Misunderstandings Of The Income Tax And Related Law
(The "misunderstandings" articles follow below)
"It ain't what ya don't know that hurts ya. What really puts a hurtin' on ya is what ya knows for sure, that just ain't so."
-- Uncle Remus
FROM THE VERY BEGINNING of the effort to induce participation in the "income" tax by those to whom it does not legally apply, Americans have recognized the conflict between the clear language of the Constitution (and even merely grade-school-level principles of law) with what the "income" tax schemers seek to suggest is true. Thus, for many decades now, thousands-- perhaps millions-- of upstanding men and women who take seriously their right (and their responsibility) to defend the rule of law have resisted that effort.
Unfortunately, this resistance has generally been misdirected-- in large part as a consequence of inadequate legal research. The discussions which follow are intended to reveal and rectify such misdirections for the sake of the many folks who have been led down wrong, and sometimes dangerous paths.
I KNOW THAT THOSE WHO HAVE TREAD some of these paths to the swamplands might find some of the material which follows highly disagreeable. It is never easy or pleasant to shed a familiar (and often, in this case, comforting) perspective or belief. But I trust that the same intellectual integrity by virtue of which anyone challenges the "income" tax scheme in the first place will find itself exercised here as well.
Practical interest should help, also. Even the most sincerely-held and well-intentioned misunderstanding has the serious potential to ruin the lives of those it misleads.
Furthermore, confusion and lies are the servants-- in many ways the chief characteristics-- of the real “income” tax scheme. While misunderstandings and misinformation persist, they will continue to be disseminated-- most often and most successfully to those who are new to the subject-- and therefore are a infection we all need to cure.
After all, anyone whose first introduction to the notion that the “income” tax scheme can and should be challenged is by way of a misunderstanding (which inevitably will be revealed to be nonsense one way or another) will ultimately be lost to the cause. Once burned and twice warned, that person won't afterward stand and listen with an open mind to even the clearest bell of perfect truth on this subject.
So everyone will do well to be familiar with these errors, and why they are errors. That will equip each person to be a light-bringer whenever light is needed.
Topical In-Depth Discussions
Of Course, That's Not Everything...
MUCH OTHER NONSENSE clutters the landscape and will inevitably be encountered now and then by those seeking the truth about the law in general, and tax law in particular. These other misunderstandings-- about which I have no more to say at this time than the general observation that they either constitute deliberate misinformation, are misconstrued as presented, are unsupported by meaningful evidence, and/or are entirely irrelevant to both the means by which the "income" tax is misapplied and the means for addressing that misapplication-- include (but are not confined to):
That Social Security (or Social Security numbers or cards) or the "income" tax involve or have anything to do with a trust or trusts;
That the District of Columbia was incorporated as a replacement for the Constitutional government of the United States;
That all U.S. courts are solely cognizant of, or that the "income" tax is inherently related to, "Admiralty Law";
That the United States government went meaningfully bankrupt in 1933;
That it matters whether the 'penalties of perjury' statement on a tax return references 'the United States of America' or not;
That 'district courts of the United States' and 'United States District Courts' are different courts;
That the Secretary of the Treasury referred to in the revenue laws is the Secretary of the Treasury of Puerto Rico; that the Internal Revenue Service is the Internal Revenue Service of Puerto Rico; etc.;
That all collection and/or enforcement authority spelled out in the internal revenue laws is exercised exclusively by the BATF under provisions of 27 CFR;
That only federally-connected employment amounts to an "income"-taxable activity;
...and many, many more.
I know some will find it off-putting for me to say it, but the bottom-line is this: The reader is strongly encouraged to simply avoid sources of information other than 'Cracking the Code- The Fascinating Truth About Taxation In America' and what is presented on this site. Exposure to misinformation is more than merely a waste of time-- it is also a step into a thicket of debilitating confusion, which will keep the errant wanderer out of the real contest while he or she struggles pointlessly (or dangerously) with shadows.
In this regard, it should be borne in mind that many of the prominent and not-so-prominent tax "theorists" and soapbox orators have studied CtC themselves, and have incorporated anything from a little bit to a great deal of what they have learned there into their own presentations. Thus, such presentations may appear on the surface to be soundly based. However, since these partial-adopters have also clung to elements (or even a great deal) of their original misunderstanding, they continue to promote much error-- which is now simply better concealed, or more convincingly presented, than before.
ANYTHING THAT IS RELEVANT TO THE "INCOME" TAX SUBJECT WILL BE FOUND ACCURATELY AND APPROPRIATELY ADDRESSED IN CtC AND/OR ON THIS WEBSITE. ANYTHING NOT FOUND ADDRESSED IN CtC AND/OR ON THE WEBSITE IS NOT RELEVANT TO THE "INCOME" TAX SUBJECT, AND WILL INTERFERE WITH YOUR ACCURATE COMPREHENSION OF THE SUBJECT.
Finally, just a word to the wise: Among other things, the ideas described or debunked here have in common that they are all readily disproven. Consequently, to espouse, or even be known to entertain, these notions will cause you to be perceived as a sloppy researcher at best, if not simply a nutcase. As noted above, it will also give a bad name to the whole concept of bringing clarity to the actual existing legal structures about which misunderstanding has been carefully nurtured by its beneficiaries-- that is, it will taint the movement to spread the truth about the tax. Thus, although it may seem harsh, I recommend being seriously wary of the motives of anyone pushing these nonsense "theories", who can only be presumed to intend that effect to the degree that they persist in pushing the errors now that the truth has been revealed.
More Nonsense Currently Being Flogged Throughout The "Tax Honesty" Community
(These posts are from various newsletter articles published over the years since 2005 or so. Please ignore all contingent temporal references such as "new" and "the last couple of days", etc..)
Two new scams/schemes/misunderstandings making their way about have come to my attention in the last couple of days. One apparently goes by the title, "Zero Account", and though my speculation could be wrong, this scheme might represent an effort by some of the UCC-Redemption crowd to inject a little life into their wildly-mistaken notions by torturing what they appear to have (sort of) learned about the mechanics of the "income" tax from CtC into the framework of long-standing errors to which they stubbornly insist on clinging. If so, it's a shame that these folks couldn't bring themselves to just chuck the whole body of misunderstanding to which they are prey once they had the truth in their hands, rather than just distort some of that truth to suit the needs of their "theories". Sadly, when someone learns something that doesn't conform to the mistaken notions already in their heads, they often prove either incapable of understanding it, or not willing to do so.
This "Zero Account" nonsense will be recognized by its use (or misuse) of "Forms 1099 O.I.D. (Original Issue Discount)" and what are referred to as "treasury direct accounts", as well as the standard "strawmen" and "bills of exchange" components that have long been characteristic features of the dangerously-mistaken UCC-Redemption "theory". Run, don't walk, away from this if encountered.
The other item recently forwarded to me is an email with the subject line: IMPORTANT! SOCIAL SECURITY / INCOME TAX SCAM DOCUMENTS. This email, which comes with a large ".zip" attachment containing a number of readily-available documents relating to the Social Security system as well as some on withholding long quoted on this site and recently posted here in the original, breathlessly announces that, "After 50 years of searching the archives, we have a fabulous find to share." The email then proceeds to make the erroneous and destructive unqualified assertions that, "those required to pay the income tax are federal/state employees and people with social security numbers," and that, "the income tax is imposed on those with a Social Security number." (I guess all those poor non-federal/state employees sued or prosecuted for "income" tax issues before the advent of Social Security numbers in the late 1930s were victims of some kind of space-time-continuum anomaly...)
Is it somehow possible that the folks responsible for this distribution aren't aware of CtC? Or does the distribution of this distracting and misleading nonsense serve someone's deliberate agenda?
Those who have already done so (or haven't done so lately) should click here for a detailed discussion of the persistent errors about SSNs and the tax plaguing the "tax honesty" community.
Judges Can Certainly Be Corrupt, But They Don't Get Federal Bonuses For It
There's a new version of an old ghost-story circulating within the "tax honesty" community asserting that federal judges receive cash awards as incentives for corrupt partisan behavior in tax-related judicial contests. According to the story, these incentives are paid out under the "superior accomplishment, or other meritorious effort" bonus provisions of 5 USC § 4502.
Any reader of this newsletter or my books knows that I take a backseat to no one in my recognition and condemnation of judicial misconduct. But those same readers will also know that I set a very high bar for evidence and accuracy regarding any assertion, and have a very low tolerance for the circulation of distracting and discouraging inaccuracies among folks who should be focusing on spreading the truth and encouraging themselves and others to act on behalf of the rule of law without worry or concern about anyone else's behavior.
Consequently, a few words correcting this errant and distracting notion are in order.
5 USC § 4502 does indeed provide for incentives for superior accomplishment, or other meritorious effort, which incentives can reach as high as $25,000:
Directly preceding 5 USC § 4502 is the "definitions" section controlling the meaning of terms in § 4502, and there we quickly discover that the judiciary are not within the scope of any agency qualifying for these awards.
The following moldy baloney has the those-who-will-not-see crowd all aglow:
Although those who posted this material apparently don't recognize this, it is plain that the "Payroll Deduction Agreement" being discussed in the IRM excerpt and IRS "Helpdesk" response is not "withholding". Rather, it is a "debt payment by installment through payroll deduction", by which paying off outstanding liabilities can be satisfied a bit less painfully than a one-time payment (as is made obvious by the language of the IRM section to anyone not blinded by a fixation on a pet misunderstanding of the "income" tax: "Payroll Deduction agreements and Direct Debit installment agreements benefit the taxpayer by reducing the likelihood of default and lessening taxpayer burden." ). "Withholding" (as in the kind with which a W-4 is connected) involves the making of a deposit against a possibility that a liability might prove to arise during the period involved. Two completely different things, as is understood by any CtC warrior.
Unfortunately, some of those who do not yet have a CtC education will see the nonsense above and be diverted from acquiring an accurate understanding of the law. Worse, in many cases such folks will become more deeply mired in the dangerous "There Is No Law" or "The Law Can't Apply To Me" errors, due to the character of this foolishness, and the advocacy of those who clutter the inboxes of the unwary with this ignorant junk.
An old bit of "movement" pollution showed up in my email inbox this week, sent around by someone who should have known better (I don't remember who, actually, but anyone should have known better...). This email contained a document titled "31 Questions and Answers About the Internal Revenue Service"-- a collection of nonsense that has been cluttering the minds and mailboxes of folks who would be more productively active without such distractions for some years now.
The very first of the "questions and answers" in this thing suffices to reveal its true nature to anyone prepared to expend the least effort to actually test its ridiculous assertions before passing the thing along to others like the enervating virus that it is:
Leaving aside the nonsense about the IRS not being an organization within the United States Department of Treasury (and the unsupported and erroneous suggestion that 31 USC 301-310 is the only place one should look for anything related to the IRS), all that is needed to determine that this document should be tossed and its sender viewed with a jaundiced eye henceforth is to click on the conveniently-provided link to the cited "footnote 23" from the Chrysler Corp. v. Brown ruling. That one-paragraph footnote plainly says nothing whatever that is declared by this "answer" (and, in fact, directly contradicts what it asserts):
This "31 Questions..." document goes on to declare the IRS to be exclusively a Puerto Rico operation (implying that for some unexplained reason Congress is incapable of establishing a tax-collection and accounting agency otherwise...) and so forth, but no more need be presented or discussed. One single click of the mouse and 30 seconds of reading is enough to debunk this nonsense.
Another in a seemingly endless train of distractions from the actual contest to enforce the law has issued forth from the agents-provocateur of the statist quo, and is predictably being ingested by the credulous in the "tax honesty" community. This one is of the "silver-bullet" class. It revolves around the notion that the "collections" provisions found in 15 USC (or, by implication, elsewhere) are importantly relevant to the implementation of the "income" tax, and that because of quirks in those collections provisions tax debts somehow can't be collected. Most significantly, this distracting nonsense (the presentation of which is riddled with other errors...) strives to suggest that both of these things are true (that is, the relevance of the collections provisions, and their exploitability to thwart debt collection) with regard to someone who hasn't actually been made liable for the tax.
Although I hate to sound impatient, and imagine that most who are seizing on this latest agency-inspired distraction from the real battle are sincere and well-meaning (although those who peddle it are not), this notion is almost too out-of-touch with reality to enable a coherent response. Nonetheless, it should suffice to observe that in a case in which a legitimate debt DOES exist, any and all provisions of law related to collections may well apply and be relevant. BUT IN A CASE WHERE NO TAXABLE ACTIVITY HAS ACTUALLY BEEN ENGAGED IN, THE ENTIRE MATTER STARTS AND ENDS WITH THAT FACT.
Indeed, in the latter case, to even BEGIN to argue "collections" practices is to constructively concede the legitimacy of the "debt", the collection of which is being challenged! This is like getting a bill from someplace with which one did no business, and choosing to dispute it by arguing that the vendor has sent you the wrong kind of invoice!
Another loony notion being re-circulated at the moment is that the "Internal Revenue Tax and Audit Service" (a business incorporated in Delaware in 1933) is the IRS (or vice versa); or that there is some organization or agency called the "Internal Revenue", by virtue of which notion the "Internal Revenue Code" is imagined to be merely that organization's operating structure. Both of these ideas necessarily presuppose that for some reason there can't actually be an actual federal agency such as the IRS, or a body of law imposing a federal tax on anything. (The Title 15 thing discussed above rests upon a similar self-evidently flawed assumption-- which is that Congress has tied its own hands such that even if a legitimate debt IS outstanding, its collection can be thwarted by taking advantage of some quirk or loophole in the collections-related rules. Is it not obvious that if this were the case, those rules would be immediately changed?)
The "Two Crowns" nonsense. As I wrote to someone who, for some inexplicable reason, forwarded this ridiculous clutter around:
"The guy at the IRS that has the job of dreaming this stuff up to distract, pollute and discredit the "tax honesty" community must love his work, as he is most prolific..."
The "Lost (or suppressed) Original 13th Amendment" is taking a new run after a few years off. This amendment would have largely duplicated language of Article 1, section 9 of the Constitution regarding the acceptance of titles of nobility and the like from foreign potentates. Although the story of the amendment's brief appearance and subsequent disappearance is interesting in and of itself, it is seized upon as having a significance which is misplaced.
The misunderstanding has it that this amendment was intended to prevent lawyers from serving in federal office, based on two further and interdependent misunderstandings: that the "bar" to which attorneys are said to belong is actually an acronym for "British Accredited Registry"; and that the "esquire" that many attorneys use after their names is indicative of titled status in Britain. Neither of these things is true. As observed in Bouvier's dictionary of Law (the official law dictionary of Congress during much of the period in which the original 13th Amendment was before the states, by the way), the real meaning of these terms is as follows:
An old and ridiculous notion that the use of banks (and in some versions, FRNs) constitutes the adoption of a "privilege", making all deposits (or FRN receipts) taxable has been recycled this week. Click here for the debunk...
An old canard, to the effect that a SSA-521 form is, or can be used, for withdrawing an application for a Social Security number is floating around again.
A document flogging the erroneous "income means corporate profit" argument (and filled with many other errors), titled 'The Truth About Courtrooms- Stay Out!' is making the rounds.
A .pdf file of a book by author Vern Holland, titled 'The Law That Always Was', is being circulated. I'm about halfway through this book, and am finding it quite good in many respects.
Holland's scholarship as to long-standing categorization of general income taxes (not the specialized, limited excise we call an "income tax" today) as "direct" taxes is very good indeed. However, he makes one important (and, based on what I have seen of his work so far, uncharacteristic) error about midway through, in reference to the U. S. Supreme Court ruling in the case of Loughborough v. Blake, 18 U. S. 317 (1820). Holland suggests that in this ruling the court holds that within the District of Columbia and the territories and possessions Congress is relieved from the Constitutional taxing clauses which restrain its authority within the several states, declaring that, "the power of Congress in respect to taxation in the former was unfettered by the restrictions imposed by the Constitution with reference to taxation in the latter." (pp. 122-123). This is incorrect.
In fact, what the court rules in the case (which was a challenge to the power of Congress to tax these districts at all while they remain unrepresented in the legislature) is that Congress CAN tax these districts, but in exactly the same manner as it is authorized to lay taxes among the several states. The ruling can be read here.
I wouldn't normally devote space here to a book-review observation of this kind, and I will say again that at least up to the halfway point, with this single exception I am finding this a very good read. However, there is a long-standing myth within sectors of the "tax-honesty" community to the effect that the "income" tax (or its application) is based on (or involves) citizenship or residency. Certain flavors of that myth rest on, or are nourished by, the very misunderstanding about the legal status of the District of Columbia, and the territories and possessions, or those residing therein, implicit in Holland's mistaken presentation of the Loughborough ruling. I would hate to see these myths find a new life due to the re-circulation of this book with this error uncorrected.
For some extended discussion of certain of the "citizenship/residency" misunderstandings, see www.losthorizons.com/tax/Misunderstandings/snakeoilwarning.htm, www.losthorizons.com\comment\CitizenshipJuriesVoting14th.pdf and www.losthorizons.com/appendix.htm#RegardingNon-ResidentAliens
An Old Bit Of Nonsense Makes Another Run Around The "Tax Honesty" Community
Another bit of old and utter nonsense has begun recirculating within the "tax honesty" community-- the fake citation/quotation about governments only being able to interact with "artificial persons":
It is tiresome both because it is so transparently ridiculous and so readily revealed as a hoax, and because even bothering to look at such things is so pointless. (It is also VERY tiresome because the book in which this nonsense apparently first appeared is, ironically, titled 'Cracking the Code-Third Edition'. I might have gone with a different title altogether for CtC had I known before going to print about this similarly-titled collection of nonsense and mis-direction...)
The simple fact is, there is nothing more to search for in regard to understanding the tax, how it works, how it is misapplied, etc., etc.. That has all been definitively and completely laid out in 'Cracking the Code- The Fascinating Truth About Taxation In America'.
The only thing left to do is to relentlessly spread the word about what is revealed therein, and relentlessly insist that the law be upheld. That it is not being upheld is not because of some strange quirk such as that "governments can only talk to corporations", or any other nonsense of the sort.
Rather, the law is not being upheld now for the simple reason that not enough people are demanding that it be. One reason this is so is that too many of those who know there is an issue distract and spend themselves with foolishness such as this "artificial person" fixation, instead of just standing up and taking action like those warriors honored below, those already listed in their hundreds on the victories pages, and all those who have acted but still wait for their victories. The adversaries of the truth have no answer to educated Americans taking proper and forthright action consistent with the words and spirit of the law but stonewalling and corrupt lies . In time, when enough good patriots have acted, those adversaries will be crushed by their own stone walls and eaten away by their own corruption.
But this will take forever if myths and outright lies like this "Penhallow" nonsense keep finding an audience. Believe me, those who are refusing to abide by the law couldn't be happier than when those who could and should be acting, spreading the word and bringing total victory closer are cluttering up their minds and their inboxes with this trash-- which is why those adversaries keep sending this stuff out.
The "861 argument" folks are at it again, circulating a well-produced two-part film purporting to demonstrate that only non-Americans or those doing business in foreign countries or federal territories and possessions can be liable for "income" taxes. The film focuses on the recent indictment of Wesley Snipes, and the fact that, in part, the indictment accuses Snipes of "failing to file a return stating his income and claiming any deductions and credits to which he is entitled". Seizing on the language "deductions and credits", the actors in the film conduct a search of 26 USC for those words as a phrase, which (it is asserted) will only be found in portions of the code related to non-resident aliens, foreign corporations and territories or possessions. They suggest (without troubling themselves with the fact that claiming deductions and credits is obviously optional) that it therefore must be concluded that only persons to whom these portions relate can be "required to file a return".
Unfortunately, this is merely an exercise in fallacious reasoning, in which the film-maker's proposition is illegitimately presented as being decisive of the issue they claim to address, and is also carefully framed in a fashion that leads to the conclusion desired. Without bothering to run my own search to the same effect, I'll grant for purposes of this discussion that these may be the only locations where the entire phrase "deductions and credits" may be found. However, they are certainly NOT the only places that "deductions" and/or "credits" available to filers are found in the code or the law. A search for either will turn up MANY references to these terms. Those found here and here, for instance:
...are sufficient by themselves to make clear that the film's premise is completely unfounded.
That this presentation, and the thinking behind it, is invalid doesn't mean that Mr. Snipes has actually done anything wrong, in the sense of having had ill-intent, or in the sense of having evaded a tax liability which he actually owed, of course. I hope that someone who knows him gets a copy of CtC into his hands, so that he can learn what is actually going on in his case.
I also hope that the very talented producers of these films learn the truth as well. Putting erroneous material like this into circulation is very harmful. The flaws in presentations like this will be very quickly apparent to any "newbie" that gives them brief consideration and even the most superficial research, such as is demonstrated here. This is likely to result in that "newbie" turning his or her back on the whole concept of "tax honesty" and never looking further to find the real truth-- another possible warrior for the truth transformed into a disparaging and cynical voice helping to dissuade the next American from even taking a first look at the subject.
On the other hand, these very talented producers could be doing a lot of good, if they were devoting their time to learning, and helping spread the word, about the reality of the "income" tax...
Update: Wesley Snipes-- The Latest Victim Of "Non-Filing"
Late last week (February 1, 2008) actor Wesley Snipes and his co-defendants heard from the jury in his highly-publicized trial on various "tax crimes". Snipes was found guilty on three counts of "failure to file". He was acquitted on another three counts of that offense, and also on charges of conspiracy and fraud. Co-defendants Eddie Kahn and Douglas Rosile were convicted of conspiracy and fraud.
Those felony conspiracy and fraud charges involved Snipes' effort to claim a refund of amounts previously treated as payments of tax during 1997 on his original return for that year by the filing of an amended return. Lacking an accurate understanding of what they were dealing with, the return (and thus, the claim) Snipes filed with the advice of his codefendants was inadvertently (and pointlessly) rendered invalid by the addition of a "no" to the jurat (so that it read "under no penalties of perjury"). Further, the rationale under which the claim was made was the "861" misunderstanding, and, as is typical of filings made under that misunderstanding, several pages of "861"-related material were attached to the return but nothing rebutting any information returns concerning Snipes' receipts for the year were included. See the return here.
Nonetheless, Snipes succeeded in convincing the jurors that insofar as the felony charges were concerned, his behavior lacked willfulness-- that is, the deliberate violation of a known legal duty. This was based on his defense argument that he was simply an unwitting victim of his codefendant's influence and manipulations. Judging by what was presented at trial about his voluminous mailings to the IRS and other behavior over the years, this is more than highly unlikely, but Snipes' star-power appears to have served him well with the jury.
Snipes got the benefit of a vaguely more credible doubt regarding three of the failure-to-file charges as well, claiming that he believed that he couldn't be required to file returns that he (inexplicably) imagined would constitute evidence against himself once he became aware that he was under investigation (even though the investigation was for behavior in previous years...). Star-power doubtless helped him successfully skate on that thin ice, as well. No such rationale was available for the years 1999, 2000 and 2001, though, and so the "There Is No Law" and "861" nonsense-- the continued noisy advocacy of which prevented Snipes from learning the actual truth about the law at any time over the last four-and-a-half years-- have claimed another victim.
Nor is the system done with Snipes, by the way, even without regard to what kind of time he will serve and fine he will pay. Like others distracted from the truth about the tax and misled into "non-filing" despite allegations of the receipt of "income" (including even those entirely acquitted of any criminal culpability for this choice, such as Tom Cryer and Vernie Kuglin) Snipes can now count on a civil trial to collect a whole lot of money from him (if he doesn't just make himself liable by creating a bunch of tax returns in continuing ignorance and hand over the money, as his equally ignorant attorneys have declared he will). It's a pity. Even at this late date, Snipes could still spare himself a good deal of financial and moral abuse if he would just learn the truth.
Anyone circulating any of this stuff is advised to immediately cease and desist, and anyone receiving it should reply to the sender to that effect, in the strongest possible terms. In recognition of the sender's failure to do even minimal research to verify what he or she is circulating, and the possibility that the circulation of erroneous information and ideas is deliberate, anything presented by that sender in the future should be taken with at least a grain of salt, if not a little suspicion, in the future; and any "guru" presenting any of this nonsense should be instantly dropped like the menace to the truth that he or she is.
NOTE: Needless to say, I cannot address EVERY bit of the vast amount of nonsense constantly making its way around the "tax honesty" community. The simple rule of thumb to follow is this-- if you didn't read it in CtC, or on losthorizons.com (the Forum-- which I do not edit or supervise-- excluded), it is either unreliable or simply not true; and in any case is irrelevant to the "income" tax subject. The material posted here and here is worth reading in this regard.
Also, please don't waste pixels writing to argue with me about items posted here, or to defend them. The reason items are listed here is that they are wrong, and serve to distract from the reality of the law, and our critically important responsibility for its enforcement. I have already looked into each of the listed items and don't intend to let myself be distracted any further-- you shouldn't either.