June 18, 1996
Cathy Bird, Examination Division
Arkansas/Oklahoma District
"Internal Revenue Service"
55 N. Robinson
Oklahoma City 73102/tdc
OKLAHOMA STATE
Re: Audit/inspection of records,
for John & Sally Victim
Subject: Request to re-schedule audit conference
Enclosure: Public Notice memorandum relating to
IRS/IRC matters
Dear Ms. Bird:
This letter conveys a request to re-schedule the audit
conference which was previously scheduled. The request is based
on matters antecedent to assessment authority and particulars of
liability for federal tax.
Enclosed you will find a Memorandum which addresses various
matters concerning application of Internal Revenue Code taxing
authority, and the authority of the Internal Revenue Service. We
have examined the memorandum, constructed by Dan Meador of Ponca
City, Oklahoma, and find that documentation cited as authority,
so far as we have been able to ascertain from available
resources, is accurate. Of particular note, we have had access to
the Parallel Table of Authorities and Rules which lists
regulations published in the Federal Register that extend
application of statutory authority to the several States and the
population at large (page 751, et seq., 1995 Index volume to the
Code of Federal Regulations), and find that 26 U.S.C. §§ 7621,
7801, 7802 & 7803 are not listed as having regulatory authority
applicable to the several States and the population at large (see
Item #1 of the Memorandum). These statutes (1) authorize
establishing revenue districts, (2) extend authority of the
Department of the Treasury, (3) extend authority of the
Commissioner of Internal Revenue and assistants, and (4) extend
authority of other Department of the Treasury personnel. Since
the statutes are not listed in the Parallel Table of Authorities
and Rules, as noted in Mr. Meador's memorandum, the underlying
implication supports other cited authorities suggesting that the
Internal Revenue Service is not an agency of the United States
Department of the Treasury, and that Congress never created a
Bureau of Internal Revenue, predecessor to the Internal Revenue
Service.
Please consult Item #3 of the Memorandum: This section
appears to tie the current Internal Revenue Code (IRC of 1954, as
amended in 1986 and since), to the Public Salary Act of 1939, and
the Social Security Act which was effective after 1936, both of
which appear to apply exclusively to federal agencies and
employees. By consulting the Parallel Table of Authorities and
Rules, we find that 26 U.S.C. § 11 relating to corporate tax is
absent, and there are no regulations which extend application of
the definition of taxable income (26 U.S.C. § 64) to the several
States.
Model Response to Audit/Summons Demand:
Page 1 of 4
The need for regulations prescribing application of statutes
to be published in the Federal Register when there is general
application is expressly set out in the Administrative Procedures
Act (5 U.S.C. § 552 et seq.) and the Federal Register Act (44
U.S.C. § 1501 et seq.), with particulars of publication detailed
in Chapter I, Title 1 of the Code of Federal Regulations. Where
revenue laws of the United States are concerned, the necessity is
preserved at 26 CFR § 601.702(a) and 31 CFR § 1.3(a).
Provisions of particular import to the instant matter are
found in 1 CFR, Part I, Subpart B:
§ 21.40 General requirements: Authority citations.
Each section in a document subject to codification must
include, or be covered by, a complete citation of the
authority under which the section is issued, including --
(a) General or specific authority delegated by statute; and
(b) Executive delegations, if any, necessary to link the
statutory authority to the issuing agency.
[50 FR 12468, Mar. 28, 1985]
21.41 Agency responsibility.
(a) Each issuing agency is responsible for the accuracy and
integrity of the citations of authority in the documents it
issues.
(b) Each issuing agency shall formally amend the citations
of authority in its codified material to reflect any changes
therein.
Authority for canvassing, examination of books and
witnesses, service of summons, etc., is located in Chapter 78,
Subchapter A of the Internal Revenue Code, with general powers
and duties in Subchapter B (§ 7601 through § 7624). Regulations
prescribed for these statutes, where there are listed regulations
published in the Federal Register, are cited as being under Title
27 of the Code of Federal Regulations, with general authority at
27 CFR § 70. Title 27 of the United States Code and the Code of
Federal Regulations are under exclusive authority of the Bureau
of Alcohol, Tobacco and Firearms, with provisions of the title
relating to IRC Subtitle E and other revenue laws of like nature.
No corresponding regulations published in the Federal Register
for Title 26 U.S.C., Subchapters A, B & C are listed. Therefore,
there does not appear to be regulatory authority for the Internal
Revenue Service to canvass, issue summons, examine books and
witnesses, administer oaths, etc., within the several States as
applies to the population at large.
Model Response to Audit/Summons Demand:
Page 2 of 4
This notion is reinforced by the general authority
regulation under provisions for "Discovery of Liability and
Enforcement of Title", under 26 CFR § 301.7601-1, as follows:
Each district director shall, to the extend he deems it
practicable, cause officers or employees under his
supervision and control to proceed, from time to time,
through his district and inquire after and concerning all
persons owning or having the care and management of any
objects with respect to which any tax is imposed.
There are three categories of tax imposed by the Internal
Revenue Code: The tax must issue against the transaction, service
or object to be taxed (United States v. Community TV, Inc., 327
F.2d 797, at p. 800 (1964); Hassett v. Welch, 303 U.S. 303, 58
S.Ct. 559, 82 L.Ed. 858). The regulation cited above, which
conveys general authority for Chapter 78 of Title 26 (Discovery
of Liability and Enforcement of Title), clearly specifies that
the authority in this chapter relates to "_ any objects with
respect to which any tax is imposed_," thus complying with Title
27 CFR authority relating to Subtitle E excise taxes under BATF
administration.
However, allowing for benefit of the doubt, please cite the
taxing statute which specifically describes the transaction,
service or object of the tax which you are concerned with. To
that point, it is impossible for us to comply with your request
to examine books and records as we do not know what books and
records are required. Certainly you wouldn't want books and
records pertaining to diaper training or banjo picking -- you see
the problem.
Next, 26 U.S.C. § 6001 provides that the Secretary will
notify anyone liable for a tax prescribed by the Internal Revenue
Code (Vol. 68A of the Statutes at Large) with direct notice or by
regulation. We do not recall having received direct notice from
the Secretary that we are required to keep books and records or
file return reports, per 26 CFR § 301.7512-1. Therefore, if you
would attend to this antecedent matter by providing a certified
copy of the Secretary's notice previously sent to us, which
stipulates what tax we are liable for, we can prepare for your
request to conduct an audit. In the alternative, please cite a
general application regulation, published in the Federal
Register, which clearly specifies that we are required to keep
books and records and file tax return reports.
Also, please provide a certified copy of the Form 23C that
authorizes Internal Revenue Service personnel to engage the
assessment and collections process against us.
Finally, the first sentence of 26 U.S.C. § 7804(b) preserves
all existing "rights and remedies" (Constitutional due process
included). One of those rights is that people are not required to
testify against themselves. Therefore, you will please provide a
certificate granting immunity from civil and/or criminal
liability premised on any information we might voluntarily submit
for audit or other inspection. See also, 26 CFR § 601.106(f)(1),
which specifically acknowledges the Fifth Amendment, and
Paragraph 332.(1) of the Handbook for Revenue Agents, which
acknowledges the force of fundamental law.
Model Response to Audit/Summons Demand:
Page 3 of 4
Once you've complied with these preliminary requirements, we
will be more than happy to re-schedule an appointment and will
cooperate with what the law prescribes as it specifically relates
to us. We appreciate your indulgence.
Regards
/s/ John Victim
John Victim
/s/ Sally Victim
Sally Victim
Model Response to Audit/Summons Demand:
Page 4 of 4
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