Patriot Arguments Bite the Dust

 

      The argument that wages are not income continues in the Freedom Movement.  Individuals perpetrating this argument have not studied the current case law on this issue.  Although it can easily be argued that wages are not income from the language of the statute, it is very difficult to maintain the argument that wages are not income based on the court cases.  Remember that the courts are going to protect the Federal Income Tax System.  The courts are not going to overturn the federal tax system by ruling that wages are not income.

 

      The following cases have lost on the issue of wages are not income:  See United States v. Romero, 640 F.2d 1014 (9th Cir. 1981);   Lonsdale v. CIR, 661 F2d 71 (5th Cir. 1981) (rejecting the "even exchange" argument; United States v. Lawson, 670 F. 2d. 923 (10th Cir. 1982); Granzow v. CIR, 739 F.2d 265 (7th Cir. 1984); Hansen v. United States,  744 F.2d 658 (8th Cir. 1984); Perkins v. CIR, 746 F.2d 1187 (6th Cir. 1984); Schiff v. CIR, 751 F.2d 116 (2nd Cir. 1984); Fiscalora v CIR,Lovell v. United States, 755 F.2d 517, 519 (7th Cir. 1984); United States v. Latham, 754 F.2d 747 (7th Cir.,1985); Hyslep v. United States, 765 F.2d 1083 (11th Cir. 1985); Coleman v. CIR, 791 F2d, 70 (7th Cir. 1986); Stubbs v. Commissioner of IRS, 797 F.2d 936(11th Cir. 1986)(rejecting argument that wages are not taxable income as "patently frivolous."); Wiicox v. CIR, 848 F.2d 1007, 1008 (9th Cir. 1988); Maisano v. United States, 908 F.2d 408 (9th Cir.1990), and Maisano v. United States, 940 F.2d 499, 501-02 (9th Cir. 1991); United States v. Gerards, 999 F.2d 1255 (8th Cir. 1993).  751 F.2d 85, 87-88 (2nd Cir. 1984)(holding that income includes compensation for services.);

      As you can see, the "wages are not income" argument has big problems.  If you file a "zero" tax return based on this theory, you might be slapped with a $500 frivolous penalty.  You have no chance of winning a suit against the IRS. 

 

      Another popular issue in the Freedom Movement is the argument that we are, for tax purposes, non-resident aliens.  The courts have soundly rejected this argument.  See, United States v. Sloan,United States v. Jagim, 978 F.2d 1032, 1036 (8th Cir. 1992); United States v. Hilgeford, 7 F.3d 1340, 1342 (7th Cir. 1993); Larue v. United States, 959 F. Supp. 957 (C.D.Ill.1997). 939 F.2d 499, 501 (7th Cir. 1991);

 

      Some individuals have argued that a Notice of Levy is not equal to a levy.  The courts have ruled against this argument.  You will not stop a levy by arguing that a notice of levy is not a levy.  See: United States v. Eiland, 223 F.2d 118, 121 (4th Cir. 1955); Rosenblum v. United States, 300 F.2d 843, 844-45 (1st Cir. 1962); United States v. Pittman, 449 F.2d 623, 627 (7th Cir. 1971); In re Chicagoland Ideel Cleaners, Inc. 495 F.2d 1283, 1285 (7th Cir. 1974); Wolfe v. United States 798 F.2d 1241, 1245 (9th Cir. 1986); Sims v. United States, 359 U.S.108, 79 S.Ct.  641 (1959). 

 

      The courts have also ruled that the argument regarding implementing regulations and the cross references in the CFR index are frivolous.  See United States v. Hartman, 915 F. Supp 1227 (M.D. Fla. 1996) and Stafford v. CIR, TCM 1997-50.

 

MY GOOD BUDDY: THE IRS COMPUTER

 

 

         An Article by Bill Conklin

 

          Remember this: The IRS is totally dependent on computers.  It is to your advantage to know what is happening.  If you can discover computer errors in their system, you might cause the IRS problems.

 

         The IRS calls its computer system the Automatic Data Processing (ADP).  A master file of all the taxpaying entities is kept at the National Computer Center (NCC), in Martinsburg, West Virginia 25401.  And guess what?  They probably have records about YOU there!

 

         The ADP system has different kinds of files.  Your 1040 records are kept in the IMF File by Social Security Number. There are ten Service Centers in the United States that put information into the ADP system. Each week magnetic tapes are forwarded from the Service Centers to the NCC. (Now you know that 1984 is here!)

 

         The Service Centers generate computerized notices for collection and other stuff.  The IRS has a system called the IDRS (Integrated Data Retrieval System).  This system allows the IRS local offices to access ADP information from the Service Center.

 

         There are several different types of IDRS transcripts, which the computer can print out.  The type that contains the most information is the TXMOD transcript.

 

         When you look at an IRS transcript you will see a bunch of numbers called Document Locator Numbers.  Every return or IRS document that gets input through the ADP system is assigned a Document Locator Number or DLN. This number contains 14-digits and it is used to control and locate documents.

 

         The following is an example of a Document Locator Number:

 

         74 2 12 046 204 255

 

         Now what do these numbers mean?

 

         "74" is the District Office Service Center Code.  The number "74" stands for the Austin Office.

 

         "2" is the Tax Class.  The number "2" stands for Individual Income Tax and Other Related IMF Documents.

 

         "12" is the Document Code.  The "12" is a 1040 Non- business.

 

         "046" is the Julian Date.  In order to determine the control date for some IDRS transactions, you subtract 400 from this number; since 400 is added to avoid duplicate Document Locator Numbers.

 

         "204" is the Block Number.  The Service Center starts with block 000 on Monday for each separate District's returns sorted to Class and Document Code and will continue to number the blocks in ascending order until the close of business that week.

 

         "25" is the serial number and the Maximum number of records in a block is 100 which are usually numbered from 00 to 99.

 

         "5" is the computer generated figure that indicates the last digit of the year of the processing.

 

         As you can see, the DLN gives a lot of information.  You will notice the DLN on your IMF after the three digit transaction codes.

 

         Along the left side of your IMF, you will see transaction codes.  A very common code is the Transaction Code 150.  This code means that a return was filed.  The following code:  150 082073 would mean that a return was filed and tax was assessed on 8-20-73.  (See Chapter 8 in the IRS 6209 Manual for the meaning of the transaction codes).

 

         There are also various tax account codes.  The Tax Account Code 30 means that the return is a 1040 or a 1040 A.

 

         The IDRS Transcripts will also indicate the status of the account during the stages of the assessment and collection process.  An account could be in notice statute, collected or uncollectible.

 

         If you would like to order your IMF transcript, you may do so. Give me a call.

 

 

Will Social Security Bite the Dust?

 

      Let's take a look at the facts.  The Social Security System will have major problems starting in  the year 2010.  There are over seventy million individuals in the Baby Boom generation.  By the year 2040, there will be 40 million more senior citizens than today.  In 1900, only one in twenty-five Americans was over sixty-five. By 2040, one out of every five Americans will be over 65.   Government will support the majority of these seniors.  In 1960, 5.1 taxpayers supported each senior citizen.  Today there are 3.3 workers supporting each senior on social security and by 2040, only 1.4 workers will support a senior on social security.  During the next half century, the number of individuals between the ages of 65 and 69  will double, but the number of individuals between the age of 85 and over is expected to quadruple.  Two thirds of the oldest individuals will be women and over four fifths will be single, divorced or widowed.  They are the groups most likely to need government assistance.  In 1970, there were 1.4 million old-old Americans.    By 2040 there could be 14.4 million.  The incredible growth of the old population will really increase the health costs. The  costs of health care for the elderly are an exponential and not a linear rate.  Caring for the elderly is extremely expensive. 

 

      By the year 2013, Social Security revenues will start to turn negative. By 2030, when the Boomers have reached sixty-five, Social Security will be running an annual deficit of about $800 billion.  The projected deficit of Medicare increase the total to about $1.7 trillion per year. By 2040, the deficit could be $3.2 trillion. By 2050 the federal deficit for the two senior programs of social security and Medicare will be about $700 billion or four times the size of the entire federal deficit in 1996. (See the 1995 Annual Report of the Board of Trustees of the federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds.

 

      By the year 2040, the cost of Social Security as a share of the worker's payroll will rise from 11 percent to 22 percent. If we add the projected cost of Medicare, the cost of taking care of the old will be about 50 percent of each worker's paycheck even if we don't count the rest of the cost of government such as the military and fat salaries for the politicians.  Obviously if government attempts to tax middle class individuals at a rate of 70 or 80 percent, the tax revolt will explode.  Even though many people do not currently revolt at tax rates bordering 50 percent, the projected future rates surely have a great potential to cause problems. 

 

      Currently there are more young people who believe in UFOs than think they will ever receive Social Security. A recent poll (Third Millennium 1994) found that 46 percent of the individuals polled believe that UFOs exist and only 28 percent believe that Social Security will exist by the time they retire.

 

      A typical single male who retired in 1980 will get a windfall of $39,000 above what he paid in social security but a typical single male retiring in 2010 will suffer a net loss of $36,000; a high earning male will suffer a net loss of $135,000.