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Complying With The Law (Part 4)

(originally launched into cyberspace on 01/25/2007)

Dear Subscriber,

Suppose today you learned that the U.S.
Congress passed a law that said the following:

Section 1: A tax is
hereby imposed on the importation of automobiles into the U.S.,
including all cars, pick-up trucks, vans, and SUVs.

Section 2: See
Section 3, which provides that the vehicles listed in Section 1 may
in some cases be excluded from the tax imposed by this Act.

Section 3: Automobiles manufactured by the following companies are
subject to the tax imposed by this Act: Honda, Mazda, Mercedes,
Peugot and Ferrari.

Now suppose you were in the business of
importing Hyundai's into the U.S. Would you think the tax applied
to the business you were doing, or not? While you do import CARS,
where the law specifies which MANUFACTURERS are subject to the tax
(a different issue entirely), Hyundai isn't there. Should you just
ASSUME that the tax also would apply to Hyundais, even if that's
not specifically pointed out?

There is a principle of law,
expressed in Latin as “inclusio unius est exclusio alterius,” which
dictates that where the law specifically lists matters to which it
applies, an “irrefutable inference” must be drawn that what was NOT
listed was intended to be omitted. (It only makes sense for the law
to work that way, so we don't have to guess at what the law
requires.) Specifically regarding tax laws, the Supreme Court says
that they should NOT be interpreted in a way that includes "matters
not specifically pointed out” (Gould v. Gould, 245 U.S. 151). (The
Court then said that in case of doubt, tax laws should be
interpreted in favor of the citizen, NOT in favor of the
government.) So, in our example above, if the law doesn't
specifically point out that Hyundais are subject to the tax, you
should conclude that they are NOT.

Now compare that hypothetical
example to a few actual citations from the current income tax

Section 1.61-1 says that "gross income" means "all
income from whatever source derived, unless excluded by law." By
itself that doesn't tell us much, since it just means "everything
that isn't exempt is taxable," which is a truism.

Sections 1.861-
8(a)(3) and 1.861-8(b)(1) say that the items of income listed in
Section 61 of the tax code (things such as compensation for
services, interest, rents, business income, etc.) make up what are
called "classes of gross income." Then those regulations say that
those "classes of gross income" "may include EXCLUDED income." In
other words, we're again told that they may be exempt. And the regs
direct us to another section...

Section 1.861-8T(d)(2) gives a
list of non-exempt income. On the list is certain foreign income of
Americans, U.S. income of foreigners, and other matters related to
international corporations and federal possessions. The domestic
income of the average American, on the other hand, is conspicuously
NOT on the list.

So we're told about certain items of income,
we're told they're sometimes exempt, and then we're told that
income is NOT exempt when it comes from certain types of
INTERNATIONAL trade. And this is just what we saw with the older
income tax regulations, as well. Compare that to our hypothetical
car-importing tax.

I want to interrupt things here for a quick
word about "prejudice." People often "pre-judge" things before they
have all of the evidence--sometimes before they have ANY of the
evidence. That is "prejudice." When looking at the hypothetical car-
importing tax above, you have no prejudice, because you've never
heard of it before. You look at what it says, and based on that
alone decide what it means. On the other hand, when it comes to the
federal income tax, the average American starts enormously biased
and prejudiced, because he thinks he ALREADY KNOWS what the law
taxes. Hardly anyone has seen the tax laws; they just go by what
"everyone knows." Since most people start with a deeply ingrained
belief that most Americans owe federal income taxes, when they look
at the law itself they will be starting with the foregone
conclusion that it means that most Americans owe the tax. Without
that prejudice, it would be perfectly reasonable--dang near
unavoidable--based on the citations above, to suspect that the tax
applies to INTERNATIONAL trade, but not to purely domestic
commerce. But since that flies in the face of "conventional
wisdom," people have a hard time even considering the possibility
that that could be true. Our long-held beliefs and baseless
assumptions get in the way of our objectivity. Consider the

1) The tax code has an index. If you look under "Income
tax" and look up "citizens," you will find only entries about
citizens living or working OUTSIDE of the United States. Why?

If you look at the instruction booklet for the infamous 1040 form,
where it talks about the issue of "income," it says that Americans
must report income they receive from OUTSIDE of the United States.
It does NOT say the same about their domestic income. Why?

3) Most
of IRS Publication 525, titled "Taxable and Nontaxable Income,"
deals with which ITEMS of income are or are not specifically
exempted. But when it comes to the issue of COMMERCE, the only
thing the publication says is that Americans must report income
they receive from OUTSIDE of the United States. Why?

( You can
confirm the previous two items yourself at: )

4) In fact, EVERYWHERE
you look in the law books regarding the issue of commerce, you will
find INTERNATIONAL trade discussed. The IRS has something called a
"cumulative bulletin," in which all its rulings are published. When
it comes to income from INSIDE the U.S., the entries are always
about foreigners. When the income is from OUTSIDE of the U.S.,
American citizens and residents are mentioned. But again, domestic
income of the average American is NEVER mentioned. Why?

Subchapter N of the federal income tax statutes is titled "Tax
based on income from sources within or without the United States."
As the name implies, this is where the law addresses the issue of
COMMERCE: when domestic income is taxable, and when foreign income
is taxable. Once again, it's all about FOREIGN income of Americans
and domestic income of FOREIGNERS. And once again, the domestic
income of Americans is not mentioned at all. Why?

6) To top it
all off, as we'll see in the upcoming messages, there are specific
sections of the tax code which give the rules about determining
taxable DOMESTIC income (and different sections for determining
taxable foreign income), and for over 80 YEARS those sections have
showed income from within the U.S. to be taxable for FOREIGNERS,
but NOT for the average American. Why? Isn't it a little weird for
the rules about domestic income to FAIL TO SAY that such income is
taxable for the 100,000,000 million Americans who report it every

There are a lot of things in the law itself which suggest
that the tax is a tax on INTERNATIONAL trade, not a tax on the
income of the average American. But since most people are so sure
(based on what they've always heard, but not based on the law) that
all Americans owe this tax, they are actually incapable of
believing their own eyes. They immediately seek to explain away the
evidence, in order to preserve their long-held, but utterly
baseless beliefs. In the next message, we'll see what I consider to
be the most blatant example of that.


Larken Rose

[ January 26, 2007, 03:04 AM: Message edited by: 3rdEar ]

Ed Brown vs. The Feds

(originally launched into cyberspace on 01/21/2007)

Dear Subscriber,

For those of you not already aware of it, the
following link tells a little about the current situation with Ed
Brown up in New Hampshire, and his standoff against the federal
government. I'm sure I'll have comments about it later, but for now
I'll just give you the link:


Larken Rose

Complying With The Law (Part 3)

(originally launched into cyberspace on 01/18/2007)

(If you missed any of the prior messages in this series, you can
find them at this address:;f=16 )


Suppose you were alive several decades ago, and you
knew several well-respected zoology experts, each of whom declared
to you that all mammals have live young. Since they were the
"experts," you'd probably assume they knew what they were talking
about. Then suppose someone visited you from Australia with his pet
platypus--an egg-laying mammal. Then you'd have a conflict: little
ol' you would have a piece of evidence (the platypus) that flew in
the face of what the supposed "experts" told you. So which would
you believe, your own eyes or the opinions of the professionals?
Well, now you have a REAL example: you've seen the regulations
saying that some income is exempt for federal income tax purposes
because of the Constitution itself, while the vast majority of tax
professionals have no idea that any such Constitutionally-exempt
income exists. (Then you saw how, for some reason, those in
government really don't like talking about the subject.)

How do
our rhetorical zoologists above explain the platypus? To begin
with, they don't. They didn't know it existed, so they didn't have
an explanation for it. After they've been shown it, they either
have to change their opinions, or deny that a platypus is a mammal,
or deny that it lays eggs (with the latter two being rather silly
things to argue). They can't just pretend it doesn't exist.
Likewise, there aren't very many rational responses a modern tax
professional can give to the regs we've seen, because he's never
seen that evidence before. He could (and should) say "I didn't know
it said that, and I'm not sure what income it's talking about."
(Hopefully he'd be curious enough to want to then go figure out
what it means before continuing to pass himself off as a tax
"expert.") But he can't rationally just ignore it and pretend it
doesn't exist... which I have found is what most of them do.

mention all this to make something clear: when I give you my
conclusions about the meaning of those regulations, I basically
have no competition from the government or the tax industry
"experts." You can poo-poo my conclusions all you want, but those
who have tantrums about my beliefs DO NOT HAVE an alternative
explanation for the evidence. Instead, they use the time-honored
method of ignoring the evidence and vilifying anyone who would dare
to contradict the provably false proclamations of the self-
appointed "experts." So if anyone can come up with a DIFFERENT
explanation of the evidence, I'd love to see it. (I've been begging
the government to give me their explanation for the last eight
years, and they won't.)

Now we finally get to the question, WHAT
income might be non-taxable because it is, "under the Constitution,
not taxable by the Federal Government"? Well, there is only ONE
thing that the Constitution specifically says that Congress can't
tax: state exports. But in Peck v. Lowe (before all the regulations
we've looked at), the Supreme Court specifically said that just
because the income tax gets applied to income from exporting things
does NOT make it an unconstitutional tax on state exports per se,
so that can't be what the regulations were talking about.

else in the Constitution specifically prohibits Congress from
taxing anything. HOWEVER, the Supreme Court has stated that there
are “certain virtual limitations” on the taxing power, arising from
the principles of the Constitution itself [United States v. Butler,
297 U.S. 1]. As one silly example, the Constitution does not
empower the U.S. government to tax everyone in China. Obviously the
feds don't have jurisdiction over everyone in China, even though
the Constitution doesn't bother to specifically say they CAN'T tax
everyone there.

So, under the Constitution, what was Congress
intended to tax? In Federalist #45, James Madison (often called
"The Father of the Constitution") explained that under the new
Constitution the federal government would have only a few, limited
powers, and went on to say that the federal power “will be
exercised principally on external objects, as war, peace,
negotiation, and FOREIGN commerce; with which last [foreign
commerce] the power of TAXATION will, for the most part, be
connected.” So the Father of the Constitution said that federal
taxes would primarily apply to FOREIGN commerce, meaning trade
which crosses country borders.

But what does that have to do with
an income tax? Anything? As you may or may not know, the
Constitution specifically gives Congress jurisdiction over
INTERNATIONAL trade (aka "commerce with foreign nations"). So that
kind of trade IS Congress' business. On the other hand, “very
different considerations apply to the internal commerce or domestic
trade of the states. Over this commerce and trade Congress has NO
POWER of regulation nor any direct control. This power belongs
exclusively to the states. No interference by Congress with the
business of citizens TRANSACTED WITHIN A STATE is warranted by the
Constitution, except such as is strictly incidental to the exercise
of powers clearly granted to the legislature” [License Tax Cases,
72 U.S. 462 (1866)].

So, as James Madison explained, under the
Constitution Congress' powers mainly had to do with international
matters, while purely domestic matters were the business of state
governments. But again, does this have any relation to taxation?
Well, in one of the earliest cases about the 1913 federal income
tax (from which the current tax evolved), the Supreme Court ruled
that because the Constitution grants Congress the general power to
tax, AS WELL AS giving Congress specific jurisdiction over
“commerce with FOREIGN nations,” the federal government could
therefore “undoubtedly” apply an income tax to an American business
engaged in INTERNATIONAL trade [Peck v. Lowe, 247 U.S. 165].

(Before you bother writing any of this stuff down, I should let you
know that at the conclusion of these messages, I'll be telling you
how to download for free my complete "Taxable Income" report, with
all relevant quotes and citations, which is a lot more thorough
than what I'm trying to cover quickly here.)

Might that be the
answer to our question about what is Constitutionally taxable?
Might it be that Constitutionally, the income tax is only supposed
to be applied to income which comes from "commerce with foreign
nations"? Guess what. That's not for you or me to decide. Yes, you
heard me right. It's not OUR job to decide the proper application
of the law. Our system of written law is not supposed to be a
guessing game, where we each theorize about what is or is not
Constitutionally taxable. But if we don't do that, how are we ever
to know what is taxable and what is exempt? If it's not our job to
decide that, whose job is it? The answer is, it is the job of the
government's regulation-writers. The law must be knowable and
precise; the law books themselves must specifically TELL us what
our legal obligations are. And the regulations published by the
government are our official notice of what the law requires of us.
So, rather than theorizing (like I just did), let's see if we can
find where the regulations answer the question.

Once again, here
is a link to scans of the old regulations defining "gross income."
Last time we focused on where it talks about some income being
excluded because it is, "under the Constitution, not taxable by the
Federal Government." Okay, so what is to be included? Well, it says
that all income is "gross income" unless exempted by law--which we
are told means exempted by statute OR excluded because of the
Constitution. See for yourself what the regulation says after that:

you can see, the regs specifically say that income which citizens
and domestic companies receive from FOREIGN commerce "must be
included in their gross income." It then mentions nonresident
aliens, foreign corporations, and certain matters involving federal
possessions (e.g., Guam, Puerto Rico), but nowhere does it
specifically mention the DOMESTIC income of the average American.
(That matches my theorizing pretty well, don't you think?) Remember
all those different years of older regs talking about some income
being exempted by "fundamental law" (the Constitution)? Well EVERY
YEAR those same regulations specifically explained that income from
"FOREIGN commerce" was subject to the tax; NEVER did they mention
purely domestic income. (The only time income from inside the U.S.
was mentioned was when it was received by foreigners, which again
constitutes international trade.)

But surely that just means that
income from international trade is taxable in ADDITION to domestic
trade, right? I mean, we can't just assume that our income isn't
taxable because it's not mentioned there, right? Okay, it's a
little weird that they didn't just say that Americans are taxed on
income from "foreign OR domestic commerce," which would have been
easy to say. But it can't REALLY mean that the tax only applies to
international trade. Can it?

Once again, let me conclude today's
message with the following: In what I've said above, do you see me
encouraging anyone to break the law? Do you see me objecting to the
law? Do you see me arguing anything "frivolous"? (No, no, and no.)
Lastly, would you consider it okay for the government to try to
forcibly stop me from telling you what I've told you so far, or to
punish me for publicly talking about such things? (Me neither.)


Larken Rose

Complying With The Law (Part 2)

(originally launched into cyberspace on 01/17/2007)

Dear Subscriber,

Just to remind you, the subject of this series
of messages is how to properly COMPLY with the federal tax laws.
For example, if your Uncle Fred gave you a gift of $200 last year,
you should NOT have reported it on your tax return, because the tax
code specifically says that gifts are NOT subject to the federal
income tax (26 USC 102). It's not patriotic or noble to have
reported such income on your return; it's an ERROR. It's income
you're NOT SUPPOSED TO pay taxes on (because it's non-taxable).

we saw in the last message, the older federal income tax
regulations used to clearly state that, in addition to the types of
income specifically exempted by the tax code, some OTHER income is
also NOT SUPPOSED TO BE included in your taxable income, because
such income is, "under the Constitution, not taxable by the Federal
Government." Near the bottom of the following link are scans of
many different years of regulations saying so (look for links
called "First," "Second," etc.):

As also stated in
the last message, current tax professionals (with very rare
exceptions) DO NOT KNOW that this is the case. They are completely
unaware that ANY income is tax-free because of the Constitution
itself. As a result, they NEVER tell their clients about it, and
they NEVER take it into account when determining their clients' tax
liabilities. We haven't yet considered WHAT income might be
Constitutionally non-taxable (we will very soon), but whether it's
some obscure kind of investment income that only a few people have,
or something more significant, you HAVE TO KNOW what it is if you
are to properly COMPLY WITH the law. Why? Because if you happen to
have some of that Constitutionally non-taxable income, and you
report it on your return as if it were taxable, you are MISAPPLYING
the law, just as if you had reported that $200 gift from Uncle

The link above shows older tax regulations (many years'
worth). An obvious question at this point would be, What about NOW?
Are those Constitutional limits still applicable? Do the current
regulations still mention them? Yes, and yes, though they make it a
lot let obvious now. There have been no Constitutional amendments
relative to Congress' taxing power since those older regulations
were written. So anything that was, "under the Constitution, not
taxable by the Federal Government" in 1956 (or 1925), is still not
taxable today. The current regulations defining "gross income" (26
CFR 1.61-1) just say "gross income" includes all income from
whatever source derived, "unless excluded by law." Unlike the older
regs, however, they do not specifically explain that income can be
exempted by statutory law OR by "fundamental law" (the Constitution
itself). However, the current 26 CFR 1.265-1 does still show that
something OTHER than the tax code can exempt income, and a fairly
obscure regulation at 26 CFR 1.312-6(b) does still plainly speak of
THREE types of income: 1) "all income exempted by statute"; 2)
"income not taxable by the Federal Government under the
Constitution"; and 3) income which is "includible in gross income
under section 61." In case you think I'm making this up, you can
see that regulation on the government's own web site at:

should be noted that occasionally a tax professional will at least
guess at something that might be Constitutionally non-taxable, such
as the income of state governments, or interest on municipal bonds.
However, those things have been exempted by STATUTE from the
beginning (e.g., 26 USC 103, 115), so that is NOT what the regs
(past and present) were talking about. Remember, they mention
income exempted by statute, and then say that no OTHER income is
exempt, except for what is, "under the Constitution, not taxable by
the Federal Government.")

So while the older regulations were a
lot more obvious about it (you can wonder why if you'd like), the
principle still applies. Now, here is what may seem like a silly
question: Do those in government WANT us to know how to OBEY the
law? Presumably they would be eager to have us all understand the
law so we can comply with it. In fact, the IRS' "mission statement"
says that their reason for existing is to help people "UNDERSTAND"
and comply with their tax responsibilities. So, in light of what
we've seen above, wouldn't it make sense to ASK the government what
the regs mean when they talk about some income being excluded
because of the Constitution?

1) When I brought up that point at my
first meeting with the IRS, they had no comment at all. (I'm not
sure they even comprehended what the question was.) When we met
again, same thing: I quoted the regulations saying that, and they
had no response.

2) When I was a witness at someone else's meeting
with the IRS, the person explained to the IRS that it was his
position that "some of the income not specifically exempted by
statute is nonetheless exempted from taxation by the Constitution
itself," and cited the regs saying just that. The veteran IRS agent
responded, "Without further research, I don’t really have a
response for that one. I can’t really tell you without researching
an answer to that question." (As of today, many YEARS later, he
never answered that question.)

3) At another meeting with the IRS
(at which they were looking for an excuse to shut down my web
site), the following exchange occurred:

Me: "These are photocopies
of two of the sections of the 1956 regulations. Again, we’re
talking about 1956 at the moment. I’m about to tie it to the
current. As you’ll see on the last page of that, exemptions from...
exclusions from gross income. It’s on the right-hand side. It talks
about the items exempted by statute, and then it says no other
items may be excluded from gross income except "a," those items of
income which are, under the Constitution, not taxable by the
Federal Government. And then it mentions some other Acts of
Congress and things that exempt other income. That’s one of the
questions I have yet to hear anybody at the IRS or any tax
professional give me an explanation as to what that could be
talking about. If you’d like to offer any opinions, I’m open for

IRS Agent Chris Roginksy: "It’s at outdated regulation. Not
going to comment on it."

Wow, that was a short discussion (or lack
of one).

4) Since then, hundreds of people have sent letters to
two IRS commissioners, two Secretaries of the Treasury, two
Assistant Secretaries of the Treasury, IRS Chief Counsel, the
Attorney General, the head of the Tax Division of the DOJ, and many
lower DOJ and IRS offices, asking several basic questions about how
we are to COMPLY with the federal tax laws. The last question was:
"What types of income (if any) are not exempted from taxation by
any statute, but are nonetheless 'excluded by law' (not subject to
the federal income tax) because they are, under the Constitution,
not taxable by the federal government?" (All six questions can be
seen here: )

how many answers to the question we got? If you guessed ZERO, you

5) When I went to trial, I filed a motion asking the judge to
inform the jury that "gross income" means all income, except for
what is exempted by statute OR exempted by the Constitution itself
(aka "fundamental law"). He refused to tell them that. When the
government called an IRS agent up to testify about the taxes they
thought I owed, based on my financial numbers, the following
exchange occurred:

Me: "When you go to total up these figures and
get to the bottom, do you keep your eyes open for any sorts of
income which may be specifically exempted by a section of the tax
IRS witness: "I normally did, but I did not see that in this
Me: "Okay, but it's normal to keep your eyes open in case
there's some item, and that would enter into the equation. Is that
IRS witness: "Sure, sure."

So far so good. This 24-year
veteran IRS agent obviously knew about statutory exemptions. Then
this happened:

Me: "My last question is, in coming to your total,
did you subtract any amounts of income which are exempt from
federal taxation because of the Constitution itself?"
DOJ attorney:
Judge: "I'm not sure I understand the question."
witness: "Yeah, I don't either."
Judge (to the witness): "Do you
understand the question?"
IRS witness: "No, I do not."
Judge (to
me): "Do you want to rephrase it?"
Me: "Did you subtract, to arrive
at your bottom number, any amounts of income which are excluded
from federal taxation due to the Constitution itself?"
attorney: "Objection."
Me: "Well, she either did or didn't. It's a
Judge (to witness): "Well, you can answer that 'yes' or
'no,' if you understand it."
IRS witness: "I'm not sure I
understand the question. I mean, if you're asking if I subtracted
anything from these numbers, I did not."

Why is it that neither
the IRS witness nor the JUDGE had any idea what I was even asking?
Why did they not know that anything might be excluded because of
the Constitution itself? The IRS' own regulations say it--why don't
their employees know about it? And why does it seem that NO ONE in
government is able (or willing) to say what income that might be,
even when HUNDREDS of Americans politely ask them in writing? Why,
when I cite their OWN regulations to them, are those in government
so reluctant to discuss the matter?

Back to our seemingly silly
question: Given what you've seen above, would you still assume that
those in government WANT us to know how to properly COMPLY with the
law? Shouldn't they WANT us to know what is and what isn't taxable?
There must BE an answer to the question. Shouldn't they be not only
able, but EAGER to explain such things to common folk like you and
me? After all, it is literally IMPOSSIBLE to correctly determine
your taxes without first knowing what is and what isn't taxable. So
why are they unable (or unwilling) to tell us what is meant by some
income being exempt because it is, "under the Constitution, not
taxable by the Federal Government"? Is this all starting to seem a
wee tad curious to you yet?

Once again, let me conclude this
message with the following: In what I've said above, do you see me
encouraging anyone to break the law? Do you see me objecting to the
law? Do you see me arguing anything "frivolous"? (No, no, and no.)
Lastly, would you consider it okay for the government to try to
forcibly stop me from telling you what I've told you so far, or to
punish me for publicly talking about such things? (Me neither.)


Larken Rose

Complying With the Law (Part 1)

(originally launched into cyberspace on 01/15/2007)

Dear Subscriber,

In the series of messages to follow, I'd like to
say a few things about taxes. First, just to prepare you, I'd like to tell you what I'm NOT going to talk about. I'm NOT going to whine and complain about taxes in general, nor will I opine about how taxes are unfair, unconstitutional, illegal, invalid, immoral, economically-destructive, or in any other way nasty. I'm NOT going to protest or object to any tax. I'm also NOT going to talk about how to get out of paying taxes, or how to use some loophole or financial or legal trickery to avoid or reduce taxes. And I'm NOT going to advocate that any law be disobeyed, or that any law be repealed, or that any tax law policy be changed. (It's easy to find
plenty of other people who will be glad to talk about those things until they're blue in the face. I'm not going to.) The only topic I WILL be discussing in the following messages is how to COMPLY WITH THE LAW; in other words, HOW TO DETERMINE WHAT YOU OWE in federal income taxes. That may at first sound like a remarkably boring
thing to discuss, but please bear with me; it will be worth it.

According to tax professionals, this is how one complies with the tax laws:

1) If you can find some section of the tax code
specifically saying that some of your income is tax-free, congratulations. (For example, one section says that life insurance proceeds aren't taxable.) Otherwise, all of your income constitutes what is called "gross income," which is income subject to the federal income tax.

2) However, the tax pros know how to then apply various rules to increase your allowable deductions, or to arrange things to make certain income tax-deferred (or sometimes even tax-exempt), or to entitle you to certain tax credits. In these ways, they can lower your taxable income, and lower what you owe in taxes. They then put the numbers together, fill out the
forms, and give them to you to sign.

If you read the preceding to your tax preparer, he will most likely agree that that's a fair summary of what it is he does. And tax professionals tend to be pretty good at step #2 (finding deductions, credits, and other tricks to reduce the bottom line of what you owe). The problem is with step #1. No matter how much you pay them, or how knowledgeable you assume them to be, the folks you look to for tax advice apply the law INCORRECTLY. This is not because they're sneaky or dishonest, but only because they're ignorant--not completely
ignorant, but ignorant of one fundamental issue that is CRUCIAL to correctly determining what someone owes in federal income taxes.

Of course, your accountant can assert one thing, and I can assert another, but then it would just be a matter of who you choose to believe. So rather than me telling you how things are, I'm going to let the government's own official law books tell you how things are. (If you decide to give more credence to the so-called "tax experts" than you do to the actual LAW they are supposed to be applying, then you might as well skip the rest of this discussion.

But if you're one of those crazy people who believe their own eyes, hang on to your hat.)

If you were to take a look at the official
federal income tax regulations from a few decades ago, you would only need to go through a few pages to learn all of the following:

1) When it comes to the federal income tax, neither income exempted by statute (sections of the tax code) NOR income exempted by "FUNDAMENTAL LAW" (the Constitution itself), enter into the
computation of one's taxable income.

2) There are several concepts important to determining one's tax liability: the concept of
"income" in the broad sense, which means all wealth a person receives (except when he's just getting back what was already his); "gross income," which means all income except for any income that is exempted by statute or OTHERWISE exempt; and "net income," which generally means "gross income" minus allowable deductions.

3) The statutes of the tax code exempt certain types of income, and no OTHER income is to be excluded from one's taxable "gross income"
EXCEPT for income which is, "under the CONSTITUTION, not taxable by the federal government."

For that last one, the following link shows an actual scan of the regulation saying that:
(I hope to have more complete, better-quality scans up soon.)

Okay. So what? Why is any of that worth mentioning? Because, in the span of a couple pages, those older regulations admitted THREE TIMES to a fact that your tax preparer is utterly unaware of. You see, just about every CPA and tax attorney you'll ever meet (except for a handful of wackos who have actually looked at the law) accepts as unquestionable tax doctrine that ALL income is taxable unless a specific section of the tax code says it isn't. (All of the tricks with deductions, deferments, credits, etc., are based on their ASSUMPTION that your income is taxable in the first place.) They believe that all income fits neatly into two categories:

1) Non-taxable: Income exempted by the statutes of the tax code.

2) Taxable: All other income.

But, as you can see for yourself, that is NOT what those older income tax regulations (expressing the
government's official interpretation of the tax laws) say. They very clearly delineate THREE categories of income:

1) Non-taxable: Income exempted by the statutes of the tax code.
2) Also non-taxable: Income excluded because of the Constitution itself.
3) Taxable: All other income.

I can't stress this enough: the current tax professionals DO NOT KNOW that that second category exists at all. Soon enough we'll address the question of WHICH income might be excluded from tax because of the Constitution itself, but first it's important to let this sink in: SOME kinds of income are exempt (non-taxable), not because of any particular section of the tax
code, but because of the Constitution itself--and your tax preparer DOES NOT KNOW THAT.

Feel free to go back to the link above and review those old regulations. See for yourself where the
government's own law books say in plain English (at least as plain as their law books ever get) that there is some income you're supposed to LEAVE OUT of the calculation of your taxable income
because such income is, "under the Constitution, not taxable by the Federal Government." Your tax preparer doesn't know that the law books ever said such a thing. YOU now know something about tax law
that all those highly-paid tax "experts" DON'T. If you don't believe me, ask them. Pick someone who makes a living preparing tax returns, and ASK him, "What income is exempt from the federal income tax because of the Constitution itself?" He won't know what you're talking about, because he doesn't know that ANY income fits that description.

Just to be clear, I'm NOT saying there is anything unconstitutional about the income tax. Those regulations are just saying that because of the Constitution, certain income isn't subject to the tax, which means it would be a MISTAKE to report such income on a tax return, or to pay taxes on it, just as it would be a MISTAKE to report and pay taxes on life insurance proceeds (which the statutes say are tax-exempt). This isn't a protest of the law; this is the government's own law books telling you how to properly COMPLY with the law, and to do that you are SUPPOSED TO leave out of your calculations any income you may receive which is non-taxable due to the Constitution.

Why don't the tax pros know about this? Which income is it talking about? Why would some income be Constitutionally non-taxable? We'll get to all
of those questions soon, but for today I'm just going to leave things hanging right there. But before I sign off for the day, there are a few questions I want you to ask yourself. (I'll include these after each message in this series.)

In what I've said above, do you see me encouraging anyone to break the law? Do you see me objecting to the law? Do you see me arguing anything "frivolous"? (No, no, and no.) Lastly, would you consider it okay for the government to try to forcibly stop me from telling you what I've told you so far, or to punish me for publicly talking about such things? (Me neither.)


Larken Rose

[ January 21, 2007, 02:56 AM: Message edited by: 3rdEar ]

Evidence Review

(originally launched into cyberspace on 01/12/2007)

Dear Subscriber,

It seems that lots of people--most, in fact--
aren't as interested in what is TRUE as they are in what (as they
put it) "works." Personally, I want to know the truth, the whole
truth, and nothing but the truth, whether anything can be done
about it or not (though I admit that that can be pretty

In the past I've cautioned people against relying
on the bogus idea that what "works" has to be the same as what's
true. When some people were getting huge refunds from the IRS based
on the 861 evidence, I was telling people NOT to take that as proof
of anything. And when people got refunds after arguing various
other stuff--from slavery reparations to the "claim of right" myth--
I also warned people against reading anything into it. If you
argued that only people who wear blue hats are subject to the tax,
and the IRS gave you a refund or has left you alone (so far),
congratulations, but that's not proof of anything.

I can't count
how many people claim to know the magic words that will make the
IRS and the courts leave them alone, nor can I count how many
people have been harmed after using those supposedly infallible
methods. Even being RIGHT doesn't stop liars and thieves from
hurting you. How can anyone believe that saying just the right
words will suddenly make power-happy politicians and bureaucrats
voluntarily let go of their power, as if there's some secret
password that, once pronounced, will give you a get-out-of-tyranny-
free card?

Neither being left alone by the IRS, nor getting
harmed by the feds, is proof of whether you're right or not. If
someone breaks your nose for saying 2 + 2 = 4, that doesn't mean
that 2 + 2 = 5. This should be obvious, but apparently some people
don't get it. For example, in addition to the flood of supportive e-
mails I received after my release I also got one in which a person
asked to be removed from my list because he was only interested in
"a position that will win in court." He then wondered how I could
claim I had committed no crime, having had my day in court. He
added, "I have yet to hear you publicly apologize to all those who
believed in you and your theory."

Clearly implied in his message
is: if the government says you're wrong, and if it hurts you, then
you ARE wrong. Sorry, but I just can't relate to that mindset. And
no, I will not apologize for telling the truth, even though I was
put in prison for a year for doing so. If you don't care what is
TRUE, but only what some power-happy megalomaniac will give his
blessing to, then by all means, pay no attention to anything I have
to say. Because what I say is pro-freedom and anti-tyranny, which
(of course) will get the blessing of tyrants. (It's beyond me why
so many people put so much hope into the possibility of having the
perpetrators and beneficiaries of fraud "ruling" against their own
source of power.)

Evidence and logic lead to the truth. Guesses
and fads do not. Trouble is, when it comes to the federal income
tax, there is such a flood of misinformation, coming from the
status quo AND the "tax honesty movement," that every individual
either has to start from scratch and then do a zillion hours of his
own research, or start taking things on faith. Unfortunately, that
second option seems a lot more popular than the first.

Lots of
people don't like the IRS, and don't like giving them money, and
there is a tendency for people to want all such potential allies to
"work together" against the common foe (the IRS). But if endorsing
something false is the price of such unity, what is the point?
Isn't falsity the real common enemy? Lots of people don't like to
see divisions in the "movement," but if two people have
contradictory, mutually exclusive conclusions, there already IS a
division, and forsaking the truth just to present a common front is
not the solution.

Since it's been so long since I've sent stuff
to this list, I'm about to again do a very basic overview of the
issue and the evidence. Having just sent my wife off to do her 30-
day prison sentence, my kid and I will be incommunicado for a
couple days. In that time, if you know anyone who you wished would
pay attention to this issue, twist their arms until they sign up
for these updates, which they can do by sending an e-mail to: 861-
This email address is being protected from spambots. You need JavaScript enabled to view it. (It's free, it's easy to unsubscribe, and we
don't ever share e-mail addresses with anyone.) Then, starting
Monday, they can see for themselves just how "frivolous" it is.


Larken Rose