Hendrickson's witnesses in his criminal trial

[Judge Roy Bean]

...
I do not consider the government to either inefficient or stupid, but, quite the opposite. I don't believe this case is going to be quite as simple as one might thing. Just my opinion. But time will tell.

The bureaucracies installed by government by and large are inefficient because they have no economic incentive except to perpetuate their existence by having their patrons in Congress protect them from competition.

Hendrickson is not competition. He's a microscopic anomaly in terms of impact.

[LPC]

Its not the employer/employee relationship but rather the type of employer and type of employee that may or may not generate wages. It is my understandng wages, as defined , can only be generated by certain specific employers/employees. All other employers/employees may or may not generate compensation for services.

You have it exactly 180 degrees backwards.

The Internal Revenue Code starts with the broadest possible definition of "wages" and then provides exclusions for certain specific types of payments, or certain types of employers, or certain types of employees, or some combination of payment, employer, and employee. So, for example, section 3401(a) defines "wages" as "all remuneration (other than fees paid to a public official) for services performed by an employee for his employer, including the cash value of all remuneration (including benefits) paid in any medium other than cash; except that such term shall not include remuneration paid—" and then follows 22 numbered exceptions.

So which exception do you think Hendrickson thought applied to him? Was he doing agricultural work? Was he providing domestic service in a private home? Was he being paid for his services as a duly ordained minister?

Unless one of the exceptions applies, then the general rule is that "wages" means ALL compensation paid by an employer to an employee.

Hendrickson will be hanging his hat on his misreading of the section 3401(c) definition of "employer," and the government will need to prove that Hendrickson KNEW he was wrong about section 3401(c) at the time he filed his returns. And so, once again, it boils down to "willfulness."

[Noah]

Nikki,
Good to hear from you.

I am well aware of the definition of Gross Income which includes compensation for services.

Now you go and see if you can find "wages" in the definition of Gross Income. It is not there.

I have no problem with both wages or compensation for services resulting in taxable income, but Pete does. I believe he is wrong.

The only credible position I believe Pete MAY have, is, that he had no wages as defined in Subtitle C chapter 24 that was subject to withholding at the source. The compensation for services he rendered may not be subject to withholding at the source but still would be included in Gross Income resulting with taxable income.

Even if Pete wins that point all he will have done is jump out of the frying pan into the fire. And the government will have lost withholding at the source in a huge way. Rather than risk getting a adverse ruling on withholding at the source or losing on the willful issue the government may drop some or all counts against Pete. It would not be first time.

[Famspear]

The only credible position I believe Pete MAY have, is, that he had no wages as defined in Subtitle C chapter 24 that was subject to withholding at the source. The compensation for services he rendered may not be subject to withholding at the source but still would be included in Gross Income resulting with taxable income.

That's correct. A "wage" is a form of "compensation for services." The law makes no distinction between and among wages, or salary, or bonus, etc.; it's all compensation for services, and it's all includible in section 61 gross income except to the extent otherwise excluded under some other provision of law.

Even if Pete wins that point all he will have done is jump out of the frying pan into the fire. And the government will have lost withholding at the source in a huge way. Rather than risk getting a adverse ruling on withholding at the source or losing on the willful issue the government may drop some or all counts against Pete. It would not be first time.

That is a fantasy. Pete cannot win on any of these issues. It would be delusional to think that Peter Hendrickson or any other tax protester has found some legal loophole to make ordinary compensation for services not be "subject to withholding", regardless of whether that compensation is called "wages" or something else. The government is in no danger on this issue. To believe, as some of Peter's followers may well "believe," that the government would drop any charge against Peter because the government is somehow "afraid" that Peter might win on a tax protester argument is laughable.

EDIT: Pete has a habit of trying to give his followers the impression that every time he loses in court, it means he somehow has backed the government into a corner. You see this in his rhetoric about the courts somehow avoiding deciding his cases on the merits, etc., because the courts are "afraid" of him or his arguments, or whatever his theory is. This is classic narcissism: the delusional belief that one's self is omnipotent. Every loss, according to Peter, is a victory for him. Some of his followers love to parrot that line of thought - such as Mooney. These people are sick.

[Noah]

You have it exactly 180 degrees backwards.

Hendrickson will be hanging his hat on his misreading of the section 3401(c) definition of "employer," and the government will need to prove that Hendrickson KNEW he was wrong about section 3401(c) at the time he filed his returns. And so, once again, it boils down to "willfulness."

It would not be the first time I got things backwards.

but,

I have not read all the pleadings and don't know if Pete preserved the issue of whether he was a 3401 employee or not. If not then I think Pete will be hanging his hat on his understanding (right or wrong) of both the 3401 definitions of employer and employee.

[Nikki]

First, the definitions in §3401 apply ONLY to Chapter 24 of Subtitle C and have no bearing whatsoever on the difinition of gross income.

Second, Pete managed to come up with his warped interpretation of §3401 only by specifically ignoring -- in fact reversing -- the definition of "includes and including" as spelled out in 26USC.

Pete looked at

(c) Employee
For purposes of this chapter, the term "employee" includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term "employee" also includes an officer of a corporation.

and decided to interpret "includes" as "means", thereby defining himself out of the scope of an employee.

So, aside from deliberately misinterpreting the plain letter of the law and applying a definition outside its specifically limited scope, he's 100% correct.

Unfortunately, those two actions also form 100% of the basis of CtC.

[LPC]

I have not read all the pleadings and don't know if Pete preserved the issue of whether he was a 3401 employee or not.

I don't practice criminal law, but I believe that there are very few (if any) issues that need to be "preserved" in pre-trial pleadings, and those few that might need to preserved are procedural or relate to affirmative defenses.

The government has the burden of proving that the alleged crime was committed by the defendant. If at the close of the government's case, the government has not proved the alleged crime, or has produced evidence of a crime that was not alleged in the indictment, or has produced evidence of the actions described in the indictment and those actions are not criminal, then the defendant is entitled to a verdict of not guilty.

If not then I think Pete will be hanging his hat on his understanding (right or wrong) of both the 3401 definitions of employer and employee.

How on earth could Personnel Management (Hendrickson's employer) not be within the section 3401 definition of "employer"? Have you even read the definition?

[Dezcad]

After listening to PH on the recent No State Project show, my guess as to PH's reasoning is as follows. PH thinks that since the government must prove under 26 USC 7206 (1) that "he does not believe to be true and correct as to every material matter", the LH members can testify that PH did believe that he had $0 wages.

PH continued to stress that the government cannot prove that he "did not believe" that he had $0 wages.

I think that PH is completely wrong and will fail in that line of reasoning but I think that is his current approach.

Then again, it is just my WAG.

[Imalawman]

After listening to PH on the recent No State Project show, my guess as to PH's reasoning is as follows. PH thinks that since the government must prove under 26 USC 7206 (1) that "he does not believe to be true and correct as to every material matter", the LH members can testify that PH did believe that he had $0 wages.

PH continued to stress that the government cannot prove that he "did not believe" that he had $0 wages.

I think that PH is completely wrong and will fail in that line of reasoning but I think that is his current approach.

Then again, it is just my WAG.

Ah, yes, the "I'm too stupid to know that my wages are taxable" defense. It has occasionally worked. I'm not going to underestimate his ability to convince the jury that he really is that stupid.

[Demosthenes]

the LH members can testify that PH did believe that he had $0 wages.

Which would be hearsay, no?

[Noah]

How on earth could Personnel Management (Hendrickson's employer) not be within the section 3401 definition of "employer"? Have you even read the definition?

Yes and I have also read the definition of employee also...how do you fit Pete into the definition of employee ?

[Nikki]

How on earth could Personnel Management (Hendrickson's employer) not be within the section 3401 definition of "employer"? Have you even read the definition?

Yes and I have also read the definition of employee also...how do you fit Pete into the definition of employee ?

WRONG !

The definition of employee is broad with specific exceptions. Which of those exceptions applies to Pete, making him NOT an employee?

And, how does his status as an employee matter with respect to his income taxes?

[Pottapaug1938]

I think that, once again, Henderson and his defenders are playing the word game in which they pretend that the word "includes" is a term of limitation, and this anything not specifically mentioned in the definition is not covered by it. It's because of people like this that you sometimes see the legalese phrase "including, but not limited to". However, legal precedent has amply supported the true meaning of "including" as a term of emphasis and clarification -- thus when I say that the list of those who post on Quatloos forums includes Pottapaug1938 and SteveSy, that does not mean that only the two of us post on these forums.

[Noah]

The definition of employee is broad with specific exceptions. Which of those exceptions applies to Pete, making him NOT an employee?

And, how does his status as an employee matter with respect to his income taxes?

(c) Employee
For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term “employee” also includes an officer of a corporation.

Where are the exceptions listed?

I believe Pete's position is that he is not included in the definition rather than an exception to it.

The wages of employees defined in 3401 are subject to income tax collection at the source
( subtitle C , chapter 24 ) . As far as the general income tax, the type of employee does not matter.

[LPC]

How on earth could Personnel Management (Hendrickson's employer) not be within the section 3401 definition of "employer"? Have you even read the definition?

Yes and I have also read the definition of employee also...how do you fit Pete into the definition of employee ?

Your question does not answer my question.

Unless you are conceding that the definition of "employer" is irrelevant to Hendrickson's defense.

[Noah]

How on earth could Personnel Management (Hendrickson's employer) not be within the section 3401 definition of "employer"? Have you even read the definition?

Yes and I have also read the definition of employee also...how do you fit Pete into the definition of employee ?

Your question does not answer my question.

Unless you are conceding that the definition of "employer" is irrelevant to Hendrickson's defense.

Employee is used to define employer, therefore, if Pete is not a employee as defined in 3401 then the person who paid Pete his compensation is not a employer as defined in 3401. That is how Personnel Management would be outside of 3401 definition of employer.

[Nikki]

The definition of employee is broad with specific exceptions. Which of those exceptions applies to Pete, making him NOT an employee?

And, how does his status as an employee matter with respect to his income taxes?

(c) Employee
For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term “employee” also includes an officer of a corporation.

Where are the exceptions listed?

I believe Pete's position is that he is not included in the definition rather than an exception to it.

The wages of employees defined in 3401 are subject to income tax collection at the source
( subtitle C , chapter 24 ) . As far as the general income tax, the type of employee does not matter.

See 26USC3121(b)

[Cpt Banjo]

Employee is used to define employer, therefore, if Pete is not a employee as defined in 3401 then the person who paid Pete his compensation is not a employer as defined in 3401. That is how Personnel Management would be outside of 3401 definition of employer.

But this is based upon Hendrickson's asinine interpretation of the word "includes", which has been consistently shot down by the courts.

[Quixote]

Employee is used to define employer, therefore, if Pete is not a employee as defined in 3401 then the person who paid Pete his compensation is not a employer as defined in 3401. That is how Personnel Management would be outside of 3401 definition of employer.

But this is based upon Hendrickson's asinine interpretation of the word "includes", which has been consistently shot down by the courts.

And even if Pete's pay were not wages, that matters only in his fantasy world. In his recent interview, Pete confirmed that he believes that, if a term is specially defined in a statute, any statute, no matter how obscure, the courts use the word as defined, not as it is commonly used.

[Noah]

Where are the exceptions listed?

I believe Pete's position is that he is not included in the definition rather than an exception to it.

The wages of employees defined in 3401 are subject to income tax collection at the source
( subtitle C , chapter 24 ) . As far as the general income tax, the type of employee does not matter.

See 26USC3121(b)

26USC3121(b) is in chapter 21 and not applicable to chapter 24. 3401 definitions are exclusive to chapter 24.