Home | News | Site Map | Search | Contact

Weeding The Garden

Shining A Little Disinfecting Sunlight Into The Law-Defier's Toadstool Factory


The American legal landscape has become a tangled mess. Once a well-tended garden, it is now an ugly, weed-infested disgrace in which evil things find plenty of places to lurk, grow, and be used against the people. It is up to those of us who cherish the rule of law and take our responsibilities to our posterity seriously to correct this problem by pulling the weeds and making clear that error and lies will not be tolerated.


This will happen by CtC-educated Americans, who have learned how to read the law, and how to research precedents accurately, taking charge of the legal landscape. In legal contests with the enemies of the law, the good guys need to debunk every inapposite citation deployed against them and keep the courts honest and on-point, something too many in the legal profession apparently abandoned long ago for reasons of their own.


In order to facilitate this effort, I'm setting up this special space in which to post material debunking abused and misconstrued "precedents" such as the 'Lovell' rulings, 'Latham', 'Sullivan' and all the rest. These junk- and misrepresented-rulings litter government legal filings and have too often been taken by courts (without investigation) as actually standing for the proposition in the context of which they are cited, even though knowledgeable examination actually proves this to be untrue.


I'm inviting and encouraging every Warrior to take on the task of pulling at least a few weeds by subjecting one or more cases used as "precedent" by government lawyers and "ignorance tax" beneficiaries to proper analysis and investigation, and then sending the results to WeedWhackers (at) losthorizons.com (fix the email address appropriately when sending). In a short time, we should have a large collection of ready-for-prime-time, ACCURATE material concerning these cases, able to be used by anyone facing government corruption in a courtroom.


I hope you'll all dive in here and contribute to this project. Submissions should be in html format, and should include the full text of the case being analyzed and any preceding cases cited within the misused ruling (going back in like manner as far as necessary). Analysis should focus on claims of authority within the subject ruling which are not actually supported by the references cited, if any (which could be "case law" or statutes), or claims and conclusions actually contradicted by logic, Constitution, statutes or other rulings (which should be included in the submission). Layout should be:

1.) The citation being misused by the lying contingent;

2.) A concise statement of "what is wrong with this picture" and why;

3.) The analysis proving the statement made in 2, with references cited and quoted as necessary and appropriate; and

4). an appendix containing the complete text of the analyzed case and referenced authorities (or links thereto within the analysis).

It's our law, people, but only if we take charge of it. For far too long, the American people have left care of this oh-so-important resource to our competitors, who have unsurprisingly twisted it to their own purposes. There's a lot of truth in the old adage that says if you want something done right, you have to do it yourself, and it's hard to imagine too many areas where it's more important that things be done right.


BTW: As you read what follows, don't ever lose sight of the fact that the false authorities revealed here are relied upon because there ARE no actual authorities supporting what those who use them want to be imagined true.



United States v. Sloan, 939 F.2d 499, 501 (7th Cir. 1991)

Lovell v. United States, 755 F.2d 517 (7th Cir. 1984) (and Parker v. Comm'r, 724 F.2d 469, (Fifth Cir. 1984))

United States v. Latham, 754 F.2d 747, 750 (7th Cir. 1985) and Sullivan v. United States, 788 F.2d 813 (1st Cir. 1986)

"LexisNexis" Misrepresentations Regarding Pacific Nat'l Ins. v. United States and the Limited Meaning of "Person" in 26 U.S.C. § 6671(b)

In re Meador, 16 F. Cas. 1294 (ND Ga. 1869)

Hartman v. Comm'r, 65 T.C. 542 (1975)

U.S. v. Hendrickson

Hendrickson v. United States

Hendrickson v. United States

May v. Commissioner, 752 F.2d 1301 (8th Cir. 1985)


United States v. Sloan


THIS 1991 7th CIRCUIT CASE is cited for presentation of this excerpt: ""All individuals, natural or unnatural, must pay federal income tax on their wages," regardless of whether they requested, obtained or exercised any privilege from the federal government." As we will see, though these words appear in the ruling, they do not stand as authority for what they appear to when only seen out of context.


Going to the ruling, we quickly discover that Sloan was anything but CtC-educated. (This is obvious from the 1991 date of the case, of course, but much more so when Sloan's many possibly-well-meaning but baseless and confused arguments are examined.)


Among other things, Sloan suffered from the "Show me the law!" syndrome. He apparently argued that "the revenue laws of the United States do not impose a tax on income". At least the 7th Circuit panel declares this to be his position. The panel goes on to say that, "Sloan cites Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984), for the proposition that the tax code provisions establishing an income tax are an unlawful agency interpretation of a statute because the Congress clearly did not intend to impose a tax on income."


The appellate panel continues: "Also basic to Mr. Sloan's "freedom from income tax theory" is his contention that he is not a citizen of the United States, but rather, that he is a freeborn, natural individual, a citizen of the State of Indiana, and a "master"--not "servant"--of his government. As a result, he claims that he is not subject to the jurisdiction of the laws of the United States." Here is where we get to the mis-represented excerpt, with the panel going on to say: "This strange argument has been previously rejected as well. "All individuals, natural or unnatural, must pay federal income tax on their wages," regardless of whether they requested, obtained or exercised any privilege from the federal government."


But of course, this is not the end of the story...


First of all, and simplest, we can take note of the confused mix of terms in this declaration. "All individuals... ...must pay federal income tax on their wages,..." Read in the context of the tax, there is no question that "wage-receipt" invokes the tax. Had the court said "on their earnings", we would be given pause a moment longer. But it did not, even though that expression, were it true, would be far more useful a statement for any court to make in any effort to slap down those pesky and intransigent "tax protestors".


Second, we can note that the panel doesn't end there-- it goes on to cite the case from which this excerpted language is actually borrowed: Lovell v. United States, 755 F.2d 517 (7th Cir. 1984), and references yet another case to illustrate the point that the Lovell excerpt and citation was really intended to address: "cf. Studley, 783 F.2d at 937 (Studley's argument that "she is not a 'taxpayer' because she is an absolute, freeborn and natural individual ... is frivolous. An individual is a 'person' under the Internal Revenue Code.")."


It is revealed, then, that the Sloan panel is not itself making some kind of declaration about "privilege", as those deploying the excerpt from this ruling means to be imagined. Instead, the Sloan panel is citing the Lovell language for its rebuttal of the "I'm a "natural person" and therefore not subject to the tax" nonsense (which is a product of the "income is only corporate [read: artificial person] profit" error).


So, Sloan doesn't really say the "privilege" thing, but Lovell does, right? Well, that's not actually true, either...


Lovell v. United States


THIS 1984 7th CIRCUIT CASE is cited as authority for the proposition that the "income tax" is not an excise on gains from the exercise of privilege (and therefore, by implication, that is must be a tax on undistinguished economic activity-- that is, ALL economic activity). Here is the language from the ruling relied on for this purpose, as typically presented (when any is presented at all):

"Plaintiffs argue first that they are exempt from federal taxation because they are "natural individuals" who have not "requested, obtained or exercised any, privilege from an agency of government." This is not a basis for an exemption from federal income tax. [citation omitted] All individuals, natural or unnatural, must pay federal income tax on their wages, regardless of whether they received any "privileges" from the government. Plaintiffs also contend that the Constitution prohibits imposition of a direct tax without apportionment. They are wrong; it does not. U. S. Const. amend. XVI [. . . .]"

Lovell v. United States

You'll notice the "[citation omitted]" after the "privilege"-related assertion in this excerpt. That omitted citation is to Holker v. United States, 737 F.2d 751 (8th Cir. 1984). This is the case allegedly relied upon by the Lovell court as providing the authority for its otherwise unsupported declaration about "privilege". However, upon examination is turns out the Holker court not only also doesn't supply any authority for the contention made in Lovell, it doesn't address the issue at all.  Here is that ruling in its entirety:

Louis E. Holker, pro se.

Before HEANEY, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and ARNOLD, Circuit Judge.



Louis E. Holker was assessed a $500 penalty under 26 U.S.C. Sec. 6702 for filing a frivolous tax return. He then commenced this suit under 26 U.S.C. Sec. 6703(c)(2) for abatement of this assessment. The district court granted the government's motion for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(b) and we affirm.


In a letter to the IRS, Holker requested a tax refund for 1982, arguing that he owed no tax because he is a "natural individual and unenfranchised freeman" who "neither requested, obtained nor exercised any privilege from any agency of government." Holker enclosed with this letter an unsigned Form 1040 marked "NOT A TAX RETURN--For information only," two W-2 forms marked "INCORRECT," and a Schedule C profit and loss statement. On Schedule C, Holker claims to be in "construction" and he lists, among other things, gross receipts of over $15,000 which were also deducted as labor costs (despite directions in Schedule C not to include salary that the taxpayer paid to himself).


Under 26 U.S.C. Sec. 6702, the questions presented to this Court are whether Holker filed "what purports to be a return" but which contains insufficient information by which the substantial correctness of the self-assessment may be judged or which contains information that on its face indicates that the self-assessment is substantially incorrect; and, if so, whether filing the purported return is due to a position which is frivolous. As the district court correctly noted, these are issues of law for the court to decide. See United States v. Grabinski, 727 F.2d 681, 686 (8th Cir.1984) (citing United States v. Moore, 627 F.2d 830, 834 (7th Cir.1980), cert. denied, 450 U.S. 916, 101 S.Ct. 1360, 67 L.Ed.2d 342 (1981)).


Although Holker denies having filed any document that purports to be a tax return, his argument is meritless. Taxpayers may not obtain refunds without first filing returns. 26 C.F.R. Sec. 301.6402-3(a)(1) (1983). With Holker's refund request to the IRS, he appended a Form 1040 and W-2 statements. Under the circumstances, we can only construe these documents as elements of a purported return. Nichols v. United States, 575 F.Supp. 320, 322 (D.Minn.1983). Any other construction of section 6702 would flout the intent of Congress to penalize any individual filing a frivolous return. See S.Rep. No. 97-494, 97th Cong., 2d Sess., reprinted in 1982 U.S.Code Cong. & Ad.News 781, 1024.


Holker's return facially indicates that his self-assessment is incorrect and that his position is frivolous. His W-2 forms show his receipt of wages totaling $15,060.96, yet he reported no wages on his Form 1040. His unexplained designation of his W-2 forms as "INCORRECT" and his attempt to deduct his wages as his cost of labor on Schedule C also establish the frivolousness and incorrectness of his position. See Funk v. Commissioner, 687 F.2d 264, 265 (8th Cir.1982) (designation of wages received for services as untaxable income is frivolous).


Accordingly, the judgment of the district court is affirmed on the basis of 8th Cir.R. 14.


The Holker court recites Holker's argument that he should get a refund of amounts withheld because (as he says) "he is a "natural individual and unenfranchised freeman" who "neither requested, obtained nor exercised any privilege from any agency of government."" But the court in no way proceeds to analyze or even refer a single time further to this argument. It neither accepts nor disagrees with the argument, instead [carefully? who knows...] stepping right past it.


In fact, the Holker court DOES declare what it DOES actually find to be "frivolous" about Holker's filing, and his "privilege-related" position is notable by its absence: "Holker's return facially indicates that his self-assessment is incorrect and that his position is frivolous. His W-2 forms show his receipt of wages totaling $15,060.96, yet he reported no wages on his Form 1040. His unexplained designation of his W-2 forms as "INCORRECT" and his attempt to deduct his wages as his cost of labor on Schedule C also establish the frivolousness and incorrectness of his position."


Thus, even without bothering to address the larger features distinguishing the Lovell case as concerning a mass of misunderstandings by Lovell more than adequately setting up the appellate panel to blithely do drive-bys on all of them without care or regard for accuracy, as revealed in the circuit court's summary:

"In April 1983, plaintiffs filed separate Forms 1040 for the 1982 tax year. Each plaintiff claimed no income from wages or salaries during 1982, although each claimed a refund of all the federal income and Social Security taxes that had been withheld during the year. The Lovells also filed Schedule C forms on which they claimed that their gross receipts as "labor contractors" were totally offset by adjustments for the "cost of labor." Neither plaintiff signed the return; instead, they each wrote on the signature line: "not a tax return (see attached letter)." The letter explained that they sought a refund and that the forms filed were not tax returns but supporting documentation for their refund claims. The IRS assessed a $500 frivolous return penalty under s 6702(a); [FN1] plaintiffs paid 15% of the penalties and filed claims for refund which were denied by the IRS. Plaintiffs then filed the instant action in district court.";

...the plain fact is that the Lovell court actually cites a false authority to support its therefore empty words.


The same is true of the Lovell court's declaration that, "Plaintiffs also contend that the Constitution prohibits imposition of a direct tax without apportionment. They are wrong; it does not. U. S. Const. amend. XVI--" .


In support of THIS contention, the Lovell court relies on Parker v. Comm'r, 724 F.2d 469, (5th Cir. 1984). There, we find the following: "The Supreme Court promptly determined in Brushaber... that the sixteenth amendment provided the needed constitutional basis for the imposition of a direct non-apportioned income tax.”  Proceeding to Brushaber, we find that what that Supreme Court ACTUALLY said is:

"We are of opinion, however, that the confusion is not inherent, but rather arises from the conclusion that the 16th Amendment provides for a hitherto unknown power of taxation; that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes. And the far-reaching effect of this erroneous assumption will be made clear by generalizing the many contentions advanced in argument to support it...”

and to suggest the contrary would be idiotic (okay, they didn't use the word "idiotic"...), because that would cause:

“...one provision of the Constitution [to] destroy another; that is, [it] would result in bringing the provisions of the Amendment [supposedly] exempting a direct tax from apportionment into irreconcilable conflict with the general requirement that all direct taxes be apportioned."  Brushaber v. Union Pacific R. Co., 240 U.S. 1 (1916)

So, the 5th circuit was flatly wrong in its declaration in Parker, and the 7th circuit has actually cited no authority for its own declaration in Lovell.  And yet, this Lovell excerpt is presented as authority for the contention that "the courts have ruled" against the issue of "privilege" as an element of the "income" tax, and that the 16th amendment authorized a non-apportioned tax on what had been taxable only by apportionment prior to the amendment.


'Fraid not...


Latham and Sullivan


The IRS (and other tax agencies) have relied for decades on excerpts from two rulings-- United States v. Latham, 754 F.2d 747 (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 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.


In fact, the court goes on to say, "It is obvious that within the context... ...the word "includes" is a term of enlargement not of limitation, and the reference to certain entities or categories is not intended to exclude all others."  Since under the rule of construction applying to "includes" (26 USC §7701(c)) the term allows for limited expansion to other things not listed but of like kind and class as those which are, this declaration is certainly correct.  In that sense, and to that degree, "includes" IS a "term of enlargement".  It is simply not a term of "unlimited enlargement", and the court tacitly admits this with its careful wording, "...not intended to exclude all others." (Emphasis added.)   As the court says, the reference to certain categories isn't intended to exclude ALL others, but at the same time, that the term "employee" is defined in the statute at all makes inescapably plain that it isn't intended to INCLUDE all others, either, because if it was meant to cover everybody meeting the standard dictionary definition of 'employee', it wouldn't have been given a statutory definition in the first place.  The court's careful language makes no effort to dispute this fact.


When a statute includes an explicit definition, we must follow that definition, even if it varies from that term's ordinary meaning."  Stenberg v. Carhart, 530 U.S. 914 (2000)


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.  That is, if the Latham court meant to be understood as using the term "wages" as it is defined in the law, then anyone earning them could only be said to be "privately employed" if "privately" is meant in a carefully nuanced way (as in, "I may be an officer of this federally-controlled corporation, but I'm here looking out for my own interests, and my pay-check goes into my own bank account...").  Nothing more of this "best-we-have-to-work-with" case need be considered here, as this vapid and meaningless excerpt of dicta 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."


The language here does happen to be technically accurate, though.  Due to the meaning of "includes" in these statutes-- itself a custom defined term-- the definition of "employee" cited by the Sullivan Court is capable of limited expansion.  As is helpfully clarified by the Department of Treasury:

Meaning of Terms: The terms “includes and including” do not exclude things not enumerated which are in the same general class."  27 CFR 72.11

Nonetheless, this remains a far cry from, "Withholding applies to everybody, period."  Instead, it translates only to, "Withholding [under 3401(c)] DOES NOT apply to everyone-- only those listed and others that might also belong in the class established by the characteristics of those listed"  (which is to say, members of the federal workforce, in this case).  Again, the very fact that misleading, empty nonsense such as this is what the tax agencies must rely upon in attempting to suggest universal applicability of the "income" tax emphasizes the complete lack of substance in that ridiculous contention.


Interestingly (due to the IRS having grasped at it in an effort to obscure the truth about the tax), the Sullivan ruling has more to offer than merely demonstrating the IRS's inability to substantiate what it would like everyone to believe about the law.   Actually reading the ruling in its entirety makes clear that it is not only completely inapposite to any CtC-educated filing, but it actually supports the accuracy what is taught about the law and the "income" tax structure in the book, and the discussions of the actual meaning of a statutory "frivolous return" in CtC, here and elsewhere on this site.  This is amply demonstrated by the following portions of the ruling:

“... [Sullivan] did not submit actual tax return or schedule for profit or loss from business or profession... Sullivan filed with the IRS a letter entitled “Request for Refund of Income Tax,” and two attached documents entitled “Income Tax Refund Statement for the Tax Year 1983,” and “Business Income/Loss Statement for the Tax Year 1983.”  In the letter, Sullivan stated that he was a “natural individual and un-enfranchised freeman” who “neither requested, obtained, nor exercised any privilege from an agency of government” for taxable year 1983... Sullivan reported no income from “wages, tips, [or] other compensation”, even though two Forms W-2 he attached indicated that he had received $32,502.32 in “wages, tips, [or] other compensation.”

“[Thus] Sullivan’s purported return facially indicated (bold added) that his self-assessment was incorrect, and that his position was frivolous.  The attached Forms W-2 show that Sullivan received wages totaling $32,502.32 in 1983, yet he reported no income from wages on the purported return.”


“Here, the only questions to be resolved were whether the documents Sullivan filed amounted to a purported return under section 6702, whether the purported return contained information that on its face (bold added) indicated that the self-assessment was substantially incorrect, and whether Sullivan’s position was frivolous.”  (emphasis added)



Clearly, the IRS effort to gin up "case-law" support for its preferred misunderstanding of the law is an exercise in futility when deployed against anyone willing to go to the trouble to look and think beyond the superficial.  This is particularly true as regards the "words of art" issues on which we are focusing here.  See the detailed discussion of the "includes" mechanism in 'The Law Means What It Says' for an accurate presentation of the reigning Supreme Court doctrine regarding these matters.


That said, though, it is worth keeping in mind that a specific point-by-point correction of these efforts to mislead isn't actually necessary.  It is enough to simply point out that unapportioned capitations are prohibited.  ANY construction of the term "includes" (and any other term in which it is used, OR ANY OTHER STATUTORY ELEMENT AT ALL) which would suggest that an unapportioned capitation has been imposed is clearly and inarguably a misconstruction of the statute (otherwise the statute would be inherently invalid and void).  No further analysis is really required.  This is one of the "light bulb moment" perceptions important for those still struggling with their grasp of the overall "income" tax subject.

"It is elementary law that every statute is to be read in the light of the constitution.  However broad and general its language, it cannot be interpreted as extending beyond those matters which it was within the constitutional power of the legislature to reach." McCullough v. Com. of Virginia, 172 U.S. 102, 112 (1898)

Finally, when the courts aren't conscious of an interest in obfuscation as in Sullivan and Latham (where both exploiting and sustaining confusion about the meaning of "includes" appears to have been very much on the judge's minds), they are capable of perfect clarity on the point, as is revealed in the following excerpt from the July 18, 2008 newsletter 'Tax Tip':


IT'S A SHAME AND A DISGRACE that this merits posting, frankly.  However, the chronic obfuscation by federal courts and federal agencies on this subject makes a slip like the one suffered by the Sixth Circuit in an opinion issued 8 July worthy of note, and of interest to those working to restore the rule of law in America.


In the opinion, Mobley v. C.I.R. (6th Circuit No. 07-2019), the three-judge panel ruminates over whether a definition of “courts” referred to in 28 USC 1631 could encompass the Tax Court.  The definition involved is from 28 USC § 610- Courts defined:

"As used in this chapter the word “courts” includes the courts of appeals and district courts of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, the District Court of the Virgin Islands, the United States Court of Federal Claims, and the Court of International Trade".

Weighing various different approaches to considering the question, the panel observes that, "One might think, for example, that all of the "include[d]" courts listed in section 610 are Article III courts, which would exclude the Tax Court-- an Article I court."  That is, the panel admits that if all the courts listed in the statutory definition were courts of the Article III class, those of other classes-- despite being well within the common meaning of "courts"-- would necessarily be recognized as being EXCLUDED from the meaning of “courts” for the purposes of this statute.


The panel goes on to point out that, in fact, an Article I court-- the Court of Federal Claims-- IS listed in the definition, and so Tax Court can qualify as included within the meaning of the statutory term "courts" despite not being listed (but only for this reason).  This is precisely the doctrine of statutory construction applicable to definitions using “includes” in the internal revenue laws, as explicitly expressed by statute:


“Includes and including: The terms ''includes'' and ''including'' when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.” Rev. Act of 1938 §901(b) (Codified at 26 USC 7701(c),


and as reflected in various Treasury Department interpretations of this statute over the years:


26 CFR 170.59 and 27 CFR 72.11- Meaning of Terms: "The terms “includes and including” do not exclude things not enumerated which are in the same general class."


Ultimately, the panel concludes that Tax Court doesn’t qualify as a “court” within the meaning of section 1631 (for other reasons), but has made refreshingly clear that despite the relentless efforts by everyone's favorite alphabet agency to evade this standard reality of statutory construction and interpretation, "includes" remains reflexively and accurately recognized by the federal courts as a device of limited expansion.


(Interestingly, the standardized character of this rule as to the "limited expansion" meaning of "includes" finds particularly explicit expression elsewhere in Title 28, by way of the special chapter-level exception made in 28 USC 3003:

Section 3003, Rules of Construction

(a) For purposes of this chapter

(1) the terms “includes” and “including” are not limiting;”

Similarly, Title 26 itself contains numerous explicit exceptions to the statutory meaning of the terms "includes" and "including", adding the qualifying language "but is not limited to" or "but not limited to" in various places in the tax code where "includes" and "including" are deployed.  This by itself is enough to make clear to anyone with more than a fifth-grade level of comprehension that the only expansion or enlargement provided by the language of 26 USC 7701(c) IS INHERENTLY LIMITED.  If it were not, there would be no point in adding "but is not limited to" anywhere, because that would be already true of the term "includes" to which that excepting language has been attached.)


Click here for the Mobley opinion.



"LexisNexis" Misrepresentations Regarding Pacific Nat'l Ins. v. US and the Limited Meaning of Person in 26 U.S.C. § 6671(b)


Frankly, I could devote an entire page-- maybe a book-- to misrepresentations of "case-law" by LexisNexis. I have seen many, and they are important because attorneys on both sides of a case often resort to LexisNexis for a "cliff-notes" rendering of precedents on a point of law. (Judges may well do the same.) This is sheer laziness, and leads to completely mistaken or outright bogus conclusions such as those discussed elsewhere on this page.


No attorney should ever use this service. A competent attorney bringing integrity to his or her job will always follow the rules of case analysis laid out above.


Anyway, while I may write that book eventually, for the moment I will just present one misrepresentation made by the service in its offering of precedents concerning the term "person" as statutorily defined at 26 U.S.C. § 6671(b).


The statutory definition reads:

(b) Person defined.-The term "person", as used in this subchapter, includes an 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.

Now, read without craft and corruption, this definition plainly confines "persons" (as the term is used in the subchapter) to the class described by the examples given (officer[s] or employee[s] of a corporation, or a member[s] or employee[s] of a partnership, who as such officer[s], employee[s], or member[s] [are] under a duty to perform the act in respect of which the violation occurs), per the "includes" rule of construction at 26 U.S.C. § 7701(c):

(c) Includes and including

The terms “includes” and “including” when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.

This rule is explained by the Treasury Department as:

“The terms “includes and including” do not exclude things not enumerated which are in the same general class;”  27 CFR 26.11 and 27 CFR 72.11 (that is, things within the general class described by the enumeration in the definition can be considered to also be within the meaning of the defined term as it is used in the statute).

Here’s how the United States Supreme Court explains the rule: 

“[T]he verb “includes” imports a general class, some of whose particular instances are those specified in the definition.”

Helvering v Morgan’s, Inc, 293 U.S. 121, 126 fn. 1 (1934);


“[I]ncluding... ...connotes simply an illustrative application of the general principle."

Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1 U.S. (1941).

However, in its lead "precedent" presented concerning the meaning of "person" under 6671(b), LexisNexis offers this:

Definition of "person" in 26 USCS § 6671 is not restricted to class of persons specifically listed. Pacific Nat'l Ins. Co. v United States (1970, CA9 Cal) 422 F.2d 26, 70-1 USTC If 9238, 25 AFTR 2d 714, cert den (1970) 398 US 937, 26 L Ed 2d 269, 90 S Ct 1838, reh den (1970) 400 US 883, 27 L Ed 2d 121, 91 SCt 116

This is a completely misleading rendering of what the Ninth Circuit actually said in Pacific National.


Here is what the Pacific court REALLY said:

We think Pacific reads sections 6672 and 6671(b) too narrowly. Briefly, it is our conclusion that the language of these provisions is broad enough to reach an entity which assumes the function of determining whether or not an employer will pay over taxes withheld from its employees; that this reading of the language serves the evident purpose of the statute; and that the district court's finding that Pacific performed this function with respect to Central is fully justified by the record.


The definition of "persons" in section 6671 (b) indicates that the liability imposed by section 6672 upon those other than the employer is not restricted to the classes of persons specifically listed --officers or employees of corporations and members or employees of partnerships. "By use of the word ['includes'] the definition suggests a calculated indefiniteness with respect to the outer limits of the term" defined. First National Bank In Plant City, Plant City, Florida v. Dickinson, 396 U.S. 122, 90 S. Ct. 337, 24 L. Ed. 2d 312 (1969). 8 As we said in United States v. Graham, 309 F.2d 210, 212 (9th Cir. 1962): "The term 'person' does include officer and employee, but certainly does not exclude all others. Its scope is illustrated rather than qualified by the specified examples." 9


The language is broad enough to reach corporations and other artificial entities, as well as natural beings. The Code expressly provides that unless "otherwise distinctly expressed or manifestly incompatible with the intent * * The term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." 26 U.S.C. § 7701 (a)(1). And since artificial entities commonly provide operating, accounting, and management services for independent businesses, it is not "manifestly incompatible" with the intent of section 6672 to include them within its reach.


We may assume that when the employer is a corporation the statutory language does limit liability under section 6672 to those who exercise the corporation's power to determine whether or not to pay over the withheld tax. But the definition of "persons" does not require that they be formally vested with the office or employed in the position normally charged with this function; the definition simply "includes" such persons. 10 Indeed, the language itself does not require that they be officers or employees of the corporation at all, so long as they are in fact responsible for controlling corporate disbursements. 11 As we held in Graham, supra, 309 F.2d at 212, "the section must be construed to include all those so connected with a corporation as to be responsible for the performance of the act in respect of which the violation occurred"; it reaches those who have "the final word as to what bills should or should not be paid, and when." Wilson v. United States, 250 F.2d 312, 316 (9th Cir. 1958). See a/so White v. United States, 372 F.2d 513, 517, 178 Ct.CI. 765 (1967).

Pacific National Insurance Co. v. United States, 422 F.2d 26 (9th Cir.) (1970) (Emphasis added.)


The misleading LexisNexis rendering of this ruling: "Definition of "person" in 26 USCS § 6671 is not restricted to class of persons specifically listed," virtually guarantees that this ruling will be incorrectly taken as holding that the definition of "person" does not confine its meaning to those within the class described in the definition. This would mean, of course, that the court said the meaning of "person" as used in the subchapter is not confined at all by the definition.


This is plainly wrong. What the Pacific court ACTUALLY said is merely that the class described in the definition is bigger than just the officers, employees and members specifically enumerated-- it also embraces others who are under the same duty:

"[I]t is our conclusion that the language of these provisions is broad enough to reach an entity which assumes the function of determining whether or not an employer will pay over taxes withheld from its employees..."


"[T]he definition of "persons" does not require [that in order to qualify as a relevant "person" someone] be formally vested with the office or employed in the position normally charged with this function...so long as they are in fact responsible for controlling corporate disbursements."

An accurate "cliff-note" rendering of Pacific would read: "Definition of "person" in 26 USCS § 6671 includes those sharing the characteristics of relevant duty with the enumerated examples; the class of "persons" defined by the statute is that of persons under such a duty, whether technically an officer, employee, or member of the entity in regard to which the duty arises."


Accurately rendered, it is clear that the Pacific ruling plainly and properly confines the meaning of "person" as used in 26 U.S.C. Chapter 68, Subchapter B- Assessable Penalties, contrary to what is so strongly suggested by (and easily misread into) the LexisNexis misrepresentation of this ruling. STAY AWAY FROM LEXISNEXIS!!




By the way, it is also clear that, accurately rendered, the Pacific ruling fully supports, and can be read in no way other than as acknowledgement of, the accurately limited meaning of "includes". The Pacific court clearly construes "includes" not as an "also includes" supplement of some other, broader definition, but merely as permitting limited expansion of a definition to objects not mentioned but within the class actually illustrated by the examples given (which is not the class of the examples themselves, but of what they exemplify)-- and therefore, axiomatically, to no one outside that illustrated class-- just as the authorities say:

“The terms “includes and including” do not exclude things not enumerated which are in the same general class;”  27 CFR 26.11 and 27 CFR 72.11 (that is, things within the general class described by the enumeration in the definition can be considered to also be within the meaning of the defined term as it is used in the statute).

“[T]he verb “includes” imports a general class, some of whose particular instances are those specified in the definition.”

Helvering v Morgan’s, Inc, 293 U.S. 121, 126 fn. 1 (1934);

“[I]ncluding... ...connotes simply an illustrative application of the general principle."

Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1 U.S. (1941).

For more on this subject, and how the Pacific ruling has been cited in other proceedings to illustrate the proper understanding of "includes" and the limited meaning of "person" in statutory definitions like that of 6671(b), click here. For more on "includes" generally, see this.


Another Reeking Example Of Judicial GIGO


PROPER UNDERSTANDING OF LEGAL ISSUES can wither by many different causes. The most obnoxious cause is sheer judicial stupidity which goes not only unchallenged but is treated as a precedent upon which a wholly-errant doctrine is founded. An example of this can be seen in the ruling in In re Meador, 16 F. Cas. 1294 (ND Ga. 1869), concerning the authority granted under section 49 of the revenue act of 1868 for the federal government to to "examine all persons, books, papers, accounts and premises", and to compel persons to appear, and to produce books and records, in order to ascertain the correctness of a return.


The Meadors had challenged this authority as repugnant to the Constitution's Fourth Amendment when exercised without a warrant. The court hearing the case ruled otherwise, based on mistaking the meaning of a ruling ten years prior:

"The objection made to the power given to the supervisor by the statutes is, as just mentioned, that it is forbidden by the fourth amendment to the constitution. But this is a civil proceeding, and in no wise does it partake of the character of a criminal prosecution; no offense is charged against the Meadors. Therefore, in this proceeding, the fourth amendment is not violated. Said Merrick, J., in pronouncing the judgment of the court in Robinson v. Richardson, 13 Gray. 454: 'Search warrants were never recognized by the common law as processes which might be availed of by individuals in the course of civil proceedings, or for the maintenance of any mere private right; but their use was confined to cases of public prosecutions, instituted and pursued for the suppression of crime or the detection and punishment of criminals.1 Murray v. Hoboken Land & Imp. Co., supra; 1 Bish. Cr. Proc. § 716. I do not perceive any likeness in principle between the summons issued by the supervisor and either general warrants or writs of assistance."

AS IS READILY SEEN, the Meador court mistakes the Robinson court as having declared warrants to be unnecessary in searches conducted pursuant to investigations for purposes of civil prosecutions. The court seems to think the Founders were fine with the idea of government agents rooting through someone's stuff at will, as long as they were only looking for tax-related contraband (precisely the use of the "general warrants" and "writs of assistance" against which the Fourth Amendment was most specifically provided).


In fact, all Robinson actually says regarding civil actions is that private citizens can't deploy search warrants pursuant to their civil litigations. The Robinson court's further declaration that warrants can only be used in criminal prosecutions isn't a statement that searches can be conducted for other reasons, and without warrants, to boot; on the contrary, it is a statement consistent with the Founders' plain and well-settled doctrine on the Fourth Amendment principle that searches can only be conducted at all if pursuant to criminal investigations (and based on sworn declarations by competent witnesses alleging what will be found and where)". Nonetheless, the Meador court uses this ruling as authority for the proposition that "civil" searches are lawful, and need nothing but a tax examiner's curiosity as their basis.


This is a classic case of "garbage in, garbage out", with the "out" taking the form of many decades of judicial doctrine that no warrants were needed for a search, as long as the search was not pursuant to an ongoing criminal investigation! Here, then, is another in an endless list of available examples of why nothing coming out of any court should ever be automatically accorded the least respect or significance as to the competent determination of a point of law.


Interestingly, court issuing the Meador ruling availed itself of a pretextual escape hatch a few pages later in its ruling:

"And here a thought suggests itself. As the Meadors, subsequently to the passage of this act of July 20, 1868, applied for and obtained from the government a license or permit to deal in manufactured tobacco, snuff and cigars, I am inclined to be of the opinion that they are, by this their own voluntary act, precluded from assailing the constitutionality of this law, or otherwise controverting it For the granting of a license or permit—the yielding of a particular privilege—and its acceptance by the Meadors, was a contract, in which it was implied that the provisions of the statute which governed, or in any way affected their business, and all other statutes previously passed, which were in pari materia with those provisions, should be recognized and obeyed by them. When the Meadors sought and accepted the privilege, the law was before them. And can they now impugn its constitutionality or refuse to obey its provisions and stipulations, and so exempt themselves from the consequences of their own acts?"

With this reasoning, the court puts itself on arguably valid ground for deeming enforcement of the examiner's actions not a Fourth Amendment violation, and perhaps is signaling its own recognition of the flaws in its earlier declaration. But this hedge was overlooked by courts subsequently citing to the ruling as precedent for finding warrantless "civil" searches Constitutional, resulting in a simple, errant and enduring doctrine that searches conducted for ostensibly "civil' purposes simply have no meaningful Fourth Amendment implications.


Hartman v. Commissioner  


The IRS and DOJ routinely cite to a 1975 Tax Court ruling, Hartman v. Commissioner, 65 T.C. 542 (1975) (or subsequent cases which cite to Hartman)-- a "deficiency" case concerning a non-filer in which it was held that no 6020(b) was required for a deficiency proceeding to go forward when no return had been filed-- for the proposition that a[n actual] 6020(b) return need not be signed under penalties of perjury. But though the ruling of this agency court does indeed say these words (purely as a disposal of an irrelevant contention, since neither a 1040 nor a 6020(b) return was involved in the case), it does so in a complete obfuscation of the truth, which is that while 6020(b) doesn't impose the oath obligation itself, that obligation is imposed on 6020(b) returns by action of 26 U.S.C. § 6065.


Further, the rambling on this point conflates two different issues, reflecting confusion probably borrowed from Hartman, who apparently argued that the 6020(b) language somehow imposed a requirement for a signature under oath for mere deficiency determinations and findings:

"Finally, petitioner argues that the "so made and subscribed" language of section 6020(b)(2) (see p. 544 supra) requires that all determinations and findings of the Commissioner must be under oath. (Emphasis added.) Contrary to petitioner's position, section 6020(b)(2) imposes no oath requirement at all. The language cited by petitioner simply refers to a return made by the Secretary or his delegate pursuant to section 6020(b)(1) and "subscribed" by him. Webster's Third New International Dictionary (1965) defines "subscribe" as "to write (as one's name) underneath; sign (one's name) to a document." We find no reason to believe Congress intended to give the word other than this ordinary and well-known meaning."

Hartman v. Commissioner, 65 T.C. 542 (1975)


Can't argue with the court about the meaning of "subscribed" by itself, but of course that subscription must be made in conformity with other rules, one of which is found in 26 U.S.C. § 6065 and does impose the oath requirement on 6020(b) returns. In short, the citation of this case by government attorneys is just corrupt lawyering in an effort to abuse a non-precedential judicial expression of ignorance or corruption, done in the hope that their opponent won't know enough to debunk this phony claim of authority for a proposition that is actually false..


May v. Commissioner

Contributed by Dave Scotese

Citation being misrepresented: May v. Commissioner, 752 F.2d 1301, 85-1 U.S. Tax Cas. 9156 (8th Cir. 1985). The misrepresentation is that May made a meaningful assertion in a tax court petition that because he "enjoys no grant of privilege or franchise", he is not liable for federal income tax, and that this was addressed as a point of law by the appellate court and rejected.

What’s wrong with this picture:  The court did NOT reject the argument about privilege. In fact, the court deliberately avoided mentioning that argument even when listing others in May's petition to tax court.


May engaged in frivolous litigation while also making an honest claim that would have been honored if not for the frivolous litigation and his failure to properly rebut presumptions created by information returns.  Alleging something in a complaint that happens to be true does not require that the court find in favor of the complainant.

The court determined his complaint was frivolous, saying, in the first paragraph of the "Background" section, that "On July 22, May filed an amended petition contesting the deficiency determination in which he asserted, inter alia, that he is not subject to federal income tax because the Internal Revenue Code contains no definition of ‘income’; that his income for these years was derived solely from wages which is neither "gain" nor "profit" subject to the federal income tax; that the filing of a tax return is voluntary and he did not "volunteer to self-assess himself" for the years in question; and that the Commissioner violated the Privacy Act of 1974, 5 U.S.C. Sec. 552a (1982), an act of fraud which vitiates his obligation to comply with any act."

May had indeed asserted all the points the court lists above. But he also declared in his petition that he "has received nothing during the years in question of a known tangible value that qualified as income and enjoys no grant of privilege or franchise," and this assertion the court specifically declines to identify as one to which its ruling is addressed. It is therefore false to present this as a ruling standing for the rejection of this point.

Further, even if the court HAD acknowledged the point, its failure to award May a victory simply because he had made this assertion is NOT a "rejection" of the "privilege" point. First of all, May was a non-filer in regard to the years involved here. Thus, he had failed to make his "privilege" assertion where it had legal substance-- on 1040s addressing these years. On the contrary, he had acquiesced to the unrebutted assertions of "information returns" that he HAD exercised privilege. Saying he hadn't years later and only in a tax court petition was legally-meaningless, and in no way dispositive of the case in his favor.

Further still, according to the appellate court's characterization of May's argument, he admitted even in his petition that he had received "wages". The court was therefore bound to judge his petition to be "frivolous" and without merit, because the legal definition of "wages" in Title 26 implies the exercise of privilege (and the creation of a tax liability). The court needed nothing more; even had May's "privilege" point been considered by the court, rather than not, this "wage" assertion contradicted it.  


Additional Legal Resources