FRNs and "Lawful Money" (U.S. v. Thomas)

[Famspear]

Finally, David, you keep missing another essential point:

For Federal income tax purposes, it doesn't even matter whether Federal Reserve notes are "lawful money" or not. The receipt of Federal Reserve notes as compensation for services is generally a taxable event, regardless of whether those notes are "money" or not. NOTHING IN THE INTERNAL REVENUE LAWS OF THE UNITED STATES GENERALLY EXCLUDES "NON-MONEY" (to coin a term) FROM INCOME.

People who try to avoid paying Federal income tax based on some theory about whether Federal Reserve notes are "money" vel non or "lawful money" vel non are running down a rabbit trail -- a fruitless, pointless endeavour.

[wserra]

NOTHING IN THE INTERNAL REVENUE LAWS OF THE UNITED STATES GENERALLY EXCLUDES "NON-MONEY" (to coin a term) FROM INCOME.

In fact, of course, non-money exchanges - barters - are specifically taxable events if they result in compensation for goods and services. That's one of the many reasons why the "redeem lawful money" nonsense resulting in no income tax is simply stupid gibberish.

You're a patient man, Famspear.

[Pottapaug1938]

Here is a reminder:

(b) The amount of United States currency notes outstanding and in circulation—
(1) may not be more than $300,000,000; and
(2) may not be held or used for a reserve.

The court says that Federal Reserve notes are reserves, ergo they cannot be lawful money in the same sense as US notes.

I'm not going to even bother responding to the final sentence quoted above; but I will point out that the law you quote has to do with UNITED STATES NOTES, not Federal Reserve Notes. These USNs first saw the light of day during the Civil War; but as has been pointed out to you many times, in other threads, the only USNs which still exist today are those in private currency collections (and no, that does NOT mean money stashed in a safe place. That's an accumulation) and those few notes which are placed in circulation (which I do when the condition is too poor to make them worth collecting). USNs are not a part of our currenmcy today because (again, as has been pointed out to you repeatedly in other threads) they serve no useful function which is not served just as well by FRNs. This law may be still "on the books"; but like many other laws it is essentially a dead letter, and not considered worth the effort and money to repeal.

[David Merrill]

Famspear;


Rather what you are doing is failing to read the second sentence in the context of the sentence before it. They cite and quote Title 12 USC §411 in the sentence before it.

The cash filing fee is fully paid in public money and not in private credit (US notes in the form of Federal Reserve notes). The funds were redeemed lawful money according to the US Supreme Court's interpretation of the Congress' definition from US v Rickman; 638 F.2d 182

In the exercise of that power Congress has declared that Federal Reserve Notes are legal tender and are redeemable in lawful money. And, US v Ware; 608 F.2d 400

United States notes shall be lawful money, and a legal tender in payment of all debts, public and private, within the United States, except for duties on imports and interest on the public debt. Also, in USA v. Thomas 319 F.3d 640

Paper currency, in the form of the Federal Reserve Note, is defined as an “obligation[ ] of the United States” that may be “redeemed in lawful money on demand.” 12 U.S.C. § 411 (2002). These bills are not “money” per se...

Furthermore you think that earning income is the taxable event rather than endorsing private credit from the Fed. Endorsing private credit from the Fed is the cause of the irrecusable obligation to file a Return of (their) Income. If you are not engaging in their private credit then there is no obligation and no first lien by the treasury on your "money"; whether it is legal tender or lawful money. The magic, as Wserra puts it is in making the demand.

The obligation arises on the presumption you are endorsing the private credit from the Fed because you want to take advantage of that elastic currency. You have to pay for most benefits in life, you know.


Regards,

David Merrill.

[Famspear]

Famspear;


Rather what you are doing is failing to read the second sentence in the context of the sentence before it. They cite and quote Title 12 USC §411 in the sentence before it.

No, David.

Furthermore you think that earning income is the taxable event rather than endorsing private credit from the Fed.

Earning income is the taxable event, David. The phrase "endorsing private credit from the Fed" is word salad that you have used over and over and over. It was word salad yesterday. It's word salad today. And it will be word salad tomorrow.

Endorsing private credit from the Fed is the cause of the irrecusable obligation to file a Return of (their) Income.

That is meaningless gibberish.

If you are not engaging in their private credit then there is no obligation and no first lien by the treasury on your "money"; whether it is legal tender or lawful money.

That is Van Peltian nonsense, David.

The obligation arises on the presumption you are endorsing the private credit from the Fed because you want to take advantage of that elastic currency.

No, David. That's just more gibberish.

[Pottapaug1938]

Famspear;

Rather what you are doing is failing to read the second sentence in the context of the sentence before it. They cite and quote Title 12 USC §411 in the sentence before it.

The cash filing fee is fully paid in public money and not in private credit (US notes in the form of Federal Reserve notes). The funds were redeemed lawful money according to the US Supreme Court's interpretation of the Congress' definition from US v Rickman; 638 F.2d 182

Wrong again. Here is the full, unedited (except for emphasis), paragraph from the Rickman opinion:

"Defendant argues that the Federal Reserve Notes in which he was paid were not lawful money within the meaning of Art. 1, § 8, United States Constitution. We have held to the contrary. United States v. Ware, 10 Cir., 608 F.2d 400, 402-403. We find no validity in the distinction which defendant draws between "lawful money" and "legal tender." Money is a medium of exchange. Legal tender is money which the law requires a creditor to receive in payment of an obligation. The aggregate of the powers granted to Congress by the Constitution includes broad and comprehensive authority over revenue, finance, and currency. Norman v. B. & O. R. Co., 294 U.S. 240, 55 S.Ct. 407, 79 L.Ed. 885. In the exercise of that power Congress has declared that Federal Reserve Notes are legal tender and are redeemable in lawful money. Defendant received Federal Reserve Notes when he cashed his pay checks and used those notes to pay his personal expenses. He obtained and used lawful money."

And then -- remember what I and many others have said about dicta and holdings in appellate court cases? The above paragraph is a dictum -- an explanation of the court's holding (or, in plain English, the essence of the court's decision). The holding in Rickman reads:

"The issue is whether his failure to file was wilfull and with the specific intent to violate what he knew to be his legal duty. The instructions covered wilfullness and intent."

"Defendant claims error in the instruction that Federal Reserve Notes are lawful money. We have held that they are. The instruction was proper. Viewed as a whole the instructions were fair, adequate, clear and understandable. They permitted consideration of every defense which defendant offered and allowed acquittal if the jury believed the defendant. See United States v. Hudler, supra, 605 F.2d at 491."

"Affirmed."

In other words, you are wrong yet again; and no matter how much you twist, evade, mislead and distort, you will continue to be wrong unless and until you can produce a valid appellate court holding which shows that "redeeming" lawful money makes a difference in anyone's tax burden. Since you have already admitted that no such cases exist, you will continue to be wrong on this point.

[Famspear]

The defendant, Gary Rickman, apparently assumed that if he could just get the Court to rule that Federal Reserve notes were "not lawful money," the Court would then conclude that the receipt of those notes was not "income" within the meaning of the Internal Revenue Code. There is no indication from the text of the Court's opinion that Mr. Rickman expressly, explicitly, specfically, made that connection as part of his argument -- and it appears that the Court did not even bother to disabuse him of that silly notion.

One of the things that we learn in law school is that, in general, you cannot count on the judge in your case to go out of his or her way to "practice law for you". That is, when you're charging down a fruitless rabbit trail, the judge is not always going to explain in minute detail why your path is a rabbit trail. Sometimes the judge will do that, and other times the judge won't.

In this particular case, the Court simply rejected the hapless Gary Rickman's goofy contention that Federal Reserve notes were not "lawful money."

[Dr. Caligari]

Furthermore you think that earning income is the taxable event rather than endorsing private credit from the Fed. Endorsing private credit from the Fed is the cause of the irrecusable obligation to file a Return of (their) Income.

Then the Internal Revenue Code would say that, wouldn't it? But it doesn't; it says that earning income is the taxable event. And the Supreme Court has said that anything that makes you economically better off ("any realized accession to wealth") is "income." It doesn't matter if you're paid in FRNs, lawful money, gold coins, Iraqi dinars, flat-screen television sets or sacks of fertilizer; if you work and get paid, you have taxable income.

[LPC]

Furthermore you think that earning income is the taxable event rather than endorsing private credit from the Fed.

Earning income is the taxable event, David.

Sorry to be picky, but it is the *realization* of income that is taxed.

“From the beginning the revenue laws have been interpreted as defining ‘realization’ of income as the taxable event rather than the acquisition of the right to receive it.” Helvering v. Horst, 311 U.S. 112, 115 (1940).

One might "earn" $30/hour on a job, but no income is realized (or taxed) until the wages are actually (or constructively) paid.

I also want to add to what others have said about the realization of income received in a form other than money. This is clear from the regulations under section 61:

"Gross income includes income realized in any form, whether in money, property, or services. Income may be realized, therefore, in the form of services, meals, accommodations, stock, or other property, as well as in cash." Treas. Reg. § 1.61-1(a).

This principle has been affirmed by the Supreme Court on many occasions. For example, in Helvering v. Bruun, 309 U.S. 461 (1940), the Supreme Court confirmed that a landlord realized income at the end of a lease equal to the value of improvements made to the property by the tenant. (The Department of the Treasury had issued a ruling to the same effect in 1917.)

So whether Federal Reserve Notes are "lawful money" is irrelevant to whether the receipt of the notes is income.

[Famspear]

Sorry to be picky, but it is the *realization* of income that is taxed.

Good point. For an accrual method taxpayer, the time of the earning of the income and the time of "realization" would generally be the same, but for a cash method taxpayer (typically, an individual), the income is generally "realized" not when earned but rather when cash (or cash equivalent) is received (or constructively received).

[David Merrill]

Sorry to be picky, but it is the *realization* of income that is taxed.

Good point. For an accrual method taxpayer, the time of the earning of the income and the time of "realization" would generally be the same, but for a cash method taxpayer (typically, an individual), the income is generally "realized" not when earned but rather when cash (or cash equivalent) is received (or constructively received).

Sorry to break it to you like this.

The taxable event is endorsing private credit from the Fed.

[LPC]

For myself, I'm not approving any of Van Pelt's or Harvester's posts unless they say something new. They do not have the right to repeat the same meaningless and unsupported gibberish over and over again.

[Famspear]

......The taxable event is endorsing private credit from the Fed.

No. And there is no such thing as "endorsing private credit from the Fed."

David's nonsense has now come around full circle, again, for the umpteenth time. I agree with LPC. At this point, I don't see a compelling reason to approve posts such as this one, at least not from David.

I don't approve posts like this from Harvester, either, as I know that he will never attempt to support his assertions. At least David gives it a try (well, "sort of") from time to time.

[Imalawman]

For myself, I'm not approving any of Van Pelt's or Harvester's posts unless they say something new. They do not have the right to repeat the same meaningless and unsupported gibberish over and over again.

I don't have a problem with it so long as he's not overrunning the thread with meaningless rambling junk posts. Simple ones like this are fine with me so long as they are short and not repetitive with something already posted in the thread. I don't think there is a reasonable fear of someone believing David and if they do, they deserve their fate.

[Paul]

The taxable event is endorsing private credit from the Fed.

Then how did the income tax work during the Civil War, 50 years before the Fed was created?

[David Merrill]

The taxable event is endorsing private credit from the Fed.

Then how did the income tax work during the Civil War, 50 years before the Fed was created?

Unconstitutionally.

Today it works non-constitutionally.

[LaVidaRoja]

Please explain the difference (WITH CITES TO LEGAL AUTHORITY) between unconstitutional and non-consititutional

[Paul]

Unconstitutionally.

Today it works non-constitutionally.

So you're saying that the Internal Revenue Code does say that income is taxable even when it doesn't involve endorsing private credit from the fed, and that your point is that doing so is unconstitutional?

[David Merrill]

Please explain the difference (WITH CITES TO LEGAL AUTHORITY) between unconstitutional and non-consititutional

The income tax was repealed as unconstitutional around 1894.

As admitted in the Redeemed Lawful Money thread FRNs were bank markers between 1913 and 1933. Since 1934 people can contract with the Fed by endorsement like I keep showing you.

When you contract in private like that, it is non-constitutional.

As with Aaron RUSSO's America: Freedom to Fascism where he kept asking, Where is the law? The law for the Income Tax is right there in Article IV of the federal constitution; no state can diminish the obligations of contract.



Regards,

David Merrill.

[Pottapaug1938]

Please explain the difference (WITH CITES TO LEGAL AUTHORITY) between unconstitutional and non-consititutional

The income tax was repealed as unconstitutional around 1894.

No, it was held unconstitutional as applied. The Sixteenth Amendment was designed, among other things, to remedy the gap in the law which allowed the Supreme Court to invalidate that earlier income tax law.

As with Aaron RUSSO's America: Freedom to Fascism where he kept asking, Where is the law? The law for the Income Tax is right there in Article IV of the federal constitution; no state can diminish the obligations of contract.

Again, you fail to cite at least one appellate court opinion to buttress your assertion. Simply citing a constitutional provision accomplishes NOTHING. To illustrate, let's take the language of the Second Amendment: "a well regulated militia, being necessary to the security of a free State, the right of the people to keep and bear arms shall not be infringed." Those are the words, but what do they mean? Does it mean, for example, that the right to keep and bear arms is contingent on it being done within the context of a well-regulated militia? What IS a well-regulated militia? Can someone "keep and bear arms" outside of a well-regulated militia? That, my friend, is why we need our appellate courts to issue opinions which clarify the bare language of the provision(s) in question. Reasonable people can have differing opinions as to the meaning of that language; but only an appellate court opinion can settle the argument. As for the "impairment of contract" language which you cite, look at the following excerpt from the Wikipedia article on the impairment of contract clause:

"In Home Building & Loan Association v. Blaisdell 290 U.S. 398 (1934), the Supreme Court upheld a Minnesota law that temporarily restricted the ability of mortgage holders to foreclose. The law was enacted to prevent mass foreclosures during a time of economic hardship in America. The kind of contract modification performed by the law in question was arguably similar to the kind that the Framers intended to prohibit. The Supreme Court held that this law was a valid exercise of the state's Police Power. It found that the temporary nature of the contract modification and the emergency of the situation justified the law."

"Further cases have refined this holding, differentiating between governmental interference with private contracts and interference with contracts entered into by the government. Succinctly, there is more scrutiny when the government modifies a contract to alter its own obligations. (See United States Trust Co. v. New Jersey, 431 U.S. 1 (1977).)"

"Modification of Private Contracts: The Supreme Court laid out a three-part test for whether a law conforms with the Contract Clause in Energy Reserves Group v. Kansas Power & Light 459 U.S. 400 (1983). First, the state regulation must not substantially impair a contractual relationship. Second, the State "must have a significant and legitimate purpose behind the regulation, such as the remedying of a broad and general social or economic problem." 459 U.S. at 411-13 Third, the law must be reasonable and appropriate for its intended purpose. This test is similar to rational basis review."

"Modification of Government Contracts: In United States Trust Co. v. New Jersey 431 U.S. 1 (1977), the Supreme Court held that a higher level of scrutiny was needed for situations where laws modified the government's own contractual obligations. In this case, New Jersey had issued bonds to finance the World Trade Center and had contractually promised the bondholders that the collateral would not be used to finance money-losing rail operations. Later, New Jersey attempted to modify law to allow financing of railway operations, and the bondholders successfully sued to prevent this from happening."

So, David, even if you could somehow torture the meaning of the clause so that it applied to income tax issues, it is clear that federal, state and local governments can enact income tax laws despite the clause.

And, here is a link to an article about the income tax and so-called "pure trusts":

http://www.oocities.org/zipcat29/contracts_clause.html

While the cases cited are not on all fours with the issue of so-called "redeeming lawful money" as affecting income taxation, the cases do make clear that the "impairment of contract clause" will be of no help to tax deniers.

Is that better?