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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