20th March 1996
BEHIND THE LINES by Jack Wheeler IS THE IRS A PAPER TIGER? reprinted from STRATEGIC INVESTMENT March 20, 1996. One definition of a pioneer is a guy with an arrow in his back. So notice the above headline is a question, not an assertion. But it is nonetheless a question being asked by a lot of folks these days, from Bill Archer, Chairman of House Ways & Means, to a number of smart tax attorneys. The federal tax code has mutated into this gigantically incomprehensible Rube Goldberg monstrosity that day-to-day gets closer to collapsing under its own weight. Couple that with the fact that the IRS computer system is about to go belly up. The IRS originally computerized itself ad hoc, with the regional centers getting various platforms that can't communicate with each other very well. The agency has now spent over $8 billion on the TSM project to recomputerize which an independent review recently concluded is a colossal failure. As the IRS teeters on the brink, a fellow named Eddie Kahn has stepped forward and may be about to push the whole creaking mess over the edge. He hasn't got an arrow in his back yet, so he might just succeed. Disdainful of "tax protests" such as 5th Amendment or legal tender arguments that quickly get their advocates behind bars, Eddie looked into the structure of federal law. When Congress passes a law, codified as a statute, it then delegates to a regulatory agency the authority to issue the implementing regulations specifying to whom and under what circumstances the statute applies. These regulations must, by law, be published in the Federal Register. Lacking these implementing regulations the law cannot be applied and has no force. Well, it turns out the implementing regulations for IRS' enforcement statutes-things like requirement to file a tax return and the authority to place a lien-cannot be found in the Federal Register. When queried on this, the General Counsel for the Office of the Federal Register, Michael White, replied in writing, "Our records indicate that the Internal Revenue Service has not incorporated by reference in the Federal Register a requirement to file an income tax return. This is starting to get interesting, isn't it? And yes, I see that big smile on your face. If Eddie is right, the IRS has no assessment authority, no collection authority, no authority to enforce a lien or seize property, no authority to pursue criminal penalties for failure to file a return or make false/fraudulent return. I am not suggesting at all you be a pioneer. But if you should have any difficulty with the lovable folks at the IRS, you might consider making an appointment to see them in person at their nearest office, and tell them face-to-face that you need to see a copy of the implementing regs published in the Federal Register that show they have the authority to do what they want. Not one of the close to a thousand people who, following Eddie's advice, have done so received a copy -and not one of them has been further harassed. Better to let these folks drop out of the system quietly than risk a negative decision in court, which would be for them an ultimate catastrophe. You can get more info from Eddie at 1-800-419-7512. STRATEGIC INVESTMENT is published monthly. STRATEGIC INVESTMENT 1217 St. Paul Street Baltimore MD 21202-4799 410-234-0691
