483: Can You Avoid Income Taxes? with Kelly Alexander

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It's my pleasure to welcome Kelly Alexander to the show. She has very unique idea. I thought I've heard everything over the years. I've interviewed many libertarian thinkers and people who claim to have a way to pay zero taxes. Well, this one I have not heard before. So let's talk about it today. Kelly is the founder of American Tax Remedy. She is not a cpa, not, I guess, not a tax expert, just a layperson who came across this idea and researched it and chased it down and, well, she'll tell you more about it today. Kelly, welcome. How are you?

I'm just great. Thank you so much for having me today.

Good to have you on the show. So is it really possible to pay no income taxes without going to jail?

Yes, yes and yes.

And you've been doing this since 2014, I believe you said, right?

Yes, yes, I have. I waited a few years before I realized, gee whiz, you know, when I learned it, I guided people to where I learned it to many, many people. Not a single one followed through and did it. So I realized there was a need for someone like me to guide and handhold people through that process. And because I had done so much legal research, I was more comfortable with the subject matter than most people that just hear something like this and go, that just can't possibly be true.

Right, right. Well, I must admit, I'm skeptical. Of course, I and everybody listening would love to not have to pay income tax. So just to give people a little teaser and we'll dive into the details. But your method involves, you say, go ahead and file a tax return, show the government that you've made money, but when you deposit checks that you receive as income, you endorse them under your method in a special way that converts them instead of $2, which are federal Reserve notes to what Kind of notes.

United States notes.

United States Notes. And you say that United States notes are tax exempt, is that right?

That is correct.

Okay, and so we'll dive into the details in a few minutes here, but tell us how you came upon this and how it all evolved.

Well, just real quick, when I was 16 and got my first job at a fast food restaurant and filled out a W4, it says on there, if you did not pay federal taxes for all of your income for last year, and you expect that you will not owe any taxes, federal income taxes for the upcoming year, then you may put exempt for federal withholdings. And I saw that at age 16, and I thought, they're telling us there's a way to be exempt. And it just was like the grain of sand in the oyster that I lived with for 30 some years before I actually dove into the subject and started learning. Back in the early 2000s, I started trading stocks and options on the stock market. And through that process, I became more aware of the Federal Reserve and how it worked. And I began to have questions about the Federal Reserve. And that led me into researching it and how it's not actually a federal agency, it's a privately held corporation.

My listeners know all about that stuff. We've discussed that ad nauseam. You know, we've had J. Edward Griffin on the show many times and many other thought leaders on the scam known as central banking. So we don't need to probably dive into that too much. But what came next, the Federal Reserve issue is not really related to this, other than just understanding that a dollar is a Federal Reserve note.

It's very related to this.

Okay, all right.

This method is the solution to what G. Edward Griffin put in his book so beautifully. He exposes the challenges and the issues that the Federal Reserve raises. The process that I teach is the solution for us as the individual people of the country.

All right, so what happened? How did you discover this, this specific thing? I'm not talking about general Federal Reserve conspiracy theories, all this kind of stuff, which is certainly interesting and I love it. But. Yes, but this specific technique.

I started going to groups that were learning about different types of commercial remedy. And then I learned about banking law. Banking law is in title 12 of the United States Codes, and there is a statute in there, subsection 411, that says federal Reserve notes shall be redeemed in lawful money at the U.S. treasury or at any Federal Reserve Bank. And then from there, I found very few, but there are few people that know of this method that I learned from also. And I started testing it and doing things with my employer and my bank and figuring it all out in the nuts and bolts form.

So was there a book, a speaker, something you saw that gave you the specific information of how to do this?

It wasn't a book, was not a speaker. I found some information online and I pieced together a bunch of just different things that all kind of little by little by little, unfolded it.

All right. Pretty much you're saying that you're the creator of this idea, right?

I wouldn't say that I'm the creator. I discovered it and so few people know about it that I feel like I want to get the word out.

Do you know anybody else who's doing this?

Yes, I do.

Okay, who else is doing it?

There's a group of people out of Colorado. They now have a website called Lawful Money Trust. They have been doing it since the early 2000s successfully. That gentleman was a law student, is now an attorney. So his background is different than mine in that area.

What's his name, by the way? I'm just curious.

His name is David Merrill.

David Merrill. Okay. With Lawful Money Trust. Right. And that's. And he's got a group of people that are doing this technique too?

Yes.

Do you know how long he's been doing it?

Since the early 2000s.

Okay, so he's not in jail yet. Right. All right, tell us the technique specifically. It sounds like what you do is when you receive a check as income, by the way, what. What do you do for a living? This is what you do, or do you have another job or business?

I've had a 25 year career in the fashion industry, actually, and I do work related to that while I build up this business.

So are you basically doing freelance work in the fashion industry then? And then you're getting checks that way? Because I want to follow the path.

Yes. Currently I have an actual W2 job, and so I receive a paycheck.

Okay. And so now that's the point. When you get your paycheck. And by the way, where are you located?

I'm in Las Vegas.

Las Vegas.

Okay.

When you get your paycheck from your day job, if you will, and you're a W2 employee, what do you do?

Okay. In my case, I received my paycheck through direct deposit.

Okay. Which doesn't allow you to endorse it. And that's kind of the technique you talked about.

Right. However, most businesses pay their employees with direct deposit these days. So much money is moving around electronically. So there is A form called a direct deposit authorization, and that gets filled out prior or as soon as you become an employee. And there is an authorization on there that you sign that substitutes for your endorsement. Okay, so on that paperwork, you notate that you're redeeming for lawful money pursuant to Title 12, subsection 411.

So in other words, you fill out this direct deposit form, and above your signature, you write in this verbiage that you just said. You're saying it again. What is the verbiage?

Redeemed for lawful money pursuant to title 12 USC411.

Okay, so title 12, US code, I guess, right?

Yes. US code 411.

Isn't it funny that it's 411, like information? The old number for information.

Okay, that's coincidence.

All right, so this code we'll talk about in a moment. So when those checks go into your bank, do you bank at a big, normal bank, like, you know, one of the big banks or.

Yeah, I bank at Chase.

Okay. All right, so that you bank at the criminal organization known as JP Morgan. Chase. Just got to throw that in there. They were at the center of the robo signing scandal, illegally foreclosed on lots of people's homes. But, you know, all these big banks are so crooked. Wells Fargo being the leader of the crooks now. But, you know, it changes. Sometimes they change.

You know, they bat the ball around.

Yeah, they bat the ball around. That's a good way to put it. Okay, so you bank at Chase. Big, huge bank, right? This money goes into your account, then what happens?

So that verbiage on the endorsement signals to the bank that they cannot treat this the same way that they treat Federal Reserve Notes. Because you've made this conversion or redemption or exchange, they cannot fractionally lend against the money that you deposit.

Well, they must hate that. I'm surprised they haven't kicked you out.

They don't like it. However, title 12, 411, says they shall be redeemed, which means it is not maybe or when we feel like it or it. Shell is mandatory in legal terminology.

Okay, so the bank has to, like, earmark your direct deposits from your employer, right?

Yes.

Okay.

Yes.

Now, how do you pay your bills? I mean, because you're the same way. Your. Your account is in dollars, right? Your checking account.

Right. So I pay my bills exactly the.

Same way, the same way everybody else does, or the same way you use this. What is it called? U.S. notes.

United States Notes has not changed the way that I pay my bills. However, anybody pays their bills, they can continue Paying them the same way with.

Good old fashioned checks or online bill pay or wire transfer or whatever, right? Yeah. Okay.

Correct. The important transaction is when the money enters your bank account.

Okay.

That's the point of redemption.

Do you go to the ATM and withdraw Federal Reserve Notes, otherwise known as dollars?

A person can, but if you've deposited the money in, then they come out as what you put them in, they look very similar to Federal Reserve notes. However, back in 1971, the US treasury put out a statement saying that Federal Reserve notes serve the purpose of both currencies. So they were not, they stopped at that point in time issuing physical United states notes. There's 300 million of them in circulation and that comes from Title 31, subsection 5115. And it talks about how they're issued and who issues them. And there's no more than 300 million currently in circulation. They cannot be held as reserve.

Are they, when you say there's 300 million, do they have the same value as a dollar?

They have the exact same dollar as.

That's not very much, just 300 million. One wealthy person could gobble up the entire supply, right?

Yes. Well, at this point in time, there is so little demand for United States Notes because people do not know that they are available for use. You know, my hope is that in time, when people learn about this, there will be greater demand and that will be revised upwards. Yes. It's like a dollar a person for the national population.

Yeah, basically. Basically. Okay, so you've got this money in your account. It's earmarked as US Notes. You pay your bills normally with Federal Reserve Notes, otherwise known as common dollars. If you withdraw cash, do you get it in dollars? I kind of asked you that, but I don't know if you really answered yes.

Yes. You still will physically receive Federal Reserve.

Notes dollars, AKA dollars. Okay, got it.

Yes.

What makes. What is the way the money goes in?

You said is the way the money goes in and that you have documented your election of which currency you're using.

Okay. And you file a tax return every year, right?

Yes.

Okay. And tell us what your tax return says or what it looks like. What do you do there? You have to do something special, right?

Yes. There's an area where after I put in my, you know, W2 income and, you know, various things, there's a place to say redeemed for lawful money, 12 USC411, and the amount of my income that I have redeemed.

So in other words, if you make $100,000 you could redeem in quotes, 80,000 of it in federal or in U.S. notes, right?

Correct, correct.

And 20,000 in Federal Reserve notes, aka dollars.

Sure.

So, and then you would pay tax only on the 20,000. Correct, the federal Reserve notes. Okay, but with you, you just take 100% of it in US notes, right?

Yes.

What section is this on your tax return? Is it a 1040 long form you're filing?

Yes.

Okay, and what, what section? What line? I mean, it's one of the lines, right? They just changed or is it a new schedule or something?

It's not on a schedule. It's on the. One of the front pages. They changed the 1040 this last year with all the revisions to the tax code. So I believe it was used to be line 21, and now it's line 6. I'd have to verify that, but I.

Want to look for one of my tax returns while I'm talking to you so I can look at that myself. Okay, interesting. You're not operating as a corporate entity or an LLC or anything like that, right? You're just operating as an individual with a Social Security number.

Yes, at this time that's true. Although I will probably set it up as an LLC in time.

Why would you do that? Do you need to, or does it matter?

That's exactly the question that I have, and I'm still doing some exploration to make a final decision on what the best way to handle it is.

So is it this simple or is there more to it? Kelly, I know you basically are in the business of helping people do this. Under what entity? What's Your business name? U.S. tax Remedy.

The Great American Tax Remedy.

Great American Tax Remedy. So, I mean, can someone just listen to this episode and start doing this? You started in your tax year 2014, right?

Correct.

Okay.

Yes. The process itself is very simple. It's mind blowingly simple. The understanding of all the background takes a little more education and guidance. And I have a presentation that I share with clients and I review with them and, you know, to help them develop confidence and understanding of how it all fits together and why it all fits together. So that part is a little more involved, but the process itself is remarkably simple. And what I haven't shared with you is when a person redeems their Federal Reserve money for United States Notes, that causes the Federal Reserve to surrender an equal amount of that, whatever that redemption value is of the bonds that they hold as collateral from the US Treasury. They have to surrender those back to the treasury, which means the national debt is lowered so let's say over the course of a year, you've redeemed $100,000. The Federal Reserve takes $100,000 of bond and basically tears it up or gives it back to the treasury, and our US national debt drops by $100,000.

Okay, I found a tax return. So on the 1040 tax return you talked about, I believe line 6 and line 21, was that correct?

Yes, line 6 for the current filing, which was 2018.

Yeah, got it. So this happens to be a 2017 return.

So that would be line 21.

Yeah. Okay. So just so you know, line 6 is exemptions. Right. 6A is yourself, 6B is your spouse, and then C is dependents. You can put down your kids. But on line 21, it says other income.

Correct.

Okay. What do you do there?

I basically just put in that I've redeemed and I put in a negative number of my other income because the other income is tax exempt.

So you're basically taking the US Notes as a tax deduction. In essence, a loss, right?

Yes.

So in that example I gave earlier, if you make $100,000 in income, they're going to send a W4 or 1099 to the IRS, right. Or W2. I don't know. I get those two mixed up. Anyway, whatever, they're going to tell the irs you made $100,000. So that's what the IRS will see in their computer. And then you're going to give the IRS a tax return and says, yeah, that's true. I made $100,000, but I redeemed 80,000 of them for us notes, and that's a legitimate deduction. So I only pay tax on 20,000 in income. That's how it works.

That's how it works.

Okay. Wow. And you're doing this with all of your income. So if you make $100,000 at your job, you're saying you redeemed 100,000 in US notes, so you have zero income according to the IRS.

I have zero taxable income.

Taxable income.

Correct.

And the first year you filed a tax return like this is 2014, right?

Correct.

Okay, so 2014-2015-2016-2017, 2018. Did you file your 2018 return yet?

Yes.

Wow. So five years of tax returns.

Yes.

Have you been audited?

No.

Wow, that's amazing. Are you concerned about being audited?

I wish they would so that I could.

You want proof of concept is what you want.

It would be. Yes. Yes. What I didn't share, you can certainly.

Invite them to audit you if you do something really cagey other. Well, this seems really cagey to me, but I told you I'm skeptical.

I understand. And that's healthy to be skeptical because it requires understanding it well enough that you see the whole picture.

And this is another one of those things, dear listeners, that I would love to be wrong about. I hope I'm wrong and Kelly is right, because, hey, my next call after this is to my cpa. I'm going to ask him and he's going to go, you're nuts. I'm not filing your return if you put that up.

So let me address this. CPAs, they are extremely educated and capable and smart people that do their best to keep you out of trouble with the irs. However, because this remedy comes from banking law, it is outside the scope of the actual tax codes, which means it's outside the scope of a CPAs or a tax attorney's area of expertise. When you bring something like this to them, they're going to be unfamiliar with it. And when people are unfamiliar with something, they're naturally negative on it.

Sure they are. But who do you think works at the IRS? CPAs and tax attorneys. And those are the people that are going to audit you and question your tax return.

They are, but then that involves bringing the law to them, the Title 12 law, and say, can you show me where this doesn't apply?

Yeah, Kelly, of course. I'm sure you've seen videos. You know, there are documentaries about how income tax is illegal, it's unconstitutional. You know about this, right?

Those are flawed statements.

Okay.

Income tax is not unconstitutional. And the reason it's not unconstitutional is because we have a choice whether or not to use those Federal Reserve notes. If we were forced to use Federal Reserve notes and pay the taxes that come with them, then the taxation would be unconstitutional. But because we have the choice yet we are not taught that we have that choice, people get mad and all blustery and upset. Well, it's unconstitutional. No, it's not unconstitutional because all those.

Libertarian folks that produce those videos have probably ended up in big trouble.

Yes, they have.

Yeah. You know, I mean, Peter Schiff's father, Irwin Schiff, who recently passed away. Yeah. He was a tax protester and, you know, ruined his life to protesting tax.

He didn't understand that component. It is not correct to say that taxes are unconstitutional. That's a flawed statement. It's a dead end argument and it gets you nowhere but jail.

Okay, let's go back to the CPA discussion. Is the CPA filing your return for you doing it yourself?

I do it myself.

Do you have a complicated return with investment properties and other assets and things or.

Well, okay, because I redeem my income. I don't need to track and figure out and look for every deduction that I can find to lower my tax liability. I found it.

Right.

You lowered by 100% to do it. So my tax returns have become very simple. The first year that someone does this, it's a combination of the traditional way of filing taxes and this new way. So if someone starts with me, say in mid year July, for example, this process is from that point going forward, it is not retroactive.

Sure. It's just a percentage like in the example I gave. If you made the 100,000 and you took 20,000 and let it be Federal Reserve notes, aka dollars, you'd pay tax on the 20 and the 80 would be redeemed for US notes. And that's not taxable according to you.

Right, Right. Okay, Right.

But you know, very few people are going to be willing to do this and take the chance without getting the blessing of a CPA who's going to stick their name on that return. I mean, you do realize that, right? I mean, I don't think I'd do it, of course.

Well, there is so much conditioning, you know, through the education system, through the media, through the politicians, through school, every everything. And so yes, there is enormous amount of that to allow to shed. And some people have personality types where they're just more willing to go down this road.

But if I was going to do this, I want to get ideally a big accounting firm to stick their name on my return and bless it.

Okay, I understand.

Yeah, I'd at least want a cpa, even if it's a solo CPA to do it. I wouldn't want to be filing my own tax return. It just seems reckless to me. I. Okay, so you haven't been audited. That's awesome. You haven't received a letter from the irs. You know, why aren't you making money? You should declare this income. Nothing.

Nothing. Let me tell you something else that I omitted in my progression of coming to this method. I learned some other method that was ultimately flawed. I received a $50,000 refund from IRS that was not based on money I paid in. It was based on my banking activity.

You mean you got a refund from them or you had to pay them 50,000 sounds like you should be saying you had to pay them.

I received a refund.

Oh, okay.

And a few months, some months later, they Sent me a letter and they said, that refund should not have been issued. We need the money back, blah, blah, blah. So I got into some hot water with IRS doing some other method that had some merit to it, but ultimately was flawed.

But you got $50,000. Why do you say you got into some trouble? It sounds like you benefited.

Well, I benefited for a window of time. And then they challenged me on it and they said, we need the money back. It should not have been issued. It was. You weren't entitled to that refund.

Okay, so they gave you 50,000 as a refund, like on a normal tax procedure. Right. You just got a normal refund without debating?

I got a normal refund, but it was not a normal tax return.

Right. And then you. Ultimately they said, no, you got to give us that refund back.

Yes.

Okay.

So I got into hot water with irs, you know, and paying that back and sorting it all out and so forth, and it was part of my learning curve.

Okay, all right. What year was that?

That was filing? 2008.

Oh, okay. So there was quite a bit of. There were several years between that year where you had this lesson and then starting again in 2014 with this new tactic. So how long have you lived in Nevada?

Since 2006.

Did you live in a state with income taxes before that?

I lived in California, yes.

Well, you have my path. I lived in the Socialist Republic of California, then Nevada. So now I live in Florida, another no income tax state. I very intentionally want to live in a no income tax state. But, you know, it would be interesting to see if the Franchise Tax Board would, and I'm going to say it, fall for this because, you know, I would argue, and some would probably agree with me, that the Franchise Tax Board in California is more vicious than the IRS because they're more broke. Okay. Yeah.

Yes. The state is mismanaged, so grossly.

Yeah. It's ridiculous.

Yes.

It'd be interesting to see if you could pull it past the FTB in California. I think they would almost be more difficult than the irs.

I agree with you. I agree.

Do you know anyone in California who's doing it? I mean, you got these people in Colorado. Colorado has state income taxes.

Yes. I do have one person I'm working with in California and he elected to just do it for his federal return only for his first year.

That's just weird, because if you get audited and you paid the state, but you didn't pay the feds, it seems like the feds would have a really easy case to say look, you got to pay us, too. Just my logic, but.

Well, I mean, the law is the law. And there's a Supreme Court case site, Maryland vs. McCulloch, that says that the states are not allowed to tax the constitutional money of the country, which is why this applies to state income as well as federal income.

Interesting. What year was that Supreme Court case?

That was back in the 1800s. I would have to look up really old. It's a really old one.

It's before the Federal Reserve even existed.

Yes.

Okay, so Maryland versus McCulloch.

McCulloch, yes. C O L L O U G.

H. And so you. You cite this as one of the decisions that defends what you're doing, right?

Yes.

Okay. Very interesting. Is there anything else you want people to know? Wrap it up for us, Kelly.

Basically, if you want to learn more, I just recommend that you go to my landing page@mytaxremedy.com and I have a free download that explains this that's, you know, easy to read. It's 12 pages, and it's a way to contact me if you want to receive a consultation for your unique situation. If you want to learn more, you know, just taking that one step down this path to find out if it suits you. Feels right. Whatever.

Okay. Hey, thanks for joining us, Kelly.

Thank you. Have a great day.

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