The short answer is: I don't think this quote appears in any English
translation, but it might be a paraphrase.
Now for the long answer. Laozi (the current standard spelling) did
not write in English, so at best the sentence you quoted could only be
from some English translation. The only book ascribed to Laozi is the
Tao Te Ching ("Daodejing" by the same transliteration that gives
"Laozi"; I am following Wikipedia on the spelling). I have read the
Tao Te Ching many times in various renderings and translations and the
quote did not seem familiar. (It's a short book, compared to, say,
the Bible.) I have also searched several texts of the Tao Te Ching
available on-line and have not found the sentence in any of them, or
even anything close. I also searched for the quote itself and found
it only on this page, where judo master Gunji Koizumi, writing circa
1945, attributed it to Laozi:
(Perhaps this is where you found the quote.) Mr. Koizumi continues,
"Reality is so vast yet so rarified it eludes all human words, so
vague, and the mind so finite."
This statement, more than the sentence you quoted, is very reminiscent
of the beginning of Chapter 1 of the Tao Te Ching, which is about how
language is inadequate to describe or express the Tao. I will quote
some translations to give you an idea of what it says.
"Tao can be talked about, but not the Eternal Tao.
Names can be named, but not the Eternal Name."
From "Tao Teh Ching," translated by Dr. John C. H. Wu, St. John's
University Press, 1961.
"Tao cannot be defined, because it applies to everything. You cannot
define something in terms of itself.
If you can define a principle, it is not Tao."
From "The Tao of Leadership" by John Heider, Bantam Books, 1986.
"Existence is beyond the power of words
Terms may be used
But are none of them absolute."
From "The Way of Life," translated by Witter Bynner, Capricorn Books, 1962.
"If you can talk about it,
it ain't Tao.
If it has a name,
it's just another thing.
Tao doesn't have a name.
Names are for ordinary things."
From "Tao Te Ching," perpetrated by Ron Hogan
You can see there is a lot of variation in these translations, which
is typical for the Tao Te Ching. Perhaps Mr. Koizumi knew a Japanese
translation and the quote in your question was translated from that.
The paradoxical character of the quote is certainly consistent with
much of the Tao Te Ching, which has plenty of statements like "To hold
onto weakness is to be strong" (Wu translation, chapter 52).
There may be an English translation somewhere that contains the
sentence "When you say it is, it is not," but I doubt it. I can't
prove it, though.
Stanford Encyclopedia of Philosophy article on Laozi
A Taoism Information page with links to several English translations
of the Tao Te Ching
Wikipedia on Laozi
Wikipedia on Tao Te Ching
I hope this discussion is helpful. If you need any more information
about this, please ask for a clarification.