LH's take on IRS' Frivolous Arguments

[Imalawman]

Its really quite funny how far they will go to try to explain away the IRS' positions. I think that the IRS needs to write these definitions on a 4th grade level.

I just read through the document "R.R. 2007-22, discussing 'person,' IRC 7701" and based on that, I would have to disagree that it spells the "death knell" for anything. While I found it 100% accurate, I also found it 100% deceptive. By the deceptive use of devices such as statutory terms vs. "common language" (they usually use the former without explicitly tell you so), strawman arguments, what they DO NOT say, etc., they attempt to create the appearance of an all-encompassing tax snare while technically staying within legal bounds and "absolving" themselves of legal liability.

Take for example the first sentence:

The Internal Revenue Service (Service) is aware that some taxpayers are claiming that they are not subject to federal income tax, or that their income is excluded from taxation, because...

on page 6 of the same document they cite the defition of "taxpayer:"

Section 7701(a)(14) defines “taxpayer” as “any person” subject
to any internal revenue tax,

So an honest author could have written the first sentence something like this:

The Internal Revenue Service (Service) is aware that some persons who are subject to any internal revenue tax are claiming that they are not subject to federal income tax...

But of course, such wording might lead to questions such as: "You mean not all persons are subject to any internal revenue tax?" And we can't have that.

Another example is on page 7 of the same document which reads:

2. The term “person” as used by the Internal Revenue Code includes natural persons and individuals.

Notice that they did not say:

"2. The term “person” as used by the Internal Revenue Code includes ALL natural persons and individuals."

Hmmm... Anybody else find that omission curious? So that begs the question: WHICH "natural persons and individuals," under WHAT CIRCUMSTANCES IN THEIR ENTIRETY consitute a "person" as used by the Internal Revenue Code? Notice that they rather conveniently did not offer any such explanation.

We could go on and on dissecting this web of deceit, but you get the idea.

[rachel]

Its really quite funny how far they will go to try to explain away the IRS' positions. I think that the IRS needs to write these definitions on a 4th grade level.

I just read through the document "R.R. 2007-22, discussing 'person,' IRC 7701" and based on that, I would have to disagree that it spells the "death knell" for anything. While I found it 100% accurate, I also found it 100% deceptive. By the deceptive use of devices such as statutory terms vs. "common language" (they usually use the former without explicitly tell you so), strawman arguments, what they DO NOT say, etc., they attempt to create the appearance of an all-encompassing tax snare while technically staying within legal bounds and "absolving" themselves of legal liability.

Take for example the first sentence:

The Internal Revenue Service (Service) is aware that some taxpayers are claiming that they are not subject to federal income tax, or that their income is excluded from taxation, because...

on page 6 of the same document they cite the defition of "taxpayer:"

Section 7701(a)(14) defines “taxpayer” as “any person” subject
to any internal revenue tax,

So an honest author could have written the first sentence something like this:

The Internal Revenue Service (Service) is aware that some persons who are subject to any internal revenue tax are claiming that they are not subject to federal income tax...

But of course, such wording might lead to questions such as: "You mean not all persons are subject to any internal revenue tax?" And we can't have that.

Another example is on page 7 of the same document which reads:

2. The term “person” as used by the Internal Revenue Code includes natural persons and individuals.

Notice that they did not say:

"2. The term “person” as used by the Internal Revenue Code includes ALL natural persons and individuals."

Hmmm... Anybody else find that omission curious? So that begs the question: WHICH "natural persons and individuals," under WHAT CIRCUMSTANCES IN THEIR ENTIRETY consitute a "person" as used by the Internal Revenue Code? Notice that they rather conveniently did not offer any such explanation.

We could go on and on dissecting this web of deceit, but you get the idea.

The problem of LH is that P. Hendrickson doesnt understand that its the Social Security aspect that causes most Americans to be taxed.
Pete is a miserable researcher to beleive that common people before the Social Security Act were taxed federal taxes on common labor.
Pete needs to do some history checking to see that Social Security came after 1862.
It clearly states in section 3121(b) employment that federal and state officials, employee's and elected officials are not allowed to make 3121(a) "wages" for Title 2 benefits.
Most federal and state elected officials, employee's and officers are from Title 5(Government Organizations and Employee's) who have their own government benefit plan.
There are exclusions of course which are clearly again written for any reader of 3121.
Most CtCer's dont want to understand that 3401 and 3121 both come under Subtitle C for employment. They despise it when you bring that to their attention. Including Pete himself. Employment is defined as a "service" of whatever nature.
That 3402 then withholds for making 3121(a) "wages" which includes those federal and state individuals for earning federal 5USC 8501(2) wages.
Both federal and nonfederal individuals are withheld for the section 1 tax.

[Nikki]

Rachel:

Welcome.

Pete is not necessarily a poor researcher. He is a tax evader.

He shoots bullets at the barn, and paints the bullseyes around the holes afterward.

He decided, ahead of time, that he doesn't want to pay income taxes. THEN, he went through the tax code, and other laws as needed, to extract, misinterpret, and warp the words to mean what he wants them to mean.

This is typical of determined tax evaders. Consider Rose's butchering of the §861 laws. Look at the people who go back to the Constitution and base their case on "exclusive jurisdiction."

Spending time analyzing and correcting tax evaders' arguments is a guaranteed route to a brain explosion.

[rachel]

I dont think he shoots the gun and then paints the bulleye around the bullet holes.
I think he just doesnt understand what it is he's actually talking about. His arguement is based around 3401(c) as being a federal and state entity to pay taxes.
He completely disregards the imposing section of 6051 which is section 3101 as if this section doesnt have any meanong or reason being the statute in the first place.
To Petes demise 3401(c) doesnt define what a federal and state entity is. To be exact your employer has to be wholly or partially owned by the federal government to be a federal employee.
Petes a complete idiot.

[Quixote]

The problem of LH is that P. Hendrickson doesnt understand that its the Social Security aspect that causes most Americans to be taxed.
Pete is a miserable researcher to beleive that common people before the Social Security Act were taxed federal taxes on common labor.

If Pete believes that wage income was taxable prior to the Social Security Act, that would not indicate that he is a poor researcher, because wage income was taxable prior to the Social Security Act. Anyone who believes that income tax liability is directly related to FICA liability is at least as confused as Hendrickson himself.

[Imalawman]

I dont think he shoots the gun and then paints the bulleye around the bullet holes.
I think he just doesnt understand what it is he's actually talking about. His arguement is based around 3401(c) as being a federal and state entity to pay taxes.
He completely disregards the imposing section of 6051 which is section 3101 as if this section doesnt have any meanong or reason being the statute in the first place.
To Petes demise 3401(c) doesnt define what a federal and state entity is. To be exact your employer has to be wholly or partially owned by the federal government to be a federal employee.
Petes a complete idiot.

Welcome to Quatloos, Rachel.

You have to understand where PH is coming from though. He isn't a guy who just thought he'd research his liability as to taxes. He's a guy who's been pissed off at the ebil gubmint for years. He's been involved in mail bombings long before he wrote CTC. He's also written other books as well that are anti-gov't. This latest attempt is truly a shoot first, explain the law later approach. Anyone who believes that "includes" is a term of limitation isn't a poor researcher, but rather, 1. dumb or 2. trying to fit a square peg into a round hole to fit his needs. I don't think PH is dumb, but rather will try to explain away the obvious in order to suit his presuppositions about the tax code.

[rachel]

The problem of LH is that P. Hendrickson doesnt understand that its the Social Security aspect that causes most Americans to be taxed.
Pete is a miserable researcher to beleive that common people before the Social Security Act were taxed federal taxes on common labor.

If Pete believes that wage income was taxable prior to the Social Security Act, that would not indicate that he is a poor researcher, because wage income was taxable prior to the Social Security Act. Anyone who believes that income tax liability is directly related to FICA liability is at least as confused as Hendrickson himself.

I'm not sure about you Quixote, but my pay sub reflects 3121(a) wages and 3401(a) wages. Outside of that I'm not taxed and very few people before SS was enacted were taxed for "service of what ever nature" as defined in 3121(b).
Yes you had short lived taxation of common labor, but these were usually repealed after the reason was negated like the war tax of WW2.
Not sure if you fully understand what Pete espouses in CtC, but his poor research results in numerous people beleiving they are something they are not.
Someone who works as a bricklayer for a company that is not at least particially owned is not what pete beleives is a 3401(c) "federal" employee.
I highly doubt you understand what 3121(b) actually says, because if you did you'd understand that 3121(b) does not permit federal and state officers, employees and elected officials to partake in 3121(a) "wages" for Title 2 benefits.
Those federal and state entities have a different benefit plan that regulations 31.3121 will explain clearly without a doubt who is and who is not allowed to build credits towards Title 2 immediate and retirement benefits.
Besides Pete will tell you himself that Social Security is only for retirement at age 65 and willfully tell you you dont get immediate benefits, but thats tells you Pete doesnt really research anything because if you dont have a ssn (enrolled) you will not recieve unemployment compensation, public health care, assisted living, nor will you get food stamps.
3401(c) does not define any employee nor does section 3401 ever impose any tax. All 3402 does is tac on additional deductions for having made "wages". More particularly 3121(a) "wages" for the majority of the nongovernment employee.
I dont find it a coincidence that "service" is defined in Title 42 for Social Security and Title 26 for collection of 3101 taxes relating to 3121(a) "wages" for Social Security purposes. Furthermore, if you ever read 3401(a) you will find that this section is also directly related to 3121(b)'s "service of whatever nature" as it has the same exclusion from making 3401(a) "wages" as being in "employment" as defined in 3121(b).
So in reality all 3401(c) does is include those federal and state individuals into this 3402 deduction for making "wages" as defined in Title 5 with those nongovernment employee's who make 3121(a) "wages" for Social Security purposes.
3401 will even tell you its a "withholding at source on wages". It doesnt say anything else.
And like I said little one....."Petes a very poor researcher"! If he did any research he'd know what I just explained to you, now wouldnt he?

Why dont you go back to Losthorizons

[grammarian44]

Rachel, I'm really not following you, and honestly, I tried. Is it your argument that prior to enactment of the Social Security Act in 1935 US wage earners did not in fact pay income taxes? Or, as Quixote said, that before the Social Security Act wage earners were not taxable on their wages?

Whichever is your position, it's not clear to me what all the citations from Title 26 as it currently exists--regardless of whether the statutes originated in the 1986, 1954, or 1939 Codes--would do either to support or not support your argument. If you're making a historical point about when taxation of wage earners commenced, the current IRC isn't going to be much help. If you're making a point about the structure of the system as it currently exists, then what is that point? Can you tell us in one sentence what your thesis is here?

[ASITStands]

And, just to add a little something into the mix when considering whether the earnings of common labor were taxed, reading from the first Pollock case:

From the report of Oliver Wolcott, when secretary of the treasury, on direct taxes, to the house of representatives, December 14, 1796,-his most important state paper (Am. St. P. 1 Finance, 431),-and the various state laws then existing, it appears that prior to the adoption of the constitution nearly all the states imposed a poll tax, taxes on land, on cattle of all kinds, and various kinds of personal property, and that, in addition, Massachusetts, Connecticut, Pennsylvania, Delaware, New Jersey, Virginia, and South Carolina assessed their citizens upon their profits from professions, trades, and employments.

Note: Before the Constitution, or even before the union of the States, certain states were laying and collecting a tax on the profits from professions, trades and employments.

This was part of the discussion of direct/indirect. And, yes, I know this could be considered the rights of a State and not necessarily the federal government. However, it is good to understand it was not considered illegal, or contrary to law [and, thus, exempted by the constitution], to lay and collect a tax on the earnings of common labor.

From the second Pollock case:

But this is not all. The decision now made may provoke a contest in this country from which the American people would have been spared if the court had not overturned its former adjudications, and had adhered to the principles of taxation under which our government, following the repeated adjudications of this court, has always been administered. Thoughtful, conservative men have uniformly held that the government could not be safely administered except upon principles of right, justice, and equality, without discrimination against any part of the people because of their owning or not owning visible property, or because of their having or not having incomes from bonds and stocks. But, by its present construction of the constitution, the court, for the first time in all its history, declares that our government has been so framed that, in matters of taxation for its support and maintenance, those who have incomes derived from the renting of real estate, or from the leasing or using of tangible personal property, or who own invested personal property, bonds, stocks, and investments of whatever kind, have privileges that cannot be accorded to those having incomes derived from the labor of their hands, or the exercise of their skill, or the use of their brains. Let me illustrate this. In the large cities or financial centers of the country there are persons deriving enormous incomes from the renting of houses that have been erected, not to be occupied by the owner, but for the sole purpose of being rented. Near by are other persons, trusts, combinations, and corporations, possessing vast quantities of personal property, including bonds and *673 stocks of railroad, telegraph, mining, telephone, banking, coal, oil, gas, and sugar-refining corporations, from which millions upon millions of income are regularly derived. In the same neighborhood are others who own neither real estate, nor invested personal property, nor bonds, nor stocks of any kind, and whose entire income arises from the skill and industry displayed by them in particular callings, trades, or professions, or from the labor of their hands, or the use of their brains. And it is now the law, as this day declared, that under the constitution, however urgent may be the needs of the government, however sorely the administration in power may be pressed to meet the moneyed obligations of the nation, congress cannot tax the personal property of the country, nor the income arising either from real estate or from invested personal property, except by a tax apportioned among the states, on the basis of their population, while it may compel the merchant, the artisan, the workman, the artist, the author, the lawyer, the physician, even the minister of the Gospel, no one of whom happens to own real estate, invested personal property, stocks, or bonds, to contribute directly from their respective earnings, gains, and profits, and under the rule of uniformity or equality, for the support of the government.

Sorry for the long post. It just seems interesting to me the argument "there was no tax on the earnings of common labor before the income tax [or, social security tax]" is made with so little understanding of history.

There has not always been an income tax in the united States, but it certainly has never been disallowed by the constitution or statutes [other than the disallowance of a tax on the income from property in Pollock].

That's my two cents.

[rachel]

Rachel, I'm really not following you, and honestly, I tried. Is it your argument that prior to enactment of the Social Security Act in 1935 US wage earners did not in fact pay income taxes? Or, as Quixote said, that before the Social Security Act wage earners were not taxable on their wages?

Whichever is your position, it's not clear to me what all the citations from Title 26 as it currently exists--regardless of whether the statutes originated in the 1986, 1954, or 1939 Codes--would do either to support or not support your argument. If you're making a historical point about when taxation of wage earners commenced, the current IRC isn't going to be much help. If you're making a point about the structure of the system as it currently exists, then what is that point? Can you tell us in one sentence what your thesis is here?

No problem Gram,
As the current system structure exists, in respect to W2's, 3's and 4's, 3121(a) and 3401(a) "wages. A person outside any privileged activity (working for a wholly owned or particially owned agency of the federal government) has to be enrolled into Social Security.
This is just how the law exists as its written.

My point about Pete is that he espouses the untrue nature of 3401(c) being confined strictly to federal and state officers, employee's and elected officials. Which is based upon his loose interpretation of the term "includes".
Pete goes right to the term 3401(c) "employee" and spot lights it without ever taking in consideration what 3401(a) actually reads.
The only individuals who are exempt from making 3401(a) wages are those same nongovernment individuals who are exempt from participating in 3121(b) employment fior Social Security purposes.
Now the switch and the most confusing aspect of 3401(a) is 3401(c).
3401(c) doesnt define what a federal or state officer, employee, or elected official is. You need to look those individuals up in Title 5 (Federal Organizations and Employee's) to understand what they are.
So 3401(c) is not neccessarily a defining statute of limiting capacity as Pete interprets, but its a statute that considers 3121(b) employment first and foremost and secondly the included federal and state individuals for the 3402 withholding deductions for the section 1 tax liability.
(This is where Pete Hendrickson falls right on his face.)
Its most important to understand and not forget that the 3401(a) "wage" statute has the same exclusions of 3121(b) "employment" minus the federal and state officers, employee's and elected officials who are added in at 3401(c).
Just compare the two statutes together. You'll see they compliment each other and at the same time they check each other.

Basically in a nut shell 3121(b) and the related regulations (31.3121) will not allow certain federal and state individuals from participating in Social Security for Title 2 benefits. Those certain excluded or exempted individuals are officers, employee's and elected officials. They are exempted from Social Security for Title 2 benefits because they fall under different benefits from a different government program established under the laws of the United States. But !!!they are not exempted from the 3402 witholding deductions which why 3401(c) is written the confusing way it is, but thats no excuse if you completely comprehend the purpose of Subtitle C and not spot light 3401(c) to misinterpret 3401(a)'s meaning. Which if read carefully takes you back to 3121(b) and then to 3121(a) which leads to Social Security which is codified at Title 42.

[grammarian44]

If that was your point--a point which has been covered on this site a thousand times, although not always by reference to social security--then why so angry at Quixote? He said nothing that would have disagreed with the argument above. His point was purely historical--it was about the way the system developed, not about the way it currently is.

[rachel]

Then what was Quixote point?

The reply had nothing to do with the current system as I demonstratedly point out in the beginning.
Even Quixote is also confused as to the law.
The only thing left is the demonstrated support to Hendrickson.

[rachel]

If that was your point--a point which has been covered on this site a thousand times, although not always by reference to social security--then why so angry at Quixote? He said nothing that would have disagreed with the argument above. His point was purely historical--it was about the way the system developed, not about the way it currently is.

If that was your point--a point which has been covered on this site a thousand times, although not always by reference to social security

Even you admit this site doesnt fully understand the law. Which was the reason behind my posting here.

[.]

Geez, another semi-sorta-TP. "I think Hendrickson is deluded, but I'm not, blah, blah, blah."

[Quixote]

Besides Pete will tell you himself that Social Security is only for retirement at age 65 and willfully tell you you dont get immediate benefits, but thats tells you Pete doesnt really research anything because if you dont have a ssn (enrolled) you will not recieve unemployment compensation, public health care, assisted living, nor will you get food stamps.

Pete is certainly wrong, but none of the examples you gave contradict his position. Even if the various agencies all required applicants to have SSNs (and they don't), that has nothing to do with social security, but rather the widespread use of the SSN as a national ID number, a use opposed by (almost?) every Commisioner of Social Security.

[grammarian44]

Even you admit this site doesnt fully understand the law. Which was the reason behind my posting here.

Well, since when can an Internet web site "understand" anything? More to the point, the people on this site have varying understandings of a portion of the law. No one fully understands "the law"--there is too much of it for any one person to understand.

Yes, the point about PH's misunderstanding of 3401 has not always been made with reference to social security. How does it follow from this fact that people don't "understand the law"? You have your opinion about 3401; other people express the same general point in different ways. Having a slightly different way of articulating the same point does not mean that one completely "misunderstands the law."

It seems like you're trying to pick a fight. You're looking for disagreement when there is none, as if your real goal is to show up people you seem to think want to show you up. Why the chip on your shoulder?

[rachel]

Besides Pete will tell you himself that Social Security is only for retirement at age 65 and willfully tell you you dont get immediate benefits, but thats tells you Pete doesnt really research anything because if you dont have a ssn (enrolled) you will not recieve unemployment compensation, public health care, assisted living, nor will you get food stamps.

Pete is certainly wrong, but none of the examples you gave contradict his position. Even if the various agencies all required applicants to have SSNs (and they don't), that has nothing to do with social security, but rather the widespread use of the SSN as a national ID number, a use opposed by (almost?) every Commisioner of Social Security.

Even if the various agencies all required applicants to have SSNs (and they don't), that has nothing to do with social security

So how is it that applicants are to receive "survivor benefits", for example, if that person doesnt have a ssn as a covered employee?
How is the applicant to receive "public health care" with out a ssn?
Please by all means, explain away how a "U.S. citizen" can receive any (FICA) benefit without a ssn!

You oppose Pete without knowing fully the arguement you are argueing. You are no different than Pete himself. Only on the opposite side of the tracks with no justification nor any reason!

Pete says 3401(c) makes him a federal and or state officer, employee and elected official, but the law, especially 3121(b), says that if you are deducted 3121(a) wages from 3121(b) employment for Title 2 Social Security benefits specifically states you cannot be any federal or state officer, employee, or elected official. They have an entirely different benefit plan established by the laws of the United States government.
Go read the 31.3121 regulations. There it will refer you to Title 5 which is (Government Organizations and Employees) as the exclusions to Title 2 Social Security.

[Demosthenes]

It seems like you're trying to pick a fight. You're looking for disagreement when there is none, as if your real goal is to show up people you seem to think want to show you up.

Trolling.

[Imalawman]

Besides Pete will tell you himself that Social Security is only for retirement at age 65 and willfully tell you you dont get immediate benefits, but thats tells you Pete doesnt really research anything because if you dont have a ssn (enrolled) you will not recieve unemployment compensation, public health care, assisted living, nor will you get food stamps.

Pete is certainly wrong, but none of the examples you gave contradict his position. Even if the various agencies all required applicants to have SSNs (and they don't), that has nothing to do with social security, but rather the widespread use of the SSN as a national ID number, a use opposed by (almost?) every Commisioner of Social Security.

Even if the various agencies all required applicants to have SSNs (and they don't), that has nothing to do with social security

So how is it that applicants are to receive "survivor benefits", for example, if that person doesnt have a ssn as a covered employee?
How is the applicant to receive "public health care" with out a ssn?
Please by all means, explain away how a "U.S. citizen" can receive any (FICA) benefit without a ssn!

You oppose Pete without knowing fully the arguement you are argueing. You are no different than Pete himself. Only on the opposite side of the tracks with no justification nor any reason!

Pete says 3401(c) makes him a federal and or state officer, employee and elected official, but the law, especially 3121(b), says that if you are deducted 3121(a) wages from 3121(b) employment for Title 2 Social Security benefits specifically states you cannot be any federal or state officer, employee, or elected official. They have an entirely different benefit plan established by the laws of the United States government.
Go read the 31.3121 regulations. There it will refer you to Title 5 which is (Government Organizations and Employees) as the exclusions to Title 2 Social Security.

I'm still trying to figure out exactly what you're trying to convince us about the tax code. Are you saying if someone opts out of SS, that you don't have to pay taxes? I'm just not following you.

[ASITStands]

'rachel' was banned from LH for this same argument [if I understand correctly]. Didn't make too many friends over there.