Can the term "includes" in a definition be synonymous with the term "means"?
A young man came to us via email to inquire about why and how we can possibly imply the definitions of the Internal Revenue Code to mean that 99% of Americans are not required to file and pay income tax. His questions and evidence opposing our arguments were insightful and very thoughtful, and while he really pressed us to show our in-depth knowledge of the law, we were able to convince him of the truth that 99% of Americans truly are not required by the law to file and pay income taxes!
Read this email thread and the great points that this gentleman brought up, and our chief legal researcher's responses.
Question 1: How can the word “includes” be defined as “means”, given IRC 7701(c) and the Supreme Court’s interpretation of that statute?
From: Eli
Sent: Sunday, August 7, 2022
Subject: Incorrect Definition of “Include”
Peymon,
Your contention that the term “United States” doesn’t include the 50 federated states because 26 U.S. Code § 7701 (a)(10) includes the District of Columbia, goes against the meaning of the word “include”. If I say my medical education includes the training I got during my service in the Army, that doesn’t mean that is the only medical education I received. So, I was quite surprised that you didn’t explain upfront why you interpreted the word “include” in Code § 7701 (a)(10) to be defined as “mean”, as in:
“The term ‘State’ shall be construed to mean the District of Columbia…”
It gets worse. Not only is the word “include” not commonly defined as “mean”, even 26 U.S. Code §7701(c) clarifies that it doesn’t:
(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."
So, does the term “United States” otherwise include the 50 federated states?
Let’s check The Law Dictionary:
Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.
What is UNITED STATES
"Made up of the 50 federated states, American Samoa, District of Columbia, Johnston Island, Guam, Wake and Midway Islands, Northern Marianas and US Virgin Islands."
So, Peymon, because the 50 federated states are otherwise within the meaning of the term “United States”, they are, according to 26 U.S. Code § 7701(c), not excluded from the definition of the United States given in 26 U.S. Code § 7701(a)(9) even when 26 U.S. Code § 7701 (a)(10) includes the District of Columbia. That means the term “United States” still includes the 50 federated states.
If you don’t agree with this, please explain why IRC 7701(c) “Includes and including”, doesn’t apply to the definitions of “United States” and “States”.
Furthermore, your contention that the word “includes” is defined as “means” would make the statute below read:
The term "United States" when used in a geographical sense includes only the District of Columbia and the District of Columbia.
Obviously, that sentence is grammatically incorrect, and therefore would be null and void.
IRC 7701(a)(9) United States
"The term 'United States' when used in a geographical sense includes only the States and the District of Columbia."
IRC 7701(a)(10) State
"The term 'State' shall be construed to include the District of Columbia, where such construction is necessary to carry out the provisions of this title."
IRC 7701(b)(1)(B) Nonresident alien
"An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States (within the meaning of subparagraph (A))."
I look forward to your reply, since your whole theory rests on a definition of the word “includes” that contradicts the statutory definition in IRC 7701(c).
You don’t need to take my word for how to interpret IRC 7701(c) “Includes and including.”
Here is what the Supreme Court has said:
“[T]he verb ‘includes’ imports a general class, some of whose particular instances are those specified in the definition. This view finds support in ... the Act, which reads: ‘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’.” Helvering v Morgan’s Inc., 293 U.S. 121, 125 fn. 1 (1934).
The United States Supreme Court reiterated this rule of construction in Federal Land Bank v Bismarck Company, 314 U.S. 95, 100, 62 S. Ct. 1 (1941) “We...point out that the term “including” is not one of all-embracing definitions, but connotes simply an illustrative application of the general principle.”
In Massachusetts v E.P.A. 549 U.S. 497, (2007) the Supreme Court again repeats the “general principle” of the use of “including”:
“The word ‘including’ can indeed indicate that what follows will be an ‘illustrative’ sampling of the general category that precedes the word,” citing Federal Land Bank of St. Paul v Bismarck Lumber Company, 314 U.S. 95, 100 (1941);
Furthermore, to my point that a redundant interpretation of
26 USC 7701(a)(9) United States that reads:
“The term "United States" when used in a geographical sense includes only the District of Columbia and the District of Columbia.”
would be null and void:
“This Court’s duty to give effect, where possible, to every word of a statute...makes the Court reluctant to treat statutory terms as surplus.” Duncan v Walker 533 U.S. 167, 121 S. Ct. 2120 (2001).
United States Supreme Court: “...[To] give effect, where possible, to every word of a statute.” Duncan v Walker, 533 U.S. 167, 121 S. Ct. 2120 (2001).
And:
“It is our duty to give effect, if possible, to every clause and word of a statute.” Montclair v Ramsdell, 107 U.S. 147, 152, 2 S.Ct. 391 (1882).
Again, I look forward to your explanation of how the word “including” in these statutes can be defined as “meaning”, given the definition in IRC 7701(c) “Includes and including”, and the Supreme Court’s interpretation of that statute.
Answer 1: U.S. Supreme Court Decision Actually Says the Opposite
Benny:
Thank you for engaging with us in this important discussion and for sharing with us your struggle to understand the intentions of Congress in writing these definitions the way they did. You are right that Congress has staked all the income tax laws on the interpretation of the word "includes"!
I also appreciate the research you have done to find U.S. Supreme Court decisions that seem on their surface to support the opinions of several lower courts that the term "includes" is always and necessarily a term of expansion and not limitation. Although I have not had a chance to review the other Supreme Court decisions you mentioned, which I plan to do soon, I recently reviewed the first one you mentioned, Helvering v. Morgan's Inc., and found that the quote you referred to was removed from the context of the footnote in which it is found. The body of the opinion states, "It may be admitted that the term 'includes' may sometimes be taken as synonymous with 'means' ... But the phraseology is also open to the construction that the word 'included' is used as the equivalent of 'comprehends' or 'embraces' ..."
Eli: Good point.
Benny: The footnote begins by stating, "The terms "means" and "includes" are not necessarily synonymous." This confirms the above quote from the body of the opinion that sometimes "includes" is synonymous with "means"!
Eli: Agreed.
Benny: Further into the footnote is written that, "The natural distinction would be that where "means" is employed, the term and its definition are to be interchangeable equivalents, and that the verb "includes" imports a general class, some of whose particular instances are those specified in the definition." Note that in all the key income tax definitions on which the income taxes rely, the term "means" is not employed!
Eli: Okay!
Benny: The footnote concludes by pointing out that the term under scrutiny in this case, "taxable year", employs the term "meaning", then the term "including" is used. Such is the case also with the definitions of "United States" in the Immigration and Naturalization laws at 8 USC 1101(a)(38) and the petroleum tax laws in IRC 4612(a)(4). Due to this being the case, the Supreme Court states, "it hardly can be said that the words plainly and without ambiguity import" that what Congress 'included' in the term "taxable year" must exclude what the statute had earlier defined the term to 'mean'.
Eli: I think that’s saying that when a statute defines what a term means, then the word “includes” can be fairly considered to not be exclusionary to anything that fits into the definition. Is that right?
Benny: You got it!
Here are the two laws I referenced above:
8 USC 1101(a)(38): "The term 'United States', except as otherwise specifically herein provided, when used in a geographical sense, means the continental United States [48 states plus DC], Alaska, Hawaii, Puerto Rico, Guam, the Virgin Islands of the United States, and the Commonwealth of the Northern Mariana Islands."
I was mistaken; there is no "includes" to that definition. However, note that while the definition of the term "United States" for purposes of income tax at IRC 7701(a)(9) also states "when used in a geographical sense", it states what the term "includes" instead of what it "means". This is an instance in which the term "includes" is synonymous with the term "means". This is where the deception occurs due to the word "includes" sometimes being a term of clarification rather than of definition.
IRC 4612(a)(4):
(A) In general
The term "United States" means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands.
(B) United States includes continental shelf areas
The principles of section 638 shall apply for purposes of the term "United States".
(C) United States includes foreign trade zones
The term "United States" includes any foreign trade zone of the United States.
Therefore, this U.S. Supreme Court case, which is often used as evidence that the term "includes" is always a term of expansion, only shows that in statutes where the definition says what it means, and then gives an example of what that includes, the term includes should be taken as a term of expansion. Otherwise, the other, well-established, ancient legal maxim of "Inclusio unius est exclusio alterius" -- to include one thing is to exclude alternatives -- applies, and the term "includes" is then synonymous with the term "means".
Eli: You’re saying that if the statute doesn’t define what a term means, then the statute telling you what the term “includes” becomes synonymous with a definition of what it means. Is that right?
Benny: You got it!
Regarding the other Supreme Court decisions you mentioned, I have no reason to think those decisions contradict or overturn Helvering v. Morgan's Inc. or Stenberg v. Carhart (2000) or Gould v. Gould, the latter of which we cite so frequently. I am sure you recall the Court there says "In case of doubt, [statutes levying taxes] are construed most strongly against the government and in favor of the citizen."
Eli: You’re saying that the fact that the tax code “defines” terms by telling us what they “include” instead of what they mean, that ambiguity requires that those “definitions” be interpreted in favor of the citizen, that is, in favor of the citizen having less obligation to the government. Is that right?
Benny: Yes!
As to why Congress would introduce doubt by writing the redundancy of what amounts to "DC+DC" into the critically important definition of "United States", our question to you would be, why did they not define what the term "United States" means by employing the term "means"? And why did they leave out "the several States", or "the states of the Union", or "the continental United States, Hawaii and Alaska"? And why did they do the same with the other key terms on which income taxes rely, stating only what the terms "trade or business" (IRC 7701(a)(26)), "employee" (IRC 3401(c)) and "employment" (IRC 3121(b)) "include", and not what those terms "mean"? Why did Congress, or more probably Congressional lawyers, define what the term "United States" "means" in all other laws except tax laws, when the Supreme Court stated it was especially important to clearly define tax laws?
Sidebar: Difference Between Lost Horizons dot com Website and Freedom Law School
Eli: The book “Cracking the Code” by Pete Hendrickson convinced me of the following:
It is unconstitutional for the Federal Government to tax the money we get in exchange for our labor, because that is a “direct tax” which is prohibited by the Constitution.
The definition of “income” when the Constitution was written was: A gain on investments.
The 16th Amendment did not expand the definition of “income” to include money paid in exchange for labor.
If you’re not aware of evidence for those points, I highly recommend his book.
Benny: Cracking the Code is how I first came to an understanding of these income tax laws and several of the US Supreme Court decisions. Pete is a really good researcher. His writing style is very complex, but he is thorough and generally correct.
Eli: Unfortunately, they sent Pete to jail. I’m not sure if he lost because he missed the fact that the Federal government’s definition of “citizens” is that they are “employees” of the Federal government, or if there was some other thing they got him on, or if they just put him in jail in spite of the fact that he was innocent. I couldn’t tell by reading about the case.
I was eventually fined $5,000 by the IRS for following his method. When I looked into what happened to others who appealed that, it looked to me like the judges ignored the Supreme Court decisions that Pete has in his book and just responded by increasing the fine to $25,000. So I just paid the $5,000.
Benny: I used Pete's method to amend my 2015 return and do my original 2016 return. I was expecting to get $20k back but instead the IRS hit me with $15k in Frivolous Filing Penalties! This was $5k for each return, plus another $5k for a letter I wrote them. I decided not to file after that.
In 2019, the IRS filed a lien for the $15k. I had a deadline in July to ask for a CDP hearing and hired Peymon in a panic for my first 1-hour consultation. He helped me understand that I didn't need to be concerned about the consequences of the lien or with paying the fine.
This is our only major difference with Pete. He encourages people to file, we show them how dangerous it is to do so.
Realization: The income tax is constitutional because it doesn't apply outside of the District of Columbia
Eli: Anyway, it seems to me that your previous two paragraphs might be saying that the tax code is cleverly written in order for it to say things in a way that is technically Constitutional (meaning that I am not obligated to pay taxes on money I get for my labor, as you say), but written in a way that sounds like I am obligated to pay such taxes. Is that what you’re saying?
Benny: You got it!
Eli: If all of my interpretations in the above text are correct (please let me know), then your arguments are very convincing, but it seems to me they could still all be trumped by:
IRC 7701(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.”
Benny: The meaning of this law is easily misunderstood. The mistake easily made is thinking of "the meaning of the term defined" as the dictionary meaning, rather than the meaning as it is defined earlier in that very same definition (if so). If the definition does not give any other meaning, nothing else can be included.
The US Supreme Court states in Fox v. Standard Oil Co. of New Jersey, 294 US 87, 96 (1935): “…definition by the average man, or even by the ordinary dictionary …is not a substitute for the definition set before us by the lawmakers…. There would be little use in such a glossary if we were free in despite of it [if we do not like the way the term is defined] to choose a meaning for ourselves.”
Eli: As I pointed out in my first email, according to Black’s Law Dictionary, the “50 federated states” are otherwise within the meaning of the term “United States”, and so, not excluded from the IRS “definition” of that term.
Benny: The US Supreme Court, in Hooven & Allison Co. v. Evatt, 324 U.S. 652, 671 (1945), listed three possible “senses” of the term “United States” when used in law:
1. As one “sovereign” among many sovereigns in the “family of nations” (United States federal government compared with the governments of other countries like England, Egypt, and Japan);
2. The “territory over which the sovereignty of the United States [federal government] extends” (such as the District of Columbia and military bases);
3. The “collective name of the states which are united by and under the Constitution.” (the sovereign 50 states, such as Georgia, Texas, and Idaho.)
If you haven't already, also watch our presentation “Does the ‘Includes and Including’ clause in IRC 7701(c) mean you are INCLUDED as a taxpayer?”
Conclusion: Certain Key Definitions in Federal Income Tax Laws Use "Includes" as a Way to Deceive
Eli:
So, here is how this seems to me now:
26 USC 7701(a)(10)
The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
The term "State" shall be construed to include (mean) the District of Columbia, where such construction is necessary to carry out provisions of this title (in a Constitutional manner, which is always).
IRC 7701(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.”
The term “State” is defined in 26 USC 7701(a)(10) as the “District of Columbia”. So “including” the District of Columbia shall not be deemed to exclude things otherwise within the meaning of the term “State”. The only thing “within the meaning” of the term “State” in 26 USC 7701 (a) (10) is the District of Columbia. Therefore, according to IRC 7701 (c), including the District of Columbia in the definition of the term "State” shall not exclude the District of Columbia.
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.”
26 USC 7701(a)(9)
The term "United States" when used in a geographical sense includes only the States and the District of Columbia.
The term "United States" when used in a geographical sense includes only the States (which means the District of Columbia) and the District of Columbia.
Also, because 26 USC 7701 (a) (9) says “when used in a geographical sense”, then the definition of "United States" provided in The US Supreme Court, in Hooven & Allison Co. v. Evatt, 324 U.S. 652, 671 (1945), that applies, is:
Sense 2. The “territory over which the sovereignty of the United States [federal government] extends” (which you are interpreting to mean the District of Columbia and military bases, because the next definition is “the collective name of the states which are united by and under the Constitution.”, which is a different definition.)
That seems to all make sense of the deception. Pretty amazing. Almost hard to believe, even knowing what I know.
Benny:
You got it!
I share your amazement. Often over the last decade as I have studied the laws, just when I think there is no hope and they have us trapped, I find a way out!
See also our blog article, "Does 'Trade or Business' Include Trades or Businesses?"
