Should be Interesting
Larken Rose
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Dear Subscriber,
As many of you know, getting anyone from the "other side" to
rationally discuss the 861 evidence has been like pulling teeth.
(They tend to fling out a few assertions, a barrage of insults and
threats, and then refuse discussion.) Well, one of those rare
opportunities will occur this coming Saturday, when I will be
debating Jonathan Siegel, law professor at George Washington
University, regarding the 861 evidence. Here is the web site:
http://www.getonyoursoapbox.com/
Tune in, and I think you'll see why the other side doesn't usually
invite discussion on the topic.
Sincerely,
Larken Rose
www.larkenrose.com
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Shyster1040
As many of you know, getting anyone from the "other side" to
rationally discuss the 861 evidence has been like pulling teeth.
(They tend to fling out a few assertions, a barrage of insults and
threats, and then refuse discussion.) Well, one of those rare
opportunities will occur this coming Saturday, when I will be
debating Jonathan Siegel, law professor at George Washington
University, regarding the 861 evidence. Here is the web site:
***************************************
Dear Larken,
I would love to have a rational discussion with any one of you from the
"loony side" regarding the complete lack of any evidence for the so-called
861 Position, but the most I get out of any of you is an out-of-context
quotation to a single subclause of a single treasury regulation, and then
either nasty insults (Dale's favorite at the time was "ASS-ertions") or
silence when I go on to patiently walk through the regulation and the
relevant Code provisions, and demonstrate, without cavil, that Sec. 861
does not result in any domestically-earned income being excluded from the
income tax.
So, if you want to have that discussion, please get started with a short,
concise statement of how and why it is that Sec. 861 excludes from
taxation the income of ordinary Americans.
Paul Thomas, CPA
"Larken Rose" wrote
> As many of you know, getting anyone from the "other side" to
> rationally discuss the 861 evidence has been like pulling teeth.
> (They tend to fling out a few assertions, a barrage of insults and
> threats, and then refuse discussion.)
Here's some real discussion:
http://www.irs.gov/businesses/small/article/0,,id=106503,00.html
Contention: Wages, tips, and other compensation received for personal
services are not income.
This argument asserts that wages, tips, and other compensation received for
personal services are not income, because there is allegedly no taxable gain
when a person "exchanges" labor for money. Under this theory, wages are not
taxable income because people have basis in their labor equal to the fair
market value of the wages they receive; thus, there is no gain to be taxed.
Some take a different approach and argue that the Sixteenth Amendment to the
United States Constitution did not authorize a tax on wages and salaries,
but only on gain or profit.
The Law: For federal income tax purposes, "gross income" means all income
from whatever source derived and includes compensation for services. I.R.C.
§ 61. Any income, from whatever source, is presumed to be income under
section 61, unless the taxpayer can establish that it is specifically
exempted or excluded. In Reese v. United States, 24 F.3d 228, 231 (Fed. Cir.
1994), the court stated, "an abiding principle of federal tax law is that,
absent an enumerated exception, gross income means all income from whatever
source derived."
All compensation for personal services, no matter what the form of payment,
must be included in gross income. This includes salary or wages paid in
cash, as well as the value of property and other economic benefits received
because of services performed, or to be performed in the future.
Furthermore, criminal and civil penalties have been imposed against
individuals relying upon this frivolous argument.
Relevant Case Law:
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955) - Referring
to the statute's words "income derived from any source whatever," the
Supreme Court stated, "this language was used by Congress to exert in this
field 'the full measure of its taxing power.' . . . And the Court has given
a liberal construction to this broad phraseology in recognition of the
intention of Congress to tax all gains except those specifically exempted."
Commissioner v. Kowalski, 434 U.S. 77 (1977) - The Supreme Court found that
payments are considered income where the payments are undeniably accessions
to wealth, clearly realized, and over which a taxpayer has complete
dominion.
United States v. Connor, 898 F.2d 942, 943-44 (3d Cir.), cert. denied, 497
U.S. 1029 (1990) - The court stated, "[e]very court which has ever
considered the issue has unequivocally rejected the argument that wages are
not income."
Lonsdale v. Commissioner, 661 F.2d 71, 72 (5 th Cir. 1981) - The court
rejected as "meritless" the taxpayer's contention that the "exchange of
services for money is a zero-sum transaction . . . ." Reading v.
Commissioner, 70 T.C. 730 (1978), aff'd, 614 F.2d 159 (8 th Cir. 980) - The
court said the entire amount received from the sale of one's services
constitutes income within the meaning of the Sixteenth Amendment. United
States v. Richards, 723 F.2d 646, 648 (8 th Cir. 1983) - The court upheld
conviction and fines imposed for willfully failing to file tax returns,
stating that the taxpayer's contention that wages and salaries are not
income within the meaning of the Sixteenth Amendment is "totally lacking in
merit."
United States v. Romero, 640 F.2d 1014, 1016 (9 th Cir. 1981) - The court
affirmed Romero's conviction for willfully failing to file tax returns,
finding, in part, that "[t]he trial judge properly instructed the jury on
the meaning of ['income' and 'person']. Romero's proclaimed belief that he
was not a 'person' and that the wages he earned as a carpenter were not
'income' is fatuous as well as obviously incorrect." Abrams v. Commissioner,
82 T.C. 403, 413 (1984) - The court rejected the argument that wages are not
income, sustained the failure to file penalty, and awarded damages of $5,000
for pursuing a position that was "frivolous and groundless . . . and
maintained primarily for delay."
Cullinane v. Commissioner, T.C. Memo. 1999-2, 77 T.C.M. (CCH) 1192, 1193
(1999) - Noting that "[c]ourts have consistently held that compensation for
services rendered constitutes taxable income and that taxpayers have no tax
basis in their labor," the court found Cullinane liable for the failure to
file penalty, stating, "[his] argument that he is not required to pay tax on
compensation for services does not constitute reasonable cause."
B. Contention: Only foreign-source income is taxable.
Some maintain that there is no federal statute imposing a tax on income
derived from sources within the United States by citizens or residents of
the United States. They argue instead that federal income taxes are excise
taxes imposed only on nonresident aliens and foreign corporations for the
privilege of receiving income from sources within the United States. The
premise for this argument is a misreading of sections 861, et seq., and 911,
et seq., as well as the regulations under those sections.
The Law: As stated above, for federal income tax purposes, "gross income"
means all income from whatever source derived and includes compensation for
services. I.R.C. § 61. Further, Treasury Regulation § 1.1-1(b) provides,
"[i]n 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." I.R.C. sections 861 and 911 define the sources of income
(U.S. versus non-U.S. source income) for such purposes as the prevention of
double taxation of income that is subject to tax by more than one country.
These sections neither specify whether income is taxable, nor do they
determine or define gross income.
Further, these frivolous assertions are clearly contrary to well-established
legal precedent. "Recently the IRS explained its position on the I.R.C. 861
argument in Rev. Rul. 2004-30 and on the I.R.C. 911 argument in Rev. Rul.
2004-28."
Relevant Case Law:
Williams v. Commissioner, 114 T.C. 136, 138 (2000) - The court rejected the
taxpayer's argument that his income was not from any of the sources listed
in Treas. Reg. § 1.861-8(a), characterizing it as "reminiscent of
tax-protester rhetoric that has been universally rejected by this and other
courts."
Aiello v. Commissioner, T.C. Memo. 1995-40, 69 T.C.M. (CCH) 1765 (1995) -
The court rejected the taxpayer's argument that the only sources of income
for purposes of section 61 are listed in section 861.
Madge v. Commissioner, T.C. Memo. 2000-370, 80 T.C.M. (CCH) 804 (2000) - The
court labeled as "frivolous" the position that only foreign income is
taxable.
Solomon v. Commissioner, T.C. Memo. 1993-509, 66 T.C.M. (CCH) 1201, 1202
(1993) - The court rejected the taxpayer's argument that his income was
exempt from tax by operation of sections 861 and 911, noting that he had no
foreign income and that section 861 provides that "compensation for labor or
personal services performed in the United States . . . are items of gross
income."
You had your shot in the courts Larken, why didn't you "bare it all" and try
to use your beliefs as a defense?
--
"Any citizen may resort to the courts
whenever he or she in good faith and
with a colorable claim desires to challenge
the Commissioner's determination"
TC Memo 1981-299
--------------------------------
Paul A. Thomas, CPA
Athens, Georgia
cpt banjo
wrote:
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>
> Dear Subscriber,
>
> As many of you know, getting anyone from the "other side" to
> rationally discuss the 861 evidence has been like pulling teeth.
> (They tend to fling out a few assertions, a barrage of insults and
> threats, and then refuse discussion.) Well, one of those rare
> opportunities will occur this coming Saturday, when I will be
> debating Jonathan Siegel, law professor at George Washington
> University, regarding the 861 evidence. Here is the web site:
>
> http://www.getonyoursoapbox.com/
>
> Tune in, and I think you'll see why the other side doesn't usually
> invite discussion on the topic.
Hey Rosie, will you explain to the listening audience why you didn't
pay your Pennsylvania income taxes, especially since PA has no
counterpart to Section 861?
cpt banjo
wrote:
> Tune in, and I think you'll see why the other side doesn't usually
> invite discussion on the topic.
And you'll also see why Rose doesn't invite discussion of why he
refused to pay his Pennsylvania income taxes, especially since PA has
nothing corresponding to Section 861.
Shyster1040
U.S. v. Rose, unreported (DCPA, Criminal No. 05-101, 05/25/2005)
OPINION
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA,
MEMORANDUM
Judge: Baylson, J.
These Defendants, husband and wife, appearing pro se, are charged with
five counts of willful failure to file federal income tax returns under 26
U.S.C. § 7203. They have filed a Motion to Suppress Evidence and also a
Motion for Disclosure of Grand Jury Transcript.
A hearing on both motions was held on May 19, 2005. The government
presented testimony by Special Agent Pearlman of the Internal Revenue
Service, who identified the search warrant, the affidavit in support of a
search warrant, Exhibit 1(A) which was the inventory of items seized after
the search, and Exhibit 1(B) which was the list of items sought under the
warrant.
The Defendants attack the probable cause stated in the affidavit as
insufficient to allow the search that was conducted of their home but the
Court will deny the motion. The Court finds that the affidavit sets forth
in considerable detail probable cause for the search of the defendants
home. The Defendants' motion and memorandum in support attacks the search
warrant and the resulting search and seizure of evidence under several
different grounds. First, the Defendants assert that the warrant is not
valid and does not meet constitutional requirements. The Court rejects
this argument and finds that the warrant, based on the affidavit of
probable cause by Special Agent Pearlman, contains ample probable cause
for the search of the Defendants' home. The warrant, and the affidavit in
support, meet the requirements of the Fourth Amendment pursuant to
Illinois v. Gates, 462 U.S. 213 (1983) and many other cases. The
Defendants do not point to any specific case which would support this
Court finding the search warrant invalid.
The thrust of the Defendants' cross examination of Agent Pearlman, and
their argument at the hearing, was that the government already knew a lot
about the Defendants, in that the Defendants purportedly had admitted
their disagreement with the tax laws, that they were not paying their
taxes and therefore argue that there was no need for the government to
seize additional evidence from their home.
The Court rejects this argument and finds that the government was entitled
to, in this case as in any criminal investigation, to secure a search
warrant based on probable cause to collect evidence which may be relevant
at the trial. The govern- [pg. 2005-2649] ment does not necessarily know
all defenses or positions the defense will offer at trial and the
government is entitled to secure evidence in the defendants possession,
through the means of a search warrant with probable cause to gather
evidence. Agent Pearlman testified that the search recovered a number of
items of which the government did not previously have possession. The
Court rejects Defendants' suggestion that the search was for an illegal
purpose as unfounded.
The Defendants' brief in support of their motion cites numerous provisions
of the Internal Revenue Code and case citations with an argument that
Agent Pearlman's affidavit relied on the Defendants' exercise of their
free speech rights, their claim that their disputes about tax laws are
unconstitutional or otherwise invalid, and similar arguments. The Court
rejects all of these arguments as irrelevant to the issue of probable
cause. The Motion to Suppress is not the opportunity for the Defendants to
attack the Internal Revenue Code, or its application to them, or whether
they are guilty or innocent of the charges.
Defendants also assert that the motion should be granted because the
evidence sought was not related to criminal activity. The Court rejects
this argument. The Defendants have admittedly not filed tax returns and
have even sought refund of taxes paid in prior years. The search warrant
relates facts that the Defendants have had income and thus the Court finds
that the search warrant was based on probable cause that the Defendants
were involved in criminal activity, i.e., the non-filing of tax returns.
The Court also rejects Defendants' argument that the evidence sought was
not specific and limited. The Court finds that in a case of this nature
where the Defendants assert that their conduct was not “willful” and that
the tax laws are not applicable to their income, the government must have
wide leeway in securing evidence to show that the Defendants had knowledge
of their conduct, that the Defendants' conduct was “willful” and the Court
finds that the evidence sought and seized was properly within the scope of
a lawful investigation.
The Court similarly rejects all of Defendants' arguments about First
Amendment issues and their argument that the Internal Revenue Service
seized multiple copies of certain documents. Furthermore, the government
represents that after the return of the indictment, the government
returned all but a few copies of the multiple copies of videotapes that
were seized. The Court rejects the Defendants' assertions that the
government activities were in retaliation of the Defendants' First
Amendment activities as frivolous.
The Defendants' argument that because they were not concealing evidence,
this fact precludes the government from conducting a search of their home
for evidence of the criminal activity alleged in the indictment, is
unfounded in law. For all these reasons, the Motion to Suppress will be
denied.
As to the Motion for Disclosure of Grand Jury Transcript, the Court notes
the agreement that the Defendants have now received their own grand jury
testimony, and they withdraw the request for the testimony of IRS
witnesses. The defense nevertheless requests that they receive transcripts
which show any instructions by government counsel to the grand jury on
points of law, and any other statements by the prosecutors before the
grand jury. For the reasons stated at the hearing, the Court has directed
the government to produce the grand jury transcript for in camera
inspection.
The Court has reviewed the materials produced in camera, which consist of
two transcripts of proceedings on February 22, 2005. The first transcript,
which commenced at 9:42 a.m., consists of thirteen pages of
comments/instructions by Assistant U.S. Attorney Floyd Miller setting
forth certain legal aspects and answering certain questions by the grand
jury. The Court finds that there is no evidence of prosecutorial
misconduct in Mr. Miller's statements, as alleged by Defendants.
Nonetheless, the Court will require the [pg. 2005-2650] government to
produce this transcript as it arguably contains legal instructions.
The second transcript of February 22, 2005 commenced at 9:56 a.m. and
consists of testimony of Agent Pearlman. The Court will not require the
government to produce this transcript.
An appropriate Order follows.
ORDER
Judge: Michael M. Baylson, U.S.D.J.
AND NOW, this 25th day of May, 2005, it is hereby ORDERED that Defendants'
Motion to Suppress Evidence (Doc. No. 7) is DENIED and that Defendants'
Motion for Disclosure of Grand Jury Transcript (Doc. No. 2) is GRANTED in
part, as stated in the foregoing Memorandum, and is otherwise DENIED.
BY THE COURT:
Michael M. Baylson, U.S.D.J.
Paul Thomas
> U.S. v. Rose, unreported (DCPA, Criminal No. 05-101, 05/25/2005)
>
> OPINION
> IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
> PENNSYLVANIA,
>
> MEMORANDUM
> Judge: Baylson, J.
>
> These Defendants, husband and wife, appearing pro se,
"pro se".....that's Latin for "they have an idiot for an attorney"?
--
Have no fear of perfection - you'll never reach it.
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