Tax Payment Method

[ogr8bearded1]

ref State of Alabama Department of Revenue Administrative Law Division Docket No. Inc. 03-438
Every time I received a refund from either State or Federal governments I could not cash them for face value. Banks, grocery stores, check cashing establishments and all other places required a fee to cash them (I have not had enough money to bother with a bank account in over a decade.) In my view, the government was essentially making a piece of paper and calling it a payment. The definition of a negotiable instrument I found laid out the following. A negotiable instrument must state who is paying(payer), be dated, be signed, state an exact amount and to whom that amount be paid(payee). A negotiable instrument may not be drawn on funds set aside specifically for payment nor have an expiration date.

Therefore my argument was my payment was as good as the governments. In fact, mine was legal whereas theirs is not (government documents say "void after.....(60 days or 6 months or 1 year in some cases) which violates the definition above. Tax booklets clearly state "Do Not Send Cash" therefore the only payment method left is a negotiable instrument, payable on demand by the payee. Most often this is a check drawn on a bank, a money order or a drawing on a credit card, but all that is needed is that payment meet the terms of a negotiable instrument which I did.

The Federal government has not to this day presented their negotiable instrument of $219 for payment, expressed shock at the ruling above and as far as I know is most likely assessing penalties and interest for non-payment of my 2001 taxes. I have no idea, I informed them by phone of the above case and asked when they would like to arrange an exchange of Federal Reserve Notes for my negotiable instrument. The person I spoke with said I could not pay in such a manner. I informed them a court had recognised my payment already. "What court decided that?!" they exclaimed and I replied, "Administrative Law court of the State of Alabama."

Next they wanted me to send them documents of this case which I have never done on the basis of I had informed them of what they needed to know and it was their job to verify case law and not my duty to supply at my cost those documents which were as easily assessable to them as to myself. Since 2001 I have worked very little and usually for only 3 to 6 months. I have been exempt from Income tax based on fact I have not earned enough to pay and insure I stay below that amount while at same time making sure the government does not "borrow" any of my money with no interest looking to "refund" a lesser amount later.

So, that is my story. Hope you have enjoyed it and that it has given you some thought. I am coming out with this now as many are looking to start protesting taxes by non-payment, risking imprisonment for fraud, evasion or failure to file and I believe these actions will lead to sorrow. Pay the government their monies, render under Caesar what is Caesar's, and do it under the rules and definitions of law that they themselves have promulgated.

If anyone would like I can post a transcribed copy of the State's Answer and the Final Order.

ref State of Alabama Department of Revenue Administrative Law Division Docket No. Inc. 03-438

[Pottapaug1938]

Your issue is not with the State or Federal governments; rather, it is with yourself and the banks. I have never had an issue with receiving full payment from any state or federal agency; but then again, I have a bank account. It is not the government's fault that you don't have a bank account, and instead choose to present your negotiable instrument to an entity which is not in the banking business but which will cash your check, minus a fee (after all, these places are in business to make money).

My checking account is with a small Massachusetts bank which charges no maintenance fees, etc. (and I have taken my money out of any bank that does). Try looking for a similar bank down your way, a credit union which you can join (they are good for minimizing fees), or an old-fashioned savings and loan bank (if there are any left -- deregulation killed most of them off).

[ogr8bearded1]

True, but neither is it my fault the government can not find anyone to cash my negotiable instrument but have to present it to the issuer, me. Banks are under federal regulation and if a bank is fearful of a government check being no good then we are in a lot more trouble. Also the Constitution clearly states in Article 1, Section 10 Clause 1 "No State shall....make anything but gold and silver coin a tender in payment of debt....". By refusing to hear the case of Chermack v. Bjornson (Minnesota State Supreme Court 1974 I believe) in the Supreme Court of the United States, they upheld the ruling that gold and silver coin was the tender of the time and Federal Reserve Notes are acceptable payment. A State check (or warrant) is nether of these things and relies on the payee to travel to the State Treasury for redemption at face value.

All I have done is level the playing field and paid in a like manner. If they wish to find a middle-man who will give them less than face value who later brings to me for full value then that is fine. If they wish to bring to me for full value that is fine. I was taught that "what's good for the goose is good for the gander." The main point of my post is though, there are LEGAL methods that can cause apoplectic fits to the revenuers without subjecting yourself to fines, imprisonment, levies, or interest. Mostly this is directed to those who 'protest' taxes to no avail. Sorry, you owe them, you have to pay them, but you don't have to make it easy on them.

I'm very happy with very little, not that I object to having more, its just not required to satisfy me. A grocery store or check cashing place I can understand requiring a fee, but not a bank. I can take a check issued by an individual to any branch of the bank that person's check is drawn from and receive face value, no fee because "I" don't have an account there. There is no reason a fee should incur then on a government check from any bank. Simple remedy is for the government to require government checks at FDIC or FSLIC insured places to be cashed for face value or withhold FDIC or FSLIC backing for that institution.

I tried for three years to have the government take steps to rectify this 'fee' problem with little result. After that I became an independent contractor, made sure I owed them money and decided to see how they liked the shoe on the other foot....and I won. My payment is just as good as their payment.

On another note, really don't plan on jumping through hoops for those 'free' checking places. The details to get them free without a minimum balance, with free checks, an ATM card so have access to my cash 24hrs a day for no fee are horrific. They often regulate even on savings accounts how often you may withdraw per month or quarter and charge a fee if exceed that amount. No, what little money I have I can watch for free in my pocket and go to the all night stores at any time

[Pottapaug1938]

If you still quote the Gold and Silver clause of Article 1, Section 10, you obviously have some more studying to do. Start with Article 1, Section 8, in which Congress had the power to "coin money, and regulate the value thereof." No court has ever held that our current money violates this or any other clause of the Constitution.

And as for my checking account, there isn't a single hoop that I have to jump through to get no fees for account maintenance. As I said, it's a smaller bank; and from my experience, these banks don't try to screw the account holder with fees the same way that the megabanks do.

[ogr8bearded1]

I guess you didn't read that entire sentence, it went on to quote a court case and concluded with "...they upheld the ruling that gold and silver coin was the tender of the time and Federal Reserve Notes are acceptable payment."

My reason for quoting is to show that a State MUST pay its debt with the legal tender as declared by Congress under the Article 1 Sec 8 you mention. As a check is not the currency proscribed, but only a promise to pay that currency, and the same true with Federal checks then the People also have to right to do the same. This is the view upheld by Judge Thompson. The State's argument that allowing such payments placed an undue burden on the State to collect was rejected. Otherwise I would have been responsible for far more than just the $32 my return required me to pay.

[Pottapaug1938]

[quote="ogr8bearded1"]I guess you didn't read that entire sentence, it went on to quote a court case and concluded with "...they upheld the ruling that gold and silver coin was the tender of the time and Federal Reserve Notes are acceptable payment."

I DID read the sentence quoted; but since the gold and silver clause is such a nullity today, I wondered why you even used it.

As for checks -- in my current business (mutual funds), checks are considered "cash substitutes". They are demanded for all investments in mutual funds (at least when you invest by mail) because sending cash in the mail is just too risky. Likewise, mutual fund redemptions are made by check (if not by electronic fund transfer or wire) because of the risk of loss and because the mutual fund companies would find it prohibitively expensive to maintain a cash room.

The bottom line is, though, I suggest you resign yourself to the reality that any money due to you by a state or federal government will be paid by check; and that any effort on your part to force them to do otherwise will lose, and will consume more of your resources than you will care to use. My advice stands: either find a local bank or credit union which will cash checks for no fees, or else adjust to the reality of cashing checks without a bank account.

[Dezcad]

If anyone would like I can post a transcribed copy of the State's Answer and the Final Order.

ref State of Alabama Department of Revenue Administrative Law Division Docket No. Inc. 03-438

Sure, that would be helpful.

[ogr8bearded1]

Ken Thrash
v. State of Alabama Department of Revenue
State of Alabama Department of Revenue Administrative Law Division

Docket No. INC.03-438

ANSWER

Comes now the State of Alabama Department of Revenue (the "Department") by David E. Avery, III, and Answers the appeal of Ken Thrash (the "Taxpayer") by setting forth a brief statement of facts, the issue or issues in dispute and the Department's responses on those issues as follows:

Statement of Facts

Taxpayer filed his 2001 Alabama Income Tax return without payment. The Taxpayer did include a piece of paper which essentially promised to pay $152 "to be drawn on the funds of Ken Thrash" apparently in the possession of Ken Thrash. The Department reviewed the return and reduced the Taxpayer's liability to $32 due to a miscalculation on the part of the Taxpayer and billed him for the difference. This billing eventually evolved into a Final Assessment, which was appealed to the Administrative Law Division. The Taxpayer appears to agree with the assessment but asserts satisfaction through tender of the 'negotiable instrument' submitted with his letter of appeal.

Issues

Whether payment was made through tender of a document titled "negotiable instrument" not accepted by the Department.

Position of the Department

The Department asserts that the Taxpayer must pay the tax liability and that tender of the "negotiable instrument" is not a payment. The Taxpayer appears to have
some protest against the banking system that he is attempting to bring into this appeal. This is not the right place. It is the Taxpayer's responsibility to pay this
tax liability with penalty and interest. He has not done so. Tender of a negotiable instrument is not payment. If he would like to make payment in cash it may be
convenient for him to go to our local office at 1403-A Beltline Road SW in Decatur. If he would like to call first, the telephone number is 793-5802. Otherwise,
the Final Assessment is due to be affirmed.

David E. Avery, III Assistant Counsel
Department of Revenue and Assistant
Attorney General, State of Alabama
P.O. Box 32001
Montgomery, AL 36132-0001
Telephone:(334)a242-9690

(It should be noted that at time of this answer the local office had already been closed, and also that on a previous attempt to pay cash there the tender was refused.)

(Heading omitted as is same as above)

FINAL ORDER

The Revenue Department assessed 2001 income tax against Ken Thrash ("Taxpayer"). The Taxpayer appealed to the Administrative Law Division pursuant to Code of
Ala. 1975, para40-2A-7(b)(5)a. A hearing was conducted on September 30, 2003 in Birmingham, Alabama. The Taxpayer attended the hearing. Assistant Counsel
Keith Maddox represented the Department.

The Taxpayer reported tax due of $152 on his 2001 Alabama income tax return. He also submitted a document with his return entitled "Negotiable Instrument" for $152.

The Department adjusted the return, which reduced the Taxpayer's Liability to $32 or the year. However, it also rejected the "Negotiable Instrument" as not proper payment. It subsequently assessed the Taxpayer for the amount due.

The Taxpayer submitted another "Negotiable Instrument" for $32 with his notice of appeal. At the September 30 hearing, the Taxpayer agreed to remit $32 in cash
in return for voiding the $32 "Negotiable Instrument." The cash payment was submitted to Assistant Counsel Keith Maddox for remittance to the Department's
Income Tax Division. The Taxpayer was provided a receipt acknowledging payment of the $32, and voiding the above referenced "Negotiable Instrument." Based on
the above, the final assessment in issue is voided.

This Final Order may be appealed to circuit court within 30 days pursuant to Code of Ala. 1975 para 40-2A-9(g).

Entered October 3, 2003

Bill Thompson
Chief Administrative Law Judge

[Dezcad]

So you paid the tax due in cash. I'm not sure what that proves, if anything.

[ogr8bearded1]

The judge could have agreed with the State that no payment had ever been made and that my negotiable instrument was frivolous. The State wanted the liability, penalty and interest and most probably court costs. By voiding my instrument he gave it merit, a worthless instrument needs no voiding. By not charging penalty or interest he recognised payment had been offered and the State had simply not even attempted to collect monies due. Yes, around one year and 5 months later the State received their due. Something they could have received at any time by sending someone with my negotiable instrument. I had even offered to come to the then open district office and exchange the cash for it. I had even offered to pay the cash at the district office at one point and was told all payments had to be sent by me to Montgomery and they could not accept payment.

During the hearing, the only position the Defense stated was that by allowing such payments an undue hardship would be placed on the State to collect monies owed. The judge cited no such undue hardship. Yes, we owe our taxes. I made it clear that I felt we people were obligated to pay such taxes as they owed. I informed the judge that we were dealing with an issue of what form that tender must take and that my assertion was I had tendered payment.

Basically, let's say you do use a check drawn on a bank, and said check has the funds available to cover the amount. The State never tries to cash that check and then accuses you of not paying while still holding the check, knowing how to receive monies for the check. The government does not consider taxes paid until they cash your check. I gave them a check (albeit drawn on funds in my immediate possession and not drawn on a bank.)

At issue was the fact, the government makes its own negotiable instrument (actually not with the 'void after... statement) and sends it out as payment and therefore a citizen can do the same. I don't mind they use a check. I do mind they allow others to prey on those who have no bank account.

The reason I am bringing up this case now is there are people who are starting to say they simply are not going to pay their taxes. Craig T. Nelson (actor) has stated he is not going to pay his in protest and will most likely be going to jail. I offer this as an alternative to those who wish to protest. The IRS has yet to cash the $219 negotiable instrument I submitted with my 2001 Federal return. They have never even tried. I still have their money. I'm still ready to tender that money. I haven't dodged my taxes, I haven't refused to pay, they have simply chosen not to collect them.

[Demosthenes]

What a fricken' waste of time and energy.

[ogr8bearded1]

Ya, I never understood why they didn't just cash the thing instead of us having to go through a song and dance about it either.

[Demosthenes]

Ya, I never understood why they didn't just cash the thing instead of us having to go through a song and dance about it either.

Who is "us"?

[ogr8bearded1]

The judge, the State's attorney, the stenographer and me.

[Demosthenes]

Does it please you that you're wasting so much of the state's money for stupid shit?

[ogr8bearded1]

If it was stupid, the judge would have ruled frivolous. =p

[Demosthenes]

If it was stupid, the judge would have ruled frivolous. =p

Did a judge tell you that you could wear clothing in the courtoom?

[ogr8bearded1]

For 3 years I tried to get the legislature it do something about the fact of banks charging fees to cash government check. I e-mailed all of the state legislature and received one reply. That person said they didn't like the title loan shops.

Before issuing the negotiable instrument I contacted the Governor who asked the head of the Department of Revenue to talk to me (nice letter on pretty stationary) and even later sent me an invitation to the Christmas Tree lighting ceremony. The head of the Department of Revenue refused to even come to the phone. That left me no choice but to proceed on the course I took. I had been ignored by the legislative and executive branches so my only recourse was to seek remedy from the judicial.

Seriously, you really think I'm asking too much that government checks be redeemable for face value without me having to meet any other criteria than providing legal documentation that I am the person named on the check?

[ogr8bearded1]

The law proscribes that a negotiable instrument is anything which is dated, states who is paying, who is to be paid, is signed and states a specific amount to be paid. There may not be an expiration date nor may the payment be from funds set aside specifically to pay it.

Writing IOU an amount and signing is not considered a negotiable instrument by law.

I don't have a scanner or I could upload an image of the item. I'll try and represent how it looks.
It was written on notebook paper.

NEGOTIABLE INSTRUMENT
Date 2 May 2003

Pay to the order of:Alabama Department of Revenue

the Sum of: $32.00(thirty-two Dollars and no cents)

payable from the funds of Ken Thrash

then was signed.

The judge wrote on my copy of that instrument the following:
I certify that Ken Thrash paid $32 on Sept. 30, 2003 to Judge Bill Thompson. The money was submitted to Dept. Assistant Counsel Keith Maddox as payment in full for the tax owed by Kenneth S. Thrash for 2001. This instrument is voided.

and signed his name.

So, it met all the criteria required by law to be a negotiable instrument. Dated, signed, had a payer, a payee and an exact amount.

[Judge Roy Bean]

Seriously, you really think I'm asking too much that government checks be redeemable for face value without me having to meet any other criteria than providing legal documentation that I am the person named on the check?

So your theory is the banking industry should cash "government" checks at no charge for non-account holders?

Let's examine this through a lens of what it would require to implement such a change.

Aside from greed in charging non-account holders a fee for cashing a check or draft, one of the primary reasons for not cashing a check (even one drawn on the bank in question) for a non-account holder is check fraud and money laundering prevention. Frankly, it's just too damn easy to create an identity that passes visual muster at a teller window.

But by opening an account, a prospective check-casher is subject to what amounts to a background check and the funds they deposit will be held based on a number of factors. Without that, the bank is running afoul of what's known as the regulatory concept of "knowing your customer."

That's why check-cashing places have proliferated over the years. They are willing to take the risk with the great un-banked masses because they get such a huge chunk of the transaction that it more than covers their losses and they aren't overseen by highly-inquisitive regulatory bodies who want to see every movement of every dollar in any account they're curious about.

Not having an account is the price you pay for your privacy.