SOURCE: The Great IRS Hoax book, Section 6.5.16.

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This act was passed on March 4, 1923 as H.R. 8928. Chapter 265 created several custom terms and definitions to be used throughout the government from that point on, including in subsequent Revenue Acts as well as the Internal Revenue Code, first codified in the U.S. Code in the Internal Revenue Code of 1939. Among the important terms defined and subsequently used in the I.R.C. include:

1. “department”: “the term ‘department’ means an executive department of the United States Government, a governmental establishment in the executive branch of the United States Government which is not a part of an executive department, the municipal government of the District of Columbia, the Botanic garden, Library of Congress, Library Building and Grounds, Government Printing Office, and the Smithsonian Institution.”

2. “position”: “means a specific civilian office or employment, whether occupied or vacant, in a department other than the following: Offices or employments in the Postal Service; teachers, librarians, school attendance officers, and employees of the community center department under the Board of Education of the District of Columbia; officers and members of the Metropolitan police, the fire department of the District of Columbia, and the United States park police;and the commissioned personnel of the Coast Guard, the public Health Service, and the Coast and Geodetic Survey.”

3. “employee”: “means any person temporarily or permanently in a position.”

4. “service”: “means the broadest division of related offices and employments.”

5. “compensation”: “means any salary, wage, fee, allowance, or other emolument paid to an employee for service in a position.”

Nearly all of the above definitions would be very carefully used to deceive the American public in subsequent acts of Congress, because they would be misconstrued by the general public to have their common definition, rather than the very specific legal definition above. This act much better concealed the nature of the I.R.C. Subtitle A income tax as an excise tax upon the privileges incident to public office (e.g. “trade or business”, see 26 U.S.C. §7701(a)(26)) by disguising hidden meanings within the terms “compensation” and “services” and “employee”, all of which, by the above act, can ONLY be incident to service in the United States government as a public officer, whether elected or appointed.

The effect of this act carried over into the IRC’s of 1954 and 1986 insofar as they merely restate relevant elements incorporated in the 1939 version. It is particularly important in the modern I.R.C. Section 61, “Gross Income Defined”, wherein “compensation for services” is listed as a specific “item of income” and its misleadingly ambiguous distinction from “income derived”, seen in the 1921 Revenue Act, is restored. The restoration was accompanied by a notation to the effect that the reconstruction of the 1928 language (which the 1939 code section duplicated) represented no substantial change in its meaning. Below is the content of 26 U.S.C. §61, “Gross Income Defined” so you can now apply the above definitions properly. We have boldfaced and underlined the words from the above definitions contained in the Classification Act and added bracketed material so you can clearly see the meanings:

TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART I > §61

§61. Gross income defined

(a) General definition Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

(1) Compensation for services [as a public official], including fees, commissions, fringe benefits, and similar items;

(2) Gross income derived from [a trade or] business;

(3) Gains derived from dealings in property [within the District of Columbia, see 26 U.S.C. 871];

(4) Interest;

(5) Rents;

(6) Royalties;

(7) Dividends;

(8) Alimony and separate maintenance payments;

(9) Annuities;

(10) Income from life insurance and endowment contracts;

(11) Pensions;

(12) Income from discharge of indebtedness;

(13) Distributive share of partnership gross income;

(14) Income in respect of a decedent; and

(15) Income from an interest in an estate or trust [in the District of Columbia].

You can read the complete text of the Classification Act of 1923 at the link below:

http://famguardian.org/TaxFreedom/History/Congress/1923-ClassAct1923-42Stat1988.pdf