Originally Published on forbes.com on August 17th, 2011
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Last month I dipped into a couple of days worth of the latest federal tax decisions and IRS rulings that I scan fairly thoroughly and didn’t see anything new that is that interesting. My criteria are practical utility, matter for reflection and humor. I know that I will never really run out of material. You can take a look at my pre-Forbes site which is now a repository of original source material. You will see numerous items that I have not yet worked into posts for Forbes. Regardless, that brief couple of days when the IRS failed to deliver anything worthwhile motivated me to start surveying state tax material. I started with New York mainly because I was waiting for the other shoe to drop on the tax implications of marriage equality. It took me a while to get to Florida, even though I have a Florida CPA license to go with my Massachusetts license and spend a good amount of time in Orlando and know some great people down there. Florida doesn’t have an individual income tax, but it does have other taxes, so there are some interesting rulings from time to time. At any rate my extra searching has been rewarded with this little gem from Florida.
There are people that call themselves by a variety of names, “Patriots” being one. The IRS calls them tax protesters. I once ran into one who was telling my client not to withhold federal tax. He got real excited when I referred to his arguments as protester arguments. Anyway you can call these guys late to dinner but don’t call them protesters unless you want to piss them off. Just to give you an idea of the arguments, here is one of them Code Section 7701(a)(8) and 7701(a)(9) (7701 is definitions, by the way):
(9) United States.
The term “United States” when used in a geographical sense includes only the States and the District of Columbia.(10) State.
The term “State” shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
So the United States is the “states” and the District of Columbia. What are the states ? The District of Columbia. That’s it. Do you see Massachusetts or Florida there ? – never mind North Dakota. So the income tax only applies to activities in the United States, which includes just the District of Columbia. There’s a little more to it depending on the source and whether they think the Internal Revenue Service is owned by the Rothschild’s or there is a difference between real American citizens and 14th Amendment citizens. Just so you don’t get excited about this loophole I just showed you the thing the “patriots” forget to mention is 7701(c):
Includes and including.
The terms “includes” and “including” when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.
The terms “includes” and “including” when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.
So if you have a geographic expression like Virginia in your mind you can check with a fourth grader and probably get a pretty reliable answer as to whether it is a “State” or not.
The IRS is used to dealing with these characters as are the federal courts The Tax Court will tell them that they don’t have to refute their stupid arguments and then sanction them. You can be fined $5,000 for a frivolous submission about your own or anybody else’s taxes. That is kind of taking the fun out of it. You can sit in the Dunkin Donuts and tell the next guy in the booth about this stuff and it might seem new and interesting but IRS employees know how to deal with this bullshit now. Since it isn’t that much fun laying this on somebody who isn’t actually trying to collect taxes from you and with the sanctions and everything it’s really not fun to pull it on the IRS, it’s not surprising that they have found a new victim. It doesn’t work at the Federal building, so let’s try Town Hall or in the case the county seat.
C. Robert McIntyre is the Appraiser of Highlands County Florida. I don’t know how much aggravation his job entails. I’m sure there is a bit. I don’t know how many people work for him, but I’m sure it’s a lot fewer than the IRS. So he had to hire attorney Loren Levy to request an opinion from the Florida Attorney General:
According to your letter, the Highlands County Property Appraiser has received several assertions from different property owners claiming that his office lacks the legal authority to assess certain parcels of real property located in Highlands County. A number of property owners have recorded “Declaration of Land Patent” notices in the public records. Another property owner has placed its property into a “Common Law Pure Trust.” In each of these circumstances, the property owners assert that their action requires the property appraiser to remove the parcels from the assessment roll because they are no longer subject to ad valorem taxation. You have requested assistance from this office regarding the property appraiser’s duties and responsibility in this regard.
According to your letter, the Highlands County Property Appraiser has received several assertions from different property owners claiming that his office lacks the legal authority to assess certain parcels of real property located in Highlands County. A number of property owners have recorded “Declaration of Land Patent” notices in the public records. Another property owner has placed its property into a “Common Law Pure Trust.” In each of these circumstances, the property owners assert that their action requires the property appraiser to remove the parcels from the assessment roll because they are no longer subject to ad valorem taxation. You have requested assistance from this office regarding the property appraiser’s duties and responsibility in this regard.
Being the attorney general and all, they couldn’t just say “What bullshit” and leave it at that. They actually had to give a sober answer. Here are some excerpts:
You advise that the parcel referenced in the declaration attached to the purported “land patent” is located in a residential subdivision in Highlands County known as Placid Lakes. The property was purchased from a private construction company in 2004 by the current owners and the lot is improved with a residential home built in 2004. The residential subdivision in which the property is located was first platted in Highlands County in 1958 and the final plat was recorded in 1970. Information you have supplied indicates that this property has been held in private hands for nearly 100 years. The transfer of this land into private hands occurred nearly a century ago and at that time these lands ceased to be public and became private lands subject to taxation by the state, adverse possession, or assignment of interest.
Self-prepared land patent documents do not affect title to property and would not render the property described therein exempt from state ad valorem taxes. I find no authority for an individual to “patent” land to himself or herself. Further, a patent is not an exemption. The mere statement by a private owner that real property is subject to a “Declaration of Land Patent” and the recording of such a statement is not enough to invest that property with any of the indicia of federal land patent.
There’s more:
Recent out-of-state cases have considered the tax consequences of a “Declaration of Land Patent” in light of concerns that this is a method of tax avoidance and a possible foreclosure fraud scheme. In Taylor v. Davis, 14 the State Tax Commission of Missouri was presented with an appeal to determine whether the subject property was exempt from taxation under the Missouri statutes and constitution. The property owner presented a number of documents upon which he based his claim of exemption from taxation based upon his property being in “Patent at Law Status,” including a quitclaim deed and a declaration of land patent. The declaration of land patent documents filed in the Missouri case contained citations to six early legal cases which are also cited in the Florida documents which have been presented to Mr. McIntyre. The Missouri tax commission stated:
“ review of those cases failed to provide any basis upon which the exemption claim can be established. It is unnecessary to provide a recitation of the facts of each case. None of the cases involve a claim by a citizen to exemption from state ad valorem taxation as is the present case. Therefore, the holdings of the various courts in these cases are not applicable to and provide no support for the claim advanced by Complainant.”
That’s fairly typical tax protester behavior. Copious irrelevant citations.
These arrangements, variously described as “family trusts,” “ABC trusts,” “constitutional trusts”, “contract trusts”, “family estate trusts,” “sovereign trusts,” and, as discussed above “pure trusts,” have been determined to be “a time-worn tool of tax avoidance, the legitimacy of which has been repeatedly and overwhelmingly rejected in every context that the courts have considered these arrangements.” While I am aware of no Florida court cases discussing the ad valorem tax consequences of property held in a “Common Law Pure Trust,” a United States Tax Court reviewed several “Common Law Pure Trusts” and determined that they were shams lacking economic or legal substance and were to be disregarded for Federal income tax purposes. The court then concluded that the net income of the business interests purportedly made the subject of the trust were properly taxable to the taxpayers.
These arrangements, variously described as “family trusts,” “ABC trusts,” “constitutional trusts”, “contract trusts”, “family estate trusts,” “sovereign trusts,” and, as discussed above “pure trusts,” have been determined to be “a time-worn tool of tax avoidance, the legitimacy of which has been repeatedly and overwhelmingly rejected in every context that the courts have considered these arrangements.” While I am aware of no Florida court cases discussing the ad valorem tax consequences of property held in a “Common Law Pure Trust,” a United States Tax Court reviewed several “Common Law Pure Trusts” and determined that they were shams lacking economic or legal substance and were to be disregarded for Federal income tax purposes. The court then concluded that the net income of the business interests purportedly made the subject of the trust were properly taxable to the taxpayers.
In light of the absence of any exemption for “Common Law Pure Trusts” contained in the Florida Constitution or Florida Statutes, it is my opinion that the Highlands County Property Appraiser may not remove privately-owned property from the tax rolls and exempt that property from ad valorem taxation based on the owner of such property transferring it into a “Common Law Pure Trust.”
If you do a google land patent you will find people like this one who will tell you how to do this in the truly correct manner:
We must obey Yahweh as a society to exercise Allodium. And that must include driving all the enemies and strangers out of the Land, who dilute our sovereignty and use force of arms (corporate police, courts) to deprive us of our possession of the land (tax sale, ad valorem lien, IRS siezure, etc.)
Anyway Mr. McIntyre has my sympathy.
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