|INSTRUCTIONS: 3.5. Educate and Screen Your Financial Institutions and County Recorder|
It’s no secret that most employers, financial institutions, and the county recorders and the less educated people working at these organizations simply don’t know what the federal laws say about the lack of authority of the Internal Revenue Service to lien and levy and seize both real and personal property without a court order. They aren’t equipped to be legal experts and don’t want to be. When these institutions receive an IRS Form 668-A(c )(DO) “Notice of levy” or a IRS Form 668-B “Levy” from the IRS (which incidentally the IRS is not authorized to institute), it is very common that financial institutions won’t question the authority of the IRS to levy such assets under law. Instead, they will blindly surrender over to the IRS whatever proceeds are asked for by the agent, often without the consent or approval or even the knowledge of the account holder. County recorders will record illegal liens on property issued by the IRS on a “Notice of tax lien” statement. If the institution improperly or illegally honors the request, then the financial institution, county clerk, and/or the IRS agent can both be held liable for violating the regulations and the Fifth Amendment. The IRS agent can also be criminally charged in such an instance under 26 U.S.C. Section 7214 and may lose his job or the agency can be fined between $100,00 and $1,000,000!
With the above in mind, it’s very important that you choose financial institutions to park your assets in that are very familiar with the legal authority of the IRS and state taxation authorities to lien, levy, and seize property in satisfaction of a tax debt. Even if the financial institution or county recorder isn’t familiar with the laws on tax liens and levies, you can often win them over by taking the time to patiently educate both them and their legal counsel on the authority of the IRS to seize, lien, and levy property. You are invited to use materials provided in this book to that end and you should do this whenever you open a new account at any institution. If you haven't already done so, you should also do it for all existing accounts that you have.
Below is the actual law for you to read for yourself and for use in providing to your financial institution to educate them on the authority of the IRS to use force (distraint):
26 U.S.C. §6331. Levy and distraint
(a) Authority of Secretary
If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. Levy may be made upon the accrued salary or wages of any officer, employee, or elected official, of the United States, the District of Columbia, or any agency or instrumentality of the United States or the District of Columbia, by serving a notice of levy on the employer (as defined in section 3401(d)) of such officer, employee, or elected official. If the Secretary makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the Secretary and, upon failure or refusal to pay such tax, collection thereof by levy shall be lawful without regard to the 10-day period provided in this section.
(b) Seizure and sale of property
The term ''levy'' as used in this title includes the power of distraint and seizure by any means. Except as otherwise provided in subsection (e), a levy shall extend only to property possessed and obligations existing at the time thereof. In any case in which the Secretary may levy upon property or rights to property, he may seize and sell such property or rights to property (whether real or personal, tangible or intangible).
In most cases, the IRS “Notice of Levy” is sent out with ONLY paragraph (b) above, and with paragraph (a) conspicuously removed (I wonder why?…the scoundrels!). You should ensure that the financial institution and the county recorder have read the WHOLE of section 6331 and understand the definition of “employee” appearing in 26 U.S.C. Section 3401(c), which reads:
26 U.S.C. Section 3401(c )
For purposes of this chapter, the term ''employee'' includes [is limited to] an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term ''employee'' also includes an officer of a corporation.
You can view this section for yourself on the web at:
Your financial institution and the county recorder should also read the definition of "employee" found in 5 U.S.C. Sec. 2105:
(a) For the purpose of this title, ''employee'',
except as otherwise provided by this section
[....skipped a few entries since irrelevant...]
(d) A Reserve of the armed forces who is not on active duty or who is on active duty for training is deemed not an employee or an individual holding an office of trust or profit or discharging an official function under or in connection with the United States because of his appointment, oath, or status, or any duties or functions performed or pay or allowances received in that capacity.
It ought to be clear that only those "public officers" who depend on a privilege granted to the government by virtue of the authority they exercise in carrying their duties are subject to distraint or force in the collection of taxes owed.
Another interesting fact is that the use of distraint in the collection of taxes is ONLY authorized by law for use by the Bureau of Alcohol, Tobacco, and Firearms but NOT the IRS. The parallel table of authorities in the Code of Federal Regulations makes this very plain, in that it shows that the parallel authority for 26 U.S.C. Section 6331 shows the following:
TITLE 27--ALCOHOL, TOBACCO PRODUCTS AND FIREARMS
CHAPTER I--BUREAU OF ALCOHOL, TOBACCO AND FIREARMS,
DEPARTMENT OF THE TREASURY
SUBCHAPTER F--PROCEDURES AND PRACTICES
PART 70--PROCEDURE AND ADMINISTRATION
Following the education process of your financial institution(s), it is necessary to put your foot down by telling them that you will with certainty withdraw your money, close your account, and abandon them if they will not sign a form stating that they:
A simple contract indicating the above that you and your financial institution can sign appears in Form 5.4 for you to reuse. This contract is useful to keep the IRS from stealing your assets illegally with the cooperation and blessing of the financial institution and facilitated by the ignorance of the people working at that institution. In the event that your financial institution won’t sign this contract, then you should immediately close your account and look for a more cooperative institution, because sooner or later, your assets will just magically disappear and you will have to litigate against both the IRS and the institution in order to get them back.
We also have a letter from the IRS posted on our website admitting that distraint (force) may only legally be used against "public officers" of the U.S. government that might help to convince your financial institution of the above. See:
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