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12/87 /199J


48B-45 3-5'3'3 7






Wt:m:tJ< EDmON

Bishop's Gambit

Hawaiians Who Own

Goldman Sachs Stake
Play Clever Tax Game
Their Trust Is Educational,
But Investments Produce
Big Incomes for Trustees

PAUl AUtI. CALlf'lNiV o

,,' . <Chapter :.Thirteen..','.

:" ~ ",' :,':


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, harassment, 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.
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


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 continuity 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 fiduciary agents. This means that transferability is not easy. So a properly written common law trust contract 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 settlement - 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.

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 requires that a K1 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 offshore assets with the domestic management trust (the third level trust filed a K1 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 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)


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.


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"~00FltFat QlalilSe~'ofthe U. S. Constitution.
In Fulton, the State


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."


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
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 MarvinSchiller

of Raleigh, joined by Boyce

and his law firm in 1990, won a class actio,n settlement in the landmark
Simpson case that Schiller
hadbeen pursUing throug h state trial and appellate courts for over six
years. For reasons attorneys
for the


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
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

by Arthu r Thom as
ng for a good busi- those trusts created by privilege, and
passed by the legislature, not rules
_ness trust can be a frus- _ the second, those which arise as
by adIJlinistrlltive agencies. or
-- trating and confusing ez matter of right. Those trusts which
s of judiciary commi ttees
- -:perience for tke neophyte. are created by privilege are by far
Even experienced attcrr most common. A brief discuss the based upon prior case history. The
ion of legislature does not dfrect1y
neys are often confused or, W01"8e both types will serve to
describ e
illustrate the the forma part.ic
still, misinfOrmed-concerning the es- essenti al differences betwee
ulwtru st is-ro take;
n the but the legislat
sential nature of the- Irrevocable Pure two.
ure does' have th~pow
er to delegate certilin power stooth Business Trust. Scores of trust
er governmental agencies, including
writers have become convinced that Statut ory trusts
the authority to make their 0wn-ru1e~"
theirs is the only good business trust
Trusts which are defined in precise
on the market. CQ.3e law and of tenns and which are bound by proce- These rules are termed Uadniihistrative law" and become law (or tlie
law-have been cited to-support their dural structu re fall into the catego
ry urule ofJaw") simply by being
pubvarious positions.
of trusts which arise by
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
Ther e is at least one -very
nesses by means of a trust arrange- IRS th Amer . the
~L - fi l'-''':
. _., e
ment? The intent 0if ~
differ.e.nce between atnte 0
Law Institu te's Coma~le is-jin{Llly to put to rest any mittee on Trusts
Irrevocable Pure Busitress. Tnist .
, or
misunderstandings regarding the some other body or
and other trusts; that difference
Pure Irrevocable B'UBiness Trust in agency, has seen fit to
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
The trust maker is then forced to
different-kinds of trusts. A glance at trusts, "granto r" trusts, and
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
careful granto r of the privilege. The judicibroken 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
Case-law can be quite'fl.exible"~'For
~t ISnot.tfuly_a_~t It.IS. a contra ct be regard ed as the produc t of expert
every-~whie:h,P.dintS~moiie-;~--: m the fonn ofa -ticiiSt2tbiS IS the ~t opinion and as the expression
of the tion, there always 6eellUJto ~- moth "se<:r,e~" that has. C?~and misled law by the legal profession."
er which pointsjntheoppp~te~one.
so many tl'ust wnters m the past..
In other word$, the form of a trust We may-conform ll&;eci.SeJ~-~_pqsis nornuilly dependent upon prior case sible wier-the unue bf'la\v" in.
TWo categori_~sof trusts_
formlaw, and the author ity for that "law" ing a ~~t, and it -~ .-spm
It ig,he1pful W:'tti,vide trusts into t,wo is based upon opinion. When we think attacke
d m co~ by _an ~_~)lQS,~~_ atbroad catego nes-th e first bemg of law, we normally think of statute
s torney . CertainlY'a traditio nal trUst


AN'E'SAlfE5J August 1-993

of this tlature can successfully avoid

probate court.
.But what about total liability protection? 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 consequent 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, usually to thedetrirnent of some individual.

"No state shall ... pass ... any Law

impamng the ObligatiOn of Con-


It is very irnportant,to construct the

business trust such that'every offiCer
or party' of interest has a contractual'
relationship to the trust; otherwise,
the protection of the contract" is lost.
The trustees must be appointed and
must accept their position by.contraCt.
The business manager must be contracted in the 'same 'manner. ' Every
party in interest must have some kUld
of contractual relationship withthe
business trust. ever
once partake of the priVileges. iur6tded by legislatively granted ~nci~s,
then it will compromise lheStrength
of its own P9sition. Granted, statutes
rarely directly addresstru.st8;:but; for
convenience to the reader, let U:8, for
a moment"refer to "the rule of law"
compriSing case law an<Fagen~ leIDllationspuBlished'ip th~-Federal
ister as Siinply "Statutes."
Now we know that business trusts (common-law contract.u3l trusts) are-":created by contract. But ifthoSe t:ru:rts

That section of the ConstitUtion provides, in a nutshell, the sum strength

and structure of the lITevocable Pure
Business Trust. Any other position
serves only to weaken the essential
nature of the business trust. Indeed,
the Courts have roled that:
"A pure trust is not so much a trust
as a contractual relationship in trust
(Berry v. McCourt, 204 NE2d 235)
The right to contract is protected,
as we have pointed out, by the COnstitutio~
"A pure TrUst is established by contract"and any law or procedure in its
Contractual right
operation, denying or obstructing con,
tract rights impairs contract obligation
The other broad 'category of trust 18 and is therefore violative of the Unitt~t. created by. ,crn~ ripht. .._ed Sbtes Constitution.'.:.
PrivUe~;can De Wlthata:wn, revised
(Smith v. Morse 2 CA 524)
?r~~~bY:~en""giver. But a ~t
and again:
which are creed'by.etmi:ractever par.
18 that whiCh 18 'mcapable of reVlSlon
or modification and cannot be statu'The nght to create the Busmess take ofthe privilegesgra:rtted trusts'.lnI
torily abridged~Iri RiStiiteT7iimt oftJii" ~ is based on .th~, ~rnrnon-law the "Legisl4t:ure, wthqn 8~idtru.stsim
lAw of Trusts,' which we quoted earli- r;g~t to .~?tract by mdivuiu:aIS estab- mediately beco-rM8Ulije.ct towhimlJ;of
the "Legislature," and they'lose the
er, we read:'
lishing It.
"A statement of the rules of law
(Gleason v. MacKay, 134 Mass, 419) (please turn to 'JX1{#1 +4)
relating to the, employment of a trust ....--------~---------~-+--~
as a device for carry.fug on business is
not within the ScOpe of the Restate. meJlt oHhiscSubj~ Although many
e Survilior'$';I~Q1MN,eds
of the roles applicanlecto trusts are apAnaljris
plied tobtlSihess trusts, yet many of
the rules are not applied, and there
are other rules whicll are applicable
e F-edemllMiJm~: Tu
only to-business'-tnIsts. The business
trust. is a',speaaf'kind' of business as.........~..... e EstauoPltmiling
sociationahdc3n'best be dealt with in
e RetinJTunt Plimning
connection with other business associeDUti/liIfty Incomihuzlym
e Ctuh Flow-Analym
TheAmerican ~w Institute's classic mUIti~volurne StUdy oftnlsts fails
even to discuss the irrevocable busi.ness~Why? They won't
-OPTIONAL GRAPHICS SUPPLE-~,~! A'!'.M~'.~~it beeauaeit really isn't a trust, and
the rilles: for tzilStsj\lSt don't apply to
it. In reality, it is a contract in the
form of a tru8
As'businesspeople; we all want security. We want security for our businessesand'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 permitS',ust6'orglUiiZe'Ollr trust-upontoe
princi:ple,J>tt;Orltract:nther than ~_




legislative.1l-nv~e~: Amcle I


10'of Ule' C5ilSm.tutien provides that:



Irrecovable Pure Busin ess Trust

:rContinued from page 37)
'Y'inhfrtMhe una.'lsailable 'Tl')"()tection oif
"II -I
r' ~
a contract. It is like a "Tar Baby."
Wher we fwst touch the tar, we are
The "Ashw ander Doctri ne" expl~s this principle:

Irrevocable Pure Business Trust and

other trusts. Those "other trusts"
may even 'have the outwar d fonn and
name of the irrevoc able. busine ss
trust, but they lack the substa nce


&-OtherM;~ijt .

(Continued from page 38)

That difference lies in contra ct.,lf

tfre trust is formed and organized by
contractual relationships, and pro,
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
ute, or anyone who even places him- Trust. If the trust partak es of
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 oed
not reach constitutional ground s to by privilege can be plugged at
will by
redress grieyan ces in the courts the legislature, which has the
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
legislative'priVilege whe~ it. is not realThat 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
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
ory~ Califorma, Fl., da;. ..0 and Texas.
every case--liw'on one side of an issue, s stem
under the rt>tection 0
The newslet
asSlSt,. urers,J:!ilJ;!d
there-u sd1ye xist two on the other the constltutlo
common law. We ical professio' ms;:attQ.'ey.sandCorside. Case law is always a two-edged
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
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: .
streng th throug h having separa ted
"Atrust~organizatiQn, consist ing of ourselves from any connec
tion with w~~ker~ ompensati(mlSS~!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
te1'8are a,.vailable QyWr-iti1fU4f~ ~'- .
Supp; '39 at 270)
G fJJ Ail:insOT, J(j'4-S5'S~tO"~)J,lIn sum, tl}ere is at least one very
Road, Su,iti lJJ3., SaiJ, :Di;efio., . '
importanUiifference betwee n a true I/R Code: 8000 Trusts
921fJ-J; FAX619;4-S$.o1'13i~~ :_. ,~




" 'I'~;

Remember to take

I LIfE "'Ins ...ce

I HEAIJ'ft. ; . -"Sa
I with you!
S~nd us your
I chang.,eo{ address at least
I 4-6 weeks' in advance.
I New Address:










"OK. cut out all th:eeuteJ,.,riorisen$.ical

greetings. and: get to--the';~p!"



"There. is ~ dear distinction "in this particular case between an individual

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 ,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 ~ryon his erivate
~ b&l,~j.m\~iS_sjm.rhl~j0n way;. His power to contract is unlimited. He ow-es
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 existed 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 Iaew, and in accordance with the Constitution. Among his .riJhts
ar.ea " 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;6' i ,9r.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.
Trustsrnay\e. be-en a part of the British Law for several centuries.
f;ngIano, tn.J~t;s~',:~~r.e'in use as early as the 11 th century, and by the 15th
beiirg enforced by the Courts of Chancery.



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" .,secrey.::.of thfs' transf~r ~was. advantageous, as many of the
. ta.xe's an:q 'J:8Str+~t(ons whiCh :,applled
to the pr.o"perty
owner did "no.t attach to the
I .
. ..
. " ts:uste.e., and cQ,uJ:a,;,tbererors:,,' be" Ignored altogether. ,
. '~

. -




..:,:;:, ..... ' ... :>... . ;. ;~~,l






-:.:i.;.. . .~.. --_._,-. .


,;'. :- '.:

.\ '.,.

'.: : ',' '. : "Ov~r :':t'ti~'; Yea~:." many" ver~ions of the' ba's~c trust. ~Qf1.~ept ,have been
'. '. devel0p.~df:~~y~helr baSIC goal ha~ remained the. same the family
sittate, 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.



.. ".:


- --

)L\nCH/i\l'IUL 1995

Wnor IS.a


----_.- -_...



Common LaurTrusi?

By Zola Shee'han
'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
Trusl,.l! lI's Ih\: n(1V b~7.zl\ord.
being lhe supreme IJIV or lhe:lamJ
cold. To prolect his Interesuj the
excep'dho~uthoci7;cd"by l-lre
E\'e:Ylmc' is t:lking'~b(JonNSlS ~nd
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, ~.QtlAiliClfr.SC::cliollItlcr.1 di((mnl lrpeso( tMI, but
~It~ck by thosc wile polilici~ns
nolV owned Ihe property, ~nd the
10 the UlilleU' s.1~te.:sCotisiiluiion
'''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"
to !nvells bi:ing Impinged by ~II o(
ZLlme se,ur~cy (or lhe (uNre. .
since lhe: IruS!' Is ~ conlnel
T~~IU He Iho.\e Ihat ~llorne)'$ heJp
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~
S<,)me will s~y ui~t ~le eonvnon
~tlorney ~nd fl~trlOl! P~lrlck Henry,
Illes,.fl?wers ~nuJe~ponsjbi1ilje.s ~(
when J government PH1C$
I~IV Is no more. nJey ~re dOler mis,
In 176S. tlVenly.rOur yem h~tore those r'ho ~dminisler the lruSI. THe
S~,:";\;ICS. or rules on IVhelher or no<
In(ormcd, usurper.\, or ignor~nl o(
the ~Uupllon o( the Constlluilon.. d6cuml:nt "f.(:~tlng, lh.c"lruzl is
)'uu CII\' do .<om'lhins;, ~nd lhen on
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.
e.\:clly holV il lhould ~ done, thii
'Lc:~ look::11 ~ir i:x~m'Jlle cf holV
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
)'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
IYUC, lIVo klw ~ntl, ~ hlllnC. He has
wer,cc :LJkin~ ror ~ flrivill:se. When
worked h~ld ~II o(-hLs li(ony he: Is
:::,J j'c::r.L'\Jilln Ilr flrjvikl:c.: i$ gr:llll'
~(r:lid Ih~t when lIt ('la:'s~s"'~lVa)'
C:.!. r"~ :111: lhen unll" Ihl: juri$uic
:;:.n er I~\I: J~cnq:'I:t;In\inli'll\e'pJiv,
,'proll~te =nd e.II~le I~xes lVili e~t
;:~;z. You JII: c~fl':,""\ed 10 obey ~II
",; lV?y hl.\,e.\I~IC" ',Ic.:. h:l.\ :llso jusl
of ;I:e ,-;'/l:s ur blVs'3SsAci~tcd lVilh
(uund out Ih:!l pioh:lle alune c~n
11:::1 j.:iljJ.,;.c. Nld illntlr.IIl~e o( lh~
)'t~~i Su he'decitlcs
I; ro i,\ :lCJ '.HUSC ir you your w~l/et. They ~re prob~bly
Nnerbn Re-.:oIUlion. Knor.:n ~1 thc
lh~l lhc hC:~t "'~r,IO l:n lVouldbc III
r.\:~c J Ini':ll:kc.
" . 'ign'ora~t do.goQders who don'l
Americ:ln Gnd eomfl3nY.Jh~\ com
r131:~ h~~ (iC'le in ~~\I. lie C(e~le$ ~
, 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 twcntyhis 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, (he 1(V.\1 I!~~ nOI
:~1i.lblure cre:lles. il Cllnlrols.
'Common ~IV' 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(
Orlen c~lIed
~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 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
IrUSlees-calied the Senale ~ntl ~J\e:
c1i:i.t, -tl':.l/S~iJ;(llop~ilr ~;n ploie~l,
o( lIatulC$ arc cot\St:lnlly ch:lnginll
Org:lniz:ltion, UOO, B),I~lne$.l TNst
House or neflrc1Cnt~tlves. The
ro~'r ~sct$: i~Jul(:your prlt:;Icy~'
JllV "'il::t 11Ilet "~IS aCl:t.:pclhle sud, .OIg<l(\iz~IlQtLJIT.Q, ..Jil~,HlIcJIY$ellS
conlr~ct c~l/s,rur ~ 8ener~lll\:Inscr,
,elimln:lilf'jirob:fle-ltOd ~s,~11e; 9:<;s.!
uel\'ly no lonser i$. Chanccs ~re you
TrusI, Conslitullon31'Trust, Pure
which Is ~he execulive br~nch, ~nd
:lnd orrer ')'ou ltre~lcr CIX s~vinll.l. .. ,
"'iil :101 (,nu lIul :l1~l,lwlhe'L'h~nscs
TI\J,\t, Contr.l~lional TN.\ll, L\ 10 sec
:1 proleclor, IVhlch Is the Suprc.:me:
"r.lil lite momcnl IVhc.:n you ~ie
it ~s ~ Ihre.:e p~rty conlrJct IVIlt.:re
Court ~nd lhe judlci~ry, IVho c:ln
:;(;:13 hUll hy lhc.:m.
meLS ~re owned 3bsolult:ly by ~n
stop thc tMlees rrom gelling 100
Wi;h) S',I~I.\!Wry Tru.~t, ~ tNst
indivitlu~1 who put~ them in lhe
(:l( out o( o(der. The IMt would
~'r:::en vnocr lh~ SI~IUIC Ja,,'S or ih~
condltion~1 olVnershlp or ~nolher,
(~il ir aI/the tMtces-terms' cXl'ired
51:;c ~nd lhe Inlern,,1 Revenue
the lNSlee, who m~n~gcs or con
~I Ihc ,~11I1l1: lillle, so Ihe Omoton
(' rou Jre under Iht.:ir jurisdic,
trots them "'hile 'lhey ~re In lr~t\Sil
renew ihe.: lruSI every (ew ye~rs
lien. You hJv~ to hc con.mnlly
10 the evenN~1 OlVncr, Ihe INSt cer,
(lre 171h Alllcndment) by ~ppoint.
;''';re of "'h~l Jillhe 'rulc.:s',con
liIit31e holdJ:~, i.c.thc bcnenci~r~es.
Inll nelV IN.llees. The benenci~cies
cernin~ IhCJ,c lru,$,~\ ~(e. ,',
A sllllple eX:lmpl( or ihi$ Is ~ . o( lhe II\Jst ~re 'Wc Ihe People.'
,\ ll"Ji~ ivlt' ii( Ihumh hCllVeen
Parcel Scrvice. You lVisli 10 senu 3
Wilh sudI II finc ~:rJm(llc, how'
1:;:Ute I: ... :n<.l c,t.J!n;nM I~:'V i$lhis;'
p:lcbge. You pUl lhe p~.cbge
c:ln IYC (l:sL~t hal'lnll ~ lI\J.\t o( uur
.~I;r~:c 1:l1V le,lIJ roy IVIt:t YIlU musl
inlo lhe c~re ~nd Irusleeslilp of
OlVn? whcn you crealC ~ l(u.\t (~
<':v. CUlr.mon~l~ivis IIt~t'-1Vhidl telll
the uellv:ery .lerv/ce, IVho lhcn
1'l:~1 COlllr3Cl dc.:1igncd to hllid your
rou un:1 you '':lnnlll <.10.
u,livers it lCl Ihe hene(jci~ry, Ihe.:
~.\'~eIS undcr Ihe IUfle.:rvislon CJ( ~
For cx:mplc, 'Yuu mU.'1 "slsler
~ddres.lee. A IrU.II JUS I pUiS ccrtaln
IOLIle.:I:) ynu ~re ~'rclilins ~ ,.~P:Jr.Ile.:
rO~( cr. You mUll hJve in$ur3nce.
~sscu 'In lr3nsll.'
lel:~1 c.:ntily Ih"t 1m ILl olVn cum,
)'c:u m~ll h~\'c J vrjy(.\ licence.'
TIle Common ~IV IAMt had iL\
mon 131V Idenlity ~nd rishL\, nut
:r.(J( ;re IC'Nte Iws.
be innin s In E'n bnJ'lli lhe cfGh.
flrivilelles lh~t t3n be revokecJ.
Inul cenNry. n Ilal en, when ~
The.:re ~re no JI~IUles directing _
. You KlU.\1 not lie 10 ~ court.
You rr.~ll nOI llcai. Yuu must not
I~nd olVner cJied; ~II o( hL\ hCJldinl:o~
hnIY or why ~ commnn lalV lru.~t_
ii!l. rr,= :tiC common lalV.I.
,,",ould re.:vc.:rt to Ih(: CrolVn, 1l.1~vlnR,
C:ln he org~nlzed. No one h~.\ ICll~I_.


... it is created under the common law.

contracts and does not depend
upon any statute for its existehce.


' ' cr


Volume I, Number 6

The Higher Truth

Diane N. Whitby
Chief, Accounting Branch
Internal R~venue Service



3-25- 96




y applied for an EIN nurnber,

for a

['ure Tru:::t,


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.



Doportmonl or tho Tron'llry

(nlornnl Rovonuo Sorvlco





,. 11 ;"l n kyo ufo r


[n rCDly



t hc


i n Clu 1 r y






N u r.





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
Form! He responded with the above
letter and the IRS cancelled his
number and agreed he did not need
to file a 1041 Form!




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
:;/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.
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
you for your

for ,1r1y inconvenience









Sincerely yours,

Barbara J. McCormick
Chief. Accounts Service




Volume I, Issue 6
k .'.,.=\H2;;..; '&iPz,.. Vi'- ...... 1....... bo,dS".


The Higher Truth

,,_ .'

~ ....,


~ ~....... _lo..~, - _ l ' _ _


~ ...


DoplH1monl of tho Troaellry

Intorn:!1 Rovonuo Sorvlco










0000 go 000


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
0' 9 I. 1"1 i t ~ t l 0 n h J S


)po11c~tion fo~

not. x r r 5 u 1 r t m, n t

"u~bgr, A Pure Tru~t

for 1 a E I}O/' n U {P. bel" j J f'lO t


t ht r


any oue;,t1cnl ebout tn1s lltt~r, plll:lll Ioi,...ite us lit the

~Jdrt1~ shQ~n on th~J l*ttar.
If vou pr~fer, rOU m~y call the IRS
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,







bQ r .... ch.d,


1nclud. ~Dur t.l.phon. nu~b.r, the hour~

COpy Qr thil lGttAr for




..... _-- .......... - ....




H ou r





;", .. , .. ~.~ ...... ,._.""':~~

J _. -

trid:s might include corporate benefits,

corporate certification. Therefore,
Commerce, Defense, State,
Social Security Cards, banI: cards,
under the corporate U.S., fetuses and
Transportation and Veterans Affairs . o.s.mcs in all~pitai~~co~;ce; ~~
embryos are disposable non-entities
these are, presumably, the 'legitimate"
aDd even (jeot money .::: ~~ tcliins how
who can be legally aborted. However,
components of government. That is,
devices riiigni DC iis:c~ tO~mQ;~~:
since the fundamental requirement for
these forty-eight organizations might be
.(rom- the status- OO( '(reemen' in the
Union membership is flesh and blood,
composed of "public servants'
'Union usA' io subjecis a~(j" ~itiiens
we are each members of the Union
operating government for the benefit of
iliecorpora-te 'United States'.
USA and fully endowed with our Godthe Preamble's "Union", Mal-b.__-.....__
givenrlght; to 'life-, nbe;'ty, aiiathe
A number o( Amendments,
But in that same Governmenl
~pecislly the 16th (income tax), were
pUrsuit of happiness' (rom the moment
Manual, under the sub-heading
nO( law(ully ratified. Another called
ofconceplion. Within the Union USA
'Independent Establishments and
'-'-Ulc'i:i1issing' I-jtil(iitles of nobility)
and according to 'Constitution for the
Corporabons, thereire
was probably ratified in 1819 and later
United States of America", abortion of
si::rty-Iwo "organizations". Among
remoye;d illegally from the Constitution
any Oesh and blood member is murder.
these sixty-two Independent and
near the end of the Civil War. Under
(Is the 'absurd' correlation
Corporate entities are the CIA, EPA,
the Union and 'Constitution for the
between evil and artificial entities
United States of America', these
beginning to seem more plausible?)
Reserve System, GSA, NASA, OSHA,
improper ratifications and deletions are
Peace Corps, SEC, TVA, the U.S.
tre.!.SOnous; but under a corporate U.S.
Prob'ly No< So, But ....
Arms Control and Disarmament
aod 'Constitution of the United
Intriguing hypothesis, hmm?
Agency, and the U.S. Post Office.
State>', these acts might be
But still too fantastic to be easily
These organizations are not precisc:ly
uoremarkable examples of
believed without a lot more research
'part of" the government; Instead they
and analysis. Therefore, I concede my -are agencies of the executive branch of
administrative procedure (corporate
hypothesis (that America was intended
government, which operate principally
to be a Uoion, but is instead being
As a public servanl of the
as corporaliOllS.
'administered' as a corporation) may
Uoion USA, government could never
So has our government
sign a treaty with a foreign power that
be false. Still, even if there's not a
incorporated into a single artificial
single government corporation, it is
imp.sired the rights of Union members.
entity? Maybe not. But has our
Howe ver, as corporate agents,
undeniable tbat an unaccountable
Union's government (intended to
diplomats eould enter into treaties that
corporate culture is festering in
include only public servants) evolved to
!.re legally binding on their principal include a host of agents and artificial
Washington D.C. If you examine the Contents of
th< .;orporate U.S. government - even
entities with limited liability who serve
The United Slates Government Manual
if those treaties violated the
government rather than the people of
(published annually by the Office of the
Constitution (or the Union USA.
the Union called 'The United States of
Federal Register, National Archives
America"? Absolutely.
The income tax would be
and Records Administration), you'll sec
As a result of this growing
.!::.andat?ry for government-c~
forty-eight government "organizations"
corporate presence in government,
corporations and artdlclal entitles, but
listed under the Legislative, Judicial,
- oalyvoluntary fCi(Union members who
there are a lot of surprising similarities
might want to ' help' the corporate U.5.
and Executive branches of government.
between the way our current
(as ruppened with the 'Victory Tax' of
Among these forty-eight government
government seems to operate (in open
organiutions are Congress, the General
\\'V.'II). This might also explain why
defiance to the Constitution USA), and
Accounting Office, the Supreme Court,
the Supreme Court ruled that the 16th
the way a hypothetical single corporate
the National Security Council, and the
government might operate - if it truly
Amendment granted 'no new powers'
lD goyc:rnment- maybe they meant 'no
Departments of Agriculture,
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
" The Christian Founding Of The U.S.A.
"AS flesh and blood members of
The Iocome TaJ: Caonot Be Applied To Property Including Labor, Wages,
the 'Union USA' we have God-given
Occupations, Professions, Trades, Employments.; as subjects! citizens of corporate
U.S.', we have only government Banks Can Loan Money Not Credit. pri vileges.
Lawyers Not Licensed By States.
Corporate citizens are
artificial persons who enjoy privileges
only after the moment of birth and



__ ._._-_._-



2 By Larry Becraft with adaptations by Mark and Tina Terry




II~I'I" \1.1~.I/lII<

~ Open Letter To IRS Commissioner


Dear Mrs. Margaret M. Richardson,

I have been searching fot many years to
find, within U.S. Code Title 26, the Internal

of July I, 1862, was the Office of the

Commissioner; neither the Bureau of
Internal Revenue, nor the "Internal Revenue

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 regarding how the "Internal Revenue Service" was
established; what my research has uncovered 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:

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

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

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

Secretary of the Department of the Treasury

of Puerto Rico."
So there apparently exists another
"Department of the Treasury" -- in Puerto

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 Congress. This is obviouslY a serious flaw.
I have also found the following statement

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 organizations?
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 internal 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 Directives.
"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 subsequently by the Internal Revenue Code of
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 follows it."
In other words, this cite from Title 48
plainly states that the entire Internal

"(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


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 revenue in the absence of that officer. and exercise the privilege 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

in the Federal Register Vol. 41, Sept. 15,

"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.

Revenue Code, from start to finish, is "generally" made up of "internal revenue laws"
which are relevant to the enforcem ent of
Title III of the National Prohibition Act,

which to invest one. there can be no officer. An office

may exist only by duly constituted law."

U.S. 512. 516.40 S.C!. 374, 376 (I 920}; Metcalf & Eddy

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

U.S. 264. 269, 76 S.Ct. 383 (1956) - " 'Officers' nonnal-

Turner v State. 226 Ala. 269. 146 So. 601. 602 (1933);

which is presently located in Puerto Rico

Oklahoma City v Century Indemnity Co , 178 Okl. 212,
and the Virgin Islands.
62 P.2d 94. 97 (1936); State ex rei Nagle y Kelsey, 102
This is truly astound ing. Obvious ly,
Mont. 8. 55 P. 2d 685, 689 (1936); Stapleton y,
when I read the above statute, I must ask EIslhmi.lkI,
53 Ariz. 11. 85 P. 2d 49, 51 (1938);
this question:
Buchholtz y Hill, 178 Md. 280, 13 A. 2d 348. 350
Which internal revenue laws "generally (1940); Krawiec
v Industrial Comm 372 Ill. 560. 25
located at 26 USCS @ @ I et seq." are releN.E. 2d 27, 29 (1940); People v Rapsey. 16 Cal. 2d 636.
vant to anything other than and/or in addi107 P. 2d 388. 391 (1940); Industrial Comm v Arizona
tion to the enforcement of Title III of the State Highway Comm,
61 Ariz. 59. 145 P. 2d 846. 849
National Prohibition Act?
(1943): State ex reI. Brown v Blew. 20 Wash. 2d 47.145
So far my research reveals the following:
P. 2d 554. 556 (1944); Martin v. Smith. 239 Wis. 314. I
a) The only "Internal Revenue Service" I N.W.2d 163, 172 (1941);
Taylor v Commonwealth. 305
can find so far is not an agency at all, but
Ky. 75. 202 S.W. 2d 992. 994 (1947); State ex rei
simply an alias (term replacement) for the
Hamblen v Yelle. 29 Wash. 2d 68. 185 P. 2d 723. 728
term "Directo r, Alcohol , Tobacco and
(1947); Morris v Peters. 203 Ga. 350. 46 S.E. 2d 729.
Firearms Division."
733 (1948); Weaver v North Befien Tp. 10 N.J. Super.
b) "Internal Revenue Service" isn't listed 96,76 A. 2d 701 (1950);
Tomaris v State. 71 Ariz. 147.
as an organization of the Departm ent of the
224 P. 2d 209. 211 (1950); Pollack v Montoya, 55 N.W.
Treasury in Title 31, but that there does
390. 234 P. 2d 336. 338 (1951); Schaeffer y Superior
exist in statute another "Departm ent of the
Court in & for Sama Barbara County. 248 P. 2d 450. 453
Treasury" - of Puerto Rico - which has a (CaI.App. 1952); Brusnigham
y State, 86 Ga. App. 340.
"Secretary" and "Revenue Agent(s)", and
71 S.E. 2d 698. 703 (1952); State ex rei Mathews y
perhaps an "Interna l Revenue Service" M.urra.\(, 258 p. 2d
982. 984 (Nev. 1953); ~
although I have yet to locate such "agency"
AnlIi:u..s. 342. Mich. 548. 70 N.W. 2d 765. 767 (1955);
or "term" therein.
Hetrich y County Comm of Anne Arundel County, 222
c) The internal revenue laws relevant to
Md. 304, 159 A. 2d 642, 643 (1960); Mciland v Cody,
the enforcem ent of Title III of the National
359 Mich. 78. 101 N.W. 2d 336. 341 (1960); ~
Prohibition Act are "generally located at ~. 216, Ga. 616.118
S.E. 2d 484.485 (1961); ~
26 USCS @@ I et seq.", in other words,
~. 264 N.C. 149. 141 S.E. 2d 241. 245
through out the entire Internal Revenue
Planning Bd Of Tp of West Milford v Tp Council of
Code, and I have no way of knowing which
Tp of West Milford. 123 .J. Super. 135.301 A. 2d 781.
internal revenue laws in the Code are
784 (l973); Yander Linden v Crews. 205. N. w. 2d 686.
relevant to anything other than and/or in
688 (Iowa 1973); Kirk v Flournoy. 36 Cal.App. 3d 553.
addition to Title III of the Nationa l
III Cal. Rptr. 674. 675 (1974); Wargo y Industrial
Prohibition Act.
C2m.m.. 58 III. 2d 234, 317 N.E. 2d 519. 521 (1974);
At the state level, it is a well-acknowlState v Bailey. 220 S.E. 2d 432. 435 (W. Va. 1975); Lk
edged and accepted rule that a duly consti- Y.....lJI.e.jj. 217 Kan. 784.
539 P. 2d 304, 323 (1975);
tuted office of the state government must be Midwest Television.
Inc v Champaig n-Urbana
created either by the state constitution itself,
Communications Inc. 37 III.App. 3d 926, 347 N.E. 2d
or else by some specific legislative act; see 34.38 (1976); and State v Pickney.
276 N.W. 2d 433.
the following:
436 (Iowa 1979).
Patton y Bd Of Health. 127 cal. 388. 393. 59 P. 702,
704 (1899) - "One of the requisites is that the office must
be created by the constitution of the state or it must be
authorized by some statute."
First Nat Bank of Colombus y State. 80 Neb. 597.
114 N.W. 772. 773 (1908): State ex reI. ~
Cunningham. 39 Monl. 197. 103 P. 497. 498 (1909);
State ex rei Stage y Mackie. 82 Conn. 398. 74 A. 759.
761 (1909); State ex rei Key y Bond. 94 W. Va. 255. 118
S.E. 276. 279 (1923) - "a position is a public office when
it is created by law."
Coyne y State, 22 Ohio app. 462. 153 N.E. 876. 877
(1926) - "Unless the office existed there could be no officer either de facto or de jure. A de facto officer is one
invested with an office; but if there is no office with

This same rule applies at the federal level

See United States v Gennaine. 99 U.S. 508 (1879);
Norton y Shelby County. 118 U.S. 425. 441. 6 S. CI.
1121 (1886) - "there can be no officer. either de jure or
de facto. if there be no office to till;" United States v
M! 124 U.S. 303,8 S.C!. 505 (1888); United States

.v.....Smilll. 124 U.S. 525. 8 S.C!. 595 (1888); illAvu..v.

United States. 182 U.S. 595, 607. 21 S.C!. 891 (1901)"The law creates the office. prescribes its duti~IIl;":
Cochnower y United States. 248 U.S. 405. 407. 39 S.CI.
137 (1919) - "Primarily we may say that the creation of
offices and the assignment of their compensation is a legislative function ... And we think the delegation of such
function and the extent of its delegation must have clear
expression or implication"; Burnap y United States, 252

v Mitchell. 269 U.S. 514.46 S.C!. 172. 173 (1926);

Iy means those who hold defined offices. It does not

mean the boys in the back room or other agencies of
invisible government. whether in politics or in the tradeunion movement;" Crowley v SoUthern Ry, Co, 139 F.
851. 853 (5th Cir. 1905); Adams v MUCIlhy. 165 F. 304
(8th Cir. 1908); Sully v United States, 193 F. 185. 187
(D.Nev. 1910) - "There can be no offices of the United
States. strictly speaking. except those which are created
by the Constitution itself. or by an act of Congress. and.

when Congress does so establish an inferior office;"

Commissioner v Harlan. 80 F. 2d 660. 662 (9th Cir.
1935); Yarden v Ridings, 20 F. Supp. 495 (E.D.Ky.
1937); Annoni v Bias Nadal's Heirs. 94 F. 2d 513. 515
(1st Cir. 1938); and Pope v Commissioner, 138 F. 2d
1006. 1009 (6th Cir. 1943).

Since I have reached the conclusion that

an agency known as "Internal Revenue
Service" has never been created by Congress, I am hereby requesting that you
provide to me the citation of any statute(s)
which rea.lly did create the/an "Internal
Revenue Service" (other than the "Internal
Revenue Service" referenced in Exhibit B,
which is admittedly only a term replacing
another term, and clearly not an agency.)
I am also requesting that you inform me
where in the Departm ent of the Treasury (of
the United Sates, not of Puerto Rico)
"Internal Revenue Service" is located and
listed as an agency, and provide me with the
statutes to support its establishment and
location therein.
Finally, I am also asking you to provide
me with a clear and statutorily supported
statemen t which clarifies exactly which
internal revenue laws "generally located" in
the entire Internal Revenue Code are relevant to anything other than and/or in addition to the enforcem ent of Title III of the
National Prohibition Act.
Since this is a question of profound personal and national importance, I request that
you provide an answer to me within thirty
(30) days. Failing a response within that
time period, I shall conclude that you can
find no such statute(s) responsive to my
request, and I shall act accordingly.
Respectfully, Mark & Tina Terry
405-C South Beeline Highway
Payson. Arizona 85541

(Editor 's Note: Larry Becraft is a

private attorne y who also serves as
legal counsel for this magazi ne. The
Terrys are legal researchers.)

Rebellion or
by Steffan M. Bertsch,
Attorney at Law
For years, I've said the principle
Beginning In March of 1996, Bertsch
problem with the legal profession was cow
sought the aid of the Attorney General of
ardice. Until recently, it was almost impos- ,. Washington, _Ch~i~~Jireg~Lr.el i~~~~pos- .
sible to find a lawyer who was more intering the fraud. Ms. Gregoire's office reo
ested in law than procedure orjustice rather
searched the issue and attempted to defend
than billing -- and rarest ofall, Iuu:i the cour
the unlawful acts of the IRS, but has been
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
yers willing to stand up and fight against
On May I, 1996, Bertsch also sought
the system. Mr. Bertsch appears is one of
the aid of Edward Shea, the president of the
those remarkable lawyers who has courage
Washington State Bar Association, to exand is therefore worthy of real respect.
pose the fraudulent activity of the IRS in
_ On July 4, 1996, Mr. Bertsch pubseizing property without lawful authority.
lished the following press re~ order _ In response to the plea for assistance In exposing the fraud, Mr. Shea acknowledged
toe:xpose massive fraud by the.J.!!L His
- press release was based on a series of let
that Bertsch was exercising his right to freeters askin8... Washington Governor, State
dom of speech, and suggested that the
. Bar President, and Attorney General for
United States Attorneys and the Department
of Justice would be the proper agencies to
help in correcting that fraud-"- Those letters
follow the press release and provide a well
contact for relief. Bertsch responded to this
written, professional explanation of some
suggestion by indicating that both of those
of the fundamental fraud inherent in the In
parties were too close to the fraud to be obternal Revenue Code.
jective, and proposed that he be allowed to

present a seminar to bar members to reveal

the fraud to Washington State lawyers, who
like the rest of the people, are totally ignoJULY 4, 1996
rant of the scheme. To date the bar has remained silent about the proposed seminar.
An Everett, Washington attorney,
In April of 1996, Bertsch began corSteffan M. Bertsch, has spent over eighteen
respondence with Governor Lowry's office
months examining the Internal Revenue
in an effort to halt the illegal seizures by the
Code and its regulations and concluded that
IRS in Washington State. The governor rethere is no authority for the IRS to seize any
sponded the "Because the issue raised is a
personal or real property in Washington
federal matter, it is out of my jurisdiction as
State for alleged income tax liabilities from
governor." Govemorco'wrY-aaaec!1naC '1-"most citizens. Bertsch charges that the
oope your effurts to resolve this matter pro~e
agency has been seizing property for deworthwhile...
cades through numerous deceptions and
The fraud Bertsch charges is too sestrong-ann methods, and has conducted an
vere for the Washington State Bar Associaongoing fraud that nearly everyone in the
tion to Investigate, too egregious for the Atstate believes to be legal. The state of affairs is this: De IRS is operatin&,2utside , torney General to defend, and originates
from too great a power for the governor to
.~ and has pla~~c:1 the citizens of Wash- :;
ington State under gove-,,"m_~~~~~arcL act upon it. The duty of exposing a system-




atic fraud that only Charles Ponzi could

admire falls upon the media.
Members of the media who are interested in further infonnation can contact
Steffan M. Bertsch at 1-800-597-1789.

** * *
Here's the key letters that ultimately
precipitated Mr. Bertsch's Press Release:

May I, 1996
Edward F. Shea, President
Washington State Bar Association
500 Westin Building
200 1 Sixth Avenue
Seattle, Washington 98121
Dear Mr. Shea:
After reading your article about common-law courts In the May issue of the
Washington State Bar News, I felt compelled to write you. You began to close in
the penultimate paragraph with:
"When we know that our fellow lawyers in public office and judges within the
judicial system are being subjected to coercion and harassment, we must recognize our
affirmative professional responsibility to
speak out against this harassment and to
educate the public about the true value of
our judicial system and law-and we will."
I have discovered a fraud that has a
long-standing acceptance in Washington
State. When I learned of the fraud, I naively said, "No problem, we'll take it into
the courts and have it remedied immediately." To my surprise, I discovered that
judges either cannot or will not address this
fraud. My only conclusion is that they are
being coerced into acceptance of it. Since
you are strongly opposed to the harassment

Volume 6, No. 3

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.

I now understand how Galileo must

have felt when he claimed the earth was
round. Nobody wants to hear the truth. I

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




.. TI-lt POW~~ TO TAX IS Tj.JE


Volume 6, No.3

D~SmOY ..



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.
Steffan M. Bertsch

June 26, 1996
Mr. Edward F. Shea
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 seizures 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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On July 2. 1996. Bar President Shea

responded to Mr. Bertsch:

Association was an exercise of my free

speech, but it encompasses much more of
the First Amendment than that. My petition 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 members of the bar. Each member deserves to
know that he or she is acquiescing to fraudulent seizures of property by the IRS.
Your recommendation that I present
my "accusations" to the Department of Justice and the United States Attorneys of the
Western District of Washington State is discouraging. My petition was to the bar because 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 organization 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
It was with great trepidation that I petitioned 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 fortunes and liberty will be stripped when the
truth is told. However, I know that the vast
majority of the members of the bar are ethical and honest, and I know that when the
evidence is presented, those members will
support the truth. The bulk of our members are ignorant of the fraud, and are truly
victims of the IRS scheme.
Since, from your response, I must assume that the bar will not conduct an Investigation 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 parties an opportunity to assist in the preparation 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.
Steffan M. Bertsch

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 concerns 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 Assistant Attorney General Tff!sponded with an
excellent example ofthe government's standard "analysis" (justification) of income
tax and the general population s obligation
to file and pay. The underlined texl is provided by the AGs office.

**** *

I have received a second letter from

you in which you allege that the IRS has
abused its power, and express a number of


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 Western District of Washington were and are constructive. I continue to believe in the integrity of the United States Department of Justice and its regional offices of U.S. Attorneys to pursue justice wherever the facts
may lead. Finally, there are no end of options that you have as an individual practitioner and as a citizen including contact with
members of the congressional delegation
about your concerns.
Edward F Shea, President

* *

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 concerns 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 provisions requiring individuals to file, Washington citizens may have gone to jail for failure to file a 1040; and
(4) whether the Internal Revenue Service has authority to seize property for the income tax liabilities of Washington citizens.

Volume 6. No.3

concerns about reasons behind this office's

failure to respond to your inquiries. You
stated in your April 2nd letter that you sent
another letter on March 24. 1996, which we
have not been able to locate.
The general requirement to file can
be found in the language of Section 6001
of Title 26 of the United States Code. better
known as the Internal Revenue Code (lRC)
which provides in relevant part:
Section 6001. Notice or regulations requirin g records , stateme nts, and
special returns. Every person liable for any
tax imposed by this title, or for the collection thereof, .s..b..a!l keep such records, render 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. render 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 contention.
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 collection thereof. shall make a return or statement 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 .... ,.

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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 return 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 provides in pertinent part:
Section 1.6012-1 Individ uals required 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 Secretary 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 purposes, unless one can qualify under an optional (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 general use in making the return required under this paragraph. Form 1040A is an optional short form which may be used by certain taxpayers.
As you seem to be aware, the penalties for failing to file can be somewhat severe and can include both fines and imprisonment. 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 under authority of subchapter A of chapter 61
[which includes sections 6001. 6011, and


6012, above], on the date prescribed therefor .. , 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 additional month or fraction thereof during
which such failure continues, not exceeding 25 percent in the aggregate.... In the
case of a failure to file a return of tax imposed 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

** *
Increase in penalty for fraudulent failure to file. If any failure 10 file any
return is fraudulent, paragraph (I) of subsection (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 severe penalties may result. Section 720 I of
the Code provides:
Section 7201. Attemp t to evade or
defeat tax. Any person who willfully attempts 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.


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 failing to pay taxes.

On May 7, 1996, Mr. Bertsch responded 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.

Section 7203 of the IRC makes explicit 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 authority 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
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 duties 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

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 answer my questions. On the surface, your
response seems full, complete, and to vindicate 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 Washington 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 representation. 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 image 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


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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 inspection, it controls them not.
I realize this sounds strange to you,
because you have been reared under the concept 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 participants in the fraud. And, you have not
considered an investigation of its lawfulness. 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 depression, 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 instance, 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 ; .
t;;-catc1J- the naive. To und~~~ta~d~ho it
cover;:-onemustnot assume even the minutest detail. Since you started with Section 600 I, it should be addressed first. Bear
in mind that the following is not a complete
analysis, but only a summary. Further. consider 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" liable. Under the code, persons include corporations.
As you pointed out, Section 6012
says: "Every individual having for the taxable year gross income ..." One Issue is,
quite simply, "What Is income?" Do not
reach any con~hJsio~~that;akeYou jump
Volume 6, No. 3


up and down without thorough inspection

of the code. Definitions and rules of construction 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 Constitution 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, "income" 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, District of Columbia, U.S. commonwealths or
possession, and certain foreign governments. 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 individuals to the IRS can be used against them

Volume 6. No. 3

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in a court of law. Should the Department of
Section 6012(a) says that every indiJustice believe a filer to be defrauding them
vidual shall
- -make
.- "a-retum.
- .- If "shall" means
of money, the filer can be charged with in"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 inStates. If shall is obligatory in this case. then
come tax returns such as form 1040J.Lc~ __ people are required to file retums
that may
be used against the filer in the trial.
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 onearound 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 crimithey 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
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 decepno constitutionally-protected rights. There- , tion occurswhen-ihe IRS the;:; provides "alfore, the IRC filing requirements are manleged taxpayers" with a Privacy Notice that
datory"'Upoi1-;;orporations, yet volunta.!L,"_ is a veiled Miranda warning. The tax
-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 readsupra 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 dewith 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 accompanyaway With such chicanerywnen a fundamening 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
www.antishvster ~om


rect, and complete." If someone signs the 1040

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


The Republic of Texas


A Whole Other Country

Sound Good to You?

Volume 6, No. 3



by the national government within the

state's borders. I cannot say whether the
IRS is a federal agency; it is an organization 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 character. I am chagrined to think that our governor 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 Congress for relief. Since the IRS is the collection 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 because 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 impede or eliminate illegal activities by IRS
agents by forcing them to follow the law in
Washington State.
While I am chagrined at your decision to facilitate the ongoing fraudulent seizures of property of Washington State citizens, I am not without hope. I have appealed to the President of the Washington
State Bar Association for assistance in exposing the fraud. I have also been in contact with the Attorney General's office and
have received a response from Leland
Johnson of that office. Mr. Johnson addressed many of my issues, but did not answer 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 aspect of their performance on the benches.
Therefore, the couns are not capable of effectively 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 seizures, so appeal to the national executi ve
would also be a useless petition.


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 office 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 liabilities 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 serious this matter is. If you check the history
of rebellions in the world, you will find that
almost all are based upon oppressi ve taxation. 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 rebellion 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, antigovernment, but are definitely "anti-corruption."
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 collection and banking systems. My concem for
my country is how much longer the "tax protest" 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 ultimately led to a revolution. King George had
the lawful authority to tax and seize. yet the
colonists revolted. The IRS has not the lawful authority to seize property for income tax
America is replete with a history of
passive, quiet rebellions. The election of


1800 wherein Thomas Jefferson was elected

president is one. His party of DemocraticRepublicans immediately began dismantling
federal power, then eliminated federal deficits and restored liberties that had been taleen
by the Federalists. One of the first oppressive acts to fall to the Jeffersonians was the
1798 Alien and Sedition Acts, which violated every premise of Freedom of Speech
and Press. We are a forgiving nation, therefore, we can have peaceful change, even
when there is core corruption or massive oppression.
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 disposed 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 usurpations, pursuing Invariably the same object, evinces a design to reduce them under absolute despotism, it is their right,
it is their duty to throw off such governmelll and provide new guards for their
future security. ... " (Declaration of Independence, 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 peaceable 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 intorevolutions. 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