Leins and Levies

LIENS AND LEVIES

[Forms from the Forms Pack required: #41]

According to Thatcher v. Powell, 19 US 54, 56; and Margiotta v. District Court, 214 F2d 518, if you get a Notice of Lien, and if the procedures preceding that lien were deficient, then the lien itself is void. The IRS's own manual (IRM Pt. 4, Ch 5400 sec. 5450, 545(19)(I)(b)2) also concedes that a non-compliance penalty cannot be enforced without a lawsuit.

A Notice of Levy is not a levy or a claim. The Internal Revue Code demands that a "Notice of Levy" must be issued before the Levy itself can take effect:

sec. 6331 (d) REQUIREMENT OF NOTICE BEFORE LEVY. -

( 1) IN GENERAL. -Levy may be made under section (a) upon the salary or wages or other property of any person with respect to any unpaid tax only after the Secretary has notified such person in writing of his intention to make such levy.

(2) 30-DAY REQUIREMENT. -The notice required under paragraph ( 1 ) shall be -

(A) given in person,

( B) left at the dwelling or usual place of business of such person, or

(C) sent by certified mail or registered mail to such person's last known address, no less than 30 days before the day of the levy

But, let us be sure that we're addressing the correct people. Chapter 24 of the Internal Revenue Code is entitled "COLLECTION OF INCOME TAX AT SOURCE OF WAGES." This is where the Code defines who is involved..

Sec 3401. DEFINITIONS

(a) WAGES. -For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official) for services performed by an employee for his employer, including the cash value of all remuneration (including benefits) paid in any medium other than cash..."

This would seem to say that all "employees" are involved --but who is an "employee?" Look two paragraphs farther down the Code:

Sec 3401 (c) EMPLOYEE. -For purposes of this chapter, the term "employee" includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of anyone or more of the foregoing. The term "employee" also includes an officer of a corporation.

Behold, to be an "employee," you must work for government! And, since there is no additional definition of "United States" or "State," the definitions in Section 7701 which apply to the entire title (defines "United States" and "State" as the District of Columbia) , prevail.

So, who does the next paragraph identify as the "employer?"

Sec 3 401 ( d) EMPLOYER. -For purposes of this chapter, the term " employer" means the person for whom an individual performs any service, of whatever nature, as the employee of such person..."

Who is the "employer?" The federal1!overnment!

If you ever receive a "Notice of Levy," it will state the section of the law which empowers it. But, you will notice that the definition they provide begins with paragraph (b ). Why? Because if they showed you paragraph (a), they'd destroy their own claim that you had any liability! Let us go back to the Section which describes "Levy and Distraint."

Sec 6331. LEVY AND DISTRAINT

(a) AUTHORITY OF SECRETARY. -If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property ( except such property as is exempt under section 6334 ) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. Levy may be made upon the accrued salary or wages of any officer. employee. or elected official! of the United States. the District of Columbia. or any agency or instrumentality of the United States or the District of Columbia, by serving a notice of levy on the employer ( as defined in section 3401 ( d) of such officer, employee, or elected official. If the Secretary makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the Secretary and, upon failure or refusal to pay such a tax, collection thereof by levy shall be lawful without regard to the 1 O-day period provided in this section. [emphasis added]

The SECRETARY (and nobody but the Secretary himself) is authorized to impose a levy upon a GOVERNMENT EMPLOYEE! There is NO authorization in this law for imposing a levy upon private sector wages! Since the government already has the money, it is simple to have it shifted from one government account into another. However, for a private sector employee, there is absolutely no regulation which implements a seizure pursuant to a levy, except for ATF activities.

There is a statute which purports to immunize third parties (such as banks) from suit when they surrender your assets.

Sec6332(e) EFFECT OF HONORING LEVY. -Any person in possession of (or obligated with respect to) property or rights to property subject to levy upon which a levy has been made who, upon demand by the Secretary, surrenders such property, or right to property (or discharges such obligation) to the Secretary (or who pays a liability under subsection (d)( 1 ) shall be discharged from any obligations or liability to the delinquent taxpayer and any other person with respect to such property or rights to property arising from such surrender or payment.

Do not be alarmed by this section. It applies to actual levies and demands, not simply to a "Notice of Levy." So, if you employer, or your bank, or anyone else surrenders your property without a warrant from a court, you can sue them for giving away your property without lawful authority (GM Leasing v. United States. 429 US 338.354; O'Brien v. Harrington. 233 F2d 17; United States v. O'Dell (1947 CA6). 160 F2d 304; in re Brokol. (1965 CA3). 221 F2d 640.646; Givan v. Cripe. (1957 CA7). 187 F2d 225). You will have to take this step, since once the IRS has the money (property) you can only recover it through a lawsuit claiming procedural disobedience.

So, as soon as you learn of a "Notice of Levy," you must immediately notify your boss or bank that, if they release your property, they will be sued -and be sure to give them a clear statement of the reasons (given above). Alternatively, you could bring suit against the IRS to quash the "Notice of Levy" --pointing out that such a measure is not available except as to a government employee.

Most people believe that a "Notice of Levy" is the same as a seizure. That is false. The mere "notice" without the actual seizure is empty unless an uninformed recipient of the "notice" acts upon it without proper education.

A Levy is imperfect without a seizure. That's why the IRS wants the bank to remove your money from your account before you know about it. While the bank is holding the money for 21 days, the Levy has not been perfected. Only when the money is turned over to the IRS is the Levy an accomplished fact (In re Holdsworth (1953 NJ), 113 FS 878).

Whenever you encounter a lien, levy seizure or sale, go through the IRS action list (Internal Revenue Manual 5600-33, Collection Field Techniques, Exhibit 5600-24). Check every step to see if something was omitted or skipped. Here are some of the items which might have been overlooked:

1. Notice of Deficiency (90 days prior to assessment (IRS Code Sec. 6213(a) must be sent by certified or registered mail -demand the receipt (IRS Code Sec. 621))

2. Notice of Assessment (within 60 days after assessment (IRS Code Sec. 6303))

3. Notice of Intent to Levy (at least 10 days prior to levy (IRS Code Sec. 6331(d))

4. Notice of Intent to garnish wages (United States v. Berman 825 F2d 1053. 1055; IRS Code Sec. 6331(d)(I)) --requires a lawsuit (Sniadach v. Family Finance Corn. Of Bay View. (1969).395 US 337)

5. Actual seizure with Notice of Seizure (IRS Code Sec. 6335(a) and 6502(h); Goodwin v. United States 935 US 1061; Arford v. United States. (1991).934 F2d 226.)

6. Warrant of Distraint (any seizure from private party, especially if not signed personally by Territorial Manager (IRS Code Sec. 6303))

7. Proper address used (due diligence requirement {Cyclone Drilling v. Kelley. 769 F2d 662; Mall v. Kelly. 564 FS 371.373))

8. Notice of Sale mail, post in 3 places, and publish (IRS Code sec. 6335(d))

9. Notice of Redemption Rights (IRS Code sec. 6337(b))

10. Response to Request for Record of Assessment (Arford. supra; IRS Code sec. 6203)

11. Response to Request for Record of Sale

If you find a defect (mistake) in the proceedings prior to the lien or levy, the "notice" is invalid (United states v. Sourapas. 515 F2d 295; United States v. Heffner. F2d 809. 811-812), and you are entitled to a release (26 CFR sec. 20.6325-1, et seq.).

Blacks Law Dictionary (sixth edition) defines the word "bailee" as:

In the law of contracts, one to whom goods are bailed; one to whom goods are entrusted by a bailor; the party to whom personal property is delivered under a contract of bailment. A species of agent to whom something movable is committed in trust for another. Smith v. State, 78 Okl.Cr . 343, 148 p .2d 206,208.

If you actually file suit against your employer, bank or other bailee of your property, for improper surrender, you may get additional damages as well. You should sue in state court, where the IRS will not bother to protect either the bank or your boss.

If you are faced with a seizure and sale, immediately send the IRS a demand for abatement of their action, on the grounds of lack of an implementing regulation, plus the invalidity of the assessment, based upon all of the procedural grounds listed above (IRS Code sec. 6325 and 6326).

Agents face serious personal penalties for willful refusal to abate when lawful demand is made (Bothke v. Fluor Eng'rs - Contr'rs. Inc.. 713 F2d 1405. 1414).

Chances are the property will be released and any scheduled sale vacated. If this remedy fails, do not hesitate to file a suit to quash the "notice," or, if all else fails, to put yourself into a bankruptcy to stop the seizure process. You are entitled to a full examination into the validity of the tax, both as to the amount and as to the procedure, in bankruptcy (11 USC sec. 505). And, if you select the appropriate bankruptcy chapter, you can revoke it later.

Form 41 in the Forms Pack is a Declaration of Exemptions. It is a sample of the reclassification declaration which may be executed by anyone who claims the status of a Sovereign Citizen. Such a declaration is intended to be a high-profile announcement to the world that you no long intend to submit to the abuse of big-government run wild. Copies are sent to: social Security , The Secretary of the Treasury, the Foreign Operations Department of the IRS at Philadelphia, the regional Service Center, and the local Territorial Manager. This open publication is intended to establish, once and for all, you status, and to refute any claim that you are concealing some improper intention. If you proceed with this, it is also advised tat you consider the preparation of a list of your receipts and expenditures, in full compliance with what the IRS Code in sections 6001 through 6012 requires of a "taxpayer," so that the IRS cannot claim that you have refused to comply with the law --even including the law which does not apply to the Sovereign Citizen. You must be sure to do so with full Reservation of all Rights in Law, Equity, and all other natures of law, Under Penalty of Perjury. The idea is to invite the IRS to assess the citizen (you), if it can find a legal way to do so.

Here are some definitions that come up when discussing IRS actions:

"ATTACHMENT"

"The act or process of taking, apprehending, or seizing persons or property, by virtue of a writ, summons or other judicial order, and bringing the same into the custody of the law; used either for the purpose of bringing the person before the court, of acquiring jurisdiction over the property seized, to compel an appearance, to furnish security for debt or costs, or to arrest a fund in the hands of a third person who may become liable to pay it over . Also the writ or other process for the accomplishment of the purposes above enumerated, this being the more common use of the word. A remedy ancillary to an action by which plaintiff is enabled to acquire a lien upon property or effects of defendant for satisfaction of judgment which plaintiff may obtain. [First Nat. Bank - Trust Co. of Vermillion v. Kirby, 62 S.D. 489, 253 N.W. 616; Lipscomb v. Rankin, Tex.Civ.App., 139 S.W.2d. 367, 369.]

Though sometimes called an ancillary or auxiliary proceeding, it is in all essential respects, a suit. [Farmers State Bank of Lexington v. Lemmer , 130Neb. 211,264N.W. 415,416.]

The purpose is to take defendants property into legal custody, so that it may be applied on defendants debt to plaintiff when established. [John Deere Plow Co. of St. Louis v. l. D. Jennings, Inc., 203 S.C. 426, 27 S.E.2d 571, 572; Union Bank & Trust Co. v. Edwards, 281 Ky. 693, 137 S.W.2d 344,348.]

"EXECUTION"

"Attachment distinguished". Under an attachment, property of defendant is placed in custody of law to await final determination of suit, and the attachment is really a preliminary execution dependent for its ultimate efficacy upon the rendering of a judgment in plaintiffs favor; on the other hand an "execution" is a remedy afforded by law for the enforcement of a judgment of the court. ). M. Radford Grocery Co. v. Owen by, Tex.Civ.App., 34 S.W.2d. 385,387.

"GARNISHMENT"

" A warning to a person in whose hands the effects of another are attached, not to pay the money or deliver the property in his hands to him, but to appear and answer the plaintiffs suit. Drake, Attachm. Section 451 ; National Bank of Wilmington v. Furtick, 2 Marv ., Del., 35, 42 a. 479' 44 L.R.A. 115, 69 Am.St.Rep. 99; Jeary v American Exch. Bank, 2 Neb. (unof.) 657,89 N.W. 772.

A statutory proceeding whereby one's property, money, or credits in possession or under control of, or owing by, another are applied to payment of former's debt to third person by proper statutory process against debtor and garnishee. Beggs v. Fite, 130 T ex. 46, 106 S. W .2d 1039, 1042.

It is incident or an auxiliary of judgment rendered in principal action, and is resorted to as a means of obtaining satisfaction of judgment by reaching credits or property of judgment debtor in hands of garnishee. Graber v. Ft. Dearborn Casualty Underwriters of Chicago, III. Mo.App., 35 S.W.2d 933, 934. Or by reaching goods, moneys, or effects of debtor in possession of another, or by applying on a judgment, debts or credits due to a debtor by another. Nancy v. Le Page, 341 Mo. 1039, 111 S.W.2d 25, 114 A.L.R. 259.

Also a warning to anyone for his appearance in a cause in which he is not a party, for the information of the court and explaining a cause. Cowell; Crawford State Bank of Crawford v. Murphy, 142 Neb. 795, 7 N.W.2d 762, 763.

"Equitable garnishment" is sometimes applied to the statutory proceedings authorized in some states, upon the return of an execution unsatisfied, whereby an action something like a bill of discovery may be maintained against the judgment debtor and any third person, to compel the disclosure of any money or property or chose in action belonging to the debtor or held in trust for him by such third person, and to procure satisfaction of the judgment out of such property. Geist v. St. Louis, 156 Mo. 643, 57 S.W. 766, 79 Am.St.Rep. 545. See St Louis v. O'neil Lumber Co., 114 Mo. 74, 21 S. W. 484.

"EXECUTION"

"Garnishment" Execution includes writ of garnishment. Buckley v. F. L. Riley Mercantile Co., 155 Miss. 150, 124 So. 267.

Garnishment after judgment "is execution" within statute providing that execution shall only be issued from court from which judgment is rendered. Though a garnishment is not an execution, garnishment after execution is practically an equitable execution. First Nat. Bank of Cordell v. City Guarantee Bank of Hobart, 174 Okl. 585,51 P.2d 573,576.

"GARNISHEE"

One garnished; a person against whom process of garnishment is issued; one who has money or property in his possession belonging to a defendant, or who owes the defendant a debt, which money, property or debt is attached in his hands, with notice to him not to deliver or pay it over until the result of the suit be ascertained. Welsh v. Blackwell, 14 N.).L. 348; Smith v. Miln, 22 Fed.Cas. 606; Edwards v. Stein, 94 N.).Eq. 251, 119 A. 504, 505. Blacks Law Dictionary, Fourth Edition.

IF YOU DON'T WANT TO ASSERT YOUR RIGHTS

It is possible to get back the money you have paid in at the end of the year. You can cite a vital supreme Court ruling. Here, the Citizen listed their income as stated on their employer's W -2. Then, they again listed the ENTIRE AMOUNT under II Adjustments to Income" as a DEDUCTION, and cited "Eisner v. Macomber 252 US 189" (this decision criticized Congress for trying to redefine the word "income" to include capital. Income is not "capital" but the "gains and profits" derived from or severed from the capital). Since compensation for labor is capital, it is not taxable by the federal government.

The result is that they end up with NO income, and ALL withholding is REFUNDED (Note copy of Treasury Check at the bottom of the form). However, you will not have the use of these funds from the time they are withheld until your refund check arrives. If you are comfortable with this, you can do this year after year, and the result is essentially the same. You pay no Federal Income tax.

WORST CASE: IF YOU ARE ARRESTED (extremely unlikely}

Even if you are arrested, you can stop them in their tracks if you know what to say. ..and what to avoid saying! UNDERSTAND! It is EXTREMEL y unlikely that you will be arrested. Once the IRS realizes you are knowledgeable about the law, they fear you will sue them as private citizens for false arrest (which you definitely should do!).

You must be prepared to explain to the IRS agent what penalties he faces if he doesn't keep his actions toward you legal. Have available the Laws they are breaking, and when you present it to the agent, be sure to say,

"Are you aware of the penalties you face for pursuing these unlawful actions ?"

If the agent pursuing you is a total blockhead, and you end up in tax "court", even though you will be upset and scared, you must remember one prime thing, above all other things.

Do Not ENTER A PLEA!

No matter what you think you should plead, "Guilty," Not Guilty," "No Contest"...once you enter a plea, you have given the court the jurisdiction it was lacking until that moment -you have entered their game. This is another devious way they use to establish their jurisdiction over you (they don't have any until you volunteer it).

Now, remember, you should not REFUSE the enter a plea. Instead, you should answer:
"Your honor, I am not refusing to enter a plea. However, I do not believe I have the legal knowledge to properly answer your request. I respectfully ask to be shown the law I am accused of breaking, so that I can know HOW to plead. "

As you know, they can't produce such a law. If they attempt to offer "Refusal to pay income tax" or "Willful failure to file" to the judge, just stand your ground and ask again to SEE the law.

If you pursue this course, you may very well end up with the same results as the following:

Not so long ago, in Ohio, a judge, who was not well versed in the fabrications of the IRS, accepted the defendant's request and told the unhappy counsel for the IRS that he would give them a reasonable amount of time to produce the statute. After all, this was a perfectly legal, reasonable request. The defendant went home, and waited. A YEAR WENT BY. Then the defendant petitioned the court, and the judge threw out the case!

Of course, the only cases you hear about on the evening news are the ones where somebody prominent, like Wayne Newton, Red Foxx, Willie Nelson, and even famous divorce lawyer Marvin Michelson have been snared, and whose attorneys didn't know the law. Those people are skewered by the IRS (almost always around Christmas time) to set an example which will make all the rest of us tremble in our boots and not even think of confronting them.

If you were subpoenaed for holding a picnic in your back yard, you would consider that a frivolous charge, right? Well, failing to file an income tax return is no more illegal than holding a picnic in your own back yard, if you are NOT a federal citizen.

But, is it moral?

"It ain't so much what a man doesn't know that causes him so many problems, but what he "knows" that just ain't so."

That is the sage comment of Will Rogers.

Of course, once you have removed yourself from the tax system, you are not guaranteed to be trouble free forever, but it is highly unlikely that the IRS will attempt to go up against you again.

U.S. Senator Henry Bellmon reported in 1969,

"In a recent conversation with an official at the Internal Revenue Service. I was amazed when he told me that, 1f the taxpayers of this country ever discover that the Internal Revenue Service operates on 90% BLUFF, the entire system will collapse."

In 1980, U.S. NEWS - WORLD REPORT reportedly asked the Commissioner of the IRS, Roscoe Egger,

"What would happen if millions of people got sore and refused to report their income voluntarily?"

His response was an eye-opener for those who know the truth. He said,

"If taxpayers in those numbers refused. the system simply wouldn't work."

Later, in 1986, Mr. Egger resigned as IRS Commissioner. As he departed, he publicly stated that, to the best of his knowledge, there were at that time approximately Thirty Five MILLION Americans who no longer filed federal tax returns!

Also read Levies and Seizures