Subparagraph (f)(3) of I.R.C. Section 6323 states that the form and content of the notice shall be prescribed by the Secretary. Currently, the Secretary has only prescribed the form of the Notice of Federal Tax Lien. Within Treasury Regulation Section 301.6323(f)-1, nothing can be found where the Secretary prescribed the content of the Notice. The content of the notice cannot be guessed at from its form. In the same way, both the content and the form cannot be inferred. Each prescription must be clearly titled and written for the Secretary to comply with the statute. As the pertinent government representatives have yet to comply, a Notice of Federal Tax Lien is not enforceable as a matter of law.

When you receive such a notice, you may then request that the lien be released as it is a legally unenforceable notice. Such a release is not automatic and taxpayers are required to request a release of lien in writing. Michael Ioane’s “Boston Tea Party” has sample letters and requests to keep you on track to a successful request.

Additionally, in Section 6323, the Secretary has not promulgated any regulation to deal with a Notice of Deficiency. These are dealt with under a separate title of the Code of Federal Regulations. This part of the Code deals with taxes for commercial activity related to alcohol, tobacco or firearms. The I.R.S. has no regulations to handle a Notice of Deficiency when you, as the Aggrieved Party, have no involvement in such commercial enterprises.

All these would require requests, letters and lots of tips to pull off. As mentioned, the third edition of “Boston Tea Party” has all the information you need, accompanied by letters and requests to suit your specific needs.

Chapter 6: The Claim for Abatement

Getting a Tax Abatement

By Seth Maynard

Tax abatement is a reduction or exemption from taxes. Did you know that it was possible for you to avail of it? Section 6404(a) of the Internal Revenue Code (I.R.C.) allows for abatement of the unpaid part of your tax or liability assessment when: it is too much, it was assessed after the period of applicable limitations has expired, or it was incorrectly or illegally assessed.

You would know that you have unpaid taxes as the Internal Revenue Service (I.R.S.) would send you either a 30-day letter or proposed adjustment letter or a 90-day letter or Notice of Deficiency. In either scenario, the I.R.S. is proposing to make an assessment of what you still owe. Fortunately, in either scenario, you can make an abatement claim and contest them. Take note that timing is very important in this matter. One should respond within 30 days from the date a 30-day letter was issued. The response time to a 90-day deficiency notice, from the date it was issued, is 60 days.

When you make a claim for abatement, you must state why you are making the claim. Whether the assessment was too much, was too late or was incorrect or illegal, you must have documentary evidence that it was so. This is where the Freedom of Information Act (F.O.I.A.) comes in handy. You may reconstruct your case by filing a F.O.I.A. request for the “Examination Administrative File.”

If and when you receive documents, you may find irregularities that would help support your cause. For example, you may find an I.R.C. 6654(a) penalty. This means that the Commissioner wants to assess you for unpaid estimated income taxes. He may even want to assess you for interest that could have been made on the amount of unpaid estimated income tax. Know that a 1984 amendment to the law expressly prohibits the assessment of an unpaid amount of estimated income tax. Furthermore, one cannot impose interest on money that was not meant to be collected. Seeing this type of penalty in your file tells you that the assessment of your tax was incorrect or illegal.

You may also want to check for the existence of a Form 23C, a Summary Record of Assessment. Upon signing this document, the assessment officer signifies that assessment was made. Know that no tax may be collected without a proper assessment. A proper assessment requires that a Form 23C be accomplished and signed by the assessment officer. The absence of Form 23C means that proper assessment has not been made and therefore, no tax may be collected!

If this is good news, understand that there’s a little bad news. There are several letters and forms to fill out to perform all these. There are also details like addresses and timing necessary to successfully execute an abatement claim. The other piece of good news is that all the forms and letters you would need are found in the third edition of Michael Ioane’s “Boston Tea Party.” Aside from chapters of valuable information, ready-to-use materials are collected in a binder for you to simply pull out and use.

Chapter 5: Withholding Instructions

Put a Hold on Your Withholding Tax Collections

By Seth Maynard

Did you know that you can relieve yourself from withholding?

Employees are usually subjected to withholding tax. The income tax is collected by employers by withholding the appropriate amount from the employee’s salary. This is withholding at the source of wages. This is held as credit in payment of the tax imposed for the taxable year. This is done based on the presumption that taxpayers can pay on an as-you-go basis.

Based on subtitle C of the Internal Revenue Code (“IRC”), an individual may claim exemption from withholding if: he incurred no liability for income tax under subtitle A of the code in the previous taxable year and if he would not be liable for income tax under subtitle A of the code for the current taxable year. It becomes apparent that the more important section of the law is subtitle A. Subtitle C only mentions when income tax may be withheld.

Not known to many people, subtitle A discusses tax withholding only when referring to nonresident aliens and foreign corporations. An individual exempt from withholding is defined as a nonresident alien who may be any of the following: related to a foreign government, a teacher, a trainee, a student or a professional athlete temporarily in the country to compete in a charitable sports event.

The above statements clearly do not apply to an American citizen. Moreover, a citizen can claim to be a person not subject to withholding under Treasury regulation section 1.1441-5! You simply need to file a written statement with your employer, one that states that you are a citizen or resident of the United States of America. According to Internal Revenue Service Publication 54, tax withheld in error can be claimed as a credit on a tax return. This is good news!

There are several important steps to implement this. First, your employer or his representative must be made aware of the provisions of Internal Revenue Service (I.R.S.) Publication 54. An original copy would help your cause and this could be obtained by visiting the taxpayer service division of the I.R.S. Letters, statements and notices must be drawn up and submitted.

Michael Ioane’s book, “Boston Tea Party”, contains a chapter explaining all the necessary steps to perform this. He also included sample letters, statements and notices within a binder; not to mention important tips to facilitate your claim.

You must meet your employer’s representative, the human relations employee, the company lawyer, etc., as this claim needs to be filed through your employer. As mentioned, not many people know about this and you should be very patient with the company representative. Your request may not be filed. Then you must persist, gently, and ask that your request be filed for later use.

Do not blow up your relationship with your employer. Instead, be very prepared to answer each question to convince your employer about the validity of your claim. Take heart in the fact that the law allows the taxpayer to decrease the amount of his taxes so long as the means are legal. Pick up a copy of “Boston Tea Party” and get a boost in your corner of the fight.

Chapter 4: The Assessment Process

Assessing Your Tax Assessment

By Seth Maynard

The government can claim taxes from you after the pertinent agency figures out how much you owe. This process is called an assessment and, in the United States of America, is carried out by the Internal Revenue Service (I.R.S.). The agency is authorized to perform this function under Internal Revenue Code (“IRC”) Section 6203 and Treasury Regulation Section 301.6203-1.

Under section 6322 of the IRC, a person owes taxes from the time the assessment is made until it has been paid for or becomes unenforceable as it lapses over time. An assessment must therefore be made first. Form 23C, the Summary Record of Assessment, must be signed by the assessment officer and the supporting record is required to possess the following: the taxpayer’s name, the date of the assessment, the kind of tax being imposed, the period of tax collection under which the assessment was made, and the amount owed.

This means that Form 23C must be present. Without it, an assessment can be said to have not been made. No assessment – no tax liability. Furthermore, the supporting document must be made at or near the time the form was signed. Also, the supporting document must reference the Summary Assessment Record number. The Individual Master File transcript cannot be considered a support document as this is not accomplished around the time the Form 23C was signed. A Certificate of Assessments and Payments likewise fails in this respect due to the same reasons. Supporting documents must be present for the assessment to be valid.

The IRS cannot assess you for amounts that were assumed unpaid based on an estimate of your income tax. You are taxed according to your documented income, not upon an estimation of it. It also follows, therefore, that interest assessed for unpaid amounts of estimated income tax is not valid. Interest on an invalid debt is, of course, invalid.

You should check the kind of taxes being levied upon you. For example, a “1040” tax is levied against most individuals. There is no “1040” tax. There are many others with names: income, employment, etc., but a “1040” tax type is an illegal tax assessment. The tax assessment should be invalid.

These pieces of information regarding your tax assessment may be made available to you under the Freedom of Information Act (F.O.I.A.), a federal law that allows disclosure of information about himself to the person requesting it. If you are unsure how to go about filing an F.O.I.A. request, Michael S. Ioane’s “Boston Tea Party” has a chapter explaining the steps for filing one. The book also contains sample letters and templates to help make sure that you do these correctly.

If you assess your tax assessment to be questionable, it would be to your advantage to go through chapter 4 of Mr. Ioane’s book. Did you know that if a tax assessment officer was not properly appointed, the assessment he made becomes invalid? Read the book and discover more!