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
t =
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
probate court.
.But what about total liability protec-
tion? What about privacy and tax
reduction? Unfortun;l.tely, most trusts
fail in this regard. They fail beeause
they compromise the basic principle
which, lies at the foundation of all
trusts, the tramfer of direct owner·
ship, which carries with it the conse-
quent transfer of liability. Liability
always follows direct ownership. A
trust, transfers direct ownership to an
artificial body, the "corpus" of the
trust. BUt if that transfer is challenged
in court, on the basis of the proper
''fonn''·of-the ,trust, then the liability
may be removed· from the trust, usual-
ly to thedetrirnent of some individual.
Contractual right
, . tract rights impairs contract obligation ister as Siinply "Statutes."
The other broad 'category of trust 18 and is therefore violative of the Unit-
t~t. created by. ,crn~ ripht. .._ed Sbtes Constitution.'.:.
PrivUe~;can De Wlthata:wn, revised
?r~~~bY:~en""giver. But a ~t
18 that whiCh 18 'mcapable of reVlSlon
or modification and cannot be statu-
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:'
"A statement of the rules of law
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-
plied tobtlSihess trusts, yet many of
the rules are not applied, and there
are other rules whicll are applicable
only to-business'-tnIsts. The business
trust. is a',speaaf'kind' of business as-
sociationahdc3n'best be dealt with in
connection with other business associ-
ations."
TheAmerican ~w Institute's clas-
sic mUIti~volurne StUdy oftnlsts fails
even to discuss the irrevocable busi-
.ness~Why? They won't discuss
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
"No state shall ... pass ... any Law It is very irnportant,to construct the
impamng the ObligatiOn of Con- business trust such that'every offiCer
tracts." or party' of interest has a contractual'
That section of the ConstitUtion pro- relationship to the trust; otherwise,
vides, in a nutshell, the sum strength the protection of the contract" is lost.
and structure of the lITevocable Pure The trustees must be appointed and
Business Trust. Any other position must accept their position by.contraCt.
serves only to weaken the essential The business manager must be con-
nature of the business trust. Indeed, tracted in the 'same 'manner. ' Every
the Courts have roled that: party in interest must have some kUld
"A pure trust is not so much a trust of contractual relationship with·the
as a contractual relationship in trust business trust. Ifthe.trust-shCiuid ever
form." once partake of the priVileges. ·iur6td-
(Berry v. McCourt, 204 NE2d 235) ed by legislatively granted ~nci~s,
then it will compromise lheStrength
The right to contract is protected, of its own P9sition. Granted, statutes
as we have pointed out, by the COn- rarely directly address·tru.st8;:but; for
stitutio~ ,
convenience to the reader, let U:8, for
"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-
operation, denying or obstructing con- lationspuBlished'ip th~-Federal Reg-
Now we know that business trusts -
(common-law contract.u3l trusts) are-":-
(Smith v. Morse 2 CA 524) created by contract. But ifthoSe t:ru:rts
and again: ' which are cre¢ed'by.etmi:ractever par.
,. .
'The nght to create the Busmess take ofthe privilegesgra:rtted trusts'.lnI
lishing It. the "Legislature," and they'lose the
(Gleason v. MacKay, 134 Mass, 419) (please turn to 'JX1{#1 +4)
....
e Survilior'$';I~Q1MN,eds
Analjris
eEducational,pruuJing
e F-edemllMiJm~: Tu
Estiinidor
.........~..... e EstauoPltmiling
e RetinJTunt Plimning
eDUti/liIfty Incomihuzlym
e Ctuh Flow-Analym
-OPTIONAL GRAPHICS SUPPLE¥-~,~! A'!'.M~'.~~-
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:

o( lIatulC$ arc cot\St:lnlly ch:lnginll
JllV "'il::t 11Ilet "~IS aCl:t.:pclhle sud, .OIg<l(\iz~IlQtLJIT.Q, ..Jil~,HlIcJIY$ellS
uel\'ly no lonser i$. Chanccs ~re you
"'iil :101 (,nu lIul :l1~l,lwlhe'L'h~nscs
"r.lil lite momcnl IVhc.:n you ~ie
:;(;:13 hUll hy lhc.:m. " meLS ~re owned 3bsolult:ly by ~n
Wi;h) S',I~I.\!Wry Tru.~t, ~ tNst
~'r:::en vnocr lh~ SI~IUIC Ja,,'S or ih~
51:;c ~nd lhe Inlern,,1 Revenue
('-.ie. rou Jre under Iht.:ir jurisdic,
lien. You hJv~ to hc con.mnlly
;''';re of "'h~l Jillhe 'rulc.:s',con·
cernin~ IhCJ,c lru,$,~\ ~(e. ,',
,\ ll"Ji~ ivlt' ii( Ihumh hCllVeen
1:;:Ute I: ... :n<.l c,t.J!n;nM I~:'V i$lhis;'
lJuslncss
Org:lniz:ltion, UOO, B),I~lne$.l TNst
TrusI, Conslitullon31'Trust, Pure
TI\J,\t, Contr.l~lional TN.\ll, L\ 10 sec
it ~s ~ Ihre.:e p~rty conlrJct IVIlt.:re
indivitlu~1 who put~ them in lhe
condltion~1 olVnershlp or ~nolher,
the lNSlee, who m~n~gcs or con·
trots them "'hile 'lhey ~re In lr~t\Sil
10 the evenN~1 OlVncr, Ihe INSt cer,
liIit31e holdJ:~, i.c.thc bcnenci~r~es.
A sllllple eX:lmpl( or ihi$ Is ~ . o( lhe II\Jst ~re 'Wc Ihe People.'
Parcel Scrvice. You lVisli 10 senu 3
p:lcbge. You pUl lhe p~.cbge
_
c1i:i.t, -tl':.l/S~iJ;(llop~ilr ~;n ploie~l,
House or neflrc1Cnt~tlves. The ro~'r ~sct$: i~Jul(:your prlt:;Icy~'
conlr~ct c~l/s,rur ~ 8ener~lll\:Inscr, ,elimln:lilf'jirob:fle-ltOd ~s,~11e; 9:<;s.!
which Is ~he execulive br~nch, ~nd :lnd orrer ')'ou ltre~lcr CIX s~vinll.l. .. , ,
:1 proleclor, IVhlch Is the Suprc.:me:
Court ~nd lhe judlci~ry, IVho c:ln
stop thc tMlees rrom gelling 100
(:l( out o( o(der. The IMt would
(~il ir aI/the tMtces-terms' cXl'ired
~I Ihc ,~11I1l1: lillle, so Ihe Omoton
renew ihe.: lruSI every (ew ye~rs
«(lre 171h Alllcndment) by ~ppoint.·
Inll nelV IN.llees. The benenci~cies
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
<':v. CUlr.mon~l~iv·is IIt~t'-1Vhidl telll
rou un:1 you '':lnnlll <.10.
For cx:mplc, 'Yuu mU.'1 "slsler
rO~( cr. You mUll hJve in$ur3nce.
)'c:u m~ll h~\'c J vrjy«(.\ licence.'
:r.(J( ;re IC'Nte Iws.
. You KlU.\1 not lie 10 ~ court.
You rr.~ll nOI llcai. Yuu must not
ii!l.· rr,= :tiC common lalV.I.
inlo lhe c~re ~nd Irusleeslilp of
the uellv:ery .lerv/ce, IVho lhcn
u,livers it lCl Ihe hene(jci~ry, Ihe.:
~ddres.lee. A IrU.II JUS I pUiS ccrtaln
~sscu 'In lr3nsll.'
TIle Common ~IV IAMt had iL\
be innin s In E'n bnJ'lli lhe cfGh.
I«nul cenNry. n Ilal en, when ~
I~nd olVner cJied; ~II o( hL\ hCJldinl:o~
,,",ould re.:vc.:rt to Ih(: CrolVn, 1l.1~vlnR, C:ln he org~nlzed. No one h~.\ ICll~I_.
OlVn? whcn you crealC ~ l(u.\t (~
1'l:~1 COlllr3Cl dc.:1igncd to hllid your
~.\'~eIS undcr Ihe IUfle.:rvislon CJ( ~
IOLIle.:I:) ynu ~re ~'rclilins ~ ,.~P:Jr.Ile.:
lel:~1 c.:ntily Ih"t 1m ILl olVn cum,
mon 131V Idenlity ~nd rishL\, nut
flrivilelles lh~t t3n be revokecJ.
The.:re ~re no JI~IUles directing _
hnIY or why ~ commnn lalV lru.~t_
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,
Social Security Cards, banI: cards,
. o.s.mcs in all~pitai~~·co~;ce; ~~
aDd even (jeot money .::: ~~ tcliins how
·auoy devices riiigni DC ·iis:c~ tO~mQ;~~:
.·(r·om- the status- OO( '(reemen' in the
··'Union usA' io subjecis a~(j" ~itiiens
of ilie·corpora-te 'United States'.
• A number o( Amendments,
~pecislly the 16th (income tax), were
nO( law(ully ratified. Another called
'-'-Ulc·'i:i1is·sing' I-j·til(iitles of nobility)
was probably ratified in 1819 and later
remoye;d illegally from the Constitution
near the end of the Civil War. Under
the Union and 'Constitution for the
United States of America', these
improper ratifications and deletions are
tre.!.SOnous; but under a corporate U.S.
aod 'Constitution of the United
State>', these acts might be
uoremarkable examples of
administrative procedure (corporate
rules).
• As a public servanl of the
Uoion USA, government could never
sign a treaty with a foreign power that
imp.sired the rights of Union members.
Howe ver, as corporate agents,
diplomats eould enter into treaties that
!.re legally binding on their principal -
th< .;orporate U.S. government - even
if those treaties violated the
Constitution (or the Union USA.
• The income tax would be
.!::.andat?ry for government-c~
corporations and artdlclal entitles, but
- oalyvoluntary fCi(Union members who
might want to ' help' the corporate U.5.
(as ruppened with the 'Victory Tax' of
\\'V.'II). This might also explain why
the Supreme Court ruled that the 16th
Amendment granted 'no new powers'
lD goyc:rnment- maybe they meant 'no
new powers' to the public servants of
me Union USA, while at the same time
·tlierbtfiha"dii1assive administrative
implications for the corporate citizeos.
of the U.S .. .J
"AS flesh and blood members of
the 'Union USA' we have God-given
rig.lu.s; as subjects! citizens of corporate
·U.S.', we have only government-
grarll.cd pri vileges.
Corporate citizens are
artificial persons who enjoy privileges
only after the moment of birth and
corporate certification. Therefore, Commerce, Defense, State,
under the corporate U.S., fetuses and Transportation and Veterans Affairs -
embryos are disposable non-entities these are, presumably, the 'legitimate"
who can be legally aborted. However, components of government. That is,
since the fundamental requirement for these forty-eight organizations might be
Union membership is flesh and blood, composed of "public servants'
we are each members of the Union operating government for the benefit of
USA and fully endowed with our God- the Preamble's "Union", Mal-b.__-.....__
givenrlgh·t; to 'life-, nbe;'·ty, aiia·the But in that same Governmenl
pUrsuit of happiness' (rom the moment Manual, under the sub-heading
ofconceplion. Within the Union USA 'Independent Establishments and
and according to 'Constitution for the
United States of America", abortion of
~ __ ._._-_._-
Government
... Corporabons·, there·ire
si::rty-Iwo "organizations". Among
any Oesh and blood member is murder. these sixty-two Independent and
(Is the 'absurd' correlation Corporate entities are the CIA, EPA,
between evil and artificial entities EEOC, FCC, FDIC, FEMA, Federal
beginning to seem more plausible?) Reserve System, GSA, NASA, OSHA,
Peace Corps, SEC, TVA, the U.S.
Prob'ly No< So, But .... Arms Control and Disarmament
Intriguing hypothesis, hmm? Agency, and the U.S. Post Office.
But still too fantastic to be easily These organizations are not precisc:ly
believed without a lot more research 'part of" the government; Instead they
and analysis. Therefore, I concede my -are agencies of the executive branch of
hypothesis (that America was intended government, which operate principally
to be a Uoion, but is instead being as corporaliOllS.
'administered' as a corporation) may So has our government
be false. Still, even if there's not a incorporated into a single artificial
single government corporation, it is entity? Maybe not. But has our
undeniable tbat an unaccountable Union's government (intended to
corporate culture is festering in include only public servants) evolved to
Washington D.C. - include a host of agents and artificial
If you examine the Contents of entities with limited liability who serve
The United Slates Government Manual government rather than the people of
(published annually by the Office of the the Union called 'The United States of
Federal Register, National Archives America"? Absolutely.
and Records Administration), you'll sec As a result of this growing
forty-eight government "organizations" corporate presence in government,
listed under the Legislative, Judicial, there are a lot of surprising similarities
and Executive branches of government. between the way our current
Among these forty-eight government government seems to operate (in open
organiutions are Congress, the General defiance to the Constitution USA), and
Accounting Office, the Supreme Court, the way a hypothetical single corporate
the National Security Council, and the government might operate - if it truly
Departments of Agriculture, existed.
-
SOURCE MANUAL FOR THE ACTIVE PATRIOT
S35.00 CASH OR MONEY ORDER ONLY
" The Christian Founding Of The U.S.A.
• The Iocome TaJ: Caonot Be Applied To Property Including Labor, Wages,
Occupations, Professions, Trades, Employments.
• Banks Can Loan Money Not Credit.
• Lawyers Not Licensed By States.
CITIZENS LEGAL ACfION SERVICES
POST OFFICE BOX 3Q9, FARWELL, TEXAS 79325
11
 _ •• '1'
2 By Larry Becraft with adaptations by Mark and Tina Terry
C
~ Open Letter To IRS Commissioner
III Dear Mrs. Margaret M. Richardson,
I have been searching fot many years to
find, within U.S. Code Title 26, the Internal
Revenue Code, the section(s) which created
your agency, the "Internal Revenue Service,"
but I have been unable to find it/them. I
decided to research and locate whatever
other sources of information I could regard-
ing how the "Internal Revenue Service" was
established; what my research has uncov-
ered is astounding and bizarre. Here are
some of the things which I have found:
In 1972, an Internal Revenue Manual
("IRM") 1100 was published in both the
Federal Register and the Cumulative
Bulletin; see 37 Fed. Reg. 20960, 1972-2
Cum. Bul. 836. On the very first page of
this statement published in the bulletin, the
following admission was made:
"(3) By common parlace (sic) and understanding of
the time. an office of the importance of the Office of
CQmmissioner of Internal Revenue was a bureau.
"The Secretary of the Treasury in his report at the
close of the calendar year 1862 stated that 'The Bureau
of Internal Revenue has been organized under the Act of
the last session.. .' Also it can be seen that Congress had
intended (0 establish a Bureau of Internal Revenue. or
thought they had. from the act of March 3, 1863. in
which provision was made for the President to appoint
with Senate confirmation a Deputy Commissioner of
Internal Revenue 'who shall be charged with such duties
in the bureau of internal revenue as may be prescribed by
the Secretary of the Treasury. or as may be required by
law. and who shall act as Commissioner of internal rev-
enue in the absence of that officer. and exercise the priv-
ilege of franking all leners and documents pertaining to
the office of internal revenue.' In other words. 'the office
of internal revenue' was 'the bureau of internal revenue,'
and the act of July I, 1862 is the organic act of today's
Internal Revenue Service."
This statement. which appears again in a
similar publication appearing at 39 Fed.
Reg. 11572. 1974-1 Cum, Bul. 440, as well
as the current IRM 1100, essentially admit
that Congress never created either the
Buteau of Internal Revenue, or the Internal
Revenue Service. To conclude that "it can be
seen that Congress had intended to establish
a Bureau of Internal Revenue. or thought
they had" (see IRM 1111.2 - Exhibit A)
(Emphasis added) is an admission that even
the government itself cannot find anything
whatsoever which actually created either
agency. The only office created by the act
of July I, 1862, was the Office of the
Commissioner; neither the Bureau of
Internal Revenue, nor the "Internal Revenue
Service" was created by any of these acts. I
am enclosing a copy of IRM 1111.2, marked
Exhibit A, for your convenience.
I have no doubt that, when the employees
of the "Internal Revenue Service" were
researching the origins of the so-called
agency so that this statement could be
included in the IRM 1100, that these
employees must have performed a very
thorough and exhaustive investigation, I am
sure that the position of the "Internal
Revenue Service" regarding how the alleged
"IRS" came into being is the best that can be
written under the circumstances.
However, besides the problem that these
acts simply did not create either the Bureau
of Internal Revenue or the "Internal
Revenue Service,", there exists the fact
these acts were repealed by the adoption of
the Revised Statutes of 1873. Therefore, it
would appear that your "agency" has never
actually been created by any act of Con-
gress. This is obviouslY a serious flaw.
I have also found the following statement
in the Federal Register Vol. 41, Sept. 15,
1976:
"The term 'Director, Alcohol, Tobacco
and Firearms Division' has been replaced by
the term 'Internal Revenue Service'."
A copy of the instant Federal Register is
enclosed herein and marked as Exhibit B
for your convenience. What this says to
me is that "Internal Revenue Service" is, at
least in this case, simply another name - an
alias, or, as the Federal Register clearly
states, a "term" - for the term "Director,
Alcohol, Tobacco and Firearms Division".
which is itself (as stated) a term, and not an
agency which Congress has ever created.
In addition, I have looked in 31 USC,
Chapter 3, at the list of Organizations of the
Department of the Treasury, only to find
there is no "Internal Revenue Service" listed
there as an organization of the Departm'erll
of the Treasury.
Further research reveals that there is no
"Internal Revenue Service" listed as an
agency, or even a term, within any of the
organizations listed in Chapter 3. A copy of
31 USC Chapter 3 is enclosed herein and
marked as Exhibit C.
("p~n~11l ")<)(, \1.',11., II~I'·I" \1.1~.I/lII<
Furthermore, I have found in 27 USC @
250.11 (copy enclosed herein and marked
Exhibit D) that the definition of "Revenue
Agent" is given as:
"Any duly authorized Commonwealth
Internal Revenue Agent of the Department
of the Treasury of Puerto Rico,"and that the
definition of "Secretary" is given as: "The
Secretary of the Department of the Treasury
of Puerto Rico."
So there apparently exists another
"Department of the Treasury" -- in Puerto
Rico. Is "Internal Revenue Service" found
somewhere in the Department of the
Treasury of Puerto Rico, since it isn't found
in the list of organizations in the Department
of the Treasury in Title 31, United States
Code, or within any of those listed organi-
zations?
Finally, I have found at 48 USC @ 1402
(copy enclosed herein and marked as
Exhibit E), the following:
"Title III of the National Prohibition Act,
as amended and all provisions of the inter-
nal revenue laws relating to the enforcement
thereof, are hereby extended to and made
applicable to [Puerto Rico and] the Virgin
Islands ... "
I find still further, in the same section,
under History, Ancillary Laws and Direc-
tives.
"Title III of the National Prohibition
Act", referred to in this section, is Act Oct.
28, 1919, ch 85, Title III, 41 Stat. 319,
which was generally classified to 27 USC
@ @ 71 et seq. prior to supersedure by the
Internal Revenue Code of 1939, and subse-
quently by the Internal Revenue Code of
1954."
The previous statement says to me that
Title III of the National Prohibition Act was
classified through several stages to the
Internal Revenue Code. That conclusion is
supported and confirmed by the following,
found in the same section:
"The internal revenue laws", referred to
in this section, are located generally at 26
USCS @@ I et seq."
Mrs. Richardson, as you know, 26 USCS
is the Internal Revenue Code, and" @ @ I
et seq." means: "Section I and all which fol-
lows it."
In other words, this cite from Title 48
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
of truth upon this enormou s deceptio n that
is explaine d below in a letter I sent our state
Attorney General.
About eighteen months ago a client
explaine d to me that there was a problem
with the Internal Revenue Code. Ire·
sponded that while it was quite confusin g,
when it was traced from beginnin g to end
that it was cohesive and legitimate. He dis-
agreed, and challenged me to locate a sec-
tion in the code t~a~ reqyired ordinary
._p..~pJe to file I04Q returns to theIRS.
One morning I had a few minutes free
while in the law library, and opened title 26
of the United States Code. Assumin g that I
would find the answer immediately, I did
not bother to sit while skimmin g the stat-
utes. To my surprise, the answer was not
readily apparent. I spent the entire next two
days looking for the elusive section.
Somewh at nervous that there might
not be such a section, I contacte d CPA's,
lawyers, tax attorneys, the IRS, and finally
wrote my tax professor. None could show
me the section. The best answer I received
was, that by implication, section 6012re-
qUiredpe-opletofil;-Byimpii~ati;~?B-'y Whigs in those days
'. imprrcation,\V~~hingi()I1St~te' ~i'tiz~~ iI'ave refused to pay the
gone to jail for failure to file 1040s? This is
tragic.
I realize that I am attempting to prove which got the attention of Parliament be-
the negative, which is tedious and unreward-
ing. Perhaps someone on your staff could
spend enough time to show me the author-
ity that forces ordinary people to file returns.
I doubt it can be produced.
As I looked into the issue of duty to
file 1040's, I found that the IRS has inten-
tioll~.!JLrnisciassified many o.(~;Ycli;rtl;·;S­ House of Burgesses. Court fees
. -coal mine'fs,'firearms deaie~s et cetera: and" by a statute that had a sunset clause in it
.-a~dthemas;w.,ing ~xcise taxes'.'-WhY·
~XClSetaxes'; Iwoncte rea; and -disco~ered
that the IRS has no authority to seize prop-
erty for income tax liabilities of ordinary
people, but they do for excise tax.
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
I now understand how Galileo must
have felt when he claimed the earth was
round. Nobody wants to hear the truth. I
. ha~~~_~~t..~<:.~~!S~_the ~~.~.:vith __
.~~Ient, deceP!i~!:. oQer~.tiol]!..!"ithin _ those agents that the unlawful action of
WashIngton State, and I ask your office to
. TiiVestigateTtforthwith. I would be happy
to meet with you at any time to discuss my
position, and will gladly present you with
documen ts to substantiate my claim.
As I delved into this fraud, I became a
student of history and learned that there are
really only two political philosophies. One
that looks out for the rights of the people, such
as the Whigs of the American Revolution. The
other protects the rights of rulers, such as the
Tories of the same period. Today, we have
many Tories, and few Whigs.
The Bar Association can combat this
fraud. We have the people, the position
within society, and a proud history behind
us. In 1765, the British Parliament passed
a dreadful Stamp Act. It was the first time
on our soil that the Tories attempted a di-
rect taxation of the colonists. The tax re-
quired a revenue stamp be affixed to most
legal docume nts. Lawyers were mostly
and they collectiv ely
tax because it violated
people's rights. In Virginia, the bar closed
down the courts entirely by boycotting them,
cause the British merchants were unable to
collect debts without courts operatin g in the
colony. The Stamp Act was repealed.
Again, in 1774, the Virginia courts
closed. This time it was not because of a
repressive act by Parliament, but the royal
governo r, Lord Dunsmo re abolishe d the
were set
and it expired. Since the elective body was
terminated, the law could not be extended.
Lawyers were not paid, so, again, for a less
idealistic purpose than in 1765, the courts
in Virginia had their doors shut.
ANTISH YSTER
www.antishyster.com
Today, the public is learning at a rapid
pace of the IRS fraud. Those who learn of
the fraud have lost respect for the courts,
the judges, and the bar because it is through
the
IRS continues. Nobody who learns of the
fraud forgets about it. The principles that
drove the Revolution were Whig principles,
which stand for people's rights and truth.
The Whigs have started rolling a snowball
of truth and set its course to crush the fraud.
or be melted into oblivion by lies from hell.
The IRS is playing a diabolical game
of deceptio n and thuggery. I call upon the
bar to investigate my claims, and if they be
unfound ed, then I am thoroughly deluded,
and have no business practicing law.
My several petitions to State Attor-
ney General Christine Gregoire have accom-
plished nothing. Recently, I appealed to the
governo r of the state, and in fairness, he has
not had sufficient time to respond to my two
letters, so I am uncertain whether his office
will take the matter seriously.
What I can say, however, is that the
common ·law courts you wrote about are a
symptom, not a cause. The cause is the
America n Governm ent was founded upon
Whig principles, and the Tories have been
eating away at people's rights since 1783.
My research reveals that the some of the
dirtiest work was done in 1803, but horrid
frauds have readily followed those from
1803. It appears that the only way the To-
ries could succeed in corrupting the Ameri-
can system was with lies. As George Wash-
ington and Thomas Paine both warned us,
when a wolf knocks at the door, he is easily
identifie d and ejected, but when a wolf in-
filtrates and wins the confiden ce of the
sheep, he can be devastating.
I offer this plea: Have the Washing-
ton State Bar Associat ion conduct a thor-
ough investigation of the IRS and its au-
thority by public hearing. You will be
amazed how fast the people will flock to
the support of the bar in this endeavor. I
49
fear that if we of the bar do not attack this
matter, that the people will take the examples
of 1765 and 1774 Virginia, and close down
the courts. The common-law courts show
us that this has begun. Time is running out,
and the snowball of truth may mow down
the entire bar. It will not be a pleasant task,
but we can support the truth and energize
that icy sphere and vanquish the lies.
Sincerely,
Steffan M. Bertsch
*****
June 26, 1996
Mr. Edward F. Shea
President
Washington State Bar Association
1816 North 20th Avenue
Pasco, Washington 99302
Re: Complaint Regarding Illegal Seizures
of Property by IRS
Dear Mr. Shea:
I wish to thank you for responding
to my several letters of complaint regarding
the Internal Revenue Services illegal sei-
zures of property in Washington State by
your letter of June 20, 1996. As you stated,
my petition to the Washington State Bar
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Association was an exercise of my free
speech, but it encompasses much more of
the First Amendment than that. My peti-
tion was made to attempt to find redress for
grievous wrongs, and further, it was made
in the idealistic hope that truth was still a
commodity that lawyers cared about in
America. I think that your dismissal of my
complaint is unfair to the individual mem-
bers of the bar. Each member deserves to
know that he or she is acquiescing to fraudu-
lent seizures of property by the IRS.
Your recommendation that I present
my "accusations" to the Department of Jus-
tice and the United States Attorneys of the
Western District of Washington State is dis-
couraging. My petition was to the bar be-
cause the United States Attorneys and the
Department of Justice are too close to the
source of the fraud to be objecti ve. The bar
is supposed to be an independent organiza-
tion and not subject to undue influence or
control by the executive or legislative
branches. I had believed that the bar would
be concerned about my charges of massive
fraud.
It was with great trepidation that I pe-
titioned the bar association, knowing full
well that my charges of fraud, if investigated
by the bar, would shed light that would be
devastating. There are lawyers whose for-
tunes and liberty will be stripped when the
truth is told. However, I know that the vast
majority of the members of the bar are ethi-
cal and honest, and I know that when the
evidence is presented, those members will
support the truth. The bulk of our mem-
bers are ignorant of the fraud, and are truly
victims of the IRS scheme.
Since, from your response, I must as-
sume that the bar will not conduct an Inves-
tigation into the allegations of fraud, I wish
to propose an alternate method to eliminate
ignorance and educate the members of the
bar. I will volunteer my time, prepare a
seminar, and present it at no cost if the bar
will accredit it for CLE and advertise it to
the bar members. I will gladly give U.S.
Attorneys, the IRS, or any interested par-
ties an opportunity to assist in the prepara-
tion of the materials, and ample time to
speak at the seminar to rebut my charges.
Then, after a full discussion of the issue,
the bar members can decide whether the IRS
seizures are lawful or illegal.
I would appreciate a prompt response
to my proposal.
Sincerely,
Steffan M. Bertsch
**** *
ANTIS HYSTER
www.antishysler.com
;'
On July 2. 1996. Bar President Shea
responded to Mr. Bertsch:
I believe my suggestions that you take
this matter to the United States Department
of Justice in Washington D.C., and to the
United States Attorney's Office for the West-
ern District of Washington were and are con-
structive. I continue to believe in the integ-
rity of the United States Department of Jus-
tice and its regional offices of U.S. Attor-
neys to pursue justice wherever the facts
may lead. Finally, there are no end of op-
tions that you have as an individual practi-
tioner and as a citizen including contact with
members of the congressional delegation
about your concerns.
Sincerely,
Edward F Shea, President
* •• * •
Apparently. the Washington State
Bar will not help provide a public forum in
which the legitimacy of the IRS might be
questioned. confirmed, or denied.
M r. Bensch had also shared his con-
cerns about the IRS with Christine O.
Gregoire. Attorney General of Washington.
at PO Box 40123, Olympia WA 98504-0123.
On April 30. 1996. a Washington State As-
sistant Attorney General Tff!sponded with an
excellent example ofthe government's stan-
dard "analysis" (justification) of income
tax and the general population s obligation
to file and pay. The underlined texl is pro-
vided by the AGs office.
Dear Mr. Bertsch:
Your letter of March 15, 1996, to the
Attorney General has been referred to me
for reply. In your letter you raise some con-
cerns you had about perceived problems
with the Internal Revenue Code. Briefly
summarizing, the issues you raised were:
(I) whether there was in fact a code
section requiring people to file 1040 returns
with the Internal Revenue Service;
(2) whether Section 6012 of the
Code can be read as requiring people to file
tax returns;
(3) whether, in the absence of provi-
sions requiring individuals to file, Washing-
ton citizens may have gone to jail for fail-
ure to file a 1040; and
(4) whether the Internal Revenue Ser-
vice has authority to seize property for the in-
come tax liabilities of Washington citizens.
I have received a second letter from
you in which you allege that the IRS has
abused its power, and express a number of
Volume 6. No.3
 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
the Secretary may from time to time pre-
~. Whenever in the judgment of ~
Secretary it is necessary, he may require any
~, by notice served upon such person
or by re2ulatjons. to make such returns. ren-
der such statements, or keep such records,
as the Secretary deems sufficient to show
whether or not such person is liable for tax
under this title.
26 U.S.c. 6001 (emphasis mine). As
you can see. Section 6001 not only requires
every person liable for any tax to file, but
also authorizes the Secretary to promulgate
regulations requiring that people file to show
that they owe no tax, if that is their conten-
tion.
The details of the requirement to file
are further explained in Sections 6011 and
6012, which provide in relevant part:
Section 6011. General requirem ent
of return, stateme nt, or list.
(a) General rule. When required
by regulations prescribed by the Secretary
any person made liable for any tax imposed
by this title, or with respect to the collec-
tion thereof. shall make a return or state-
ment accordjn2 to the forms and re2u!ations
prescribed by the Secretary. Every person
required to makea return or statement shall
include therein the information required by
such forms or regulations.
***
(f) Income, estate, and gift taxes. For
requirement that returns of income ... be
made whether or not there is tax liability,
[see 6012, below].
Section 6012. Persons required to
make returns of income.
(a) General rule. fulli!l:M with respect
to income taxes under subtitle A ~
Ill.Mk by the following:
(I)(A) Every individual having for
the taxable year 2ross income whjch equals
or exceeds the exemption amount .... ,.
26 US.c. 6011. 6012 (emphas is
mine). You will see that Section 6012 leaves
no doubt that anyone with gross income
above the exemption amount must file a re-
turn for each taxable year that such is the
case. This requirement is made even more
explicitly in Section 1.6012-1 of the Code
of Federal Regulations (CFR), which pro-
vides in pertinent part:
Section 1.6012-1 Individ uals re-
quired to make returns of income.
(a)( I) An income tax return must be
filed by every individual for each taxable
year ....
Section 6011 mandates that people
comply with regulations set out by the Sec-
retary with respect to the forms used when
filing their returns. As you can see from
paragraph (6) of Section 1.6012-1 of the
CFR. the regulation also makes the Form
1040 the default form to use for filing pur-
poses, unless one can qualify under an op-
tional (usually shorter) form. In any case.
every person is required to file a return and
to use the mandated forms when doing so:
(6) Form 1040 is prescribed for gen-
eral use in making the return required un-
der this paragraph. Form 1040A is an op-
tional short form which may be used by cer-
tain taxpayers.
As you seem to be aware, the penal-
ties for failing to file can be somewhat se-
vere and can include both fines and impris-
onment. Section 6651 of Title 26 of the
Code first provides for monetary penalties,
usually a percentage of the tax owing, where
someone fails to file a return:
Section 6651. Failure to file tax
return or to pay tax.
(a) Addition to the tax. In case of
(I) to file any return required un-
der authority of subchapter A of chapter 61
[which includes sections 6001. 6011, and
6012, above], on the date prescribed there-
for .. , unless it is shown thaI such failure
is due to reasonable cause and not due 10
willful neglect, there shall be added to the
amount required to be shown as tax on such
return 5 percent of the amount of such tax if
the failure is for not more than J month,
with an additional 5 percent for each addi-
tional month or fraction thereof during
which such failure continues, not exceed-
ing 25 percent in the aggregate.... In the
case of a failure to file a return of tax im-
posed by chapter I [normal income tax]
within 60 days of the date prescribed for
filing such return. unless it is shown thaI
such failure is due to reasonable cause and
not due to willful neglect, the addition to
tax under paragraph (I) shall not be less than
the lesser of $100 or 100 percent of the
amount required to be shown as tax on such
return.
** *
(f)Increase in penalty for fraudu-
lent failure to file. If any failure 10 file any
return is fraudulent, paragraph (I) of sub-
section (a) shall be applied -
(I) by substituting "IS percent" for
"5 percent" each place it appears. and
(2) by substituting "75 percent" for
"25 percent".
26 U.S.c. 6651 (emphasis mine).
Where the failure to file is willful. more se-
vere penalties may result. Section 720 I of
the Code provides:
Section 7201. Attemp t to evade or
defeat tax. Any person who willfully at-
tempts in any manner to evade or defeat any
1.aA imposed by this title or the payment
thereof mau, in addition to other penalties
provided by law, be guilty of a felony and.
upon conviction thereof, shall be fi ned not
more than $100,000, or imprisoned not more
than 5 years, or both. together wilh the costs
of prosecution.

Volume 6, No.3 ANTISH YSTER

www.antishysler.com 51
 26 U.S.c. 7201 (emphasis mine). See
e.g., H.i. McClanahan Est. (95 TC 98, Dec.
46,743), where a physician's failure to file
tax returns constituted a statement of zero
tax liability and triggered penalties for fail-
ing to pay taxes.
Section 7203 of the IRC makes ex-
plicit that willful failure to make a return
can also result in fines and imprisonment:
Section 7203. Willful failure to
file return, supply Information, or pay
tax. Any person reQuired under this title to
pay any estimated tax or tax, or required by
this title or regulations made under author-
ity thereof to make a return, keep any
records, or supply any information, who
wjllfully fails to pay such estimated tax or
tax, make such return, keep such records,
or supply such infonnation, at the time or
times required by law or regulations,~,
in addition to other penalties provided by
law, be guilty of a misdemeanor and, !U2QIl
conviction thereof, shall be fined not more,
than $25,000, or imprisoned not more than
I year, or both, together with the costs of
prosecution.
26 U.S.c. 7203 (emphasis mine).
For an excellent case on what constitutes
"willfulness," see Cheek v. United States,
498 U.S. 192,1 J2 L. Ed. 2d 617,11 I S. Ct.
604 (1991).
I hope this answers your concerns reo
garding the source of the Internal Revenue
Service's statutory authority to require
people to file tax returns and to promulgate
regulations regarding how such filing should
be done. I further hope I have answered
your questions regarding the power of law
enforcement officials to execute their du-
ties in upholding these laws, even if it reo
quires that those who willfully disobey the
Jaw suffer criminal prosecution.
Very truly yours,
sf Leland T. Johnson,
Assistant Attorney General
PROTECT YOUR PRIVACY!
P.O. Boxes and mail drops leave a trail. We forward your
mail, phone and fax messages, directly to you, out of
town or state. No government information required!
All information kept strictly confidential!
For details, call 501-785-3424
52
*****
On May 7, 1996, Mr. Bertsch re-
sponded to Assistant Attorney General
Johnson with a remarkable analysis of the
Internal Revenue Code. Note the personal
trauma al/orney Bertsch experienced when
hefirst realized the IRS was a massivefraud.
It's not easy for a lawyer who truly believes
in the legal system to discover that system
is cowardly and corrupt.
Dear Mr. Johnson:
I have read your letter of April 30,
1996, and wish to thank you for taking the
time to research the code to attempt to an-
swer my questions. On the surface, your
response seems full, complete, and to vin-
dicate the activities of the Internal Revenue
Service in Washington State. However, as
with any fraud, what you see' is often not
what you get.
I will not attempt to display all of the
fraud in this response, but only show you
pieces of how it works. 1 hope that after
reading this, you will grant me a meeting,
at which I will present as much or as little
evidence as you wish to view about how
the fraud works against almost every Wash-
ington State citizen.
Title 26 of the United States Code
operates much like a mirror image. When a
person with no knowledge of reflections first
views himself in a mirror, it appears that the
image is an identical representation of him.
When he jumps up and down in front of the
mirror, his image behaves likewise, and
again, it looks to be a perfect representa-
tion. But, when he extends his right arm,
he receives a clue to how the mirror distorts
reality. The image in the mirror appears to
extend its left. And as he examines the im-
age closer, he notices that all lettering is reo
versed. The explanation for the IRC in your
letter would be precise and accurate if the
IRC were not a mirror.
But, alas, a mirror it is, and its image
is often 180 degrees afoul of reality. The
ANTIS HYSTER
www.antishyster.com
.'
code absolutely represents the authority of
the IRS over everyone who jumps up and
down before the mirror, but it imposes no
control over those who move side to side.
The code, at first glance seems to cover those
moving side to side, but on close inspec-
tion, it controls them not.
I realize this sounds strange to you,
because you have been reared under the con-
cept that the Income tax is a lawful tax. You,
like most Americans, have naively accepted
that our government stands for truth, and
you have been educated as to its legality by
people who were probably naively ignorant
of the facts, unless, they were active par-
ticipants in the fraud. And, you have not
considered an investigation of its lawful-
ness. Why would you question what tax
attorneys, CPAs, and law professors tell you
is fact? I did not until most recently. And
after discovering the fraud I fell into depres-
sion, followed by rage, and, finally, landed
where I am now, at the point where I hope
to correct the fraud. I know how difficult
my task is. It is an adage that if you hear a
lie often enough, you will believe the lie to
be true. The IRS lie has been oft repeated,
and oft believed.
The c0.9~~.QPlies to a select group of_
.'y~~p~Those who are absolutely subject
to the income tax portion of the IRC are fed-
·~l<rye~s .. Federal employees jump
· up and down in front of the mirror. Those
who are not, by and large, are people who
are employed otherwise, the people who
move side to side and are deceived into
thinking they are covered by the IRC. A
Washington State Attorney General, for in-
stance, moves side to side.
The deception is thorough, deep and
wide. The IRC is a car~[1J!1y-cr~n~ se.t-Q.f
statut~~liT1edWTth~a'rds of art and ;nar.es .
t;;-catc1J- the naive. To und~~~ta~d·~ho it
cover;:-onemustnot assume even the mi-
nutest detail. Since you started with Sec-
tion 600 I, it should be addressed first. Bear
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
in the reporting sections such as 6001. The
heart of section 6001 is "Every person li-.
· able for-any tax.....:~· The myste'ry is-to find
· the sections· that' makes such a "person" li-
able. Under the code, persons include cor-
porations.
As you pointed out, Section 6012
says: "Every individual having for the tax-
able year gross income ..." One Issue is,
quite simply, "What Is income?" Do not
reach any con~hJsio~~that;ake·You jump
Volume 6, No. 3

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,
the IRC does not define the word "income"
. 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,
yet the IRS and the IRC never define the tenn.
In the sixteenth amendment to the Constitu-
tion is the language: "The Congress shall have
the power to lay and collect taxes on incomes,
from whatever source derived ..."
It is from this sixteenth amendment
that the Congress s~emstoiiave theauthor-
.!!t!o~ix .~ag~s"earn'ings,'~,~d all manner
of gains made by Americans. However, "in-
come" is not detined in the Constitution,
nor in the IRe. In Eisner v. Macomber, 252
U.S. 189, income is defined as "gain" or
"profit". On~QL~~sess a gain witho~t
first taking-into account -thec~"Sts'Of acquir-
.fiJh~~~,i.ri:-f~ij 'is' b~~i~,~~~~c~,~~ting~, ,"
Yet, Section 6012 deals with gross
income in an attempt to bypass Macomber
for subtitle A respecting income taxes. As
stated earlier, income isnet gain but the IRC
~vams yoiJtOtTllnklllatall reven~e;'a;ei~~
'.co,m< 'thiS is violative cifiilac countir ii
principles. The sixteenth amendment allows
taxes on incomes, or gains. Where do you
s~P9_se the authority com~ from to ~ax-
. ";';&!'oss income" instead o("net income"?
.- '-, A'reading of section 6012' seem's t~
say that every individual with gross income
in excess of a certain amount "shall" make
a return. Herein lies the reaTconstit'utfonal"
'~iickle~~f "sb.~~",i~_!]1~~~fY..Ql~, !RC is ,
a frontal assault upon the Bill ofRig,hts. To
, 'ilvoi(rlhTscOllst{lUti~nal incon'sistency,
"shall" is properly read to mean "may.':_ .,
---ande r'the"p 'rTvac yActN oiice is
found that the information on a 1040 return
may be given to the Department of Justice,
other federal agencies, cities, -states, Dis-
trict of Columbia, U.S. commonwealths or
possession, and certain foreign govern-
ments. These departments, agencies, and
countries can, and in the past, have used the
representations made upon income tax fonns
against the Individual who supplied them
to the IRS. In other words, an individual
who supplies information upon a 1040 is
subject to losing liberty or property because
of that information.
The information supplied by indi-
viduals to the IRS can be used against them
Volume 6. No. 3
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* Do you have a cause of action?
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For more information call
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in a court of law. Should the Department of
Section 6012(a) says that every indi-
Justice believe a filer to be defrauding them vidual -shall
of money, the filer can be charged with in-
- -make .- "a-retum.
. - .- If "shall" means
"must," then the Congress, by passing 6012(a)
come tax evasion under section 7207 and has superseded the Constitution of the United
face felony prosecution and if he filed in- States. If shall is obligatory in this case. then
come tax returns such as form 1040J.Lc~ __ people are required to file retums
be used against the filer in the trial.
that may
later be used against them in court as evidence
. - ---TJlel iTinam endmen tt-;the Consti.
to convict them of crimes. This cannot be the
tution protects many rights, and one of those case, and it is not the case.
most precious to Americans Is the right not In order for the Congress to get
to be compelled to be a witness against one- around this nasty item attached as the fifth
self. The fifth amendment states in pa!L:.'No article of amendment to the Constitution.
person, .. shall be compelled in any crimi- they give the job to their faithful agent. the
'fial case-to be a witness against himsei(. :-.
IRS. The IRS the~i.0~ri.c~ .£.eopl~ in~o
'." Under the Constitution, unlike the IRC, enter'contnicts of obligation, such as 1040
"person means "a natural person. People ~eturns-;or·(orceSlhe-people-topayth;'ou'gh
have constitutionally protected rights. A raw power even though the IRS lacks the
corporation is an unnatural person and has lawful authority to make them .. The decep-
no constitutionally-protected rights. There- , tion occurswhen-ihe IRS the;:; provides "al-
fore, the IRC filing requirements are man- leged taxpayers" with a Privacy Notice that
datory"'Upoi1-;;orporations, yet volunta.!L,"_ is a veiled Miranda warning. The tax
filer
-regarding nall.i'i-alfiersons. Hale'-;,. Henkeb. is supposed to interpret this notice to say.
'--20IU~S~ 43,70-(1'905). ',;... no-one shall "Anything you tell us could land you injail.
be compelled to give testimony which may so make certain that what you tell us is true,"
expose him to prosecution for crime." Hale, However, it requires a most strained read-
supra at 66. The word "shall," when used ing of the notice to glean this from it.
in the Constitution is obligatory upon the Then the IRS incorporates the notice
government. Regardless of how many de- with the nearboltom line ofa form 1040 which
ceptive dances the IRS might try to do to says "Under penalties of perjury, Ideclare that
make "shall" mean "may," they cannot get I have examined this return and accompany-
away With such chicanerywnen a fundamen- ing schedules and statements, and to the best
tal c~~~,0tutional right hangs in the bal~c~: of my knowledge and belief, they are true. cor·
ANTI SHYSTER
www.antishvster ~om 53
 rect, and complete." If someone signs the 1040
under that obligation, he subjects himself to
pe~ury charges for any misrepresentations on
the form. As a lawyer, you must consider the
absurdity of this Catch-22._I~ig.n. a 1040
makes one liable for a felon'y if there is a mis-
're'pre;;en'taiion, and to refuse t;sign ~an only
"'be a·misdemeanor. Since the code has thou-
sands pages, and many inconsistent sections, . "lion Of the IRS, which '~xplains- why" ih~
it is totally vague, so, few people, if any at all, couple lostinfederal court. Does having
could file a return for a period with complexi-
ties in it without mak.ing a misstatement.
Therefore, what is the advice a law-
yer must give a client? Tell them to attempt
to comply with the impossible (but advise
them that they risk becoming a felon)? Or
tell them to forget the whole matter because
risking a misdemeanor for noncompliance
is better than risking a felony for misrepre-
sentation? As I said at the onset, we stepped
through the looking glass when we entered
the world of the IRC and things became
"curiouser and curiouser."
A person who signs a I040 becomes
a witfl-;Ssagainsi-himseTC'This IS the pre-
.. clSe';eason why one" cannothe c'ompelled ~
IOcomplete the form. The fifth amendment
"sTates clearly that a naturaT'person cannot
- -be-fOrced-io be aw;tn~ss against himself.
. "Whe~e'r;ghts-secured by the Constitution
are involved. there can be no rule-making
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-
ever. even ass'umingarguenaoiliilt'ilie IRC
"requires" people to tile returns under sec-
tion 6012, where is the authority for the IRS
to seize property from Washington State citi-
zens for alleged "income-tax" liabilities?
The seizure regulations the IRS employs are
~~~~(!yile 27, or excise taxes, no't 1t'iie 26,
or income taxes.
Further, why is the IRS classifying my
clients as "gun dealers" or "coal miners" or
the like? The answer seems to be that the IRS
must place my clients under Title 27 for ex-
cise tax liabilities before the IRS can seize
property. While discussions could consume
volumes on how various sections and words
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- .
dei-Titl~ 27, which is fraud. .. -
a
._.." (represeni 'cou'ple;--both are in their
seventies. They made the decision, wholly in-
dependent from any advice from me, not to
file tax returns when they discovered there was
. no duty to report to the IRS. The IRS assessed
millions of dollars in "income tax" liabilities
against them and sold their home at auction
Volume 6, No. 3
and the couple lost their life savings while
standing up for the principle of truth.
The IRS seized the property through Finally, here's a lerrer from Mr
CFR 27, not CFR 26. The IRS acted ille- Bensch to Washington state Governor Mike
gally, but their action was upheld by the fed- Lowry at PO. Box 40002. Olympia. Wash·
eral and state courts because all judges an- ington 98504
swer to the IRS. I have learned that all
federal judges.!re~d.e.r:~rj~inal iriveStiga~ Dear Governor Lowry:
I wish to thank you for responding
to my letters of April 24, May I, and May 9
judges under investigation not smack of vio- by your letter dated May 14, 1996. I realize
lation of separation of powers? Who could that you have a busy schedule and I do ap-
be impartial under those circumstances? preciate your taking the time to answer my
My clients' case made me reflect petition regarding relief from the IRS. an
deeply upon what I must do. After search- agency that is so out of control that it fol-
ing my soul, I realized that I must act. There- lows no law in seizing property from the
fore, I petitioned your office for relief for citizens of Washington State. As I attempted
the rest of our state's citizens. Addition- to explain in my petitions, there is no au-
ally, I have petitioned the governor and the thority under Title 26 of the USC and its
president of the state bar association. regulations for seizure of property: the IRS
The fraud is too ugly, too widespread, is an outlaw agency that derives its pow'er .
and too horrible for me to avoid my duty. I . by trickingan-ignorant-bar'and bench into
realize that this is a tremendous issue to . coopeiaiTng:or by corrupting them.
present to your office, and I understand why you
.. _.-' iri-yo-ur respo;';-se- explain that
it is easier to allow the fraud to continue because any fraud committed by the IRS
than to confront it. However, I cannot live is a federal matter. it is beyond your ju-
with myself without striking out for truth. risdiction as governor of Washington
If the IRS is above the law, then our once State. You suggested that I contact the
proud republic has fallen to anarchy. Congress for relief. I am disheartened to
Respectfully submitted, learn that you believe that the governor
Steffan M. Bertsch has no jurisdiction over fraud committed
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ANTISHYSTER 55
www.antishystcr.com
by the national government within the
state's borders. I cannot say whether the
IRS is a federal agency; it is an organiza-
tion so cloaked in deception that it is next
to impossible to ascertain whether it is a
private agent operating for Congress, or
if it is a distinct federal bureaucracy.
Regardless of what the characterization
of the IRS is exactly, we know its charac-
ter. I am chagrined to think that our gov-
ernor is impotent to halt fraud committed
by a federal agency, if the IRS is indeed a
federal agency, or a private contractor, if
that is what the IRS is.
I appreciate receiving from you a list
of our state's national representatives and
senators, but I will not be petitioning to Con-
gress for relief. Since the IRS is the collec-
tion agent for the Congress. I cannot imagine
the Congress considering even the mildest of
reprimands of its own agent, an agent that
plunders the land and feeds its master with
considerable booty. Congress built the IRS,
condones its operation, and encourages its
every action. I appealed to your office be-
cause the Congress is the responsible agency
for the fraud perpetrated by the IRS. While I
do realize that as governor you do not have
jurisdiction over Congress, I hoped that you
would use the powers of your office to im-
pede or eliminate illegal activities by IRS
agents by forcing them to follow the law in
Washington State.
While I am chagrined at your deci-
sion to facilitate the ongoing fraudulent sei-
zures of property of Washington State citi-
zens, I am not without hope. I have ap-
pealed to the President of the Washington
State Bar Association for assistance in ex-
posing the fraud. I have also been in con-
tact with the Attorney General's office and
have received a response from Leland
Johnson of that office. Mr. Johnson ad-
dressed many of my issues, but did not an-
swer the issue concerning illegal seizures
of property by the IRS. Hopefully, that was
an oversight, and his office is working on
the matter at this time.
Should those petitions be unfruitful, I
believe that I still have other channels to seek
relief. As I indicated earlier, the couns are
impotent because they are under the scrutiny
of the IRS and federal judges are all under
crimin'al investigation by the IRS in every as-
pect of their performance on the benches.
Therefore, the couns are not capable of effec-
tively addressing this fraud. As stated earlier,
the Congress originated it, so that body will
not assist. The President controls the justice
department, which enforces the illegal sei-
zures, so appeal to the national executi ve
would also be a useless petition.
56
My next step will be to appeal to
the press. Based upon your response of
May 14, 1996 to my petition for relief, I
accept that it is the position of your of-
fice that it can do nothing to impede or
halt the ongoing fraudulent seizures of
property by the IRS of Washington State
citizens. Since that is the case, if I hear
nothing to the contrary before June 10,
1996, I will inform the media that your
office acknowledges that the bulk of the
property seizures for income tax liabili-
ties are fraudulent, but that your office
helpless to act, however it would welcome
the support of the media to expose the
fraudulent actions of the IRS.
I cannot impress upon you how seri-
ous this matter is. If you check the history
of rebellions in the world, you will find that
almost all are based upon oppressi ve taxa-
tion. The Congress of the United States has
trumped many of the oppressors of the past.
using fraud as their mechanism to collect
taxes. At this time there is a peaceful rebel-
lion in America. Millions of Americans
refuse to file returns because they have
learned of the fraud. This is a quiet protest,
a peaceful rebellion.
The government has labeled these
people as "tax protestors" and painted
them as antigovernment beings. These
"tax protestors" are not, by and large, an-
tigovernment, but are definitely "anti-cor-
ruption."
Those opposing "tax protestors" line
up as pro corruption." In 1775, John
Hancock and Samuel Adams were labeled
as "tax protestors" and warrants were sworn
out for their arrests. It was only because of
"tax protestors" like them that there ever was
the experi ment of self government called the
United States of America.
A more obvious rebellion is occurring
in Jordan, Montana by the Freemen. who,
whether they have committed crimes or not,
are absolutely in rebellion over our tax col-
lection and banking systems. My concem for
my country is how much longer the "tax pro-
test" will remain- quiet and peaceful. When
King George III and his Parliament attempted
a direct tax in the form of the Stamp Act of
1765, it was totally scoffed by the colonists
until the act was repealed. When King George
taxed the colonists to fund foreign wars, it
caused protests, petitions, rebellions, and ul-
timately led to a revolution. King George had
the lawful authority to tax and seize. yet the
colonists revolted. The IRS has not the law-
ful authority to seize property for income tax
liabilities.
America is replete with a history of
passive, quiet rebellions. The election of
ANTISHYSTER
www.antishysler.com
1800 wherein Thomas Jefferson was elected
president is one. His party of Democratic-
Republicans immediately began dismantling
federal power, then eliminated federal defi-
cits and restored liberties that had been taleen
by the Federalists. One of the first oppres-
sive acts to fall to the Jeffersonians was the
1798 Alien and Sedition Acts, which vio-
lated every premise of Freedom of Speech
and Press. We are a forgiving nation, there-
fore, we can have peaceful change, even
when there is core corruption or massive op-
pression.
I urge you to step in and strike a blow
for the truth because:
" ... Prudence, indeed, will dictate
that governments long established should
not be changed for light and transient
causes; and accordingly all experience
hath shown that mankind are more dis-
posed 10 suffer while evils are sufferable,
than to right themselves by abolishing the
forms to which they are accustomed. Bur
when a long train of abuses and usurpa-
tions, pursuing Invariably the same ob-
ject, evinces a design to reduce them un-
der absolute despotism, it is their right,
it is their duty to throw off such govern-
melll and provide new guards for their
future security. ... " (Declaration of In-
dependence, July 4, 1776)
When the general public learns of the
fraud, I tremble for my country. Please, use
your office to expose the fraud while peace-
able solutions are possible. lknow that it is
diflicult to stand for truth in these times, that
it is far easier to allow the lies to continue, but
there is the greater good to consider.
Rulers should be aware of what is
brewing, and should respond to petitions
of the people. But history is replete with
their failure to consider the pleas of the
people, which turned rebellions intorevo-
lutions. Patrick Henry warned that,
"Tarquin and Caesar had each his Brutus,
Charles the First his Cromwell. and
George the Third ..." his Henry. Rulers
too often ignore the pulse of the people
until it is too late.
After the Bastile was stormed, King
Louis XVI asked the Duke de 1a
Rochenfoucauld, "Is this a rebellion?" to
which the duke responded, "No. Sire, it is a
revolution. "
Steffan M. Bertsch, Altorney at Law.
can be reached at PO. Box 668, Lake
Stevens, Vtbshington 98258
•
Voillme 6, No.3