RIGHT click here for the Word 97 version of this document

This letter is intended to be submitted to a private/commercial (nongovernmental) employer by an employee.  The employee should tell their employer that the IRS wants them to sign this form.  If the employer refuses to the sign the form, the employee should sue their employer for wrongful application of the tax laws for the amount of taxes they paid resulting from the misreporting of "gross income" on their W-2 form, block 10.



<<CITY>>, <<STATE>> <<ZIP>>












<<CITY>>, <<STATE>> <<ZIP>>



Subject:  Federal Income Tax Withholding Policies and Procedures


Dear Mr. _____,

This letter is being written to you at your request to clarify the official position of our organization regarding the withholding of Federal Income Taxes (FIT) and their payment to the Internal Revenue Service (IRS).  Let me start off by saying that I am the highest ranking payroll/HR employee at the organization which you work, which is ____________________________________________________.  I have been employed with this organization for _____ years.  It is my duty to ensure that I am intimately familiar with all policies, procedures, laws, and employee records required to administer the withholding of income taxes at my organization.  As a matter of fact, I am expected to know more than anyone else about this subject at your place of employment because it is my primary duty to supervise ALL payroll employees at my organization in the administration of this function.

I wish to emphasize that the only reason that I withhold Federal Income Taxes (FIT) from your paycheck is exclusively and only because you have completed an IRS W-4 form and for no other reason.  I have explained to you that the payment and withholding of Federal Income Taxes is entirely voluntary and is initiated by you with the W-4 form.  I have explained to you that Federal Income Taxes may not be withheld from your pay without your permission and consent, indicated by the completion and signing by you of an IRS form W-4.  I am unaware of any law or U.S. Code which makes you liable for the payment of income taxes, nor do I consider it my duty or obligation to concern myself with whether or not you are liable from a legal standpoint to pay Federal Income Taxes. 

I am not a legal expert or a lawyer or a paralegal, and I avoid talking to lawyers as much as I can because I don’t like getting too technical about the law.  I am, for instance, unfamiliar with what you claim is the Internal Revenue Code (IRC), also known as Title 26 of the United States Code, and the Code of Federal Regulations, Title 26.  I have never taken the time to read either of these titles, nor have I ever taken any courses or seminars on the IRC during the course of my employment as a payroll specialist.  I am unfamiliar with the legal definition of “gross income” you claim are found in 26 U.S.C. Sections 71-86, with the term “taxable sources” you claim are identified in 26 U.S.C. Section 861 within that title, and have relied entirely and exclusively on the content of the Internal Revenue Service (IRS) Publications and DOD Directives throughout my payroll career as my guide in the administration of payroll taxation at your place of employment.

You have informed me quite plainly that the IRS publications do not have the force of law and are only directory in nature, as explained in the following Federal court cases:

  1. Luhring v. Glotzbach, 304 F.2d 560 (4th Cir. 1962).
  2. Einhorn v. DeWitt, 618 F.2d 347 (5th Cir. 1980).
  3. United States v. Goldstein, 342 F.Supp. 661 (E.D.N.Y. 1972).
  4. Boulez v. C.I.R., 810 F.2d 209 (D.C. Cir. 1987).
  5. United States v. Will, 671 F.2d 963, 967 (6th Cir. 1982).

You have emphasized to me that the IRS Publications are basically irrelevant and do not obligate me to do anything with respect to FITs, because they do not have the force of law.  You have said that these publications may be misleading or deceiving me into misapplying and/or misinterpreting the tax laws.  I do not, however, have enough legal knowledge or expertise to know whether this is the case, nor has it ever been a priority with my employer to be familiar enough with the tax laws to know whether what you say is true.  I am simply a clerk and an administrator of payroll at my organization and nothing more. 

You have explained to me that in order to be considered taxable, a person must have a type of income which is taxable, and that income must derive from a taxable source, as defined in 26 U.S.C. Sec. 861 (and explained in the Supreme Court case of James v. United States  (366 US 213, p. 213, 6L Ed 2d 246).  When an income meets BOTH of these criteria (taxable type of income from a taxable source), then it is considered to legally be “gross income” as defined in 26 U.S.C. Sections 71-86 and must appear in block 10 of the IRS form W-2.  You have explained that the only taxable sources of income are foreign income that is NOT from wages (compensation for labor), and that the reason for this has to do with the following legal considerations:

1.      Wages are NOT income.  This is exemplified in the Supreme Court case of Central Illinois Public Service Co. v. United States (435 U.S. 21), which stated that:

"Decided cases have made the distinction between wages and income and have refused to equate the two."

This conclusion is also consistent with the Supreme Court case of Butcher’s Union Co. v. Crescent City Co. (111 U.S. 746) in 1883, which stated that:

"Among these unalienable rights, as proclaimed in the Declaration of Independence is the right of men to pursue their happiness, by which is meant, the right any lawful business or vocation, in any manner not inconsistent with the equal rights of others, which may increase their prosperity or develop their faculties, so as to give them their highest enjoyment...It has been well said that, THE PROPERTY WHICH EVERY MAN HAS IS HIS OWN LABOR, AS IT IS THE ORIGINAL FOUNDATION OF ALL OTHER PROPERTY SO IT IS THE MOST SACRED AND INVIOLABLE..." 

Furthermore, it is noted that no where in the Internal Revenue Code’s definition of “gross income” found in 26 U.S.C. Subtitle A, Chapter 1, Subchapter B, Part II, Sections 71-86 does it say that “wages” are considered taxable income or “gross income”.

2.      The reason why employees at our organization must complete an IRS form W-4 “Withholding Allowance Certificate” giving us permission to deduct Federal Income Taxes from their pay, is because of the 4th Amendment to the Constitution of the United States, which says that a person may not be deprived of their property without “due process of law”, unless they give their consent.  In the absence of that consent, and even if they do not fill out a W-4 Exempt form, we do not have any authority to deduct any kind of taxes other than OASDI from their pay.  If an employee who does not make taxable income fills out one of these forms and pays federal income tax, he is in effect “donating” money to the federal government that he does not even realize that he does not owe, nor would the IRS or us be likely to tell him that he does not owe this money.

3.      A direct tax is one levied directly upon citizens.  The Federal Income Tax, for instance, is a direct taxDirect taxes were best explained in the Supreme Court case of Knowlton v. Moore
(178 U.S. 41) in 1900, which stated that:

“Direct taxes bear immediately upon persons, upon the possession and enjoyment of rights; indirect taxes are levied upon the happening of an event as an exchange.”

4.      Article 1, Section 2, Clause 3 of the U.S. Constitution states that “Representatives and direct taxes shall be apportioned among the several States..."

5.      Article 1, Section 9, Clause 4 of the U.S. Constitution states that “No Capitiation or other direct tax shall be laid unless in proportion to the Census or Enumeration herein before directed to be taken."

6.      There can be no unapportioned direct tax, or it would violate the above constitutional limitations.  This means that direct taxes must be requested NOT from citizens, but requested from the individual states by the Federal Government.  Therefore, a citizen CANNOT be made liable for the payment of federal income taxes.

7.      The 16th Amendment to the U.S. Constitution, which allegedly authorized the imposition of federal income taxes, did not change the constitution in such a way as to eliminate the constitutional distinction between direct and indirect taxes.  It therefore did not authorize the imposition of direct, unapportioned Federal Income Taxes upon citizens of the United States of America.  Instead, it authorized the taxation of income as an excise tax, which is to say that it is a business tax levied on corporate or business income, and not directly on individualsThis finding was confirmed in the Supreme Court case of Cook v. Tait  (265 U.S. 47) in 1924, which has never been overruled and stated that:

"The 16th Amendment does not extend the power of taxation to new or excepted subjects...Neither can the tax be sustained on the person, measured by income.  Such a tax would be by nature a capitiation rather than an excise."

8.      Direct income taxes violate the 5th Amendment to the U.S. Constitution, which says that citizens cannot be compelled to testify against themselves by the governmentHowever, the form 1040 U.S. “Individual” Income Tax Return requires the “citizen” who completes it to sign under penalty of perjury, which in effect makes them a witness against themselves.  When a person refuses to sign their 1040 form, they can be sanctioned by the IRS under the “Jurat” amendment for an amount of $500.  This financial penalty amounts to “compelling” the citizen to become a witness against themselves, which violates the constitution.  Have you ever wondered why this form isn’t titled “U.S. Citizen Income Tax Return”?  The reason is because “citizens” with income from the 50 states aren’t liable for tax, and so they had to invent a new word “Individual” to fool you into thinking you were, and not define anywhere in the code what that word meant!

9.      The index to the Internal Revenue Code, Title 26 of the United States Code, has no references anywhere that obligate a “citizen” to pay income tax, which would make them a “taxpayer”.  There are a lot of references to nonresident aliens and foreigners being liable, but none for citizens.  Instead, these codes refer to the concept of an “individual” in sections 1 and 6012(a) and the IRS form 1040, and never define the term!  The reason they don’t define the term, is because of what it really means, which is the following:

“A citizen with foreign source income ONLY.  It is NOT a citizen with domestic income who is living and working in the 50 united States of America.”

10.  A person can be a “taxpayer” by simply volunteering to pay Federal Income Taxes in the process of completing a W-4 form.  This does not mean, however, that they are liable to pay FIT as per the Internal Revenue Code.  This is the position you have said you are in and I have no cause or legal basis to refute this.

11.  The amounts reported by me in block 10 of IRS form W-2 are legally defined as “gross income”, which is to say that these amounts are considered “taxable” per the Internal Revenue Code.  By reporting any amount in this block, I am providing evidence to the IRS that claims that employees at my organization have taxable income and are liable for paying tax.  It is of extreme importance, then, to ensure that the income reported by me in this block indeed is taxable and is defined in the Internal Revenue Code as “gross income”, or I am misrepresenting and deceiving the IRS into thinking that these amounts are taxable when in deed and in fact, they may actually not be from a legal standpoint if they do not meet the other constraints appearing in items 1 through 14 of this list and the definition of “gross income”.  I was incredulously unaware of this fact before being notified of this by you.

12.  As per the IRS Restructuring and Reform act of 1998, section 3707, it is illegal for a government official to use the term “tax protester” in describing you or anyone else. (see

13.  I have been told that if I have any other questions about any of the legal issues in this letter, I am referred to the following website maintained by you:

14.  You have said that if I wish to research the U.S. Code and laws for myself, I may do so by visiting the following website:

Because of the above rather remarkable legal considerations and conclusions which you allege, most of which I was previously unaware of, the information that I provide on the annual W-2 form to both you and the IRS would seem to be more a product of corporate culture and best business practices and the following of the IRS publications on withholding, rather than a realistic or well-informed application of the tax laws found in 26 United States Code, the Code of Federal Regulations Title 26, or the U.S. Constitution.  However, my workload is such that I do not have the time or the interest in becoming a federal tax law expert, and no one at my organization does to my knowledge, so I can’t say whether our income tax withholding practices are consistent with the above legal constraints and conclusions or not.  Tax law is a very complicated subject, as you know, which even the most authoritative experts and attorneys in the field often have trouble understanding or applying.

I also have no interest whatsoever in getting my organization in trouble or exposing it to any litigation risks for misapplying the tax laws.  You have said that you won’t hold the foregoing situation against me because your particular situation is very common among employers across the nation, whether government or private.  You have instead assured me that I would eliminate any possibility of litigation risk initiated by you related to deducting or withholding federal income taxes by signing this letter.  I emphasize that I am signing this letter of my own free will, and not under duress, and am acting in my official capacity as an agent for your employer.

Should you or anyone else have any questions about the content of this letter, I’d be happy to answer them.  I can be reached at: __<<PHONE>>______.  Thank you for your enlightening explanation of the Federal Income Tax as it pertains to your employment with us.  I appreciate the opportunity to be better informed about such significant issues pertaining to payroll taxation that I was previously unaware of.








On __________________________ before me ___________________________personally appeared _____________________________________ personally known to me (proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed same in his authorized capacity, and that by his signature on the instrument the person or the entity upon behalf of which the person acted, executed the instrument.


Witness my hand and official seal.


Signature of Notary:_______________________________________