The Truth about Cracking the Code

[grammarian44]

Query re: "Includes" argument:

This is an argument about the meaning of a word--the word "includes."

Meanings of words are not contained within the words as inherent properties; meanings are always assigned by someone. Obviously a single word is susceptible to multiple meanings. That could be just as true of the verb "to include" as it is of words like "or" or "must."

Why is everyone acting as if, by looking at multiple uses of the word "includes," it would be possible to "settle" the issue of what it must mean at one particular instance of its use? Battery boxes?

The only way to settle the issue of the "true meaning" of a word is to stop multiplying examples of its use and return to the actual uses that are in dispute. The uses that are in dispute appear in the Internal Revenue Code. And the Internal Revenue Code itself assigns a meaning to the word "includes."

So why doesn't Section 7701(c) of the Code settle the issue? It says that "when used as a definition contained in this title"--which must mean title 26--"the terms 'includes' and 'including' . . . shall not be deemed to exclude other things otherwise within the meaning of the term defined."

Everyone here knows that Code section. So why are we talking about battery boxes and mayors attending ball games? I haven't heard anyone (lately, anyway) make the argument that section 7701(c) doesn't mean what it so obviously means. Why not?

[Famspear]

thanks for info Harvey. I still say this is a strange forum, some of you act like I just insulted your mother. Just a seeker here.

Peace, Lorne

So, let's get this straight. In regards to tax law, you will blindly accept what a currently imprisoned former arcade manager says and the mostly incoherent ramblings of a person who has made numerous predictions, none of which have come true, over the word of lawyers and CPAs? That is not the action or attitude of a "seeker".

No, but wait, we're understating Blowhard Hendrickson's credentials; he is a recidivist, currently imprisoned former arcade manager with an additional background in apartment complex maintenance!! That makes all the difference!



And how do we know he's right? Well, he's told us he's right! As Blowhard Hendrickson Himself once wrote:

At the risk of vulgarity, I will say as plainly as possible what I have by necessity said many times before, but usually with more circumspection (and can't seem to say often enough): Any and all notions concerning the nature of the "income" tax-- how it is applied, why it can be thus applied, how it interfaces with the legal system and so forth-- which are not taught in CtC or on this site (exclusive of forum posts, of course) are just inherently wrong or are entirely irrelevant to the tax. They are raised or promoted either in ignorance or for ill purposes.
Such notions should not be debated or discussed -- doing either is a waste of valuable time and energy.

Let's see now..... the "nature of the income tax" and how it "interfaces" with the legal system, hmm..... (flipping pages in a copy of Hendrickson's Cracking the Code, assuming I had a copy in my possession.....) hmmmm yes, let's see, where does Blowhard Hendrickson talk about how to stay out of federal prison after using his Cracking the Code method, oops, sorry, he's says it's not a method....... hmmmmm let's see, there must be something in here that talks about what you're supposed to do when the Blowhard Himself goes to prison for using this method, uh, I mean, this non-method......

And in another place on his web site, Blowhard Hendrickson referred to himself (in The Third Person) as a "researcher, analyst and scholar":

But researcher, analyst and scholar Peter E. Hendrickson believes that after Cracking the Code, you’ll agree that what has been misunderstood is the 3,413,780 word monstrosity itself– and how, and to whom, it applies.
Hendrickson delves deep into the history, statutes and case law behind the Code to reveal its startling and liberating secrets; and unless you live in a cave, you need to know what he’s uncovered.
Once you’ve finished “Cracking the Code”, the tax laws will never mean the same thing to you, or your bank account, again!

Oh, Recidivist Blowhard Pete, we sing your praises!

We just hope you can hear us singing, all the way over there in your prison cell at the Federal Correctional Institution at Milan, Michigan.

EDIT: Excuse me but I'm still stuck. I just can't figure out why Blowhard Hendrickson is having to spend the next few years in federal prison for using his Cracking the Code scheme on his own tax returns. I mean, here's another place, on his web site, where he said:

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.

Golly, gee willikers.... there must be something in the book, something in the Cracking the Code book, that tells the reader how to keep from going to federal prison for using the method, uh, the non-method, in the book. Why oh why is Pontificating Prisoner Pete, the Bloviating BlowhardMeister, in prison for using Cracking the Code?

Gosh, it sure is a puzzle.

[LPC]

So why doesn't Section 7701(c) of the Code settle the issue? It says that "when used as a definition contained in this title"--which must mean title 26--"the terms 'includes' and 'including' . . . shall not be deemed to exclude other things otherwise within the meaning of the term defined."

Everyone here knows that Code section. So why are we talking about battery boxes and mayors attending ball games?

Tax nuts often seem to want to ignore section 7701(c), or argue it simply couldn't mean what it says, and so it seems appropriate to point out to them that the meaning given to "includes" by section 7701(c) is the *normal* every-day meaning of the word.

Like many tax denial ideas, the argument that the use of the word "includes" in a definition necessarily excludes other meanings fails on so many different levels that it's often difficult to know where to start. Talking about boxes and mayors seems like as a good an approach as any, most days.

[Harvester]

So why doesn't Section 7701(c) of the Code settle the issue? It says that "when used as a definition contained in this title"--which must mean title 26--"the terms 'includes' and 'including' . . . shall not be deemed to exclude other things otherwise within the meaning of the term defined."

Agreed. But it may not be so obvious. What is the meaning of the term [employee] defined?....

(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.

So 'employee' includes:
1) an officer of the United States, a State, or any political subdivision thereof, or DC, or any agency or instrumentality of any one or more of the foregoing.
2) an elected official of the United States, a State, or any political subdivision thereof, or DC, or any agency or instrumentality of any one or more of the foregoing.
3) an officer of a corporation.
*) an employee of the United States, a State, or any political subdivision thereof, or DC, or any agency or instrumentality of any one or more of the foregoing.

Everything is clear and straightforward until *) because here the legislative draftsman has used the term defined [employee] within the definition itself! RED FLAG. The danger here is the risk of fallacy or circular logic. Therefore, to be clear (statutes should be clear, no?) we could restate *) as:
4) a worker of the United States, a State, or any political subdivision thereof, or DC, or any agency or instrumentality of any one or more of the foregoing.

Now you may also not be aware of the multiple definitions of "United States" and "State" in the statutes. With some digging, we learn that both meanings are limited to federal areas in this definition.

SO, what is the meaning of the term defined? 1 thru 4 above which could be summarized as 'federal workers.' But remember 7701, it "shall not be deemed to exclude other things otherwise within the meaning of the term defined." SO, we cannot exclude other federal workers. All federal workers shall be included in the statutory definition of 'employee.' Can anyone tell me what is NOT included? Raise your hand.

[Famspear]

[ snip the usual mindless meandering......]SO, we cannot exclude other federal workers. All federal workers shall be included in the statutory definition of 'employee.' Can anyone tell me what is NOT included? Raise your hand.

Why would anyone want to "tell you"?

Please start over, with something approaching a properly formed legal analysis.

Go look for a court case where a federal court ruled that private-sector earnings in an activity not involving a federal privilege are not "income" within the meaning of the Internal Revenue Code.

[Prof]

Unfortunately for H, no court has ever read the "includes" definition in the way he and others do. That settles the issue. The courts -- federal courts -- get to interpret the meaning of statutory language. For all I might know, H could actually be correct in his assertion that the draftperson might just have intended H's result. But, the courts get to decide what that verbage means, and their word interpretation is FINAL.

P.S., H. that is why Congress amends statutes when it does not agree with what courts or the Supreme Court has done to its verbage. Congress is certainly free to amend the IRC to give you a great big Pete WIN. It just hasn't done so. Get a lobbyist and go at it.

[Joey Smith]

The bottom line is that nobody who matters buys Pete's definition of "includes", since it is totally and completely wrong.

Under Harvester's reasoning, if he read a line that said "fruit includes strawberries" he would then presume that apples are not a fruit because they were not listed with strawberries.

Completely dumb, stupid interpretation and exactly why Pete is in prison and deservedly so.

Morons.

[The Operative]

So why doesn't Section 7701(c) of the Code settle the issue? It says that "when used as a definition contained in this title"--which must mean title 26--"the terms 'includes' and 'including' . . . shall not be deemed to exclude other things otherwise within the meaning of the term defined."

Agreed. But it may not be so obvious. What is the meaning of the term [employee] defined?....

(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.

SNIP illogical ramblings

Harvey, you are EXCLUDING things that are OTHERWISE within the meaning of the term 'employee'. Which is exactly what 7701 is telling you NOT to do.

[Paul]

What can you say, when the moron repeats the "definitions of United States" argument without even realizing that it's built on the same misinterpretation of "includes." He doesn't even know the bases for his stupid assertions, much less tried to think them through for himself.

Can anyone tell me what is NOT included?

Anything not within the normal meaning of "employee," or within the 4 categories of person expressly included within the meaning of "employee" for purposes of that statute by its own terms.

So why the inclusions? Corporate officers and elected officials have to be expressly "included" because Congress wanted them to be subject to withholding, and they are not "employees" within the ordinary meaning of that word. US governmental employees are expressly "included" to make it clear that the US must withhold from its own employees.

It's that simple.

[Harvester]

Paul, you're either deluded or misconstruing. A statutory term is being defined here, the common definition is gone, out the window, gone. Only the custom legal definition applies. Do you want the court cites?

Harvey, you are EXCLUDING things that are OTHERWISE within the meaning of the term 'employee'.

No. I am EXCLUDING things that are OTHERWISE within the meaning of the term 'employee' DEFINED. "otherwise within the meaning of the term DEFINED". What has just been defined? Will no one tell me?

Joey, you can be safely ignored - calling something stupid or wrong doesn't make it so.

To Famspire and the others: you seem not able to grasp that courts are in on the scam.

[ashlynne39]

Unfortunately for H, no court has ever read the "includes" definition in the way he and others do. That settles the issue. The courts -- federal courts -- get to interpret the meaning of statutory language. For all I might know, H could actually be correct in his assertion that the draftperson might just have intended H's result. But, the courts get to decide what that verbage means, and their word interpretation is FINAL.

P.S., H. that is why Congress amends statutes when it does not agree with what courts or the Supreme Court has done to its verbage. Congress is certainly free to amend the IRC to give you a great big Pete WIN. It just hasn't done so. Get a lobbyist and go at it.

I've suggested that before on another board with Henrickson admirerers and they don't want to change the law. Theyr'e so certain it says what Pete says it does that any suggestion of changing the law is met with a big no way.

[Red Cedar PM]

I think there's much truth in Cracking the Code, putting more pieces of this puzzle together. However near the end talks about filing amended returns going back 3 years, and also using Form 4852 to counter the W2 amounts. Both of those ideas seem fraught with risk, that your just asking for trouble there.

Harvester you appear to be successful, did you use those methods?

You don't say! Maybe because you'd be submitting documents under a strategy that has been deemed frivolous and is on the IRS' dirty dozen tax scams?

You're lucky you posted that here - you'd be labelled as a non-warrior and probably banned for such blasphemy at Lost Horizons. Stand tall while the IRS hands you your ass on a platter - that's the CtC Warrior way!

[jg]

...What has just been defined? Will no one tell me? ...

Employee is the term defined.
Section 7701 says you are not to exclude that which is within the meaning of the term defined. In this case, you are not to exclude that which is within the meaning of employee when includes is used with that term being defined (e.g. when used in this chapter) in Title 26, aka the Internal Revenue Code.

That particular inability to read just what is the term defined has always baffled me.
Do you read the phrase "the term defined" as meaning "the definition"? That is wrong.

Have you been misled to imagine that section 7701 only serves to allow the list of items being included as not being excluded? That is nonsensical and pointless.

[The Operative]

Paul, you're either deluded or misconstruing. A statutory term is being defined here, the common definition is gone, out the window, gone. Only the custom legal definition applies. Do you want the court cites?

I am not Paul, but I would like for you to provide court cites. Of course, I am not holding my breath because I know that there are zero court citations that support your position.

Harvey, you are EXCLUDING things that are OTHERWISE within the meaning of the term 'employee'.

No. I am EXCLUDING things that are OTHERWISE within the meaning of the term 'employee' DEFINED. "otherwise within the meaning of the term DEFINED". What has just been defined? Will no one tell me?

You simply provide further proof that you have a reading comprehension problem. DEFINED refers to the expansion of the term through the use of "includes". Section 7701 says that "includes" does NOT exclude anything within the meaning of the term before the expansion.

A definition can be expanded through the use of the word, "includes". However, "includes" does not EXCLUDE anything within the normal definition of the word. The idiotic contention that "includes" limits the definition to a "class" of items only obfuscates things. Who determines the class? One person may look at a list of items and decide the class is one thing and someone else may look at the same list and determine the class is something significantly different.

To Famspire and the others: you seem not able to grasp that courts are in on the scam.

To Harvester, you seem not able to grasp that in this country, what the courts rule is what the law is. A person does not get to determine what the law is. A person can make a guess as to what the law is, but if the courts say that person is wrong, then that person is wrong.

[LPC]

A statutory term is being defined here, the common definition is gone, out the window, gone. Only the custom legal definition applies.

No, that is NOT what section 7701(c) says.

Section 7701(c) says that, when a statutory definition uses the word "includes," then the "common definition" of the word being defined (i.e., the "other things otherwise within the meaning of the term defined") is NOT "gone, out the window, gone," because the definition "shall not be deemed to exclude" those "other things otherwise within the meaning of the term defined."

Do you want the court cites?

Yes, please. Please cite a court decision that says that section 7701(c) doesn't mean what it says, and that the word "employee" does not include people usually considered to be "employees."

Please cite a court decision that Peter Hendrickson has never cited, and that does not exist.

To Famspire and the others: you seem not able to grasp that courts are in on the scam.

And you do not seem to be able to grasp that Hendrickson *IS* the scam.

[Joey Smith]

Be sure to drop us a postcard if you can find any federal judge who even hints that your unique interpretation might be correct.

[LOBO]

One thing about Harvey, he doesn't know the meaning of the word "quit".

Doesn't know the meaning of a lot of other words, either.

[wserra]

courts are in on the scam.

Then youse are fucked, arentcha?

[grammarian44]

Wow, lots of people have responded to Harvester's argument that "includes" as used in 3401(c) is being used in a non-exclusive sense. Now while I agree with that, I would like to point out that the entire question is moot insofar as the main issue is whether Harvester is liable for taxes on wages.

Harvester quotes section 3401(c):

For purposes of this chapter, the term "employee" includes....

"This chapter" is Chapter 24 of Subtitle A of Title 26. The chapter is captioned "Withholding from Wages." The liability for taxes imposed by Chapter 24 is imposed on employers, not employees. See section 3403.

Obviously, whatever "employee" might mean within Chapter 24, regarding withholding from wages, says nothing about what "employee" means for purposes of imposing income taxes on people who earn wages, whether they happen to be employees or not.

So let's suppose we accept Harvester's definition of "employee"--that is, "employee" as referred to in Chapter 24 refers ONLY to federal, etc. employees. Does that change anything at all about whether the rest of the Internal Revenue Code imposes taxes on wages earned by employees? Of course not. All Chapter 24 talks about is withholding from wages.

So if I accept Harvester's definition of "employee" contained in Chapter 24 (which, as a matter of fact, I do not, but that's beside the point here), then it appears that in our tax system, the liability for taxes is imposed on anyone who earns wages (see section 61), while the benefit of employer withholding applies only to federal, etc., employees.

So Harvester, here's where your scheme leaves you: Congratulations! You don't have to have your employer withhold pay from your wages. But then come April 15, you still have to pay the exact same amount of tax that you would have had to pay. Result: Instead of employer withholding, you just have to cut a fat check to the IRS every April for a year's worth of income taxes. Your theory of 3401(c) merely converts you into a 1099 employee; it doesn't spare you a dime in tax. (It would probably save employers zillions, but I have a feeling you're not fighting this battle for the benefit primarily of employers.)

The basic thing you've forgotten is that, regardless of the definition of "includes," section 3401's definition applies to a chapter that is not about liability for taxes, but about a process of collecting taxes. We could use all kinds of collection procedures for different kinds of income while making all that income subject to the same fundamental tax liability. In fact, that's exactly what the Code does.

[darling]

Query re: "Includes" argument:
...
So why doesn't Section 7701(c) of the Code settle the issue? It says that "when used as a definition contained in this title"--which must mean title 26--"the terms 'includes' and 'including' . . . shall not be deemed to exclude other things otherwise within the meaning of the term defined."

Here's Pete's reasoning:
http://www.losthorizons.com/comment/The ... ItSays.pdf

Makes no sense to me, but then I'm not the one in prison right now.