Schlabach v. IRS (2018) RULING: The Court now turns to Schlabach's refund claims for tax year 2013. The IRS may impose a $5000 civil penalty on a person who files a frivolous tax return. I.R.C. § 6702(a). The penalty applies if (1) the person files a document that purports to be a tax return, (2) the document either contains information that on its face indicates the self-assessment is substantially incorrect or omits information on which the substantial correctness of the self-assessment may be judged, and (3) such conduct is either based on a position the IRS has identified as frivolous or reflects a desire to delay or impede tax administration. Id.
RESOLUTION: The agency also argued FRCP 12(b)(1): "lack of subject-matter jurisdiction" which the U.S. government does indeed lack since the IRS is a private agency utilizing private contracts and the trial is not a criminal proceeding against them with a valid fact-witness. The courts will often deny a lawsuit against the IRS because of this fact. All claims must be settled within the IRS, not through public courts and is done so by providing proof of lawful money redemption. No proof of redeemed checks means no lawful money redemption in the eyes of the IRS. Be competent enough in common law to realize Congress allowed the lawful money remedy for a reason. Meaning once one requests a sit-down audit with an agent, the law will prevail and all will eventually be resolved - public lawsuits against the IRS are not the correct path. Further, it is unknown how John Schlabach filled out his tax return. If the return was done improperly (e.g. not putting negatives in [ ] brackets, over-exempting funds, forgetting to deduct SSI from a lawful money return, committing perjury about prior years of lawful money redemption, even forgetting to add the lawful money proof) there can be a frivolous penalty assessed for any of these valid reasons. Finally, should a Frivolous Filing Penalty be assessed remember to send it back with a "Refusal For Cause" written on it. This has ended the matter for a number of redeemers instantly. A last resort for some has been writing a Business Letter to the US Treasury requesting forgiveness through bankruptcy and it has helped many. Request a Letter of Forgiveness to help the bankruptcy go as it is intended and on-schedule. Copy the Franchise Tax Board.
ADDITIONAL ISSUES: John sued the IRS before they were able to accept or reject the 2009, 2010, 2012, 2013 returns, thus the dismissal per FRCP 12(b)(6): "failure to state a claim upon which relief can be granted". Unfortunately, the case shows that Mr. Schlabach attempted to retroactively claim lawful money on his 1040X Amendment Forms for the mentioned years claiming "lawful money" which the agency rightfully rejected under the common sense "Why wait 4 years to claim the refunds if it was known said funds were owed from the beginning?". Once denied the refunds for obvious reasons, he was assessed $15,000 in penalties for 2009, 2010 and 2012. Mr. Schlabach is lucky perjury was not brought up as an additional charge! Further, be aware that the $10,000 frivolous filing penalty for 2013 may or may not have been related to John's prior off-shore tax shelter issues with the IRS. Further note, the frivolous filing penalty assessed for 2013 did successfully have the 2015 AND 2016 lawful money refunds applied to it without issue, but John was not happy with this result and wanted to claim ALL years retroactively as "redeemed in lawful money". And the IRS said, "No dice - here's another $15,000 owed us for lying!"
United States v. Rickman (1980) RULING: The court affirmed the conviction for willfully failing to file a return and rejected the taxpayer's argument that "the Federal Reserve Notes in which he was paid were not lawful money within the meaning of Art. 1, § 8, United States Constitution."
RESOLUTION: The courts will prosecute anyone who does not redeem lawful money using the correct "law". Rickman attempted lawful money redemption by utilizing the U.S. Constitution, which does not deliver a remedy for private currency, only the citing of the U.S. Code in Section 12 regarding lawful money redemption does.
Federal Reserve Arguments (2020) OPINION: In 1933, Congress changed the law so that all U.S. coins and currency (including Federal Reserve notes), regardless of when issued, constitutes "legal tender" for all purposes. Federal and state courts since then have repeatedly held that Federal Reserve notes are also "lawful money." Milam v. U.S., 524 F.2d 629 (9th Cir. 1974), is typical of the federal and state court cases holding that Federal Reserve notes are "lawful money." In Milam, the United States Court of Appeals for the Ninth Circuit reviewed a judgment denying relief to an individual who sought to redeem a $50 Federal Reserve Bank Note in "lawful money." The United States tendered Milam $50 in Federal Reserve notes, but Milam refused the notes, asserting that "lawful money" must be gold or silver. The Ninth Circuit, noting that this matter had been put to rest by the U.S. Supreme Court nearly a century before in the Legal Tender Cases (Juilliard v. Greenman), 110 U.S. 421 (1884), rejected this assertion as frivolous and affirmed the judgment.
RESOLUTION: The Federal Reserve is very poignant with its claims because the argument they present is in regards to redeeming Federal Reserve Notes (FRNs) into gold or silver coin. As stated within Lawful Money Secrets, the Supreme Court has ruled against this conversion - imagine trying to get $1 in gold at one's local bank, it'd be a speck of dust on the table and impossible to obtain a valid weight of transfer. Notice the one topic the Federal Reserve dare not broach is the idea that every dollar bill has TWO SEALS on it, thus satisfying the Supreme Court's demand that the currency may be used as a Federal Reserve Note (private currency) or a United States Bank Note (public credit).
United States v. Condo (1984) RULING: The court upheld the taxpayer's criminal conviction, rejecting as "frivolous" the argument that Federal Reserve Notes are not valid currency, cannot be taxed, and are merely "debts." RESOLUTION: The courts ruled correctly. The U.S. Supreme Court has upheld that Federal Reserve Notes are valid as both legal tender and lawful money (e.g. elastic currency) in United States v Rickman (1980) and again in United States v. Ware (2002).
United States v. Daly (1973) RULING: The court rejected as "clearly frivolous" the assertion "that the only 'Legal Tender Dollars' are those which contain a mixture of gold and silver and that only those dollars may be constitutionally taxed" and affirmed Daly's conviction for willfully failing to file a return.
RESOLUTION: The courts ruled correctly. In Mobley Milam v. United State (1974), and the U.S. Supreme Court has cited agreement, that Federal Reserve Notes, as ruled by Congress, are considered valid tender of payment in lieu of gold or silver coin. Mr. Daly never redeemed in lawful money and thereby was still subject to the taxable event known as the income tax due to the use of private credit (FRNs) not redeemed into public credit. His argument was frivolous.
Jones v. Commissioner (1982) RULING: The court found the taxpayer's claim that his wages were paid in "depreciated bank notes" as clearly without merit and affirmed the Tax Court's imposition of an addition to tax for negligence or intentional disregard of rules and regulations.
RESOLUTION: The courts ruled correctly. This is a frivolous tax argument with no relevance to lawful money redemption.