From the desk of (Last update: April 18, 2003) From the desk of William J. Benson P.O. Box 550 South Holland, Ill. 60473 March 4, 1996 Mrs. Margaret M.Richardson (note: today, it is Charles Rossotti) Commissioner of Internal Revenue 1111 Constitution Avenue, N.W. Washington, D.C. 20224 Dear Mrs. Richardson, Many years ago, I tried to find within the Internal Revenue Code the section which createdyour agency, the Internal Revenue Service, but I was unable to find it. Ithen decided to locate other sources of information regarding how the Internal Revenue Service was established and what I found was nothing short of amazing. In 1972, an Internal Revenue Manual 1100 was published in both the Federal Register and Cumulative Bulletin; see 37 Fed. Reg. 20960, 1972-2 Cum. Bul. 836, a copy of which is attached for your convenience. On the very first page of this statement published in the Bulletin, the following admission was made: "(3) By common parlace [sic] and understanding of the time, an office of the importance of the Office of Commissioner of Internal Revenue was a bureau. The Secretary of the Treasury in his report at the close of the calendar year 1862 stated that 'The Bureau of Internal Revenue has been organized under the Act of the last session...' Also it can be seen that Congress had intended to establish a Bureau ofInternal Revenue, or thought they had, from the act of March 3, 1863, inwhich provision was made for the President to appoint with Senate confirmationa Deputy Commissioner of Internal Revenue 'who shall be charged with suchduties in the bureau of internal revenue as may be prescribed by the Secretaryof the Treasury, or as may be required by law, and who shall act as Commissionerof internal revenue in the absence of that officer, and exercise the privilegeof franking all letters and documents pertaining to the office of internalrevenue.' In other words, 'the office of internal revenue' was 'the bureauof internal revenue,' and the act of July 1, 1862, is the organic act oftoday's Internal Revenue Service." This statement, which again appears in a similar publication appearing at 39 Fed. Reg. 11572, 1974-1 Cum. Bul. 440, as well as the current IRM 1100, essentially admits that Congress never created either the Bureau of Internal Revenue or the Internal Revenue Service. To conclude that "Congress thought it had created this agency" is an admission that even the government itself cannot even find anything which createdeither agency. The only office created by the act of July 1, 1862, was theOffice of the Commissioner; neither the Bureau nor the Service was actuallycreated by any of these acts. I have no doubt that when employees of the IRS were researching its origins so that this statement could be included within IRM 1100, those employees must have performed avery thorough investigation. This obviously is the best position that youragency can develop regarding precisely how the IRS came into being. But besidesthe problem that these acts simply did not create either the Bureau or the IRS is the fact that these acts were repealed by the adoption of the Revised Statutes of 1873. Therefore, it would appear that your agency has never beencreated by any act of Congress, and this is a serious flaw. At the state level, it is a well acknowledged rule that a duly constituted office of state government must be created either by the state constitution itself or by some legislative act; see Patton v. Bd. of Health, 127 Cal. 388, 393, 59 P. 702, 704 (1899)("One of the requisites is that the office must be created by theconstitution of the state or it must be authorized by some statute"); FirstNat. Bank of Columbus v. State, 80 Neb. 597, 114 N.W. 772, 773 (1908); State ex rel. Peyton v. Cunningham, 39 Mont. 197, 103 P. 497, 498(1909); State ex rel. Stage v. Mackie, 82 Conn. 398, 74 A. 759,761 (1909); State ex rel. Key v. Bond, 94 W.Va. 255, 118 S.E. 276,279 (1923)("a position is a public office when it is created by law"); Coynev. State, 22 Ohio App. 462, 153 N.E. 876, 877 (1926)("Unless the officeexisted there could be no officer either de facto or de jure.A de facto officer is one invested with an office; but if there isno office with which to invest one, there can be no officer. An office mayexist only by duly constituted law"); State v. Quinn, 35 N.M. 62,290 P. 786, 787 (1930); Turner v. State, 226 Ala. 269, 146 So. 601,602 (1933); Oklahoma City v. Century Indemnity Co., 178 Okl. 212,62 P.2d 94, 97 (1936); State ex rel. Nagle v. Kelsey, 102 Mont. 8,55 P.2d 685, 689 (1936); Stapleton v. Frohmiller, 53 Ariz. 11, 85P.2d 49, 51 (1938); Buchholtz v. Hill, 178 Md. 280, 13 A.2d 348,350 (1940); Krawiec v. Industrial Comm., 372 Ill. 560, 25 N.E.2d27, 29 (1940); People v. Rapsey, 16 Cal.2d 636, 107 P.2d 388, 391(1940); Industrial Comm. v. Arizona State Highway Comm., 61 Ariz.59, 145 P.2d 846, 849 (1943); State ex rel. Brown v. Blew, 20 Wash.2d47, 145 P.2d 554, 556 (1944); Martin v. Smith, 239 Wis. 314, 1 N.W.2d163, 172 (1941); Taylor v. Commonwealth, 305 Ky. 75, 202 S.W.2d 992,994 (1947); State ex rel. Hamblen v. Yelle, 29 Wash.2d 68, 185 P.2d723, 728 (1947); Morris v. Peters, 203 Ga. 350, 46 S.E.2d 729, 733(1948); Weaver v. North Bergen Tp., 10 N.J. Super. 96, 76 A.2d 701(1950); Tomaris v. State, 71 Ariz. 147, 224 P.2d 209, 211 (1950); Pollack v. Montoya, 55 N.M. 390, 234 P.2d 336, 338 (1951); Schaeferv. Superior Court in & for Santa Barbara County, 248 P.2d 450, 453(Cal.App. 1952); Brusnigham v. State, 86 Ga.App. 340, 71 S.E.2d 698,703 (1952); State ex rel. Mathews v. Murray, 258 P.2d 982, 984 (Nev.1953); Dosker v. Andrus, 342 Mich. 548, 70 N.W.2d 765, 767 (1955); Hetrich v. County Comm. of Anne Arundel County, 222 Md. 304, 159A.2d 642, 643 (1960); Meiland v. Cody, 359 Mich. 78, 101 N.W.2d 336,341 (1960); Jones v. Mills, 216 Ga. 616, 118 S.E.2d 484, 485 (1961); State v. Hord, 264 N.C. 149, 141 S.E.2d 241, 245 (1965); PlanningBd. of Tp. of West Milford v. Tp. Council of Tp. of West Milford, 123N.J.Super. 135, 301 A.2d 781, 784 (1973); Vander Linden v. Crews, 205N.W.2d 686, 688 (Iowa 1973); Kirk v. Flournoy, 36 Cal.App. 3d 553,111 Cal. Rptr. 674, 675 (1974); Wargo v. Industrial Comm., 58 Ill.2d234, 317 N.E.2d 519, 521 (1974); State v. Bailey, 220 S.E.2d 432,435 (W.Va. 1975); Leek v. Theis, 217 Kan. 784, 539 P.2d 304, 323 (1975); Midwest Television, Inc. v. Champaign-Urbana Communications, Inc., 37 Ill.App.3d 926, 347 N.E.2d 34, 38 (1976); and State v. Pinckney, 276 N.W.2d 433, 436 (Iowa 1979). This same rule applies at the federal level; see United States v. Germaine, 99 U.S. 508 (1879); Norton v. Shelby County, 118 U.S. 425, 441, 6 S.Ct. 1121 (1886)("there canbe no officer, either de jure or de facto, if there be no officeto fill"); United States v. Mouat, 124 U.S. 303, 8 S.Ct. 505 (1888); United States v. Smith, 124 U.S. 525, 8 S.Ct. 595 (1888); Glavey v. United States, 182 U.S. 595, 607, 21 S.Ct. 891 (1901)("The law creates the office, prescribes its duties"); Cochnower v. United States, 248 U.S. 405, 407, 39 S.Ct. 137 (1919)("Primarily we may say that the creation of offices and the assignment of their compensation is a legislative function... And we think the delegation of such function and the extent of its delegation must have clear expression or implication"); Burnap v. United States, 252 U.S. 512, 516, 40 S.Ct. 374, 376 (1920); Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 173 (1926); N.L.R.B. v. Coca-Cola Bottling Co. of Louisville, 350 U.S. 264, 269,76 S.Ct. 383 (1956)("'Officers' normally means those who hold defined offices.It does not mean the boys in the back room or other agencies of invisiblegovernment, whether in politics or in the trade-union movement"); Crowleyv. Southern Ry. Co., 139 F. 851, 853 (5th Cir. 1905); Adams v. Murphy,165 F. 304 (8th Cir. 1908); Scully v. United States, 193 F. 185, 187(D.Nev. 1910)("There can be no offices of the United States, strictly speaking,except those which are created by the Constitution itself, or by an act ofCongress"); Commissioner v. Harlan, 80 F.2d 660, 662 (9th Cir. 1935); Varden v. Ridings, 20 F.Supp. 495 (E.D.Ky. 1937); Annoni v.Blas Nadal's Heirs, 94 F.2d 513, 515 (1st Cir. 1938); and Pope v.Commissioner, 138 F.2d 1006, 1009 (6th Cir. 1943). Since I have reached the conclusion that the IRS has never been created by Congress, I am asking you to provide to me the citation of any statute which really did createthe IRS. Since this is a question of profound national importance, I requestthat you provide an answer to me within 20 days. Failing a response withinthat time period, I shall conclude that you cannot find any such statuteand shall act accordingly. Yours truly, William J. Benson  Memo from former CIR Coleman Andrews admitting that Bureau of Internal Revenue not created by law Letter from former Congressman Pat Danner admitting that IRS not created by law Letter from IRS attempting to claimIRS has been created by law  SOME IMPORTANT CASES NOT ON FINDLAW United States v. Mouat, 124 U.S. 303, 8 S.Ct. 505 (1888) UNITED STATES, v. MOUAT. Supreme Court of the United States January 23, 1888. MILLER, J. This is an appeal from a judgment of the court of claims, in favor of David Mouat, for the sum of $83.28. The question arises as to the compensationto be paid to Mouat for traveling expenses while acting as a pay-master'sclerk. The act of congress of June 16, 1874, making appropriationsfor the support of the army for the next fiscal year, has appended to theclause providing for the transportation of officers and baggage, and fortheir traveling expenses, the following: "Provided, that only actualtraveling expenses shall be allowed to any person holding employmentor appointment under the United States, and all allowances for mileages andtransportation in excess of the amount actually paid are hereby declaredillegal; and no credit shall be allowed to any of the disbursing officersof the United States for payment or allowances in violation of this provision." 18 U.S. St. at Large, 72. This proviso in its terms is applicable toevery person holding employment or appointment under the United States, andseems to be one of those frequent cases in which congress in a general appropriation bill has intentionally enacted some law reaching far beyond the general scope of the bill itself. Its obvious purpose was to abolish all payments for traveling expenses in which a specific allowance per mile was made by law, and to establish the more equitable principle of paying the actual expenses of persons traveling in the service of the government. And it is to be observed that the universality of this principle is secured by the use of the two words "employment or appointment" in reference to persons serving under the government of the United States. Two years later, when congress was making appropriations for the naval service by the act of June 30, 1876, the attention of that body seemed to be directed to the fact that it included officers of the navy, as well as all other officers of the government. That act contains the following provision: "And so much of the act ofJune 16, 1874, making appropriations for the support of the army for the fiscalyear ending June 30, 1875, and for other purposes, as provides that onlyactual traveling expenses shall be allowed to any person holding employment or appointment under the United States while engaged on public business, asis applicable to officers of the navy so engaged, is hereby repealed; andthe sum of eight cents per mile shall be allowed such officers while so engaged,in lieu of their actual expenses." 19 St. at Large, 65. By this declaration congress did not repeal the whole of that statute. Itdid not even repeal it as applicable to the entire navy, but it selecteda certain class of persons in the navy to whom it should no longer apply,and who should thereafter by relieved from keeping an account of their actualexpenses while traveling for the government, and should be allowed eightcents per mile in lieu thereof. The class of persons thus relievedfrom the effect of the act of 1874 is designated as "officers of the navy." No other person holding an employment or appointment under the United States,although in the navy, was thus relieved from the effect of that act. As this is a special statute, exempting for particular reasons a certainclass of persons from the operation of a general law; which was left toinclude all other persons in the employment of or holding appointment underthe government of the United States, it is obviously proper to confine thatclass to those who are, properly speaking, officers of the navy. Thereis nothing in the context, nor in the reason which may have been supposedto influence congress in making this exception out of the general law, justifyingits application to any other persons than those who are, strictly speaking,officers of the navy. What is necessary to constitute a person an officer of the United States, inany of the various branches of its service, has been very fully consideredby this court in U. S. v. Germaine, 99 U.S. 508. In that case,it was distinctly pointed out that, under the constitution of the UnitedStates, all its officers were appointed by the president, by and with theconsent of the senate, or by a court of law, or the head of a department;and the heads of the departments were defined in that opinion to be whatare now called the members of the cabinet. Unless a person in the serviceof the government, therefore, holds his place by virtue of an appointmentby the president, or of one of the courts of justice or heads of departmentsauthorized by law to make such an appointment, he is not, strictly speaking,an officer of the United States. We do not see any reason to reviewthis well established definition of what it is that constitutes such an officer. In response to this objection to the claimant as an officer of the United States, it is alleged that his appointment as pay-master's clerk, as shown by the finding of facts in the court of claims, although made by a pay-master in the United States navy, has indorsed on it the approval of D. B. Harmony, acting secretary of the navy. If there were any statute which authorized the head of the navy department to appoint a pay-master's clerk, the technical argument, that the appointment in this case, although actually made by Paymaster Whitehouse, and only approved by Harmony as acting secretary in a formalway, with the approval of a half dozen other officers, might still be considered sufficient to call this an appointment by the head of that department. But there is no statute authorizing the secretary of the navy to appointa pay-master's clerk, nor is there any act requiring his approval of suchan appointment, and the regulations of the navy do not seem to require anysuch appointment or approval for the holding of that position. Theclaimant, therefore, was not an officer, either appointed by the president,or under the authority of any law vesting such appointment in the head ofa department. Section 1378 of the Revised Statutes enacts that "all appointments in the pay corps shall be made by the president, by and with the advice and consent of the senate." Sections 1386, 1387, and 1388 provide that certain classes of pay-masters shall be allowed clerks. It is obvious from the language of section 1378 that the pay corps is limited to officers commissioned by the president, and that clerks and others who are not so commissioned donot belong to the pay corps. The naval regulations of 1876, a copyof which is found in the brief of the appellant, so far as relates to thismatter, provide very fully for these clerks, and the manner of their appointment, but nowhere is there any mention that it must be approved by the secretary of the navy; on the contrary, it is said that "every officer entitled to a secretary or clerk may nominate him; but the appointment or discharge of a clerk by any officer not in command is subject to the approval of thecommanding officer." From all this it is clear that neither by the regulations, nor by the statutes, nor by any constitutional provision, is the present claimant an officerof the navy. Undoubtedly congress may have used the word "officer"in some other connections in a more popular sense, as will be shown in thecase of U. S. v. Hendee, immediately following this, (infra,) in which caseit will be the duty of the court in construing such an act of congress toascertain its true meaning, and be governed accordingly. Thejudgment of the court of claims is accordingly reversed, and the case remandedto that court with instructions to dismiss it. United States v. Smith, 124 U.S. 525, 8 S.Ct. 595 (1888) UNITED STATES, v. SMITH. February 6, 1888. On a Certificate of Division from the Circuit Court of the United States for the Southern District of New York. This case comes from the circuit court for the Southern district of New York,on a certificate of division of opinion between its judges. The defendant was a clerk in the office of the collector of customs for the collectiondistrict of the city of New York, and in 1886 was indicted for the unlawfulconversion to his own use of public money, an offense designated in the RevisedStatutes as embezzlement of such money. The indictment contains 75counts, each charging the defendant with a separate act of embezzlement. The counts were all in the same form, and the objections to one are equally applicable to the whole of them. The first one is as follows: "The jurors of the United States of America, within and for the districtand circuit aforesaid, on their oath present that Douglas Smith, late ofthe city and county of New York, in the district and circuit aforesaid, heretofore,to-wit, on the eleventh day of October, in the year of our Lord 1883, atthe Southern district of New York, and within the jurisdiction of this court,he, the said Douglas Smith, being then and there a person charged by an actof congress with the safe-keeping of the public moneys, to-wit, a clerk inthe office of the collector of customs for the collection district of thecity of New York, appointed by the collector of customs, with the approbationof the secretary of the treasury, and having then and there in his custodya large sum of public money, to-wit, the sum of ten and 50-100 dollars,did unlawfully fail to keep the same, but the same did unlawfully convertto his own use, against the peace of the United States and their dignity,and contrary to the statute of the United States in such cases made and provided." Theindictment is founded on section 5490 of the Revised Statutes, which is asfollows: "Every officer or other person charged by any act of congresswith the safe-keeping of the public moneys, who fails to safely keep thesame, without loaning, using, converting to his own use, depositing in banks,or exchanging for other funds than as specially allowed by law, shall beguilty of embezzlement of the money so loaned, used, converted, deposited,or exchanged; and shall be imprisoned not less than six months, nor morethan ten years, and fined in a sum equal to the amount of money so embezzled." Thelaw providing for the safe-keeping of the public moneys is found in section3639 of the Revised Statutes, which is as follows: "The treasurer ofthe United States, all assistant treasurers, and those performing the dutiesof assistant treasurer, all collectors of the customs, all surveyors of thecustoms, acting also as collectors, all receivers of public moneys at theseveral land-offices, all postmasters, and all public officers of whatsoevercharacter, are required to keep safely without loaning, using, depositingin banks, or exchanging for other funds than as specially allowed by law,all the public money collected by them, or otherwise at any time placed intheir possession and custody, till the same is ordered, by the proper department or officer of the government. to be transferred or paid out; and,when such orders for transfer or payment are received, faithfully and promptly to make the same as directed, and to do and perform all other duties asfiscal agents of the government which may be imposed by any law, or by anyregulation of the treasury department made in conformity to law. Thepresident is authorized, if in his opinion the interest of the United Statesrequires the same, to regulate and increase the sums for which bonds areor may be required by law, of all district attorneys, collectors of customs,naval officers, and surveyors of customs, navy agents, receivers and registersof public lands, paymasters in the army, commissary general, and by all otherofficers employed in the disbursement of the public moneys, under the directionof the war or navy departments." Thelaw providing for the employment of clerks by collectors of customs is foundin section 2634 of the Revised Statutes, which is as follows: "Thesecretary of the treasury may, from time to time, except in cases otherwiseprovided, limit and fix the number and compensation of the clerks to be employedby any collector, naval officer, or surveyor, and may limit and fix the compensation of any deputy of any such collector, naval officer, or surveyor." To the indictment the defendant filed a demurrer, and upon its hearing the following questions occurred, upon which the judges were divided in opinion: "(1) Does the indictment sufficiently charge an offense under section5490, Revised Statutes? (2) Is a clerk in the office of the collector of customs for the collection district of the city of New York, appointed by the collector of customs, with the approbation of the secretary of the treasury, by virtue of section 2634 of the Revised Statutes, a person charged by any act of congress with the safe-keeping of public moneys? (3) Was the defendant appointed by the head of a department, within the meaning of the constitutional provisions, (article 2, § 2,) upon the subject of the appointing power?" Thereupon, on the request of the district attorney, the questions were certified to this court, with a copy of theindictment and an abstract of the record, for final decision. Mr.Justice FIELD, after stating the facts as above, delivered the opinion ofthe court. Theindictment in this case is in form sufficiently full and specific in itsaverments to embrace the offense prescribed by the statute, and yet the defendantcharged is not within its provisions. He is designated as a clerk inthe office of the collector of customs, and is thus shown not to be chargedby an act of congress with the safe-keeping of the public moneys, contraryto the averments of the indictment. The courts of the United States are presumed to know the general statutes of congress, and any avermentin an indictment inconsistent with a provision of a statute of that character must necessarily fail, the statute negativing the averment. No clerk of a collector of customs is, by section 3639 of the Revised Statutes, chargedwith the safe-keeping of the public moneys. That section requires thetreasurer of the United States, assistant treasurers, and those performingthe duties of assistant treasurer, collectors of customs, surveyors of customs,acting also as collectors, receivers of public moneys at the several land-offices, postmasters, and all public officers of whatsoever character, to keep safely all public money collected by them, or otherwise, at any time placed intheir possession and custody, till the same is ordered by the proper department or officer of the government to be transferred or paid out. They are also required to perform all other duties as fiscal agents of the government which may be imposed by law, or by any regulation of the treasury department made in conformity to law. A clerk of the collector is not an officer of the United States within the provisions of this section; and it is only to persons of that rank that the term public officer, as there used, applies. An officer of the United States can only be appointed by the president,by and with the advice and consent of the senate, or by a court of law,or the head of a department. A person in the service of the governmentwho does not derive his position from one of these sources is not an officerof the United States in the sense of the constitution. This subject was considered and determined in U. S. v. Germaine, 99 U.S. 508, andin the recent case of U. S. v. Mouat, 124 U.S. ----, ante, 505. Whatwe have here said is but a repetition of what was there authoritatively declared. Thenumber of clerks the collector may employ may be limited by the secretaryof the treasury, but their appointment is not made by the secretary, noris his approval thereof required. The duties they perform are as variedas the infinite details of the business of the collector's office, each taking upon himself such as are assigned to him by the collector. The officers specifically designated in section 3639 are all charged by some act of congress with duties connected with the collection, disbursement or keeping of the public moneys, or to perform other duties as fiscal agents of the government. A clerk of a collector, holding his position at the will of the latter, dischargingonly such duties as may be assigned to him by that officer, comes neitherwithin the letter nor the purview of the statute. And we are referredto no other act of congress bearing on the subject, making a clerk of thecollector a fiscal agent of the government or bringing him within the classof persons charged with the safe-keeping of any public moneys. Thecase of U. S. v. Hartwell, 6 Wall. 385, does not militate against thisview. The defendant there, it is true, was a clerk in the office ofthe assistant treasurer at Boston, but his appointment by that officer underthe act of congress could only be made with the approbation of the secretaryof the treasury. This fact, in the opinion of the court, rendered hisappointment one by the head of the department within the constitutional provisionupon the subject of the appointing power. The necessity of the secretary's approbation to the appointment distinguishes that case essentially from theone at the bar. The secretary, as already said, is not invested withthe selection of the clerks of the collector; nor is their selection in anyway dependent upon his approbation. It is true the indictment allegesthat the appointment of the defendant as clerk was made with such approbation,but, as no law required this approbation, the averment cannot exert any influenceon the mind of the court in the disposition of the questions presented. The fact averred, if it existed, could not add to the character, or powers,or dignity of the clerk. The constitution, after providing that thepresident shall nominate, and, by and with the advice and consent of thesenate, shall appoint, ambassadors, other public ministers, and consuls, judges of the supreme court, and all other officers of the United Stateswhose appointments are not otherwise provided for, which should be establishedby law, declares that "the congress may by law vest the appointment of suchinferior officers as they think proper in the president alone, in the courtsof law, or in the heads of departments." There must be, therefore,a law authorizing the head of a department to appoint clerks of the collectorbefore his approbation of their appointment can be required. No suchlaw is in existence. Our conclusion, therefore, is that section 3639of the Revised Statutes does not apply to clerks of the collector, and thatsuch clerks are not appointed by the head of any department within the meaningof the constitutional provision. It follows that our answers to thesecond and third questions certified to us must be in the negative. An answer to the first question is therefore immaterial.  |
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