They are part of a growing number of employers and workers who believethat:

1. THERE IS NO LAW THAT REQUIRES WORKERS, AS U.S. CITIZENS EARNING THEIRMONEY FROM DOMESTIC COMPANIES, TO PAY INCOME OR EMPLOYMENT TAXES; NOR TOHAVE THOSE TAXES WITHHELD;
2. THE 16TH AMENDMENT (THE "INCOME TAX AMENDMENT") WAS FRAUDULENTLYDECLARED TO BE RATIFIED BY THE SECRETARY OF STATE IN 1913.*

     Each of the employers has come to these conclusions with the aidof Certified Public Accountants, attorneys and/or tax researchers. In1999, upon consultation with tax researcher Thurston Bell, David Bosset,a former tax consultant himself, submitted a nine page legal memorandumto the IRS, arguing that he had erred in 1996 and 1997 in filing 528W-2s and 1099s, which reported that workers had earned taxable income.Attached were 528 W-2s and 1099s, corrected to "0".
     &The local IRS office passed the matter up to the ConflictResolution Branch, which determined that Mr. Bosset was correct. The IRSreturned the money that Mr. Bosset had withheld from the paychecks ofhis employees. Soon after, other employers around the country stoppedwithholding, including those identified above.
     Each employer has respectfully presented these arguments to the IRS (and to their representatives in Congress), asking the government toreview the results of their research and to show them if they aremistaken. The IRS DID NOT RESPOND, nor did the others.

IRS SUDDENLY THREATENS "CRACKDOWN"

     The IRS on February 10th made public announcements that it would soon conduct a crackdown on dozens of employers who have stoppedwithholding taxes from the money they pay their workers. The announcement apparently was spurred on by articles in the New York Times in November that called the employers "tax cheats" and warned that the trend could spread and cause the tax system to collapse.
     The Times quoted IRS Deputy Commissioner Dale Hart as saying thatthe employersí legal rationale is frivolous, has no legal authority, andhas been thoroughly rejected by the courts. The employers, of course, donot see their arguments as frivolous, and are unaware of any court casethat has addressed or rejected them. Hart did not offer any code sectionthat would apply.
     The employers all followed IRS administrative procedures and cite chapter and verse of the laws and regulations that allow them to stopwithholding. The IRS, after due consideration, refunded money theemployers had withheld from the paychecks of their employees. This wasnot the result of a low-level clerical error, but was based on numerousexchanges through the IRSís Problem Resolution program.
     At least one of the employers named in the Times article haswritten a letter to the IRS Commissioner requesting a meeting to discussthe matter. Excerpts from that letter are printed below.
     Nick Jessonís (NTD Electronicsí) demand for dialogue wasUNANSWERED by the IRS, so he is now going public. The IRSís failure torespond follows a series of attempts to get government officials,including the IRS, Congress and the White House, to participate inconferences to publicly explain findings and refute allegations bynumerous tax researchers and former IRS agents such as the allegationsmade at the top of this message.
     Tax researchers recognize that the actions of the employers are supported by provisions in the Tax Code. For example: A withholdingagent is only required to withhold from foreigners (Code Sections 7701,1461, 14413). Tax researchers have noted for years that a statement ofcitizenship given to an employer/withholding agent precludes thewithholding of tax, as there is no authority in the Code to withholdmoney from a citizen or resident of the U.S. unless that personauthorizes it. If the worker submits a statement of citizenship, theemployer, as a withholding agent, is relieved of duty to withhold incometaxes, since those apply to nonresident aliens. See our web site.
     Tax researchers have asserted there is no law that a U.S. citizen must have a social security number (SSN) or that an employer must havean employer identification number (EIN), or that either of them mustparticipate in the social security program(i.e., employment or FICAtaxes under Subtitle C). An employer who does participate in the socialsecurity program is required to give a W-4 form to a worker, but is notrequired to get it back, and the worker is not required to fill it outand return it, unless that worker wants to participate in the socialsecurity program. Absent a W-4 signed by the worker, an employer is notauthorized by law to withhold and submit to the IRS money from theworker for employment taxes. Further, a person without a SSN numberwould have no taxable income. All this has been well-documented andverified by numerous letters from any number of Social SecurityAdministration officials. You can check these out on our web site (seebelow).
     Section 1441(a) and (b) state that interest, dividends, rent,salaries, wages, profits, etc., are "income" when received on behalf of,or paid to, a nonresident alien or other foreign entity. And courts haveruled that profits of corporations are "income." But there is noprovision in the Code stating that receipts of citizens or residents ofthe country are "income." Thus, a citizenís own receipts are not "grossincome" and are not, therefore, "taxable income" under the Code. Incomerefers to property derived from activity involving the exercise of agovernment-granted privilege.
     Section 61 of the Code has the definition of gross income as "all income from whatever source derived," and then a list of 15 "items." Taxresearchers have recognized that the "items" listed are not the same as"sources" of income that are taxable. The sources are actually to befound in a more remote part of the Code at Section 861 (or section1.861- 8(f)(1) of the regulations) They consist of five "foreign"sources. In previous versions of the Code, the relationship anddistinction between the items and the sources was not dis guised orseparated by distance in the Code. This part of the Code is an importantaspect of the position taken by the employers who have stoppedwithholding. For more details, see "Connecting the Dots" on our website, and especially go to http://www.Taxableincome.net for a freedownload of Larken Roseís excellent book and/or refer to appropriatechapters of Chris Hansenís opus magnus athttp://familyguardian.tzo.com/Publications/GreatlRSHoax.htm, also a freedownload.

DEAR IRS : WHY DONíT YOU ANSWER? AN EMPLOYERíS LETTER.

Charles 0. Rossotti, Commissioner
Internal Revenue Service
1111 Constitution Avenue NW
Washington. D.C. 20224

Dear Commlssioner Rossotti:

     l am writing to you because I have reason to believe that certainoffices within the Internal Revenue Service are seeking unwarrantedcriminal charges both against Nick Jesson of No Time Delay Electronicsfor tax evasion and against myself as Founder and Executive Researcherof the National Institute for Tarelion Education (NITE) for conspiracyto evade taxes.
     Both Mr. Jesson and l were given this Impression by an articlethat appeared In the February 1O edition of the New York Times ("I.R.S.Going After Businesses on Withholding Tax"), In which reporter David CayJohnston refers to Mr. Jesson twice, in the context of quotes by IRSofficials such as ClD Chief Mark E. Matthews and Deputy CommissionerDale Hart. Each of these officials stated that efforts are being madewithin the IRS to tighten enforcement, and Chief Matthews fold the Timesthat "some of the business owners, as well as the promoters who advisethem, will be prosecuted for tax evasion and other crimes."
     I wish for you to know the facts of this Issue so that you canunderstand that in my work with Mr. Jesson, we have sought completecompliance with all of the Internal Revenue laws as stated In the U.S.Code, the Treasury Regulations, and the Internal Revenue Manual.Furthermore, it has always been our intent to correct any mistakes oflaw or fact that we have made and distributed to any Interested parties,as we have engaged In the IRSí administrative process in order toexhaust all administrative remedy and avail ourselves of any subsequentjudicial hearing of our legal arguments if necessary.
     However, to date the IRS has given us no reason to believe throughMr. Jessonís correspondences with the agency that Mr. Jesson or I havemisunderstood, misrepresented, or failed to comply with the law In anyway. We have made every effort to comply with the law and the IRSprocedures that we must exhaust before seeking adjudication of claims.Since the IRS has effectively accepted as correct and truthful NITEísarguments as applied by Mr. Jesson, any attempt to prosecute eithermyself or Mr. Jesson would not only be outside of the scope of the lawbut also a clear abuse of government power.
     NITE is an educational organization operating under the protectionof the First Amendment guaranty of freedom of speech and freedom ofassociation... Since 1997 NITE has bean distributing informationregarding the Internal Revenue laws and assisting Its members incomplying with the letter of the law and discovering the long-obfuscatedIRS administrative procedures, which are binding upon the IRS as well asthe Citizens.
     In the case of Mr. Jesson NITE provided to him informationregarding the U.S. Source Rules as set forth in the Internal Revenuelaws and the process of correcting prior claims made to the IRSregarding "gross income" paid and reported to the IRS. These are thepertinent facts of Mr. Jessonís case:
     On May 10, 2000, following Information researched and published by NITE, Mr. Jesson amended the 1997 returns for No Time Delay Electronics,Inc. by filing Forms 941C, W-2C and W-3C reflecting gross Income of "0í,based on the "source" rules as defined by the Treasury Regulations.These returns were submitted pursuant to 26 C.F.R. ß301.6402-2,complying with the only administrative process available to an employerseeking a Refund of overpayment of taxes. Had he failed to take thisspecific action he would be unable to seek any other remedy in thecourts before exhausting this administrative remedy.
     On June 1, 2000 Mr. Jesson received a response letter from the IRS stating that the agency needed more time to review his case beforemaking a decision on his Claim for Refund. The letter stated that nofurther information would be required of him at that time while thereview was under way.
     On July 11,2000 the IRS completed review of Mr. Jessonís case andissued four Refund checks in the amounts of $68,244.94, $61,262.01,$37,373.74, and $48,573.87. These checks were refunds for employmenttaxes that were withheld for each quarter of 1997.
     Since receiving the refund checks, Mr. Jesson has received nofurther correspondences from the IRS of any kind, especially nonestating that the refund was issued mistakenly.
     On November 19,2000 the New York Times printed an artide authoredby David Cay Johnston, which referred to Mr. Jesson (not by name but asowner of NTD Electronics) in the context of tax cheats who are evadingthe taxes owed.
     Prior to the publication of the article l had a brief conversationwith Mr. Johnston, during which I attempted to correct his misconceptionof the substance of my work. Though there was some reference made to mywork through mention of NTD Electronics, there was no specific mentionof myself or of NITE (www.nlte.org) being the source of this effort byemployers to apply the U.S. Source Rules to their determinations ofwages and gross income reported to the IRS.

[Editorís notel. . The letter goes on to note inaccuracies in the Timesstories by David Cay Johnston and his failure to take telephone callsfrom Mr. Jesson or to return them. The letter notes the article ofFebruary 10 juxtaposed statements about Mr. Jesson with statements byIRS officials who said that business owners are "scamming theiremployees" and will be prosecuted for evasion. The article stated thatthose who promote tax strategies for businesses will also be prosecuted.
The letter continues...
      I understand that the IRS should not be held responsible for the words that Mr Johnston chooses to write and the New York Times chooses topublish. I recognize the possibility that the IRS may have given Mr.Johnston wholly accurate information and that the blame for theaccusatory language lies wholly upon Mr. Johnston and the New YorkTimes. And it is with this good faith that l reach out to the IRS tobring the IRS, NITE and Mr. Jesson into an exclusive and legitimateface-to-face conversation regarding any misunderstandings or errors oflaw that NITE or Mr. Jesson are holding and availing to the public.
     We propose that the IRS, represented by you and/or your delegates,engage NITE in a public forum and discuss the legality and legitimacy ofthe positions that NITE proffers. At this meeting, we expect that theIRS will either provide pertinent case law from a court of competentjurisdiction that does not ignore the fact that the U.S. Source Rulesapply to U.S. Citizens, or failing that will admit publicly that NITEísspecific argument of law is correct and therefore no criminal or civilactions will be brought against any individual Citizen who proffersNITEís specific argument. At this meeting you and your delegates wouldhave the opportunity to refute our argument and we would have anopportunity to engage in a dialogue with our government regarding ourapplication of the whole of the Internal Revenue laws and mostspecifically our application of the U.S. Source Rules to U.S. Citizens.

[Editorís note]...The letter says that Mr. Bell and Mr. Jesson areprepared to meet for the discussion at any time and place that willallow for an audience of members of the media and other concernedcitizens, and that it would be desirable to have representatives of theJustice Department there to save the need for any follow-up meetingswith them. Mr. Bell states that the position used by Mr. Jesson hasnever been argued or decided in federal court, and that so far, nogovernment official has attempted to refute the specific arguments onwhich it is based.
He continues...
     This letter is being sent to you directly since your delegateshave made the naked threats of prosecution as contained In the David CayJohnston article.
     If the Intent of your subordinatesí comments to David Cay Johnstonwas to Initimidate and threaten law abiding citizens and employers, then theRestructuring and Reform Act of 1998 has Indeed failed to protect taxpayers in themanner that Congress intended. Nevertheless, we are not intimidated by the lawlessthreats of your deputies, as any attempt bythe IRS to follow throughwith these threats will be reviewed by the Treasury Inspector Generalfor Tax Administration as well as our elected officials In Congress.
     Presently the record shows that the IRS has not only failed torefute our position but has even affirmatively offered evidence that ourarguments are correct by refunding over $215,000 to No Time DelayElectronics. Therefore, until such time as we are shown to ourreasonable satisfaction to be holding mistaken positions, Mr. Jesson,NITE and! will continue to operate as law-abiding Citizens within theletter of the law as we have applied.
     We expect a response from you within fifteen (15) business days.

Respectfully,

Thurston P. Rell
Executive Researcher and Founder
National Institute for Taxation Education

SUMMARY OF THE LETTER

ē The employersí position is careful to follow the laws and regulations.
ē The applications went through IRSís procedures and were approved.
ē The NY Times articles were both inaccurate and biased.
ē Employer Jesson and Thurston Bell requested a meeting with the IRS to
discuss the issues and the IRS did not respond at all.

The IRS has not responded to Mr. Bellís letter. They refused to deny orrespond to former CID investigator Joe Banisterís report that concludedthe findings by numerous tax researchers were correct. They havedeclined to reply to invitations to five conferences conducted by We ThePeople Foundation to discuss questions and issues. (For further detailsof these attempts, go to our web site.) We have posed the crucialquestion: "At what point must continued evasion be regarded as anadmission that the tax researchers are correct, and that there is no lawthat requires most citizens to pay income tax?"

* In 1913, Americans got the federal income tax and a central bank (theFederal Reserve System). There is evidence in support of the hypothesisthat the income tax was imposed on the American people so that theowners of the (private) central bank could control not only our moneybut our government as well.

SHODDY JOURNALISM:
David Cay Johnston and The NY Times become an issue.

     Our previous message two weeks ago noted that the NY Times hasassumed the role of cheerleader for the IRS, obviously hoping to sic Ďemonto the employers who have stopped withholding, even though inaccordance with the rules.
     In another Times article on February 23, David Cay Johnstonreported that the recent sentencing of a couple for crimes involving taxevasion followed a trial at which defendantsí case was based on Codesection 861. Larken Rose, a tax researcher who has studied and writtenauthoritatively about the 861 position, asked Mr. Johnston about it, andhe acknowledged that the 861 position was not mentioned at the trial andwas not an issue adjudicated. This represents irresponsible andmisleading journalism. Check Larken Roseís website athttp://www.Taxableincome.net for more information (email:larken@taxableincome.net).
     We also have a copy of a very biased, hostile and condescendingletter Mr. Johnston sent to Mr. Jesson two weeks ago in response toJessonís challenge that Johnston show him the law that makes him liable,and noting that the California tax board, whose tax rules are the sameas the federal, had recently approved his position. Weíll not print thatletter at this time, but it has become evident that Mr. Johnston has setout upon a one-man crusade, using the NY Times as his vehicle, againstany and all who donít agree with his views on the income tax, eventhough he acknowledges in the letter that he hasnít done research on it.

     His letter asserts that the issues Jesson has raised have beenjudged in tax courts, district courts, and appeals courts and beenrejected as without merit. In fact, Thurston Bellís letter above statesthat these issues have never been addressed or adjudicated in any courtcase. Johnstonís desire to discredit the employers has caused him toresort to inaccurate, false and unethical reporting.
     &As further evidence of his unprofessional bias, Mr. Johnston"pulled the plug" on an interview when the guest interviewee, VirginiaCropsey, J.D., an expert on the 4th Amendment and IRS liens, began tospeak about warrant requirements for federal seizures of property forincome taxes and that IRS seizures had decreased by 98% because theycanít get a warrant, since it would require them to lie under oath thata tax was owed. She said she had never spoken with a more insolent,biased reporter, who didnít want to hear any explanations about the taxlaws that he couldnít refute. She said she had lost a lot of respect forthe Times. Check her website at http://www.getawarrant.com.
     It appears to us that there is serious reason to question whetherthe readers of the NY Times are well served by David Cay Johnstonísbrand of reporting, since it is biased and incompletely researched. Ifyou would like to express your opinion about the NY Times articles byDavid Cay Johnston, you can do so by calling his superior, Glenn Kramon,Business Editor, at (212) 556-1471.

LATE NEWS: The Texas Incident

     Subsequent to the NY Times articles, the IRS contacted Clubb Spaand Pool, a company in Keller, Texas, just northwest of Dallas, that hadstopped withholding in accordance with the provisions of the law. TheIRS wanted to send a couple of auditors to review their books andrecords. On the appointed day, last Friday, February 23, five peopleshowed up, three of them conspicuously carrying guns. When asked bycompany owner, Ten Clubb, who the armed men were, they refused todisclose their identities. The company called 911, police officersarrived, who told the agents theyíd have to identify themselves orleave. The IRS group left, still (except for one auditor) refusing togive identities. As of this writing, the police have not provided theowner with a written incident report.
     If revenue officers are authorized by law (Code section 7608) toconduct only civil enforcement of alcohol, tobacco, and firearmsregulations, and the Criminal Investigation Division only authorized toinvestigate income tax matters involving U.S. citizens residing inforeign countries and nonresident aliens with U.S. income (InternalRevenue Manual chapter 1100), one wonders just what was going on, andunder what authority.
     Employers have noted that in Texas, as in most states, garnishmentof wages (which is what withholding is, if done without the employeespermission) requires a court order. In Texas, it is even written intothe state constitution, as well.
     This whole incident seems to resemble the old Brown Shirtintimidation tactics of Nazi Germany. But the owner of one company said,in effect: "This is America. Donít show us your guns; show us yourauthority."