Use and Transfer

Are the notes the subject of the income tax?
You be the judge.

I had written the previous article on this Web page asking, could the USE of the federal reserve note cause the income tax to be applied, not to the note itself but to the use of the note which would make it an excise tax. Well a friend did some research and sent me the following case. Within the case is a principle that applies to the very nature, I believe, of why everyone receiving above a certain amount of debt obligations has to file a return. It also shows how property taxes are levied and the same principle applies, that being transfer. The property is not being taxed but the privilege of transfer, especially inheritance tax.

In my book Which One Are You, printed in 1990, I went into detail on this very issue and I am putting excerpts here to show the principle the IRS operates under to collect this “excise” income tax and to show where the privilege lies that for decades people have been trying to find the nexus. I think you are going to be shocked at the premise I give to you. After all no argument so far has succeeded in any substantial win against income taxation. There is nothing that you buy, even silver and gold, without the use of federal reserve notes. Silver, gold, house, car, tv and furniture are all tangible property that was bought with intangible paper. That is the subject of the tax, intangible paper and this case proves it. This excerpt will be at the end of the case.

[2] No. 45
[3] 1914.SCT.244, 233 U.S. 434, 58 L. Ed. 1030, 34 S. Ct. 607
[4] April 20, 1914

[7] Mr. Charles P. Howland for plaintiffs in error:

[8] The taxation of the full value of the debts represented by these promissory notes deprived the executors and beneficiaries of the estate of their property without due process of law, and was in contravention of the Fourteenth Amendment.

[9] Jurisdiction of a State for purposes of transfer or inheritance taxation is limited to property within the State, in the senses in which that phrase has been recognized. Metropolitan Life Ins. Co. v. New Orleans, 205 U.S. 395.

[10] Promissory notes are only evidences of debt and not the debts themselves. Their situs, therefore, is not the situs of the debts; the situs of the debts is at the residence of one or the other of the parties to the relation. Buck v. Beach, 206 U.S. 392; Pelham v. Way, 15 Wall. 196.

[11] As to the distinction between a debt and the evidence establishing it, see Wyman v. Halstead, 109 U.S. 654; Attorney General v. Bouwens, 4 M. & W. 171, 191; Hunter v. Supervisors, 33 Iowa, 376; Hanson’s Death Duties (4th ed.), p. 239.

[12] A note is the representative of a debt as a warehouse receipt is the representative of personal property, but such a receipt cannot be taxed at the value of the goods on the theory that in some way it represents them. Selliger v. Kentucky, 213 U.S. 200.

[13] The special factors which warrant inheritance taxation upon choses in action belonging to the estates of non-resident decedents – control over the person of the debtor or over the means of enforcement of the obligation – do not exist here. Blackstone v. Miller, 188 U.S. 189 (semble).

[14] In the case of choses in action the State of the owner’s domicile levies one tax, Matter of Swift, 137 N.Y. 77, while the State of the debtor’s domicile levies a tax “not because of any theoretical speculation concerning the whereabouts of the debt, but because of the practical fact of its power over the person of the debtor” – in other words, because it grants a practical privilege by providing means for the collection of the debt. Blackstone v. Miller, 188 U.S. 189; Matter of Houdayer, 150 N.Y. 37.

[15] In this case the State of the decedent had no control over the persons of the debtors. That control was in the States of the debtors, Buck v. Beach, 206 U.S. 392, 407; Chicago, R.I. & P. R’y v. Sturm, 174 U.S. 710, 715, and as neither the universal succession nor the control over the means of enforcement was granted or could be regulated by the former State, that State had no power to tax.

[16] The situs of bonds appears to determine the situs of the debts they symbolize, but bonds have always been sharply distinguished from promissory notes in that regard.

[17] For certain purposes bonds have a peculiar recognition in the common law, and for purposes of taxation, annual or inheritance, are often treated as having a situs dependent

upon their physical whereabouts. Matter of Bronson, 150 N.Y. 1; Matter of Fearing, 200 N.Y. 340; State Tax on Foreign Held Bonds, 15 Wall. 300.

[18] But the rule does not embrace promissory notes. Buck v. Beach, 206 U.S. 392, 403.

[19] This distinction between bonds and promissory notes has a historical basis. Selliger v. Kentucky, 213 U.S. 200, 204.

[20] A promissory note may be the subject of larceny. People v. Ogdensburgh, 48 N.Y. 390, 397; Buck v. Beach, 206 U.S. 407.

[21] At common law a promissory note was not within the law of larceny, Regina v. Watts, 6 Cox, C.c. 304, but certificates of stock, warehouse receipts and policies of insurance are unquestionably the subjects of larceny (Penal Law of New York, 1909, c. 88), although none of them is the property whose situs determines the power of annual or of inheritance taxation. Matter of James, 144 N.Y. 6; Selliger v. Kentucky, 213 U.S. 200; Matter of Horn, 39 Misc. (N.Y.) 133.

[22] Taxation rests upon protection as a correlative, and when no protection is either practically or theoretically possible, taxation should not be laid: this is the broad basis for the rules limiting taxation. Union Transit Co. v. Kentucky, 199 U.S. 194; Matter of Bronson, 150 N.Y. 1; Cooley on Taxation (3d ed.), p. 3.

[23] In this case the State of testator’s domicile may tax, and indeed does so (Public Laws of Connecticut, 1903, c. 63), because it protects the universal succession.

[24] The States of the debtors may tax, because they protect the debts by affording recourse to their respective courts. Matter of Daly, 100 App. Div. (N.Y.) 373; S.c., 182 N.Y. 524; Matter of Clinch, 180 N.Y. 300.

[25] But New York has protected nothing.

[26] If such taxation is allowed, triple taxation on many kinds of choses in action is possible; in the case of a bill of exchange issued in multiplicate, the domiciliary States of the owner and of the primary obligor would be able to tax, and also each State within which one of the multiplicate

bills happened to be found at the owner’s death.

[27] Mr. William Law Stout for defendant in error.

[28] White, McKenna, Holmes, Day, Lurton, Hughes, Van Devanter, Lamar, Pitney

[29] The opinion of the court was delivered by: Holmes

[30] The provision in the New York Inheritance Tax Statute, imposing a transfer tax on property within the State belonging to a non-resident at the time of his death, is not unconstitutional under the due process clause of the Fourteenth Amendment as applied to promissory notes the makers of which are non-residents of that State. Buck v. Beach, 206 U.S. 392, distinguished.

[31] 202 N.Y. 550, affirmed.

[32] THE facts, which involve the power of a State to tax promissory notes located in the State although neither the owner nor the maker are residents thereof, are stated in the opinion.

[33] MR. JUSTICE HOLMES delivered the judgment of the court.

[34] This proceeding began with a petition by an executor, acting under ancillary letters, for the appointment of an appraiser to determine the amount, if any, of the transfer tax due from the estate of the deceased testator, Charles C. Tiffany. Tiffany was not a resident of New York at the time of his death but left in a safe deposit box in New York four promissory notes made by Pottinger, a resident of Chicago, secured by mortgages of Chicago land to Illinois trustees, and promissory notes of the Southern Railway Company, a Virginia corporation. The appraiser held these notes taxable under the New York laws of 1905, c. 368, § 1, amending § 220 of an earlier law and imposing a tax “when the transfer is by will or intestate law, of property within the State, and the decedent was a nonresident of the State at the time of his death.” The Surrogate confirmed the appraiser’s report, and his order was affirmed by the Appellate Division and the Court of Appeals. 143 App. Div. 327. 202 N.Y. 550. The Executors contend that the tax deprives them of their property without due process of law.

[35] In support of this position it was argued that if bonds were subject to taxation simply because of their presence within the jurisdiction it was due to the survival of primitive notions that identified the obligations with the parchment or paper upon which they were written, that bills and notes had a different history, and that there was no ground for extending the conceptions of the infancy of the race to them. It was pointed out that the power to tax simple contracts depends upon power over the person of one of the parties and does not attach to documentary evidence of such contracts that may happen to be within the jurisdiction. Cases were cited in which this court has pronounced bills and notes to be only evidences of the simple contracts that they express, Pelham v. Way, 15 Wall. 196; Wyman v. Halstead, 109 U.S. 654, 656, and the precise issue was thought to be disposed of by Buck v. Beach, 206 U.S. 392. We shall discuss this case, but for the moment it is enough to say that for the purposes of argument we assume that bills and notes stand as mere evidences at common law.

[36] But we are bound by the construction given to the New York statutes by the New York courts, and the question is whether a statute that we must read as purporting to give to bills and notes within the State the same standing as bonds for purposes of taxation, goes beyond the constitutional power of the State. Again for the purposes of argument we may assume that there are limits to this kind of power; that the presence of a deed would not warrant a tax measured by the value of the real estate that it had conveyed, or even that a memorandum of a contract required by the statute of frauds would not support a tax on the value of the contract because it happened to be found in the testator’s New York strong box. But it is plain that bills and notes, whatever they may be called, come very near to identification with the contract that they embody. An endorsement of the paper carries the contract to the endorsee. An endorsement in blank passes the debt from hand to hand so that whoever has the paper has the debt. It is true that in some cases there may be a recovery without producing and surrendering the paper, but so may there be upon a bond in modern times. It is not primitive tradition alone that gives their peculiarities to bonds, but a tradition laid hold of, modified and adapted to the convenience and understanding of business men. The same convenience and understanding apply to bill and notes, as no one would doubt in the case of bank notes, which technically do not differ from others. It would be an extraordinary deduction from the Fourteenth Amendment to deny the power of a State to adopt the usages and views of business men in a statute on the ground that it was depriving them of their property without due process of law. The necessity of caution in cutting down the power of taxation on the strength of the Fourteenth Amendment often has been adverted to. Louisville & Nashville R.R. Co. v. Barber Asphalt Paving Co., 197 U.S. 430, 434. Unless we are bound by authority, we think the statute, so far as we now are concerned with it, plainly within the power of the State to pass.

[Here the court has stated that notes (federal reserve notes) can be taxed. Also the federal reserve notes are an endorsement in blank and do not these debt obligations pass from hand to hand in what is called transfer? Here the court states that bank notes, which are nothing but notes of the private federal reserve, do not differ from any other note.]

[37] As to authority, it has been asserted or implied again and again that the States had the power to deal with negotiable paper on the footing of situs. “It is well settled that bank bills and municipal bonds are in such a concrete tangible form that they are subject to taxation where found, irrespective of the domicil of the owner; . . . Notes and mortgages are of the same nature . . . we see no reason why a State may not declare that if found within its limits they shall be subject to taxation.” New Orleans v. Stempel, 175 U.S. 309, 322, 323. Bristol v. Washington County, 177 U.S. 133, 141. State Board of Assessors v. Comptoir National d’Escompte, 191 U.S. 388, 403, 404. Metropolitan Life Insurance Co. v. New Orleans,

205 U.S. 395, 400, 402. This is the established law unless it has been overthrown by the decision in Buck v. Beach, 206 U.S. 392.

Now you have a better understanding of the Decision in Cook v Tate where even though living in Mexico the man was taxed on his income which was a transfer to him of blank endorsed paper federal reserve notes simply transferred to him because the situs was with the federal reserve banks.

[38] No such effect should be attributed to that case. The Ohio notes in Buck’s hands that were held not to be taxable in Indiana were moved backward and forward between Ohio and Indiana with the intent to avoid taxation in either State. 206 U.S. 402. They really were in Ohio hands for business purposes, ibid., 395, and sending them to Indiana was spoken of by Mr. Justice Peckham as improper and unjustifiable. Ibid. 402. Their absence from Ohio evidently was regarded as a temporary absence from home. Ibid. 404. And the Conclusion is carefully limited to a refusal to hold the presence of the notes “under the circumstances already stated” to amount to the presence of property within the State. A distinction was taken between the presence sufficient for a succession tax like that in this case, and that required for a property tax such as then was before the court, and the only point decided was that the notes had no such presence in Indiana as to warrant a property tax. See New York Central & Hudson River R.R. Co. v. Miller, 202 U.S. 584,

597.  If Buck v. Beach is not to be distinguished on one of the foregoing grounds, as some of us think that it can be, we are of opinion that it must yield to the current of authorities to which we have referred.

[39] In the case at bar it must be taken that the safe deposit box in which the notes were found was their permanent resting place and therefore that the power of the State so repeatedly asserted in our decisions could come into play.

So if these notes had the permanent resting place in this state that it stands to reason that a federal reserve note has its permanent resting place back in the federal reserve system form whence it originated. So the power of the IRS to assert to collect the tax on the transfer and use, which is a excise tax for that privilege can now start to be seen.

[40] Judgment affirmed.

[41] Justice McKENNA, Concurring.

[42] I concur in the result, but cannot concur in the reasoning of the opinion, or rather its controlling proposition unmodified. I might pass it by in silence if it did not have larger consequence than the decision of the pending case. The opinion is rested on the proposition, said to be based on authority, that the States have power to deal “with negotiable paper on the footing of situs,” that is, to regard such paper so far concrete and tangible as to be of itself a subject of taxation, irrespective of the domicile of its owner or, I add, the locality of the debt which it represents. For the proposition announced, Mr. Justice Brewer, in New Orleans v. Stempel, 175 U.S. 309, is quoted from. Other cases are cited and it is said to be established law unless it has been overthrown by the decision in Buck v. Beach, 206 U.S. 392. I refrain from meeting the judgment of my brethren by simply opposing assertion, and I feel constrained to review the cases, including Buck v. Beach. I will do so in the order of their decision.

[I do not think this needs any explanation because the federal reserve has stated that it is all negotiable paper and even the UCC so states the federal reserve note is negotiable paper. They are intangible property because they are not money, only representative pieces of paper, or choses in action as they are listed as a bill of exchange also.]

[43] Commencing with the Stempel Case I may immediately say of it that its facts did not call for the broad and general declaration it is adduced to sustain. The statute passed on did not attempt to tax negotiable paper simply because of its presence in the State. It regarded the origin

and use of such paper and declared its (the statute’s) purpose to be that no non-resident, by himself or through an agent, should transact business in the State “without paying to the State a corresponding tax with that exacted of its own citizens,” and, to execute the purpose, declared: “All bills receivable, obligations or credits arising from the business done in this State are hereby declared assessable within this State, and at the business domicil of said non-resident, his agent or representative.”

[44] The property assessed was inherited by Stempel’s wards, they and she being residents of the State of New York. It was assessed to the estate of the grandfather of the wards, and was $15,000, “money in possession, on deposit, or in hand,” and 800,000, “money loaned or advanced, or for goods sold; and all credits of any and every description.” The contention was that “the situs of the loans and credits was in New York, the place of residence of the guardian and wards, and, therefore, being loans and credits without the State of Louisiana, they were not subject to taxation therein.”

[45] The question presented by the contention, this court said, was whether, under the statute as interpreted by the Supreme Court of the State, the properties were subject to taxation, and, if so subject, whether any rights secured by the Federal Constitution were thereby infringed.

The tax was sustained, but it will be observed that negotiable paper was not assessed at all or dealt with as an entity separate from what it represented. The notes which represented the credits taxed were, it is true, in New Orleans, but in possession of the agent of Stempel. Not they, but the rights of which they were the evidence were taxed. The broad declaration, therefore, that negotiable paper had such tangibility as to be of itself a taxable entity was not called for. The true value of the case and its application to the case at bar can be estimated when we consider the other cases.

[The federal reserve has the right to tax their notes that are the debt obligations of the United States. They had transferred them to you via the company you worked or if you worked as yourself they were transferred to you by a man that you did work and you in turn transfer them to others and no matter where the notes, their situs, as stated by the court, lies in the federal reserve system.]

[46] In Bristol v. Washington County, 177 U.S. 133, notes secured by mortgages in the State (Minnesota) were taxed. The question was of their situs. The state court put its decision on the ground that the notes were in the State for collection or renewal with a view of reloaning the money and keeping it invested as a permanent business. And this court in its decision said that “credits secured by mortgages, the result of the business of investing and reinvesting moneys in the State, were subject to taxation as having their situs there.” The ruling was affirmed. We said, by Mr. Chief Justice Fuller: “Persons are not permitted to avail themselves for their own benefit of the laws of a State in the conduct of business within its limits, and then to escape their due contribution to the public needs through action of this sort, whether taken for convenience or by design” (p. 144).

[47] In Board of Assessors v. Comptoir National d’Escompte, 191 U.S. 388, credits in the form of checks were taxed under the same statute considered in the Stempel Case. They were held in the State for investment and reinvestment, and this was the basis of the decision. The checks, it was said, became a credit for money loaned, localized in Louisiana, protected by it and within the scope of its taxing laws as construed by the Supreme Court. And we further said, after reviewing the Stempel Case and the Bristol Case: “From these cases it may be taken as the settled law of this court that there is no inhibition in the Federal Constitution against the right of the State to tax property in the shape of credits where the same are evidenced by notes or obligations held within the State, in the hands of an agent of the owner for the purpose of collection or renewal, with a view to new loans and carrying on such transactions as a permanent business” (p. 403).

[48] In Metropolitan Life Insurance Co. v. New Orleans, 205 U.S. 395, the assessment was also under the act passed on in the Stempel Case. I will not pause to detail the facts. It is enough to say that the credits taxed were loans (evidenced by notes) by the insurance company to its policy holders in Louisiana. The tax was not eo nomine on the notes but was expressed to be on “credits, money loaned, bills receivable,” etc., and its amount was ascertained by computing the sum of the face value of all the notes held by the company at the time of the assessment.

[49] The purpose of the taxing law was said to be to lay the burden of taxation equally upon those who do business within the State. And, after comment, it was said (p. 399): “Thus it is clear that the measure of the taxation designed by the law is the fair average of the capital employed in the business. “In other words, the investments in the State were taxed and the legality of the tax was determined by their situs, not by the locality of the notes which represented them, the notes being in New York at the home of the insurance company.

[Again it is noted that situs is the legality to tax the notes be they in California, Maine, France or China. Remember we are applying the PRINCIPLE here to the federal reserve note since the court stated that technically there is no difference between the notes they are talking about in this case and federal reserve notes which are also defined as bills of exchange as they are blank notes, which you have not endorsed but merely passed on called a transfer.]

[50] It was the situs of the debt which determined the legality of the taxation in all of the cases and united them under the principle expressed in Metropolitan Life Insurance Co. v. New Orleans, that the law regards the place of the origin of negotiable paper as its true home, to which it will return to be paid, and its temporary absence can be left out of account. They do not support the broad proposition that to negotiable paper can be ascribed such tangibility and entity as so to make it a taxable object of itself in a jurisdiction other than that of the obligation it represents. This broad generality is necessary to sustain the tax in the present case if it can be regarded a direct tax on property, for Illinois, not New York, is the situs of the debts of which the notes taxed are the evidence, and of the mortgages which secure them.

[51] That broad proposition was asserted in Buck v. Beach and rejected. The notes involved had their origin in Ohio and represented investments in that State. Their owner died, and one of the two trustees of his will resided in Indiana. The notes were kept in the custody of the latter except that at the time of assessment of taxes in that State they were sent to Ohio and after the lapse of a few days returned to him. They were taxed in Indiana. The tax was sustained by the State Supreme Court but declared invalid by this court.

[52] The proposition presented for decision was stated thus by Mr. Justice Peckham for the court: “The sole question then for this court is whether the mere presence of the notes in Indiana [the taxing State] constituted the debts of which the notes were the written evidence, property within the jurisdiction of that State, so that such debts could be therein taxed” (p. 400). The prior cases were considered, and it was said: “There are no cases in this court where an assessment such as the one before us has been involved. We have not had a case where neither the party assessed nor the debtor was a resident of or present in the State where the tax was imposed, and where no business was done therein by the owner of the notes or his agent relating in any way to the capital evidenced by the notes assessed for taxation. We cannot assent to the doctrine that the mere presence of evidences of debt, such as these notes, under the circumstances already stated, amounts to the presence of property within the State” (p. 406). And it was pointed out that the prior cases, which were specifically reviewed, gave no support to the rejected doctrine. It was not overlooked that certain specialty debts, state and municipal bonds and circulating notes of banking institutions, have sometimes been treated as property where they were found though removed from the domicile of the owner, and State Tax on Foreign-held Bonds, 15 Wall. 300, 324, was cited. Promissory notes were held not to be within the rule.

[Is not this a true statement by the court that the federal reserve notes are deemed property especially when they seized them whether in bank seizures, drug seizures and the like?]

[53] It is, however, asserted that the circumstances of the case showed that the notes were fugitives from taxation, alternately from Indiana and Ohio, and that their stay in Indiana was in evasion of their obligations to Ohio and was “a transit, although prolonged.” But the bad motive of the possessor of the notes was not made a ground of decision. If the court felt a retributive impulse to deny the notes sanctuary in Indiana it was suppressed. The court declared that the motive for sending the notes to Indiana was of no consequence and that the attempt to escape proper taxation in Ohio did not confer jurisdiction on Indiana to tax them (p. 402).

[Isn’t that interesting that notes are fugitives from taxation, and note the term evasion. Are you, holding private federal reserve notes (debt obligations) via transfer, thereby obtaining a privilege in holding and USING these private notes having their situs in the United States/federal reserve system?]

[54] But we are not required to overrule Buck v. Beach nor make it yield in any particular in order to sustain the tax in the case at bar. It, in effect, reserved from its principle inheritance or succession taxing acts by rejecting as not in point cases which involved them. We said, “The foundation upon which such acts rest is different from that which exists where the assessment is levied upon property. The succession or inheritance tax is not a tax on property, as has been frequently held by this court, Knowlton v. Moore, 178 U.S. 41, and Blackstone v. Miller, 188 U.S. 189, and therefore the decisions arising under such inheritance tax cases are not in point” (p. 408).

[55] The tax under review is of that kind. In other words, it is not tax on property, but a tax upon the transfer of the property by the will of the testator of plaintiffs in error as provided by the laws of the State. The will was probated in Connecticut, where the deceased was a resident, but ancillary letters of administration were issued to plaintiffs in error by the Surrogates' Court, County of New York, State of New York, and the taxed notes were part of the property disposed of by his will. It appears, therefore, that the property is in the control of the courts of New York. In other words, the laws of New York are invoked, accomplish its transfer and subject it to the Dispositions of the will and make effectual the purposes of the testator. Blackstone v. Miller, supra.

[Now we are right back to transfer, which is a privilege for the use of the notes and the laws of the United States are used to effect a tax on this privilege which involves intrastate transfer of blank notes that are never endorsed, which puts you in commerce which is an excise taxable privilege for the USE of this private note that bears the distinction of a debt obligation of the United States. You are simply being taxed for using IOU’s of the United States and the IRS, A.K.A. federal reserve collecting agent is bound to collect this excise tax. It is an intangible that is being taxed. An intangible fits into excise tax.]

[56] I am dealing with the power of taxation under our decisions. If there be inJustice in its exercise by measuring the tax by the value of the credits represented by the notes, it is an inJustice which this court cannot redress.

[57] I am authorized to say that MR. JUSTICE PITNEY concurs in this opinion.

[58] JUSTICE LAMAR, Dissenting.

[59] I concur in Mr. Justice McKenna’s analysis of Buck v. Beach and the other cases, but am of the opinion that the principle there decided, applies as well to inheritance and transfer taxes on notes as to direct taxes and that, therefore, the judgment in the present case should be reversed.

[Here again the dissenting judge says the PRINCIPLE applies to notes as transfer taxes.]

[60] I am authorized to say that THE CHIEF JUSTICE and MR. JUSTICE VAN DEVANTER concur in this Dissent.

I now present to you the excerpts and bear in mind that a W-4, W-2 and 1099 Forms are GIFT tax Forms listed as Tax class 5 by the IRS in the IDRS 6209 manual and also withholding on the Racs 006 and Summary Record of Assessment is listed as tax class five, Gift and Estate tax.

From Which One Are You, page 160 to page 165.

Chapter XXII

Applying the W-4 Gift tax Form to where it belongs in Subtitle B – Estate and Gift Taxes of the Internal Revenue Code.



(a) Taxable Transfers.

(1) General Rule. – A tax, computed as provided in section 2502, is hereby imposed for each calendar year on the transfer of property by gift during such calendar year by any individual, resident or nonresident.

(2) Transfers of intangible property. – Except as provided in paragraph (3), paragraph (1) shall not apply to the transfer of intangible property by a nonresident not a citizen of the United States.

The following section has bearing on the understanding of applying the Uniform Commercial Code to the taxing scheme of the government since it is an organization under UCC 1-201 (28).

(5) Transfers to political organizations. – Paragraph (1) shall not apply to the transfer of money or other property to a political organization...for the use of such organization.

Lets look to Terms (definitions), in Black’s Law, of intangible property, before we get to theirs.

“Used chiefly in the law of taxation, this term means such property as has no intrinsic value, but is merely the representative or evidence of value, such as certificates of stock, bonds, promissory notes, and franchises”.

Federal reserve notes are NOT money and can be included as intangible property, since they are not even a note under UCC 3-104, and have no intrinsic value for they are all debt. So, continuing with Section 2501 (d) (2), it states;

For exclusion of transfers of property outside the United States by a nonresident who is not a citizen of the United States, see section 2511 (a).

The W-4 is a Class Tax 5, Gift and Estate tax Form. Is the company giving you a gift whereby you are to pay a tax through withholding, not on income, but a gift on intangible property? Isn’t the W-2, which is also listed as a tax class 5 form, stating the total gift of intangible property given to you for the year? Doesn’t IRS claim your labor is worth a 0 dollar basis? But isn’t that because you are considered an “employee”, per definition as a United States citizen working as a privilege which puts your labor at the “0” dollar basis? Now the transfer of a check made out for dollars and given to you does not mean you have been paid. You simply have a piece of paper which you take to the bank and exchange for more intangible property, don’t you? REMEMBER, you have a check MINUS the withheld intangible property which was transferred, or exchanged. Think it sounds plausible. Do you trust my explanation? If you do you are not a thinker and your ignorance is what has led you into their Babylonian world.

Guess again, YOU, not the company, could be making a gift to the government by filing a W-4 gift tax Form couldn’t you? Think people THINK, which is it???? Hey, I was easy on you, wait till a commercial judge gets a hold of you. Before you could finish this little paragraph he would have made you, “another patriot that lost.”



(a) Scope. – Subject to the limitations contained in this chapter, the tax imposed by section 2501 shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible; but in the case of a nonresident not a citizen of the United States, shall apply to a transfer only if the property is situated within the United States.

Here is proof that you can be a nonresident and not a citizen of the United States or you can be a nonresident AND a citizen of the United States, PER TERMS (definitions). This now proves that you are an alien when you are not a citizen of the United States and nonresident.

(b) Intangible property. – "For purposes of this chapter, in the case of a nonresident not a citizen of the United States who is excepted from the application of section 2501 (a) (2)

(1) shares of stock issued by a domestic corporations, and

(2) debt obligations of –

(A) a United States person, or

(B) the United States, a State or any political subdivision thereof, or the District of Columbia,

which are owned and held by such nonresident shall be deemed to be property situated within the United States.

This is an impossibility to understand this section for want of proper English grammar construction, or so I thought. Re read the above but leave out the underlined words. A closer look reveals that Number (b) (1) fits the Brushaber decision. A domestic corporation is one fully chartered by Congress like Union Pacific R.R. and Amtrak which is partially owned by Congress. Brushaber was a nonresident alien owning stock which had him “effectively connected” with a “trade or business” with the United States. Well do you have shares of stock in a corporation chartered by Congress? If you do and have not filed a W-4, then all you pay a tax on is the gain from the investment on the stock, nothing else. See 26 USC § 872.

Number 2 is a little tricky. What is the debt obligation of a “United States person?” What is interesting is the following Section 163 (e) (2) (A) of 26 USC. This Section talks about the “debt Instrument” of a “United States person.” This refers you to 26 USC § 1275 (a) (1). I would make a conclusion here that the “debt instrument” is the “debt obligation” of the United States person (7701 (a) (30), found in the W-4 Gift Tax scheme at 26 USC § 2511 (b) (2), which is intangible property. The nonresident alien is excepted from this Section.

What are the debt obligations of the United States? Aren’t debt obligations of the United States, Federal reserve notes as listed in Title 18 USC § 8? Isn’t it true that obligations of the United States cannot be taxed when reading Title 31 USC § 3124 and subsequent §§ 5118 & 5119? According to these last two sections the United States admits it doesn’t pay its debts in the normal course of business. How can you own the debt of another without an agreement? Banks do it all the time when they sell your mortgage to another, usually at a discount, but an agreement must exist between the bank and the bond holder. You have nothing to say about this transfer. You still pay the original bank who then turns over the intangible property to another, who at any time can call in the loan. Don’t believe me, check for yourself and read the fine print on your agreement. What does UCC 9-106 have to say about “general intangibles?” Are you owning or merely holding the debt (federal reserve note) of another. If you own it where’s the agreement? If you own it why can’t you call it in? If you are merely holding it, can’t the original owner call it or a portion of it in whenever he wants, and you have nothing to say about it?

Could it be the gift tax Form, or application Form of the Federal CONTRIBUTION Act? Did you have a capacity to contract at the time the government misrepresented SS as an “insurance policy,” that you were forced to obtain in order to get a job? Look at UCC for the answer my friends. Where is the UCC 1-201 (3)? Does it contain your UCC 3-401? Doesn’t UCC 3-410, and 3-413 criteria have to exist? If not, does UCC 1-103, 1-207 and 2-721 help you out? How many times have you heard of people trying to get out of the Social Security ponzi scheme and it is like talking to a deaf person? What were you promised by Soc. Sec.? There is no recourse to the instrument is there? Are you a willing “party” or are you unwilling through fraud by inducement? Have you knowingly consented with intent to give a gift after being informed of any unalienable rights that you would give up? Well look at UCC 2-607, 2-608, 2-609 and 3-601 (3). And while you are at it look up the complete definition of;

26 CFR § 301.7701-11 Social Security Number. “. . . The terms ‘account number’ and ‘social security number’ refer to the same number.”

But this is not a tax on Federal reserve notes, it is a gift tax and the notes, which in reality are script, a medium of exchange, are not being taxed. (That’s why it is frivolous to argue “money issues” as they are presently being argued. The issue is not Art. 1, § 10, Cl.1, silver and gold but ; “What “Thing” has the State you live in declared as “legal tender” to pay a debt as intended by 1:10:1.") They are extracted from you, by your filling out a W-4 gift class tax 5 Form with your consent. How can you give a gift, then claim exemption? Wouldn’t that be like signing a pledge for United Way and then claiming not to withhold any money? Did you knowingly INTEND to make a gift? Did I make mention of that word before? If you did, could it become the “debt obligation” and you being the “United States citizen are the surety guaranteeing the debt by consent?

Look at 26 USC § 2513 (b), 1 & 2 for consent, (were you informed before you consented of all the ramifications of the agreement?), notice the date. By law, the government is supposed to have you fill out a W-4 each and every year so that if you want to, you can revoke your (voluntary?) consent, see 26 USC § 2513 (d). Read Section 2514 and notice the date, October 21, 1942. What is significant about that date? Could it have something to do with the withholding scheme Congress passed to skim off the buying power of the worker so as to control the economy? It might pay you to get the declassified document file # 100, entitled;

"WITHHOLDING TAX hearing 77th Congress,

Data Relative to Withholding Provisions of the 1942 Revenue Act.”

This, dated August 21 and 22, 1942, states exactly this reason for withholding. It also carries the terms “declassified see Gift and Exchange division,” NOT the term income tax, which is a tax class 2. Give credit to a woman with initials B. M. for this found document. How can I impress upon you the medium of exchange tax?


I now leave you to ponder and I believe you will have to decide that this premise is true or false. I have given you my research from 1990 that people could not understand, otherwise we would have attacked the USE of the note rather than the note itself. The excise tax is alive and well and yet no one has challenged the government on this premise. Well it is here for you to decide and do further research if you think I am right. If you decide I am wrong then that too is your choice. All I am giving is information. Like I said in the book, Which One Are You? I did not tell people who they were, I asked in the title Which One Are You? I now ask is this a plausible premise as to what and why they are applying an Income tax that is an excise for the use of the private debt obligations? Only you can decide.

The Informer