The Chairman's Report April 24 2020

The Chairman's Report April 24  2020
Photo Credit: Steve Hayes by is licensed under
Generalities &
The Internal Revenue Code

One of the things nearly everyone agrees on is some laws are needed to allow all of us to live together.

For example, few people would disagree speed limits in neighborhoods with children save lives.  However, imagine instead of seeing a sign “Speed Limit 30 MPH”, the sign simply said “No Speeding?”

Now when you drive through the neighborhood, how fast do you go?  If you are driving 30 MPH and you are stopped by a policeman who gives you a $150 ticket for speeding, what do you do?  You could go to court and tell the judge you were only doing 30 MPH which isn’t speeding.  But the policeman tells the judge you were speeding.  Without a clear definition of what constitutes speeding, the judge could decide either way.

The point is “No Speeding” is such a general statement it could be interpreted in many different ways and all would have some basis in logic.  The policeman could have a reasonable basis for believing 30 MPH was speeding.  You could have a reasonable basis for believing you weren’t speeding, and the judge could have a reasonable basis for their decision one way or the other.

When you factor into this the cost of having to go to court to assert your innocence and the fact the judge might be more inclined to believe the policeman instead of you, most people would just pay the ticket.  In that case, you would likely be very upset about what you considered to be an injustice, but the blame wouldn’t lie with either the policeman or the judge.  The ones responsible for the entire situation were the legislators who passed such a ridiculous law.

Before long, there would be so many protests the law would have to be changed so everyone would have a clear understanding of what constitutes speeding.
Internal Revenue Code

While people wouldn’t tolerate a speeding law as general as the one outlined above, they tolerate the same type of generalities in the Income-Tax-Code. An 4/1/2019 article in the Tax Advisor entitled “Exploring The Undefined”: Trade or business pointed out the following facts:
  • The term “trade or business” is one of the most widely used terms in the tax Code
  • “Generally” defined in Section 162(a)
  • Has never been “thoroughly defined”
  • Lack of a precise definition has led to numerous court cases and IRS rulings
The following is from the IRS site:  Trade or Business?

A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit.  The facts and circumstances of each case determine whether or not an activity is a trade or business.  The regularity of activities and transactions and the production of income are important elements.  You do not need to actually make a profit to be in a trade or business as long as you have a profit motive.  You do need, however, to make ongoing efforts to further the interests of your business.

Part-Time Business

You do not have to carry on regular full-time business activities to be self-employed.  Having a part-time business in addition to your regular job or business also may be self-employment.

Example: You are employed full time as an engineer at the local plant.  You fix televisions and radios during the weekends.  You have your own shop, equipment, and tools.  You get your customers from advertising and word-of-mouth.  You are self-employed as the owner of a part-time repair shop.

The above contains many generalities which can be understood differently by different people.  What does “good faith” mean? What does “profit motive” mean? What does “ongoing efforts” mean?

Let’s say you are working to create a software product to compete with Facebook. While this seems like a very difficult goal, you can believe you are operating your business in “good faith” even if others might think it was impossible.  An IRS agent may look at your activities and decide you aren’t operating in “good faith” and you are actually using your alleged “business” to purchase things like computers, internet access, cell phones, printers and other items for personal use and deducting these items from your income as business expenses.  The IRS disallows all of these business deductions and makes you repay the income taxes you saved.

“Revenue Ruling 99-7” takes 8 pages to discuss when driving to and from a taxpayer’s residence might be deductible as a business expense, but it DOES NOT provide a clear definition.  Instead, it merely gives some examples.

The federal Internal Revenue Code is full of these types of general “rules” subject to interpretation.  This is one of the reasons tax professionals love it.  They use imprecision for the benefit of their clients.  It’s also the reason the rest of us trying our best to comply with the tax code despise it.

The courts have ruled, before people can be convicted of a crime, they must have the ‘mens rea’, a Latin phrase which generally means “a person has to know their actions were against the law, and they intentionally did it anyway”.

Even though the IRS can do things like seize homes and other assets if they find your interpretation of a “business deduction” is different from theirs, you are guilty until you prove yourself innocent.

This creates a huge problem for most of us.  We don’t have the resources to challenge arbitrary IRS rulings in court.  It’s almost always less expensive for a business to just pay.
No wonder the Internal (Infernal) Revenue Code is universally hated.
It has over 4,000,000 words to actually define almost nothing and are incomprehensible to almost everyone, including the IRS agents delegated to enforce it.

Money magazine used to have an issue where they gave accounting firms who specialized in federal income tax preparation hypothetical income and expense data on a married taxpayer and asked them to prepare a return.  No two firms ever agreed on the amount of federal income tax their hypothetical taxpayer owed.  Sometimes, the difference between the highest and lowest amounts calculated from the same hypothetical data was over $40,000.

Contrast this with The FAIRtax.  Yes, there may be some disagreements over whether a particular purchase qualifies as a legitimate non-taxable business purchase.  However, there will be no argument over how much money you made because The FAIRtax is only paid when people purchase “new” retail goods and services.

Does anyone think there will be many disputes with the definition of “new” or “retail” or “goods” or “services”?  

Former President Clinton could have been speaking for all of us who are forced to live under the “general definitions” abounding in the Internal (Infernal) Revenue Code when he responded to a grand jury question,
“It depends on what the meaning of the word ‘is’ is.  If the—if he—if ‘is’ means is and never has been, that is not—that is one thing.  If it means there is none, that was a completely true statement.  … Now, if someone had asked me on that day, are you having any kind of sexual relations with Ms. Lewinsky, that is, asked me a question in the present tense, I would have said no.  And it would have been completely true”.

While bureaucrats and some highly paid tax professionals seem to delight in the kind of complicated and convoluted reasoning used by President Clinton, most of us don’t have the time or the interest.

If the people who write this tripe want to interact with others who enjoy these word games, they can have regular meetings with them, but don’t impose your idea of fun on the rest of us.

Raise money for the federal government in a simple and fair way using The FAIRtax!

If you are ready to take back our control of government from a small group of corrupt people and regain the ability for all to prosper, then go to our Homepage by clicking here and sign up to Get-Updates
Demand Congress to pass The FAIRtax—the only “Fair tax”!

The author George Bernard Shaw said these words in a play he wrote, You see things; and you say “Why?”  But I dream things that never were; and I say “Why not?”

Isn’t it time for us to ask, “Why not?” 

President Trump, “Embrace The FAIRtax, the only real tax reform!  Stand up to the Swamp.  They will oppose you anyway because they see you as a threat.  What have you got to lose?”

The truth is the truth!  Remember, if we don't continue to tell the truth and demand a change, then George Orwell's "1984" quote may foretell our children's future: “If you want a picture of the future, imagine a boot stamping on a human face, forever"
Thank you for staying FAIRtax strong!
Yours In Liberty!   Yours In Freedom!

Steve Hayes
Chairman, Americans For Fair Taxation

Websites & Online-Social Media - can be accessed by clicking here
The FAIRtax Educational Store
Is Open For Business

Your FAIRtax℠ Educational Promotional Store continues to serve all Supporters during the COVID-19 lockdowns.

We are currently running a contest for a FREE polo shirt, so it’s a great time to shop on line.

While we have many different types of FAIRtax promo items, everyone likes the new FAIRtax yard signs in-conjunction with Palm Cards and Business Cards.

The business card is small enough for you to carry around all day and hand out.  This business card hits the highlights of The FAIRtax and presents the 2020 prebate schedule.

So, how about you visit RIGHT NOW our FAIRtax Store and look around.  Remember, you are automatically entered into our free polo shirt contest when you purchase yard signs.

Help FAIRtax Become The Number One Issue in 2021

Enacting the FAIRtax must be a prominent topic in these times. We did it before, we can do it again, but we need your help!

Your gift of $25, $50, $100 – even $1,000 or more if you can possibly spare it – will help bring an end to the IRS and promote a FAIRtax. So, I urge you, please give as generously as you can.
To donate by check:
Americans for Fair Taxation
PO Box 4929
Clearwater, FL 33758

If you need to make changes to your existing Monthly Re-Occurring Donation with new card or billing address information, then Please call Adam Yomtov our New York State Co-Director. He is assisting with the administration of our donations, technology services, and website.

Please note: Inputting your new information at our website won't update your donation. The only way to update is by calling Adam Yomtov 917-689-3931 mobile.

Americans for Fair Taxation® is a 501(c)(4) non-profit, non-partisan grassroots organization solely dedicated to replacing the current income tax system with a fair, simple and transparent national consumption tax – the FAIRtax® Plan. We rely entirely on contributions from concerned citizens like you who want a tax system that will generate jobs and stimulate the economy. Welcome to the FAIRtax team!