What did Larry do wrong? Well, ...
- he claimed the 16 amendment did not authorize a direct income tax without apportionment (strangely, I agree with him - I believe it merely classified the income tax as an excise on some happening, event, or occurrence OTHER than the receipt of revenue);
- he claimed the several states did not sufficiently ratify the 16th amendment, so even if it did authorize a direct income tax without apportionment, it cannot apply (strangely, I agree with him, for I have seen sufficient evidence that a quorum of States did not ratify the precise language of the amendment);
- he claimed the income tax does not apply to resident citizens (strangely, I agree with him - I believe wage tax applies to nonresident aliens and foreign corporations earning income in the US);
- he claimed the income tax applies only in the Federal Zone (strangely, I agree with him, for I too have read Article I Section 8 Clause 17 limiting the territorial authority of Congress in most matters, and 4 USC 72 which forbids any Bureau of Internal Revenue office outside Washington DC without Congressional permission, and no such permission exists for the several states).
- he might have raised and pressed his arguments knowing that the 9th Circuit had not yet fully corroborated other Circuit opinions against his arguments (strangely, I agree with him if he had that position, for other circuit opinions do not bind the 9th Circuit, so why not give the 9th Circuit every opportunity to rethink their erroneous position).
- Circuits get the law wrong OFTEN, and that explains why the Supreme Court of the United States (SCOTUS) has overturned them so many times as to cause the student to lose count.
As of 2012 SCOTUS had overturned the buffoons in the 9th Circuit more than any other circuit panel other than the 6th, but by June 2013 SCOTUS had reversed 86% of the opinions it had reviewed from the 9th Circuit in the previous year. I believe they were just as wrong in 1989 as they are today, and they were wrong in Larry's sanction.
Nevertheless, the courts have ruled that almost every "patriot" defense against the income/wage tax constitutes a frivolous, fraudulent, or defective defense for one reason or another, particularly when a high-profile "tax protestor" faces criminal prosecution.
See also the IRS position on the meaning of 26 USC 83, which many patriots say proves they owe no tax on wages because wages constitute a swap of one's labor for money, they have equal value, and thus the wage earner realizes no "income." http://www.irs.gov/pub/irs-drop/rr-07-19.pdf. I have appended the relevant portion below the sanction opinion against Larry Becraft.
So, if you want to lose your tax case and maybe go to prison, just raise some arguments the courts have defined as frivolous. And if you want the IRS to raise a tax case against you, just use some of those arguments on your agent. You'll get labeled a "tax protestor," the IRS will slap liens and levies against you to bleed you of assets so you cannot afford a court battle, and your liberty and property will go down in flames.
Sorry, I didn't make this mess. I just report it as one friend after another goes to prison for tax crimes.
Therefore I recommend finding the ways the IRS agents injure their individual adversaries, and SUE those agents, and engage in widespread political attack against the 16th Amendment and the tax code so as to reform them with language that blatantly forbids any direct imposition or collection of income tax from US Citizens. As to the legal attack against crooked/rogue government employees or agents...
- One must first become "judgment proof"
- One should attack the injuring party administratively for violating provisions of the Internal Revenue Code such as by acting without authority, failing to sign documents the code requires under penalty of perjury, changing tax records like the IMF outside the scope of authority, failing to produce valid assessments, sending time-sensitive letters to wrong addresses, etc.
- One should become politically active in concert with others to change the tax code and Constitution so as to eliminate direct taxation and collection of taxes from the Citizenry, and to create means of bringing swift punishment upon abusive US Attorneys, Judges, and IRS agents for mob-like plunder of Citizens and ruination of Citizen lives and fortunes.
Also, you might support legislation that eliminates income and wage tax laws altogether.
First of all, so long as Congress has the power to spend more than it brings in, THAT reality makes taxes obsolete. Congress should have a choice, perhaps. Until it operates on a balanced budget, it cannot impose any taxes upon US businesses or citizens. Why? Well, you know Congress can order any money printed up that it needs.
Congress should not have the power to create or utilize a central bank OTHER than the bank of Congress itself. That means Congress and ONLY Congress (not any other agency in or out of government) should print/coin money and should become the primary lender for banks. Congress should take over the present functions of the Federal Reserve, and repudiate all debt to the Federal Reserve Banks, and mandate public disclosure of all shareholders in the Federal Reserve and other banks operating in or in connection with the US and its banks.
Congress should charge borrowing banks interest on its loans to them, and use that interest to replace income and wage taxes.
Congress should mandate that all foreign nations holding US currency (federal reserve notes) spend it in the US for US-provided goods and services, and once those notes return to the treasury, Congress should destroy them.
Congress should establish a Value Added Tax and impose it on all new goods imported into or made in the US, so as to eliminate the unfair competition between US and foreign suppliers. Thus the US would tax consumption, rather than production, thereby encouraging Americans to SAVE and build cash reserves and surpluses for old age. This would make more people pay cash for automobiles and houses, and eliminate much of the debt that has turned people into virtual slaves of creditors.
Congress should mandate destruction of all energy monopolies and prohibit companies from buying up private patents for the purpose of taking them off the market and destroying competition in the energy business. Congress should force energy companies into becoming suppliers of devices that produce energy rather than of energy itself. This will wean Congress off of the taxes from energy which stifles invention of devices that harness and provide free or nearly free energy and "over-unity" devices that produce more energy than they consume.
And Congress should mandate a high school diploma and passing a Constitution Competency test by all who would vote in any election, nationwide. This would return the US to high status a land of mental responsibility more nearly as it was in the early 1800's when voters, governors, and legislators had to own land as a primary qualification for voting. Bad government comes largely as a consequence of letting irresponsible, ignorant people vote.
Congress must ELIMINATE judicial and prosecutorial immunity, and restore the powers of grand juries to investigate all felonies and all crimes and abuses by public officers, and initiate prosecution therefor, restore the rights of Citizens to prosecute criminals who injured them, particularly if state/US prosecutors refuse to do it.
Congress must put TEETH into the loyalty oath by mandating that all who swear the oath to support the constitution MUST pass a competency test on the US and State constitutions before ascending to any government office or government employment, and by requiring all to post personal surety bonds against causing injuries through negligently or intentionally failing to support the constitutions or enforce their guarantees of rights when opportunity presents itself within the scope of employment or oversight obligations.
Congress must define the meaning and application of "Republic" to the states and enforce the guarantee of the republican form of government to the states by MANDATING removal of the state BAR organizations from the purview of the state supreme courts, removing the bars altogether from governments, and removing admission and regulation of attorneys from the supreme court and handing it to the Executive branches of all the states. Congress must mandate elimination of Unauthorized Practice of Law penalties from application to non-attorneys.
Congress must mandate that government employees carry their credentials on them at all times, with the exception of undercover operatives in dangerous jobs where disclosure of their identities and credentials would subject them to life-threatening injury, and that all employees must present those credentials with full contact information and name of immediate senior upon demand.
Congress should mandate that all law enforcers carry active camcorders on their person, recording their conversation and interactions with others while on duty, and mandate a severe penalty including termination and forfeiture of pension for non-compliance or losing the recording.
Congress must mandate that all governments must provide all Citizens with free on-line access to all laws, statutes, codes, rules, regulations, case law (opinions and case filings), active case documents, and government employee credentials, and that the judiciary cannot seal opinions that have no bearing on national security, and that a congressional committee must review and agree with the sealings.
WE THE PEOPLE need to get behind politicians who will push the foregoing principles through amendments to the Constitutions of the US and States, and through appropriate laws.
Ancient 9th Circuit Sanction against Larry Becraft- still scary.for propounding so-called frivolous arguments against abusive imposition and collection of taxes...
For those who would argue that IRC Section 83 exempts them from wage tax on the basis of exchange of two things of equal value, producing no "income"...
From IRS document at http://www.irs.gov/pub/irs-drop/rr-07-19.pdf
Arguments that wages are not subject to federal income tax take many forms including, but not limited to, the following:
1. A tax on wages is a direct tax subject to the provision in Article I, Section 2, Clause 3 of the Constitution that requires that direct taxes be apportioned among the states by population.
2. Money received in exchange for personal labor constitutes an equal, nontaxable exchange of property.
3. Taxable income from wages or other compensation for personal services can only be determined after deduction of the cost of providing the labor.
LAW AND ANALYSIS
1. Article 1, Section 2, Clause 3 of the United States Constitution states that “direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers . . . .” This statement has been used to support the argument that there is a constitutional impediment to the imposition of a direct tax on an individual’s wages. The Sixteenth Amendment to the Constitution, ratified in 1913, provides that “[t]he 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 has been reviewed by the Supreme Court and upheld. Brushaber v. Union Pacific
Railroad Co., 240 U.S. 1 (1916). Thus, the imposition of income tax on wages, without apportionment among the states, is authorized. See, e.g., Funk v. Commissioner, 687 F.2d 264 (8th Cir. 1982); Abrams v. Commissioner, 82 T.C. 403 (1984).
Section 61(a) of the Internal Revenue Code defines gross income as income from whatever source derived, including (but not limited to) “compensation for services, including fees, commissions, fringe benefits, and similar items.” I.R.C. § 61(a)(1). Courts consistently have upheld the determination that wages fall within section 61(a)(1)’s definition of compensation and, accordingly, constitute taxable income. See,
e.g., Ledford v. United States, 297 F.3d 1378 (Fed. Cir. 2002); United States v. Connor,
898 F.2d 942 (3d Cir. 1990); Casper v. Commissioner, 805 F.2d 902 (10th Cir. 1986);
Connor v. Commissioner, 770 F.2d 17 (2d Cir. 1985); Lovell v. United States, 755 F.2d
517 (7th Cir. 1984); Perkins v. Commissioner, 746 F.2d 1187 (6th Cir. 1984); Funk v.
Commissioner, 687 F.2d 264 (8th Cir. 1982); Lonsdale v. Commissioner, 661 F.2d 71
(5th Cir. 1981); Rowlee v. Commissioner, 80 T.C. 1111 (1983).
In United States v. Connor, 898 F.2d. at 943, the Third Circuit noted that “[e]very court which has ever considered the issue has unequivocally rejected the argument that wages are not income.” All income received by a taxpayer is income under section 61 unless it is specifically exempted or excluded. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955) (“Congress applied no limitations as to the source of taxable receipts, nor restrictive labels as to the intention of Congress to tax all gains except those specifically exempted.”).
2. Some taxpayers claim that the payment of wages or other compensation in exchange for personal labor is a nontaxable exchange of property. These taxpayers sometimes rely on sections 83 or 1001 of the Internal Revenue Code to support this argument. Section 83 provides for the determination of the amount to be included in gross income and the timing of the inclusion when property is transferred to an employee or independent contractor in connection with the performance of services. Section 1001 provides for the determination of the amount and timing of the recognition of gain or loss from the sale or other disposition of property.
Courts have universally rejected the argument that labor is property that can be exchanged for wages or other compensation in a nontaxable transaction. See Casper v. Commissioner, 805 F.2d at 905; Funk v. Commissioner, 687 F.2d at 265. Courts recognize a distinction between selling labor and selling or exchanging property. See Reading v. Commissioner, 70 T.C. 730, 733-34 (1978), aff’d, 614 F.2d 159 (8th Cir. 1980). Further, the courts have concluded that a taxpayer has no tax basis in one’s labor and, therefore, the full amount of the wages or other compensation received represents gain which may be taxed as income. See, e.g., Casper, 805 F.2d at 905; Abrams, 82 T.C. at 407; Reading, 70 T.C. at 733-34.
3. A related argument is that income from the sale of labor cannot be determined until the taxpayer’s investment in that labor has been recovered. This argument has been repeatedly rejected. See Rowlee, 80 T.C. at 1120; Reading, 70 T.C. at 733-34. In Reading, the Tax Court examined the contention that gain must be realized for there to be income, analyzing the distinction recognized under federal tax law between producing a physical product and providing services. The court flatly rejected the idea that living expenses constitute the cost of “goods” sold for providing labor or services. Reading, 70 T.C. at 733-34. Thus, the court concluded that the gain from the sale of labor is the entire amount received and upheld the disallowance of deductions for personal living expenses.
Courts have uniformly rejected arguments that wages and other compensation for personal services are not taxable income. Accordingly, raising these arguments justifies the imposition of sanctions. See Ledford v. United States, 297 F.3d at 1381-82
1. Wages fall within the definition of income set forth in section 61(a)(1) of the Internal Revenue Code. Taxpayer A’s wages and other compensation for services are income subject to federal income tax and must be reported on Taxpayer A’s federal income tax return.
2. The payment of wages and other compensation for personal services is not an equal exchange of property. The full amount of wages received by Taxpayer A is subject to federal income tax and must be reported on Taxpayer A’s federal income tax return.
3. Wages and other compensation received by Taxpayer A in exchange for personal services are subject to federal income tax without reduction of Taxpayer A’s personal living expenses.