A History Of Federal Government Efforts To Suppress The Inconvenient Truth About The Income Tax

“There are two distinct classes of men...those who pay taxes and those who receive and live upon taxes.”

-Thomas Paine

SINCE THE MIDDLE OF 2003 the federal government has been engaged in an intense effort to suppress the liberating truth about the "income" tax uniquely revealed in ‘Cracking the Code- The Fascinating Truth About Taxation In America’ (CtC).

Having quickly recognized that if it gets into enough hands the information in the book is fatal to what has been a decade's-long-wallow in other people's money to which the political elite have grown very comfortably accustomed, the state has spared no effort and found no level of corruption too shameful to embrace in this project. Tellingly, during every one of those same long years the state has continuously acknowledged the truth revealed in the book by steadily returning all withheld property to Americans across the country...  Here's how it has gone:

Year One: The Liberating Truth About The Tax Is Revealed And the First-Ever Complete Refund Is Issued.

IN DECEMBER OF 2002, I posted a summary of the research that would become CtC.  On August 26 of 2003, the first edition of the book went on sale.  On November 3 of that year, I became the first American in history to secure the return of ALL amounts withheld from my earnings and given over to the federal government in connection with the “income” tax-- Social Security and Medicare “contributions” included.  That was enough to bring on phase one of the assault, which had actually been being prepared since at least the day I made CtC available...

Year Two: The IRS Launches A Series Of Legal Assaults, All Of Which Fail.

THE SUPPRESSION EFFORT STARTED with attempts by the IRS to characterize my website and my distribution of CtC as “promotion of an abusive tax shelter” and charge me accordingly.  Such charges necessarily rest on the premise that what is “being promoted” is false, of course.

No time was wasted getting this effort going; on February 18, 2004, even before I secured my second complete refund (see here and here) but after the first of my few readers up to that point had made the filings which would result in THEIR first victories, which began to be received a few months later, I got this demand in the mail.  You’ll notice that no date is provided for the demanded meeting, but no matter, because two weeks later I found a summons rubber-banded to my doorknob which DID have a date for compliance on it.  A description of that summons (and how I responded to it) can be seen here.

Interestingly, included in the materials provided to the court in “support” of the enforcement action was a printout of losthorizons.com from the week of August 26, 2003...  Plainly, I was already being monitored at that point, and probably had been ever since first posting the core information in CtC eight months before publishing the book.

In the end, because nothing in CtC IS false, these efforts failed, one after another, with the DoJ itself moving the courts in which these charges were being prosecuted to dismiss the actions.  At one point in early 2005, the DoJ attorney involved asked for patience, as its IRS client was resisting the dismissals, but in the end, the DoJ prevailed and the suits were dismissed, with me agreeing, at the government's request, to forgive it my costs.  See documentation of all the foregoing here.

Meanwhile, and throughout all this, the first readers of CtC were securing THEIR first complete refunds of EVERYTHING withheld from, or paid-in by them...

On to plan “B”...

Year Three: Increasing Numbers Of Americans Begin Recovering Erroneously Withheld Or Paid-In Taxes.  The IRS Turns To A Dis-Information Campaign. 

BY NOW THE BENEFICIARIES OF THE “IGNORANCE TAX” were even more fearful of what CtC means to their good-time gravy-train of deception and exploitation, since the spread of the book was manifesting itself in an ever-increasing volume of claims for the return of withheld and paid-in property to both federal and state treasuries, and an increasingly sophisticated, well-educated and relentlessly dedicated community of claimants and others standing square and upright on behalf of the rule of law.  They shifted to a national PR/disinformation campaign.

IRS-funded or -friendly webpages began posting smears aimed at me personally, and/or disinformation about the contents of CtC, particularly efforts to tar the book as simply being a re-hash of any number of misunderstandings about the tax long-flogged throughout the “tax honesty” community.  Agents-provocateur within that community began an endless round of emails of the same sort of disinformation.

This 2005 project, during which the amount of money refunded to CtC-educated Americans by government treasurers cracked $1 million and continued to grow briskly, peaked with the IRS crafting a carefully-inaccurate description of a kind of improper filing meant to be mistaken for a CtC-educated return and posting it as the #1 red-flag item on its annual “Dirty Dozen” list issued in early 2006.

That didn't work, either.

What is revealed in CtC is simply too clear, too easily verifiable, too compelling, and too critically important to be overborne by lies, however well-crafted and frequently-repeated.  Not only does the book expose a vicious, decades-old liberty-eroding, Leviathan-feeding exploitation of the American people by an unscrupulous political elite utterly contemptuous of the rule of law, but it actually tells the reader how he or she can promptly and individually act to correct the situation and restore the individual liberty that is our right as human beings and the limited republic that is our heritage as Americans.

Once any decent person learns these things, there's no going back to lies, apathy or timidity.  More, any decent person is honor-bound to share this liberating and activating knowledge with others, and to encourage them to take up their civic responsibility of keeping their servant government within the confines of the law. And this is just what happened.

CtC’s fourth, fifth and sixth printings sold out during this phase of the government's struggle to suppress the truth. Federal and state tax agencies found themselves issuing more refund checks and notices than ever before.  On to plan “C”... 

Year Four: Large Numbers Of CtC-Educated Americans Are Now Securing Regular And Repeated Victories Over The Misapplied “Income” Tax.  The IRS And DoJ Slap Together A Hastily-Contrived “Lawsuit”. 

PLAN “C” WAS A NATIONALLY ANNOUNCED “LAWSUIT”: “The United States v. Peter and Doreen Hendrickson”.  Four days before “tax day” in April of 2006, the DoJ, now whipped into line by higher powers and no longer trying to back the IRS down from its bad behavior, filed an action in the federal court for the Eastern District of Michigan.

Unable to dispute what CtC DOES reveal about the tax, the DoJ's complaint falsely asserted that CtC argues that "wages are not income", and that "only federal, state and local government workers are subject to the income tax or to withholding " It asserted that my wife Doreen and I had based the refund claims on joint 1040s we submitted concerning 2002 and 2003 on these ridiculous notions. (Years later the government almost comically reverses itself on the false "wages are not income" ascription, definitively revealing the true character of all its assertions.)

The suit further claimed that the government had “made a mistake” in honoring those claims and returning property withheld from me during both years: "Because Defendants reported that they had no income, the IRS, unaware that Defendants’ report was false, treated the withheld federal taxes as a tax overpayments.."

But of course, there was no mistake.

NOT ONLY WAS THE GOVERNMENT'S CLAIM OF "MISTAKE" FALSE (and made only to falsely invoke an authority to file suit against us under the provisions of 26 U.S.C. § 7405), but the government also had no grounds for asserting that a tax was due from Doreen and me. To fix this evidentiary deficit, the government asked the court to coerce Doreen and me into executing new tax returns for 2002 and 2003, on which we would be compelled to testify to the government's specifications and declare our earnings during those years to be “income”!

Obviously, this “creative” lawsuit should have been tossed by the court as soon as it was filed, but remember, this was “Plan “C””, and the gravy-train-riders were getting desperate.  Thus, somehow the district court managed to sit on our immediately-filed motions to dismiss on jurisdictional and other grounds for more than nine months without comment, while allowing the government to move for summary judgment during the same period.

The government's motion was accompanied by two "supporting declarations" by IRS workers. The character of these "declarations" tell the whole story about the validity of this "lawsuit" and the ruling granting that summary judgment (over our completely ignored demand for a trial if the thing wasn't going to be dismissed as it should have been).

One of these declarations was an "examination report" asserting all manner of amounts received, and calculating tax liabilities, which ended up "found" by the court to be "facts" on which its ruling was purportedly based. But the assertions in that "examination report" were not only all formally disputed and rebutted (and never evaluated in a hearing), they were actually preceded by this:

"The preparation of this report DID NOT constitute a formal audit or examination..." SAY WHAT??!!

Think about it. This is a lawsuit brought by the United States, alleging outstanding liabilities and asking for a never-before-sought-or-granted-in American-history order seizing control of the speech and sworn testimony of two American citizens-- not to mention a lawsuit against Pete Hendrickson (and his wife Doreen), in regard to whom the IRS likely maintains a dedicated division.

The suit is brought in the hope of turning back the swelling tide of CtC-educated filings, and is an escalated government effort after years of failed previous attempts. NONETHELESS, THE GOVERNMENT CAN'T CONTRADICT WHAT IS TAUGHT IN CtC AND PRODUCE A FORMAL EXAMINATION ON WHICH TO BASE ITS ALLEGATIONS. It's hard to imagine a more definitive acknowledgement of the accuracy and unassailability of the book all this is meant to discourage Americans from reading.

Similarly, a declaration was submitted by a "frivolous return specialist", who reports on the great number of CtC-educated returns the IRS had been having to deal with since the book went to print-- but never actually declares such returns to be frivolous, and in particular says no such thing about OUR returns, which are the supposed objects of the exercise! (See the relevant portions of this declaration here, and an analysis filed in response here.) The whole affair was not only an assault on the rule of law generally, but a study in lame and shameless mendacity at every turn, as well.

(The "frivolous return specialist" testified in an actual trial in which questions could be asked of witnesses-- which we'll get to in the next segment-- a few years later. She said then that she had never actually looked at our returns before preparing her "declaration" for this lawsuit concerning our returns. If you believe that, I've got a bridge for sale...)

In late February of 2007 the district court judge simply adopted the assertions on the unsigned, informal "examination report" as true. She did so without any evidence being introduced by the government at all, without so much as a single hearing. On the following May 2, after a few motions objecting to the first one, the judge did it again in a “final ruling” written in its entirety by the government.

In her DOJ-written ruling, the judge fraudulently declares that CtC makes the false and frivolous argument that only federal, state and local workers are subject to the income tax and that the returns Doreen and I filed concerning 2002 and 2003 are based on that absurd argument. Edmunds makes this declaration despite being incapable of having any knowledge whatever, having never read the book (in which that  absurd argument is actually debunked), having examined no witnesses, and having had filed with her court affidavits expressly refuting that nonsense.

Edmunds also makes the false ascription of the "only government workers..." argument to CtC while having before her our returns for 2002 and 2003 which report our receipt of "income" and actually self-assess a tax on some of that "income" in the case of 2003. Neither Doreen nor I were government workers either of those years...

In creating a pretext for deeming our returns-- and their rebuttals of certain erroneous "income" receipt allegations--  invalid (because they were supposedly "frivolous" due to supposedly being based on the notion that only government workers are subject to the income tax), the judge created a pretext for "finding" those allegations to be true by default, which she does. On that contrived basis, she therefore also "finds" that Doreen and I owe the government taxes for 2002 and 2003.

However, because those "findings" are patently illegitimate, and also because one of the key objects of this whole corrupt and fraudulent exercise is to compel me to create an apparent repudiation of my research and conclusions about the law, the judge simultaneously orders Doreen and me to execute fictional 1040Xs for those years saying that we believe those erroneous "income" allegations to be true and thereby creating a positive pretext for the otherwise unsupported assertion of a tax debt.  (We haven't done so, of course, and thus, even now, years later and after all the government's allegations about us “owing” it these amounts, no taxes have ever been assessed for those years...) 

As you will have seen at the link to the orders above, Edmunds issues an additional order as well, at the government's request (and again, an order actually written by the DoJ). This one enjoins Doreen and me from ever filing returns based on the false and frivolous argument supposedly found in CtC that only federal, state and local workers are subject to the income tax.

The DoJ and IRS issued press releases around the country, with headlines screaming that, “Hendrickson has been ruled against by the Court!!!”  This, they figured, would finally scare into silence and “compliance” those insubordinately persevering “CtCers”!

They were wrong, of course.

What the adversaries of the truth don’t understand is that the community of CtC-educated Americans has such a thorough, unusually well-founded understanding of the level of deception the voracious state is willing to embrace in defense of its taproot into the aquifer of individual Americans’ private wealth, and the control over their behavior it manages to exercise due to widespread ignorance of the truth about the “income” tax, that it actually reads more than just the government’s press releases.  Indeed, it is a key characteristic of the CtC-educated community that its members actually read the law for themselves, as well as the filings made in actions like that of “plan “C””.

In fact, the CtC-educated community has become adept at reading and understanding the law to a degree not seen in America since Edmund Burke said of the colonists in 1775 to Parliament, explaining why British hopes of keeping the Americans in subjection were futile: 

“Permit me, Sir, to add another circumstance in our colonies, which contributes no mean part towards the growth and effect of this untractable spirit. I mean their education. In no country perhaps in the world is the law so general a study." 

CtC-educated Americans read the filings and rulings in this “lawsuit”.  They recognized the legal and substantive emptiness of government’s straw-man arguments, smoke-and-mirror charades and complete failure to actually make, or prove, its case; and they understood both the impropriety of the effort to coerce testimony more to the government's liking from my wife and me, and the acknowledgement of CtC’s accuracy reflected in the government's desire for that custom testimony.

Of course the district court ruling was appealed, but the appellate court also refused to hold any hearings. It even refused to read our brief detailing the procedural violations/errors committed by the district court, striking it from the record in compliance with a government's motion to that effect.

The appellate court simply adopted the district court's "found facts" as true, and affirmed its ruling accordingly. The First Amendment is never mentioned in its opinion, and all our other arguments in the appellate brief that were not struck are brushed past without analysis, and likely without even having been read.

The appellate ruling was issued as "unpublished", and the court refused to publish it even when the government subsequently asked it to do so.

(By the way, government press releases and troll posts about this case make much of the appellate court "sanctioning" Doreen and I for the temerity of filing an appeal in this case. The fact is, we never filed an objection to the government's motion for a sanction. Not having yet seen that the appellate court was playing the role of government-enabler/co-conspirator in all this, we naively imagined that the appellate court would, on its own accord, deny such a manifestly improper motion. Our mistake.)

See a Motion to Vacate filed in this case for a short, straight-to-the-point listing and brief discussion of just a few of the many invalidating aspects of this “lawsuit” and its treatment by the court, including: 

1. There has never been a case or controversy to adjudicate, as the United States agrees that we owe it no tax.

2. The United States invoked the Court’s jurisdiction under false pretenses. 

3. The United States has never had standing to bring this suit, and thus, this Court has lacked jurisdiction. 

4. The United States has never introduced any evidence in support of its claims; and the “information return” hearsay upon which it relied is specifically declared by statute to be insufficient to support findings and judgment in its favor. 

5. By entertaining the United States’ Motion for Summary Judgment before ruling on the various Motions we filed in response to its Complaint, and then granting its Motion and denying ours the same day, and without any hearing at any time, the Court violated our right to due process of law. 

6. The United States failed to substantiate its assertion of jurisdiction pursuant to 26 USC 7401, and the Court was therefore without jurisdiction. 

This motion was denied and its appeal was also denied by the appellate court-- in another "unpublished" decision, but with an interesting twist. This time the panel DOES mention the First Amendment, but in so doing reveals the "creative misunderstanding" by which it has always dodged the real substance of this issue in the case.

The panel says it has already addressed First Amendment issues like ours, and cites to a case as its precedent, United States v. Conces, 507 F.3d 1028 (6th CA 2007). But Conces was a case having nothing whatever to do with dictated testimony.

Conces concerned merely a court-ordered discovery, by which Conces was commanded to turn over a list of his customers and against which Conces speciously argued on First Amendment grounds:

“Conces seeks to raise the following issues in his brief on appeal: ... (3) Whether the district court violated his First Amendment right not to speak and his Fifth Amendment protection against self-incrimination by ordering him to respond to the Government's post-judgment discovery requests;”  

United States v. Conces, 507 F.3d 1028 (6th CA 2007) .

The court properly rejected that argument. But that argument has nothing to do with ours, and the panel, in citing to Conces, makes clear that it didn't address our argument or issues at all in its ruling.

AS I SAID EARLIER, no one was fooled by this lawsuit, and thus, “plan “C”” didn't do the job, either. The knowledge in CtC kept spreading, and Americans kept standing up, one after another, on behalf of the rule of law.

During the time this “suit” was in play, returned and retained property of those acting in educated harmony with the Constitution and tax-related statutes mounted into the millions of dollars.  More and more Americans stood up loud and proud with the Founders and their vision of limited government, enforcing the framework of law by which the blessings of Liberty were meant to be preserved for themselves and their posterity.

So, what was a frustrated despot to do?

Well, to begin with, it rolled out a new and more pointed scare tactic, directly targeting a few educated filers in the hope that rumors and misunderstanding of what was being done would broadly discourage others. A combination hoax and fraud concerning so-called "frivolous return penalties" was involved.

Not long ago people in three different departments of the IRS were caught in a document forgery and perjury scheme in furtherance of this corrupt CtC-suppression effort. See further discussion and documentation here.

But the "frivolous return penalty" hoax didn't slow down the spread of the truth, either. Truth is a persistent thing, once it gets out there.

On to plan “D”...

Year Six: After Four Years Of Internal Struggle While Amounts Recovered Or Retained By CtC-Educated Americans Mount Into The Millions, The IRS And DoJ Charge Me With Not Believing What I Have Revealed About The Tax 

ON NOVEMBER 12, 2008, after a series of failed attempts over four years, an unsigned “indictment” was announced, charging me with ten criminal counts of filing "false returns". The indictment alleged that when I said I hadn't received "wages" on 1040s and 4852s filed for each of six years, I didn't really believe that to be true (four of the 1040s were charged and all of the 4852s).