(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 created your agency, the Internal Revenue Service, but I was unable to find it. I then 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 of Internal Revenue, or thought they had, from the act of March 3, 1863, in which provision was made for the President to appoint with Senate confirmation a Deputy Commissioner of Internal Revenue 'who shall be charged with such duties in the bureau of internal revenue as may be prescribed by the Secretary of the Treasury, or as may be required by law, and who shall act as Commissioner of internal revenue in the absence of that officer, and exercise the privilege of franking all letters and documents pertaining to the office of internal revenue.' In other words, 'the office of internal revenue' was 'the bureau of internal revenue,' and the act of July 1, 1862, is the organic act of today'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 created either agency. The only office created by the act of July 1, 1862, was the Office of the Commissioner; neither the Bureau nor the Service was actually created 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 a very thorough investigation. This obviously is the best position that your agency can develop regarding precisely how the IRS came into being. But besides the 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 been created 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 the constitution of the state or it must be authorized by some statute"); First Nat. 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"); Coyne v. State, 22 Ohio App. 462, 153 N.E. 876, 877 (1926)("Unless the office existed there could be no officer either de facto or de jure. A de facto officer is one invested with an office; but if there is no office with which to invest one, there can be no officer. An office may exist 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, 85 P.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.2d 27, 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.2d 47, 145 P.2d 554, 556 (1944); Martin v. Smith, 239 Wis. 314, 1 N.W.2d 163, 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.2d 723, 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); Schaefer v. 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, 159 A.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); Planning Bd. of Tp. of West Milford v. Tp. Council of Tp. of West Milford, 123 N.J.Super. 135, 301 A.2d 781, 784 (1973); Vander Linden v. Crews, 205 N.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.2d 234, 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 can be no officer, either de jure or de facto, if there be no office to 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 invisible government, whether in politics or in the trade-union movement"); Crowley v. 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 of Congress"); 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 create the IRS. Since this is a question of profound national importance, I request that you provide an answer to me within 20 days. Failing a response within that time period, I shall conclude that you cannot find any such statute and shall act accordingly.
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 claim IRS has been created by law
SOME IMPORTANT CASES NOT ON FINDLAW
United States v. Mouat, 124 U.S. 303, 8 S.Ct. 505 (1888)
Supreme Court of the
January 23, 1888.
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 compensation to be paid to Mouat for traveling expenses while acting as a pay-master's clerk. The act of congress of June 16, 1874, making appropriations for the support of the army for the next fiscal year, has appended to the clause providing for the transportation of officers and baggage, and for their traveling expenses, the following: "Provided, that only actual traveling expenses shall be allowed to any person holding employment or appointment under the United States, and all allowances for mileages and transportation in excess of the amount actually paid are hereby declared illegal; and no credit shall be allowed to any of the disbursing officers of 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 to every person holding employment or appointment under the United States, and seems 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 of June 16, 1874, making appropriations for the support of the army for the fiscal year ending June 30, 1875, and for other purposes, as provides that only actual traveling expenses shall be allowed to any person holding employment or appointment under the United States while engaged on public business, as is applicable to officers of the navy so engaged, is hereby repealed; and the 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. It did not even repeal it as applicable to the entire navy, but it selected a 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 actual expenses while traveling for the government, and should be allowed eight cents per mile in lieu thereof. The class of persons thus relieved from 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 certain class of persons from the operation of a general law; which was left to include all other persons in the employment of or holding appointment under the government of the United States, it is obviously proper to confine that class to those who are, properly speaking, officers of the navy. There is nothing in the context, nor in the reason which may have been supposed to influence congress in making this exception out of the general law, justifying its 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, in any of the various branches of its service, has been very fully considered by 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 United States, all its officers were appointed by the president, by and with the consent 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 what are now called the members of the cabinet. Unless a person in the service of the government, therefore, holds his place by virtue of an appointment by the president, or of one of the courts of justice or heads of departments authorized 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 review this 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 formal way, 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 appoint a pay-master's clerk, nor is there any act requiring his approval of such an appointment, and the regulations of the navy do not seem to require any such appointment or approval for the holding of that position. The claimant, therefore, was not an officer, either appointed by the president, or under the authority of any law vesting such appointment in the head of a 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 do not belong to the pay corps. The naval regulations of 1876, a copy of which is found in the brief of the appellant, so far as relates to this matter, 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 the commanding 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 officer of the navy. Undoubtedly congress may have used the word "officer" in some other connections in a more popular sense, as will be shown in the case of U. S. v. Hendee, immediately following this, (infra,) in which case it will be the duty of the court in construing such an act of congress to ascertain its true meaning, and be governed accordingly.
The judgment of the court of claims is accordingly reversed, and the case remanded to that court with instructions to dismiss it.
United States v. Smith, 124 U.S. 525, 8 S.Ct. 595 (1888)
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 collection district of the city of New York, and in 1886 was indicted for the unlawful conversion to his own use of public money, an offense designated in the Revised Statutes as embezzlement of such money. The indictment contains 75 counts, 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 district and circuit aforesaid, on their oath present that Douglas Smith, late of the 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, at the 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 act of congress with the safe-keeping of the public moneys, to-wit, 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, and having then and there in his custody a 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 convert to 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."
The indictment is founded on section 5490 of the Revised Statutes, which is as follows: "Every officer or other person charged by any act of congress with the safe-keeping of the public moneys, who fails to safely keep the same, without loaning, using, converting to his own use, depositing in banks, or exchanging for other funds than as specially allowed by law, shall be guilty of embezzlement of the money so loaned, used, converted, deposited, or exchanged; and shall be imprisoned not less than six months, nor more than ten years, and fined in a sum equal to the amount of money so embezzled."
The law providing for the safe-keeping of the public moneys is found in section 3639 of the Revised Statutes, which is as follows: "The treasurer of the United States, all assistant treasurers, and those performing the duties of assistant treasurer, all collectors of the customs, all surveyors of the customs, acting also as collectors, all receivers of public moneys at the several land-offices, all postmasters, and all public officers of whatsoever character, are required to keep safely without loaning, using, depositing in 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 in their 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 as fiscal agents of the government which may be imposed by any law, or by any regulation of the treasury department made in conformity to law. The president is authorized, if in his opinion the interest of the United States requires the same, to regulate and increase the sums for which bonds are or may be required by law, of all district attorneys, collectors of customs, naval officers, and surveyors of customs, navy agents, receivers and registers of public lands, paymasters in the army, commissary general, and by all other officers employed in the disbursement of the public moneys, under the direction of the war or navy departments."
The law providing for the employment of clerks by collectors of customs is found in section 2634 of the Revised Statutes, which is as follows: "The secretary of the treasury may, from time to time, except in cases otherwise provided, limit and fix the number and compensation of the clerks to be employed by 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 section 5490, 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 the indictment and an abstract of the record, for final decision.
Mr. Justice FIELD, after stating the facts as above, delivered the opinion of the court.
The indictment in this case is in form sufficiently full and specific in its averments to embrace the offense prescribed by the statute, and yet the defendant charged is not within its provisions. He is designated as a clerk in the office of the collector of customs, and is thus shown not to be charged by an act of congress with the safe-keeping of the public moneys, contrary to the averments of the indictment. The courts of the United States are presumed to know the general statutes of congress, and any averment in 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, charged with the safe-keeping of the public moneys. That section requires the treasurer of the United States, assistant treasurers, and those performing the 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 in their 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 government who does not derive his position from one of these sources is not an officer of the United States in the sense of the constitution. This subject was considered and determined in U. S. v. Germaine, 99 U.S. 508, and in the recent case of U. S. v. Mouat, 124 U.S. ----, ante, 505. What we have here said is but a repetition of what was there authoritatively declared.
The number of clerks the collector may employ may be limited by the secretary of the treasury, but their appointment is not made by the secretary, nor is his approval thereof required. The duties they perform are as varied as 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, discharging only such duties as may be assigned to him by that officer, comes neither within the letter nor the purview of the statute. And we are referred to no other act of congress bearing on the subject, making a clerk of the collector a fiscal agent of the government or bringing him within the class of persons charged with the safe-keeping of any public moneys.
The case of U. S. v. Hartwell, 6 Wall. 385, does not militate against this view. The defendant there, it is true, was a clerk in the office of the assistant treasurer at Boston, but his appointment by that officer under the act of congress could only be made with the approbation of the secretary of the treasury. This fact, in the opinion of the court, rendered his appointment one by the head of the department within the constitutional provision upon the subject of the appointing power. The necessity of the secretary's approbation to the appointment distinguishes that case essentially from the one at the bar. The secretary, as already said, is not invested with the selection of the clerks of the collector; nor is their selection in any way dependent upon his approbation. It is true the indictment alleges that the appointment of the defendant as clerk was made with such approbation, but, as no law required this approbation, the averment cannot exert any influence on 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 the president shall nominate, and, by and with the advice and consent of the senate, shall appoint, ambassadors, other public ministers, and consuls, judges of the supreme court, and all other officers of the United States whose appointments are not otherwise provided for, which should be established by law, declares that "the congress may by law vest the appointment of such inferior officers as they think proper in the president alone, in the courts of law, or in the heads of departments." There must be, therefore, a law authorizing the head of a department to appoint clerks of the collector before his approbation of their appointment can be required. No such law is in existence. Our conclusion, therefore, is that section 3639 of the Revised Statutes does not apply to clerks of the collector, and that such clerks are not appointed by the head of any department within the meaning of the constitutional provision. It follows that our answers to the second and third questions certified to us must be in the negative. An answer to the first question is therefore immaterial.