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Appendix G
Deceptive IRS Code Words
Page G - 1 of 12
The Federal Zone:
Reader's Notes:
Page G - 2 of 12
Appendix G
Deceptive IRS Code Words:
"Income", "Person", "Taxpayer", "Shall", and "Must"
Learn to Decipher the Internal Revenue Code and IRS Publications
The Internal Revenue Code (IRC) is a masterpiece of
deception designed to mislead Citizens into believing that
individuals are subject to federal income tax. The Code was
written by attorneys for the Internal Revenue Service (IRS), and
contains a series of directory statutes using the word "shall",
with provisions that are requirements for corporations, but not
for individuals. Even members of Congress are generally unaware
of the deceptive legal meanings of certain terms that are
consistently used in the IRC. These terms have legal
definitions for use in the IRC that are very different from the
general understanding of the meaning of the words.
Lack of knowledge of these legal definitions causes
misunderstanding by uninformed Citizens who are confused as to
the correct interpretation of both the IRC and the true meaning
of the tricky wording in IRS instructional publications and news
articles. However, when you understand the legal definitions of
these terms, the deception is easily recognized and the limited
application of the Code becomes clear. This understanding will
help you to see that filing income tax forms and paying income
taxes must be voluntary acts for most Americans because the
United States Constitution forbids the federal government to
impose any tax directly upon individuals.
"INCOME"
Most people mistakenly believe all moneys they receive, such
as wages, salaries, and tips, are "income". However, for years,
IRS publication #525, entitled "Taxable and Nontaxable Income",
has acknowledged that wages and salaries are NOT "income".
Publication #525 states: "Wages and salaries are the main SOURCE
of income for most people." In the court decision of Graves vs
People of the State of New York ex rel O'Keefe, 59 S.Ct. 595
(1939), the United States Supreme Court ruled that a source of
income is not income, and the source is not subject to income
tax. In that decision, the Court stated: "A tax on income is
not economically or legally a tax on its source." However,
wages, salaries, commissions, and tips (sources) are considered
to be "income" for an individual when he lists them as "income"
on an IRS tax return form. When he signs the tax form under
penalty of perjury, he has made a voluntary oath that his wages,
salary, commissions, and tips listed on the return are "income"
and that he is subject to the tax.
Page G - 3 of 12
The Federal Zone:
In the still standing decision of Brushaber vs Union Pacific
Railroad Company, 240 U.S. 1, the United States Supreme Court
ruled that the federal income tax is an excise tax under the
Sixteenth Amendment (the income tax amendment). The Court
explained that THE INCOME TAX CANNOT BE IMPOSED AS A DIRECT TAX
(A TAX ON INDIVIDUALS OR ON PROPERTY) because the United States
Constitution still requires that all direct taxes must be
apportioned among the States. "Apportioned" means that a direct
tax is laid upon the State governments in proportion to each
State's population. The Court ruled that income tax can be
constitutional only as an indirect (excise) tax -- that is, a tax
on profits earned by corporations or privileges granted by
government. In other words, said the Supreme Court, in order for
there to be "income", there MUST be profits or gains received in
the exercise of a privilege granted by government. As an
example, a lawyer is granted the government privilege of being an
officer of the government court when he represents clients in
litigation.
At law, labor is property. In fact, the Supreme Court has
identified labor as man's most precious property. Therefore, the
exchange of one's labor for wages or salary (which are also
property) is considered by law to be an exchange of properties of
equal value in which there is NO gain or profit. Such a property
exchange of equal value cannot be taxed because there is no
profit or gain. Also, one who works in an ordinary occupation is
not a recipient of any privilege granted by government, because
he is merely exercising his constitutionally guaranteed right to
work and earn an living. Courts have repeatedly ruled that no
tax may be placed upon the exercise of rights. Their reasoning
was sensible. If the exercise of rights could be taxed,
government could destroy them by excessive rates of taxation.
Items that the law includes in "income" are described in
Code sections listed under the title of "Items Specifically
Included in Gross Income", which covers Sections 71 through 86.
Nowhere in these sections and nowhere else in the Code is there
any mention of wages, salaries, commissions, or tips as being
"income". For example, to deceive and intimidate waitresses into
declaring their tips to be income is a double fraud. First, tips
are gifts, not wages. According to the IRC, gifts are not
subject to income tax. In fact, even if tips were considered to
be wages, they would still not be "income" and would not be
subject to an income (excise) tax unless one enters them as
"income" on a tax return form.
"PERSON"
People generally consider the term "person" to mean an
individual only. But, IRC Section 7701, entitled "Definitions",
includes a corporation, a trust, an estate, a partnership, an
association, or company as being a "person". All of these legal
entities are "persons" at law, so it is legally correct but very
Page G - 4 of 12
Appendix G
misleading when the federal income (excise) tax on corporations
is described by the deceptive title of "Personal Income Tax".
This misleading description leads most people to believe that it
means a tax on individuals.
The legal term "person" has an even more restricted
definition when used in IRC Chapter 75, which contains all the
criminal penalties in the Code. In Section 7343 of that Chapter,
a "person" subject to criminal penalties is defined as:
... [A]n officer or employee of a corporation, or a member
or employee of a partnership, who, as such officer, employee
or member, is under a duty to perform the act in respect of
which the violation occurs.
An individual who is not in such a capacity is not defined as a
"person" subject to criminal penalties. Unprivileged
individuals, who do not impose the income (excise) tax upon
themselves by filing returns, are not subject to the tax and they
are not "persons" who can lawfully be subjected to criminal
charges for not filing a return or not paying income tax.
Sections of the Code relating to the requirements for filing
returns, keeping records, and disclosing information state that
those sections apply to "every person liable" or "any person made
liable". These descriptions mean "any person who is liable for
the tax". They do not state or mean that all persons are liable.
The only persons liable are those "persons" (legal entities such
as corporations) who owe an income (excise) tax, and are
therefore subject to the requirements of the IRC. If you
substitute the word "corporation" for the term "person" (a
corporation is a person at law) when reading the Code or other
articles and publications relating to income tax, the true
meaning of the Code becomes more apparent.
A TAX PAYER IS NOT A "TAXPAYER"
The deceptive term "taxpayer" is a legal term created by
combining the words "tax" and "payer". The general understanding
of the term's meaning is different from its legal definition in
the IRC. Section 7701(a)(14) gives the legal definition of the
term "taxpayer" in relation to income tax. It states: "The term
'taxpayer' means any person subject to any internal revenue tax."
(All internal revenue taxes are excise taxes.) Note that the
section does not say that all persons are "taxpayers" subject to
internal revenue tax. Corporations are "taxpayers", for they are
"persons" subject to an internal revenue (excise) tax.
Page G - 5 of 12
The Federal Zone:
The term "taxpayer" is used extensively throughout the IRC,
in IRS publications, news articles, and instructional literature
as a verbal trap to make uninformed Citizens believe that all
individuals are subject to federal income tax and to the
requirements of the IRC. These materials state that "taxpayers"
are required to file returns, keep records, supply information,
etc. Such statements are technically correct, because
"taxpayers" are those legal "persons" previously described that
are subject to an excise tax, but unprivileged individuals are
not "taxpayers" within the meaning of the IRC.
The confusion about the meaning of the term leads most
people to mistakenly assume that they are "taxpayers" because
they pay other taxes such as sales taxes and real estate taxes.
Those people are tax payers, not "taxpayers" as defined in the
IRC. When they read articles and publications related to income
tax, describing the legal requirements for "taxpayers", they
erroneously believe that the term applies to them as individuals.
It is very important to understand that the IRC requirements
apply to IRC-defined "taxpayers" only, and not to unprivileged
individuals. Corporations and other government-privileged legal
entities are "taxpayers under the Internal Revenue Code";
unprivileged individuals are not, unless they voluntarily file
income tax returns showing they owe taxes, thus legally placing
themselves in the classification of "taxpayers". Because of its
legal definition, the term "taxpayer" should never be used in
relation to income tax, except to describe those legal entities
subject to a federal excise tax.
"SHALL" means "MAY"
In general use, the word "shall" is a word of command with a
mandatory meaning. In the IRC, "shall" is a directory word that
has a mandatory meaning when applied to corporations. The IRC
contains a series of directory statutes using the word "shall" in
describing the actions called for in those sections of the law.
The provisions of these directory statutes are requirements for
corporations, because corporations are created by government and,
consequently, are subject to government direction and control.
Since corporations are granted the privilege to exist and operate
by government-issued charters, they do not have the
constitutionally guaranteed rights of individuals. This
government-granted privilege legally obligates corporations to
make a "return" of profits and gains earned in the exercise of
their privileged operations when directed to do so by law. This
is why the tax form is called a "return".
However, directory words in the Code merely imply that
individuals are required to perform certain acts, but directory
words are not requirements for individuals when a mandatory
interpretation of the directory words would conflict with the
constitutionally guaranteed rights of individuals. Courts have
repeatedly ruled that in statutes, when a mandatory meaning of
Page G - 6 of 12
Appendix G
the word "shall" would create a constitutional conflict, "shall"
must be defined as meaning "may". The following are quotes from
a few of these decisions. In the decision of Cairo & Fulton R.R.
Co. vs Hecht, 95 U.S. 170, the U.S. Supreme Court stated:
As against the government the word "shall" when used in
statutes, is to be construed as "may," unless a contrary
intention is manifest.
In the decision of George Williams College vs Village of Williams
Bay, 7 N.W.2d 891, the Supreme Court of Wisconsin stated:
"Shall" in a statute may be construed to mean "may" in order
to avoid constitutional doubt.
In the decision of Gow vs Consolidated Coppermines Corp., 165
Atlantic 136, the court stated:
If necessary to avoid unconstitutionality of a statute,
"shall" will be deemed equivalent to "may" ....
Sections 6001 and 6011 of the IRC are cited in the Privacy
Act notice in the IRS 1040 instruction booklet in order to lead
individuals to believe they are required to perform services for
tax collectors. Note the use of the word "shall" in the
following sections of the Code:
Section 6001 states:
Every person liable for any tax imposed by this title, or
for the collection thereof, shall keep such records, render
such statements, make such returns, and comply with such
rules and requirements as the Secretary may from time to
time prescribe.
Section 6011 states:
When required by regulations prescribed by the Secretary any
person made liable for any tax imposed by this title, or
for the collection thereof, shall make a return or statement
according to the forms and regulations prescribed by the
Secretary.
Page G - 7 of 12
The Federal Zone:
Note that Sections 6001 and 6011 apply to "every person
liable" and "any person made liable", but not to "individuals".
However, THERE IS NO SECTION IN THE IRC THAT MAKES INDIVIDUALS
LIABLE FOR PAYMENT OF INCOME TAX because any law imposing a
federal tax on individuals would be unconstitutional, for it
would violate the taxing limitations in the U.S. Constitution
which prohibit direct taxation of individuals by the federal
government. People are often confused when reading the Code
because, under Subtitle A, Chapter 1, which covers income taxes,
Part 1 of Subchapter A has the misleading title of "Tax on
Individuals". The title is misleading because Part 1 imposes the
tax on "income", but contains no requirement for individuals to
pay it. But an individual becomes a "person liable" for the tax
when he files an income tax form, thereby swearing that he is
liable for (owes) the tax.
The Privacy Act notice in the instruction booklet for IRS
Form 1040 also shows that disclosure of information by
individuals is not required. The notice states:
Our legal right to ask for information is Internal Revenue
Code sections 6001 and 6011 and their regulations.
The IRS does not say that those sections require individuals to
submit the information; those sections only give the IRS the
authority to ask for it.
Section 6012 states:
Returns with respect to income taxes under Subtitle A shall
be made by the following: (1)(A) Every individual having
for the taxable year gross which equals or exceeds the
exemption amount ...."
Subsections (2) through (6) list corporations, estates, trusts,
partnerships, and certain political organizations as also being
subject to this section.
Any requirements compelling unprivileged individuals to keep
records, make returns and statements, or to involuntarily perform
any other services for tax collectors, would be violations of
constitutionally guaranteed rights.
The Thirteenth Amendment to the United States Constitution
forbids compelling individuals to perform services involuntarily.
The Amendment states:
Page G - 8 of 12
Appendix G
Neither slavery nor involuntary servitude, except as
punishment for crimes whereof the party shall have been duly
convicted, shall exist within the United States, or any
place subject to their jurisdiction.
The Fourth Amendment in the Bill of Rights of the United
States Constitution states that the people's right to privacy of
their papers shall not be violated by government. To compel
individuals to disclose information taken from their papers would
violate this right.
The Fifth Amendment in the Bill of Rights protects the right
of individuals not to be required to be witnesses against
themselves. To compel individuals to disclose information by
submitting statements or information on a tax return form, all of
which could be used against them in criminal prosecutions, would
violate their Fifth Amendment right.
These examples show some constitutional conflicts that would
result from defining the word "shall" as meaning "is required
to". Thus, "shall" in the above mentioned statutes must be
interpreted as meaning "may". Consequently, for individuals,
keeping records, making statements, and making returns are
clearly voluntary actions that are not required by law.
"HAVING" INCOME
According to the wording of Section 6012 previously
discussed, it is a directory statute which pertains to the filing
of income tax returns, and applies only to those individuals
"having income". Since the word "having" has no deceptive legal
definition in the Code, its legal meaning is the same as its
customary meaning in general use. Although dictionaries define
the word "have" as meaning "possess" or "hold in one's
possession", the IRS fraudulently misinterprets "having income"
as meaning "receiving gross receipts" when applying Section 6012
to individuals.
To better understand the meaning of "having income",
consider this example: If during one year a corporation receives
ten million dollars (gross receipts) from the sales of its
products, and has expense items of nine million dollars, the
corporation has a profit (income) of one million dollars. When
tax liabilities are determined at the end of the year, the
corporation has (possesses) an increase in its assets (a gain) of
one million dollars. But, if the corporation's expenses equalled
its gross receipts, it would then have (possess) no profit or
gain (income) and it would owe no income tax.
Page G - 9 of 12
The Federal Zone:
Now, consider another example: If during one year an
individual receives fifteen thousand dollars in wages (gross
receipts) from the sale of his labor, and has expenses of fifteen
thousand dollars to sustain himself and his family, he then has
(possesses) no increase in assets. Although he has (possesses)
nothing more than he had at the beginning of the year, IRS agents
consider him as "having income" of fifteen thousand dollars. IRS
agents ignore the fact that his wages were not income according
to their own publications!
"MUST" means "MAY"
Most people have never studied the IRC and their
understanding of the law is generally based on hearsay, newspaper
articles and IRS instructional materials. These instructions
make frequent use of the deceptive word "must" in describing the
things that the IRS wants you to do, because "must" is a forceful
word that people mistakenly believe to mean "are required". Very
few people realize that "must" is a directory word similar to
"shall" and that, in IRS instructions to the public, it means
"may", the same as the word "shall".
In the legal definition of the word "must" in Black's Law
Dictionary, it states:
... [I]t is often used in a merely directory sense, and
consequently is a synonym for the word "may" not only in the
permissive sense of that word, but also in the mandatory
sense which it sometimes has.
Because of the constitutional conflicts explained earlier in
this article, the word "must", similar to the word "shall",
cannot have a mandatory meaning for individuals. It therefore
means "may" when used in IRS instruction publications.
The IRS instructions for Form 1040 state that you "must"
file a return if you have certain amounts of income. IRS
withholding instructions state that employers "must" withhold
money from paychecks for income tax, "must" withhold social
security tax (an income tax also), and "must" send to the IRS any
W-4 withholding statement claiming exemption from withholding, if
the wages are expected to usually exceed $200 per week. An
understanding of the legal meaning of the word "must" exposes the
deception by the IRS and makes it clear that the actions called
for are voluntary actions for individuals that are not required
by law. If these actions were required by law, the instructions
would not use the word "must", but would say that the actions
were "required".
Page G - 10 of 12
Appendix G
FREE SOVEREIGN CITIZENS
Prior to the American Revolution, the American colonists
were subjects of the English Kings and were subject to their
orders and edicts. But, according to the Declaration of
Independence and the United States Constitution, the Citizens of
our country are free sovereign individuals. They are not
subjects of government, nor are they subject to mandatory
direction or control by the federal government. Except for
duties such as military draft and jury duty, the federal
government has no authority to require unprivileged individuals
to perform services for government.
There is no section in the IRC requiring individuals to pay
income tax or file income tax returns, because the federal
government has no constitutional authority to impose any tax
directly upon individuals or to require them involuntarily to
keep records, make statements, make returns, or perform any acts
for the convenience of federal tax collectors. But, if an
individual files a return, his voluntary action of signing the
form, thereby swearing under penalty of perjury that he owes the
tax, is an acknowledgement under oath that he is subject to the
tax (a "taxpayer") and is therefore subject to the directory
statutes of the IRC.
The reader should remember the legal definitions of the
various terms and the information about the rights of Citizens
presented in this article whenever he reads the IRC and other
materials relating to income tax in order to better understand
the correct meaning of whatever they read.
_______________________________
INFORM PEOPLE OF THEIR RIGHTS.
SHOW THIS TO YOUR FRIENDS!
REPRINT THIS ARTICLE AND DISTRIBUTE IT.
YOU MAY PRINT YOUR GROUP'S NAME
AND MESSAGE BELOW.
To obtain additional information,
send a large self-addressed stamped envelope to:
FREE STATE CONSTITUTIONISTS
c/o Post Office Box 3281
Baltimore, Maryland
Postal Zone 21228
Page G - 11 of 12
The Federal Zone:
Page G - 12 of 12
