The IRS Occasionally Falls for a Crackpot Theory That Says Everyone Born in the U.S. Is Entitled to $630,000

Of the many implausible theories in the tax resister netherworld, it's hard to beat the "1099-OID / redemption" theories for pure crazy.  Unless, of course, you think it's perfectly sensible to believe that the government has a big secret pot of cash with your name on it, and you can tap it if you just fill out the right forms the right way.

The theory is, in part, that for every citizen's birth certificate issued in the U.S. since the 1936 Social Security Act, the government deposits $630,000 in a hidden bank account linked to the newborn American and administered by a Jewish cabal. Redemptionists assert that by completing certain legal maneuvers and filing a series of government forms, the actual person may entitle themselves to the $630,000 held in the name of the doppelganger persona created for them at their birth, and may then access these government funds using "sight drafts". The government views these sight drafts as "rubber checks" and the entire scheme as fraudulent. The federal government has convicted the practitioners of fraud and conspiracy. Other important documents in this theory are the security agreement, power of attorney, copyright notice, hold-harmless agreement, Form UCC-3, notice of security agreement, birth certificate bond, Form 56 (notice concerning fiduciary relationship), Form W-8BEN (serving notice to the U.S. Secretary of the Treasury of the correct status of the issuer of the bond and countering any presumption that the issuer might be considered to be a fictional entity), declaration of status, Form 1040-V, Form 1099-OID, and the Notice of International Commercial Claim in Admiralty Administrative Remedy.

The indictment also alleges that the defendants held seminars in Florida and Tennessee in which they recruited potential clients. The indictment and other publicly filed documents allege that clients paid $750 to have defendants prepare a tax return reporting this type of “OID” income, and that clients agreed to share 10 percent of their tax refund with defendants. 

 

Previously, in a separate case in Fayetteville, Ark., a client of the scheme, Philip Butcher, formerly of Rogers, Ark., was charged with filing false claims for tax refunds. According to the indictment in that case, Butcher filed two tax returns reporting his loans as OID income and tax withholding, claiming tax refunds totalling $1,456,696. The Internal Revenue Service (IRS) paid Butcher $672,781.