How do courts respond when taxpayers claim that the receipt of federal reserve notes is not “income”?
“Plaintiffs further seek an injunction against the Internal Revenue Service (‘IRS’) to prevent tax collection activities on federal reserve notes, contending that federal reserve notes are not lawful money of the United States ‘as defined and intended by the spirit of the Constitution’ and that Congress has violated the separation of powers doctrine by issuing federal reserve notes which are not redeemable in coin, thereby rendering federal reserve notes ‘counterfeit securities.’ … Plaintiffs are incorrect. “The contention that paper money is illegal has been consistently rejected. [Citations omitted.] “Congress has exercised this power [to establish a national currency] by delegation to the federal reserve system. 12 U.S.C. section 411. Federal reserve notes are legal tender for all debts, including taxes. 31 U.S.C. section 392; Milam v. U.S. 524 F.2d 629 (9th Cir. 1974). The United States Constitution, art.
