EXHIBIT B SCHIFF REPORT 7-4
As shown on page 25 of The Federal Mafia the Government uses the intimidating power of the IRS to deny American workers the right to claim "exempt" as provided by Code section 3402(n). This statute is so simple and clear that no one should have any trouble understanding it especially those lawyers who are called upon to advise employers, since lawyers are presumed to understand statutes. Section 3402(n) is reproduced on page 155. It starts off, "Notwithstanding any other provision" which means "in spite of." So, "in spite of" any other provision, employers are not "required to deduct and withhold any tax" if employees furnishes them with "withholding exemption certificates" as represented by a W-4. It is clear that there is nothing in Section 3402(n) that makes an employee's right to claim "exempt" dependent on IRS approval. As a matter of fact the IRS is not even mentioned in Code section 3402(n), or anyplace in subtitle A, for that matter.
In addition, there is nothing in section 3402(n) that requires employees to explain to anybody why they are "exempt." An employee's sworn statement speaks for itself. Therefore, how can lawyers advise employers, that they are required to honor unsigned letters from alleged IRS employees telling them to ignore sworn statements received from their own employees in accordance with section 3402(n)? But they do! We have even heard from state and municipal employees, that such governmental agencies are honoring such unsigned letters from the IRS. It is understandable how private employers can be intimidated by the IRS, but how can state and municipal governments be intimidated? State and municipal attorneys especially- should be able to understand statutes. So how could such lawyers fail to understand the unfettered right of state and municipal employees to claim "exempt" under section 3402(n)? I will cover this kind of lawyer incompetence more fully in my next book
In any case, the Government is getting so desperate, because of the number of people who have now discovered they have a right to legally claim "exempt" from withholding, that the Government is now blatantly throwing all law to the wind and allowing the IRS to write letters to major employers telling them, not only not to honor exempt W-4's, but to treat such W-4's as if the employee had claimed 0 or 1 withholding allowance. So by claiming "exempt" you run the risk of having even more taxes taken from your pay, than if you had merely claimed 3 or 4 withholding allowances. What can you do about it? The answer is not simple: you have to decide the best approach for you to take to protect your legal right not to have taxes taken from your wages. I can only supply you with some options. The Government's treachery in connection with W-4's is further compounded by the fact that withholding taxes are even income taxes, but represent an unconstitutional, non-apportioned "wage tax," as explained in pages 159-163 of The Federal Mafia. However, it is refundable under section 31(a)(1) as claimed in paragraph 10 of the attachment to the "zero" return.
So let's examine your options. For one thing, if you can speak directly to your employer, you can explain to them that employers are not legally required to send employee W-4's to the IRS. While you can show your employer the law, as shown on page 155 of The Federal Mafia, it will be more impressive and compelling if you show your employer the actual statute, as it appears in the IR Code, which, of course, Freedom Books sells and which comes highlighted, tabbed, and underlined for easy reference.
You can show your employer that nothing in the law requires them to send your W-4 to the IRS, and, obviously, no Treasury regulation, IRS "directive" or publication can override the clear wording of the statute. Seeing the law itself, should convince your employer that all they need do is withhold on the basis of what is claimed on your W- 4. If an employee claims "exempt," the employer need not withhold any so called "income tax" from their wages. The employer merely files the employee's W-4 in his employment jacket, since it furnishes the legal basis for the employer not withholding any "income taxes" from that employee.
Should your employer get a letter from the IRS telling him/her not to honor your "exempt" W-4, you can assure them that if they continue honoring your "exempt" W-4, nothing will happen to them. Give them a letter guaranteeing to reimburse them for any expenses they might incur if they continue honoring your "exempt" W-4. Ask them to call the IRS and ask them to identify the statute that authorizes IRS employees to "direct" employers not to honor employee W-4's, filed in accordance with Section 3402(n). In sum, if you have an employer with some backbone, who you can talk to and influence, you will have no problem claiming "exempt." The problem is, suppose you don't have an employer you can influence? The IRS relies on an employer's ignorance of the revenue laws, and their fear of the IRS to get employers to do anything when it comes to their employees.
If you work for companies like General Motors or American Express you will not be able to speak to the person who actually pays your salary. You will only get to speak to somebody who will say, "We have to do what the IRS tells us," and that person might even be the firm's incompetent and spineless legal counsel.
So while you have a legal right to claim "exempt" you might have to adopt another strategy to avoid the IRS illegally "instructing" your employer to ignore your W-4 "exempt" and extracting far more in withholding taxes than might be withheld if you had merely claimed 3 or 4 withholding allowances. Therefore, you might want to claim 9 withholding allowance, in lieu of claiming "exempt." In many cases, 9 withholding allowances might eliminate the withholding of any taxes, without having to claim "exempt" or it might eliminate a substantial portion of your taxes, and the balance you might get back with a "zero" return.
Withholding allowances pursuant to Code sections 3402(d) are related to dependents and are called "withholding exemptions." However section 3402(m) refers to "withholding allowances" and provides for the taking of "additional withholding allowances" that have nothing to do with dependents. It allows you to take "additional withholding allowances" related to "deductions required to be taken into account in determining adjusted gross income under section 62(a)" Since, as covered in this tape (and Pages 42-43 of The Mafia) you have no income in a "constitutional sense," you can not have any "adjusted gross income" as defined in Section 62(a) On this basis, it would appear that you can take as many "withholding allowances" as is necessary to eliminate withholding altogether; however you should consider only claiming 9 "withholding allowance." . While I recommend filing "exempt," as I have already explained, this might result in your having a greater amount of taxes (illegally) taken from your pay than if you had merely claimed 3 or 4 withholding allowances. You can sue the government if they do this, as explained in "Schiff Report 7 2 & 3 ; however, in the meantime time you might not be able to meet your mortgage payments and other basic living expenses. Since employers are advised by the IRS to send the IRS all W-4's claiming "exempt" or claiming 10 or more withholding allowances, by claiming 9 withholding allowances you should be able to slip under this (illegal) radar, and you might never have to justify your claim of 9 withholding allowances. Also if you work for an employer who gets a letter from the IRS telling them to disregard all "exempt" W-4's, you will not get caught in that illegal net.
As further protection, you should write the following statement on the back of the W-4, on which you claim 9 withholding allowances. "This W-4 is not filed voluntarily. If I didn't file it I would not get paid. While I am entitled to claim "exempt," since I had neither income in the "constitutional sense," nor any tax liability for this year or last, I am compelled to claim 9 withholding allowances, since the IRS 'instructs' employers to disregard employee 'exempt' W-4's and to withhold the maximum amount of tax in such cases." This may be a lot to write, but squeeze it in.
This statement on the back of your W-4 should eliminate the ability of the Government to use your W-4 against you, even if the information were false, which it is not. The Government cannot compel you to give them information, and then use such compelled information against you. The Government can only use against you information voluntarily given. This statement establishes that the information on your W-4 was not given voluntarily. As a matter of fact, the Privacy Act Notice on the back of the W-4 states that "The Internal Revenue Code requires this information" Your written statement merely confirms this fact. Should the IRS send you a form letter asking you to substantiate your withholding allowances, you need not respond to it. All Government requests for information must show an OMB number- usually displayed in the upper right hand corner of the document. You can see such an OMB number on the upper right hand corner of the 1040 shown on page 274: it is 1545-0074. If an IRS request for information does not contain an OMB number, it is a "bootleg" document and need not be responded to. You can send back such requests for information by writing on the form. "Since this form does not contain an OMB number, it is a "bootleg" document and does not merit a response." Or you can answer it by claiming you had no income in the "constitutional sense" and say; "See House Report 1337 and Senate Report 1622 as referenced in footnote 11 of , C.I.R. v. Glenshaw Glass 348 US 426"