The IRS is a U.S. Government agency.
Its website says:
The IRS is a bureau of the Department of the Treasury
...
Statutory Authority
The IRS is organized to carry out the responsibilities of the secretary of the Treasury under section 7801 of the Internal Revenue Code. The secretary has full authority to administer and enforce the internal revenue laws and has the power to create an agency to enforce these laws. The IRS was created based on this legislative grant.
Section 7803 of the Internal Revenue Code provides for the appointment of a commissioner of Internal Revenue to administer and supervise the execution and application of the internal revenue laws.
IRS: The Agency, its Mission and Statutory Authority
The IRS specifically addresses the claim that it is not an agency of the US government:
Some argue that the IRS is not an agency of the United States but rather a private corporation, because it was not created by positive law (i.e., an act of Congress) and that, therefore, the IRS does not have the authority to enforce the Internal Revenue Code.
The Law: There is a host of constitutional and statutory authority establishing that the IRS is an agency of the United States. Indeed, the Supreme Court has stated “that the Internal Revenue Service is organized to carry out the broad responsibilities of the Secretary of the Treasury under § 7801(a) of the 1954 Code for the administration and enforcement of the internal revenue laws.” Donaldson v. United States, 400 U.S. 517, 534 (1971).
Pursuant to section 7801, the Secretary of the Treasury has full authority to administer and enforce the internal revenue laws and has the power to create an agency to enforce such laws. Based upon this legislative grant, the IRS was created. Thus, the IRS is a body established by “positive law” because it was created through a congressionally mandated power. Moreover, section 7803(a) explicitly provides that there shall be a Commissioner of Internal Revenue who shall administer and supervise the execution and application of the internal revenue laws.
The IRS warned taxpayers of the consequences of attempting to pursue a claim on these grounds in Notice 2010-33, 2010-17 I.R.B. 609.
Relevant Case Law:
United States v. Fern, 696 F.2d 1269, 1273 (11th Cir. 1983) – the court declared “[c]learly, the Internal Revenue Service is a ‘department or agency’ of the United States.”
United States v. Provost, 109 A.F.T.R.2d (RIA) 2012-1706 (E.D. Cal. 2012) – the court rejected the taxpayer’s arguments and stated that the United States is “a sovereign, not a corporation”, the IRS is a government agency, and that arguments to the contrary are “wholly frivolous.”
Salman v. Dept. of Treasury, 899 F.Supp. 471, 472 (D. Nev. 1995) – the court described Salman’s contention that the IRS is not a government agency of the United States as “wholly frivolous” and dismissed his claim with prejudice.
Nevius v. Tomlinson, 113 A.F.T.R.2d (RIA) 2014-1872 (W.D. Miss. 2014) – the court granted summary judgment in favor of the government, rejecting Nevius’s claim that the IRS is a private corporation, rather than a government agency.
Edwards v. Commissioner, T.C. Memo. 2002-169, 84 T.C.M. (CCH) 24 (2002) – the court dismissed the argument that the IRS is not an agency of the United States Department of Treasury as “tax protester gibberish” and stated that “[i]t's bad enough when ignorant and gullible or disingenuous taxpayers utter tax protester gibberish. It's much more disturbing when a member of the bar offers tax protester gibberish as a substitute for legal argument.”
IRS: The Truth About Frivolous Tax Arguments - Section I (D to E)
E. Fictional Legal Bases
1. Contention: The Internal Revenue Service is not an agency of the United States
(thanks to @DavidRicherby for the link to this page).
The claim that the IRS is not an agency of the US government is also addressed quite thoroughly by the Evans Legal Tax Protestor FAQ:
The Internal Revenue Service is not an agency of the federal government, but a private corporation incorporated in Delaware (or, alternatively, an agency of the government of Puerto Rico).
This is silly.
Section 7801(a) of the Internal Revenue Code states that the administration and enforcement of the Code shall be performed by or under the supervision of the Secretary of the Treasury. Section 7802(a) then says that there shall be a Commissioner of Internal Revenue in the Department of the Treasury who shall have such duties and powers as may be prescribed by the Secretary of the Treasury. Finally, Section 7803(a) of the Code states that the Secretary is authorized to employ persons for the administration and enforcement of the Internal Revenue Code.
Acting under these laws, the Department of the Treasury has adopted regulations creating the Internal Revenue Service, of which the following is a part:
“The Internal Revenue Service is a bureau of the Department of the Treasury under the immediate direction of the Commissioner of Internal Revenue. The Commissioner has general superintendence of the assessment and collection of all taxes imposed by any law providing internal revenue. The Internal Revenue Service is the agency by which these functions are performed.”
Treas. Reg. Section 601.101(a).
The legitimacy and authority of the Internal Revenue Service has been confirmed by the Supreme Court:
“[T]he Internal Revenue Service is organized to carry out the broad responsibilities of the Secretary of the Treasury under section 7801(a) of the 1954 Code for the administration and enforcement of the internal revenue laws.”
Donaldson v. United States, 400 U.S. 517, 534 (1971).
And yet several courts have had to confirm that the IRS is indeed part of the government of the United States:
“It is clear that the Internal Revenue Code gave the Secretary of the Treasury full authority to administer and enforce the Code, and the power to create an agency to administer and enforce the tax laws. Pursuant to that legislative grant of authority, the Secretary created the Internal Revenue Service, so that the IRS is an agency of the Department of the Treasury, created pursuant to Congressional statute.”
Snyder v. IRS, 596 F.Supp. 240 (N.D. In. 1984).
“Plaintiff attempts to circumvent this conclusion by arguing that the IRS is ‘a private corporation’ because it was not created by ‘any positive law’ (i.e., statute of Congress) but rather by fiat of the Secretary of the Treasury. Apparently, this argument is based on the fact that in 1953 the Secretary of the Treasury renamed the Bureau of Internal Revenue as the Internal Revenue Service. However, it is clear that the Secretary of the Treasury has full authority to administer and enforce the Internal Revenue Code, 26 U.S.C. § 7801, and has the power to create an agency to administer and enforce the laws. See 26 U.S.C. § 7803(a). Pursuant to this legislative grant of authority, the Secretary created the IRS. 26 C.F.R. § 601.101. The end result is that the IRS is a creature of ‘positive law’ because it was created through congressionally mandated power. By plaintiff’s own ‘positive law’ premise, then, the IRS is a validly created governmental agency and not a ‘private corporation.’”
Young v. Internal Revenue Service, 596 F.Supp. 141 (N.D.Ind. 1984).
See also, Cameron v. IRS, 593 F.Supp. 1540, 1549 (N.D.Ind. 1984).
“We perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit. The constitutionality of our income tax system-including the role played within that system by the Internal Revenue Service and the Tax Court--has long been established.”
Crain v. Commissioner, 737 F.2d 1417 (5th Cir. 1984), (responding to, among other things, a claim that the “Internal Revenue Service, Incorporated” lacks authority).
“Salman’s argument that the Internal Revenue Service is not a government agency is wholly without merit.”
Salman v. Jameson, 52 F.3d 334 (9th Cir. 1995). (Salman has now been enjoined against filing any other lawsuits against the IRS or the United States. See Salman v. Jameson, 97-1 USTC ¶50,452, 79 A.F.T.R.2d ¶97-2667, 97 TNT 97-24 (U.S.D.C. D.Nev. 1997).) See also, Salman v. Dept. of Treasury, 899 F. Supp. 471, 472 (D. Nev. 1995) (“The court finds there is no basis in fact for Salman’s contention that the IRS is not a government agency of the United States.”)
“Petitioner has devoted 3 pages of his 12-page reply brief to arguing that the Internal Revenue Service is not an “agency of the United States”. Presumably, petitioner intends by this argument to suggest that respondent has no authority to determine or collect petitioner’s income tax deficiencies.
[...]
“Petitioner’s argument is tax protester gibberish. It’s bad enough when ignorant and gullible or disingenuous taxpayers utter tax protester gibberish. It’s much more disturbing when a member of the bar offers tax protester gibberish as a substitute for legal argument.
“The Internal Revenue Service is an agency of the United States Department of the Treasury. Secs. 7801(a), 7803. Section 7801 provides that “the administration and enforcement of this title shall be performed by or under the supervision of the Secretary of the Treasury.” Section 7803(a) provides for the appointment of a Commissioner of Internal Revenue under the Department of the Treasury. Section 7803(a)(2) provides that the Commissioner of Internal Revenue shall, among other things, “administer, manage, conduct, direct, and supervise the execution and application of the internal revenue laws or related statutes and tax conventions to which the United States is a party”. Section 7804(a) authorizes the Commissioner to employ, supervise, and direct subordinate persons to administer and enforce the internal revenue laws. These sections of the Internal Revenue Code dispel any notion that the Internal Revenue Service is not authorized to administer and enforce the internal revenue laws.”
Edwards v. Commission, T.C. Memo 2002-169.
See also, Kay v. Summers, 86 AFTR 2d 7161, 7165, 2001-1 USTC ¶50,103, at 87,013 (D. Nev. 2000) (the contention “that the Internal Revenue Service is some sort of private corporation, not a government agency” is frivolous); United States v. Fern, 696 F.2d 1269, 1273 (11th Cir. 1983) (“Clearly, the Internal Revenue Service is a ‘department or agency’ of the United States.”); Thomson v. United States, 88 AFTR 2d 5620, 5621, 2001-2 USTC ¶50,614, at 89,521 (S.D. Fla. 2001) (“The Internal Revenue Service is a ‘department or agency’ of the United States.”).
The claim that “[t]he Service is not an agency of the United States government but rather a private-sector corporation or an agency of a State or Territory without authority to administer the internal revenue laws” has been identified by the IRS as a “frivolous position” that can result in a penalty of $5,000 when asserted in a tax return or included in certain collection-related submissions. Notice 2007-30, 2007-14 I.R.B. 883.
Tax Protester “Evidence”
Tax protesters often claim that, in a footnote in Chrysler Corp. v. Brown, 441 U.S. 281, 297, n. 23 (1979), the Supreme Court “admitted” that no statute authorizing the Internal Revenue Service could be found, even though the justices searched back to the end of the Civil War. But that’s not what the Supreme Court said. What the footnote actually says is:
“There was virtually no Washington bureaucracy created by the Act of July 1, 1862, ch. 119, 12 Stat. 432, the statute to which the present Internal Revenue Service can be traced.”
441 U.S. at 297, n.23 (emphasis added).
Tax protesters seem to read a “not” into the sentence.
Tax protesters also like to cite a pleading (not a court opinion) that the government once filed in which the government denied that the IRS was an “agency” of the United States. That pleading has to be read in context. Someone had sued the Internal Revenue Service and the Department of Justice filed an answer which denied “that the Internal Revenue Service is an agency of the United States Government” but admitted “that the United States of America would be a proper party to this action.” The government therefore admitted that the actions of the IRS were the actions of the United States and that the United States is responsible for the actions of the IRS, but that the lawsuit should be against the United States and not the IRS. This was confirmed by a footnote in the court’s opinion:
“The Internal Revenue Service, and not the United States, was originally named as defendant in this action. However, the United States is correct that the Internal Revenue Service has no capacity to sue or be sued. [Citation omitted] Therefore, the United States is properly substituted for the Internal Revenue Service in this action.”
Diversified Metal Prods., Inc. v. T-Bow Co. Trust, 78 AFTR 2d 5830, 5832, n. 3, 96-2 USTC ¶50,437 at 85,462, n. 3 (D. Idaho 1996).
The action of the court in substituting the United States government for the IRS actually confirms (and not denies) that the IRS is part of the United States government. Why else would a lawsuit against the IRS be changed to a lawsuit against the United States?
Which means that tax protesters are citing a court case that refutes their argument and does not support them. Which is rather typical of tax protesters.
The IRS page refers to Internal Revenue Bulletin: 2010-17 April 26, 2010 Notice 2010-33, which sets out a list of "why I don't have to pay tax" arguments which the IRS considers frivolous, and explains the penalty for wasting the IRS's time in taking those positions:
Positions that are the same as or similar to the positions listed in this notice are identified as frivolous for purposes of the penalty for a “frivolous tax return” under section 6702(a) of the Internal Revenue Code and the penalty for a “specified frivolous submission” under section 6702(b). Persons who file a purported return of tax, including an original or amended return, based on one or more of these positions are subject to a penalty of $5,000 if the purported return of tax does not contain information on which the substantial correctness of the self-assessed determination of tax may be judged or contains information that on its face indicates the self-assessed determination of tax is substantially incorrect. ...
Positions that are the same as or similar to the following are frivolous.
(1) Compliance with the internal revenue laws is voluntary or optional and not required by law ...
(2) The Internal Revenue Code is not law (or “positive law”) or its provisions are ineffective or inoperative ...
(3) A taxpayer’s income is excluded from taxation when the taxpayer rejects or renounces United States citizenship because the taxpayer is a citizen exclusively of a State (sometimes characterized as a “natural-born citizen” of a “sovereign state”), that is claimed to be a separate country or otherwise not subject to the laws of the United States. This position includes the argument that the United States does not include all or a part of the physical territory of the 50 States ... [this is the argument under which Anna von Reitz claims to be a judge]
...
(45) The Service is not an agency of the United States government but rather a private-sector corporation or an agency of a State or Territory without authority to administer the internal revenue laws.
Moving on to the American Bar Association, it was founded by American lawyers in Saratoga Springs, New York (a city in the USA):
On August 21, 1878, seventy-five lawyers from twenty states and the District of Columbia met in Saratoga Springs, New York, to establish the American Bar Association. Since that first meeting, the ABA has played a formative role in the development of the profession of law in the United States.
ABA: History of the American Bar Association
It is a voluntary professional organisation:
The American Bar Association is one of the world’s largest voluntary professional organizations, with nearly 400,000 members and more than 3,500 entities. It is committed to doing what only a national association of attorneys can do: serving our members, improving the legal profession, eliminating bias and enhancing diversity, and advancing the rule of law throughout the United States and around the world.
ABA: About the American Bar Association
In 1992 it was incorporated in Illinois as a not-for-profit corporation.
There does not appear to be a body named "London Lawyers Guild" - a Google search for it only reveals (in the top 20 results) repeated statements of the claim cited in our question above. The original author may have been thinking of
or may simply have fabricated an entirely fictional organisation.
Neither the IRS nor the ABA is:
- a profit-making company,
- owned from outside the USA,
- a debt collection agency.
The author, 'Judge' Anna von Reitz is not an actual judge - she's appointed herself a judge under her own entirely fictional legal system (source). She appears to be part of one of the 'Sovereign Citizen' or 'Freemen On The Land' groups, whose idiosyncratic interpretations of US law are not generally accepted as having any validity.
The publishing website, examiner.com, is not widely regarded as a trusted news source:
Content farms - these include sites such as Examiner.com (not to be confused with the San Francisco Examiner) and those owned by Demand Media. While they may resemble the format used by legitimate websites (especially in the case of the former), the content is by amateur writers paid by page views and other factors, and are effectively self-published, user-generated content that lacks editorial oversight.
Wikipedia: Potentially unreliable sources
'Police' magazine provides a useful summary of what 'sovereigns' believe:
Sovereignty and sovereign citizens have existed in the United States for nearly 50 years in various forms. The roots of the sovereigns can be found in the Posse Comitatus movement of the 1970s.
"Sovereign citizen" is a broad, general term that is often applied to any individual person or group that does not believe that the laws of the United States or the state laws apply to them. In other words, they are beyond the jurisdiction of law enforcement authority. The term "sovereign citizen" should be viewed as an umbrella under which you will find thousands of loosely organized groups or individuals that share one basic ideological principle but approach it through different paths.
Extreme Ire
Some groups or individuals use their sovereign claims in an attempt to avoid legal trouble and circumvent common traffic laws and statutes. Others believe they are at war with the United States and are willing to use deadly force against anyone they perceive as standing in the way of their sovereign rights. Violent sovereigns are a clear and present danger to law enforcement, and you need to be prepared to deal with them safely and effectively.
...
Sovereigns take legitimate historical events and obscure common law and twist and change them to fit their particular claims or assertions. Their hope is that the ensuing confusion results in law enforcement and/or the judicial system's unwillingness to effectively deal with them. The fact that most of their arguments and documents contain a slight hint of factual basis and an overwhelming amount of pseudo-legal language, including the mention of various acts, amendments, and treaties, only adds to the confusion.
'Police': Sovereign Citizens: A Clear and Present Danger
In summary:
The implication that the US tax system "is illegal" is entirely without merit. If your colleague wants to test this statement for accuracy, they can withhold their taxes and see what happens. You can give them a clue by mentioning the $5,000 penalty described above, and referring them to the case of Blade actor Wesley Snipes:
Hollywood actor Wesley Snipes used OPCA arguments during a tax evasion case and is currently serving a three-year prison sentence in that regard.
Alberta Court Skewers Gibberish Legal Arguments, November 2012, Artem N. Barsukov and William B. Hembrof, Bennett Jones Commercial Litigation Update
In Meads v. Meads, 2012 ABQB 571, Canadian Associate Chief Justice J.D. Rooke provides a useful resource for dealing with this kind of claim, which he describes as an "Organized Pseudolegal Commercial Argument" ('OPCA').
In a telling paragraph of the judgement, Justice Rooke points out that these pseudolegal arguments have never succeeded in any jurisdiction:
[673] You cannot identify one instance where a court has rolled over and behaved as told. Not one. Your spells, when cast, fail.
