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The liberating truth about the "income" tax is turning those who would evade it

Every Which Way But Loose Part II

A collection of undeniable evidence of the correctness of CtC


Do you remember those old sci-fi movies (and numerous 'Lost in Space' and 'Star Trek' episodes) in which an evil robot or a computer collapses into terminal dysfunction after being presented with data that "does not compute"? The machine would flail about dangerously for a bit (or smoke and shake, and threaten to explode) before finally going limp, silent and harmless.



Some CtC Warriors are being drafted to play the part of the intrepid heroes of these space operas lately, with federal and state "income" tax agencies in the role of the neurotic robot.

SINCE AUGUST OF 2003, when the revelations of CtC were first published, tens of thousands of readers of 'Cracking the Code- The Fascinating Truth About Taxation In America' have taken control of their own resources, in accordance with, and respect for, the law. The total amount reclaimed by these good Americans so far is upward of several billion dollars.

During the same period, the IRS has engaged in a desperate struggle to regain its hold of fear and confusion over those now equipped with an understanding of the long-hidden secrets of the "income" tax, and to stop that understanding from spreading. This effort has involved the resort to many (and increasingly) bizarre evasions and theatrics.

IN THIS SERIES, we take a close look at many of these gimmicks, ploys and dodges. The action in these episodes will range from silly one-shot, quickly-abandoned agency stalls to drawn-out, elaborate efforts to resist or evade or discourage CtC-educated filers ending in dramatic slap-downs of the law-defying tax agency.

One consistent feature of all of these episodes is the special clarity with which they illustrate the accuracy and completeness of what CtC reveals about the "income" tax. Unlike the vast majority of CtC-educated refunds and other victories in applying the law in which the deep vetting to which every claim is subject is done out of view, with no evidence of the process except the filing and the check or transcript, what happens in the cases highlighted in this series takes place only after unambiguous, close tax-agency attention to the claim.

Thus, these cases present a wake-up splash of reality to those who struggle to persist in denial about the truth, completeness and correctness of CtC (some of whom actually argue with a straight face that the hundreds of thousands of complete refunds issued over all those years now from the feds and more than three dozen state and local tax agencies are a sustained "slip through a crack"!).

Here it is in a word: NOT ONE OF THE SURRENDERS DOCUMENTED IN THIS SERIES WOULD OR COULD HAPPEN UNLESS THE FILINGS AND CLAIMS MADE WERE CORRECT AND PROPER UNDER THE LAW. NOT ONE. Each of the victories presented here took place with the knowledge and participation of tax agency personnel. In almost every case, those victories took place over and despite the outright resistance of those officials.

Similarly, NOT ONE of the contortions and evasions documented in this series would be attempted unless the filings and claim against which they are deployed is correct and proper under the law. It is the insurmountably correct character of these educated filings that compels the tax agencies to resort to smoke, mirrors and bluster.

Because these things DID and DO happen, the correctness of CtC-educated filings and claims, and the view of the law on which they are based, is indisputable.


Dr. Jim Administers The Cure

DEDICATED TO LIBERTY AND THE RULE OF LAW, real American grown-up Dr. James _ has done some educated enforcement, just as the Founders meant for all Americans to do. Having concluded that his earnings as a doctor in private practice during 2011 didn't qualify as taxable, Jim said so in the manner provided for by law, stood his ground, and shut down a two-year IRS attempt to take more than $120K of his property in connection with that year.

The end result of the argument was an IRS admission that Jim's very considerable earnings do not qualify as "income" as that term is meant in the tax law, and he had zero tax liability for 2011.

Here is Jim's filing presenting his testimony into the record. It will be noted that Jim chose to do things a little differently than most-- the information returns he was obliged to address were 1099-MISCs, but rather than rebut them as most folks do (a few hundred versions of which can be seen at links on this page), Jim chose to use modified Forms 4852, instead (in keeping with the principles discussed here).

AS SOMETIMES HAPPENS, THE IRS decided to try to chivvy Jim back into the copper-top barn. This effort began with a 'notice of deficiency' in June of 2013 and then dragged on for nearly two years, until the agency finally admitted defeat in February of 2015.

Jim never went to "tax court", choosing instead to just let his return testimony and a clarifying statement made once the agency finally began to threaten to levy suffice. What follows is the series of threatening agency notices (interspersed with cryptic stalls where you can practically see the robotic gears clashing as its presumptive fictions encounter confidently-presented facts), Jim's calm and educated response, and the denouement in which what had become an asserted "balance due" of $120,158.13 by December, 2014 collapsed to an acknowledged $0 by February of 2015.


And finally:

WELL DONE, JIM!!! Both in standing, and in testifying. You are the sort of person that makes America exceptional.


Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!

Isn't it too bad everyone hasn't done like Jim and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax? You can help change that, and thereby help transform America. Click here to learn how.




CtC Warrior Scott MacNeilage filed a conventional, educated return for 2006 rebutting assertions that he had received earnings from taxable-activities in May of 2007.  Much to his surprise and annoyance, in April of 2008, an IRS stooge, in the apparent hope that Scott lacked complete understanding or confidence in his knowledge of the law, decided to subject him to some hassles.  The stooge issued a "CP2000" proposing that rather than the $0 calculated on his return, Scott owed the federal government more than $26,000.00 in outstanding tax liability for 2006:



As the note on the copy he sent me for posting makes clear, Scott was neither confused nor intimidated.  He responded accordingly, with the following:



Non-plussed, the stooge quickly cranked out a "stall letter" while considering its next step:



Eventually that call got made-- and almost within the 60 days promised!  (This may be a new record for "timeliness" in this regard...)  Unfortunately, it was not a good call:



Scott shook his head, and picked up the phone.  He ended up getting offered a ridiculous cock-and-bull "troll ate my homework" story about his CP2000 response having "been misplaced" (I wonder how many "ignorance tax" filers ever hear nonsense like this?).  Nonetheless, Scott patiently responded again:




The IRS response?  ANOTHER "We need time to decide whether to face the fact that you've escaped the fog..." notice:



Happily this time, at long last, the 'service' realized that Scott has moved firmly into the army of illuminated, never-going-back-to-slavery CtC-educated Americans.  Not even three weeks later the white flag got hoisted and the 'service' reluctantly turned its dark attention to other targets:



Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!




CtC Warrior D. Young's educated, proper and oh-so-inconvenient to the IRS "bring in all possible revenue by whatever means necessary" mission has prompted a brand new variety of tax agency obfuscation, as the truth turns the 'service' every which way but loose.  This new notice, "LTR 2893C", is of the "We're pretending to not understand what your filing means" "fog" class of dodges, and really is a piece of work.  Let's read it through:


(The entire notice is a bit longer than the portion presented above, also explaining interest additions that apply when an actual tax goes unpaid, and giving options and instructions for contacting the 'service'...)


Now, keeping always in mind that the object of this "notice" is to give the 'service' cover for its failure to honor D.'s filing and return her property while preserving plausible deniability against possible criminal charges for fraud and simultaneously sowing a little confusion...


First of all, the "notice" invites the reader to imagine that the amounts listed as Social Security and Medicare withholdings (from the "wrong box(es)") aren't "federal withholdings"!  (Maybe those withheld amounts were sent to France?)


The "notice" goes on to support this invitation to fantasy by describing the numbers in those "wrong box(es)" as not referring to amounts withheld at all, but rather as being "record[s of] charges to your income to provide for your future Medicare and Social Security benefits..."


Really?  Congress thinks differently.


When we look at the rules under which these "wrong box(es)" on W-2s are to be filled out we find this specification: "(6) the total amount deducted and withheld as tax under section 3101 [of 26 USC]".  Pretty unambiguous.


Looking at section 3101 itself, we find:

§ 3101. Rate of tax

(a) Old-age, survivors, and disability insurance
In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121 (a)) received by him with respect to employment (as defined in section 3121 (b))—


In cases of wages received during: The rate shall be:
1984, 1985, 1986 or 1987

1988 or 1989

1990 or thereafter

5.7 percent

6.06 percent

6.2 percent


(b) Hospital insurance

In addition to the tax imposed by the preceding subsection, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121 (a)) received by him with respect to employment (as defined in section 3121 (b))—

(1) with respect to wages received during the calendar years 1974 through 1977, the rate shall be 0.90 percent;

(2) with respect to wages received during the calendar year 1978, the rate shall be 1.00 percent;

(3) with respect to wages received during the calendar years 1979 and 1980, the rate shall be 1.05 percent;

(4) with respect to wages received during the calendar years 1981 through 1984, the rate shall be 1.30 percent;

(5) with respect to wages received during the calendar year 1985, the rate shall be 1.35 percent; and

(6) with respect to wages received after December 31, 1985, the rate shall be 1.45 percent.)

Plainly, the amounts listed in those "wrong box(es)" are amounts of federal withholding (and are withheld as payments of the "income" surtax imposed and arising when [and if] "wages (as defined in section 3121 (a)) [have been] received by [an individual] with respect to employment (as defined in section 3121 (b))" ).


(Further, and without regard to the issue of whether D. actually had any "income" against which they could have been "charged", they AREN'T "charges... ...to provide for [D.'s] future Medicare and Social Security benefits", as is flatly declared by the United States Supreme Court in Helvering v. Davis 301 US 619 (1937):

"The proceeds of both [employee and employer FICA] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way."

...and in Flemming v. Nestor 363 US 603 (1960):

"The noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments."

The court explains, also in Flemming v. Nestor, that:

"To engraft upon Social Security system a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands..."

It's that simple.  There is no legal relationship of any kind between what is withheld under the auspices of the "Federal Insurance Contributions Act" (FICA) and the receipt, or possible future receipt, of Social Security or Medicare benefits-- and this is true even for those whose earnings really are "wages" as that term is defined in the law.)


BUT THAT WAS ALL just the warm-up.  The real thrust of this obfuscation-by-notice is the rest of the line debunked above: "...[these charges] may not be used as deductions to your Income Tax.  Only the amount in Box 2 of a W-2 may be used to reduce or eliminate tax."  (As an aside, I am struck by the capitalization of "Income Tax".  Is the tax now an object of worship for these folks?)


Where do we start?!  First of all, amounts withheld under the protocols involved here don't get used as "deductions"-- they are credits against a tax liability, if any tax is owed.  The (doubtless) bullet-sweating IRS staffer tasked with drafting this verging-on-mail-fraud "notice" knows this, of course.  My guess is that he is trying to work some plausible deniability into the picture by suggesting that a provision in the FICA to the effect that any amounts properly withheld can't be deducted from one's total amount of "income" declared as having been received-- even though one hasn't actually received those amounts-- was on his "confused" mind, and is the cause of the ...  (That provision, which, in the original enactment of the Social Security Act of 1935 reads:

SEC. 803. For the purposes of the income tax imposed by Title I of the Revenue Act of 1934 or by any Act of Congress in substitution therefor, the tax imposed by section 801 shall not be allowed as a deduction to the taxpayer in computing his net income for the year in which such tax is deducted from his wages.

is entertainingly reflected in the following language from the FICA chapter in the current IRC (chapter 21), which I suppose might put anyone into a state of honest confusion:

§ 3123. Deductions as constructive payments

Whenever under this chapter or any act of Congress, or under the law of any State, an employer is required or permitted to deduct any amount from the remuneration of an employee and to pay the amount deducted to the United States, a State, or any political subdivision thereof, then for purposes of this chapter the amount so deducted shall be considered to have been paid to the employee at the time of such deduction.

Anyone who has persisted in harboring doubts about the fact that these tax protocols only apply to federally-connected persons who have voluntarily, deliberately and knowingly accepted them by, for instance, joining the civil service should be disabused of that mistake after reading provisions of this kind...)


This leads into the second complex pretense deployed in this "notice", because what ARE properly used as deductions involve provisions of law by which portions of what DOES constitute "income" are subtracted from the gross amount of "income" declared, resulting in a net amount which ends up being the measure of any resulting tax (against which tax credits can then be taken, when available).  That is, deductions have no purpose or effect unless there is "income" in play.


This exercise of craft is emphasized by the careful wording of the next line: "Only the amount in Box 2 of a W-2 may be used to reduce or eliminate tax."  The fact is, the "amount in Box 2 of a W-2"-- the nominal "federal income tax withheld" amount-- CAN'T be used "to reduce or eliminate tax"; it is a PAYMENT of the tax, when and if it is subsequently determined that a tax is actually owing for the period in question.  Only reducing the amount of "income" being taxed can "reduce or eliminate tax" (such as by taking an available deduction-- see how this clever nonsense goes full circle?).  But wording the line the way it has been done blends it with the morass of prior disinformation into a comprehensive fog, if you'll pardon the incongruity of the expression.


Now we come to the heart of the whole exercise, because everything discussed about this "notice" so far has been part of an elaborate effort to dodge the simple fact that, like the "amount in Box 2 of a W-2", the amounts in boxes 4 and 6 of a W-2 (the famous "wrong box(es)") are only lawfully retainable by the government AS PAYMENTS OF TAX, and can ONLY be retained when "wages (as defined in section 3121 (a)) [have actually been] received by [an individual] with respect to employment (as defined in section 3121 (b))".  If such "wages" HAVE NOT been received, the government simply has no claim to the withheld amounts, no matter what kind of nonsense it cares to suggest about their character or the reason for their appearance in a filing. 


There's the bottom line on this bogus "notice".  The 'service' is seeking to evade the substance of D.'s filing, and, secondarily, to discourage D. from proceeding with her claim for the return of her property by trying to baffle her with b*llsh*t-- because that's all its got to work with.


Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!




"FRIVOLOUS!"  "WE PROPOSE...!"  "WE CHANGED YOUR ACCOUNT!"  CtC Warrior Justin_ heard all of that from the IRS in its effort to thwart his filing for 2006.  First there was this:




...to which Justin responded with this:



...and this.


The 'service' then trotted out this:



...to which Justin responded with this.


Then this arrived in the mail:



...but before Justin even got around to responding to this nonsense (which seeks to recapture Justin's "telephone tax" refund-- the only thing he had claimed and received for the year), the 'service' grimaced and abandoned the exercise with the following admission that the more-than-$130,000.00 he earned during 2006 in his perfectly normal, non-federally-connected activities simply doesn't qualify as "income" and that, although he had paid in nothing, had had nothing withheld, and had no credits to apply, he owed no "income" tax for the year (even the variety called "Social Security and Medicare contributions"):



Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like Justin, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how.




"WE PROPOSE...!"  "WE CHANGED YOUR ACCOUNT!"  "YOU OWE US A LOT OF MONEY!!!"  CtC Warrior K. T. heard all of that from the IRS in its effort to thwart his filing for 2006.  K. had filed an educated return, including rebuttals to a variety of ignorant payer allegations that money paid to him was a result of his engaging in taxable activities, in April of 2007.  A year later, the IRS decided it'd have a go at scaring K. into reversing (and perjuring) himself.  This effort took the form of a "disputation" with K.'s reported "income" totals, and a proposed balance due of more than $44,000.00, based on the agency's self-serving preference for the allegations of K.'s payers:




K. was not impressed, and not intimidated, having a complete, CtC-solid knowledge of the law.  He responded accordingly:




...and the 'service', being squarely faced with confirmation that it was dealing with a serious, dedicated, no-going-back-to-the-farm warrior for the truth, did likewise:



This is K.'s SECOND such victory on behalf of the truth and the rule of law.  His first, putting to rest an assertion of a $43,000.00+ balance for 2005 last year, can be enjoyed at www.losthorizons.com/tax/MoreVictories23.htm.


Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like K., and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how.




Warrior Bill Granger, who has won several victories so far but also has a couple of corrections-of-the-record filings being strenuously resisted by the IRS, has been getting a particularly sustained run-around by an agency desperate to dodge reality in regard to Bill's filing for 2004.  Just a few weeks ago, the dodging got truly surreal.


On November 7, that agency sent Bill the following "ignore that man behind the curtain" scary-paper (of the sort dissected in detail in episode VII of this series):



Note the reference to "the information you filed as a return of tax, or purported return of tax, on Apr. 18, 2008", which, it is alleged, has been "determined" to be "frivolous" and has thus prompted this "notice".


Now, Bill hadn't filed anything related to 2004 last April, but he HAD sent something concerning that year to the 'service' that would have arrived in an IRS office around the 18th of that month.  What Bill had sent was a response to this:


(This is a compilation of material from the front and back of the original.)


Here is that response, which was mindlessly characterized by the Robot as "the information you filed as a return of tax, or purported return of tax, on Apr. 18, 2008", about which a "determination" is alleged to have been made by someone.  Read it with sympathy for Bill for his having to put up with this extended tax agency evasion, but also with amusement, and appreciation of how plainly the entirely fictional nature of these IRS scary-paper assaults is exposed by this particular example.

William R. Granger

April 14, 2008


Certified Mail :____________________________

Internal Revenue Service

ACS Support – STOP 5050

PO Box 219236

Kansas City, MO 64121-9236


Re:  Letter 4903 dated Apr. 07, 2008

To: Ms. Debra K. Hurst

I am in receipt of your letter wherein you state “We previously asked you for information about your tax return(s) shown on the back of this letter.”  The reverse side references a 2004 Form 1040.  You further go on to say “We have no record of receiving your reply….”

Please be advised that I deny your assertions in their entirety.  Your office has NEVER requested my 2004 return, other than an Appeals Officer who wrongfully denied me due process by alleging she didn’t have this return; which was sent to her twice. Furthermore, the IRS has been provided this return on multiple occasions.  Please permit me to provide you a chronology regarding my 2004 return: 

April 14, 2005 1040 completed and subscribed by me

April 15, 2005 1040 Placed in the US Mail under certified mail number 7000 0600 0027 5139 4202

April 23, 2005 Received in your Fresno, CA office, as denoted by signature card bearing your stamp. Received by L. Vasquez at 1:16pm.  This was my first submission.

August  2005  I requested, by phone, a copy of account transcripts for several tax years

September 2, 2005  Received transcripts from Ms. Linda Thornton, making no mention of any missing returns

October 31, 2005 Received another reply letter from Mr. Corliss M. Hicks, of your RAIVS Unit in Doraville, GA, stating he had no record of my returns from 2001-2004, even though Ms. Thornton provided transcripts for those very years.

November 16, 2005  I emphasized that I had filed these returns, and informed Mr. Hicks I held receipts for deliveries of these returns; I renewed my request for detailed information regarding these accounts, and he never replied, and he certainly made no request for copies.  Even so, I mailed him copies of all 1040s for these years, hoping to find someone competent in the IRS.    This was the second submission to the  IRS.

November 30, 2005  I met with a MR. Waters at the IRS Appeals Office in Richmond, VA to discuss several tax years in question.  At that time, I presented him with tax returns for multiple years, which included 2004.  This was the third submission to the IRS.

March 10, 2007   I received a “REMINDER NOTICE,” Letter 3228, from YOUR KANSAS CITY PO BOX, YOUR STOP 5050, kindly ‘reminding’ me of allegations of debt; the significant part being your  note on the back simply saying “TYPE OF RETURN” and identifying my 2004 1040, but making no comment as to its status.  I promptly wrote you and explained your inference that my 2004 1040 was in question confused me, and requested further information as to the problem.  My letter was sent certified, number 7006 2760 0003 9158 8080, and was received in your offices at 10:30 am, on 4/24/2007.   I told you then, as I tell you now, my 2004 1040 has been in your custody since 4/23/2005.  YOUR OFFICE NEVER REPLIED, NOR DID IT EVER MAKE ANY REQUEST FOR MY 2004 RETURN.

During recent events involving my attempts to get a competent hearing from the IRS Appeals Office in Memphis, I was compelled to send yet another copy of my 2004 1040 to the IRS.  I did so under certified mail, number 7007 0220 0002 6782 0476, which was received on 10/19/07.  That package contained a copy of the 1040, and the Return Receipt verifying a timely filing.  That was the fourth submission to the IRS.   Once again the IRS misplaced this return such that AO Mrs Banks felt justified in moving forward without my submissions. I therefore sent it again, via FAX, on 11/1/07, making this my fifth submission to the IRS.

Now along comes your office, claiming ignorance of any communications from me, and “no record of my filings.”   So I am here again providing a COPY of my 2004 return, with yet another original signature.   Since this is a copy of my original submissions, I will sign close to, but not over the copy of the original signature.   This is my sixth submission to the IRS, having never received any reply at any time,  nor any request for more information.

This record of submissions, followed by absolutely no feedback to me from your offices, demonstrates an IRS pattern of obfuscation apparently intended to thwart my subscribed testimony, with the apparent goal of substituting a return more to its liking.  There is absolutely no authority for you to disregard my return, especially without notifying me in accordance with IRC 6210.  If you believe you have such authority please inform me.   All Americans would be surprised to know the IRS can replace a return with whatever facts it deems correct. 

For the record, I am sending you this two page cover letter, five pages of 1040 w/supporting documents, and a copy of the delivery receipt.

William R. Granger


Nothing more needs to be said, I think, except,


Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like Bill, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how.




Warrior Bruce G. got run through the whole gamut of IRS dodges and balkiness revealed (and debunked) in this series, the Lost Horizons Newsletter 'Tax Tip' feature, the FAQ pages and elsewhere on this site before finally prevailing with his filing for 2004.  This all began with an IRS "Proposed Assessment" for 2004, a year for which Bruce, being at the time not yet CtC-educated, had never filed:



Having gotten that belated education, Bruce responded on February 5, 2008 with an original return, which rebutted "information returns" created about him by others, and declared that none of his earnings met the legal definition of "income".


Bruce had the misfortune of being selected for a sustained "frighten/confuse him back into the pen" campaign, however...


First came a Notice of Deficiency:



Bruce responded with the following:


Meanwhile, a "LTR 3176" for the same year had also shown up in Bruce's mailbox:



Bruce responded with a personalized version of this.


The IRS wasn't going to give up that easily, though...  In August, this upgraded version arrived:



Bruce again responded in a straightforward, educated (if understandably exasperated) manner:



Crossing his response in the mail came the next salvo of increasingly desperate B.S.:


Are we having fun yet?!


Bruce once again rapped out a cogent, pointed reply:


                                                       Certified Mail #

Scottsdale, AZ  85260

September 4, 2008



Internal Revenue Service

P.O. Box 9019

Holtsville, NY  11742-9019


RE:  Notice CP22A dated August 25, 2008


Dear Unnamed IRS Employee:


I do not agree with the contents of your notice! 


I filed and signed under penalty of perjury my 2004 Form 1040 and also signed a similar statement on the attached 1099-B spreadsheet!


Your notice is merely an assertion.  You have no authority to make any unilateral changes to my return, even under the assumption that it is somehow “frivolous” to thus be able to employ the protocol prescribed at 26 USC 6020(b).  The Internal Revenue Manual specifically excludes the Form 1040 from the list of prescribed tax forms that may be executed by the Secretary under that section!  What you have done and are presently doing is illegal!


Section 6201(d) of the Internal Revenue Code is reprinted below for your convenience:


            Sec. 6201- Assessment authority

            (d) Required reasonable verification of information returns

            In any court proceeding, if a taxpayer asserts a reasonable dispute with respect to  

            any item of income reported on an information return filed with the Secretary

            under subpart B or C of part III of subchapter A of chapter 61 by a third party and

            the taxpayer has fully cooperated with the Secretary (including providing, within a

            reasonable period of time, access to and inspection of all witnesses, information,

            and documents within the control of the taxpayer as reasonably requested by the

            Secretary), the Secretary shall have the burden of producing reasonable and

            probative information concerning such deficiency in addition to such information



Additionally, please provide me a copy of the record of assessment for 2004 pertaining to the amount on the  attached copy of your Notice CP22A as is allowed by the provisions of 26 USC 6203: 


“…Upon request of the taxpayer, the Secretary shall furnish the taxpayer

a copy of the record of the assessment;…” (bolding and underlining added)


within 30 days from the date of your receipt of this letter as confirmed by postal return receipt or through www.usps.com. 


An aggregate record will not satisfy this request.  Adequate compliance with this request requires documentation sufficient to clearly establish my personal liability.  I demand an actual photocopy, with the signature of the assessment officer included.  The reason for this request is both to establish the existence of the assessment, and to determine for myself the assessment's complete compliance with all related provisions of law. 


The making of this request is not to be considered or construed as an admission of "taxpayer" status or of liability for any tax or penalty.  Refusal to cooperate with this request will be recognized as an acknowledgement that I am NOT, in fact, liable for the tax or penalty alleged to be due and owing or otherwise collectible in any manner on the above-mentioned Notice CP22A.


Unless the IRS has factual knowledge of my private finances superior to my own and can prove such per 26 USC 6201 and 6203, please provide that information so I can respond. If you don’t have personal knowledge of the facts, I will assume this matter closed.




Bruce G.


The bad actors at the agency still weren't quite ready to give up...


This came next:

Bruce, probably really straining by now to keep his temper, delivered this in response:



Finally, responsible parties at the 'service' had had enough. Throwing up their hands, they shrugged and did what should have been done eight months prior:



Bruce, having seen the agency's manic and corrupt obstinacy in action for so long in this case, didn't let it rest at that.  He promptly FOIA'd for a transcript of his IRS "account" for 2004, just to verify that reality has indeed been properly acknowledged.  It has:

(Note that the $5000 Frivolous Penalty "charged" to Bruce back in August makes no appearance on the transcript, having obviously been a completely fictitious assertion...)


Way to hang tough and tight, Bruce!




Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like Bruce, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how.




CtC Warrior Cathy Walsh learned the truth about the tax just a year ago or so, and wasted no time in putting her new knowledge to work.  On April 16, 2008, Cathy notified the IRS that she had woken up and moved out of the barn:


The 'service' ruminated for awhile, and then replied that Cathy's views were all very well, but nothing could be done without an appropriate return:

 (Reference is made here to both 2004 and 2005, each of which Cathy has acted to address-- her claim for the latter year appears to STILL be turning the agency every which way but loose, and will doubtless find it's way onto this page at a future date...)


Cathy responded as requested:


Click here to see Cathy's amended return.


Three-and-a-half months of delay ensued before the 'service' finally responded with a what proves to be a desultory, perhaps even reflexive, "disallowance" notice:



Shortly afterward, it appears that some responsible party actually checked a calendar and did a little arithmetic:




Way to go, Cathy!  The air is nice outside that barn, isn't it?




Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like Cathy, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how.




CtC Warriors Chris and Janis Ortwein had the briefest encounter with the robot on record so far, I think...  In April of 2007, Chris and Janis filed a routine, educated return rebutting erroneous payer assertions.  It was much to their surprise that nearly a year later, the IRS deposited a smelly little present in the Ortwein mailbox:



Chris and Janis were surprised and annoyed at this baseless flailing about by the agency, but ended up not even having to bother with a reply.  Someone at the IRS apparently recognized the agency's faux pas, and two days before the indicated response date, a friendly (or at least, polite) "closing notice" arrived:



Total turn-around time: 28 days...


Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like Chris and Janis, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how.




CtC Warrior "Anonymous in Illinois" had to deal with a few speed-bumps thrown in his path by the state of Illinois before getting back all of the property that had been withheld from him and put into the state's keeping during 2007 against the possibility that his economic activities throughout that year might've been "income"-taxable.  Anon. stuck to his guns, though, and while Illinois' efforts to evade the law delayed the satisfaction of his claim for almost a year, when that satisfaction came, it came with appropriate interest added...


We begin with Anon.'s Illinois refund claim, filed on March 20, 2008 (see it here).  Illinois responded on June 16 with the following disingenuous dodge:


Note that Illinois alleges that Anon. submitted an IL-4852, and that the problem was that the IL-4852 wasn't substantiated as to the amount withheld by (among other possibilities) a federal Form 4852 (such as the one that WAS attached to Anon.'s IL-1040).



Anon. promptly responded with Page 2 of the notice, as requested, and both the federal form originally submitted and an Illinois version of the same form (after substituting "payer" on the latter form where "employer" had inappropriately appeared by default):


Almost a full six moths later-- it apparently taking the state DOR that long to settle on its next evasion-- Anon. received an acknowledgement of his response, but with yet another demand for more substantiation:


Keep in mind that it is a virtual certainty that the state has complete information on the amounts withheld from Anon. from the person that did the withholding...  Nonetheless, Anon. played along one more time (albeit a bit impatiently):


That was it-- the state had emptied its bag of tricks.  Less than a month later, Anon.'s property was returned, with interest:


Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like Anon. in Illinois, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how (while you still can-- see below...).




CtC Warrior William Barnes won his fourth victory for the rule of law only after a little tussle with the bureaucracy in Pennsylvania...


On October 11, 2008, William had filed his educated return, claiming a complete refund of everything that had been withheld from his earnings and given over to the state (see the filing here).  Annoyingly, some bureaucrat in the the state Department of Revenue decided to act badly, and adopted the pretense that William's claim as to the amount withheld was unreliable (despite the virtual certainty that the bureaucrat had corroborating information from the withholding entity sitting on his or her desk-- see here and here for more on this):



William was impatient, but untroubled.  He responded accordingly:


And, having no other pretexts for continued bad behavior, so did Pennsylvania:



Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like William, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how (while you still can-- see below...).



A Special CONTEST Episode of this series


I want to start out by cautioning those with high blood-pressure to have any needed medication handy, or perhaps to simply forego this episode entirely.  If you should proceed, and it should occur to you that the IRS employee whose work you're reading gets paid a whole lot of money every year ($63K - $82K, plus benefits, according to an ad for the position posted earlier this week on newjerseyjobnetwork.com) either to deliberately produce this drivel, or despite being incapable of producing anything better, your health may be in danger...


The Background


CtC Warrior Monte Reimann has already won several victories on behalf of the rule of law.  Nonetheless, the IRS-- still struggling to evade the law in order to continue shoveling huge gouts of American wealth to favored cronies of the political class-- has been attempting to dodge his filings for some older years.  Monte has been turning the rogue agency every which way but loose...


Part of this little battle of truth and the law versus b.s. and pretense has involved some back-and-forth with an IRS "appeals officer".  The latest missive from this fine public servant furnishes us with both the entertaining substance of this EWWBL episode, and the gameboard for a fine exercise in baloney-hunting.

Here it is in all its foggy and squishy-brown glory:


Dear Mr. Reimann:

As you may know, I have been assigned your case for Appeals consideration and to try to resolve the issues before your necessity to appear before the Tax Court. We at Appeals are neither advocates of the Government nor you as the taxpayer. Our job is to ascertain the facts and apply the law and to advise both parties, the Government and you, as to the hazards and chances of prevailing on each issue. To that end, I have several requests of you.

It appears that you protest the examination determination that you are subject to income tax on alleged wages paid to you. Due to the fact that you filed Form 4852 and deny the taxability of wages, but do claim the benefits of alleged withholdings, I am confused as to your position and request clarification.

With your filed returns, your transmittal letter states that you rebut claims by the issuer of Forms W-2 that the amounts disclosed as wages under IRC Sec. §3401 (a) and §3121 (a) are incorrect and not subject to tax. I have numerous factions of confusion on this statement. First, can you confirm that you did not work for these issuers of Form W-2's or provide me a statement that the reported earnings are not yours by ownership? If you did not provide any service for these issuers, would you please be so kind as to provide me a copy of the letter you sent them stating that the Forms were issued in error. Or is your position simply that they are not taxable under the cited authority?

If the wages are in fact exempt from taxation under the Sections you cite, which I find to be not applicable and not the case for these Sections, I ask you for your similar authorities allowing you to claim the benefit of the withheld taxes. Under the same theory, any tax withholding would also be exempt and not applicable. I can find no Code section that provides for your taking benefit of these withholdings if you claim the wages are exempt from taxation. If fact, under your authorities that you have cited, if the amounts are not "wages" as you have claimed, then those payments are also not subject to withholding. As such, the withholding of any taxes would constitute an error on your alleged employer's part. As an error, you would have to present a claim to them for the error; that would not be a matter between you and the Internal Revenue Service. Please present me a copy of your correspondence that you have sent to the respective issuers of Form W-2 requesting that they correct the Form that they have issued, and also your request for a refund of taxes withheld from you by them. Upon receipt of that correspondence, we will investigate with them as to why they have not provided you with their response. Otherwise, I find that any claim for refund is between you and them and is not an issue before me.

Additionally, since you are not denying that you received a check or monetary payment, you certainly did not receive the total amount listed on said Forms W-2. So unless your received some sort of "income" or benefit on the gross amount, I am at a loss as to your authority to claim, what perceived to be, a double benefit for the withheld taxes since you did not receive that income. I would enjoy receiving your authorities on this position.

Finally, I might agree that IRC Sec. §3401 and §3121 may not be applicable to you with regard to the issues raised by examination and your returns. However, I do find that IRC Sec. §61 is inherently applicable and overrides any consideration of IRC Sec. §3401 and §3121 with respect to you. I request that you provide me your authorities as to why IRC Sec. §61 is not applicable with regard to the money you appear to have conceded as receiving from the issuers of Form W-2. I can find no authorities that will override Sec. §61 and also find that your chances of prevailing in Tax Court on this issue to be negligible.

You have also disclosed and reported income from a bank account as interest income, and also cancellation of debt income. I would be interested in receiving your authorities as to how the amounts paid to you under the allegedly incorrect Sec. §3041 and §3121 differ from those amounts you have in fact declared and disclosed under IRC Sec. §61. As far as reporting and disclosure are required, the same authorities that are applicable to the interest and cancellation of debt income are also applicable to the amounts received from the Form W-2 issuers. I find conflict in your position with regard to this issue, and this creates another area of hazards of litigation for you should you proceed to trial.

Please provide me with the requested clarification and authorities at your earliest convenience. If I do not hear from you by April 30, 2009, I will close your Appeals consideration of your case and forward the file on to Area Counsel for Trial preparation. I look forward to hearing from you soon.


Michael Chambers

Appeals Officer


The Contest


In a word: Take this nonsense apart!


This "letter" is riddled with a mind-boggling array of misstatements, mischaracterizations and pretenses of misunderstanding.  It could be described as an 876-word fallacy, or a demonstration of the extremes to which the spouting of non sequiturs can be taken by a practiced master of that sordid little art.  Your job as a contestant is to parse out each fallacious nugget and briefly explain its failings.


The acceptable format for an entry in the contest will be that of a reply to this farcical nonsense, but within that general format, you have complete latitude.  You can do bullet-points, insertions, or whatever else suits your fancy, as long as the entry is comprehensible and presentable.


The prize for the winning entry-- which will be judged on thoroughness of parsing/debunking and presentability-- is a beautiful 'I Cracked the Code' T-shirt!



You've only got ten days to tear this thing up, Warriors, so start your computers!


Send your entries to me at survey 'at' losthorizons.com, as a .doc, .rtf, .txt or .htm file, please I can convert some WordPerfect files, but without complete reliability, so these should be avoided.


And The Winner Is...


Justin Laue, with the following cogent, scholarly and calm rebuttal of Michael Chambers' incoherence (which I think Justin saw as a product of low capacity rather than outright bad faith...):


Dear Mr. Chambers,


Thank you for the opportunity to present the facts of this case; hopefully we can come to a swift

resolution. To that end, I am herein providing answers to your various questions.


First of all, it is a bit difficult to clearly ascertain what your specific questions are as you make several

contradictions and misstatements. “Due to the fact that you… deny the taxability of wages”, “wages are

in fact exempt from taxation” are examples of statements that you attribute to me that I have not made

and are not true, but then you correctly state that I claimed the “amounts [paid to me] are not “wages””

as defined in IRC Sec. 3401(a) and 3121(a). On this latter statement, you seem to agree, and, regardless, is established fact as I am the one with personal knowledge and testified to this on my return.


In your letter, you asked me to “confirm that [I] did not work for these issuers of Form W-2’s or provide

[you] a statement that the reported earnings are not [mine] by ownership.” However, as I am sure you

are aware, the Form W-2 is not for reporting “work” or “earnings” but rather “wages” paid from an

“employer” to an “employee”, and that, in fact, any private-sector exchange of work and/or earnings

between me and anyone else is beyond the scope of this case.


You then state that, as I had received no “wages” then the issuer of the Form W-2s had no business

submitting withholdings to the IRS on my behalf and that it should then be a matter between myself and

that issuer. In general, I might agree, however the law provides that these amounts are to be treated as

“overpayments” (see IRC Sec. 6401, 6402 and 31(a)(1)). In fact, the law specifically states, “An amount

paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that

there was no tax liability in respect of which such amount was paid.” (Sec. 6401(c))


I am at a loss to understand the question you put forth in your fifth paragraph. Simply put, I am to be

credited with the “overpayment” irrespective of any liability I eventually had, and thus also, irrespective

of any “income” I may, or may not, have received. I am not seeking benefit of any sort; I only seek to

recover property incorrectly diverted to the IRS as accorded me by law.


Regarding IRC Sec 61, it would suffice to show what it cannot mean: the Supreme Court has repeatedly

stated that the income tax is not and cannot be an unapportioned direct tax (see United States Supreme

Court, Brushaber v. Union Pacific R. Co., 240 U.S. 1 (1916), Stanton v. Baltic Mining Co., 240 U.S. 103

(1916), and Peck v. Lowe, 247 U.S. 165 (1918)) such that “the income tax is, therefore, not a tax on

income as such. It is an excise tax with respect to certain activities and privileges which is measured by

reference to the income which they produce. The income is not the subject of the tax: it is the basis for

determining the amount of tax” (Congressional Record, Proceedings and Debates of the 78th Congress,

March 2, 1943, to April 5, 1943).


It can be clearly shown that congress has never meant for the income tax to be a direct tax. Sec. 61 is

derived from The Revenue Act of 1928 which had the benefit of The Classification Act of 1923. The first

item listed in Sec. 61 is “Compensation for services”. When the meanings of the terms “Compensation”

and “services” (as well as, then, “position” and “employee”) are substituted from the classification act,

“Compensation for services” has virtually identical meaning to “wages” as defined in IRC Sec. 3401(a)

and 3121(a). Thus, under the principle of ejusdem generis (see United States Supreme Court, Circuit City

Stores v. Adams, 532 US 105, 114-115 (2001) and Norfolk & Western R. Co. v. Train Dispatchers, 499 US

117 (1991)), the following items in Sec. 61 would likewise be inherently restricted to sources of income

derived from federal privilege (and thus, an excise tax, not a direct tax).


As to the items of income I declared on my return, I had received Form 1099s from the persons or

entities making those payments (I included these Form 1099s with my return). According to the

directions for the use of Form 1099, this form is only to be used by a “Trade or Business” (i.e.

“performing the functions of public office”, IRC Sec. 7701(26)). Therefore, in submitting the Form 1099s,

these persons or entities were declaring under oath that they are performing the functions of public

office. As I have little or no personal knowledge of the nature these persons or entities, I must take this

testimony at face value. These payments would clearly then be within the meaning of Sec. 61. If I come

to find that these forms were also incorrectly used, and that these persons or entities are not to be

considered a “Trade or Business,” I will surely be submitting an amended return to correct this.


I hope these answers expand your understanding of the case. If necessary, I could go into much greater

depth in support of each of my answers but in the interest of clarity I tried to make them brief.






Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!




Isn't it too bad everyone hasn't done like Monte and Justin, and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how (while you still can-- see below...).




I'm pleased to be able to share a great little story this week, the beginning of which I had learned back in 2007, but the end of which hadn't been passed along to me until just a few months ago.


A CtC-educated filer who has unfortunately chosen to remain anonymous had routinely secured a complete refund of everything withheld from him and given over to the federal government in connection with the "income" tax scheme during 2005:



However, a little over a year later, some designated "disinformation/discouragement officer" at the IRS decided to take a shot at blustering and bullsh*tting Anon. back into the pen and onto his knees:



I haven't seen the return filed by Anon. for this year, and he may well have made the mistake of listing FICA "income" tax withholdings as "excess social security tax withheld" per the misunderstanding about the purpose of that line on a 1040 discussed here.  However, as Anon. very cogently points out in his response to this disingenuous agency effort, that issue is entirely moot at this point:



The D/D officer wasn't ready to give up, though.  A few months later, Anon. got THIS in the mail:

(Math skills don't appear to be part of the D/D officer job description...)


Anon., doubtless sighing in exasperation at the apparent need to say everything twice to scoundrels trying to run a scam and not willing to take the first "NO!" for an answer (perhaps in the hope that it was just a fluke or an extended typo), repeated himself (and much more politely than some would have done, under the circumstances):

This time the D/D office got the message: this is a CtC-educated American, who therefore knows the truth and has a proper, unbending respect for the rule of law and his own rights and civic responsibilities.  No doubt with a sigh of his own, the law-defier behind this sleazy effort abandoned it as a bad business.


It shouldn't ever have been begun, of course, but if the agency took THAT attitude, a whole lot of its 122,000 workers wouldn't have anything to justify their very considerable remuneration, and would lose their jobs, and THEN where would the economy be?  But wait!  They could now all be put to work at public expense building wind turbines or other such items that somehow the market doesn't find to be worth building voluntarily!  Maybe THAT'S what Obama's new "New Deal" is really all about...


Watch out for that robot!  I THINK IT'S GOING TO EXPLODE!!



Isn't it too bad everyone hasn't done like Anon., and read CtC-- the exclusive source of the complete, accurate and liberating truth about the "income" tax?  You can help change that, and thereby help transform America.  Click here to learn how (while you still can-- see below...).

Every Which Way But Loose I

Every Which Way But Loose III

Also, see the Victories Highlights page for additional specially-notable CtC-educated victories, and, to enjoy hundreds and hundreds of straightforward "just-the-check-and-no-hassles" victories enjoyed by the CtC-educated for years now, click here.


Are You Ready For More Power?



"Peter Hendrickson has done it again!  'Upholding The Law' does for individual liberties what 'Cracking the Code' did for tax law compliance: exposes the reader to the unalienable truth!"

-Jesse Herron, Bill Of Rights Press, Fort Collins, Colorado




from Pete Hendrickson,

the man who Cracked the Code of the United States "income" tax;


became the first American in history to recover EVERYTHING withheld from him, Social Security and Medicare "contributions" included;


and has ever since been the target of unrelenting assaults by a government willing to do just about anything to thwart the spread of the truth!!


In this new volume, you'll learn about:


  • The in-depth, real story behind the Sixteenth Amendment;

  • A simple little model of just how the "income" tax works;

  • Cognitive stumbling blocks exploited by tax agencies against liberation-seeking Americans;

  • The disturbing relationship between the "income" tax and the Federal Reserve;

  • Why tax reform ideas like the "Fair Tax" are not only unnecessary, but completely counter-productive and even dangerous;

  • Why the "income" tax is what it is, and has to be;

  • The truth about common myths and misunderstandings within the "tax honesty" movement;

  • How to think clearly about the tax, the law in general, and the voracious state;


  • A sordid little passport application scam revealed;

  • How to know if you're in denial about the current crisis in America;

  • Whether the Constitution is going to save you, or is it the other way around?

  • The truth about paper "money; government schools; the Second Amendment...

...and much, much more!


Is this information of any value to you? If so, please consider a donation to help keep it available.

Donations can be sent to:

Peter Hendrickson

232 Oriole St.

Commerce Twp., MI  48382