How I Stopped Worrying and Learned to Love the Tax Code

In a scene from the 1982 movie Diner, two working-class kids meet a rich girl in a bucolic setting.  After the brief encounter, they contemplate the difference between the gritty world of inner-city Baltimore and the attitude of their more successful and beautiful neighbor, living but a few miles from the humble row homes and the dysfunctional families the boys would now return to.

"Do you ever get the feeling there's something going on we don't know about?"

It was shortly after delving into Legal Research I and II that I realized that yes, there is a lot going on, and there are powerful people who don't want us knowing about it.  Worse than that, there are things the federal government wants us to misunderstand.  It's not because we can't handle the truth; it's because the truth will enable us to handle our government.

Deviously, I applied my newly discovered legal research skills to something I had long been suspicious about: the federal income tax code – Title 26 if you're keeping score.  I always had the feeling there was something going on that I didn't know about.  The feeling was strongest right about the time I was signing income tax returns under penalty of perjury.

My Widener Law professors started noticing a theme in my research papers.  You see the federal income tax is an issue that arises in almost every class of legal study.  It came up in Wills and Trusts.  It came up in Contract Law, Employment Law, Business Organizations, Torts, Criminal Law and more.  The tax code became, for this student, the gift that kept on giving.  Since I uncovered and emphasized the basic flaws in my classmates' and my teachers' conclusions, my papers started to get noticed.  On the first day of one particular class, the professor told me, "I was warned about you."

Believe it or not, most lawyers and accountants are taught little about the income tax code.  What they are taught goes along these lines: "all income is taxable, but the tax burden can be reduced by taking allowable deductions."  This is what I call playing the deductions game.  If you start from the premise that "all that comes in" belongs to the government and then it lets you have some, you are playing a rigged game.  It's like a Three Card Monte game, big city style.

U.S. laws are written in English – black letters on white paper.  Letters make up words, and words have definitions.  The key to the income tax code is in the definitions of custom-defined words.  When a word is given a custom definition, it takes on a different meaning for legal purposes.  That is to say it loses its everyday household meaning and takes on the meaning assigned to it by its custom definition.  Some of these that dramatically affect the tax code are employee, employer, and wages.  Once verified, the definitions of these terms in the tax code clearly identify which gains or profits constitute lawfully taxable income.

I believe that to comply with the law, one should first understand what it says.  Let's look at some pertinent terms and one important legal concept.

1. Inclusio unius (est) exclusio alterius

This is a Latin legal maxim that makes the point that where a statute, contract, or other legal document includes a definitional list of items falling into a category, the inclusion of certain items on the list means that any excluded items are intentionally outside the definition (Black's Law Dictionary, 6th edition).  Now watch to see what is included (and conversely what is excluded) in the following custom-defined terms.  The words in bold are also custom-defined terms, and their legal meanings prevail throughout the chapter.

2. "Wages" 26 USC Sec. 3401.(a) Wages – For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official)for services performed by an employee for his employer[.]

3. Sec. 3401 (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 forgoing.  The term "employee" also includes the officer of a corporation.

Keeping in mind that what is not included is intentionally excluded, is there anything in the definition that leads you to believe that you are a statutorily defined "employee"?

4. Sec. 3401(d) Employer.  For the purposes of this chapter, the term "Employer" means the person for whom an individual performs or performed any service, of whatever nature, as the Employee of such person[.]

To state it all plainly and in general terms, "wages" are remunerations, federally connected, paid to persons who gained from the exercise of a federal privilege (such as federal employees, federal contractors, etc. by officers and managers of the federal government.

There is a mechanism by which you can put the IRS on notice that your earnings last year (and the year before that, etc.) are not federally connected, and the money withheld due to a misunderstanding of the law should be returned to you.  (You must be willing to accept payment by check.)  The forms are provided on the IRS website.  Form 1040 is the primary method to make your valid claim.

Here's another important definition: "Treatise: a scholarly legal publication containing all the law relating to a particular area, such as Criminal Law or Contract Law."  The finest treatise on the income tax is Cracking the Code: The Fascinating Truth about Taxation in America by Peter Hendrickson.

Yes, there is something going on that you don't know about.  Only a modicum of legal research is needed to eliminate that nagging feeling, especially where the tax code is concerned.

Willie Shields holds a bachelor's degree in paralegal studies from Widener University.  The author of EXIT 13A – A Control Tower Diary, he is a former Marine and air traffic controller.  Mr. Shields will respond to inquiries: Twitter @WILLIEONRADIO or WSHIELDS1775@VERIZON.NET.

In a scene from the 1982 movie Diner, two working-class kids meet a rich girl in a bucolic setting.  After the brief encounter, they contemplate the difference between the gritty world of inner-city Baltimore and the attitude of their more successful and beautiful neighbor, living but a few miles from the humble row homes and the dysfunctional families the boys would now return to.

"Do you ever get the feeling there's something going on we don't know about?"

It was shortly after delving into Legal Research I and II that I realized that yes, there is a lot going on, and there are powerful people who don't want us knowing about it.  Worse than that, there are things the federal government wants us to misunderstand.  It's not because we can't handle the truth; it's because the truth will enable us to handle our government.

Deviously, I applied my newly discovered legal research skills to something I had long been suspicious about: the federal income tax code – Title 26 if you're keeping score.  I always had the feeling there was something going on that I didn't know about.  The feeling was strongest right about the time I was signing income tax returns under penalty of perjury.

My Widener Law professors started noticing a theme in my research papers.  You see the federal income tax is an issue that arises in almost every class of legal study.  It came up in Wills and Trusts.  It came up in Contract Law, Employment Law, Business Organizations, Torts, Criminal Law and more.  The tax code became, for this student, the gift that kept on giving.  Since I uncovered and emphasized the basic flaws in my classmates' and my teachers' conclusions, my papers started to get noticed.  On the first day of one particular class, the professor told me, "I was warned about you."

Believe it or not, most lawyers and accountants are taught little about the income tax code.  What they are taught goes along these lines: "all income is taxable, but the tax burden can be reduced by taking allowable deductions."  This is what I call playing the deductions game.  If you start from the premise that "all that comes in" belongs to the government and then it lets you have some, you are playing a rigged game.  It's like a Three Card Monte game, big city style.

U.S. laws are written in English – black letters on white paper.  Letters make up words, and words have definitions.  The key to the income tax code is in the definitions of custom-defined words.  When a word is given a custom definition, it takes on a different meaning for legal purposes.  That is to say it loses its everyday household meaning and takes on the meaning assigned to it by its custom definition.  Some of these that dramatically affect the tax code are employee, employer, and wages.  Once verified, the definitions of these terms in the tax code clearly identify which gains or profits constitute lawfully taxable income.

I believe that to comply with the law, one should first understand what it says.  Let's look at some pertinent terms and one important legal concept.

1. Inclusio unius (est) exclusio alterius

This is a Latin legal maxim that makes the point that where a statute, contract, or other legal document includes a definitional list of items falling into a category, the inclusion of certain items on the list means that any excluded items are intentionally outside the definition (Black's Law Dictionary, 6th edition).  Now watch to see what is included (and conversely what is excluded) in the following custom-defined terms.  The words in bold are also custom-defined terms, and their legal meanings prevail throughout the chapter.

2. "Wages" 26 USC Sec. 3401.(a) Wages – For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official)for services performed by an employee for his employer[.]

3. Sec. 3401 (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 forgoing.  The term "employee" also includes the officer of a corporation.

Keeping in mind that what is not included is intentionally excluded, is there anything in the definition that leads you to believe that you are a statutorily defined "employee"?

4. Sec. 3401(d) Employer.  For the purposes of this chapter, the term "Employer" means the person for whom an individual performs or performed any service, of whatever nature, as the Employee of such person[.]

To state it all plainly and in general terms, "wages" are remunerations, federally connected, paid to persons who gained from the exercise of a federal privilege (such as federal employees, federal contractors, etc. by officers and managers of the federal government.

There is a mechanism by which you can put the IRS on notice that your earnings last year (and the year before that, etc.) are not federally connected, and the money withheld due to a misunderstanding of the law should be returned to you.  (You must be willing to accept payment by check.)  The forms are provided on the IRS website.  Form 1040 is the primary method to make your valid claim.

Here's another important definition: "Treatise: a scholarly legal publication containing all the law relating to a particular area, such as Criminal Law or Contract Law."  The finest treatise on the income tax is Cracking the Code: The Fascinating Truth about Taxation in America by Peter Hendrickson.

Yes, there is something going on that you don't know about.  Only a modicum of legal research is needed to eliminate that nagging feeling, especially where the tax code is concerned.

Willie Shields holds a bachelor's degree in paralegal studies from Widener University.  The author of EXIT 13A – A Control Tower Diary, he is a former Marine and air traffic controller.  Mr. Shields will respond to inquiries: Twitter @WILLIEONRADIO or WSHIELDS1775@VERIZON.NET.