Q.  I didn’t find instructions on how to fill out “Form 123”, and/or “Schedule ABC” in ‘Cracking the Code-…’.  What do I put on all these lines?

A.  No one-- whether a government agent, a relative, an attorney, or anyone else (including me)-- can tell another person what to put on a tax-related form, which one to file, or whether or not to file one at all, other than in the most general terms.  In almost every case, such forms are affidavits, by which the testimony of the signer is conveyed.  That's why I don't give instructions in CtC, but merely explain how I have filed my own returns.

Furthermore, someone seeking advice may have a night-job at the Post Office, or receive a military pension, or have something else of the sort going on that results in taxable receipts, but that I don't know about and they don't mention.  Under such circumstances, if I were to advise putting X on line Y, or just filing Form Z-- or not filing Form Z--, I might be advising incorrectly.  Thus, I will neither advise nor assist any person as to what he, she, or it should put on a tax-related form; which one to file or not file, etc; or whether or not to file one at all; period.  Nor will I advise any person as to which of his, her, or its receipts qualify as "income".

However, making these decisions, and filling out the forms, is not rocket science.  Here is the long and the short of it: Learn (or review) the actual custom legal meaning of every term used in the relevant law, on the forms, and in their instructions, and then fill in the appropriate blanks truthfully and accurately.  There is nothing more to it.

In the vast majority of cases the only difference between filling out tax forms in ignorance of the law and filling them out in knowledge of the law will be the "income" amounts one starts with.  (Another, consequent difference is that, in most cases, starting with accurate "income" figures will mean that there ARE no complicated calculations, deductions, etc, to concern oneself with.  Educated Americans will typically find themselves doing their taxes in ten minutes, and without boxes of receipts, an adding machine, two packs of cigarettes and a stiff drink afterward to numb the sense of having just bent over for another annual..., well, let's just call it an "indignity"...) 

In the most general terms, this means that where a form asks for an original figure (that is, not the mere product of a calculation involving figures already entered thereon), a filer should take care to record what is precisely correct to the best of his or her own fully-educated knowledge and belief, paying careful attention to the fact that every such entry constitutes both a declaration as to an amount, AND a declaration as to the legal character of that amount.  Both of these considerations apply to figures transferred from other forms, as well: If the filer transfers such a figure to a form he or she is completing, he or she is declaring that the figure involved is both accurate as to the amount, and to the legal status of that amount.

This is also true of any figures on any form submitted with a return.  By such a submission (or transcription), the filer is explicitly endorsing the accuracy-- both as to the amount, and as to the legal character-- of any figures on such a form (or as transcribed).  That's why the law provides for, and fully accommodates, a filer replacing inaccurate originals of any forms needing to be attached to a return with accurate instruments reflecting his or her own testimony.

By the way, some will find it useful to bear in mind that when a CPA, or other service-provider "does somebody's taxes", that service-provider operates on the assumption that the customer is deliberately and knowingly certifying the accuracy of everything handed over to him or her in the way of documents and "information returns".  For instance, if someone hands over a W-2 (or other "information return") to a tax preparer, the tax-preparer takes that as THE CUSTOMER'S declaration or agreement that everything reported on that form is accurate (and it is the customer who will finalize and take responsibility for that certification by signing the completed return).  The service-provider is not making such determinations for himself, nor could he.  After all, what does he know about the circumstances reflected on any such form?  Precisely the same is true when a service-provider is given a 4852 or other instrument by which the filer is correcting forms known to have been sent to the relevant tax agency with whom the return being prepared will be filed.

The only thing for which such a service-provider is responsible (and the only thing that is his legitimate concern) is the accuracy of his calculations in processing the numbers given to him, and the accuracy of his application of relevant deductions and so forth to, and in connection with, those provided numbers.  The filer, and no one but the filer, determines the "income" amounts involved.

Q.  I see all these readers getting refunds, but isn't the government just going to come back later and demand the money back?

A.  Of course not.  The reason a properly-claimed refund (numbers all correct, nothing claimed that wasn't actually withheld, etc.) issues in the first place is that the related evidence on record in the government's own files has established that the government has no claim to the money, and that the refund must be made as a matter of law.  Indeed, as you will have noticed, refunds received by many CtC-educated Americans have been personally supervised by IRS employees, and in some cases readers have gone to the trouble of securing transcripts of their account status after receiving their refunds, which clearly acknowledge the legitimacy of their claims.  In this regard, it is important to remember that a refund is the FILER'S money being returned.  It is NOT the government's money being 'paid out'.

Further, even if a government wished to 'rescind' a refund (or act as though it could), the simple fact is that unless that government is a party to the original transactions reported on a return/claim for refund, it has no standing to modify the evidence on the basis of which the refund is issued, and therefore no standing to modify the resulting refund itself-- bluster to the contrary notwithstanding.  (Material related to this subject can be found at 'It's Time To Demand An End To This "Frivolous" Nonsense'.)

Indeed, unless a refund recipient can be cowed into "voluntarily" revoking his own claim to that property, and declaring a governmental claim to it, I am at a loss to imagine how even a lawsuit could be maintained to reverse a refund.  There is no injury which has been suffered by the government, and it would have no claim to press.  It would be a classic "failure to state a claim upon which relief can be granted".  (Even if a suit WERE to be allowed to proceed, the burden of proof would be on the government, by the way.  I want to be in the courtroom as that government is attempting to explain what it is about a defendant's receipts that makes them qualify as "income"...  Of course, that being yet unproven, the government has no claim to press, and thus no standing in court-- but I repeat myself.)

In fact, that such a suit (or other means of overcoming a filer's testimony by anything but craft and intimidation) is precluded is no surprise.  It is, after all, nothing more than an actualization of the provision of section 93 in the original revenue act that, "...the [amount of "income" declared by a filer on his or her return] shall be received as the sum upon which duties are to be assessed and collected." (embodied in the current statutes primarily in section 3173 of the Revised Statutes, as amended in 1919).

(Since these words were first posted, the federal government HAS engaged in a PR campaign "lawsuit"-styled contrivance in which it is, rather comically, begging a district court judge to order my wife and me to change the testimony on our 1040s for two years, so as to allow the government to then claim that we owe it taxes for those years.  That is, the government is admitting that it has no claim to our money, as things stand.  Needless to say, we cannot, and will not, be made to change our testimony-- the reality is, this April 12th-launched "lawsuit" was and remains a cheap media event intended to frighten those who only read the headlines away from the knowledge in CtC, while amusingly confirming everything I have just said on the subject...  See the segment below for more on this.)

Q.  Some people who have challenged the “income” tax based upon the ‘861 argument’, or Irwin Schiff’s views, have gotten a few refunds, but then were challenged later by the government over their claims.  Why?

A.  Refund claims made in the confusion of the '861 argument’-- or Irwin Schiff’s income-means-corporate-profit-only position, as well-- inevitably suffer as a consequence of the inability of those misunderstandings to accommodate the provisions of law reflected in Subtitle C.  (This happens because the elements of Subtitle C-- the imposition of taxes directly, such as in chapter 21, and the withholding of prepayments for Subtitle A taxes measured by the receipt of “wages” in chapter 24-- fundamentally contradict the premises on which the ‘861’ and Schiff theories are based).

This blind spot results in filings which are inherently self-contradictory, and which support the government's position.  They demand a refund of a portion of "income" taxes withheld under the title of "Federal Income Taxes", while declining to do the same for federal "income" taxes withheld under the name "Social Security Taxes" and "Medicare Taxes"-- and leave at least portions of the evidence about the filer’s receipt of “income” created by others uncorrected, as well.  (Indeed, in many cases, such evidence will actually be explicitly endorsed in the filing, by the attachment of a Form W-2-- remember, a filer is testifying to the accuracy and truth of everything accompanying a 1040.)  In other words, a typical filing of this type will declare, "I acknowledge (or let stand unchallenged assertions of) being paid "wages as defined in 3121(a) of the code" (and/or similar declarations as to the receipt of "wages as defined in 3401(a) and/or proceeds from a "trade or business"); and yet simultaneously deny that I had any "income" and demand a refund of a large portion of what was withheld.”

Even the filings of certain adherents of the '861' misunderstanding who have actually come to a partial understanding of the purpose of the Form 4852 are just as fatally flawed, amounting to nothing but a more nuanced self-contradiction, due to a superficial avoidance of one of these errors.  Because the other error stands, the benefit of that superficial relief is legally nullified, and the filing as a whole is just as compromised as those suffering from both errors overtly.  To the administrators of the “income” tax scheme as it really is, filings of either variety constitute deer-in-the-headlights-class red meat.  (The self-contradictory aspect of these filings meets the requirements of 26 USC 6702(1)(B); and the typical attachments arguing the '861' or 'corporate-profit' positions, which those who file these returns are encouraged to deploy, make it easy for the government to characterize them as meeting the requirements of subparagraph (2)(A) as well-- thus, these filings are ripe for 'frivolous filing' treatment.  For more on this subject, visit www.losthorizons.com/tax/misunderstandings/map.htm.)  

In short, Schiff- and 861-style filings actually ARE "frivolous", and while it may take the tax agencies a while to address them, when that time comes, those agencies are well within the relevant provisions of law in disregarding those filings and proceeding accordingly.  On the other hand, although a public-relations campaign is currently underway intended to appear as though the federal government is demanding the return of refunds made to six Americans informed by the knowledge in CtC, the mechanism to which the government is reduced-- asking the relevant courts to order these folks to change the testimony on their 1040s-- reveals the fact that the government actually has no claim to pursue.

In fact, the IRS admits that CtC-educated returns are often routed to special scrutiny divisions at the IRS-- indeed, the 'service' testified to this effect in affidavits filed by the government in its PR "lawsuit" against my wife and me. However, as I pointed out in my responsive filing back in September of 2006, the end result of that special scrutiny is the issuance of the refund:

[IRS specialist] Henline’s “declaration” merits a few further observations beyond the points already made, however, particularly insofar as her “declaration” is to be imagined as supporting Plaintiff’s depraved prayer to this honorable Court to assist it in suppressing Defendant Peter Hendrickson’s speech.

After her tedious ruminations about how the world would be if only IRS-approved testimony were allowed to have standing in legal contests, Henline proceeds to describe an IRS program called the “Frivolous Return Program”, which she says operates out of the “Ogden Compliance Services Campus”. She states (in paragraph 21 of her “declaration”) that “Near the end of 2004” she and her colleagues began to observe “a particular pattern or trend” of filings with characteristics which Henline means to be taken as reflecting the knowledge communicated in ‘Cracking the Code- The Fascinating Truth About Taxation In America’. She obviously hopes that this honorable Court will presume that the filings described qualify as “frivolous”, simply by associating them with her discussion of this program.

However, throughout Henline’s “declaration” in its entirety, she never once actually declares the returns she describes to be improper or frivolous. Indeed, she doesn’t even declare OUR returns to be improper or “frivolous”. The closest she comes is to suggest that it was “erroneous” for us to include in our claim for refund the amounts withheld in connection with the possibility of Social Security and Medicare “wages” having been received. She doesn’t trouble herself to explain how, in light of the fact that we DID NOT receive such “wages”, the government has any proper right to keep that money...

Henline is really just trying to play a semantic game involving the fact that on certain tax-related forms, some amounts withheld are designated as “Federal income tax withheld”, some as “Social security tax withheld” and some as “Medicare tax withheld”, while the line on a 1040 for reporting the total amount withheld uses the expression “Federal income tax withheld”. The fact is, the distinction of “federal income tax withheld”, “Social security tax withheld” and “Medicare tax withheld” on certain forms is purely nominal, without any legal meaning-- the law explicitly declares “Social security” and “Medicare” taxes to be “income” taxes like any others.

Henline plays other semantic games in this portion of her “declaration” as well. She deploys the term “taxpayer” throughout her descriptions of the filings noted by her “Frivolous Return Program”, in the apparent hope that the inference will be drawn that some filers are making claims unsuited to their status (although again, without actually saying so explicitly). However, when Henline specifically refers to those who have received refunds, she carefully uses the word “individuals”, instead. Yet another of the endless examples of the bad faith underlying the “complaints” in this action.

HENLINE CONTRADICTS HERSELF IN HER DECLARATION-- PERHAPS WHILE SEEKING TO CONCEAL THREE YEARS OF SUSTAINED PROOF THAT RETURNS AND CLAIMS LIKE THOSE OF THE HENDRICKSONS ARE NOT IMPROPER, “FRIVOLOUS”, FALSE OR FRAUDULENT

Further on in the “Frivolous Return Program” portion of her “declaration”, in paragraph 24, Henline contradicts her earlier statement regarding timing. Now she says that the “pattern or trend” of filings to which she refers first caught the attention of her and her colleagues shortly after the publication of ‘Cracking the Code-...’ in July, 2003, rather than “near the end of 2004”. There is about a year-and-a-half of spread between these two points on the calendar, suggesting that Henline is making this up as she goes along and lost track of her earlier fabrication by the time she got around to the later one. Another possibility is that she made the first assertion in deliberate service to her purposes in this carefully-crafted “declaration”, and then had a failure of cunning and told the truth inadvertently with the second date.

We favor the latter of these two possibilities, as we suspect that Henline would prefer it to be imagined that it was only in late 2004 that the IRS began to take an interest in what Peter Hendrickson reveals about the law, and would prefer that the preceding 18 months to be forgotten. But it was not late 2004 before the IRS focused on this subject.

The truth is, the very week ‘Cracking the Code-...’ became available (which was actually late August of 2003), the IRS downloaded the content of Peter Hendrickson’s website, losthorizons.com, as part of its immediate preparations for efforts to suppress his book and other speech-- in part by means of injunctions of the same sort being sought in the instant action. The IRS and Department of Justice formally launched those efforts in February of 2004, commencing three different legal actions over the course of the following 7 months-- two of them in this very Court-- and including in its evidence packages the downloaded website content mentioned above. Each of these three actions was eventually dismissed on the government’s own motions, raising a bar to its further pursuit of such efforts under the doctrine of res judicata.

The more significant aspect of this timing reality is the fact that the IRS has been intensely conscious of Peter Hendrickson and his speech for fully three years now. The agency has also been intensely conscious of the many, many filings made by Americans across this great country who have read ‘Cracking the Code-...’ and acted based upon what they have learned-- and really wishes it could stop them. But, its gross obfuscations in the instant action notwithstanding, even the IRS recognizes the truth about these filings, and what the law requires. Thus, the agency has been routinely delivering complete refunds of every penny withheld from the (often) considerable earnings of these upstanding Americans-- including nominal “Social Security” and “Medicare” taxes-- during that entire period, without interruption.

Well over a million dollars worth of such refunds, respectfully issued by the federal and 22 state and local governments so far, are displayed at losthorizons.com, and many more have been reported as received but not made available for display. These refunds, the displayed host of which range from a largest single check of $75,150.00 to a smallest of $1.00, continue to this very day. The most recently dated federal refund check posted issued on August 11th, 2006-- every penny withheld from this upstanding American during 2003, plus interest. It shares page space with another issued July 17th, 2006, by the very Ogden “campus” at which Shauna Henline’s “Frivolous Return Program” operates. Obviously, these filings are not in any way false, fraudulent, or “frivolous”, or anything but lawful, proper, and correct in every way.

Many of these refunds have involved considerable personal contact between the Americans claiming them and IRS workers. Many filing readers, having no withheld property to reclaim, have instead secured transcripts of $0 balances as posted in the IRS database. Others have had “Notices of Deficiencies” and levies withdrawn, or received reimbursement of money previously taken from them by garnishment. Obviously, these filings are not in any way false, fraudulent, or “frivolous”, or anything but lawful, proper, and correct in every way.

Indeed, just last week the Washington Post reported that throughout 2005, a year during which nearly $1,000,000.00 worth of (merely the posted) refunds were issued, the IRS had a sophisticated “fraud detection” computer program in use, which specifically scrutinized every return on which a refund was claimed. Another administrative program in use since 1977 was also deployed during the same period, under which more than 120,000 refund claims WERE frozen last year. But not those claimed by these ‘Cracking the Code-...’ readers. Obviously, this near million dollars worth of refunds claimed by readers of ‘Cracking the Code-...’ (and the many more received during 2005 but not available for display, and the others of the same character claimed before and since) DID NOT AND DO NOT QUALIFY AS FALSE OR FRAUDULENT. Needless to say, the same is true of the returns by which these claims were made.
 

One final note related to "Schiff" (and similar) filings-- those who have been persuaded to take such a course in the past should understand that when a return has qualified as "frivolous" (or otherwise unprocessable), it is treated as though never filed.  Consequently, any subsequent filing for the same period will be viewed as an original return by the tax agency, not a replacement, or amendment.  The same is true in cases where the tax agency has presumed to file a "substitute for return" (or acted as though it had authority to do so).  Such "SFRs" have no legal stature relevant to the person with whom they purport to be concerned, and when and if that person files an actual return, it will be an original return, not an amending return-- the "SFR" notwithstanding.