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                    Deceptive IRS Code Words








































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Reader's Notes:























































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                                                       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.


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     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


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                                                       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.






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     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


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                                                       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.




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     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:






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                                                       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.






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     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".





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                                                       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.


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