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"Reporting?" Hardly.

(originally launched into cyberspace on 01/13/2003)
---

Dear List Subscriber,

From time to time I like to prod the other side's propagandists, to find out
their current psychology, level of panic, etc. No publication better
represents the mainstream media than the New York Times. (Many other
mainstream papers simply cut and paste NYT stories, without bothering to
confirm any of the facts.) And no "reporter" (and I use the term loosely)
has written more about 861 in the New York Times than David Cay Johnston.
From past experience, I already knew Mr. Johnston to have a selective
memory, reporting things he had every reason to know were utterly false. So
I don't expect him to become honest or informed, or to change his tune, but
I did want to get an example to show to YOU folks, which illustrates what
we're up against in the mainstream media.

The following is a letter I just wrote to him, in response to some comments
he made via e-mail to a few people:

-------------------------------------------------------

Dear Mr. Johnson,

Here is some evidence that is inconvenient to your agenda. I expect you to
pretend you never saw it (as you have done with other "inconvenient"
citations I have provided to you).

> DCJ wrote:
> Mr. Bell told the court that his argument
> rests on the regulations which implement
> Section 861... Regulations are written by
> government agencies to implement the laws
> that Congress passes. A regulation cannot
> itself make new law. A regulation cannot
> undo what Congress has done. All a
> regulation can do is IMPLEMENT what the
> statute says... Now to believe what Mr.
> Bell says one would have to believe that
> the IRS's own lawyers drafted regulations
> that exempted most of the wages paid in
> the United States from tax.

After all this time, after all your reporting on this issue, have you really
done that little research into the substance of the issue? I guess your
hunger for truth stops where the truth might jeopardize your comfortable
beliefs.

Your argument is rather odd, in that it seeks to IGNORE the regulations
under Section 861, under the claim that they cannot change the underlying
law. Who is suggesting that the regulations are inappropriate? You seek to
dismiss out of hand decades of regulations because you just want to look at
the STATUTES. In case you were not aware of this, those regulations, having
remained substantially unchanged for decades, are considered to HAVE THE
FORCE OF LAW.

"Treasury regulations and interpretations long continued without substantial
change, applying to unamended or substantially reenacted statutes, are
deemed to have received congressional approval and have the effect of law."
[United States v. Correll, 389 U.S. 299 (1967)]

Oops. But you'd rather not address the regulations, so you dismiss them all
as if they don't matter. (And apparently you don't bother to ponder WHY the
regulation-writers would write such things.) They are the OFFICIAL Executive
Branch interpretation of the law. The IRS is bound by them. If they DID
improperly limit the application of some statute (which is not at all the
case with 861), they are still binding on the IRS until THROWN OUT by a
court of law (not until thrown out by a reporter). Have they been? No. So
they are still binding on the IRS, and still act as our official
notification of what the law requires (under the Federal Register Act). Yet
you want to brush them all aside, and replace them with YOUR incorrect
reading of the statutes. Exactly where did Congress delegate to YOU the
authority to interpret the statutes? You apparently think that YOUR reading
outranks the reading of the IRS regulation-writers. (That makes you a tax
protestor in my book.)

> So, since Section 861 itself makes all
> wages earned in the US subject to tax
> whether paid by a domestic company or
> a foreign company the regulations
> cannot undo that.

Have you noticed that IRS Chief Counsel does NOT argue what you just
claimed? If your interpretation of the law is correct, why does the IRS not
respond with an enthusiastic "YES!" every time someone asks if they should
use 26 USC § 861(b) and 26 CFR § 1.861-8 to determine their taxable domestic
income? Why do they instead try so hard to DISTRACT from those sections, if
those sections say that the income of most Americans is taxable? Don't you
find that odd? Or do your reporter instincts not get curious about things
which might endanger your beliefs and your agenda?

Below is the EVIDENCE showing that your conclusion is dead wrong. I expect
you to ignore it.

If you bothered to actually pay attention to the substance of the issue, you
would know that the current Section 861 and following came from Section 217
of the Revenue Act of 1921. (Treasury Decision 8687 shows that the Treasury
Department still refers to the 1921 statutes to decide what CURRENT
regulations should say.) Have you seen that section? Obviously not, and you
have obviously not watched "Theft By Deception," or you would not want to
hang your hat on 26 USC § 861(a)(3). (Again, I would point out that what you
are saying is NOT what the IRS lawyers argue.)

The predecessor STATUTE to Section 861--since you like statutes so
much--said that in the case of nonresident aliens, foreigner corporations,
and U.S. ctizens and corporations who receive most of their income from
federal POSSESSIONS, certain types of income (such as compensation for
services performed in the U.S. and interest from U.S. investments) was to be
treated as income from sources within the United States, and was to be
included in full as taxable income (the term then was "net income") from
sources within the United States. Any third-grader could see that the
section was NOT saying that MY "compensation for services performed in the
United States" was taxable.

So when did the drastic change occur to this section of law, Mr. Johnston?
When did it expand to suddenly cover the domestic income of most Americans?
Was it in 1939, when the STATUTE dropped the phrase saying who it was about,
but the wording of the regulations--regulations which received the APPROVAL
of Congress--remained the same? Was it in 1954, when Congress said the
application had NOT changed? When was it? I think even you would admit that
the 1921 statute (Section 217) did NOT say my income was taxable, whatever
you want to believe some other section might have said. So if you believe
that 861(a)(3) says that MY income is taxable, I want to know WHEN that
rather significant change occurred.

You have plenty of connections inside the IRS. Why not get THEM to answer
this, for the public good? Why not ask THEM to put in writing the answers to
the first two questions of Operation Honest Inquiry? You obviously think the
answers should be "yes" (use 861) and "yes" (it shows our income to be
taxable). Ask the IRS lawyers why they won't say that in writing. I don't
suppose your reporter instincts find it odd that in my own case, after the
IRS examiners ADMITTED they couldn't answer my questions, they then said
that IRS District Counsel had instructed the examiners NOT to send the issue
to the lawyers. Why weren't the lawyer eager to make the argument you just
made? Why are they so eager, despite what the regulations say in plain
English (see 26 CFR § 1.861-1(a), 1.861-1(b), 1.861-8(a), 1.863-1(c)), to
distract people away from Section 861, if (as you claim) it shows most
domestic income to be taxable anyway?

While government officials continue to froth about the issue being
"frivolous," people by the hundreds are examining the EVIDENCE for
themselves, and finding the exact opposite. Your argument shows that after
all this time, you still have not bothered to examine the substance of the
issue. You can parrot the government disinformation line all you want (or
make up your own line, which CONTRADICTS the government's position, as you
are doing now). The fraud is still doomed.

Sincerely,

Larken Rose
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.theft-by-deception.com

(P.S. Please pass on this message from me to your IRS and DOJ buddies: I
DARE you lying thieves to prosecute me.)

---------------------------------------------------------------------

And here is the response I got back from Mr. Johnston.

--------------------------------------------------------------------

Mr. Rose,

How interesting that when you are faced with a set of facts that you dislike
you turn to an ad hominem attack. It looks like Larken Rose is not one to
let facts get in the way of his theories.

As I have told you before, if any judge ever rules that you are right I am
sure it will be Page One news. Meanwhile, your note shows that you continue
to focus on irrelevant minutia and to ignore fundamentals of law. So let's
go through the facts that matter that you digress from:

1. Mr. Bell conceded that his position rests on the regulations, not the
statute itself.

2. A regulation cannot undo a statute.

3. For the regulation to do what Mr. Bell and you claim it would have to
undo the statute by creating a tax exemption for wages that Mr. Bell
conceded to the court does not exist in the statute.

4. The judge found that no such exemption exists and he called Mr. Bell's
arguments "nonsensical."

5. Even if the regulations DID create the exemption that you and Mr. Bell
claim then any judge who agreed with your interpretation would no doubt rule
that the regulation is invalid. Why? See # 2 above, a regulation cannot undo
a statute.

6. Based on fundamental principles of law every appeals court judge
reviewing such a decision would uphold it because a regulation cannot trump
a statute.

7. However, if there is no exemption created by the regulation, which is
what Judge Conner ruled just as a growing number of judges have in unrelated
cases, then of course the regulation would stand.

That's why I call all of the minutia you sent irrelevant. You digress into
all sorts of irrelevant minutia, but fail to keep your eye on the ball.

Did you sleep through both Logic 101 and basic algebra, Mr. Rose? Or do you
just willfully blind yourself to facts that are inconvenient to your cause?

The ball is this:

Mr. Bell has undone the 861 position with his own words. And all the minutia
you throw up on the Internet cannot undo this simple fact: Mr. Bell and your
versions of the 861 position are based on the regulations saying something
contrary to what the statute says and a regulation cannot undo a statute.

But as I said, if any judge ever finds that there is even a scintilla of
merit to the 861 position I am sure it will be news and if he finds that you
are right I am positive it would be front page news in every newspaper in
the country. And if that ever happens I will report it without fear or
favor, just as I have all along.

Meanwhile, ad hominem attacks reflect poorly on your character.

The fact is that yet another judge has found that the 861 position is
nonsense and to anyone who actually understands how law works that is no
surprise.

David Cay Johnston
Reporter
The New York Times
(from home)

P.S. Another simple fact you keep getting wrong. Your email misspelled my
name.

But more to the point -- there are a growing number of judges up to the
Circuit Court of Appeals who have rejected this argument. There is not a
single judge anywhere who has found a scintilla of merit to your claims.
-----------------------------------------

And here is my second (and final) response:

-----------------------------------------

DCJ wrote:
> Mr. Rose,
> How interesting that when you are faced
> with a set of facts that you dislike you
> turn to an ad hominem attack.

And what "facts" would those be, if you don't mind pointing them out to a
"tax cheat" (who you would of course never personally attack)?

> As I have told you before, if any judge
> ever rules that you are right I am sure
> it will be Page One news. Meanwhile,
> your note shows that you continue to
> focus on irrelevant minutia and to ignore
> fundamentals of law.

The LAW ITSELF is now "minutia," and your provably false claims about how
the regulations don't matter is "fundamentals of law." Interesting.

> So let's go through the facts that matter
> that you digress from:

Let's.

> 1. Mr. Bell conceded that his position
> rests on the regulations, not the statute
> itself.

And did he say the statutes were WRONG? If so, he was incorrect. The
regulations clarify the proper meaning, scope, and application of the
statutes. That's what they're for.

> 2. A regulation cannot undo a statute.

Correct. Who is suggesting that it can, or that it did?

> 3. For the regulation to do what Mr. Bell
> and you claim it would have to undo the
> statute by creating a tax exemption for
> wages that Mr. Bell conceded to the court
> does not exist in the statute.

Thank you for telling me what I claim. However, you're dead wrong (again).
The statutes and regulations match precisely. You didn't bother to learn how
Subchapter N works, so you read 861 out of context. Tell me, using the EXACT
SAME LOGIC, do you not conclude that 862(a)(3) shows the income of most
people in China to be subject to the U.S. income tax? It doesn't SAY that
income is exempt, does it? Be careful; you wouldn't want to argue that the
general rules in 861 and 862 might not be the end of the line in determining
what is taxable.

> 4. The judge found that no such exemption
> exists and he called Mr. Bell's arguments
> "nonsensical."

Yes, he said that. It's wrong, but he said it. The regulations do NOT creat
the exemption.

> 5. Even if the regulations DID create the
> exemption that you and Mr. Bell claim...

The regulation does not create the exemption. If Mr. Bell said it does, he
is incorrect. The regulation SHOWS what is taxable, and correctly reflects
both statutory and fundamental law.

> ...then any judge who agreed with your
> interpretation would no doubt rule that
> the regulation is invalid.

You're the only one I know of even hinting that the regulations MIGHT be
inappropriate.

> 6. Based on fundamental principles of
> law every appeals court judge reviewing
> such a decision would uphold it because
> a regulation cannot trump a statute.

No kidding. If Mr. Bell thinks that a regulation "overrides" a statute, he
is incorrect. I certainly have never claimed such a thing (despite various
attempts by the IRS to mischaracterize the issue). The statutes and
regulations are in perfect harmony. (If they weren't I expect Congress would
not have approved them for more than 80 YEARS in a row.)

> That's why I call all of the minutia you
> sent irrelevant. You digress into all
> sorts of irrelevant minutia, but fail to
> keep your eye on the ball.

Thank you for doing exactly what I said you would do: ignore evidence that
doesn't fit with your agenda. You dismiss 80 YEARS of statutory and
regulatory history--i.e. the LAW ITSELF--as "irrelevant minutia." You don't
even bother to make a PEEP about them, because they blow to hell your
ignorant claim that 861(a)(3) means that MY income is taxable. (Again, the
IRS lawyers are smart enough NOT to make such a claim, but you don't find
that odd.)

> Did you sleep through both Logic 101 and
> basic algebra, Mr. Rose? Or do you just
> willfully blind yourself to facts that are
> inconvenient to your cause?

I just quoted a nice collections of legally relevant statutes and
regulations, showing the proper scope of Section 861. In your response, you
cited ABSOLUTELY NOTHING with any legal weight. Then you accuse me of being
blind to the facts. I notice that you didn't answer my question, so let me
try again, and make it even simpler:

1) Did Section 217 of the Revenue Act of 1921 show the domestic income of
the average American to be taxable?

2) Has the scope of that section significantly changed between 1921 and the
current Section 861 and following?

3) If you answered "yes" to #2, please point out where and when it changed.

> Mr. Bell has undone the 861 position
> with his own words.

While I suspect you misquoted him (since I've seen you misquote both of us
repeatedly), what Mr. Bell said does not change the LAW. (I think even you
would agree with that.)

> And all the minutia you throw up on the
> Internet cannot undo this simple fact:
> Mr. Bell and your versions of the 861
> position are based on the regulations
> saying something contrary to what the
> statute says...

Thank you for that incorrect "fact," but the regulations do NOT contradict
the statutes. I just gave you CITATIONS (which you ignored) which help show
why the current regulations are absolutely correct about which domestic
income is taxable, and which foreign income is taxable.

> But as I said, if any judge ever finds
> that there is even a scintilla of merit
> to the 861 position I am sure it will
> be news and if he finds that you are
> right I am positive it would be front
> page news in every newspaper in the
> country. And if that ever happens I will
> report it without fear or favor, just as
> I have all along.

Remember you said that. I will. (You seem to suffer from a logical disorder
that most lawyers suffer from: the idea that what the law itself SAYS means
nothing until it is blessed by someone with a robe and a gavel.)

> Meanwhile, ad hominem attacks reflect
> poorly on your character.

You are not a "reporter," as your above comments prove. You dismiss THE LAW
ITSELF as "irrelevant minutia," and cite COMMENTARY about the law as "fact."
If my pointing that out is an "ad hominem" attack, then so be it.

> The fact is that yet another judge has
> found that the 861 position is nonsense
> and to anyone who actually understands
> how law works that is no surprise.

Thank you. I feel enlightened now. If not for you, I never would have known
that 80 YEARS OF STATUTORY AND REGULATORY HISTORY is "irrelevant minutia";
what the LAW ITSELF says does not matter; what some judge asserts does. I
must not have been paying attention when they taught me that in school.
Shame on me.

Larken Rose
--------------------------------------

His response was one sentence, basically saying he would care when a judge
rules in our favor. Still no answers.

Above is a great example of why you must examine the evidence for yourself.
The mainstream press is obviously beyond lazy; they are downright dishonest.
To put it nicely, they will report what fits their "perception" of things.
What that really means is: they will report only what doesn't endanger their
career and reputation. Mr. Johnston gave a fine example, by referring to an
explanation based on the INCOME TAX STATUTES AND REGULATIONS THEMSELVES as
"irrelevant minutia." Notice he never answered the question; it was too
inconvenient. He didn't seem to mind that the IRS is NOT arguing what he is
arguing. So long as the conclusion is "conventional wisdom is right," he
doesn't much care how he gets there.

There's no need to have tantrums at Mr. Johnston, and since he dismisses
CITATIONS OF LAW (not to mention Supreme Court rulings saying that
regulations CAN have the weight of law) as "irrelevant minutia," what would
you want to point out to him anyway? He is not worth debating, and his
agenda will not change, at least not until a significant percentage of the
populace knows the truth.

But he does give a good indication of where the other side's propaganda
machine is at. Once they step into specifics, they are sunk. Several
thousand people who watched Step Six of "Theft By Deception" carefully will
know that Mr. Johnston hasn't done his homework, that he fell for the
cover-up (hook, line and sinker), and will understand why the IRS lawyers do
not dare share his lame reliance on 861(a)(3). The more we get into the
specifics, the more the fraud is doomed. So the most well-known "reporter"
on the subject, writing for the biggest newspaper in the world, dismissed
the SPECIFICS IN THE LAW as "irrelevant minutia." They have no other
choice. The devil is in the details.

Sincerely,

Larken Rose
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.theft-by-deception.com