Updated April 2, 2002 at the bottom
 
 

DETAIL OF IRS SYMPOSIUM ON NOVEMBER 13, 1999

Devvy Kidd
March 6, 2000

As regular readers of this web site know, Bob Schulz of the We the People Foundation (www.givemeliberty.org), held a second IRS Symposium at the National Press Club in Washington, DC. One of the panel members was David Bosset. Below is the detailed information he presented at this event. I have omitted some material that I don't think you need as this document is quite lengthy.

Two things to remember while reading this material:

At the core of everything is the fraudulent ratification of the 16th Amendment. It simply is a law that does not exist.

By the government's own admission (http://www.devvy.com/irs_20000208.html), the IRS is not an agency of the U.S. government. Therefore, they have no authority to issue regulations, much less enforce them.

Of course, the crooks, cowards and criminals in the Congress refuse to rectify this fraud, which is why The Wallace Institute is raising money to take the matter to court.

Larry Becraft raised this issue of source income back in 1986. It is nothing new it's just that tens of millions of Americans are now reading the IRC and CFR and discovering for themselves the immoral and sickening fraud shoved down their throats all their lives by the Republicans and Democrats - many who do know the truth. Also remember, in all but a few states (who have no state income tax) your obligation to file a state income tax is tied to you're having to file a federal income tax return. That's right.

I would like to remind readers that while the Internet is a wonderful tool, people like me get in excess of 1,000 e-mails per month, usually more. I'm sure Mr. Bosset receives an avalanche of them every day. It just isn't possible for us to answer each and every question that comes in with individual requests. Sometimes I can't even respond with a one-sentence reply for weeks at a time. It would require a full-time secretary for me to respond to all the regular mail, e-mail and guest book questions. Since I'm the only person who runs my project and my web site, it just isn't possible. I hope you'll keep that in mind if you decide to contact Mr. Bosset.

The format below is what Mr. Bosset used during his presentation and in some cases is just a guideline. As he gets into his material, it becomes quite detailed. This is a legal path that you follow step-by-step. I strongly recommend that you purchase a copy of Title 26 if you don't have one or

you can go to any law library and look up the codes used in this presentation. Once you have the legal path down, you will see how the American people have been cleverly hoodwinked and tricked into this tax scheme run by some rogue operation called the IRS, see: (http://www.devvy.com/irs_20000208.html).

How to Apply and Benefit From Our Income Tax Laws
Or
Why I Love The Tax Law Just As It Is!!

By

David Bosset, President
The Bosset Partners Marketing, Inc.
P.O. Box 5690
Clearwater, Florida 33758

(727) 298-0064/e-mail: daveb@bosset.com

Presented at the Citizens' Summit to End the Illegal Operation of the IRS

On November 13, 1999 at the National Press Club, Washington, DC

Three Areas of Discussion

1. The Law and the Regulations
2. How an employer applies the laws
3. How an employee applies the law

First - Orientation

I am not a tax protester. Application of the Law is the only recourse to you.

The Law

Title 26 United States Code (USC)
Regulations (CFR)
Internal Revenue
Referenced as 26 CFR XXX

How the Law and Regulations Apply to Citizens

The Steps

1. Congress passes and the President signs the law
2. Regulations (if any) for each section of law are created
3. The regulations are published in the Federal Register
4. If Congress does not timely object, the regulations become like law

The Title 26 grants authority to the Secretary of the Treasury

How the authority is transferred

Delegation Orders
TDO - Treasury Delegation Order
CDO - Commissioner Delegation Order

Income Tax Quick Study

Income Tax facts and their significance
The Income Tax "Playing Field"

The 16th Amendment

Gives the Congress authority to tax incomes from "source(s)" within the several states.

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

The U.S. Supreme Court

U.S. v. Burke, James v. U.S., and many other cases

The U.S. Supreme Court determined in cases such as U.S. v. Burke, James v. U.S., and many other cases, and reveal that the tax laws mean what the words in them say, as the Congress acts purposefully in the use of its language, and the 16th Amendment reveals the full measure of the taxing power of the U.S. Congress.

26 U.S.C.  7806(b)

Tables of Contents, etc.

26 U.S.C.  7806(b) states that tables of contents, headings, and charts and other descriptive matter do not constitute the law, bu the words in the laws are the law.

26 U.S.C.  1

Imposes the income tax

26 U.S.C.  1 - imposes the income tax on "taxable income" defined in  63.

26 CFR  602.101 (1990)

The form's OMB Control number

26 CFR  602.101 (1990) - lists the form's OMB Control number 1545-0067, which is the 2555, Foreign Earned Income form, as the only form to be filed by U.S. Citizens pursuant to 1.1-1 of the Regulations and thus 1 of the Internal Revenue Code (IRC).

26 CFR 602.101 (1990)

The form's OMB Control number is 1545-0067

26 CFR  602.101 - (1990) lists the form's OMB Control number 1545-0067 which is the 2555, Foreign Earned Income form, as the primary return to be filed pursuant to the regulations of  6012 (the section of law that the IRS claims, requires U.S. Citizens to file an income tax return) at the listing for  1.6012-0

26 CFR  602.101

Presently lists the form's OMB Control number 1545-0067

26 CFR  602.101 - presently lists the form's OMB Control number 1545-0067, which is the 2555 Foreign Earned Income form, as the first return in the list of returns to be filed pursuant to  6012 at  1.6012.1, since  1.6012-0 and 1.1-1 have both been removed.

26 U.S.C.  63

Definition of "Taxable Income"

26 U.S.C.  63 - defined "Taxable income," on which the tax is imposed, in  1; and the form to be filed, proved to be the 2555, is primarily dependent upon the definition of the term "Gross income," defined in  61 of the IRC.

26 U.S.C.  61

Definition of "Gross income"

26 U.S.C.  61 - defines "Gross income" as income from whatever "source(s), and the items listed alphabetically below  61, are "items" of gross income not sources. Very important distinction.

26 U.S.C.  861

TAX BASED ON INCOME FROM SOURCES

26 U.S.C.  861 - Located in Subchapter N - TAX BASED ON INCOME FROM SOURCES WITHIN OR WITHOUT THE UNITED STATES, PART 1 - SOURCE RULES AND OTHER GENERAL RULES RELATING TO FOREIGN INCOME, lists items of gross income which are to be treated as income from sources within the U.S. This statute does not identify any specific sources within the United States, only items of gross income from the broad-brush term "sources within the United States."

No other subchapter can be located that deals with 'TAX BASED ON INCOME"

No other subchapter can be located that deals with "TAX BASED ON INCOME FROM SOURCES WITHIN...THE UNITED STATES", and no other PART can be located that deals with "SOURCE RULES AND OTHER GENERAL RULES RELATING TO" U.S. Citizens earning Domestic or U.S. source income. Therefore, as the law assets, all else is exempt by reason that it is not within the 'fence' of the law described previously.

26 CFR  1.861-8(f)(1)

The regulation for 26 USC  861

26 CFR  1.861-8(f)(1) - the regulation for  861 of the IRC (26 U.S.C.), in a part that is supposed to related to FOREIGN INCOME only, there is a citation of foreigners being taxable on U.S. source income at subsection (iv).

26 CFR  1.861-8T(d)(2)(iii)

A regulation for  861

26 CFR  1.861-8T(d)(2)(iii) - a regulation for  861 of the IRS (26 U.S.C.), in a part that is supposed to relate to Foreign Income only, there is a citation of foreigners being taxable on U.S. source income at subsection (A).

26 CFR  1.861.8T(d)(2)(ii)(A)

A regulation for  861

26 CFR  1.861.8T(d)(2)(ii)(A) - a regulation for  861 of the IRS (26 U.S.C.), which lists the only U.S. sources taxable for the purpose of the income tax, states that "exempt

income" under the law means any income that is excluded for federal income tax purposes. Or, in other words, if it isn't within the 'fence' of the law, then it is 'outside' of the 'fence' and thus, exempt.

The term "Excluded":

From Black's Law Dictionary

The term "Excluded" - in Black's Law Dictionary means "denial of entry or admittance." Or, in the case of the above, is not to be admitted within the 'fence' containing 'taxable sources."

26 CFR  1/861-8(f)(1)(i) and (vi)

26 CFR  1/861-8(f)(1)(i) and (vi) - both of these sections of laws could possibly apply to U.S. Citizens, as they have to do with possessions of the U.S. that the Congress has deemed to be neither foreign sources nor U.S. sources in specific instances, so U.S. Citizens are not "exempt" from the income tax per se, but are taxable in relationship to these items.

26 CFR  1.861-8T(d)(2)(iii)(D)

26 CFR  1.861-8T(d)(2)(iii)(D) - plainly displays the fact that some U.S. Citizens are not "exempt" from the income tax per se, but are taxable in relationship to foreign earned income as defined in  911, so income earned under  911 is the only source of "gross income" in regards to a U.S. Citizen covering both U.S. and foreign sources when the Citizen claims a foreign tax home.

26 U.S.C.  911

Entitled "Citizens or residents of the United States living abroad"

26 U.S.C.  911 - is entitled "Citizens or residents of the United States living abroad," and many will be hard pressed to prove that it is not limited, as its title claims.

The Secretary has stated in the Regulations

Plainly, the Secretary has stated, in the Regulations he has promulgated for the function of the section of law which lists sources within the U.S. from which the income tax can be based, ( 861), as enacted by the Congress, that the only sources of income which U.S. Citizens earn, which is "gross income" and thus taxable, are under  911.

The Secretary wrote the applicable regulations as he understood the law

The secretary wrote the applicable regulations as he understood the law, as enacted by the Congress, and how he was going to enforce it. The U.S. Congress obviously did not object, as they are now an official Federal Regulation and law, as seen by the Federal Courts.

26 CFR  1.861-8T(d)(2)(ii)(A)

26 CFR  1.861-8T(d)(2)(ii)(A) - confirms the fact that U.S. Citizens only earn "Gross Income" under the income tax law when living abroad, as it only defines renumeration paid to a U.S. Citizen by an employer, as "Wages" and "Gross Income," (and subsequently construed from the entries on a W-2 form pursuant to 6051, and then entered on the 1040 return) only when its payment is included in  911. If U.S. Citizens make gross income under any other law, why are they not listed here in  911, so they can be withheld from?

26 U.S.C.  3401(a)(8)(A)(ii)(B)(C) and (D)

All relate to U.S. Citizens

26 U.S.C.  3401(a)(8)(A)(ii)(B)(C) and (D) - all relate to U.S. Citizens being paid remuneration while working in U.S. possessions or Puerto Rico (which are not considered U.S. sources).

26 U.S.C.  3402

Imposes the withholding

26 U.S.C.  3402 - imposes the withholding of the income tax only upon "wages" as defined exclusively within its chapter (24) at  3402(a).

26 U.S. C.  3401(a)(8)(A)

Reveals that the remuneration paid

26 U.S. C.  3401(a)(8)(A) - reveals that the remuneration paid to U.S. Citizens living and working in the U.S. is excepted from the definition of "wages" which are subject to the withholding requirement of  3402.

26 U.S.C.  3403

Only protects employers from liability

26 U.S.C.  3403 - only protects employers from liability for paying the withheld remuneration to the IRS if the remuneration is first "wages" under  3401(a), which is then required to be withheld from under chapter 24 at  3402.

26 U.S.C. Section  911

With  911 (as referenced in 26 U.S.C.  3401(a)(8)(A)) being listed as the statute revealing the only way a U.S. source of income from which U.S. Citizens earn income subject to the income tax, in the regulations promulgated by the Secretary for the purpose of explaining sources of income within the U.S., and income earned in Puerto Rico and U.S. possessions also being listed as taxable sources in the same regulations and in  3401(a)(8)(A), (B), (C) and (D), it should not be too difficult to understand how only some remuneration paid to a U.S. Citizen living broad, is included in the definition of gross income in  911 and is wages to be withheld from under  3402.

Remuneration

With the remuneration not being defined as "wages" there is no legal requirement to withhold, as there are no "wages" to be withheld from. Subsequently, the employer is not required to withhold, and therefore can remuneration not defined as "ages" per  3401(a)(8)(a).

GROSS INCOME FROM SOURCES - A CLOSER LOOK

Let's look at the definition of Gross Income:

26 U.S.C. Section 62 IRS

(a) GENERAL DEFINITION

Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items;

IMPORTANT NOTE: The list below is compromised of 'items' as stated above, not 'sources' don't give up yet....the below 'items' must originate from a 'source' established by the Secretary of the Treasury to be 'items' of 'Gross Income.'

Here are the 'items':

(1) Compensation for services, including fees, commissions, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;

26 U.S.C. Section 61

(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent;
(15) Income from an interest in an estate or truth 1.861-8(a)(4)

The Sixteenth Amendment

The Constitution of the United States of America Amendment XVI

"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." ( Ed. Note: Of course we know that without question the 16th Amendment was never ratified by the states.)

Code of Federal Regulations  1.861-8(a): And the Secretary said:

"The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections."

26 CFR Sec. 1.861-8(f)(1):

And the Secretary Said:

(i) Overall limitation to the foreign tax credit
(ii) [Reserved]
(iii) DISC and FSC taxable income. (Note: DISC is Direct International Sales Corp, and FSC is a Foreign Sales Corp.)
(iv) Effectively connected taxable income. Nonresident alien individuals and foreign corporations engaged in trade or business within the United States...
(v) Foreign based income
(vi) Other operative sections

(A) "...foreign source items of tax..."
(B) "...foreign mineral income..."
(C) [Reserved]
(D) "...foreign oil and gas extraction income..."
(E) "...citizens entitled to benefits of section 931 and the section 936 tax credit..."
(F) "...residents of Puerto Rico..."
(G) "...income tax liability incurred to the Virgin Islands..."
(H) "...income derived from Guam
(I) "...China Trade Act corporations..."
(J) "...income of a controlled foreign corporation..."
(K) "...income from the insurance of U.S. risks..."
(L) "...international boycott factor...attributable taxes and income under section 999
(M) "...income attributable to the operation of an agreement vessel under section 607 of the Merchant Marine Act of 1036..."

26 CFR  1.863-1

Determination of taxable income

(c) Determination of taxable income. The taxpayer's taxable income from sources within or without the United States will be determined under the rules of  1.861-8 through 1.861-14T for determining taxable income from sources within the United States.

Koshland v. Helvering

The Supreme Court said:

"The provisions of the act are unambiguous and its directions specific, there is no power to amend it by regulation." Koshland v. Helvering (1936) 298 U.S. 441, 80 L.Ed 1268 56 S.Ct. 7878

Important note:

It is not always important what is in a law that is important. Frequently what is not stated in a law is equally important. Especially if you're assuming something is in a law (something the U.S. Supreme Court does not have authority to do), when it clearly is not there.

Let's put it still another way:

1.) Section 61 states that gross income is from 'sources' which are taxable.

Let's put it still another way...

2.) 26 U.S.C.  861(a), states that the following items of gross income shall be treated as income from sources within the United States that are taxable, but fails to include such income paid to U.S. Citizens within the regulation setting forth the 'specific sources' of income from within the U.S.

Let's put it still another way....

3.) 26 CFR 1.861 and following, are the Regulations promulgated by the Secretary of Treasury to implement 26 U.S.C.  861, and prove that the items of gross income discussed in 26 U.S.C.  861, are applicable only to foreigners and U.S. Citizens living abroad.

Important Note:

The Internal Revenue Code considers a U.S. Citizen living and working in a U.S. Territory (Puerto Rico, Virgin Islands, Guam, etc...] as being abroad. See IRC Sections 930 and 940.

Significantly, the only application of the federal income tax upon the income of U.S. Citizens in existence is with respect to:

(1) a U.S. Citizen's foreign earned income, and
(2) the income of U.S. Citizens living abroad.

26 CFR  1.861-8T(d)(2)(ii)(A)

Exempt Income

"In general. For purposes of this section, the term "exempt income" means any income that is in whole or in part, exempt, excluded, or eliminated for federal income tax purposes."

Exclusion

"Exclusion" which is defined in Black's Law Dictionary, in part, as follows:

'Denial of entry or admittance.'

26 CFR  1.861-8T(d)(2)(iii)

Not considered exempt

(iii) Income that is not considered tax exempt. The following items are not considered to be exempt, eliminated, or excluded income and, thus, may have expenses, losses, or other deductions allocated and apportioned to them:

(A) In the case of a foreign taxpayer (including a foreign sales corporation (FSC) computing its effectively connected income, gross income (whether domestic or foreign source) which is not effectively connected to the conduct of a United States trade or business;

(B) In computing the combined taxable income of a DISC or FSC and its related supplier, the gross income of a DISC or a FSC

(C) For all purposes under sub-chapter N of the Code, including the computation of combined taxable income of a possessions corporation and its affiliates under section 936(h), the gross income of a possessions corporation for which a credit is allowed under section 936(a); and

(D) Foreign earned income as defined in section 911 and the regulations thereunder (however, the rules of section 1.911-6 do not require the allocation and apportionment of certain deductions, including home mortgage interest, to foreign earned income for purposes of determining the deductions disallowed under section 911(d)(6)).

NOTE: The only income above related to U.S. Citizens is D.

A simple 'rule of thumb' to remember about the tax code:

The entire topic of the 'Income Tax' and the statutes regarding it, are built chiefly around the foundation of "Gross Income' as defined in Sec. 61 of the Internal Revenue Code and that our laws mean what they say.

HOW AN EMPLOYER APPLIES THE TAX LAW

THE ROAD MAP

The steps taken to correct the amount of "wages" and taxable income reported to the IRS by the employer, The Bosset Partners Marketing, Inc.:

I will outline the steps for the year 1996 so as not to confuse the issues. The company has corrected ll W-2's and 1099's for all years.

The most important step is this one. Be absolutely sure you understand the code and regulations you are applying. When you understand the correctness and legality of your actions, two things will happen:

(1) You will be angry that the government (IRS) has taken such extensive steps to deceive and defraud you, and

(2) You will tell everyone you know about the truth. Prepare the corrected W-2 documents. A Form W-2c Corrected Wage and Tax Statement is available from most business form suppliers.

Prepare the corrected 1099 documents. The 1099 form has a correction box to check.

Prepare the corrected 941 Form(s). I used the standard blank 941 form and labeled the top of the form as "Amended and Corrected." Note that the "Refunded" box needs to be checked. Without checking this box the overpayment will be credited to your next quarterly amount.

Prepare the corrected 940 Form(s). Again mark the top of the form as "Amended and Corrected."

Use a transmittal letter to identify the package contents. This step is very important. This transmittal defines the law (US Code) and the Regulations from the Secretary of the Treasury that you are standing on making the corrections. The entire package (as outlined in the transmittal letter) was then sent to the District Director of the IRS, Certified Mail Return Receipt Requested.

Then the employees were sent the corrected W-2's with a transmittal letter explaining the reason for the change. Surprisingly, very few calls with questions were received. Interestingly, a few called me to thank me because they did not file tax returns and the zero W-2 and the explanation letter helped them to not "look over their shoulder" as often.

The same procedure was followed with the 1099's. Each commissioned person received a letter explaining the correction and a corrected 1099 Form. One of the commission sales people was in the middle of an IRS audit when the corrected 1099 was received. I would have liked to be a "fly on the wall" at that meeting!

[Ed. Note: Last month here in Sacramento, a third brother was indicted for not withholding from his subs nor issuing them 1099's; he is a contractor. His two brothers pleaded and are helping the IRS go after all the people who worked for their companies who didn't file tax returns because, golly, oh, gosh - they got paid in cash. I think that's the way business was done back in the days of Thom Jefferson - you know, the guy who drafted the Constitution? W-2's, 1099's - Americans are embracing bondage.

Now, it's get you suckered into the social (in)security program (No, I'm not trying to suggest that social security should be stopped tomorrow - the commitment must be honored but no one else should sign on), and then track you through this goodwill number to enforce their fraudulent IRS "laws." What a scam. How shameful.

The federal boys and girls over here at the big, fancy new federal building must feel real proud of themselves. I did send this third brother the law and recommended he discuss it with his attorney. I have had no response. This is how Americans are not only railroaded into prison, ignorance of the law, but then, in order to stay out of federal prisons or lighter sentences, they sing like Jenny Lind against other Americans. Our Founding Fathers must feel shame for what is going on in our Republic.]

Back to Dave Bosset's story:

I waited. No response whatsoever. All of the emotions that I have talked about previously came and went. I was 100% positive that I was correct in the corrections, but still I will admit to doubts. Perhaps now you will understand why instruction number one is the most important.

Still no response. Decided to become aggressive and began to build the paper trail that would be used as evidence should it be necessary to take the IRS to court about the refund.

The follow-up letter [Ed. Note: Dave was presenting a slide show] was the first in a series that appears to have moved the IRS to the solution of the refund. This letter was followed by an additional letter that reminded the IRS that they had not responded to previous requests regarding the refund.

Suddenly a response. IRS sent a CP-504 "URGENT We intend to levy on certain assets" for $28,783.60 on an issue that had been well settled in 1997. The amount of the Lien was a little more than the expected amount of the refund. Strange coincidence, don't you think?

But the letters had apparently moved the issue off of dead center. I then received a phone call from the "Problem Resolution Office" in Atlanta. The corrected documents were being processed and "oh, by the way, you will be getting a refund."

A confirming fax was received, but it had the additional warning "The refund will be sent to you if there are no other taxes due." Remember the CP-504 (threatened levy)? A letter was also received from the Problem Resolutions Office.

[Mr. Bosset apparently then used certain techniques attacking the validity of the CP-504, demanding evidence that supported this IRS action. The IRS presented no evidence.]

Then as if by magic on August 26, 1999, the documents "adjusting" the amount of the invalid CP- 504 to zero and the check arrived.

As a footnote, the levies that had ben applied by the IRS for 1996 was not returned as of this date. Needless to say, we have not given up and thrown in the towel. Strategies are being developed to have them returned without a lawsuit against the IRS. After all the presumed basis for the levies no longer exists.

Part 3 was too vague to re-type and this information is already covered in several areas of the IRS section on this web site; use the search engine. End.

Mr. Bosset's saga continues. This fraud has been going on since 1913. While Mr. Bosset appears to have a good method of dealing with this mess, it is my desire, as well as Larry Becraft, Bill Benson and others to see the complete and whole truth come out. All of the material above is a moot point when you consider the ironclad facts:

At the core of everything is the fraudulent ratification of the 16th Amendment. It simply is a law that does not exist.

By the government's own admission (http://www.devvy.com/irs_20000208.html), the IRS is not an agency of the U.S. government. Therefore, they have no authority to issue regulations, much less enforce them.

If one chooses to proceed with Bosset's methods, that's great. Every time the IRS is challenged and proven wrong, it is a plus for America. However, how many people can really understand all the material above to the point where they can proceed on their own? It's absurd. It's only the rich and powerful who can buy the favors of whores who call themselves lawyers (there are good lawyers and then there are the shysters), that know the in's and out's that keep people like John D. Rockefeller from paying a nickel in taxes. The rest go to organizations like H. & R. Block who never raise the issue of whether or not Mr. & Mrs. America who just walked in the door, is even liable for any tax. Oh, no - income tax is big, big, business to the H. & R. Blocks of this nation. They don't want the IRS abolished and I would die before I ever spend one nickel at H. & R. Block.

If you are fortunate enough to be able to afford the services of a CPA, take this information to them and ask them how come they never told you what the 10,000+ pages of the Internal Revenue Code and the Code of Federal Regulations really say? Hmm? Ask them what you've been getting for that $100-$250 per hour all these years - the truth or the big lie to keep them in business?

* * *

Update: April 2, 2002

FOR IMMEDIATE RELEASE
FEBRUARY 1, 2002
WWW.USDOJ.GOV

                   JUSTICE DEPARTMENT OBTAINS PERMANENT INJUNCTION
                           AGAINST ATLANTA TAX RETURN PREPARER

                        Accountant Agrees To Stop Asserting Meritless Positions

WASHINGTON, D.C. -- On Tuesday a federal court in Atlanta, Georgia issued a permanent injunction against Harold E. Hearn—an accountant and tax return preparer—and two of his corporations, HEH Financial Services, Inc. and Hal's Financial Services, L.L.C. from preparing tax returns for clients claiming exemption from income tax based on frivolous positions, including a misinterpretation of Section 861 of the Internal Revenue Code. Hearn has improperly requested refunds for his clients totaling over $2.5 million.

In the permanent injunction issued by the court, the parties agreed that Hearn, in promoting the Section 861 argument, made false or fraudulent statements regarding the exclusion of wages and other items from income. The injunction requires Hearn to notify his clients of the injunction, and to inform his clients that the representations made by Hearn and his corporations and the tax returns prepared by Hearn and his corporations were false. Hearn and his corporations must also tell their clients about the possibility that the IRS may impose frivolous-return penalties on his clients and seek to recover any erroneous refunds the clients received. The injunction further requires Hearn and his corporations to turn over all records which identify clients whose
tax returns they prepared.

Eileen J. O'Connor, Assistant Attorney General in charge of the Justice Department's Tax Division, said, "Taxpayers must be wary of unscrupulous promoters and return preparers who advocate baseless legal positions. The Section 861 argument has been rejected by every judge who has considered it. Moreover, courts have imposed penalties of as much as $25,000 against those who assert this legally frivolous position. If it sounds too good to be true, it usually is."

According to court papers the Justice Department filed in the case, Hearn and his corporations prepared tax returns for clients claiming exemption from federal income tax based on a false claim that the income tax generally applies only to income earned by United States citizens working abroad. The Government's complaint alleged that Hearn prepared at least 88 original and amended income tax returns on behalf of at least 35 clients.

On November 15, 2001, the same day the United States sued Hearn, it filed separate injunction suits against two other Section 861 promoters—David Bosset of Clearwater, Florida, and Thurston Bell of Hanover, Pennsylvania. Those two cases are still pending.

                                                                               * * *

FOR IMMEDIATE RELEASE
MONDAY, FEBRUARY 11, 2002
WWW.USDOJ.GOV

                          TAX FRAUD COMPLAINT UNSEALED AGAINST
                          FOUNDER OF ANDERSON ARK & ASSOCIATES

WASHINGTON, D.C. - The founder of a nationwide abusive tax shelter promotion scheme was charged today with conspiring to defraud the United States by organizing a group of accountants who used a variety of shell corporations, trusts and partnerships to operate tax shelter schemes they sold to their clients, the Department of Justice's Tax Division announced today.

Keith E. Anderson, founder of Anderson Ark and Associates was charged in a criminal complaint which was unsealed today in Seattle.

Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division, said, "By encouraging people to cheat on their taxes, promoters of tax scams defraud honest taxpayers many times over." Assistant Attorney General O'Connor called on all taxpayers to report suspected tax fraud to the IRS. "Tax fraud promoters are like all con artists. If their sales pitch sounds too good to be true, it probably is not true."

The complaint alleges that from 1998 through 2001, Anderson Ark and Associates obtained more than $30 million in illegal tax refunds for between 1,500 and 2,000 clients and received approximately $50 million in fees and other funds from the clients.

The complaint further alleges that Anderson Ark & Associates' accountants prepared tax returns that claimed large tax deductions for fraudulent "loans" and "consulting expenses." In reality, the complaint alleges, the funds were not spent as claimed, but instead were wired to Costa Rica so that Anderson Ark & Associates' clients could later withdraw them with a debit card.

The tax charges against Anderson are in addition to an indictment returned in the Eastern District of California on May 3, 2001, charging Anderson and several other defendants with conspiring to commit money laundering through Costa Rica.

Anderson, who had been a fugitive from justice, was apprehended in Costa Rica on Saturday, February 9, 2002, and is awaiting extradition to the United States.

The tax fraud case is being prosecuted by Tax Division Trial Attorneys Corey J. Smith and Krista Tongring.Additional information about tax fraud schemes to watch out for can found on the IRS Criminal Investigation website at http://www.ustreas.gov/irs/ci.

                                                                                * * *
 

FOR IMMEDIATE RELEASE
THURSDAY, FEBRUARY 21, 2002
WWW.USDOJ.GOV

                   JUSTICE DEPARTMENT OBTAINS PERMANENT INJUNCTION
                         PROHIBITING THE SALE OF ILLEGAL TAX PLANS

                         Victory For IRS In Battle Against Tax Fraud Promoters

WASHINGTON, D.C. – Yesterday, a federal court in Tampa, Florida issued a permanent injunction against Joseph N. Sweet and EDM Enterprises, both of Bradenton, Florida, ordering them and others working with them from promoting and selling tax plans or shelters that urge taxpayers to violate tax laws.

"The Tax Division of the Department of Justice is determined to stop the promotion and practice of tax fraud," said Eileen J. O'Connor, Assistant Attorney General for the Tax Division. "This injunction should assure people who pay their taxes that those who don't, or who encourage others not to, will not get away with it."

The injunction requires Sweet and EDM to contact customers who previously purchased their abusive tax promotions and inform them of the injunction. It also prohibits Sweet, EDM, and persons working cooperatively with them from promoting their false claims that wages are not taxable income, the federal income tax is unconstitutional, and the IRS is not legally authorized to collect taxes. The court's order requires Sweet and EDM to identify all persons who bought tax shelter plans from Sweet or EDM.

According to papers the United States filed in the case, Sweet and EDM have sold and continue to sell tax-avoidance plans stating that paying federal income taxes is voluntary and that wages are not income. The Court papers also say the plan materials are sold in conjunction with Sweet's self-published book "GOOD NEWS For FORM 1040 Filers: Your Compliance is Strictly VOLUNTARY! BAD NEWS For The IRS! Everything You Ever Needed to Know About the Income Tax That the IRS Is Afraid You'll Find Out." Sweet and EDM sold books and other plan materials to at least 650 persons and sold at least 400 "trusts." Sweet's and EDM's activities could cost American taxpayers more than $6.5 million.

The United States' papers also allege that numerous web sites currently advertise "Dr. Sweet's program," and Sweet himself actively participates in marketing the plan materials. Material from one such web site filed with the court, from a group called "The JoY Foundation," claims Sweet as the author of its program for tax avoidance and lists Sweet as a speaker at JoY Foundation seminars and bi-weekly "Associate Degree Conference Calls."

People hearing about tax benefits which sound "too good to be true" should check them out with a trusted tax professional or the IRS. Anyone who has information about suspected tax fraud should report it to the Internal Revenue Service tip line at 1-800-829-0433.

                                                                                * * *

FOR IMMEDIATE RELEASE
MONDAY, MARCH 4, 2002
WWW.USDOJ.GOV

                                 JUSTICE DEPARTMENT SUES TO HALT PROMOTERS
                                                OF ILLEGAL TRUST TAX SCHEME

                   Potential Revenue Loss Estimated At More Than $9 Million Annually

WASHINGTON, D.C. – The Department of Justice today filed a civil suit in Chicago to stop an alleged abusive tax scheme promoted by two Chicago-area men, Michael D. Richmond and Rex E. Black. The government complaint alleges that Richmond, Black and their businesses—The Liberty Network, Liberty Estate Planning, The Liberty Institute, Fiduciary Management Group, National Council of Certified Estate Planners, Association for Certified Estate Planning Attorneys, and Eagle Publications Trust—sell sham trust packages that improperly reduce or eliminate customers' reported federal income taxes. The suit also seeks to bar the defendants from preparing federal income tax returns and to require them to turn over their customer lists to the government.

"The IRS and the Justice Department are working closely together to halt the spread of fraudulent trust schemes," said Eileen J. O'Connor, Assistant Attorney General in charge of the Justice Department's Tax Division. "The Internet makes selling tax scams remarkably easy, but the public should be on guard—using the word ‘trust' doesn't make a scheme legitimate. Substantial civil and criminal sanctions may be imposed on those who participate in abusive trust schemes."

According to the complaint filed in the United States District Court in Chicago, Richmond and Black advise and encourage customers to violate federal tax laws by transferring their houses and other assets to sham trusts, which defendants describe as "Pass-Through Technology." The government alleges that the defendants falsely advise customers that these trusts allow customers to claim deductions for house payments, utilities, and other non-deductible personal expenses.

The defendants allegedly recruit agents and customers through the Internet and through ostensible "educational" programs conducted by their "Liberty Institute." The complaint alleges that the Liberty Institute teaches nationwide "certification" courses offering a "Certified Estate Planner" designation. According to the complaint, Richmond and Black charge customers trust set-up fees of $3,750 and other annual fees for tax return preparation, "trustee services," and secretarial services. The complaint alleges that Richmond is currently incarcerated. The IRS estimates the revenue loss from the scheme at more than $9 million annually.

Taxpayers should look for the following warning signs that may indicate an abusive trust promotion:

     a promise to reduce or eliminate income and self-employment tax.
     deductions for personal expenses paid by the trust.
     depreciation deductions for a personal residence.
     high fees for trust packages, to be made up by promised tax benefits.
     lack of an independent trustee.
     use of terms like "pure trust," "constitutional trust," "sovereign trust,"
    "unincorporated business  organization," or "common law trust."

Taxpayers can find more information about abusive trusts on the IRS website at www.irs.gov. People hearing about tax benefits that sound "too good to be true" should check them out with a trusted tax professional or the IRS. Anyone with information about suspected tax fraud should report it to the IRS tip line at 1-800-829-0433.

                                                                                * * *

FOR IMMEDIATE RELEASE
TUESDAY, MARCH 5, 2002
WWW.USDOJ.GOV

           JUSTICE DEPARTMENT SUES TO HALT FRAUDULENT INCOME TAX SCHEME

                  "Joy Foundation" Claims To Have Thousands Of Members Nationwide
                         Tells Members They Need Not File Returns Or Pay Tax

WASHINGTON, D.C. – The Department of Justice today filed a civil suit in federal court in Illinois directing three persons and their organization, "the Joy Foundation," for promoting an illegal tax scheme. The government alleged that the defendants charge thousands of dollars for materials and courses containing false or fraudulent statements about the income tax laws. Yesterday, the Department filed a similar suit in federal court in Chicago seeking to stop an alleged abusive tax scheme promoted by two Chicago-area men, Michael D. Richmond and Rex E. Black.

"This lawsuit is part of the Justice Department's ongoing effort to stop abusive tax schemes at their source—the promoters who peddle them," said Eileen J. O'Connor, Assistant Attorney General for the Department of Justice's Tax Division. "The Tax Division is committed to bringing appropriate legal action to uniformly enforce the tax laws Congress enacts. We will take the necessary action to stop people who attempt to defraud the public using this and other abusive tax plans."

According to the complaint, filed in the United States District Court in Peoria, Illinois, the defendants, Robert Lawrence, Yvonne M. Malone, Jack L. Malone, and the Joy Foundation, disseminated false statements about the tax laws, advising taxpayers to:

     not file income tax returns,
     improperly attempt to avoid tax withholding from wages,
     transfer assets to bogus trusts, and
     not pay federal income tax.

According to the complaint, the defendants charged customers $1,650 to join the Joy Foundation. For this fee, the defendants' programs allegedly assist customers in "un-volunteering" from the federal income tax system through a number of steps. The Joy Foundation instructs customers to begin sending a series of letters to the IRS that will, the defendants claim, decrease the risk of IRS audit and defeat criminal charges based on willfulness. The complaint further alleges that the defendants teach Joy Foundation customers how to evade IRS collection efforts.

The complaint states that the defendants' promotional activities at a Mitsubishi Motors plant and elsewhere in the Peoria area recruited current or former Mitsubishi employees as Joy Foundation members. The government further alleges that a number of Mitsubishi employees have attempted to prevent Mitsubishi from withholding federal income tax from their wages and have stopped filing federal income tax returns. The complaint states that the defendants promote their programs on numerous websites.

The complaint notes that a federal court in Florida last month directed Joseph Sweet, who is affiliated with the Joy Foundation. The government asks the Illinois federal court in today's filing to order the defendants to stop promoting their scheme and to turn over to the government a list of participants.

"The law is crystal clear that people must pay their taxes," said IRS Commissioner Charles O. Rossotti. "There is no gray area on this issue. For decades, the courts have consistently upheld the tax law."

People hearing about tax benefits that sound "too good to be true" should check them out with a trusted tax professional or the IRS. Anyone with information about suspected tax fraud should report it to the IRS tip line at 1-800-829-0433.

                                                                                            * * *

FOR IMMEDIATE RELEASE
WEDNESDAY, MARCH 6, 2002
WWW.USDOJ.GOV

                  JUSTICE DEPARTMENT SUES TO ENJOIN RETURN PREPARERS
                       IMPLICATED IN SLAVERY-REPARATIONS TAX SCAM

                     IRS Says $2.7 Billion In False Reparations Claims Filed In 2001

WASHINGTON, D.C. – The Department of Justice today filed civil suits in Mississippi and Virginia to enjoin tax return preparers from preparing income tax returns claiming bogus refunds based on a supposed tax credit for slavery reparations. The lawsuits also seek to require the defendants to give the government their complete client lists. The complaints, filed today in federal courts in Richmond, Virginia and Jackson, Mississippi, note that the IRS has recently seen a surge in these frivolous claims. In January the IRS announced that it received nearly 80,000 returns in 2001 claiming more than $2.7 billion in false reparation refunds. The complaints filed today allege that the two defendants are responsible for some of these false claims.

"We hope the courts act promptly to stop the promotion of this fraudulent tax scheme," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "People who prepare fraudulent returns are risking penalties and possible prosecution not only for themselves, but also for the people whose returns they prepare. Filing a return claiming slavery reparations is illegal."

According to the complaints filed today, the two defendants prepared and filed returns and amended returns claiming bogus refunds ranging from $8,000 to $500,000 per client, based on tax credits for reparations for slavery or segregation. No provision in the federal tax code allows such credits or refunds. The complaint filed in Mississippi alleges that Andrew L. Wiley of Durant, Mississippi may be responsible for helping to prepare as many as 3,910 returns claiming a total of approximately $168 million in improper reparation refunds. The complaint filed in Richmond alleges that Robert L. Foster prepared bogus reparation claims exceeding $2 million.

The IRS has issued public warnings about the reparations tax scam. In January, IRS Commissioner Charles O. Rossotti said: "Promoters are shamelessly preying upon people. These snake-oil salesmen build false hopes and charge people good money for bad advice on reparation refunds. In the end, the victims discover their refund claims are rejected, and their money and the promoters are long gone."

Some promoters of the reparations scam have been charged criminally. In October 2001, Vernon T. James of Carrollton, Texas was convicted of preparing false, fictitious and fraudulent personal federal income tax returns for preparing tax returns claiming the reparations credit. In January, a federal judge sentenced James to six and one-half years in prison and ordered him to pay $1.2 million in restitution.

People hearing about tax benefits that sound "too good to be true" should check them out with a trusted tax professional or the IRS. Anyone with information about suspected tax fraud should report it to the IRS tip line at 1-800-829-0433.

                                                                            * * *

Charles O. Rossotti is a bottom feeder and puts the Italian Mafia to shame.

Judicial Watch is trying to do something about this expensive Judas:

http://www.judicialwatch.org/1283.shtml

                                                                                    * * *

FOR IMMEDIATE RELEASE
THURSDAY, MARCH 14, 2002
WWW.USDOJ.GOV

                                            JUSTICE DEPARTMENT SUES PREPARER OF
                                                             BOGUS TAX REFUND CLAIMS

                                                   One Refund Claim Exceeded $7 Million

 WASHINGTON, D.C.The Justice Department filed suit in federal court in Tampa today seeking to stop a Florida man, Douglas P. Rosile, Sr., from promoting a tax refund scheme that allegedly has been used to under-report tens of millions of dollars of tax liability for nearly 200 clients in 32 states. The civil suit, filed in the U.S. District Court for the Middle District of Florida, alleges that Rosile's licenses to practice as a certified public accountant were revoked by Florida and Ohio.

The complaint alleges that all the bogus refund claims prepared by Rosile were based on the erroneous assertion that only income from foreign sources is subject to U.S. income tax. According to the complaint filed today, the "foreign sources" argument Rosile uses is based on an absurd misreading of Section 861 of the Internal Revenue Code. A federal appellate court recently upheld a $25,000 penalty against a taxpayer who asserted the argument before the U.S. Tax Court. The government brought injunction suits against three other promoters of the Section 861 scheme last November. In one of those cases, a federal court on January 29, 2002 enjoined Harold Hearn, an Atlanta accountant, from continuing to assert the argument. Two other cases—in federal courts in Florida and Pennsylvania—are pending.

"The argument that only foreign sources of income are subject to income tax has been rejected out of hand by every judge who has examined it," said Eileen J. O'Connor, Assistant Attorney General in charge of the Justice Department's Tax Division. "Taxpayers who participate in this and other patently frivolous schemes risk substantial civil and criminal penalties. The Justice Department is committed to stopping abusive promoters who seek to bilk the U.S. Treasury."

The government complaint states that Rosile's bogus claims, had the IRS not detected them, would have resulted in a loss of over $36 million to the Treasury. The complaint refers to one refund claim for $7.3 million. In its complaint, the Government asks the court to order Rosile to turn over his clients' identities and all related records.

People hearing about tax benefits that sound "too good to be true" should check them out with a trusted tax professional or the IRS. Anyone with information about suspected tax fraud should report it to the IRS tip line at 1-800-829-0433.

                                                                            * * *

FOR IMMEDIATE RELEASE
WEDNESDAY, MARCH 27, 2002
WWW.USDOJ.GOV
 

               FEDERAL COURT IN TAMPA ORDERS TAX FRAUD PROMOTER TO
                         STOP PREPARING BOGUS TAX RETURNS, PROMOTING
                                                 FRAUDULENT TAX SCHEME

                       Documents Must Be Turned Over To The Justice Department

WASHINGTON, D.C. – A Federal District Court in Florida has ordered David Bosset of Spring Hill, Fl., to stop preparing bogus tax returns and promoting a fraudulent tax scheme. Bosset had claimed that only income from foreign sources is subject to United States income taxes. The court, which handed down its ruling yesterday, also ordered Bosset to provide the Justice Department a complete list of clients back to1998, including their social security numbers and other information, and to send the Department copies of every federal tax return or other document he prepares or sends to the IRS on behalf of others. The order also applies to Bosset's "agents, servants, employees, attorneys and those persons in active concert or
participation" with him.

Papers filed in the federal court include a statement from one of Bosset's clients alleging that she paid over $11,000 to Bosset or his associate after being told they would solve her family's problems with the IRS. The income tax returns Bosset prepared for her falsely declared that she had zero income, on the frivolous grounds that income earned in Florida is not taxable. The client said she is now worse off than before she met Bosset.

"It is impossible to tell how much money the court has just saved the Federal Treasury and law-abiding taxpayers by ordering Mr. Bosset to stop preparing and filing false income tax returns," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "This court's action should alert people who promote or rely on this or other bogus tax schemes to the fact that their days of defrauding the public are numbered."

The Justice Department's suit against Bosset is one of four cases recently brought to stop the promotion of the foreign-source income scheme. In one of the other suits, the Department obtained an injunction in January 2002 against Harold E. "Hal" Hearn, an Atlanta-based CPA, prohibiting him from preparing returns based on, or promoting, the foreign-source income argument. The third case, filed against Thurston Bell in federal court in Harrisburg, Pennsylvania, is still pending. In the fourth case, the Department filed a suit on March 14, 2002, against Douglas P. Rosile, Sr., a Venice, Florida-based former accountant, which seeks to permanently enjoin Rosile from preparing tax returns and from promoting the foreign-source income argument. The under-reporting of tax liabilities stemming from Rosile's actions alone was estimated at $36 million.