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General vs. Specific

(originally launched into cyberspace on 10/05/2007)

Dear Subscriber,

I realize that I haven't been talking much about the 861 evidence
lately. Really, I can't think of much more to say. The evidence
speaks for itself; whether someone will look at the evidence or not
is another issue entirely. I suppose every couple of weeks I could
urge you all to tie up a few of your friends, and at gunpoint make
them read my "Taxable Income" report, but I don't think that would
go over too well.

However, I was recently reminded of a point worth adding to my
report, and I thought I'd mention it here, too. This is nothing
new, but I really haven't emphasized it before, and it should be

What is the IRS position regarding the 861 evidence? Well, when
they have one at all, it usually amounts to: "You don't need to
look at those rules under 861; just look at the GENERAL definitions
found in Section 61 and 63."

Of course, if those general definitions were all that mattered, we
would have a two-page tax code, instead of a multi-thousand-page
tax code. Section 61 itself begin, "Except as OTHERWISE
provided...," making it obvious that stopping at the general
definitions is a mistake. Likewise, the regs under Section 61
(namely, 26 CFR 1.61-1) say that where ANY other statute or
regulation deals with a particular kind of income, those other
provisions will apply "notwithstanding" Section 61.

Really that statement is nothing more than an acknowledgement of a
very old and well-established maxim of statutory interpretation,
which can be generalized as "the specific governs the general."
Where any law gives a GENERAL rule, but also includes a SPECIFIC
rule regarding some narrow issue, the specific rule "trumps" the
general. In case you think I'm making this up, here are a few
Supreme Court rulings on the matter:

"As always, '[w]here there is no clear intention otherwise, a
specific statute will not be controlled or nullified by a general
one, regardless of the priority of enactment.'" [Crawford Fitting
Co. v. J. T. Gibbons, Inc., 482 U.S. 437 (1987)]

"General language of a statutory provision, although broad enough
to include it, will not be held to apply to a matter specifically
dealt with in another part of the same enactment." [D. Ginsberg &
Sons v. Popkin, 285 U.S. 204 (1932)]

"It is a well-settled principle of construction that specific terms
covering the given subject-matter will prevail over general
language of the same or another statute which might otherwise prove
controlling." [Kepner v. U.S., 195 U.S. 100 (1904)]

"It is an old and familiar rule that 'where there is, in the same
statute, a particular enactment, and also a general one, which, in
its most comprehensive sense, would include what is embraced in the
former, the particular enactment must be operative, and the general
enactment must be taken to affect only such cases within its
general language as are not within the provisions of the particular
enactment.' ... This rule applies wherever an act contains general
provisions and also special ones upon a subject which, standing
alone, the general provisions would include." [U.S. v. Chase, 135
U.S. 255 (1890)]

And what do we find in the federal tax code? In addition to the
GENERAL definitions of terms like "gross income" and "taxable
income," we find SPECIFIC rules concerning the issue of when
DOMESTIC income--"income from sources within the United States"--is
taxable (861 and its regulations). And we find such rules going
back over 80 years, always showing such income to be taxable for
foreigners and for certain Americans in unusual situations, but NOT
for Americans who live and work only in the 50 states.

Considering how well-established the above-described legal
principle is, why do you suppose the IRS so often argues: "You
don't need to look to those SPECIFIC rules; just look at the
GENERAL rule!" Their lawyers know darn well that doing so goes
against a very basic, very old rule of statutory construction. But,
with so much money and power at stake, I guess the rules don't
matter much to them.


Larken Rose