The IRS Wants to Know What You Might be Reading


According to a July 30 fundraising letter from the Center for Individual Rights (and this small notice on its Web site), "tax honesty" author Peter Hendrickson has been visited by federal officers, at the instigation of the Internal Revenue Service (IRS), asking him to provide them with the name of everyone who has bought his book, Cracking the Code. Seems they are considering his book–in which he carefully reads the existing language of the tax code and comes to conclusions opposite to common understanding or the IRS's insistence, namely that most income we think of as taxable really isn't–an "abusive tax shelter," and an "investment" that fraudulently promises certain tax benefits to its "investors"–what more normal people might call "readers."

I've written on some other figures and ideas in the "tax honesty" movement before, in this May Reason feature. As the CIR notes in its fundraising letter, and I will repeat here, one needn't believe that Hendrickson's arguments are correct to be appalled that the IRS considers buying a book something it needs to investigate. According to the CIR letter, CIR attorney's have gotten an assistant U.S. attorney to ask a District Court to rescind an order that he show up in court to explain why he didn't give the IRS what it wanted, but they aren't sure the IRS will back down.

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  1. I assume you mean
    “one need not believe that Hendrickson’s arguments are correct to be appalled”

    rather than

    “one needed believe that Hendrickson’s arguments are correct to be appalled”

  2. ^ damn lawyers are always busting on imperfection.


  4. 99 % of the tax protest arguments are based on irrelevant technicalities. It simply doesn’t matter that Hendrickson and my old buddy Irwin Schiff over in Vegas are technically correct in most of the arguments they make. Why? Because time after time the courts have refused to buy off on those arguments. And if the Supremes ever buy, CONgress will spend exactly 35 seconds enacting a different kind of tax that will pass court muster. It isn’t like they don’t know what side of the bread is buttered.

    That said, IRS has no right to ask who bought the book (the phrase ‘got a warrant’ comes to mind).

    Which raises a second point. IRS frequently uses the audit procedure to gather evidence to use in a planned or evolving criminal prosecution.

    Because audits are civil matters the taxpayer doesn’t have the same rights as in criminal cases where IRS actually has to prove something illegal happened.

    Sure, you can tell the IRS to pound salt at interview one…but if you do you better bring your lunch, a bag of cash, and your sleeping bag (plus one of each for your attorney)

  5. Frankly I’m surprised IRS hasn’t asked Reason for a list of subscribers. After all, libertarians are notoriously in favor of abolishing the IRS.

  6. I don’t know if Hendrickson’s arguments are correct either, but for thr IRS to demand the name of everyone who has bought his book is tyranny! A free society can not long tolerate this type of behavior from its government and stay free.

    If you value your liberty please, please contact your congressperson and senators and tell them to stop this outrage.

    When there has been public demand in the past, congress has been willing to reign in the IRS. The choice is ours. If the readers of this blog will not stand up for liberty; than who will?

  7. I don’t get it. What’s the problem here?

    /end David Cay Johnston

    I think I’ll head down to the local library and ask them if they will accept this book on my behalf.

  8. You’ve a got a federal system which requires 20% of GDP to regulate commerce among the states. If you think about that, it sounds like a terribly inefficient arrangement.

    You could argue that the Supreme Court was wrong in the 1930s, and that the vast expansion of the federal government based on the commerce clause is a violation of the Constitution. You could further argue that the taxes collected to fund unconstitutional federal activities are illegal. The courts won’t go along, but, the argument is fairly reasonable. The position the Supreme Court and the feds try to take is totally unreasonable. Morally you’re cool, but you’re still in jail. If you had the character of Jesus or Gandhi, you could make the feds feel very uncomfortable. They view the truth like Dracula views a crucifix. It sears into their flesh. I think that explains somewhat why they have to suppress certain books.

  9. dfr,

    You’re right, but at least we undid those suppressions. This one seems like it might require more vigorous opposition since the IRS is behind it.

  10. The real problem is that the Constitution is crap. How can you reconcile the fact that one amendment prohibits slavery and another allows for the forced confiscation of the products of labor?

  11. “I think that explains somewhat why they have to suppress certain books.”

    Not in our republic are they going to suppress books! Not if we don’t let them.

  12. This is the IRS trying to use an easy way to “filter” through the returns, figuring that the normal % they audit only catches so many “cheaters” if they have this list of names their hit rate will be higher. Along Brian’s thinking, you don’t have to agree with Hendrickson’s thinking, but if you bought his book you apparently have increased your odds of being audited.

    Iguana points out the reason I don’t subscribe the Reason. I’ll buy it at the magazine rack anonymously, thanks.

  13. They can have my books when they pry them out of my cold, dead fingers.

  14. “Not in our republic are they going to suppress books! Not if we don’t let them”

    hey rick, much as i agree with you on lots of issues, um, huck fin or catcher in the rye? no suppression of books? it’s been like that for a while.

  15. What readers, including attorneys, CPA’s, paralegals, university professors, etc., have to say about ‘Cracking the Code’:

    ?First off thank you for writing it!? ?I now realize the amount of work that you have put into this? I pray that tens of thousands purchase it. Again thanks!!!?
    Ed Paquette, Canton, North Carolina

    “Thank you so much for your exquisitely documented and beautifully written “Cracking the Code”- “This book is a masterpiece of analysis, clarity and revelation.” “This is brain candy for patriots!”
    Christiane Sauter, Syracuse, New York

    “I would like to pick up at least 10 copies of your book for friends and family??
    Charles Shiflett, Marietta, Georgia

    ?BRAVO! You are an excellent writer and I certainly feel informed enough to begin my challenge of our Income Tax laws.?
    Patrick Mooney, The Institute of Unlearning

    “Your book gave me a much deeper understanding into what this is all really about, and a better idea of how to defend myself against the monster.? ?I enjoyed your style of writing, as it does bring greater clarity to a very complicated set of problems, one building upon the next.?
    Bill Woodrow, Damascus, Maryland

    “Wonderful Book!!! Thank you for your work!”
    Michael-Edward, Deland, Florida

    “All American Citizens who truly love their freedom and have a healthy skepticism of the federal government will add this book to their evidentiary foundation…” “…it’s a beautiful thing you’ve done.”
    John Carpenter, Ann Arbor, Michigan

    “Thank you so much for a well written book. It really gave me a lift.”
    Clyde H Shaulis, Jr., Erie, Michigan

    “?haven’t been able to put it down. Great information and fabulously put together!?
    Bart Goss, Stockbridge, Georgia

    “…your book confirms my understanding of the fraud.” “I have recommended this book to many…”
    Jeff G. Pemberton, Little Rock, Arkansas

    “This is a fabulous book I would highly recommend??
    Larry Golson, Montgomery, Alabama

    “…one of the best I have read on the subject and I have been studying the subject for over 30 years.”
    Bill Richards, Newport News, Virginia

    “I consider your book to be one of my most prized possessions. Thank you.”
    Darrell Berg, Milton, New York

    “Read the book in about 2 days. Very well done. I have been looking at the issue for about 5 years and you distill the info down in a way even the newbies can absorb. Well worth the asking price. I hope this really sells.”
    Ed Wahler, Fletcher, North Carolina

    “Loved your book Cracking The Code.”
    Bill Harding, Hudson, Michigan

    “Received your book yesterday. Started reading at 11 PM, finished at 4 AM.” “I have 16 feet (literally 16′ 4.5″) of documents supporting just about everything in your book.” “Your book should be required reading for every lawyer before being admitted to any Bar.” “I hope you sell a million of them.”
    John Green, Spring, Texas

    “Greetings! I want to thank you heartily for the fine book ‘Cracking the Code.”
    Betsy Dettloff, Rochester Hills, Michigan

    “I found the book to be extremely beneficial even though I was fairly knowledgeable on the subject prior to reading the book.” “It is definitely on my list of ‘recommended reads. Thanks for a great book.”
    Phil Patana, St. Louis, Missouri

    “Your book gives me a great boost in my determination…” “Thanks for your great book as I will use it as a reference in the future.”
    T.L. Peck, Lyman, South Carolina

    “EXCELLENT” “…very well written and accurate.” “… I would highly recommend.”
    Dave Wissel, Lebanon, Ohio

    “I am SO grateful for your book.”
    Nancy in Massachusetts

    “I’ve just started reading the book a couple of days ago. Talk about mind blowing. Your book is really helping me to understand what the tax system is all about.”
    Elizabeth Larsen, Midland, Michigan

    “I very much enjoyed reading it and will be recommending it to many…”
    K. B., Omaha, Nebraska

    “…a valuable tool, and a wealth of knowledge.” “Thank you for all your research…”
    Arleen Miller, Page, Arizona

    “…of everything I’ve read in the last 15 years, this is certainly the clearest explanation I have ever seen.”
    Sue Kennedy, Sun Valley, California

    “Wow!!!! I’ve been studying this for 10 years and haven’t gotten anything as clearly as you have put it in your book. I will be ordering more copies to put into the hands of everyone I know!! I cannot thank you enough for your time and research.”
    Joyce Cox, Afton, Wyoming

    “I wanted to drop you a quick note to tell you how much I appreciate the level and quality of research you’ve obviously undertaken to write this book.” “…I think your book is probably one of the most cohesive presentations I have read on the subject of the federal income tax.”
    R. L., San Diego, California

    “I think your book is the best and most thorough analysis of the “Income Tax” law. The book is extremely well written. Almost no one has written about this subject with the clarity and precision you have in your book.” “I think your book is the one everyone in this movement should read.”
    Joe Wert, Arlington, Texas

    “I want to express my congratulations and my gratitude for such an exhaustive and thorough work as ‘Cracking the Code'”. “[I found it] extraordinarily enlightening.”
    Carl Stewart, Saint Cloud, Florida

    “Your book is exhaustively researched and a must have for anyone who is considering removing the government leech from their backside. Great Stuff!”
    Rick Jaensch, Annandale, Virginia

    “Kudos to a well researched and well presented book. It’s about time that someone has printed a book that accurately describes the meaning and intent of the tax laws.”
    Thom Anderson, Annapolis, Maryland

    “Wow! You?ve created a masterpiece…” “I too am walking taller today after reading ?Cracking the Code?. Thank you very much for writing it…” “…you?ve given us the knowledge needed for asserting a proper legal defense.”
    Michael Olsen, Wellsville, Utah

  16. Cracking the Code- The Fascinating Truth About Taxation In America

    by Peter E. Hendrickson

    Lost Horizons, 2003, 232 pages, $19.95

    Reviewed by Steve Thomas

    Any student of liberty and of the founding of the United States has to know intuitively that the current tax code of our federal government could have never been the intention of our Founding Fathers. One can take it as a given that the Founders would be disheartened and outraged by the growth and perversion of the federal government ? and the abuse of power it employs in collecting taxes from the people.

    I have often wondered how much different the course of American history would be if an economist like Milton Friedman or James Buchanan ? with two hundred years of hindsight ? could be transported back in time to advise the Founders on Constitutional issues like taxation. Perhaps they could provide the Founders with insights that would have made the Constitution impervious to time and the ?factions? that so troubled them.

    In his recently published book, Cracking The Code: The Fascinating Truth About Taxation In America, libertarian author Peter Eric Hendrickson makes it perfectly clear that America?s Founders were very much aware of the dangers associated with the federal government?s power to tax. Accordingly, they established a wholly viable system of checks and balances within the Constitution to prevent the federal government from abusing its taxing power. Hendrickson also points out that the Founders actually had a renowned economist (if indirectly) advising them: a capable Scotsman by the name of Adam Smith.

    The Constitution calls for direct taxes (i.e., those which are unavoidable) to be apportioned according to each state?s population. That means that federal taxes are supposed to be collected from the states proportionate to their percentage of the nation?s total population ? not directly from individuals.

    Even the Sixteenth Amendment, which is widely misunderstood as having established an ?income? tax, actually represents only a slight modification of the tax already in place at the time of its proposal. It did not change the Constitution?s restriction on direct taxation.

    Nonetheless, a widespread misunderstanding of the effects of that amendment has successfully been exploited to convince Americans that everything changed in 1913. People wrongly believe that the amendment gives the government the legal ability to take citizen?s property at will ? but nothing could be further from the truth, says Hendrickson. There?s a reason why we hear all the time that it?s a ?voluntary? system, and it?s not because we all ?volunteer? to save the government the trouble of doing the paperwork.

    It is Hendrickson?s contention that the only people from whom the federal government can legally demand an ?income? tax are those who are direct beneficiaries of the federal government. Such parties would include federal employees, contractors and those who benefit from government licensing. In other words, if you are a private citizen who earns a salary, Hendrickson claims that you do not have to pay ?income? taxes ? including FICA ? to the federal government.

    Don?t believe him? Then go to Hendrickson?s website ( and bear witness to the unthinkable: a letter from the IRS acknowledging that his claim of ?money improperly withheld.? is valid. But don?t expect your accountant or attorney to jump on Hendrickson?s bandwagon any time soon. Their jobs ? and those of millions of others ? depend on your confusion and fear when it comes to the IRS and the bewildering tax code it enforces.

    Cracking The Code is a product of the information age. The Internet and its search engines allowed Hendrickson to not only wade through the entire tax code, but to investigate and cross-reference its content: all 3,413,780 words of it. What Hendrickson found is that the tax code, regardless of its confusing and misleading language, is consistent with the Constitution?s original restriction on direct taxes ? and that there is no legal way for the federal government to enforce an ?income? tax on the labor or earnings of private citizens. Hendrickson cites clear and consistent case law throughout the book to back his claim ? including a plethora from the United States Supreme Court.

    Readers of Cracking The Code will undoubtedly experience a paradigm shift in their thinking as they make their way through its pages. Skepticism and doubt will slowly be replaced with certainty and conviction as Hendrickson systematically walks his readers through the law and the tax code?s maze of confusion. But it won?t come easy.

    As Thomas Paine once wrote in Common Sense, ? . . . a long habit of not thinking something wrong, gives it the superficial appearance of being right, and raises at first a formidable outcry in defense of custom.? Paine?s wisdom undoubtedly applies to the sentiments most Americans have when it comes to the way income taxes are imposed upon them.

    There?s no shortage of frivolous books on the market that make the claim that you can avoid taxes. Cracking The Code is not one of them. It is a judicious and thoughtful work written by an American patriot deeply dedicated to the rule of law. Hopefully, this book will find its way into the hands of concerned citizens, legal scholars and federal judges who truly believe in upholding the Constitution ? and who are sympathetic to the cause of liberty.

    # # #

    Steve Thomas is a freelance writer and businessman in Detroit, Michigan, and an Adjunct Scholar with the Mackinac Center For Public Policy in Midland, Michigan.

  17. I’m going to hold my breath while the Booksellers and Librarians who have agitated against PATRIOT Act provisions that theoretically could make them cough up information about what a customer has purchased raise a similar ruckus about the IRS’s moves.

    No, I fibbed. I’ll suffer permanent brain damage, be buried, eaten by maggots, and eventually fossilized before that happens.

    (former bookseller)

  18. The article above states “in which he (i.e., Pete Hendrickson) carefully reads the existing language of the tax code and comes to conclusions opposite to common understanding or the IRS’s insistence.” What do you mean “common understanding?” How many people have ever even considered the “existing language of the tax code?” There is no “common understanding” because most people couldn’t find tax law if their lives depended on it. Most people are so scared & hypnotized that they can’t be bothered to turn off the TV and study the so-called income tax.

    All I can say is read the book and, if you can refute it, post your refutations here. By the way, refutations do NOT include: “that’s silly;” “that’s frivolous;” “everybody knows that …;” “if what the book says is right then how come everyone blah, blah, blah,” and other such brain dead comments.

  19. Just because you bought the book doesn’t mean you acted on it. So, I guess it is okay to demand something from Pete that you do not have the lawful authority to do. Even a warrant? For what? Selling a book that has information in it that the people posing as government (that’s right it is just men and women like you and I, pretending the People gave them the authority to do anything) doesn’t like. What’s that all about? If I cannot demand Pete give me a list of names, then how can I or anyone else delegate that authority to anybody posing as a service organization?

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