For the 64 years of its existence, the U. S. Internal Revenue Code has been ridiculed, feared and despised by virtually everyone. And why not? As presented by the Internal Revenue Service, the code appears illogical, inconsistent and incomprehensible. As presented, the code defies practically the entire Bill of Rights– requiring citizens to testify against themselves, allowing searches and seizures without warrants, levying fines and penalties without trials and imposing a tax on the basic right to earn a living. As presented, the IRC would appear to turn everything we all thought we had learned in grade school English and Civics on its head.
Is it possible that we all just misunderstood those simple lessons? Maybe. 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!
What You Will Learn in 'Cracking the Code':
- That the vast majority of the Internal Revenue Code (IRC) is not the law itself, but is only evidence -- a representation -- of the actual statues in force, and like in the game of post-office, the real language has beena bit garbled in transmission.
- That "income", "wages", "self-employment income", "employee", "employer" and "trade or business" -- as these and certain other terms are used within, and in regard to, the tax law -- have narrow legal meanings exclusive involving, applying to, certain privileged activities, such as holding or administering a government office, or working in one.
- That altough the tax statutes make perfectly clear that, for instnace, language describing the obligations of "employees" -- and the taxes to which "employees" are subject -- only apply to a small minority of American workers, the distinction is artfully concealed int he IRC representation of the law, and is never forthrightly acknowledged in any IRS publication (although it is obliquely acknowledged whenever necessary for the avoidance of legal jeopardy).
- That an elaborate system has been created which causes some people to whom the tax laws do not otherwise apply (maybe including you) to inadvertently declare themselves to be among the poersons to whom those laws do apply.
"The revenue laws are a code or system in regulation of tax assessment and collection. They relate to taxpayers, and not to nontaxpayers. The latter are without their scope." United States Court of Claims, Economy Plumbing and Heating v. United States, 470 F.2nd 585, at 589 (1972)
From the Forward:
It was not until the late 1990's, when the Internal Revenue Code was digitized (and thus made searchable) that it became possible to decipher its deliberately confusing and misleading construction. Only then could complete searches be doen of all 3,413,780 or so words (not counting regulations!) for every incidence of "liable", "imposed", "income", "employee", and dozens of other key or misleading terms -- checking every reference, exception, definition and sources. Only then could it be established that, as written, the laws behind the code and the taxes that they impose technically comply with the Constitution, just as all the judges have said over the years.
But the same analysis also reveals that, as written, these laws don't apply to most of the receipts of most private citizens. Indeed, the two things are interdependent -- the former couldn't be true unless the latter was also true.
What you will learn as you read this book is that specific Constitutional limitations on the federal government’s power to tax do shape related law, and have generated a coherent Supreme Court doctrine which clearly and soundly answers the question of what is taxable "income”. Both the statutes and the doctrine acknowledge the exemption of the vast majority of private-sector receipts from that taxing power’s reach.
However, you will also learn about a complex combination of craft, routine bureaucratic incoherence, and casual-- and not-so-casual-- corruption by virtue of which many people are led to inadvertently allow, and even participate in, the legal transformation of their untaxable earnings into taxable "income”. Such people are tricked into voluntarily and utterly unnecessarily enabling the diversion of a river of wealth from their own hands, usually never to be seen again.
Thanks to an unhappy coincidence of reiterations and amendments of the law, a series of complicated judicial rulings, and the passage of time and memories, the details of American tax law-- and the principles upon which it is based-- have come to be widely misunderstood. The opportunities presented by that reality have been seized upon, by those paid to maximize revenue flow to the government, to successfully construct an elaborate and deceptive tax scheme rooted in today’s Internal Revenue Code.
This scheme capitalizes on widespread public ignorance of general legal doctrine and rules of statutory construction. It practices a careful gauging of extraction levels to the tolerance limits of key demographic segments. It relies upon the concealment of the underlying actual-law-in-force behind the misleading words of the code, which is legally no more than ‘evidence of the law’, and not the law itself.
Fundamental to the scheme is designing that code to be so dauntingly and profoundly confusing as to force the vast majority of those against whom it’s directed to abandon even a pretense of personal comprehension. These targets are thus compelled to surrender their decision-making to the code’s administrative bureaucracy or a professional class of fixers and go-betweens-- the members of either of which are dependent on the scheme for their own earnings.
Unsurprisingly, both assure any who ask that of course private-sector receipts are taxed under the law. If pressed, these experts will trot out carefully selected, out-of-context and ambiguous fragments of law calculated to convincingly suggest that what they claim must be in the law, somewhere. But somehow, they never manage to demonstrate exactly where. ‘Cracking the Code’ is going to provide that missing context, unravel the tangle of deceit and confusion, and make clear that not only is it not in there anywhere, what is in there is just the opposite.
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