12/87 /199J 21:45 48B-45 3-5'3'3 7 NTS

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THE WALL STREET JOURNAL.

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*** Wt:m:tJ< EDmON
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PAUl AUtI. CALlf'lNiV o
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Bishop's Gambit
Hawaiians Who Own
Goldman Sachs Stake
Play Clever Tax Game
Their Trust Is Educational,
But Investments Produce
Big Incomes for Trustees
 , ,,' . <Chapter :.Thirteen..','. :" ~ ",' :,': ,
PROTECTI·NG YOUR ASSETS
How important is your personal and professional privacy? How important is it that your business and
personal assets be well organized to offer you the best possible protection from liability, taxation, harass-
ment, judgments, etc. while providing you the greatest benefits? The combination of your business and
personal estate represents the work and accumulation of a lifetime. Shouldn't protecting and preserving that
accomplishment with proper business and estate planning be one of your highest financial priorities?

All of this can be achieved through the use of trusts.

Trusts

A trust is a right of property, real or personal, held by one party for the benefit of another.
Americans have the unlimited freedom to hold, transfer, sell, give away or dispose of their property
in any manner they wish. Trusts provide a lawful method of relinquishing ownership. along with its
inherent liabilities, while maintaining unlimited use and practical control of the property. Simply put,
a trust is a contract in which an individual transfers property into a fictitious entity that is managed by
one or more fiduciary agents on behalf of holders of beneficial interest in the trust.

Many of America's wealthiest and most influential people have long established trusts to
protect their assets. These include the Rockefellers, Kennedys and Morgans, to name but a few.

There are only two basic kinds of trusts: statutory and common law. Statutory trusts get their
existence from the State. Somebody, somewhere, sometime wrote a statute that created this type of
trust entity. Some legislative body enacted the statute as law. As a result, the State can regulate these
trusts. and the State can change the rules governing these trusts at any time. The creator (the State)
maintains control of its creation (the statutory trust). In other words, whatever protections a statutory
trust may afford you today may not apply in the future. If you care to research it, you will find that
ordinarily, attorneys will exclusively work with statutory trusts.

Unlike their counterpart, common law trusts - also called Pure !rust Organizations (PTOs). True
Trusts, or Unincorporated Contractual Organizations (UCOs) • get their existence from fundamental
law, British Ecclesiastical law, the Magna Carta, the Holy Bible, and your Natural Right to c'ontract.
Neither the federal nor State government can regulate common law trusts, nor can either in any way
obstruct your right to contract.

No state shall ••• pass any bill of attainder, ex post facto law, or law impairing
the obligation of contracts••. "
Un;ted States Constitution, Article 1, Section 10, Paragraph 1

Most of the trusts you commonly hear about are statutory in nature. However, for the purposes
of this discussion I will deal exclusively with common law trusts, since my goal is to teach you how to live
free from government regulation, and no government can lawfully regulate these types of trust entities.

One of the most important aspects of putting together a working trust is to ensure that the,
trust does not have the appearance of a corporation. Remember, all corporations get their existence
from federal law, therefore corporations are subject to the jurisdiction of the (federal) United States.
If your trust looks too much like a corporation then the IRS and corporate State will tax it and the
83
federal government will regulate it as a corporation. There are four general attributes inherent in
ail cOfpotations. If your trust possesses any three, it will be treated as a corporation.

The fkst attribute of a corporation is centralized management, which does ~xist within any trust.
Second, limited personal liability of the principals, which is also true of trusts. Number three is conti-
nuity of life, because a corporation continues in perpetuity; a trust, however, is a contract and must
therefore have a termination date (in law, there is no such thing as a life contract), which may be
extended, but which extention must first be incorporated into the body of the trust.

Fourth is ea-sy transferability of beneficial interest; corporate stock certificates are negotiable
instruments, transferable to anyone at any time. A properly written common law trust contract includes
the issue of Certificates of Evidence of Right of Distribution to holders of beneficial interest in the trust.
However, in order to transfer these Certificates, the Holder must obtain the written approval of the fidu-
ciary agents. This means that transferability is not easy. So a properly written common law trust con-
tract shares only two of the four attributes of a corporation, and will therefore be treated as a trust.

History of Common Law Trusts

Plato is believed' to have had one of the first common law trusts around the year 400 B.C. The
first trust of record was drafted by patriot Patrick Henry for businessman Robert Morris of Virginia in
the year 1764, twelve years before the signing of the Declaration of Independence! This trust is still
fully operational today, over 234 years later, under the name The North American Land Company.

In 1968, Senator Edward Kennedy (D-Mass.), while in a state of alcoholic inebriation, ran his car
off ehappaquiddlck Brid@e, resulting in the death of his companion, 29 year old Mary Jo Kopeckni, whose
parents subsequently sued Senator Kennedy for the wrongful death of their daughter. They receiveda set-
tlement - from a K(;mn~r;:Jy- in the amount of 30,000 dollars. The thing is, they were lucky,to get that much!
The reason they had no choice but to accept such a paltry settlement is that Ted Kennedy doesn't own
anything! As a matter of fact, Senator Edward Kennedy has filed a public Oath of Poverty!! Everything that
he uses, everything that he possesses, is held in common law trusts, and other fictitious entities. As a
result, those assets could never be attached due to an indiscretion or violation committed by the Senator.

Former President John F. Kennedy had a cat that scratched someone badly on the face. The
person decided that, having been scratched by a Kennedy cat, he would sue for damages. Now, when
you are somebody like John F. Kennedy you go to great lengths to protect yourself frem liability claims
by divesting yourself of ownership. It turned out that the cat was not owned by JFK at all, but rather
was held in a common law Pure Trust Organization. Further, it turned out that the cat was the only
thing held in that particu1ar PTO. So the plaintiff won his case and was awarded the cat.

These are some of the many examples of how a common law trust can give you substantial
liability protection and build an iron-clad wall around your assets, making you virtually jUdgment-proof.
By diversifying your assets into different trusts, you can eliminate almost all liability.

How to Set Up a Pure Trust Organization

In the beginning, you - the Exchanger· are the owner of real or personal private property. You
enter into a contract with a Creator, to create the trust; then you exchange into that trust certain assets
which you currently own. You receive back from the trust Certificates of Evidence of Right of
Distribution in the amount of one hundred (100) units, representing all of the trust assets. You no
longer own the real or personal private property; the trust now owns it. However, only the Holders of
these Certificate units can benefit from or use those assets.

84
 You can establish any number of trusts on the first level, containing any amount of property. The
second level holds a domestic management trust, which is the Holder of beneficial interest. in each
of the first ·Ieveltrusts. Distributions from any of the first level trusts go to the second level domestic
management trust.

The third trust in the conduit~ structure is called a Foreign Conduit trust, which becomes the
Holder of beneficial interest in the second level trust. Distributions from the domestic management
trust go to_ the Foreign Conduit trust. This is where the initial transfer of property· from domestic to
off-shore· occurs. The distribution to an off-shore trust req·uires that a K·1 Form be filed with the
InterrialRevenue Service.

The fourth level contains a Foreign Accumulation trust, which receives distributiens from the
third level Foreign Conduit trust. Up to this point, there is still paperwork which may connect the off-
shore assets with the domestic management trust (the third level trust filed a K·1 Ferm, remember?),
so in order to completely sever the connection and end any possible paper trail, I recommend a fifth
level. This final entity is a Foreign Passive or Foreign Grantor trust, and it receives distributions from
the fourth level trust. To complete the example, let's say that you are the Holder of beneficial interest
in the fifth level Foreign Grantor trust. The structure is now complete.

Now, let me give you an example of the practical benefits of using a foreign trust conduit
structure as I have just described.

Let's say you place your home into the first level trust; the trust then sells the home. After
payil1g its expen-ses (Le.• remuneration paid to officers by contract, operating expenditures, etc.). the
trust makes a distribution to the Holder of beneficial interest (second level trust) which, after p:aying its
expenses, makes a distribution to the third level trust, etc. This process continues until the fifth trust
makes a tax..free distribution to you, pursuant to IRS Revenue Ruling 69-70. The- result is that you pay
no capital gains taxes on the sale of the home or the receipt of the Foreign Grantor trust distribution!

Filing Requirements

Common law Pure Trust Organizations are not required to file 940s, 9415, 10405. or any other
forms (except the aforementioned K-1 in a conduit situation) with the Internal Revenue Service. Pure
Trusts are not required to pay income taxes; the IRS even admits that they cannot tax property owned
by a Pure Trust (see Appendix J). The IRS considers this type of trust to be a "foreign estate" or
"foreign trust" because it is foreign to federal jurisdiction.

"The terms "foreign estate" and "foreign trust" mean an estate or trust. as
the ca-se may be. the income of which, from sources without the United
States which is not effectively connected with trade or business within the
Un-ited States. is not includible in gross income under subtitle A."
26 USC770 1 (a)(31)

88
 In General

As Exchanger, you no longer own the property held in trust. You are therefore free from liens,
levies, attachments, taxes, or any other action which may be filed against the property. Likewise,
the property is free from liens, levies, attachments, taxes, or any other action which may be til-ed
against you.

A common law trust may be considered a living, or inter vivos trust, since these terms a~ply to
any trust established during the lifetime of the Exchanger. A common law trust is irrevocable; once you
have set it up you cannot arbitrarily change your mind. However, under certain special circumstances,
the fiduciary agent may terminate the trust prior to its contracted termination date.

Pure Trust Organizations are considered to be active, because the fiduciary a@ent has actual
duties to p-erform in administering and conseNing the trust estate. A trust can be eitlier complex (able
to accumulate income and make distributions at its discretion) or simple (income must be dlstl'ibuted
at least annually). Most of the trusts I work with are complex.

Remember that attorneys make a huge amount of money on probate cases and liabilIty claims.
Pure Trust Organizations completely eliminate probate and minimize liability claims. Theref0re, most
of the time an attorney will not advise you to create a common law Pure Trust Organization, since it
w-ould represent a direct conflict of interest on his/her part. You are advised to research these trusts
and draw your own conclusions. (See Volume 13, American Jurisprudence for legal validity of these
trust entities.) .

"No state shall ••• pass any••• law impairing the obligation of contracts..."
Article I, Section 10, United States Constitution

"A trust is not dependent on statutory law."

Eliot vs. Freeman, 220 U.S. 178 (1911)

"A trust 1s a legal entity."

Bumett VS. Smith, 240 SE 1007 (1922)

"If it is free of control by Certificate Holders, then it is a Pure Trust."

Schuman-Heink V5. Folsom, 159 NE 259 (1927)

IlA Pure Trust is a contractual relationship in trust form."

Berry VS. McCourt, 204 NE 2d 235 (1965)

Bengfits of a Common Law Pure Trust

• Business and liability protection

• Total real and liquid asset protection
• Freedom from taxation
• Freedom from probate
• Maintaining your natural right to privacy
• Virtual elimination of liability claims
• Iron-cl'ad protection from judgments, liens, levies, etc.

89
 N. C. SUPREME COURT TO HEA R
BAILEY STATE RETIREES,
FA ULKENB URY DISABLED STAT E
RETIREES AND INTANGrBLES 'FAX
CASES ON SEPTE11BER 12TH
The consti tution al rights of thousands of retired and active state emplo
yees will be argued
by attorneys for state emplo yees and retirees, disabled state and law
enforc ement employees and
people who paid illegal intangible taxes. Chief Justice Burley Mitch
ell and the North Carolina
Supreme Court will hear the attorneys' arguments on Thursday, Septem
ber 12, 1996. What do all
these folks have in comm on? "Plent y," says Eugene Boyce, a Raleig
h attorney who repres ents,
severa l hundr ed thousa nd Plaintiffs involved in three class action
lawsuits. "There are comm on
threads running throug h all three cases that at first glance appear to
involv e quite different issues,"
says Boyce.

The three cases, known as the Bailey case, the FaulkenburylWooda

rdiPeele case and the
Fulton case, all involv e recent court proceedings in which different
state and federal judges at
variou s times over the past year have ruled the State of North Caroli
na is violati ng constitutional
rights of its citizens. In the state retiree caSe, the State failed to live
up to a fifty year-old promise
not to tax Judge Bailey and other state employees, teachers and law
enforc ement officers on their
pensions - a w01ation 0fthe"~00FltFa€t QlalilSe~'ofthe U. S. Constitution.
In Fulton, the State 4Dil~t~1i

the "Comm.€:Fee,.€lause" of the U. S. Constitution by taxing owner s

of stock in non-N orth Carolina

corporations while exemp ting local corporate stock. As to disabled retiree

s, Faulkenbury (a school
teache r), Woodard (a police man) and Peele (a st'ate worker), these
class memb ers have contract
rights that also are being violate d under state and federal consti tutiona
l provisions'1'rflhi1;1ilmg
em:act'm.ent of'Stamtes"tRa ·impaiF::tl1e 0lili:gations of contract."
.F .•

The State set up twelve to eighteen defenses in the three cases but
failed on all. "The
eviden ce at trial was rather overwhelmingly in favor of the state emplo
yees and taxpayers," says
Boyce. "And the three different courts, two state and one federa
l, were consistent in their
detennination ofwhat the true facts are as well as their application of the
law and constitutions," he
adds.

The disabled retiree controversy goes back eleven years to 1985 when
.. a Greensboro fireman
and policeman in behalf of a group of local government employees eventu
ally succee ded in- proving
their right to an adjusted formula for monthly allowances. Their legal
effort resulted in restoration
of25% more in benefits disabl ed local government employees were losing
by reason of a 1982 law
change.. After lengthy and complex litigation, Attorney Marvin·Schiller
of Raleigh, joined by Boyce
and his law firm in 1990, won a class actio,n settlement in the landmark
Simpson case that Schiller
had·been pursUing throug h state trial and appellate courts for over six
years. For reasons attorneys
for the ~tate employees, teachers and law officers are unable to explain, the Attorn
ey General and
the Retirement System settled with local government employees but
continue to resist revising
formu la payments to their counterpart teachers and state employees.
About seven thousand state
employees, teachers and judicia l system disabled retirees are being denied
.
.
correct monthly
allowances even after trial court rulings in May 1995. The Attorney Gener
al entered an appeal;c~cl
got a "stay" ofthe trial coUrt's judgment which postpones relief through
the time of a Suprem e Court
ruling. Local govern ment employees when disabled have been getting
twenty-five percent greater
benefi ts than teachers and state employees for the past five years.
State employees must wait a
while longer. "A decisi on effects state employees who are already disabl
ed and retired as well as
active employees who were vested with five years service by the time
illegal changes were made
in July 1982 or Januar y 1988," Boyce says.
"

Secrets of the
IRevocablePureBusinesslmst
by Arthu r Thom as

·ng for a good busi- those trusts created by privilege, and

SE _ness trust can be a frus- _ the second, those which arise as passed by the legislature, not rules
-- trating and confusing ez· matter of right. Those trusts which a passed by adIJlinistrlltive agencies. or
- -:perience for tke neophyte. are created by privilege are by far opinion s of judiciary commi ttees
- Even experienced attcrr· most common. A brief discuss the based upon prior case history. The
neys are often confused or, W01"8e both types will serve to ion of legislature does not dfrect1y
illustrate the the forma part.ic describ e
still, misinfOrmed-concerning the es- essenti al differences betwee ulwtru st is-ro take;
sential nature of the- Irrevocable Pure two. n the but the legislat
ure does' have th~pow­
Business Trust. Scores of trust er to delegate certilin power s·tooth -
writers have become convinced that Statut ory trusts er governmental agencies, including
theirs is the only good business trust the authority to make their 0wn-ru1e~"
Trusts which are defined in precise
on the market. CQ.3e law and rul.es of tenns and which are bound by proce- These rules are termed Uadniihistra-
law-have been cited to-support their dural structu re fall into the catego tive law" and become law (or tlie
ry urule ofJaw") simply by being
various positions. of trusts which arise by pub-
Can tMyal l be wrong? Are they all those cases, some privilege. In lished in the Fe&ral Register.
right? -Whom can we trust when w~ deciding author ity or
seek liability protection for our busi- agency, wheth
nesses by means of a trust arrange- IRS th Amer . the Ther e is at least one -very
~L - fi l'-''': . _., e
ment? The intent 0if ~ 0 UTWl.ng
encan
Law Institu te's Com- impo rtant differ.e.nce between atnte -
a~le is-jin{Llly to put to rest any mittee on Trusts , or Irrevocable Pure Busitress. Tnist .
misunderstandings regarding the some other body or
Pure Irrevocable B'UBiness Trust in agency, has seen fit to and other trusts; that difference
UJ01'ds that are direct, simple and in- describe and limit a lies in contract.
capOhle of being misunderstood. partic ular kind of
There are literally hundre ds of trust. "Chari table" trusts, "family
different-kinds of trusts. A glance at trusts, "granto r" trusts, and " The trust maker is then forced to
so on, choose the form of his trust from
Black's Law dictionary confin ns the are described and limited by the
form among wl).atis offeredrWhen he doo$ .
formidable array ofeqUitable trust in- given them by some commi
ttee or so, heiS accepting aPrMIege1l'on;r(Ul--
strume ntswhi ch have been the sub- agency, which in turn has based
its timately) theJegis13tuie. kpriVile~,
jed of litigation in the past. This fin<iin2s upon judiciary conclus
ions as of comSe, is that wfficll~{~te:ary
cate~rization also sugges ts to the provia ed m case law. In Restate
uninItiated that any tr-ust must follow of the Law of Trusts we read: ment the good -pleas~ of the author _of
that privilege_ Privil~-~1be-v4t:Ji­
precise guidelines and must conform " ... The sections of the Restat e- drawn, revised or mOdified by
to prescn bed patt:ems , or it can be ment expres s the result of a the
careful granto r of the privilege. The judici-
broken in coUllt. 'Blie truth is that al- analysis of the subject and a thorou
gh ary, on the other hand,:is'facf!d~With
though many trusts m~t conform, examination and discussion ofpert
i- what is known as the,.RUle of Law,"
the li'rev~bl_e~ B~e ssTn1st nent cases. The accuracy of the
state- a fonniE1able combination.of niles and
need fiO~:and's1iotUa!1Qt~riform to ments of law made rests
on the case law.
ail)" spe<#ic ~~of;1A)1Vf9r trusts. for. author ity of the Institu
te. They
~t ISnot.tfuly_a_~t It.IS. a contra ct be regard ed as the produc t of expert may Case-law can be quite'fl.exible"~'For
--: m the fonn ofa -ticiiSt2tbiS IS the ~t opinion and as the expression every-~whie:h,P.dintS~moiie-;~-
of the tion, there always 6eellUJto ~- moth-
• "se<:r,e~" that has. C?~and misled law by the legal profession."
so many tl'ust wnters m the past.. er which pointsjntheoppp~te~one.
In other word$, the form of a trust We may-conform ll&..pt;eci.SeJ~-~_pqs-
TWo categori_~sof trusts_ is nornuilly dependent upon prior case sible wier-the unue bf'la\v" in.
form-
law, and the author ity for that "law" ing a ~~t, and y.et it -~ .-spm
It ig,he1pful W:'tti,vide trusts into t,wo is based upon opinion. When we think attacke be
broad catego nes-th e first bemg of law, we normally think of statute d m co~ by _an ~_~)lQS,~~_ at-
s torney . CertainlY'a traditio nal trUst
36 ~ INSWR AN'€E'SAlfE5J August 1-993
 of this tlature can successfully avoid "No state shall ... pass ... any Law It is very irnportant,to construct the
probate court. impamng the ObligatiOn of Con- business trust such that'every offiCer
.But what about total liability protec- tracts." or party' of interest has a contractual'
tion? What about privacy and tax That section of the ConstitUtion pro- relationship to the trust; otherwise,
reduction? Unfortun;l.tely, most trusts vides, in a nutshell, the sum strength the protection of the contract" is lost.
fail in this regard. They fail beeause and structure of the lITevocable Pure The trustees must be appointed and
they compromise the basic principle Business Trust. Any other position must accept their position by.contraCt.
which, lies at the foundation of all serves only to weaken the essential The business manager must be con-
trusts, the tramfer of direct owner· nature of the business trust. Indeed, tracted in the 'same 'manner. ' Every
ship, which carries with it the conse- the Courts have roled that: party in interest must have some kUld
quent transfer of liability. Liability "A pure trust is not so much a trust of contractual relationship with·the
always follows direct ownership. A as a contractual relationship in trust business trust. Ifthe.trust-shCiuid ever
trust, transfers direct ownership to an form." once partake of the priVileges. ·iur6td-
artificial body, the "corpus" of the (Berry v. McCourt, 204 NE2d 235) ed by legislatively granted ~nci~s,
trust. BUt if that transfer is challenged then it will compromise lheStrength
in court, on the basis of the proper The right to contract is protected, of its own P9sition. Granted, statutes
''fonn''·of-the ,trust, then the liability as we have pointed out, by the COn- rarely directly address·tru.st8;:but; for
stitutio~ ,
may be removed· from the trust, usual- convenience to the reader, let U:8, for
ly to thedetrirnent of some individual. "A pure TrUst is established by con- a moment"refer to "the rule of law"
tract"and any law or procedure in its compriSing case law an<Fagen~ leIDl-
Contractual right operation, denying or obstructing con- lationspuBlished'ip th~-Federal Reg-
, . tract rights impairs contract obligation ister as Siinply "Statutes."
The other broad 'category of trust 18 and is therefore violative of the Unit- Now we know that business trusts -
t~t. created by. ,crn~ ripht. .._ed Sbtes Constitution.'.:. (common-law contract.u3l trusts) are-":-
PrivUe~;can De Wlthata:wn, revised (Smith v. Morse 2 CA 524) created by contract. But ifthoSe t:ru:rts
?r~~~bY:~en""giver. But a ~t and again: ' which are cre¢ed'by.etmi:ractever par.
18 that whiCh 18 'mcapable of reVlSlon ,. .
or modification and cannot be statu- 'The nght to create the Busmess take ofthe privilegesgra:rtted trusts'.lnI
torily abridged~Iri RiStiiteT7iimt oftJii" ~ is based on .th~, ~rnrnon-law the "Legisl4t:ure, wthqn 8~idtru.stsim­
• lAw of Trusts,' which we quoted earli- r;g~t to .~?tract by mdivuiu:aIS estab- mediately beco-rM8Ulije.ct towhimlJ;of
er, we read:' lishing It. the "Legislature," and they'lose the
"A statement of the rules of law (Gleason v. MacKay, 134 Mass, 419) (please turn to 'JX1{#1 +4)
relating to the, employment of a trust ....--------~---------~-+--~
as a device for carry.fug on business is
....
not within the ScOpe of the Restate-
. meJlt oHhiscSubj~ Although many
of the roles applicanlecto trusts are ap- e Survilior'$';I~Q1MN,eds
plied tobtlSihess trusts, yet many of Analjris
the rules are not applied, and there eEducational,pruuJing
are other rules whicll are applicable e F-edemllMiJm~: Tu
only to-business'-tnIsts. The business Estiinidor
trust. is a',speaaf'kind' of business as- .........~..... e EstauoPltmiling
sociationahdc3n'best be dealt with in e RetinJTunt Plimning
connection with other business associ-
ations." eDUti/liIfty Incomihuzlym
TheAmerican ~w Institute's clas- e Ctuh Flow-Analym
sic mUIti~volurne StUdy oftnlsts fails
even to discuss the irrevocable busi-
.ness~Why? They won't discuss -OPTIONAL GRAPHICS SUPPLE¥-~,~! A'!'.M~'.~~-
it beeauaeit really isn't a trust, and
the rilles: for tzilStsj\lSt don't apply to
it. In reality, it is a contract in the
form of a tru8£
As'businesspeople; we all want secu-
rity. We want security for our busi-
nessesand'we don~t want someone
else telling us how to-or,ganize or ron
our businesses. We conduct business
by entering into Contracts. An Ir-
~ocable Pure,. RUSiness Trust per-
mitS',us·t6'orglUiiZe'Ollr trust-upontoe
princi:ple,J>tt;Orltract:nther than ~_
legislative.1l-nv~e~: Amcle I Section
10'of Ule' C5ilSm.tutien provides that:
~INStlRANCE SALESJAu2ust 1993 37
 Irrevocable Pure Business Trust and
Irrecovable Pure Busin ess Trust other trusts. Those "other trusts"
:rContinued from page 37) may even 'have the outwar d fonn and ublications &-OtherM;~ijt .
name of the irrevoc able. busine ss (Continued from page 38)
'Y'inhfrtMhe una.'lsailable 'Tl')"()tection oif trust, but they lack the substa nce
• "II -I r' ~
a contract. It is like a "Tar Baby." thereof.
l
Wher we fwst touch the tar, we are That difference lies in contra ct.,lf
stuc~. . tfre trust is formed and organized by
The "Ashw ander Doctri ne" ex- contractual relationships, and pro,
pl~s this principle: tects the parties in interes t by provid·
ing them an "arm's length distanc e"
". ~ . anyone who partak es of the relationship to the trust, then
it is a
benefits or privileges of a given stat- true Irrevo cable Pure Busine
ss
ute, or anyone who even places him- Trust. If the trust partak es of
statu.
self into a position where he may avail tory privileges then it is a "statut
himself: of those benefit s at will, can- ry" trust, and the loopholes provid o-
not reach constitutional ground s to by privilege can be plugged at ed
will by
redress grieyan ces in the courts the legislature, which has the
power
against the given statute ." to suspend its privileges as easily as
(Ashwa:nderv. T. V.A., 287 U.S. 288, it can grant them. We would be wise
56 S;Ct. 466) not to rely upon statuto ry privile ge
The bottom line is quite simple. It and the case law that suppor ts
is a matter of.t!ahts vs. privilege. Why privileges. Rather , we shouldthose
should we'res fricnne operation of our upon the constitutional safegurely
businesses to the territo ry grante d by agains t the impair ment of contra ard
cts..
legislative'priVilege whe~ it. is not real- That way we may totally avoid the Two ne,W state . .t1 f:1s,'F~hm;~b7
ly nec~ssar;y? Nat onl{' .lS 1t unnece.§:.. contentious litigation that comes
I
~
from.... and Ilfu:1ois,ha " b'. en ad~ea: ~~he
sary, 1t can be dOwnright foolhardy. Challenges to statuto ry trust§.
~smart.'laWYercan tell you that for Then out of the legislative statutare f~rQ~ne.wsl.,.'~rs. ~~tnow serv:~s
We
ory~ Califorma, Fl., da;.· ..0 and Texas.
every case--liw'on one side of an issue, s stem
there-u s¢d1ye xist two on the other the constltutlo
ana under the rt>tection 0 The newslet asSlSt,. urers,J:!ilJ;!d·
common law. We ical professio' ·ms;:attQ.'ey.s·and·Cor-
side. Case law is always a two-edged are as
in therell ili of positive law op- porate m~~ ers}Ii:i;te~,:',)~~ht~e
sword. It'cuts:both coming and going. posed to colorable statuto ry
law. complex 1S. es and re ~ ~tn)Jl~m·
The Irrevo~blePure Business Trust. We are, in short, in a position ~f volved in t e worker s' co ~'p,sys
on the other hand, is: . tem.
streng th throug h having separa ted
"Atrust~organizatiQn, consist ing of ourselves from any connec
These'? wsl~,t;te l'S:~p~v, l. '¢"t}e:~ s:on
tion with w~~ker~ ompensati(mlSS~ s.sl!ch3li:S
a U.S~'G0nstitt:iti-onaI right of contract any trust or trust proper ty
... whi~p c~uiQt'l),e-:abn~ied. The agree- the bounds of a contrac tual outside l~glslatl n, c~e law,~e. ~. te:!i.
relation- ruques, phyS1Cal' therap y· d voca-
""'-'-... '\.. menbv.he~ ex7cuti,g:!?ec.omes a Fee!:.. ship. It is axiomatic that
liability fol. ~ional r;ehabilitat~9~ as.eU , as
era! orgamzatlon_and not under the lows direct ownership, and
de facto info atlOn on billing .and renn·
laws passed by any of the severa l ownership has been the object
of in- burs ent. " _
. legisla tures." -nume rable IRS challenges I'ftI F e sample copj,e8/ofPi~'1};.,:8~t·.
(Crocker v. Mac Cloy, 649 U.S. to traditi onal trusts . 1&1
Supp; '39 at 270) te1'8are a,.vailable QyWr-iti1fU4f~ ~'- .
G fJJ Ail:insOT, J(j'4-S5·'S~tO"~)J,l-
In sum, tl}ere is at least one very
importanUiifference betwee n a true I/R Code: 8000 Trusts l Road, Su,iti lJJ3., SaiJ, :Di;efio., . '
921fJ-J; FAX619;4-S$.o1'13i~~ :_. ,~

IrM0:\~
"'V'VJ::I:\ ~J:G'1•
" 'I'~;
I Remember to take
I LIfE "'·Ins··• ...ce
I HEAIJ'ft. ; . -"Sa
>
~s
I with you!
S~nd us your
I chang.,eo{ address at least
I 4-6 weeks' in advance.
I New Address:
AFFIX LABEL OR WRITE OLD ADDRESS ABOVE
I
I NAME
I 5TREET

I CITY UFH HEAlTWI NSU~<7~ s

L_ MAlLiO:
STATE

SUbscriptio~Depart~n':'S61:.w..:..~~~c::.Cic~~L~~~~_J
ZIP I "OK. cut out· all th:eeuteJ,.,riorisen$.ical
greetings. and: get to--the';~p!"

44
 .-
. ,

.'.
"There. is ~ dear distinction "in this particular case between an individu·al
and a corporation, and that the latter has no right to refuse to submit its books
~~d p~pers for an ex:aIT?ln~tion at the ..sl:Jit ,of }~,~.,"~.~~J.e. The indivi:dual m:<;lly.s1:ilnd
gp~pp .,~t$ 'e'G>n~~t[~tJ>ti(:ma! rights as a citizen. :He' is 8ntitlep. ,to ~ry·on his erivate
~ b&l,~j.m\~iS_sjm.rhl§·~j0n wa·y;. His power to contract is unlimited. He ow-es such no.
atltY~}r:i' 't'f*B; .SfQ't~';sint3e he receives nothing therefrom, beyond the p.fotectien o,f
h'is l-ite and I1fop,ertv. His rights are such as exi·sted by the law of the land long
am.!ece~denx tEl' the organization of the state, and can only be taken fro,m him by
d'tJe pr~oeess of I·aew, and in accordance with the Constitution. Among his .ri€Jhts
ar.e·a "refusal.to i:n9rimin'Qte himself, and the immunity of himself and his property
t(6~i:Tl ~rF;e9t ot· S1eJlureeXC,ept under a warrant of the law, He owes nothing to
the,·.pubHc so '/0,89 as he does not trespass up'on their rights. II
Hale Y. 'Henk.e.I, 201 U. S. 43
• $

Ori,g'ins of the plure trust from Plato to Patrick Henry •

Trusts hav-e';had a long history and usage. Trusts can be tracee back to
'. a-n-c-i.ent Gr.ee:.e;6' i ,9·r.qund the time of 400 B.C., when Plato first used a non-profit
trus.'!:· to f,inanc'~' his university. There is also evidence that Roman Law
recognized th'e .u:s:e of trusts.

Trust·s·rnay\e.· be-en a part of the British Law for several centuries. In

f;ngIano, tn.J~t;s~',:~~r.e'in use as early as the 11 th century, and by the 15th
·cer:'\tury·,·tfustS" were
beiirg enforced by the Courts of Chancery.

DU'rin~
the Mi.ddle Age? in Europe, abusive taxes, limitations, and
restrictions· w"e,re .place'ti, on the ownership' of land. By using trusts the pro,perty
owner w'a's ab;I~' to ,tr.a~n'sfer ,tbe I~gal title, of property to a trustee for the herlefi.t
, '.of- th~ heirs." the" .,secre·¢y.::.of thfs' transf~r ~was. advantageous, as many of the
. ta.xe's an:q 'J:8Str+~t(ons whiCh :,applled
• . - ~. \.. •.•.• I .-
to the • pr.o"perty
t, . ..
owner did "no.t attach to the
• f ,. • •

. " ts:uste.e.,· and· cQ,uJ:a,;,tbererors:,,' be" Ignored altogether. , . '~

~ ..:,:;:, ..... ' ... :>... . ;. ;~~,l .... ~.-' • " :~-- ·-:.:i.··;.. . .~.. --_._,-. . ,;'. :- '.: , .\ '.,. .
: .:
'.: : ',' '. : "Ov~r :':t'ti~'; Ye·a~:." many" ver~ions of the' ba's~c trust. ~Qf1.~ept ,have been
.~.

'. '. devel0p.~df:~~y~helr baSIC goal ha~ remained the. same •• p.re~~eNlnQ. the family
• '. . . . 'f ' \ ' , ' '.. • • • • ..... • . '. . ., •

,
•
.. ".:
0' J

sittate, whiie·~~.ing it out of the hands of the king (governrtie~t). ···.The same'
goals are desirable today. "~;

Pure /trust organizations arrived in America with the colonist. The first
American pure trust of' record was drafted by the famous attorney and patriot,
Patrick Henry, .in 1765, 24 years before the adoption of the Constitytion. Known
as the North American Land Company, this pure trust is still in o~er:a,ti.oM to,day,
more than 200 years lat:er.

6
 - -- - .:. ----_.- -_...
-----;

)L\nCH/i\l'IUL 1995 EREPAREDt::lC:SS~ TOIJRNA.1..

..,.~

Wnor IS.a Common LaurTrusi?

By Zola Shee'han
Trusl,.l! lI's Ih\: n(1V b~7.zl\·ord. 'The common I~IV Is touted ~s the I~nd owner's r~OIily out In lhc ~ulhlJ(ilY: 10"d\~111:1: ,il.s~ prQ,\'i~ions
E\'e:Ylmc' is t:lking'~b(JonNSlS ~nd being lhe supreme IJIV or lhe:lamJ cold. To prolect his Interesuj the excep'dho¥~uthoci7;cd"by l-lre
he'" rou, n,~d.tu'II~'fI(: on~; W(II, by all tho.\e who rUll (or public l~ntl olVncr m~l(:d :ntl pbce.:d 'his tru~I'i'lS.!=If.'This 'lsSOPPOIl,CQcb):
c.\;;:ly wh:ll is ~ INSl? 10ere ~re ornce, yet il Is ~Iso under cons~nt property InlCl a lI\Jst..Since .th.e II\Isl 'Conlr3GI(I~w, ~.Qtl·AiliClfr.SC::clioll-
Itl·cr.1 di((mnl lrpes·o( tMI, but ~It~ck by thosc wile polilici~ns nolV owned Ihe property, ~nd the o( 10 the UlilleU' s.1~te.:s·Cotisiiluiion
'''e ",ill simflli(y,il dOlVn 10 IIVO IVllh lhe cre3tion o( their mtulory lMt w~s not subject to ~ "physl~l ivliich'si~te$]n p~i'I, 'No Shle fh~1I
t'llic IHlO: St~lUIOry Trusl$ ~nd I~\\'s lh~t suppre-\.! lhe COlllOlon Iw. dC3th, thc 13nd IV~S held ror the p~ss, ~ny 13l'~, Imp_irjl1S tht £~I~J,:
Common l~1V Trust.l. Sl~tulory For e:<:tmple ~le common bw right I~nd owner's' (~mily, giving lhem tiun o( contraclS.... /~ccoroinSly"
T~~IU He Iho.\e Ihat ~llorne)'$ heJp to !nvells bi:ing Impinged by ~II o( ZLlme se,ur~cy (or lhe (uNre. . since lhe: IruS!' Is ~ conlnel
rou flUI 10;l:Iher, h:ued upon the Sl:llutory Nics surroundIng lhe TIle first U.s. common I~w lI\JSl b,erwcen lhe seu/or ~nJ Ihe lruslee.
l;;:-':IC b,"'. o(lCrJllon o( your ~ul?moblle. o( r~cor(J 1V~.l ilnlteiJ by Ihe (:lnIO(JS the livst-conlr~et conlrols Ihe ~,eli~
when J government PH1C$ S<,)me will s~y ui~t ~le eonvnon ~tlorney ~nd fl~trlOl! P~lrlck Henry, Illes,.fl?wers ~nuJe~ponsjbi1ilje.s ~(
S~,:";\;ICS. or rules on IVhelher or no< I~IV Is no more. nJey ~re dOler mis, In 176S. tlVenly.rOur yem h~tore those r'ho ~dminisler the lruSI. THe
)'uu CII\' do .<om'lhins;, ~nd lhen on In(ormcd, usurper.\, or ignor~nl o( the ~Uupllon o( the Constlluilon.. d6cuml:nt "f.(:~tlng, lh.c"lruzl is
e.\:clly holV il lhould ~ done, thii hislory ~nd re~lily. I( you find 3 . 1he W:l.S cJone (or GO\'crnor Rol><;rt • termed lbe taIY o(.l(je lru.\l.
LI c:J~'.~J fl:l.\ling SI:IlUll: !:l1V. When , le.:g~1 type: _TiUO, .t~.)'J Jh~, COmmon .. Morris or thc Virglni~ Colony, who 'Lc:~ look::11 ~ir i:x~m'Jlle cf holV
)'W JIX permi.I.\illn (rom govern· I~" Is no more, be IV'Jry ~ntl t3rcful IY~S ~ prominent hncjcr or lhe ~ common I~w tNsl "n work (ur
rr.e:ll tn do lllmc.:lhinll, rou ~r( In you. S:lm Is ~ common ll13n wi~1 :I
wer,cc :LJkin~ ror ~ flrivill:se. When
:::,J j'c::r.L'\Jilln Ilr flrjvikl:c.: i$ gr:llll'
... it is created under the common law. IYUC, lIVo klw ~ntl, ~ hlllnC. He has
worked h~ld ~II o(-hLs li(ony he: Is
C:.!. r"~ :111: lhen unll" Ihl: juri$uic·
:;:.n er I~\I: J~cnq:'I:t;In\inli'll\e'pJiv,
contracts and does not depend
,.of· ~(r:lid Ih~t when lIt ('la:'s~s"'~lVa)'
,'proll~te =nd e.II~le I~xes lVili e~t
;:~;z. You JII: c~fl':,""\ed 10 obey ~II
of ;I:e ,-;'/l:s ur blVs'3SsAci~tcd lVilh
upon any statute for its existehce.
" • I
•",; lV?y hl.\,e.\I~IC" ',Ic.:. h:l.\ :llso jusl
(uund out Ih:!l pioh:lle alune c~n
11:::1 j.:il·jJ.,;.c. Nld illntlr.IIl~·e o( lh~==.======================= ' ' cr
~kr:'-UpIA )'t~~i Su he'decitlcs
I; ro i,\ :lCJ '.H·USC ir you perh~p.so( your w~l/et. They ~re prob~bly Nnerbn Re-.:oIUlion. Knor.:n ~1 thc lh~l lhc hC:~t "'~r,IO l:n lVouldbc III
r.\:~c J Ini':ll:kc. " . 'ign'ora~t do.goQders who don'l Americ:ln Gnd eomfl3nY.Jh~\ com· r131:~ h~~ (iC'le in ~~\I. lie C(e~le$ ~
, On, vepcnd~hle (31:1 aboul ' .knolV lhe di((erellce belween 'the.: mun I~w lNSl is stili iii opcr~tlon triis ;"oJnu ,s\(sliist&q09irJi~II«:Ill!\?t
Ic;isbtion L~ Ih:1l olle It:s:j.II~IO'' h~s. ~ Rt.:nublic' (or which ie ~I~nds' ~nd tpd~y over lWO hundred twcnty- his tl\l$tel:. ille lru$lcc lI~lkd ~1I11:
the npl'"mlnily IlJi!n'uII.N' Ifpd:lle: " thc :S~i:lllst cJ(IllOCrJCY IVhich p~ys c.:lght y.C::lrs blcr. lh~l lhc C$l~tc '!:s liept lip 3nd per'
j.,,,,·itIUI k t L'\;lIi"o: SI~I\lllIry I..IV my bilu hy stc~ling rrom you" - the common I~IV Irust ~':Ime' h~ril CI;cn:h:l.f,~n.irlcrl.".l<c in 'l:llue.
("; ,1 ch"n~c likl: li~hlhilll:! Wh51 lhe The basis ror lhe terminulogy into g(e~ter- uSC,ln ,1Ii~.\.!:lChusetLI In .\'Vhe,l' S~I)I •.d.lt~, ·(he 1(V.\1 I!~~ nOI
:~1i.lblure cre:lles. il Cllnlrols. 'Common ~IV Tru.lt' Is lh~t It'is IH27. As ~ result, ~ eommon I~IV die iv'ilh<Wni It ClJnliOl'jcs 10 ,ex!.ll
:",ilie.1 CIC:lI,V umlt:r $'allllory blV tre~ted under the common lalV o( lrU$( Is Orlen c~lIed a ~nd hold thcplO(l(ny. The lI\J.\lee
~:e like te:ll~1 hIlU.ICS lI'illl ~ day contr~clS 3nd does not dtpend '~Ias.\~chllsells TrUSI' In leg~1 elr. CIlI nolV dLllribule.: $~I\l'.1 eml( ~.l
"iJ~' I.':<Y II:nl~1 a;:r"'CIllc.:nt. I( Ihe upun ~ny SI~lute ror iLS cxi$ttnce. dc.\. In r~1:1 the Con,llilUllon, tht he 1Y1lnied l\'ilholll hOlI'ing lhe
:·"r.c.JlnrU \\'~nl hLI hOlL~t.: h:ll:k.. you II Is b~Hd on lhe common 131V gre.:al governing doc.:ument or lhis I:OUI\.\ or.~tlorru:yS'gl:l· ilt'·Lllved.
:11 C nlll in OIl1dl o( 3 (lt~ljtjon 10 risht 10 euntr3cI 3S enUIlle.:ro/ltcJ In nalion, Is IVdlttn like ~ INSt. Yes, It )I~~J IIke:.in old,E.~!lI:t~u ~, lI\JSI
:,~'~~. Tilt.: .~I:lll1le hllll.l.e 'L·.\L~LI 10 lhe United SI~II:S Consiitutilln, 1$ rencr-'cd e.:vcry, (,IV ye~l1. 111e C'Jn'hriW'iihtd' Ull:"(:(rilll)" dble":inu'
l""'C (he k~L~biure h'':L~lu.~e Ihey ArtIde I, Stction 10. stvtr~1 Republics or SI~lci 'gr~nl " I:r~nt secur!ty..lo_ rQ\I~ J~mil~! In lhc
Si',1: it ('lril'ikl:e.l.· A,!luod lY~y 10 undermnu ~ eunditlon~1 I:unlrol over a porllon CJld il llil cOIn~uJol\'n 10 Ihis, ~
Wc .'-':,c Ihts !l:I('lpen,~U.lhe lime, Common J.~w TruSI, (ak~ Ilr their suvel,clgnly to 1I b03rd 0( .... "coffililbn ·Iaw ·trlJ.II" tl:~, .lUU~"{A':,tlJ(JIJ\
'··'r....d:tllr "'ilh lile.: IllS, \,l;cr~ 'rulJs Unlncorpor~le.:d IrUSlees-calied the Senale ~ntl ~J\e:

_
lJuslncss c1i:i.t, -tl':.l/S~iJ;(llop~ilr ~;n ploie~l,
o( lIatulC$ arc cot\St:lnlly ch:lnginll Org:lniz:ltion, UOO, B),I~lne$.l TNst House or neflrc1Cnt~tlves. The ro~'r ~sct$: i~Jul(:your prlt:;Icy~'
JllV "'il::t 11Ilet "~IS aCl:t.:pclhle sud, .OIg<l(\iz~IlQtLJIT.Q, ..Jil~,HlIcJIY$ellS conlr~ct c~l/s,rur ~ 8ener~lll\:Inscr, ,elimln:lilf'jirob:fle-ltOd ~s,~11e; 9:<;s.!
uel\'ly no lonser i$. Chanccs ~re you TrusI, Conslitullon31'Trust, Pure which Is ~he execulive br~nch, ~nd :lnd orrer ')'ou ltre~lcr CIX s~vinll.l. .. , ,
"'iil :101 (,nu lIul :l1~l,lwlhe'L'h~nscs TI\J,\t, Contr.l~lional TN.\ll, L\ 10 sec :1 proleclor, IVhlch Is the Suprc.:me:
"r.lil lite momcnl IVhc.:n you ~ie it ~s ~ Ihre.:e p~rty conlrJct IVIlt.:re Court ~nd lhe judlci~ry, IVho c:ln
:;(;:13 hUll hy lhc.:m. " meLS ~re owned 3bsolult:ly by ~n stop thc tMlees rrom gelling 100
Wi;h) S',I~I.\!Wry Tru.~t, ~ tNst indivitlu~1 who put~ them in lhe (:l( out o( o(der. The IMt would
~'r:::en vnocr lh~ SI~IUIC Ja,,'S or ih~ condltion~1 olVnershlp or ~nolher, (~il ir aI/the tMtces-terms' cXl'ired
51:;c ~nd lhe Inlern,,1 Revenue the lNSlee, who m~n~gcs or con· ~I Ihc ,~11I1l1: lillle, so Ihe Omoton
('-.ie. rou Jre under Iht.:ir jurisdic, trots them "'hile 'lhey ~re In lr~t\Sil renew ihe.: lruSI every (ew ye~rs
lien. You hJv~ to hc con.mnlly 10 the evenN~1 OlVncr, Ihe INSt cer, «(lre 171h Alllcndment) by ~ppoint.·
;''';re of "'h~l Jillhe 'rulc.:s',con· liIit31e holdJ:~, i.c.thc bcnenci~r~es. Inll nelV IN.llees. The benenci~cies
cernin~ IhCJ,c lru,$,~\ ~(e. ,', A sllllple eX:lmpl( or ihi$ Is ~ . o( lhe II\Jst ~re 'Wc Ihe People.'
,\ ll"Ji~ ivlt' ii( Ihumh hCllVeen
1:;:Ute I: ... :n<.l c,t.J!n;nM I~:'V i$lhis;'
Parcel Scrvice. You lVisli 10 senu 3
p:lcbge. You pUl lhe p~.cbge
Wilh sudI II finc ~:rJm(llc, how'
c:ln IYC (l:sL~t hal'lnll ~ lI\J.\t o( uur . -

--
.~I;r~:c 1:l1V le,lIJ roy IVIt:t YIlU musl inlo lhe c~re ~nd Irusleeslilp of OlVn? whcn you crealC ~ l(u.\t (~
<':v. CUlr.mon~l~iv·is IIt~t'-1Vhidl telll the uellv:ery .lerv/ce, IVho lhcn 1'l:~1 COlllr3Cl dc.:1igncd to hllid your
rou un:1 you '':lnnlll <.10. u,livers it lCl Ihe hene(jci~ry, Ihe.: ~.\'~eIS undcr Ihe IUfle.:rvislon CJ( ~
For cx:mplc, 'Yuu mU.'1 "slsler ~ddres.lee. A IrU.II JUS I pUiS ccrtaln IOLIle.:I:) ynu ~re ~'rclilins ~ ,.~P:Jr.Ile.:
rO~( cr. You mUll hJve in$ur3nce. ~sscu 'In lr3nsll.' lel:~1 c.:ntily Ih"t 1m ILl olVn cum,
)'c:u m~ll h~\'c J vrjy«(.\ licence.' TIle Common ~IV IAMt had iL\ mon 131V Idenlity ~nd rishL\, nut
:r.(J( ;re IC'Nte Iws. be innin s In E'n bnJ'lli lhe cfGh. flrivilelles lh~t t3n be revokecJ.
. You KlU.\1 not lie 10 ~ court. I«nul cenNry. n Ilal en, when ~ The.:re ~re no JI~IUles directing _
You rr.~ll nOI llcai. Yuu must not I~nd olVner cJied; ~II o( hL\ hCJldinl:o~ hnIY or why ~ commnn lalV lru.~t_
ii!l.· rr,= :tiC common lalV.I. ,,",ould re.:vc.:rt to Ih(: CrolVn, 1l.1~vlnR, C:ln he org~nlzed. No one h~.\ ICll~I_.
Volume I, Number 6 The Higher Truth

To: Diane N. Whitby

Chief, Accounting Branch 3-25- 96
Internal R~venue Service
E'I,ildut::l~I,io, Pd. 1925S

Hs. ~lhitby

I rec~rtt y applied for an EIN nurnber, for a ['ure Tru:::t, at

your office. After applying I was informed, and given copy of a
l.:?tt",r writt011 by you. Which states "A t>ure Trust Org3ni::ation
has no ta:·: r.:;quiro?llHnt, therefore a EIN n mbo:r is not r.:;quireo."
I Wd~ t,jld ch.n I ~,I'01JlJ let::eivo:: LJ letto::l ::.ayir".;l t"':,t fcJ<::t, fl,jlll
your off Leu. I~lst':;:Id I reedv,~J',lI'l EIN nUnlb·,r. I <:11l v.::ry C,)r,fl::::·;.j
oVur thb. Could you pl,.~:J3'} c .Jrity this for m.::?
I ,lill irlcludLn') in this lNter a cory of th,= 55-4
application. Your o(fica's response. And a copy of your letter
savin') that: <111 F:IN ntJlllb,=r i:; not r'~C]lIir'.xl.
Th.ln~: YC)tJ v,!ry lIIuch (or y')ur Lilll'~ in I.ili~ 111~t:V:r. - will b,=
:Jl1xiousLy wJitin0 your answer.
3in~~l.~ly

~J3ll:;
OGDEN,
Doportmonl or tho Tron'llry
(nlornnl Rovonuo Sorvlco

UT 84201
[n rCDly
Hay 20,
rcfcr
1996
to:
LTR 696C

This letter was received after

another one of our Clients applied
for an EIN for a Pure Trust
Organization because he wanted a
letter like the first Client. Instead, as
requested, the IRS sent him an EIN#
and a Notice to file an annual 1041
Tuxpaycr Idcntification Numbcr:
Form! He responded with the above
letter and the IRS cancelled his
number and agreed he did not need
,. 11 ;"l n kyo ufo r t hc i n Clu 1 r y d il ted N u r. 27,
to file a 1041 Form!
Our records show you no longer h,1ve to file rorm(s) •
l!il.
[f you h .1 veil n V Cl u est Ion ~ il l.> alit t /l 1 ~ let t e r, n leu sew r' 1 t e t a lJ 5 il t the
.1(JcJrc~~ :;/lown on t/lls leLter. If you prefer. YOll nl.1Y c.1ll the IRS
Lc 1 e plIO 11 C n \I"' II c r 1 1 ~ t c cJ I n yo 1I r lac il 1 d 1 r e c Lor y . ft, 11 e "'P loy e e t he r e
111 ;"l Y Ii e ill! l e t 0 II e 1 p yo \I, b \I t the off 1 ceil t t /l e il cJ d r c :; 5 ~ II 0 w non t 111 :;
letter i~ mo~t famillilr with your CilSC.

Whcnever yOll write to u:;, ple,)se include your telcnhone number witll
tllc ilrca cocJa. tile 1I0urs we Ciln reuch you. ilncJ ~encJ tlll~ letter. You
nl il Y il 1 sow., n t t a k c e n il con y o f t 11 1 5 let t e r for you r (. e cor d :; .
Te 1 CClllone Iluml.>er 1I0lir 5 _

We ilPologl7.e for ,1r1y inconvenience we milY hilve cau:;ccJ you. ilnd thank
you for your cooneriltion.

Sincerely yours,

Barbara J. McCormick
Chief. Accounts Service Section
l2lil Volume I, Issue 6 The Higher Truth 1,1
~ k ··.'.,.·=·\H2;;··..;· '&iP·z,.. Vi·'-· ...... 1....... bo,dS". _.~ ,,_ .' ~ ...., ....... ~ ~....... _lo..~, - _ • • • l ' _ _ .... ~ ... w'_. ;", .. , .. ~.~ ...... ,._.""':~~

~
~ DoplH1monl of tho Troaellry
't Intorn:!1 Rovonuo Sorvlco

In re~l~ r.rer 2a2022~1

tOI
PH!LAtlELPHIA, p~ 19255 Jura OS, 1995 LTR'Se '1&
0000 go 000
02'01

This Letter was received from the IRS

by a Bank Manager after the bank
ordered a ErN Number for one of our
Pure Trust Organization Clients.

~. C~n"ot prQCgS2
'; your )po11c~tion fo~ ~ EIN "u~bgr, A Pure Tru~t
*
0' 9 I. 1"1 i t ~ t l 0 n h J S not. x r r 5 u 1 r t m, n t ~ I t ht r • for 1 a E I}O/' n U {P. bel" j J f'lO t
rtaulr~d.

!( you hlyt any oue;,t1cnl ebout tn1s lltt~r, pl«ll:lll Ioi,...ite us lit the
~Jdrt1~ shQ~n on th~J l*ttar. If vou pr~fer, rOU m~y call the IRS
t~l.cho'" nUl':\b,r l i l t . d ~n your local d1rlctcry, A:") 'mD~O~a. thtrw
fI, • Y C::t a b 1 t t 0 h t 1 p you, b LJ t t~. ~ 0 f f 1 C t "t t; h e . d d ,. Q ::1 ~ ~ h a "" I") 0 n t h 1. s
lb\\er 11 ~o~t romlliar ~1\~ your Clae,

~~~ngv.r yQU ~rl\., p1~.~. 1nclud. ~Dur t.l.phon. nu~b.r, the hour~
YOu C:ln bQ r .... ch.d, .nd th~J lGttor. (gOP II COpy Qr thil lGttAr for
your r,cord1.

) ..... _-- .......... - .... _.~ ..... _---- H ou r J _. - ~ •••• - •

J~O/od:a
DIANE H. WHlf!Y
cKHF I ACCOU~TI~C;
~
r,R'\HCH
 trid:s might include corporate benefits, corporate certification. Therefore, Commerce, Defense, State,
Social Security Cards, banI: cards, under the corporate U.S., fetuses and Transportation and Veterans Affairs -
. o.s.mcs in all~pitai~~·co~;ce; ~~ embryos are disposable non-entities these are, presumably, the 'legitimate"
aDd even (jeot money .::: ~~ tcliins how who can be legally aborted. However, components of government. That is,
·auoy devices riiigni DC ·iis:c~ tO~mQ;~~: since the fundamental requirement for these forty-eight organizations might be
.·(r·om- the status- OO( '(reemen' in the Union membership is flesh and blood, composed of "public servants'
··'Union usA' io subjecis a~(j" ~itiiens we are each members of the Union operating government for the benefit of
of ilie·corpora-te 'United States'. USA and fully endowed with our God- the Preamble's "Union", Mal-b.__-.....__
• A number o( Amendments, givenrlgh·t; to 'life-, nbe;'·ty, aiia·the But in that same Governmenl
~pecislly the 16th (income tax), were pUrsuit of happiness' (rom the moment Manual, under the sub-heading
nO( law(ully ratified. Another called ofconceplion. Within the Union USA 'Independent Establishments and
'-'-Ulc·'i:i1is·sing' I-j·til(iitles of nobility)
was probably ratified in 1819 and later
and according to 'Constitution for the
United States of America", abortion of
~ __ ._._-_._-
Government
... Corporabons·, there·ire
si::rty-Iwo "organizations". Among
remoye;d illegally from the Constitution any Oesh and blood member is murder. these sixty-two Independent and
near the end of the Civil War. Under (Is the 'absurd' correlation Corporate entities are the CIA, EPA,
the Union and 'Constitution for the between evil and artificial entities EEOC, FCC, FDIC, FEMA, Federal
United States of America', these beginning to seem more plausible?) Reserve System, GSA, NASA, OSHA,
improper ratifications and deletions are Peace Corps, SEC, TVA, the U.S.
tre.!.SOnous; but under a corporate U.S. Prob'ly No< So, But .... Arms Control and Disarmament
aod 'Constitution of the United Intriguing hypothesis, hmm? Agency, and the U.S. Post Office.
State>', these acts might be But still too fantastic to be easily These organizations are not precisc:ly
uoremarkable examples of believed without a lot more research 'part of" the government; Instead they
administrative procedure (corporate and analysis. Therefore, I concede my -are agencies of the executive branch of
rules). hypothesis (that America was intended government, which operate principally
• As a public servanl of the to be a Uoion, but is instead being as corporaliOllS.
Uoion USA, government could never 'administered' as a corporation) may So has our government
sign a treaty with a foreign power that be false. Still, even if there's not a incorporated into a single artificial
imp.sired the rights of Union members. single government corporation, it is entity? Maybe not. But has our
Howe ver, as corporate agents, undeniable tbat an unaccountable Union's government (intended to
diplomats eould enter into treaties that corporate culture is festering in include only public servants) evolved to
!.re legally binding on their principal - Washington D.C. - include a host of agents and artificial
th< .;orporate U.S. government - even If you examine the Contents of entities with limited liability who serve
if those treaties violated the The United Slates Government Manual government rather than the people of
Constitution (or the Union USA. (published annually by the Office of the the Union called 'The United States of
• The income tax would be Federal Register, National Archives America"? Absolutely.
.!::.andat?ry for government-c~ and Records Administration), you'll sec As a result of this growing
corporations and artdlclal entitles, but forty-eight government "organizations" corporate presence in government,
- oalyvoluntary fCi(Union members who listed under the Legislative, Judicial, there are a lot of surprising similarities
might want to ' help' the corporate U.5. and Executive branches of government. between the way our current
(as ruppened with the 'Victory Tax' of Among these forty-eight government government seems to operate (in open
\\'V.'II). This might also explain why organiutions are Congress, the General defiance to the Constitution USA), and
the Supreme Court ruled that the 16th Accounting Office, the Supreme Court, the way a hypothetical single corporate
Amendment granted 'no new powers' the National Security Council, and the government might operate - if it truly
lD goyc:rnment- maybe they meant 'no Departments of Agriculture, existed.
new powers' to the public servants of -
me Union USA, while at the same time SOURCE MANUAL FOR THE ACTIVE PATRIOT
·tlierbtfiha"dii1assive administrative S35.00 CASH OR MONEY ORDER ONLY
implications for the corporate citizeos.
of the U.S .. .J " The Christian Founding Of The U.S.A.
"AS flesh and blood members of • The Iocome TaJ: Caonot Be Applied To Property Including Labor, Wages,
the 'Union USA' we have God-given Occupations, Professions, Trades, Employments.
rig.lu.s; as subjects! citizens of corporate
·U.S.', we have only government- • Banks Can Loan Money Not Credit.
grarll.cd pri vileges. • Lawyers Not Licensed By States.
Corporate citizens are
artificial persons who enjoy privileges CITIZENS LEGAL ACfION SERVICES
only after the moment of birth and POST OFFICE BOX 3Q9, FARWELL, TEXAS 79325

11
 _ •• '1'

2 By Larry Becraft with adaptations by Mark and Tina Terry ("p~n~11l ")<)(, \1.',11., II~I'·I" \1.1~.I/lII<
C

~ Open Letter To IRS Commissioner

III Dear Mrs. Margaret M. Richardson, of July I, 1862, was the Office of the Furthermore, I have found in 27 USC @
I have been searching fot many years to Commissioner; neither the Bureau of 250.11 (copy enclosed herein and marked
find, within U.S. Code Title 26, the Internal Internal Revenue, nor the "Internal Revenue Exhibit D) that the definition of "Revenue
Revenue Code, the section(s) which created Service" was created by any of these acts. I Agent" is given as:
your agency, the "Internal Revenue Service," am enclosing a copy of IRM 1111.2, marked "Any duly authorized Commonwealth
but I have been unable to find it/them. I Exhibit A, for your convenience. Internal Revenue Agent of the Department
decided to research and locate whatever I have no doubt that, when the employees of the Treasury of Puerto Rico,"and that the
other sources of information I could regard- of the "Internal Revenue Service" were definition of "Secretary" is given as: "The
ing how the "Internal Revenue Service" was researching the origins of the so-called Secretary of the Department of the Treasury
established; what my research has uncov- agency so that this statement could be of Puerto Rico."
ered is astounding and bizarre. Here are included in the IRM 1100, that these So there apparently exists another
some of the things which I have found: employees must have performed a very "Department of the Treasury" -- in Puerto
In 1972, an Internal Revenue Manual thorough and exhaustive investigation, I am Rico. Is "Internal Revenue Service" found
("IRM") 1100 was published in both the sure that the position of the "Internal somewhere in the Department of the
Federal Register and the Cumulative Revenue Service" regarding how the alleged Treasury of Puerto Rico, since it isn't found
Bulletin; see 37 Fed. Reg. 20960, 1972-2 "IRS" came into being is the best that can be in the list of organizations in the Department
Cum. Bul. 836. On the very first page of written under the circumstances. of the Treasury in Title 31, United States
this statement published in the bulletin, the However, besides the problem that these Code, or within any of those listed organi-
following admission was made: acts simply did not create either the Bureau zations?
"(3) By common parlace (sic) and understanding of of Internal Revenue or the "Internal Finally, I have found at 48 USC @ 1402
the time. an office of the importance of the Office of Revenue Service,", there exists the fact (copy enclosed herein and marked as
CQmmissioner of Internal Revenue was a bureau. these acts were repealed by the adoption of Exhibit E), the following:
"The Secretary of the Treasury in his report at the the Revised Statutes of 1873. Therefore, it "Title III of the National Prohibition Act,
close of the calendar year 1862 stated that 'The Bureau would appear that your "agency" has never as amended and all provisions of the inter-
of Internal Revenue has been organized under the Act of actually been created by any act of Con- nal revenue laws relating to the enforcement
the last session.. .' Also it can be seen that Congress had gress. This is obviouslY a serious flaw. thereof, are hereby extended to and made
intended (0 establish a Bureau of Internal Revenue. or I have also found the following statement applicable to [Puerto Rico and] the Virgin
thought they had. from the act of March 3, 1863. in in the Federal Register Vol. 41, Sept. 15, Islands ... "
which provision was made for the President to appoint 1976: I find still further, in the same section,
with Senate confirmation a Deputy Commissioner of "The term 'Director, Alcohol, Tobacco under History, Ancillary Laws and Direc-
Internal Revenue 'who shall be charged with such duties and Firearms Division' has been replaced by tives.
in the bureau of internal revenue as may be prescribed by the term 'Internal Revenue Service'." "Title III of the National Prohibition
the Secretary of the Treasury. or as may be required by A copy of the instant Federal Register is Act", referred to in this section, is Act Oct.
law. and who shall act as Commissioner of internal rev- enclosed herein and marked as Exhibit B 28, 1919, ch 85, Title III, 41 Stat. 319,
enue in the absence of that officer. and exercise the priv- for your convenience. What this says to which was generally classified to 27 USC
ilege of franking all leners and documents pertaining to me is that "Internal Revenue Service" is, at @ @ 71 et seq. prior to supersedure by the
the office of internal revenue.' In other words. 'the office least in this case, simply another name - an Internal Revenue Code of 1939, and subse-
of internal revenue' was 'the bureau of internal revenue,' alias, or, as the Federal Register clearly quently by the Internal Revenue Code of
and the act of July I, 1862 is the organic act of today's states, a "term" - for the term "Director, 1954."
Internal Revenue Service." Alcohol, Tobacco and Firearms Division". The previous statement says to me that
This statement. which appears again in a which is itself (as stated) a term, and not an Title III of the National Prohibition Act was
similar publication appearing at 39 Fed. agency which Congress has ever created. classified through several stages to the
Reg. 11572. 1974-1 Cum, Bul. 440, as well In addition, I have looked in 31 USC, Internal Revenue Code. That conclusion is
as the current IRM 1100, essentially admit Chapter 3, at the list of Organizations of the supported and confirmed by the following,
that Congress never created either the Department of the Treasury, only to find found in the same section:
Buteau of Internal Revenue, or the Internal there is no "Internal Revenue Service" listed "The internal revenue laws", referred to
Revenue Service. To conclude that "it can be there as an organization of the Departm'erll in this section, are located generally at 26
seen that Congress had intended to establish of the Treasury. USCS @@ I et seq."
a Bureau of Internal Revenue. or thought Further research reveals that there is no Mrs. Richardson, as you know, 26 USCS
they had" (see IRM 1111.2 - Exhibit A) "Internal Revenue Service" listed as an is the Internal Revenue Code, and" @ @ I
(Emphasis added) is an admission that even agency, or even a term, within any of the et seq." means: "Section I and all which fol-
the government itself cannot find anything organizations listed in Chapter 3. A copy of lows it."
whatsoever which actually created either 31 USC Chapter 3 is enclosed herein and In other words, this cite from Title 48
agency. The only office created by the act marked as Exhibit C. plainly states that the entire Internal
 Revenue Code, from start to finish, is "gen- which to invest one. there can be no officer. An office U.S. 512. 516.40 S.C!. 374, 376 (I 920}; Metcalf & Eddy
erally" made up of "internal revenue laws" may exist only by duly constituted law." v Mitchell. 269 U.S. 514.46 S.C!. 172. 173 (1926);
which are relevant to the enforcem ent of State v Ouinn. 35 N.M. 62. 290 P. 786. 787 (1930); N L R B v Coca-Cola Bottling Co of Louisvj!le. 350
Title III of the National Prohibition Act, Turner v State. 226 Ala. 269. 146 So. 601. 602 (1933); U.S. 264. 269, 76 S.Ct. 383 (1956) - " 'Officers' nonnal-
which is presently located in Puerto Rico Oklahoma City v Century Indemnity Co , 178 Okl. 212,
Iy means those who hold defined offices. It does not
and the Virgin Islands. 62 P.2d 94. 97 (1936); State ex rei Nagle y Kelsey, 102 mean the boys in the back room or other agencies of
This is truly astound ing. Obvious ly, Mont. 8. 55 P. 2d 685, 689 (1936); Stapleton y, invisible government. whether in politics or in the trade-
when I read the above statute, I must ask EIslhmi.lkI,
53 Ariz. 11. 85 P. 2d 49, 51 (1938); union movement;" Crowley v SoUthern Ry, Co, 139 F.
this question: Buchholtz y Hill, 178 Md. 280, 13 A. 2d 348. 350 851. 853 (5th Cir. 1905); Adams v MUCIlhy. 165 F. 304
Which internal revenue laws "generally (1940); Krawiec
v Industrial Comm • 372 Ill. 560. 25 (8th Cir. 1908); Sully v United States, 193 F. 185. 187
located at 26 USCS @ @ I et seq." are rele- N.E. 2d 27, 29 (1940); People v Rapsey. 16 Cal. 2d 636. (D.Nev. 1910) - "There can be no offices of the United
vant to anything other than and/or in addi- 107 P. 2d 388. 391 (1940); Industrial Comm v Arizona States. strictly speaking. except those which are created
tion to the enforcement of Title III of the State Highway Comm,
61 Ariz. 59. 145 P. 2d 846. 849 by the Constitution itself. or by an act of Congress. and.
National Prohibition Act? (1943): State ex reI. Brown v Blew. 20 Wash. 2d 47.145 when Congress does so establish an inferior office;"
So far my research reveals the following: P. 2d 554. 556 (1944); Martin v. Smith. 239 Wis. 314. I Commissioner v Harlan. 80 F. 2d 660. 662 (9th Cir.
a) The only "Internal Revenue Service" I N.W.2d 163, 172 (1941);
Taylor v Commonwealth. 305 1935); Yarden v Ridings, 20 F. Supp. 495 (E.D.Ky.
can find so far is not an agency at all, but Ky. 75. 202 S.W. 2d 992. 994 (1947); State ex rei 1937); Annoni v Bias Nadal's Heirs. 94 F. 2d 513. 515
simply an alias (term replacement) for the Hamblen v Yelle. 29 Wash. 2d 68. 185 P. 2d 723. 728 (1st Cir. 1938); and Pope v Commissioner, 138 F. 2d
term "Directo r, Alcohol , Tobacco and (1947); Morris v Peters. 203 Ga. 350. 46 S.E. 2d 729. 1006. 1009 (6th Cir. 1943).
Firearms Division." 733 (1948); Weaver v North Befien Tp. 10 N.J. Super. Since I have reached the conclusion that
b) "Internal Revenue Service" isn't listed 96,76 A. 2d 701 (1950);
Tomaris v State. 71 Ariz. 147. an agency known as "Internal Revenue
as an organization of the Departm ent of the 224 P. 2d 209. 211 (1950); Pollack v Montoya, 55 N.W. Service" has never been created by Con-
Treasury in Title 31, but that there does 390. 234 P. 2d 336. 338 (1951); Schaeffer y Superior gress, I am hereby requesting that you
exist in statute another "Departm ent of the Court in & for Sama Barbara County. 248 P. 2d 450. 453 provide to me the citation of any statute(s)
Treasury" - of Puerto Rico - which has a (CaI.App. 1952); Brusnigham
y State, 86 Ga. App. 340. which rea.lly did create the/an "Internal
"Secretary" and "Revenue Agent(s)", and 71 S.E. 2d 698. 703 (1952); State ex rei Mathews y Revenue Service" (other than the "Internal
perhaps an "Interna l Revenue Service" M.urra.\(, 258 p. 2d
982. 984 (Nev. 1953); ~ Revenue Service" referenced in Exhibit B,
although I have yet to locate such "agency" AnlIi:u..s. 342. Mich. 548. 70 N.W. 2d 765. 767 (1955); which is admittedly only a term replacing
or "term" therein. Hetrich y County Comm of Anne Arundel County, 222 another term, and clearly not an agency.)
c) The internal revenue laws relevant to Md. 304, 159 A. 2d 642, 643 (1960); Mciland v Cody, I am also requesting that you inform me
the enforcem ent of Title III of the National 359 Mich. 78. 101 N.W. 2d 336. 341 (1960); ~ where in the Departm ent of the Treasury (of
Prohibition Act are "generally located at ~. 216, Ga. 616.118
S.E. 2d 484.485 (1961); ~ the United Sates, not of Puerto Rico)
26 USCS @@ I et seq.", in other words, ~. 264 N.C. 149. 141 S.E. 2d 241. 245
(1965); "Internal Revenue Service" is located and
through out the entire Internal Revenue Planning Bd Of Tp of West Milford v Tp Council of listed as an agency, and provide me with the
Code, and I have no way of knowing which Tp of West Milford. 123 .J. Super. 135.301 A. 2d 781. statutes to support its establishment and
internal revenue laws in the Code are 784 (l973); Yander Linden v Crews. 205. N. w. 2d 686. location therein.
relevant to anything other than and/or in 688 (Iowa 1973); Kirk v Flournoy. 36 Cal.App. 3d 553. Finally, I am also asking you to provide
addition to Title III of the Nationa l III Cal. Rptr. 674. 675 (1974); Wargo y Industrial me with a clear and statutorily supported
Prohibition Act. C2m.m.. 58 III. 2d 234, 317 N.E. 2d 519. 521 (1974); statemen t which clarifies exactly which
At the state level, it is a well-acknowl- State v Bailey. 220 S.E. 2d 432. 435 (W. Va. 1975); L«k internal revenue laws "generally located" in
edged and accepted rule that a duly consti- Y.....lJI.e.jj. 217 Kan. 784.
539 P. 2d 304, 323 (1975); the entire Internal Revenue Code are rele-
tuted office of the state government must be Midwest Television.
Inc v Champaig n-Urbana vant to anything other than and/or in addi-
created either by the state constitution itself, Communications Inc. 37 III.App. 3d 926, 347 N.E. 2d tion to the enforcem ent of Title III of the
or else by some specific legislative act; see 34.38 (1976); and State v Pickney.
276 N.W. 2d 433. National Prohibition Act.
the following: 436 (Iowa 1979). Since this is a question of profound per-
Patton y Bd Of Health. 127 cal. 388. 393. 59 P. 702, This same rule applies at the federal level sonal and national importance, I request that
704 (1899) - "One of the requisites is that the office must See United States v Gennaine. 99 U.S. 508 (1879); you provide an answer to me within thirty
be created by the constitution of the state or it must be Norton y Shelby County. 118 U.S. 425. 441. 6 S. CI. (30) days. Failing a response within that
authorized by some statute." 1121 (1886) - "there can be no officer. either de jure or time period, I shall conclude that you can
First Nat Bank of Colombus y State. 80 Neb. 597. de facto. if there be no office to till;" United States v find no such statute(s) responsive to my
114 N.W. 772. 773 (1908): State ex reI. ~ M!lu.al. 124 U.S. 303,8 S.C!. 505 (1888); United States request, and I shall act accordingly.
Cunningham. 39 Monl. 197. 103 P. 497. 498 (1909); .v.....Smilll. 124 U.S. 525. 8 S.C!. 595 (1888); illAvu..v. Respectfully, Mark & Tina Terry
State ex rei Stage y Mackie. 82 Conn. 398. 74 A. 759. United States. 182 U.S. 595, 607. 21 S.C!. 891 (1901)- 405-C South Beeline Highway
761 (1909); State ex rei Key y Bond. 94 W. Va. 255. 118 "The law creates the office. prescribes its duti~IIl;": Payson. Arizona 85541
S.E. 276. 279 (1923) - "a position is a public office when Cochnower y United States. 248 U.S. 405. 407. 39 S.CI.
it is created by law." 137 (1919) - "Primarily we may say that the creation of
Coyne y State, 22 Ohio app. 462. 153 N.E. 876. 877 offices and the assignment of their compensation is a leg- (Editor 's Note: Larry Becraft is a
(1926) - "Unless the office existed there could be no offi- islative function ... And we think the delegation of such private attorne y who also serves as
cer either de facto or de jure. A de facto officer is one function and the extent of its delegation must have clear legal counsel for this magazi ne. The
invested with an office; but if there is no office with expression or implication"; Burnap y United States, 252 Terrys are legal researchers.)
 Rebellion or
Revolution?
by Steffan M. Bertsch,
Attorney at Law

For years, I've said the principle Beginning In March of 1996, Bertsch atic fraud that only Charles Ponzi could
problem with the legal profession was cow· sought the aid of the Attorney General of admire falls upon the media.
ardice. Until recently, it was almost impos- ,. Washington, _Ch~i~~Jireg~Lr.el i~~~~pos- .
sible to find a lawyer who was more inter- ing the fraud. Ms. Gregoire's office reo Members of the media who are in-
ested in law than procedure orjustice rather searched the issue and attempted to defend terested in further infonnation can contact
than billing -- and rarest ofall, Iuu:i the cour· the unlawful acts of the IRS, but has been Steffan M. Bertsch at 1-800-597-1789.
age 10 stand up and challenge the system. .!Q!,a1ly unable t(u~bJ!Ute[tsch~s,<;harg~ of
TImes change. Although still exceed· ~ fraudulent conve~slOn of property by the ** *• *
ingly rare, there is a growing cadre oflaw·
IRS. -._- -_. - -
yers willing to stand up and fight against On May I, 1996, Bertsch also sought Here's the key letters that ultimately
the system. Mr. Bertsch appears is one of the aid of Edward Shea, the president of the precipitated Mr. Bertsch's Press Release:
those remarkable lawyers who has courage Washington State Bar Association, to ex-
and is therefore worthy of real respect. pose the fraudulent activity of the IRS in May I, 1996
_ On July 4, 1996, Mr. Bertsch pub- seizing property without lawful authority.
lished the following press re~ order _ In response to the plea for assistance In ex- Edward F. Shea, President
toe:xpose massive fraud by the.J.!!L His posing the fraud, Mr. Shea acknowledged Washington State Bar Association
- press release was based on a series of let· that Bertsch was exercising his right to free- 500 Westin Building
s
ters askin8... Washington Governor, State dom of speech, and suggested that the 200 1 Sixth Avenue
. Bar President, and Attorney General for United States Attorneys and the Department Seattle, Washington 98121
help in correcting that fraud-"- Those letters of Justice would be the proper agencies to
follow the press release and provide a well· contact for relief. Bertsch responded to this Dear Mr. Shea:
written, professional explanation of some suggestion by indicating that both of those After reading your article about com-
of the fundamental fraud inherent in the In· parties were too close to the fraud to be ob- mon-law courts In the May issue of the
ternal Revenue Code. jective, and proposed that he be allowed to Washington State Bar News, I felt com-
present a seminar to bar members to reveal pelled to write you. You began to close in
PRESS RELEASE the fraud to Washington State lawyers, who the penultimate paragraph with:
JULY 4, 1996 like the rest of the people, are totally igno- "When we know that our fellow law-
rant of the scheme. To date the bar has re- yers in public office and judges within the
An Everett, Washington attorney, mained silent about the proposed seminar. judicial system are being subjected to coer-
Steffan M. Bertsch, has spent over eighteen In April of 1996, Bertsch began cor- cion and harassment, we must recognize our
months examining the Internal Revenue respondence with Governor Lowry's office affirmative professional responsibility to
Code and its regulations and concluded that in an effort to halt the illegal seizures by the speak out against this harassment and to
there is no authority for the IRS to seize any IRS in Washington State. The governor re- educate the public about the true value of
personal or real property in Washington sponded the "Because the issue raised is a our judicial system and law-and we will."
State for alleged income tax liabilities from federal matter, it is out of my jurisdiction as I have discovered a fraud that has a
most citizens. Bertsch charges that the • governor." Govemorco'wrY-aaaec!1naC '1-"- long-standing acceptance in Washington
agency has been seizing property for de- oope your effurts to resolve this matter pro~e State. When I learned of the fraud, I na-
cades through numerous deceptions and worthwhile... ively said, "No problem, we'll take it into
strong-ann methods, and has conducted an The fraud Bertsch charges is too se- the courts and have it remedied immedi-
ongoing fraud that nearly everyone in the vere for the Washington State Bar Associa- ately." To my surprise, I discovered that
state believes to be legal. The state of af- tion to Investigate, too egregious for the At- judges either cannot or will not address this
fairs is this: De IRS is operatin&,2utside , torney General to defend, and originates fraud. My only conclusion is that they are
.~ and has pla~~c:1 the citizens of Wash- :; from too great a power for the governor to being coerced into acceptance of it. Since
ington State under gove-,,"m_~~~~~arcL act upon it. The duty of exposing a system- you are strongly opposed to the harassment

48 ANTIS HYSTER Volume 6, No. 3

www.:lntishyster.com

.
 of judges, I appeal to you to shine the light
I now understand how Galileo must Today, the public is learning at a rapid
of truth upon this enormou s deceptio n that have felt when he claimed the earth was
is explaine d below in a letter I sent our state pace of the IRS fraud. Those who learn of
round. Nobody wants to hear the truth. I the fraud have lost respect for the courts,
Attorney General.
. ha~~~_~~t..~<:.~~!S~_the ~~.~.:vith __ the judges, and the bar because it is through
.~~Ient, deceP!i~!:. oQer~.tiol]!..!"ithin _ those agents that the unlawful action of
About eighteen months ago a client the
WashIngton State, and I ask your office to IRS continues. Nobody who learns of the
explaine d to me that there was a problem . TiiVestigateTtforthwith. I would be happy fraud forgets about it. The principles that
with the Internal Revenue Code. Ire· to meet with you at any time to discuss my drove the Revolution were Whig principles,
sponded that while it was quite confusin g, position, and will gladly present you with which stand for people's rights and truth.
when it was traced from beginnin g to end documen ts to substantiate my claim. The Whigs have started rolling a snowball
that it was cohesive and legitimate. He dis-
of truth and set its course to crush the fraud.
agreed, and challenged me to locate a sec- As I delved into this fraud, I became a or be melted into oblivion by lies from hell.
tion in the code t~a~ reqyired ordinary student of history and learned that there are The IRS is playing a diabolical game
._p..~pJe to file I04Q returns to theIRS. really only two political philosophies. One of deceptio n and thuggery. I call upon the
One morning I had a few minutes free that looks out for the rights of the people, such bar to investigate my claims, and if they be
while in the law library, and opened title 26 as the Whigs of the American Revolution. The unfound ed, then I am thoroughly deluded,
of the United States Code. Assumin g that I other protects the rights of rulers, such as the and have no business practicing law.
would find the answer immediately, I did Tories of the same period. Today, we have
not bother to sit while skimmin g the stat- My several petitions to State Attor-
many Tories, and few Whigs. ney General Christine Gregoire have accom-
utes. To my surprise, the answer was not The Bar Association can combat this plished nothing. Recently, I appealed to the
readily apparent. I spent the entire next two fraud. We have the people, the position governo r of the state, and in fairness, he has
days looking for the elusive section. within society, and a proud history behind not had sufficient time to respond to my two
Somewh at nervous that there might us. In 1765, the British Parliament passed letters, so I am uncertain whether his office
not be such a section, I contacte d CPA's, a dreadful Stamp Act. It was the first time will take the matter seriously.
lawyers, tax attorneys, the IRS, and finally on our soil that the Tories attempted a di- What I can say, however, is that the
wrote my tax professor. None could show rect taxation of the colonists. The tax re- common ·law courts you wrote about are a
me the section. The best answer I received
was, that by implication, section 6012re-
quired a revenue stamp be affixed to most symptom, not a cause. The cause is the
legal docume nts. Lawyers were mostly America n Governm ent was founded upon
qUiredpe-opletofil;-Byimpii~ati;~?B-'y Whigs in those days
and they collectiv ely Whig principles, and the Tories have been
'. imprrcation,\V~~hingi()I1St~te' ~i'tiz~~ iI'ave refused to pay the tax because it violated eating away at people's rights since 1783.
gone to jail for failure to file 1040s? This is people's rights. In Virginia, the bar closed My research reveals that the some of the
tragic. down the courts entirely by boycotting them, dirtiest work was done in 1803, but horrid
I realize that I am attempting to prove which got the attention of Parliament be- frauds have readily followed those from
the negative, which is tedious and unreward- cause the British merchants were unable to 1803. It appears that the only way the To-
ing. Perhaps someone on your staff could collect debts without courts operatin g in the ries could succeed in corrupting the Ameri-
spend enough time to show me the author- colony. The Stamp Act was repealed. can system was with lies. As George Wash-
ity that forces ordinary people to file returns. Again, in 1774, the Virginia courts ington and Thomas Paine both warned us,
I doubt it can be produced. closed. This time it was not because of a when a wolf knocks at the door, he is easily
As I looked into the issue of duty to repressive act by Parliament, but the royal identifie d and ejected, but when a wolf in-
file 1040's, I found that the IRS has inten- governo r, Lord Dunsmo re abolishe d the filtrates and wins the confiden ce of the
tioll~.!JLrnisciassified many o.(~;Ycli;rtl;·;S­ House of Burgesses. Court fees
were set sheep, he can be devastating.
. -coal mine'fs,'firearms deaie~s et cetera: and" by a statute that had a sunset clause in it I offer this plea: Have the Washing-
.-a~dthemas;w.,ing ~xcise taxes'.'-WhY· and it expired. Since the elective body was ton State Bar Associat ion conduct a thor-
~XClSetaxes'; Iwoncte rea; and -disco~ered terminated, the law could not be extended. ough investigation of the IRS and its au-
that the IRS has no authority to seize prop- Lawyers were not paid, so, again, for a less thority by public hearing. You will be
erty for income tax liabilities of ordinary idealistic purpose than in 1765, the courts amazed how fast the people will flock to
people, but they do for excise tax. in Virginia had their doors shut. the support of the bar in this endeavor. I
C~EESt W~AStl
I AGREE WlnI nJlS GUOTE :
.. TI-lt POW~~ TO TAX IS Tj.JE
PO'Nl:R TO D~SmOY ..•

Volume 6, No.3 ANTISH YSTER

www.antishyster.com 49
fear that if we of the bar do not attack this Association was an exercise of my free On July 2. 1996. Bar President Shea
matter, that the people will take the examples speech, but it encompasses much more of responded to Mr. Bertsch:
of 1765 and 1774 Virginia, and close down the First Amendment than that. My peti-
the courts. The common-law courts show tion was made to attempt to find redress for I believe my suggestions that you take
us that this has begun. Time is running out, grievous wrongs, and further, it was made this matter to the United States Department
and the snowball of truth may mow down in the idealistic hope that truth was still a of Justice in Washington D.C., and to the
the entire bar. It will not be a pleasant task, commodity that lawyers cared about in United States Attorney's Office for the West-
but we can support the truth and energize America. I think that your dismissal of my ern District of Washington were and are con-
that icy sphere and vanquish the lies. complaint is unfair to the individual mem- structive. I continue to believe in the integ-
Sincerely, bers of the bar. Each member deserves to rity of the United States Department of Jus-
Steffan M. Bertsch know that he or she is acquiescing to fraudu- tice and its regional offices of U.S. Attor-
lent seizures of property by the IRS. neys to pursue justice wherever the facts
***** Your recommendation that I present may lead. Finally, there are no end of op-
my "accusations" to the Department of Jus- tions that you have as an individual practi-
June 26, 1996 tice and the United States Attorneys of the tioner and as a citizen including contact with
Western District of Washington State is dis- members of the congressional delegation
Mr. Edward F. Shea couraging. My petition was to the bar be- about your concerns.
President cause the United States Attorneys and the Sincerely,
Washington State Bar Association Department of Justice are too close to the Edward F Shea, President
1816 North 20th Avenue source of the fraud to be objecti ve. The bar
Pasco, Washington 99302 is supposed to be an independent organiza- * •• * •
tion and not subject to undue influence or
Re: Complaint Regarding Illegal Seizures control by the executive or legislative Apparently. the Washington State
of Property by IRS branches. I had believed that the bar would Bar will not help provide a public forum in
be concerned about my charges of massive which the legitimacy of the IRS might be
Dear Mr. Shea: fraud. questioned. confirmed, or denied.
I wish to thank you for responding It was with great trepidation that I pe- M r. Bensch had also shared his con-
to my several letters of complaint regarding titioned the bar association, knowing full cerns about the IRS with Christine O.
the Internal Revenue Services illegal sei- well that my charges of fraud, if investigated Gregoire. Attorney General of Washington.
zures of property in Washington State by by the bar, would shed light that would be at PO Box 40123, Olympia WA 98504-0123.
your letter of June 20, 1996. As you stated, devastating. There are lawyers whose for- On April 30. 1996. a Washington State As-
my petition to the Washington State Bar tunes and liberty will be stripped when the sistant Attorney General Tff!sponded with an
truth is told. However, I know that the vast excellent example ofthe government's stan-

~
majority of the members of the bar are ethi- dard "analysis" (justification) of income
Tired of fighting all
cal and honest, and I know that when the tax and the general population s obligation
\1/. the battles alone? evidence is presented, those members will to file and pay. The underlined texl is pro-
;IfiI Single women and men: support the truth. The bulk of our mem- vided by the AGs office.
?~~ Contact other singles bers are ignorant of the fraud, and are truly
1J~/)interested in Constitution,
IJ ~ common law, freedom
victims of the IRS scheme.
Since, from your response, I must as-
Dear Mr. Bertsch:
Your letter of March 15, 1996, to the
issues, and traditional values; sume that the bar will not conduct an Inves- Attorney General has been referred to me
tigation into the allegations of fraud, I wish for reply. In your letter you raise some con-
Form a bond with someone who
to propose an alternate method to eliminate cerns you had about perceived problems
already shares your goals, beliefs,
ignorance and educate the members of the with the Internal Revenue Code. Briefly
and concerns.
bar. I will volunteer my time, prepare a summarizing, the issues you raised were:
seminar, and present it at no cost if the bar (I) whether there was in fact a code
Find someone special for love and
will accredit it for CLE and advertise it to section requiring people to file 1040 returns
support and begin to enjoy every
the bar members. I will gladly give U.S. with the Internal Revenue Service;
day to its fullest with your new
Attorneys, the IRS, or any interested par- (2) whether Section 6012 of the
partner while planning a happy
ties an opportunity to assist in the prepara- Code can be read as requiring people to file
and successful life together.
tion of the materials, and ample time to tax returns;
JOIN US TODAV! speak at the seminar to rebut my charges. (3) whether, in the absence of provi-
Then, after a full discussion of the issue, sions requiring individuals to file, Washing-
For Free Information:
the bar members can decide whether the IRS ton citizens may have gone to jail for fail-
Send large self-addressed,
stamped envelope to: seizures are lawful or illegal. ure to file a 1040; and
I would appreciate a prompt response (4) whether the Internal Revenue Ser-
Freedom Lovers Connection to my proposal. vice has authority to seize property for the in-
c/o P.O. Box 987·AA Sincerely, come tax liabilities of Washington citizens.
Alamogordo, New Mexico Steffan M. Bertsch
[88311] I have received a second letter from
1·505·437·6546 **** * you in which you allege that the IRS has
abused its power, and express a number of

50 ANTIS HYSTER Volume 6. No.3

www.antishysler.com

;'
 concerns about reasons behind this office's
failure to respond to your inquiries. You
.~ "Space-Age" Cloth KILL S Bacteria!
~
stated in your April 2nd letter that you sent
another letter on March 24. 1996, which we
~
have not been able to locate.
This hi-tech cloth applies technology developed for NASA to help astronauts
stay antiseptically clean
The general requirement to file can inside their space suits. Made ofconon and rayon meshed with ultra-fine
copptr, iJ tfJeeti.·tly
be found in the language of Section 6001 eradicates E. Coli, salmonella, staphylococcus Qureus, and many other
disease·cauJu,g
bacteria!
of Title 26 of the United States Code. better
Chemical-free, it can be u"d to clean food preparation surfaces like
known as the Internal Revenue Code (lRC) boards. Or . .. Kill odor-causing bacteria on your skin -WITHOU T
countereops and cunlng
SOAP (the)' are soft and
which provides in relevant part: absorbent). Most p"'ple who use them dlaco"er that body odor
Ia reduced or eUminated !-
AND they can stop ualne deodorant! The potential is obvious, not
Section 6001. Notice or regula- aspeel, but for those who have allergic reactions to soaps, deodorants
only for the anti-bacterial
and the chemicals they conuin.
tions requirin g records , stateme nts, and Cloth is durable and can be washed in your washing machine. Use
is limlt.d only by your
special returns. Every person liable for any imagination Csurvivalists', campers and all othm). Hang or tumb"
dry. $ 19.95 plus $3.00 S&H
tax imposed by this title, or for the collec- DON'T DHA Y... ORDER TODA Y
tion thereof, .s..b..a!l keep such records, ren- ChBr/ottB GrBguski, c/o Box 180061, DB//as, TUBS /752t8J

der such statements, make such returns, and

comply with such rules and re2ulations as 26 US.c. 6011. 6012 (emphas is 6012, above], on the date prescribed there-
the Secretary may from time to time pre- mine). You will see that Section 6012 leaves
~. Whenever in the judgment of ~
for .. , unless it is shown thaI such failure
no doubt that anyone with gross income is due to reasonable cause and not due 10
Secretary it is necessary, he may require any above the exemption amount must file a re-
~, by notice served upon such person
willful neglect, there shall be added to the
turn for each taxable year that such is the amount required to be shown as tax on such
or by re2ulatjons. to make such returns. ren- case. This requirement is made even more return 5 percent of the amount of such tax if
der such statements, or keep such records, explicitly in Section 1.6012-1 of the Code the failure is for not more than J month,
as the Secretary deems sufficient to show of Federal Regulations (CFR), which pro- with an additional 5 percent for each addi-
whether or not such person is liable for tax vides in pertinent part: tional month or fraction thereof during
under this title. Section 1.6012-1 Individ uals re- which such failure continues, not exceed-
quired to make returns of income. ing 25 percent in the aggregate.... In the
26 U.S.c. 6001 (emphasis mine). As (a)( I) An income tax return must be case of a failure to file a return of tax im-
you can see. Section 6001 not only requires filed by every individual for each taxable posed by chapter I [normal income tax]
every person liable for any tax to file, but year .... within 60 days of the date prescribed for
also authorizes the Secretary to promulgate
filing such return. unless it is shown thaI
regulations requiring that people file to show Section 6011 mandates that people such failure is due to reasonable cause and
that they owe no tax, if that is their conten- comply with regulations set out by the Sec- not due to willful neglect, the addition to
tion. retary with respect to the forms used when tax under paragraph (I) shall not be less than
The details of the requirement to file filing their returns. As you can see from the lesser of $100 or 100 percent of the
are further explained in Sections 6011 and paragraph (6) of Section 1.6012-1 of the amount required to be shown as tax on such
6012, which provide in relevant part: CFR. the regulation also makes the Form return.
Section 6011. General requirem ent 1040 the default form to use for filing pur-
of return, stateme nt, or list. poses, unless one can qualify under an op-
** *
(f)Increase in penalty for fraudu-
(a) General rule. When required tional (usually shorter) form. In any case. lent failure to file. If any failure 10 file any
by regulations prescribed by the Secretary every person is required to file a return and return is fraudulent, paragraph (I) of sub-
any person made liable for any tax imposed to use the mandated forms when doing so: section (a) shall be applied -
by this title, or with respect to the collec- (6) Form 1040 is prescribed for gen- (I) by substituting "IS percent" for
tion thereof. shall make a return or state- eral use in making the return required un- "5 percent" each place it appears. and
ment accordjn2 to the forms and re2u!ations der this paragraph. Form 1040A is an op- (2) by substituting "75 percent" for
prescribed by the Secretary. Every person tional short form which may be used by cer- "25 percent".
required to makea return or statement shall tain taxpayers.
include therein the information required by
26 U.S.c. 6651 (emphasis mine).
such forms or regulations. As you seem to be aware, the penal- Where the failure to file is willful. more se-
*** ties for failing to file can be somewhat se- vere penalties may result. Section 720 I of
(f) Income, estate, and gift taxes. For vere and can include both fines and impris- the Code provides:
requirement that returns of income ... be onment. Section 6651 of Title 26 of the
made whether or not there is tax liability, Code first provides for monetary penalties, Section 7201. Attemp t to evade or
[see 6012, below]. usually a percentage of the tax owing, where defeat tax. Any person who willfully at-
Section 6012. Persons required to someone fails to file a return: tempts in any manner to evade or defeat any
make returns of income. Section 6651. Failure to file tax 1.aA imposed by this title or the payment
(a) General rule. fulli!l:M with respect return or to pay tax. thereof mau, in addition to other penalties
to income taxes under subtitle A ~ (a) Addition to the tax. In case of provided by law, be guilty of a felony and.
Ill.Mk by the following:
upon conviction thereof, shall be fi ned not
(I)(A) Every individual having for (I) to file any return required un- more than $100,000, or imprisoned not more
the taxable year 2ross income whjch equals der authority of subchapter A of chapter 61
or exceeds the exemption amount .... ,. than 5 years, or both. together wilh the costs
[which includes sections 6001. 6011, and of prosecution.

Volume 6, No.3 ANTISH YSTER

www.antishysler.com 51
 26 U.S.c. 7201 (emphasis mine). See ***** code absolutely represents the authority of
e.g., H.i. McClanahan Est. (95 TC 98, Dec. the IRS over everyone who jumps up and
46,743), where a physician's failure to file On May 7, 1996, Mr. Bertsch re- down before the mirror, but it imposes no
tax returns constituted a statement of zero sponded to Assistant Attorney General control over those who move side to side.
tax liability and triggered penalties for fail- Johnson with a remarkable analysis of the The code, at first glance seems to cover those
ing to pay taxes. Internal Revenue Code. Note the personal moving side to side, but on close inspec-
trauma al/orney Bertsch experienced when tion, it controls them not.
Section 7203 of the IRC makes ex- hefirst realized the IRS was a massivefraud. I realize this sounds strange to you,
plicit that willful failure to make a return It's not easy for a lawyer who truly believes because you have been reared under the con-
can also result in fines and imprisonment: in the legal system to discover that system cept that the Income tax is a lawful tax. You,
Section 7203. Willful failure to is cowardly and corrupt. like most Americans, have naively accepted
file return, supply Information, or pay that our government stands for truth, and
tax. Any person reQuired under this title to Dear Mr. Johnson: you have been educated as to its legality by
pay any estimated tax or tax, or required by I have read your letter of April 30, people who were probably naively ignorant
this title or regulations made under author- 1996, and wish to thank you for taking the of the facts, unless, they were active par-
ity thereof to make a return, keep any time to research the code to attempt to an- ticipants in the fraud. And, you have not
records, or supply any information, who swer my questions. On the surface, your considered an investigation of its lawful-
wjllfully fails to pay such estimated tax or response seems full, complete, and to vin- ness. Why would you question what tax
tax, make such return, keep such records, dicate the activities of the Internal Revenue attorneys, CPAs, and law professors tell you
or supply such infonnation, at the time or Service in Washington State. However, as is fact? I did not until most recently. And
times required by law or regulations,~, with any fraud, what you see' is often not after discovering the fraud I fell into depres-
in addition to other penalties provided by what you get. sion, followed by rage, and, finally, landed
law, be guilty of a misdemeanor and, !U2QIl I will not attempt to display all of the where I am now, at the point where I hope
conviction thereof, shall be fined not more, fraud in this response, but only show you to correct the fraud. I know how difficult
than $25,000, or imprisoned not more than pieces of how it works. 1 hope that after my task is. It is an adage that if you hear a
I year, or both, together with the costs of reading this, you will grant me a meeting, lie often enough, you will believe the lie to
prosecution. at which I will present as much or as little be true. The IRS lie has been oft repeated,
evidence as you wish to view about how and oft believed.
26 U.S.c. 7203 (emphasis mine). the fraud works against almost every Wash-
For an excellent case on what constitutes ington State citizen. The c0.9~~.QPlies to a select group of_
"willfulness," see Cheek v. United States, Title 26 of the United States Code .'y~~p~Those who are absolutely subject
498 U.S. 192,1 J2 L. Ed. 2d 617,11 I S. Ct. operates much like a mirror image. When a to the income tax portion of the IRC are fed-
604 (1991). person with no knowledge of reflections first ·~l<rye~s .. Federal employees jump
views himself in a mirror, it appears that the · up and down in front of the mirror. Those
I hope this answers your concerns reo image is an identical representation of him. who are not, by and large, are people who
garding the source of the Internal Revenue When he jumps up and down in front of the are employed otherwise, the people who
Service's statutory authority to require mirror, his image behaves likewise, and move side to side and are deceived into
people to file tax returns and to promulgate again, it looks to be a perfect representa- thinking they are covered by the IRC. A
regulations regarding how such filing should tion. But, when he extends his right arm, Washington State Attorney General, for in-
be done. I further hope I have answered he receives a clue to how the mirror distorts stance, moves side to side.
your questions regarding the power of law reality. The image in the mirror appears to The deception is thorough, deep and
enforcement officials to execute their du- extend its left. And as he examines the im- wide. The IRC is a car~[1J!1y-cr~n~ se.t-Q.f
ties in upholding these laws, even if it reo age closer, he notices that all lettering is reo statut~~liT1edWTth~a'rds of art and ;nar.es .
quires that those who willfully disobey the versed. The explanation for the IRC in your t;;-catc1J- the naive. To und~~~ta~d·~ho it
Jaw suffer criminal prosecution. letter would be precise and accurate if the cover;:-onemustnot assume even the mi-
Very truly yours, IRC were not a mirror. nutest detail. Since you started with Sec-
sf Leland T. Johnson, But, alas, a mirror it is, and its image tion 600 I, it should be addressed first. Bear
Assistant Attorney General is often 180 degrees afoul of reality. The in mind that the following is not a complete
analysis, but only a summary. Further. con-
sider that the fraud is far more obvious in
the seizure of the properties by the IRS than
PROTECT YOUR PRIVACY! in the reporting sections such as 6001. The
heart of section 6001 is "Every person li-.
P.O. Boxes and mail drops leave a trail. We forward your · able for-any tax.....:~· The myste'ry is-to find
mail, phone and fax messages, directly to you, out of · the sections· that' makes such a "person" li-
able. Under the code, persons include cor-
town or state. No government information required! porations.
All information kept strictly confidential! As you pointed out, Section 6012
says: "Every individual having for the tax-
able year gross income ..." One Issue is,
For details, call 501-785-3424 quite simply, "What Is income?" Do not
reach any con~hJsio~~that;ake·You jump

52 ANTIS HYSTER Volume 6, No. 3

www.antishyster.com

.'
 "

up and down without thorough inspection

of the code. Definitions and rules of con-
struction are critical to unraveling the IRC
fraud. Would it not be logical for the code
to define income since that is the basis of
the entire income tax scheme? Can you
think of any rational reason why "income"
is not defined in the code?
.~ecause of constitutional difficulties, Rick Schramm teaches students to stay On Point!
the IRC does not define the word "income" Learn the "ins and outs" of Civil Rights suits including:
. anywhere in the'title. u.s. v. Ballard, 535 F.2d
400,404 (1976); cert. denied, 429 U.S. 918
(1977). Income is the basis of the 1040 tax, * Do you have a cause of action?
yet the IRS and the IRC never define the tenn. * Writing a winning complaint.
In the sixteenth amendment to the Constitu- * Overcoming dispositive motions.
tion is the language: "The Congress shall have * Overcome immunity.
the power to lay and collect taxes on incomes, * Effective Discovery.
from whatever source derived ..." * Case law you cannot do without.
It is from this sixteenth amendment * Using traverse and demurrer in a federal law suit
that the Congress s~emstoiiave theauthor-
.!!t!o~ix .~ag~s"earn'ings,'~,~d all manner Available through Rig ht Way l.a.w .
of gains made by Americans. However, "in-
come" is not detined in the Constitution,
nor in the IRe. In Eisner v. Macomber, 252
For more information call
U.S. 189, income is defined as "gain" or (216) 699·1605
"profit". On~QL~~sess a gain witho~t or write to:
first taking-into account -thec~"Sts'Of acquir- c/o 13004 Cleveland Avenue, N.W. Suite 194
.fiJh~~~,i.ri:-f~ij 'is' b~~i~,~~~~c~,~~ting~, ," Uniontown, Ohio state
Yet, Section 6012 deals with gross NonDomestic, 44685
income in an attempt to bypass Macomber
for subtitle A respecting income taxes. As in a court of law. Should the Department of
stated earlier, income isnet gain but the IRC Section 6012(a) says that every indi-
Justice believe a filer to be defrauding them vidual -shall
~vams yoiJtOtTllnklllatall reven~e;'a;ei~~ of money, the filer can be charged with in-
- -make .- "a-retum.
. - .- If "shall" means
"must," then the Congress, by passing 6012(a)
'.co,m< 'thiS is violative cifiilac countir ii come tax evasion under section 7207 and has superseded the Constitution of the United
principles. The sixteenth amendment allows face felony prosecution and if he filed in- States. If shall is obligatory in this case. then
taxes on incomes, or gains. Where do you come tax returns such as form 1040J.Lc~ __ people are required to file retums
s~P9_se the authority com~ from to ~ax- be used against the filer in the trial.
that may
later be used against them in court as evidence
. ";';&!'oss income" instead o("net income"? . - ---TJlel iTinam endmen tt-;the Consti.
.- '-, A'reading of section 6012' seem's t~ to convict them of crimes. This cannot be the
tution protects many rights, and one of those case, and it is not the case.
say that every individual with gross income most precious to Americans Is the right not In order for the Congress to get
in excess of a certain amount "shall" make to be compelled to be a witness against one- around this nasty item attached as the fifth
a return. Herein lies the reaTconstit'utfonal" self. The fifth amendment states in pa!L:.'No article of amendment to the Constitution.
'~iickle~~f "sb.~~",i~_!]1~~~fY..Ql~, !RC is , person, .. shall be compelled in any crimi- they give the job to their faithful agent. the
a frontal assault upon the Bill ofRig,hts. To 'fial case-to be a witness against himsei(. :-.
, 'ilvoi(rlhTscOllst{lUti~nal incon'sistency, IRS. The IRS the~i.0~ri.c~ .£.eopl~ in~o
'." Under the Constitution, unlike the IRC, enter'contnicts of obligation, such as 1040
"shall" is properly read to mean "may.':_ ., "person means "a natural person. People ~eturns-;or·(orceSlhe-people-topayth;'ou'gh
---ande r'the"p 'rTvac yActN oiice is have constitutionally protected rights. A raw power even though the IRS lacks the
found that the information on a 1040 return corporation is an unnatural person and has lawful authority to make them .. The decep-
may be given to the Department of Justice, no constitutionally-protected rights. There- , tion occurswhen-ihe IRS the;:; provides "al-
other federal agencies, cities, -states, Dis- fore, the IRC filing requirements are man- leged taxpayers" with a Privacy Notice that
trict of Columbia, U.S. commonwealths or datory"'Upoi1-;;orporations, yet volunta.!L,"_ is a veiled Miranda warning. The tax
possession, and certain foreign govern- filer
-regarding nall.i'i-alfiersons. Hale'-;,. Henkeb. is supposed to interpret this notice to say.
ments. These departments, agencies, and '--20IU~S~ 43,70-(1'905). ',;... no-one shall "Anything you tell us could land you injail.
countries can, and in the past, have used the be compelled to give testimony which may so make certain that what you tell us is true,"
representations made upon income tax fonns expose him to prosecution for crime." Hale, However, it requires a most strained read-
against the Individual who supplied them supra at 66. The word "shall," when used ing of the notice to glean this from it.
to the IRS. In other words, an individual in the Constitution is obligatory upon the Then the IRS incorporates the notice
who supplies information upon a 1040 is government. Regardless of how many de- with the nearboltom line ofa form 1040 which
subject to losing liberty or property because ceptive dances the IRS might try to do to says "Under penalties of perjury, Ideclare that
of that information. make "shall" mean "may," they cannot get I have examined this return and accompany-
The information supplied by indi- away With such chicanerywnen a fundamen- ing schedules and statements, and to the best
viduals to the IRS can be used against them
tal c~~~,0tutional right hangs in the bal~c~: of my knowledge and belief, they are true. cor·

Volume 6. No. 3 ANTI SHYSTER

www.antishvster ~om 53
 rect, and complete." If someone signs the 1040 and the couple lost their life savings while
under that obligation, he subjects himself to standing up for the principle of truth.
pe~ury charges for any misrepresentations on The IRS seized the property through Finally, here's a lerrer from Mr
the form. As a lawyer, you must consider the CFR 27, not CFR 26. The IRS acted ille- Bensch to Washington state Governor Mike
absurdity of this Catch-22._I~ig.n. a 1040 gally, but their action was upheld by the fed- Lowry at PO. Box 40002. Olympia. Wash·
makes one liable for a felon'y if there is a mis- eral and state courts because all judges an- ington 98504
're'pre;;en'taiion, and to refuse t;sign ~an only swer to the IRS. I have learned that all
"'be a·misdemeanor. Since the code has thou- federal judges.!re~d.e.r:~rj~inal iriveStiga~ Dear Governor Lowry:
sands pages, and many inconsistent sections, . "lion Of the IRS, which '~xplains- why" ih~ I wish to thank you for responding
it is totally vague, so, few people, if any at all, couple lostinfederal court. Does having to my letters of April 24, May I, and May 9
could file a return for a period with complexi- judges under investigation not smack of vio- by your letter dated May 14, 1996. I realize
ties in it without mak.ing a misstatement. lation of separation of powers? Who could that you have a busy schedule and I do ap-
Therefore, what is the advice a law- be impartial under those circumstances? preciate your taking the time to answer my
yer must give a client? Tell them to attempt My clients' case made me reflect petition regarding relief from the IRS. an
to comply with the impossible (but advise deeply upon what I must do. After search- agency that is so out of control that it fol-
them that they risk becoming a felon)? Or ing my soul, I realized that I must act. There- lows no law in seizing property from the
tell them to forget the whole matter because fore, I petitioned your office for relief for citizens of Washington State. As I attempted
risking a misdemeanor for noncompliance the rest of our state's citizens. Addition- to explain in my petitions, there is no au-
is better than risking a felony for misrepre- ally, I have petitioned the governor and the thority under Title 26 of the USC and its
sentation? As I said at the onset, we stepped president of the state bar association. regulations for seizure of property: the IRS
through the looking glass when we entered The fraud is too ugly, too widespread, is an outlaw agency that derives its pow'er .
the world of the IRC and things became and too horrible for me to avoid my duty. I . by trickingan-ignorant-bar'and bench into
"curiouser and curiouser." realize that this is a tremendous issue to . coopeiaiTng:or by corrupting them.
A person who signs a I040 becomes present to your office, and I understand why you
.. _.-' iri-yo-ur respo;';-se- explain that
a witfl-;Ssagainsi-himseTC'This IS the pre- it is easier to allow the fraud to continue because any fraud committed by the IRS
.. clSe';eason why one" cannothe c'ompelled ~ than to confront it. However, I cannot live is a federal matter. it is beyond your ju-
IOcomplete the form. The fifth amendment with myself without striking out for truth. risdiction as governor of Washington
"sTates clearly that a naturaT'person cannot If the IRS is above the law, then our once State. You suggested that I contact the
- -be-fOrced-io be aw;tn~ss against himself. proud republic has fallen to anarchy. Congress for relief. I am disheartened to
. "Whe~e'r;ghts-secured by the Constitution Respectfully submitted, learn that you believe that the governor
are involved. there can be no rule-making Steffan M. Bertsch has no jurisdiction over fraud committed
or legislation which would abrogate them."
Miranda v. Arizona, 384 U.S. 491.
The preceding is a brief explanation
of why Section 6012 is not mandatory for
individuab, but is a voluntary section. How-
The Republic of Texas
ever. even ass'umingarguenaoiliilt'ilie IRC W-i \S
"requires" people to tile returns under sec-
tion 6012, where is the authority for the IRS
{e~
\\ A Whole Other Country
to seize property from Washington State citi-
zens for alleged "income-tax" liabilities? A Place For:
The seizure regulations the IRS employs are
~~~~(!yile 27, or excise taxes, no't 1t'iie 26, ... Self Responsibility
or income taxes. ...Freedoms you've dreamed about but never experienced
Further, why is the IRS classifying my
clients as "gun dealers" or "coal miners" or
... True Prosperity
the like? The answer seems to be that the IRS ... The Rule of Common Law
must place my clients under Title 27 for ex- ... Life without Government Intervention
cise tax liabilities before the IRS can seize
property. While discussions could consume ... Freedom from the bondage of overtaxation
volumes on how various sections and words ... The Good Life
therein interplay, there is no hiding the fact
that the IRS seizes properw of?late citizens
. whosup'po~edly h~Ye.jl1.C9!J1~~.li'lQi)jties un- . Sound Good to You?
dei-Titl~ 27, which is fraud. .. - for more infonnation call:
a
._.." (represeni 'cou'ple;--both are in their San Antonio Office : (210) 349-8994
seventies. They made the decision, wholly in- DfFW Information Line : (214) 471-3584
dependent from any advice from me, not to
file tax returns when they discovered there was Internet address : texas. by. net
. no duty to report to the IRS. The IRS assessed c/o PO Box 460554
millions of dollars in "income tax" liabilities San Antonio, Republic of Texas TPZ 78246
against them and sold their home at auction

Volume 6, No. 3 ANTISHYSTER 55

www.antishystcr.com
by the national government within the My next step will be to appeal to 1800 wherein Thomas Jefferson was elected
state's borders. I cannot say whether the the press. Based upon your response of president is one. His party of Democratic-
IRS is a federal agency; it is an organiza- May 14, 1996 to my petition for relief, I Republicans immediately began dismantling
tion so cloaked in deception that it is next accept that it is the position of your of- federal power, then eliminated federal defi-
to impossible to ascertain whether it is a fice that it can do nothing to impede or cits and restored liberties that had been taleen
private agent operating for Congress, or halt the ongoing fraudulent seizures of by the Federalists. One of the first oppres-
if it is a distinct federal bureaucracy. property by the IRS of Washington State sive acts to fall to the Jeffersonians was the
Regardless of what the characterization citizens. Since that is the case, if I hear 1798 Alien and Sedition Acts, which vio-
of the IRS is exactly, we know its charac- nothing to the contrary before June 10, lated every premise of Freedom of Speech
ter. I am chagrined to think that our gov- 1996, I will inform the media that your and Press. We are a forgiving nation, there-
ernor is impotent to halt fraud committed office acknowledges that the bulk of the fore, we can have peaceful change, even
by a federal agency, if the IRS is indeed a property seizures for income tax liabili- when there is core corruption or massive op-
federal agency, or a private contractor, if ties are fraudulent, but that your office pression.
that is what the IRS is. helpless to act, however it would welcome I urge you to step in and strike a blow
I appreciate receiving from you a list the support of the media to expose the for the truth because:
of our state's national representatives and fraudulent actions of the IRS. " ... Prudence, indeed, will dictate
senators, but I will not be petitioning to Con- I cannot impress upon you how seri- that governments long established should
gress for relief. Since the IRS is the collec- ous this matter is. If you check the history not be changed for light and transient
tion agent for the Congress. I cannot imagine of rebellions in the world, you will find that causes; and accordingly all experience
the Congress considering even the mildest of almost all are based upon oppressi ve taxa- hath shown that mankind are more dis-
reprimands of its own agent, an agent that tion. The Congress of the United States has posed 10 suffer while evils are sufferable,
plunders the land and feeds its master with trumped many of the oppressors of the past. than to right themselves by abolishing the
considerable booty. Congress built the IRS, using fraud as their mechanism to collect forms to which they are accustomed. Bur
condones its operation, and encourages its taxes. At this time there is a peaceful rebel- when a long train of abuses and usurpa-
every action. I appealed to your office be- lion in America. Millions of Americans tions, pursuing Invariably the same ob-
cause the Congress is the responsible agency refuse to file returns because they have ject, evinces a design to reduce them un-
for the fraud perpetrated by the IRS. While I learned of the fraud. This is a quiet protest, der absolute despotism, it is their right,
do realize that as governor you do not have a peaceful rebellion. it is their duty to throw off such govern-
jurisdiction over Congress, I hoped that you The government has labeled these melll and provide new guards for their
would use the powers of your office to im- people as "tax protestors" and painted future security. ... " (Declaration of In-
pede or eliminate illegal activities by IRS them as antigovernment beings. These dependence, July 4, 1776)
agents by forcing them to follow the law in "tax protestors" are not, by and large, an- When the general public learns of the
Washington State. tigovernment, but are definitely "anti-cor- fraud, I tremble for my country. Please, use
While I am chagrined at your deci- ruption." your office to expose the fraud while peace-
sion to facilitate the ongoing fraudulent sei- Those opposing "tax protestors" line able solutions are possible. lknow that it is
zures of property of Washington State citi- up as pro corruption." In 1775, John diflicult to stand for truth in these times, that
zens, I am not without hope. I have ap- Hancock and Samuel Adams were labeled it is far easier to allow the lies to continue, but
pealed to the President of the Washington as "tax protestors" and warrants were sworn there is the greater good to consider.
State Bar Association for assistance in ex- out for their arrests. It was only because of Rulers should be aware of what is
posing the fraud. I have also been in con- "tax protestors" like them that there ever was brewing, and should respond to petitions
tact with the Attorney General's office and the experi ment of self government called the of the people. But history is replete with
have received a response from Leland United States of America. their failure to consider the pleas of the
Johnson of that office. Mr. Johnson ad- A more obvious rebellion is occurring people, which turned rebellions intorevo-
dressed many of my issues, but did not an- in Jordan, Montana by the Freemen. who, lutions. Patrick Henry warned that,
swer the issue concerning illegal seizures whether they have committed crimes or not, "Tarquin and Caesar had each his Brutus,
of property by the IRS. Hopefully, that was are absolutely in rebellion over our tax col- Charles the First his Cromwell. and
an oversight, and his office is working on lection and banking systems. My concem for George the Third ..." his Henry. Rulers
the matter at this time. my country is how much longer the "tax pro- too often ignore the pulse of the people
Should those petitions be unfruitful, I test" will remain- quiet and peaceful. When until it is too late.
believe that I still have other channels to seek King George III and his Parliament attempted After the Bastile was stormed, King
relief. As I indicated earlier, the couns are a direct tax in the form of the Stamp Act of Louis XVI asked the Duke de 1a
impotent because they are under the scrutiny 1765, it was totally scoffed by the colonists Rochenfoucauld, "Is this a rebellion?" to
of the IRS and federal judges are all under until the act was repealed. When King George which the duke responded, "No. Sire, it is a
crimin'al investigation by the IRS in every as- taxed the colonists to fund foreign wars, it revolution. "
pect of their performance on the benches. caused protests, petitions, rebellions, and ul-
Therefore, the couns are not capable of effec- timately led to a revolution. King George had
tively addressing this fraud. As stated earlier, the lawful authority to tax and seize. yet the
the Congress originated it, so that body will colonists revolted. The IRS has not the law- Steffan M. Bertsch, Altorney at Law.
not assist. The President controls the justice ful authority to seize property for income tax can be reached at PO. Box 668, Lake
department, which enforces the illegal sei- liabilities. Stevens, Vtbshington 98258
zures, so appeal to the national executi ve America is replete with a history of
would also be a useless petition. passive, quiet rebellions. The election of
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56 ANTISHYSTER Voillme 6, No.3
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