IRS Loses in Court

Bill KellerBill Keller

In an amazing court case involving the "income tax", a Chattanooga jury agreed with the argument by the defendant that the "income tax" is actually an "Excise Tax" and applies only to certain classes of people. [U.S. v. Long, Eastern District of Tennessee. CR 19391. October 15, 1993]

Nationally prominent attorney, Lowell Becraft of Huntsville, AL, assisted by attorney Russell J. Leonard of Sewanee, TN, defended Lloyd R. Long of Decherd, TN, who was charged by the Internal Revenue Service with willful failure to file income tax returns for the years 1989 and 1990.

In presenting the case for the Internal Revenue Service, assistant U.S. Attorney Curtis Collier, assisted by special agent Michael Greasley of the IRS, declared that Mr. Long had gross income in excess of $49,000 for each of the years 1989 and 1990, and that he had "willfully" failed to file income tax returns for those years as "required by law".

The defense admitted that Mr. Long did in fact have income in excess of $49,000 for each of the years in question, and that he did not file a return. He then proceeded to prove to the jury beyond a reasonable doubt that he was not "liable" for an income tax, nor was he "required by law" to file.

Defense testimony presented a case entitled Brushaber v. Union Pacific Railroad wherein it was the unanimous decision of the U.S. Supreme Court that the Sixteenth Amendment did not give Congress any new power to tax any new subjects; it merely tried to simplify the way in which tax was imposed. It also showed that the income tax was in fact an excise tax on corporate privileges and privileged occupations. The defense then brought a case entitled Flint v. Stone Tracy, wherein an excise tax was defined as being a tax laid upon the manufacture, sale and consumption of commodities within the country; upon licenses to pursue certain occupations and upon corporate privileges. Mr. Long's attorneys also brought out a case entitled Simms v. Arehns, where in the court ruled that the income tax was neither a property tax nor a tax upon occupations of common right, but was an excise tax.

The defense then brought out a case entitled Redfield v. Fisher, wherein the court ruled that the individual, unlike the corporation, cannot be taxed for the mere privilege of existing, but that the individual's right to live and own property was a natural right upon which an excise cannot be imposed. Defense also noted studies done by the Congressional Research Service showing the Income Tax to be an Excise Tax.

Next, the defense noted that in a Tennessee Supreme Court case, Jack Cole v.Commissioner, the court ruled that citizens are entitled by right to INCOME or EARNINGS and that right could not be taxed as a privilege. In another Tennessee Supreme Court case, Corn v. For, the court ruled that individuals have a right to combine their activities as partnerships; and that this is a natural right, independent and antecedent of the government.

The prosecution did not challenge or attempt to refute any of the cases cited, or the conclusions of the courts.

Defense brought out in testimony the fact that nowhere in the entire Internal Revenue Code was anyone actually made liable for the income tax. The IRS's own privacy act notice cites only three sections, and none of these sections makes anyone liable for the tax. They also proved that this was not an oversight by showing that the alcohol tax was worded so clearly that no one could misinterpret who is made liable for the alcohol tax.

Prosecution did not challenge or attempt to refute this point, nor were they able to show a statute that made anyone liable for the income tax.

Defense then presented the mission statement of the Internal Revenue Service stating that the income tax relied upon "voluntary compliance" and a statement from the head of the Alcohol and Tobacco Tax Division of the IRS which in essence showed that the income tax is 100% voluntary, as opposed to the alcohol tax, which is 100% enforced. Mr. Long stated that in 1988 he knew that: the income tax was in fact an excise tax; that he was not enjoying any corporate privileges nor engaged in any privileged occupation; that income or earnings from the exercise of common rights could not be taxed as an excise or otherwise; that nowhere in the Internal Revenue Code was he made liable for the tax and the income tax was voluntary. But Mr. Long was still so intimidated by the IRS that he filed and paid his voluntary assessment.

He then began a series of letters to the IRS explaining that he had no licenses or privileges issued to him by the federal government. He asked for direct answers to questions such as: "Am I required to file federal income tax returns?" and "Am I liable for federal income taxes?" The IRS never gave a direct answer to any of his questions. Instead they inferred and insinuated and extrapolated and beat around the bush, and generally avoided answering. So Mr. Long testified that he decided to stop "volunteering."

The IRS brought in two "expert" witnesses. Both were actually IRS employees who had received training as professional witnesses. Upon cross examination by Mr. Becraft, one witness, a Ms. Jeu, stated that a secret code known only to the this admission, to the point that she was beginning to frustrate the jury. The other witness, upon cross examination by Mr. Becraft, gave testimony that conflicted with the privacy act notice.

The government also attempted to insinuate "guilt by association" by claiming Mr. Long had known and relied upon persons of questionable character. They argued that the writers of some of the books he read, and people he knew, had been convicted of tax-related charges in the past and were in fact criminals.

Mr. Long responded that just because a person had been convicted of a crime by a court that did not invalidate everything he said. To illustrate his point, he pointed out that the Apostle Paul was a murderer, but that by the Grace of God he became the greatest of the Apostles. He added that he, Mr. Long, did not rely on anything that he did not personally check out thoroughly.

In summation, Mr. Becraft reminded the jury that Galileo was imprisoned for holding a belief that conflicted with what everyone else knew was a "fact" and that Columbus, acting on a belief that conflicted with what everyone else knew was a "fact" discovered something no one else thought existed.

The jury agreed with the defense. By finding Mr. Long "not guilty" on all counts, they have ventured into uncharted territory in their monumental decision.

A Chattanooga TV station quoted the government spokesman as saying that this case will change the way the IRS will handle such cases in the future. They indicated that they (the government) will be less likely to prosecute if a jury isn't going to decide in their favor.

FOOTNOTE: A student of freedom seeking to repeat Mr. Long's success must be skilled at using a law library; this skill is not difficult to acquire. Note that Mr. Long thoroughly checked out all points that he later relied on. This whole exercise is one of self-responsibility, self-education and self-action.

"A nation of well informed men who have been taught to know and prize the rights which God has given them cannot be enslaved. It is in the region of ignorance that tyranny begins." -- Benjamin Franklin

This is an example of what can happen when the IRS steps into an actual court of law. Again the question is, "how can this be if the tax code is law??" Answer: In most applications, the tax code is not law unless you accept it as one, and apply it to yourself voluntarily.

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