Gateway to Financial Freedom
Tape 7
Introduction to Foreign Trusts
Hi, I’m Keith Anderson. I’m a lecturer on constitutional law and taxation, and on this presentation we’re going to be talking about trusts. This will be a trust introduction for the purposes of introducing other people to the concept of utilizing trusts. There is a particular reason why trusts are coming back into the forefront of the choice of business operations and family preservation or into asset protection for family asset preservation purposes and that’s because we have some problems in this country, quite frankly. We have some problems with people being maybe over taxed a little bit. Is that possible? So we have excessive taxation. And we have excessive regulation. Is that fair to say? Does anybody want to object to that? Okay, and what we have an interest in obtaining in our lives is freedom. Americans have this desire to be free. Is that fair to say? We want to be free. So we know that there’s some specific characteristics that tie us to excessive taxation and excessive regulation. So let’s list some of those. And we want to talk about it in terms of the law. What I want to do is I want to ask you a question. When they decided to make alcohol illegal, when they did the prohibition amendment, what did they have to do in order to prohibit people from drinking alcohol, to make it illegal? What did they have to do? It’s okay. You can respond to these questions. It’s all right. They had to make a constitutional amendment now, didn’t they? Why did they have to make a constitutional amendment in order to make alcohol illegal? Why didn’t they just pass a law and say okay, alcohol is illegal now? Why didn’t the Congress just pass a law? Why? The reason for that is is that the Congress did not have the power in the Constitution to prohibit people from consuming alcohol, so the people had to agree to it by a Constitutional amendment to prohibit themselves from being able to consume alcohol. To that Constitutional act, they were then able to make it illegal across the country for people to consume alcohol. But, of course, that had to be repealed because they just went ahead and, you know, manufactured and sold alcohol anyway -- which was called bootlegging -- and that made millionaires in this country.
Okay, so that’s a very important concept because they’re not following that concept any more, now are they? In other words, if they want to prohibit people from growing hemp in their backyard... Does everybody know what hemp is? Another word for it is marijuana. If they want to prohibit people from doing that, they just pass a law and make it illegal. There’s no constitutional amendment that prohibits people from using hemp in this country, now is there? Is there? There’s no constitutional amendment. So why are people... where did the Congress get the power from to make it illegal for the people to use marijuana? Called hemp? Where did they get the power? Where did they get the authority? Okay, so the question is is what has tied us to excessive taxation and excessive regulation? What is the difference between the statutory rules and regulations that are being implemented and enforced against the people in the United States of America now and common law which provides for absolute freedom as long as you do not infringe upon someone else’s right to life, to liberty, to property? Under the common law, in order for there to be some kind of a claim against you or an impairment upon your liberty or upon your finances, there has to be an injury. Okay? There has to be an injury and there has to be a complaint by the injured party, but under our program of statutory rules and regulations, the state now can bring an action against the people with no injured party. Would you give me an example of those types of complaints? Can anybody think of one? How about speeding 65 in a 55? Right, where’s the injured party? Who did you hurt? What is the damage that you created that you have to cover? Okay, so what the question is is where did the state get the power to bring forth a complaint against you and punish you -- either criminally or civilly -- without having an injured party that’s been damaged?
Now we have been brought up in our society, or most of our lives, I can tell by the look on most of you that most of you have been brought up in this country under a foreign form of government -- foreign to our constitutional law. And that is called statutory rules and regulations. And it’s been brought forward under a commercial jurisdiction called law merchant. And that law merchant jurisdiction has been brought forth through the Constitution under Article I, Section 8, Clause 3, the power of the Congress to regulate interstate commerce. Now, the question is is what happens when we engage in a contractual relationship? If we were to engage in a contractual relationship and you agreed to give me say a 100 hours of your time for $10,000, and I paid you the 10,000 bucks, what would you owe me? A hundred hours of your time, correct? That’s simple, isn’t it? Okay, so I give you the 10,000 bucks and you say wait a minute, no involuntary servitude in America, the thirteenth amendment of the Constitution, I don’t have to give you my 100 hours of time because you can’t force me to work for you. What’s my response? My response is wait a minute, I paid you for the 100 hours; therefore, you owe those 100 hours to me. And I can collect damages from you if you do not perform that 100 hours of labor for me, correct? In other words, you waive your rights by giving, entering into a contractual relationship for consideration. Is that correct? In other words, all the rights that God gave us, which are called God-given unalienable rights in the Constitution, rather the Declaration of Independence of the United States of America, all those rights are rights that we can give up to someone else by contracting those rights away. So the question is, is how did we all come under this contractual commercial law merchant jurisdiction that subjects us to the statutory rules and regulations of the legislative bodies without constitutional authority, giving them the power to infringe upon our God-given unalienable rights? Okay? How did we do that? Well, let’s see what we did. Let’s see what we did.
I’m going to read you just a couple of little letters here. This is from the Department of Health and Human Services, Social Security Administration. Social security does not require anyone to have a social security number. Okay? Other government agencies and employers require individuals to obtain numbers in order to participate in their programs. So the social security number is a voluntary thing that you only need to participate in programs. Now, what kind of programs are those? Social welfare benefit programs. Social security, welfare, the disability programs of social security as well, and there’s a number of different ways that you can be eligible for benefits through social security. The average age recipient of it is age 30. And, of course, you can be eligible for food stamps, housing allowances, baby well care. Okay? But the point is, is that no one’s required to get a social security number. Now what kind of a contract is social security? It’s an interstate commercial contract. Isn’t social security good between all the states? I mean the United States of America, correct? In other words, it’s an interstate commercial contract, now, isn’t it? Okay, so now that’s governed by what? Article I, Section 8, Clause 3 of the Constitution of the United States of America, the power of the Congress of the United States of America to regulate interstate commerce. So when you signed up for social security, you gave something up. What did you give up to get a social security welfare-type benefit eligibility? Now I don’t care if you’ve never received a check from the government, that is of no significance whatsoever because the eligibility for social security is the benefit. Are you with me? The eligibility is the benefit. Okay? So what did you give up to become eligible for benefits from the United States DC, which is District of Columbia Jurisdiction, what did you give up? Now, when was the first time you ever got punished for having income? When is the first time you ever had income? When’s the first time any deductions were made out of your paycheck? When’s the first time you ever had any social security deductions taken out of your paycheck? When’s the first time? Before or after you got the social security number? After, correct? Okay, so now, what did you give up to receive the benefits of welfare protection services from the United States government? You gave up freedom, now, didn’t you? You gave up your right to a portion of your labor that they now take away from you at their will. Now isn’t it true every year they decide how much more they’re going to take away from you and how much they’re going to leave to you? Correct? So now, that is evidence that they are claiming 100% total ownership of all of your earnings. ‘Cause they’re deciding how much they get to take away from you and how much you have left over. They’re making that determination. But, if you had never applied for the social security card, guess who would have the right to make that determination? You would, now, wouldn’t you? Why? Because you would remain in ownership of your labor, but when you give up your freedom to get a social security number, you lose ownership of your labor and you relinquish that to them. Now they have the right to control your labor for the benefit of everyone into the social security program. That is called the Federal Reserve Allimossory(?) Corporate Estate Trust, it’s a trust that everybody entered into.
Now, this is a letter, again, from the Department of Health and Human Services, Social Security Administration. Social security is a voluntary system in that no one is required to get a number. However, programs which use social security numbers for control purposes might not allow a person without a social security number to participate. Okay, so if they’re using a social security number to require, or they’re requiring a social security number for participation in programs that are welfare social programs, what is it that we do not want? We wouldn’t want the social security number, why? We have to give up our labor, our rights of labor and our rights of freedom, to be able to become eligible for those benefits. Now this is a very, very serious matter because a lot of people have been raised in a society that feels that it’s common to have the security of the system for these benefit protection programs. There’s only one serious problem here -- the government takes so much wealth away from the producers of this country to fund these social welfare programs that it’s destroying the productive base of this country. We now are living in a debt society that has the largest national budget deficit in the history of the world, the largest national debt in the history of the world, the fastest declining production base in the history of the world, which means what? We’re headed for bankruptcy. Now I remember when I was growing up that my father he used to have to pay cash for his automobiles. He paid cash for his home. There was none of this financing business. Nowadays, everybody owes on everything. They owe on their cars, they owe on their credit cards, they owe on their homes. In other words, we have the illusion of wealth, the illusion that we’re well off and that we’re prospering when, in fact, what we’re doing is going more and more into debt all the time. Now what’s going to happen, unless we reverse this trend, is we’re going to have a massive bankruptcy and a correction that’s going to be devastating to a lot of people, especially those people on welfare benefit programs.
Okay, the Internal Revenue Service uses social security numbers as taxpayer identification numbers. Okay? So, what’s the legal definition of a social security number? Taxpayer’s identification number. So you became identified as a taxpayer when? When you got the social security number. So what were you before you got the social security number? You were a non-taxpayer. Non-taxpayer. In other words, you were not required to pay the income tax and the social security taxes before you got the social security number. Why? You were not eligible for the benefits. As soon as you got the social security number, now you’re required to pay the social security tax and the income tax because you’re eligible for the benefits. Now the Supreme Court has ruled, that was in the Brushaber case, Brushaber vs. Union Pacific Railroad case, that the income tax is an excise tax on a thing. Now the Constitution required that direct taxes on a person are required to be apportioned to the states. They would bill the states for the taxes. And a lot of people think that the government is actually taxing your pay, they have a right to a percentage of the amount of funds you make for the running of the government. Does that make sense? That’s a con job, right? In other words, we would not have any roads if it was not for the income tax, is that correct? We wouldn’t have any roads, right? Well, they fund the roads out of the gasoline excise tax. We wouldn’t have any educational system now, would we, without the income tax? Right? Well, that’s funded by the property tax in the states and they use sales taxes there also. And they also use, or are supposed to be using the money racket money which is the lottery funds for those purposes as well. And that’s nothing but a numbers racket, by the way, the lottery, the state’s running it. As far as I’m concerned, it’s illegal. What they’ll do is they’ll run this numbers racket, shaking people down for the, you know, money to run this con job gambling scheme that they’ve got going and then what they’ll do is have the audacity to go down and bust into someone’s home who’s having a private gambling game to themselves, and they’ll arrest the people and throw them in jail while they’re running the biggest numbers racket, you know, in the state and getting by with it.
Okay. This is interesting. I want you to listen to it carefully. Public law 87-397 was passed on October 5, 1961, requiring each taxpayer... now this only requires taxpayers... who’s a taxpayer? Someone with a social security number. They’re a taxpayer, therefore, this applies to them. Now if you did not have a social security number, would it apply to you? It would not apply to you, had nothing to do with you. ...requires the taxpayer to furnish an identifying number for tax reporting purposes. In other words, you would not have to apply, or rather submit, a number for tax reporting purposes if you did not have a social security number because you’d be a nontaxpayer. Because of this, employers must have the social security numbers of their workers to legally report their earnings. Now it says, because of this, employers must have the social security number. Must has been redefined by the courts to mean may when it concerns constitutional rights. That was settled in a United States of America Supreme Court case, that when it concerns constitutional rights, in America, that must and shall are redefined to mean may. So if we read this correctly, it’s because of this employers may have the social security numbers of their workers to legally report their earnings. Now, would an employer have to have a taxpayer identification number or social security number on someone who did not have one? No, they only have to have it on who? Taxpayers. Taxpayers who have a social security number. Why? Those are the only ones eligible for benefits. They could not continue to employ an individual for whom they could not legally report earnings. Well, they don’t have to legally report earnings on people who do not have a social security number. Those people are exempt from all reporting. Did you know that? Okay. Evidence? You’ll see right here in an Internal Revenue Service foreign status W-8 form. We call it a W-8 exempt form. Right here it says, certification, check the applicable box. Under the penalties of perjury, I certify that for interest payments, for dividends, for broker transactions and bartering exchanges, by the way, exchanging labor for funds -- labor for gold, for silver, for funds, for carrots, apples, bananas, oranges --is a barter exchange. You’re bartering out your labor for something else of value. Okay. So, under the penalties of perjury, I certify that for broker transactions or barter exchanges, I am an exempt foreign person as defined in the instructions below. Exempt foreign person: For purposes of this form, you are an exempt foreign person for a calendar year in which you are a nonresident alien individual, or a foreign corporation, partnership, estate, or trust. You are an individual who has not been and plans not to be present in the United States for a total of 183 days or more during the calendar year. You are not either engaged nor plan to be engaged during the year in a U.S. trade or a business that has effectively connected gains from transactions with a broker or bartering exchange, etc.
Okay, now, I want to ask you a question. How many here fall in that category? And I’ll read through them one at a time here. We’ll raise our hands together. You are a nonresident alien individual, or a foreign corporation, partnership, estate, or trust. I’m going to raise my hand because I’m in that category. How many of you are in that category? Okay, the rest of you are not? Okay. You are an individual who has not been and plans not to be present in the United States for a total 183 days or more during the calendar year. I don’t plan on being in the United States. Anybody else here? Do I look like I’m in the United States? I do? Okay. The next one is three, you are neither engaged nor plan to be engaged during the year in a U.S. trade or business that is effectively connected gains from transactions with a broker or bartering exchange. Okay? That’s in the United States. All right? Anybody here planning on doing that? I don’t plan on doing that? Alright. Okay.
So, one of the things that has happened in America is that we have lost the educational motivation to keep our government under our foot. They’re supposed to be under our foot, not over our head. We hired government to serve us in this country. We earn the funds. We pay them to work for us. They are supposed to serve us. What they have done by tricking us into these social welfare programs is conned us into going to them for benefits and when we do that, now, they become the master over our lives and start telling us everything we can and cannot do. And they’ve taken over control of the educational system. And it’s been done very methodically, that was exposed by Dr. Norman Dodd. He was a researcher for the Congress and he researched the tax exempt foundations to find out if they were involved in un-American activities which were unconstitutional and he found out that they were involved in a conspiracy with the White House to involve us in wars and other disturbances so as to keep us unsettled so that we could be comfortably merged with Russia and with Russia and the United States of America being brought back under the dominion of Great Britain. Now who was it out founding fathers overthrew to establish this as a free country? Great Britain. Okay? So that’s what they’re trying to do. They’re trying to get us back under Great Britain. And they’ve done an excellent job of it, as a matter of fact.
Now, the definitions here are very, very important and this class is not a class of definitions, but we have to lay out a few to understand the valued benefits of trusts properly. The United States is legally defined in trade and commerce that they have the jurisdictional authority to control as District of Columbia, American Samoa, Guam, Puerto Rico, Virgin Islands. Now how many here now.... if you would just say let’s accept that as the definition that is correct, you have to do your own research and prove it to yourself -- I’ve done that. But let’s say the United States’ District of Columbia, American Samoa, Guam, Puerto Rico, Virgin Islands -- how many here now consider that you’re out of the United States? Okay, now, what happens when you get a social security number and engage in a contractual relationship with the United States which is the District of Columbia, American Samoa, Guam, Puerto Rico, Virgin Islands... what happens when you do that? It brings you back under their jurisdiction. Am I under the jurisdiction of France? I’m going to tell you right now I have no connection with France whatsoever. Would I be under the jurisdiction of France? Okay, let’s say I go over to France and I borrow a million bucks. And they loan it to me on the condition that I pay them back so much per year for so many years. Would I be under their jurisdiction? At least to the extent of the terms and conditions of that contractual relationship. Would I? I would now, wouldn’t I? And I could not say that I was foreign to that jurisdiction because I got a loan from the government of France and I have to perform by the contract that I agreed to perform to when I entered into it? Correct?
Okay, so, when you went down to the social security administration office, didn’t you go into a foreign office, under the jurisdiction of the District of Columbia, American Samoa, Guam, Puerto Rico, Virgin Islands? Didn’t you enter into a contractual relationship whereby you agreed to give them a portion of your pay in consideration of benefits and protections that they were going to give you? Correct? Now, based on that contractual relationship, you’re now under their jurisdiction. Correct? Okay. So, you’d be under their jurisdiction in those cases, but if you weren’t, you could say that you were foreign to the United States, now, couldn’t you? You certainly could, but you have to research that; you have to settle that in your own mind as being true. I’ve done that. By the way, you’ll find that definition just as I stated it in the Internal Revenue Code.
And we want to talk just briefly now about the Internal Revenue Code. What does that mean to you? Internal Revenue Code. Internal? [response from audience member] That is correct. They have the control over the people who are internal to the code. Now, what does the Internal Revenue Code cover? It covers social security, income tax, drug, alcohol, tobacco, firearms, railroad retirement act. Okay? Now is it possible that we could not engage in those Internal Revenue Code activities and be external to the Internal Revenue Code? Is that possible? Is there such thing as external to the Internal Revenue Code? [response from audience member] Okay, so if we didn’t have a social security number, if we were not engaged in a contractual relationship within the alcohol, tobacco, and firearms department, railroad retirement act, etc. -- all these things that the code covers -- then we would be external to the Internal Revenue Code, correct? And we wouldn’t be under the interstate regulatory commercial powers any more and then we would be in what? We would be in free enterprise.
And I’m going to try to write better for the purposes of this film here, but don’t expect too much out of me. ...be external, then we’d be into free enterprise. Okay. And what is the opposite of free enterprise? What’s the opposite of free enterprise? Anybody know? In this country it’s called capitalism. Capitalism as opposed to free enterprise. This country was primarily founded on the basis of free enterprise and trusts were the major tool for the accumulation of wealth to finance big adventures, business ventures, to create a productive base of private enterprise investments in America. Until the advent of the corporations in the 30s, this was the primary form of government. Now, let’s just look at this very, very simply. What are some of the forms of business that the government offers us? What are some of the forms of business, forms of organization of business activities that the government offers us to engage in a business opportunity to earn revenues? Okay, fine, corporation, what else? [audience responses] Ok, what else? [audience responses] I’m more looking at the form that you would use to invest as opposed to... okay, we have limited liability companies. Okay, other types of corporations, there’s Cs and there’s S’s. Okay. Now, does the government offer you a trust as an alternative of doing business? [audience responses] But they don’t have a specific category of organizations called trusts, now, do they? They operate by the way... by the way, the government does operate a lot of their business activities in the form of trusts. The automobile trust is one of those. When you register a car with the state, you’re giving up the ownership papers on the car in exchange for the beneficial use of the car -- that’s called a trust. That’s why they have the power to tell you everything you can and cannot do with the car. When you register a home after you buy the equitable interest from a party and you register that with the state, now the state tells you what you can and cannot do with that house. Now, right? They tell you what you can and cannot build on it, how big it has to be, what the electrical has to be, etc. Okay, that’s because when you register with the state it puts it into their trusteeship and gives them the power to control it for your benefit. You become the beneficial interest holder in the property. Okay, so they function with trusts substantially, but that’s not one of the tools that they offer us to engage in a business association or a free enterprise association, now, right? Now you can take a trust, a free enterprise trust, and you can register it with the government and they’ll recognize that as a valid, legal entity and you can do business with it under them, but they don’t offer that as one of those alternatives, now do they? Secondly, there’s no requirement of law that you register a trust with them to conduct free enterprise.
Now I want to ask you all a question. If we were to form a trust, well, let’s look at a couple of benefits that you might want to be eligible for here first. This is publication 901 U.S. Tax Treaties with Foreign Countries, and it has just a little bit to say about benefits that foreigners have that you may not have. Do you think a foreigner coming to this country ought to have more benefits from this country than what you should have? Does that make any sense that they should have more than what you should have? Okay. This is subparagraph B under regulation 1.1441-1, subparagraph A, subparagraph 2, subparagraph B... compensation for personal services of an individual, exemption from withholding -- withholding is not required under 1.441-1 from salaries, wages, remuneration, or any other compensation for personal services of a nonresident alien individual if such compensation is effectively connected with the conduct of a trade or a business within the United States. So, even in the United States, a foreigner can come in and conduct trade and commerce and be exempted from withholding. No liability for that. Do you think they should be able to come in here and work and not have withholding, and you have withholding?
Okay. Subparagraph 4: Such compensation is or will be exempt from the income tax imposed by chapter 1 of the Code by reason of the provision of the Internal Revenue Code or tax treaty to which the United States is a party. So that is exempt from taxation.
Okay. Tax exemptions provided by treaties. In addition, the tables in the back of this publication -- this publication contains discussions of the exemptions from tax and certain other effects of the tax treaties on which the following types of income: one, certain pay for personal services performed as a nonresident alien, pay as a foreign professor or a teacher who lectures or performs research in the United States for a limited time, amount received from abroad for maintenance and studies by a foreign student or apprentice who is here for study and experience, and wages, salaries and pensions received as a nonresident alien paid by a foreign government. Those are all exempt from taxation.
Okay, now, we also have what is called the Internal Revenue Service 69-70 Ruling. This is in the Internal Revenue Service Bulletin 69-1, January-June, Revenue Ruling 69-70, Foreign trusts with a U.S. Beneficiary. An individual beneficiary who is a resident of the United States is not taxable on that portion of the income distributed to him from the foreign trust which is considered to be owned by the nonresident alien grantor. What this means is that if an off-shore foreign grantor creates a trust and names a United States citizen who is -- what I call ‘em, I call ‘em slaves of the USDC jurisdiction because they have social security numbers, they have to do whatever they’re told by the government -- they can designate a United States citizen as a beneficiary of a distribution of funds in any amount of money and send it back to the United States citizen 100% tax-free. No filing. No paying. No reporting. It’s 100% exempt. In other words, what I’m saying is there are ways that even people with social security numbers can receive tax-free payments. The question is is how do you arrange getting a foreign grantor to designate you as a beneficiary so you can get it tax free? And that’s what we’re going to be talking about in this lecture.
Now, if... we talked about a couple of things here... to lay a foundation for this. If I had never have gotten a social security number, I was never a tax payer, correct? Based on the evidence that I have given you today. And, of course, you’re going to want to do more research on it and prove it to yourself on your own time and I challenge you to do that. Okay, but had I never gotten a social security number, I would not be a tax payer, I would not be engaged in interstate commercial regulation by contract with the USDC jurisdiction, and whatever I earned I would be able to keep. Is that correct? I wouldn’t be taxed on it, now would I? As a matter of fact, I started teaching that the Internal Revenue Service was just nothing but a bunch of lying, stealing, cheating crooks in 1979 because they’ve done this by con job and a fraud -- they tricked us out of our lawful money of account, our gold and silver coin. They replaced it with a worthless counterfeit money called federal reserve notes which had been devastating to, you know, our country. A lot of people think the federal reserve notes are okay because you can buy something with it. Well, the fact is you cannot buy anything with it. All’s you can do is acquire the use of something with federal reserve notes. Buying something means that you acquire ownership. To acquire ownership of something means that you have to pay with a valuable consideration. A valuable consideration in this country lawfully is gold and silver coin per article I, section 10 of the Constitution of the United States of America. However, they stole our gold and silver coin by bringing in a worthless counterfeit paper currency and then they conned us into using the counterfeit paper currency long-term for our purchases. Which means that every time we buy anything with those counterfeit paper currencies, it relinquishes ownership to what is called Federal Reserve Allimossory (?) Corporate Estate Trust. That’s why the courts are now governing under the policy of public opinion. Public opinion governing means that if they can find 12 people dumb enough to find you guilty and put you in jail for doing something that they don’t want to do themselves, that would be the law that they will enforce. Okay. Now, that doesn’t necessarily that it is compatible with the supreme law of the land, the Constitution, but it puts the burden upon you to carry a constitutional challenge to the Supreme Court of the United States. And how many people can afford to carry those challenges to the Supreme Court? Not very many, right? So they win by bullying us. By being nothing but a big bully. Okay, so I don’t have a social security number so, therefore, I’m not a taxpayer. Correct? So, therefore, I am foreign to the USDC jurisdiction, correct? Now, can I sign that form and saying under the penalties of perjury, I’m not a United States citizen? I can do that, now, can’t I? Okay, and I can go open up a foreign bank account, now, can’t I? Right? And have a foreign W-8 exempt account. Okay.
Okay. Wonderful. Well, can you do that with a trust? Can two people who are sovereigns, in other words free people who have no social security numbers, can they organize a trust organization that is foreign to the United States DC jurisdiction and swear under the penalties of perjury that it’s foreign and open up a foreign account with no social security number. Can they do that? Yes they can. Now, are you starting to see the benefits of trusts? You see, if we can go ahead and organize trusts in a foreign jurisdiction by two people who are foreign the USDC jurisdiction, then we have... in fact, established a foreign entity, a foreign organization to get the benefits of a foreigner that United States citizen slaves cannot receive. Correct? Okay. So what we’re going to do is learn how to use trusts as opposed to these other organizations that compel us to report to the state, pay to the state. Isn’t that what all these do? They compel us to report to the state and pay to the state, correct? Now, why can’t we reorganize our business and our financial activities in free enterprise? And do it as a foreigner, earn all we want, bank the money, and spend it out. See, we can if we do it through organizations that are not slaves of the state.
Okay. So here’s some... here’s the definition of common law, the law that I’m talking about here, that gives us maximum freedom... Common law -- that system of law or form of the science of jurisprudence which has prevailed in England and the United States of America in contradistinction to other great systems such as the Roman or the Civil Law. And, by the way, the Roman of the Civil Law is comparable to the statutory law that is going on in America today. But our founding fathers created our country as a constitutional republican form of government and gave us the common law with which to function. The common law is reason dealing by the light of experience with human affairs. One of its merits is that it has the capacity to reach the ends of justice by the shortest path. Now, is the statutory method of law reaching the ends of justice by the shortest path? If you want justice, what do you have to do in this system? In the United States DC... you have to take it all the way to the Supreme Court of the United States. They are consistently breaking the law in the lower levels of government to challenge a particular constitutional assertion to try to bully the people into the ceasing of the assertion of their constitutional guarantees and protections. And it leaves a burden upon us to finance taking that challenge all the way to the Supreme Court of the United States of America. One of the merits, anther merit, is that as those principles, uses, and rules of action applicable to the government and security persons and are property which do not rest for the authority upon any express and positive declaration of the will of the legislature. Do you want me to repeat that? Let’s just go over that once again. I’m going to read it slowly. One of the merits is that it has the capacity to reach the ends of justice by the shortest path is those principles, usages, and rules of action applicable to the government and security of persons in the property which do not rest for their authority upon any express and positive declaration of the will of the legislature. In other words, it’s totally contrary to statutory rules and regulations. The common law is in contradistinction to the statutory law. It’s totally the opposite. So, when you joined social security, what did you do? What did you do? You gave up your birth right to have due process of law by the course of the common law and you brought yourself under statutory rules and regulations that govern the privileges that you made yourself eligible for. That’s what you did. See?
Okay, so, now one of the ways that we can start restructuring our life is to start utilizing trusts in a way that gives stability to the transition back out of the statutory legislative process of capitalism that they have created and back in the freedom of free enterprise. If I sound just a little bit negative about this system right here, I think I have a right to be. This system is destroying people’s lives all over the country. So, we want to talk about trusts and just what they are because trusts are the simplest form of a business organization that you can engage in. It’s much more simple than corporations and partnerships and estates and... I should say, trusts. And... correction. Let me back up. It’s substantially more simple than corporations, partnerships, limited liability companies, DBAs, etc. Okay.
Trusts. A right of property, real or personal, held by one party for the benefit of another. Okay, now, how many here have been into a trust relationship at one time in your life? Raise your hand, if you have. Okay. How many years you says to Mom, here’s my bike, would you do me a favor and hold on to that until I get back? I’ll be back from summer camp in a couple of weeks. Would you save it for me until I get back? Was that a trust? Were you trusting her to hold onto your bike? Okay, now how many here now have been into a trust relationship at one time in your life or not? Okay, and how many here have registered a car with a state at one time in your life or not? Okay, again, how many have been into a trust at one time in your life? Okay. Well, when you registered the car with the state, you made them the trustee of it so, yes, you’ve been into a trust so it’s really easy to go into a trust relationship, right? So it’s not difficult, it’s not esoteric, it’s not complex anymore. It’s just simply... If you go into a trust relationship, that means that you have placed the property that you think you own or own into the care, custody, control of someone else to take care of it for you until you reclaim it. That’s all it means. So it’s really simple.
Okay. It is in the technical sense, it is a right, enforceable solely and equity to the beneficial enjoyment of property of which the legal title is in another. So if you put property into a trust, you have the right then to receive the beneficial enjoyment that comes off of that property which is called profits.
Okay, we’re going to take a break now and turn the tape over. It’ll just be a few minutes. If you want to get up and walk around, great. Thank you. Be back in a minute.
END OF SIDE A
Trust implies two estates or interests: one equitable and one legal. One person as trustee holding the legal title, while another is the beneficiary who has a beneficial interest. Also, a legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument. The trustee holds the fiduciary responsibility to manage the trust, corporate assets and the income for the economic benefit of all the beneficiaries. So, trust is simply when you put property into the care custody control of another. You have a right to receive a beneficial interest off of that property, and the trustee has the obligation to manage the property to maximize its best use for the trust and to benefit you in the best possible way. The trust then has the legal title which is called the ownership and control over the property and the beneficial interest holder, the one that put the property into it, has the right to receive the distribution of revenues from the property. The trustee holds a fiduciary responsibility to manage the trust, corporate assets and the income for the economic benefit of all the beneficiaries. A confidence reposed in one person who is termed trustee for the benefit of another who is called the beneficiary respecting property which is held by the trustee for the benefit of the beneficiary.
By the way, these are all legal definitions. They’re not anybody’s personal opinion. Any arrangement whereby property is transferred with intention that it be administered by the trustee for another’s benefit. A fiduciary relationship in which one person is the holder of title to the property subject to an equitable obligation to keep or use the property for the benefit of another.
Now, are you kind of getting the idea that, you know, it would be pretty hard for a government to regulate these? It’s a natural right for us to enter into personal contractual relationships. That’s guaranteed by article I, section X of the Constitution of the United States of America, the government does not have the right to interfere in our obligations of contracts. What is a trust? To boil it down, simply it’s a contract. That means the government is now barred legally from interfering in our contractual obligations. They cannot tell us to engage in them or not to engage in them. They cannot tell us that we have to register them with the government.
Now, if there’s no law that requires anyone to have a social security number, do you also suspect that there’s possibly no law that requires anyone to have an employer’s identification number? Is that possible? Well, that as a matter of fact is the truth. There’s no law that requires you to have an employer’s identification number. You don’t have to have one. What does an employer’s identification number do when you go to apply for one? It identifies you as an employer produciary, makes you eligible for benefits thereby required to deduct deductions from your employee’s pay and transmit that to the government for benefits. Okay, if you do not have an employer’s tax identification number, then you do not have the right to be a produciary; therefore, they do not have the right to deduct money from your worker’s pay and you don’t have the right to submit it to the government. You are barred from doing that legally.
Okay. A trust can be created for any purpose which is not illegal and which is not against public policy, as Collins vs. Lines, Inc., 181 VA 230 2424 S.E. Second, 572 and 579. Essential elements of a trust are designated beneficiaries and a trustee. Funds sufficiently identified to enable title to pass to a trustee and actual delivery to the trustee with intention of passing title. As any association, organization of persons or corporations, having the intention and power or the tendency to create a monopoly, control production, interfere with the free course of trade or transportation or to fix or regulate the supply and price of commodities. In the history of economic development, the trust was originally devised by which several corporations engaged in the same general line of business might combine for the mutual advantage and the direction of eliminating destructive competition, controlling the output of their commodity, and regulating and maintaining its price. At the same time, preserving their separate individual existence and without any consolidation or merger. The device was the erection of a central committee or board composed perhaps of the presidents or general managers of the different corporations and the transfer to them of a majority of the stock in each of the corporations to be held in trust for the several stockholders still assigning their holdings. These stockholders receive and return trust certificates showing that they were entitled to receive the dividends on their assigned stock, though the voting power of it had passed to the trustees. The last feature enabled the trustees or committee to elect all of the directors of the corporations and through them the officers thereby to exercise an absolutely controlling influence over the policy and operations of each constituent competent to the ends and with the purpose above mentioned. Now, is that a powerful business instrument or not? They can absolutely control business competition through these types of trust organizations. Though the trust, in this sense, is now seldom if ever resorted to as a form of corporate organization having given place to the holding corporation and other devices, the word became current and statute laws as well as popular speech to designate almost any form of combination of a monopolistic character or tendency. In a looser sense, the term is applied to any combination of establishments in the same line of business for securing the same ends by holding the individual interests of each subservient to a common authority with the common interest of all. A trust, as the term is used in the restatement which, when not qualified by the word charitable, resulting or constructive, is a fiduciary relationship with respect to property subjecting the person by whom the title to the property is held to equities, duties to deal with the property for the benefit of another person which arises as a result of the manifestation of an intention to create it.
Okay. So now we have the definition of trust. Now I know that’s kind of a laborious thing to go through, but anyway, that’s how they define. Now we want to look at the specific applications for helping us to engage in free enterprise activities. And that’s what we’re really all about here. We want to eliminate excessive taxation and excessive regulation, and we want to start enjoying life. It’s called get a life. Now, one of the difficulties that I had with the system was that I found myself with a business whereby I was working 30-35% of my time keeping books and records for the government, reporting to the government, deducting monies and sending them to the government. That was irritating and the reason that taxation was never a major concern to me is that, in or out of the system, I’ve never paid in much of any money as it relates to taxation. So getting out of the system had nothing to do with saving money. That wasn’t the point of it. The point of it was to be honest in my dealings with other people. How many here believe that communism is a good way to go about your daily lives? The practice of communism in America is the proper way of conducting your affairs? Anybody here for communism? Anybody here ever been a card-carrying communist? You have? You have, too? Okay, how many here have had a social security number one time in your life? Just one time in your life? At one time, anybody here? Everybody here? Okay, how many here have been a card-carrying communist of the USDC communist party? (laughter) Just stop and think about this. Communism is everybody receives according to their need and pays according to their ability. What’s the definition of social security? Everybody receives according to their need and pays according to their ability. Okay. Another way of looking at communism is, is that it’s a form of... it’s a method to equalize people to the lowest common denominator. What they do... well, let me put this in the proper perspective. In California, they call the major communistic organization the Board of Equalization. The Board of Equalization has the job of equalizing everybody through taxation. Now, when you equalize everybody... let’s say we were to equalize everybody in this room, what would necessarily have to happen? We would all have to be equalized down to the lowest common denominator. Why? Because we can’t make anybody better than what they are, now, can we? God created everybody to be a certain way and we can’t make anybody better than what they are. So, therefore, to equalize everybody in this room, you would have to equalize everybody to the lowest common denominator, correct? Now what would that... What would be the result of that equalization process? We would all be the loser, because the people who are the extraordinary producers would have to be equalized down to the lower level producers, now, wouldn’t they? Which means we’d have less production,, therefore, we’d have less wealth for everybody to enjoy. Everybody in this country has got different types of talents that allow them to perform in specific ways that benefit everybody as a whole. And what we want to do is we want to have a system that releases everybody’s energy such that everybody can produce at their highest potential and thereby benefit everybody in society.
Okay, now... Does communism do that? Okay. How many here have funded communism in your lifetime? The second plank of the Communist Manifesto is the heavy progressive income tax. Once again, second plank of the Communist Manifesto -- heavy progressive income tax. How many have paid income tax at one time or another in your life? Okay, so how many have funded communism at one time in your life? Yeah. Okay. That... You all know when you became an enemy of the United States government subject to liens, levies, seizures, and confiscation of property, sale of property, and of course, taxation on pay... do you all know when you became subject to those penalties? It was when you got a social security number, right? Okay, in other words, in when you became a card-carrying communist of the United States District of Columbia jurisdiction, correct? Okay, think about that because that’s a serious animal.
What we want to do is we want to change out of that into freedom in free enterprise. Well, in the democracy which is under the US District of Columbia jurisdiction, that is in total opposition to the republican form of government that’s under the common law. This is statutory law. Well, if we simply reorganize our activities, such as to enjoy freedom in free enterprise, what we can do is we can create a foreign trust. I’ll tell you what, let’s take it a step further than that. You didn’t have to create a foreign trust. We’ll have someone else do that for you. We’ll go to a foreign jurisdiction, we’ll use a foreign trustee, and we’ll use a foreign grantor, and we’ll capitalize a foreign trust with federal reserve notes and dollars. And then we’ll come over here and appoint you to be the treasurer or accountant of that foreign trust. Now, let’s see... what benefit is that to me? To be a treasurer or accountant over a foreign trust? Well, this certificate of foreign status from the Internal Revenue Service says right on it that I’m not a United States citizen or a resident or I am filing for a foreign corporation, partnership, estate, or trust. So if you were a card-carrying communist of the USDC party with a social security number, would you be able to take this foreign trust created in a foreign jurisdiction with a foreign trustee and a foreign grantor into a U.S. bank and give them this W-8 foreign status form and no tax ID number and open up a foreign account in your local federal reserve bank -- would you be able to do that? That’s one of the benefits of a foreign trust. You can take them into a bank right across the street, you can open up a foreign W-8 foreign status account, no tax identification number, no social security number, no filing, no paying, no reporting.
Now, is this trust foreign to the DC jurisdiction? Yes, it is foreign. Okay. Is it engaged in trade and commerce with the USDC jurisdiction? No. Why? It has no social security number, no tax identification number, no employer’s identification number. So it’s not in interstate commercial regulation. Okay. So, it’s not under their jurisdictional authority; therefore, it can go out and it can engage in free enterprise activities and it can earn revenues and bank those revenues and pay out those revenues -- no filing, no paying, no reporting. In other words, you don’t have to keep books and records for the government any more. You don’t have to pay any more income tax. You don’t have to pay any more social security tax. Does that sound interesting? Is that something you might be interested in? Would that help you as a transitional tool? Would that be valuable for you to be able to go into free enterprise activities, including multi-level? So you start earning all your money tax-free and gradually stop earning money in the system so you’re no longer subject to statutory law. That’d be a valuable tool for you to be able to do that, correct? So that’s one of the reasons why we use trusts, is to use them and as a interface, to help us learn how to earn revenues outside the system so we can gradually close down all of our activities inside the system. Now, I’m not just talking out of my hat. I sold down... I sold or closed down two businesses and I sold everything I had and I transformed out of trade and commerce business activities tied to the system into free enterprise in the early 80s. I sold out everything. I bought everything back that I wanted to and, you know, as owned property. I went into free enterprise businesses. I never filed another return. I haven’t filed a return since 1978. Haven’t paid any income tax or social security tax since 1978. Reorganized all my business affairs outside the system so I can earn a living without being subject to the income tax. Okay, now... why I was able to do that? Because I’m not eligible for the benefits any more; therefore, I do not have to pay for the benefits. Okay? So you want to remember that rule of law: You owe your servitude to whoever you receive your benefits from. So if you stop being eligible for the benefits from the system, you don’t owe them the penalty for the insurance benefits any longer. And that’s all it is, it’s an insurance policy.
Okay. So this is one of the reasons that we would utilize trust organizations. Another reason we’d utilize trust organizations we’re aware of the fact that the government likes to steal property. Correct? To compel obedience. They’ll manufacture levies, they’ll lien, they’ll levy and they’ll seize, and they’ll sell people’s property without any due process of law in the courts. And, believe me, if you ever get in that situation and you think you’re going to get justice, you’re not going to get it. There’s no justice in the system whatsoever. They’ll take those properties without any court hearings of any kind. And the reason for that is they own those properties. You don’t own them; they do. What they’re doing is they’re punishing you for being a disobedient slave. So, it has become popular in America not to own properties any more because they cannot steal something from you that is not yours, that they’re trying to lien against you. So, another tool that we utilize a foreign trust for, foreign trust, is to go into the system with a foreign trust and buy properties. Okay, now, here you are over here... by the way, I’m terrible with drawing characters. Here you are over here. You’re this funny looking thing I’ve drawn on this board, okay? Now, you have a foreign trust and you capitalize it in a foreign jurisdiction and then you come... this is the U.S. here... this is foreign... Okay, you come into the U.S. and you buy property utilizing this foreign trust here and the property goes into this trust. Now, if you don’t file or pay the income taxes, can they seize that property in this trust? No, they cannot. You do not own that property. Okay?
Now, you don’t... as a United States citizen, you don’t want to exchange property in that foreign trust because they’re going to execute at 30% withholding against you at that time. You’re not going to be able to afford that. Okay, so, another way to utilize trusts would be to create a domestic trust. And you would exchange property into it for certificates of beneficial interest. Now, would you still own that property after you put it into a domestic trust? No, you wouldn’t. You would not own that property any more; you’d own the beneficial interest off of the property. Now, can the Internal Revenue Service lien, levy, and seize that property for tax liability that you have? Yes, they can. Because you cannot utilize a domestic trust in this kind of a situation to exchange the property into to secure it from their liens and levies. They’ll call that a DBA nominee sham and they’ll take it. So, you don’t do that if you’re a tax protester. You only do that if you’re going to be an obedient slave in the system. In other words, file whatever income you do have and pay whatever taxes you do owe. And, by the way, there’s no requirement of law to file or to pay the taxes, but we know the government’s going to steal from you if you don’t. Okay, so you’d only do this if you’re an obedient slave, if you’re filing and paying.
Okay, now if you’re a disobedient slave and you’re not in the situation where you can use a foreign trust to buy properties with so you can enjoy those properties what you would do is you would have an innocent third party purchase of the property. So what you’d do is you’d say, okay, fine, I have this property and you offer to sell to a third party that’s innocent... we’ll call it an innocent person. The innocent person would pay you a valuable consideration for the property and own it. Now, can they... if you’re a disobedient slave and you sold that property to this innocent third party before the property was liened and you had a tax liability, could they seize that property from the innocent third party purchaser for your tax liability? They couldn’t do that. They couldn’t do that. You see? So this also could be a trust. So there’s another reason why a trust could be valuable, because you could use it as an innocent third party purchase to buy the property and secure it from liens, levies, and seizures, but you cannot exchange it in unless you’re an obedient slave.
So those are several little techniques that you might find that trusts are very valuable for you to utilize.
(question from audience) Could that innocent third party be my innocent little daughter?
Your daughter cannot be the innocent third party because she’s a relative; that’s too close to you. They’re going to call that an alter-ego and they’re going to go ahead and lien and seize and sell the property. It cannot be a relative. And, by the way, when you’re using an innocent third party purchase strategy to secure properties from liens, levies, and seizures, you don’t want to use a single individual. You may not want to use individuals at all. You have to be very careful. We had a fellow that put properties into the name of a friend who died. And to make a long story short, the friend who he gave it to to hold for him who died, his heirs wound up with the half of the property. He lost half of his estate. Okay, recently an elderly fellow gave as a gift his property to a close relative, with the idea that the close relative is supposed to gift it back to him at a later date. Well, that close relative who received the property as a gift is now attempting to evict him from that property. Okay? From the property that he gave to him. Okay, so be careful who you’re dealing with and make sure you’re in a situation where you can, you know, protect, at least for the back door, you know, that which you have a right to.
There are some horror stories, so what I do is I try to help people in a way that it protects them so that they can feel secure with those things. And, of course, there’s situations where you can only go so far. Now what we’re going to do is talk about a complex business organization. This is allowed for in the Internal Revenue Service code. Okay, let’s take for example, let’s say that we have a party that has a banking account in Austria, as an example. Funds in the bank. And let’s take that Austrian bank account and let’s capitalize a foreign trust. Now we know we can do that; this is really easy to set up trust organizations because all’s we have to do is have one person who puts the capital into the trust and another person to be the trustee. Correct? So this trust is going to put the capital in and this trust is going to give up the certificates of beneficial interest to the Austria bank account. That means that the Austria bank account is the recipient of the benefits earned by this foreign trust. Is that understandable? Just like, you know, in a corporation when you give up shares in a corporation, you earn so much profits and you have to pay out so much in dividends to each of the shareholders of the corporation. They’re receiving payment on their certificates of beneficial interest. That’s all a share is in a corporation.
Okay, so, this foreign trust capitalizes another foreign trust in the democracy. And the reason it’s doing that is it wants to engage in trade and commerce big time in the United States of America and it does not want to have any difficulties from the governmental authorities. It doesn’t want to fight any battles but it doesn’t want to pay any tax, or as little as possible. So, for having put in financial resources into this foreign trust, its certificates of beneficial interest are going to be held over here in this foreign trust. Then this foreign trust is going to capitalize a domestic trust. And incidentally, this foreign trust right here would apply for and obtain a tax identification number, in this particular circumstance. I would not recommend that for free enterprise activities, but for engagement in trade and commerce for this particular example, this one would get a tax ID number. This domestic trust would also apply for and receive a tax identification number. Then, a general partner would be named and go into a partnership relationship with this domestic trust. So this unit as a whole would be called a partnership. This domestic trust would owe its profits and gains to this foreign trust because this foreign trust capitalized this domestic trust. And, this domestic trust would maintain 95% ownership in this partnership and give up 5% of the ownership of the partnership to the general partner. What that means is when this partnership goes out and conducts trade and commerce with outside entities, that the monies flowing into this partnership would first be used, of course, to pay expenses and then the profits and gains would be divided up by giving the general partner the 5% and the general... rather, the domestic partner the 95%. Okay, so if you’re the general partner, now you’re going to be receiving 5%... Would that be less than what you’re receiving now? Of the profits? As a general partner now in an organization... say you’re in the DBA, you’re a sole proprietor, how much of the profits are you receiving now? Are you receiving 100% of the profits? Yes, you are. If you’re in business for yourself right now, after you pay expenses, you’re receiving 100% of the profits, even if it’s only one buck, you get 100%, right?
Okay, now, if you reorganize your affairs so that you only get 5%, is that going to reduce your income tax, and social security tax liability? Is it? Substantially so now, isn’t it. Okay. So you would be left with only having to report and pay on 5%; whereas, the domestic trust would report on 95%. And how much would it have to pay in tax? We’d file a return and would pay no tax. Why? The 95% has to be given to this foreign trust that capitalized the domestic trust. Once again, this is provided for in the Internal Revenue Code. So the 95% winds up here. This trust has to file and pay. Correction. It has to file on the receipt of this 95% and it would pay zero. Why? Because it’s owned by this off-shore foreign trust and its profits have to flow there, so the 95% winds up over here in a foreign country. Now this trust has no tax identification number. It’s not required to file or to pay. So there’s no filing and no paying. Now it can freely distribute this 95% down into this bank account in Austria. And, the grantor in this foreign country can create a foreign trust. Maybe one’s already been created. And the grantor can designate you or anyone it chooses, that is a United States citizen, to be the beneficiary of that foreign trust and distribute the profits and gains... Correction. Distribute any amount of funds it wishes at 95% to this United States citizen tax-free under the IRS 69-70 ruling.
Or we can have another scenario whereby a foreign trust is capitalized by the banking account in Austria and you are appointed as the treasurer or accountant and you simply manage those funds for the benefit of the beneficiary. Would that be of benefit to you? What this would do is give you a foreign account in a U.S. bank, W-8 exempt form -- foreign status form, and you could utilize this in free enterprise and you could use it to conduct all kinds of free enterprise operations, earn the funds in this free enterprise foreign trust, and you can spend the funds out freely. No filing, no paying, no reporting. Now, is that too simple? Does it sound like it’s too simple? Like, you know, can it really be that easy to change our lives and get out of the system? Is it that easy? Is it that possible? Does anybody feel like that’s impossible to do that? Any comments? Is it possible?
(audience comment -- inaudible)
I’m sorry Larry, I didn’t hear you.
(audience comment -- inaudible)
You can be trustee on this trust, you can be a treasurer or accountant, you could be a secretary. The important thing here is that you can use this trust now to buy whatever you want the trust to own. But then as the officer of the trust, you would have the right and the power to utilize that property, now wouldn’t you? How many here own a house now? Anybody here own a house? Raise your hand if you own a house. Is that one the government tells you everything you can and cannot do with? Okay. Anybody here own a car? Raise your hand if you own a car. Okay, so nobody owns a.... So, the point is, if you don’t own a house or a car now, this system of utilizing properties owned by a foreign trust whereby you have the right to use that property should not bother you, now should it? It should not be a problem to you. Okay.
Okay, this is a letter from a lawyer who is very knowledgeable... oh, by the way, I work... I approved the funding to develop this program for a foreign company in a foreign jurisdiction, this system right here. I approved the funding of about $250,000 to develop this with a team of experts, and I worked with that group of experts. And this is the program that we came up with that was by IRS rules and regulations to be able to avoid the tax. Now, why do you suppose they developed systems like this to avoid tax? Because the people who write the Internal Revenue Codes do not want to pay the tax, right? Okay, how many here feel like you should be patriotic about paying taxes, that it’s your patriotic duty to pay taxes? Well the Supreme Court has ruled that no one has any patriotic duty to pay more than what the law demands. Now, does the law demand that you pay income taxes? Does the law demand that you pay social security taxes? Only if you’re eligible for the welfare benefits from the USDC jurisdiction. That’s the only time. In other words, there’s no requirement to be eligible for the benefits; therefore, there’s no requirement to pay those taxes. There’s never been a law passed that required you to file an income tax return with the Internal Revenue Service. Has anybody ever seen the law? I used to go down and challenge Internal Revenue Service agents, down at the IRS, on a regular basis I used to investigate them with my investigation kit. It got to the point to when I went down there, everybody would stop and just look at me. When I was there with a client, they would find out who I was and they would say this audit is terminated. They would not even talk to either one of us. They would terminate the audit and they would never bother that guy again. Just that fast. That’d shut them down. And the reason for that is we went in with investigation kits and we had all the questions to ask them about the law requiring to file and pay these taxes and then we had... I always had a witness there to verify that they refused to show us where there was any law that required us to file and to pay taxes or to keep books and records for them, and then I would serve them with that notice before we left and demand that they place it in the file. That would take away their capacity to be able to charge the willful failing to file the income tax return.
Okay, now this system right here is supported by an attorney at law. I’m not going to give you his name in this presentation, but it is in this booklet, “Trust, a Lawful Foundation in Use” by Trust Concepts Company. It’s available for $6.00. Facts: There are in existence three trust organizations called for simplicity sake AA, BB, and CC. AA is domiciled to the United States as is its trustee. BB is domiciled outside the United States. AA is required by its indenture to distribute all of its net income currently to its beneficiaries. BB is likewise required to so distribute. CC is allowed by the terms of its indenture to distribute or accumulate its net income. So we go AA, BB, CC. Yes, ok, thank you. The trust certificate units of AA are held by BB. The trust certificate units of BB are held by CC. The trust certificate units of CC are held by either a foreign or a United States persons. AA, BB, and CC are not associations taxable as corporations; they’re not deemed to be grantor trusts under 671-679 of the Internal Revenue Code. That’s why we save the foreign grantor trust then over here. Reference to all sections of the Internal Revenue Code of 1954 Amended. Since these organizations are trusts, they are then also considered to be individuals. In the event of Section 60-12 which discusses duties of individuals to file returns and gives exceptions. 60-12A wants these states if the exception under A does not apply to an estate or a trust. Since 60-12A, 1A is specifically addressed to individuals. That term must also include trusts. Income tax and return consequences. AA would be required to file a form 1041 or form 1041S. However, since it distributes its income currently, it is allowed a deduction under 651 for that distribution and would, therefore, owe and pay no tax. So this one files; pays no tax. BB is considered a non-resident alien. You must look to sections 861 and 897 to find the income tax and return consequences. Under 871, B1, a non-resident alien individual is taxed the same as a resident, on its taxable income only if it is engaged in a trade or business within the United States during the taxable year and such income is effectively connected with the conduct of a trade or business within the U.S.
8-64-C3 defines effectively connected income as all income, gain or loss, from sources within the United States. This makes the income received by BB as distributions from AA to be treated as effectively connected income. 875-2 provides that a non-resident alien individual, which is a beneficiary of the trust, which is engaged in any trade or business within the United States shall be treated as being engaged in such trade or business within the United States. Since AA is engaged in trade or business within the United States, BB is treated as engaged in a trade or business within the United States. Therefore, since BB meets both the tests of 871-B1, for example, treated as engaged in business in the United States and such income treated as effectively connected income, it files and pays taxes as though it were a resident. Therefore, it files a form 10-40NR; however, since it is allowed the same deductions as a resident under 651-A, deduct its distributions payable to CC and, therefore, owes and pays no tax. Okay, so that shows you here by the Internal Revenue Code, that this one would file and pay no tax; this one files and pays no tax; it distributes to CC. And, of course, CC is a non-resident alien with no tax identification number. It’s not required to file or to pay the income taxes.
Okay. So, trusts can give you an opportunity to reorganize your life so that #1) you can have income outside the system. Therefore, you can accumulate wealth and with the accumulated wealth, you’re going to have the capacity to save and pay for things that you need in full. No more borrowing. No more being in debt. By the way, how many here are in debt? Anybody here in debt? The Constitutional republican form of government is a wealth accumulation society. The democracy is a debt accumulation society. The reason everybody’s in debt in the democracy is because of all of the payment programs you’re involved in to have someone else take care of you if something happens. If you eliminate all those programs and start saving up those funds, transfer over into free enterprise activities so you earn these monies tax-free, then you can start accumulating the wealth to pay for everything in full and you’ll be out of debt. The #1 key to freedom is to release yourself from the bondages of debt. And with that I’m going to end this trust seminar and I just want you to know that I was able to reorganize my life and become free. If I can do it, so can you. And I want you to join me.
God bless you. Thanks for coming.