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by Otto Skinner

For many years, individuals have been urged by various "patriot" promoters to complete a Form W-4 claiming an "exempt" status in order to prevent an employer from withholding money for taxes. However, for over 15 years, it has been well known by these promoters that when an individual claimed "exempt" on a Form W-4, it would, almost without exception, cost the individual a $500 civil penalty under 26 U.S.C. 6682, and in many cases, the individual would be charged criminally under 26 U.S.C. 7205 and subsequently incarcerated for having made false statements on the Form W-4.

Not only has the "false and fraudulent" "taxpayer" Form W-4 caused individuals to be charged criminally for a misdemeanor under section 7205, but it has also provided the government prosecutors the "proof" they needed to establish an affirmative act of attempted tax evasion (a felony) under 26 U.S.C. 7201.

Of course, in addition to the $500 civil penalty came huge interest penalties assessed against a "taxpayer" for not filing and paying on time. Just talk to the people who got into this mess.

All the while, the self-proclaimed "experts" would claim that their "legal" position was correct and that the individuals were being unlawfully penalized and incarcerated. The fact is, the courts have simply allowed the individuals to trap themselves with arguments that have no legal validity.

My estimate is that hundreds, if not thousands, of individuals suffered criminal charges under 7201, 7203 and 7205, and hundreds of thousands, if not millions, of individuals suffered $500 civil penalties under 6682; all for having blindly followed some rather bad "legal" theories promoted by the self-proclaimed "experts".

The purportedly correct "legal" theory (combined with some other rather wild and flawed "legal" theories) was based on the claim that if an individual was not liable for (subject to) the tax, the revenue laws allowed him to claim "exempt" on a Form W-4. However, this is like suggesting to 85-year-old grandmothers that they should file for exemption under the military draft laws, when in fact, 85-year-old grandmothers are not subject to the military draft laws in the first place. They are not required to file for an exemption in order to avoid the military draft.

In an attempt to prevent individuals from being devastated from the use of flawed "legal" theories and arguments, a few of us have tried to make known certain facts. For many years, we pointed out that the Form W-4 (withholding allowance certificate) and various other tax forms are provided for the "taxpayers" to use to claim certain allowances (benefits) which Congress has provided for "taxpayers" who qualify for such allowances. We have pointed out that the "exempt" status was provided by Congress for certain "taxpayers" who owed no taxes the previous year and did not expect to owe any taxes for the current year. We have pointed out that there is no law against a person paying more taxes than he owes; i.e., there is no law requiring anyone to claim a benefit that Congress has provided by statute. It has also been pointed out that there is no law even requiring one who is subject to (liable for) a tax to claim a benefit on a withholding allowance certificate. (If the employer does not understand this, the problem is with the employer, not with the law, so don't get sidetracked at this point on another issue.)

Especially from 1986 on, I have shown that the term "taxpayer" is defined in the Code as any person subject to the applicable revenue law, and that the courts have ruled the revenue laws relate to "taxpayers" as defined, and not to nontaxpayers. See Economy Plumbing and Heating v. United States, 470 F.2d 585, at 589 and Note 3 at 590 (Ct.Cl. 1972). I have also pointed out that the term "subject to" means "liable for". See Black's Law Dictionary. In Houston Street Corp. v. C.I.R., 84 F.2d 821, at 822 (5th Cir. 1936), the Court stated, "We see no distinction between the phrases 'liable for such tax' and 'subject to a tax'." Yet, the self-proclaimed "experts" (both in and out of the legal profession) have chosen to ignore these simple truths.

It has also been pointed out that the "exempt" status, or any exemption allowed by Congress, applies to persons who are actually subject to (liable for) the tax, and that Congress essentially chose to give these "taxpayers" a break. This is much like Congress allowing corporations a break on capital gains.

The "taxpayer" forms, such as the Form W-4, are to be used by "taxpayers" to claim the benefit. They are not for an individual to use to prove that he is not subject to (liable for) the tax. As an example, whatever forms were used to claim an exemption from the draft (such as in the case of a young man being needed at home to work on the farm), the forms were to be used by the young men who were actually subject to the draft, and who would be drafted if it were not for the benefit (exemption) provided by Congress. They were not for the use or benefit of the 85-year-old grandmothers.

Because many, many people have blindly followed the purportedly valid "legal" theories promoted by the self-proclaimed "experts", and submitted the Form W-4 claiming to be exempt, it has provided the revenue agents and government prosecutors with the prima facie evidence they needed which indicated that the individual was a "taxpayer" who did not pay his taxes. And because so many people were suckered into these "legal" theories, it has provided the government prosecutors with a never-ending supply of suckers to be prosecuted in order to set examples for the rest of the people of the nation. Getting a conviction has usually been a slam-dunk for the prosecutors, who should be quite fond of the self-proclaimed "experts".

And all the while, the self-proclaimed "experts" chose to ignore the fact that the revenue laws (including the forms) apply to those who are subject to (liable for) a tax, and not to those who are not.

Next, the self-proclaimed "experts" have promoted the idea of completing "zero income" tax returns. People have been getting convicted for years for trying this theory. See United States v. Moore, 627 F.2d 830 (7th Cir. 1980). And of course, the Form 1040 provides the agents and prosecutors with even more prima facie evidence of "taxpayer" status, and such a form places the burden of proof right on the shoulders of the one making the claim on the form.

And if all of the above was not enough, the self-proclaimed "experts" are now even urging individuals to go to Tax Court ("taxpayer's" court) and urging the individuals to use their "administrative remedies". (Remember, Grandma doesn't have any administrative remedies to exhaust because she is not subject to the darned draft law in the first place.) How does an individual get to Tax Court? By acting like a "taxpayer", of course.
The Tax Court has jurisdiction only when the Commissioner issues a valid deficiency notice, and the taxpayer files a timely petition for redetermination. Scar v. C.I.R., 814 F.2d 1363 (9th Cir. 1987). (Emphasis added.)
Some of you have even been told that the best way to control the taxing agencies is to use the agencies' administrative procedures and process. But ask yourself, if you subject yourself to the rules and regulations of a taxing agency, who is really in control?

How long are patriots going to let others talk them into acting like a "taxpayer" on one hand by providing prima facie evidence of "taxpayer" status, and at the same time, claim they are not liable for (subject to) the tax? Common sense alone should negate this two-sided position.

And there is even more. Some of you are being urged to "establish" a good-faith belief that you are not required to make income tax returns because the Sixteenth Amendment was not properly ratified. By doing so, you would essentially be saying that you would be required to make tax returns if the Sixteenth Amendment had been properly ratified; an amendment which conferred no new power of taxation and which did not extend the taxing power to new or excepted subjects, but simply prohibited the courts from taking the power of "income taxation" out of the category of indirect taxation to which it inherently belongs. See Stanton v. Baltic Mining Co., 240 U.S. 103, 112; and Peck & Co. v. Lowe, 247 U.S. 165, 172. In other words, since the Sixteenth Amendment (properly ratified or not) did not do anything new which would affect you, you are, according to your argument, required to file. Such an argument also places the burden of proof on you to prove that the United States Supreme Court was wrong in ruling that "income taxation" is in the category of indirect taxation, and to prove that the Sixteenth Amendment was not properly ratified. More than one person who has used this approach has been incarcerated. (I might suggest that before you rely upon any attorney's opinion, you check out his or her win-loss record.)

Some of you have also been told by the self-proclaimed "experts" that they have already tried the approach which I present in The Biggest "Tax Loophole" of All, and claim it did not work. This is the time to challenge the purported "experts" and demand to see the papers they supposedly submitted to the courts. Whatever it was they submitted, it will not even resemble the Motion to Dismiss (by Special Appearance) which you will find in The Biggest "Tax Loophole" of All. Whatever they submitted will probably have placed the burden of proof on the poor defendant. At any rate, this is the time to call their bluff. For too long, far too many individuals have suffered tremendously because they have been suckered into using some very bad, but purportedly valid, "legal" theories promoted by the self-proclaimed "experts" and their cohorts.

Isn't it interesting how the arguments promoted by the self-proclaimed "experts" lead you right back into the "taxpayer" trap? Does it make you wonder whose side they are really on?

Patriots appear to be captivated by "extravaganza" rhetoric or theories. Forget the "extravaganza": go for the basics; go for the facts. Know your case law by getting copies of the cases and studying them for yourself.

I don't know who you are going to trust. I am going to trust myself and the 17 years of research that I have done. My conclusions make the most sense of all to me.

Otto Skinner is the author of the following three books:

The Best Kept Secret, "Taxpayer" V. Nontaxpayer" (1986, revised 1996) - $24.95
If You Are the Defendant (1989, revised 1996) - $24.95
The Biggest "Tax Loophole" of All (1997) (A 2 pound book.) - $39.95

Add $5.00 S/H flat rate for all orders. - $  5.00

Get all three for a total of $84.85 and save $20.00
as compared to ordering each book separately.

Order from: Otto Skinner
PO Box 6609
San Pedro, CA 90734

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