Deceptive IRS Code Words
"Income," "Person," "Taxpayer," "Shall," and "Must."
Learn to Decipher the Internal Revenue Code and IRS Publications
The Internal Revenue Code (IRC) is a masterpiece of deception designed
to mislead Citizens into believing that individuals are subject to
federal income tax. The Code was written by attorneys for the Internal
Revenue Service (IRS), and contains a series of directory statutes
using the word "shall", with provisions that are requirements for
corporations, but not for individuals. Even members of Congress are
generally unaware of the deceptive legal meanings of certain terms
that are consistently used in the IRC. These terms have legal
definitions for use in the IRC that are very different from the
general understanding of the meaning of the words.
Lack of knowledge of these legal definitions causes misunderstanding
by uninformed Citizens who are confused as to the correct
interpretation of both the IRC and the true meaning of the tricky
wording in IRS instructional publications and news articles. However,
when you understand the legal definitions of these terms, the
deception is easily recognized and the limited application of the Code
becomes clear. This understanding will help you to see that filing
income tax forms and paying income taxes must be voluntary acts for
most Americans because the United States Constitution forbids the
federal government to impose any tax directly upon individuals.
Most people mistakenly believe all moneys they receive, such as wages,
salaries, and tips, are "income". However, for years, IRS publication
#525, entitled "Taxable and Nontaxable Income", has acknowledged that
wages and salaries are not "income". Publication #525 states: "Wages
and salaries are the main source of income for most people." In the
court decision of Graves vs People of the State of New York ex rel
O'Keefe, 59 S.Ct. 595 (1939), the United States Supreme Court ruled
that a source of income is not income, and the source is not subject
to income tax. In that decision, the Court stated: "A tax on income is
not economically or legally a tax on its source." However, wages,
salaries, commissions, and tips (sources) are considered to be
"income" for an individual when he lists them as "income" on an IRS
tax return form. When he signs the tax form under penalty of perjury,
he has made a voluntary oath that his wages, salary, commissions, and
tips listed on the return are "income" and that he is subject to the
In the still standing decision of Brushaber vs Union Pacific Railroad
Company, 240 U.S. 1, the United States Supreme Court ruled that the
federal income tax is an excise tax under the Sixteenth Amendment (the
income tax amendment). The Court explained that the income tax cannot
be imposed as a direct tax (a tax on individuals or on property)
because the United States Constitution still requires that all direct
taxes must be apportioned among the States. "Apportioned" means that a
direct tax is laid upon the State governments in proportion to each
State's population. The Court ruled that income tax can be
constitutional only as an indirect (excise) tax -- that is, a tax on
profits earned by corporations or privileges granted by government. In
other words, said the Supreme Court, in order for there to be
"income", there must be profits or gains received in the exercise of a
privilege granted by government. As an example, a lawyer is granted
the government privilege of being an officer of the government court
when he represents clients in litigation.
At law, labor is property. In fact, the Supreme Court has identified
labor as man's most precious property. Therefore, the exchange of
one's labor for wages or salary (which are also property) is
considered by law to be an exchange of properties of equal value in
which there is no gain or profit. Such a property exchange of equal
value cannot be taxed because there is no profit or gain. Also, one
who works in an ordinary occupation is not a recipient of any
privilege granted by government, because he is merely exercising his
constitutionally guaranteed right to work and earn an living. Courts
have repeatedly ruled that no tax may be placed upon the exercise of
rights. Their reasoning was sensible. If the exercise of rights could
be taxed, government could destroy them by excessive rates of
Items that the law includes in "income" are described in Code sections
listed under the title of "Items Specifically Included in Gross
Income", which covers Sections 71 through 86. Nowhere in these
sections and nowhere else in the Code is there any mention of wages,
salaries, commissions, or tips as being "income". For example, to
deceive and intimidate waitresses into declaring their tips to be
income is a double fraud. First, tips are gifts, not wages. According
to the IRC, gifts are not subject to income tax. In fact, even if tips
were considered to be wages, they would still not be "income" and
would not be subject to an income (excise) tax unless one enters them
as "income" on a tax return form.
People generally consider the term "person" to mean an individual
only. But, IRC Section 7701, entitled "Definitions", includes a
corporation, a trust, an estate, a partnership, an association, or
company as being a "person". All of these legal entities are "persons"
at law, so it is legally correct but very misleading when the federal
income (excise) tax on corporations is described by the deceptive
title of "Personal Income Tax". This misleading description leads most
people to believe that it means a tax on individuals.
The legal term "person" has an even more restricted definition when
used in IRC Chapter 75, which contains all the criminal penalties in
the Code. In Section 7343 of that Chapter, a "person" subject to
criminal penalties is defined as:
... [A]n officer or employee of a corporation, or a member or employee
of a partnership, who, as such officer, employee or member, is under a
duty to perform the act in respect of which the violation occurs.
An individual who is not in such a capacity is not defined as a
"person" subject to criminal penalties. Unprivileged individuals, who
do not impose the income (excise) tax upon themselves by filing
returns, are not subject to the tax and they are not "persons" who can
lawfully be subjected to criminal charges for not filing a return or
not paying income tax.
Sections of the Code relating to the requirements for filing returns,
keeping records, and disclosing information state that those sections
apply to "every person liable" or "any person made liable". These
descriptions mean "any person who is liable for the tax". They do not
state or mean that all persons are liable. The only persons liable are
those "persons" (legal entities such as corporations) who owe an
income (excise) tax, and are therefore subject to the requirements of
the IRC. If you substitute the word "corporation" for the term
"person" (a corporation is a person at law) when reading the Code or
other articles and publications relating to income tax, the true
meaning of the Code becomes more apparent.
A TAX PAYER IS NOT A "TAXPAYER"
The deceptive term "taxpayer" is a legal term created by combining the
words "tax" and "payer". The general understanding of the term's
meaning is different from its legal definition in the IRC. Section
7701(a)(14) gives the legal definition of the term "taxpayer" in
relation to income tax. It states: "The term 'taxpayer' means any
person subject to any internal revenue tax." (All internal revenue
taxes are excise taxes.) Note that the section does not say that all
persons are "taxpayers" subject to internal revenue tax. Corporations
are "taxpayers", for they are "persons" subject to an internal revenue
The term "taxpayer" is used extensively throughout the IRC, in IRS
publications, news articles, and instructional literature as a verbal
trap to make uninformed Citizens believe that all individuals are
subject to federal income tax and to the requirements of the IRC.
These materials state that "taxpayers" are required to file returns,
keep records, supply information, etc. Such statements are technically
correct, because "taxpayers" are those legal "persons" previously
described that are subject to an excise tax, but unprivileged
individuals are not "taxpayers" within the meaning of the IRC.
The confusion about the meaning of the term leads most people to
mistakenly assume that they are "taxpayers" because they pay other
taxes such as sales taxes and real estate taxes. Those people are tax
payers, not "taxpayers" as defined in the IRC. When they read articles
and publications related to income tax, describing the legal
requirements for "taxpayers", they erroneously believe that the term
applies to them as individuals. It is very important to understand
that the IRC requirements apply to IRC-defined "taxpayers" only, and
not to unprivileged individuals. Corporations and other
government-privileged legal entities are "taxpayers under the Internal
Revenue Code"; unprivileged individuals are not, unless they
voluntarily file income tax returns showing they owe taxes, thus
legally placing themselves in the classification of "taxpayers".
Because of its legal definition, the term "taxpayer" should never be
used in relation to income tax, except to describe those legal
entities subject to a federal excise tax.
"SHALL" means "MAY"
In general use, the word "shall" is a word of command with a mandatory
meaning. In the IRC, "shall" is a directory word that has a mandatory
meaning when applied to corporations. The IRC contains a series of
directory statutes using the word "shall" in describing the actions
called for in those sections of the law. The provisions of these
directory statutes are requirements for corporations, because
corporations are created by government and, consequently, are subject
to government direction and control. Since corporations are granted
the privilege to exist and operate by government-issued charters, they
do not have the constitutionally guaranteed rights of individuals.
This government-granted privilege legally obligates corporations to
make a "return" of profits and gains earned in the exercise of their
privileged operations when directed to do so by law. This is why the
tax form is called a "return".
However, directory words in the Code merely imply that individuals are
required to perform certain acts, but directory words are not
requirements for individuals when a mandatory interpretation of the
directory words would conflict with the constitutionally guaranteed
rights of individuals. Courts have repeatedly ruled that in statutes,
when a mandatory meaning of the word "shall" would create a
constitutional conflict, "shall" must be defined as meaning "may". The
following are quotes from a few of these decisions. In the decision of
Cairo & Fulton R.R. Co. vs Hecht, 95 U.S. 170, the U.S. Supreme Court
As against the government the word "shall" when used in statutes, is
to be construed as "may," unless a contrary intention is manifest.
In the decision of George Williams College vs Village of Williams Bay,
7 N.W.2d 891, the Supreme Court of Wisconsin stated:
"Shall" in a statute may be construed to mean "may" in order to avoid
In the decision of Gow vs Consolidated Coppermines Corp., 165 Atlantic
136, the court stated:
If necessary to avoid unconstitutionality of a statute, "shall" will
be deemed equivalent to "may" ....
Sections 6001 and 6011 of the IRC are cited in the Privacy Act notice
in the IRS 1040 instruction booklet in order to lead individuals to
believe they are required to perform services for tax collectors. Note
the use of the word "shall" in the following sections of the Code:
Section 6001 states:
Every person liable for any tax imposed by this title, or for the
collection thereof, shall keep such records, render such statements,
make such returns, and comply with such rules and requirements as the
Secretary may from time to time prescribe.
Section 6011 states:
When required by regulations prescribed by the Secretary any person
made liable for any tax imposed by this title, or for the collection
thereof, shall make a return or statement according to the forms and
regulations prescribed by the Secretary.
Note that Sections 6001 and 6011 apply to "every person liable" and
"any person made liable", but not to "individuals". However, there is
no section of the IRC that makes individuals liable for payment of
income tax because any law imposing a federal tax on individuals would
be unconstitutional, for it would violate the taxing limitations in
the U.S. Constitution which prohibit direct taxation of individuals by
the federal government. People are often confused when reading the
Code because, under Subtitle A, Chapter 1, which covers income taxes,
Part 1 of Subchapter A has the misleading title of "Tax on
Individuals". The title is misleading because Part 1 imposes the tax
on "income", but contains no requirement for individuals to pay it.
But an individual becomes a "person liable" for the tax when he files
an income tax form, thereby swearing that he is liable for (owes) the
The Privacy Act notice in the instruction booklet for IRS Form 1040
also shows that disclosure of information by individuals is not
required. The notice states:
Our legal right to ask for information is Internal Revenue Code
sections 6001 and 6011 and their regulations.
The IRS does not say that those sections require individuals to submit
the information; those sections only give the IRS the authority to ask
Section 6012 states:
Returns with respect to income taxes under Subtitle A shall be made by
the following: (1)(A) Every individual having for the taxable year
gross which equals or exceeds the exemption amount ...."
Subsections (2) through (6) list corporations, estates, trusts,
partnerships, and certain political organizations as also being
subject to this section.
Any requirements compelling unprivileged individuals to keep records,
make returns and statements, or to involuntarily perform any other
services for tax collectors, would be violations of constitutionally
The Thirteenth Amendment to the United States Constitution forbids
compelling individuals to perform services involuntarily. The
Neither slavery nor involuntary servitude, except as punishment for
crimes whereof the party shall have been duly convicted, shall exist
within the United States, or any place subject to their jurisdiction.
The Fourth Amendment in the Bill of Rights of the United States
Constitution states that the people's right to privacy of their papers
shall not be violated by government. To compel individuals to disclose
information taken from their papers would violate this right.
The Fifth Amendment in the Bill of Rights protects the right of
individuals not to be required to be witnesses against themselves. To
compel individuals to disclose information by submitting statements or
information on a tax return form, all of which could be used against
them in criminal prosecutions, would violate their Fifth Amendment
These examples show some constitutional conflicts that would result
from defining the word "shall" as meaning "is required to". Thus,
"shall" in the above mentioned statutes must be interpreted as meaning
"may". Consequently, for individuals, keeping records, making
statements, and making returns are clearly voluntary actions that are
not required by law.
According to the wording of Section 6012 previously discussed, it is a
directory statute which pertains to the filing of income tax returns,
and applies only to those individuals "having income". Since the word
"having" has no deceptive legal definition in the Code, its legal
meaning is the same as its customary meaning in general use. Although
dictionaries define the word "have" as meaning "possess" or "hold in
one's possession", the IRS fraudulently misinterprets "having income"
as meaning "receiving gross receipts" when applying Section 6012 to
To better understand the meaning of "having income", consider this
example: If during one year a corporation receives ten million dollars
(gross receipts) from the sales of its products, and has expense items
of nine million dollars, the corporation has a profit (income) of one
million dollars. When tax liabilities are determined at the end of the
year, the corporation has (possesses) an increase in its assets (a
gain) of one million dollars. But, if the corporation's expenses
equalled its gross receipts, it would then have (possess) no profit or
gain (income) and it would owe no income tax.
Now, consider another example: If during one year an individual
receives fifteen thousand dollars in wages (gross receipts) from the
sale of his labor, and has expenses of fifteen thousand dollars to
sustain himself and his family, he then has (possesses) no increase in
assets. Although he has (possesses) nothing more than he had at the
beginning of the year, IRS agents consider him as "having income" of
fifteen thousand dollars. IRS agents ignore the fact that his wages
were not income according to their own publications!
"MUST" means "MAY"
Most people have never studied the IRC and their understanding of the
law is generally based on hearsay, newspaper articles and IRS
instructional materials. These instructions make frequent use of the
deceptive word "must" in describing the things that the IRS wants you
to do, because "must" is a forceful word that people mistakenly
believe to mean "are required". Very few people realize that "must" is
a directory word similar to "shall" and that, in IRS instructions to
the public, it means "may", the same as the word "shall".
In the legal definition of the word "must" in Black's Law Dictionary,
... [I]t is often used in a merely directory sense, and consequently
is a synonym for the word "may" not only in the permissive sense of
that word, but also in the mandatory sense which it sometimes has.
Because of the constitutional conflicts explained earlier in this
article, the word "must", similar to the word "shall", cannot have a
mandatory meaning for individuals. It therefore means "may" when used
in IRS instruction publications.
The IRS instructions for Form 1040 state that you "must" file a return
if you have certain amounts of income. IRS withholding instructions
state that employers "must" withhold money from paychecks for income
tax, "must" withhold social security tax (an income tax also), and
"must" send to the IRS any W-4 withholding statement claiming
exemption from withholding, if the wages are expected to usually
exceed $200 per week. An understanding of the legal meaning of the
word "must" exposes the deception by the IRS and makes it clear that
the actions called for are voluntary actions for individuals that are
not required by law. If these actions were required by law, the
instructions would not use the word "must", but would say that the
actions were "required".
FREE SOVEREIGN CITIZENS
Prior to the American Revolution, the American colonists were subjects
of the English Kings and were subject to their orders and edicts. But,
according to the Declaration of Independence and the United States
Constitution, the Citizens of our country are free sovereign
individuals. They are not subjects of government, nor are they subject
to mandatory direction or control by the federal government. Except
for duties such as military draft and jury duty, the federal
government has no authority to require unprivileged individuals to
perform services for government.
There is no section in the IRC requiring individuals to pay income tax
or file income tax returns, because the federal government has no
constitutional authority to impose any tax directly upon individuals
or to require them involuntarily to keep records, make statements,
make returns, or perform any acts for the convenience of federal tax
collectors. But, if an individual files a return, his voluntary action
of signing the form, thereby swearing under penalty of perjury that he
owes the tax, is an acknowledgement under oath that he is subject to
the tax (a "taxpayer") and is therefore subject to the directory
statutes of the IRC.
The reader should remember the legal definitions of the various terms
and the information about the rights of Citizens presented in this
article whenever he reads the IRC and other materials relating to
income tax in order to better understand the correct meaning of
whatever they read.
FREE STATE CONSTITUTIONISTS
The Deoxyribonucleic Hyperdimension