From:
http://www.wethepeoplefoundation.org/UPDATE/Update2007-07-19.htm
July 19, 2007
Withholding On The Ropes?
U.S. Unable To Prove It's Not Voluntary
The United States appears to have bitten off more than it can chew
when it sued Bob Schulz and the We The People organizations earlier
this year in an effort to shut down "Operation Stop Withholding."
In the lawsuit, the Government accused WTP of operating an unlawful
"abusive tax shelter" in violation of IRC Sections 6700 and 6701,
citing the organization's efforts to urge individuals to terminate
their W-4 wage and salary withholding agreements.
In response to the lawsuit served on Schulz on May 3, 2007, Schulz
filed a motion to have the case dismissed on the ground that Operation
Stop Withholding is not only fully protected by the First Amendment
(including the Petition clause), it is protected because We The People
organization is educating People about the withholding laws as they
are currently written and which expressly provide that such agreements
are voluntary.
The Government's lawsuit has asked the District Court to issue an
injunction prohibiting WTP's efforts to educate Americans about the
legal termination of private withholding agreements. WTP's efforts
rely on "black letter" law which clearly establishes that Withholding
Agreements (W-4s) are voluntary and that a worker can -- at any time
-- terminate his W-4 by simply notifying the company that he no longer
gives his permission to the company to withhold from his pay.
The Government finds itself in a very tough spot.
On one hand, it is asking the Court to shut the WTP program down, but
on the other hand, neither the IRS nor the attorneys at the Department
of Justice have been able to dispute or refute the simple truth that
the law itself plainly establishes that withholding is voluntary and
permission to withhold can be easily withdrawn by workers at their
sole discretion.
What follows are a just a few of the legal citations that the
Government has been confronted with and has failed to rebut:
26 CFR 31.3402 (p)-1 "Voluntary Withholding Agreements". (a) An
employee who desires to enter into an agreement for
withholding.....shall furnish his employer with Form W -4 (or
equivalent) for withholding.
Read it for yourself.
Pursuant to 26 CFR 31.3402(p)-1(b)(2), either a company or a worker
may terminate the withholding agreement (or its equivalent) at any
time, by furnishing a signed, written notice to the other. Read it
for yourself.
Pursuant to 26 USC 3402(p)(3)(A), 5 USC 5517 and 31 CFR 215.2(n)
(1), all ordinary American workers have the right to refuse to consent
to enter into a voluntary withholding agreement and can voluntarily
refuse to have amounts taken from his/her pay for federal and/or state
taxes, social security, other governmental insurance programs or
welfare programs.
"Protected Individuals" as per 8 USC 1324a cannot be compelled to
submit any specific government documents or to disclose a social
security number as a condition of being hired by or maintaining their
status as a worker. Most American workers qualify as "Protected
Individuals" under the law.
The landmark decision of EEOC v. Information Systems Consulting
CA3-92-0169T U.S.D.C. Northern District of Texas Dallas Division, held
that companies cannot discriminate against applicants or workers for
failure to obtain or disclose a social security number.
No law requires a worker to file a Form W-4 (or its equivalent). In
U.S. v. Mobil Oil Co., 82-1 USTC para. 9242, U.S.D.C. ND Tex. Dallas
1981 CA. 3-80-0438-G, the court ruled that an Entity does not even
have to send a W-4 Form or other employment forms to the Internal
Revenue Service unless served with a judicial court-ordered summons to
do so.
Pursuant to IRC 6041(c), a worker is only required to furnish a
name and address upon demand of a company for whom he seeks to work.
No social security number is required by statute.
Building upon a plethora of false statements, pitiful hyperbole,
factual omissions and defective (and vindictive) claims of lawful
authority, the Government has attempted to paint WTP as a "promoter"
of an illegal tax fraud "scheme" without ever specifically identifying
any false speech made by WTP, and without addressing the very laws WTP
has relied upon -- and which irrefutably establish that wage and
salary withholding is voluntary.
Nowhere in its pleadings does the Government directly confront the
voluntary nature of the withholding laws cited by WTP even though
withholding is the central issue before the court.
Indeed, beyond the compelling judicial and constitutional drama
unfolding as the landmark Right to Petition lawsuit continues its
certain path to the Supreme Court, the Government may have done itself
great harm by pursing a "6700" lawsuit against WTP.
As a result of accusing WTP of activity expressly protected by the
Constitution and the lesser laws of the nation, it has risked
widespread exposure in the public domain of the very information it
seeks to censor.
It is no miracle that the United States cannot -- by any law -- force
average workers to submit to mandatory withholding. To do so would be
to require them to withhold monies for taxes, which by the
Constitution and U.S. law, CANNOT BE IMPOSED UPON ORDINARY AMERICANS.
The fact that one's signature is required to execute a W-4 withholding
agreement is simple evidence of this truth that, until recently, has
remained well-obscured within the complexity of the tax code.
It is beyond time that our government confront a difficult political
question that our organization has asked repeatedly over numerous
years:
Do our elected leaders and guardians of the Rule of Law move with
deliberation toward an orderly transition of a replacement for our
Constitutionally-abusive tax system, or do they risk a chaotic,
systemic collapse of the government funding mechanism (or even worse)
because of the growing, yet unstoppable, awakening of the public
consciousness regarding the truth about our nation's tax laws?
It is indeed not ironic that such a possibility awaits our nation, and
may one day come to pass, inadvertently perhaps, because of one IRS
prosecution too many.
The truth is out there and it's not going away.
History of the "6700" Lawsuit:
The United States served its Complaint on May 3, 2007, charging Schulz
with promoting an abusive tax shelter in violation of Section 6700 of
the Internal Revenue Code.
On May 23rd, Schulz and WTP filed a Motion to Dismiss for failure to
state a claim for which relief can be granted under 6700 and under the
First Amendment's Petition for Redress and Free Speech clauses. Also
filed were three Declarations by Schulz.
On June 18th, the United States filed its Response and its Statement
of Material Facts.
On July 16th, Schulz and WTP filed their Reply, including six more
Declarations by Schulz.
For those not familiar with WTP's Operation Stop Withholding here are
the highlights:
On March 15, 2003, by letter, Schulz Petitioned the Government for a
Redress of Grievances relating to the forced withholding and diversion
of workers' pay. The theme of the Petition for Redress was the black
letter law showing that withholding was voluntary, that any worker
could legally terminate an existing withholding certificate (W-4) by
simply notifying the company, in writing, that the worker did not want
to continue having his pay withheld, and that a worker did not have to
provide the company with a Social Security number.
Enclosed with Schulz's March 15, 2003 letter was a Blue Folder with
documentation supporting the Petition for Redress, and Forms for
workers to use to legally terminate withholding.
In the March 15 letter, Schulz notified the United States that he
would begin to instruct workers on how to legally terminate
withholding unless the United States were to tell him his
interpretation of the law was wrong.
Hearing no objection, Schulz embarked on his schedule of 37 meetings
around the country, handing out 3500 copies of the Blue Folders (at no
cost) to people in attendance at those meetings. The materials
comprising the Operation Stop Withholding "Blue Folder" are still
available (for free) on the WTP website.
The day before he left on his trip, the IRS sent Schulz a letter
saying, in effect, "We have reviewed certain materials and have
decided to investigate you for promoting an abusive tax shelter, in
violation of Section 6700 of the Internal Revenue Code. You are asked
to meet with us and to bring your books and records."
Thus, under color of an "official" 6700 investigation of Schulz and
the WTP organization, the IRS could now get away with almost anything,
including harassing Schulz and the organization to death, or at least
to the point where we could not continue with our process of
Petitioning the Government for Redress of Grievances relating to
withholding or anything else.
Schulz told the IRS, in effect, "No answers, No records." The IRS then
served a Summons on Schulz for the books and records. Schulz sued the
IRS. The U.S. Court of Appeals for the Second Circuit held in Schulz
I, that Schulz did not have to respond to the Summons without a court
order and if the IRS wanted the information it would have to bring
Schulz to court to get it.
The IRS and DOJ then filed a subsequent motion asking the U.S.Court of
Appeals to modify its decision claiming it would make it harder for
the Government to collect taxes. In Schulz II, the Court sternly
denied the motion again holding that taxpayers enjoy the protection of
broad Due Process Rights with regard to all forms of IRS
administrative actions.
Within weeks of the decision in Schulz II, the IRS began serving a
series of third-party summonses against Schulz, rather than bring
Schulz to Court to enforce the original Summons. Each third-party
summons has resulted in a new lawsuit by Schulz against the IRS.
In November, 2006 the IRS felt the teeth of the Second Circuit Court
of Appeal's decision in Schulz II when it served an administrative
Summons on a New York bank demanding Schulz's personal bank records.
Read our 11/8/06 web article.
After Schulz filed a lawsuit against the IRS to quash the Summons, on
November 6th a federal judge issued an injunctive order enjoining and
prohibiting the IRS from enforcing the bank Summons. During pre-trial
pleadings, the primary investigator for the IRS was caught perjuring
herself to the District Court regarding the alleged basis for issuing
the Summons. This case is currently awaiting the disposition of that
Court.
Immediately following the March 30, 2007 "V" demonstration outside the
White House (video) and its coverage by the Washington Post, the
United States filed the "6700" civil injunction lawsuit against Schulz
and the WTP organizations.
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Update Related Links
Read the Government's June 18th Response to WTP's Motion to Dismiss,
its Statement of Material Facts. and several supporting IRS
Declarations.
Read the July 16th Schulz and WTP Reply brief and Schulz's
Declarations.
Download the contents of the Operation Stop Withholding "Blue Folder"
for FREE
--
when you believe the only tool you have is a hammer.
All problems look like nails.
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