'Includes' in the Internal Revenue Code
The Internal Revenue Code uses the words “includes” and “including” extensively in its definitional sections. The IRC defines “State,” “United States,” “person,” “employee,” “employer,” “trade or business,” and dozens of other terms by listing items that the term “includes” — without exhaustively enumerating every possible referent.
Whether those listed items are exhaustive (the defined term means only the listed things) or expansive (the listed things are added to the term’s ordinary meaning) is a question of statutory construction. The default common-law canon in this area is expressio unius est exclusio alterius — “the express mention of one thing excludes others” — which raises a presumption that items not listed are excluded. That canon is real and operative in U.S. statutory interpretation generally. But it is a defeasible presumption, displaced by express statutory language to the contrary. For the IRC, the answer is explicit and self-supplied:
“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.”
That is 26 U.S.C. § 7701(c), titled “Includes and including.” The provision is short, direct, and dispositive. “Includes” in the IRC is non-exclusive: the listed items expand the term’s ordinary meaning rather than replace it.
The Supreme Court reached the same conclusion ninety years ago. In Helvering v. Morgan’s, Inc., 293 U.S. 121 (1934), the Court construed “includes” in a Revenue Act of 1928 definition — relying on Section 2(b) of the Revenue Act, the precursor to § 7701(c), and on the canon’s actual operation — and held the term non-exclusive. The construction rule the Court applied in 1934 has been continuously preserved through three IRC re-enactments (1939, 1954, 1986) and is now codified as § 7701(c). The 1934 holding is binding apex precedent on substantively the same question.
What this resolves
A great deal of alternate-tax theory — most systematically The Federal Zone and its derivative works — depends on the opposite reading. The argument runs: the IRC defines “State” to “include” the District of Columbia (§ 7701(a)(10)), and “include” is restrictive, so “State” means D.C. only and the fifty states are excluded. The same move is then applied to “employee,” “employer,” “wages,” “taxpayer,” and other terms to argue that the IRC’s reach is narrower than its plain text suggests.
§ 7701(c) forecloses the move. The defined terms cover their ordinary meaning AND the listed items; the listed items do not limit the term to themselves. “State includes D.C.” means D.C. is added to “State” — not that “State” is reduced to D.C.
This is the IRC’s own answer to its own internal construction question. It is not borrowed from a treatise, a Treasury Decision, or a Supreme Court case. It is enacted text, part of the Internal Revenue Code, supplied by Congress for the specific purpose of governing how the Code’s “includes” formulations should be read.
The Treasury Decision argument
The most systematic alternate-tax argument against § 7701(c) appeals to Treasury Decision 3980, an administrative pronouncement from the early 1930s allegedly adopting a restrictive reading of “includes” in pre-IRC tax statutes. The argument runs that TD 3980 established the controlling administrative interpretation of “includes” in tax contexts and that subsequent statutory provisions must be read against that established meaning.
The argument has two problems:
The historical claim is unverified in this analysis. TD 3980 itself was not directly fetchable in the verification work that underlies this concept page. Whatever the document actually says about “includes” — restrictive, non-exclusive, or qualified — the historical-document question is open as a research matter.
The legal claim is foreclosed regardless. Even if TD 3980 said exactly what alternate-tax theory claims it said, it cannot govern IRC interpretation when the IRC supplies its own contrary construction rule. The hierarchy is fundamental: an Act of Congress beats a Treasury Decision on questions of statutory construction within the Act. § 7701(c) is part of the Internal Revenue Code as enacted by Congress (1939, 1954, 1986). It controls.
The Treasury Decision argument is, on this account, an attempt to preserve a resolved interpretive question by appealing past the controlling text. The IRC’s enacted construction rule replaces whatever administrative or pre-IRC reading may have existed. That is what construction rules in statutes are for.
Why this matters
The “includes” question is not technical pedantry. It is the load-bearing construction issue for a substantial fraction of the alternate-tax movement’s arguments. Once “includes” is read as non-exclusive (as § 7701(c) requires), several lines of argument collapse:
- The “State means D.C. only” argument fails — “State” covers the fifty states plus D.C.
- The “United States = federal territory only” argument fails — § 7701(a)(9) reaches the fifty states + D.C.
- The “employee” / “employer” / “wages” definitional restrictions that some movement texts develop fail — those definitions add to ordinary meaning rather than restrict to listed items.
Restoring § 7701(c) to its rightful operative position simplifies the entire conversation. The IRC means what it appears to mean: the listed items in its definitions are illustrative of, and additions to, the terms’ ordinary meanings. The Code reaches what its words appear to reach.
This concept anchors the Federal Zone foundation essay, which works through the structural-interpretation argument in full, and pairs with the “State” in the IRC and Three Meanings of “United States” concept pages.