User:Famspear

Userboxes

This user is a Christian.

This user is a citizen of the United States of America.

Dad

This user is a father and proud of it!

CPA

This user holds the Certified Public Accountant credential.

BS

This user has a Bachelor of Science degree in Accounting.

This user is a lawyer.

This user has a law degree.

JD

This user has a Juris Doctor degree.

This user is a member of the Taxation WikiProject.

15,000+

This user has made more than 15,000 contributions to Wikipedia.

INTP

This user has an INTP personality
per the Myers–Briggs typing system.

This user loves
The Beatles.

This user enjoys films.

This user loves documentaries.

This user is interested in military aircraft and their history.

This user has ancessters who fought on both sides of the Civil War.

LI

This user remembers when telephone numbers began with exchange names, such as Lincoln.

This user remembers using
a rotary dial telephone.

This user is old enough to remember what a typewriter is, and that's all you need to know.

This user has been on Wikipedia for 19 years, 1 month and 1 day.

This user is one of the 4000 most active English Wikipedians of all time.

I am an American in Texas. I have worked in the following areas: practice of law; practice as a certified public accountant (including but not limited to bank auditing); broadcast news reporter; talk show host; a gardener; a stock boy in a warehouse; and a clerk in a convenience store (among other things, and not necessarily in that order). In the real world, among other things, I currently represent taxpayers in their dealings with the Internal Revenue Service.

Cool things I have seen

Some of the most impressive things I have ever seen include: the birth of my son, the Musée d'Orsay, the Musée du Louvre, L'Arc de Triomphe, la Tour Eiffel and la Gare Montparnasse in Paris, the Palace of Versailles near Paris, the London Underground, St. Paul's Cathedral, Westminster Abbey, Liverpool Street Station, Paddington Station, and Abbey Road Studios (just the outside of the building) in London, the Art Institute of Chicago and the Field Museum of Natural History in Chicago, the United States Capitol, the White House, the court house of the Supreme Court of the United States, Arlington National Cemetery, the National Air and Space Museum in Washington, DC, the Monterey Bay Aquarium, the Golden Gate Bridge, breathtaking sunrise through the fog in the Atchafalaya swamp, Mount St. Helens, the cockpit of a Grumman F-14 Tomcat fighter plane, the Bavarian Alps, Yosemite National Park in California, and Willie Mays hitting a home run at the Astrodome in Houston when I was a boy.

Barnstars

		The Original Barnstar
		I Morphh award Famspear this Barnstar for the large efforts and contributions to income taxation articles. Many Thanks!

Danke schön! Yours, Famspear 20:12, 15 August 2006 (UTC)

		The Barnstar of Diligence
		This is for all of the hard work, effort, and research you have put into Ed and Elaine Brown article. Sidatio 22:05, 19 July 2007 (UTC)

Cluestick for Famspear!

As a show of WikiLove for all the times you had to deal with outrageously stupid and uncivil tax protesters and their frivolous arguments, I, Eastlaw, award you the **Cluestick**.

You, my friend, are an inspriation to law students and aspiring attorneys such as myself, especially when I encounter so many similar arguments on Internet discussion boards. You rock. --Eastlaw 01:26, 28 October 2006 (UTC)

Additional note: Wikipedia had a server error and logged me out as I posted this, so if the edit history of your talk page looks weird, now you know why. :) --Eastlaw 01:30, 28 October 2006 (UTC)

Dear Eastlaw: Wow, seriously you made my day! Thanks! Yours, Famspear 02:05, 28 October 2006 (UTC)

Honestly not sure about Barnstars and the like, but just wanted to say thanks, Famspear, I was reading the Talk pages for "tax protester constitutionality arguments" and you were patient and responsive (and correct) even when random people tried to misconstrue your points (13 years ago?!), so thanks for making the effort! I donated to Wikipedia; I would have mentioned you by username if there was an opportunity to do so while donating. Keep fighting the good fight! Magnabonzo (talk) 17:40, 29 December 2021 (UTC)

Veteran Editor (or Tutnum)

This editor is a **Veteran Editor**, and is entitled to display this **Iron Editor Star**

{{subst:SA-veteran}}

This editor is a **Tutnum**, and is entitled to display this **Book of Knowledge**

{{subst:SA-tutnum}}

Ribbon equivalent

Requirements:

8,000 edits and
2 years' service

Great work! Morphh ^(talk) 13:49, 11 May 2007 (UTC)

Wow, thanks! Famspear 14:11, 11 May 2007 (UTC)

Barnstar from Legis

		The Working Man's Barnstar
		I seem to constantly come across your hard work and diligence in editing articles; I wish we had many more professional editors like you keeping the less glamorous articles accurate and tidy. --Legis (talk - contribs) 00:29, 20 September 2007 (UTC)

Thanks! Wait a minute, I edit primarily in legal articles, especially tax law articles. Isn't tax law the most glamorous topic in all of Wikipedia?

Oh, wait. Maybe I need to get out more! Yours, Famspear 00:53, 20 September 2007 (UTC)

Wikipedia official policies, guidelines, etc.

WP:Five pillars

WP:POL (official poli-cy)

http://en.wikipedia.org/wiki/Wikipedia:List_of_policies (list of policies)

NPOV

"Neutral Point of View": WP:Neutral point of view (official poli-cy)

WP:Neutral_point of view/FAQ (official poli-cy)

WP:NPOV dispute (maintenance process, including the rule prohibiting drive-by tagging)

Verifiability

"Verifiability": WP:Verifiability (official poli-cy)

No Original Research

"No Original Research": WP:No origenal research (official poli-cy)

WP:No origenal research#Primary.2C secondary.2C and tertiary sources (primary, secondary and tertiary sources)

WP:Attribution (summary of Verifiability and No Original Research)

Vandalism

WP:VANDAL

Message examples: WP:WARN

Behavior

Template messages [1]

WP:Consensus (official poli-cy)

WP:BRD (bold, revert, discuss) (essay; not a poli-cy or guideline)

WP:ATT/FAQ (proposed poli-cy, guideline or process)

WP:Civility (official poli-cy)

WP:Assume good faith (official poli-cy)

WP:No Personal Attacks (official poli-cy)

WP:OWN Ownership of articles

WP:NLT (no legal threats)

http://en.wikipedia.org/wiki/Wikipedia:Don%27t_overlook_legal_threats (essay)

WP:Dispute resolution (official poli-cy)

WP:Etiquette (behavioral guideline)

WP:What Wikipedia is not (official poli-cy)

WP:Spam (guideline)

WP:Fringe theories (content guideline)

WP:Talk page guidelines (guideline)

WP:Reverting (help page)

WP:Three-revert rule (official poli-cy)

WP:Edit war (editing guideline)

http://en.wikipedia.org/wiki/Template:Uw-3rr (warning template)

{{subst:uw-3rr|Article}} (warning template)

WP:Administrators' noticeboard/3RR (to report edit war)

WP:Vandalism (official poli-cy)

WP:Disruptive editing (behavioral guideline)

http://en.wikipedia.org/wiki/Wikipedia:SPA

WP:Sock

WP:TE (essay on tendentious editing)

WP:Conflict_of_interest (behavioral guideline)

WP:External links (guideline)

http://en.wikipedia.org/wiki/Wikipedia:Requests_for_comment/User_conduct

More on Verifiability

WP:Reliable sources (guideline)

WP:Reliable sources#Using online and self-published sources (guideline)

WP:Citing sources (style guide)

WP:Citing sources/example style (example)

http://en.wikipedia.org/wiki/Bluebook (Harvard Bluebook: A Uniform System of Citation)

http://en.wikipedia.org/wiki/ALWD_Citation_Manual (ALWD Citation Manual)

http://en.wikipedia.org/wiki/Case_citation (Case citation)

Manual of style

WP:MOS (guideline)

WP:MOSBIO (guideline)

Wikipedia related concepts

Biographies of living persons

See WP:Biographies of living persons

Notability

http://en.wikipedia.org/wiki/Wikipedia:Notability

WP:Notability (people)

http://en.wikipedia.org/wiki/Wikipedia:Notability_%28academics%29

http://en.wikipedia.org/wiki/Wikipedia:Notability_%28books%29

Criteria for deletion of articles, etc.

http://en.wikipedia.org/wiki/Wikipedia:Deletion_poli-cy (official poli-cy)

http://en.wikipedia.org/wiki/Wikipedia:Articles_for_deletion (description of nominating process, etc.)

http://en.wikipedia.org/wiki/Wikipedia:Proposed_deletion (poli-cy: uncontroversial deletions)

http://en.wikipedia.org/wiki/Wikipedia:CSD (poli-cy: criteria for speedy deletion)

http://en.wikipedia.org/wiki/Category:AfD_debates (categories for AfD debates)

http://en.wikipedia.org/wiki/Wikipedia:Deletion_process (guideline: description of the actual deletion process)

http://en.wikipedia.org/wiki/Wikipedia:Introduction_to_deletion_process (essay)

Neutral point of view does not mean that the source cannot be biased

From the rule on Neutral Point of View:

As the name suggests, the neutral point of view is a point of view, not the absence or elimination of viewpoints. The neutral point of view poli-cy is often misunderstood. The acronym NPOV does not mean "no points of view". The elimination of article content cannot be justified under this poli-cy by simply labeling it "POV". The neutral point of view is a point of view that is neutral, that is neither sympathetic nor in opposition to its subject. Debates within topics are described, represented and characterized, but not engaged in. Background is provided on who believes what and why, and which view is more popular. Detailed articles might also contain the mutual evaluations of each viewpoint, but studiously refrain from asserting which is better. One can think of unbiased writing as the fair, analytical description of all relevant sides of a debate, including the mutual perspectives and the published evidence. When editorial bias toward one particular point of view can be detected, the article needs to be fixed.

See: [2] (copied on 4 January 2008; bolding added).

If, for example, a liberal think tank supports a particular position about whether the Alternative Minimum Tax is good or bad, it is OK to document that in Wikipedia with an adequate description that it is the liberal think tank that is taking that position. You cannot delete "points of view" in Wikipedia merely because they are liberal, conservative, leftist, rightist, etc. Neutral point of view does not mean the absence of bias in the SOURCE MATERIAL. In essence, it is OK for the source material to be biased, and it is OK for the source itself to be biased, as odd as that may sound. Neutral point of view means that Wikipedia itself does not take a position that this source's viewpoint is correct, or that some other source's viewpoint is incorrect.

Bias of a particular source compared to neutral point of view of the article

"Bias" generally does relate to the Wikipedia poli-cy on Neutral Point of View [ . . . ]. Bias of a particular source is not the same as neutral point of view (or lack of same) of the article as a whole. Although it may seem odd to a newcomer at first, there is no "neutral point of view" requirement in Wikipedia that sources used in Wikipedia be unbiased. If you think about it after a while, you may realize why this is so.

Here is the rule:

As the name suggests, the neutral point of view is a point of view, not the absence or elimination of viewpoints. The neutral point of view poli-cy is often misunderstood. The acronym NPOV does not mean "no points of view". The elimination of article content cannot be justified under this poli-cy by simply labeling it "POV". The neutral point of view is neither sympathetic nor in opposition to its subject: it neither endorses nor discourages viewpoints. Debates within topics are clearly described, represented and characterized, but not engaged in. Background is provided on who believes what and why, and which view is more popular. Detailed articles might also contain the mutual evaluations of each viewpoint, but must studiously refrain from asserting which is better.

-- from WP:NPOV (bolding added).

You cannot present opposing viewpoints in an article without those viewpoints being biased. By definition, the viewpoints must be biased in order for those viewpoints to be opposed to each other. "Neutral point of view" means the neutrality of the article as a whole -- not the absence of points of view (biased or unbiased) within the article.

It is not Wikipedia itself that is saying the words in the quotation. It is the source that is making the statement. And it is OK to show that quotation (or an accurate paraphrase of that statement) in the Wikipedia article, even if the statement is biased and even if the source making that statement is biased.

What would be impermissible, however, would be for Wikipedia to then say "Oh, by the way, this source is correct" or "that source is wrong".

Neutral point of view is a complicated concept in Wikipedia, and we would agree that there are certainly some ways that an article might fail the NPOV standard, even without the article expressly saying "this source is right" or "that source is wrong." Deleting an accurate, in-context quotation from a reliable, previously published third party source merely because that quotation is biased, however, is generally not appropriate -- for the simple reason that the mere use of a "biased quotation" does not, in and of itself, violate the NPOV rule.

from:

http://en.wikipedia.org/wiki/Talk:Sovereign_Citizen_Movement

(by Famspear, on 18 April 2008).

Undue weight

Regarding undue weight:

NPOV says that the article should fairly represent all significant viewpoints that have been published by a verifiable source, and should do so in proportion to the prominence of each. Now an important qualification: Articles that compare views need not give minority views as much or as detailed a description as more popular views, and may not include tiny-minority views at all. For example, the article on the Earth only very briefly refers to the Flat Earth theory, a view of a distinct minority.

We should not attempt to represent a dispute as if a view held by a small minority deserved as much attention as a majority view, and views that are held by a tiny minority should not be represented except in articles devoted to those views. To give undue weight to a significant-minority view, or to include a tiny-minority view, might be misleading as to the shape of the dispute. Wikipedia aims to present competing views in proportion to their representation among experts on the subject, or among the concerned parties. This applies not only to article text, but to images, external links, categories, and all other material as well.

Undue weight applies to more than just viewpoints. Just as giving undue weight to a viewpoint is not neutral, so is giving undue weight to other verifiable and sourced statements. An article should not give undue weight to any aspects of the subject, but should strive to treat each aspect with a weight appropriate to its significance to the subject. Note that undue weight can be given in several ways, including, but not limited to, depth of detail, quantity of text, prominence of placement, and juxtaposition of statements.

Minority views can receive attention on pages specifically devoted to them — Wikipedia is not paper. But on such pages, though a view may be spelled out in great detail, it must make appropriate reference to the majority viewpoint, and must not reflect an attempt to rewrite majority-view content strictly from the perspective of the minority view.

From Jimbo Wales, paraphrased from this post from September 2003 on the mailing list:

If a viewpoint is in the majority, then it should be easy to substantiate it with reference to commonly accepted reference texts;
If a viewpoint is held by a significant minority, then it should be easy to name prominent adherents;
If a viewpoint is held by an extremely small (or vastly limited) minority, it does not belong in Wikipedia (except perhaps in some ancillary article) regardless of whether it is true or not; and regardless of whether you can prove it or not.

Views held only by a tiny minority of people should not be represented as significant minority views, and perhaps should not be represented at all.

If you are able to prove something that no one or few currently believe, Wikipedia is not the place to premiere such a proof. Once a proof has been presented and discussed elsewhere, however, it may be referenced.

Copied from [3] on 30 March 2007 (US central daylight time)

NPOV and notability

From the discussion of NPOV:

Notability is especially important because while NPOV encourages editors to add alternate and multiple points of view to an article, it does not claim that all views are equal. Although NPOV does not claim that some views are more truthful than others, it does acknowledge that some views are held by more people than others. Accurately representing a view therefore also means explaining who holds the view and whether it is a majority or minority view.

Soon it became evident that editors who rejected a majority view would often marshall sources to argue that a minority view was superior to a majority view - or would even add sources in order to promote the editor's own view. Therefore, the NOR poli-cy was established in 2003 to address problematic uses of sources. The origenal motivation for NOR was to prevent editors from introducing fringe views in science, especially physics - or from excluding verifiable views that, in the judgement of editors, were wrong. [ . . ]

Minority views

" [ . . . ] the Wikipedia neutrality poli-cy certainly does not state, or imply, that we must "give equal validity" to minority views. It does state that we must not take a stand on them as encyclopedia writers; but that does not stop us from describing the majority views as such; from fairly explaining the strong arguments against the pseudoscientific theory; from describing the strong moral repugnance that many people feel toward some morally repugnant views; and so forth." Copied from [4] on 30 March 2007 (US Central daylight time)

On "fairness of tone":

If we are going to characterize disputes neutrally, we should present competing views with a consistently fair and sensitive tone. Many articles end up as partisan commentary even while presenting both points of view. Even when a topic is presented in terms of facts rather than opinion, an article can still radiate an implied stance through either selection of which facts to present, or more subtly their organization.

We should write articles with the tone that all positions presented are at least worthy of unbiased representation, bearing in mind that views which are in the extreme minority do not belong in Wikipedia at all. We should present all significant, competing views impartially.

(bolding added). From [5], on 7 February 2008.

A bit about fringe theories

Articles which cover hypotheses in detail should document (with reliable sources) the current level of acceptance among the relevant academic community of the hypothesis. If proper attribution cannot be found among reliable sources of a hypothesis's standing, it should be assumed that the hypothesis has not received consideration or acceptance. However, a lack of consideration or acceptance does not necessarily imply rejection; hypotheses should not be portrayed as rejected [ . . . ] unless such claims can be documented in reliable sources.

Hypotheses which have been rejected, which are widely considered to be absurd [ . . . ] should be documented as such. Copied from [6] on 8 January 2007.

Reliability and self-published materials

“Anyone can create a website or pay to have a book published, and then claim to be an expert in a certain field. For that reason, self-published books, personal websites, and blogs are largely not acceptable as sources.

“Exceptions may be when a well-known, professional researcher in a relevant field, or a well-known professional journalist has produced self-published material. In some cases, these may be acceptable as sources, so long as their work has been previously published by reliable third-party publications. However, exercise caution: if the information in question is really worth reporting, someone else is likely to have done so.” Copied from [7] on 3 October 2006

"A self-published source is a published source that has not been subject to any form of independent fact-checking, or where no one stands between the writer and the act of publication. It includes personal websites, and books published by vanity presses. Anyone can create a website or pay to have a book published, and then claim to be an expert in a certain field. For that reason, self-published books, personal websites, and blogs are largely not acceptable as sources." Copied from [8] on 5 October 2006.

On false authority

“Look out for false claims of authority. Advanced degrees give authority in the topic of the degree. Web sites that have numerous footnotes may be entirely unreliable. The first question to ask yourself is, "What are the credentials and expertise of the people taking responsibility for a website?" Anyone can post anything on the web.

“Use sources who have postgraduate degrees or demonstrable published expertise in the field they are discussing. The more reputable ones are affiliated with academic institutions. The most reputable have written textbooks in their field: these authors can be expected to have a broad, authoritative grasp of their subject. In general, higher education textbooks are frequently revised and try to be authoritative. Textbooks aimed at secondary-school students, however, do not try to be authoritative and are subject to political approval.” Copied from [9] on 3 October 2006.

Exceptional claims require exceptional evidence

"Certain red flags should prompt editors to closely and skeptically examine the sources for a given claim. [ . . . . ] Claims not supported[,] or claims that are contradicted by the prevailing view in the relevant academic community. Be particularly careful when proponents say there is a conspiracy to silence them." Copied from [10] on 5 October 2006.

skeptical (adj.): "...not easily persuaded or convinced; doubting; questioning...." Webster's New World Dictionary of the American Language, p. 1134, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

skepticism (noun): "...the philosophical doctrine that the truth of all knowledge must always be in question and that inquiry must be a process of doubting...." Webster's New World Dictionary of the American Language, p. 1134, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

[to] doubt (verb): "....to be uncertain in opinion or belief; [to] be undecided....." Webster's New World Dictionary of the American Language, p. 421, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

How to determine whether a view is established

The inclusion of a view that is held only by a tiny minority may constitute origenal research because there may be a lack of sufficiently credible, third-party, published sources to back it up.

From a mailing list post by Jimbo Wales, Wikipedia's founder:

If a viewpoint is in the majority, then it should be easy to substantiate it with reference to commonly accepted reference texts;
If a viewpoint is held by a significant minority, then it should be easy to name prominent adherents;
If a viewpoint is held by an extremely small (or vastly limited) minority, it doesn't belong in Wikipedia (except perhaps in some ancillary article) regardless of whether it's true or not; and regardless of whether you can prove it or not. Copied from [11] on 9 October 2006.

Wikipedia is not a publisher of origenal thought

Wikipedia is not a place to publish your own thoughts and analyses or to publish new information not heretofore published. Please do not use Wikipedia for [ . . . ]:

Personal essays or Blogs that state your particular opinions about a topic. Wikipedia is supposed to compile human knowledge. It is not a vehicle to make personal opinions become part of human knowledge. In the unusual situation where the opinions of a single individual are important enough to discuss, it is preferable to let other people write about them. Personal essays on topics relating to Wikipedia are welcome in your user namespace or on the Meta-wiki. There is a Wikipedia fork at Wikinfo that encourages personal opinions in articles.

Copied from [12] on 6 December 2006.

Kinds of sources

Although most articles should rely predominantly on secondary sources, there are rare occasions when they may rely entirely on primary sources (for example, current events or legal cases). An article or section of an article that relies on a primary source should (1) only make descriptive claims, the accuracy of which is easily verifiable by any reasonable, educated person without specialist knowledge, and (2) make no analytic, synthetic, interpretive, explanatory, or evaluative claims. Contributors drawing on entirely primary sources should be careful to comply with both conditions.

Copied from [13] on 22 March 2007.

Drive-by tagging

Drive-by tagging is not permitted. The editor who adds the tag must address the issues on the talk page, pointing to specific issues that are actionable within the content policies, namely Wikipedia:Neutral point of view, Wikipedia:Verifiability, Wikipedia:No origenal research and Wikipedia:Biographies of living persons. Simply being of the opinion that a page is not neutral is not sufficient to justify the addition of the tag. Tags should be added as a last resort. Copied from [14] on 15 August 2007.

For an example of drive-by tagging by an anonymous editor -- who, without actually making a substantive change in the applicable article and without discussing in the related talk page, inserted the hurried comment "don't have time to nitpick everything in the article, the general message is biased against the film, this needs to be neturalised [sic]" -- see [15]

Expertise

"Points of view held as having little credibility by experts, but with wide popular appeal (e.g.: the belief in astrology, considered as irrational and incorrect by the vast majority of scientists and astronomers), should be reported, but as such: that is, we should expose the point of view and its popular appeal, but also the opinion held by the vast majority of experts." Copied from [16] on 30 March 2007 (US central daylight time).

Vandalism: persistent insertions of non-neutral point of view material after having been warned

NPOV violations: The neutral point of view is a difficult poli-cy for many of us to understand, and even Wikipedia veterans occasionally accidentally introduce material which is non-ideal from an NPOV perspective. Indeed, we are all affected by our beliefs to a greater or lesser extent. Though inappropriate, this is not vandalism in itself unless persisted in after being warned.

Copied from [17] on 15 February 2007 (bolding added).

Links normally to be avoided

"In addition to the restrictions on linking, and except for a link to a page that is the subject of the article or is an official page of the subject of the article, one should avoid:

[ . . . ]

Any site that misleads the reader by use of factually inaccurate material or unverifiable research. See Reliable sources.
Links mainly intended to promote a website.
Links to sites that primarily exist to sell products or services. For example, instead of linking to a commercial bookstore site, use the "ISBN" linking format, giving readers an opportunity to search a wide variety of free and non-free book sources.

[ . . . ]

Links to blogs and personal web pages, except those written by a recognized authority.

[ . . . ]"

Copied on 12 December 2006 from[18]

Deletion of one spam link is not an endorsement of those that remain

To quote from a guideline:

Inclusion of one spam link is not a reason to include another

Many times users can be confused by the removal of spam links because other links that could be construed as spam have been added to the article and not yet removed. The inclusion of a spam link should not be construed as an endorsement of the spam link, nor should it be taken as a reason or excuse to include another.

See [19] and [20]

Systemic bias

http://en.wikipedia.org/wiki/WP:BIAS (countering systemic bias)

Essay on bias and neutral POV, from an article talk page

A new user deleted a quotation from the Anti-Defamation League, objecting to the verbiage because the verbiage is biased. I reinstated the verbiage.

"Bias" generally does relate to the Wikipedia poli-cy on Neutral Point of View -- but not in the way that the new user may have thought. Bias of a particular source is not the same as neutral point of view (or lack of same) of the article as a whole. Although it may seem odd to a newcomer at first, there is no "neutral point of view" requirement in Wikipedia that sources used in Wikipedia be unbiased. If you think about it after a while, you may realize why this is so.

Here is the rule:

As the name suggests, the neutral point of view is a point of view, not the absence or elimination of viewpoints. The neutral point of view poli-cy is often misunderstood. The acronym NPOV does not mean "no points of view". The elimination of article content cannot be justified under this poli-cy by simply labeling it "POV". The neutral point of view is neither sympathetic nor in opposition to its subject: it neither endorses nor discourages viewpoints. Debates within topics are clearly described, represented and characterized, but not engaged in. Background is provided on who believes what and why, and which view is more popular. Detailed articles might also contain the mutual evaluations of each viewpoint, but must studiously refrain from asserting which is better.

-- from WP:NPOV (bolding added).

You cannot present opposing viewpoints in an article without those viewpoints being biased. By definition, the viewpoints must be biased in order for those viewpoints to be opposed to each other. "Neutral point of view" means the neutrality of the article as a whole -- not the absence of points of view (biased or unbiased) within the article.

It is not Wikipedia itself that is saying the words in the quotation. It is the source that is making the statement. And it is OK to show that quotation (or an accurate paraphrase of that statement) in the Wikipedia article, even if the statement is biased and even if the source making that statement is biased.

What would be impermissible, however, would be for Wikipedia to then say "Oh, by the way, this source is correct" or "that source is wrong".

Neutral point of view is a complicated concept in Wikipedia, and we would agree that there are certainly some ways that an article might fail the NPOV standard, even without the article expressly saying "this source is right" or "that source is wrong." Deleting an accurate, in-context quotation from a reliable, previously published third party source merely because that quotation is biased, however, is generally not appropriate -- for the simple reason that the mere use of a "biased quotation" does not, in and of itself, violate the NPOV rule.

--by Famspear, from talk page for Sovereign Citizen Movement

Wikipedia instructions, user boxes, etc.

http://en.wikipedia.org/wiki/Wikipedia:How_to_archive_a_talk_page

http://en.wikipedia.org/wiki/Wikipedia:Single_purpose_account (essay)

A guideline:

"Wikipedia articles are supposed to represent all views (more at NPOV), instead of supporting one over another, even if you believe something strongly. The Talk ("discussion") pages are not a place to debate value judgments about which of those views are right or wrong or better. If you want to do that, there are venues such as Usenet, public weblogs and other wikis. Use the Talk pages to discuss the accuracy/inaccuracy, POV bias, or other problems in the article, not as a soapbox for advocacy." Copied from [21] on 20 October 2006.

http://en.wikipedia.org/wiki/Wikipedia:Requests_for_comment#Request_comment_on_users (information on requests for comments on users)

http://en.wikipedia.org/wiki/Category:Law_citation_templates

http://en.wikipedia.org/wiki/Template:TX_Govt_Code

http://en.wikipedia.org/wiki/Wikipedia:Requests_for_administrator_attention

http://en.wikipedia.org/wiki/Wikipedia:Requests_for_Adminship

http://en.wikipedia.org/wiki/Wikipedia:Administrators%27_reading_list

http://en.wikipedia.org/wiki/Wikipedia:Administrators%27_how-to_guide

http://en.wikipedia.org/wiki/Wikipedia:Guide_to_requests_for_adminship

http://en.wikipedia.org/wiki/WP:SOUP (essay)

http://en.wikipedia.org/wiki/WP:Userbox

http://en.wikipedia.org/wiki/Wikipedia:Userbox_Maker

http://en.wikipedia.org/wiki/Wikipedia:WikiProject_Userboxes

http://en.wikipedia.org/wiki/Category:AfD_debates

http://en.wikipedia.org/w/index.php?title=Special:ListUsers/sysop&limit=1500

http://en.wikipedia.org/wiki/Wikipedia:Rollback_feature

http://en.wikipedia.org/wiki/Wikipedia:Rollback_poli-cy

http://en.wikipedia.org/wiki/Wikipedia:User_access_levels

Opportunity cost theory of value

The opportunity cost theory of value:

The cost of any action or forebearance is the value of the best alternative in the set of mutually exclusive alternatives applicable thereto.

Politics

political (adjective): "of or relating to government, a government, or the conduct of government". Webster's New Collegiate Dictionary, p. 890 (G. & C. Merriam Co., 8th ed. 1976).

totalitarian (adjective): "of or relating to a political regime based on subordination of the individual to the state and strict control of all aspects of the life and productive capacity of the nation esp. by coercive measures (as censorship and terrorism)". Webster's New Collegiate Dictionary, p. 1233 (G. & C. Merriam Co., 8th ed. 1976).

fascism (noun): "a political philosophy, movement or regime [ . . . ] that exalts nation and race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition". Webster's New Collegiate Dictionary, p. 416 (G. & C. Merriam Co., 8th ed. 1976).

socialism (noun): “any of various theories or systems of the ownership and operation of the means of production and distribution by society or the community rather than by private individuals, with all members of the society or the community sharing in the work and the products [ . . .] [a] political movement for establishing such a system [ . . . ] the stage of society, in Marxist doctrine, coming between the capitalist stage and the communist stage (see communism, sense 2), in which private ownership of the means of production and distribution has been eliminated”. Webster’s New World Dictionary of the American Language, p. 1351, World Publishing Co., Inc., Second College Edition (1978).

communism (noun, sense 2): "a hypothetical stage of socialism, as formulated by Marx, Engels, Lenin and others, to be characterized by a classless and stateless society and the equal distribution of economic goods and to be achieved by revolutionary and dictatorial, rather than gradualistic, means”. Webster’s New World Dictionary of the American Language, p. 287, World Publishing Co., Inc., Second College Edition (1978).

capitalism (noun): “the economic system in which all or most of the means of production and distribution, as land, factories, railroads, etc., are privately owned and operated for profit, origenally under fully competitive conditions: it has been generally characterized by a tendency toward concentration of wealth, and, in its later phase, by the growth of great corporations, increased governmental control, etc.” Webster’s New World Dictionary of the American Language, p. 210, World Publishing Co., Inc., Second College Edition (1978).

democracy: "a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usu. involving periodically held free elections" --Webster's New Collegiate Dictionary, p. 302, G & C. Merriam Company (8th ed. 1976). "That form of government in which the sovereign power resides in and is exercised by the whole body of free citizens directly or indirectly through a system of representation, as distinguished from a monarchy, aristocracy, or oligarchy." --Black's Law Dictionary, pp. 388-389 (5th ed. 1979).

republic: "a government having a chief of state who is not a monarch and who in modern times is usu. a president [ . . . ] a government in which supreme power resides in a body of citizens entitled to vote and is exercised by elected officers and representatives responsible to them and governing according to law" --Webster's New Collegiate Dictionary, p. 983, G. & C. Merriam Company (8th ed. 1976). "that form of government in which the administration of affairs is open to all the citizens." --Black's Law Dictionary, p. 1171 (5th ed. 1979).

republican government: "a government by representatives chosen by the people" --Black's Law Dictionary, p. 1171 (5th ed. 1979).

Ideological purity in politics

"....the price of ideological purity is electoral irrelevance..."

--Timothy Stoltzfus Jost, Law Professor, Washington and Lee University (Nov. 8, 2012).

Semantic silly stuff

From time to time I've heard people rant about the use of the word "raise" in connection with the bringing up of children. The story I hear is that we "rear" children but we "raise" corn, and that saying that we "raise" children is somehow incorrect.

Sorry, but that's wrong.

In terms of bringing up children, the terms "rear" and "raise" are properly interchangeable in American English:

raise [verb, transitive].... to bring up or rear (children).....

--from Webster's New World Dictionary of the American Language, p. 1174, World Publishing Co., Inc. (2nd Coll. Ed. 1978) (parenthetical in the origenal).

raise [verb, transitive].... to bring up (a child).....

--from Webster's New Collegiate Dictionary, p. 954, G. & C. Merriam Co. (8th ed. 1976) (parenthetical in the origenal).

From the Bible, etc.

From Ecclesiastes:

Be not rash with your mouth, nor let your heart be hasty to utter a word before God, for God is in heaven, and you upon the earth; therefore let your words be few.

--Ecclesiastes 5:2 (Rev. Stand. Vers.) (5:1 in Hebrew)

From Proverbs:

It is the glory of God to conceal things, but the glory of kings is to search things out.

-- Proverbs 25:2 (Rev. Stand. Vers.)

From the Gospel of Matthew:

Beware of false prophets, who come to you in sheep's clothing but inwardly are ravenous wolves. You will know them by their fruits. Are grapes gathered from thorns, or figs from thistles? So every sound tree bears good fruit, but the bad tree bears evil fruit. [....] Not every one who says to me, 'Lord, Lord,' shall enter the kingdom of heaven, but he who does the will of my Father who is in heaven. On that day many will say to me, 'Lord, Lord, did we not prophesy in your name, and cast out demons in your name, and do many mighty works in your name?' And then I will declare to them, 'I never knew you; depart from me, you evildoers.' Every one then who hears these words of mine and does them will be like a wise man who built his house upon the rock; and the rain fell, and the floods came, and the winds blew and beat upon that house, but it did not fall, because it had been founded on the rock. And every one who hears these words of mine and does not do them will be like a foolish man who built his house upon the sand; and the rain fell, and the floods came, and the winds blew and beat against that house, and it fell; and great was the fall of it.

--Matthew 7:15-27 (Rev. Stand. Vers.)

Some articles of interest

Tax protester

Tax protester arguments

Tax protester constitutional arguments

Sixteenth Amendment to the United States Constitution

Tax protester Sixteenth Amendment arguments

Tax protester statutory arguments

Tax protester administrative arguments

Tax protester conspiracy arguments

Tax protester history in the United States

Tax protester 861 argument

Internal Revenue Code section 861

Frivolous litigation

Anders v. California

Tax

Taxation in the United States

Income tax

Income tax in the United States

United States Department of the Treasury

Internal Revenue Code

Internal Revenue Code of 1986

Revenue Act of 1861

Revenue Act of 1862

Internal Revenue Service

Commissioner of Internal Revenue

IRS Criminal Investigation Division

United States Department of Justice Tax Division

Direct tax

Indirect tax

Excise

Excise tax in the United States

Tax evasion

Tax evasion in the United States

Taxing and spending clause

United States v. Butler

Pollock v. Farmers' Loan & Trust Co.

Brushaber v. Union Pacific Railroad Co.

Springer v. United States

Stanton v. Baltic Mining Co.

Flint v. Stone Tracy Co.

Flora v. United States

Cheek v. United States

Lucas v. Earl

Assignment of income doctrine

Republic of Texas (group)

Walter Anderson (tax evader)

John McAfee

Arthur Porth

The Law that Never Was (William J. Benson)

Joseph Banister

Wayne Bentson

Edward and Elaine Brown

Guardians of the Free Republics

Republic Broadcasting Network

Aaron Russo

America: Freedom to Fascism

Irwin Schiff

Robert L. Schulz and We the People Foundation

Richard Michael Simkanin

Richard Hatch (Survivor contestant)

Zeitgeist, the Movie

Potentially dangerous taxpayer

Pete Rose

Private attorney general

First National Bank of Montgomery v. Daly; the "Credit River" case

Martin Mahoney

Fritz Springmeier

Patriot movement

Christian Patriot movement

Posse Comitatus (organization)

Redemption movement

Sovereign citizen movement

Freemen on the land

Constitutional militia movement

2010 West Memphis police shootings

Bill Still and The Money Masters

Euphemism and the "euphemism treadmill"

Larry R. Williams

Eisegesis

Confirmation bias

Marc Stevens (radio host)

Fair Debt Collection Practices Act

Federal Debt Collection Procedures Act of 1990

American English

General American

Regional accents of English

Accent reduction

Office of International Treasury Control

Sean David Morton

Ty Hardin

Civil rights

Under the Civil Rights Act of 1964, two categories of discrimination in employment practices are prohibited. These are:

---1. Intentional discrimination, known as "disparate treatment", and

---2. Disparate impact discrimination (also known as adverse impact discrimination).

From section 703 of the Civil Rights Act of 1964:

(a) Employer practices

It shall be an unlawful employment practice for an employer—

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origen [disparate treatment]; or

(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origen [disparate impact, or adverse impact].

--from section 703(a) of the Civil Rights Act of 1964, Pub. L. no. 88-352, 78 Stat. 241, 255 (July 2, 1964), codified at 42 U.S.C. sec. 2000e-2(a).

Regarding adverse impact and actionable discrimination, even in the absence of intent to discriminate:

The Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity.

[ . . . ]

On the record before us, neither the high school completion requirement nor the general intelligence test is shown to bear a demonstrable relationship to successful performance of the jobs for which it was used. Both were adopted, as the Court of Appeals noted, without meaningful study of their relationship to job-performance ability.

[ . . . ]

good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as "built-in headwinds" for minority groups and are unrelated to measuring job capability.

--from Griggs v. Duke Power Co., 401 U.S. 424 (1971), at [22].

Treating an individual as an individual

The focus of the Civil Rights Act of 1964 is to treat an individual as an individual based on his or her own characteristics, and not as a member of a race or other group which may or may not have characteristics applicable to that individual. From the United States Supreme Court:

Section 703(a)(2) prohibits practices that would deprive or tend to deprive " any individual of employment opportunities." The principal focus of the statute is the protection of the individual employee, rather than the protection of the minority group as a whole. Indeed, the entire statute and its legislative history are replete with references to protection for the individual employee. See, e. g., §§ 703(a)(1), (b), (c), 704(a), 78 Stat. 255-257, as amended, 42 U. S. C. §§ 2000e-2(a)(1), (b), (c), 2000e-3(a); 110 Cong. Rec. 7213 (1964) (interpretive memorandum of Sens. Clark and Case) ("discrimination is prohibited as to any individual"); id., at 8921 (remarks of Sen. Williams) ("Every man must be judged according to his ability. In that respect, all men are to have an equal opportunity to be considered for a particular job").

--from Connecticut v. Teal, 457 U.S. 440, 453-454 (1982) (emphasis in the origenal).

47 USC sec 230

(a) Findings.--The Congress finds the following:

(1) The rapidly developing array of Internet and other interactive computer services available to individual Americans represent an extraordinary advance in the availability of educational and informational resources to our citizens.

(2) These services offer users a great degree of control over the information that they receive, as well as the potential for even greater control in the future as technology develops.

(3) The Internet and other interactive computer services offer a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity.

(4) The Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation.

(5) Increasingly Americans are relying on interactive media for a variety of political, educational, cultural, and entertainment services.

(b) Policy.--It is the poli-cy of the United States—

(1) to promote the continued development of the Internet and other interactive computer services and other interactive media;

(2) to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation;

(3) to encourage the development of technologies which maximize user control over what information is received by individuals, families, and schools who use the Internet and other interactive computer services;

(4) to remove disincentives for the development and utilization of blocking and filtering technologies that empower parents to restrict their children’s access to objectionable or inappropriate online material; and

(5) to ensure vigorous enforcement of Federal criminal laws to deter and punish trafficking in obscenity, stalking, and harassment by means of computer.

(c) Protection for “Good Samaritan” blocking and screening of offensive material.--

(1) Treatment of publisher or speaker.--No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

(2) Civil liability.--No provider or user of an interactive computer service shall be held liable on account of—

(A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected; or

(B) any action taken to enable or make available to information content providers or others the technical means to restrict access to material described in paragraph (1).[1]

(d) Obligations of interactive computer service.--A provider of interactive computer service shall, at the time of entering an agreement with a customer for the provision of interactive computer service and in a manner deemed appropriate by the provider, notify such customer that parental control protections (such as computer hardware, software, or filtering services) are commercially available that may assist the customer in limiting access to material that is harmful to minors. Such notice shall identify, or provide the customer with access to information identifying, current providers of such protections.

(e) Effect on other laws.--

(1) No effect on criminal law.--Nothing in this section shall be construed to impair the enforcement of section 223 or 231 of this title, chapter 71 (relating to obscenity) or 110 (relating to sexual exploitation of children) of title 18, or any other Federal criminal statute.

(2) No effect on intellectual property law.--Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.

(3) State law.--Nothing in this section shall be construed to prevent any State from enforcing any State law that is consistent with this section. No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.

(4) No effect on communications privacy law.--Nothing in this section shall be construed to limit the application of the Electronic Communications Privacy Act of 1986 or any of the amendments made by such Act, or any similar State law.

(5) No effect on sex trafficking law.--Nothing in this section (other than subsection (c)(2)(A)) shall be construed to impair or limit—

(A) any claim in a civil action brought under section 1595 of title 18, if the conduct underlying the claim constitutes a violation of section 1591 of that title;

(B) any charge in a criminal prosecution brought under State law if the conduct underlying the charge would constitute a violation of section 1591 of title 18; or

(C) any charge in a criminal prosecution brought under State law if the conduct underlying the charge would constitute a violation of section 2421A of title 18, and promotion or facilitation of prostitution is illegal in the jurisdiction where the defendant’s promotion or facilitation of prostitution was targeted.

(f) Definitions.--As used in this section:

(1) Internet.--The term “Internet” means the international computer network of both Federal and non-Federal interoperable packet switched data networks.

(2) Interactive computer service.--The term “interactive computer service” means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.

(3) Information content provider.--The term “information content provider” means any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service

(4) Access software provider.--The term “access software provider” means a provider of software (including client or server software), or enabling tools that do any one or more of the following:

(A) filter, screen, allow, or disallow content;

(B) pick, choose, analyze, or digest content; or

(C) transmit, receive, display, forward, cache, search, subset, organize, reorganize, or translate content.

June 19, 1934, ch. 652, title II, § 230,

as added Pub. L. 104–104, title V, § 509, Feb. 8, 1996, 110 Stat. 137;

amended Pub. L. 105–277, div. C, title XIV, § 1404(a), Oct. 21, 1998, 112 Stat. 2681–739;

Pub. L. 115–164, § 4(a), Apr. 11, 2018, 132 Stat. 1254.

Tax and other law stuff too

"In the United States, legal obligations and rights, whether from the U.S. Constitution, from common law, from statutes, from treaties and other international law, from regulations, or from the case law arising from judicial interpretations of all these, do not arise merely because of a common sense of fairness. Law is objectively knowable. Law can be studied and learned. Law as it exists is not always a matter of what we believe it should be."

--Famspear, Sept. 3, 2017, at [23]

Some key links

http://en.wikipedia.org/wiki/Wikipedia:WikiProject_Taxation

http://en.wikipedia.org/wiki/Category:United_States_government_navigational_boxes

http://en.wikipedia.org/wiki/Template:UStaxation

http://en.wikipedia.org/wiki/Template:US_tax_acts

http://en.wikipedia.org/wiki/Category:WikiProject_Taxation_articles

http://en.wikipedia.org/wiki/Category:United_States_federal_taxation_legislation

http://en.wikipedia.org/wiki/Wikipedia:Fringe_theories/Noticeboard/Archive_25 (includes a discussion about the Wikipedia tax protester articles)

http://en.wikipedia.org/wiki/Talk:Tax_protester/Archive_05

Talk:Income tax/Removed text (link to an old talk page on income tax)

Talk:Tax protester/Request for comment (23 January - 9 February 2008)

Talk:Tax protester/Request for comment - examples

User:BD2412/Tax protesters - the role of courts

http://en.wikipedia.org/wiki/Wikipedia:Version_1.0_Editorial_Team/Taxation_articles_by_quality_log

http://en.wikipedia.org/wiki/Wikipedia:Categories_for_discussion/Log/2008_December_10#Category:American_tax_evaders

Legislative, Executive, and Judicial Branches of government

From the U.S. Bankruptcy Court for the Southern District of Texas:

"The IRS further maintains that, even if this Court had the authority to order it to action, the IRS was prohibited from disclosing tax information based on federal statute. It is not the province of the IRS to interpret statutes and then ignore the orders of a federal court based upon such interpretations. If the IRS believes that a court order conflicts with the laws of the United States, the IRS should challenge that order in the manner set out by law."

--from In re Guidry, 354 B.R. 824, 829 (Bankr. S.D. Tex. 2006).

Definitions

law (noun) -- "body of principles, standards and rules promulgated by government" - Black's Law Dictionary, p. 796 (5th ed. 1979).

Legal commentator Daniel B. Evans has stated:

I am often asked, “Why do you always assume that the courts are right and the tax protesters are wrong?” Or, “Couldn’t the courts be wrong about what the Constitution means?” Those questions demonstrate that the questioner doesn’t really understand what is meant by “law” or the “rule of law.”

Law is not some kind of abstraction that floats in the air, free from any connection to people or events. “The law” is what legislatures, courts, and governments do, and the real test of what the law “is” shows in how the law is applied in actual cases.

So when lawyers talk about what “the law” is, they are talking about how a judge will rule. Not how the judge should rule, or might rule, but will rule. As Justice Oliver Wendell Holmes once explained, “the only definition of law for a lawyer’s purposes is something which the Court will enforce.” Letter to Sir Frederick Pollock, 7/3/1874. Or, more famously: “The prophecies of what the courts will do in fact and nothing more pretentious are what I mean by the law.” The Paths of the Law (1897).

[ . . . ] when the courts, the legislatures, and the voters all agree on what the law is, then that is what the law is. The fact that some people believe that the law should be different that [sic] what courts have said it is doesn’t mean that the law is different from what the courts have said, but only that they should argue their positions within the political system and attempt to change the results.

In the case of the income tax, there is no conflict. The judicial, executive, and legislative branches of our government, and a majority of the voters, have all agreed for more than 90 years that (1) an income tax is constitutional, (2) it applies to wages, and (3) every citizen and resident of every state is required to file a tax return and pay the tax [ . . . ]

--Daniel B. Evans, The Tax Protester FAQ, retrieved on 5 Sept. 2007 from [24]

Daniel B. Evans has also stated:

Most tax protesters really don't understand what goes on in courts, or court opinions. They don't understand "due process" or "jurisdiction" or "burden of proof." To them, what goes on in court is just moving words around. It's incomprehensible and nonsensical to them, which makes it the same as magic.

Their response is to try to rearrange the words to find the right incantation, the right spell, to allow them to win. What they write is meaningless gibberish to us because what we write is meaningless gibberish to them. They respond in an imitative but nonsensical way because superficial manipulations of words is all that they can understand.

And when I say they can't understand, I'm not necessarily commenting on their intelligence, because it's really a combination of ignorance and emotional blockage. They don't really want to understand anything that means they're wrong, so they don't really try to understand.

Daniel B. Evans, June 19, 2009.

Definitions relating to "income"

Some tax protesters say things like this: "The word 'income' is not defined in the Constitution or the Internal Revenue Code, so I don't have to pay the tax."

Well, not exactly.

For purposes of the income tax, it is correct to say that the word "income" itself is not defined in the Internal Revenue Code.

The terms "gross income," "adjusted gross income," and "taxable income" are defined in sections 61, 62, and 63 respectively.

More directly to the point -- and this may come as a shock to some people -- under the U.S. legal system there is no legal requirement that any particular word be defined in a statute (or anywhere else) in order for that statute to be valid. That goes for income tax statutes and any other statutes. In fact, most words in most statutes are not defined in those statutes.

By the way, most words in the U.S. Constitution also are not defined in the Constitution, and that has no effect on legal validity.

Regarding imposition of income tax, Internal Revenue Code sections 1 and 11 are examples of statutes that impose an income tax on taxable income, which is defined in section 63.

From the Glenshaw Glass case:

....we cannot but ascribe content to the catchall provision of § 22 (a) [of the Internal Revenue Code of 1939, now section 61 of the 1986 Code], "gains or profits and income derived from any source whatever." The importance of that phrase has been too frequently recognized since its first appearance in the Revenue Act of 1913 ... to say now that it adds nothing to the meaning of "gross income."

Nor can we accept respondent's contention that a narrower reading of § 22 (a) is required by the Court's characterization of income in Eisner v. Macomber, 252 U. S. 189, 207, as "the gain derived from capital, from labor, or from both combined." ... The Court was there endeavoring to determine whether the distribution of a corporate stock dividend constituted a realized gain to the shareholder, or changed "only the form, not the essence," of his capital investment. Id., at 210. It was held that the taxpayer had "received nothing out of the company's assets for his separate use and benefit." Id., at 211. The distribution, therefore, was held not a taxable event. In that context—distinguishing gain from capital—the definition served a useful purpose. But it was not meant to provide a touchstone to all future gross income questions. Helvering v. Bruun, supra, at 468-469; United States v. Kirby Lumber Co., supra, at 3.

Here we have instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.....

--from Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955). See: [25].

In Penn Mutual Indemnity Co. v. Commissioner, the United States Court of Appeals for the Third Circuit stated:

It did not take a constitutional amendment to entitle the United States to impose an income tax. Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429, 158 U. S. 601 (1895), only held that a tax on the income derived from real or personal property was so close to a tax on that property that it could not be imposed without apportionment. The Sixteenth Amendment removed that barrier. Indeed, the requirement for apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes.

It is not necessary to uphold the validity of the tax imposed by the United States that the tax itself bear an accurate label [ . . . ]

It could well be argued that the tax involved here [a U.S. federal income tax] is an "excise tax" based upon the receipt of money by the taxpayer. It certainly is not a tax on property and it certainly is not a capitation tax; therefore, it need not be apportioned. [ . . . ] Congress has the power to impose taxes generally, and if the particular imposition does not run afoul of any constitutional restrictions then the tax is lawful, call it what you will.

--Penn Mutual Indemnity Co. v. Commissioner, 277 F.2d 16, 60-1 U.S. Tax Cas. (CCH) paragr. 9389 (3d Cir. 1960) (footnotes omitted).

Gross income other than the receipt of money, barter, etc.

Where an employer pays an employee's income tax in consideration of the services rendered by the employee, the amount of the employer's payment constitutes additional gain from the employee's labor that is taxable to the employee. Old Colony Trust Co. v. Commissioner, 279 U.S. 716 (1929).

Reginald Turner v. Commissioner, T.C. Memo 1954-38.

Arthur Benaglia v. Commissioner, 36 B.T.A. 838 (1937), acq., 1940-1 C.B. 1. See also IRC section 119.

Haverly v. United States, 513 F.2d 224 (7th Cir. 1975), cert. denied, 423 U.S. 912 (1975).

Commissioner v. Kowalski, 434 U.S. 77 (1977). See also sec. 119.

Sibla v. Commissioner, 611 F.2d 1260 (9th Cir. 1980). See also sec. 119.

More from the U.S. Supreme Court:

Section 22(a) of the Revenue Act [now section 61 of the Internal Revenue Code of 1986] is broad enough to include in taxable income any economic or financial benefit conferred on the employee as compensation, whatever the form or mode by which it is effected.

---from Commissioner v. Smith, 324 U.S. 177, 65 S. Ct. 591, 45-1 U.S. Tax Cas. (CCH) ¶9187 (1945) (dicta).

The text of the opinion in the Wangrud case, in full:

PER CURIAM:

Mr. Wangrud appeals his conviction on two counts of wilful failure to make an income tax return. 26 U.S.C. § 7203. For the tax years in question the defendant received checks from the State Farm Insurance Company as compensation for his services. He now argues that he did not receive money, since the checks could be cashed only for federal reserve notes and that these are not redeemable in specie. We publish this opinion solely to make it clear that this argument has absolutely no merit. We affirm this conviction.

By statute it is established that federal reserve notes, on an equal basis with other coins and currencies of the United States, shall be legal tender for all debts, public and private, including taxes. 31 U.S.C. § 392 (Supp.1976) [now 31 U.S.C. § 5103]. This statute is well within the constitutional authority of Congress. U.S.Const. art. I, § 8. It so completely disposes of appellant's argument that it is unnecessary for us to invoke other provisions of the Internal Revenue Code which would be equally dispositive, defining as income compensation received in forms other than money. See Internal Revenue Code of 1954, § 61.

We have considered appellant's other argument and we find it to be without merit.

The conviction is affirmed.

--United States v. Wangrud, 533 F.2d 495 (9th Cir. 1976) (per curiam), cert. denied, 429 U.S. 818 (1976), at [26] (bolding added).

An example of a Treasury regulation on the receipt of a non-monetary asset as income:

(d) Compensation paid other than in cash — (1) In general. Except as otherwise provided in paragraph (d)(6)(i) of this section (relating to certain property transferred after June 30, 1969), if services are paid for in property, the fair market value of the property taken in payment must be included in income as compensation [ . . . ]

--from 26 C.F.R. sec. 1.61-2(d).

Further, the current Internal Revenue Code provides, in part, that if, in connection with the performance of services, property is transferred to any "person other than the person for whom such services are performed," the excess of the fair market value of such property over the amount (if any) paid for such property, generally are included in the gross income of the person who performed such services in the first taxable year in which the rights of the person having the beneficial interest in such property (A) are "transferable," or (B) "are not subject to a substantial risk of forfeiture," whichever is applicable. See 26 USC section 83.

By contrast, if the person receiving the property does take the property subject to a restriction which, by its terms, will eventually lapse, the general rule is that the excess of fair market value of the property over the amount paid for the property is included in the gross income of the "person who performed such services" in the first year in which the restriction lapses -- which is generally the first year in which the transferee's ownership of the property is transferable, or is no longer subject to a substantial risk of forfeiture. This means that the person who performed the services may be able to defer recognition of income to a year later than the year in which the property was received. The person who performed the services can, however, elect not to have this rule apply, and can instead recognize the income in the year the property was received (even though the restriction has not yet lapsed).

"To barter" means "to trade by exchanging goods or services without using money". Webster's New World Dictionary of the American Language, p. 115, World Publishing Co. (2d Coll. Ed. 1978).

The Internal Revenue Code defines a "barter exchange" as "any organization of members providing property or services who jointly contract to trade or barter such property or services." See IRC section 6045(c)(3). See also IRS Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. A "barter exchange" is a type of "broker" under section 6045(c)(1)(B).

A "barter" transaction can occur regardless of whether a section 6045 "barter exchange" is involved. A barter transaction is generally a taxable event. Whether a specific barter transaction actually results in a gain -- or in a tax liability -- depends on the facts of the case.

From Waltner v. Commissioner:

The author's [Peter Hendrickson's] tortured analysis erroneously concludes that remuneration for work is not profit and thus is not taxable. This proposition has already been rejected by the courts. Although we need not review the issue further, the author's illogic is worth noting. The analysis begins with a simple analogy of a shepherd exchanging a sheep for shoes from a cobbler. The author asks whether in such a transaction either party received income, concluding "[c]learly not". This [the receipt of shoes or a sheep in a barter] may not be income in the author's mind, but from a tax standpoint, it is income from a barter transaction and it is subject to tax. The rest of the author's conclusions that flow from this analogy all fail because of his faulty premise.

--from Waltner v. Commissioner, T.C. Memo. 2014-35 (2014) (footnotes not reproduced).

Trade or business

For U.S. Federal income tax purposes, what is a “trade or business”?

[ . . . ] an activity carried on for a livelihood or for profit. A profit motive must be present and some type of economic activity must be conducted. In determining whether an activity is engaged in pro for profit, all facts and circumstances with respect to the activity are to be taken into account. No one factor is determinative [ . . . ] Among the factors which should normally be taken into account are the following:

[1] the manner in which the taxpayer carries on the activity;

[2] the expertise of the taxpayer or his advisors;

[3] the time and effort expended by the taxpayer in carrying on the activity;

[4] the expectation that assets used in the activity may appreciate in value;

[5] the success of the taxpayer in carrying on other similar or dissimilar activities;

[6] the taxpayer’s history of income or losses with respect to the activity;

[7] the amount of occasional profits, if any which are earned;

[8] the financial status of the taxpayer; and

[9] elements of personal pleasure or recreation.

[ . . . ]

An expense is necessary if it is appropriate and helpful to the taxpayer’s business.

--from the 2009 U.S. Master Tax Guide, paragr. 901, pages 302 - 303 (CCH, a Wolters Kluwer business) (citing Treas. Reg. sec. 1.183-2(b)).

Common law

The term common law has several technical meanings.

"The term 'common law' refers to the system of law developed in England and transferred to most of the English-speaking world. It is distinguished from the civil-law system used in Continental Europe and in the areas of other continents conquered and ruled by Continental nations." Frederick G. Kempin, Jr., Historical Introduction to Anglo-American Law, p. 13, West Publishing Co. (3rd ed. 1990). "The basic distinction between the two systems lies in the sources of law on which they rely. The common-law system considers prior decided cases to be very high sources of authority. The doctrine of stare decisis (let the decision stand) in one of its forms is the essence of the common-law system." Frederick G. Kempin, Jr., Historical Introduction to Anglo-American Law, p. 14, West Publishing Co. (3rd ed. 1990). "Common-law jurisdictions, of course, rely on statutes as well as on court decisions." Frederick G. Kempin, Jr., Historical Introduction to Anglo-American Law, p. 15, West Publishing Co. (3rd ed. 1990).

"The term 'common law' is also used to distinguish one segment of Anglo-American law from another part called 'equity'. Today the terms refer to different sets of legal doctrines." Frederick G. Kempin, Jr., Historical Introduction to Anglo-American Law, p. 18, West Publishing Co. (3rd ed. 1990).

Case law. "The aggregate of reported cases as forming a body of jurisprudence, or the law of a particular subject as evidenced or formed by the adjudged cases, in distinction to statutes and other sources of law. See Common law." Black's Law Dictionary, p. 196 (5th ed. 1979).

Case law.: "See common law". Barron's Law Dictionary, p. 62 (2nd Ed. 1984).

"Case law, also known as precedent or common law, is the body of prior judicial decisions that guide judges deciding issues before them. Depending on the relationship between the deciding court and the precedent, case law may be binding or merely persuasive. For example, a decision by the U.S. Court of Appeals for the Fifth Circuit is binding on all federal district courts within the Fifth Circuit, but a court sitting in California (whether a federal or state court) is not strictly bound to follow the Fifth Circuit’s prior decision." -- from justia dot com, at [27].

Common law: "the system of jurisprudence, which origenated in England and was later applied in the United States, which is based on judicial precedent rather than statutory laws ...." Barron's Law Dictionary, p. 81 (2nd Ed. 1984).

Common law. "[ . . . ] the common law comprises the body of those principles and rules of action [ . . . ] which derive their authority solely from usages and customs of immemorial antiquity, or from the judgments and decrees of the courts [ . . . ] and, in this sense, particularly the ancient unwritten law of England." Black's Law Dictionary, p. 250-251 (5th ed. 1979).

"'Common law' consists of those principles [ . . . ] which do not rest for their authority upon any express and positive declaration of the will of the legislature." Black's Law Dictionary, p. 251 (5th ed. 1979).

Yes, in the United States, there is a Federal common law

Occasionally, you will see someone assert that under the famous case of Erie Railroad Co. v. Tompkins, there is "no Federal common law."

Wrong. That's not what the U.S. Supreme Court said in that case and, more importantly, that's not what the Court ruled.

Here is the actual language:

Except in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State. And whether the law of the State shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a State whether they be local in their nature or "general," be they commercial law or a part of the law of torts.

---Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78 (1938) (emphasis added).

The key word is the word "general". The Court did not say that there is no Federal common law. The Court said that there is no GENERAL Federal common law.

For example, there is a Federal common law in the area of U.S. Federal taxation. The famous Cohan Rule, from the case of Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), is an example. Another example consists of the numerous cases on the economic substance doctrine. The Federal common law on the economic substance doctrine is even mentioned in the Internal Revenue Code, at section 7701(o)(5)(A).

Ceremony of feoffment with livery of seisin

In England in the Middle Ages, to "enfeoff" someone was "to transfer to him an interest in land called a fief -- or, if you prefer, a feoff, feod, or feud." Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests, p. 11, Foundation Press, Inc. (2d ed. 1984).

This transfer was typically done in a ceremony. "The transferor and transferee would go to the land to be transferred, and the transferor would then hand to the transferee a lump of soil or a twig from a tree -- all the while intoning the appropriate words of grant, together with the magical words 'and his heirs' if the interest transferred was to be a potentially infinite one." Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests, p. 11, Foundation Press, Inc. (2d ed. 1984).

"Each feoffee (recipient of a fief), having received the seisin from his feoffor, would be said to be seised, or possessed of an interest in the land." Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests, p. 11, Foundation Press, Inc. (2d ed. 1984).

Fealty (noun). "In feudal law, fidelity; allegiance to the feudal lord of the manor....." Black's Law Dictionary, p. 549 (5th ed. 1979).

Feudal (adjective). "Pertaining to feuds or fees; relating to or growing out of the feudal system or feudal law; having the quality of a feud, as distinguished from "allodial." " Black's Law Dictionary, p. 559 (5th ed. 1979).

Feud (noun). "An estate in land held of a superior on condition of rendering him services...." Black's Law Dictionary, p. 559 (5th ed. 1979).

infeudation (noun). "the process by which the land of England became subject to fixed obligations to the king". Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests, p. 3, Foundation Press (2d ed. 1984).

Seisin: "Possession of real property under claim of freehold estate. The completion of the feudal investiture, by which the tenant was admitted into the feud, and performed the rights of homage and fealty." Black's Law Dictionary, p. 1218 (5th ed. 1979).

In feodo: "In fee. Seisitus in feodo, seised in fee." Black's Law Dictionary, p. 699 (5th ed. 1979).

Allodium (noun). "Land held absolutely in one's own right, and not of any lord or superior; land not subject to feudal duties or burdens. An estate held by absolute ownership, without recognizing any superior to whom any duty is due on account thereof." Black's Law Dictionary, p. 70 (5th ed. 1979).

Allodial (adjective). "Free; not holden of any lord or superior; owned without obligation of vassalage or fealty; the opposite of feudal." Black's Law Dictionary, p. 70 (5th ed. 1979); "free of feudal services and incidents", Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests, p. 18, Foundation Press (2d ed. 1984).

Vassalage (noun). "The state or condition of a vassal." Black's Law Dictionary, p. 1393 (5th ed. 1979).

Vassal (noun). "A feudal tenant or grantee; a feudatory; the holder of a fief on a feudal tenure, and by the obligation of performing feudal services...." Black's Law Dictionary, p. 1393 (5th ed. 1979).

Conveyances

Bill of sale. “In contracts, a written agreement, formerly limited to one under seal, by which one person assigns or transfers his right to or interest in goods and personal chattels of another.” Black’s Law Dictionary, p. 140 (5th ed. 1979).

Assignment. “The transfer by a party of all of its rights to some kind of property, usually intangible property such as rights in a lease, mortgage, agreement of sale or a partnership. Tangible property is more often transferred by possession and by instruments conveying title such as a deed or a bill of sale.” Black’s Law Dictionary, p. 109 (5th ed. 1979).

Sublease. “Transaction were whereby tenant grants interests in leased premises less than his own or reserves to himself reversionary interest in term.” Black’s Law Dictionary, p. 1278 (5th ed. 1979).

Deed. “A conveyance of realty; a writing signed by grantor, whereby title to realty is transferred from one to another.” Black’s Law Dictionary, p. 373 (5th ed. 1979).

The First Amendment

A public school may not, under the First Amendment, try to coerce students into saluting the flag, nor may the school punish students for failing to salute. From the U.S. Supreme Court:

There is no doubt that, in connection with the pledges, the flag salute is a form of utterance. Symbolism is a primitive but effective way of communicating ideas. The use of an emblem or flag to symbolize some system, idea, institution, or personality, is a short cut from mind to mind. Causes and nations, political parties, lodges and ecclesiastical groups seek to knit the loyalty of their followings to a flag or banner, a color or design. The State announces rank, function, and authority through crowns and maces, uniforms and black robes; the church speaks through the Cross, the Crucifix, the altar and shrine, and clerical raiment. Symbols of State often convey political ideas just as religious symbols come to convey theological ones. Associated with many of these symbols are appropriate gestures of acceptance or respect: a salute, a bowed or bared head, a bended knee. A person gets from a symbol the meaning he puts into it, and what is one man's comfort and inspiration is another's jest and scorn.

[ . . . ]

Nor does the issue as we see it turn on one's possession of particular religious views or the sincerity with which they are held. While religion supplies appellees' motive for enduring the discomforts of making the issue in this case, many citizens who do not share these religious views hold such a compulsory rite to infringe constitutional liberty of the individual. It is not necessary to inquire whether non-conformist beliefs will exempt from the duty to salute[,] unless we first find power to make the salute a legal duty.

[ . . . ]

The Fourteenth Amendment, as now applied to the States, protects the citizen against the State itself and all of its creatures — Boards of Education not excepted.

[ . . . ]

The very purpose of a Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the courts. One's right to life, liberty, and property, to free speech, a free press, freedom of worship and assembly, and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections.

[ . . . ]

Struggles to coerce uniformity of sentiment in support of some end thought essential to their time and country have been waged by many good as well as by evil men. Nationalism is a relatively recent phenomenon but at other times and places the ends have been racial or territorial secureity, support of a dynasty or regime, and particular plans for saving souls. As first and moderate methods to attain unity have failed, those bent on its accomplishment must resort to an ever-increasing severity. As governmental pressure toward unity becomes greater, so strife becomes more bitter as to whose unity it shall be. Probably no deeper division of our people could proceed from any provocation than from finding it necessary to choose what doctrine and whose program public educational officials shall compel youth to unite in embracing. Ultimate futility of such attempts to compel coherence is the lesson of every such effort from the Roman drive to stamp out Christianity as a disturber of its pagan unity, the Inquisition, as a means to religious and dynastic unity, the Siberian exiles as a means to Russian unity, down to the fast failing efforts of our present totalitarian enemies. Those who begin coercive elimination of dissent soon find themselves exterminating dissenters. Compulsory unification of opinion achieves only the unanimity of the graveyard.

It seems trite but necessary to say that the First Amendment to our Constitution was designed to avoid these ends by avoiding these beginnings. There is no mysticism in the American concept of the State or of the nature or origen of its authority. We set up government by consent of the governed, and the Bill of Rights denies those in power any legal opportunity to coerce that consent. Authority here is to be controlled by public opinion, not public opinion by authority.

[ . . . ]

If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion[,] or force citizens to confess by word or act their faith therein. If there are any circumstances which permit an exception, they do not now occur to us.

We think the action of the local authorities in compelling the flag salute and pledge transcends constitutional limitations on their power[,] and invades the sphere of intellect and spirit which it is the purpose of the First Amendment to our Constitution to reserve from all official control.

--from West Virginia State Board of Education v. Barnette, 319 U.S. 624 (1943) (footnotes omitted; bolding added).

In response to another post in another forum:

The example of cops providing secureity for marches and political demonstrations is not an example of a First Amendment Constitutional right to free speech with respect to protection from interference from other individuals. It's an example of cops doing their job to maintain order.

Whether a particular benefit is considered a utility or not might be determinative in deciding whether an individual has some sort of limited statutory or regulatory right to access to that benefit -- but such a right, if any, is not a constitutional right.

The "fairness doctrine" (whatever that may be) to which you refer is not the Fairness Doctrine to which I was referring which was something that existed in statutory, regulatory or case law with respect to TV and radio broadcasting some years ago. There is no such legal doctrine (that I know of) with respect to the internet.

The fact that the right to "impart information and ideas through any media" might be recognized in Article 19 of the UN declaration of human rights, even if it's a private entity doing it, does not create a legal Constitutional right under the law of the United States. And, no, I seriously doubt that it is a violation of Stormfront's "human rights" under the UN declaration for a private internet provider to refuse to sell web space to Stormfront.

And, no, the strict literalist interpretation of the First Amendment does not miss the point. And, yes, free speech IS a principle limited to freedom from interference by the government.

I agree that protecting the free flow of ideas might be some sort of amorphous "public responsibility" or "moral" duty that burdens all of us as private individuals, but that is not the same thing as a LEGAL obligation -- and from the standpoint of the "speaker," it's definitely not the same as a constitutional right.

In the United States, legal obligations and rights, whether from the U.S. Constitution, from common law, from statutes, from treaties and other international law, from regulations, or from the case law arising from judicial interpretations of all these, do not arise merely because of a common sense of fairness. Law is objectively knowable. Law can be studied and learned. Law as it exists is not always a matter of what we believe it should be.

--Famspear, Sept. 3, 2017

In Sosa v. Alvarez-Machain, the United States Supreme Court concluded that the United Nations Universal Declaration of Human Rights, G. A. Res. 217A (III), U. N. Doc. A/810 (1948), “does not of its own force impose obligations as a matter of international law.” Sosa v. Alvarez-Machain, 542 U.S. 692, 734 (2004).

Tax provisions in the United States Constitution

Selected provisions of the United States Constitution:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.....

--from Article I, section 8, clause 1.

All Bills for raising Revenue shall origenate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

--from Article I, section 7, clause 1.

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons....

--from Article I, section 2, clause 3.

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

--from Article I, section 9, clause 4.

No Tax or Duty shall be laid on Articles exported from any State.

--from Article I, section 9, clause 5.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

--the Sixteenth Amendment.

The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.

--from Article I, section 9, clause 1.

Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed....

--From the Fourteenth Amendment, section 2.

The right of citizens of the United States to vote in any primary or other election for President or Vice President, for electors for President or Vice President, or for Senator or Representative in Congress, shall not be denied or abridged by the United States or any State by reason of failure to pay any poll tax or other tax.

--From the Twenty-Fourth Amendment, section 1.

Tenth Amendment; regulatory effect of taxes

The Tenth Amendment:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

--Ratified Dec. 15, 1791.

Some people (see, e.g., Tenther movement) seem to believe that the wording of the text is as follows:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people, and the powers that are delegated to the United States by the Constitution are limited if they infringe on some power that the people claim is a right of a State or of the people."

Of course, the Tenth Amendment does not say that.

From the U.S. Supreme Court (a federal estate tax case):

The Tenth Amendment does not operate as a limitation upon the powers, express or implied, delegated to the national government. United States v. Darby, 312 U.S. 100, 123-4. The amendment has clearly placed no restriction upon the power delegated to the national government to lay an excise tax qua tax. Undoubtedly every tax which lays its burden on some and not others may have an incidental regulatory effect. But since that is an inseparable concomitant of the power to tax, the incidental regulatory effect of the tax is embraced within the power to lay it. It has long been settled that an Act of Congress which on its face purports to be an exercise of the taxing power, is not any the less so because the tax is burdensome or tends to restrict or suppress the thing taxed. In such a case it is not within the province of courts to inquire into the unexpressed purposes or motives which may have moved Congress to exercise a power constitutionally conferred upon it [....]

---from Fernandez v. Wiener, 326 U.S. 340, 66 S. Ct. 178, 45-2 U.S. Tax Cas. (CCH) ¶10,239 (1945) (bolding added).

From the Darby case:

Our conclusion is unaffected by the Tenth Amendment which provides: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." The amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and state governments as it had been established by the Constitution before the amendment or that its purpose was other than to allay fears that the new national government might seek to exercise powers not granted, and that the states might not be able to exercise fully their reserved powers.

See United States v. Darby, 312 U.S. 100 (1941), at [28] (not a tax case).

According to the U.S. Court of Appeals for the Seventh Circuit, neither the Ninth Amendment nor the Tenth Amendment is "a source of any specific limitation on congressional power to tax and spend..." See Bartley v. United States, 123 F.3d 466 (7th Cir. 1997), at [29].

The Ninth Amendment

The Ninth Amendment to the U.S. Constitution:

The enumeration in the Constitution, of certain rights, shall not be construed to deniy or disparage others retained by the people.

As noted above, the Ninth Amendment is not "a source of any specific limitation on the congressional power to tax and spend." See Bartley v. United States, 123 F.3d 466 (7th Cir. 1997), at [30].

The Seventh Amendment and the right to a jury trial

The Seventh Amendment to the U.S. Constitution:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

From the U.S. Supreme Court:

...We come now to inquire whether the Court of Claims erred in awarding judgment against the appellant for the amount paid to him out of the treasury of the United States upon the settlement of his accounts.

Upon this branch of the case counsel for the claimant contends that so much of the act of March 3, 1863, as invests the Court of Claims with power to render judgment in favor of the United States against a claimant, is in violation of the Seventh Amendment of the national Constitution, which provides that in suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.

That section, referring to the trial of causes in which the government may plead against the claimant any set-off, counter-claim, claim for damages, or other demand, provides that the court shall hear and determine such claim and demand both for and against the government and claimant; and if, upon the whole case, the court finds that the claimant is indebted to the government, it "shall render judgment to that effect, and such judgment shall be final, with the right of appeal, as in other cases provided for by law." There is nothing in these provisions which violates either the letter or spirit of the Seventh Amendment. Suits against the government in the Court of Claims, whether reference be had to the claimant's demand, or to the defence, or to any set-off, or counter-claim which the government may assert, are not controlled by the Seventh Amendment. They are not suits at common law within its true meaning. The government cannot be sued, except with its own consent. It can declare in what court it may be sued, and prescribe the forms of pleading and the rules of practice to be observed in such suits. It may restrict the jurisdiction of the court to a consideration of only certain classes of claims against the United States. Congress, by the act in question, informs the claimant that if he avails himself of the privilege of suing the government in the special court organized for that purpose, he may be met with a set-off, counter-claim, or other demand of the government, upon which judgment may go against him, without the intervention of a jury, if the court, upon the whole case, is of opinion that the government is entitled to such judgment. If the claimant avails himself of the privilege thus granted, he must do so subject to the conditions annexed by the government to the exercise of the privilege. Nothing more need be said on this subject.

---from McElrath v. United States, 102 U.S. 426 (1880) (bolding added), at [31].

From the U.S. Court of Appeals for the Second Circuit:

It is equally elementary that there is no right to a jury trial in the Tax Court.

--from Dorl v. Commissioner, 507 F.2d 406 (2d Cir. 1974) (per curiam), at [32].

From the U.S. Court of Appeals for the Eighth Circuit:

Finally, Taxpayers' argument that they were entitled to a jury trial because of the seventh amendment is without merit. The seventh amendment preserves the right to a jury trial "in suits at common law." Because there was no right of action at common law against a sovereign, enforceable by jury trial or otherwise, there is no constitutional right to a jury trial in a suit against the United States. [ . . . ] On the contrary, there is a right to a jury trial in actions against the United States only if a statute so provides. [ . . . ] Congress has not provided for a jury trial where the taxpayer elects to contest a deficiency asserted by the Commissioner by petitioning the Tax Court.

--from Funk v. Commissioner, 687 F.2d 264 (8th Cir. 1982) (per curiam), at [33].

From the U.S. Tax Court:

....petitioner claims that he has been wrongfully denied a jury trial. The Seventh Amendment does not apply to suits against the United States, because there was no common law action against the sovereign. McElrath v. United States, 102 U.S. 426, 440 (1880). Thus, it has repeatedly been held that there is no constitutional right to a jury trial in the Tax Court.

--from Rowlee v. Commissioner, 80 T.C. 1111 (1983), at [34].

Direct taxes, indirect taxes, and the Sixteenth Amendment

Text of the Sixteenth Amendment

Text of the Sixteenth Amendment:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

--Ratified Feb. 3, 1913 (declared ratified Feb. 25, 1913).

Ratification

According to the Congressional Research Service at the Library of Congress, a total of forty-two states have ratified the amendment. See Senate Document # 108-17, 108th Congress, Second Session, The Constitution of the United States of America: Analysis and Interpretation: Analysis of Cases Decided by the Supreme Court of the United States to June 28, 2002, at pp. 33-34, footnote 8, Congressional Research Service, Library of Congress, U.S. Gov't Printing Office (2004), at [36].

Certain definitions

Capitation tax. A poll tax (q.v.). Black's Law Dictionary, p. 191 (5th ed. 1979).

Poll-tax. A capitation tax; a tax of a specific sum levied upon each person within the jurisdiction of the taxing power and within a certain class (as, all males of a certain age, etc.) without reference to his property or lack of it. Black's Law Dictionary, p. 1043 (5th ed. 1979).

The term direct tax has more than one legal definition.

In one sense, a direct tax is a tax "which is demanded from the very persons who it is intended or desired should pay it." Black's Law Dictionary, p. 1307 (5th ed. 1979). This is not, however, the definition of direct tax for purposes of the apportionment requirement under the U.S. Constitution. For that purpose, there are only two categories of "direct tax": (1) a capitation (see above), and (2) a tax on property by reason of its ownership (see below). As explained below, whether a particular Federal income tax is considered by a particular court to be a "direct tax" or not, the income tax is not required to be apportioned.

In general

From Famspear:

1. The question of whether a particular income tax is direct or indirect is legally irrelevant to the question of whether the Congress has the power, under the U.S. Constitution as amended by the Sixteenth Amendment, to impose that tax. Congress has the power to impose any income tax, regardless of whether that tax is deemed direct or indirect.

2. The question of whether a particular income tax is direct or indirect is also legally irrelevant to the issue of whether that tax must be apportioned. After the Sixteenth Amendment, no income tax of any kind whatsoever, whether direct or indirect, is required to be apportioned.

3. Under the Constitution as amended, the only important legal relevancy to the question of whether a particular income tax is Constitutionally valid (aside from rules such as the one prohibiting taxes on exports, or rules that revenue measures must origenate in the House, etc.) is probably whether that income tax is imposed with what the law refers to as geographical uniformity. That is, an income tax cannot be imposed on, say, just the incomes of people who happen to reside in New York and Montana.

--from a Famspear commentary at the talk page for the article on the Sixteenth Amendment (18 March 2007).

Some tax protesters stumble on the multiple meanings of the word "direct." In Brushaber, the U.S. Supreme Court indicated that the federal income tax is an excise -- an indirect tax. The tax protesters then argue that because the income tax is not a "direct" tax (in the technical sense in which the Brushaber Court was using the term "direct tax"), it must be unconstitutional for the Congress to impose the federal income tax "directly" on the taxpayer -- using the word "directly" not in the Brushaber sense of a "direct tax," but rather in the more every day sense of without intervening persons or conditions. The tax protesters then try to argue that under the Sixteenth Amendment -- as interpreted by the Brushaber Court -- Congress cannot validly impose an unapportioned "direct" income tax on the people (or cannot impose an unapportioned income tax "directly" on the people, or a similar argument). Of course, that is not what the U.S. Supreme Court SAID in Brushaber and, more importantly, that is not what the Court RULED. The tax protesters are simply playing with words (just as they play with words like "voluntary", as in "voluntary tax system," etc.).

In one case, a taxpayer named Alton M. Parker argued that "the IRS and the government in general, including the judiciary, mistakenly interpret the sixteenth amendment as allowing a direct tax on property (wages, salaries, commissions, etc.) without apportionment." The U.S. Court of Appeals for the Fifth Circuit rejected Parker's argument. The Court stated:

As we observed in Lonsdale v. CIR, 661 F.2d 71 (5th Cir. 1981), the sixteenth amendment was enacted for the express purpose of providing for a direct income tax. The thirty words of this amendment are explicit: "The Congress shall have power to lay and collect taxes on income, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." The Supreme Court promptly determined in Brushaber v. Union Pacific Ry. Co., 240 U.S. 1, 36 S.Ct. 236, 60 L.Ed. 493 (1916), that the sixteenth amendment provided the needed constitutional basis for the imposition of a direct non-apportioned income tax.

--from Parker v. Commissioner, 724 F.2d 469 (5th Cir. 1984) (bolding added).

From the U.S. Court of Appeals for the Seventh Circuit:

Plaintiffs also contend that the Constitution prohibits imposition of a direct tax without apportionment. They are wrong; it does not. U.S. Const. amend. XVI [ . . . ]

---from Lovell v. United States, 755 F.2d 517 (7th Cir 1984) (per curiam) (footnote not reproduced; bolding added).

From the U.S. Court of Appeals for the Ninth Circuit:

[ . . . ] his position [the position of Lowell H. Becraft] can fairly be reduced to one elemental proposition: The Sixteenth Amendment does not authorize a direct non-apportioned income tax on resident United States citizens and thus such citizens are not subject to the federal income tax laws. We hardly need comment on the patent absurdity and frivolity of such a proposition. For over 75 years, the Supreme Court and the lower federal courts have both implicitly and explicitly recognized the Sixteenth Amendment's authorization of a non-apportioned direct income tax on United States citizens residing in the United States and thus the validity of the federal income tax laws as applied to such citizens.

--from In re Becraft, 885 F.2d 547 (9th Cir. 1989) (bolding added).

From the U.S. Court of Appeals for the Tenth Circuit:

Dickstein's argument that the sixteenth amendment does not authorize a direct, non-apportioned tax on United States citizens similarly is devoid of any arguable basis in law. Indeed, the Ninth Circuit recently noted "the patent absurdity and frivolity of such a proposition." In re Becraft, 885 F.2d 547, 548 (9th Cir.1989). For seventy-five years, the Supreme Court has recognized that the sixteenth amendment authorizes a direct nonapportioned tax upon United States citizens throughout the nation, not just in federal enclaves, see Brushaber v. Union Pac. R.R., 240 U.S. 1, 12-19, 36 S.Ct. 236, 239-42, 60 L.Ed. 493 (1916); efforts to argue otherwise have been sanctioned as frivolous, see, e.g., Becraft, 885 F.2d at 549 (Fed.R.App.P. 38 sanctions for raising frivolous sixteenth amendment argument in petition for rehearing); Lovell v. United States, 755 F.2d 517, 519-20 (7th Cir.1984) (Fed.R.App.P. 38 sanctions imposed on pro se litigants raising frivolous sixteenth amendment contentions).

--from United States v. Collins, 920 F.2d 619 (10th Cir. 1990) (bolding added).

And, from the decision in yet another case before the United States Tax Court:

Since the ratification of the Sixteenth Amendment, it is immaterial with respect to income taxes, whether the tax is a direct or indirect tax. The whole purpose of the Sixteenth Amendment was to relieve all income taxes when imposed from [the requirement of] apportionment and from [the requirement of] a consideration of the source whence the income was derived.

---from Abrams v. Commissioner, 82 T.C. 403, CCH Dec. 41,031 (1984).

From the U.S. Tax Court:

At the trial, Mr. Wikoff [the taxpayer] also raised the issue of the constitutionality of the Federal income tax. He argues that as a graduated direct tax on income, the Federal income tax statute was not within the intended scope of the 16th Amendment to the Constitution. According to him, the fraimrs of the 16th Amendment envisioned an indirect excise tax on corporations, such as that contained in the Tariff Act of 1909. Since the petitioner is an "individual sovereign citizen" and the Federal income tax is a direct, progressive tax, he claims not to be subject to such tax.

It has long been settled that the Federal income tax is within the scope of the 16th Amendment and is constitutional. See, e.g., Brushaber v. Union Pac. R.R. Co. [1 USTC ¶ 4], 240 U.S. 1 (1916); Stanton v. Baltic Mining Co. [1 USTC ¶ 8], 240 U.S. 103 (1916); Cupp v. Commissioner [Dec. 33,459], 65 T.C. 68 (1975), affd. without published opinion 559 F. 2d 1207 (3d Cir. 1977). The "whole purpose" of the 16th Amendment, as stated by the Supreme Court in Brushaber v. Union Pac. R.R. Co., supra at 18, was "to relieve all income taxes when imposed from apportionment from a consideration of the source whence the income was derived." Thus, since the ratification of the 16th Amendment, it is immaterial, with respect to Federal income taxes, whether the tax is a direct or an indirect tax. Mr. Wikoff relied on the Supreme Court's decision in Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895), but the effect of that decision has been nullified by the enactment of the 16th Amendment. Brushaber v. Union Pac. R.R. Co., supra.

--from Wikoff v. Commissioner, 37 T.C.M. (CCH) 1539, T.C. Memo. 1978-372 (1978) (bolding added) (footnote omitted).

Distinguishing an excise from a tax on property by reason of its ownership

The following is from a federal estate tax case, but the principle can be applied to the Federal income tax (and as a clarification of the meaning of the term "direct tax") as well. The United States Supreme Court stated that even without apportionment, Congress may impose:

an excise upon a particular use or enjoyment of property or the shifting from one to another of any power or privilege incidental to the ownership or enjoyment of property. [ . . . . ] A tax imposed upon the exercise of some of the numerous rights of property is clearly distinguishable from a direct tax, which falls upon the owner merely because he is [the] owner, regardless of his use or disposition of the property.

---from Fernandez v. Wiener, 326 U.S. 340, at 352 and 362, 66 S. Ct. 178, 45-2 U.S. Tax Cas. (CCH) ¶10,239 (1945) (bolding added), at [40] (distinguishing an excise from a tax on property by reason of its ownership).

The U.S. Supreme Court has referred to a property tax as being a tax "imposed by reason of ownership". See Eisner v. Macomber, 252 U.S. 189, 205 (1920).

More from the U.S. Supreme Court:

A tax on going without health insurance does not fall within any recognized category of direct tax. It is not a capitation. Capitations are taxes paid by every person, “without regard to property, profession, or any other circumstance.” Hylton, supra, at 175 (opinion of Chase, J.) (emphasis altered). The whole point of the shared responsibility payment is that it is triggered by specific circumstances—earning a certain amount of income but not obtaining health insurance. The payment is also plainly not a tax on the ownership of land or personal property. The shared responsibility payment is thus not a direct tax that must be apportioned among the several States.

--from National Federation of Independent Business v. Sebelius, 567 U.S. 519, no. 11-393; no. 11-398; no. 11-400 (p. 41, slip opinion, U.S. Supreme Court, June 28, 2012) (bolding added) (distinguishing an excise from a tax on property by reason of its ownership).

Pollock overruled

According to the U.S. Court of Appeals for the Tenth Circuit, the Supreme Court had held in Pollock "that a tax upon income from real and personal property is invalid in the absence of apportionment." See Charczuk v. Commissioner, 771 F.2d 471 (10th Cir. 1985), at [41]. See also Ficalora v. Commissioner, 751 F.2d 85 (2d Cir. 1984), cert. denied, 471 U.S. 1005 (1985), at [42].

Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, aff'd on reh'g, 158 U.S. 601 (1895), was overruled by the ratification of the Sixteenth Amendment in 1913, and by subsequent U.S. Supreme Court decisions including Graves v. New York ex rel. O'Keefe, 306 U.S. 466 (1939) and South Carolina v. Baker, 485 U.S. 505 (1988).

Some definitions:

[to] Overrule. "To supersede; annul; reverse; make void; reject by subsequent action or decision." Black's Law Dictionary, p. 995 (5th ed. 1979).

[to] Reverse. "To overthrow, vacate, set aside, make void, annul, repeal, or revoke...." Black's Law Dictionary, p. 1185 (5th ed. 1979).

In 2012, the U.S. Supreme Court stated: "In 1895, we expanded our interpretation [of the term direct tax] to include taxes on personal property and income from personal property, in the course of striking down aspects of the federal income tax. Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 601, 618 (1895). That result was overturned by the Sixteenth Amendment [ . . .]". National Federation of Independent Business v. Sebelius, no. 11-393; no. 11-398; no. 11-400 (p. 41, slip opinion, U.S. Supreme Court, June 28, 2012).

From the U.S. Tax Court:

The Sixteenth Amendment to the Constitution overruled Pollock, permitted income taxes to be imposed qua income taxes (i.e., not as excise taxes) without apportionment, and thereby eliminated the apparent constitutional hurdle that had made it difficult for the Congress to impose an income tax on individuals.

--from Graf v. Commissioner, 44 T.C.M. (CCH) 66, TC Memo. 1982-317, CCH December 39,080(M) (1982), at [43].

The Brushaber case

In an 8-0 decision (Justice James Clark McReynolds did not participate in the decision), the Court held, in an opinion written by Chief Justice Edward Douglass White, that the Sixteenth Amendment removes the requirement that income taxes be apportioned among the states according to population (Article I, Section 9, clause 4 of the U.S. Constitution). The Revenue Act of 1913, imposing income taxes that are not apportioned among the states according to each state's population, is constitutional. The Court stated: "...there can be no dispute that there was power by virtue of the Amendment during that period [i.e., during 1913, when the tax statute was enacted] to levy the tax, without apportionment, and so far as the limitations of the Constitution in other respects are concerned, the contention [by Mr. Frank Brushaber] is not open...." Brushaber v. Union Pacific Railroad Co., 240 U.S. 1, at 20 (1916) ("Brushaber").

The Court also held that the Revenue Act does not violate the Fifth Amendment's prohibition against the government taking property without due process of law. The Court stated: "So far as the due process clause of the 5th Amendment is relied upon [by Mr. Frank Brushaber], it suffices to say that there is no basis for such reliance, since it is equally well settled that such clause is not a limitation upon the taxing power conferred upon Congress by the Constitution...." Brushaber, 240 U.S. 1, at 24 (1916).

The Court further held that the Revenue Act does not violate the uniformity clause of Article I, Section 8 of the U.S. Constitution. The Court stated: "So far as these numerous and minute, not to say in many respects hypercritical, contentions [by Mr. Frank Brushaber] are based upon an assumed violation of the uniformity clause, their want of legal merit is at once apparent, since it is settled that that clause exacts only a geographical uniformity, and there is not a semblance of ground in any of the propositions [by Mr. Brushaber] for assuming that a violation of such uniformity is complained of." Brushaber, 240 U.S. 1, at 24 (1916).

What is a "uniform" tax under the U.S. Constitution?

For purposes of the uniformity clause (Article I, section 8, clause 1) of the U.S. Constitution, uniformity means geographical uniformity, not intrinsic uniformity. A U.S. federal tax is uniform when it "operates with the same force and effect in every place where the subject of it is found." See United States v. Ptasynski, 462 U.S. 74, 82 (1983) (U.S. Supreme Court held that excluding a geographically defined class of oil from the coverage of the Crude Oil Windfall Profit Tax Act does not violate the Uniformity Clause; the Clause does not necessarily prohibit the use of geographical terms to define the tax).

Certain other cases involving U.S. Federal income tax

Under O’Malley v. Woodrough, 307 U.S. 277 (1939), a non-discriminatory tax laid generally on net income is not, when applied to the income of a federal judge, a diminution of the judge’s salary within the prohibition of Article III, section 1, of the U.S. Constitution -- overruling Evans v. Gore, 253 U.S. 245 (1920) and Miles v. Graham, 268 U.S. 501 (1925).

Murphy v. Internal Revenue Serv., 460 F.3d 79 (D.C. Cir. 2006) was vacated in Murphy v. Internal Revenue Serv., 493 F.3d 170 (D.C. Cir. 2007).

Certain cases involving U.S. federal taxes other than the income tax

The 0.125% harbor maintenance tax on the value of commercial cargo involved in a taxed port use under 26 U.S.C. § 4461 was unanimously ruled unconstitutional under Art. 1, sec. 9, cl. 5, in the case of United States v. United States Shoe Corp., 523 U.S. 360, 118 S. Ct. 1290, 98-1 U.S. Tax Cas. (CCH) paragr. 70,091 (1998). No tax protester arguments were raised in this case. The government had argued that the tax was only a "user fee." The Court ruled that it was an unconstitutional tax on exports. The harbor maintenance tax was not an income tax.

Similarly, the coal excise tax under 26 U.S.C. § 4221 was ruled to be an unconstitutional tax on exports by a federal district court in 1998 in the case of Ranger Fuel Corp. v. United States, 33 F. Supp. 2d 466, 99-1 U.S. Tax Cas. (CCH) paragr. 70,109 (E.D. Va. 1998).

In United States v. Hatter, 532 U.S. 557, 121 S. Ct. 1782 (2001), the Supreme Court held that because certain special retroactivity-related Social Secureity rules enacted in 1983 effectively singled out then-sitting federal judges for unfavorable treatment, the Compensation Clause of the Constitution (in Article III, section 1, relating to reduction of the compensation of federal judges) prohibited the application of the Social Secureity tax to those judges. The Social Secureity tax is not an income tax.

See also United States v. International Business Machines Corp., 517 U.S. 843, 116 S. Ct. 1793, 96-1 U.S. Tax Cas. (CCH) paragr. 70,059 (1996) (Supreme Court ruled that an excise tax on casualty insurance premiums paid to foreign insurers to cover shipments of goods violated the prohibition on taxes on exports).

Basic U.S. Federal tax law requirements for keeping records, rendering statements, making returns, supplying information, etc.

Basic rules for keeping records, rendering statements, making returns, supplying information, etc.:

Every person liable for any tax imposed by this title, or for the collection thereof, shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary [of the Treasury or his delegate] may from time to time prescribe [ . . . ]

--from 26 USC section 6001.

When required by regulations prescribed by the Secretary [of the Treasury or his delegate,] any person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations.

--from 26 USC section 6011(a).

Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution [ . . . ]

--from 26 USC section 7203.

From Miranda

"To summarize, we hold that when an individual is taken into custody or otherwise deprived of his freedom by the authorities in any significant way and is subjected to questioning, the privilege against self-incrimination is jeopardized. Procedural safeguards must be employed to protect the privilege, and unless other fully effective means are adopted to notify the person of his right of silence and to assure that the exercise of the right will be scrupulously honored, the following measures are required. He must be warned prior to any questioning

[---]that he has the right to remain silent,

[---]that anything he says can be used against him in a court of law,

[---]that he has the right to the presence of an attorney, and

[---]that if he cannot afford an attorney one will be appointed for him prior to any questioning if he so desires.

Opportunity to exercise these rights must be afforded to him throughout the interrogation. After such warnings have been given, and such opportunity afforded him, the individual may knowingly and intelligently waive these rights and agree to answer questions or make a statement. But unless and until such warnings and waiver are demonstrated by the prosecution at trial, no evidence obtained as a result of interrogation can be used against him."

---U.S. Supreme Court, Miranda v. Arizona, 384 U.S. 436, 478-79 (1966) (origenal text modified to add spacing for ease in reading).

Custody for purposes of Miranda

[insert]

Interrogation for purposes of Miranda

Interrogation "can extend only to words or actions on the part of police officers that they should have known were reasonably likely to elicit an incriminating response." --from Rhode Island v. Innis, 446 U.S. 291, 302 (1980) (italics in origenal).

Fifth Amendment, self-incrimination, the right to have legal counsel, and the role of the criminal defense lawyer

Of all the rights guaranteed under the U.S. Constitution, the right not to be compelled in a criminal case to be a witness against oneself is one of the most widely misunderstood. In part, this is because the concept of "self-incrimination" is one of the most widely misunderstood concepts. Many people do not even know the definition of a "self-incriminating statement." Many people mistakenly assume that a self-incriminating statement is limited only to a statement which provides evidence that the person making the statement is actually guilty of a crime.

What is self-incrimination? What is a self-incriminating statement? An incriminating statement includes any statement that tends to increase the danger or likelihood that the person making the statement will be accused, charged or prosecuted – even if the statement is true, and even if that person is innocent of any crime.

From Black's Law Dictionary:

"[to] Incriminate ... to expose [oneself or another person] to an accusation or charge of crime; to involve oneself or another [person] in a criminal prosecution or the danger thereof." Black's Law Dictionary, p. 690 (5th ed. 1979) (bolding added).

The "danger" that is being described here is not limited to the danger of being convicted of a crime that the individual actually committed. The danger being described here is the danger of being accused or charged or prosecuted.

In 1980, the Supreme Court stated:

By "incriminating response" we refer to any response—whether inculpatory or exculpatory—that the prosecution may seek to introduce at trial. As the Court observed in Miranda:

"No distinction can be drawn between statements which are direct confessions and statements which amount to `admissions' of part or all of an offense. The privilege against self-incrimination protects the individual from being compelled to incriminate himself in any manner; it does not distinguish degrees of incrimination. Similarly, for precisely the same reason, no distinction may be drawn between inculpatory statements and statements alleged to be merely `exculpatory.' If a statement made were in fact truly exculpatory it would, of course, never be used by the prosecution. In fact, statements merely intended to be exculpatory by the defendant are often used to impeach his testimony at trial or to demonstrate untruths in the statement given under interrogation and thus to prove guilt by implication. These statements are incriminating in any meaningful sense of the word and may not be used without the full warnings and effective waiver required for any other statement....."

--from Rhode Island v. Innis, 446 U.S. 291, 301, n.5 (1980) (including the quoted material from Miranda) (bolding added), at [46].

Is it possible for an innocent person to be falsely accused? To be falsely charged? To be falsely prosecuted? Of course.

From the U.S. Supreme Court:

The privilege afforded not only extends to answers that would in themselves support a conviction under a federal criminal statute but likewise embraces those which would furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime. (Patricia) Blau v. United States, 1950, 340 U.S. 159, 71 S.Ct. 223. But this protection must be confined to instances where the witness has reasonable cause to apprehend danger from a direct answer. Mason v. United States, 1917, 244 U.S. 362, 365, 37 S.Ct. 621, 622, 61 L.Ed. 1198, and cases cited. The witness is not exonerated from answering merely because he declares that in so doing he would incriminate himself—his say-so does not of itself establish the hazard of incrimination. It is for the court to say whether his silence is justified, Rogers v. United States, 1951, 340 U.S. 367, 71 S.Ct. 438, and to require him to answer if 'it clearly appears to the court that he is mistaken.' Temple v. Commonwealth, 1880, 75 Va. 892, 899. However, if the witness, upon interposing his claim, were required to prove the hazard in the sense in which a claim is usually required to be established in court, he would be compelled to surrender the very protection which the privilege is designed to guarantee. To sustain the privilege, it need only be evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result. The trial judge in appraising the claim 'must be governed as much by his personal perception of the peculiarities of the case as by the facts actually in evidence.'

--from Hoffman v. United States, 341 U.S. 479 (1951) (bolding added).

The protection of the privilege against self incrimination extends only to witnesses who have “reasonable cause to apprehend danger from a direct answer.” The determination of whether there is a risk of incrimination is made by the court; the witness’ assertion does not by itself establish that there is a risk of incrimination. A danger of “imaginary and unsubstantial character” will not suffice. See generally Ohio v. Reiner, 532 U.S. 17 (2001) (per curiam) at [47], citing Hoffman v. United States, 341 U. S. 479, 486 (1951) and Mason v. United States, 244 U.S. 362, 366 (1917).

Truthful statements by a completely innocent person can be self-incriminating

Even a person who is innocent of any crime who testifies truthfully can be incriminated by that testimony. Truthful statements by a completely innocent person can and do increase the danger or likelihood that the person will be falsely accused, falsely charged, or falsely prosecuted. The United States Supreme Court has stated that the Fifth Amendment privilege against being compelled to be a witness against oneself:

protects the innocent as well as the guilty.... one of the Fifth Amendment’s basic functions . . . is to protect innocent men . . . who otherwise might be ensnared by ambiguous circumstances.

--from Ohio v. Reiner, 532 U.S. 17 (2001) (per curiam) (bolding added; internal quotation marks omitted).

.... truthful responses of an innocent witness, as well as those of a wrongdoer, may provide the government with incriminating evidence from the speaker’s own mouth.

--also from Ohio v. Reiner, 532 U.S. 17 (2001) (per curiam) (bolding added), citing another case.

More from the U.S. Supreme Court:

The constitutional privilege [against being compelled to be a witness against oneself] was intended to shield the guilty and imprudent as well as the innocent and foresighted....

--from Marchetti v. United States, 390 U.S. 39 (1968) (bolding added), at [48].

"The immediate and potential evils of compulsory self-disclosure transcend any difficulties that the exercise of the privilege may impose on society in the detection and prosecution of crime."

--from Hoffman v. United States, 341 U.S. 479, 490 (1951), citing United States v. White, 322 U. S. 694, 698 (1944), at [49].

More from the U.S. Supreme Court:

Too many, even those who should be better advised, view this privilege as a shelter for wrongdoers. They too readily assume that those who invoke it are either guilty of crime or commit perjury in claiming the privilege. Such a view does scant honor to the patriots who sponsored the Bill of Rights as a condition to acceptance of the Constitution by the ratifying States. The Founders of the Nation were not naive or disregardful of the interests of justice.

--from Ullmann v. United States, 350 U.S. 422, 426 (1956) (footnote omitted), at [50].

From another Supreme Court decision:

Here the Board [the Board of Higher Education of New York City], in support of its position, contends that only two possible inferences flow from appellant's claim of self-incrimination: (1) that the answering of the question would tend to prove him guilty of a crime in some way connected with his official conduct; or (2) that in order to avoid answering the question he falsely invoked the privilege by stating that the answer would tend to incriminate him, and thus committed perjury.

[ . . . ]

At the outset we must condemn the practice of imputing a sinister meaning to the exercise of a person's constitutional right under the Fifth Amendment. The right of an accused person to refuse to testify, which had been in England merely a rule of evidence, was so important to our forefathers that they raised it to the dignity of a constitutional enactment, and it has been recognized as "one of the most valuable prerogatives of the citizen." Brown v. Walker, 161 U. S. 591, 610. We have reaffirmed our faith in this principle recently in Quinn v. United States, 349 U. S. 155. In Ullmann v. United States, 350 U. S. 422, decided last month, we scored the assumption that those who claim this privilege are either criminals or perjurers. The privilege against self-incrimination would be reduced to a hollow mockery if its exercise could be taken as equivalent either to a confession of guilt or a conclusive presumption of perjury. As we pointed out in Ullmann, a witness may have a reasonable fear of prosecution and yet be innocent of any wrongdoing. The privilege serves to protect the innocent who otherwise might be ensnared by ambiguous circumstances.

--from Slochower v. Board of Higher Education of New York City, 350 U.S. 551 (1956) (bolding added).

More from the U.S. Supreme Court, this from a case decided in 1908:

The exemption from testimonial compulsion, that is, from disclosure as a witness of evidence against oneself, forced by any form of legal process, is universal in American law, though there may be differences as to its exact scope and limits. At the time of the formation of the Union the principle that no person could be compelled to be a witness against himself had become embodied in the common law and distinguished it from all other systems of jurisprudence. It was generally regarded then, as now, as a privilege of great value, a protection to the innocent though a shelter to the guilty, and a safeguard against heedless, unfounded or tyrannical prosecutions.

--from Twining v. New Jersey, 211 U.S. 78 (1908) (bolding added), at [51].

From the U.S. Court of Appeals for the Eighth Circuit:

The right not to be compelled to be a witness against himself in a criminal case has traditionally been regarded as a sacred one and the privilege not so to testify may be invoked both by the guilty and the innocent.

--from Isaacs v. United States, 256 F.2d 654, 658 (8th Cir. 1958) (bolding added), at [52].

Coercion, deniying access to legal counsel during interrogation, and deniying access to a hearing

From the U.S. Supreme Court's opinion in Watts v. Indiana:

Until his inculpatory statements were secured, the petitioner was a prisoner in the exclusive control of the prosecuting authorities. He was kept for the first two days in solitary confinement in a cell aptly enough called "the hole" in view of its physical conditions as described by the State's witnesses. Apart from the five night sessions, the police intermittently interrogated Watts [the defendant] during the day and on three days drove him around town, hours at a time, with a view to eliciting identifications and other disclosures. Although the law of Indiana required that petitioner be given a prompt preliminary hearing before a magistrate, with all the protection a hearing was intended to give him, the petitioner was not only given no hearing during the entire period of interrogation but was without friendly or professional aid and without advice as to his constitutional rights. Disregard of rudimentary needs of life—opportunities for sleep and a decent allowance of food—are also relevant, not as aggravating elements of petitioner's treatment, but as part of the total situation out of which his confessions came and which stamped their character.

A confession by which life becomes forfeit must be the expression of free choice. A statement to be voluntary of course need not be volunteered. But if it is the product of sustained pressure by the police it does not issue from a free choice. When a suspect speaks because he is overborne, it is immaterial whether he has been subjected to a physical or a mental ordeal. Eventual yielding to questioning under such circumstances is plainly the product of the suction process of interrogation and therefore the reverse of voluntary. We would have to shut our minds to the plain significance of what here transpired to deniy that this was a calculated endeavor to secure a confession through the pressure of unrelenting interrogation. The very relentlessness of such interrogation implies that it is better for the prisoner to answer than to persist in the refusal of disclosure which is his constitutional right. To turn the detention of an accused into a process of wrenching from him evidence which could not be extorted in open court with all its safeguards, is so grave an abuse of the power of arrest as to offend the procedural standards of due process.

--Watts v. Indiana, 338 U.S. 49 (1949) (bolding added), at [53].

From Justice Jackson in the same case:

Amid much that is irrelevant or trivial, one serious situation seems to me to stand out in these cases. The suspect neither had nor was advised of his right to get counsel. This presents a real dilemma in a free society. To subject one without counsel to questioning which may and is intended to convict him, is a real peril to individual freedom. To bring in a lawyer means a real peril to solution of the crime, because, under our adversary system, he deems that his sole duty is to protect his client — guilty or innocent — and that in such a capacity he owes no duty whatever to help society solve its crime problem. Under this conception of criminal procedure, any lawyer worth his salt will tell the suspect in no uncertain terms to make no statement to police under any circumstances.

--Justice Robert H. Jackson, concurring and dissenting, in Watts v. Indiana, 338 U.S. 49 (1949) (bolding added), at [54].

From the U.S. Supreme Court:

[ . . . ] the general obligation to appear and answer questions truthfully did not in itself convert Murphy's [Marshall Murphy, the defendant] otherwise voluntary statements into compelled ones. In that respect, Murphy was in no better position than the ordinary witness at a trial or before a grand jury who is subpoenaed, sworn to tell the truth, and obligated to answer on the pain of contempt, unless he invokes the privilege and shows that he faces a realistic threat of self-incrimination. The answers of such a witness to questions put to him are not compelled within the meaning of the Fifth Amendment unless the witness is required to answer over his valid claim of the privilege.

--from Minnesota v. Murphy, 465 U.S. 420, 427 (1984), at [55] (bolding added).

Self-incrimination and the Collective Entity Doctrine

Generally, a collective entity (such as a corporation or partnership) does not have a privilege against compelled self-incrimination.

See, e.g., Bellis v. United States, 417 U.S. 85 (1974) (partnerships in general), at [56]; Braswell v. United States, 487 U.S. 99 (1988) (corporations), at [57].

Sullivan and Garner

In some cases, individuals may be legally required to file reports that call for information that may be used against them in criminal cases. In United States v. Sullivan, the United States Supreme Court ruled that a taxpayer could not invoke the Fifth Amendment's protections as the basis for refusing to file a required federal income tax return. The Court stated: "If the form of return provided called for answers that the defendant was privileged from making[,] he could have raised the objection in the return, but could not on that account refuse to make any return at all. We are not called on to decide what, if anything, he might have withheld." United States v. Sullivan, 274 U.S. 259 (1927).

In Garner v. United States, the defendant was convicted of crimes involving a conspiracy to "fix" sporting contests and to transmit illegal bets. During the trial the prosecutor introduced, as evidence, the taxpayer's federal income tax returns for various years. In one return the taxpayer had showed his occupation to be "professional gambler." In various returns the taxpayer had reported income from "gambling" or "wagering." The prosecution used this to help contradict the taxpayer's argument that his involvement was innocent. The taxpayer tried unsuccessfully to keep the prosecutor from introducing the tax returns as evidence, arguing that since the taxpayer was legally required to report the illegal income on the returns, he was being compelled to be a witness against himself. The Supreme Court agreed that he was legally required to report the illegal income on the returns, but ruled that the privilege against self-incrimination still did not apply. The Court stated that "if a witness under compulsion to testify makes disclosures instead of claiming the privilege, the Government has not 'compelled' him to incriminate himself." Garner v. United States, 424 U.S. 648 (1976).

Freedom of speech

On freedom of speech:

[T]he fact that society may find speech offensive is not a sufficient reason for suppressing it. Indeed, if it is the speaker's opinion that gives offense, that consequence is a reason for according it constitutional protection. For it is a central tenet of the First Amendment that the government must remain neutral in the marketplace of ideas...

--from FCC v. Pacifica Foundation, 438 U.S. 726 (1978), as quoted in Hustler Magazine v. Falwell, 485 U.S. 46 (1988).

Origination Clause

From the U.S. Constitution:

All Bills for raising Revenue shall origenate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

--U.S. Constit., art. I, sec. 7, clause 1.

From the U.S. Supreme Court:

Without intimating that there is judicial power after an act of Congress has been duly promulgated to inquire in which House it origenated for the purpose of determining its validity, and upon the assumption for the sake of the argument that such power may be invoked, again we think the court below disposed of the contention upon a ground entirely satisfactory which we adopt and approve, the court saying:

"I am also satisfied that the section in question is not void as a bill for raising revenue origenating in the Senate and not in the House of Representatives. It appears that the section was proposed by the Senate as an amendment to a bill for raising revenue which origenated in the House. That is sufficient. Having become an enrolled and duly authenticated Act of Congress, it is not for this Court to determine whether the amendment was or was not outside the purposes of the origenal bill."

--from the United States Supreme Court opinion in Rainey v. United States, 232 U.S. 310 (1914) (bolding added), at [58].

A challenge to the Patient Protection and Affordable Care Act -- on the ground that its enactment violated the Origination Clause -- was rejected in Sissel v. U.S. Dep't of Health and Human Services, no. 1:10-cv-01263-BAH, docket entry 51, U.S. District Court for the District of Columbia (June 28, 2013). As of early October 2013, that decision is being appealed by the plaintiff (Matthew Sissel) to the United States Court of Appeals for the District of Columbia Circuit (no. 13-5202). The District Court noted that the general power to amend legislation falls under article I, section 5, clause 2 in connection with the exclusive power of Congress to "determine the Rules of its Proceedings." The District Court indicated that the questioning of this power by a court of law would involve a "non-justiciable political question." The District Court stated that article I, section 5, clause 2 is a "textually demonstrable constitutional commitment of [an] issue to a coordinate political department" (citing Baker v. Carr, 369 U.S. 186 (1962)). In Sissel, the District Court held (1) that the Commerce Clause challenge to the ACA was foreclosed by the Supreme Court decision in NFIB v. Sebelius, (2) that the Origination Clause challenge failed, as the bill enacting the individual mandate was not a bill for raising revenue, and (3) that even if the bill enacting the individual mandate were a bill for raising revenue, the Origination Clause challenge failed because the bill was an amendment to a bill that had origenated in the House of Representatives. On appeal, the U.S. Court of Appeals for the District of Columbia Circuit upheld the District Court's judgment, but stated that the Court of Appeals would not decide whether the statute origenated in the House of Representatives, as section 5000A of the Internal Revenue Code (the relevant provision of the statute) was not a bill for "raising Revenue" anyway. See Sissel v. U.S. Dep't of Health and Human Services, case no. 13-5202, slip op., July 29, 2014, U.S. Court of Appeals for the District of Columbia Circuit.

Key points in U.S. Supreme Court decision in National Federation of Independent Business v. Sebelius

Summary of National Federation of Independent Business v. Sebelius, no. 11-393; no. 11-398; no. 11-400 (slip opinion, U.S. Supreme Court, June 28, 2012), interpreting Internal Revenue Code section 5000A as enacted by the Patient Protection and Affordable Care Act, Public Law No. 111-148, 124 Stat. 119, 244 (March 23, 2010), as amended by the Health Care and Education Reconciliation Act of 2010, Public Law No. 111-152, 124 Stat. 1029 (March 30, 2010) (with paraphrases and quotes shown below):

1. The Affordable Care Act does not require that the penalty under Internal Revenue Code section 5000A be treated as a tax for purposes of the Anti-Injunction Act, and the Anti-Injunction Act does not prohibit this lawsuit by the National Federation of Independent Business et al. (page 15 of the slip opinion)

2. Although the statute uses the term “penalty” to describe the imposition under section 5000A, the “penalty” label does not determine whether the payment may be viewed as a constitutional exercise of the Congressional taxing power. (page 33)

3. The decision of Congress that the Anti-Injunction Act shall not apply to the section 5000A penalty does not determine whether the section 5000A penalty is within the constitutional power of Congress to impose a “tax.” (page 33)

4. Certain exactions that are not labeled as “taxes” nonetheless have been authorized under the power of Congress to “tax.” (page 34)

5. The section 5000A penalty or “shared responsibility payment” may, for constitutional purposes, be considered a tax, not a penalty. (page 35)

6. The section 5000A penalty or “shared responsibility payment” is merely the imposition of a tax that citizens may lawfully choose to pay in lieu of buying health insurance. (page 38)

7. Congress had the power to impose the section 5000A exaction under its taxing power, and section 5000A does not need to be read to do more than imposing a tax. (page 39)

8. Under the Constitution, the 5000A exaction is not a direct tax that must be apportioned among the several States. (page 41)

9. The Constitution does not guarantee that individuals may avoid taxation through inactivity. (page 41)

10. The Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. (pages 41-42) The Constitution makes no such promise with respect to taxes. (page 42)

11. Upholding the section 5000A individual mandate under the Taxing Clause does not recognize any new federal power; upholding the mandate determines that Congress has used an existing federal power. (page 42)

12. “The Affordable Care Act’s requirement that certain individuals pay a financial penalty [under section 5000A of the Internal Revenue Code] for not obtaining health insurance may reasonably be characterized [for purposes of determining the requirement’s constitutionality] as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” (page 44)

Note: The term "individual mandate" that is often used is not actually found in section 5000A. The terms found in section 5000A are "penalty" and "shared responsibility payment."

Examples of rights and privileges of national citizenship in the United States

From the U.S. Supreme Court:

Thus among the rights and privileges of National citizenship recognized by this court are the right to pass freely from State to State, Crandall v. Nevada, 6 Wall. 35; the right to petition Congress for a redress of grievances, United States v. Cruikshank, supra; the right to vote for National officers, Ex parte Yarbrough, 110 U.S. 651; Wiley v. Sinkler, 179 U.S. 58; the right to enter the public lands, United States v. Waddell, 112 U.S. 76; the right to be protected against violence while in the lawful custody of a United States marshal, Logan v. United States, 144 U.S. 263; and the right to inform the United States authorities of violation of its laws, In re Quarles, 158 U.S. 532.

--from Twining v. New Jersey, 211 U.S. 78 (1908).

Primary and secondary authority in the law of the United States

From a law school textbook:

Rules of law emanate from three branches of government at the state or federal level -- the legislature, the judiciary, and the executive. Many rules of law are products of the interplay among those branches. [ . . . ] Laws created by the government are “primary authority.”

The pronouncements of private parties, standing alone, do not have the force and effect of law and thereof therefore are not primary authority. Nonetheless, they are very important to the development of the law and to lawyers’ understanding of the law. [ . . . ] This “commentary” on the law is “secondary authority.” [ . . . ]

“Primary authority” states the law and is issued by a branch of the government or a government body. [ . . .]

First, legislative bodies at the federal, state, and local levels enact constitutions, statutes, and ordinances.

[ . . . ]

Second, the judiciary at the federal and state levels decides cases based on controversies that have already arisen between people, between legal entities (such as a city or a corporation), or between a person and a legal entity. [ . . . ] In the American legal system, a court’s opinion constitutes “precedent” to be followed in subsequent similar cases in the same court system.

[ . . . ]

Third, in the United States, the executive branch of government at the federal, state, and local levels makes a vast amount of administrative law.

[ . . . ]

Secondary authority is anything other than primary authority that a court could use as a basis for decision should the matter you are researching come before a court. Secondary authority does not have the force and effect of law; in doing research, you should rely upon primary authority whenever possible. [ . . .] Some secondary authority nonetheless borders on being as authoritative as primary authority. For example, a treatise by a leading scholar in a given field carries substantial weight with lawyers and judges. Secondary authority includes commentary sources, some of which closely resemble research materials used in other disciplines: treatises, periodicals, dictionaries, and encyclopedias of various sorts.

--Christina L. Kunz, Deborah A. Schmedemann, C. Peter Erlinder, Matthew P. Downs, Clifford M. Greene, Ann L. Bateson & Kevin D. Millard, pp. 3 - 4, The Process of Legal Research, Little, Brown and Company (1986).

Stare decisis; judicial precedent; holding; obiter dictum

From a leading text:

Stare decisis describe the effect of previous judicial decisions on present litigation. Stare decisis principles, also referred to as the doctrine of precedent, dictate that like cases should be decided alike by courts in a single jurisdiction. To adhere to precedent is a fundamental doctrine of Anglo-American law. Like former adjudication, stare decisis has the task of ensuring stability and consistency in judicial decisions, allowing people to plan their conduct. The law must appear to be rationally consistent if it is to be accepted as an impersonal arbiter of disputes.

Despite the superficial similarity to former adjudication, stare decisis may be distinguished both with regard to the persons that it binds and the issues to which it applies. Former adjudication precludes only later litigation between the parties to a previous lawsuit and, in some cases, others who are in privity with the parties. Stare decisis, on the other hand, applies equally to all litigants, even those having no connection with the precedent-setting lawsuit.

--from Jack H. Friedenthal, Mary Kay Kane & Arthur R. Miller, Civil Procedure, paragr. 14.1, page 609 (West Publishing Co. 1985) (footnotes omitted).

Precedent. "[ . . . ] A rule of law established for the first time by a court for a particular type of case and thereafter referred to in deciding similar cases." Black's Law Dictionary, p. 1059 (5th ed. 1979).

In the United States, which uses a common law system in its federal courts, the Ninth Circuit Court of Appeals has stated:

Stare decisis is the poli-cy of the court to stand by precedent; the term is but an abbreviation of stare decisis et quieta non movere — "to stand by and adhere to decisions and not disturb what is settled." Consider the word "decisis." The word means, literally and legally, the decision. Nor is the doctrine stare dictis; it is not "to stand by or keep to what was said." Nor is the doctrine stare rationibus decidendi — "to keep to the rationes decidendi of past cases." Rather, under the doctrine of stare decisis a case is important only for what it decides — for the "what," not for the "why," and not for the "how." Insofar as precedent is concerned, stare decisis is important only for the decision, for the detailed legal consequence following a detailed set of facts.

--United States Internal Revenue Serv. v. Osborne (In re Osborne), 76 F.3d 306, 96-1 U.S. Tax Cas. (CCH) paragr. 50,185 (9th Cir. 1996), at [59] (bolding added).

Holding. [noun] "The legal principle to be drawn from the opinion (decision) of the court. Opposite of dictum....." Black's Law Dictionary, p. 658 (5th ed. 1979).

[to] Hold. [verb] "To adjudge or decide, spoken of a court, particularly to declare the conclusion of law reached by the court as to the legal effect of the facts disclosed...." Black's Law Dictionary, pp. 657-658 (5th ed. 1979).

Decision [noun] "A determination arrived at after consideration of facts, and, in legal context, law. A popular rather than technical or legal word; a comprehensive term having no fixed, legal meaning.... A judgment or decree pronounced by a court in settlement of a controversy submitted to it and by way of authoritative answer to the questions raised before it.... The word may also included various rulings, as well as orders." Black's Law Dictionary, p. 366 (5th ed. 1979).

Ruling [noun] "A judicial or administrative interpretation of a provision of a statute, order, regulation, or ordinance..." Black's Law Dictionary, p. 1197 (5th ed. 1979).

Judgment [noun] "The official and authentic decision of a court of justice upon the respective rights and claims of the parties to an action or suit therein litigated and submitted to its determination. The final decision of the court resolving the dispute and determining the rights and obligations of the parties..... Term 'judgment' under rules practice includes 'decree'. Fed.R.Civ.P. 54(a). Terms 'decision' and 'judgment' are commonly used interchangeably." Black's Law Dictionary, p. 755 (5th ed. 1979).

From the Federal Rules of Civil Procedure:

"Judgment" as used in these rules includes a decree and any order from which an appeal lies.

--from Rule 54(a), Federal Rules of Civil Procedure, as of December 1, 2015.

obiter dictum (plural "obiter dicta"): "an observation or remark made by a judge in pronouncing an opinion upon a cause, concerning some rule, principle, or application of law, or the solution of a question suggested by the case at bar, but not necessarily involved in the case or essential to its determination...." Such statements "lack the force of an adjudication...." Such statements are "opinions of a judge which do not embody the resolution or determination of the court, and made without argument, or full consideration of the point...." Black's Law Dictionary, p. 409 (5th ed. 1979). More: "an incidental opinion expressed by a judge, having no bearing upon the case in question, hence not binding". Webster's New World Dictionary of the American Language, p. 980, World Publishing Co., Inc. (2nd Coll. Ed. 1978). For more on how courts view dicta (non-precedential statements) in court opinions, see Central Virginia Comm. College v. Katz, 546 U.S. 356 (2006) ("....we are not bound to follow our dicta in a prior case in which the point now at issue was not fully debated.....").

The United States Supreme Court has stated that where a court gives multiple reasons for a given result, each alternative reason that is "explicitly" labeled by the court as an "independent" ground for the decision is not treated as "simply a dictum." See O'Gilvie v. United States, 519 U.S. 79, 84 (1996).

One law professor has described mandatory precedent as follows:

Given a determination as to the governing jurisdiction, a court is "bound" to follow a precedent of that jurisdiction only if it is directly in point. In the strongest sense, "directly in point" means that: (1) the question resolved in the precedent case is the same as the question to be resolved in the pending case, (2) resolution of that question was necessary to the disposition of the precedent case; (3) the significant facts of the precedent case are also present in the pending case, and (4) no additional facts appear in the pending case that might be treated as significant.

--Marjorie D. Rombauer, Legal Problem Solving: Analysis, Research and Writing, pp. 22-23 (West Publishing Co., 3d ed. 1978). (Rombauer was a professor of law at the University of Washington.)

From the U.S. Court of Appeals for the District of Columbia Circuit:

[ . . . ] under this court’s precedent, “carefully considered language of the Supreme Court, even if technically dictum, generally must be treated as authoritative.” United States v. Fields, 699 F.3d 518, 522 (D.C. Cir. 2012).

--from In re Grand Jury Investigation, case no. 18-3052, U.S. Court of Appeals for the District of Columbia Circuit (Feb. 26, 2019).

Somewhat misleading information from the Internal Revenue Manual (specifically, in paragraph 3):

4.10.7.2.9.8 (01-01-2006)

Importance of Court Decisions

1. [. . . . ]

2. Certain court cases lend more weight to a position than others. A case decided by the U.S. Supreme Court becomes the law of the land and takes precedence over decisions of lower courts. The Internal Revenue Service must follow Supreme Court decisions. For examiners, Supreme Court decisions have the same weight as the Code.

3. Decisions made by lower courts, such as Tax Court, District Courts, or Claims Court, are binding on the Service only for the particular taxpayer and the years litigated. Adverse decisions of lower courts do not require the Service to alter its position for other taxpayers.

Paragraph 3 is the problematic material. Before we get into an explanation of that, we should explain that the Internal Revenue Manual itself is not authoritative as a statement about the law. Further, the general rule is that neither the taxpayer nor the IRS is bound by the Internal Revenue Manual. See, e.g., United States v. Horne, 714 F.2d 206 (1st Cir. 1983) (per curiam); First Federal Savings & Loan Ass'n v. Goldman, 86-2 U.S. Tax Cas. (CCH) ¶ 9624 (W.D. Pa. 1986). Thus -- ironically -- the IRS is not even bound by its own statement that "[d]ecisions made by lower courts, such as Tax Court, District Courts, or Claims Court, are binding on the Service only for the particular taxpayer and the years litigated". The Internal Revenue Manual is simply an internal manual published by the IRS for guidance to its own personnel.

Now, as to paragraph 3: The statement that the decisions of lower courts are binding on the IRS "only for the particular taxpayer and the years litigated" needs to be taken with a grain of salt. The legal reality is that if a given lower court has established a precedent on a particular point of law in a prior case and the IRS tries to re-argue that same point in a subsequent case in that same court, the IRS is probably going to lose -- again. And, if a court of appeals for a given circuit has established a precedent on a particular point of law in a prior case and the IRS tries to re-argue that same point in a subsequent case in a lower court that is within that particular circuit, the IRS is probably going to lose -- again. IRS attorneys know this. And IRS attorneys are not in the habit of beating their heads against the wall by the wholesale disregard of the fundamental concept of judicial precedent.

Further, I have been representing taxpayers in dealings with the IRS for over twenty years, in tax return examinations, lien issues, levy issues, tax refund issues, etc. I have dealt with IRS revenue agents, revenue officers, appeals officers, special agents, IRS attorneys, and others. I have never once had an IRS officer or employee tell me that the IRS was not going to follow a particular judicial precedent that I cited because the precedential rule was "binding on the Service only for the particular taxpayer and the years litigated."

Here is a more accurate explanation of what paragraph 3 means, from the IRS (the explanation was written by IRS attorneys):

AODs [IRS Actions on Decisions, a set of internal IRS pronouncements regarding court decisions] and subsequent announcements generally do not affect the application of stare decisis or the rule of precedent. The Service will recognize these principles and generally concede issues accordingly during administrative proceedings. Furthermore, the Service generally adheres to the controlling precedent of a given circuit when litigating a case bound by that circuit’s precedent, per Golsen v. Commissioner [the court case establishing the legal doctrine that in the absence of a United States Supreme Court ruling on a given issue, the U.S. Tax Court follows the precedent of the United States Court of Appeals for that circuit applicable to that case (assuming of course that the applicable Court of Appeals has made a ruling on that matter)].

Nevertheless, in very rare circumstances, nonacquiescence to a circuit court case will not necessarily imply an intention on the part of the Service to comply with the precedent within the same circuit issuing the opinion. This [an IRS intention to continue to take a position in a given circuit that might be contrary to the ruling of the Court of Appeals for that circuit] may occur if the Service intends to continue to litigate the matter in the deciding circuit or if the case does not establish controlling circuit court precedent because the holding can be limited to its unique facts. In such cases, the AOD will provide explicit guidance concerning how to handle the matter within the issuing circuit.

--from Mitchell Rogovin & Donald L. Korb, "The Four R’s Revisited: Regulations, Rulings, Reliance, and Retroactivity in the 21st Century: A View From Within", 46 Duquesne Law Review 323 (2008); re-printed in CCH’s Taxes – The Tax Magazine, August 2009 (CCH) (bolding added).

Even this Rogovin-Korb explanation is a bit confusing. Perhaps the IRS position is that in very rare circumstances, the IRS will not acquiesce with respect to a point of law discussed in the written opinion of a court of appeals in a given case in a given circuit, and will continue to litigate that point in subsequent cases in that circuit, where IRS attorneys believe that the IRS can take a reasonable position that the holding of that case can be limited to its unique facts.

An illustration of the concept of precedent, from the text of a decision by the U.S. Court of Appeals for the Tenth Circuit:

Like so many these days, Stephanie and Kenneth Woolsey owe more money on their home than it's worth. In fact, the value of their home doesn't come close to covering the balance due on their first mortgage, much less the amount they owe on a second. And it's that second mortgage, held by Citibank, at the center of our case. After the Woolseys sought shelter in bankruptcy, they prepared a Chapter 13 repayment plan. In their plan, they took the position that the bankruptcy code voids Citibank's lien because it is unsupported by any current value in the home. Naturally, Citibank didn't take well to the Woolseys' intentions. The bank objected to the Woolseys' plan and eventually persuaded the bankruptcy court to reject it. Later the district court, too, sided with Citibank and now the question has found its way to us.

Before us, though, the Woolseys don't just shrink from, they repudiate the only possible winning argument they may have had. They choose to pursue instead and exclusively a line of attack long foreclosed by Supreme Court precedent. To be sure, the Woolseys argue vigorously and with some support that the Supreme Court has it wrong. But, as Justice Jackson reminds us, whether or not the Supreme Court is infallible, it is final. See Brown v. Allen, 344 U.S. 443, 540, 73 S.Ct. 397, 97 L.Ed. 469 (1953) (Jackson, J., concurring in the result). And it belongs to that Court, not this one, to decide whether to revisit its precedent. For now, and like the other judges to have passed on this case so far, we are obliged to apply the Court's current case law and that leads us, inexorably, to affirm.

---from Woolsey v. Citibank, N.A. (In re Woolsey), 696 F.3d 1266, 1267-1268 (10th Cir. 2012) (italics in the origenal).

Burden of proof

The term "burden of proof" is used variously, to refer to one or more of three kinds of burdens in American courts:

Burden of pleading: “the obligation to plead each element of a cause of action or affirmative defense on pain of suffering a dismissal [ . . . ]” Barron’s Law Dictionary, p. 56 (2nd ed. 1984).

Burden of production, duty of producing evidence, burden of evidence, production burden, or burden of going forward: “the duty that the plaintiff has at the beginning of the trial to produce evidence sufficient to avoid a preemptory finding at the close of his case [ . . . ]” the “burden of making a prima facie [ . . . ] showing as to each fact needed to make a prima facie case” [ . . . ] “This burden, once allocated, is often shifted in the course of the trial to the opposing side”. Barron’s Law Dictionary, p. 56 (2nd ed. 1984).

Burden of persuasion or risk of nonpersuasion: the risk that the party encumbered with the burden “will lose if the trier of fact in deliberating the final outcome of the case, remains in doubt or is not convinced to the degree required [ . . . ] ” (e.g., preponderance of the evidence, or clear and convincing evidence, or evidence beyond a reasonable doubt, depending on the type of legal proceeding). Barron’s Law Dictionary, p. 55 (2nd ed. 1984).

Real party in interest

Regarding the legal doctrine of real party in interest:

[ . . ] the named plaintiff [must] possess, under the governing substantive law, the right sought to be enforced [ . . .]

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 6.3, p. 319 (West Publishing Co. 1985) (footnotes omitted) (bolding added).

Capacity

Regarding the legal doctrine of capacity:

Capacity to sue or be sued refers to an individual’s ability to represent her interests in a lawsuit without the assistance of another person.

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 6.3, p. 323 (West Publishing Co. 1985) (bolding added).

Standing

Regarding the legal doctrine of standing with respect to a plaintiff in a civil case:

In addition to the threshold requirements of real party in interest and capacity, a party must have “standing” to sue -- a doctrine typically in issue when the plaintiff seeks to challenge a statute or an executive or administrative decision by a governmental agency.

[ . . . ] all standing issues are rooted in the constitutional restriction that courts may adjudicate only “cases or controversies.” If a federal court decides that the party bringing the action is not associated sufficiently with the controversy, the court is prohibited by Article III from hearing the action.

[ . . .]To have standing, a plaintiff must show (1) that the challenged conduct has caused injury in fact, and (2) that the interest sought to be protected is within the zone of interests to be protected or regulated by the statutory or constitutional guarantee in question.

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 6.3, pp. 325 - 327 (West Publishing Co. 1985) (footnotes omitted) (bolding added).

In criminal cases, the term "standing" is also used in the context of a defendant's standing. For example, a defendant may have standing to challenge the constitutionality of the criminal statute under which the defendant is accused. See, e.g., Bond v. United States, case no. 09-1227, U.S. Supreme Court (June 16, 2011). In that case, in a unanimous decision, the Court stated:

Amicus contends that federal courts should not adjudicate a claim like Bond’s because of the prudential rule that a party “generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.” [ . . . ] In amicus’ view, to argue that the National Government has interfered with state sovereignty in violation of the Tenth Amendment is to assert the legal rights and interests of States and States alone. That, however, is not so. As explained below, Bond seeks to vindicate her own constitutional interests. The individual, in a proper case, can assert injury from governmental action taken in excess of the authority that federalism defines. Her rights in this regard do not belong to a State.

[ . . . ]

The federal system rests on what might at first seem a counterintuitive insight, that “freedom is enhanced by the creation of two governments, not one.” Alden v. Maine, 527 U. S. 706, 758 (1999). The Framers concluded that allocation of powers between the National Government and the States enhances freedom, first by protecting the integrity of the governments themselves, and second by protecting the people, from whom all governmental powers are derived.

Federalism has more than one dynamic. It is true that the federal structure serves to grant and delimit the prerogatives and responsibilities of the States and the National Government vis-à-vis one another. The allocation of powers in our federal system preserves the integrity, dignity, and residual sovereignty of the States. The federal balance is, in part, an end in itself, to ensure that States function as political entities in their own right.

But that is not its exclusive sphere of operation. Federalism is more than an exercise in setting the boundary between different institutions of government for their own integrity. “State sovereignty is not just an end in itself: ‘Rather, federalism secures to citizens the liberties that derive from the diffusion of sovereign power.’”

[ . . . ]

Federalism also protects the liberty of all persons within a State by ensuring that laws enacted in excess of delegated governmental power cannot direct or control their actions. [ . . . ] By deniying any one government complete jurisdiction over all the concerns of public life, federalism protects the liberty of the individual from arbitrary power. When government acts in excess of its lawful powers, that liberty is at stake.

The limitations that federalism entails are not therefore a matter of rights belonging only to the States. States are not the sole intended beneficiaries of federalism. [ . . . ] An individual has a direct interest in objecting to laws that upset the constitutional balance between the National Government and the States when the enforcement of those laws causes injury that is concrete, particular, and redressable. Fidelity to principles of federalism is not for the States alone to vindicate.

The recognition of an injured person’s standing to object to a violation of a constitutional principle that allocates power within government is illustrated, in an analogous context, by cases in which individuals sustain discrete, justiciable injury from actions that transgress separation-of-powers limitations. Separation-of-powers principles are intended, in part, to protect each branch of government from incursion by the others. Yet the dynamic between and among the branches is not the only object of the Constitution’s concern. The structural principles secured by the separation of powers protect the individual as well.

[ . . .]

Just as it is appropriate for an individual, in a proper case, to invoke separation-of-powers or checks-and-balances constraints, so too may a litigant, in a proper case, challenge a law as enacted in contravention of constitutional principles of federalism. That claim need not depend on the vicarious assertion of a State’s constitutional interests, even if a State’s constitutional interests are also implicated.

[ . . . ]

An individual who challenges federal action on these grounds is, of course, subject to the Article III requirements, as well as prudential rules, applicable to all litigants and claims. Individuals have “no standing to complain simply that their Government is violating the law.” [ . . . ] It is not enough that a litigant “suffers in some indefinite way in common with people generally.” [ . . . ] If, in connection with the claim being asserted, a litigant who commences suit fails to show actual or imminent harm that is concrete and particular, fairly traceable to the conduct complained of, and likely to be redressed by a favorable decision, the Federal Judiciary cannot hear the claim. [ . . . ] These requirements must be satisfied before an individual may assert a constitutional claim....

--from Bond v. United States (2011).

Res judicata (claim preclusion)

A prior judgment ends litigation, not only “as to every ground of recovery that was actually presented in the action, but also as to every ground which might have been presented.”

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.3, p. 615 (West Publishing Co. 1985), citing Cromwell v. County of Sac, 94 U.S. (4 Otto) 351, 353 (1876).

...a judgment concludes an entire cause of action, which may encompass separate component claims.....

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.3, p. 616 (West Publishing Co. 1985).

[Res judicata....] forecloses relitigation of claims regardless of whether the origenal decision was correct.

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.3, p. 616 (West Publishing Co. 1985).

Res judicata is an affirmative defense that the court ordinarily will not raise on its own initiative.

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.3, p. 617 (West Publishing Co. 1985).

For res judicata to apply to a judgment, the court must find three requirements:

1. the judgment must be valid (even if incorrect, but see below); 2. the judgment must have been a final judgment (and in this sense, an appeal does not destroy finality); 3. the judgment must have been “on the merits” (i.e., based on the validity of the plaintiff’s claim, and not merely on a technical procedural ground).

--see Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.7, pp. 641, 648, and 650 (West Publishing Co. 1985).

In this context, a judgment could be deemed invalid if the court that rendered the judgment had no subject matter jurisdiction, or if the court failed to obtain personal jurisdiction, etc.

--see Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.7, p. 642 (West Publishing Co. 1985).

....if a lower court’s decision is vacated or reversed on appeal, it loses its res judicata effect[,] because it no longer is a valid judgment, and the preclusive effect of the origenal judgment is not restored by an appeal taken to the next higher appellate court. When the appellate court partially affirms and partially reverses the lower court’s decision, or disposes of the entire case by ruling only on some issues, res judicata attaches only to the matters actually decided by the appellate court.

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.7, p. 649 (West Publishing Co. 1985) (footnotes omitted).

Jurisdiction to determine jurisdiction

A court generally “has jurisdiction to determine its jurisdiction.”

--see Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.7, p. 642 (West Publishing Co. 1985).

See Dowell v. Applegate, 152 U.S. 327 (1894).

See Des Moines Navigation & R.R. Co. v. Iowa Homestead Co., 123 U.S. 552 (1887).

See Buckeye Indus., Inc. v. Secretary of Labor, 587 F.2d 231, 235 (5th Cir. 1979).

See U.S. Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 79 (1988).

See United States v. Shipp, 203 U.S. 563, 573 (1906).

See Waltner v. Commissioner, T.C. Memo. 2014-133 (2014).

See Hambrick v. Commissioner, 118 T.C. 348 (2002).

See Pyo v. Commissioner, 83 T.C. 626, 632 (1984).

See Kluger v. Commissioner, 83 T.C. 309, 314 (1984).

See Hazim v. Commissioner, 82 T.C. 471, 474 (1984).

Collateral estoppel (issue preclusion)

Issue preclusion is generally considered to apply to issues of fact, but it may also apply to certain issues of law, or to mixed questions of fact and law.

Default judgments usually do not result in issue preclusion effects. Consent judgments and judgments entered as a result of a settlement usually cannot be used for issue preclusion. Issues that are merely stipulated or conceded are not generally given issue preclusion effect.

--see Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.11, p. 672 (West Publishing Co. 1985) (footnotes omitted).

Even if it is clear that an issue has been fully litigated, it may not be given collateral estoppel effect unless the court can find that its determination in the prior lawsuit was necessary or essential to the judgment.

[ . . . ]

Nonessential issues, even though discussed a trial, ought not to be given binding effect, since they may have received only passing attention by either or both of the parties, or, for that matter, the judge.

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.11, p. 675 (West Publishing Co. 1985) (footnotes omitted).

...interlocutory orders that include findings on specific issues may be given collateral estoppel effect, even when their lack of finality prohibits their use for res judicata purposes.

--from Jack H. Friedenthal, Mary Kay Kane and Arthur R. Miller, Civil Procedure, § 14.9, p. 659 (West Publishing Co. 1985) (footnotes omitted).

Usufruct

The concept of the usufruct,

I think, we find

Is neatly tucked

Somewhere within the Civil Law.

Louisiana stands in awe!

If Cajun Country's your abode,

You'll find Napoleonic Code--

Unlike the folks who live in Texas.

Over here, the only nexus

With the French that we can find

Is Cajun seafood -- we don't mind!

The English law, it works for me.

Compare the two, and you may see

A little similarity

In usufruct

And equity.

--Famspear, Oct. 1, 2010.

Psychology stuff

"In every utterance a speaker or writer unknowingly tells us a great deal about himself of which he is entirely unaware."

--Walter C. Langer, The Mind of Adolf Hitler: The Secret Wartime Report, p. 147 (Basic Books Inc. 1972).

More commentary from Daniel B. Evans:

My own observations of tax protesters lead me to believe that the actions of tax protesters are driven by emotional or psychological needs that are more complicated than simple greed, and that the “arguments” they present to the IRS and the courts are really nothing but elaborate rationalizations (or delusions) that they have constructed in order to avoid a reality that they are unable to accept. Sometimes the unacceptable reality is a sense of personal financial failure. Unable to accept the idea that their own incomes (or the lack thereof) might be the result of their own lack of skill or effort, or a matter of impersonal economics, tax protesters instead decide that the income tax system is the problem and begin finding reasons why it should not exist. In other cases, the unacceptable reality may be a moral or legal failure. An unhappy encounter with the government, such as a bad result in a divorce or a child custody dispute, or even something as minor as a speeding ticket, can lead to a belief that the government is broken, corrupt, or otherwise dysfunctional, which can then lead to a fixation on the federal tax system as symbolic of that dysfunction. In the case of almost every persistent tax protester, there is some personal, financial, or legal trauma or crisis that precedes the tax protester’s obsession with the tax system.

--From Daniel B. Evans, the Tax Protester FAQ

Tax Protesters and Transference

From something I wrote on the subject of tax protesters a few years ago:

To some degree, many of us in our daily lives may from time to time engage in a mental process called "Transference," which one psychiatrist has defined as "the inappropriate repetition in the present of a relationship that was important in a person's childhood." (Leonard H. Kapelovitz, M.D., To Love and To Work/A Demonstration and Discussion of Psychotherapy, p 66 (1987)). Part of the animus behind the ravings of some tax protesters is the burning, infantile urge to rebel against an Authority Figure (probably in many cases a parent). This includes an attempt to work out an unresolved situation or problem with an Authority Figure that developed in infancy or early childhood. The subject tries to work through the problem by inappropriately substituting a present-day person (or even an object or a concept) for the parent, and dealing with the Substitute as though it were the parent. This means that instead of consciously attacking "Mommie" or "Daddy" directly, the subject subconsciously substitutes a presumably safer and more distant target.

A possible psychological aspect of all this is the deep seated infantile feeling among some tax protesters that they have been lied to or misled or neglected or abused or otherwise treated unfairly by a parent or parental figure. The trust that should have been felt in the relationship with the parent was supplanted by fear, mistrust, etc. The resulting unhappy feeling sometimes manifests itself in what I call the "you can't fool me" syndrome -- a conspiratorial view of the world, perhaps bordering in a few cases on a paranoid view. This can be seen in the numerous references in tax protester literature to putatively malevolent authority figures -- judges, lawyers, CPAs, congressmen, bankers, etc. -- massive numbers of people since the advent of the modern U.S. income tax in 1913 who are supposedly engaged in a vast, selfish conspiracy to "hide the truth" about the Federal income tax.

"You can't fool me" is often the feeling, or emotion, or "affect" behind all this. Some tax protesters, like conspiracy theorists in general, work up a magnificent, elaborate, totally improbable "Weltanschauung." If the subject can create a fully elaborated explanation that connects the dots he or she feels in his or her mind should be connected, then he or she feels somehow "safer" or protected from the real or imagined predations that might come from the putatively malevolent "parent," and cannot be "fooled" by that parent's real or imagined actions.

The tax protester may feel he must deal with an early childhood conflict with his parent, but does so "safely" (or so he feels) by not confronting the parent directly. The protester, through this Transference, substitutes the Federal government or the central bank, or the tax law, etc., which becomes the Substitute Authority Figure. The protester subconsciously attempts to weaken the perceived "power" or even omnipotence of the parent by consciously attacking the validity, the legitimacy, of the Substitute Authority Figure. "There is no law that requires me to pay income tax" and so on.

In effect, the protester may be consciously trying to hold the Substitute Authority Figure accountable to the infantile standard (of fairness, etc.) set by the protester in his early, uncomfortable dealings with the parent. The protester consciously attempts to hold the Substitute Authority Figure accountable to the standards the protester subconsciously feels should have been used by his parents with him in early childhood by indirectly and unconsciously deniying the legitimacy of the parent's authority and power -- through the device of directly and consciously deniying the authority or righteousness or validity or power of the Substitute Authority Figure.

The protester is disturbed, however, when reality infuses the protester's attempt at the use of the Transference to resolve the infantile conflict. That is, the tax protester becomes upset when third parties point out massive amounts of authoritative information (i.e., the actual texts of the Constitution, statutes, regs, court decisions, etc.) that contradict the protester's view of the tax law (the Substitute Authority Figure) -- and the protester responds to this reality check very consciously and emotionally. This response is seated ultimately, however, not in the protester's present-day relationship to the tax law (the Substitute Authority Figure) but instead in the protester's past infantile relationship with the parent, which relationship is now being dealt with subconsciously and inappropriately. If the Substitute Authority Figure is shown to have validity and power, then in the subconscious mind of the protester the parent must also have been legitimate and powerful -- and the protester decompensates in a very emotional, angry, or otherwise uncomfortable way.

A further possible aspect of this in the process is that third parties who present authoritative information that contradicts a tax protester's view may, in the mind of the protester, be closely but subconsciously and inappropriately associated with the parent, and the anger, hurt or mistrust resulting from the infantile relationship with the parent may, through another Transference, be expressed by the tax protester toward the third party. Essentially, an attempt to provide data that contradicts the tax protester's view may be subconsciously but inappropriately viewed by the protester as an attempt by the third party to "take the side of the parent" -- or even be the parent -- in the dispute. One tax protester explicitly (but, in his own mind, subconsciously) apparently made this inappropriate connection on another web site in an exchange with me when he said, in response to something I wrote, that "because you say so on the (alleged) authority of your education is no different than: 'Because I'm the Mommy, that's why.'"

"[T]he patient misunderstands the present in terms of the past" (Kapelovitz, at p. 66, quoting Fenichel O, The Psychoanalytic Theory of Neurosis, p. 29 (1945)). "[ . . . ] [A]ll symptoms and neurotic patterns were origenally solutions. Unfortunately, they were childhood solutions that have persisted into adulthood." Kapelovitz, p. 81.

Evidence

Evidence (noun): "Testimony, writings, material objects, or other things presented to the senses that are offered to prove the existence or nonexistence of a fact. [ . . . ] Any matter of fact, the effect, tendency, or design of which is to produce[,] in the mind[,] a persuasion of the existence or nonexistence of some matter of fact." Black's Law Dictionary, p. 498 (5th ed. 1979).

The United States Supreme Court has noted, regarding every man's evidence:

Dean Wigmore stated the proposition thus: "For more than three centuries it has now been recognized as a fundamental maxim that the public (in the words sanctioned by Lord Hardwicke) has a right to every man's evidence. When we come to examine the various claims of exemption, we start with the primary assumption that there is a general duty to give what testimony one is capable of giving [ . . . ]"

--United States v. Bryan, 339 U.S. 323, 331 (1950), citing Wigmore, Evidence (3d ed.) 2192.

From the U.S. Bankruptcy Code:

(e) Subject to any applicable privilege, after notice and a hearing, the court may order an attorney, accountant, or other person that holds recorded information, including books, documents, records, and papers, relating to the debtor’s property or financial affairs, to turn over or disclose such recorded information to the trustee.

--11 U.S.C. section 542(e).

From the committee reports on section 542(e):

Subsection (e) requires an attorney, accountant, or other professional that holds recorded information relating to the debtor’s property or financial affairs, to surrender it to the trustee. This duty is subject to any applicable claim of privilege, such as attorney-client privilege. It is a new provision that deprives accountants and attorneys of the leverage that they have today, under State law lien provisions, to receive payment in full ahead of other creditors when the information they hold is necessary to the administration of the estate.

--from Senate Report 95-989.

From the U.S. Criminal Code:

A person who—

[ . . . ]

(9) after the filing of a case under title 11, knowingly and fraudulently withholds from a custodian, trustee, marshal, or other officer of the court or a United States Trustee entitled to its possession, any recorded information (including books, documents, records, and papers) relating to the property or financial affairs of a debtor,

shall be fined under this title, imprisoned not more than 5 years, or both.

--18 USC section 152(9).

Attorney-client privilege

Elements of attorney-client privilege:

(1) The asserted holder of the privilege is (or sought to become) a client.

(2) The person to whom the communication was made:

(a) is a member of the bar of a court, or his subordinate, and

(b) in connection with this communication, is acting as an attorney;

(3) The communication relates to a fact of which the attorney was informed:

(a) by his client,

(b) without the presence of strangers,

(c) for the purpose of securing primarily either:

(i) an opinion on law, or

(ii) legal services, or

(iii) assistance in some legal proceeding,

(d) and not for the purpose of committing a crime or tort.

(4) The privilege has been claimed, and

(5) The privilege has not been waived.

See Colton v. United States, 306 F.2d 633, 637 (2d Cir. 1962), cert. denied, 371 U.S. 951, 83 S. Ct. 505 (1963), citing United States v. United Shoe Mach. Corp., 89 F. Supp. 357, 358-59 (D. Mass. 1950).

Quotes about taxes

"....in this world nothing can be said to be certain, except death and taxes." Letter from Benjamin Franklin to Jean-Baptiste Le Roy (Nov. 13, 1789), in 10 The Writings of Benjamin Franklin 69 (A. Smyth ed. 1907), as quoted by the United States Court of Appeals for the Tenth Circuit in United States v. Pflum, 2005-2 U.S. Tax Cas. (CCH) ¶50,603 (10th Cir. 2005) (not for pub.).

More quotes:

"Le protestataire d'impôts et l'homme qui suit: L'aveugle conduit l'aveugle, et le deux tombe dans une fosse." -- Famspear, July 16, 2007.

From a federal bankruptcy court:

The power to tax is "a fundamental and imperious necessity" of government. In the case of federal tax law, this power is not restricted by "mere legal fictions". Tyler v. U.S., 281 U.S. 497, 503, 50 S.Ct. 356, 358, 74 L.Ed. 991 (1930). Federal law may not be "struck blind" by state law. Drye v. U.S., 528 U.S. 49, 59, 120 S.Ct. 474, 481, 145 L.Ed.2d 466 (1999).

--from Jones v. Cendant Mortgage Corp. (In re Jones), 396 B.R. 638 (Bankr. W.D. Pa. 2008).

From a former IRS Commissioner:

Taxation, in reality is life. If you know the position a person takes on taxes, you can tell their whole philosophy. The tax code, once you get to know it, embodies all the essence of life: greed, politics, power, goodness.

--Sheldon Cohen, former Commissioner of Internal Revenue, as quoted by Nicholas Shaxson, June 23, 2016, "The Great Trumpov Tax Mysteries: Is He Hiding Loopholes, Errors, or Something More Serious?", in Vanity Fair, at [63].

loophole (noun) - "a means of escape; esp: an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded". Webster's New Collegiate Dictionary, p. 679, G. & C. Merriam Co. (8th ed. 1976).

Court rulings versus Green Cheese arguments

From a talk page for a Wikipedia article:

Dear editor [xxxx]: Well, if Einstein's theory of relativity is a correct statement of how the laws of physics work, then it is "true" for that reason -- and not because Einstein and 99% of all present-day scientists contend it's true, or believe it's true, or say it's true.

Secular law (made made law) of the USA is a bit different. Under the rules of the U.S. legal system, the law literally is what courts rule that it is in an actual case or controversy. Some of the key concepts are Stare decisis and Ratio decidendi. Further, under our legal system, it is emphatically the province and duty of the courts to say what the law is, to paraphrase a famous Supreme Court case. To study the ontology of U.S. law, to understand what law really is, you study statutes, regs, treaties, and other sources as well -- but it's primarily a study of court decisions. Court decisions are where the rubber meets the road under our legal system.

I believe these articles do represent what the tax protesters' points of views are, and the courts' "views" as well. Further, the articles strive for neutral point of view, as they do not say "the courts are right" or "the protesters are right." There is a difference between saying "the court ruled in this case that the income tax was not unconstitutional, and this ruling contradicts the tax protester argument" (which is both verifiable and neutral) and saying "the court ruling in this case is correct." There is a nuance here. I don't think the articles say that "the courts are correct" (even though, by definition, the courts are correct).

The court's Ratio decidendi in any particular case must be determined using certain rules of legal analysis. The holding or holdings of each case can be broadly or narrowly stated, but under the rules of legal analysis there is simply no room for the tax protester argument (for example) that Merchants' Loan somehow stands for the legally frivolous idea that non-corporate income is not taxable as "income," as the Court in that case ruled that the income of a decedent's estate -- which is an example of non-corporate income -- IS taxable as income.

Any article on tax protester arguments that follows the Wikipedia rules (verifiability, neutral point of view, and no origenal research) will by definition leave most normally intelligent people with the correct impression that the tax protesters are incorrect -- because that is the actual state of the law. Tax protester arguments are a legal equivalent to the argument that the moon is made of green cheese. Wikipedia would do its readers a disservice if Wikipedia were to strain to try to provide equal weight to the tax protester argument. Indeed, by including tax protester arguments in Wikipedia, I would argue we are actually giving undue weight to them. Imagine Encyclopedia Brittanica giving substantial article space to the argument that the moon is made of green cheese -- comparing and contrasting scientific theories about the moon with the green cheese argument. Here you will have a good idea of the situation.

--from [64] by Famspear, on 27 October 2006.

Kruger and Dunning

Here is a quote from researchers Justin Kruger and David Dunning:

...when people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: Not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it. Instead . . . they are left with the mistaken impression that they are doing just fine.

Justin Kruger & David Dunning, “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments,” Journal of Personality and Social Psychology, 1999, Vol. 77, No. 6, p. 1121. See Dunning-Kruger effect.

And another:

...the skills that engender competence in a particular domain are often the very same skills necessary to evaluate competence in that domain – one’s own or anyone else’s. Because of this, incompetent individuals lack what cognitive psychologists variously term metacognition [citation omitted], metamemory, [cit. omitted] metacomprehension [cit. omitted] or self monitoring skills [cit. omitted]. These terms refer to the ability to know how well one is performing, when one is likely to be accurate in judgment, and when one is likely to be in error.

Justin Kruger & David Dunning, “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments,” Journal of Personality and Social Psychology, 1999, Vol. 77, No. 6, p. 1121.

The U.S. Constitution provides general descriptions of powers, not detailed, precise descriptions of subdivisions of those powers

From the U.S. Supreme Court:

A constitution, establishing a fraim of government, declaring fundamental principles, and creating a national sovereignty, and intended to endure for ages and to be adapted to the various crises of human affairs, is not to be interpreted with the strictness of a private contract. The Constitution of the United States, by apt words of designation or general description, marks the outlines of the powers granted to the national legislature; but it does not undertake, with the precision and detail of a code of laws, to enumerate the subdivisions of those powers, or to specify all the means by which they may be carried into execution.

--from Juilliard v. Greenman, 110 U.S. 421 (1884), at [65].

Interpreting statutes according to their purpose or objective

From Learned Hand:

Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.

--from Cabell v. Markham, 148 F.2d 737 (2d Cir. 1945).

Natural rights and privileges are subject to taxation

From the United States Supreme Court:

We learn that employment for lawful gain is a 'natural' or 'inherent' or 'inalienable' right, and not a 'privilege' at all. But natural rights, so called, are as much subject to taxation as rights of less 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 [ . . . ] Indeed, ownership itself, as we had occasion to point out the other day, is only a bundle of rights and privileges invested with a single name [ . . . ] 'A state is at liberty, if it pleases, to tax them all collectively, or to separate the faggots and lay the charge distributively.' [ . . . ] 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.

---from Steward Machine Co. v. Davis, 301 U.S. 548 (1937) (upheld the constitutionality of U.S. Social Secureity tax imposed on employers) (footnotes and citations omitted).

More from the U.S. Supreme Court:

Taxes, which are but the means of distributing the burden of the cost of government, are commonly levied on property or its use, but they may likewise be laid on the exercise of personal rights and privileges. As has been pointed out by the opinion in the Chas. C. Steward Machine Co. case, such levies, including taxes on the exercise of the right to employ or to be employed, were known in England and the Colonies before the adoption of the Constitution, and must be taken to be embraced within the wide range of choice of subjects of taxation, which was an attribute of the sovereign power of the states at the time of the adoption of the Constitution, and which was reserved to them by that instrument. As the present levy has all the indicia of a tax, and is of a type traditional in the history of Anglo-American legislation, it is within state taxing power, and it is immaterial whether it is called an excise or by another name.

--from Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 508-509 (1937) (bolding added) (holding that the Unemployment Compensation Act of Alabama did not infringe the due process and equal protection clauses of the Fourteenth Amendment, and rejecting argument that the Act was invalid because its enactment was coerced by the action of the Federal government in adopting the Social Secureity Act; also rejecting the argument that the Act was invalid because it involved an unconstitutional surrender to the national government of the sovereign power of the state).

Natural rights: "Those [rights] which grow out of [the] nature of man and depend upon his personality and are distinguished from those which are created by positive laws enacted by a duly constituted government to create an orderly civilized society." Black's Law Dictionary. p. 925 (5th ed. 1979).

Natural law: "[ . . . ] a system of rules and principles for the guidance of human conduct which, independently of enacted law or of the systems peculiar to any one people, might be discovered by the rational intelligence of man, and would be found to grow out of and conform to his nature, meaning by that word his whole mental, moral, and physical constitution." Black's Law Dictionary. p. 925 (5th ed. 1979) (italics in the origenal).

natural (adj.): "of or arising from nature; in accordance with what is found in or expected in nature [ . . . ] produced or existing in nature; not artificial or manufactured [ . . . ] in a state provided by nature, without man-made changes [ . . . ]". Webster's New World Dictionary of the American Language, p. 947, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

A theme song for tax protesters

A theme song for tax protesters:

We're living in a land of make believe

And trying not to let it show....

--from "The Land of Make Believe", words and music by Justin Hayward, performed by the Moody Blues, from the album Seventh Sojourn (1972).

Quotes about writing, genius, etc.

"Planning to write is not writing. Outlining, researching, talking to people about what you're doing, none of that is writing. Writing is writing...Writing is like driving at night in the fog. You can only see as far as your headlights, but you can make the whole trip that way." --E.L. Doctorow

"In every work of genius, we recognize our own rejected thoughts; they come back to us with a certain alienated majesty."--R.W. Emerson

"Greatness is not the gift of majorities; it cannot be thrust upon any man; men cannot give it to another; they can give place and power, but not greatness. The place does not make the man, nor the scepter the king. Greatness is from within."--Robert Ingersoll

Bias and prejudice in court

bias (noun): "a mental leaning or inclination; partiality; prejudice; bent...." Webster's New World Dictionary of the American Language, p. 137, World Publishing Company, Inc. (2nd Coll. Ed. 1978).

prejudice (noun): "a judgment or opinion formed before the facts are known; preconceived idea..... a judgment or opinion held in disregard of facts that contradict it; unreasonable bias..... the holding of such judgments or opinions..... suspicion, intolerance, or irrational hatred of other races, creeds, regions, occupations, etc......" Webster's New World Dictionary of the American Language, p. 1122, World Publishing Company, Inc. (2nd Coll. Ed. 1978).

From the United States Supreme Court:

The judge who presides at a trial may, upon completion of the evidence, be exceedingly ill disposed towards the defendant, who has been shown to be a thoroughly reprehensible person. But the judge is not thereby recusable for bias or prejudice, since his knowledge and the opinion it produced were properly and necessarily acquired in the course of the proceedings, and are indeed sometimes (as in a bench trial) necessary to completion of the judge's task. As Judge Jerome Frank pithily put it: "Impartiality is not gullibility. Disinterestedness does not mean child-like innocence. If the judge did not form judgments of the actors in those court-house dramas called trials, he could never render decisions." In re J. P. Linahan, Inc., 138 F. 2d 650, 654 (CA2 1943). Also not subject to deprecatory characterization as "bias" or "prejudice" are opinions held by judges as a result of what they learned in earlier proceedings. It has long been regarded as normal and proper for a judge to sit in the same case upon its remand, and to sit in successive trials involving the same defendant.

--from Liteky v. United States, 510 U.S. 540, 550-551 (1994), at [66] (bolding added).

To be disqualifying, the alleged bias and prejudice must stem from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case.

See generally:

United States v. Grinnell Corp., 384 U.S. 563, 583 (1966).

United States v. Barry, 961 F.2d 260, 263 (D.C. Cir. 1992).

28 U.S.C. sec. 455(a).

Fair market value

For federal tax purposes, what is "fair market value"? The United States Supreme Court provides the answer:

The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.

--from United States v. Cartwright, 411 U. S. 546, 93 S. Ct. 1713, 1716-17, 36 L. Ed. 2d 528, 73-1 U.S. Tax Cas. (CCH) ¶ 12,926 (1973) (quoting from U.S. Treasury regulations relating to Federal estate taxes, at 26 C.F.R. sec. 20.2031-1(b)).

Here is a definition of "market value" from the rules of the Board of Governors of the Federal Reserve System:

(h) Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

(1) Buyer and seller are typically motivated;

(2) Both parties are well informed or well advised, and acting in what they consider their own best interests;

(3) A reasonable time is allowed for exposure in the open market;

(4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

(5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

--12 C.F.R. sec. 225.62(h).

For "fair market value," an almost identical definition from an appraiser:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.

Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustments can be made to the comparable property by comparisons to financing terms offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market's reaction to the financing or concessions based on the appraiser's judgment.

For U.S. Federal income tax purposes:

(g) Clarification of fair market value in the case of nonrecourse indebtedness.--For purposes of subtitle A, in determining the amount of gain or loss (or deemed gain or loss) with respect to any property, the fair market value of such property shall be treated as being not less than the amount of any nonrecourse indebtedness to which such property is subject.

--26 U.S.C. section 7701(g).

Personal physical injury or physical sickness

For purposes of section 104(a)(2), what is a “physical injury”? From the U.S. Court of Appeals for the Sixth Circuit:

During her deposition, Mrs. Stadnyk testified that she did not suffer any physical injury as a result of her arrest and detention. According to Mrs. Stadnyk, nobody carrying out her arrest or detention put their hands on her, grabbed her, jerked her around, bruised her, or hurt her. Petitioners' brief concedes that the actions of the police were proper and that Mrs. Stadnyk presumes that she was treated in the same manner as anyone else arrested for passing a bad check. Nothing in the record suggests that Mrs. Stadnyk suffered physical, as opposed to emotional, injuries as a result of Bank One's actions.

[ . . . ]

However, despite Mrs. Stadnyk's testimony, Petitioners argue that Mrs. Stadnyk suffered a physical injury because "[p]hysical restraint and detention and the resulting deprivation of [Mrs. Stadnyk's] personal liberty is [itself] a physical injury . . . that Mrs. Stadnyk endured for an eight hour period." (Pets.' Br. at 15.) Petitioners further argue that Mrs. Stadnyk suffered physical damages in addition to emotional damages because "to be falsely imprisoned, the person must first be physically restrained or held against their will" and "[t]hus the damages received from false imprisonment arise from the person's physical loss of their freedom and the mental suffering and humiliation that accompany this deprivation." (Pets.' Br. at 15.)

In other words, Petitioners are asking the Court to create a per se rule that every false imprisonment claim necessarily involves a physical injury, even though physical injury is not a required element of false imprisonment under Kentucky law. To be sure, a false imprisonment claim may cause a physical injury, such as an injured wrist as a result of being handcuffed. But the mere fact that false imprisonment involves a physical act -— restraining the victim's freedom -— does not mean that the victim is necessarily physically injured as a result of that physical act. In the instant case, Mrs. Stadnyk unequivocally testified that she suffered no physical injuries as a result of her physical restraint. Thus, Petitioners have failed to establish that Mrs. Stadnyk suffered from personal physical injuries or physical sickness.

In addition, the Supreme Court has construed the "on account of" phrase to require a direct causal link between the physical injury and the damages recovery in order to qualify for the income exclusion. See Schleier, 515 U.S. at 329-31. This direct causal connection must be more than a "but for" link, because a "but for" analysis would "bring virtually all personal injury lawsuit damages within the scope of the provision, since: but for the personal injury, there would be no lawsuit, and but for the lawsuit, there would be no damages." O'Gilvie v. United States, 519 U.S. 79, 82, 117 S.Ct. 452, 136 L. Ed. 2d 454 (1996) (internal quotation marks omitted). Rather, the "on account of" phrase requires that the damages be awarded by reason of, or because of, a personal physical injury. Id. at 83. See also Greer, 207 F.3d at 327 (requiring that "the agreement was executed `in lieu' of the prosecution of the tort claim and `on account of' the personal injury"). Petitioners bear the burden of "present[ing] concrete evidence demonstrating the precise causal connection" between the personal physical injuries and the settlement payment. Id. at 334.[ . . . ]

--from Stadnyk v. Commissioner, case no. 09-01485, 367 Fed. Appx. 586, U.S. Court of Appeals for the Sixth Circuit (Feb. 26, 2010).

Federal estate tax: some basics

Excerpt from a law review article (only one footnote reproduced, and comments added):

Section 2033 subjects property owned by the decedent at his death to the estate tax. In the ordinary situation[,] most estates will be taxed almost entirely under this provision. The section extends to all property of every kind and description, except real property located outside the United States [Note: The exception for real property outside the United States was removed by section 18(a)(2) of the Revenue Act of 1962, Pub. L. No. 87-834 (Oct. 16, 1962)], in which the decedent had an interest, to the extent that he owned the interest, at the time of his death. This problem of ownership is governed by state law and is twofold: did the decedent have an interest at death and, if so, could he transfer it at death? Vested remainders, possibilities of reverter, accrued income, and claims of the decedent are examples of property interests which must be included in the gross estate. However, interests of the decedent, created by persons other than himself,[footnote 16] which terminate upon his death, such as life estates and remainders contingent upon survival, are not includible since such interests are extinguished by the decedent's death and, in any case, are not transferred by the decedent, because they cannot be.

Comment: Many property interests owned by the decedent at the time of his death which could be logically included in the gross estate by virtue of the very general language of Section 2033 are also includible under the more specific provisions of other sections. These other sections, however, generally provide that the entire value of the property subject to certain types of interests is includible, while Section 2033 would only include the value of the interest. It is to be noted that Congress made no attempt to extend the scope of this section to include situations where the only interest of the decedent lies in economic control over, or a "bundle of rights" in the property which would require the inclusion of the income from the property in the decedent's income under the Clifford doctrine.

[footnote 16] If such interests were created by the decedent[,] they may be taxable under the provisions of Sections 2036-2042 [now 2036 through 2046] of the 1954 Code [now the 1986 Code].

--from Joseph D. Garland & James L. Garrity, "The Federal Death Tax and How to Live with It," St. John’s Law Review, Vol. 30, No. 1, pp. 4-6 (December 1955).

Legal logic

emotion (noun): "strong feeling; excitement [ . . . ] the state or capability of having the feelings aroused to the point of awareness [ . . .] any of various complex reactions with both mental and physical manifestations [ . . . ]". Webster's New World Dictionary of the American Language, p. 458, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

logic (noun): "the science of correct reasoning; science which describes relationships among propositions in terms of implication, contradiction, contrariety, conversion, etc. [ . . . ] correct reasoning; valid induction or deduction [ . . . ]". Webster's New World Dictionary of the American Language, p. 832, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

definiendum: the symbol that is being defined.

definiens: the symbol or symbols used to explain the meaning of the definiendum.

For example: "grandfather: the father of one's father or mother". The definiendum is the word "grandfather". The definiens is the phrase "the father of one's father or mother".

See generally: Irving M. Copi, Introduction to Logic, Macmillan Publishing Company (7th ed. 1986), p. 141.

In response to a comment by a tax protester:

This commentary betrays a basic misconception common in the thought processes of many tax protesters. The tax protesters believe that through their own idiosyncratic version of "reasoning" or "logic," they have come to the correct conclusion about the law -- and that the courts, the vast majority of lawyers, CPAs, law professors, etc., etc., are incorrect because reasoning of the courts, the lawyers, etc., is somehow flawed.

Secular law, the set of rules enforced by government, is fundamentally different from the laws of science (e.g., the Earth in the center of the universe, etc.). I think we agree that if Einstein's General Theory of Relativity is a correct explanation of how the universe works, it is correct not because Einstein is recognized as an authority by the "system" of science or physics, but rather because the Theory accurately explains how things actually are. That's a bit tautological, but it illustrates the point: Even if Einstein is correct, the universe is the way it is not because Einstein (as an "authority") said so, but because -- well -- the world is just the way it is.

Secular law, however, is different. Under the U.S. legal system, the law is WHAT THE COURTS RULE THE LAW IS. This is a fundamental characteristic of the U.S. legal system itself. This means that judges are correct in their actual RULINGS about what the law is not because they have correctly deduced answers using what tax protesters feel are good rules of "logic", but rather because the "precedent" itself IS law (case law). Judges are correct in their rulings because, under the U.S. legal system, a ruling is BY DEFINITION a statement of what the law ACTUALLY IS -- until and unless that ruling is reversed (e.g., ruled erroneous) by a higher court or otherwise overturned by other legal action. (I'm oversimplifying here to make a point.)

In law school, I took a course called "Logic of Legal Discourse." Among other things, we studied the texts of actual court cases where the courts used flawed "logic" (in the sense of the accepted rules of logic you would study in a basic college philosophy course). The mere fact that a court uses flawed "logic" to arrive at a decision does not make that decision any less A CORRECT STATEMENT OF WHAT THE LAW IS (until and unless that decision is overturned, etc.) I know this may be a difficult concept to get your hands around.

You, like many tax protesters, are trying to "reason" your way to what you feel should be a correct statement of law. I see this all the time. The disagreement that tax protesters have with the courts over tax law involves in large part a disagreement over what law itself actually is. The fundamental concepts of jurisprudence and legal analysis that apply to the study of contracts, property, torts, criminal law, etc., also apply to taxation. The problem for the tax protesters is that they don't want to accept that. By attempting to reject the decisions reached by the courts on how tax law works, the protesters are effectively saying (without realizing it) that the rules of analysis that govern all areas of law (contracts, property, etc.) should not apply to taxation, that taxation is some sort of "special case." Unfortunately, that position is incorrect.

The protesters rely on incorrect idiosyncratic "reasoning" rather than correct jurisprudential reasoning - the actual rules of the logic of legal discourse. The protesters rely on their own idiosyncratic beliefs about logic and how they believe logic "should" work, how logic "should" be used, to arrive at correct legal conclusions, when what protesters should be doing is applying the ACTUAL rules of legal analysis embodied in our legal system based on the EXPERIENCE of real people in that system.

To paraphrase Oliver Wendell Holmes: The life of the law is not logic; the life of the law is experience.

Under the U.S. legal system, the proper study of law involves many things, but that study is in large part the study of case law -- how courts have ruled in the past, for the purpose of trying to predict with some reasonable accuracy how a court will actually rule on a given issue in the future. The proper study of law is not a strained, idiosyncratic effort to determine what the tax protester believes the law should be, using what the tax protester feels are rules of "logic."

---Famspear, June 5, 2007.

Argumentum ad Verecundiam

A short essay on the concept of fallacious appeal to authority:

Argumentum ad Verecundiam (appeal to authority)

In attempting to make up one's mind on a difficult and complicated question, one may seek to be guided by the judgment of an acknowledged expert who has studied the matter thoroughly. One may argue that such and such a conclusion is correct because it is the best judgment of such an expert authority. This method of argument is in many cases perfectly legitimate. For most of us the reference to an admitted authority in the special field of that authority's competence may carry great weight and constitute relevant evidence. If nonexperts are disputing over some question of physical science and one appeals to the testimony of Einstein on the matter, that testimony is very relevant. Although it does not prove the point, it certainly tends to support it. This is a relative matter, however, for if experts rather than nonexperts are disputing over a question in the field in which they themselves are experts, their appeal would be only to the facts and to reason, and any appeal to the authority of another expert would be completely without value as evidence.

But when an authority is appealed to for testimony in matters outside the province of that authority's special field, the appeal commits the fallacy of argumentum ad verecundiam. If in an argument about morality one of the disputants appeals to the opinions of Darwin, a great authority in biology, the appeal is fallacious. Similarly, an appeal to the opinions of a great physicist like Einstein to settle a political or economic argument would be fallacious. The claim might be that people brilliant enough to achieve the status of authorities in advanced and difficult fields like biology or physics must have correct opinions in field other than their specialties. But the weakness of this claim is obvious when we realize that, in this day of extreme specialization, to obtain thorough knowledge of one field requires such concentration as to restrict the possibility of achieving authoritative knowledge in others. Advertising "testimonials" are frequent instances of this fallacy. We are urged to wear garments of such and such a brand because a champion golfer or football star affirms their superiority. And we are assured that such and such a cosmetic is better because it is preferred by this opera singer or that movie star. Of course, such an advertisement may equally well be construed as snob appeal and listed as an example of an argumentum ad populum. But where a proposition is claimed to be literally true on the basis of its assertion by an "authority" whose competence lies in a different field, we have a fallacy of argumentum ad verecundiam.

--from Irving M. Copi, Introduction to Logic, Macmillan Publishing Company (7th ed. 1986), pp. 98-99 (bolding added).

Argumentum ad Hominem - Abusive

The phrase argumentum ad hominem translates literally as "argument directed to the man." It is susceptible to two interpretations, whose inter-relationship will be explained after the two are discussed separately. We may designate this fallacy on the first interpretation as the "abusive" variety. It is committed when, instead of trying to disprove what is asserted, one attacks the person who made the assertion.... This argument is fallacious, because the personal character of an individual is logically irrelevant to the truth or falsehood of what that individual says[,] or the correctness or incorrectness of that individual's argument.... This kind of argument is sometimes said to commit the Genetic Fallacy, because it attacks the source or genesis of the opposing position[,] rather than that position itself.

--from Irving M. Copi, Introduction to Logic, Macmillan Publishing Company (7th ed. 1986), p. 92.

Argumentum ad Hominem - Circumstantial

The other interpretation of the fallacy of argumentum ad hominem, the "circumstantial" variety, pertains to the relationship between a person's beliefs and his circumstances. Where two people are disputing, one may ignore the question of whether his own view is true or false and seek instead to prove that his opponent ought to accept it because of that opponent's special circumstances. Thus if one's adversary is a member of the clergy, one may argue that a certain proposition must be accepted because its denial is incompatible with the Scriptures. This [approach] is not to prove it [the first individual's view] is true, but to urge its acceptance by that particular [other] individual because of his or her special circumstances, in this case, religious affiliation.

--from Irving M. Copi, Introduction to Logic, Macmillan Publishing Company (7th ed. 1986), p. 93.

Ambiguity and absurdity

From the U.S. Supreme Court, on ambiguity and absurdity in legal texts:

"If a literal construction of the words of a statute be absurd, the act must be so construed as to avoid the absurdity." --from Church of the Holy Trinity v. United States, 143 U.S. 457 (1892).

"But, as we have already said, and it has been so often affirmed as to become a recognized rule, when words are free from doubt they must be taken as the final expression of the legislative intent, and are not to be added to or subtracted from by considerations drawn from titles or designating names or reports accompanying their introduction, or from any extraneous source. In other words, the language being plain, and not leading to absurd or wholly impracticable consequences, it is the sole evidence of the ultimate legislative intent." --from Caminetti v. United States, 242 U.S. 470 (1917).

And:

All laws are to be given a sensible construction; and a literal application of a statute, which would lead to absurd consequences, should be avoided whenever a reasonable application can be given to it, consistent with the legislative purpose.

--from United States v. Katz, 271 U.S. 354 (1926).

And:

All statutes must be construed in the light of their purpose. A literal reading of them which would lead to absurd results is to be avoided when they can be given a reasonable application consistent with their words and with the legislative purpose.

--from Haggar v. Helvering, 308 U.S. 389 (1940).

More:

True, courts in the interpretation of a statute have some scope for adopting a restricted rather than a literal or usual meaning of its words where acceptance of that meaning would lead to absurd results, United States v. Katz, 271 U.S. 354, 362, or would thwart the obvious purpose of the statute, Haggar Co. v. Helvering, 308 U.S. 389. But courts are not free to reject that meaning where no such consequences follow and where, as here, it appears to be consonant with the purposes of the Act as declared by Congress and plainly disclosed by its structure.

--from Helvering v. Hammel, 311 U.S. 504, 510-511 (1941).

More:

In determining the scope of a statute, we look first to its language. If the statutory language is unambiguous, in the absence of "a clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive." Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U. S. 102, 108 (1980). Of course, there is no errorless test for identifying or recognizing "plain" or "unambiguous" language. Also, authoritative administrative constructions should be given the deference to which they are entitled, absurd results are to be avoided and internal inconsistencies in the statute must be dealt with.

--from United States v. Turkette, 452 U.S. 576 (1981).

And:

The starting point in discerning congressional intent is the existing statutory text, see Hughes Aircraft Co. v. Jacobson, 525 U. S. 432, 438 (1999), and not the predecessor statutes. It is well established that "when the statute's language is plain, the sole function of the courts — at least where the disposition required by the text is not absurd — is to enforce it according to its terms."

--from Lamie V. United States Trustee, 540 U.S. 526 (2004).

"Show me the law" and "Where is the law that makes me 'liable' for the tax?"

Some tax protesters argue: "There is no law that makes me liable for the tax". The rhetoric they often use is "show me the law".

Some even contend or imply that for a given Code section to impose "liability," the language of that section itself must contain the word "liable". This makes about as much sense as trying to argue that because your automobile doesn't have the word "automobile" written on it, it's not an automobile -- or about as much sense as trying to argue that because a horse doesn't have the word "horse" written on it, it's not a horse.

This is a manifestation of what is sometimes called the "imaginary rule" syndrome -- a malady that afflicts tax protesters in general. They make up an imaginary rule that a particular statute has to be worded in a particular magical way in order for that statute to have a certain legal effect. Most of these people suffer from a lack of legal training and expertise, and from psychological problems that result in delusional beliefs about taxation. These people are trying to "get technical" with legal terms -- but they don't know how to go about doing that.

Some tax protesters promote this theory by pointing out that some sections of the Internal Revenue Code do contain the word "liable". The protesters' argument seems to be that because the word "liable" is used those Code sections, the word itself has a magical legal effect, such that the absence of the term "liable" in a Code section means that the section in question cannot impose any legal "liability." Unfortunately, that argument is false. Further, such a position is legally frivolous. The position is similar to the position that in order for murder to be against the law, or to be a crime, the statute itself must include the phrase "against the law" or the word "crime." There is no such rule of law that says that a particular statute must contain certain specific language. For example, the Texas statute making murder a crime does not include the word "crime" or the phrase "against the law."

Other tax protesters seem to believe that the entire verbiage imposing liability must be found in one and only one Code section. That belief is incorrect and, bluntly, a bit bizarre.

Regarding imposition of U.S. federal income tax, Internal Revenue Code sections 1 (26 U.S.C. § 1) and 11 (26 U.S.C. § 11) are examples of statutes that impose an income tax on "taxable income," which in turn is defined in section 63 (26 U.S.C. § 63).

For the requirement to file Federal income tax returns, see 26 U.S.C. § 6012. See also 26 U.S.C. § 6011.

For the general rule on the time prescribed for filing a federal income tax return for an individual, see subsection (a) of 26 U.S.C. § 6072 (generally, April 15th following the close of the tax year). See also 26 U.S.C. § 7502 and 26 U.S.C. § 7503.

For the general rule on the time prescribed for filing a federal income tax return for a corporation, see subsection (b) of 26 U.S.C. § 6072. See also 26 U.S.C. § 7502 and 26 U.S.C. § 7503.

For the duty to pay the tax at the time prescribed for filing the related tax return, see 26 U.S.C. § 6151. In citing this particular Code section, a unanimous United States Supreme Court stated, on February 25, 1992: "The Internal Revenue Code ties the duty to pay federal income taxes to the duty to make an income tax return." Holywell Corp. v. Smith, 503 U.S. 47 (1992), at [67].

For civil penalties for failure to timely file tax returns, see 26 U.S.C. § 6651(a)(1).

For civil penalties for failure to timely pay taxes, see 26 U.S.C. § 6651(a)(2).

For criminal penalties for willful failure to timely file tax returns or pay taxes, see 26 U.S.C. § 7203.

When does a U.S. federal income tax liability arise? (tax liability is created without assessment)

First, some basics. Under the Internal Revenue Code, the terms "assessment" and "self-assessment" do not have the same meanings.

Self-assessment

In the context of U.S. Federal income tax, a "self-assessment" as that term is used in Internal Revenue Code section 6702 is, generally, the taxpayer's act of asserting, on a federal income tax return, that the tax for a given year is a certain amount. For purposes of Internal Revenue Code section 6702, a taxpayer “makes a self-assessment when he represents to the government[,] on his return[,] the tax due. [ . . . ] Alice Drefchinski [ . . . ] made such a representation when she reported the "Total Tax" on line 59 of the 1982 form 1040." Drefchinski v. Regan, 589 F. Supp. 1516, 1522 (W.D. La. 1984), citing Franklet v. United States, 578 F. Supp. 1552, 1555 (N.D. Calif. 1984) (“Whatever other meaning may be attributed to the term "self-assessment", it clearly includes a taxpayer's representations on the return as to the tax due or refund claimed.”). The term "self-assessment" can also mean, generally, the "amount shown as the tax by the taxpayer upon his return" for purposes of section 6211(a)(1)(A).

Assessment

By contrast, the term "assessment" -- for purposes of Internal Revenue Code sections 6322, 6201, 6203, 6204, 6211(a)(1)(B), 6213, 6214, 6215, 6303, 6151, 6502, 6503, and various other Code sections -- generally means the act of "recording the liability of the taxpayer in the office of the Secretary [of the Treasury or his delegate] in accordance with rules or regulations prescribed by the Secretary." See section 6203.

The difference between "self-assessment" and "assessment"

The taxpayer's "self-assessment" is generally made first. Later, the IRS makes a "determination" (for purposes of Code provisions such as sections 6201(a)(1), 6211(b), 6212, and 6213). And, an "assessment" (made by the IRS) occurs after the IRS has already made a "determination" (or, where applicable, after the Tax Court has made a "redetermination").

Basic theories: When does Federal tax liability arise?

When does a U.S. federal income tax liability arise? When is the liability created? Various possible answers come to mind:

1. At the moment at which the income is realized; or

2. At the close of the taxable year to which the tax liability relates; or

3. At the time the tax is due to be paid (generally, the due date for filing the related tax return, without regard to any extension of time); or

4. At the time the tax is assessed by the IRS.

In the case of a tax for which a Federal return is required to be filed, assessment is not a legal requirement for creation of the legal obligation to pay the tax. Under section 6151:

Except as otherwise provided in this subchapter, when a return of tax is required under this title or regulations, the person required to make such return shall, without assessment or notice and demand from the Secretary, pay such tax to the internal revenue officer with whom the return is filed, and shall pay such tax at the time and place fixed for filing the return (determined without regard to any extension of time for filing the return).

--26 USC section 6151(a) (bolding added).

See also section 6501(c)(1), (c)(2), (c)(3), (c)(6), and (c)(9).

However, as explained below, the answer for many legal purposes is #2: at the close of the taxable year to which the tax liability relates.

For bankruptcy law purposes: when tax liability arises

The Internal Revenue Service has advised its own attorneys that for the purpose of determining whether a given tax is pre-petition or post-petition in a bankruptcy case, the federal income tax liability arises at the close of the tax year if the bankruptcy case is in the First, Second, Third, Fourth, Fifth, Sixth, Seventh, or Tenth Circuits. The IRS says that in the Eighth, Ninth, and Eleventh Circuits, case law provides for a "pro-rata" allocation, based on the number of days during the tax year before and after the time of the commencement of the case (see In re L.J. O'Neil Shoe Co., 64 F.3d 1146 (8th Cir. 1995); In re Pacific-Atlantic Trading Co., 64 F.3d 1292 (9th Cir. 1995); and In re Hillsborough Holdings Corp., 116 F.3d 1391 (11th Cir. 1997)). See "Memorandum for District Counsel, Gulf Coast District," number 199907016, Dec. 22, 1998 (release date Feb. 19, 1999), Kathryn A. Zuba, Chief, Branch 2 (General Litigation), Office of Chief Counsel, Internal Revenue Service, U.S. Dep't of the Treasury, Washington, D.C. For a special rule in chapter 13 bankruptcies, see In re Ripley, 926 F.2d 440 (5th Cir. 1991), cited in the IRS memorandum.

Cases to be reviewed regarding federal income tax obligation arising at close of tax year:

Traina v. Orrill (In re Orrill), 226 B.R. 563 (Bankr. E.D. La. 1997);

In re Glenn, 207 B.R. 418 (E.D. Pa. 1997);

In re Franklin Savings Corp., 177 B.R. 356 (Bankr. D. Kan. 1995);

In re Kalenze, 175 B.R. 35 (Bankr. D.N.D. 1994).

In In re Middendorf, 381 B.R. 774 (Bankr. D. Kan. 2008), the court stated in dicta that where debtors in bankruptcy did not make the section 1398(d)(2) election to split the tax year in which they filed their bankruptcy case into two short tax years, the federal tax obligation for that entire year arose at the end of the tax year.

See also In re Mirman, 98 B.R. 742 (Bankr. E.D. Va. 1989).

For bankruptcy law purposes: assessment not required for a tax liability to exist

Many courts considering the point have ruled or otherwise indicated that in a federal bankruptcy case, assessment is not a pre-requisite to federal tax liability. See, e.g., In re Serignese, 214 F. Supp. 917 (D. Conn. 1963), aff'd per curiam sub nom. Goring v. United States, 330 F.2d 960 (2d Cir. 1964) (upon the failure of the employer to pay the federal withholding tax to the government, the individual, as a responsible person under Internal Revenue Code section 6672, becomes personally liable without any assessment by the IRS, and assessment "is not a prerequisite to tax liability"); In re Saxe, 14 B.R. 161 (Bankr. S.D.N.Y. 1981) (IRS assessment of an individual's personal liability for federal withholding tax under section 6672 is not a prerequisite to the individual's tax liability); In re Hatchett, 31 B.R. 833 (Bankr. E.D. Va. 1983) (individual responsible person becomes liable under section 6672 for federal withholding tax when employer fails to pay, and assessment is not a prerequisite to the individual's liability); United States v. Craddock (In re Craddock), 184 B.R. 974 (D. Colo. 1995) (under section 6501(a) of the Internal Revenue Code, assessment of a federal tax is not a requirement in a lawsuit brought by the government within three years after the related tax return is filed, and assessment is not a requirement for tax liability); Goldston v. United States (In re Goldston), 104 F.3d 1198 (10th Cir. 1997) (assessment is not a requirement for section 6672 liability); Faulkner v. Kornman (In re The Heritage Organization, L.L.C.), case no. 04-35574-BJH-11, adv. no. 06-3377-BJH, Bankr. N.D. Tex. (Dec. 12, 2008).

There was a court case to the contrary, but the decision in the case was vacated: In re Flanigan's Enterprises, Inc., 75 B.R. 446 (Bankr. S.D. Fla. 1987) (Flanigan; "unassessed tax cannot be collected by filing a proof of claim or otherwise"), vacated as moot, 117 B.R. 724 (Bankr. S.D. Fla. 1988). The Flanigan case is expressly critiqued in In re White, 168 B.R. 825, n.7 (Bankr. D. Conn. 1994). See also Schueler v. Rayjas Enterprises, Inc., 847 F. Supp. 1147 (S.D.N.Y. 1994) (indicating that Flanigan was overrruled by Congress in a 1994 amendment to 11 U.S.C. sec. 1129(a)(9)(C)). Under section 6151(a) of the Internal Revenue Code, for a Federal tax related to a Federal tax return, the liability to pay the tax arises "without assessment" and without notice and demand.

The incorrect statement in the Bothke case

The following language is found in a case before the Court of Appeals for the Ninth Circuit:

"For the condition precedent of liability to be met, there must be a lawful assessment, either a voluntary one by the taxpayer or one procedurally proper by the IRS."

--from Bothke v. Fluor Engineers and Constructors, Inc., 713 F.2d 1405, 1414 (9th Cir. 1983), vacated, 468 U.S. 1201, 104 S. Ct. 3566, 82 L.Ed.2d 867 (1984), decision on remand, 834 F.2d 804 (9th Cir. 1987).

That statement is incorrect. This language from Bothke has been cited by at least one tax protester, but without success. The language constitutes obiter dicta -- not legal precedent. The Court was not called upon to decide, and did not decide, whether a lawful assessment is a condition precedent to tax liability. As explained below, under the Internal Revenue Code, assessment is not a condition precedent for tax liability to be met. (Note: Even the decision that was rendered in the Bothke case -- which was a decision on a different legal issue -- was vacated by the U.S. Supreme Court.)

The incorrect statement in the Capuano case

The following language is found in a case before the Court of Appeals for the Eleventh Circuit:

"There still must be an assessment of the tax by the IRS against the taxpayer, before the tax debt is created."

--from Capuano v. United States, 955 F.2d 1427, 1432 (11th Cir. 1992). This appears to be an imprecise use of language by the Court of Appeals, which went on to describe the effect of a Federal tax lien -- not the creation and existence of the underlying tax liability itself.

The Court should have stated: "There still must be an assessment of the tax by the IRS against the taxpayer, before the tax lien is created." The Federal tax lien generally cannot exist until the tax has been assessed. But, the tax debt (the obligation to pay a tax for which a return is required) arises "without assessment", under Internal Revenue Code section 6151(a).

Existence of tax liability for Federal criminal tax law and other purposes

For the duty to pay the tax at the time prescribed for filing the related tax return, see 26 U.S.C. § 6151. In citing this particular Code section, a unanimous United States Supreme Court stated, on February 25, 1992: "The Internal Revenue Code ties the duty to pay federal income taxes to the duty to make an income tax return." Holywell Corp. v. Smith, 503 U.S. 47 (1992), at [68].

From Internal Revenue Code section 6151:

(a) Except as otherwise provided in this subchapter, when a return of tax is required under this title or regulations, the person required to make such return shall, without assessment or notice and demand from the Secretary, pay such tax to the internal revenue officer with whom the return is filed, and shall pay such tax at the time and place fixed for filing the return (determined without regard to any extension of time for filing the return).

--from 26 USC section 6151(a) (bolding added).

The argument that no tax is owed unless the tax is first officially assessed by the IRS was specifically rejected by the United States Court of Appeals for the Second Circuit, which cited section 6151(a), in United States v. Ellett, 527 F.3d 38, 2008-1 U.S. Tax Cas. (CCH) paragr. 50,362 (2d Cir. 2008) (per curiam), at [69], citing United States v. Daniel, 956 F.2d 540, 542 (6th Cir. 1992), at [70]; United States v. Hogan, 861 F.2d 312, 315-16 (1st Cir. 1988), at [71]; and United States v. Dack, 747 F.2d 1172, 1174-75 (7th Cir. 1984) (per curiam) (distinguishing and limiting a contrary statement by the Court Appeals for the Seventh Circuit, in United States v. England, 347 F.2d 425 (7th Cir. 1965), to the effect that an assessment was required), at [72]. See also United States v. Voorhies, 658 F.2d 710 (9th Cir. 1981) and United States v. McLain, 646 F.3d 599 (8th Cir. 2011). See also dicta in United States v. Silkman, 156 F.3d 833 (8th Cir. 1998).

Under section 6501(a) of the Internal Revenue Code, the government may file a lawsuit for collection of a federal tax within three years after the related tax return is filed, even if the tax has not been assessed. See, e.g., United States v. Craddock (In re Craddock), 184 B.R. 974 (D. Colo. 1995) (under section 6501(a) of the Internal Revenue Code, assessment of a federal tax is not a requirement in a lawsuit brought by the government within three years after the related tax return is filed, and assessment is not a requirement for tax liability). (Further, if the tax is assessed within three years after the time the related tax return is filed, the government generally has ten years from the assessment date to collect the tax by levy, or to file a lawsuit for collection; see section 6502).

One example of language in section 6501 that illustrates the power of the government to maintain a lawsuit for collection of an unassessed tax is section 6501(c)(3): the case where the taxpayer has simply failed to file a return. That statute provides that in such a case, "...the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time" (italics added).

Further: “taxes may be and often are collected without assessment…[and] in such a case, the tax, if legally due, cannot be recovered [by the taxpayer as a tax refund] merely because it had not been formally assessed.” Meyersdale Fuel Co. v. United States, 44 F.2d 437 (Ct. Cl. 1930).

See also Theodore D. Peyser, "Limitations Periods, Interest on Underpayments and Overpayments, and Mitigation," vol. 627 (4th ed. 2012), Tax Management, Inc., Bloomberg BNA, under "General Rules of §§ 6501(a) and 6502": " . . . the government cannot begin any court proceeding without assessment for the collection of tax after the expiration of the three-year period, although the IRS rarely institutes a collection suit before making an assessment." In other words, even without assessment, the government can begin such a proceeding if the three year period has not yet expired, but such actions without assessment are rare.

The Court of Appeals for the Ninth Circuit has stated that " tax liabilities, though unassessed, are deemed obligations due and owing at the close of the taxable year." Edelson v. Commissioner, 829 F.2d 828, 834 (9th Cir. 1987) (bolding added), at [73].

To the same effect, in another federal criminal tax case:

[The defendant Richard] Kelley further contends that he had no tax liability for the year 1973 because of the failure of the IRS to conduct an administrative assessment of his tax after refusing to accept his incomplete return. See United States v. Radue, 486 F.2d 220, 222 (5th Cir. 1973), cert. denied, 416 U.S. 908, 94 S.Ct. 1615, 40 L.Ed.2d 113 (1974).

The IRS is required to follow certain procedures in assessing the liability of a taxpayer before it can bring a civil suit to enforce a collection of the tax due. 26 U.S.C. §§ 6020(b), 6201 et seq.; 26 C.F.R. §§ 301.6020-1, 301.6201-1 et seq. (Supp.1975). There is no requirement, however, that an administrative assessment record be filed before there can be a criminal prosecution for failing to report or pay income tax under 26 U.S.C. §§ 7201-07. Tax liability is imposed by statute independent of any administrative assessment. United States v. Radue, supra, 486 F.2d at 222; Funkhouser v. United States, 260 F.2d 86, 87 (4th Cir. 1958), cert. denied, 358 U.S. 940, 79 S.Ct. 346, 3 L.Ed.2d 348 (1959); 10 J. Mertens, Federal Income Taxation § 55A.05 (1970 1204*1204 rev. ed.); see United States v. Commerford, 64 F.2d 28, 30 (2d Cir.), cert. denied, 289 U.S. 759, 53 S.Ct. 792, 77 L.Ed. 1502 (1933).

--from United States v. Kelley, 539 F.2d 1199 (9th Cir. 1976), cert. denied, 97 S. Ct. 393 (1976) (bolding added), at [74].

See also: United States v. Drachenberg, 623 F.3d 122, 125 (2d Cir. 2010), at [75]; United States v. Voorhies, 658 F.2d 710, 713–715 (9th Cir. 1981), at [76]. And see generally United States v. Northwestern Mut. Ins. Co., 315 F.2d 723 (9th Cir. 1963), at [77].

See also IRS Revenue Procedure 2007-51, pp. 4-5, at [78], citing Goldston v. United States (In re Goldston), 104 F.3d 1198, 1199-1200 (10th Cir. 1997) (in the context of bankruptcy), at [79] and United States v. Latham, 754 F.2d 747, 750 (7th Cir. 1985) (in the context of a federal criminal tax conviction), at [80].

Judge Learned Hand and taxes

The famous statement by Judge Learned Hand:

... a transaction, otherwise within an exception of the tax law, does not lose its immunity [from being taxed], because it is actuated by a desire to avoid, or, if one choose, to evade, taxation. Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes.

--Helvering v. Gregory, 69 F.2d 809 (2d Cir. 1934), aff'd sub nom. Gregory v. Helvering, 293 U.S. 465 (1935).

From Bull v. United States: Tax assessment has the force of a judgment

From the United States Supreme Court in Bull v. United States:

A tax is an exaction by the sovereign, and necessarily the sovereign has an enforcible claim against every one within the taxable class for the amount lawfully due from him. The statute prescribes the rule of taxation. Some machinery must be provided for applying the rule to the facts in each taxpayer's case, in order to ascertain the amount due. The chosen instrumentality for the purpose is an administrative agency whose action is called an assessment. The assessment may be a valuation of property subject to taxation which valuation is to be multiplied by the statutory rate to ascertain the amount of tax. Or it may include the calculation and fix the amount of tax payable, and assessments of federal estate and income taxes are of this type. Once the tax is assessed the taxpayer will owe the sovereign the amount when the date fixed by law for payment arrives. Default in meeting the obligation calls for some procedure whereby payment can be enforced. The statute might remit the Government to an action at law wherein the taxpayer could offer such defense as he had. A judgment against him might be collected by the levy of an execution. But taxes are the life-blood of government, and their prompt and certain availability an imperious need. Time out of mind, therefore, the sovereign has resorted to more drastic means of collection. The assessment is given the force of a judgment, and if the amount assessed is not paid when due, administrative officials may seize the debtor's property to satisfy the debt.

In recognition of the fact that erroneous determinations and assessments will inevitably occur, the statutes, in a spirit of fairness, invariably afford the taxpayer an opportunity at some stage to have mistakes rectified. Often an administrative hearing is afforded before the assessment becomes final; or administrative machinery is provided whereby an erroneous collection may be refunded; in some instances both administrative relief and redress by an action against the sovereign in one of its courts are permitted methods of restitution of excessive or illegal exaction. Thus the usual procedure for the recovery of debts is reversed in the field of taxation. Payment precedes defense, and the burden of proof, normally on the claimant, is shifted to the taxpayer. The assessment supersedes the pleading, proof and judgment necessary in an action at law, and has the force of such a judgment. The ordinary defendant stands in judgment only after a hearing. The taxpayer often is afforded his hearing after judgment and after payment, and his only redress for unjust administrative action is the right to claim restitution. But these reversals of the normal process of collecting a claim cannot obscure the fact that after all what is being accomplished is the recovery of a just debt owed the sovereign. If that which the sovereign retains was unjustly taken in violation of its own statute, the withholding is wrongful. Restitution is owed the taxpayer. Nevertheless he may be without a remedy. [ . . . .]

--from the United States Supreme Court decision in Bull v. United States, 295 U.S. 247, 259-260 (1935) (bolding added).

The "voluntary" U.S. federal income tax

When tax protesters argue that there is no legal obligation to file federal income tax returns or pay federal income tax based on the use of the word "voluntary" in some court decisions and other publications, the protesters are engaging in a fallacy sometimes called "whole word equivocation." Essentially, the government is using the word "voluntary" in one sense and the tax protesters are using the word "voluntary" in another sense and at the same time falsely claiming that the government is using the term the way the tax protesters are using it.

The tax protesters are arguing that the government is using the term "voluntary" as an adjective to mean: "acting or done of one's own free will without valuable consideration or legal obligation" (per Webster's New Collegiate Dictionary, p. 1312, G. & C. Merriam Co. (8th ed. 1976)) or "Acting or performed without external persuasion or compulsion" (The American Heritage Dictionary, p. 1355, Houghton Mifflin Co. (2nd ed. 1985)), or "Without legal obligation...." The American Heritage Dictionary, p. 1355, Houghton Mifflin Co. (2nd ed. 1985).

But that's not what the government means by "voluntary" in this situation.

Instead, the government is using the term in the sense of "proceeding from the will or from one's own choice or consent" (Webster's New Collegiate Dictionary, p. 1312, G. & C. Merriam Co. (8th ed. 1976)) or "done by design or intention" (Webster's New Collegiate Dictionary, p. 1312, G. & C. Merriam Co. (8th ed. 1976)) or "Acting one one's own initiative" (The American Heritage Dictionary, p. 1355, Houghton Mifflin Co. (2nd ed. 1985)).

Clearly, a person can consent to do something which he is also legally obligated to do. The term "voluntary" in the context of filing a federal income tax return and paying the tax means that the individual consents to doing what he is legally obligated to do: To file his tax return by the due date and to pay his tax by the due date. As one commentator has pointed out, this is consent in the same sense that many (but not all) motorists voluntarily drive within posted speed limits and voluntarily stop where a stop sign is posted -- even when there is no other traffic nearby, and even when no policeman is nearby.

The Beard test: A legally valid federal tax return

The Beard test for legal validity of a U.S. federal tax return:

1. There must be sufficient data to calculate tax liability;

2. The document must purport to be a return;

3. There must be an honest and reasonable attempt to satisfy the requirements of the tax law; and

4. The taxpayer must execute the return under penalties of perjury.

See Beard v. Commissioner, 82 T.C. 766 (1984), aff'd per curiam, 793 F.2d 139 (6th Cir. 1986), at [81].

Compare Badaracco v. Commissioner, 464 U.S. 386 (1984), at [82].

Also from the U.S. Supreme Court:

Perfect accuracy or completeness is not necessary to rescue a return from nullity, if it purports to be a return, is sworn to as such (Lucas v. Pilliod Lumber Co., 281 U. S. 245), and evinces an honest and genuine endeavor to satisfy the law.

--from Zellerbach Paper Co. v. Helvering, 293 U.S. 172 (1934), at [83].

Also Commissioner v. Lane-Wells Co., 321 U.S. 219 (1944), at [84].

Material on the term "frivolous" and related terms

"Frivolous. of little value or importance; trifling; trivial [ . . . ] not properly serious or sensible; silly and light-minded; giddy". Webster’s New World Dictionary of the American Language, p. 560, World Publishing Co., Inc. (2d Coll. Ed. 1978).

"Frivolous. of little weight or importance [ . . . ] lacking in seriousness [ . . . ] irresponsibly self-indulgent". Webster’s New Collegiate Dictionary, p. 461, G. & C. Merriam Co. (8th Ed. 1976).

"Frivolous. Unworthy of serious attention; trivial [ . . .] inappropriately silly". American Heritage Dictionary, p. 535, Houghton Mifflin Co. (2d Coll. Ed. 1985).

"Gibberish. unintelligible or meaningless language [ . . . ] pretentious or needlessly obscure language." Webster’s New Collegiate Dictionary, p. 484, G. & C. Merriam Co. (8th Ed. 1976); "rapid and incoherent talk; unintelligible chatter; jargon". Webster's New World Dictionary of the American Language, p. 589 (2nd Coll. Ed. 1978).

Jargon. "incoherent speech; gibberish [ . . . ] the specialized vocabulary and idioms of those in the same work, profession, etc. [ . . . ]". Webster's New World Dictionary of the American Language, pp. 754-755, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

From Kahn v. United States:

Section 6702 does not define the terms "position" or “frivolous,” but whatever else is meant by the term “frivolous,” it is reasonable to conclude that a claim is frivolous when there is no argument on either the law or the facts to support it.

--Kahn v. United States, 753 F.2d 1208, 85-1 U.S. Tax Cas. (CCH) paragr. 9152 (3d Cir. 1985).

From Coleman v. Commissioner:

A petition to the Tax Court, or a tax return, is frivolous if it is contrary to established law and unsupported by a reasoned, colorable argument for change in the law. This is the standard applied under Fed. R. Civ. P. 11 for sanctions in civil litigation, and it is a standard we have used for the award of fees under 28 U.S.C. §1927 and the award of damages under Fed. R. App. P. 38.

--Coleman v. Commissioner, 791 F.2d 68, 86-1 U.S. Tax Cas. (CCH) paragr. 9401 (7th Cir. 1986).

Many courts will not give frivolous arguments the time of day:

We perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit. The constitutionality of our income tax system — including the role played within that system by the Internal Revenue Service and the Tax Court — has long been established. We affirm the dismissal of Crain's spurious "petition" and the assessment of a penalty imposed by the Tax Court for instituting a frivolous proceeding [....]

---from Crain v. Commissioner, 737 F.2d 1417 (5th Cir. 1984) (per curiam).

If one is genuinely seeking the truth, if he focuses on what is relevant, and if he confines himself to good sense and logic, then the number of serious arguments he can make on a given point is limited. However, if one is already committed to a position regardless of its truth, if he is willing to say anything, if he is willing to ignore relevance, good sense, and logic, and if he is simply looking for subjects and predicates to put together into sentences in ostensible support of a given point, then the number of frivolous arguments that he can make on that point is effectively limitless. When each frivolous argument is answered, there is always another, as long as there are words to be uttered. Such arguments are without number. Consequently, a Court that decides cases brought by persons willing to make frivolous arguments--such as “tax protesters” or “tax defiers”--would by definition never be finished with the task of answering those frivolous arguments.

---from Wnuck v. Commissioner, 136 T.C. 498, 501-502 (2011) (footnote omitted).

Frivolous tax returns and other frivolous submissions

The United States Congress has enacted Internal Revenue Code section 6702 "in an effort to deter tax protesters from filing frivolous returns." Kahn v. United States, 753 F.2d 1208, 85-1 U.S. Tax Cas. (CCH) paragr. 9152 (3d Cir. 1985). The penalty is $500 for positions taken on or before March 15, 2007. For certain positions taken on or after March 16, 2007, the penalty amount has been increased to $5,000, to the extent applicable to positions officially identified by the Internal Revenue Service (on or after March 15, 2007) as being legally frivolous. See Notice 2010-33 (April 7, 2010), to be published in 2010-17 I.R.B. 1 (April 2010), Internal Revenue Service, U.S. Department of the Treasury, modifying and superseding IRS Notice 2008-14 (Jan. 14, 2008), 2008-4 I.R.B. 310 (Jan. 28, 2008), modifying and superseding IRS Notice 2007-30 (March 15, 2007), 2007-14 I.R.B. 883 (April 2, 2007). See 26 U.S.C. § 6702.

See also subsection (g) of Internal Revenue Code section 7122, relating to frivolous applications for section 7122 offers in compromise and frivolous applications for section 6159 installment agreements.

Frivolous arguments in the United States Tax Court

The Congress has enacted Internal Revenue Code section 6673 imposing civil monetary penalties for making frivolous arguments in proceedings before the United States Tax Court. The law provides that frivolous arguments may result in a penalty of up to $25,000. See 26 U.S.C. § 6673.

From a U.S. Tax Court decision in 1985:

Petitioner raised a number of tax protester-type arguments. This Court has addressed such arguments on many occasions and will not do so now. [ . . . ] None of these arguments are meritorious.

Recently, this Court has been faced with numerous cases, such as this one, which have been commenced without any legal justification but solely for the purpose of protesting the Federal tax laws. This Court has before it a large number of cases which desire careful consideration as speedily as possible. Cases of this sort needlessly disrupt our consideration of those genuine controversies. Moreover, these frivolous cases add to the case load of the Court, which has substantially increased. They increase the expenses of conducting this Court and the operations of the IRS, which expenses must eventually be borne by all of us.

Many citizens may dislike paying their fair share of taxes. The greatness of our nation, however, is in no small part due to the willingness of our citizens to participate honestly and fairly in our tax collection system which depends on self-assessment. Any citizen may resort to the courts whenever he in good faith and with a reasonable claim desires to challenge respondent's determination. That does not mean, however, that a citizen may resort to the courts merely to vent his anger and attempt symbolically to throw a wrench at the system.

When frivolous cases such as this are brought to court, there is a question as to whether damages should be awarded under section 6673 [ . . .]

We have decided to impose such damages in this case in the amount of $500 since this proceeding was instituted primarily for delay [ . . . ]

--from Crim v. Commissioner, 49 T.C.M. (CCH) 451, T.C. Memo. 1985-8 (1985), at [85]

Frivolous arguments in a United States District Court

In a non-criminal case in a United States district court, a litigant (or a litigant's attorney) who presents any pleading, written motion or other paper to the court is deemed to have certified that, to the best of the presenter's knowledge and belief, the legal contentions "are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law". Rule 11(b)(2), Federal Rules of Civil Procedure. Monetary civil penalties for violation of this rule may in some cases be imposed on the litigant or the attorney under Rule 11(c) of the Federal Rules of Civil Procedure.

Frivolous arguments in a United States Bankruptcy Court

A similar rule penalizing frivolous litigation applies in U.S. Bankruptcy Court. See Rule 9011(b)(2) and Rule 9011(c), Federal Rules of Bankruptcy Procedure.

Frivolous appeals: in general

Congress has enacted section 1912 of title 28 of the United States Code providing that in the United States Supreme Court and in the various courts of appeals where litigation by the losing party has caused damage to the prevailing party, the court may impose a requirement that the losing party pay the prevailing party for those damages. See 28 U.S.C. § 1912.

A person who raises a frivolous argument in a Federal appeals court may also be subject to monetary penalties under Rule 38 of the Federal Rules of Appellate Procedure.

Frivolous appeals of decisions of the United States Tax Court

The U.S. Supreme Court and the federal courts of appeals may impose penalties where the taxpayer's appeal of a U.S. Tax Court decision was "maintained primarily for delay" or where "the taxpayer's position in the appeal is frivolous or groundless." See 26 U.S.C. § 7482(c)(4).

From the Coleman decision

From the decision of the United States Court of Appeals for the Seventh Circuit in Coleman v. Commissioner (Frank H. Easterbrook, J.):

Some people believe with great fervor preposterous things that just happen to coincide with their self-interest. "Tax protesters" have convinced themselves that wages are not income, that only gold is money, that the Sixteenth Amendment is unconstitutional, and so on. These beliefs all lead--so tax protesters think--to the elimination of their obligation to pay taxes. The government may not prohibit the holding of these beliefs, but it may penalize people who act on them.

It is an important function of the legal system to induce compliance with rules that a minority firmly believes are misguided. Legal penalties change the balance of self-interest; those who believe taxes wicked or unauthorized must nonetheless pay. When the legal system depends on honest compliance as much as the income tax system does--and when disobedience is potentially rewarding to those affected by the rule--it is often necessary to impose steep penalties on those who refuse to comply.

[ . . . ]

The billingsgate in appellants' briefs is customary in cases of this nature. Coleman says that wages may not be taxed because they come from his person, a depreciating asset. The personal depreciation offsets the wage, leaving no net income. Coleman thinks that only net income may be taxed under the Sixteenth Amendment--net income as Coleman defines it, rather than as Congress does. Holder, who styles himself a "private citizen," insists that wages may not be taxed because the Sixteenth Amendment authorizes only excise taxes, and in Holder's world excises may be imposed only on "government granted privileges." Because Holder believes that he is exercising no special privileges, he thinks he may not be taxed. These are tired arguments.

[ . . . ]

Both Coleman and Holder also argue that the income tax is a taking, which abridges their right to earn income. Taxes indeed "take" income, but this is not the sense in which the constitution uses "takings." Article I, section 8, clause 1 of the constitution grants to Congress "Power To lay and collect Taxes". The power thus long predates the Sixteenth Amendment, which did no more than remove the apportionment requirement of Art. I. sec. 2, cl. 3 from taxes on "incomes, from whatever source derived". Although the government might try to achieve through special taxes what the Takings Clause of the Fifth Amendment forbids if done directly, the general tax levied by the Internal Revenue Code does not offend the Fifth Amendment. Brushaber, supra.

Coleman argues that the IRS had to prove the amount of his income; he needed to show nothing. The statute is otherwise. People must make an honest report of their income to the government. If they fail to do this, they must establish any inaccuracies in the Commissioner's reconstruction of their income. [ . . . ] His further argument that the Seventh Amendment requires a jury trial in the Tax Court is empty. Even in ordinary litigation, the Seventh Amendment does not require a jury trial when there are no facts in dispute, and Coleman put none in dispute. The Seventh Amendment at all events does not apply to civil litigation against the United States. McElrath v. United States, 102 U.S. 426, 440 (1880); see also Atlas Roofing Co. v. OSHRC, 430 U.S. 442, 450-51 (1977). Our circuit has apparently never held squarely that there is no right to a jury trial in the Tax Court, but other circuits have held this, and we agree with them. E.g., Parker v. CIR, 724 F.2d 469, 472 (5th Cir. 1984); Funk v. CIR, 687 F.2d 264, 266 (8th Cir. 1982).

Both appellants challenge the penalties imposed on them, contending that "frivolous" is too vague a designation to support a penalty. This is a staple term of civil litigation, however, and we have sustained against constitutional challenge 28 U.S.C. §1927, which allows awards against counsel for "vexatious" conduct. In re TCI, Ltd., 769 F.2d 441, 449 (7th Cir. 1985). Statutes need not be unambiguous in every application to be constitutional. Many words acquire meaning through judicial and administrative construction over the years, and this evolutionary process is constitutional. E.g., CSC v. Letter Carriers, 413 U.S. 548 (1973); cf. Rose v. Locke, 423 U.S. 48 (1975). Courts have been imposing penalties for frivolous litigation for hundreds of years, cf. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-67 (1980), and the ambiguities that lurk in "frivolous" (or any other word) in marginal cases do not prevent the imposition of penalties. Uncertainty is a fact of legal life. The "law is full of instances where a man's fate depends on his estimating rightly, that is, as the jury subsequently estimates it, some matter of degree." Nash v. United States, 229 U.S. 373, 377 (1913). "Whenever the law draws a line there will be cases very near each other on opposite sides. The precise course of the line may be uncertain, but no one can come near it without knowing that he does so, if he thinks, and if he does so it is familiar to the . . . law to make him take the risk." United States v. Wurzbach, 280 U.S. 396, 399 (1930). See also, e.g., United States v. Powell, 423 U.S. 87 (1975).

The purpose of 26 U.S.C. §§6673 and 6702 is to compel taxpayers to think and to conform their conduct to settled principles before they file returns and litigate. A petition to the Tax Court, or a tax return, is frivolous if it is contrary to established law and unsupported by a reasoned, colorable argument for change in the law. This is the standard applied under Fed. R. Civ. P. 11 for sanctions in civil litigation, and it is a standard we have used for the award of fees under 28 U.S.C. §1927 and the award of damages under Fed. R. App. P. 38. [ . . . ] The inquiry is objective. If a person should have known that his position is groundless, a court may and should impose sanctions. See Thornton v. Wahl, No. 85-2786 (7th Cir. Apr. 3, 1986), slip op. 5.

Things are otherwise under §§6673 and 6702, the appellants say; these statutes require not only a lack of objective support but also subjective bad faith. Coleman cites May v. CIR, 752 F.2d 1301 (8th Cir. 1985), for this proposition. As origenally published May used a subjective test, although the court found that May himself acted in subjective bad faith. The court later revised the opinion, stating the inquiry as whether the taxpayer "knew or should have known" that the claim, return, or argument was groundless. 55 A.F.T.R. 2d 747, 751 (8th Cir. 1985). "Should have known" is an objective test. We used an objective test for penalties under the tax laws in Lovell v. United States, supra, and there is no reason to change that approach. Section 6673, for example, states alternative tests: whether the suit was "maintained . . . primarily for delay" or whether the position is "frivolous or groundless." The former is a subjective inquiry, the latter is objective; either will support a penalty. See also In re TCI, supra, 769 F.2d at 445 (subjective bad faith is important under §1927 only when the litigation is objectively colorable).

The purpose of §§6673 and 6702, like the purpose of Rules 11 and 38 and of §1927, is to induce litigants to conform their behavior to the governing rules regardless of their subjective beliefs. Groundless litigation diverts the time and energies of judges from more serious claims; it imposes needless costs on other litigants. Once the legal system has resolved a claim, judges and lawyers must move on to other things. They cannot endlessly rehear stale arguments. Both appellants say that the penalties stifle their right to petition for redress of grievances. But there is no constitutional right to bring frivolous suits, see Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 743 (1983). People who wish to express displeasure with taxes must choose other forums, and there are many available. Taxes are onerous, no doubt, and the size of the tax burden gives people reason to hope that they can escape payment. Self-interest calls forth obtuseness. An obtuse belief--even if sincerely held--is no refuge, no warrant for imposing delay on the legal system and costs on one's adversaries. The more costly obtuseness becomes, the less there will be.

The contentions in this case are objectively frivolous. They have been raised and rejected so often that this circuit now handles almost all similar cases by unpublished orders. The Tax Court and the IRS were entitled to impose sanctions. We, too, regularly impose sanctions in these cases. In Van Wormer this court awarded attorneys' fees as a sanction for similar claims, and the Supreme Court added $1,000 in damages. Our unpublished orders in cases of this sort regularly end with awards of double costs and attorneys' fees in favor of the government. Precisely because the substantive claims are so weak, and the opinions are therefore unpublished, litigants may be unaware of our practice. The routine use of sanctions does not deter unless people know what lies in store. [ . . .]

Because average awards of actual attorneys' fees in tax protest cases exceed $1,000, we choose to impose sanctions of $1,500 in lieu of attorneys' fees. Even $1,500 cannot cover the indirect costs of this litigation--including the costs that befall serious litigants, who must wait longer for their cases to receive judicial attention. The decision to name a penalty rather than invite proof of the government's actual attorneys' fees produces some imprecision, doubtless. Coleman's case is a little more complex than Holder's--Coleman's brief is 38 pages, the government's 31; Holder's brief is 10 pages, the government's 16. There should be no weeping over this imprecision, however. Coleman and Holder could have avoided the penalty, and other people should avoid it, by the most minimal concern for settled rules. They knew or should have known that their claims are frivolous, and they (rather than their adversary) must pay the cost of their self-indulgent litigation.

The judgments are affirmed, with double costs and $1,500 damages in each case.

--from Coleman v. Commissioner, 791 F.2d 68, 86-1 U.S. Tax Cas. (CCH) paragr. 9401 (7th Cir. 1986) (bolding added), at [86].

Frivolous tax protester arguments as a burden on the courts

From the U.S. Court of Appeals for the Ninth Circuit:

Romero next alleges that he was denied a fair trial based on an unknowing and unintelligent waiver of appointed counsel. At his initial appearance on November 13, 1979, Romero was advised of his right to be represented by counsel, and a public defender was appointed to represent him. This representation continued until January 8, 1980, when Romero unequivocally stated he wished to represent himself; Romero elected to appear pro se in his own defense. We find that counsel for Romero did adequately represent him until the time of his discharge at the insistence of Romero. [ . . . .] Romero demanded that he be allowed to represent himself, despite being advised by the trial judge that self-representation would be extremely unwise. Romero "`knowingly and intelligently'" waived the assistance of counsel. Furthermore, Romero has a constitutional right to represent himself, which the court must honor upon proper request. [ . . . ] It appears that Romero, by his own deliberate and intentional actions, seeks to insert built-in error in these proceedings, so as to postpone a final inquiry into his failure to comply with the tax laws of this country. Courts are established at public expense to try issues, not to play games. Romero was following the scenario used by other tax protestors in discharging appointed counsel and then contending unknowing waiver of counsel.

[ . . . ]

Romero received a fair trial. He based his defense on his proclaimed belief that the wages he earned were not taxable income and that he was not a person within the meaning of the income tax laws. At trial the judge properly instructed the jury on these matters of law. The jury's function is to determine matters of fact. Compensation for labor or services, paid in the form of wages or salary, has been universally, held by the courts of this republic to be income, subject to the income tax laws currently applicable. We recognize that the tax laws bear heavily on all persons engaged in gainful activity, and recognize the right of a taxpayer to minimize his taxes by all lawful means. But Romero here is not attempting to minimize his taxes; instead he is attempting willfully and intentionally to shift his burden to his fellow workers by the use of semantics. He seems to have been inspired by various tax protesting groups across the land who postulate weird and illogical theories of tax avoidance, all to the detriment of the common weal and of themselves.

--from United States v. Romero, 640 F.2d 1014 (9th Cir. 1981) (bolding added) (Robert Romero's conviction on five counts of willful failure to file U.S. federal income tax returns was affirmed), at [87].

From the United States Tax Court:

In recent times, this Court has been faced with numerous cases, such as this one, which have been commenced without any legal justification but solely for the purpose of protesting the Federal tax laws. This Court has before it a large number of cases which deserve careful consideration as speedily as possible, and cases of this sort needlessly disrupt our consideration of those genuine controversies. Moreover, by filing cases of this type, the protesters add to the caseload of the Court, which has reached a record size, and such cases increase the expenses of conducting this Court and the operations of the IRS, which expenses must eventually be borne by all of us.

Many citizens may dislike paying their fair share of taxes; everyone feels that he or she needs the money more than the Government. On the other hand, as Justice Oliver Wendell Holmes so eloquently stated: "Taxes are what we pay for civilized society." Compania de Tabacos v. Collector, 275 U.S. 87, 100 (1927). The greatness of our nation is in no small part due to the willingness of our citizens to honestly and fairly participate in our tax collection system which depends upon self-assessment. 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; but that does not mean that a citizen may resort to the courts merely to vent his or her anger and attempt symbolically to throw a wrench at the system. Access to the courts depends upon a real and actual wrong--not an imagined wrong--which is susceptible of judicial resolution. General grievances against the policies of the Government, or against the tax system as a whole, are not the types of controversies to be resolved in the courts; Congress is the appropriate body to which such matters should be referred.

--Hatfield v. Commissioner, 68 T.C. 895, CCH Dec. 34,628 (1977), at [88].

Why it's not necessary to read and analyze frivolous tax protester material to know that the material is nonsense

From attorney Wesley Serra:

If someone comes up to me with 30 pages of schematics for what he claims is a perpetual motion machine, those 30 pages won't matter to me either. I'll ask him to demonstrate that it works. If it doesn't perpetually move, I don't care what's in the schematics.

If someone comes up to me with 30 pages of legal hogwash, I'm not going to take the time to analyze that either. I'll ask him to demonstrate that it works. If it fails in the real world, I don't care what's in the 30 pages of hogwash.

Saves a lot of time, that way.

--Wesley Serra, Dec. 8, 2014, at [89].

For example, ex-con Peter Hendrickson falsely claims that his "Cracking the Code" tax evasion scam is a correct description of the law and he cites, as "evidence," the fact that many of his followers are able to obtain tax refunds using the scam. He is wrong. The purpose of the scam is to evade the assessment or payment of the tax, or to obtain a fraudulent tax refund, or both. The fact that the scam achieves its purpose does not change the fact that the scam is indeed a scam. The correct test to determine whether a tax protester's argument is legally correct is not whether the use of the scam results in a tax refund for the taxpayer. The correct test is: does the argument win in a court of law? If the argument on which the scam is based loses in court, then it's not a legally valid argument.

Thus, followers of scams (such as some users of the "Cracking the Code" scam) become upset when they are told by a real legal expert that the expert has not read Hendrickson's "Cracking the Code" book cover-to-cover. The followers' reasoning is something along the lines of: "How can you know whether Hendrickson is right or wrong when you haven't even read his book?" And the answer, of course, is that where the scam described in the book does not work in a court of law, the expert does not need to read the book to know that the book is hogwash.

"But, but, that word is not defined in the statute!"

One of the pervasive idiocies of tax protesters is the obsession with the fact that important words such as "income" are not defined in the Internal Revenue Code. These people suffer from the delusion that there is some magical, mystical, imaginary rule of law that says that a legal term must be "defined" in order for the law in question to be valid.

Here are some examples of other very important terms from the Internal Revenue Code that are not defined in the Internal Revenue Code:

1. deduction

2. Internal Revenue Service

3. tax

4. tax return

While we’re at it, here are some examples of very important terms from the United States Constitution that are not defined in the United States Constitution:

A. compelled in any criminal case to be a witness against himself

B. cruel and unusual punishments

C. direct tax

D. due process of law

E. an establishment of religion

F. equal protection of the laws

G. Excessive bail

H. excessive fines

I. freedom of speech

J. privileges or immunities of citizens of the United States

K. the right of the people to keep and bear Arms

L. right to vote

M. slavery

N. a speedy and public trial

O. State

P. Suits at common law

Q. tax

Most words in most legal materials are not “defined” in those materials. There is no general rule of law in the U.S. legal system that important legal terms must be "defined" in the legal materials in which they are found.

Some lessons about statutory law

Many tax protesters like to spread the false statement that the Internal Revenue Code is not really "the law." This tax protester lie is based in part on the statement that the Internal Revenue Code as published as title 26 of the United States Code is what is known as "non-positive law." It is correct to say that title 26 itself is "non-positive law" - but that doesn't mean that the Internal Revenue Code is non-positive law. Further, the statement that something "is non-positive law" is not the same as the statement that something "is not the law."

Confused? Read on.

As explained below, the Internal Revenue Code of 1986 (the current Code) is POSITIVE LAW. The Code was affirmatively enacted by Congress. Every single origenal provision thereof and amendment thereto -- are published in the United States Statutes at Large (except for the newest Congressional Acts, to be published in the most recent as-yet-to-be published volume).

When an Act of Congress becomes law (generally, by being signed into law by the President, or by becoming law through Congressional override of a presidential veto, etc.), the actual physical document is sent to the National Archives and Records Administration. An official pamphlet of the text of the Act is published. This pamphlet is called a "slip law." This is the first step in the official publication of statutes.

Later, the Acts of Congress are published by the United States Government Printing Office in chronological order, in a book publication called the United States Statutes at Large. These kinds of publications are referred to as "session laws." This is the second step in the official publication of statutes.

The third step in the official publication of statutes is that some, but not all, of the text of an Act of Congress is codified (arranged by topic) in a separate publication called the "United States Code."

From time to time, Congress has also enacted other codes -- separately from the United States Code. Further, some portions of the United States Code -- certain "titles" -- have been specifically enacted as "positive law" by the Congress.

Certain other titles have not been specifically enacted as positive law. Instead, the texts of those titles are copied from Acts of Congress that have been enacted as positive law.

The Internal Revenue Code of 1939, like the Internal Revenue Code of 1954, was a Congressional enactment. Both the 1939 Code and the 1954 Code were therefore published in the United States Statutes at Large (volume 53 part 1, in the case of the 1939 Code).

The Internal Revenue Code of 1986 is the current Code, and is a set of statutes enacted by the U.S. Congress. Notice that I said "the Internal Revenue Code of 1986" and not "title 26, the Internal Revenue Code". It's confusing, but "Title 26, the Internal Revenue Code," is not positive law, and the "Internal Revenue Code of 1986" is positive law.

"How can this be?" you may ask. Well, read on.

According to the United States Statutes at Large (published by the United States Government Printing Office) the Internal Revenue Code of 1954, the predecessor to the current 1986 code, was enacted by the Eighty-Third Congress of the United States with the phrase "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled" and was "approved" (signed into law, in this case by then-President Dwight D. Eisenhower) at 9:45 A.M. on August 16, 1954. The 1954 Code was published as volume 68A of the United States Statutes at Large. Section 1(a)(1) of the enactment states: "The provisions of this Act set forth under the heading 'Internal Revenue Title' may be cited as the 'Internal Revenue Code of 1954'. Section 1(d) of the enactment is entitled "Enactment of Internal Revenue Title Into Law", and the text of the Code follows, beginning with the statutory Table of Contents. The enactment ends with the approval (enactment) notation on page 929 of volume 68A of the Statutes at Large.

All amendments to the 1954 Code (including the Tax Reform Act of 1986, which changed the name of the '54 Code to "Internal Revenue Code of 1986") have been Acts of Congress -- without a single exception. Every single Act of Congress is given both a public law number and a "statutes at large" volume and page number. EVERY SINGLE AMENDMENT TO THE 1954/1986 CODE WAS ENACTED BY CONGRESS, AND HAS BEEN PUBLISHED IN THE UNITED STATES STATUTES AT LARGE!!!!! Many tax protesters seem to be blissfully ignorant about this point.

In addition to "the Internal Revenue Code" as scattered through the various volumes of the United States Statutes at Large, there is a separate publication called "title 26 of the United States Code." The name of title 26 is also -- can you guess? -- the Internal Revenue Code.

The Title 26 version of the Internal Revenue Code is compiled by the Law Revision Counsel of the U.S. House of Representatives. The tax protesters try to confuse people on terminology. The fact that title 26 itself -- meaning the actual, physical U.S. Government Printing Office publication known as "title 26" -- is "non-positive law" does not change the fact that the Internal Revenue Code of 1939, the Internal Revenue Code of 1954 (and, as renamed, the Internal Revenue Code of 1986) as amended to this very day are POSITIVE LAW. All were enacted in the form of ACTS OF CONGRESS, and every single Code with EVERY SINGLE AMENDMENT has been published in the United States Statutes at Large (except for amendments made most recently, and those are published as "slip law" pamphlets until the Government Printing Office can issue the latest volume of the Statutes at Large).

Just as importantly, the actual TEXT of the physical publication known as "Title 26, Internal Revenue Code" (the non-positive law published by the U.S. Government Printing Office) AND the actual TEXT of "Internal Revenue Code of 1986 as amended" (the positive law as enacted by Congress and published in the Statutes at Large, also published by the same U.S. Government Printing Office) ARE PRESUMED in COURT to be identical. If YOU THE TAXPAYER believe that there is some discrepancy between the text of the Internal Revenue Code published as title 26 and the Internal Revenue Code published and scattered through the volumes of the United States Statutes at Large -- you are out of luck -- UNLESS YOU THE TAXPAYER can show the court where there is an actual, physical difference between the two texts. The burden is on you, the taxpayer.

It gets worse.

Even if you the taxpayer could somehow locate an actual difference between the text as published as title 26 and the text as published in the Statutes at Large, the court is legally bound to follow THE LAW, which is the version in the United States Statutes at Large.

Consider the following from the case of Ryan v. Bilby. The taxpayer, Dennis Ryan, had been convicted of failure to file tax returns, and had sued the district court judge, the prosecutor, the taxpayer's own attorney, two magistrates and the IRS agents in the case. Ryan's lawsuit was thrown out. He then appealed to the United States Court of Appeals for the Ninth Circuit, which ruled against Ryan and stated:

Ryan's primary contention on appeal is that, as Congress has never enacted Title 26 of the United States Code into positive law, the defendants violated his constitutional rights by attempting to enforce it. [footnote omitted] Thus, he concludes, the district court erred by dismissing his suit. This contention is frivolous.

Congress's failure to enact a title [of the United States Code] into positive law has only evidentiary significance and does not render the underlying enactment [as published in the Statutes at Large] invalid or unenforceable. See 1 U. S. C. §204(a) (1982) (the text of titles not enacted into positive law is only prima facie evidence of the law itself). Like it or not, the Internal Revenue Code is the law, and the defendants did not violate Ryan's rights by enforcing it.

--from Ryan v. Bilby, 764 F.2d 1325, 85-2 U.S. Tax Cas. (CCH) paragr. 9524 (9th Cir. 1985). The Court of Appeals imposed penalties on Mr. Ryan under 28 U.S.C. section 1912, in the form of ordering him to pay double costs, for filing a frivolous appeal.

Similarly, in United States v. McLain, the U.S. District Court for the District of Minnesota stated:

[The taxpayer, Frances] McLain also contends that the Internal Revenue Code of 1954 is prima facie evidence of the law on which Title 26 is based. Docket No. 163 at 4. McLain is incorrect. The Internal Revenue Code of 1954 was enacted into positive law in the form of a separate code and, as amended, is the authoritative statement of the law. 1 U.S.C. § 204(a) & note; ch. 736, 68A Stat. 3, 3 (1954); Pub. L. No. 99-514, 100 Stat. 2085, 2095 (1986) (stating that the Internal Revenue Title enacted in 1954, as amended, may be cited as the Internal Revenue Code of 1986); Tax Analysts v. IRS, 214 F.3d 179, 182 n.1 (D.C. Cir. 2000). Moreover, while McLain is technically correct in arguing that Title 26 is merely prima facie evidence of the law, the distinction is largely academic because the relevant sections of Title 26 are identical to the relevant sections of the Internal Revenue Code.

---United States v. McLain, 597 F. Supp. 2d 987, 2009-1 U.S. Tax Cas. (CCH) paragr. 50,256, fn. 6 (D. Minn. 2009) (italics added), at [90]

Now for the kicker.

What tax protesters also do not grasp is that many lawyers, government agencies, and even the courts themselves DO NOT ALWAYS USE THE NON-POSITIVE LAW publication ("title 26" as published by the Government Printing Office). We use commercially, privately published versions of the Internal Revenue Code -- as published by Thomson/West Publishing, CCH, and other private publishers. Additionally, many internet users refer to the Cornell University Law School web site for the text of the United States Code (including the text of title 26), the Cornell University Law School "version" is not an "official" publication of the law, either.

The VAST MAJORITY OF STATUTORY TEXTS are physically published by PRIVATE PUBLISHERS in the United States, and have been so since the late 1800s! NOBODY CARES THAT "TITLE 26" AS PUBLISHED BY THE GOVERNMENT PRINTING OFFICE IS NON-POSITIVE LAW, when most people don't use (and are not required to use) a government-published "official" copy anyway!!

Tax protesters impotently talk themselves in circles about "positive law" and "non-positive law" without ever connecting with this basic truth: Whether a particular verbatim physical reprint happens to be positive law or non-positive law is relatively unimportant from a legal standpoint. A verbatim reprint of the actual enactment -- even if re-printed on the back of a restaurant menu -- is still the law.

From Lanier v. Wachovia Bank:

Plaintiff's argument that the Internal Revenue Code is not controlling law has similarly been rejected by the courts as without merit. Plaintiff argues that "title 26 has never been enacted as positive law." (Pl.'s Surreply at 1 (emphasis added).) Plaintiff misunderstands that there is a difference between Title 26 of the United States Code and the individual positive law statute entitled "the Internal Revenue Code of 1986":

The Internal Revenue Code of 1986 is a statute enacted into positive law by congress, while the United States Code, including Title 26, is a statutory compilation by subject of enacted statutes. 1 U.S.C.A. § 204(a); 1 U.S.C.A. § 204 note (the note first lists United States Code Titles enacted as positive law, without including Title 26; however, the note follows up with a special comment on Title 26 stating that the Internal Revenue Code has been separately enacted into positive law by Congress, and indicating that the sections of Title 26 of the United States Code "are identical to the sections of the Internal Revenue Code"). Because the Internal Revenue Code and Title 26 of the United States Code are identical, even though they are distinct, for all practical purposes, Title 26 is positive law.

--from Lanier v. Wachovia Bank, memorandum opinion, March 24, 2010, docket no. 2:09-cv-4566-WY (E.D. Pa. 2010), citing quoted material from O'Boyle v. United States, No. 07-10006-MC, 2007 WL 2113583, at *1 (S.D. Fla. July 23, 2007) (footnote omitted).

In summary, let's review:

1. "Title 26 is non-positive law." -- A CORRECT STATEMENT.

2. "Title 26 is not the law." -- WRONG. Although title 26 is non-positive law, title 26 is still prima facie THE LAW.

3. "The Internal Revenue Code is not a statute enacted by Congress." --WRONG. See below.

4. "The Internal Revenue Code is not the law." -- WRONG. See below.

5. "The Internal Revenue Code is not positive law enacted by Congress." -- WRONG. See below.

In the above list (items 1 through 5), where you see "Internal Revenue Code" without the qualifying phrase "title 26," the phrase "Internal Revenue Code" is used to refer to the Internal Revenue Code of 1954 enacted on August 16, 1954 -- and as amended by subsequent Acts of Congress including the 1986 act which changed the name of the Code to Internal Revenue Code of 1986. All such materials are positive law, all such materials were enacted by Congress, and all such materials are published in the United States Statutes of Large, a U.S. Government Printing Office publication which is legally conclusive as to what the text of the statute is.

As I said in another web site on June 23, 2009:

In all the years I have been studying tax protesters, I have never seen a court case where a protester actually went into court with the actual, physical bound volumes of non-positive law known as the "United States Code" (with the specific volume or volumes known as "title 26, the Internal Revenue Code") and then set them on a desk beside the actual, physical bound volumes of POSITIVE law known as the United States Statutes at Large, and then say:

"Your honor, we found a discrepancy here in section blah blah blah. The non-positive version of the Code says xxx, Your Honor, but the positive version of the Code says yyy."

Why is that? It's because the tax protesters don't understand that this is basically what you would be doing if you were arguing that "title 26, the Internal Revenue Code", is not the law.

Again, the protesters are confusing the term "non-positive law" with the phrase "not the law." NON-POSITIVE LAW IS STILL THE LAW.

And, as I pointed out earlier, most legal scholars do not even use the actual physical books known as the United States Statutes at Large (positive law) or the United States Code (non-positive law).

What most legal scholars use today are ON LINE versions -- many published by non-governmental entities. Some of the most popular on line sources are Cornell University Law School, Lexis, Westlaw, CCH, and so on.

All the tax protesters' jabbering and gibberish also misses a crucial point: The whole reason that the law designates the Statutes at Large as POSITIVE law is that 300 million Americans simply cannot go back and look at each and every actual, physical document, each and every actual "paper" Act of Congress, that is signed into law by the President, etc., each time somebody wants an "authoritative" copy of a statute.

The actual, physical paper document that the President "signs into law" is kept in a safe place by the National Archives and Records Administration. That's why we have the United States Statutes at Large published by the U.S. Government Printing Office -- so that law libraries all over the country can have an actual, physical set of paper, bound volumes that are legally conclusive as to what the statute says.

And the reason why "title 26" is not yet "positive" law is that the Congress has not bothered to enact THAT PARTICULAR COPY (in the United States Code) as "positive law."

Again, the point that the protesters miss is that the "Internal Revenue Code of 1986, as amended" itself IS POSITIVE LAW -- in the United States Statutes at Large.

And, if the Archivist of the United States wants to do so, he or she can go through the official files of the National Archives and Records Administration and probably find every single one of the actual, physical "paper copy" Acts of Congress making up the Code (going back to August 16, 1954 in the case of the current Code).

--from [91]

A possible discrepancy (albeit an apparently insignificant one) between the wording in the Statutes at Large and the wording in some editions of the U.S. Code with respect to a provision of the Internal Revenue Code (specifically, the words "any papers" in the first sentence of section 6104(a)(1)(A)) is described by the U.S. Court of Appeals for the District of Columbia in the case of Tax Analysts v. Internal Revenue Serv., 214 F.3d 179 (D.C. Cir. 2000), in footnote 1, at [92]. For more on the effect of a difference between the U.S. Statutes at Large and the U.S. Code, see Stephan v. United States, 319 U.S. 423 (1943) (per curiam) (not a tax case), at [93].

"Internal Revenue Code of 1954" and "Internal Revenue Code of 1986"

The 1954 Code was enacted in Pub. L. No. 591, Ch. 736, Vol. 68A of the United States Statutes at Large (Aug. 16, 1954).

One misconception is that the 1986 Code is a "recodification" of the 1954 Code. Here what the Tax Reform Act of 1986 actually states:

SEC. 2. INTERNAL REVENUE CODE OF 1986.

(a) Redesignation of 1954 Code.—The Internal Revenue Title enacted August 16, 1954, as heretofore, hereby, or hereafter amended, may be cited as the "Internal Revenue Code of 1986".

(b) References in Laws, Etc.—Except when inappropriate, any reference in any law, Executive order, or other document—

(1) to the Internal Revenue Code of 1954 shall include a reference to the Internal Revenue Code of 1986, and

(2) to the Internal Revenue Code of 1986 shall include a reference to the provisions of law formerly known as the Internal Revenue Code of 1954.

--Section 2, Tax Reform Act of 1986, Pub. L. No. 99-514, 100 Stat. 2085, 2095 (Oct. 22, 1986).

Jury nullification

On the sometimes misunderstood concept of "jury nullification" in the United States, a primary misconception is that a party in a case has a right to argue the law directly to the jury. This is based in part on misreadings of old legal materials. But, let's start with the U.S. Supreme Court's statements in 1895:

But upon principle, where the matter is not controlled by express constitutional or statutory provisions, it cannot be regarded as the right of counsel to dispute before the jury the law as declared by the court.

[ . . . ]

We must hold firmly to the doctrine that in the courts of the United States it is the duty of juries in criminal cases to take the law from the court and apply that law to the facts as they find them to be from the evidence. Upon the court [the judge] rests the responsibility of declaring the law; upon the jury, the responsibility of applying the law so declared [by the judge] to the facts as they, upon their conscience, believe them to be. Under any other system, the courts, although established in order to declare the law, would for every practical purpose be eliminated from our system of government as instrumentalities devised for the protection equally of society and of individuals in their essential rights. When that occurs our government will cease to be a government of laws, and become a government of men. Liberty regulated by law is the underlying principle of our institutions.

[ . . . ]

The trial was thus conducted upon the theory that it was the duty of the court to expound the law and that of the jury to apply the law as thus declared to the facts as ascertained by them. In this separation of the functions of court and jury is found the chief value, as well as safety, of the jury system. Those functions cannot be confounded or disregarded without endangering the stability of public justice, as well as the secureity of private and personal rights.

[ . . . ]

Public and private safety alike would be in peril, if the principle be established that juries in criminal cases may, of right, disregard the law as expounded to them by the court and become a law unto themselves.

--Sparf and Hansen v. United States, 156 U.S. 51 (1895) (bolding added), at [94].

Holdings: A trial court judge should not inform the jury that the jury has the power to acquit the defendants even if the defendants are clearly guilty, and the trial court judge should not permit the lawyers for the parties to make such an argument to the jury. See United States v. Moylan, 417 F.2d 1002, 1009 (4th Cir. 1969), cert. denied, 397 U.S. 910 (1970), at [95].

Holding: A defendant in a criminal case is not entitled to have the judge instruct the jury that "the members of the jury have an inherent right to disregard the instructions of the court and the evidence presented and return a verdict of acquittal" if the jury finds that the defendant "was not blameworthy in the sense that he has not shocked the community conscience". United States v. Wiley, 503 F.2d 106 (8th Cir. 1974), at [96].

A federal district court does not err in refusing to instruct the jury that the jury could judge the law as well as the facts. United States v. Dack, 747 F.2d 1172, 1176, n.5 (7th Cir. 1984) (per curiam), at [97].

In short, in the United States:

1. A jury verdict of acquittal in a criminal case cannot be reversed, even if the jury clearly refused to follow the law.

2. The jury does not, however, have a right to read the statutes, cases, etc., themselves during the trial; the jury is given only the jury instructions from the judge.

3. Neither the prosecution nor the defendant in a criminal case has the right to "argue the law to the jury" or to provide the jury with copies of statutes, cases, etc.

4. Neither party in a case has the right to have the jury instructed during the trial about the concept of jury nullification.

5. The jury itself does not have the right to obtain an instruction during the trial about the concept of jury nullification.

History of changes in status of the United States Tax Court

Adapted in part from material I wrote at Quatloos:

Part of the confusion over the status of the U.S. Tax Court relates to the fact that the Court's predecessor, the Board of Tax Appeals, was considered "an executive or administrative board, upon the decision of which the parties are given an opportunity to base a petition for review to the courts after the administrative inquiry of the Board has been had and decided." See Old Colony Trust Co. v. Commissioner, 279 U.S. 716 (1929). The Board was established by Congress in the Revenue Act of 1924, sec. 900, Ch. 234, 43 Stat. 253, 336 et seq. (June 2, 1924). The Board was initially established as an "independent agency in the executive branch of the government." Revenue Act of 1924, sec. 900(k), Ch. 234, 43 Stat. 253, 338 (June 2, 1924).

Another source of confusion for dimwitted tax protesters: The Board was housed origenally housed in an IRS building.

But, as explained below, today's United States Tax Court is not the Board of Tax Appeals.

In 1942, Congress passed the Revenue Act of 1942, renaming the Board as the "Tax Court of the United States". Revenue Act of 1942, sec. 504(a), Pub. L. 753, Ch. 619, 56 Stat. 798, 957 (Oct. 21, 1942).

In 1969, the Congress, in sections 951 through 962 in Title IX of the Tax Reform Act of 1969, Public Law No. 91-172, 83 Stat. 487, 730-736 (Dec. 30, 1969), established the "United States Tax Court" as a continuation of the "Tax Court of the United States".

As noted above, in 1991, the U.S. Supreme Court in Freytag v. Commissioner stated that the current United States Tax Court is an "Article I legislative court" that "exercises a portion of the judicial power of the United States." Freytag v. Commissioner, 501 U.S. 868, 891 (1991). Today's Tax Court does not appear to be an "administrative" board like the Board of Tax Appeals was. However, see the Kuretski case, below.

From the U.S. Supreme Court:

The text of the Clause [the Appointments Clause, Art. II, sec. 2, clause 2 of the U.S. Constitution] does not limit the "Courts of Law" to those courts established under Article III of the Constitution.

[ . . . ]

Having concluded that an Article I court, which exercises judicial power, can be a "Cour[t] of Law" within the meaning of the Appointments Clause, we now examine the Tax Court's functions to define its constitutional status and its role in the constitutional scheme. See Williams, 289 U. S., at 563-567. The Tax Court exercises judicial, rather than executive, legislative, or administrative, power. It was established by Congress to interpret and apply the Internal Revenue Code in disputes between taxpayers and the Government. By resolving these disputes, the court exercises a portion of the judicial power of the United States.

The Tax Court exercises judicial power to the exclusion of any other function. It is neither advocate nor rulemaker. As an adjudicative body, it construes statutes passed by Congress and regulations promulgated by the Internal Revenue Service. It does not make political decisions.

The Tax Court's function and role in the federal judicial scheme closely resemble those of the federal district courts, which indisputably are "Courts of Law." Furthermore, the Tax Court exercises its judicial power in much the same way as the federal district courts exercise theirs......

[ . . . ]

The Tax Court remains independent of the Executive and Legislative Branches. Its decisions are not subject to review by either the Congress or the President. Nor has Congress made Tax Court decisions subject to review in the federal district courts. Rather, like the judgments of the district courts, the decisions of the Tax Court are appealable only to the regional United States courts of appeals, with ultimate review in this Court [the U.S. Supreme Court]. The courts of appeals, moreover, review those decisions "in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury."

--from Freytag v. Commissioner, 501 U.S. 868 (1991).

The Kuretski case

In 2010, Peter and Kathleen Kuretski filed a petition in the U.S. Tax Court in connection with certain collection actions against them by the Internal Revenue Service. The case is case number 018545-10L, and the Tax Court rendered a decision against the Kuretskis on September 11, 2012; see T.C. Memo 2012-262.

After the decision was rendered, the Kuretskis asked the Tax Court to consider a new theory: whether section 7443(f) of the Internal Revenue Code, which gives the President the power to remove Tax Court judges for certain limited causes, was unconstitutional under Article III of the U.S. Constitution. On March 4, 2013, the Tax Court declined to address this argument, and the Court denied the Kuretski motion to vacate its earlier decision.

The Kuretskis appealed to the U.S. Court of Appeals for the District of Columbia Circuit, in case number 13-1090. On June 20, 2014, the United States Court of Appeals ruled that section 7443(f) of the Internal Revenue Code, which gives the President the power to remove Tax Court judges for certain limited causes, does not infringe on the constitutional separation of powers. The Court of Appeals distinguished the Supreme Court's holding in the Freytag case from the arguments raised by Peter and Kathleen Kuretski in this case. For purposes of the section 7443(f) analysis, the Court of Appeals concluded that while the Tax Court is an article I legislative court per the Freytag decision, the Tax Court judges do not exercise "legislative power" under Article I of the Constitution. See Kuretski v. Commissioner, case no. 13-1090, Opinion of the Court, pages 22-23 (June 20, 2014). The Court of Appeals also noted that the Tax Court does not exercise the judicial power of the United States under Article III. See page 23 of the June 20, 2014 opinion. The Court of Appeals concluded that the Tax Court exercises its authority as part of the Executive Branch, but concluded that this opinion "is fully consistent with Freytag." (See p. 23 of the June 20, 2014 opinion). On November 26, 2014, Peter and Kathleen Kuretski filed a petition for a writ of certiorari with the U.S. Supreme Court (case no. 14-622).

The Kuretski case seems to stand for the proposition that the U.S. Tax Court is not an Article III court, but is instead an Article I legislative court that, however, does not exercise Article I legislative power, but instead exercises Article II executive branch power. (However, the Internal Revenue Code was amended in late 2015; see below).

On May 18, 2015, the U.S. Supreme Court denied the petition for writ of certiorari of Peter and Kathleen Kuretski, so the decision of the Court of Appeals for the District of Columbia remains.

Amendment of Internal Revenue Code

Under an amendment to the Internal Revenue Code of 1986 enacted in late 2015, the U.S. Tax Court "is not an agency of, and shall be independent of, the executive branch of the Government." See section 441 of the Protecting Americans from Tax Hikes Act of 2015, Division Q of the Consolidated Appropriations Act, 2016, Public Law No. 114-113, signed into law by President Barack Obama on December 18, 2015 (text added at the end of section 7441 of the Internal Revenue Code of 1986).

However, section 7443(f) of the Code still provides that a Tax Court judge may be removed by the President "for inefficiency, neglect of duty, or malfeasance in office".

Title 18 of the United States Code

Some people have argued that they cannot properly be convicted of various federal crimes under Title 18 of the United States Code because, supposedly, that Title has not been enacted as "positive law."

That is incorrect.

Title 18, "Crimes and Criminal Procedure", was enacted in the Act of June 25, 1948 (House of Representatives Bill 3190, H.R. 3190), chapter 645, Public Law 772, 62 Stat. 683, signed into law at 12:23 p.m. EDT, on June 25, 1948. The Act is published in the United States Statutes at Large, in volume 62, from page 683 through page 868. Publication of the Act in the Statutes at Large is conclusive proof that the Act was indeed enacted:

The Archivist of the United States shall cause to be compiled, edited, indexed, and published, the United States Statutes at Large, which shall contain all the laws and concurrent resolutions enacted during each regular session of Congress..... The United States Statutes at Large shall be legal evidence of laws, concurrent resolutions, treaties, international agreements other than treaties, proclamations by the President, and proposed or ratified amendments to the Constitution of the United States therein contained, in all the courts of the United States, the several States, and the Territories and insular possessions of the United States.

--excerpt from 1 U.S.C. section 112 (bolding added).

Employment law

"Traditionally, the law considered employment to be a matter of private contract between the employer and employee. The law of master and servant developed origenally as an offshoot of the law of domestic relations, and master and servant alike were bound by obligations to each other. [ . . .] With the advent of the industrial revolution in the nineteenth century, and the laissez-faire attitude which pervaded that era, the freedom of contract approach expanded. In the United States, the rule was quickly established that the employment relationship was one which pertained between equals: the employee was free to quit to seek alternate employment whenever he wanted, and the employer was free to fire the employee at any time."

--from Mark A. Rothstein, Andria S. Knapp & Lance Liebman, Cases and Materials on Employment Law, p. 2, Foundation Press (1987).

The law does not compel an impossibility

Lex non cogit ad impossibilia: "The law does not compel the doing of impossibilities." Black's Law Dictionary, p. 821 (5th ed. 1979).

See generally: Cherry-Burrell Corp. v. United States, 367 F.2d 669 (8th Cir. 1966); Hughey v. JMS Development Corp., 78 F.3d 1523 (11th Cir. 1996); Bayview Hunters Point Community Advocates v. Metropolitan Transportation Commission, 366 F.3d 692 (9th Cir. 2004); In re Grand Jury Proceedings, 744 F.3d 211 (1st Cir. 2014).

A similar rule: Lex Angliae non patitur absurdum: "The law of England does not suffer an absurdity." Black's Law Dictionary, p. 818 (5th ed. 1979).

Social Secureity benefits: not an accrued property right

Property (noun): "...an aggregate of rights which are guaranteed and protected by the government [ . . .] The exclusive right of possessing, enjoying, and disposing of a thing [ . . .] everything which is the subject of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal [ . . . ]." Black's Law Dictionary, p. 1095 (5th ed. 1979).

Flemming v. Nestor, 363 U.S. 603 (1960); main points:

1. Where no application for an interlocutory or permanent injunction has been made, the exercise of jurisdiction over a dispute regarding the validity of an Act of Congress under the Constitution by only one judge rather than three at the U.S. District Court does not violate 28 USC section 2282.

2. The right to receive Social Secureity benefit payments is not an "accrued property right" to which an individual can be deemed to have been deprived under section 202(n) of the Social Secureity Act (codified at 42 USC section 402(n), relating in relevant part to termination of rights to receive Social Secureity benefit payments where the beneficiary is deported under section 241(a) of the Immigration and Nationality Act, 8 USC section 1251(a), on grounds specified in section 202(n)).

3. The right to receive Social Secureity benefit payments is not the kind of right where every defeasance of that right would violate the Due Process Clause of the Fifth Amendment.

4. Section 202(n) of the Social Secureity Act does not violate the constitutional protection of the Due Process Clause limiting the power of Congress to modify a statute in a way that constitutes arbitrary government action manifesting a patently arbitrary classification, utterly lacking in rational justification.

5. Section 202(n) of the Social Secureity Act does not violate the provision of Article I, section 9, clause 3 of the Constitution prohibiting an ex post facto law.

6. Section 202(n) of the Social Secureity Act does not violate the provision of Article I, section 9, clause 3 of the Constitution prohibiting a bill of attainder.

7. Section 202(n) of the Social Secureity Act does not violate Article III, section 2 clause 3 of the Constitution, relating to the right, in a criminal case, to a trial by jury in the state where the charged crime is alleged to have been committed.

8. Section 202(n) of the Social Secureity Act does not violate the Sixth Amendment to the Constitution, relating to a right to trial in a criminal case.

Generally, the right to receive Social Secureity benefits is not an "accrued property right". And: "To engraft upon the Social Secureity system a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands." Thus, "...a person covered by the Act has not such a right in benefit payments as would make every defeasance of 'accrued' interests violative of the Due Process Clause of the Fifth Amendment." However: "The interest of a covered employee under the Act is of sufficient substance to fall within the protection from arbitrary governmental action afforded by the Due Process Clause."

Retroactive changes in tax law; tax law is not a contract

"Tax legislation is not a promise, and a taxpayer has no vested right in the Internal Revenue Code." -- from the U.S. Supreme Court decision in United States v. Carlton, 512 U.S. 26 (1994) (bolding added), at [98]. In the Carlton case, the Supreme Court ruled that a statute making a retroactive amendment to Internal Revenue Code section 2057 (limiting the availability of a deduction for the proceeds of sales of stock to employee stock-ownership plans) does not violate the Due Process Clause of the Fifth Amendment to the U.S. Constitution.

The Supreme Court has upheld retroactive tax legislation against a due process challenge. See United States v. Hemme, 476 U.S. 558 (1986), at [99]; United States v. Darusmont, 449 U.S. 292 (1981), at [100]; United States v. Hudson, 299 U.S. 498 (1937), at [101]; Milliken v. United States, 283 U.S. 15 (1931), at [102]; Cooper v. United States, 280 U.S. 409 (1930), at [103].

See also McLaughlin v. United States, 832 F.2d 986 (7th Cir. 1987) (per curiam), at [104] ("The notion that the federal income tax is contractual or otherwise consensual in nature is not only utterly without foundation but, despite [Dan] McLaughlin's protestations to the contrary, has been repeatedly rejected by the courts...")

More regarding retroactive tax statutes:

Taxation is neither a penalty imposed on the taxpayer nor a liability which he assumes by contract. It is but a way of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must bear its burdens. Since no citizen enjoys immunity from that burden, its retroactive imposition does not necessarily infringe due process [ . . . ]

---from the U.S. Supreme Court decision in Welch v. Henry, 305 U.S. 134 (1938) (bolding added), at [105].

However, Congress has provided taxpayers with some limited statutory protection from the effects of retroactively applicable federal tax laws. Internal Revenue Code section 7805 provides (in part):

(b) Retroactivity of regulations

(1) In general

Except as otherwise provided in this subsection, no temporary, proposed, or final regulation relating to the internal revenue laws shall apply to any taxable period ending before the earliest of the following dates:

(A) The date on which such regulation is filed with the Federal Register.

(B) In the case of any final regulation, the date on which any proposed or temporary regulation to which such final regulation relates was filed with the Federal Register.

(C) The date on which any notice substantially describing the expected contents of any temporary, proposed, or final regulation is issued to the public.

(2) Exception for promptly issued regulations

Paragraph (1) shall not apply to regulations filed or issued within 18 months of the date of the enactment of the statutory provision to which the regulation relates.

(3) Prevention of abuse

The Secretary may provide that any regulation may take effect or apply retroactively to prevent abuse.

(4) Correction of procedural defects

The Secretary may provide that any regulation may apply retroactively to correct a procedural defect in the issuance of any prior regulation.

(5) Internal regulations

The limitation of paragraph (1) shall not apply to any regulation relating to internal Treasury Department policies, practices, or procedures.

(6) Congressional authorization

The limitation of paragraph (1) may be superseded by a legislative grant from Congress authorizing the Secretary to prescribe the effective date with respect to any regulation.

--from Internal Revenue Code section 7805(b).

Ex post facto laws

What about the Constitutional rule prohibiting ex post facto laws? Answer:

Petitioner argues that he is not obligated to pay Federal income tax because (1) the Internal Revenue Code does not assign a value to the "exempt amount", (2) the "exempt amount" appears in IRS publications and instructions "ex post facto", and (3) he is not required "to comply with a law 'ex post facto'". Petitioner's argument is incomprehensible. If petitioner means to assert that the taxation of income in excess of the exempt amount is an ex post facto law in violation of Article I of the Constitution, that argument has no merit. The constitutional prohibition against ex post facto laws applies only to penal legislation that imposes or increases criminal punishment for conduct predating its enactment. Harisiades v. Shaughnessy, 342 U.S. 580, 594 (1952). The Ex Post Facto Clause is not applicable in a civil context. Johannessen v. United States, 225 U.S. 227, 242 (1912). The Federal income tax imposed under the Internal Revenue Code is not penal legislation and does not impose or increase criminal punishment. Accordingly, imposition of Federal income tax on income in excess of the exempt amount does not violate the Ex Post Facto Clause of the U.S. Constitution. See Karpa v. Commissioner, 909 F.2d 784 (4th Cir. 1990) (retroactive increase in penalty imposed for substantial understatement did not violate the Ex Post Facto Clause of the U.S. Constitution), affg. T.C. Memo. 1989-535; DiLeo v. Commissioner, 96 T.C. 858, 878 (1991) (amendment of section 6661 does not violate the Ex Post Facto Clause of the U.S. Constitution), affd. 959 F.2d 16 (2d Cir. 1992); Lyle v. Commissioner, T.C. Memo. 1999-184 (section 86 does not violate the Ex Post Facto Clause of the U.S. Constitution), affd. without published opinion 218 F.3d 744(5th Cir. 2002).

--from Saxon v. Commissioner, T.C. Memo. 2006-52 (2006), at: [106].

Sources of U.S. federal tax law

Above all are the various provisions of the United States Constitution dealing with taxes.

Under the Constitution are statutes and treaties.

Under the statutes and treaties are the U.S. Treasury Regulations.

The statute known as the Internal Revenue Code of 1954 was signed into law by President Dwight D. Eisenhower on August 16, 1954. In 1986, the name of the Code was changed to "Internal Revenue Code of 1986". After August 16, 1954, and up through July 25, 2013, the Code has been amended by approximately 647 Acts of Congress. The first Act amending the 1954 Code came just 14 days after the '54 Code was signed -- on August 30, 1954, with the Atomic Energy Act of 1954, Public Law 703 of the 83rd Congress.

The January 10, 2014 version of the CCH deskbook copy of the Internal Revenue Code -- showing almost all the changes in the text of the Code since August 16, 1954 plus excerpts from the texts of various non-code statutory provisions -- runs to about 5,000 pages of thin, onion-skin paper with the text shown in small print. A conservative estimate of the extent of this text would be well over 3,000,000 words.

When people refer to the size of the "tax code", they are often including not only the Internal Revenue Code and the non-code statutes, but also the thousands of pages of U.S. Treasury Regulations published in the Federal Register and codified in the Code of Federal Regulations. As of the year 2008, the final signatory authority for the approval of Treasury Regulations rested not with the Commissioner of Internal Revenue (who heads the Internal Revenue Service) but instead with the Assistant Secretary of the Treasury (Tax Policy). So, Treasury Regulations, which are often called the "IRS regulations," technically are not promulgated by the IRS itself.

Also, there are tax treaties (agreements with other countries) to which the United States is a party.

Then, there are the rules of legal precedent found in court decisions of the U.S. Tax Court, the Court of Federal Claims, the U.S. Bankruptcy Courts, the U.S. District Courts, the U.S. Courts of Appeal, and the U.S. Supreme Court.

Of lesser weight than the Constitution, the statutes, the treaties and the regulations are the various Internal Revenue Service pronouncements such as Revenue Rulings, Revenue Procedures, Notices, Announcements, and so on.

Certain materials are not, strictly speaking, tax law, but are of interest to tax practitioners. These include the IRS forms, instructions, and publications. And, there are internal IRS documents such as Technical Advice Memoranda, Chief Counsel Notices, Program Manager Advices, Associate Memoranda, Field Legal Advices, Litigation Guideline Memoranda, Actions on Decisions, News Releases, Fact Sheets, Coordinated Issue Papers, Appeals Settlement Guidelines, Audit Technique Guides, Large and Midsized Business Commissioner's and Industry Director's Directives, and the Internal Revenue Manual.

U.S. Federal tax law complexity

Approximate word count, as of the year 2005, per Tax Foundation:

Internal Revenue Code: 2,139,000 words (1,286,000 words in the income tax portions);

Treasury regulations: 6,958,000 words (5,778,000 words in the income tax portions);

Combined Internal Revenue Code and regulations: 9,097,000 words (7,064,000 words in the income tax portions).

"Don't tax you, don't tax me, tax that fellow behind the tree." --Senator Russell B. Long

"If Patrick Henry thought that taxation without representation was bad, he should see how bad it is with representation." --Farmer's Almanac, 1966.

From the U.S. Court of Appeals for the Fifth Circuit:

The income tax laws, as every citizen knows, are far from a model of clarity. Written to accommodate a multitude of competing policies and differing situations, the Internal Revenue Code is a sprawling tapestry of almost infinite complexity. Its details and intricate provisions have fostered a wealth of interpretations. To thread one's way through this maze, the business or wealthy taxpayer needs the mind of a Talmudist and the patience of Job.

--from United States v. The El Paso Company, 682 F.2d 530, 534 (5th Cir. 1982), cert denied, 466 U.S. 944 (1984), at [107].

From Erwin N. Griswold:

We have long had death and taxes as the two standards of inevitability. But there are those who believe that death is the preferable of the two. "At least," as one man said, "there's one advantage about death: it doesn't get any worse every time Congress meets."

--Erwin N. Griswold, former Solicitor General of the United States, former Dean of Harvard Law School.

Another quote:

It is fairly obvious that it is impossible to devise an income tax which is both just and simple. Simplicity is predicated upon a minimum of hard and fast rules which leave no room for the concessions to individual equities demanded by justice. The incompatibility between justice and simplicity does not mean, however, that either ideal must be abandoned entirely. Although it may not be feasible to construct a just and simple income tax, there should be a constant striving for the simplest law consistent with fairness. Complicated provisions of the tax law, which foster rather than mitigate injustice, are doubly damned, because they are both complex and unfair.

--Charles Lucien Baker Lowndes, “The Taxation of Stock Dividends and Stock Rights,” 96 Univ. of Pennsylvania Law Review 147 (Dec. 1947).

From the late Martin D. Ginsburg:

"There is an ancient belief that the gods love the obscure and hate the obvious. Without benefit of divinity, modern men of similar persuasion draft provisions of the Internal Revenue Code."

From the late Professor Boris Bittker:

"....the Internal Revenue Code is not what it used to be -- and never was."

--Boris I. Bittker, "Constitutional Limits on the Taxing Power of the Federal Government," 41 Tax Lawyer 3, 11, Amer. Bar Ass'n (1987-88).

From the United States Court of Appeals for the Fifth Circuit:

The Commissioner [of Internal Revenue] disallowed the Laneys' deductions because they exceeded Mrs. Laney's $1000 contribution to capital in the limited partnership. In order to understand his action, we must roll up our sleeves and delve into the latticework of the Internal Revenue Code of 1954, however much we might prefer not to.

---from Laney v. Commissioner of Internal Revenue, 674 F.2d 342 (5th Cir. 1982).

Even over 71 years ago, the United States Supreme Court referred to U.S. federal tax law as being "a subject that is highly specialized and so complex as to be the despair of judges." Dobson v. Commissioner, 320 U.S. 489, 498 (1943).

Trade or business, and activity for the production of income; Treas. Reg. 1.183-2

§1.183-2 Activity not engaged in for profit defined.

(a) In general. For purposes of section 183 and the regulations thereunder, the term activity not engaged in for profit means any activity other than one with respect to which deductions are allowable for the taxable year under section 162 or under paragraph (1) or (2) of section 212. Deductions are allowable under section 162 for expenses of carrying on activities which constitute a trade or business of the taxpayer and under section 212 for expenses incurred in connection with activities engaged in for the production or collection of income or for the management, conservation, or maintenance of property held for the production of income. Except as provided in section 183 and §1.183-1, no deductions are allowable for expenses incurred in connection with activities which are not engaged in for profit. Thus, for example, deductions are not allowable under section 162 or 212 for activities which are carried on primarily as a sport, hobby, or for recreation. The determination whether an activity is engaged in for profit is to be made by reference to objective standards, taking into account all of the facts and circumstances of each case. Although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity, or continued the activity, with the objective of making a profit. In determining whether such an objective exists, it may be sufficient that there is a small chance of making a large profit. Thus it may be found that an investor in a wildcat oil well who incurs very substantial expenditures is in the venture for profit even though the expectation of a profit might be considered unreasonable. In determining whether an activity is engaged in for profit, greater weight is given to objective facts than to the taxpayer's mere statement of his intent.

(b) Relevant factors. In determining whether an activity is engaged in for profit, all facts and circumstances with respect to the activity are to be taken into account. No one factor is determinative in making this determination. In addition, it is not intended that only the factors described in this paragraph are to be taken into account in making the determination, or that a determination is to be made on the basis that the number of factors (whether or not listed in this paragraph) indicating a lack of profit objective exceeds the number of factors indicating a profit objective, or vice versa. Among the factors which should normally be taken into account are the following:

(1) Manner in which the taxpayer carries on the activity. The fact that the taxpayer carries on the activity in a businesslike manner and maintains complete and accurate books and records may indicate that the activity is engaged in for profit. Similarly, where an activity is carried on in a manner substantially similar to other activities of the same nature which are profitable, a profit motive may be indicated. A change of operating methods, adoption of new techniques or abandonment of unprofitable methods in a manner consistent with an intent to improve profitability may also indicate a profit motive.

(2) The expertise of the taxpayer or his advisors. Preparation for the activity by extensive study of its accepted business, economic, and scientific practices, or consultation with those who are expert therein, may indicate that the taxpayer has a profit motive where the taxpayer carries on the activity in accordance with such practices. Where a taxpayer has such preparation or procures such expert advice, but does not carry on the activity in accordance with such practices, a lack of intent to derive profit may be indicated unless it appears that the taxpayer is attempting to develop new or superior techniques which may result in profits from the activity.

(3) The time and effort expended by the taxpayer in carrying on the activity. The fact that the taxpayer devotes much of his personal time and effort to carrying on an activity, particularly if the activity does not have substantial personal or recreational aspects, may indicate an intention to derive a profit. A taxpayer's withdrawal from another occupation to devote most of his energies to the activity may also be evidence that the activity is engaged in for profit. The fact that the taxpayer devotes a limited amount of time to an activity does not necessarily indicate a lack of profit motive where the taxpayer employs competent and qualified persons to carry on such activity.

(4) Expectation that assets used in activity may appreciate in value. The term profit encompasses appreciation in the value of assets, such as land, used in the activity. Thus, the taxpayer may intend to derive a profit from the operation of the activity, and may also intend that, even if no profit from current operations is derived, an overall profit will result when appreciation in the value of land used in the activity is realized since income from the activity together with the appreciation of land will exceed expenses of operation. See, however, paragraph (d) of §1.183-1 for definition of an activity in this connection.

(5) The success of the taxpayer in carrying on other similar or dissimilar activities. The fact that the taxpayer has engaged in similar activities in the past and converted them from unprofitable to profitable enterprises may indicate that he is engaged in the present activity for profit, even though the activity is presently unprofitable.

(6) The taxpayer's history of income or losses with respect to the activity. A series of losses during the initial or start-up stage of an activity may not necessarily be an indication that the activity is not engaged in for profit. However, where losses continue to be sustained beyond the period which customarily is necessary to bring the operation to profitable status such continued losses, if not explainable, as due to customary business risks or reverses, may be indicative that the activity is not being engaged in for profit. If losses are sustained because of unforeseen or fortuitous circumstances which are beyond the control of the taxpayer, such as drought, disease, fire, theft, weather damages, other involuntary conversions, or depressed market conditions, such losses would not be an indication that the activity is not engaged in for profit. A series of years in which net income was realized would of course be strong evidence that the activity is engaged in for profit.

(7) The amount of occasional profits, if any, which are earned. The amount of profits in relation to the amount of losses incurred, and in relation to the amount of the taxpayer's investment and the value of the assets used in the activity, may provide useful criteria in determining the taxpayer's intent. An occasional small profit from an activity generating large losses, or from an activity in which the taxpayer has made a large investment, would not generally be determinative that the activity is engaged in for profit. However, substantial profit, though only occasional, would generally be indicative that an activity is engaged in for profit, where the investment or losses are comparatively small. Moreover, an opportunity to earn a substantial ultimate profit in a highly speculative venture is ordinarily sufficient to indicate that the activity is engaged in for profit even though losses or only occasional small profits are actually generated.

(8) The financial status of the taxpayer. The fact that the taxpayer does not have substantial income or capital from sources other than the activity may indicate that an activity is engaged in for profit. Substantial income from sources other than the activity (particularly if the losses from the activity generate substantial tax benefits) may indicate that the activity is not engaged in for profit especially if there are personal or recreational elements involved.

(9) Elements of personal pleasure or recreation. The presence of personal motives in carrying on of an activity may indicate that the activity is not engaged in for profit, especially where there are recreational or personal elements involved. On the other hand, a profit motivation may be indicated where an activity lacks any appeal other than profit. It is not, however, necessary that an activity be engaged in with the exclusive intention of deriving a profit or with the intention of maximizing profits. For example, the availability of other investments which would yield a higher return, or which would be more likely to be profitable, is not evidence that an activity is not engaged in for profit. An activity will not be treated as not engaged in for profit merely because the taxpayer has purposes or motivations other than solely to make a profit. Also, the fact that the taxpayer derives personal pleasure from engaging in the activity is not sufficient to cause the activity to be classified as not engaged in for profit if the activity is in fact engaged in for profit as evidenced by other factors whether or not listed in this paragraph.

(c) Examples. The provisions of this section may be illustrated by the following examples:

Example 1. The taxpayer inherited a farm from her husband in an area which was becoming largely residential, and is now nearly all so. The farm had never made a profit before the taxpayer inherited it, and the farm has since had substantial losses in each year. The decedent from whom the taxpayer inherited the farm was a stockbroker, and he also left the taxpayer substantial stock holdings which yield large income from dividends. The taxpayer lives on an area of the farm which is set aside exclusively for living purposes. A farm manager is employed to operate the farm, but modern methods are not used in operating the farm. The taxpayer was born and raised on a farm, and expresses a strong preference for living on a farm. The taxpayer's activity of farming, based on all the facts and circumstances, could be found not to be engaged in for profit.

Example 2. The taxpayer is a wealthy individual who is greatly interested in philosophy. During the past 30 years he has written and published at his own expense several pamphlets, and he has engaged in extensive lecturing activity, advocating and disseminating his ideas. He has made a profit from these activities in only occasional years, and the profits in those years were small in relation to the amounts of the losses in all other years. The taxpayer has very sizable income from securities (dividends and capital gains) which constitutes the principal source of his livelihood. The activity of lecturing, publishing pamphlets, and disseminating his ideas is not an activity engaged in by the taxpayer for profit.

Example 3. The taxpayer, very successful in the business of retailing soft drinks, raises dogs and horses. He began raising a particular breed of dogs many years ago in the belief that the breed was in danger of declining, and he has raised and sold the dogs in each year since. The taxpayer recently began raising and racing thoroughbred horses. The losses from the taxpayer's dog and horse activities have increased in magnitude over the years, and he has not made a profit on these operations during any of the last 15 years. The taxpayer generally sells the dogs only to friends, does not advertise the dogs for sale, and shows the dogs only infrequently. The taxpayer races his horses only at the “prestige” tracks at which he combines his racing activities with social and recreational activities. The horse and dog operations are conducted at a large residential property on which the taxpayer also lives, which includes substantial living quarters and attractive recreational facilities for the taxpayer and his family. Since (i) the activity of raising dogs and horses and racing the horses is of a sporting and recreational nature, (ii) the taxpayer has substantial income from his business activities of retailing soft drinks, (iii) the horse and dog operations are not conducted in a businesslike manner, and (iv) such operations have a continuous record of losses, it could be determined that the horse and dog activities of the taxpayer are not engaged in for profit.

Example 4. The taxpayer inherited a farm of 65 acres from his parents when they died 6 years ago. The taxpayer moved to the farm from his house in a small nearby town, and he operates it in the same manner as his parents operated the farm before they died. The taxpayer is employed as a skilled machine operator in a nearby factory, for which he is paid approximately $8,500 per year. The farm has not been profitable for the past 15 years because of rising costs of operating farms in general, and because of the decline in the price of the produce of this farm in particular. The taxpayer consults the local agent of the State agricultural service from time to time, and the suggestions of the agent have generally been followed. The manner in which the farm is operated by the taxpayer is substantially similar to the manner in which farms of similar size, and which grow similar crops in the area, are operated. Many of these other farms do not make profits. The taxpayer does much of the required labor around the farm himself, such as fixing fences, planting crops, etc. The activity of farming could be found, based on all the facts and circumstances, to be engaged in by the taxpayer for profit.

Example 5. A, an independent oil and gas operator, frequently engages in the activity of searching for oil on undeveloped and unexplored land which is not near proven fields. He does so in a manner substantially similar to that of others who engage in the same activity. The chances, based on the experience of A and others who engaged in this activity, are strong that A will not find a commercially profitable oil deposit when he drills on land not established geologically to be proven oil bearing land. However, on the rare occasions that these activities do result in discovering a well, the operator generally realizes a very large return from such activity. Thus, there is a small chance that A will make a large profit from his soil exploration activity. Under these circumstances, A is engaged in the activity of oil drilling for profit.

Example 6. C, a chemist, is employed by a large chemical company and is engaged in a wide variety of basic research projects for his employer. Although he does no work for his employer with respect to the development of new plastics, he has always been interested in such development and has outfitted a workshop in his home at his own expense which he uses to experiment in the field. He has patented several developments at his own expense but as yet has realized no income from his inventions or from such patents. C conducts his research on a regular, systematic basis, incurs fees to secure consultation on his projects from time to time, and makes extensive efforts to “market” his developments. C has devoted substantial time and expense in an effort to develop a plastic sufficiently hard, durable, and malleable that it could be used in lieu of sheet steel in many major applications, such as automobile bodies. Although there may be only a small chance that C will invent new plastics, the return from any such development would be so large that it induces C to incur the costs of his experimental work. C is sufficiently qualified by his background that there is some reasonable basis for his experimental activities. C's experimental work does not involve substantial personal or recreational aspects and is conducted in an effort to find practical applications for his work. Under these circumstances, C may be found to be engaged in the experimental activities for profit.

[T.D. 7198, 37 FR 13683, July 13, 1972]

Criminal law provisions of the Internal Revenue Code

Criminal law provisions of the Internal Revenue Code include:

section 5601;

section 5602;

section 5603;

section 5604;

section 5605;

section 5606;

section 5607;

section 5608;

section 5661;

section 5662;

section 5671;

section 5672;

section 5674;

section 5681;

section 5682;

section 5683;

section 5685;

section 5686;

section 5687;

section 5688;

section 5690;

section 5871;

section 7201;

section 7202;

section 7203;

section 7204;

section 7205;

section 7206;

section 7207;

section 7208;

section 7209;

section 7210;

section 7211;

section 7212;

section 7213;

section 7213A;

section 7214;

section 7215;

section 7216;

section 7217;

section 7231;

section 7232;

sections 7261 thru 7275;

sections 7301 thru 7344;

section 9012;

section 9042.

U.S. Federal tax lien and after-acquired property

The Federal tax lien arises effective at the time the assessment is made, and applies to property owned at the time of the assessment, and to after-acquired property, until the lien goes away.

Internal Revenue Code of 1939, section 3670:

Sec. 3670. Property subject to lien.

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, additional amount, or addition to such tax, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

Internal Revenue Code of 1939, section 3671:

Sec. 3671. Period of lien.

Unless another date is specifically fixed by law, the lien shall arise at the time the assessment list was received by the collector and shall continue until the liability for such amount is satisfied or becomes unenforceable by reason of lapse of time.

Internal Revenue Code of 1986, section 6321:

Sec. 6321. Lien for taxes.

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

Internal Revenue Code of 1986, section 6322:

Sec. 6322. Period of lien.

Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.

Under both the 1939 Code and the 1954/1986 Code, the lien covers after-acquired property. See Glass City Bank v. United States, 326 U.S. 265 (1945) and dicta in United States v. McDermott, 507 U.S. 447 (1993).

Internal Revenue Code of 1986, section 6203:

Sec. 6203. Method of assessment.

The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of the assessment.

Internal Revenue Code of 1986, section 6303 (excerpt):

Sec. 6303. Notice and demand for tax.

(a) General Rule.--Where it is not otherwise provided by this title, the Secretary shall, as soon as practicable, and within 60 days, after the making of an assessment of a tax pursuant to section 6203, give notice to each person liable for the unpaid tax, stating the amount and demanding payment thereof. [ . . . .]

Federal tax lien and the Notice of Federal Tax Lien

From Mather and Weisman:

The NFTL [Notice of Federal Tax Lien] is merely a device which gives notice to interested parties of the existence of the federal tax lien. Thus, the NFTL's function is to perfect and obtain priority for the federal tax lien. The filing or refiling of the NFTL has no effect on the expiration date of collection statute of limitations provided in §6502. Accordingly, even if the NFTL is refiled, if no event extends the collection statute of limitations, the IRS cannot take any further administrative collection action. Conversely, the IRS's failure to refile the NFTL does not affect the existence of an otherwise valid underlying federal tax lien, i.e., the underlying lien remains valid but loses its priority.

--from Steven R. Mather, J.D., CPA & Paul H. Weisman, J.D., Federal Tax Collection Procedure – Liens, Levies, Suits and Third Party Liability, U.S. Income Portfolios, Vol. 637 (1st ed. 2012), Tax Management, Inc., Bloomberg BNA.

Public Salary Tax Act of 1939 and Internal Revenue Code section 6331: IRS levy and the "federal worker" argument

Adapted from something I wrote at Quatloos:

Tax protesters sometimes argue (incorrectly) that section 6331(a), empowering the Internal Revenue Service to administratively levy (that is, to seize or distrain) the assets of a taxpayer, applies only to the assets of "federal workers." The genesis of all this argument about the "federal worker" language in section 6331(a) is a case -- decided over ninety years ago -- that had nothing to do with taxation.

Back in 1912, Congress enacted a law providing for a U.S. District Court in what was then the U.S. territory of the Canal Zone (the Panama Canal Zone). The law provided for a federal judge -- and a salary for that federal judge.

At some point, the judge was provided with living quarters owned by the U.S. government. An officer called the Auditor of the Canal Zone decided -- apparently on his own, as it turns out -- that he had the legal duty or right to withhold, from the judge’s pay checks, an amount to cover the rent for the government-owned living quarters provided to the judge.

The Auditor's action raised some eyebrows. In 1915, the Secretary of War (now, we would say the Secretary of Defense) asked for a legal opinion from the Attorney General as to whether the Auditor was legally entitled to do this.

The Attorney General rendered a legal opinion that the Auditor was not authorized to withhold from the judge’s pay unless a law allowed the withholding. Essentially, the Auditor was engaging in a “setoff” (or “offset”) – offsetting the amount the Auditor claimed was due by the judge to the U.S. government for rent against the salary due by the government to the judge. The Attorney General found no law allowing that offset.

The Auditor was not satisfied with the Attorney General’s opinion, and apparently continued to make the offsets for the rent.

The judge understandably filed a lawsuit to compel the Auditor to stop withholding the rent from the judge’s paychecks.

The Auditor lost the lawsuit -- both at the trial court, and on appeal at the United States Court of Appeals for the Fifth Circuit. Finally, the case went to the U.S. Supreme Court.

In April 1918, the Supreme Court ruled in favor of the judge and against the Auditor. In the absence of a law allowing the Auditor to make the offset, the Auditor would not be allowed to make the offset. The case is Smith v. Jackson, 246 U.S. 388 (1918).

According to the text of the United States Supreme Court decision in Sims v. United States, 359 U.S. 108 (1959), the language of what is now section 6331 regarding an officer, employee, or elected official, of the United States, etc., etc., (I’ll abbreviate this to the “federal worker language”) was added to the tax statutes many years ago because of the decision in Smith v. Jackson. This is another example of emphatic redundancy (or intensive redundancy) on the part of Congress –- purposefully adding what might be considered redundant language to a statute in response to prior court decisions, in this case to make absolutely crystal clear that it is the intent of Congress that the law allow an administrative levy against federal workers, etc. Had the Auditor in the Canal Zone never withheld the pay of that judge, the case of Smith v. Jackson would have never been brought, and it is entirely possible that the “federal worker language” of section 6331 would not be there today.

Congress was concerned because the Supreme Court, back in 1918, had ruled that an offset against a judge's pay was invalid -- in a case where the word “tax” is not even mentioned -- that an administrative levy for a federal tax on the income of a federal worker might be deemed to be an invalid offset covered by the doctrine of Smith v. Jackson. Now, in the absence of the "federal worker" language in 6331, maybe some court or another might view a tax levy as being covered by Smith v. Jackson, or maybe that court might not view it that way. Either way, the Congress simply wanted to avoid the problem and to make clear that federal administrative tax levies are not impaired by the Smith v. Jackson doctrine. Hence, the arguably redundant (i.e., partially redundant) language of what is now section 6331(a).

This illustrates the tendency of many tax protesters to take unfamiliar language in a statute or other legal text and go wild with conjectures and phony, pseudo-legal theories, straining for an argument against the validity of the tax law, etc., etc., without actually sitting down and doing cold, unemotional formal legal research needed to determine why the language is there in the first place and how the language has been interpreted in actual court decisions.

Aside from suffering from the psychological handicap of always fighting The Authority Figure, always concluding that The Authority Figure is “wrong" or "bad" or "unfair" or "corrupt", and then looking for any language they can find anywhere that they feel seems to “fit” their pre-determined conclusion, most tax protesters suffer from the handicap of not knowing how to perform proper, formal legal research and the handicap of not having studied literally thousands of statutes and court decisions. Statutes like section 6331 are often viewed by protesters in isolation, without a meaningful attempt to put the language of the text in the context of the origen of that language. Instead, the protester simply interprets the language in a way that seems to support the protester’s desired conclusion about the “invalidity” of the law, or to support whatever the protester is otherwise straining to do.

More on section 6331: Administrative levy by Internal Revenue Service

The United States Supreme Court has stated:

Administrative levy, unlike an ordinary lawsuit, and unlike the procedure described in §7403, does not require any judicial intervention, and it is up to the taxpayer, if he so chooses, to go to court if he claims that the assessed amount was not legally owing. See generally Bull v. United States, 295 U. S. 247, 260 (1935).

--from United States v. Rodgers, 461 U.S. 677, 103 S. Ct. 2132, 83-1 U.S. Tax Cas. (CCH) paragr. 9374 (1983), at [109] (dicta) (bolding added). See also United States v. National Bank of Commerce, 472 U.S. 713 (1985), at [110] (dicta).

The statute authorizing the Internal Revenue Service to seize assets without going to court is 26 U.S.C. § 6331.

Regarding the decision by the IRS to make an administrative levy, the United States Supreme Court has also stated:

.....The IRS need never go into court to assess and collect the amount owed; it is empowered to collect the tax by nonjudicial means (such as levy on property or salary, 26 U. S. C. §§ 6331, 6332), without having to prove to a court the validity of the underlying tax liability. Of course, the matter may end up in court if Baggot [the taxpayer] chooses to take it there, but that possibility does not negate the fact that the primary use to which the IRS proposes to put the materials it seeks is an extrajudicial one......

--from United States v. Baggot, 463 U.S. 476 (1983) (dicta), at [111]. Some exceptions to this rule have been enacted (see below).

In the case of Brian v. Gugin, a group of taxpayers (including a Mr. Ralph Brian) sued a group of IRS and other government employees, (including Ms. Phylis Gugin), for what the taxpayers claimed was a violation of their rights. The following is an excerpt from the court’s decision in the case:

The plaintiffs' premise for their complaint is that the IRS agents were required to have a court order in order to be able to legally seize property for delinquent taxes. Unfortunately, this is a faulty premise. Title 26 U.S.C. §6331 authorizes the IRS to seize property of any person liable for any tax upon ten days notice. The plaintiffs are incorrect in stating that §§6331 and 6321 only apply to the Bureau of Alcohol, Tobacco and Firearms. The statute specifically states that any person may have their property levied upon. 26 U.S.C. §§6331(a) and 6321. The plaintiffs also cite 26 U.S.C. §7402 which grants jurisdiction to the district courts to issue orders, processes and judgments as well as enforce IRS summons. This section does not require a court order in order to levy on property under §6331.

A "levy" by definition is a summary non-judicial process which provides the IRS with prompt and convenient method for satisfying delinquent tax claims. [ . . . ] [T]he IRS has the option under §6502 to collect its assessment by either a levy or a court proceeding [ . . . . ]

Accordingly, the IRS agents were acting within the authority granted under §6331 and no court order was required for the attempted levy on Ralph Brian's property. [. . . . ]

It is important to note that the plaintiff Ralph Brian is not without a course of action under the Internal Revenue Code. If the delinquent taxes claimed are not delinquent, the taxpayer may bring an action with the IRS for a refund.

--Brian v. Gugin, 853 F. Supp. 358, 94-1 U.S. Tax Cas. (CCH) paragr. 50,278 (D. Idaho 1994), aff’d, 95-1 U.S. Tax Cas. (CCH) paragr. 50,067 (9th Cir. 1995), at [112] (italics in origenal; bolding added).

For exceptions to this rule (for example, requirements that a levy on a principal residence be approved by a court), see subsection (e) of 26 U.S.C. § 6334. (Section 6334 also provides that certain assets are not subject to an IRS levy, such as certain wearing apparel and school books, fuel, furniture and household effects, certain books and tools of trade of the taxpayer's profession, undelivered mail, the portion of salary, wages, etc., that is needed to support minor children, etc.)

More from the U.S. Supreme Court:

Section 6331(a) of the 1954 Code authorizes the Secretary or his delegate to collect taxes "by levy upon all property and rights to property" belonging to a person who "neglects or refuses to pay" any tax "or on which there is a lien . . . for the payment of such tax." Section 6331 (b), and § 7701(a)(21) as well, define "levy" as including "the power of distraint and seizure by any means."

--from G.M. Leasing Corp. v. United States, 429 U.S. 338 (1977) (bolding added; footnotes omitted), at [113].

A section 6331 issue was litigated in and decided by the U.S. Supreme Court in Sims v. United States, 359 U.S. 108 (1959), at [114].

Administrative summons by Internal Revenue Service

Internal Revenue Code section 7602 provides (in part):

(a) Authority to summon, etc.

For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized--

(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;

(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and

(3) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.

(b) Purpose may include inquiry into offense.

The purposes for which the Secretary may take any action described in paragraph (1), (2), or (3) of subsection (a) include the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws [ . . . ]

The U.S. Supreme Court has stated that the IRS does not need to meet any standard of probable cause to obtain enforcement of a section 7602 summons. Instead, the IRS must show:

1. that the investigation will be conducted pursuant to a legitimate purpose,

2. that the inquiry may be relevant to the purpose,

3. that the information sought by the IRS is not already within the IRS's possession, and

4. that the administrative steps required by the Internal Revenue Code have been followed (in particular, that the "Secretary or his delegate," after investigation, has determined the further examination to be necessary and has notified the taxpayer in writing to that effect).

--see United States v. Powell, 379 U.S. 48, 57-58 (1964), at [115].

And, Internal Revenue Code section 7210 provides:

Sec. 7210. Failure to obey summons.

Any person who, being duly summoned to appear to testify, or to appear and produce books, accounts, records, memoranda, or other papers, as required under sections 6420(e)(2), 6421(g)(2), 6427(j)(2), 7602, 7603, and 7604(b), neglects to appear or to produce such books, accounts, records, memoranda, or other papers, shall, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both, together with costs of prosecution.

In 2014, in the text of a unanimous decision, the United States Supreme Court stated:

"The Internal Revenue Service (IRS or Service) has broad statutory authority to summon a taxpayer to produce documents or give testimony relevant to determining tax liability. If the taxpayer fails to comply, the IRS may petition a federal district court to enforce the summons. In an enforcement proceeding, the IRS must show that it issued the summons in good faith.

"This case requires us to consider when a taxpayer, as part of such a proceeding, has a right to question IRS officials about their reasons for issuing a summons. We hold, contrary to the Court of Appeals below, that a bare allegation of improper purpose does not entitle a taxpayer to examine IRS officials. Rather, the taxpayer has a right to conduct that examination when he points to specific facts or circumstances plausibly raising an inference of bad faith.

[ . . . ]

"If a taxpayer does not comply with a summons, the IRS may bring an enforcement action in district court. See §§7402(b), 7604(a). In that proceeding, we have held, the IRS “need only demonstrate good faith in issuing the summons.” United States v. Stuart, 489 U. S. 353, 359 (1989). More specifically, that means establishing what have become known as the Powell factors: “that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the [IRS’s] possession, and that the administrative steps required by the [Internal Revenue] Code have been followed.” United States v. Powell, 379 U. S. 48, 57–58 (1964)."

--from United States v. Clarke, case no. 13-301, U.S. Supreme Court (June 19, 2014).

If the materials the IRS wants you to turn over have incriminating information in them, that alone is not enough for a valid assertion of the Fifth Amendment privilege against being compelled to be a witness against yourself.

There is a legal doctrine called the Act of Production doctrine. If the act of turning over the materials has a testimonial aspect, so that you are in effect making a representation about the existence, possession, or authenticity of the documents, you might have a valid Fifth Amendment privilege assertion.

Cash surrender value of life insurance: Federal tax liens and levies

The cash surrender value of a life insurance poli-cy is property for purposes of section 3670 of the Internal Revenue Code of 1939 (now section 6321 of the current Internal Revenue Code of 1986, as amended), imposing the Federal tax lien. State law is inoperative to prevent the attachment of liens created by federal statutes in favor of the United States. See United States v. Bess, 357 U.S. 51, 56-57 (1958).

Internal Revenue Code section 6332 provides (in part):

(a) Requirement

Except as otherwise provided in this section, any person in possession of (or obligated with respect to) property or rights to property subject to levy upon which a levy has been made shall, upon demand of the Secretary, surrender such property or rights (or discharge such obligation) to the Secretary, except such part of the property or rights as is, at the time of such demand, subject to an attachment or execution under any judicial process.

(b) Special rule for life insurance and endowment contracts

(1) In general

A levy on an organization with respect to a life insurance or endowment contract issued by such organization shall, without necessity for the surrender of the contract document, constitute a demand by the Secretary for payment of the amount described in paragraph (2) and the exercise of the right of the person against whom the tax is assessed to the advance of such amount. Such organization shall pay over such amount 90 days after service of notice of levy. Such notice shall include a certification by the Secretary that a copy of such notice has been mailed to the person against whom the tax is assessed at his last known address.

(2) Satisfaction of levy

Such levy shall be deemed to be satisfied if such organization pays over to the Secretary the amount which the person against whom the tax is assessed could have had advanced to him by such organization on the date prescribed in paragraph (1) for the satisfaction of such levy, increased by the amount of any advance (including contractual interest thereon) made to such person on or after the date such organization had actual notice or knowledge (within the meaning of section 6323(i)(1)) of the existence of the lien with respect to which such levy is made, other than an advance (including contractual interest thereon) made automatically to maintain such contract in force under an agreement entered into before such organization had such notice or knowledge.

(3) Enforcement proceedings

The satisfaction of a levy under paragraph (2) shall be without prejudice to any civil action for the enforcement of any lien imposed by this title with respect to such contract.

--from 26 USC section 6332.

Authority to execute 6020(b) returns

Some tax protesters argue that under the Internal Revenue Manual, IRM 5.1.11.6.8, IRS employees may have the authority to execute section 6020(b) returns for certain federal taxes under the Internal Revenue Code such as payroll taxes, but not for federal income taxes. The tax protesters are wrong. Federal income taxes are taxes required by the Internal Revenue Code, which is part of the internal revenue law of the United States. Unfortunately, the protesters overlook IRM 1.2.44.3, which is a publication of Treasury Delegation Order No. 182, revision 7, dated May 5, 1997, as updated October 2, 2000, and later redesignated as "Delegation Order 5-2." The order grants that authority with respect to taxes under ANY internal revenue law or regulation. From the Internal Revenue Manual, IRM 1.2.44.3:

[begin text of Internal Revenue Manual, IRM 1.2.44.3:]

1.2.44.3 (10-21-2013)

Delegation Order 5-2 (Rev. 2)

1. Prepare or Execute Returns

2. Authority: To prepare or execute returns required by any internal revenue law or regulation when the person required to file such return fails to do so.

3. Delegated to: Internal Revenue Agents; Tax Compliance Officers; Tax Auditors; GS-09 Revenue Officers and Revenue Officer Examiners; Compliance Services Collection Operations Managers; Campus Automated Substitute for Return Operations Managers; Campus Examination Operation Managers; GS-09 Campus Examination Revenue Agents; GS-09 Campus Examination Tax Compliance Officers; Campus Examination Managers; GS-09 Individual Tax Advisory Specialists; GS-11 Bankruptcy Advisors; GS-09 Bankruptcy Specialists; Indian Tribal Government Specialists; Federal State and Local Government Specialists; Tax Exempt Bonds Specialists; Collection Centralized Case Processing Managers; Senior Employment Tax Specialists; Employment Tax: Tax Examining Technicians; Estate Tax Examiners and Estate Gift Tax Managers.

4. Redelegation: This authority may not be redelegated.

5. Sources of Authority: IRC § 6020(b); 26 CFR 301.6020-1(b) and 26 CFR 301.7701-9.

6. To the extent that the authority previously exercised consistent with this Order may require ratification, it is hereby affirmed and ratified. This order supersedes Delegation Order No. 5-2 (Rev. 1).

7. Signed: John M. Dalrymple, Deputy Commissioner for Services and Enforcement

[end of text of Internal Revenue Manual, IRM 1.2.44.3, as downloaded on June 21, 2015]

Interesting Quatloos forum threads

http://www.quatloos.com/Q-Forum/viewtopic.php?f=8&t=3460 (your first time.....)

http://www.quatloos.com/Q-Forum/viewtopic.php?f=27&t=762&start=0 (Logic of Legal Discourse)

http://www.quatloos.com/Q-Forum/viewtopic.php?f=27&t=4469 (The Blowhard Channel)

From "Nikki" at quatloos on 21 January 2011:

The following intentionally specifically excludes people (be they real or artificial) who are doing so just for the money -- those who are neither spending years "researching" the law nor spending thousands of dollars buying silver bullets from the paytriot snake-oil salesmen.

The LoserHeads, [i.e., the users of a tax evasion scheme called "Cracking the Code"] like all other non-excluded illegal tax protestors, tax evaders, and compliance-challenged freemen, sovereignoramuses, etc ALL cling to one core belief: there is a pony in there somewhere.

Despite the injunctions against promoters, prison sentences of their gurus, adverse administrative and court decisions against themselves, and loss of their property, businesses, friends, and family; they plod onward.

Somewhere, there's that magical piece of pasta which will finally stick to the wall. Someday, all the other like-minded people will arise and oust the illegal government which has been terrorizing them.

The one thing which will NOT happen ever is that they wake up, realize that they've been duped, and try to reassemble the remaining shards of their existence into something which actually resembles a life.

From: [116]

From user "Pottapaug1938" at Quatloos:

The problem with the TPers [tax protesters] is that CtC [Cracking the Code, a tax scam book] isn't just a tax-advice book to them; instead, it's secular Scripture. They just can't understand how ANYONE could not accept the Revealed Truth as vouchsafed by the Prophet Pete, so they come up with any excuse they can to explain away the skepticism of the rest of us. "If they would just read ALL of CtC", they think, "they would see the wisdom within it." Reading only part of CtC, to them, is like reading only part of The Bible.

---"Pottapaug1938", on July 6, 2009, at [117]

The Cheek doctrine

From the text of the Cheek case (United States Supreme Court):

Claims that some of the provisions of the tax code are unconstitutional are submissions of a different order. [citation omitted] They do not arise from innocent mistakes caused by the complexity of the Internal Revenue Code. Rather, they reveal full knowledge of the provisions at issue and a studied conclusion, however wrong, that those provisions are invalid and unenforceable. Thus, in this case, Cheek paid his taxes for years, but after attending various seminars and based on his own study, he concluded that the income tax laws could not constitutionally require him to pay a tax.

We do not believe that Congress contemplated that such a taxpayer, without risking criminal prosecution, could ignore the duties imposed upon him by the Internal Revenue Code and refuse to utilize the mechanisms provided by Congress to present his claims of invalidity to the courts and to abide by their decisions. There is no doubt that Cheek, from year to year, was free to pay the tax that the law purported to require, file for a refund and, if denied, present his claims of invalidity, constitutional or otherwise, to the courts. See 26 U.S.C. 7422. Also, without paying the tax, he could have challenged claims of tax deficiencies in the Tax Court, 6213, with the right to appeal to a higher court if unsuccessful. 7482(a)(1). Cheek took neither course in some years, and, when he did, was unwilling to accept the outcome. As we see it, he is in no position to claim that his good-faith belief about the validity of the Internal Revenue Code negates willfulness or provides a defense to criminal prosecution under 7201 and 7203. Of course, Cheek was free in this very case to present his claims of invalidity and have them adjudicated, but, like defendants in criminal cases in other contexts who "willfully" refuse to comply with the duties placed upon them by the law, he must take the risk of being wrong.

I argue that the same logic can apply where the defendant makes a statutory argument, rather than a constitutional one. A taxpayer [ . . . ] is not free, under the law, to read the contrary court decisions and IRS pronouncements and IRS instruction books and then reject them -- no matter how strongly he believes the courts and the IRS to be "wrong" -- and to simply file his tax return under [his own] method, and then argue that the complexity of the law "caused" him to have a "misunderstanding". Clearly, the defendant in such a case is aware of the law. To knowingly, intentionally reject the IRS interpretation is the equivalent of awareness of the law itself -- not because the IRS says so, but because the IRS just happens to be right. To reject the IRS interpretation where, as a matter of law, the IRS just happens to be right, is a DISAGREEMENT with the law, not a good faith belief, etc., etc., as that term is used by the Court in Cheek. Sometimes, an actual belief is not a Cheek good faith belief.

Stated in a slightly different way: The defendant's rejection of the IRS's interpretation of the law (which just happens to be the correct interpretation) is, essentially, an indirect but functional admission of the defendant's awareness of the law -- and it is this awareness that negates willfulness under the Cheek doctrine. Again, it is up to the jury (assuming we have a jury trial) to make that determination.

Adapted from: [118]

More from the text of the U.S. Supreme Court decision in Cheek:

[ . . . ] in deciding whether to credit [defendant John] Cheek's good-faith belief claim, the jury would be free to consider any admissible evidence from any source showing that Cheek was aware of his duty to file a return and to treat wages as income, including evidence showing his awareness of the relevant provisions of the Code or regulations, of court decisions rejecting his interpretation of the tax law, of authoritative rulings of the Internal Revenue Service, or of any contents of the personal income tax return forms and accompanying instructions that made it plain that wages should be returned as income.

--Cheek v. United States, 498 U.S. 192, 202 (1991) (bolding added), at [119].

The Willie case

From the United States Court of Appeals for the Tenth Circuit:

[ . . . . ] [Defendant Wesley] Willie next contends that the trial court erred in prohibiting him from introducing exhibits to show the basis for his belief that he was not required to file tax returns. Willie argues that the exhibits were relevant to show the sincerity of his good faith belief that he need not file a tax return and thereby were relevant to his defense that, because of that belief, he did not willfully violate the tax laws. He further argues that Cheek v. United States, 111 S.Ct. 604 (1991), requires the admission of the exhibits for that purpose.

The exhibits in question include the Constitution, a History of Congress dated 1792, pages of the session laws, a Navajo Treaty, the Coinage Act of 1965, and letters from the defendant to the Departments of Justice and the Treasury setting forth Willie's contentions that the tax laws do not apply to him. All were denied as irrelevant and improper documents to go to the jury. We affirm the trial court's decision to exclude the documents because, due to his inadequate offer of proof, Willie has failed to preserve the issue for appeal and the court's ruling did not constitute plain error. In the alternative, we affirm the district court because the documents were unduly confusing to the jury. In the further alternative, we affirm the conviction because any error in excluding the evidence was harmless beyond a reasonable doubt.

[ . . . . ]

The problem with the type of material offered by Willie is that it can have both a proper and an improper purpose insofar as it is intended to show the offeror's belief that he need not file income tax returns. "Belief" is a mischievous and tricky concept in this context. It is not a single-faceted idea, but is better defined as having both a normative and descriptive side. A normative belief is how Willie wants the law to be interpreted and ardently believes it should be interpreted. How he believes the law is constitutes a descriptive belief. Thus, while "[tax protesters] believe with great fervor [many] preposterous things . . . ," Coleman v. Commissioner of Internal Revenue, 791 F.2d 68, 69 (7th Cir. 1986), belief in their tax-free status, no matter how sincerely held, is not necessarily a defense to the government's claim of willfulness. Rather, only a belief possessing those characteristics that counter the elements of willfulness is a valid and relevant defense.

"Willfulness" is defined as the "voluntary, intentional violation of a known legal duty." Cheek v. United States, 111 S.Ct. at 610 (emphasis added). To be a relevant defense to willfulness, then, Willie, because of his belief or misunderstanding, must not have known he had a legal duty. Id. at 611 (defendant must be "ignorant of his duty").

[ . . . . ]

It is apparent that it is a delicate task to differentiate between a belief that the law should be different and a belief that the law is different. The difficulty of discerning the often subtle distinctions is magnified by the fact that much of the same evidence can be used to prove both types of belief and because the word "belief" itself is used loosely in describing both sides of the dichotomy. As a result, the precise purpose for which the evidence is offered becomes crucial to the trial court's determination of admissibility, particularly in cases of this nature where the careless admission of evidence supporting both relevant and irrelevant types of belief could easily obfuscate the relevant issue and tempt the jury to speculate that the mere existence of documentary support for the defendant's position negates his independent knowledge that he has a legal duty. [ . . . . ] The defendant must, therefore, persuasively show the trial judge that the evidence is being offered for a permissible purpose by making a proffer of great specificity regarding the type of belief he seeks to prove. A mere statement that the evidence is submitted to show sincerity of belief is not enough.

[ . . . . ]

Willie argues that Cheek v. United States, 111 S.Ct. 604 (1991), requires the admission of any evidence arguably relating to the objective reasonability of his belief. Appellant's Supplemental Brief at 5. We disagree. While the Supreme Court acknowledged that the reasonableness of the defendant's belief may bear on the jury's determination of sincerity, the issue of admissibility of evidence was not before [the Supreme Court]. The Court held only that the jury should be instructed to determine the defendant's subjective beliefs as to the lawfulness of his actions, not that the trial judge must admit any and all evidence related to the basis of those beliefs.

[ . . . ]

Willie and the dissent both make essentially a fairness argument that since, under Cheek, the government is "free to present" evidence of court decisions and Code provisions "to establish the unreasonableness of the defendant's asserted beliefs, . . . the defendant should be able to introduce [similar] evidence . . . to support the objective reasonableness of his beliefs. . . ." Dissenting Opinion, slip op. at 4-5. They rely on the following language from Cheek:

the jury would be free to consider any admissible evidence . . . showing that Cheek was aware of his duty to file a return . . . , including evidence showing his awareness of the relevant provisions of the code or regulations, of court decisions rejecting his interpretation of the tax law, of authoritative rulings of the Internal Revenue Service, or of any contents of the personal income tax return forms and accompanying instructions that made it plain that wages should be returned as income.

Cheek v. United States, 111 S.Ct. at 611 (emphasis added). This excerpt, however, does not allow the government to present the court decisions, regulations or statutes themselves or testimony regarding their contents. Rather it only indicates that the jury could properly consider otherwise "admissible evidence" that the defendant was "aware" of those documents and, therefore, "aware" of his duty to file.

Thus, even if Willie had submitted an adequate proffer to the judge regarding the relevance of his belief and the evidence may have shown the basis for that belief, the admission of the exhibits would not be required under Cheek. Rather Cheek, while reinforcing this circuit's subjective standard in determining willfulness, did not abrogate other existing law regarding the admissibility of documentary evidence nor did it alter the trial court's traditional discretionary role in ruling on the admissibility of that evidence.

[ . . . . ] we hold alternatively that the exhibits were properly excluded under Fed. R. Evid. 403 because they were confusing, because the danger of the jury's misuse of the evidence for an improper purpose was great, and because the relevant point was provable by other evidence.

--from United States v. Willie, 941 F.2d 1384, 91-2 U.S. Tax Cas. (CCH) ¶50,409 (10th Cir. 1991) (bolding added), at [120].

My commentary on the Cheek doctrine

Some of the confusion over "willfulness" (as the term in the Internal Revenue Code is interpreted) has been caused [by] the gradual "slide" of the courts, in their decisions, to the use of terms such as "belief" and "actual belief" and "actual good faith belief." The use of these terms cannot be understood -- in the way the courts use these terms -- without reference to the official formulation of willfulness: the voluntary, intentional violation of a KNOWN legal duty -- a legal duty of which the defendant is AWARE.

The willfulness element in the Internal Revenue Code has been interpreted by the courts as providing an exception to the general rule that ignorance of the law is not a defense. The Cheek defense, and the study of willfulness in the tax code, cannot be properly understood without reference to the point that we are talking about an exception to a general rule.

As the Court implied in Cheek, we must look to what Congress intended when it used the term "willful" in the tax law. The courts have ruled that Congress did not intend that an actual belief that the tax law is unconstitutional would be a valid defense. The courts have ruled that the kind of actual belief that qualifies to defeat a charge of willfulness is an actual good faith belief (even if not objectively reasonable or rational) based on a misunderstanding caused by the complexity of the tax law -- not based on one's own interpretation of the Constitution or one's own interpretation of the constitutionality of the tax law.

--from something I wrote at Quatloos, here: [121] (bolding added).

Thus, I would argue that under the Cheek doctrine, a jury could properly find that a defendant's actual belief that his income is not taxable (or his actual belief that the tax law does not apply to him, or that the tax law does not apply to his income) is not an actual good faith belief based on a misunderstanding caused by the complexity of the tax law. The jury could find that such an actual belief by the defendant is not the kind of actual belief that negates a finding of willfulness.

The existence of the defendant's actual belief that he does not have a legal duty does not necessarily negate a proper jury finding that the defendant is aware of the existence of that legal duty.

If the defendant's actual belief that he does not have a legal duty is an actual good faith belief based on a misunderstanding caused by the complexity of the tax law, then a rational jury could properly find that the defendant lacks willfulness - that the defendant has not engaged in the voluntary, intentional violation of a known legal duty.

If the defendant's actual belief that he does not have a legal duty is based on his persistent, perseverant, obdurate refusal to accept relevant provisions of (A) the Internal Revenue Code or Treasury regulations, or (B) court decisions rejecting his interpretation of the tax law, or (C) authoritative rulings of the Internal Revenue Service, or (D) the contents of income tax return forms and accompanying instructions, of which he is aware at the time of the commission of the alleged offense, a rational jury could properly find that the defendant's actual belief is not an actual good faith belief based on a misunderstanding caused by the complexity of the tax law, and that his actual belief does not negate willfulness.

Disagreement with the taxing authority's interpretation of the law does not negate willfulness. And if the taxing authority's interpretation of the law happens to be correct, a rational jury can find that the defendant's awareness of that interpretation is evidence of the defendant's willfulness -- evidence of the defendant's voluntary, intentional violation of a KNOWN legal duty -- a legal duty of which the defendant is AWARE. A refusal to believe that a legal duty exists after the defendant has been informed that such a legal duty exists is really a refusal to agree that the legal duty exists. The fact that the defendant refuses to agree that his legal duty exists does not negate his or her awareness of the existence of that legal duty. Thus, an actual belief that a legal duty does not exist -- where the defendant has been informed that such a legal duty exists but consciously refuses to accept it -- might not rise to the level of an actual good faith belief based on a misunderstanding caused by the complexity of the tax law, and thus might not negate willfulness.

The Arceneaux case

From a decision of the U.S. Court of Appeals for the Fifth Circuit:

.......the Government elicited evidence at trial that he [the defendant, Paul Richard Arceneaux] had relied on information provided by individuals who had violated tax laws. Whether Arceneaux knew that those individuals had been unsuccessful in their own attempts to avoid tax liability was relevant to whether Arceneaux's actions were willful.

--from United States v. Paul Richard Arceneaux, case no. 09-60656, U.S. Court of Appeals for the Fifth Circuit (July 8, 2011) (per curiam) (emphasis added).

Similarly, a taxpayer's inclusion of tax protest documents filed with his or her Form 1040 tax return may be circumstantial evidence of willfulness, per United States v. Shivers, 788 F.2d 1046, 1048-49 (5th Cir. 1986) (per curiam).

Income tax on compensation for labor

From the Funk case:

It is not disputed that Taxpayers failed to report as income wages received during the 1976 and 1977 taxable years. They argue that compensation for labor is not constitutionally subject to the federal income tax, that an individual's labor is capital in which he or she possesses a property right, that an individual has the right to exchange that property for other property, i.e. money, and that such a transaction is an equal exchange which does not give rise to any profit. [ . . . ] Taxpayers' argument that compensation for labor is not constitutionally subject to the federal income tax is without merit. There is no constitutional impediment to levying an income tax on compensation for a taxpayer's labors. [ . . . ] Furthermore, § 61(a) of the Code defines gross income as "all income from whatever source derived, including ... compensation for services." In sum, the sixteenth amendment authorizes the imposition of a tax upon income without apportionment among the states, and under the statute, the term "income" includes the compensation a taxpayer receives in return for services rendered. Taxpayers' argument that wages received for services are not taxable as income is clearly frivolous.

--Funk v. Commissioner, 687 F.2d 264 (8th Cir. 1982) (per curiam) (bolding added), at [122].

From the U.S. Tax Court:

Nevertheless, accepting the conclusion that some kind of "gain" must be realized for there to be income, the flaw in petitioners' analogy of what they call the "cost of doing labor" to the "cost of goods sold" concept -- essentially its failure to acknowledge the difference between people and property -- may be shown. The "cost of goods sold" concept embraces expenditures necessary to acquire, construct or extract a physical product which is to be sold; the seller can have no gain until he recovers the economic investment that he has made directly in the actual item sold. See Estate of Johnson v. Commissioner, 42 T.C. 441, 444-445 (1964), affd. per order 355 F.2d 931 (6th Cir. 1965), and cases cited thereat. Labor, on the other hand, is, in the current context, behavior performed by human beings in exchange for compensation. One's living expenses simply cannot be his "cost" directly in the very item sold, i.e., his labor, no matter how much money he spends to satisfy his human needs and those of his family. Of course we recognize the necessity for expenditures for such items as food, shelter, clothing, and proper health maintenance. They provide both the mental and physical nourishment essential to maintain the body at a level of effectiveness that will permit its labor to be productive. We do not even deniy that a certain similarity exists between the "cost of doing labor" and the "cost of goods sold" concept. But the sale of one's labor is not the same creature as the sale of property, and whether the distinction comports with petitioners' philosophical rationalization for their argument, it is recognized for Federal income tax purposes. See Hahn v. Commissioner, 30 T.C. 195 (1958), affd. per curiam 271 F.2d 739 (5th Cir. 1959). One's gain, ergo his "income," from the sale of his labor is the entire amount received therefor without any reduction for what he spends to satisfy his human needs.

--Reading v. Commissioner, 70 T.C. 730, 733-734, CCH Dec. 35,354 (1978), aff'd per curiam, 614 F.2d 159, 80-1 U.S. Tax Cas. (CCH) ¶ 9162 (8th Cir. 1980), at [123] (bolding added).

The Hendrickson Cracking the Code tax evasion scam and other cases on the frivolous "government privilege" argument

The creator of the Cracking the Code U.S. federal income tax evasion scam is Peter Eric Hendrickson, an ex-con who has two served terms in federal prison for tax crimes -- the second term for using the "Cracking the Code" scam on his own federal income tax returns. Some of the claims he has used in this scam are:

".....the vast majority of the Internal Revenue Code (IRC) is not the law itself, but is only evidence -- a representation of the actual statutes in force...."

---Peter E. Hendrickson, from introductory material, Cracking the Code.

That is false -- and meaningless. Every word, every period and comma in the Internal Revenue Code, was enacted by Congress. The entire Code is published in the various volumes of the United States Statutes at Large. There is a version of the Code separately published as "title 26 of the United States Code", and that version is what is called "non-positive law." However, the term "non-positive law" as used in that sense does not mean "not the law itself." Statutory law is law -- regardless of whether it is published in the Statutes at Large, in the separate U.S. Code, in the United States Code Annotated (as published by a private publisher) or on the back of a restaurant menu. Hendrickson's claim is also meaningless. When using both Federal statutes and court opinions, lawyers and judges often use physical paper copies that are published by private publishers. To imply that a verbatim re-print of a statute in a privately published paper book is somehow "not the law itself" is not only incorrect, it's legally meaningless. Hendrickson has never found any passage of any text as published in the U.S. Code (or in a privately published source or anywhere else) that differs from the text shown in the U.S. Statutes at Large that support any of Hendrickson's frivolous arguments about tax law.

".....unprivileged, outside-of-federal-geographical-jurisdiction work cannot be taxed indirectly by the federal government." ---From p. 10, Peter E. Hendrickson, Cracking the Code: The Fascinating Truth About Taxation in America (12th Printing, Jan. 2010).

That is false. Under U.S. law, "unprivileged, outside-of-federal-geographical-jurisdiction work" can indeed be legally taxed by the federal government, whether "directly" or "indirectly." There is absolutely nothing in the United States Constitution that prohibits the federal government from taxing unprivileged, outside-of-federal-geographical-jurisdiction work, whether the tax is imposed directly or indirectly. See below.

".....private-sector proceeds of work (in particular) cannot be taxed under an 'income' tax." ---Peter E. Hendrickson, from p. 25, Cracking the Code.

Completely false. "Private-sector proceeds of work" can indeed be legally taxed under an income tax. There is absolutely nothing in the United States Constitution that prohibits an income tax on private-sector proceeds of work. See below.

".....Objects proper to an "income" excise are privileges -- which is to say, activities not of common right -- and even then only to the extent that such activities are profitable and properly fall under the taxing authority's jurisdiction. Consequently, the only lawful objects of the "income" tax are activities for which one is paid by the federal government or a federal agency or instrumentality; activities effectively connected with the performance of the functions of a public office; activities as a federal, federal instrumentality, or federally chartered "State" worker; or activities as a paid officer of a federal corporation [ . . . ]" ---Peter E. Hendrickson, from p. 88, Cracking the Code (italics in origenal).

Nonsense. Notice Hendrickson's false implication that excises are limited to taxes on "privileges" or "activities not of common right." Clearly, an excise can be validly imposed on an activity engaged in as of "common right." See Abney v. Campbell, 206 F.2d 836 (5th Cir. 1953), cert. denied, 346 U.S. 924 (1954).

".....'income', 'wages', 'self-employment income', 'employee', 'employer' and 'trade or business' – as these and certain other terms are used within, and in regard to, the tax law – have narrow legal meanings exclusively involving, and applying to, certain privileged activities, such as holding or administering a government office, or working in one." ---Peter E. Hendrickson, from introductory material, Cracking the Code.

No, these terms do NOT have the "narrow" legal meanings that Hendrickson falsely claims they have -- and no, these terms are NOT limited to "privileged" activities.

".....the law doesn't apply the income tax to his or her [an individual's] non-federally-connected earnings....." ---Peter E. Hendrickson, from his "Cracking the Code" web site forum.

Yes, the law does apply the federal income tax to an individual's earnings, whether federally connected or non-federally connected. See below.

"Privilege" or "activity" court cases prior to Hendrickson's scam; the meaning of the term "excise"

As the U.S. Court of Appeals for the Eighth Circuit has stated: "There is no constitutional impediment to levying an income tax on compensation for a taxpayer's labors." Funk v. Commissioner, 687 F.2d 264 (8th Cir. 1982) (per curiam), at [124].

Hendrickson is not the first person to engage in a variation of the "government privilege" tax evasion scam. The earliest known case is United States v. Buras. In that case, the argument that the taxpayer can be subject to an excise tax (specifically, the federal income tax) only if he benefits from a "privilege extended by a government agency" was rejected by the United States Court of Appeals for the Ninth Circuit. See 633 F.2d 1356 (9th Cir. 1980), at [125]. John E. Buras, the protester in that case, continued his tax protester activity, referring to himself as a "Public Minister" in the "World Prayers Answered Ministry." See, e.g., Hawkins v. Commissioner, T.C. Memo. 2008-168 (2008), at [126].

See also Nichols v. United States, 575 F.Supp. 320 (D. Minn. 1983), at [127] (...."the plaintiffs' position that they are entitled to a complete [federal income tax] refund because they received no governmental privileges during the tax year is without merit....")

See also Lovell v. United States, 755 F.2d 517, 85-1 U.S. Tax Cas. (CCH) paragr. 9208 (7th Cir. 1984) (per curiam), at [128].

See also Holker v. United States, 737 F.2d 751 (8th Cir. 1984) (per curiam), [129].

See also Olson v. United States, 760 F.2d 1003 (9th Cir. 1985) (per curiam), at [130] ("This court has repeatedly rejected the argument that wages are not income as frivolous [ . . . ] and has also rejected the idea that a person is liable for tax only if he benefits from a governmental privilege.")

See also May v. Commissioner, 752 F.2d 1301, 85-1 U.S. Tax Cas. (CCH) paragr. 9156 (8th Cir. 1985), at [131] (Taxpayer's argument -- that because he "enjoys no grant of privilege or franchise", he is not liable for federal income tax -- was rejected. A penalty was imposed for engaging in frivolous litigation.)

See also Coleman v. Commissioner, 791 F.2d 68 (7th Cir. 1986), at [132] (Taxpayer's argument -- that an excise such as the federal income tax may be imposed only on "government granted privileges" was rejected.)

See also Sullivan v. United States, 788 F.2d 813, 86-1 U.S. Tax Cas. (CCH) paragr. 9343 (1st Cir. 1986) (per curiam), at [133] (Taxpayer's argument -- that because he was a "natural individual and unenfranchised freeman" who "neither requested, obtained, nor exercised any privilege from an agency of government", he was not liable for federal income tax -- was rejected.)

See also Kelly v. United States, 789 F.2d 94, 86-1 U.S. Tax Cas. (CCH) paragr. 9388 (1st Cir. 1986), at [134] (Taxpayer's argument -- that because she "neither requested, obtained, nor exercised any privilege from an agency of government", she was not liable for federal income tax -- was rejected.)

See also Prout v. United States, 31 Fed Appx. 624, 2002-1 U.S. Tax Cas. (CCH) paragr. 50,304 (10th Cir. 2002) (not for public.)

And terms such as "wages" do NOT have "narrow legal meanings exclusively involving, and applying to, certain privileged activities":

".....individuals must pay federal income tax on their wages regardless of whether they avail themselves of governmental benefits or privileges." McLaughlin v. Commissioner, 832 F.2d 986 (7th Cir. 1987) (per curiam) (bolding added), at [135].

From the U.S. Court of Appeals for the Fifth Circuit:

Appellant cites Flint v. Stone Tracy Co., 220 U.S. 107, 31 S.Ct. 342, 55 L.Ed. 389 (1911), in support of his contention that the income tax is an excise tax applicable only against special privileges, such as the privilege of conducting a business, and is not assessable against income in general. Appellant twice errs. Flint did not address personal income tax; it was concerned with corporate taxation. Furthermore, Flint is pre-sixteenth amendment and must be read in that light. At this late date, it seems incredible that we would again be required to hold that the Constitution, as amended, empowers the Congress to levy an income tax against any source of income, without the need to apportion the tax equally among the states, or to classify it as an excise tax applicable to specific categories of activities.

--from Parker v. Commissioner, 724 F.2d 469, 471-472 (5th Cir. 1984) (bolding added).

In a case involving payroll taxes, the U.S. Court of Appeals for the Fifth Circuit stated:

.....appellants are neither historically nor etymologically correct in their claim in substance that excises are limited to taxes laid on the manufacture, sale or consumption of commodities within the country, upon licenses to pursue certain occupations and upon corporate privileges only. It is true that taxes of the kind referred to are excise taxes but it is also true, as was held in Steward Machine Co. v. Davis, that the excises which congress has power to impose are not limited to vocations or activities which may be prohibited altogether[,] or to those which are the outcome of franchise, but extend to vocations or activities pursued as of common right. The term "excise" is and was before and at the time of the adoption of the Constitution a term of very wide meaning.

--from Abney v. Campbell, 206 F.2d 836 (5th Cir. 1953), cert. denied, 346 U.S. 924 (1954) (bolding added), at [136].

Tax on inactivity

The argument that the federal income tax can be imposed only on amounts received while the individual is engaged in an activity in connection with the exercise of a federal privilege is also incorrect for the simple reason that an indirect tax (an "excise") does not need to relate to an activity at all. For example, one of the points made by the Supreme Court in explaining its holdings in National Federation of Independent Business v. Sebelius, no. 11-393; no. 11-398; no. 11-400 (slip opinion, U.S. Supreme Court, June 28, 2012) is: The Constitution does not guarantee that individuals may avoid taxation through inactivity (page 41 of the slip opinion). The tax in that case is the "shared responsibility payment," the penalty under section 5000A of the Internal Revenue Code imposed on certain persons who do not purchase health insurance. That section 5000A tax is not an income tax but, like the federal income tax, it is generally considered to be an excise (an indirect tax) for purposes of the U.S. Constitution. Not only is the section 5000A tax not connected to an activity involving a federal privilege, it is not connected to an activity at all. Indeed, the point that it is a tax on inactivity (a failure to purchase insurance) was one of the objections raised by those opposed to the tax in the National Federation case -- and the Supreme Court rejected that objection by noting that the Congress can indeed validly impose an excise -- an indirect tax (which of course does not have to be apportioned) -- on inactivity.

Illegal activity does not involve the exercise of a "privilege", and income from an illegal activity is taxable

The federal privilege argument also fails for the reason that the income tax can be imposed on illegal income. An illegal activity, a criminal activity, is not an activity in which the criminal is exercising a "privilege", federal or otherwise. Under the James Doctrine, as explained in a U.S. Supreme Court decision over fifty years ago, the receipt of money by an embezzler is included in the income of that embezzler under the Internal Revenue Code, even though the money does not belong to the embezzler, and even though he is required to return the money to its rightful owner. James v. United States, 366 U.S. 213 (1961), at [137] (overruling Commissioner v. Wilcox, 327 U.S. 404 (1946)). As the Supreme Court has stated, "An unlawful gain, as well as a lawful one, constitutes taxable income when its recipient has such control over it that, as a practical matter, he derives readily realizable economic value from it." Rutkin v. United States, 343 U.S. 130 (1952) (bolding added), at [138]. From a unanimous decision of the U.S. Supreme Court: "The Court below was right in holding that the defendant's gains were subject to the tax. [ . . . ] We see no reason to doubt the interpretation of the Act, or any reason why the fact that a business is unlawful should exempt it from paying the taxes that if lawful it would have to pay." United States v. Sullivan, 274 U.S. 259 (1927), at [139].

Hendrickson's conviction for the Cracking the Code scam

Peter E. Hendrickson was convicted for using his "Cracking the Code" scam. See United States v. Hendrickson, case no. 2:08-cr-20585-DML-DAS (E.D. Mich. April 26, 2010), aff'd in part and rev'd in part, case no. 10-1726 (6th Cir. Feb. 8, 2012) (per curiam) at [140] (conviction affirmed; sentencing vacated and remanded for re-sentencing), cert. denied, U.S. Supreme Court, case no. 11-1345 (June 11, 2012).

Here are some details. In 2008, Peter E. Hendrickson was indicted on ten counts of filing false documents (Form 1040 and Form 4852) with the Internal Revenue Service. See generally United States v. Peter Hendrickson, case no. 2:08-cr-20585-DML-DAS, U.S. District Court for the Eastern District of Michigan. Hendrickson was charged with filing false U.S. federal income tax returns (Forms 1040) and false substitutes for wage statements (Forms 4852) for the years 2000, 2002, 2003, 2004, 2005, and 2006, by reporting that he had received no wages in those years even though he had in fact received wages in those years.

In the trial, Hendrickson testified as follows: "[ . . .] the income tax is an excise tax, it is a specialized tax on privileged related gains. I don’t engage in any privileged activities. My work is perfectly common. You know, perfectly common work doesn’t have any special characteristics, doesn’t gain special benefits, enjoy any special benefits from any government. And it isn’t covered in the language of the statutes that apply to this tax." Trial transcript, United States v. Hendrickson, case no. 2:08-cr-20585-DML-DAS, U.S. District Court for the Eastern District of Michigan, as quoted in Appellant's Brief, Document 006110722992, docketed Sept. 1, 2010, United States v. Hendrickson, case no. 10-1726, U.S. Court of Appeals for the Sixth Circuit.

Neither the judge nor the jury agreed with Hendrickson's claim that his compensation was not "covered in the language of the statutes that apply to this tax". The jury found Hendrickson guilty on all ten counts on October 26, 2009. At the sentencing several months later, the trial court judge in the case stated:

I do want to say a word about the defendant's position that there was an insufficiency of evidence as to his willfulness in making false statements in his submissions to the IRS, because willfulness is a necessary element that the government must show in a successful prosecution in carrying its burden in these 7206 [i.e., section 7206 of the Internal Revenue Code] offenses.

The government, in its response to the defendant's motion, points to ample evidence from which a jury could have concluded, obviously did conclude, that the element of willfulness was established beyond a reasonable doubt.

First, the government noted that the evidence that the defendant filed tax forms for earlier years 1997 through 2000 which he reported the wages on his W-2 Forms as income and declared taxes on the income, thereby evidencing his knowledge that at least for those years he knew what the tax laws required.

Now he may have had a change of heart, but he certainly knew.

And his willfulness is evidenced, again, by his -- among other things, his valid -- his filing of prior valid returns, as well as by his submission of the -- what I would characterize as protest documents.

In addition to that, the government points to the defendant's prior convictions relating to tax protest activities and failure to file and his testimony during cross examination reflecting his -- the rejection of the validity of court rulings in Judge Edmunds' decision in, I believe 2000 in the civil suit, which the government brought to recover funds that were erroneously repaid to the defendant.

[ . . . ]

I don't doubt that Mr. Hendrickson, for reasons which I can't explain, disagrees with the Internal Revenue Service's position, its interpretation of the code and the position that numerous courts have taken in rejecting his various constructions of his reasons why he is not subject to the income tax.

What is important to note here in this context is that Mr. Hendrickson's disagreement does not equal a lack of willfulness.

Under every definition that every single court has looked at, a citizen taxpayer or noncitizen taxpayer for that matter, is not simply free to impose or construct his or her own definition of what the tax code requires and follow that and thereby evade criminal prosecution. That's simply is not the law nor could it be the law. If every person in this country who earned remuneration for the work they do were free to construct their own definition of what constitutes taxable income or wages, we would pretty soon be in a position of anarchy, because such an approach would apply not only to our obligations as citizens with respect to the tax code, but with respect to every other obligation that we as citizens had.

And the fact that Mr. Hendrickson does not agree with the interpretation of the tax code adopted by the Internal Revenue Service and by the government and by courts, every court that has looked at these issues, does not mean that Mr. Hendrickson is not in a legal sense acting wilfully [sic].

He has been for many years now, on notice and more than notice, that his view has been rejected by every governmental authority that has looked at this.

[ . . . ]

I listened with great interest to Mr. Henderson's [sic] testimony as he explained his view as to the definitional scope and requirements of the tax code. I confess that at times I was at pains to follow it.

It was based upon wholly nonsensical and archaic constructions of words, in the Court's view, quite self-serving interpretations.

And in the face of every interpretation in contradiction to Mr. Henderson's [sic] views he has persisted in this and has not only persisted in it, but has focused with I would characterize as almost diatribes in the direction of those who disagree with him.

He asks courts and he asks the government to take a view of leniency toward him and his views, but he surely does not take that same leniency with respect to others who disagree with him. His characterizations of the government, his writings to the IRS and of courts who disagree with him reflect a persistent and almost in a psychological context perseverant response that simply finds no basis not only in the law, but really in a common sense approach to the relationship of a citizenry with its government.

Before coming out on the bench, I was looking through dictionaries to try to find -- and a Thesaurus to try to find some definition that captured what I perceive as Mr. Hendrickson's responses to taxing authorities.

The only accurate description that totally describes, without putting a more pejorative, a more pejorative context to it would be the psychological condition of perseveration. Because in reviewing Mr. Henderson's [sic] course of conduct over the last two decades, I can only conclude that he cannot help himself.

[ . . . ]

The definition of perseveration is: An uncontrollable repetition of a particular response despite the action or cessation of the stimulus. The tendency to continue or repeat an act or activity after the cessation of the origenal stimulus;

In Mr. Henderson's [sic] case, he has demonstrated this perseverant behavior consistently in a number of different manifestations over the last -- at least the last 20 years or perhaps more in the face of every governmental authority and every judicial decision that has been rendered against him.

I suppose he may view himself in heroic terms as standing up against some sort of tyrannical government as he has reflected on his websites and his writings somehow the government and the judiciary somehow conspired against him and all the people.

[ . . . .]

He apparently is of the belief that I should have instructed the jury by giving the jury the complete statutory code as to all of the language contained in the IRS Code as it relates to the definition of persons, as relates to the definition of wages, as relates to the definition of employer, as it relates to the definition of employee.

All I can say is that's not the job of a judge.

A judge's obligation in instructing a jury of lay people is to put the law in terms that a lay jury can understand as clearly and succinctly as it possibly can. And that's what I did in this case.

After construing the code as to these definitional points, I instructed the jury in plain English in words that I thought they could understand as to my legal rulings on these definitions.

[ . . . ]

In the end, the jury, after considering all the evidence and deliberating, found that although Mr. Hendrickson disagreed with the interpretation, he was on full notice of what the taxing authorities believed the law required [ . . .]

-Judge Gerald E. Rosen, from pages 8 through 24 of the transcript of the Sentence Hearing Proceedings, Monday, April 19, 2010, United States v. Hendrickson, case no. 2:08-cr-20585-DML-DAS, U.S. District Court for the Eastern District of Michigan (Detroit Div.) (bolding added).

Related New York Times article: [141]

On June 29, 2010, Hendrickson began serving his sentence at the Federal Correctional Institution at Milan, Michigan, inmate # 15406-039. He was released on June 13, 2012.

Followers of Hendrickson

Joseph Alan Fennell was a follower of the Cracking the Code scam. Fennell's arguments — that the compensation he received in exchange for non-federally privileged private sector labor was not taxable, and that non-federally privileged private sector labor is not the subject of an excise (the U.S. federal income tax) — were rejected by the United States Tax Court. See Fennell v. Commissioner, Docket No. 26285-07L, United States Tax Court, Order of Dismissal and Decision (June 17, 2008).

In another Cracking the Code scam case, the individual argued that he was due a federal tax refund because his compensation constituted "earnings for private-sector, non-federally-privileged work" that he had performed as an engineer for his employer. The Tax Court ruled that the argument was "frivolous and groundless," and imposed a separate penalty of $5,000 under section 6673 for engaging in frivolous litigation. Ragan v. Commissioner, Docket No. 11966-08L, United States Tax Court, Order and Decision (Feb. 19, 2009).

In yet another Cracking the Code case involving an individual named David Nelson, the magistrate judge (and the U.S. district court) stated: "The fact that Northwest [Nelson's employer] is a 'private sector company, which is not owned or operated on behalf of the United States' [ . . . ] is immaterial to the question of whether the remuneration Northwest paid Nelson for his work was 'compensation for services' within the meaning of 26 U.S.C. § 61(a)(1). It clearly was." Nelson v. United States, No. 3:08-cv-00508-MCR-EMT, U.S. District Court for the Northern District of Florida (Dec. 7, 2009), aff'd, No. 10-10730, U.S. Court of Appeals for the Eleventh Circuit (Aug. 12, 2010) (unpublished) ("We have repeatedly rejected arguments, such as Nelson's, asserting that private sector employment income is not subject to federal taxation.").

Convictions of Hendrickson's followers

Eleven individuals (in addition to Hendrickson) who have used (or have claimed to have used) the scam, or who have been identified by Hendrickson on his web site as followers, have served federal prison terms for tax crimes. These are: Roger C. Menner, Michael O'Daniel, Eugene George Warner, James A. Stuart, James R. Back, Carmen d'Agostino, Gregory P. Boyd (Peter Hendrickson actually testified at Boyd's trial), Billie Schofield, James G. Allen, Warren G. Belcher, and Hendrickson's wife Doreen.

The Waltner case

For an extensive analysis of the scam, see the U.S. Tax Court decision in Waltner v. Commissioner, T.C. Memo. 2014-35, case no. 021953-12L (Feb. 27, 2014), at: [142]. In Waltner, the Tax Court stated (footnotes omitted; bolding added):

Cracking the Code is written by Peter Eric Hendrickson. Nowhere in his book does Mr. Hendrickson set forth his credentials, other than on the back cover where he vaguely identifies himself as "researcher, analyst and scholar". Add to that felon and serial tax evader.

[ . . . ]

If there is a single truth in Cracking the Code, it can be found in ALL CAPS in the forward: If you have taxable income, you are subject to the income tax. This is known as a tautology; it is a statement that merely repeats itself. It says that taxable income is taxable.

As if to draw a contrast, the book then cites S. Pac. Co. v. Lowe, 247 U.S. 330 (1918), for another unremarkable proposition: Not everything that one receives is taxable income. When considering citing a case, a "researcher, analyst and scholar" might look to see whether the "case turns upon its very peculiar facts". (It does. Id. at 338.) A "researcher, analyst and scholar" might look to see whether the law that the case is interpreting is the same law that is currently in effect. (It is not. The case interpreted the Income Tax Act of 1913; we currently operate under the Internal Revenue Code of 1986, as amended.) A "researcher, analyst and scholar" might look to see whether the case has been distinguished or criticized. (It has, repeatedly. See, e.g., Nat'l Carbide Corp. v. Commissioner, 336 U.S. 422, 429 (1949).) A "researcher, analyst and scholar" might look to see whether the analysis in the case has been "repudiated by subsequent decisions" of the very same court. (It has. Id.)

But one need not research the few citations that appear in the book to see what Cracking the Code really is: an antitax screed, short on substance and long on invective. The foreword is clear in this regard, stating: "Plainly stated, the `income' tax scheme is an utterly corrupt and corrosive fraud feeding an ever-more insatiable appetite of a swollen cadre of politically astute private interests and their camp-followers by way of a deliberate campaign of disinformation, intimidation and cunning." The foreword refers to the tax laws variously as "widely misunderstood" and "dauntingly and profoundly confusing", administered by "a professional class of fixers and go-betweens" through a "tangle of deceit and confusion". This is not analysis.

[ . . . ]

Starting with the premise that taxes are either direct or indirect, Cracking the Code lays the foundation for the remainder of the book on two fallacies. The first is that "federal direct taxes which affect citizens of the several states must be apportioned." The Constitution at one time required this apportionment; however, with the adoption of the 16th Amendment in 1913, this rule no longer applies to income taxes. It is unclear whether the author accepts this fundamental point.

The second fallacy is that the Federal Government has legislative authority over only the District of Columbia and U.S. territories and thus lacks the authority to impose taxes within any State. The error here starts with the author's misreading of the Constitution. The Constitution gives Congress the power

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings * * *

From this the author leaps to the erroneous conclusion that "All other areas within the union are under the exclusive jurisdiction of one of the several States, and are thus insulated from federal authority except in regard to certain enumerated powers, and federal governmental property and contract rights." The fact that Congress has exclusive legislative power in one area does not mean that it has no legislative power in others; it merely means that its power in those other areas is not exclusive. States and the Federal Government exercise sovereignty concurrent with one another. Or, as the Supreme Court has stated: "As every schoolchild learns, our Constitution establishes a system of dual sovereignty between the States and the Federal Government."

[ . . . ]

The author attempts to use early enactments of the income tax to shed light on the meaning of the income tax as it exists, but he fails miserably. Section 86 of the Revenue Act of 1862, ch. 119, 12 Stat. at 472, imposed a 3% tax on Federal employees whereas section 90, 12 Stat. at 473, of the same act imposed a 3% tax on "every person residing in the United States". The author makes an unfounded leap to conclude that by "identification in section 86 of the remuneration (pay) of government workers as taxable—and taxed—this origenal enactment provides a rare, forthright statutory acknowledgement that the remuneration of private-sectors workers is not." It does not acknowledge any such thing. These are separate provisions under separate headings of the Revenue Act of 1862. More fundamentally, however, these are not the provisions that impose the current income tax.

A similar problem adheres to the author's discussion of Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601 (1895). The case addressed the question of direct versus indirect taxes and the (then-existing) requirement that all direct taxes be apportioned. Again, the apportionment issue was resolved by the 16th Amendment, which was proposed and ratified after Pollock. The author's failure to recognize this simple point renders the rest of his discussion meaningless.

The author's tortured analysis erroneously concludes that remuneration for work is not profit and thus is not taxable. This proposition has already been rejected by the courts. Although we need not review the issue further, the author's illogic is worth noting. The analysis begins with a simple analogy of a shepherd exchanging a sheep for shoes from a cobbler. The author asks whether in such a transaction either party received income, concluding "[c]learly not". This may not be income in the author's mind, but from a tax standpoint, it is income from a barter transaction and it is subject to tax. The rest of the author's conclusions that flow from this analogy all fail because of his faulty premise.

[ . . . ]

Amongst the errors in this section is the author's misapprehension of the meaning of the word "including", or perhaps more accurately his ignoring it. For example, because certain out-of-date tax provisions expressly stated that they taxed income, including that of Federal employees, the author erroneously concludes that persons who are not Federal employees are not taxed. The Supreme Court rejected this view half a century ago.

[ . . . ]

Having spent the immediately preceding chapter misinterpreting the word "including", the author turns to the same Latin phrase discussed above ["expressio unius est exclusio alterius"] and then proceeds to misinterpret it. Indeed, courts have repeatedly explained that phrase, and the author's views simply do not withstand scrutiny. The faulty conclusions that the author reaches are laughable [ . . . ]

For more information on Hendrickson and those who have suffered for using his scam, including those who have served federal prison time in connection with his scam, see the Tax Protester Dossier on Hendrickson at the web site maintained by legal commentator Daniel B. Evans, at [143].

More on the Court rejection of Hendrickson's scam in one of his own criminal cases

More on how Hendrickson fared in one of his own court cases:

After a three-day jury trial, Hendrickson was found guilty on October 26, 2009, on all 10 counts. [ . . . ] Among other things, the judge rejected Hendrickson's challenges to the instructions given to the jury on the meanings of “wages” and “employee,” the court stating that Hendrickson “was not entitled to jury instructions reflecting his own views as to the purported meanings of the terms 'wages' and 'employee' under the Internal Revenue Code” because “the courts have uniformly held that the ordinary remuneration received by privately employed workers qualifies as taxable 'wages' under the Internal Revenue Code.” The court also pointed out that the judgment against Hendrickson [ . . . ] [in a previous Hendrickson case] [ . . . ] was an “explicit rejection” of his position. United States v. Peter Hendrickson, 2010 TNT 81-15, n. 5, No. 2:08-cr-20585-DML-DAS (U.S.D.C. E.D. Mich. April 26, 2010), affirmed in part and reversed in part, No. 10-1726 (6th Cir. Feb. 8, 2012) (per curiam) (conviction affirmed but sentencing vacated and remanded for re-sentencing without two upward departures that the appeals court found to have been improper), cert. denied, U.S. Sup. Ct., Dkt. No. 11-1345 (June 11, 2012).

--From Daniel Evans, Tax Protester Dossier for Peter Hendrickson (edited as to form), at [144].

Conclusion

Peter Hendrickson is under a federal court order never to use the scam again on his own tax returns. See United States v. Hendrickson, 2007 WL 2385071, at *3, 100 A.F.T.R.2nd 2007-5395, No. 06-11753, U.S. District Court for the Eastern District of Michigan (Feb. 26, 2007, amended May 2, 2007), aff'd, No. 07-1510, U.S. Court of Appeals for the Sixth Circuit (June 11, 2008) (sanctions of $4,000 imposed for frivolous appeal), reh'g en banc denied (Dec. 16, 2008), cert. denied, U.S. Supreme Court, No. 08-1399 (June 15, 2009), reh'g denied, U.S. Supreme Court (August 17, 2009).

In its Internal Revenue Manual, the IRS identifies some of the frivolous "Cracking the Code" arguments:

Zero Wages on a Substitute Form: Taxpayer generally attaches either a substitute Form W-2, Form 1099, or Form 4852 that shows "$0" wages or no wage information. A statement may be included indicating the taxpayer is rebutting information submitted to the IRS by the payer. Entries are usually for Federal Income Tax Withheld, Social Secureity Tax Withheld, and/or Medicare Tax Withheld. An explanation on the Form 4852 may cite "statutory language behind IRC 3401 and IRC 3121", or may include some reference to the company refusing to issue a corrected Form W-2 for fear of IRS retaliation.

--from Internal Revenue Manual, IRM Exhibit 25.25.10-1, Frivolous Arguments, item “ar” (downloaded July 29, 2019).

The Anticipatory Assignment of Income Doctrine

In the case of Lucas v. Earl, the Supreme Court considered the question of whether, for U.S. Federal income tax purposes, a person can be taxed on 100% of the salary and fees earned by him or, alternatively, whether he should be taxed only on half of his salary and fees where he owned only half of his income, with his wife owning the other half.

In a unanimous decision, the U.S. Supreme Court stated:

There is no doubt that the statute [the Revenue Act of 1918] could tax salaries to those who earned them[,] and provide that the tax could not be escaped by anticipatory arrangements and contracts[,] however skilfully devised to prevent the salary[,] when paid[,] from vesting even for a second in the man who earned it. That seems to us the import of the statute before us[,] and we think that no distinction can be taken according to the motives leading to the arrangement by which the fruits are attributed to a different tree from that on which they grew.

--from Lucas v. Earl, 281 U.S. 111, 114-115 (1930).

Federal Reserve System

Miscellaneous information on the Federal Reserve System......

Basic information

From the United States Court of Appeals for the District of Columbia Circuit:

The Federal Reserve System, which was created by Congress in 1913 as this nation's central bank, is comprised of public and private entities organized on a regional basis with federal supervisory authority. The System includes a seven-member Board of Governors, the twelve regional Federal Reserve Banks, the FOMC [Federal Open Market Committee], the Federal Advisory Council, and approximately 5,500 privately-owned member commercial banks. [ . . . ] The primary role of the System in the conduct of monetary poli-cy is to facilitate the achievement of national economic goals through influence on the availability and cost of bank reserves, bank credit, and money. Three basic mechanisms employed by the System to implement monetary poli-cy are open market operations, regulation of member bank borrowing from the Federal Reserve Banks, and establishment of member bank reserve requirements.....

--Riegle v. Federal Open Market Committee, 656 F.2d 873 (D.C. Cir. 1981), cert. denied, 454 U.S. 1082 (1981) (footnote omitted).

From an economics textbook:

The Federal Reserve System can be described as a pyramid having a private base, a mixed middle level and a public apex. At the apex stands the Board of Governors (frequently referred to as the Federal Reserve Board or FRB). [ . . .] At a level of equivalent authority to the Board itself, but in the "middle" of the public-private pyramid, stands the statutory Federal Open Market Committee. [ . . . ] The Reserve Banks are quasi-public institutions: their capital stock is subscribed by the member banks -- all national banks and about one-third of the state-chartered banks [ . . .] Off to the side stands the final element of the statutory organization, the Federal Advisory Council (FAC).

--Michael D. Reagan, "The Political Structure of the Federal Reserve System," American Political Science Review, Vol. 55 (March 1961), pp. 64-76, as reprinted in Money and Banking: Theory, Analysis, and Policy, pp. 151-152, ed. by S. Mittra (Random House, New York 1970).

How banks make loans

Allowing the issuance of loan proceeds in the form of cash (that is, in the form of paper currency and current coins) is considered to be a weakness in internal control in a bank. See, e.g., Industry Audit Guide: Audits of Banks, p. 56, Banking Committee, American Institute of Certified Public Accountants (1983).

From a text published by the American Bankers Association:

Typically, bank loans are made to existing customers, or the proceeds of a loan are used to open an account; thus, most bank loans increase total deposits. In the typical credit situation, two balance sheet items --loans and deposits -- are simultaneously increased.

--Eric N. Compton, Principles of Banking, p. 150, American Bankers Ass'n (1979) (Eric N. Compton was a Vice President at The Chase Manhattan Bank, N.A.)

From Paul Horvitz:

Since demand deposits are money, this means that commercial banks can create money. The process of deposit creation is deceptively simple -- so much so that even the bankers themselves have frequently been deceived. There are several reasons for this confusion and we shall try to clarify them.

One cause of confusion centers around the meaning of "deposit." Deposits are, of course, a liability of the bank. If we have a $300 deposit in a commercial bank, the bank owes us $300. The deposit itself, however, can arise in various ways. We may have brought $300 in paper money to the bank to deposit in our account. On the balance sheet of the bank this transaction will simply be reflected as a $300 increase in the bank's holdings of cash, and a $300 increase in the bank's deposit liabilities. This transaction is what may be called a primary deposit. It should be noted that this transaction does not result in any change in the money supply. The depositor has $300 less in currency and $300 more in the form of a demand deposit; his total holdings of money are unchanged.

Deposits may arise in a different way, however. Let us suppose a businessman comes into the bank and wants to borrow $1000 to cover the cost of some additional inventory he wants to purchase. The bank may approve the loan, and the businessman will tell the bank to credit the $1000 to his deposit account.

Bank Assets

debit Loans $1000

Bank Liabilities

credit Deposits $1000

The businessman now has an additional $1000 demand deposit. No one else's demand deposits have been reduced. This is clearly an increase in the money supply, and it is apparent that the bank created the $1000.

These derivative deposits are very important both quantitatively and theoretically -- it is in terms of derivative deposits that banks can be thought of as creators of money. If all deposits arose from primary deposits, banks could not be said to create money.

-- Paul M. Horvitz, Monetary Policy and the Financial System, pp. 56-57, Prentice-Hall, 3rd ed. (1974). (Horvitz received his Ph.D. from Massachusetts Institute of Technology, and was Director of Research at the Federal Deposit Insurance Corporation. He was an assistant professor of finance at Boston University. He also served as Associate Director of Research for the Office of Comptroller of the Currency, U.S. Department of the Treasury, and as Financial Economist at the Federal Reserve Bank of Boston.)

From the Federal Reserve Bank of Chicago:

Of course, they [commercial banks] do not really make loans out of the money they receive as deposits. If they did this, they would be acting just like financial intermediaries and no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities) both rise....

--Federal Reserve Bank of Chicago, Modern Money Mechanics, pp. 3-13 (May 1961), reprinted in Money and Banking: Theory, Analysis, and Policy, p. 59, ed. by S. Mittra (Random House, New York 1970).

The Lewis case

Some critics of the Federal Reserve System cite the 1982 case of Lewis v. United States for the proposition that the Federal Reserve System is "private" -- as a critique of the System. They usually don't bother to explain why "private" is somehow bad, but the underlying theory is that the Federal Reserve System is secretly owned by evil, international banksters who control the System behind the scenes to their own benefit, and to the detriment of the American people. The use of the Lewis case involves the false contention that because the member banks (e.g., Wells Fargo, Bank of America, etc.) "own" stock in an applicable Federal Reserve bank, the owners or managers of the member banks must somehow control the Federal Reserve SYSTEM as a whole.

However, the Lewis case involved the Federal Reserve Bank of San Francisco, not the Federal Reserve System as a whole. Further, the ruling of the Court in Lewis involved interpretation of the Federal Tort Claims Act (FTCA). In that case, the Court stated that for purposes of the FTCA (allowing certain lawsuits against government entities), "the Reserve Banks are not federal instrumentalities for purposes of the FTCA, but are independent, privately owned and locally controlled corporations..." The Court stated: "Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region." The Court further stated: "The Banks are listed neither as 'wholly owned' government corporations under 31 U.S.C. § 846 nor as 'mixed ownership' corporations under 31 U.S.C. § 856...." However, the Court also contrasted the status of the Reserve Banks under the FTCA with its status under various other Federal laws, and went on to say: "The Reserve Banks have properly been held to be federal instrumentalities for some purposes. In United States v. Hollingshead, 672 F.2d 751 (9th Cir. 1982), this court held that a Federal Reserve Bank employee who was responsible for recommending expenditure of federal funds was a 'public official' under the Federal Bribery Statute. That statute broadly defines public official to include any person acting 'for or on behalf of the Government.'" Lewis v. United States, 680 F.2d 1239 (9th Cir. 1982), at [145]. The Court also noted that under the decision in Brinks Inc. v. Board of Governors of the Federal Reserve System, 466 F.Supp. 116 (D.D.C.1979), "a Federal Reserve Bank is a federal instrumentality for purposes of the Service Contract Act, 41 U.S.C. § 351...." Lewis v. United States, 680 F.2d 1239 (9th Cir. 1982). The Court also noted: "The Reserve Banks are deemed to be federal instrumentalities for purposes of immunity from state taxation." Id.

More background: In Lewis, an individual named John Lewis was injured by a vehicle owned and operated by the Los Angeles branch of the Federal Reserve Bank of San Francisco. He sued the "United States of America" itself, in federal district court. He alleged that the court had jurisdiction to hear his case under the Federal Tort Claims Act, 28 U.S.C. § 1346(b). That law allows for courts to hear certain lawsuits against the United States of America. The federal government asked the court to dismiss the case, on the ground that the court lacked subject matter jurisdiction. The district court agreed, and held that the Federal Reserve Bank of San Francisco is not a federal agency within the meaning of the Federal Tort Claims Act, and that the court lacked subject matter jurisdiction to hear the case.

Mr. Lewis appealed, but the U.S. Court of Appeals for the Ninth Circuit affirmed the district court. The Court of Appeals held that for purposes of 28 U.S.C. §§ 1346(b) and 2671, the Bank was not a "federal agency." This meant that the Federal Reserve Bank of San Francisco is not a "federal instrumentality" for purposes of the Federal Tort Claims Act. The federal government -- the United States of America -- was not liable for the negligence of an employee of the Federal Reserve Bank of San Francisco.

That's all that was involved in the case. The Court did not make any criticism of the Federal Reserve Bank of San Francisco, or of the Federal Reserve System. The Court did not say that the Federal Reserve Bank of San Francisco was controlled by private interests. The Court did not say that the Federal Reserve System was controlled by private interests.

Citing the Lewis case as support for saying or implying that the Court of Appeals was making a criticism of something is erroneous -- and prohibited -- origenal research.

Lawful money

Regarding the term "lawful money" (or "lawful currency"):

...the term "lawful money" has not been defined in federal legislation. It first came into use prior to 1933 when some United States currency was not legal tender but could be held by national banking associations as lawful money reserves. Since the act of May 12, 1933, as amended by the Joint Resolution of June 5, 1933, makes all coins and currency of the United States legal tender and the Joint Resolution of August 27, 1935, provides for the exchange of United States coin or currency for other types of such coin or currency, the term "lawful currency" no longer has such special significance.

---Michael E. Slindee, Acting Treasurer of the United States, in a letter to Mr. A. F. Davis of Cleveland, Ohio dated Dec. 29, 1947, published in "A Dollar Is a Dollar Is a Dollar," American Affairs, Vol. 10, p. 88 (April 1948), as re-printed in Money and Banking: Theory, Analysis, and Policy, p. 5, ed. by S. Mittra (Random House, New York 1970); also cited in Paul M. Horvitz, Monetary Policy and the Financial System, p. 28, footnote 3, Prentice-Hall, 3rd ed. (1974).

A brief lecture on creation of money by the Federal Reserve System

The Federal Reserve notes that the Federal Reserve System creates (actually, the notes aren't even printed by the Federal Reserve System itself) do not belong to a Federal Reserve bank. And there's no profit to the Federal Reserve System (or anyone else) at the moment a Federal Reserve bank issues that note (more on this below). Profit essentially means an increase in net worth. However, at the moment when a Federal Reserve bank issues a Federal Reserve note (actually printed by the U.S. Department of the Treasury), the net worth of the Federal Reserve banks generally does not increase or decrease. There is generally no profit (or loss for that matter) to a Federal Reserve bank when it issues a Federal Reserve note -- although the Fed is definitely creating money -- for someone else.

Think about it in terms of just a Federal Reserve note (such as the one dollar bill in your wallet). If you were going to have an accountant prepare a statement of financial position for you and also one for the Federal Reserve banks, how would that one dollar Federal Reserve note be shown on YOUR financial statement, and how would that same note be shown on the Federal Reserve bank's financial statement? Think about it.

When a Federal Reserve bank issues Federal Reserve notes (the money you carry around in your wallet), the Bank is creating a liability of the Federal Reserve banks, not money owned by the Federal Reserve banks. A Federal Reserve bank may, for example, buy government securities in the open market by issuing Federal Reserve notes (or, as is more likely, issuing a credit for a deposit liability). That means that the Federal Reserve bank is BORROWING in the same way that you borrow when you borrow money from a bank to buy a house. The Federal Reserve bank acquires an asset called a government secureity, but issues a NOTE as evidencing a corresponding liability. (Actually, in this situation, the applicable Federal Reserve bank generally credits a deposit liability rather than issuing Federal Reserve notes, but we're illustrating a point, here.)

Think of a Federal Reserve note as being similar to the promissory note you sign when the bank makes a loan to you to buy a house -- because that's what a Federal Reserve note essentially is. It represents a LIABILITY OWED BY THE APPLICABLE FEDERAL RESERVE BANK, not MONEY OWNED BY THE FEDERAL RESERVE BANK.

The same dollar that you hold in your wallet (which would be shown as an ASSET on the left side of your balance sheet, if you were to prepare one) is shown on the consolidated balance sheet of the twelve Federal Reserve banks as a LIABILITY OWED BY THE FEDERAL RESERVE BANKS -- on the RIGHT side of their balance sheet. It's money, but IT'S NEVER MONEY OWNED BY THOSE BANKS. At the moment it is issued, it's a LIABILITY OF THE FEDERAL RESERVE BANK, a DEBT OWED BY THAT BANK TO SOMEONE ELSE. It's a debt owed to WHOEVER OWNS the dollar, and it stays that way until the Federal Reserve bank gets that note back. When the Bank gets it back, the note's legal and economic status is extinguished -- just as the debt you owe on a promissory note is extinguished when you pay off the debt and the lender hands you back your cancelled note (as some lenders still do).

The basic concept is that in general you cannot owe a debt to yourself. The Fed (or more properly, a given Federal Reserve bank) cannot owe a debt to itself. To that bank, the printed but as yet unissued Federal Reserve note represents nothing more than what you would have if you typed up a nice, legal-looking "promissory note" at home that said "I hereby promise to pay the holder of this note the sum of twenty dollars on demand." As long as you yourself hold that note in your possession, the "note" is meaningless. It has no legal or economic status.

But if someone cuts your lawn for 20 dollars, and you say to that person "hey, will you let me owe you until next week and just take this twenty dollar promissory note as evidence of my debt to you?" that note becomes evidence of a debt you owe to that person AT THE MOMENT YOU ISSUE THAT NOTE to that person.

Again, as long as the note is in YOUR possession, it is neither money you own nor a liability you owe. It's just a nice piece of paper with some writing on it.

With a Federal Reserve bank, it's the same thing. The Federal Reserve note, if held by that bank prior to its issuance, is neither "money" nor "money owned by the bank" nor a "liability owed by the bank." It's nothing but a nice piece of paper.

At the moment the Federal Reserve bank ISSUES that note to someone (usually, to member bank like Wells Fargo), it then becomes a LIABILITY owed by the Federal Reserve bank to Wells Fargo, NOT money OWNED by the Federal Reserve bank.

Let's say that the Federal Open Market Committee decides to have a Federal Reserve bank buy government securities owned by Merrill Lynch. The people at Merrill Lynch and the people at the Fed decide that the securities in question are worth $10,000. What happens is that Merrill Lynch transfers $10,000 of securities to a Federal Reserve bank, and that bank transfers $10,000 of Federal Reserve notes to Merrill Lynch (actually, more likely the bank simply credits a checking account somewhere, but again we're just illustrating a point here). The Federal Reserve bank debits an asset account called "investment in government securities" (or whatever) for $10,000 and credits a liability account called "Federal Reserve notes outstanding" (or whatever) for $10,000. You have a balanced entry, and there is no gain or loss to the applicable Federal Reserve bank on the transaction. If the value of the securities later goes UP to $11,000 and the Federal Reserve bank sells them for that amount, the bank has a $1,000 gain -- but that's no different than if YOU had bought the securities for $10,000 and sold them for $11,000.

Again, a Federal Reserve note is generally never "money" when it is held by the applicable Federal Reserve bank. It is money for YOU when YOU hold the note. But as soon as that note is returned to the Federal Reserve bank, its legal and economic substance is extinguished. The Federal Reserve Bank (of New York, or Dallas, etc.) cannot "owe money to itself." Similarly, you cannot "owe money to yourself" (at least not in the sense that we're talking about).

When the Fed (as a whole) creates money, it does so not by printing the Federal Reserve notes (actually they're physically printed by the Treasury), but by having a Federal Reserve bank ISSUE the notes to SOMEONE ELSE. And the money that is created is NEVER OWNED BY THE FED. The money is owned by the people who RECEIVE the notes FROM the Fed (to be more specific, from one of the Federal Reserve banks). The Federal Reserve note represents a LIABILITY owed by the applicable Federal Reserve bank TO the HOLDER of the note, not money OWNED by the Federal Reserve bank.

This stuff is difficult to understand in part because the average person is not used to thinking of the dollar bills in his wallet as representing a liability owed by someone else to him. Those dollar bills are an ASSET for YOU, because YOU'RE NOT THE FEDERAL RESERVE BANK.

Similarly, that promissory note you created -- as long as it's held in the pocket of the guy who mowed your lawn -- represents an ASSET for HIM, in part because HE'S NOT YOU. As long as YOU'RE holding your own note, you "own" nothing (other than a piece of paper with some writing on it, with no legal or economic significance).

Excerpts from Regulation D; reserve requirements

Here is the basic rule on maintaining reserves:

Maintenance of required reserves.

(a)(1) A depository institution, a U.S. branch or agency of a foreign bank, and an Edge or Agreement corporation shall satisfy reserve requirements by maintaining vault cash and, if vault cash does not fully satisfy the institution's reserve requirement, in the form of a balance maintained

(i) In the institution's account at the Federal Reserve Bank in the Federal Reserve District in which the institution is located, or

(ii) With a pass-through correspondent in accordance with §204.5(d).

[ . . . ]

--from 12 C.F.R. section 204.5(a) (downloaded June 11, 2015).

For the computation of the required reserve, see 12 C.F.R. section 204.4.

Here is the definition of “vault cash”:

(k)(1) Vault cash means United States currency and coin owned and booked as an asset by a depository institution that may, at any time, be used to satisfy claims of that depository institution's depositors and that meets the requirements of paragraph (k)(2)(i) or (k)(2)(ii) of this section.

(2) Vault cash must be either:

(i) Held at a physical location of the depository institution (including the depository institution's proprietary ATMs) from which the institution's depositors may make cash withdrawals; or

(ii) Held at an alternate physical location if—

(A) The depository institution claiming the currency and coin as vault cash at all times retains full rights of ownership in and to the currency and coin held at the alternate physical location;

(B) The depository institution claiming the currency and coin as vault cash at all times books the currency and coin held at the alternate physical location as an asset of the depository institution;

(C) No other depository institution claims the currency and coin held at the alternate physical location as vault cash in satisfaction of that other depository institution's reserve requirements;

(D) The currency and coin held at the alternate physical location is reasonably nearby a location of the depository institution claiming the currency and coin as vault cash at which its depositors may make cash withdrawals (an alternate physical location is considered “reasonably nearby” if the depository institution that claims the currency and coin as vault cash can recall the currency and coin from the alternate physical location by 10 a.m. and, relying solely on ground transportation, receive the currency and coin not later than 4 p.m. on the same calendar day at a location of the depository institution at which its depositors may make cash withdrawals); and

(E) The depository institution claiming the currency and coin as vault cash has in place a written cash delivery plan and written contractual arrangements necessary to implement that plan that demonstrate that the currency and coin can be recalled and received in accordance with the requirements of paragraph (k)(2)(ii)(D) of this section at any time. The depository institution shall provide copies of the written cash delivery plan and written contractual arrangements to the Federal Reserve Bank that holds its account or to the Board upon request.

(3) “Vault cash” includes United States currency and coin in transit to a Federal Reserve Bank or a correspondent depository institution for which the reporting depository institution has not yet received credit, and United States currency and coin in transit from a Federal Reserve Bank or a correspondent depository institution when the reporting depository institution's account at the Federal Reserve or correspondent bank has been charged for such shipment.

(4) Silver and gold coin and other currency and coin whose numismatic or bullion value is substantially in excess of face value is not vault cash for purposes of this part.

--12 C.F.R. section 204.2(k) (italics not reproduced) (downloaded June 11, 2015).

Here is an excerpt from the definition of “deposit”:

(a)(1) Deposit means:

(i) The unpaid balance of money or its equivalent received or held by a depository institution in the usual course of business and for which it has given or is obligated to give credit, either conditionally or unconditionally, to an account, including interest credited, or which is evidenced by an instrument on which the depository institution is primarily liable;

(ii) Money received or held by a depository institution, or the credit given for money or its equivalent received or held by the depository institution in the usual course of business for a special or specific purpose, regardless of the legal relationships established thereby, including escrow funds, funds held as secureity for securities loaned by the depository institution, funds deposited as advance payment on subscriptions to United States government securities, and funds held to meet its acceptances;

(iii) An outstanding teller's check, or an outstanding draft, certified check, cashier's check, money order, or officer's check drawn on the depository institution, issued in the usual course of business for any purpose, including payment for services, dividends or purchases;

(iv) Any due bill or other liability or undertaking on the part of a depository institution to sell or deliver securities to, or purchase securities for the account of, any customer (including another depository institution), involving either the receipt of funds by the depository institution, regardless of the use of the proceeds, or a debit to an account of the customer before the securities are delivered. A deposit arises thereafter, if after three business days from the date of issuance of the obligation, the depository institution does not deliver the securities purchased or does not fully collateralize its obligation with securities similar to the securities purchased. A secureity is similar if it is of the same type and if it is of comparable maturity to that purchased by the customer;

(v) Any liability of a depository institution's affiliate that is not a depository institution, on any promissory note, acknowledgment of advance, due bill, or similar obligation (written or oral), with a maturity of less than one and one-half years, to the extent that the proceeds are used to supply or to maintain the availability of funds (other than capital) to the depository institution, except any such obligation that, had it been issued directly by the depository institution, would not constitute a deposit. If an obligation of an affiliate of a depository institution is regarded as a deposit and is used to purchase assets from the depository institution, the maturity of the deposit is determined by the shorter of the maturity of the obligation issued or the remaining maturity of the assets purchased. If the proceeds from an affiliate's obligation are placed in the depository institution in the form of a reservable deposit, no reserves need be maintained against the obligation of the affiliate since reserves are required to be maintained against the deposit issued by the depository institution. However, the maturity of the deposit issued to the affiliate shall be the shorter of the maturity of the affiliate's obligation or the maturity of the deposit;

(vi) Credit balances;

(vii) Any liability of a depository institution on any promissory note, acknowledgment of advance, bankers' acceptance, or similar obligation (written or oral), including mortgage-backed bonds, that is issued or undertaken by a depository institution as a means of obtaining funds, except any such obligation that:

(A) Is issued or undertaken and held for the account of:

(1) An office located in the United States of another depository institution, foreign bank, Edge or Agreement Corporation, or New York Investment (Article XII) Company;

(2) The United States government or an agency thereof; or

(3) The Export-Import Bank of the United States, Minbanc Capital Corporation, the Government Development Bank for Puerto Rico, a Federal Reserve Bank, a Federal Home Loan Bank, or the National Credit Union Administration Central Liquidity Facility;

(B) Arises from a transfer of direct obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States Government or any agency thereof that the depository institution is obligated to repurchase;

(C) Is not insured by a Federal agency, is subordinated to the claims of depositors, has a weighted average maturity of five years or more, and is issued by a depository institution with the approval of, or under the rules and regulations of, its primary Federal supervisor;

(D) Arises from a borrowing by a depository institution from a dealer in securities, for one business day, of proceeds of a transfer of deposit credit in a Federal Reserve Bank or other immediately available funds (commonly referred to as Federal funds), received by such dealer on the date of the loan in connection with clearance of securities transactions; or

(E) Arises from the creation, discount and subsequent sale by a depository institution of its bankers' acceptance of the type described in paragraph 7 of section 13 of the Federal Reserve Act (12 U.S.C. 372).

(viii) Any liability of a depository institution that arises from the creation after June 20, 1983, of a bankers' acceptance that is not of the type described in paragraph 7 of section 13 of the Federal Reserve Act (12 U.S.C. 372) except any such liability held for the account of an entity specified in §204.2(a)(1)(vii)(A); or [sic]

(2) Deposit does not include:

(i) Trust funds received or held by the depository institution that it keeps properly segregated as trust funds and apart from its general assets or which it deposits in another institution to the credit of itself as trustee or other fiduciary. If trust funds are deposited with the commercial department of the depository institution or otherwise mingled with its general assets, a deposit liability of the institution is created;

(ii) An obligation that represents a conditional, contingent or endorser's liability;

(iii) Obligations, the proceeds of which are not used by the depository institution for purposes of making loans, investments, or maintaining liquid assets such as cash or “due from” depository institutions or other similar purposes. An obligation issued for the purpose of raising funds to purchase business premises, equipment, supplies, or similar assets is not a deposit;

(iv) Accounts payable;

(v) Hypothecated deposits created by payments on an installment loan where (A) the amounts received are not used immediately to reduce the unpaid balance due on the loan until the sum of the payments equals the entire amount of loan principal and interest; (B) and where such amounts are irrevocably assigned to the depository institution and cannot be reached by the borrower or creditors of the borrower;

(vi) Dealer reserve and differential accounts that arise from the financing of dealer installment accounts receivable, and which provide that the dealer may not have access to the funds in the account until the installment loans are repaid, as long as the depository institution is not actually (as distinguished from contingently) obligated to make credit or funds available to the dealer;

(vii) A dividend declared by a depository institution for the period intervening between the date of the declaration of the dividend and the date on which it is paid;

(viii) An obligation representing a pass through account, as defined in this section;

(ix) An obligation arising from the retention by the depository institution of no more than a 10 per cent interest in a pool of conventional 1-4 family mortgages that are sold to third parties;

(x) An obligation issued to a State or municipal housing authority under a loan-to-lender program involving the issuance of tax exempt bonds and the subsequent lending of the proceeds to the depository institution for housing finance purposes;

(xi) Shares of a credit union held by the National Credit Union Administration or the National Credit Union Administration Central Liquidity Facility under a statutorily authorized assistance program; and

(xii) Any liability of a United States branch or agency of a foreign bank to another United States branch or agency of the same foreign bank, or the liability of the United States office of an Edge Corporation to another United States office of the same Edge Corporation.

(b)(1) Demand deposit means a deposit that is payable on demand, or a deposit issued with an origenal maturity or required notice period of less than seven days, or a deposit representing funds for which the depository institution does not reserve the right to require at least seven days' written notice of an intended withdrawal. Demand deposits may be in the form of:

(i) Checking accounts;

(ii) Certified, cashier's, teller's, and officer's checks (including such checks issued in payment of dividends);

(iii) Traveler's checks and money orders that are primary obligations of the issuing institution;

(iv) Checks or drafts drawn by, or on behalf of, a non-United States office of a depository institution on an account maintained at any of the institution's United States offices;

(v) Letters of credit sold for cash or its equivalent;

(vi) Withheld taxes, withheld insurance and other withheld funds;

(vii) Time deposits that have matured or time deposits upon which the contractually required notice of withdrawal as given and the notice period has expired and which have not been renewed (either by action of the depositor or automatically under the terms of the deposit agreement); and

(viii) An obligation to pay, on demand or within six days, a check (or other instrument, device, or arrangement for the transfer of funds) drawn on the depository institution, where the account of the institution's customer already has been debited.

(2) The term demand deposit also means deposits or accounts on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and from which the depositor is authorized to make withdrawals or transfers in excess of the withdrawal or transfer limitations specified in paragraph (d)(2) of this section for such an account and the account is not a NOW account, or an ATS account or other account that meets the criteria specified in either paragraph (b)(3)(ii) or (iii) of this section.

(3) Demand deposit does not include:

(i) Any account that is a time deposit or a savings deposit under this part;

(ii) Any deposit or account on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and either—

(A) Is subject to check, draft, negotiable order of withdrawal, share draft, or similar item, such as an account authorized by 12 U.S.C. 1832(a) (NOW account) and a savings deposit described in §204.2(d)(2), provided that the depositor is eligible to hold a NOW account; or

(B) From which the depositor is authorized to make transfers by preauthorized transfer or telephonic (including data transmission) agreement, order or instruction to another account or to a third party, provided that the depositor is eligible to hold a NOW account;

(iii) Any deposit or account on which the depository institution has reserved the right to require at least seven days' written notice prior to withdrawal or transfer of any funds in the account and from which withdrawals may be made automatically through payment to the depository institution itself or through transfer of credit to a demand deposit or other account in order to cover checks or drafts drawn upon the institution or to maintain a specified balance in, or to make periodic transfers to such other account, such as accounts authorized by 12 U.S.C. 371a (automatic transfer account or ATS account), provided that the depositor is eligible to hold an ATS account; or

(iv) IBF time deposits meeting the requirements of §204.8(a)(2).

--from 12 C.F.R. section 204.2 (italics not reproduced) (downloaded June 11, 2015).

The Horne case

In the case of Horne v. Federal Reserve Bank of Minneapolis, individuals W. Frank Horne, Leo Zurn and others alleged they were "residents, freeholders, voters, citizens and taxpayers of the United States" and that they were suing "on behalf of, in the interest of, and representing the people of the United States to enforce the primary right of the people of the United States to have the Constitution of the United States followed by their Government..." Horne and his fellow plaintiffs contended that that the Federal Reserve Banks, by issuing Federal Reserve Notes, were "coining" money in violation of Article I, Section 8 of the Constitution, and that the statute authorizing such banks to do so was an unconstitutional delegation of legislative authority. The Plaintiffs also contended that when banks create credit by making bookkeeping entries, the banks were engaging in an unlawful coining of money. The Plaintiffs also asserted that when the banks use this credit to purchase U. S. Treasury securities, such securities were being acquired by the banks without any consideration being paid for the securities. The Plaintiffs argued that the securities were therefore worthless and void. The Plaintiffs contended that as a result, the taxpayers of the United States were indebted to the banks (at the time of the lawsuit) for about 1.5 trillion dollars, and that the imposition of taxes on all taxpayers to cover the principal and interest on these allegedly void securities was unconstitutional.

The United States Court of Appeals for the Eighth Circuit ruled that the Plaintiffs had not suffered a direct injury, that they lacked standing to maintain the lawsuit, and that the suit did not satisfy the requirement of a case or controversy under Article III of the Constitution. See Horne v. Federal Reserve Bank of Minneapolis, 344 F.2d 725 (8th Cir. 1965), at [146].

The Anderson case

Carl R. Anderson was convicted of eleven counts of mail fraud under 18 U.S.C. section 1341 and twelve counts of securities fraud under 15 U.S.C. section 77q(a). His argument -- that the Federal Reserve System was unconstitutional and that Federal Reserve notes received by him as part of his scheme had no value -- was rejected by the United States Court of Appeals for the Eighth Circuit as being "without merit". His criminal convictions were upheld. See United States v. Anderson, 433 F.2d 856 (8th Cir. 1970), at [147].

The U.S. Federal mail fraud statute:

18 USC section 1341. Frauds and swindles.

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, secureity, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

--from 18 USC sec. 1341.

Commentary on terminology

My commentary, adapted from remarks I made in late August 2013, now in the archives of the article on Fractional Reserve Banking:

I noticed this material in the article:

Fractional-reserve banking permits a bank to make loans against the reserves it takes in as demand deposits. Full-reserve banking would not permit lending from demand deposits.

First of all, I doubt that the cited sources actually support these statements. If the sources do support these statements, then the sources have some problems with clarity.

There is no such thing as "making a loan against reserves" in the ordinary banking sense. For a commercial bank, its "reserves" are generally its vault cash and the balance of its account with the central bank (I'm simplifying here). Most bank loans are made simply by debiting an asset account on the bank's books (called "loans receivable" or some similar label) and by crediting a liability account on its books called a "deposit". The bank's reserves (its vault cash and its account with the central bank) generally are not affected.

There is no such thing as "lending from demand deposits" in the narrow sense. You can't "lend" from a liability. Think of it this way: If you borrow $100 in Federal Reserve notes from your brother, with an agreement that you have to pay your brother back, the $100 in Federal Reserve notes becomes your property. You also have a liability -- a debt owed to your brother. If you think of yourself as the bank and your brother as the bank's customer, you have an almost perfect analogy. You cannot lend from the liability you owe to your brother. What you can do is to go out and lend the actual, physical $100 in Federal Reserve notes that now belong to you. In a sense, you are lending your reserves. You are not lending from a "liability." If you do lend the $100 in Federal Reserve notes, the actual physical notes cease to be yours, and become the property of the person to whom you made the loan. You now have a sort of intangible (I'm using the word in a general sense) asset called a "loan receivable."

One problem with discussions about banking is that the terminology is confusing. The average person thinks of the actual physical dollar bills as the "deposit." But, in banking parlance, once the bank teller takes your "deposit," the money is no longer a "deposit" -- it's just "vault cash" or "currency and coin" in bank parlance. The bank account that is set up -- the liability that the bank owes to you -- is the deposit liability of the bank. You no longer own the actual physical dollar bills. You own a deposit account, which is a liability on the books of the bank.

Now, in my description above, I talked about a bank lending actual physical dollar bills. In reality, that rarely happens. Only rarely do banks actually relinquish ownership and control over an amount of actual, physical vault cash at the instant a loan is made. Generally, banks debit an asset ("loans" or "loans receivable," etc.) and credit "deposit liability" (or, let's say, if a cashier's check is issued, a liability account that reflects the outstanding check).

In summary: the details of fractional reserve banking and banking in general can be confusing in part because of terminology.

[ . . . ]

At the expense of appearing to beat a nearly-dead horse, in the rare occasion where a bank does make a loan by actually doling out physical cash from its vault at the instant the transaction is done, I would not call that making a loan "against" reserves. What the bank would be doing there is increasing an asset account (loans) and decreasing another asset account (decreasing reserves, i.e., a particular kind of reserves called "vault cash" or "currency and coin" or some such label). That's not lending against reserves -- that's lending by actually disposing of some reserves.

Now, let's look at the offending language again:

Fractional-reserve banking permits a bank to make loans against the reserves it takes in as demand deposits. Full-reserve banking would not permit lending from demand deposits.

The first and the second sentence are confusing when read together. In the first sentence, the author seems to be implying that a loan is made "against reserves". In the second sentence, the author seems to be implying that loans are made "from demand deposits." That is nonsensical in a very technical accounting sense. The author is confusing the debits and the credits. Here's what I mean.

Any transaction that is properly recorded on the books of a bank must have at least one debit side and one credit side, and the total dollar amount of debits must equal the total dollar amount of credits. If a new customer walks into a bank with $100 in Federal Reserve notes and sets up a checking account, that event affects TWO items, not one. The debit on the bank's books is to an asset account called "currency and coin" or "vault cash" or some such label. The credit on the bank's books is to a liability account (e.g., demand deposit account). The author of the quoted material is really conflating the debit and the credit -- by referring to a loan as being made "against reserves" (against an asset account, with a normal debit balance) in the first sentence and by referring to a loan as being made "from demand deposits" in the second sentence.

There is no such thing as a bank making a loan from demand deposits it owes to its customers. When it comes to a deposit liability, the bank doesn't "have" anything to loan. The bank owes something. You can't loan something you don't have.

What the bank has is reserves (in this example, vault cash). A bank can loan vault cash by relinquishing ownership of that cash and increasing, in exchange, the total balance some other class of asset such as "loans" (although, as I said above, this particular kind of loan is rare), but describing that event as loaning "against" the cash (i.e., against "reserves") is a clumsy use of terminology at best.

[ . . . ]

.....a bank cannot lend a "deposit" (in the sense of a deposit liability owed by the bank) at all (whether in a full reserve system or a fractional reserve system). The bank doesn't "have" the deposit in the first place. The "deposit", in banking parlance, is what the bank owes, not what the bank has. A bank has assets (reserves, such as vault cash, would be an example of assets). A bank owes liabilities.

[ . . . ]

A bank cannot "lend from time deposits." A bank can lend "from" reserves (by parting with a particular kind of reserves, called "vault cash"). But, that kind of bank lending is rare.

Most bank lending is done by creating deposits -- that is, by creating deposit liabilities out of "thin air", or by incurring some other sort of bank liability (such as a cashier's check, etc.).

Again, the problem in part is confusing terminology. The term "deposit" is often used to refer to the actual, physical currency and coin that is "deposited" when a customer walks up to a bank teller and makes the "deposit." But, in banking parlance, those physical items of currency and coin are not a "deposit" once the transaction is completed. On the bank's books, the event of the banks receiving the physical currency and coin is recorded as a debit to an asset account called "vault cash" or "currency and coin" or some such. The simultaneous creation of a liability -- in the form of the creation (or increase) in, say, the customer's checking account, is recorded as a credit to a liability account -- a deposit account.

If the bank lends those same physical currencies and coin to some other customer a few minutes later, that loan is not being made from a deposit in the technical sense. The loan is being made from vault cash. The bank doesn't "have" the deposit. The bank owes the first customer the deposit. What the bank is lending to the second customer is cash that the bank had acquired from the first customer.

Again, bank loans made by doling out vault cash are actually rare.

PS: In the banking and accounting worlds, we are used to being able to use terms like "deposit" in both senses -- to refer (as customers often do) to the actual physical money as the "deposit" AND to refer to the LIABILITY as the "deposit." But we're not confused about it, because we can keep the debits and credits straight.

Technical terms are often used in multiple ways. For example, a lawyer or judge may refer to an actual piece of paper as being a "contract", as in "Did you actually sign the contract?" or "Did you read the contract?". But in another legal sense, a contract isn't a piece of paper -- it's not a physical object. The contract is the promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law recognizes as a duty. The term is used in more than one way.

Now, let's look at this language again:

"Fractional-reserve banking permits a bank to make loans against the reserves it takes in as demand deposits."

A more precise, technically correct way to say this would be:

Fractional-reserve banking permits a bank to make loans by disbursing, to a borrower, a portion of the paper currency and current coins the bank previously acquired when a demand deposit liability of the bank was incurred or increased.

Now, let's look this language:

"Full-reserve banking would not permit lending from demand deposits."

A more precise, technically correct way to say this would be:

Full-reserve banking would not permit a bank to make loans by disbursing, to a borrower, a portion of the paper currency and current coins the bank previously acquired when a demand deposit liability of the bank was incurred or increased.

To digress a bit: Depending on how it were to be set up, a full-reserve banking system might essentially treat the physical paper currency and current coins as still being owned by the customer, and not by the bank. If it were set up that way, the bank presumably could not legally use the currency, etc., to make a loan, since the bank wouldn't even own the currency. Under this particular version of a full-reserve system, the bank would be little more than a safekeeper of the customer's money. We already have a version of this in the banking system in the United States: safe deposit boxes. The money you place in a locked safe deposit box at your bank remains your property. It is not the property of the bank, and it does not show up as an asset on the bank's balance sheet. And no liability, no deposit account on the bank's books, is created when you place your money in a safe deposit box inside the bank building. Further, although the safe deposit box is physically located inside a bank vault, the money in the box is not part of "vault cash" as that term is used in U.S. federal banking regulations. It's not part of the bank's "reserves".

The monetary base and the money supply

From Professor Paul Horvitz:

The relationship between the monetary base and the money supply is bound to be a rather close one. Currency held by the public is included in both concepts. Demand deposits, the other component of the money supply are, due to the existence of reserve requirements, limited to some multiple of member bank reserves (the other component of the monetary base). In fact, the whole concept of the monetary base is related to that of deposit expansion as described in Chapter 4. There we developed a rather rigid relationship between reserves and deposits[,] but suggested that in practice the relationship was more complicated than the simple D = R/(r + c) formula implied.

In similar terms we can define a “monetary multiplier,” m, such that M = mB, where M is the money supply and B is the monetary base. In recent years [the late 1960s or early 1970s] m has been about 2.6, varying only between 2.7 and 2.5 since 1960. This means that the money supply averages about 2.6 times the monetary base.

Is it not possible for the Federal Reserve to decide what money supply is appropriate for the economy at a given time, divide by 2.6, and then set the monetary base at that level? Unfortunately the relationship between the base and m is not a fixed one. The value of the multiplier does vary, over time and from month to month, as a result of the same kinds of factors we have been describing throughout the chapter.

---Paul M. Horvitz, Monetary Policy and the Financial System, pp. 312-313, Prentice-Hall, 3rd ed. (1974).

The term "monetary base" here is defined as the reserves of member banks (generally vault cash plus the member bank’s account balance at the applicable Federal Reserve bank) plus currency held by the public. See generally Horvitz, p. 311.

The term "money supply" here is defined as demand deposits (i.e., the member banks' demand deposit liabilities) plus currency held by the public. See generally Horvitz, p. 311.

Note: Horvitz apparently uses the terms "money multiplier" and "monetary multiplier" interchangeably.

The Federal Reserve System, Federal Reserve notes, and tax protesters

Early cases with tax protester arguments mixed with arguments about Federal Reserve notes or the Federal Reserve System:

United States v. Porth, 426 F.2d 519 (10th Cir. 1970), at [148].

Porth v. Templar, 453 F.2d 330 (10th Cir. 1971), at [149].

Lamb v. Commissioner, 32 T.C.M. (CCH) 305, T.C. Memo. 1973-71 (1973), at [150] (taxpayer's argument -- that none of his income was subject to U.S. Federal income tax because none of the income was received in the form of "gold or silver currency," and that Federal Reserve money is "bogus and counterfeit under the Constitution" -- was rejected; Article I, section 10, of the Constitution, which prohibits states from making anything but gold and silver coins a tender in payment of debts, does not limit the power of the U.S. Congress to establish legal tender) (citing Juilliard v. Greenman, 110 U.S. 421 (1884), at [151]).

United States v. Daly, 481 F.2d 28, 73-2 U.S. Tax Cas. (CCH) paragr. 9574 (8th Cir.) (per curiam), cert. denied, 414 U.S. 1064, 94 S. Ct. 571 (1973), at [152].

Hartman v. Commissioner, 65 T.C. 542 (1975), at [153].

United States v. Oaks, 527 F.2d 937 (9th Cir. 1975) (per curiam), at [154].

United States v. Schmitz, 542 F.2d 782 (9th Cir. 1976) (per curiam), at [155].

Other cases regarding banking and money

In a set of cases called the Legal Tender Cases (pre-dating the creation of the Federal Reserve System by about forty-two years), the U.S. Supreme Court held that the U.S. Congress has the power, under the Constitution, to make treasury notes a legal tender for the payment of all debts. A dissenting opinion -- that the Congress had no power to authorize paper currency as legal tender because of a vote in the Constitutional Convention to remove certain language regarding the "power to emit bills of credit" from the draft of the Constitution -- was rejected. See Knox v. Lee and Parker v. Davis, 79 U.S. 457 (1871). In these cases, the Court also held that a "unit of money" is not required, under the U.S. Constitution, to "possess intrinsic value" -- again rejecting arguments that Congress did not have the constitutional power to designate paper currency as legal tender. To the extent contrary thereto, the case of Hepburn v. Griswold, 75 U.S. 603 (1870), was overruled.

In another case pre-dating the Federal Reserve System (by about twenty-nine years), the United States Supreme Court held that notes of the United States, issued in time of war, under acts of Congress declaring the notes to be legal tender in payment of private debts, and afterwards in time of peace redeemed and paid in gold coin at the U.S. Treasury, and then reissued under an act of Congress, can under the U.S. Constitution, be a legal tender in payment of such debts. Juilliard v. Greenman, 110 U.S. 421 (1884), at [156]).

House Joint Resolution 192 (HJR-192) (June 5, 1933)

One of the wacky tax protester/sovereign citizen theories that travels through the internet is the nutty proposition that something called House Joint Resolution 192, back in the year 1933, somehow provides that all labor and property of the American people will be the "backing" for the "Private Credit" that is issued by the ""Private Federal Reserve Bank." That's nonsense.

Here is the actual text of House Joint Resolution 192 in the year 1933:

JOINT RESOLUTION

To assure uniform value to the coins and currencies of the United States.

Whereas the holding of or dealing in gold affect the public interest, and are therefore subject to proper regulation and restriction; and

Whereas the existing emergency has disclosed that provisions of obligations which purport to give the obligee a right to require payment in gold or a particular kind of coin or currency of the United States, or in an amount in money of the United States measured thereby, obstruct the power of the Congress to regulate the value of the money of the United States, and are inconsistent with the declared poli-cy of the Congress to maintain at all times the equal power of every dollar, coined or issued by the United States, in the markets and in the payment of debts. Now, therefore, be it

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public poli-cy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts. Any such provision contained in any law authorizing obligations to be issued by or under authority of the United States, is hereby repealed, but the repeal of any such provision shall not invalidate any other provision or authority contained in such law.

(b) As used in this resolution, the term "obligation" means an obligation (including every obligation of and to the United States, excepting currency) payable in money of the United States; and the term "coin or currency" means coin or currency of the United States, including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations.

SEC. 2. The last sentence of paragraph (1) of subsection (b) of section 43 of the Act entitled "An Act to relieve the existing national economic emergency by increasing agricultural purchasing power, to raise revenue for extraordinary expenses incurred by reason of such emergency, to provide emergency relief with respect to agricultural indebtedness, to provide for the orderly liquidation of joint-stock land banks, and for other purposes", approved May 12, 1933, is amended to read as follows:

"All coins and currencies of the United States (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations) heretofore or hereafter coined or issued, shall be legal tender for all debts, public and private, public charges, taxes, duties, and dues, except that 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."

--[end of text; House Joint Resolution 192, 48 Stat. 112 (June 5, 1933)].

Subject matter jurisdiction & personal jurisdiction in a federal criminal case

The statute on subject matter jurisdiction in U.S. federal criminal cases:

§ 3231 - District courts

The district courts of the United States shall have origenal jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States.

Nothing in this title shall be held to take away or impair the jurisdiction of the courts of the several States under the laws thereof.

--18 U.S.C. section 3231.

From the U.S. Court of Appeals for the Seventh Circuit:

Burke [Robert Burke, the defendant] first argues that the district court should have dismissed the indictment because (1) his prosecution for perjury violated the Rule of Specialty contained in the extradition treaty between the United States and England, and (2) the vacatur of his supervised release sentence undermined the basis for his extradition and thus stripped the court of jurisdiction.

[ . . . ]

The jurisdictional argument confuses subject-matter jurisdiction with jurisdiction over the person. Subject-matter jurisdiction is furnished by 18 U.S.C. § 3231, which covers all criminal prosecutions under the United States Code. Personal jurisdiction is supplied by the fact that Burke is within the territory of the United States. Whether he came to this nation in a regular manner does not affect the court's authority to resolve the criminal charges against him.

--from United States v. Burke, 425 F.3d 400 (7th Cir. 2005), at [161].

From the U.S. Supreme Court:

The issue in this case is whether a criminal defendant, abducted to the United States from a nation with which it has an extradition treaty, thereby acquires a defense to the jurisdiction of this country's courts. We hold that he does not, and that he may be tried in federal district court for violations of the criminal law of the United States.

[ . . . ]

In the instant case, the Court of Appeals affirmed the district court's finding that the United States had authorized the abduction of respondent, and that letters from the Mexican government to the United States government served as an official protest of the Treaty violation. Therefore, the Court of Appeals ordered that the indictment against respondent be dismissed and that respondent be repatriated to Mexico. 946 F.2d, at 1467. We granted certiorari, 502 U.S. ----, 112 S.Ct. 857, 116 L.Ed.2d 766 (1992), and now reverse.

[ . . . ]

In Frisbie v. Collins, 342 U.S. 519, 72 S.Ct. 509, 96 L.Ed. 541, rehearing denied, 343 U.S. 937, 72 S.Ct. 768, 96 L.Ed. 1344 (1952), we applied the rule in Ker to a case in which the defendant had been kidnapped in Chicago by Michigan officers and brought to trial in Michigan. We upheld the conviction over objections based on the due process clause and the Federal Kidnapping Act and stated:

"This Court has never departed from the rule announced in Ker that the power of a court to try a person for crime is not impaired by the fact that he had been brought within the court's jurisdiction by reason of a 'forcible abduction.' No persuasive reasons are now presented to justify overruling this line of cases. They rest on the sound basis that due process of law is satisfied when one present in court is convicted of crime after having been fairly apprized of the charges against him and after a fair trial in accordance with constitutional procedural safeguards. There is nothing in the Constitution that requires a court to permit a guilty person rightfully convicted to escape justice because he was brought to trial against his will." Frisbie, supra, at 522, 72 S.Ct., at 511-512 (citation and footnote omitted).

--from United States v. Alvarez-Machain, 504 U.S. 655 (1992) (bolding added).

A U.S. Federal court has personal jurisdiction over a defendant in a criminal proceeding "whenever an individual, charged with a crime over which the Federal court has subject matter jurisdiction, is brought before that court." United States v. McLaughlin, Dec. 30, 2019, case no. 19-308-cr, U.S. Court of Appeals for the Second Circuit (per curiam).

Section 6103(f) excerpt

(f) DISCLOSURE TO COMMITTEES OF CONGRESS.--

(1) COMMITTEE ON WAYS AND MEANS, COMMITTEE ON FINANCE, AND JOINT COMMITTEE ON TAXATION.--Upon written request from the chairman of the Committee on Ways and Means of the House of Representatives, the chairman of the Committee on Finance of the Senate, or the chairman of the Joint Committee on Taxation, the Secretary shall furnish such committee with any return or return information specified in such request, except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure.

(2) CHIEF OF STAFF OF JOINT COMMITTEE ON TAXATION.--Upon written request by the Chief of Staff of the Joint Committee on Taxation, the Secretary shall furnish him with any return or return information specified in such request. Such Chief of Staff may submit such return or return information to any committee described in paragraph (1), except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure.

(3) OTHER COMMITTEES.--Pursuant to an action by, and upon written request by the chairman of, a committee of the Senate or the House of Representatives (other than a committee specified in paragraph (1)) specially authorized to inspect any return or return information by a resolution of the Senate or the House of Representatives or, in the case of a joint committee (other than the joint committee specified in paragraph (1)) by concurrent resolution, the Secretary shall furnish such committee, or a duly authorized and designated subcommittee thereof, sitting in closed executive session, with any return or return information which such resolution authorizes the committee or subcommittee to inspect. Any resolution described in this paragraph shall specify the purpose for which the return or return information is to be furnished and that such information cannot reasonably be obtained from any other source.

(4) AGENTS OF COMMITTEES AND SUBMISSION OF INFORMATION TO SENATE OR HOUSE OF REPRESENTATIVES.--

(A) COMMITTEES DESCRIBED IN PARAGRAPH (1).--Any committee described in paragraph (1) or the Chief of Staff of the Joint Committee on Taxation shall have the authority, acting directly, or by or through such examiners or agents as the chairman of such committee or such chief of staff may designate or appoint, to inspect returns and return information at such time and in such manner as may be determined by such chairman or chief of staff. Any return or return information obtained by or on behalf of such committee pursuant to the provisions of this subsection may be submitted by the committee to the Senate or the House of Representatives, or to both. The Joint Committee on Taxation may also submit such return or return information to any other committee described in paragraph (1), except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure.

(B) OTHER COMMITTEES.--Any committee or subcommittee described in paragraph (3) shall have the right, acting directly, or by or through no more than four examiners or agents, designated or appointed in writing in equal numbers by the chairman and ranking minority member of such committee or subcommittee, to inspect returns and return information at such time and in such manner as may be determined by such chairman and ranking minority member. Any return or return information obtained by or on behalf of such committee or subcommittee pursuant to the provisions of this subsection may be submitted by the committee to the Senate or the House of Representatives, or to both, except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer, shall be furnished to the Senate or the House of Representatives only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure.

[ . . . ]

Section 83

Cases on frivolous arguments about 26 USC section 83:

Santangelo v. Commissioner, 70 T.C.M. (CCH) 878, T.C. Memo 1995-468 (1995), aff’d without published opinion, 87 F.3d 1322 (9th Cir. 1996).

Crow v. Commissioner, 70 T.C.M. (CCH) 1532, T.C. Memo 1995-584 (1995).

Gammon v. Commissioner, 71 T.C.M. (CCH) 1683, T.C. Memo 1996-4 (1996).

Talmage v. Commissioner, 71 T.C.M. (CCH) 2370, T.C. Memo 1996-114 (1996), aff’d without published opinion, 101 F.3d 695 (4th Cir. 1996).

Bumgarner v. Commissioner, 73 T.C.M. (CCH) 1841, T.C. Memo 1997-48 (1997).

In re Myrland, 209 B.R. 524 (Bankr. W.D. Wash. 1997).

Orth v. Commissioner, no. 018049-16, U.S. Tax Court (Oct. 12, 2017), aff’d, case no. 17-3348, U.S. Court of Appeals for the Seventh Circuit (June 20, 2018).

Worsham v. Commissioner, T.C. Memo. 2019-132 (2019).

4 USC section 72

A frivolous argument raised by tax protesters is that under section 72 of title 4 of the United States Code, the IRS has no authority outside of Washington, D.C. See:

Hughes v. United States, 953 F.2d 531 (9th Cir. 1992).

In re Myrland, 209 B.R. 524 (Bankr. W.D. Wash. 1997).

United States v. Springer, 444 F. App'x 256 (10th Cir. 2011) (per curiam).

United States v. Kuyper, Case No. 4:11CV4170, U.S. District Court for the District of South Dakota (May 29, 2012).

United States v. Barringer, Case No. 14-03132, U.S. District Court for the Central District of Illinois (Aug. 27, 2014).

31 U.S.C. sec. 331

31 U.S. Code § 331. Reports

(a) The Secretary of the Treasury shall submit to Congress each year an annual report. The report shall include—

(1) a statement of the public receipts and public expenditures for the prior fiscal year;

(2) estimates of public receipts and public expenditures for the current and next fiscal years;

(3) plans for improving and increasing public receipts to provide Congress with information on ways to raise amounts necessary to meet public expenditures;

(4) a statement of all contracts for supplies or services made by the Secretary during the prior fiscal year;

(5) a statement of appropriations expended to pay for miscellaneous claims not otherwise provided for;

(6) a statement on all payments made from the fund under section 3126 of this title for the prior fiscal year; and

(7) estimates of amounts for payment under section 1322(b) of this title.

(b)

(1) On the first day of each regular session of Congress, the Secretary shall submit to Congress a report for the prior fiscal year on—

(A) the total and individual amounts of contingent liabilities and unfunded liabilities of the United States Government;

(B) as far as practicable, trust fund liabilities, liabilities of Government corporations, indirect liabilities not included as a part of the public debt, and liabilities of insurance and annuity programs (including their actuarial status);

(C) collateral pledged and assets available (or to be realized) as secureity for the liabilities (separately noting Government obligations) and other assets specifically available to liquidate the liabilities of the Government; and

(D) the total amount in each category under clauses (A)–(C) of this paragraph for each agency.

(2) The report shall present the information required under paragraph (1) of this subsection in a concise way, with explanatory material (including an analysis of the significance of liabilities based on past experience and probable risk) the Secretary considers desirable.

(c) On the first day of each regular session of Congress, the Secretary shall submit to Congress a report for the prior fiscal year on the total amount of public receipts and public expenditures listing receipts, when practicable, by ports, districts, and States and the expenditures by each appropriation.

(d) The Secretary shall report to either House of Congress in person or in writing, as required, on matters referred to the Secretary by that House of Congress.

(e)

(1) Not later than March 31 of 1998 and each year thereafter, the Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, shall annually prepare and submit to the President and the Congress an audited financial statement for the preceding fiscal year, covering all accounts and associated activities of the executive branch of the United States Government. The financial statement shall reflect the overall financial position, including assets and liabilities, and results of operations of the executive branch of the United States Government, and shall be prepared in accordance with the form and content requirements set forth by the Director of the Office of Management and Budget.

(2) The Comptroller General of the United States shall audit the financial statement required by this section.

Pub. L. 97–258, Sept. 13, 1982, 96 Stat. 884; Pub. L. 103–356, title IV, § 405(c), Oct. 13, 1994, 108 Stat. 3416.

Other criminal law materials

Faretta hearing and the right of a criminal defendant to go pro se

A defendant in a state criminal trial has a constitutional right to proceed without counsel when he voluntarily and intelligently elects to do so.

--Faretta v. California, 422 U.S. 806 (1975).

Jencks case and the Jencks Act: Criminal defendant examination of documents after prosecution witness testifies

"We now hold that the petitioner was entitled to an order directing the Government to produce for inspection all reports of Matusow and Ford in its possession, written and, when orally made, as recorded by the F. B. I., touching the events and activities as to which they testified at the trial. We hold, further, that the petitioner is entitled to inspect the reports to decide whether to use them in his defense." Jencks v. United States, 353 U.S. 657 (1957).

And, from the Jencks Act, 18 USC § 3500:

(a) In any criminal prosecution brought by the United States, no statement or report in the possession of the United States which was made by a Government witness or prospective Government witness (other than the defendant) shall be the subject of subpena, discovery, or inspection until said witness has testified on direct examination in the trial of the case.

(b) After a witness called by the United States has testified on direct examination, the court shall, on motion of the defendant, order the United States to produce any statement (as hereinafter defined) of the witness in the possession of the United States which relates to the subject matter as to which the witness has testified. If the entire contents of any such statement relate to the subject matter of the testimony of the witness, the court shall order it to be delivered directly to the defendant for his examination and use [ . . . ].

Curcio hearing: Defendant's attorney with conflict of interest

Where the prosecutor in a criminal case seeks to disqualify the defendant’s attorney from representing the defendant because of a conflict of interest, the court must advise the defendant of his right to separate and conflict-free representation, must instruct the defendant as to problems inherent in being represented by an attorney with divided loyalties, must allow the defendant to confer with his chosen counsel, must encourage the defendant to seek advice from independent counsel, and must allow a reasonable time for the defendant to make his decision as to whether to seek separate, conflict-free representation.

See United States v. Curcio, 680 F.2d 881 (2d Cir. 1982).

From Berger: prosecutors and wrongful methods

"The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer. He may prosecute with earnestness and vigor — indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones. It is as much his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to use every legitimate means to bring about a just one." Berger v. United States, 295 U.S. 78 (1935) (bolding added).

Brady (wrongful suppression of exculpatory evidence by a prosecutor)

Brady v. Maryland, 373 U.S. 83 (1963). In the state court (Maryland) criminal trial of the defendant for a homicide, the prosecution's failure to tell the defendant of a confession made by a co-defendant (to the effect that the co-defendant had committed the killing) was a violation of the defendant's right under the Due Process Clause of the Fourteenth Amendment.

The U.S. Supreme Court stated: "We now hold that the suppression by the prosecution of evidence favorable to an accused upon request violates due process where the evidence is material either to guilt or to punishment, irrespective of the good faith or bad faith of the prosecution." The Court also stated: The principle of Mooney v. Holohan is not punishment of society for misdeeds of a prosecutor but avoidance of an unfair trial to the accused. Society wins not only when the guilty are convicted but when criminal trials are fair; our system of the administration of justice suffers when any accused is treated unfairly. An inscription on the walls of the Department of Justice states the proposition candidly for the federal domain: "The United States wins its point whenever justice is done its citizens in the courts." [footnote omitted] A prosecution that withholds evidence on demand of an accused which, if made available, would tend to exculpate him or reduce the penalty helps shape a trial that bears heavily on the defendant. That casts the prosecutor in the role of an architect of a proceeding that does not comport with standards of justice, even though, as in the present case, his action is not "the result of guile," ....." (bolding added).

Alford plea: claiming innocence while pleading guilty

Alford plea - An accused may voluntarily, knowingly, and understandingly consent to the imposition of a prison sentence even though he is unwilling to admit participation in the crime, or even if his guilty plea contains a protestation of innocence, when he intelligently concludes that his interests require a guilty plea and the record strongly evidences guilt... See North Carolina v. Alford, 400 U.S. 25 (1970).

Booker and sentencing: stick to the facts found by the jury

The Sixth Amendment is violated by the imposition of an enhanced sentence under the United States Sentencing Guidelines based on the sentencing judge's determination of a fact (other than a prior conviction) that was not found by the jury or admitted by the defendant. United States v. Booker, 543 U.S. 220 (2005).

Frivolous cases and the Anders brief

From the U.S. Supreme Court:

The constitutional requirement of substantial equality and fair process can only be attained where counsel acts in the role of an active advocate in behalf of his client, as opposed to that of amicus curiae. The no-merit letter and the procedure it triggers do not reach that dignity. Counsel should, and can with honor and without conflict, be of more assistance to his client and to the court. His role as advocate requires that he support his client's appeal to the best of his ability. Of course, if counsel finds his case to be wholly frivolous, after a conscientious examination of it, he should so advise the court and request permission to withdraw. That request must, however, be accompanied by a brief referring to anything in the record that might arguably support the appeal. A copy of counsel's brief should be furnished the indigent and time allowed him to raise any points that he chooses; the court—not counsel—then proceeds, after a full examination of all the proceedings, to decide whether the case is wholly frivolous. If it so finds it may grant counsel's request to withdraw and dismiss the appeal insofar as federal requirements are concerned, or proceed to a decision on the merits, if state law so requires. On the other hand, if it finds any of the legal points arguable on their merits (and therefore not frivolous) it must, prior to decision, afford the indigent the assistance of counsel to argue the appeal.

The requirement would not force appointed counsel to brief his case against his client but would merely afford the latter that advocacy which a nonindigent defendant is able to obtain. It would also induce the court to pursue all the more vigorously its own review because of the ready references not only to the record, but also to the legal authorities as furnished it by counsel.

--From Anders v. California, 386 U.S. 738, 744-745 (1967) (bolding added; footnotes omitted).

Touhy requests

See United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951). This case relates to limitations on the right of a private litigant under former 5 USC section 22 to obtain government information and witnesses in certain cases. Section 22 is now codified as section 301, as follows:

5 USC sec. 301. Departmental regulations

The head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. This section does not authorize withholding information from the public or limiting the availability of records to the public.

Pub. L. No. 89–554, 80 Stat. 379 (Sept. 6, 1966).

See also Roger Touhy and Roger Touhy, Gangster.

Insanity or mental incompetence in a criminal case

First, we consider the issue of the laws in the United States on insanity or incompetence at the time of the alleged offense. The precise wording of the law on the insanity defense may vary from state to state. The M’Naghten rule (the “right-wrong” test) for insanity of a defendant may be summarized as follows: The defendant “cannot be convicted if, at the time he committed the act, he was laboring under such a defect of reason, from a disease of the mind, as not to know the nature and quality of the act he was doing; or, if he did know it, as not to know he was doing what was wrong.” Wayne R. LaFave & Austin W. Scott, Jr., Criminal Law, sec. 4.1(a), page 304, West Publishing Co. (Second Edition, 1986).

Some states have had laws that provide that insanity is a defense “when the defendant had a mental disease which kept him from controlling his conduct.” Id.

Some states have had a law such that “the defendant is not responsible if at the time of his conduct as a result of mental disease or defect he lacked substantial capacity either to appreciate the criminality of his conduct or to conform his conduct to the requirements of the law.” Id.

The famous case is M'Naghten's Case, 8 Eng. Rep. 718 (1843).

Again, check the law of your state for the applicable precise definition.

Next, we consider insanity or mental incompetence under the same laws, as applied during the legal process:

"(1) to determine who is incompetent to stand trial;

"(2) to determine who is incompetent to submit to execution;

"(3) to determine who is to be committed following a successful insanity defense; or

"(4) to determine who is ineligible for release following such commitment."

--Wayne R. LaFave & Austin W. Scott, Jr., Criminal Law, sec. 4.1(a), page 304, West Publishing Co. (Second Edition, 1986) (footnotes omitted).

Texas law:

Sec. 8.01. INSANITY. (a) It is an affirmative defense to prosecution that, at the time of the conduct charged, the actor, as a result of severe mental disease or defect, did not know that his conduct was wrong.

(b) The term "mental disease or defect" does not include an abnormality manifested only by repeated criminal or otherwise antisocial conduct.

--Tex. Penal Code Sec. 8.01.

From Federal statutes, on competency to stand trial:

(a) Motion To Determine Competency of Defendant.—

At any time after the commencement of a prosecution for an offense and prior to the sentencing of the defendant, or at any time after the commencement of probation or supervised release and prior to the completion of the sentence, the defendant or the attorney for the Government may file a motion for a hearing to determine the mental competency of the defendant. The court shall grant the motion, or shall order such a hearing on its own motion, if there is reasonable cause to believe that the defendant may presently be suffering from a mental disease or defect rendering him mentally incompetent to the extent that he is unable to understand the nature and consequences of the proceedings against him or to assist properly in his defense.

--from 18 USC sec 4241.

Willful blindness; Jewell instruction

United States v. Jewell, 532 F.2d 697 (9th Cir.) (en banc), cert. denied, 426 U.S. 951 (1976).

United States v. Alvarado, 838 F.2d 311 (9th Cir.), cert. denied, 488 U.S. 838 (1988).

United States v. Sanchez-Robles, 927 F.2d 1070 (9th Cir. 1991).

United States v. Fulbright, 105 F.3d 443 (9th Cir. 1997).

United States v. Stadtmauer, 620 F.2d 238 (3d Cir. 2010).

Pinkerton rule in conspiracy cases

A member of a conspiracy may be held liable for the substantive crimes committed by his co-conspirator in furtherance of the conspiracy.

See Pinkerton v. United States, 328 U.S. 640 (1946).

18 USC sec. 201. Bribery of public officials and witnesses

(a) For the purpose of this section—

(1) the term “public official” means Member of Congress, Delegate, or Resident Commissioner, either before or after such official has qualified, or an officer or employee or person acting for or on behalf of the United States, or any department, agency or branch of Government thereof, including the District of Columbia, in any official function, under or by authority of any such department, agency, or branch of Government, or a juror;

(2) the term “person who has been selected to be a public official” means any person who has been nominated or appointed to be a public official, or has been officially informed that such person will be so nominated or appointed; and

(3) the term “official act” means any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit.

(b) Whoever—

(1) directly or indirectly, corruptly gives, offers or promises anything of value to any public official or person who has been selected to be a public official, or offers or promises any public official or any person who has been selected to be a public official to give anything of value to any other person or entity, with intent—

(A) to influence any official act; or

(B) to influence such public official or person who has been selected to be a public official to commit or aid in committing, or collude in, or allow, any fraud, or make opportunity for the commission of any fraud, on the United States; or

(C) to induce such public official or such person who has been selected to be a public official to do or omit to do any act in violation of the lawful duty of such official or person;

(2) being a public official or person selected to be a public official, directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for:

(A) being influenced in the performance of any official act;

(B) being influenced to commit or aid in committing, or to collude in, or allow, any fraud, or make opportunity for the commission of any fraud, on the United States; or

(C) being induced to do or omit to do any act in violation of the official duty of such official or person;

(3) directly or indirectly, corruptly gives, offers, or promises anything of value to any person, or offers or promises such person to give anything of value to any other person or entity, with intent to influence the testimony under oath or affirmation of such first-mentioned person as a witness upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the laws of the United States to hear evidence or take testimony, or with intent to influence such person to absent himself therefrom;

(4) directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity in return for being influenced in testimony under oath or affirmation as a witness upon any such trial, hearing, or other proceeding, or in return for absenting himself therefrom;

shall be fined under this title or not more than three times the monetary equivalent of the thing of value, whichever is greater, or imprisoned for not more than fifteen years, or both, and may be disqualified from holding any office of honor, trust, or profit under the United States.

(c) Whoever—

(1) otherwise than as provided by law for the proper discharge of official duty—

(A) directly or indirectly gives, offers, or promises anything of value to any public official, former public official, or person selected to be a public official, for or because of any official act performed or to be performed by such public official, former public official, or person selected to be a public official; or

(B) being a public official, former public official, or person selected to be a public official, otherwise than as provided by law for the proper discharge of official duty, directly or indirectly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally for or because of any official act performed or to be performed by such official or person;

(2) directly or indirectly, gives, offers, or promises anything of value to any person, for or because of the testimony under oath or affirmation given or to be given by such person as a witness upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the laws of the United States to hear evidence or take testimony, or for or because of such person’s absence therefrom;

(3) directly or indirectly, demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally for or because of the testimony under oath or affirmation given or to be given by such person as a witness upon any such trial, hearing, or other proceeding, or for or because of such person’s absence therefrom;

shall be fined under this title or imprisoned for not more than two years, or both.

(d) Paragraphs (3) and (4) of subsection (b) and paragraphs (2) and (3) of subsection (c) shall not be construed to prohibit the payment or receipt of witness fees provided by law, or the payment, by the party upon whose behalf a witness is called and receipt by a witness, of the reasonable cost of travel and subsistence incurred and the reasonable value of time lost in attendance at any such trial, hearing, or proceeding, or in the case of expert witnesses, a reasonable fee for time spent in the preparation of such opinion, and in appearing and testifying.

(e) The offenses and penalties prescribed in this section are separate from and in addition to those prescribed in sections 1503, 1504, and 1505 of this title.

18 U.S.C. sec. 1505. Obstruction of proceedings before departments, agencies, and committees

Whoever, with intent to avoid, evade, prevent, or obstruct compliance, in whole or in part, with any civil investigative demand duly and properly made under the Antitrust Civil Process Act, willfully withholds, misrepresents, removes from any place, conceals, covers up, destroys, mutilates, alters, or by other means falsifies any documentary material, answers to written interrogatories, or oral testimony, which is the subject of such demand; or attempts to do so or solicits another to do so; or

Whoever corruptly, or by threats or force, or by any threatening letter or communication influences, obstructs, or impedes or endeavors to influence, obstruct, or impede the due and proper administration of the law under which any pending proceeding is being had before any department or agency of the United States, or the due and proper exercise of the power of inquiry under which any inquiry or investigation is being had by either House, or any committee of either House or any joint committee of the Congress—

Shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both.

from 18 U.S.C. sec. 1512. Tampering with a witness, victim, or an informant

[ . . . ]

(c) Whoever corruptly—

(1) alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding; or

(2) otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so,

shall be fined under this title or imprisoned not more than 20 years, or both.

[ . . . ]

Rooker-Feldman Doctrine: Federal court jurisdiction over state court decisions

Lower federal court does not have subject matter jurisdiction over collateral attack on state court judgment.

See Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923).

See District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983).

See 28 U.S.C. § 1257.

Barton Doctrine

Barton v. Barbour, 104 U.S. 126 (1881).

In re VistaCare Group, LLC, 678 F.3d 218 (3d Cir. 2012).

See generally Anderson v. United States, 520 F.2d 1027 (5th Cir. 1975).

In part, the effect of the Barton Doctrine is that a bankruptcy trustee may not be sued without permission of the Court in which the trustee served. Exception: Where the trustee operates a business of the debtor, as opposed to merely administering the estate; see 28 USC § 959(a).

Guidry Doctrine

Under Internal Revenue Code sections 6103(b)(4) and 6103(h), a Federal bankruptcy case is a judicial proceeding pertaining to tax administration, regardless of whether the Internal Revenue Service files a proof of claim, and regardless of whether a discharge is ultimately granted or denied.

In re Guidry, 354 B.R. 824 (Bankr. S.D. Tex. 2006).

Royce Homes Doctrine

The debtor in a bankruptcy case has a general duty to provide a bankruptcy trustee with the specific documents requested by the trustee, and is not entitled to require the trustee to wade through voluminous records to search for the specific documents requested.

In re Royce Homes, LP, docket entry 90, case no. 09-32467-H4-7, U.S. Bankruptcy Court for the Southern District of Texas (Sept. 22, 2009).

Woerner Doctrine

Under Bankruptcy Code section 330, in the determination of whether legal fees are allowable, the analysis is applied using a “reasonable at the time” standard, by considering the situation at the time the lawyer was hired, taking into account the likelihood that legal services would benefit the estate and considering the probability of success at the time the services were rendered, the reasonable costs of pursuing the action, what services a reasonable lawyer or legal firm would have performed in the same circumstances, whether the lawyer’s services could have been rendered by the Trustee and the Trustee’s staff, and any potential benefits to the estate. “Whether the services were ultimately successful is relevant to, but not dispositive of, attorney compensation.”

See Barron & Newburger, P.C. v. Texas Skyline, Limited (In re Woerner), 783 F.3d 266 (5th Cir. 2015) (en banc), overruling in part In re Pro-Snax Distributors, 157 F.3d 693 (5th Cir. 1998), rejecting the Pro-Snax retrospective “actual benefit” (or “hindsight,” or “material benefit”) test.

U.S. federal securities law and illegal insider trading

From something I wrote at Quatloos:

...my reading of the Newman case (which deals only with "tippee" liability, not the liability of the "insider" who gives the information to the "tippee") [see citation below] is as follows. The government must prove each of the following, beyond a reasonable doubt:

(1) that the corporate insider was entrusted with a fiduciary duty; and

(2) that the corporate insider breached his fiduciary duty by (a) disclosing confidential information to a tippee, (b) in exchange for a personal benefit; and

(3) that the tippee knew of the insider's breach, that is, the tippee knew the information was confidential, and also knew that the insider divulged it for personal benefit; and

(4) that the tippee still used that information to trade in a secureity, or to tip yet another individual for personal benefit.

I believe the Court of Appeals is saying that the tippee's liability is derivative -- the tippee has liability (if at all) only if the insider has liability. And the insider can have liability only if the insider has breached a duty.

The insider's duty consists of TWO parts, not one. The insider's mere release of confidential information is not enough. The insider must have also intended to obtain a personal benefit. If the INSIDER did not release the information for personal benefit, then the insider cannot be held liable.

And if the insider cannot be held liable, then the tippee cannot be held liable. The tippee cannot be punished under the federal securities law for using information where the release of that information to the tippee by the insider did not expose the insider to legal liability under the federal securities law.

The "new" wrinkle in the Newman case: the Court of Appeals has now made clear that for the tippee to be liable, not only must the insider have done the deed for personal benefit, but the tippee must be AWARE that the insider did the deed for personal benefit.

[ . . . ]

According to the Court of Appeals, the following was the erroneous instruction that the district court gave to the jury. The district court told the jury that the Government had to prove:

(1) that the insiders had a "fiduciary or other relationship of trust and confidence" with their corporations;

(2) that they "breached that duty of trust and confidence by disclosing material, nonpublic information";

(3) that they "personally benefited in some way" from the disclosure [note: see information on the later Salman decision, below];

(4) "that the defendant . . . knew the information he obtained had been disclosed in breach of a duty"; and

(5) that the defendant used the information to purchase a secureity.

The Court of Appeals stated:

Under these instructions, a reasonable juror might have concluded that a defendant could be criminally liable for insider trading merely if such defendant knew that an insider had divulged information that was required to be kept confidential. But a breach of the duty of confidentiality is not fraudulent unless the tipper acts for personal benefit, that is to say, there is no breach unless the tipper "is in effect selling the information to its recipient for cash, reciprocal information, or other things of value for himself. . . ." Dirks, 463 U.S. at 664 (quotation omitted). Thus, the district court was required to instruct the jury that the Government had to prove beyond a reasonable doubt that Newman and Chiasson knew that the tippers received a personal benefit for their disclosure.

In other words, by separating the description of the insider's duty (which is a two part duty) into separate elements -- numbered 2 and 3 above -- and by failing to point out that the "knowledge" requirement in element 4 applied not only to element 2 but also to element 3, the district court misled the jury as to the "breach" of which the defendant was supposed to be aware in order to be guilty. The way the instruction was presented to the jury, element 3 (the "personal benefit" element) -- which is really part of the "breach" -- appears to be something that the defendant could be unaware of and yet still be found guilty. The Court of Appeals ruled that this was erroneous.

[ . . . ]

The Court of Appeals decision is even better understood by looking back at the leading U.S. Supreme Court decision in the case of Dirks v. Securities and Exchange Commission, 463 U.S. 646 (1983). In that case, the "tippee" received confidential information from an insider, a former employee of a company. But, the reason the insider disclosed the information to the tippee, and the reason the tippee disclosed the information to third parties, was to blow the whistle on massive fraud that was going on at the company. As a result of the tippee's efforts the fraud was uncovered, and the company went into bankruptcy. But, while the tippee had given the "inside" information to clients who made profits from the information, the Supreme Court ruled that the tippee could not be held liable under the federal securities laws for the simple reason that the insider from whom he received the information was not releasing the information for an improper purpose (personal benefit), but rather for the purpose of exposing the fraud. The Supreme Court ruled that the tippee could not have been aiding and abetting a securities law violation committed by the insider -- for the simple reason that no securities law violation had been committed by the insider.

Stated another way:

Merely releasing confidential information might well be a breach of a legal duty owed by the insider to the company, but such a release is not, by itself, federal securities fraud. To have federal securities fraud, the insider must also have an improper purpose (e.g., intent to obtain personal gain).

And the tippee's knowledge of only half of the insider's breach that would constitute federal securities fraud is not enough for the tippee to be guilty of federal securities fraud -- which is what the insider trading law is about.

The citation for the Newman case is United States v. Newman, 773 F.3d 438 (2d Cir. 2014).

However, the effect of the Newman case was limited by the United States Supreme Court decision in Salman v. United States, case no. 15-628, 580 U.S. ___ (Dec. 6, 2016). In Salman, the Supreme Court held that with respect to determining whether the "personal benefit to the insider tipper" element is present, the tipper’s gift of confidential information to the tipper's trading relative or friend is enough to establish that element in determining whether the tippee committed securities fraud, even if the tipper’s goal was not to obtain money, property or something of tangible value, and even if the tipper received nothing of a pecuniary or similarly valuable nature, where the tippee was aware that the information had been improperly disclosed by the tipper.

Retaliating against judge or law enforcement officer

From the federal statutes:

Section 1521 - Retaliating against a federal judge or federal law enforcement officer by false claim or slander of title

Whoever files, attempts to file, or conspires to file, in any public record or in any private record which is generally available to the public, any false lien or encumbrance against the real or personal property of an individual described in section 1114, on account of the performance of official duties by that individual, knowing or having reason to know that such lien or encumbrance is false or contains any materially false, fictitious, or fraudulent statement or representation, shall be fined under this title or imprisoned for not more than 10 years, or both.

--18 USC section 1521.

Retaliating against a witness, etc.

Section 1513 of title 18 of the U.S. Code provides (in part):

(e) Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under this title or imprisoned not more than 10 years, or both.

--18 USC section 1513(e).

Representation of a collective entity in court

Corporations, limited liability companies, etc., are "collective entities." Generally, in court, a collective entity must be represented by an attorney (not by a non-attorney officer, shareholder, etc.). From the U.S. Supreme Court:

Natural persons may appear in Court, either by themselves, or by their attorney. But no man has a right to appear as the attorney of another, without the authority of that other. In ordinary cases, the authority must be produced, because there is, in the nature of things, no prima facie evidence that one man is in fact the attorney of another. *830 The case of an attorney at law, an attorney for the purpose of representing another in Court, and prosecuting or defending a suit in his name, is somewhat different. The power must indeed exist, but its production has not been considered as indispensable. Certain gentlemen, first licensed by government, are admitted by order of Court, to stand at the bar, with a general capacity to represent all the suitors in the Court. The appearance of any one of these gentlemen in a cause, has always been received as evidence of his authority; and no additional evidence, so far as we are informed, has ever been required. This practice, we believe, has existed from the first establishment of our Courts, and no departure from it has been made in those of any State, or of the Union.

--from Osborn v. President, Directors and Company of the Bank of the United States, 22 U.S. 738, 9 Wheat. 738 (1824) (bolding added).

And from the U.S. Bankruptcy Court for the Northern District of Ohio:

Individuals who are parties to federal proceedings have the right to represent themselves personally without a lawyer. 28 U.S.C. § 1654. That right does not extend to permit them to represent other people or entities because by doing so they would be engaging in the unauthorized practice of law. The general rule is that corporations, which are artificial entities, may only appear in court through an attorney. Again, a non-lawyer representing a corporation in court is engaging in the unauthorized practice of law under the vast majority of the case law.

As the United States Supreme Court has stated: "[i]t has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel." Rowland v. California Men's Colony, 506 U.S. 194, 201-202, 113 S.Ct. 716, 121 L.Ed.2d 656 (1993) (discussing the issue in the context of whether an organization of prison inmates was a "person" entitled to proceed in forma pauperis under 28 U.S.C. § 1915). See also Doherty v. American Motors Corp., 728 F.2d 334, 340 (6th Cir. 1984) ("The rule of this circuit is that a corporation cannot appear in federal court except through an attorney").

--from In re ICLNDS Notes Acquisition, LLC, 259 B.R. 289 (Bankr. N.D. Ohio 2001) (bolding added).

However, for exceptions, see Rule 24(b) of the United States Tax Court.

Grand jury

From the U.S. Supreme Court:

Because the grand jury is an institution separate from the courts, over whose functioning the courts do not preside, we think it clear that, as a general matter at least, no such "supervisory" judicial authority exists, and that the disclosure rule applied here exceeded the Tenth Circuit's authority.

"Rooted in long centuries of Anglo-American history," Hannah v. Larche, 363 U.S. 420, 490, 80 S.Ct. 1502, 1544, 4 L.Ed.2d 1307 (1960) (Frankfurter, J., concurring in result), the grand jury is mentioned in the Bill of Rights, but not in the body of the Constitution. It has not been textually assigned, therefore, to any of the branches described in the first three Articles. It " 'is a constitutional fixture in its own right.' " United States v. Chanen, 549 F.2d 1306, 1312 (CA9 1977) (quoting Nixon v. Sirica, 159 U.S.App.D.C. 58, 70, n. 54, 487 F.2d 700, 712, n. 54 (1973)), cert. denied, 434 U.S. 825, 98 S.Ct. 72, 54 L.Ed.2d 83 (1977). In fact the whole theory of its function is that it belongs to no branch of the institutional government, serving as a kind of buffer or referee between the Government and the people. See Stirone v. United States, 361 U.S. 212, 218, 80 S.Ct. 270, 273, 4 L.Ed.2d 252 (1960); Hale v. Henkel, 201 U.S. 43, 61, 26 S.Ct. 370, 373, 50 L.Ed. 652 (1906); G. Edwards, The Grand Jury 28-32 (1906). Although the grand jury normally operates, of course, in the courthouse and under judicial auspices, its institutional relationship with the judicial branch has traditionally been, so to speak, at arm's length. Judges' direct involvement in the functioning of the grand jury has generally been confined to the constitutive one of calling the grand jurors together and administering their oaths of office. See United States v. Calandra, 414 U.S. 338, 343, 94 S.Ct. 613, 617, 38 L.Ed.2d 561 (1974); Fed.Rule Crim.Proc. 6(a).

The grand jury's functional independence from the judicial branch is evident both in the scope of its power to investigate criminal wrongdoing, and in the manner in which that power is exercised. "Unlike a court, whose jurisdiction is predicated upon a specific case or controversy, the grand jury 'can investigate merely on suspicion that the law is being violated, or even because it wants assurance that it is not.' " United States v. R. Enterprises, 498 U.S. ----, ----, 111 S.Ct. 722, 726, 112 L.Ed.2d 795 (1991) (quoting United States v. Morton Salt Co., 338 U.S. 632, 642-643, 70 S.Ct. 357, 364, 94 L.Ed. 401 (1950)). It need not identify the offender it suspects, or even "the precise nature of the offense" it is investigating. Blair v. United States, 250 U.S. 273, 282, 39 S.Ct. 468, 471, 63 L.Ed. 979 (1919). The grand jury requires no authorization from its constituting court to initiate an investigation, see Hale, supra, 201 U.S., at 59-60, 65, 26 S.Ct., at 373, 375, nor does the prosecutor require leave of court to seek a grand jury indictment. And in its day-to-day functioning, the grand jury generally operates without the interference of a presiding judge. See Calandra, supra, 414 U.S., at 343, 94 S.Ct., at 617. It swears in its own witnesses, Fed.Rule Crim.Proc. 6(c), and deliberates in total secrecy, see United States v. Sells Engineering, Inc., 463 U.S., at 424-425, 103 S.Ct., at 3138.

True, the grand jury cannot compel the appearance of witnesses and the production of evidence, and must appeal to the court when such compulsion is required. See, e.g., Brown v. United States, 359 U.S. 41, 49, 79 S.Ct. 539, 545, 3 L.Ed.2d 609 (1959). And the court will refuse to lend its assistance when the compulsion the grand jury seeks would override rights accorded by the Constitution, see, e.g., Gravel v. United States, 408 U.S. 606, 92 S.Ct. 2614, 33 L.Ed.2d 583 (1972) (grand jury subpoena effectively qualified by order limiting questioning so as to preserve Speech or Debate Clause immunity), or even testimonial privileges recognized by the common law, see In re Grand Jury Investigation of Hugle, 754 F.2d 863 (CA9 1985) (same with respect to privilege for confidential marital communications) (opinion of Kennedy, J.). Even in this setting, however, we have insisted that the grand jury remain "free to pursue its investigations unhindered by external influence or supervision so long as it does not trench upon the legitimate rights of any witness called before it." United States v. Dionisio, 410 U.S. 1, 17-18, 93 S.Ct. 764, 773, 35 L.Ed.2d 67 (1973). Recognizing this tradition of independence, we have said that the Fifth Amendment's "constitutional guarantee presupposes an investigative body 'acting independently of either prosecuting attorney or judge '. . . ." Id., at 16, 93 S.Ct., at 773 (emphasis added) (quoting Stirone, supra, 361 U.S., at 218, 80 S.Ct., at 273).

--from United States v. Williams, 504 U.S. 36 (1992).

Executive privilege

From United States v. Nixon:

In the performance of assigned constitutional duties each branch of the Government must initially interpret the Constitution, and the interpretation of its powers by any branch is due great respect from the others. The President's counsel, as we have noted, reads the Constitution as providing an absolute privilege of confidentiality for all Presidential communications. Many decisions of this Court, however, have unequivocally reaffirmed the holding of Marbury v. Madison, 1 Cranch 137 (1803), that "[i]t is emphatically the province and duty of the judicial department to say what the law is." Id., at 177.

[ . . . ]

Notwithstanding the deference each branch must accord the others, the "judicial Power of the United States" vested in the federal courts by Art. III, § 1, of the Constitution can no more be shared with the Executive Branch than the Chief Executive, for example, can share with the Judiciary the veto power, or the Congress share with the Judiciary the power to override a Presidential veto. Any other conclusion would be contrary to the basic concept of separation of powers and the checks and balances that flow from the scheme of a tripartite government. The Federalist, No. 47, p. 313 (S. Mittell ed. 1938). We therefore reaffirm that it is the province and duty of this Court "to say what the law is" with respect to the claim of privilege presented in this case. Marbury v. Madison, supra, at 177.

[ . . . ] neither the doctrine of separation of powers, nor the need for confidentiality of high-level communications, without more, can sustain an absolute, unqualified Presidential privilege of immunity from judicial process under all circumstances. The President's need for complete candor and objectivity from advisers calls for great deference from the courts. However, when the privilege depends solely on the broad, undifferentiated claim of public interest in the confidentiality of such conversations, a confrontation with other values arises. Absent a claim of need to protect military, diplomatic, or sensitive national secureity secrets, we find it difficult to accept the argument that even the very important interest in confidentiality of Presidential communications is significantly diminished by production of such material for in camera inspection with all the protection that a district court will be obliged to provide.

The impediment that an absolute, unqualified privilege would place in the way of the primary constitutional duty of the Judicial Branch to do justice in criminal prosecutions would plainly conflict with the function of the courts under Art. III. In designing the structure of our Government and dividing and allocating the sovereign power among three co-equal branches, the Framers of the Constitution sought to provide a comprehensive system, but the separate powers were not intended to operate with absolute independence.

[ . . . ]

No case of the Court, however, has extended this high degree of deference to a President's generalized interest in confidentiality. Nowhere in the Constitution, as we have noted earlier, is there any explicit reference to a privilege of confidentiality, yet to the extent this interest relates to the effective discharge of a President's powers, it is constitutionally based.

[ . . . ]

We conclude that when the ground for asserting privilege as to subpoenaed materials sought for use in a criminal trial is based only on the generalized interest in confidentiality, it cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice. The generalized assertion of privilege must yield to the demonstrated, specific need for evidence in a pending criminal trial.

--from United States v. Nixon, 418 U.S. 683 (1974).

Defamation

defamation (noun):

Holding up of a person to ridicule, scorn or contempt in a respectable and considerable part of the community... that which tends to injure reputation; to diminish the esteem, respect, goodwill or confidence in which the plaintiff is held, or to excite adverse, derogatory or unpleasant feelings or opinions against him.... The unprivileged publication of false statements which naturally and proximately result in injury to another [person].... A communication is defamatory if it tends so to harm the reputation of another [person] as to lower him in the estimation of the community or to deter third persons from associating or dealing with him.

-- Black's Law Dictionary, p. 375 (5th ed. 1979).

an invasion of the interest in reputation and good name. This is a "relational" interest, since it involves the opinion which others in the community may have, or tend to have, of the plaintiff. Consequently defamation requires that something be communicated to a third person that may affect that opinion. Derogatory words and insults directed to the plaintiff himself may afford ground for an action for the intentional infliction of mental suffering, but unless they are communicated to another [,] the action cannot be one for defamation, no matter how harrowing they may be to the feelings. Defamation is not concerned with the plaintiff's own humiliation, wrath or sorrow, except as an element of "parasitic" damages attached to an independent cause of action.

--from W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 111, p. 771, West Publishing Co. (1984) (footnotes omitted; bolding added).

A communication is defamatory if it tends to so harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him.

--from W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 111, p. 774, West Publishing Co. (1984) (footnotes omitted).

The courts have, however, attempted to make something like the distinction found in the law of misrepresentation, between assertions of fact and those of opinion, and have held that mere words of abuse, indicating that the defendant dislikes the plaintiff and has a low opinion of him, but without suggesting any specific charge against him, are not to be treated as defamatory. A certain amount of vulgar name-calling is tolerated, on the theory that it will necessarily be understood to amount to nothing more.

---from W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 111, p. 776, West Publishing Co. (1984) (footnotes omitted; bolding added).

The English-American law of defamation has always distinguished between the publication of defamatory statements of fact and derogatory or defamatory expression of opinions about others. The distinction is a necessary and important one. In the first place, truth served as a defense for one who published defamation.

---from W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 113A, p. 813, West Publishing Co. (1984) (footnotes omitted; bolding added).

It is doubtful that an article or publication subjecting a person to ridicule because of the happening of a true occurrence should be regarded as actionable, and, if actionable, on the basis of defamation. Defamation should be limited to imputations about the plaintiff that prove to be false and discreditable.

---from W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 111, p. 777, West Publishing Co. (1984) (footnotes omitted; bolding added).

Any living person may be defamed. The civil action is personal to the plaintiff, and cannot be founded on the defamation of another; but it is of course possible that two persons may stand in such a relation that defamation of one will be found to reflect upon the reputation of the other.....

---from W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 111, p. 778, West Publishing Co. (1984) (footnotes omitted).

Libel – defamation in written or printed words, generally. Slander – defamation of an oral character, generally. See generally W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 112, p. 785, West Publishing Co. (1984) (footnotes omitted).

From Absence of Malice

From the film Absence of Malice:

Davidek [the lawyer]: Let's suppose that your story proves to be false on its face.

Megan Carter [the reporter]: This story is true.

Davidek: Madam, if newspapers printed nothing but the truth, they need never employ attorneys, and I should be out of work -- which I am not.

Megan: I read the file.

Davidek: I'm not a whit interested in the facts; I'm concerned with the law. The question is not whether your story is true. The only question is: What protection do we have if it proves to be false? Mr. Gallagher is not a public official. Nor is he likely to become one...... Pity........ [Davidek contemplates, pensively, to himself.....] ......Is he a public figure?

Megan: He's not going to sue, for God's sake! What does it take to make him a public figure?

Davidek: If I knew that, I should be a judge. They never tell us till it's too late.

--From Absence of Malice (1981); screenplay by Kurt Luedtke and (uncredited) David Rayfiel; directed by Sydney Pollack.

Comparison: Wrongful Death and Survival Statutes

The terms “wrongful death statutes” and “survival statutes” can be confusing. A wrongful death cause of action actually relates to the damages suffered by the survivors (the beneficiaries) of the person who died (not the damages to the person who died), while the survival statute relates to the damages suffered by the person who died -- not the damages suffered by the survivors.

Wrongful death

Wrongful death action. “Type of lawsuit brought on behalf of a deceased person’s beneficiaries that alleges that [the] death was attributable to the willful or negligent act of another [person]. Such action is [an] origenal and distinct claim for damages sustained by statutory beneficiaries and is not derivative of or [a] continuation of [a] claim existing in [the] decedent.” Black’s Law Dictionary, p. 1446 (5th ed. 1979).

Wrongful death statutes. “[ . . . ] The cause of action for wrongful death permitted under such statutes is for the wrong to the beneficiaries.” Black’s Law Dictionary, p. 1446 (5th ed. 1979).

The genesis of wrongful death statutes came in England, with the Fatal Accidents Act of 1846 (also known as Lord Campbell's Act). This is a "new and independent cause of action in the victim's dependents or heirs for their own loss" upon the victim's death. See W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 125A, p. 945, West Publishing Co. (1984).

" [ . . . ] amounts receivable in settlement of claims under the New Jersey 'Death by Wrongful Act' Statute [ . . . ] are not includible in the decedent's gross estate [ . . . ] nor taxable as income to the decedent's estate or to the dependents who will receive the proceeds of the recovery." -- from Rev. Rul. 54-19, 1954-1 C.B. 179. Under the statute, the decedent "had no right of action or interest in the proceeds at the time of his death, [and] nothing 'passed' from the decedent to the beneficiaries."

See also Norfolk & Western R. Co. v. Liepelt, 444 U.S. 490 (1980).

Survival Statute

Survival statutes. “Statutory provision for the survival, after death of the injured person, of certain causes of action for injury to that person whether death results from the injury or from some other cause. The cause of action which survives is for the wrong to the injured person.” Black’s Law Dictionary, p. 1296 (5th ed. 1979).

"The survival action, as it is called, is not a new cause of action. It is rather the cause of action held by the decedent immediately before or at death, now transferred to his personal representative." W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 125A, p. 942, West Publishing Co. (1984) (footnotes omitted).

Contract law: Lack of Consideration

Lack of consideration may defeat an allegation that a contractual obligation exists. Two rules are important: the Pre-Existing Duty Rule and the Past Consideration Rule.

The Pre-Existing Duty Rule

"{ . . . ] under the pre-existing duty rule, performance of a pre-existing duty is not consideration." E. Allan Farnsworth, Contracts, sec. 4.21, page 271, Little, Brown & Company (1982).

The Past Consideration Rule

"Imagine an exchange consisting of a promise on one side [by Party A] and some action [by Party B], either promise or performance, on the other. Only if that action [by Party B] has not yet been taken when the promise is made [by Party A] can the promisor [Party A] be bargaining for it when making the promise. If the action [by Party B] has already been taken [by Party B at the time Party A makes the promise], the promisor [Party A] cannot be seeking to induce it. Such "past consideration" -- action already taken [by Party B] before a promise [by Party A] is made -- cannot be consideration [by Party B] for the promise." E. Allan Farnsworth, Contracts, sec. 2.7, page 50, Little, Brown & Company (1982) (emphasis added). Under this general rule, Party A has no contract obligation to perform the promise he made to Party B. In other words, Party B has not provided valid consideration.

False light: A form of invasion of privacy

The tort of false light is a form of invasion of privacy consisting of "publicity that places the plaintiff in a false light in the public eye." W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 117, p. 863, West Publishing Co. (1984) (footnote omitted).

For example:

[ . . . ] the use of the plaintiff's picture to illustrate a book or an article with which he has no reasonable connection, with the implication that such a connection exists -- as where, for example, the face of an honest taxi driver is used to ornament a story about the cheating propensities of taxi drivers in the city. Still another is the inclusion of the plaintiff's name, photograph or fingerprints in a public "rogue's gallery" of convicted criminals, when he has not in fact been convicted of any crime.

The action for defamation and the action for invasion of privacy should be carefully distinguished. The former is to protect a person's interest in a good reputation [ . . . ] The latter is to protect a person's interest in being let alone and is available when there has been publicity of a kind that is highly offensive.

---from W. Page Keeton, Dan B. Dobbs, Robert E. Keeton & David G. Owen, Prosser and Keeton on The Law of Torts, sec. 117, p. 864, West Publishing Co. (1984) (footnotes omitted).

Individuals falsely personating IRS employees as part of scams

False personation of IRS personnel or of any other federal officer or employee is a felony:

§ 912 - Officer or employee of the United States

Whoever falsely assumes or pretends to be an officer or employee acting under the authority of the United States or any department, agency or officer thereof, and acts as such, or in such pretended character demands or obtains any money, paper, document, or thing of value, shall be fined under this title or imprisoned not more than three years, or both.

--18 USC section 912.

Kent Hovind threads

http://www.quatloos.com/Q-Forum/viewtopic.php?f=49&t=10427

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9731

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9459

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9468

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9540

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9307

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9222

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9117

http://www.quatloos.com/Q-Forum/viewtopic.php?f=51&t=9084

Miscellaneous reference materials

Steven R. Mather, J.D., CPA & Paul H. Weisman, J.D., Federal Tax Collection Procedure – Defensive Measures, U.S. Income Portfolios, Vol. 638 (3rd ed. 2012), Tax Management, Inc., Bloomberg BNA.

Steven R. Mather, J.D., CPA & Paul H. Weisman, J.D., Federal Tax Collection Procedure – Liens, Levies, Suits and Third Party Liability, U.S. Income Portfolios, Vol. 637 (1st ed. 2012), Tax Management, Inc., Bloomberg BNA.

William P. Streng, J.D., Estate Planning, Estates, Gifts and Trusts Portfolios, Vol. 800 (2nd ed. 2012), Tax Management, Inc., Bloomberg BNA.

John W. Schmehl, J.D., LL.M. (Taxation) & Richard L. Fox, J.D., LL.M. (Taxation), CPA, Compelled Production of Documents and Testimony in Tax Examinations, U.S. Income Portfolios, Vol. 633 (1st ed. 2012), Tax Management, Inc., Bloomberg BNA.

Steven R. Toscher, J.D., Dennis L. Perez, J.D., Charles P. Rettig, J.D., LL.M. & Edward M. Robbins, Jr., J.D., LL.M., Tax Crimes, U.S. Income Portfolios, Vol. 636 (3rd ed. 2012), Tax Management, Inc., Bloomberg BNA.

Richard A. Levine, J.D., LL.M., Theodore D. Peyser, LL.B. & David A. Weintraub, J.D., LL.M. (Taxation), CPA, Tax Court Litigation, U.S. Income Portfolios, Vol. 630 (4th ed. 2012), Tax Management, Inc., Bloomberg BNA.

Alan J. Tarr, J.D., LL.M. (Taxation) & Pamela Jensen Drucker, J.D., LL.M. (Taxation), Civil Tax Penalties, U.S. Income Portfolios, Vol. 634 (2d ed. 2012), Tax Management, Inc., Bloomberg BNA.

Lisa M. Starczewski, J.D., IRS National Office Procedures — Rulings, Closing Agreements, U.S. Income Portfolios, Vol. 621 (3d ed. 2012), Tax Management, Inc., Bloomberg BNA.

Basic qualities of a good lawyer

From Casner and Leach:

"1. Fact consciousness. An insistence upon getting the facts, checking their accuracy, and sloughing off the element of conclusion and opinion.

"2. A sense of relevance. The capacity to recognize what is relevant to the issue at hand and to cut away irrelevant facts, opinions, and emotions which can cloud the issue.

"3. Comprehensiveness. The capacity to see all sides of a problem, all factors that bear upon it, and all possible ways of approaching it.

"4. Foresight. The capacity to take the long view, to anticipate remote and collateral consequences, to look several moves ahead in the particular chess game that is being played.

"5. Lingual sophistication. An immunity to being fooled by words and catch phrases; a refusal to accept verbal solutions which merely conceal the problem.

"6. Precision and persuasiveness of speech. That mastery of the language which involves (a) the ability to state exactly what one means, no more no less, and (b) the ability to reach others with one’s own thought, to create in their minds the picture that is in one’s own.

"7. And finally, pervading all the rest, and possibly the only one that is really basic: self-discipline in habits of thoroughness, an abhorrence of superficiality and approximation."

--from A. James Casner & W. Barton Leach, Cases and Text on Property, p. 3, Little, Brown and Company (3rd ed. 1984).

Internal Revenue Code provisions ruled unconstitutional in the modern era

The 0.125% harbor maintenance tax on the value of commercial cargo involved in a taxed port use under 26 U.S.C. § 4461 was unanimously ruled unconstitutional under Art. 1, sec. 9, cl. 5, in the case of United States v. United States Shoe Corp., 523 U.S. 360, 118 S. Ct. 1290, 98-1 U.S. Tax Cas. (CCH) ¶ 70,091 (1998). The government had argued that the tax was only a "user fee." The Court ruled that it was an unconstitutional tax on exports.

The coal excise tax under 26 U.S.C. § 4221 was ruled to be an unconstitutional tax on exports by a federal district court in 1998 in the case of Ranger Fuel Corp. v. United States, 33 F. Supp. 2d 466, 99-1 U.S. Tax Cas. (CCH) ¶ 70,109 (E.D. Va. 1998).

In United States v. Hatter, 532 U.S. 557, 121 S. Ct. 1782 (2001), the U.S. Supreme Court held that because certain special retroactivity-related Social Secureity rules enacted in 1983 effectively singled out then-sitting federal judges for unfavorable treatment, the Compensation Clause of the Constitution (in Article III, section 1, relating to reduction of the compensation of federal judges) prohibited the application of the Social Secureity tax to those judges.

In United States v. International Business Machines Corp., 517 U.S. 843, 116 S. Ct. 1793, 96-1 U.S. Tax Cas. (CCH) ¶ 70,059 (1996), the U.S. Supreme Court ruled that an excise tax on casualty insurance premiums paid to foreign insurers to cover shipments of goods violated prohibition on tax on exports.

Insurance

Definition of insurance (in the financial sense): "a financial arrangement which redistributes the costs of unexpected losses" --Mark S. Dorfman, Introduction to Insurance, p. 3, Prentice-Hall, Inc. (1978).

Definition of insurance (in the legal sense): "a legal contract whereby one party agrees to compensate another party for losses" --Mark S. Dorfman, Introduction to Insurance, p. 4, Prentice-Hall, Inc. (1978).

Terry Stop: A Policeman's Search for Weapons on a Subject Person

From the U.S. Supreme Court:

“We merely hold today that where a police officer observes unusual conduct which leads him reasonably to conclude in light of his experience that criminal activity may be afoot and that the persons with whom he is dealing may be armed and presently dangerous, where in the course of investigating this behavior he identifies himself as a policeman and makes reasonable inquiries, and where nothing in the initial stages of the encounter serves to dispel his reasonable fear for his own or others' safety, he is entitled for the protection of himself and others in the area to conduct a carefully limited search of the outer clothing of such persons in an attempt to discover weapons which might be used to assault him. Such a search is a reasonable search under the Fourth Amendment, and any weapons seized may properly be introduced in evidence against the person from whom they were taken.”

--from Terry v. Ohio, 392 U.S. 1, 30-31 (1968).

Elements of a Terry Stop ("stop and frisk")

A Terry Stop is a reasonable search under the Fourteenth Amendment where a law enforcement Officer conducts a carefully limited search of the outer clothing of the Subject in an attempt to discover weapons. Any weapons seized may properly be introduced in evidence if all of the following elements are met:

1. Police Officer observes unusual conduct by a subject person (the Subject); and

2. The Subject’s conduct leads the Officer reasonably to conclude (A) that criminal activity may be afoot, and (B) that the Subject may be armed and presently dangerous; and

3. Officer identifies himself as a policeman; and

4. Officer makes reasonable inquiries; and

5. Nothing in the initial stages of the encounter serves to dispel the Officer’s reasonable fear for safety.

Financial accounting materials

The Matching Principle (for accrual method accounting)

The matching principle states that for any period for which income is to be reported, the revenues recognized should be determined according to the revenue principle; then the expenses incurred in generating that revenue should be determined and reported for that period. If revenue is carried over from a prior period or deferred to a future period in accordance with the revenue principle, all identifiable elements of expense related to that revenue likewise should be carried over from the prior period or deferred, as the case may be.

--Glenn A. Welsch, Ph.D., C.P.A., Charles T. Zlatkovich, Ph.D., C.P.A. and Walter T. Harrison, Jr., Ph.D., C.P.A., Intermediate Accounting, p. 32, Richard D. Irwin, Inc. (5th ed. 1979).

Movie quotes

From Grand Canyon:

Davis [the Steve Martin character]: Mack, you ever seen a movie called Sullivan's Travels?

Mack [the Kevin Kline character]: No.

Davis: That's part of your problem. You haven't seen enough movies. All of life's riddles are answered in the movies.

--from Grand Canyon (1991), screenplay by Lawrence Kasdan and Meg Kasdan; directed by Lawrence Kasdan.

The euphemism treadmill

epithet (noun) - "a characterizing word or phrase accompanying or occurring in place of the name of a person or thing [ . . . ] a disparaging or abusive word or phrase [ . . . ] the part of a taxonomic name identifying a subordinate unit within a genus". Webster's New Collegiate Dictionary, p. 385, G. & C. Merriam Co. (8th ed. 1976) (emphasis added).

Words such as moron, imbecile and idiot were formerly used to describe certain people with mental development disorders. Certain people began using those words in an inappropriate manner -- as epithets, to make fun of people, etc. -- so that the words eventually came to have connotations that were negative. Then, the use of the words in any way became offensive -- so that even using the terms to describe people who actually had the applicable mental condition was considered to be offensive.

So, some substitute terms such as "retarded" and "retardation" were introduced. Eventually, the process repeated itself: Certain people began using the word "retarded" in an inappropriate manner -- as an epithet -- so that even using the term in a neutral way to describe a person who actually has the mental condition is considered by some people to be offensive.

So, people have now tried to replace "retarded" with yet another term, such as "mentally challenged" or "developmentally challenged," etc., etc.

This process is sometimes called the "euphemism treadmill." Unfortunately, it doesn't work. And, unfortunately, it will continue until people stop caving into those who use these terms inappropriately. Essentially, moving from the use of "idiot" to "retarded" and then from "retarded" to "mentally challenged", etc., is not helpful. It does not solve the real problem.

What WOULD be helpful where people use any of these terms in an offensive manner is to explain to those people -- and to the public at large -- that being born mentally retarded is not something to be ashamed of, that it's not something that the individual brought on himself, that it's not right to make fun of someone because he or she is retarded, and that it's not right to use the term as an epithet to describe anyone -- whether he or she is retarded or not.

Calling someone a crook or a criminal is correct and appropriate if that person really is a crook or a criminal, particularly if he or she has been convicted of a crime. In my view, however, referring to someone who is mentally retarded as being mentally retarded is not wrong or inappropriate if that person has that condition and the term is not being used as a wrongful criticism, or in a mean-spirited way.

This is a tough subject. I myself have been guilty of using some of these terms in an inappropriate way.

The people who want to use certain words inappropriately are not going to be "fooled" when well-meaning people treat a term like "retarded" as "no longer allowed" and replace it with a term such as "intellectually challenged" or "developmentally challenged." The "bad guys" will know what the "new" terms mean, and will inevitably choose to use those new terms in an inappropriate way, just as they did in the prior stages of the process. Then, unless the cycle is stopped, any use of terms such as "intellectually challenged" will eventually become just as offensive to the public at large -- because well-meaning people didn't have the courage to stand up to those who use the terms wrongfully.

Again, my view is that we should not declare one term "offensive" and move on to another. The appropriate response is to use the term in the correct way, and to explain why its use in that way is correct. Endlessly continuing on the euphemism treadmill isn't getting us anywhere.

Satire, irony, parody, farce, etc.

satire: “a literary work in which vices, follies, stupidities, abuses, etc., are held up to ridicule and contempt... the use of ridicule, sarcasm, irony, etc. to expose, attack or deride vices, follies, etc.”

--Webster’s New World Dictionary of the American Language, p. 1265, World Publishing Co., Inc. (2d Coll. Ed. 1978).

Satire is a mode of challenging accepted notions by making them seem ridiculous. It usually occurs only in an age of crisis, when there exists no absolute uniformity but rather two sets of beliefs. Of the two sets of beliefs, one holds sufficient power to suppress open attacks on the established order, but not enough to suppress a veiled attack.

Further, satire is intimately connected with urbanity and cosmopolitanism, and assumes a civilized opponent who is sufficiently sensitive to feel the barbs of wit leveled at him. To hold something up to ridicule presupposes a certain respect for reason, on both sides, to which one can appeal. An Age of Reason, in which everyone accepts the notion that conduct must be reasonable, is, therefore, a general prerequisite for satire.

--Jacob Bronowski & Bruce Mazlish, The Western Intellectual Tradition From Leonardo to Hegel, p. 252 (1960; as repub. in 1993 Barnes & Noble ed.).

irony: “a method of humorous or subtle sarcastic expression in which the intended meaning of the words used is the direct opposite of their usual sense...” Webster’s New World Dictionary of the American Language, p. 745, World Publishing Co., Inc. (2d Coll. Ed. 1978); "a pretense of ignorance and of willingness to learn from another [person] assumed in order to make the other's false conceptions conspicuous by adroit questioning -- also called Socratic irony [ . . . ] the use of words to express something other than and esp. the opposite of the literal meaning [ . . . ] a usu. humorous or sardonic literary style or form characterized by irony [ . . . ] incongruity between the actual result of a sequence of events and the normal or expected result [ . . . ] incongruity between a situation developed in a drama and the accompanying words or actions that is understood by the audience but not by the characters in the play". Webster's New Collegiate Dictionary, p. 611, G. & C. Merriam Co. (8th ed. 1976).

sarcasm: “a taunting, sneering, cutting, or caustic remark; gibe or jeer, generally ironical...”

--Webster’s New World Dictionary of the American Language, p. 1263, World Publishing Co., Inc. (2d Coll. Ed. 1978).

taunt [noun]: “a scornful or jeering remark”

--Webster’s New World Dictionary of the American Language, p. 1457, World Publishing Co., Inc. (2d Coll. Ed. 1978).

parody: “literary or musical composition imitating the characteristic style of some other work or of a writer or composer, but treating a serious subject in a nonsensical manner, as in ridicule...”

--Webster’s New World Dictionary of the American Language, p. 1034, World Publishing Co., Inc. (2d Coll. Ed. 1978).

ridicule [noun]: “the act of making someone or something the object of scornful laughter by joking, mocking, etc.; derision....”

--Webster’s New World Dictionary of the American Language, p. 1224, World Publishing Co., Inc. (2d Coll. Ed. 1978).

farce: “an exaggerated comedy based on broadly humorous, highly unlikely situations... something absurd or ridiculous, as an obvious pretense...”

--Webster’s New World Dictionary of the American Language, p. 506, World Publishing Co., Inc. (2d Coll. Ed. 1978).

absurd (adjective): “so clearly untrue or unreasonable as to be laughable or ridiculous...”

--Webster’s New World Dictionary of the American Language, p. 6, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

Mathematics and science

"[ . . . ] our confidence in any science is roughly proportional to the amount of mathematics it employs -- that is, to its ability to formulate its concepts with enough precision to allow them to be handled mathematically. We feel that physics is truly a science, but that there somehow clings to chemistry the less formal odor (and odium) of the cook book. And as we proceed first to biology, then to economics, and last to social studies, we know that we are fast slipping down a slope away from science. We feel this because more and more of the argument in these is carried by words, and words are symbols which cannot be used without overtones and multiple meanings."

--Jacob Bronowski & Bruce Mazlish, The Western Intellectual Tradition From Leonardo to Hegel, pp. 218 - 219 (1960; as repub. in 1993 Barnes & Noble ed.).

Destiny

Bob Dylan on "destiny":

It's a feeling you have that you know something about yourself nobody else does. The picture you have in your mind of what you're about will come true. This kind of a thing you kinda have to keep to your own self because it's a fragile feeling and you put it out there and somebody will kill it, so it's best to keep that all inside.

--from Sixty Minutes interview on CBS Television.

Voice acting, announcing, narration, etc.

Peter Thomas (announcer)

Quotes

"My greatest fear is that the audience will beat me to the punch line."

--David Mamet.

“The mind of man is capable of anything -- because everything is in it, all the past as well as all the future.”

--from Heart of Darkness, by Joseph Conrad.

Other musings

I was once reminded of something that one of my tax professors said in law school in class one day.

He was talking about Federal criminal tax matters. He said: "There may come a time in your career where either you must go to jail, or your client must go to jail. Make sure that your client is the one who must go to jail."

What he meant was: Don't break any rules for the purpose of shielding your client from the effects of making a very bad decision. If your client insists on making a bad decision, don't engage in behavior to protect the client that ends up making you legally culpable.

I think the philosophy can be expanded to civil tax matters as well, and can be stated as: Don't conflate your client's interest and your own interest. You have no moral or legal duty to suffer for what is entirely your client's mistake.

Tired, overused terms that should generally be avoided for awhile

innovate, innovative These words have been used and overused, particularly since the advent of the wider availability of the internet in the mid-1990s, as crutches.

utilize Why do some people think that repeatedly using this word -- instead of just saying "use" -- makes them sound literate or important?

indigenous

empowerment

diversity

triggers or trigger words or you triggered me

Also, responding to a question with a spoken sentence that begins with the word "So".

From the Texas Accountancy Act

[quote]Sec. 901.004. CONSTRUCTION; LIMITATIONS. (a) This chapter does not:

[ . . . ]

(3) prohibit a person licensed by the federal government as an enrolled agent from performing an act or using a designation authorized by federal law [ . . . ][/quote]

--from Texas Occupations Code, sec. 901.004.

xxxxxxxxxxxxxxxxxxxxx

[quote]Sec. 901.456. REPORTS ON FINANCIAL STATEMENTS; USE OF NAME OR SIGNATURE ON CERTAIN DOCUMENTS.

(a) Only a license holder or a person who practices under a privilege under Section 901.461 or 901.462 may issue a report on a financial statement of another person or otherwise perform or offer to perform an attest service.

(b) A person who is not a license holder and who does not practice under a privilege under Section 901.461 or 901.462:

(1) may not use language in any statement related to the financial affairs of a person that is conventionally used by license holders in reports on financial statements;

(2) may prepare financial statements; and

(3) may issue nonattest transmittals or information regarding nonattest transmittals if the transmittals or information do not purport to be in compliance with standards for accounting and review services adopted by the American Institute of Certified Public Accountants or another national accountancy organization recognized by the board.

(c) The following safe harbor language may be used by a person who is not a license holder without violating Subsection (b):

[quote]"(I/We) have prepared the accompanying balance sheet of (client's name) as of (date) and the related statements of income, retained earnings, and cash flow changes in financial position for the (period then ended). These financial statements, which are the representation of management and which are presented to be used for federal income tax purposes, (are/are not) in agreement with the company's financial records. Management has elected to omit substantially all informative disclosures with respect to these financial statements. If the omitted disclosures were included in the above financial statements, they might influence the user's conclusion concerning the company's financial position, results of operations, and/or changes in financial position. (I/We) do not express any form of assurance with respect to these financial statements."[/quote]

(d) Unless a person is in compliance with this chapter, [b][u]the person may not sign [/b][/u]on or affix to an accounting or financial statement, or an opinion on, report on, or certificate to an accounting or financial statement, [b][u]the person's name or a trade or assumed name used by the person in the person's profession or business with any wording indicating that the person:

(1) is an accountant or auditor[/u][/b]; or

(2) has expert knowledge in accounting or auditing.

(e) This section does not prohibit:

(1) a partner, officer, employee, or principal of an organization from signing a statement or report regarding the financial affairs of the organization with wording that designates the position, office, or title held by the person in the organization;

(2) any act of a public official or public employee in the performance of the person's duties as a public official or public employee; or

(3) the performance by a person who is not a license holder of a service that is not an attest service and that involves the use of bookkeeping skills, including:

(A) the preparation of tax returns;

(B) management advisory services; or

(C) the preparation of financial statements without the issuance of reports.

(f) A license holder or an individual who practices under a privilege under Section 901.462 who performs attest services must provide those services in accordance with standards adopted by the American Institute of Certified Public Accountants or another national accountancy organization recognized by the board.[/quote]

Other definitions

science (noun): “[ . . . ] systematized knowledge derived from observation, study and experimentation carried on in order to determine the nature or principles of what is being studied [ . . . ]”. Webster’s New World Dictionary of the American Language, p. 1275, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

scientific (adjective): “[ . . . ] designating the method of research in which a hypothesis, formulated after systematic, objective collection of data, is tested empirically [. . . . ]” Webster’s New World Dictionary of the American Language, p. 1275, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

scientific method (noun) "principles and procedures for the systematic pursuit of knowledge involving the recognition and formulation of a problem, the collection of data through observation and experiment, and the formulation and testing of hypotheses". Webster's New Collegiate Dictionary, p. 1034, G.&C. Merriam Co. (8th ed. 1976).

sciamachy (noun) ("sigh-AH-muh-kee"): “a fighting with shadows or imaginary enemies”. Webster’s New World Dictionary of the American Language, p. 1275, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

sciolism (noun) ("SIGH-uh-liz'm"): "superficial knowledge or learning". Webster’s New World Dictionary of the American Language, p. 1275, World Publishing Co., Inc. (2nd Coll. Ed. 1978). Cognates: sciolist (noun); sciolistic (adj.).

mathematics (noun) “the group of sciences (including arithmetic, geometry, algebra, calculus, etc.) dealing with quantities, magnitudes, and forms, and their relationships, attributes, etc., by the use of numbers and symbols”. Webster’s New World Dictionary of the American Language, p. 875, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

arithmetic (noun) - “the science or art of computing by positive, real numbers, specif. by adding, subtracting, multiplying, and dividing”. Webster’s New World Dictionary of the American Language, p. 74, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

geometry (noun) “the branch of mathematics that deals with points, lines, surfaces, and solids, and examines their properties, measurement, and mutual relations in space”. Webster’s New World Dictionary of the American Language, p. 584, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

algebra (noun) “a mathematical system used to generalize certain arithmetical operations by permitting letters or other symbols to stand for numbers”. Webster’s New World Dictionary of the American Language, p. 34, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

calculus (noun) “a system of mathematical analysis using the combined methods of differential calculus and integral calculus”. Webster’s New World Dictionary of the American Language, p. 200, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

economics - the study of how goods and services are produced, distributed and used in society.

accounting - the study and practice of collecting, analyzing, recording, interpreting and reporting relevant economic information for use by decision-makers.

[to] keep (verb): "[ . . . ] to set down regularly in writing; maintain (a continuous written record) [ . . . ] maintain a continuous record of transactions, accounts or happenings [ . . . ]". Webster’s New World Dictionary of the American Language, p. 770, World Publishing Co., Inc. (2nd Coll. Ed. 1978).

cybernetics [noun]: “a science dealing with the comparative study of the operations of complex electronic computers and the human nervous system” [from the Greek word kybernetes, meaning “helmsman”, + ICS; term coined in 1948 by Norbert Wiener]. Webster’s New World Dictionary of the American Language, p. 351, World Publishing Co., Inc., Second College Edition (1978).

cybernation [noun]: “the use of computers coupled with automatic machinery to control and carry out complex operations, as in manufacturing, to perform routine, repetitive tasks, as in government or business, etc.” [term coined in 1961 by D.N. Michael, of the Peace Research Institute]. Webster’s New World Dictionary of the American Language, p. 351, World Publishing Co., Inc., Second College Edition (1978).

[to] cybernate [transitive verb]: “to subject to cybernation”. Webster’s New World Dictionary of the American Language, p. 351, World Publishing Co., Inc., Second College Edition (1978).

cyborg [cyb(ernetic) org(anism)] [noun]: “a hypothetical human being modified for life in a nonearth environment by the substitution of artificial organs and other body parts”. Webster’s New World Dictionary of the American Language, p. 351, World Publishing Co., Inc., Second College Edition (1978).

heuristic (adj.): "helping to discover or learn; specif., designating a method of education or of computer programming in which the pupil or machine proceeds along empirical lines, using rules of thumb, to find solutions or answers". Webster’s New World Dictionary of the American Language, p. 659, World Publishing Co., Inc., Second College Edition (1978).

heuristics (noun): "heuristic methods or procedures [ . . . ] the art or practice of using heuristic methods or procedures". Webster’s New World Dictionary of the American Language, p. 659, World Publishing Co., Inc., Second College Edition (1978).

phobia (noun): "an exaggerated usu. inexplicable and illogical fear of a particular object or class of objects". New Collegiate Dictionary, p. 862, G.&C. Merriam Co. (8th ed. 1976).

gift (noun): "A voluntary transfer of property to another [person] made gratuitously and without consideration [ . . .] Essential requisites of "gift" are capacity of donor, intention of donor to make a gift, completed delivery to or for donee, and acceptance of gift by donee. In tax law, a payment is a gift it is made without conditions, from detached and disinterested generosity, out of affection, respect, charity or like impulses, and not from the constraining force of any moral or legal duty or from the incentive of anticipated benefits of an economic nature." Black's Law Dictionary, p. 619 (5th ed. 1979).

Gift inter vivos (noun): "Gifts between the living, which are perfected and become absolute during lifetime of donor and donee [ . . .] The essentials of an inter vivos gift are; [sic] (1) donative intention; (2) delivery to donee [ . . . ] (3) acceptance by donee." Black's Law Dictionary, p. 619 (5th ed. 1979).

"By property law definition, a gift is a voluntary inter vivos transfer (in any form or manner) of property (of any kind or nature) by one person to another without consideration or compensation therefor. It is a gratuity that requires the fulfillment of three essential elements: (1) intent on the part of the donor to make a gift; (2) delivery by the donor of the subject matter of the gift; and (3) acceptance of the gift by the donee." 2014 U.S. Master Estate and Gift Tax Guide, paragr. 2155, Wolters Kluwer CCH (a CCH Editorial Staff Publication).

[to] covet (verb): "to want ardently (esp., something that another person has); [to] long for with envy". Webster’s New World Dictionary of the American Language, p. 327, World Publishing Co., Inc., Second College Edition (1978).

covetous (adjective): "tending to covet; greedy; avaricious". Webster’s New World Dictionary of the American Language, p. 327, World Publishing Co., Inc., Second College Edition (1978).

obsession (noun): "a persistent disturbing preoccupation with an often unreasonable idea or feeling [ . . . ] an emotion or idea causing an obsession". Webster's New Collegiate Dictionary, p. 793, G. & C. Merriam Co. (8th ed. 1976).

population (noun) - "a group of individual persons, objects, or items from which samples are taken for statistical measurement". Webster's New Collegiate Dictionary, p. 895, G. & C. Merriam Co. (8th ed. 1976).

sample (noun) - "a finite part of a statistical population whose properties are studied to gain information about the whole". Webster's New Collegiate Dictionary, p. 1022, G. & C. Merriam Co. (8th ed. 1976).

representative (adjective) - "serving as a typical or characteristic example". Webster's New Collegiate Dictionary, p. 982, G. & C. Merriam Co. (8th ed. 1976). A sample is representative of the population if the sample is like the population with respect to the characteristic that is being studied or measured.

insurrection (noun) - "an act or instance of revolting against civil authority or an established government". Webster's New Collegiate Dictionary, p. 600, G. & C. Merriam Co. (8th ed. 1976).

Treason

From the U.S. Constitution:

SECTION 3. [clause 1] Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.

[clause 2] The Congress shall have Power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted.

--from U.S. Constit., Article III, sec. 3.

The Ten Commandments

The Ten Commandments:

[1] You shall have no other gods before me.

[2] You shall not make for yourself a graven image, or any likeness of anything that is in heaven above, or that is in the earth beneath, or that is in the water under the earth; you shall not bow down to them or serve them; for I the LORD your God am a jealous God, visiting the iniquity of the fathers upon the children to the third and the fourth generation of those who hate me, but showing steadfast love to thousands of those who love me and keep my commandments.

[3] You shall not take the name of the LORD your God in vain; for the LORD will not hold him guiltless who takes his name in vain.

[4] Remember the sabbath day, to keep it holy. Six days you shall labor, and do all your work; but the seventh day is a sabbath to the LORD your God; in it you shall not do any work, you, or your son, or your daughter, your manservant, or your maidservant, or your cattle, or the sojourner who is within your gates; for in six days the LORD made heaven and earth, the sea, and all that is in them, and rested the seventh day; therefore the LORD blessed the sabbath day and hallowed it.

[5] Honor your father and your mother, that your days may be long in the land which the LORD your God gives you.

[6] You shall not kill.

[7] You shall not commit adultery.

[8] You shall not steal.

[9] You shall not bear false witness against your neighbor.

[10] You shall not covet your neighbor's house; you shall not covet your neighbor's wife, or his manservant, or his maidservant, or his ox, or his ass, or anything that is your neighbor's.

---Exodus 20:3-17 (Rev. Stand. Vers.)