Customer Reviews

Cracking the Code

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I came across `Cracking the Code' while searching for income tax information for my small business. Out of plain curiosity, I bought it, believing at the least I'd learn something new that would help me reduce my tax load. After reading it, I can certainly understand the negative reviews. I was one of them. I read it and thought to myself, what a waste of money and time. For whatever reason, a few months later, I picked it up because I did remembered something in the book that might help lower my taxes. While searching, I decided to research the statutes, regulations, and court cases myself. Believe it or not, all this information is available in searchable format on the Internet. It took some time, but after doing so, I was amazed at what I came to understand. The information in the book is accurate and I would challenge anyone (especially the negative reviewers) to prove otherwise. This book isn't the easiest read and if you read it quickly and dismiss it, as I did, I believe you will be personally throwing thousands of dollars away.

In a nutshell, I'm an average small business owner with a BA from a public university just trying to make a buck and keep my income taxes as low as possible, while still paying my fair share. The information in the book was enlightening and helped me understand the tax laws to do so.

Nowhere in the book does the author say that you don't owe federal income taxes. I already knew (which this book confirmed) that I do owe federal income tax each year, but not as much as I originally thought.

If you're trying to keep your taxes as low as possible, whether you are a small business owner or work for someone else, this is a must read. Plus, there's a CD with additional information (tax code, court cases, statutes, etc.) available for about $15. The same information is also on the Internet for free if you don't want to spend the extra $15.

That's it. If you're looking for information on the tax code and how it relates to you and the tax you owe, this is the book for you.

I highly recommend it.

Anyone who has actually attempted to read U.S. Code Title 26 (which comprises the sections of the Internal Revenue Code) will agree that words like confusing and convoluted cannot begin to do it justice. Definitions of terms almost never come before their use and the definitions themselves often depend upon other terms defined elsewhere. Sometimes these recursing definitions are nested 4 or 5 levels deep and are complexly intertwined through the 3000-odd pages of text. Some sections use terms that appear identical to terms used in other sections but have been bound to very different definitions. Passages where these terms are used never refer the reader to which actual definitions apply -- the reader must work backwards from the locations of the definitions and apply a kind of Boolean logic to the scope references in order to determine which terms mean what, where they mean it and, importantly, where they don't. And I don't just mean terms like "capital gains averaging" or "oil depletion allowance" either. We're talking about terms like "State", "wages", "employer" and "includes".

These facts alone imply a great deal about such Federal law: 1) It could not have been intended for 'mere' citizens to easily comprehend. 2) It seems instead intended to actively discourage widespread understanding. 3) The existence of widespread and even generations-old misunderstandings should not be surprising or unexpected. 4) Ample capacity exists in the Code's obfuscations for at least the possibility of intentional deception in promoting these widespread misunderstandings.

And intentional deception is exactly what dedicated tax researcher and rule-of-law advocate Pete Hendrickson has found within the Code. And within the derived regulations. And in the governing statutes-at-large. And, in fact, throughout the entire smarmy history of the promulgation of the so-called Income Tax. But unlike various works to be found within the 'Tax Protester' community, "Cracking the Code" eschews any histrionic rants of righteous indignation and instead rolls up its sleeves and gets straight to work explaining how the scheme really operates and to whom and under what circumstances it really applies. Uniquely for this kind of book, it shows just how the reader can use the Service's own forms and procedures to legally limit his or her own tax liability to what is actually and demonstrably lawful (which is often little or no "income" tax liability at all), and also provides specific examples on how to obtain refunds for all withheld overpayments (including Social Security and Medicare).

Rather than trying to foment a modern Boston Tea Party, Hendrickson is asking readers to join with him in keeping the application of federal revenue laws within lawful boundaries. If enough Americans are persuaded to pay only the tax they're actually liable for, the Federal government may yet be forced on a diet that will return it to the limited dimensions intended by the framers of the Constitution.

In keeping with its presumed mission, "Cracking the Code" is largely focussed on the actual mechanics of properly filing lawful tax returns and obtaining refunds, perhaps too much so for my own personal tastes. But broader topics such as the politics, history and motives of those responsible for this institutionalized public fleecing, as well as its calamitous consequences, are well-treated by others elsewhere. (One of my own favorites is "The Creature from Jekyll Island", by G. Edward Griffin.)

All in all, if you intend to buy only one book about personal income taxes or on the subject of taxation in general, this should be the one. (A $20 investment here is likely to save the average middle-class American many thousands of dollars in overpaid federal and state taxes.) And if you intend to become better versed in the secretive past and present of the U.S. government, you'll do well to start here too.

I have studied taxes for many years for myself and my company, and specifically Title 26 the last five years.

Finally a book that concisely organizes what I have learned and practical methods to implement what I have studied. It is obvious a threat to the "professionals" making money off of "taxpayers' ignorance, just see all the naysayers. They just put up simplistic reviews to intimidate, like "you will go to jail!" If the book is full of inaccuracies, they should stick to specifically commenting on these with proof to back up their claims. The Tax Honesty movement has taken a giant step forward with this book.

I bought this book about two weeks ago, and am currently re-reading it to absorb all the facts. And I do mean facts. Some other reviews on here say that the author merely provides theories, but he points directly to IRS tax code and federal law, making it easy to fact-check his work. Those reviewers obviously have not read the book, or they'd see that he is EXTREMELY thorough. My mind still boggles at the amount of research Mr. Hendrickson has done.

What I've learned is that

1. I can make sense of the tax law

2. I do not make "wages" (as defined by federal law)

3. I do not recieve "income" (as defined by federal law).

Every term in the Federal law books is subject to having a very limiting definition, often located in another section of the law altogether- yet that definition tells the exact meaning of the word that they intend it to have. Hendrickson has properly characterized the framers of our Constitution as people who wanted to protect citizens of the states from having to give their labor (money earned) away. The freedom to earn money is a right, not a privilege, and the income tax is a type of tax (an excise tax) that can only be applied to privileges, ACCORDING TO FEDERAL LAW.

I cannot describe to you how empowered I feel after reading this book. If you find his website, losthorizons, you can see many, many examples of people who have re-filed their previous taxes due to learning the truth. Some of these people even scan their new refund checks and related documents to be posted on his website. So far, people have reported (with images of checks to back it up)-- over 2 MILLION DOLLARS. These refunds accompany letters from the IRS that basically say "case closed".

When we sign documents for the IRS, we are agreeing to the status they set for us, and are volunteering our money. Once we agree that we are "employees" and have received "income" or "wages", we are in their clutches. You will find the specific meanings of the words in quotes in this book (and in the federal law books). THEY DO NOT MEAN WHAT YOU THINK THEY MEAN.

Cracking the Code educates you about how to follow the letter of the law to tell the powers to be that you and your pay are not within their jurisdiction to tax, rather than taking the tax-protest stance (which I myself have done in the past) of just not paying and not communicating with the IRS. You can talk to them with authority after reading this book, and stop paying a tax that is based on "voluntarily compliance". How voluntary does it feel on April 15th of every year? This is due to the trickery of the wording in the tax code, and Hendrickson helps you understand the real meaning behind the words.

Paying "income tax" truly is a voluntary act for 99% of Americans- we obligate ourselves by signing papers which claim a legal status that DOES NOT APPLY TO US. We can stop doing this safely, and stunt the overgrowth of a government which is seeking more and more power all the time, and was never intended by the founders to be this large.

Do you like how the federal government is using your money? Do you think it will change with the next president? Do something about it. Your dollar is your vote.

This is a very interesting, informative book. Admittedly, it can be heavy and technical reading at times. The analysis of reviews here is interesting, reflecting a wide divergence of opinion. I'm not going to make your decision for you - just know that this book contains intriguing and enlightening (and unsettling) information.

This book discusses the history of income taxation in our country, starting in 1861, then the 1862 Revenue Act. That first Act contained a section called the "Income Duty." Remember "duties, imposts, and excises" from Article 1, Sec. 8 of the Constitution? That first "duty" was applied to "income" in 2 ways - "earned income" (those in the civil, military, or other employment or service of the U.S.), and "derived income" (the "gain derived from capital" [money made from money investment]). It was also a small rate.

The book discusses later revenue acts, the Constitutional classes of taxes, etc. The Supreme Court in Brushaber v. Union Pacific Railroad clarified that there are "2 great classes of taxes":

1. One class is "duties, imposts, and excises" - and the rule is "uniformity."

2. The other class is "capitations, and other direct tax[es]" - and the rule is "apportionment."

The Brushaber court also clarified that the 16th amendment did NOT create any new "third" class of taxes. Later in the case the court also clarified about the income tax:

"...recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such..."; "...which otherwise as an excise would not apply to it."

The House Congressional Record of 1943 (78th Congress, 1st Session, Vol. 89, Part 2, p.2579, March 27, 1943), right column, states: "The income tax is an excise tax, and income is merely the basis for determining its amount." This document can be found in Federal Repository Libraries.

In any event, the book discusses the abundant use of statutory terms in the Revenue Laws and the IRC - these are custom legal terms with meanings created by Congress. Many seem to be created to confuse the casual reader. The book also discusses doctrines of statutory construction such as 'noscitur a sociis'; 'ejusdem generis'; and 'inclusio unius est exclusio alterius.' Nice Latin mumbo jumbo, but basically he discusses how terms are created for certain reasons, and they have a scope of activities to which they apply.

Much is also discussed about PRESUMPTIONS and papers. By using tricky legal terms, and "voluntary compliance", the average, well, 'nontaxpayer' is made to look like a 'taxpayer' - they look like they engaged in a taxable activity due to the info returns like W-2s and 1099 forms. So the American public is basically presumed guilty of taxable activity until proven innocent. It does make you think.

The book uses many LARGE and complicate words, no doubt. It takes time to dig through it. Another great book is "The Biggest Loophole of All" by Otto Skinner. At one time I agreed with the procedures for obtaining refund in the CTC book, but later on I realized that using those forms in that manner did not attack the base presumptions of taxpayer status and engagement in taxable activity. Likely the IRS and the IRC drafters have acted to confuse and mislead the general public.

So some base points the book talks about in regard to where we are are:

1. Third parties submit forms containing allegations of engagement in taxable activity, and in the course of the taxable activity, taxable receipts were paid.

2. Third parties and pamphlets help "reinforce" the false propaganda campaign, keeping Americans in the dark.

3. Aggressive collection actions are taken against individuals and companies - fear and intimidation help to support the presumptions/campaign.

4. Any money reported in conjunction with a Social Security number is automatically deemed to have been due to engagement in taxable activity, for taxable receipts.

5. TONS of money goes to the government via payroll taxes - taxes that most nontaxpayers shouldn't owe at all.

So overall, this book clarifies that ANYONE can be liable for the 'income' tax, but everyone is not automatically liable because they are alive and work for money. What one does, and who pays you - that is the way the book discusses to determine if 'money' is 'income.'

*** This is not tax preparation nor legal advice whatsoever. ***

P.S. A couple other reviewers mentioned the `includes' language from IRC 7701(c).

(c) Includes and including
The terms "includes" and "including" when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.

This is somewhat confusing, but remember it is in a `definitions' section. It says the `term' defined, not the `word' defined. It is confusing at first read.

I noticed that in many credit card, legal contracts, etc, they say, "___ includes, but is not limited to, x, y, z..." I wondered, why would "but is not limited to" be needed - unless there is some sort of 'limiting' going on??

In the book, Mr. Hendrickson does NOT say that `includes' ONLY covers the listed things. He clarifies, the same as the Treasury Dept has (T.D. 3980 (1927)), as well as the doctrines of noscitur a sociis and ejusdem generis, the Supreme Court, as well as Congress, that `includes/including' within a definition means `things not enumerated but in the same general class.' It presents the specific words to which the general words also apply, or as the Treasury Dept. clarified (TD 3980, p.65):

"But granting that the word `including' is a term of enlargement, it is clear that it only performs that office by introducing the specific elements constituting the enlargement. It thus, and thus only, enlarges the otherwise more limited, preceding general language. ... When read in its immediate context, as on all authority it must be read, the word `including' is obviously used in the sense of its synonyms `comprising; comprehending; embracing.'"

So then, it does not limit the `included things' to only what is listed, but it DOES limit `other things otherwise within the meaning of the term defined' to only those things IN THE SAME CLASS. Thus, if a few federal workers are listed, the `employee' definition also applies to other federal workers - but NOT private-sector workers.

The listed items are merely REPRESENTATIVE EXAMPLES of all the things that can be placed in the class.

So when "includes/including" is used for a term, it allows a limited expansion - TONS of other things could be comprised by the term - so long as they are "of like kind or class." This way Congress doesn't have to keep re-writing legal terms.

It may help to have a dictionary handy when reading this book. But it definitely makes you think.

Regardless of what "other" unscrupulous hucksters might tell you, income taxes are definitely legal and certainly constitutional. Some of these people sell their materials for $1000's of dollars, so their outlandish stories must match accordingly.

On the other hand, Hendrickson's book opens with his statement, "IF YOU HAVE TAXABLE INCOME, YOU ARE SUBJECT TO THE INCOME TAX." He isn't trying to "sucker" anyone into buying his book; with its tiny price, sales of Hendrickson's little book might provide him modest, supplemental earnings at best.

Despite what critics may believe or say, no one has had to defend themselves in court using knowledge gained from 'Cracking The Code.' Refunds totaling nearly $0.5 million posted on the (...) website attest to the success of tax payers studying the book.

Hendrickson truthfully illuminates the laws behind the tax code which determine taxable income. His book does not advise anyone to dodge income taxes; if you have taxable wages or income, then you are obligated to pay income taxes.

No pie in the sky promises, no get rich quick scams, no tax shelter schemes; in fact, Hendrickson closes his book with a warning saying that even when acting in accordance with requirements and limitations of the law, Americans will probably meet with strenuous and nearly lawless resistance from the government.

Most people (either out of fear, or connection to the IRS) are quick to criticize, or misunderstand the tax code and its laws, especially without ever actually having read them (or this book). My advice is to buy 'Cracking The Code' and decide for yourself; at the very least, you'll finally know the truth about taxation in America.

After reading some of the other "reviews", I'd suggest, If you haven't read - don't review! I've read the book forward and backward, annotated and highlighted and researched the findings on the web.

But, if this is your subject and you know more about your citizenship than you do about your sports team or that reality show, this is a must read for you!

Let me ask a question!... Is there any other law in the United States of America that implies "individual self-assessment" and "voluntary compliance"? Not a one! That should be a good indication of the mendacity at play here. A stop sign at a lonely crossroads in the dead of night. One "self-assesses" the situation and decides not to stop. Whether a cop is present or not, there is no "voluntary compliance" - the law says stop - always! Running the stop sign breaks the law - it's illegal. Every law in this country applies the same way, either positively or negatively. That's the way law works.

There is either a law that compels people to owe and pay an income tax or there is not. If there is a law it should be clear, concise and understandable. If it exists at all it would be "mandatory" and "compulsory". There would be absolutely NO abiguity. But....

And that is why you need to read this book. The author clearly and concisely reveals the truth about the Internal Revenue Code and sheds light on the terms, phrases, and definitions that do indicate who has and who does not have taxable income. The fact revealed is that most of us "volunteer" to comply with a law that doesn't even apply to us. And we do it time and again, year after year. The facts in this book, properly applied, can end that cycle.

Don't be fooled by negative reviews by people with "conventional wisdom" who have no intention of learning, or allowing you to learn. Buy this book. Read this book. Apply this book. And, share this book.

Cracking the Code is THE 1st book that has successfully decifered the "code". Pete has done an outstanding job of research and has stuck his neck out for everyone. I, along with many Americans, have known that the Constitution and the "Income" tax scheme, as typically applied, don't seem to line up. But, the complete truth has eluded most of us just enough to keep us too fearful of not sending in "our taxes". I've read numerous books regarding the original intent of the Constitution and the Supreme Court rulings regarding "income", but they never got down to how the IRS did what they did and remained Constitutional. THE KEY?? It's in the DEFINITIONS! It's hard to believe, but when you understand the truth behind the IRS's narrowly-defined terms, it all becomes clear! The fear of doing what you know is right, is gone. Learn the CODE and be set free of fear and illegal taxation. I read Cracking the Code, filed my last years taxes and was REFUNDED everything I mistakenly sent in as "estimate payments"! Learn the Law, Follow the Law, keep your money and help the economy, all at the same time! You won't be sorry!!

First, let me say what this book is NOT: it is not a rehash of old ideas, it does not contain "strategies" that have failed in court, it has no connection with "tax protesters", it does NOT start with the premise that you don't have to pay taxes (because in some cases you do, and you will learn what those are), it does not ignore court cases but rather cites many of them in detail, it does not target the gullible because it does not rely on the author's authority but rather encourages the reader to read the tax law and code and think for himself, and it does not promote anything that risks jail time.

It DOES present an astonishing and enlightening picture of just how the income tax system came to be what it is: a confusing mess. Though I have investigated the income tax and how to reduce my payments for years, I experienced a number of "Aha!" moments in this book. You too may say to yourself as I did, "Now I get it!", and you will know why the IRS relies so much on intimidation and fear.

But the book gives more than insight and understanding, it describes the exact forms that the author used to pay the proper amount of tax on his earnings that the law requires--in his case, zero. Has he gone to jail? No. Has the IRS even bothered him about the refund they made of all the money withheld from his paycheck? No. Could anyone who understands what is in this book do the same thing? Yes, and many have, and many have received refunds with the blessing of the IRS. Why? Because they corrected the record in the manner prescribed by law and then insisted that the IRS do what the law requires them to do.

There is a small number of IRS defenders out there ready to bash anyone who even suggests that the IRS is out of line in any way. Don't let them scare you away from reading this monumental work.

When I read Pete's book, I shook my head because I could not believe that the Internal Revenue Code could be that easy to really understand. When the light finally came on, I realized that, yes, it's really that simple. The Internal Revenue Code simply means what the words say!!! Duh!!!!

Very well organized. Pete stays on track, does not jump to conclusions, and presents the Code exactly as it's written. This is NOT a tax-protestor's handbook, but is a Tax Professional's worst nightmare.

I always KNEW something was not right about this Federal Income Tax, and this book just flat-out lays it on the line!! Finally, the truth rises to the surface, free of tax protestor arguments and IRS dogma. It's about time!!!