Cracking the Code Overview

Opinion By Blogger Ed.

Cracking the Code, by Pete Hendrickson is a book by a Tax Honesty member, which trys to explain how citizens can overcome the built in burden of proof which is imposed on the american people for the income tax which many who have researched the laws, know does not exist.

Basical the book begins with 4 presumptions.
1. That any citizen who files any forms with the IRS, where a jurat is required, does so risking felony conviction. The Jurat is the "under penalties of perjury claus found on 1040 forms and w4 forms, for example.
2. That the IRS is NOT held accountable for the accuracy of its records, and that it is up to us, the people to correct those records. And that the the current tax system is set up to create a legal presumption of liablity.
3. That there must be an administrative procedure to overcome said presumption. And that procedure is to use IRS form 4852.
4. The terms within the IRC (internal revenue code) mean what they say, and that the term includes is inclusive, and not expansive. This legal presumption/argument has been going on for years, without proper clarification, despite the rulings of the US Supreme Court on the subject matter.

The premise of the book, is that the IRS knows there is no liablity for income tax for most Americans. And that most Americans might be liable for social security taxes (presuming that we have volunteered into the system, which we have not.) And that the IRS thinks that everyone who works for any artifical created entity, or "person" as defined by law (see IRC 7701A1 ), which means things like corporations, trusts, companies, trusts, parternships, etc, and who gets paid by said entity is involved the legaly defined "employment" as defined by IRC Subtitle C, Chapter 24, and thus is an employee also defined in the same chapter, who is subject to employment taxes. These employees get paid wages, which are taxable.

The IRS uses chapter 24 to justify withholding of parts of a workers pay check. Notice 3 things are withheld. 2 Social security taxes (medicare/medicade and fica) and income tax. The IRS claims it is the income tax being withheld by authority of chapter 24.

Companies at the end of the year, use form w3 to report social security withholdings to the Secretary of the SocSec Administration, however CTC contends this form (like many of the IRS forms) is incomplete and inaccurate and does not reflect enough specific information.

The w3 is signed under Jurat, that is penalties of perjury. It clearly says that it is a return. This means it is an information return. The IRS uses this information to create a presumption of income tax liablity.
How can they (the IRS) do that?

Simple: the form says amongst other things that the citizen was paid x amount of money in income taxable wages.

Line 1 asks for Wages, tips and Other Comphensation, but does not make it clear which wages are being reported. Are these Chapter 21, 23 or 24 wages? It also asks for comphensation. in 1969, the US Courts ruled that congress has taxed income, not comphensation (Connor v. U.S., 303 F.Supp., 1187) and there have been numerous other related decisions that are simular. So why is the IRS asking for comphensation?

Line 2 then asks for the amount of income tax withheld. If the company withheld any amount, it is shown here.

Line 3 asks specificaly for social security wages, (which are defined in chapter 21) and line 5 asks for Medicare wages (also defined in chapter 21).

Understand this: wages has more than 1 legal meaning within the IRC. There are 3 definitions of the word, each one is applicable only to the chapter (and tax) where it is found. Chapter 21 (social security taxes), Chapter 23 (unemployment taxes), and chapter 24 (employment taxes and collection of income tax at the source).

There are NO chapter 1 (income tax) definitions for wage or wages.

Note: Some people claim that the w3 form has the OMB number 1546-0008 same as 1040 form, so some question its validity as a form, according to Office of Managment and Budget rules.

So the company sends the W3 to the Secretary of the Social security administration claiming you received wages. The IRS takes that information and claims that since you were paid wages, you owe income tax on those wages. The IRS claims wages is a part of gross income as defined in section 61A of the IRC, but you will never find wages listed as an item of gross income in that definition.

The IRS uses the information sent to the Sec of Soc Sec and creates a presumption of liablity for the chapter 1 income tax. So how do you over come that presumption?

CTC author discovered an administrative remedy. Using the avilable IRS for 4852, you correct the presumptive record. That is, you file a claim that the information sent to the IRS by the company is WRONG and that your information is correct. The company has 3rd hand knoweldge, while you have first hand knoweldge.

Can the payroll clerk testify how he/she knows you were paid wages, and that how you meet the definition of employee (found atchapter 24)? No. Most will testify that they filed out the forms as instructed by the IRS or someone else. This makes their testimony (they signed the w3 under penalties of perjury), null and void and worthless.

By correcting the record in this manner, no taxable income is shown on a 1040 form. And this is what the IRS hates, and finds intollerable. \

Yet this is being done all perfectly lawfull.And within their rules and regulations and filing guidelines.

It shifts the burdent of proof back to the IRS who knows cannot show roff of liablity. They cannot show what does not exist.

It all boils down to this: If we the citizens have to risk felony charges (IRC 7206)as a condition to being in compliance with this law, then they have an obligation to present us with proof of liablty when challenged to do so. And for the last 50 years, they have refused to.