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Letters to the Editor • TAXES: Federal

Notice of Federal Tax Lien; cracking the IRS code

The Notice of Federal Tax Lien (NFTL) is quite misunderstood and therefore looking at both case law and Statutes are required to get a better understanding of the issue.  If you’ve ever received one, it’s a frightening experience, knowing the news headlines of various people going to jail on tax evasion.  We know the government’s stance.  We tell you to pay a tax and if you don’t file and pay it, we lien and/or levy anything that we can get our hands on, that has value without any type of trial by a jury of our peers.        

When you actually receive your first NFTL, the most interesting item in the form is the “Kind of Tax”.  Generally the kind of tax is noted as either a 1040 or a 1040a. The problem is that there is no such thing as a 1040 or 1040a kind of tax nor is there a 6702 or 6772 kind of tax which are also sometimes noted on a NFTL. Now here is the interesting part. One would then just assume that these are the type of “forms” used to file various tax returns as the 1040 is the most common.  But no, they are not. They appear to be the various Sections under Title 26 of the United States Code. Section 6702 is Titled “Frivolous Tax Submission” which generally accounts for $5000 fines for each year filed and this is exacted what comes opposite in the "Unpaid Balance of Assessment" column on the NFTL. Section 6772 is “Failure to collect and pay over tax, or attempt to evade or defeat tax” basically another fine dealing with frivolous defenses that is generally assessed a $500 fine in "Unpaid Balance of Assessment" column on the NFTL. Now guess what the title to Section 1040 is; “Transfer of certain farm, etc. real property” and it relates to an “estate” tax.  


Every time when the IRS is questioned through either FOIA requests or during a CDP hearings, they refuse to answer any questions relating to this Kind of Tax issue. Nada, nothing, not an acknowledgment or a peep.  Why?


Interestingly enough, in addition to this question being unanswered by the IRS or the Treasury, oh by the way is the Federal Agency in which the IRS is under, they refuse to answer the most important question, in my opinion, relating to the Federal Personal Income Tax. That is; When was the law enacted and what was the Title of the Act that requires Citizens working for money in exchange for their labor in a private capacity.  Nada, nothing, not an acknowledgment or a peep and I have asked this question under a FOIA request and also in various correspondences, always sent by certified mail.     


So why is the IRS and the Treasury Department of the United States withholding this very important information from people. Why?    


But first, let’s take a look at what I think is a very important legal suit relating to NFTLs. A relatively recent United States Court of Appeals for the Second Circuit case Schulz v. IRS, 04-0196 clearly states that an administrative summons has no force and effect unless issued via a court order.  “We realize that our holding today stands in direct contradiction to our previous decisions in Application of Colton, 291 F.2d 487, 491 (2d Cir. 1961), and In re Turner, 309 F.2d 69, 71 (2d4 Cir. 1962). While reversal of our prior precedent is never a matter we regard lightly, we take no small solace in Judge Friendly’s discussion of Colton and Turner in United States v. Kulukundis, 329 F.2d 197 (2d Cir. 1964). There, Judge Friendly, who authored both Colton and Turner, points out that Reisman “seems to destroy the basis underlying decisions of this court which authorized applications to vacate [an IRS] summons (and appeals from their denial) in advance of any judicial proceeding by the Government for their enforcement.” Id. at 199. In light of this, we view ourselves today as completing a task begun forty years ago and hold that, absent an effort to seek enforcement through a federal court, IRS summonses apply no force to taxpayers, and no consequence whatever can befall a taxpayer who refuses, ignores, or otherwise does not comply with an IRS summons until that summons is backed by a federal court order.” This case has not been overturned or amended, as of this date.  


This logically makes sense to me, depending perhaps on what the definition of an administrative summons is, in that no individual or lawful entity is allowed to just take property or money from an individual without legally going through a Court of competent jurisdiction and getting a court determination.  Yet, only the IRS gets away with this, including administrative garnishment of both bank accounts and wages.  

So how is it that the IRS is the only entity in the entire United States of America that can do this and get away with it?  It is actually quite simple. No one or no group, such as all for profit businesses, out of fear of retaliation, is willing to go up against the IRS. Recently an Attorney, out of north Florida, was sanctioned $5,000 for filing a defense on behalf of his client, using Statutes and APA regulations, so the Judges are obviously in on the IRS’s enforcement of “Notice” of Federal Tax Liens as well as Title Companies, Employers and HR companies who do payroll administration. Why, the Judges are just as afraid of the IRS as everyone else is. The IRS has been used politically for decades and all one must do is to listen to the Nixon White house tapes, as an example. Nixon would literally send the IRS after political adversaries and luckily no one erased the tapes of him doing this from the Oval Office. Additionally a host of Attorneys are making a fortune defending people against the IRS and the Judges are all Attorneys so the deck is quit stacked against the American people.  Try getting an attorney to fight the IRS or it’s agents.               

What are administrative summons? 408, Definitions of Judicial Subpoena, Administrative Summons and Formal Written Request. An administrative summons or subpoena is a judicially enforceable demand for records issued by a government authority which is authorized by some other provision of law to issue such process; administrative process is governed by the Act. 12 U.S.C. § 3405. Judicial subpoenas are any court order to produce records, other than a grand jury subpoena, and are governed by the Act. 12 U.S.C. § 3407. Although the Act is clear on the point that grand jury subpoenas are excepted, 12 U.S.C. § 3413(i), one financial institution has argued that grand jury subpoenas are a form of "judicial subpoena" and therefore subject to the customer notice and challenge requirements of 12 U.S.C. § 3407. The court considering this argument, however, held that grand jury subpoenas are not "judicial subpoenas" within the meaning of the Act. In re Subpoena to Testify Before the Grand Jury Issued to the Commonwealth Nation Bank, Civil Action No. 79-349, Misc. 7924, slip op. (M.D. Pa., April 6, 1979). A formal written request is designed to allow government authorities to request records in a formal manner. Section 3408 of the Act governs formal written requests by agency officials. Unlike administrative process, a formal written request is not a coercive form of process, therefore a financial institution may refuse to honor the request. 12 U.S.C. § 3408(2). See form DOJ463 for a suggested form of formal request.


There obviously seems to be some differencial between what the Courts now say and the definition of Administrative Summons in 12 U.S.C. §3405. Of course, the Courts determination trumps legislative actions as they determine Constitutionality.    


My questions to you: 1. Is not a request for filing a tax return when one has not done so an administrative summons and the required precursor to a Notice of Federal Tax Lien. 2. Is a NFTL considered an Administrative Summons and therefore can only be issued by a Court Order? 3. Why doesn’t the IRS and Treasury, provide We the People, the Federal Personal Income Tax Law and when it was enacted, and 4. What type of Federal Taxes are most Americans really paying?  If you have the truthful answers to these important questions, please let the world know. This is what the Tax Honesty Movement is really about and not a bunch of frivolous claims as the government is ruling more and more. The Truth about frivolous claims is even more complex and a essay for another day.   

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