Are the Federal Reserve and the IRS private organizations?

Question

I have heard that both the Federal Reserve and the IRS are private organizations and the IRS serves as a collection agency for the Federal Reserve thus the question.

Answer 1

Neither is a private organization. The Federal Reserve is setup in accordance with Title 12 U.S. Code Chapter 3. The Federal Reserve is structured similar to a corporation, but that is primarily to maintain INDEPENDENCE from political influence (at least as much as possible). The IRS is part of the Department of Treasury.
http://www.law.cornell.edu/uscode/html/uscode12/usc_sup_01_12_10_3.html

I don't have the space here to give a complete class on the Federal Reserve System, but I'll give a brief overview which can be verified in a number of ways.

The Board of Governors, located in Washington, D.C., provides the leadership for the System.

The Board of Governors, also known as the Federal Reserve Board, is the national component of the Federal Reserve System. The board consists of the seven governors, appointed by the president and confirmed by the Senate. Governors serve 14-year, staggered terms to ensure stability and continuity over time. The chairman and vice-chairman are appointed to four-year terms and may be reappointed subject to term limitations.

Among the responsibilities of the Board of Governors are to guide monetary policy action, to analyze domestic and international economic and financial conditions, and to lead committees that study current issues, such as consumer banking laws and electronic commerce.

The Board also exercises broad supervisory control over the financial services industry, administers certain consumer protection regulations, and oversees the nation's payments system. The Board oversees the activities of Reserve Banks, approving the appointments of their presidents and some members of their boards of directors. The Board sets reserve requirements for depository institutions and approves changes in discount rates recommended by Reserve Banks.

A network of 12 Federal Reserve Banks and 25 branches make up the Federal Reserve System under the general oversight of the Board of Governors. Reserve Banks are the operating arms of the central bank.

Each of the 12 Reserve Banks serves its region of the country, and all but one have other offices within their Districts to help provide services to depository institutions and the public. The Banks are named after the locations of their headquarters-Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

The Reserve Banks serve banks, the U.S. Treasury, and, indirectly, the public. A Reserve Bank is often called a "banker's bank," storing currency and coin, and processing checks and electronic payments. Reserve Banks also supervise commercial banks in their regions. As the bank for the U.S. government, Reserve Banks handle the Treasury's payments, sell government securities and assist with the Treasury's cash management and investment activities. Reserve Banks conduct research on regional, national, and international economic issues. Research plays a critical role in bringing broad economic perspectives to the national policymaking arena, and supports Reserve Bank presidents who all attend meetings of the Federal Open Market Committee (FOMC).

Each Reserve Bank's board of directors oversees the management and activities of the District bank. Six of the nine board members of a district bank are selected by the member banks with approval of the Board of Governors. The other three board members are chosen directly by the Board of Governors. Reflecting the diverse interests of each District, these directors contribute local business experience, community involvement, and leadership. The board imparts a private-sector perspective to the Reserve Bank. Each board appoints the president and first vice president of the Reserve Bank, subject to the approval of the Board of Governors.

All member banks hold stock in Reserve Banks and receive dividends. Unlike stockholders in a public company, banks cannot sell or trade their Fed stock and THE AMOUNT OF STOCK HELD BY EACH MEMBER BANK IS SET BY LAW TO A CERTAIN AMOUNT OF THE MEMBER BANKS' CAPITAL. Currently, it is 3%. This allows the Fed to have some direct control over a portion of the reserves a member bank is required to have. Reserve Banks interact directly with banks in their Districts through examinations and financial services and bring important regional perspectives that help the entire Federal Reserve System do its job more effectively. Additionally, by law, private individuals, non-banking corporations, and foreign corporations cannot own more than a tiny amount of Federal Reserve stock and these small owners have no say in the operation of the banks. These member banks don't really 'own' the Federal Reserve. The stock structure is setup so the Federal Reserve system can have some control over the member bank reserves and to offset the lost ability to generate revenue from the mandatory reserves. This stock also does not confer any ownership rights beyond the par value of the stock. In other words, in the event a Federal Reserve district bank was closed, member banks of that district would only get the amount of money they paid in to subscribe to the shares. All excess assets and capital would remain the property of the U.S. Government.

Approximately 38 percent of the 8,039 commercial banks in the United States are members of the Federal Reserve System. National banks must be members; state-chartered banks may join if they meet certain requirements.

The Federal Reserve is required to return excess income to the U.S. Treasury. In 2006, the Federal Reserve collected $36.5 billion on the $770 billion in U.S. Government debt that it held. Of that amount, $29.1 billion was returned to the U.S. Treasury. Don't believe me? Check the INDEPENDENTLY AUDITED financial statements of the Federal Reserve banks for yourself. They can be found in the Federal Reserve's ANNUAL REPORT to Congress.
http://www.federalreserve.gov/boarddocs/rptcongress/annual06/default.htm
http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/audits.pdf

Some conspiracy theorists claim that all individual income taxes go to pay interest on the U.S. Government debt. That is obviously false. In 2006, individual income taxes collected amounted to approximately $1 trillion. The U.S. Government debt at the end of 2006 was probably close to $8.5 trillion. In order to all income tax revenue to only pay interest on the debt, the interest rate would have to be almost 12%. In reality, U.S. Government securities normally carry an interest rate between 4.0 and 6.0%. Currently, the interest rate on new debt is about 5.0%. The total amount of interest paid on U.S. Government debt in 2006 was $405,872,109,315.83
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=203
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=199&Topic2id=20&Topic3id=23
http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

There was a court ruling that conspiracy theorists quote that said that Federal Reserve Banks were "privately owned entities". However, that was in regards to the Federal Tort Claims Act. That same court in the VERY SAME DECISION said that Federal Reserve Banks "have properly been held to be federal instrumentalities for some purposes".

Answer 2

The IRS like the Federal Reserve is also a private corporation. The Government Accounting Office (GAO) stated in 2007 that “ the IRS is a foreign corporation”.

Answer 3

Yes for the Fed, I do not know re: the IRS. Any serious research or noticing the actions of the Federal Reserve after the 2008 meltdown confirms the veracity of the 'conspiracy' theorist arguement.

Answer 4

Re the IRS, you heard wrong. They are a US government organization, part of the department of the treasury. And the tax they collect goes to the US government, not to the Federal Reserve.

Answer 5

No. They are both part of the federal government and the IRS is a collection agency for the Treasury Department.

Answer 6

Yes and No.
The Federal Reserve Bank IS a private corporation, though it's board of directors is made up of Federal Government Employees.
The IRS is a totally government agency, that is part of the U.S. Department of Revenue

Answer 7

I can't speak for Ron Paul, but with regards to the Einstein quote it's simple. An income tax penalizes you for what you contribute to the economy. The alternative, a consumption (sales) tax penalizes you for what you take out of the economy. Now, which makes more sense?

Answer 8

It sounds like you have been listening to people who have a lot of flaky ideas about FRB, IRS and the rest of government. Don't listen to them or at least don't take them seriously.

Answer 9

Yeah it's true and it's diabolical.

read Creature from Jekyll Island

Answer 10

No.