From STRATEGIC INVESTMENT March 20, 1996
Strategic Investment 1217 St. Paul St. Baltimore, MD 21202 It is published monthly for US$159 per year for U.S. residents (C$190 for Canadian residents and US$200 for other non-U.S. residents). behind the lines - by Jack Wheeler Is the IRS a paper tiger? One definition of a pioneer is a guy with an arrow in his back. So notice the above headline is a question, not an assertion. But it is nonetheless a question being asked by a lot of folks these days, from Bill Archer, Chairman of House Ways & Means, to a number of smart tax attorneys. The federal tax code has mutated into this gigantically in- comprehensible Rube Goldberg monstrosity that day by day gets closer to collapsing under its own weight. Couple that with the fact that the IRS computer system is about to go belly up. The IRS originally computerized itself AD HOC, with the regional centers getting various platforms and software that can't communicate with each other very well. The agency has now spent over $8 billion on the TSM project to re-computerize, which an independent review recently concluded is a colossal failure. As the IRS teeters on the brink, a fellow named Eddie Kahn has stepped forward and may be about to push the whole creaking mess over the edge. He hasn't got an arrow in his back yet, so he might just succeed. Dis- dainful of "tax protests" such as 5th Amendment or legal tender arguments that quickly get their advocates behind bars, Eddie looked into the stru- ture of federal law. When Congress passes a law, codified as a statute, it then delegates to a regulatory agency the authority to issue the im- plementing regulations specifiying to whom and under what circumstances the statute applies. These regulations must, by law, be published in the Federal Register. Lacking these implementing regulations, the law cannot be applied and has no force. Well, it turns out that the implementing re- gulations for IRS' enforcement statutes-things like the requirement to file a tax return and the authority to place a lien-cannot be found in the Federal Register. When queried on this, the General Counsel for the Office of the Federal Register, Michael White, replied in writing, "Our records indicate that the Internal Revenue Service has not incorporated by reference in the Federal Register a requirement to make an income tax return." This is starting to get interesting, isn't it? And yes, I see that big smile on your face. If Eddie is right, the IRS has no assessment autho- rity, no collection athority to enforce a lien or seize property, no au- thority to pursue criminal penalties for failure to file a return or make a false/fraudulent return. I am not at all suggesting you be a pioneer. But if you should have any difficulty with the lovable folks at the IRS, you might consider making an appointment to see them in person at their nearest office, and tell them face to face that you need to see a copy of the implementing regs published in the Federal Register that show they have the authority to require you to do what they want. Not one of the close to a thousand people who, following Eddie's advice, have done so received a copy-and not one has been further harassed. Better to let these folks drop out of the system quietly than risk a negative decision in court, which would be for them an ultimate catastrophe. You can get more info from Eddie at: 1-800-419-7512. --------------------------------------------------------------------- PUSH EM BACK! PUSH EM BACK! WWWAAAYYY BBBAAACCCK! BBBEEEAAATTTT STATE! Gary Jeffers P.S. This reminds me of something else that I read a few months ago. There is a book with the title The Law that Never Was - the 16th Amendment (this was the title or close) that had a similar affect on the IRS. I believe it was the SPOTLIGHT that said that when the then Commissioner of the IRS found that the book was published, he gave gave instructions that people citing the book in arguments with the IRS be left alone. The 16th Amendment created the IRS.