As we reported earlier this week, Schulz received a landmark decision from the Second Circuit Court of
Appeals that effectively nullifies key enforcement provisions of the Internal Revenue Code (Section 7604).
The Court found that absent a federal court order, IRS does not have any authority to enforce an administrative action from their agency. In short, the Appeals Court held, "No personal or private property without a court order."
Quoting from the Appellate decision in Schulz v. IRS:
"...absent an effort to seek enforcement through a federal court, IRS summonses apply
no force to taxpayers, and no consequence whatever can befall a taxpayer who refuses, ignores, or otherwise does not comply with an IRS summons until that summons is backed by a federal court order[a taxpayer] cannot be held in contempt, arrested, detained, or otherwise punished for refusing to comply with the original IRS summons, no matter the taxpayer's reasons, or lack of reasons for so refusing." (emphasis added)
Although the matter before the court involved a Motion to Quash an IRS administrative Summons, the Appellate Court's ruling addressed (and clarified) several Due Process issues that arise as a direct result of the IRS's routine, day-to-day administration of the Internal Revenue Code (i.e., liens, levies, property seizures, wage garnishments, bank-account seizures, etc.). This ruling answers questions about the boundaries of the authority IRS actually possesses when it demands information or property without a court order from a federal district court.
Bob Schulz
Bob Schulz
We The People Founder
We The People Founder
At oral argument, DOJ argued that the District Court lacked jurisdiction and could not quash the Summons served on Schulz because the Summons legally meant nothing. Ironically, in order to scuttle Schulz's case by asserting lack of jurisdiction, and to avoid a judicial skirmish directly debating the Summons authority of the IRS, DOJ argued before the three appellate justices that the IRS Summons was legally "unenforceable," therefore Schulz was under no legal obligation to respond to it, denying the court subject matter jurisdiction.
February 8, 2005
Our Full-Page MessageTo The President's Tax Reform Panel WTP Plans
On March 1st, IRS and DOJ filed a motion with the Second Circuit Court of Appeals asking the Court to amend its January ruling in Schulz v IRS (Case No. 04-0196).
March 9, 2005
IRS: Gut Schulz v IRS
DOJ: Court's Opinion Threatens
Tax System - Schulz Responds
On March 1st, IRS and DOJ filed a motion with the Second Circuit Court of Appeals asking the Court to amend its January ruling in Schulz v IRS (Case No. 04-0196).
Today, Bob Schulz mailed to the Court in Manhattan his brief opposing that motion.
The government's motion is evidence that IRS is obviously upset with the Court's opinion that held that the recipient of an IRS administrative summons "cannot be held in contempt, arrested, detained, or otherwise punished for refusing to comply with the original IRS summons, no matter the taxpayer's reasons or lack of reasons for so refusing."
In Schulz, the Court also held that "IRS Summonses apply no force to taxpayers, and no consequences can befall a taxpayer who refuses or ignores, or otherwise does not comply with an IRS summons until that summons is backed by a federal court order."
Clearly troubled by the potential implications of the Schulz decision, the DOJ engaged their "top guns" from the Attorney General's office in DC to request that the Court of Appeals gut its decision in Schulz, which clearly binds IRS to the due process requirements of the Constitution, limiting IRS's ability to use force against tax payers absent a court order. The IRS obviously sees its ability to acquire personal and private property, on demand, as being constrained.
