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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
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410-234-0691