Let Not Thy Left Hand

by | Aug 12, 1999 | LAW

The differences between the actions allowed to private parties on one hand and to the Postal Service and Internal Revenue Service on the other, are examples of a reversal of the proper relationship between the government and the governed.

True or false? Under the anti-trust laws of the United States and the various state governments, no corporation may have a monopoly over the production of goods or services.

False. The United States Postal Service, for example, is in a monopoly position with respect to the delivery of letters. And its monopoly is protected with criminal sanctions: generally, the penalty for delivering letters in competition with the Postal Service is a $50.00 fine for each letter; and for establishing a “private express”, $500.00 or six months in jail.

The Post Office’s legally enforced monopoly has existed since colonial times. It is justified by an alleged necessity to ensure that the Postal Service is able “to fulfill its mandate of providing uniform rates and service to patrons in all areas, including those that are remote or less populated.” Without the monopoly protection, it is argued, competitors would undercut the Postal Service on profitable routes and leave the Postal Service with high-cost routes and insufficient means to serve them. Egalitarianism over freedom.

Of course, the Post Office exploits its monopoly position. For example, although the government is prosecuting Microsoft for “‘leveraging’ its dominance in one field in order to compete in another”, the United States Postal Service is seeking to expand into fields served by private companies; i.e., doing the very same thing.1 Thus, the same criminal law used to persecute private companies is used to protect the government in doing the same activity.

True or false? In the United States, the law cannot be used unjustly to effect a deprivation of property. An individual claiming, for example, that another has breached a contract can take no action without the intervention of an independent entity (a court). The creditor must initiate court action. In the court proceedings, he bears the burden of proving both the existence and the amount of the debt. Even if the property must be seized temporarily before debtor has a chance to squander or destroy it, facts justifying the seizure must be established in a sworn statement, the debtor must have an opportunity to be heard before or promptly after the seizure, and a judge must make the decision to seize the property. A creditor cannot take the property and force the debtor to show why it should be returned.

Those who believe in an affirmative answer to this question have the support of the United States Supreme Court. In a series of decisions beginning in 1969, the Court declared that the protections described above are required by Constitution.

But, when the creditor is the federal government, the answer is “false.” If the Internal Revenue Service believes that an individual owes extra taxes and that the “assessment or collection of a deficiency . . . will be jeopardized by delay . . . “, it summarily assesses the taxes. This is called a “jeopardy assessment.” If, in addition, the IRS finds that the taxpayer has “designs” that may jeopardize collection2, it may declare the tax immediately due and payable, prematurely close the taxpayer’s year, and prepare the tax return for the taxpayer. The IRS computes the tax by considering all the taxpayer’s known assets, liabilities, income and expenses. This is known as the “termination assessment.” Under certain circumstances3, upon a finding that the collection of . . . tax is in jeopardy,” the IRS may immediately, without notice, and “by any means” seize a taxpayer’s property; this is known as a “jeopardy levy.”4

None of these actions requires judicial intervention. In case of a dispute, it is the taxpayer who bears the burden of initiating the legal action. Although the government must show that there is a deficiency, the burden then shifts to the taxpayer to show the amount owed. And even before the taxpayer can take his case to court, he must satisfy IRS administrative procedures.5

The differences between the actions allowed to private parties on one hand and to the Postal Service and Internal Revenue Service on the other, are examples of a reversal of the proper relationship between the government and the governed. The purpose of the former is to protect the latter’s rights. It is the individual who should be given the widest latitude in the manner in which he can run his business and the government which should be restricted. The government should neither run a corporation nor protect it from competitors; nor should it intervene to favor one business concern over another. The collection of just debts should be as efficient as possible; governmental taking of property from its citizens should be difficult—actually impossible.

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References:
1. The Intellectual Activist, Volume 12, Issue 5 (May 1998).

  1. The “design” is demonstrated by taking actions such as preparing “quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his property therein, or to do any other act (including in the case of a corporation distributing all or a part of its assets in liquidation or otherwise) tending to prejudice or to render wholly or partially ineffectual proceedings to collect the income tax for the current or the immediately preceding taxable year . . .” 26 U.S.C. § 685 1.
  2. Circumstances that can trigger these jeopardy procedures include:
    Possession of large amounts of cash,
    Engaging in an illegal activity,
    Using aliases,
    Concealing assets,
    Transferring or attempting to transfer property to others,
    Liquidating assets and/or manifesting other behavior which indicates a likelihood of flight (U-Haul at house is sufficient).
  3. Another example worthy of mention is often designated the “unidentified cash rule”. If the possessor of cash or cash equivalent (bearer instruments, foreign currency, coins, precious metals, jewelry, precious stones, postage stamps, etc.) in excess of $10,000 does not claim it as his, and if no one steps forward to claim the cash after the individual states the cash belongs to another person whose identity the IRS “cannot readily ascertain,” the IRS may:
    Create a new and fictitious taxpayer, the possessor of the cash, Create a statutory presumption that this fictitious taxpayer has a tax deficiency equal to the highest individual tax rate, and Assess the tax in jeopardy, seizing the cash.
  4. Once in a while, the press discovers some horror example of the use of these powers and labels it an “abuse.” This is a misnomer. The horror examples consist of the use of the powers in the way they are designed. As long as they exist, they will be so used. Lord Acton was right: “Power corrupts . . .”

Copyright © The Association for Objective Law. All rights reserved. Republished in Capitalism Magazine by permission of TAFOL.

The Association for Objective Law is a non-profit corporation whose purpose is to advance Objectivism, the philosophy of Ayn Rand, as the basis of a proper legal system.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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