Hendrickson on Latham and Sullivan

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LPC
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Hendrickson on Latham and Sullivan

Post by LPC »

I recently found that Hendrickson does actually refer to two judicial opinions that refute his 3401(c) argument, and Hendrickson's rationales for ignoring these opinions are mind-numbingly obtuse.

From Hendrickson's Frequently Asked Questions Page One (all emphasis is from the original):
Hendrickson wrote:We can know it as self-evident that if there were, for instance, dispositive court rulings declaring that "all earnings or receipts are "income", or "all workers are "employees" within the meaning of 3401(c)", or all pay for work is "wages" as defined at 3401(a) and/or 3121(a)" and so forth, the IRS would long since have carved them on Mt. Rushmore, or at least would include them in its voluminous publications and many court filings purporting to respond to challenges on these points. It has done neither, because there are no such rulings. Further, a close (or even cursory) look at the awkward trash the 'service' offers up instead, in an effort to try to suggest that it has judicial precedent supporting its representations, definitively underscores this unambiguous fact.

For example, the IRS (and other tax agencies) have relied for decades on excerpts from two rulings-- United States v. Latham, 754 F.2d 747, 750 (7th Cir. 1985) and Sullivan v. United States, 788 F.2d 813 (1st Cir. 1986)-- to suggest judicial support for several of its frivolous "arguments" concerning the meaning of "employee", "wages" and "includes". However, neither of these excerpts actually say what the tax agencies use them to infer-- in fact, both explicitly and carefully AVOID saying what the agencies hope they will be misunderstood to say. This doesn't stop the agencies from doing their best to make lemonade out of lemons, though: These excerpts have been cited scores of times in IRS/DOJ briefs in other tax cases, and in virtually every "Answer to Frivolous Arguments" publication the 'service' churns out; and they have been used as the precedential foundation for a number of subsequent-- and thus, equally meaningless-- rulings in various courts.

Simple logic deals with the first of these cases, in which the Latham Court makes the vague definitions-related-non-statement that an "[argument] that under 26 USC §3401(c) the category of ‘employee’ does not include privately employed wage earners is a preposterous reading of the statute”. This snippet is presented in the hope that it will be misunderstood to be a definitive declaration that "all workers" (or everyone meeting the common, non-specialized, dictionary-definition of 'employee') are included in the custom definition of the legal term "employee" provided in 26 USC §3401.

However, notwithstanding the intense desire of the tax agencies that this be misunderstood, and despite the apparent intention of the Latham Court to sow confusion by the use of the most awkward phraseology possible, this facile declaration plainly DOES NOT say the category of ‘employee’ under 26 USC §3401(c) INCLUDES ALL WORKERS-- which, of course, it doesn’t, or “employee” WOULDN'T HAVE a special definition provided in the law itself, as any freshman law school student understands. (Nor would "federal employees" be specifically listed in that special definition, as, in fact, they are and always have been-- which by itself is insurmountable evidence that the custom-defined term "employees" DOESN'T simply mean 'employees' as commonly defined, or 'employees'-as-commonly-defined-plus-the-listed-additions.) Instead, the court's declaration explicitly and carefully AVOIDS saying these things.

The quoted language doesn’t even clarify what is meant by “privately employed wage earners”, for that matter-- a “depends-on-what-the-meaning-of-“is”-is escape hatch big enough to navigate a bound edition of the tax code through (due to the fact that "wage" is a custom defined, inherently-limited term in the tax law itself)... Nothing more of this "best-we-have-to-work-with" case need be considered here, as this vapid and meaningless excerpt is the only thing from it the agencies attempt to exploit (in apparent reliance on their target audience being incapable of clear thinking).

Regarding the "Sullivan" ruling, the snippet presented by the tax agency is as follows:

“To the extent Sullivan argues that he received no ‘wages’ because he was not an ‘employee’ within the meaning of 26 U.S.C. § 3401(c), that contention is meritless. Section § 3401(c), which relates to income tax withholding, indicates that the definition of ‘employee’ includes government officers and employees, elected officials, and corporate officers. The statute does not purport to limit withholding to the persons listed therein."

As is the case in Latham, even on its face this excerpt says nothing of any significance. Saying that, "The statute does not purport to limit withholding to the persons listed therein," is in no way the same as saying that "Withholding applies to everybody, period," although this is how the tax agencies would like this language to be understood. In fact, "The statute does not purport to limit withholding to the persons listed therein," is language which explicitly and carefully AVOIDS saying: "Withholding applies to everybody, period."
Needless to say, there are so many problems with these fantasies that it's difficult to know where to begin, but I think that the following points are the most important:

1. Hendrickson wants to believe that a statement by a court that "section 3401(c) does not exclude your compensation from income" is not the same as saying "your compensation is income." Technically speaking, that might be correct. But if 3401(c) does not exclude your compensation from income, what does? Section 3401(a) says that "the term "wages" means all remuneration (other than fees paid to a public official) for services performed by an employee for his employer...." Once the 3401(c) "limitation" is thrown out, why is the remuneration received by Hendrickson not "wages"? (This is a variant on the "generalities" fallacy I describe in my FAQ. Hendrickson presents a false dichotomy, positing that his compensation is "wages" only if everything paid to everybody is also "wages," which is simply not logical.)

2. Hendrickson is unable to understand (or admit) that Latham and Sullivan both lost in court. Regardless of what words the court used to describe the reason for the result, the holding of the court was that their incomes were subject to tax, and Hendrickson can offer no reason whatsoever to believe that he or anyone else will ever be successful in court using the same kinds of arguments.

3. Hendrickson is unwilling to admit that, regardless of how narrowly he wants to read the opinions in Latham and Sullivan, those courts absolutely and positively rejected his interpretation of section 3401(c). For example, in his on-line introduction to "Cracking the Code," Hendrickson quotes section 3401(c) and then states:

"If you are a federal or U.S. possessions government worker, or the officer of a U.S. government corporation being remunerated for "services" performed as such (" ...a corporate agency or instrumentality, is one (a) a majority of the stock of which is owned by or on behalf of the United States, or (b) the power to appoint or select a majority of the board of directors of which is exercisable by or on behalf of the United States,..."; the Public Salary Tax Act of 1939), your compensation for work is both taxable and subject to mandatory withholding. If you are not one of these things, it is not."

At the very least, Latham and Sullivan say that Hendrickson is wrong about the meaning of section 3401(c), but he's not even willing to admit that.
Dan Evans
Foreman of the Unified Citizens' Grand Jury for Pennsylvania
(And author of the Tax Protester FAQ: evans-legal.com/dan/tpfaq.html)
"Nothing is more terrible than ignorance in action." Johann Wolfgang von Goethe.
Dr. Caligari
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Re: Hendrickson on Latham and Sullivan

Post by Dr. Caligari »

2. Hendrickson is unable to understand (or admit) that Latham and Sullivan both lost in court. Regardless of what words the court used to describe the reason for the result, the holding of the court was that their incomes were subject to tax, and Hendrickson can offer no reason whatsoever to believe that he or anyone else will ever be successful in court using the same kinds of arguments.
True, and, more importantly, the facts stated in those cases show that Latham and Sullivan were both workers for private-sector, non-federally-connected companies.
Dr. Caligari
(Du musst Caligari werden!)
The Operative
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Re: Hendrickson on Latham and Sullivan

Post by The Operative »

Typical tax protester 'logic':

1. Decide you do not have to pay taxes.

2. Jump to the conclusion that the law says you do not have to pay taxes.

3. Take out of context quotes and twist them in an attempt to find a legal basis for the conclusion.

4. Whenever a court case specifically states that your conclusion is wrong, proclaim the court's decision does not apply because it did not use your specific phrasing.
Light travels faster than sound, which is why some people appear bright, until you hear them speak.
Famspear
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Re: Hendrickson on Latham and Sullivan

Post by Famspear »

Dr. Caligari wrote:
2. Hendrickson is unable to understand (or admit) that Latham and Sullivan both lost in court. Regardless of what words the court used to describe the reason for the result, the holding of the court was that their incomes were subject to tax, and Hendrickson can offer no reason whatsoever to believe that he or anyone else will ever be successful in court using the same kinds of arguments.
True, and, more importantly, the facts stated in those cases show that Latham and Sullivan were both workers for private-sector, non-federally-connected companies.
----Which means that Pete Hendrickson's "private-sector, non-federally-connected income is somehow not taxable" Cracking the Code theory is legally invalid, which means that Hendrickson's scam will continue to lose whenever it is presented in court, which of course proves that Hendrickson is correct in everything he says and writes!

Ka-ching!!!! drum roll/whistles..../clashing cymbals

Hey, I can really rattle this stuff out now! I'm gettin' the hang of the Patrick Michael Mooney version of Hendrickson's blather!
"My greatest fear is that the audience will beat me to the punch line." -- David Mamet
LPC
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Re: Hendrickson on Latham and Sullivan

Post by LPC »

Dr. Caligari wrote:more importantly, the facts stated in those cases show that Latham and Sullivan were both workers for private-sector, non-federally-connected companies.
Hendrickson has made it clear that, even if a court were to declare that workers for "private-sector, non-federally-connected companies" were subject to income tax, it still wouldn't matter unless the court explained exactly what it meant by "private-sector, non-federally-connected companies."

Hendrickon quotes the Latham court as making the "vague definitions-related-non-statement" that an "[argument] that under 26 USC §3401(c) the category of ‘employee’ does not include privately employed wage earners is a preposterous reading of the statute”. Hendrickson goes on to say that:
The quoted language doesn’t even clarify what is meant by "privately employed wage earners", for that matter-- a "depends-on-what-the-meaning-of-“is”-is escape hatch big enough to navigate a bound edition of the tax code through (due to the fact that "wage" is a custom defined, inherently-limited term in the tax law itself)...
So even if the court uses Hendrickson's own terminology, Hendrickson won't accept the judgment of the court unless the court provides definitions for the words that Hendrickson himself uses.

There really is no satisfying these people.
Dan Evans
Foreman of the Unified Citizens' Grand Jury for Pennsylvania
(And author of the Tax Protester FAQ: evans-legal.com/dan/tpfaq.html)
"Nothing is more terrible than ignorance in action." Johann Wolfgang von Goethe.
jg
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Re: Hendrickson on Latham and Sullivan

Post by jg »

Hendrickson wrote:We can know it as self-evident that if there were, for instance, dispositive court rulings declaring that "all earnings or receipts are "income", or "all workers are "employees" within the meaning of 3401(c)", or all pay for work is "wages" as defined at 3401(a) and/or 3121(a)" and so forth, the IRS would long since have carved them on Mt. Rushmore, or at least would include them in its voluminous publications and many court filings purporting to respond to challenges on these points. It has done neither, because there are no such rulings. Further, a close (or even cursory) look at the awkward trash the 'service' offers up instead, in an effort to try to suggest that it has judicial precedent supporting its representations, definitively underscores this unambiguous fact.
Hendrickson argues that since there is no all inclusive ruling that lack of an all encompassing ruling somehow implies that payments to him for his work are not included in gross income subject to income tax.

Of course, no one with even vague familiarity of the Internal Revenue Code would ever make such a claim; so it is no more than a straw man. There are no such rulings as it is not a fact that "all earnings or receipts are "income", or "all workers are "employees" within the meaning of 3401(c)", or all pay for work is "wages" as defined at 3401(a) and/or 3121(a)" .

Nonetheless, one must have an explicit reason to not include such payments received as income subject to the income tax as shown in the statement in Section 61 that gross income includes all income from whatever source derived, unless specifically excluded by law. This fact is obvious to the casual reader and most of the population that has only ever read a publication; but it somehow is incomprehensible to the CtC follower.

It is unimaginable to me that Hendrickson was not fully aware of what he was constructing when he wrote this garbage. I do hold some hope that the recent financial crimes will inspire us to have the government do more to increase enforcement efforts.
“Where there is an income tax, the just man will pay more and the unjust less on the same amount of income.” — Plato