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Definition of "United States" and "State" in the Internal Revenue Code
While poking around in the regulations about tax deficiencies I came across an interesting little deception that I will show you soon, but first, some background.
When reading laws, statutes, and regulations we should always be aware of defined "terms." When a word is defined in a law it takes on a completely new meaning. In other words, in writing laws, the lawmaker can invent new meanings for common English words. The newly defined meaning is the only meaning for purposes of the law. The defined meaning doesn't augment or add to the common English meaning, it completely replaces it. The defined word in such circumstances is referred to as a "term," or sometimes as a "word of art."
If the law says: "For purposes of this section the term 'dog' means 'fish'." Then where ever you see the word 'dog' in that section the word means 'fish.' The defined term retains none of its original and ordinary dictionary meaning.
See for example: Stenberg v. Carhart, 530 U.S. 914, 942, 120 S.Ct. 2597, 2615 (2000) “When a statute includes an explicit definition, we must follow that definition, even if it varies from that term's ordinary meaning.” and Meese v. Keene, 481 U. S. 465, 484-485 (1987) "It is axiomatic that the statutory definition of the term excludes unstated meanings of that term"
The Internal Revenue Code is chock-a-block full of defined terms. And among those defined terms are "United States" and "State." See 26 USC 7701(a)(9) & (10):
26 USC 7701(a):
(9) United States The term “United States” when used in a geographical sense includes only the States and the District of Columbia.
(10) State The term “State” shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
To make matters even more confusing sometimes the authors of statutes use the word 'includes' instead of the word 'means' when they define a term. The definition here is a sort of double deception. First the definition of United States "in the geographical sense" "includes only" the States and D.C. But in the next definition "State" is defined to "include" D.C. "where such construction is necessary to carry out the provisions of this title."
In paragraph 9 we are told that the definition of United States "includes only" two distinct geographical locations. In the second, the lawmakers redefine the "term" "State" using the deliciously ambiguous verb "includes." In the first instance we were told that the definition "includes only" and in the second it is implied that the definition might "include" something other than what is named in the definition. The casual reader would tend to believe that the second definition still "includes" the union states as well.
The trick is, when the verb "includes" is used in a statutory definition, it doesn't mean "includes only" but instead creates a class of similar items, not all of which are named, but the definition still replaces the standard English definition. Thus the definition in paragraph 10 limits the term "State" to the District of Columbia and similar geographical locations, such as other places that share the same characteristics as the District, namely, that they are part of the "Federal Zone" over which the federal government has 'exclusive' jurisdiction. The Supreme Court said this about the use of the word "includes" in statutory definitions:
“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.” Helvering v. Morgan's Inc. 239 U.S. 121, 79 L.Ed. 232, 55 S.Ct. 60, 125 n.1 (1934).
And what, you ask, might be the circumstances where the definition of State would have to be limited to the District of Columbia "where such construction is necessary to carry out the provisions of this title." How about the case where we would like to keep the law within the bounds placed on the federal government by the Constitution. See 4 U.S.C. 72, for example:
All offices attached to the seat of government shall be exercised in the District of Columbia, and not elsewhere, except as otherwise expressly provided by law.
If you are still not convinced, consider this. Alaska and Hawaii were admitted to the union in 1959. Until they were admitted as states of the union, they were U.S. Territories. U.S. Territories are under the exclusive jurisdiction of the federal government. And before Alaska and Hawaii became states they were listed specifically in the definition of "State" that appears a 26 U.S.C. 7701(a)(10). When the two territories were admitted to the union the definition was changed, dropping Alaska and Hawaii out of the definition of "State." See: Alaska Omnibus Act of 1959, PUBLIC LAW 86-70; 73 STAT. 141, § 22(h), and the Hawaii Omnibus Act of 1960, PUBLIC LAW 86-624; 74 STAT 411, §18(j).
This interpretation is further confirmed by statutory definitions of "United States" and "State" that we find elsewhere in the law. This brings me back to the little deception I discovered in the regulations. At § 301.6213-1 Restrictions applicable to deficiencies; petition to Tax Court we find the following:
In determining such 90-day or 150-day period, Saturday, Sunday, or a legal holiday in the District of Columbia is not counted as the 90th or 150th day. In determining the time for filing a petition with the Tax Court in the case of a notice of deficiency mailed to a resident of Alaska prior to 12:01 p.m., e.s.t., January 3, 1959, and in the case of a notice of deficiency mailed to a resident of Hawaii prior to 4 p.m., e.d.s.t., August 21, 1959, the term “States of the Union” does not include Alaska or Hawaii, respectively, and the 150-day period applies. In determining the time within which a petition to the Tax Court may be filed in the case of a notice of deficiency mailed to a resident of Alaska after 12:01 p.m., e.s.t., January 3, 1959, and in the case of a notice of deficiency mailed to a resident of Hawaii after 4 p.m., e.d.s.t., August 21, 1959, the term “States of the Union” includes Alaska and Hawaii, respectively, and the 90-day period applies.
Wow, here we are told there is a "term" called "States of the Union." So an interpretation of 7701(a)(10) that leaves out the union states is probably wrong, right?
This regulation advances the deception that Alaska and Hawaii were "outside the United States" before they were admitted to the union. But the truth is exactly the opposite. When they were admitted to the union in 1959 they were moved from exclusively federal jurisdiction to "outside the United States" as the term is defined for Title 26. They became sovereign states, foreign to the U.S. government, just like all the other union states.
Remember, a 'term' is a defined word or phrase for the purposes of the law. So if we do a search for the term "States of the Union" in the code we should be able to find where that term is defined. Unfortunately, we find nothing in Title 26. And we find also, that "States of the Union" is not a term at all. The phrase isn't defined anywhere in the code, and simply has its normal English meaning.
We do find, however, that Congress is well aware of how it defines the terms 'United States' and 'State.' Whenever Congress intends to include the 'States of the Union' it clearly does so:
"The term “State” means the States of the Union, Puerto Rico, the Virgin Islands, Guam and the Northern Mariana Islands. (§ 349) ..."
"As used in sections 469 to 469c–1 of this title, the term “State” includes the several States of the Union, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Commonwealth of the Northern Mariana ..."
"the term “State” includes, in addition to the several States of the Union, the Commonwealth of Puerto Rico, ..."
"(6) State.— The term “State” means each of the several States of the Union ..."
"the term “United States” means the several States of the Union, the District of Columbia, the Commonwealth ..."
I'm sure you get the idea. There is no "term" called "States of the Union." And the States of the Union are not part of the definition of United States that appears in the IRC.
I will leave it to you to make your own conclusions about this issue. And I will warn you that the U.S. Tax Court will declare frivolous any argument that the definition of United States in IRC 7701(a) does not include the "States of the Union." See for example the Supplemental Opinion in Wnuck v. Commissioner, 136 T.C. No. 24, sup. Op. (2011).
This is one of the rare occasions where the Tax Court actually addressed an argument it labeled as 'frivolous.'
The Wnuck decision reveals why the Tax Court generally dismisses troublesome statutory language with the 5th Circuit’s Crain v. Commissioner exemption to "somber reasoning" and "copious citation to authority."
To mutilate the accepted rules of statutory construction the Wnuck Court resorts to misstatement of the law, athletic leaps to false conclusions, logical fallacy, and judiciously reserved, though none the less gleeful, name calling . Misinterpreting the plain language of the learned and honorable men who sat on the Supreme Court for the Helvering v. Morgan’s and Slodov decisions is heavy legal lifting indeed.
The Wnuck Court quotes the Helvering v. Morgan’s footnote that appears above and absurdly places emphasis on the word some in order to leap to the flawless non-sequitur that because only some instances of the defined class are included in the definition we may ignore the clearly stated limits of the class and include any possible meaning of the original English word. The Court completely ignores the characteristics of the class as they appear in the definition. The Wnuck Court works the language like a hustler working three cups and a pea. Or perhaps like a tenacious advocate who knows how very much is at stake for his client.
The U.S. Tax Court started back in the 1920s as part of the collection apparatus of the IRS. Although it is now a full Article I Court, it's relationship with the Service is essentially the same as it has always been. Any petition that suggests the Service is exceeding its authority will be shouted down as frivolous and the petitioner fined. Be aware of it if you plan to take a case to the Tax Court.
 Wnuck v. Commissioner, 136 T.C. No. 24, slip op. at 13, subhead a. (2011).
 Wnuck v. Commissioner, supra, at 15, where the Court “includes” the unstated 50 states in the definition at §7701(a)(10) “(and the others of which are obviously the 50 States)” even though no union state is mentioned in that definition. There’s nothing obvious about it. The Court here is shamelessly ignoring the Supreme Court’s ruling in Gould v. Gould, 245 U.S. 151, 153: “But in statutes levying taxes the literal meaning of the words employed is most important, for such statutes are not to be extended by implication beyond the clear import of the language used.”
 Wnuck, supra, specifically at pg. 4, and throughout the opinion the Court relies on the logical fallacy known as Appeal to Authority, wherein the Court attacks Mr. Wnuck’s lack of formal legal training and summons its own authority to advance an argument not supportable by the facts.
 Wnuck, supra, pg. 6, n. 2.
 Helvering v. Morgan's Inc. 239 U.S. 121, 79 L.Ed. 232, 55 S.Ct. 60, (1934)
 Wnuck, supra, at 15.