Petition for Writ of Certiorari — Beresford v. Internal Revenue Service

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In The

Supreme Court of the United States

INTERNAL REVENUE SERVICE,

US DEPARTMENT OF THE TREASURY

(UNITED STATES OF AMERICA)

Respondent

On Petition For A Writ Of Certiorari

To The Ninth Circuit Court Of Appeals

PETITION FOR WRIT OF CERTIORARI

Steven M. Beresford, Ph.D.

Petitioner in Propria Persona

18803 SE 18th Street

Vancouver, WA 98683

tek 360-449-3350

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QUESTIONS PRESENTED FOR REVIEW

1) The primary question is the resolution of a due

process conflict involving federal income taxation that

affects not only the Petitioner but the vast majority of

Americans, and is therefore a matter of national

importance.

On one hand, the IRS has published numerous

authoritative admissions that the federal income tax

system is based on voluntary compliance, specifically

stating in one admission that the payment of federal

income tax s voluntary. Nowhere in these

admissions are any exceptions or conditions applied to

the term ‘voluntary compliance’, nor is any special

meaning attached to the word ‘voluntary, which is

therefore construed according to its plain meaning.

On the other hand, the IRS routinely persecutes

individuals who choose not to volunteer, frequently

seizing property without a warrant and/or causing the

dissidents to be incarcerated.

The lower courts have failed to resolve the

matter. The District Court erroneously dismissed the

above-mentioned admissions as ‘frivolous’. The Ninth

Circuit Court of Appeals affirmed the District Court's

and declined Petitioner’s request to provide its

findings of fact and conclusions at law.

2) The lower courts have repeatedly disregarded

several important rulings by this Court on the subject

of federal income taxation. The secondary question is

whether the lower courts were justified in disregarding

these rulings.

ais

LIST OF PARTIES

All parties appear in the caption of the case on the

cover page.

TABLE OF CONTENTS

— [[ AAA ˙»- 1

Statement Of Juridictioo n 1

Constitutional & Statutory Provisions .............. 2

Statement Of The Case —*—ũ 2 555 3

Reasons For Granting The — ep eae 12

CE odcctnedhacsduearadevevn det w 15

INDEX TO APPENDICES

Appendix A: Decision of the District Court

Appendix B: Memorandum of the Ninth

Circuit Court of Appeals

Appendix C: Order of the Ninth

Circuit Court of Appeals

Appendix D: Supreme Court Cases

TABLE OF AUTHORITIES

a) CASES

Pollock X. Farmers Loan & Trust COO. 6

158 US. 601 (1895)

Treat x. White, 181 US. 264 (1901) ............. 4,15

Spreckels Sugar x. McClain, 192 US. 397 (1904) . . 14,15

Flint x. Stone Tracy Co. 220 US. 107 (1911) ...... 6,10

Independence v. Howbert,........... 6,10

231 US. 399 (1913)

Brushaber X. Union Pacific, 240 US. 1 (1916)...... 7,11

Stanton X. Baltic Mining Co. 240 US. 103 (1916) . . 7,11

Gould x. Gould, 245 US. 151 (1917) ............. 14,15

Southern Pacific Co, X. Lowe, 247 US. 330 (1918) . 7,10

Doyle x. Mitchell Bros. 247 U.S. 179 (1918) ....... 8,10

Peck & Co, X. Lowe, 247 US. 165 (1918) .......... 8,11

Eisner . Macomber, 252 US. 189 (1920) 8,9,10,11

Merchants Loan & Trust Co. v. Smietanka,...... 9,10

255 US. 509 (1921)

Bowers X. Kerbaugh-Empire, 271 US. 170 (1926) . . 9,10

Raley v. Ohio, 360 US. 423 (1959) .............. 13,15

Flora X. United States, 362 US. 179 (1960)........ 3,15

Cox v. Louisiana, 379 US. 559 (1965) ........... 13,15

United States . Bishop, 412 US. 346 (1973)...... 13,15

United States X. Mason, 412 US. 391 (1973) 15

. 13

411 US. 655 (1973)

TABLE OF AUTHORITIES (Continued)

b) STATUTES & REGULATIONS

ne eee 6

Corporate Excise Tax Act of 1009. 6,8,9,10

Rovenmn £00 GE THe sav ceccoccceséstcansset 6,8,9,11

PGI. GHEE . 3,13

Sec · W 3.13

Treasury Regula tion 60 L- Ibo. 3

Internal Revenue Manual 20123 ................. 3

Federal Register 39:62 (11572), 1974...........+.5.- 3

c) OTHER AUTHORITIES

Chambers English Dictionary (1988) .............. 4

American Heritage Dictionary (1992) ............. 5

Webster’s New International Dictionary (1993) ....5

Corpus Juris Secundum ( 1029, 1030, 1031) ....... 5

Testimony of Dwight E Ass. 4

In The

Supreme Court Of The United States

PETITION POR WRIT OF CERTIORARI

Petitioner hereby prays for a writ of certiorari

to review the judgments below.

LOWER COURT OPINIONS

The Ninth Circuit Court of Appeals affirmed the

District Court in 00-35650 in which the District Court in

CV-00-00293 granted the United States of America’s

motion to dismiss Petitioner’s suit for refund of taxes.

Both rulings are inchided in the Appendix. The ruling

of the Ninth Circuit Court of Appeals is unpublished.

STATEMENT OF JURISDICTION

The Ninth Circuit Court of Appeals decided

Petitioner's case on February 23rd, 2001 and denied

Petitioner's timely petition for rehearing en banc on

May 17th, 2001. Jurisdiction of this Court is invoked

under 28 USC. 1254 (1).

CONSTITUTIONAL PROVISIONS

The Constitution of the United States provides

in pertinent part:

Article 1, Section 2

“Representatives and direct taxes shall be

apportioned among the several States which may

included within this Union, according to their

respective numbers

Article 1, Section &

“The Congress shall have power to lay and

collect taxes, duties, imposts and excises, to pay the

delts and provide for the common defence and

general welfare of the United States, but all duties,

imposts and excises shall be uniform throughout the

United States.”

Article 1, Section 9

“No capitation or other direct tax shall be laid,

unless in proportion to the census or enumeration

herein before directed to be taken.”

Amendment XVL

“The Congress shall have power to lay and

collect taxes on incomes, from whatever source

derived, without apportionment among the several

States, and without regard to any census or

enumeration.”

STATEMENT OF THE CASE

The United States government has published

numerous authoritative admissions that the federal

income tax system is based on voluntary compliance,

and that the payment of federal income tax 8

voluntary. These admissions include (emphasis added):

i) “Taxpayers in the United States assess

their tax liabilities against themselves and pay them

voluntarily. This system of assessment and payment

is based on the principle of voluntary compliance.”

Internal Revenue Manual, 20123.

ii) “The purpose of publishing revenue

rulings and revenue procedures . . is to assist

taxpayers in attaining maximum voluntary

compliance.” 26 C.F.R. 601.601.

iii) “The tax system is based on voluntary

compliance. 26 C.F.R. 601.602.

iv) “Our income tax system is voluntary...”

Treasury Regulation 601.103.

v) “The mission of the Service is to

encourage and achieve the highest possible degree of

voluntary compliance with the tax laws and

regulations and to maintain the highest degree of

public confidence in the integrity and efficiency of the

Service.” Federal Register, Volume 39, 62 (11572), 1974.

vi) “Our system of taxation is based upon

voluntary assessment and payment, not upon

distraint.” Flora y. United States, 362 US. 179 (1960).

ee

vii) “Your income tax is 100 percent

voluntary tax,and your liquor tax is 100 percent

enforced tax. Now the situation is as different as day

and night.” Testimony of Dwight E. Avis, Head of the

Bureau of Internal Revenue Alcohol and Tobacco Tax

Division, before the House Ways and Means

Committee, 83rd Congress, 1953.

Based on these admissions, Petitioner chose not

to pay federal income taxes for 1987, 1988, and 1989.

The IRS filed a ‘notice of federal tax lien’ against him

in 1996, which it used to withhold $14,609.97 under |

protest from the sale of his home in 1999. Petitioner |

subsequently claimed a refund from the IRS pursuant

to 26 U.S.C. 7422{a). His claim was ignored.

The Meaning Of ‘Voluntary Compliance’

The United States government has not defined

‘voluntary compliance’, hence it is necessary to rely on

the semantic attributes of the term.

It is important to note that none of the above

admissions impose any conditions on or ascribe any

special meaning to the term ‘voluntary compliance’,

such as ‘in the sense that’ or ‘subject to the condition

that’ or ‘with the exception of. If the United States

government intended to make voluntary compliance

conditional, these admissions would have surely have

contained specific language to stipulate the conditions.

In fact, the word ‘voluntary always stands unmodified

and must therefore be construed in terms of its plain

meaning, which includes.

“Done without compulsion or legal obligation.”

Chambers English Dictionary (1988).

“Without legal obligation or consideration.”

American Heritage Dictionary (1992).

“Acting or done without any present legal

obligation to do the thing done, or any such obligation

that can accrue from the current state of affairs.

Voluntary implies freedom from any compulsion that

could constrain one’s choice.” Webster's Third New

International Dictionary (1993).

“Although for legal purposes the word

‘voluntary is considered to be so simple and in such

general use that it need not be defined, it has been

variously defined as meaning acting without

compulsion; the doing of something which a person is

free to do or not to do, as he so desires .. . without any

present legal obligation to do_the thing done.” Corpus

Juris Secundum (92: 1029, 1030, 1031).

Hence the term ‘voluntary compliance’ must be

construed according to its plain meaning, namely that

the assessment and payment of federal income tax is

without any compulsion or legal obligation.

Constitutional Considerations

The Constitution makes important distinctions

between direct and indirect taxes and sets up different

conditions for imposing them. Direct taxes are

imposed directly upon individuals and include taxes on

wages, salaries, and personal compensation. Direct

taxes must be apportioned among the various States,

according to the population of each State. Indirect

taxes are excises or tariffs imposed on things such as

commodities, corporate profits, and stock dividends,

and must be uniform throughout the United States.

5

Congress attempted to directly tax sources of

income such as wages, salaries, and compensation for

personal services through the Income Tax Act of 1894.

This Court thoroughly reviewed the Act in Pollock v.

Farmer’s Loan & Trust Company, 158 US. 601 (1895)

and ruled it unconstitutional because it failed to meet

the requirement of apportionment.

In 1909, Congress passed the Corporate Excise

Tax Act, which taxed corporate income. This act met

the requirement for uniformity, and because it was

an excise tax, no apportionment was required.

In 1913, Congress passed the 16th Amendment,

which abolished the apportionment requirement for

direct taxation of income, then passed the Revenue

Act of 1913. During those years, several cases came

before this Court to determine the exact meaning of

‘income’ and the scope of the 16th Amendment. The

following rulings are relevant to this case:

Flint x. Stone Tracy Co. 220 US. 107 (1911):

“The tax under consideration, as we have

construed the statute, may be described as an excise

upon the particular privilege of doing business in a

corporate capacity.”

, 231 US.

399 (19137 7

“The Corporation Excise Tax Act of 1909 was not

intended to be and is not, in any proper sense, an

income tax law. This Court has decided in the Pollock

case that the income tax law of 1894 amounted in

effect to a direct tax upon property, and was invalid

because not apportioned according to populations, as

prescribed by the Constitution.”

“The act of 1909 avoided this difficulty by

imposing not an income tax, but an excise tax upon

the conduct of business in a corporate capacity,

measuring, however, the tax by the income of the

corporation.“

Brushaber . Union Pacific, 240 US. 1 (1916):

“We are of the opinion that the confusion is not

inherent, but rather arises from the conclusion that

the 16th Amendment provides for a hitherto unknown

power of taxation; that is, a power to levy an income

tax which, although direct, should not be subject to

the regulation of apportionment applicable to all other

direct taxes. And the far-reaching effect of this

erroneous assumption. (emphasis added)

Stanton v. Baltic Mining Co., 240 US. 103 (1916):

“The provisions of the Sixteenth Amendment

conferred no new power of taxation but simply

prohibited the complete and plenary power of income

taxation possessed by Congress from the beginning

from being taken out of the category of indirect

taxation to which it inherently belonged .. .”

Southern Pacific Co. X. Lowe, 247 US. 330 (1918):

“We must reject in this case, as we have

rejected in cases arising under the Corporation Excise

Tax Act of 1909, the broad contention submitted on

behalf of the government that all receipts, everything

that comes in, are income within the proper definition

of the term gross income’. Certainly the term income

has no broader meaning in the Revenue Act of 1913

than in that of 1909, and for the present purpose we

assume there is no difference in its meaning as used in

the two acts.”

Doyle x. Mitchell Bros. 247 US. 179 (1918):

“An examination of these and other provisions

of the Act make it plain that the legislative purpose

was not to tax property as such, or the mere a

conversion of property, but to tax the conduct of the

business of corporations organized for profit upon the

gainful returns from their business operations.”

Peck & Co, v. Lowe, 247 US. 165 (1918);

“The Sixteenth Amendment, although referred

to in argument, has no real bearing and may be put

out of view. As pointed out in recent decisions, it does

not extend the taxing power to new or excepted

subjects.”

Eisner v. Macomber, 252 U.S. 189 (1920):

“The Sixteenth Amendment must be construed

in connection with the taxing clauses of the original

Constitution and the effect attributed to them before

the amendment was adopted.”

“Proper regard for its genesis as well as its very

clear language, requires also that this amendment

shall not be extended by loose construction, so as to

repeal or modify,.except as applied to income, those

provisions of the Constitution that require an

apportionment according to population for direct

taxes upon property, real and personal.”

“In order, therefore, that the clauses cited from

Article 1 of the Constitution may have proper force i

and effect, save only as modified by the amendment,

and that the latter also have proper effect, it becomes

essential to distinguish between what is and what is

not ‘income’ as the term is there used.”

a

“Income may be defined as the gain derived

from capital, from labor, or from both combined,

provided it be understood to include profit gained

through sale or conversion of capital assets.”

“The government, although basing its argument

upon the definition as quoted, placed chief emphasis

upon the word gain, which was extended to include a

variety of meanings; while the significance of the next

three words was either overlooked or misconceived:

derived from - capital: 'gain-derived-from-capital.”

“Here we have the essential matter, not a gain

accruing to capital; not a growth or increment of value

in the investment; but a gain, a profit, something of

exchangeable value, proceeding from the property,

severed from the capital, however invested or

employed, and coming in, being ‘derived’ - that is,

received or drawn by the recipient (the taxpayer) for

his separate use, benefit and disposal - that is income

derived from property.”

Merchant's Loan & Trust Co, X. Smietanka, 255

US. 509 (1921):

“There would seem to be no room to doult that

the word ‘income’ must be given the same meaning in

all of the Income Tax Acts of Congress that was given

to it in the Corporation Excise Tax Act, and what that

meaning is has now become definitely settled by

decisions of this Court.”

Bowers v. Kerbaugh-Empire, 271 US. 170 (1926):

“Income has been taken to mean the same thing

as used in the Corporation Excise Tax Act of 1909, in

the 16th Amendment, and in the various revenue acts

subsequently passed.”

ANALYSIS OF THESE RULINGS

These rulings state without ambiguity that the

‘income’ referred to in the 16th Amendment and the |

subsequent Revenue Acts is the same as the corporate |

income referred to in the Corporation Excise Tax Act

of 1909. (Southern Pacific, Merchants Loan, Bowers.)

These rulings also state without ambiguity that ö

income tax is an indirect, excise tax imposed on the

privilege of doing business in a corporate capacity,

measured by the amount of gain or profit resulting

from the business. (Flint, Stratton’s, Doyle, Ener.)

Nowhere do these rulings state or even suggest

that income tax is a direct per capita tax on wages,

salaries, or compensation for personal services. In

fact, Eisner precisely defines the word ‘income’ as the

gain or profit derived from capital, labor, or capital

assets. Let us consider each form of ‘income’ defined

by Eisner.

a) Gain Derived From Capital. Examples include

stock dividends and interest from banks and bonds.

b) Gain Derived From Labor. Examples include

profits resulting from the hiring of employees, such as

the use of employees to run a business, or contracting

employees to a third party.

c) Gain Derived From Capital & Labor Combined.

Examples include profits resulting from the purchase

of machinery and hiring employees to operate it, or

renting an office and hiring employees to run it.

d) Profit Gained From The Sale of Capital Assets.

Examples include profits resulting from the sale of

assets such as merchandise, stocks, and real estate.

10

7 a ee

e) Profit Gained From The Conversion of Capital

Assets. Examples inchide profits resulting from the

exchange of one piece of equipment for another, or

the exchange of one piece of real estate for another.

To clarify the situation, Eisner states that the

term ‘derived from’ separates income from its source.

An item of income is derived from the source but is

not the same as the source, just as wine is not the

same as grapes. The essence of the matter is that

the source cannot be taxed. Only income (gain or

profit) derived from the source can be taxed.

For example, the Revenue Act of 1913 stated

“The net income of a taxable person shall include

gains, profits, and income derived from salaries, wages,

and compensation for personal services

The language of the Act shows that Congress

intended salaries, wages, and compensation for

personal services to be classified as sources of income.

The rulings of this Court discussed above also

state that the 16th Amendment conferred no new

power of taxation, nor did it extend the taxing power

to new or excepted subjects, nor did it repeal any of

the taxing clauses of the Constitution, which therefore

remain intact. (Brushaber, Stanton, Peck. Eisner.)

Hence the direct per capita taxation without

apportionment of salaries, wages, and compensation

for personal services is lawful under the current

system only if it is voluntary. That is why the

admissions of the United States government discussed

previously concur in stating that the income tax

system is based on voluntary compliance and that the

payment of income tax by individuals is voluntary.

11

REASONS FOR GRANTING THE WRIT

The biggest mistake made by the lower courts

is their failure to consider or even acknowledge the

evidence -- the published admissions of the United

States government regarding voluntary compliance.

Similarly, the lower courts failed to consider or

even acknowledge the due process conflict caused by

the IRS, which publicly admits that the payment of

federal income tax is voluntary but persecutes those

who choose not to volunteer.

By affirming the District Court’s decision, the

Ninth Circuit Court of Appeals (henceforth referred to

as the ‘Panel’) commit or subscribe to the following

errors:

a) Misrepresentation Of Petitioner’s Argument

The District Court based its decision on the

statement: “Beresford'’s primary contention, that the

federal income tax system is based on voluntary

compliance, has been held to completely lacking in

legal merit and patently frivolous.”

The above statement is completely erroneous.

Petitioner has never contended that the federal

income tax system is based on voluntary compliance.

It is the United States government, not the Petitioner,

that contends that the federal income tax system is ;

based on voluntary compliance, through the published |

admissions referred to previously. Petitioner simply

relies on these admissions as being true and correct,

accepting them at their face value according to their

plain meaning.

12

Petitioner’s primary contention is that because

the United States government publicly admits that

the payment of income tax is voluntary, the IRS had

no legal cause of action to withhold money from the

sale of his home. This argument was ignored by the

lower courts.

b) Conflict With Statutory Regulations

The decisions of the lower courts are in direct

conflict with 26 C.F.R. 601.601 and 26 C.F.R. 601.602. As

previously noted, 26 C.F.R. 601.602 states: “The tax

system is based on voluntary compliance ...”

c) Conflict With Prior Decisions Of This Court

It is well settled that Supreme Court decisions

are binding on all lower courts, and that lower court

decisions that conflict wit: Supreme Court decisions

are erroneous. In this case, tie decisions of the District

Court and the Panel are in conflict with numerous

Supreme Court decisions for the following reasons:

i) This Court has repeatedly ruled that its

own decisions, government agency regulations, and

statements made by senior government officials

constitute reliable admissions. United States v. Bishop,

412 US. 346 (1973); United States X. Mason, 412 US. 391

(1973); Raley vy, Ohio, 360 US. 423 (1959); Cox _v.

Louisiana, 379 US. 559 (1965);

Ind. Chem. Corn. 411 U.S. 655 (1973).

By affirming the District Court's decision, the

Panel in effect denies the reliability of the admissions

referred to previously and is therefore in direct conflict

with the Supreme Court.

13

ii) This Court has repeatedly ruled that laws

must be interpreted in terms of their plain meaning

and that in cases of doubt or ambiguity, they must be

construed against the government and favor of the

individual

“There must be certainty as to the meaning and

scope of language imposing any tax, and doult in

respect to its meaning is to be resolved in favor of the

taxpayer.” Treat . White, 181 US. 264 (1901).

“The citizen is exempt from taxation unless the

same is imposed by clear and unequivocal language,

and that where construction of a tax law is doubt ful.

the doult is to be resolved in favor of those upon

whom the tax is sought to be laid.” Spreckels Sugar

Refining Co. X. McClain, 192 US. 397 (1904).

“In the interpretation of statutes levying taxes, it

is the established rule not to extend their provisions by

implication beyond the clear import of the language

used, or to enlarge their operation so as to embrace

matters not specifically pointed out. In case of doula

they are construed most strongly against the

government, and in favor of the citizen.” Gould x.

Gould, 245 US. 151 (1917).

— eR

As discussed above, a serious due process conflict

exists between the published admissions of the IRS

(which specifically states that the payment of income

tax is voluntary) and the actual behavior of the IRS

(which routinely persecutes those who choose not to

volunteer). By resolving this ambiguity in favor of the

IRS instead of the Petitioner, the lower courts are in

direct conflict with the Supreme Court.

14

CONCLUSION

Throughout these entire proceedings, the lower

courts have repeatedly refused to consider or even

acknowledge the main issues surrounding the matter,

namely:

a) The reliability and implications of the

published admissions of the United States government

regarding voluntary compliance.

b) The due process conflict imposed by the IRS

on the Petitioner.

c) Petitioner’s argument, which is that because

the income tax system is voluntary, the IRS had no

legal cause of action against him when it withheld

money from the sale of his home.

Sweeping these issues under the proverbial

carpet by labeling them ‘frivolous’ does not do justice

to the Petitioner nor to the substantial body of law

supporting his case.

This Court ruled in United States vy. Mason, 412

US. 391 (1973): “If the doctrine of stare decisis has any

meaning at all, it requires that people in their

everyday affairs must be able to rely on our decisions

and not be penalized by them.”

Petitioner has indeed relied on decisions of this

Court and has been penalized by them, first by the

IRS, then by the lower courts, which have repeatedly

disregarded the decisions of this Court in Treat,

Spreckels, Gould, Bishop, Mason. Raley, Cox. Flora, etc.

15

In closing, Petitioner points out that this case is

not about shirking his duty by refusing to pay his fair

share of taxes. Petitioner agrees that taxation is the

price we pay for a civilized society, and he is willing to

pay whatever taxes he is legally liable for. By the

same token, he is not willing to pay taxes for which

he is not legally liable.

Historically, this Court has always stood as the

supreme voice of logic, reason, and integrity, one of

whose major functions is to curb the unbridled greed

and lust for power shown by many government

officials, especially in the realm of taxation.

Petitioner therefore respectfully and prayerfully

calls on this Court to reassert its authority and provide

a fair and just resolution to this dilemma by granting

a writ of certiorari.

Steven M. Beresford, Ph.D.

Petitioner in Propria Persona

Datec 8/10/01

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