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CRACKING THE CODE CRACKER

May 04, 2007

About a year ago we talked about the book "Cracking the Code" and its author, Peter Hendrickson. In short, Mr. Hendrickson said that you could legally recover all of your withholding and avoid federal taxes simply by filing a Form 4852. This form is designed for employees who don't receive W-2s from their employers. People following Mr. Hendrickson's book would file this form showing no income and claim their refund.

Not surprisingly, a few of these returns slipped through the system, and some of the filers actually got tax refunds this way. For awhile, anyway. The Hendrickson's then used these IRS errors as evidence that they had "cracked the code" and could legally enable people to skip out on their taxes.

Of course, it doesn't work that way.

The Justice Department yesterday announced that it won a court order permanently enjoining Mr. Hendrickson and his wife from filing returns based on:

"...the false and frivolous claims set forth in Cracking the Code that only federal, state or local government workers are liable for the payment of federal income, social security taxes from their wages under the internal revenue laws..."

The court also ordered the Hendricksons to file correct tax returns for 2002 and 2003 properly reporting their income.

The Moral: It's not necessarily the Code that's a little cracked.

Links to related coverage:

Detroit News

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