Every Which Way But Loose

from the federal and state governments-- including Social Security and Medicare 'contributions'-- and kept it in their own pockets where it belongs, simply by knowing what the law actually says. These Americans have gotten back every penny they've paid or had withheld from them during the year in connection with the "income tax", and have secured written acknowledgements that they owed nothing-- many for several years in a row now.

The liberating truth about the "income" tax is turning those who would evade it

Every Which Way But Loose

The collected episodes of this occasional Newsletter feature

Do you remember those old sci-fi movies (and numerous 'Lost in Space' and 'Star Trek' episodes) in which an evil robot or a computer collapses into terminal dysfunction after being presented with data that "does not compute"? The machine would flail about dangerously for a bit (or smoke and shake, and threaten to explode) before finally going limp, silent and harmless.

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

Some CtC Warriors are being drafted to play the part of the intrepid heroes of these space operas lately, with federal and state "income" tax agencies in the role of the neurotic robot:

Since August of 2003, when the revelations of CtC were first published, the IRS has been engaged in a desperate struggle to regain its hold of fear and confusion over those now equipped with an understanding of the long-hidden secrets of the "income" tax, and to stop that understanding from spreading. We have seen, for instance:

two revampings of the Form 4852 during that time-- both attempting to obscure the scope of that form's proper use;

a carefully inaccurate allusion to a typical CtC-educated filing sit as #1 on the IRS "Dirty Dozen" list for a year (then quietly get relocated to #5 and then #7 as CtC-educated filings merely increased, and continued to prevail, making the misdirection of the listing too obvious for the agency's comfort);

Mis-directional ploys such as the "Questionnaire" discussed here;

a multitude of constantly tweaked agency "FAQ" and "Truth About Frivolous Argument" publications seeking to instill doubts about what is taught about the law in CtC in the minds of careless readers, worthy of attention only in order to enjoy the agency's entertaining efforts to imply what it cannot simply declare, but wishes a naive reader to take from the reading.

We have also seen a series of transformations in the means by which the occasional loose-cannon IRS staffer attempts to persuade a CtC-educated filer to stand down.

For a while, fairly brazen declarations that a filing meets the statutory definition of a "frivolous return" was the popular approach. Brazen or not, of course, these notices were always mere exercises in intimidation, which careful analysis readily revealed to be fallacious.

Everyone must come to his or her own conclusions, but consider: The notices strive hard to give the impression that the tax agency can unilaterally disregard the target's filing, and can tack on a penalty as well. BUT they say that the agency will generously refrain from imposing the penalty, if only the target withdraws the original filed testimony and replaces it with what the agency wants attested-to (which, remember, the target is simultaneously being told would be legally meaningless, because the agency can unilaterally disregard that original testimony at will...).

What is being implied is that, either way, the amount of tax owed is going to end up being whatever the agency dictates-- the filer's return notwithstanding. The only optional element is the additional penalty, which the agency is offering to forego out of the goodness of its heart.

Well, if this is true..., WHY SEND THIS "LETTER" AT ALL? If the agency has the power to unilaterally make these decisions, there is absolutely no point to asking the target to do anything!

If the agency (or its client) has the power it is suggesting, its correspondent would simply get a notice along the following lines: "Dear Mr. XXX: We have calculated your tax liability for 200X, and converted $XXX of your withheld property in escrow to our ownership. An invoice for the outstanding balance [if any] is attached. Your filed return was frivolous, and provided us with the authority to add a $XXX penalty to your tax liability. We have [added or foregone] this penalty."

After all, if the agency has the unilateral authority it is attempting to suggest that it does, why would it care whether another return was filed? (Readers of 'Cracking the Code...' will know the answer to that, of course.)

Instead, the agency DOES make this "threatening" request; and/or "proposes" calculated liabilities to which it asks its target's agreement in order to have effect (see examples of this here). Sometimes it begins sending endless "levy notices" to the unbending filer (which notices, insofar as they concern years when only accurate, educated returns have been filed, only allege liability for a penalty, and not for any tax related to the year in question-- even when the target has received a complete refund of every penny withheld or paid-in in connection with that year...). The sum of all of this is, of course, that the agency DOESN'T have the unilateral authority which it suggests that it does, and where accurate, educated filings are concerned, its "frivolous letters" are just exactly that: frivolous letters.

"Tax liability is a condition precedent to the demand. Merely demanding payment, even repeatedly, does not cause liability. For the condition precedent of liability to be met, there must be a lawful assessment, either a voluntary one by the taxpayer or one procedurally proper by the IRS."

Bothke v. Terry, 713 F. 2d 1405, at 1414 (1983)

Nonetheless, as more and more warriors have forcefully pointed out to more and more IRS workers that inappropriately sending such threatening-looking letters cuts very close to the criminal under a variety of federal and state laws, the tax agency has scrambled to adjust. For one thing, the "frivolous" notices have been carefully and repeatedly modified toward ever-more obvious legal meaninglessness, in order to deflect potential charges of constructive fraud, witness tampering, extortion, etc.

At the same time, these legally dicey threatening-sounding notices have been largely replaced by a comical kind of delay tactic, in which the agency sits on a filing in silence, and when contacted with an inquiry to the effect of "Where the h*ll is my property?!", responds with a claim that the agency can't find the filer's return and a request that the offended filer please send a fresh copy, or a series of "We need 45 days to look into the matter-- please be patient-- don't call us, we'll call you..." notices.

In this series, we take a close look at many of these gimmicks, ploys and dodges in order to accurately perceive their true character, and take in and appreciate the underlying message, which is that efforts like these are engaged in only when the corrupt actor has no real basis for its actions, and is simply being turned every which way but loose by the liberating truth. The action in these episodes will range from the simply silly one-shot stalls like those in Episode I to the drawn-out, elaborate slap-downs like what you'll see in Episode X, and everything in between.

Enjoy.

Every Which Way But Loose III

In the last week or so, I've become aware of yet another 'Every Which Way But Loose'-class ploy by the IRS-- this time in connection with "Proposed Individual Income Tax Assessments". For a while, a few educated filers would receive these, "You're invited to let us decide how much tax you owe for year 2xxx. If you're willing, please sign the enclosed form in order to allow us to do what we've tried to convince you all your life we have the power to do whether you like it or not..." notices. These notices would be accompanied by a dry and rhetoric-free series of "examination" forms on which proposed tax, penalty and interest calculations were inscribed, all based on taking submitted "information return" testimony at face value, and excluding the testimony on the target's return. The typical CtC Warrior's response is to inform the agency that he or she actually meant what was said on the documents already filed; it would be appreciated if the agency would cut the bs, and send the refund demanded without further delay (the results of which can be seen here).

Apparently not willing to abandon this futile approach, but recognizing that its ongoing failures are just adding to the agency's embarrassments, a new version of this "Proposed Assessment" ploy has been trotted out. Here, the "proposed changes" are introduced by way of a "Letter 1862" which asserts that "We have no record of receiving your federal income tax return for the year(s) shown above or the return(s) we received was not valid." (An example can be seen below.) This new "either/or" vagueness is not all, though. Where the "examination" forms accompanying the request traditionally contain nothing but figures (if even that), those arriving with the new version are accompanied by literally thousands of words of rhetoric and "explanation". The standard "Explanation of Items" forms now have anywhere from a paragraph with each entry to SIX PAGES of rhetoric for one entry alone!

All of the surplusage deployed in these new versions of the same old trick have precisely the character of presumptions exercised in the earlier kind, of course. But apparently the thinking is, "If a little bit of nonsense isn't doing the trick, let's try piling it on, and see what happens!"

Sigh...

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

Every Which Way But Loose- VI

IN OUR LAST EPISODE OF 'ROBBIE THE ROBOT', we learned that :

These desperate transformations now come fast and furious. A new dodge has made an appearance practically before we have had proper time to chuckle at the last one! Warrior Greg W.s 2006 claim for refund has prompted another brand new combination stall tactic/can-we-get-you-to-slip-up-or-be-intimidated-into-doubt-by-pretending-we-don't-understand-your-filing ploy (and a pretty weak one...):

The creative department at the old 'service' is clearly burning the midnight oil, but running out of steam...

(A number of older varieties of this gratuitous mischaracterization effort can be seen at 'Revealing Ploys')

NOW, let's resume our story with this:

UPDATE

Earlier this week, Greg let me know that he had wasted no time slapping this nonsense down:

To: Internal Revenue Service

Atlanta, GA 39901-0025

Ref: 0742223017 2005 Amended Taxes

Feb. 7, 2008

Ms. Black:

This letter is in response to your attached letter dated Feb 06, 2008.

Your letter stated my Form 1040X had no documentation for the additional amount of $6436.71 of federal income tax withholdings on line 11, column B. In Part II Explanation of Changes on my Form 1040X it states the following:

“Line 11 - original amount did not include Social Security and Medicare taxes withheld. See Form 4852.”

The additional amount of $6436.71 is the sum of the Social Security and Medicare taxes withheld. If you look on my form 4852 you will see the following amounts:

7-i Social security tax withheld 5216.68

7-j Medicare tax withheld 1220.03

If you total these 2 amounts you will get the sum of $6436.71. What more explanation do you require?

The other withholdings of $21,034.99 on form 4852 were incorrectly withheld from my private non-federal non-taxable receipts that were incorrectly identified as “wages” (as defined in the Internal Revenue Code) on my original 1040 return and company provided W2. I stated the following in Part II of my form 1040X:

Line 1 - "wages" amount was incorrect on original W2. See attached Form 4852 for correct amount.

Section 6201 Part D of the Internal Revenue Code is reprinted below for your convenience:

Sec. 6201- Assessment authority
(d) Required reasonable verification of information returns
In any court proceeding, if a taxpayer asserts a reasonable dispute with respect to any item of income reported on an information return filed with the Secretary under subpart B or C of part III of subchapter A of chapter 61 by a third party and the taxpayer has fully cooperated with the Secretary (including providing, within a reasonable period of time, access to and inspection of all witnesses, information, and documents within the control of the taxpayer as reasonably requested by the Secretary), the Secretary shall have the burden of producing reasonable and probative information concerning such deficiency in addition to such information return.

Unless the IRS has knowledge of my private finances superior than my own and can prove as such per Sec. 6201, please process my law abiding signed and truthfully sworn statement of my assessed income tax liabilities and refund my monies.

Sincerely,

Gregory D.

It wasn't long before the 'service' issued its simple but devastating point-by-point "rebuttal" to Greg's letter:

I wonder if the mass resignations have begun yet?

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

***

Not To Pile On, But...

Last year, I was pleased to post federal and California victories concerning 2005 by Warriors Erik Segelstrom and Cathie Hamer. At the time, I noted that there was apparently a bit of cognitive dissonance in the mind of the IRS in regard to Erik and Cathie's claim for the return of their property. Even while properly honoring that claim, the 'service' simultaneously asserted-- without, it is virtually certain, legal assessment-- that the claim was "frivolous"; and presumed to withhold a portion of Erik and Cathie's property (which was unfortunately already in the agency's hands, of course).

Thus, the $9,648.00 belonging to Erik and Cathie which had been being held by the federal government in escrow against the possibility of normal and "Social Security" and "Medicare "income" taxes proving to be due from them for 2005 was dinged for $500 before the balance was returned. What's more, even after this little outrage, the IRS sent a "levy notice" to Erik and Cathie months later claiming the $500 was still due from them.

The insignificance of "notices" such as the one received by Erik and Cathie-- even those not ludicrously issuing belatedly as in this case-- has been discussed in depth elsewhere on this site, as has the rare but thoroughly childish and obnoxious "penalty deduction" from property otherwise properly returned. No more needs to be said about that here. However, after I first posted their victories, Erik and Cathie realized that I did not know the whole of the IRS's vaudeville routine in this case. They were kind enough to send me documentation of the rest.

Enjoy.

The first thing that happened after Erik and Cathie filed their claim was the arrival of a "LTR 3176C"

Erik and Cathie hammered out an immediate response, essentially reading the 'service' the riot act and demanding that it cease its ridiculous and criminal efforts to evade the law. They also began a series of frustrating phone calls to IRS staffers, which continued off and on for the next ten months. Later in the summer, they filed an FOIA seeking any documentation of a liability for 2005, which was received by the 'service' on September 21, 2006. The response they got was a "LTR 3175C":

and then eventually another, for good measure:

Then came an assertion that Erik and Cathie's (allegedly frivolous) return couldn't actually be found!

(The reference to "the inquiry of Dec. 25" is a mystery...)

Erik and Cathie wearily sent another copy of their return, to which the 'service' responded with:

Then came this:

...and this:

...and then finally, this:

and, at long last, this:

Now, earlier in April, before the check had arrived, Erik and Cathie had already sent yet another scathing letter demanding that the service get its act together, and either substantiate that this alleged "penalty" had actually been legally assessed or drop its "frivolous" nonsense. This showed up, in completely unresponsive response:

...followed by this:

...and this:

Obviously, these later notices are simply even more blatantly empty eyewash than the earlier ones, but they have served the useful function of keeping Erik and Cathie from forgetting that the federal government is still holding $500 of their property to which it has no legitimate claim. Toward the end of last year, after another round of interminable phone conversations with a variety of mystified IRS personnel, Erik and Cathie sent another notice and demand for evidence of the lawful assessment of this penalty or the return of their property.

To date, after nearly two years in which to justify or substantiate all of this baloney, the 'service' has offered:

"{ }".

...but after Erik and Cathie's November, 2007 demand it did send this:

...and then, after another chain-yank, this alternative version of the same nonsense...

"Bravo!" to Erik and Cathie for their steadfast perseverance and their nearly complete legal victory, and overwhelming moral and illustrative victory. To the IRS for its performance in this little comic opera: Nothing but raspberries...

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

Every Which Way But Loose- VII

As noted in the introduction to this series, the "frivolous" thing hasn't entirely disappeared, and it appears to be evolving in an entertaining way. Since CtC first laid bare the truth about the tax, the IRS has taken to making cosmetic modifications of some of its forms in an effort to confuse the folks addressed here and here. Now another effort to mutate a tired old standard into a truth-resistant form has been made manifest as a new version of the LTR 3176:

Pretty scary-looking, huh?

But notice what's missing...

This new "threat" notice (which actually only "proposes" a penalty-- and proposes it to who? This form appears to propose to James and Susan that they decide to agree that their return was "frivolous"...) prominently recites both elements of 6702(a)(2), one or the other of which must be established for a return to qualify as "frivolous" under the statute. However, it makes no mention at all of either of the elements of 6702(a)(1), one or the other of which MUST ALSO be established for a return to qualify as "frivolous"! As the 'service' admits in its official list of "frivolous" "positions" (see the 'Tax Tip' feature below for the whole list):

Persons who file a purported return of tax, including an original or amended return, based on one or more of these positions are subject to a penalty of $5,000 if the purported return of tax does not contain information on which the substantial correctness of the self-assessed determination of tax may be judged or contains information that on its face indicates the self-assessed determination of tax is substantially incorrect [these being the elements specified in 6702(a)(1)]. (Emphasis added)

There's a simple reason for this, of course. Sending "threat" letters to folks to whom they do not really apply is very legally hazardous for whoever is responsible at the IRS, as was noted above. Thus, if they are deployed, plausible deniability is very important.

This new LTR 3176 version is a model of carefully-engineered "plausible deniability". To begin with, the suggestion by a responsible tax agent that he or she somehow perceived an underlying "official frivolous position" behind any given return, however illegitimate and indefensible it might be (and WOULD be, in the case of a CtC-educated return-- see 'It's Time To Demand An End To This "Frivolous" Nonsense'), might be expected to escape punishment for bad faith merely upon even an utterly specious claim that it was the product of an "honest misunderstanding". (The "desire to delay or impede..." thing can be dismissed without comment, as such a desire must actually be stated on the return for this element to be invoked regardless of what else may be true of the filing.)

This is in complete distinction from both of the requisite elements of 6702(a)(1) which are of a concrete, admitting-of-no-"misunderstanding" character. A LTR 3176 which asserts that a return meets one or the other of the elements from "column 1", if sent out in regard to a filing which DOESN'T actually meet either, would be indefensible. A LTR 3176 which asserts that a return meets one or the other of the elements from "column 2" AND one or the other from "column 1" would be a legally meaningful accusation and threat-- and would, if sent out in regard to a filing which DOESN'T actually meet both standards, amount to a flat-out, unambiguous and criminally-prosecutable effort at extortion and witness-tampering.

However, one like the example above that references the elements of "column 2" (and vaguely, at that) but doesn't attempt to allege that a return also meets one of the two standards of "column A" is a meaningless piece of paper purely intended to intimidate.

(Click here for a little more on this subject.)

Watch out for that robot! I THINK IT'S GOING TO EXPLODE!!

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

Every Which Way But Loose- VIII

Another entertaining alternate "frivolous" effort-- a new version of the CP15 "Notice":

Pretty scary-looking, huh?

Well, read carefully...

This new "threat" notice is a beaut. Unlike the new LTR 3176SC discussed in our last installment of this series (see Every Which Way But Loose- VII), which actually only "proposes" a penalty, and prominently forgets to mention either of the elements of 6702(a)(1), one or the other of which MUST be established for a return to qualify as "frivolous", this new scary-paper very prominently mentions all the requisite elements of the "frivolous" penalty.

HOWEVER, look at that last paragraph! "If you wish to contest THE ASSERTION of this penalty..." Gotta love the craft!

Assertion: 1. A positive statement or declaration, often without support or reason. (Random House College Dictionary, Revised Edition, 1975)

Needless to say, an "assertion" of a penalty is nothing more than a "declaration" of a penalty, about as far from an "assessment" of a penalty as you could get other than by not ever bringing it up at all. The paragraph goes on to underscore the meaninglessness of this reference by explaining that if one wished to contest this "assertion", one must pay the "penalty" first and then file a claim for refund.

No kidding... Unless one gets taken in by this nonsense and actually sends the IRS money in response, one has suffered no harm, has nothing to contest, and has no standing from which to go through the exercise!

"Tax liability is a condition precedent to the demand. Merely demanding payment, even repeatedly, does not cause liability. For the condition precedent of liability to be met, there must be a lawful assessment, either a voluntary one by the taxpayer or one procedurally proper by the IRS. Because this country's income tax system is based on voluntary self-assessment, rather than distraint, Flora v. United States, 362 U.S. 145, 176, 80 S.Ct. 630, 646-47, 4 L.Ed.2d 623 (1960), the Service may assess the tax only in certain circumstances and in conformity with proper procedures."
Bothke v. Terry, 713 F. 2d 1405, at 1414 (1983).

Man, they must be staying up REAL late trying to figure out ways to stop CtC-educated America these days! I guess it's true that hope springs eternal...

Watch out for that robot! I THINK IT'S GOING TO EXPLODE!!

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

EVERY WHICH WAY BUT LOOSE- IX

The IRS isn't the only tax agency to attempt these cheeseball ploys to stall, intimidate, mislead and evade. State tax agencies can play this game, too, and CtC Warrior Kurt Rickerd is enjoying the dubious honor of being the target of one of the most common (though still quite rare) state-agency "Hail Mary" plays. This gimmick involves an agency assertion that it can't process a return claiming a refund without "more evidence" that the amount claimed was actually withheld. Here's the notice that Kurt received:

Now, bear in mind that every penny withheld is associated with scrupulous records as to whose escrow account it belongs to when deposited with the state every month or quarter. Further, the producer of the "information return" Oregon is asking Kurt to provide is required by law to send a copy to the state at the same time it sends one to Kurt. Further still, Kurt has already provided a sworn affidavit declaring the amounts withheld, and claiming their return, and the state isn't even making a pretense of suggesting that any contrary evidence is in its possession, nor any competing claim to Kurt's property.

Finally, Oregon law really doesn't provide for the option of sending Kurt a notice like this...

305.270 Refund of excess tax paid; claim procedure. (1) If the amount of the tax shown as due on a report or return originally filed with the Department of Revenue with respect to a tax imposed under ORS chapter 118, 308, 308A, 310, 314, 316, 317, 318 or 321, or collected pursuant to ORS 305.620, or as corrected by the department, is less than the amount theretofore paid, or if a person files a claim for refund of any tax paid to the department under such laws within the period specified in subsection (2) of this section, any excess tax paid shall be refunded by the department with interest as provided in this section and ORS 314.415.
(2) The claim shall be made on a form prescribed by the department, except that an amended report or return showing a refund due and filed within the time allowed by this subsection for the filing of a claim for refund, shall constitute a claim for refund. The claim shall be filed within the period specified in ORS 314.415 (2) for taxes imposed under ORS chapters 310, 314, 316, 317 and 318, or collected pursuant to ORS 305.620 (except where any applicable ordinance specifies another period), within the period specified in ORS 118.100 (2) for taxes imposed under ORS chapter 118 and within two years of the payment of any tax under ORS chapter 308, 308A or 321.
(3) Upon receipt of a claim for refund, or original report or return claiming a refund, the department shall either refund the amount requested or send to the claimant a notice of any proposed adjustment to the refund claim, stating the basis upon which the adjustment is made. A proposed adjustment may either increase or decrease the amount of the refund claim or result in the finding of a deficiency. If the proposed adjustment results in a determination by the department that some amount is refundable, the department may send the claimant the adjusted amount with the notice.

What's actually going on here, of course, is that the state of Oregon is attempting to gull Kurt into contradicting his own testimony by submitting an instrument which would indeed agree with his withholding claims, but would DISAGREE with his "wage" receipt testimony. In fact the very reason Kurt's return DIDN'T include the W-2 the state seeks is that it contains some bad information...

Click here for more on this cheap little ploy.

IX.I- Oregon Gets Metaphysical

Ok, I'll admit that, in retrospect, I may have given the Oregon DOR more credit for craft than it deserves when I suggested above that the agency was deliberately and cleverly trying to get Kurt to compromise his own testimony. There now being more evidence in hand, it appears likely that Oregon's first effort was just the far more typical stall. (That said, I'm confident that even such stalls are overseen by tax agency legal departments whose working plan is to encourage supplemental submissions and declarations from the filer whose claim they hope to thwart, just in a general hope that such superfluous submissions and declarations will contain something that might provide a pretext for continued bad behavior. It's what you've got to do when you've got no REAL basis for your behavior...)

Kurt responded to Oregon's [illegal] request as follows:

July 5^th 2008

Oregon Department Of Revenue

Suspense Unit

PO Box 14999

Salem OR 97309-0990

Dear Sir/Madam,

I have received a notice for more information concerning my State of Oregon Tax filing, filing number 03069094. The information requested from the ODR was a W-2 or “wage transcript”. I believe I enclosed a wage substitute form 4852, which is my sworn affidavit. In the event that this was misplaced at the ODR office, I have enclosed an additional one. Please be advised that this document is true and accurate to the best of my knowledge as my signature bears witness to.

Sincerely,

Kurt Rickerd

The agency stayed on game, and with remarkable alacrity, volleyed back with a stall of truly extraordinary irrelevance:

If it were me, I'd be tempted to respond, "Because Xerox is run by morons who have never read the law," and maybe "I didn't have "Oregon withholdings" (whatever that means), some of my property was just improperly diverted into your keeping," but either or both would be more than this nonsense deserves. Late-night dormitory bull-session chit-chat doesn't appear to be one of the response options available to the state tax agency under Oregon law, as quoted above.

Such responses wouldn't suit the true nature of the stall the agency is now revealed to be playing at, anyway. Remember, the first "notice" Kurt got alleged that the agency couldn't verify that the $2031.00 he's claiming was actually withheld. Now that Kurt has made clear that he's neither a fool nor a farmyard animal by way of his reply to that ploy, the agency has simply dropped it like yesterday's garbage and moved to another...

Watch out for that robot! I THINK IT'S GOING TO EXPLODE!!

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

EVERY WHICH WAY BUT LOOSE- X

This week's episode of EWWBL starts out with a nice, complete refund of everything withheld from warrior David Nelson during 2005 against the possibility that he might prove to be liable for "income" taxes in connection with that year once he has filed his declaration of relevant taxable activities:

More than a year after this May, 2006 victory, some IRS law-defier decided to take a shot at herding David back into the barn. In September of 2007, David got this scary-paper in the mail:

(Note the remarkable coincidence of the amount of "increase in tax because of this change" and the amount of David's refund...)

David wasn't cowed by this tax-agency effort to evade the law. As he wrote to me after receiving this attempt to confuse and intimidate him: "I will not get back down on all fours for this agency!" And he certainly did not.

Instead, David got on the phone and rattled the cage of his assigned IRS flack for a while. The flack did his best to pretend to misunderstand David, but...

Eight months later, David gets THIS in his mailbox:

Now David is down to a $10,593.00 "tax increase", with $26,298.00 due...

David disagrees, and said so. He responded to this nonsense with the following:

David L. Nelson
XXXXXXXXXXXX
XXXXXXXXXXXX

May 9, 2008
Certified Mail #70073020000199971928

Internal Revenue Service
4800 Buford Hwy
Attn: D Kidd
Chamblee, GA 39901-0021

Re: Reply to LTR CP2000 May 05, 2008

To Dennis Kidd and the Internal Revenue Service:.

On the face of the Form 1040 return and Form 4852 I have enclosed and previously filed with the Internal Revenue Service for TY 2005, I accurately accounted for all receipts under the excise laws of the United States. I do not agree to any changes to my returns.

In the Explanation section of your letter you indicate information reported to IRS differs from that amount shown on my return. It also says that . “IF this information is correct, your tax increase is $10,593 plus applicable penalties….” The difference in Taxable Wages was corrected on the Form 4852 which was included with my Form 1040. My private non-federal non-taxable receipts were incorrectly identified as “wages” ( as defined in 26 USC Sec 3401 (a)(c) and 3121 and others) by my private sector company.

The difference in Tax Withheld of $8027 is the sum of Social Security and Medicare income taxes withheld. If you look on my Form 4852 you will see the following amounts:

7(i) Social security tax withheld 5580.00
7(j) Medicare tax withheld         2446.87
This rounds the total to $8027

Section 6201 Part D of the Internal Revenue Code is reprinted below for your convenience:

            Sec. 6201- Assessment authority
            (d) Required reasonable verification of information returns
            In any court proceeding, if a taxpayer asserts a reasonable dispute with respect to
            any item of income reported on an information return filed with the Secretary
            under subpart B or C of part III of subchapter A of chapter 61 by a third party and
            the taxpayer has fully cooperated with the Secretary (including providing, within a
            reasonable period of time, access to and inspection of all witnesses, information,
            and documents within the control of the taxpayer as reasonably requested by the
            Secretary), The Secretary shall have the burden of producing reasonable and
            probative information concerning such deficiency in addition to such information
            return.

Additionally, in accordance with 26 USC 6203 and CFR 26 Sec 301.6203-1, please provide me with the record of assessment signed by the assessment officer, authorized by the Secretary, whom recorded these liabilities for TY 2005.

Unless the IRS has factual knowledge of my private finances superior than my own and can prove as such per Sec 6201and 6203, please provide that information so I can respond. If you don’t have personnel knowledge of the facts I will assume this matter closed.

Sincerely,

David L. Nelson

Encl:
Notice CP 2000 May 5, 2008
TY 2005 Form 1040 and Form 4852

The law-defiers took a little time figuring out their next move, and then struck back with an impressive display of confidence, and the presentation of overwhelming legal support for their claims:

...followed by this:

Now we've got a $21,786.00 "DECREASE in tax" (and interest), and what amounts to a plea to David to return the FICA "contributions" which were long since properly refunded to him. This request is made despite the fact EVERYONE once again agrees David had received none of the "wages" by which liability for such "contributions" is measured! (If David HAD received such "wages", he would have been liable for the normal tax on those "wages", AS WELL as the FICA surtax on the first $75,000.00, or whatever the threshold was in 2005, which the "service" is trying to cajole him into presenting to it as a gift.)

Hang in there, Dave! In another six months of this pattern, the IRS is going to start sending you notices claiming IT owes YOU...

EVERY WHICH WAY BUT LOOSE- X.I

With an exasperated (but amused) "I don't know how many more letters I can get from the different campuses all on the same subject...", Dave sent me the following "letter 2645C" that arrived in his mailbox the day the rest of this EWWBL episode was posted:

Hey, there are only 122,000 workers at that 146-year-old agency. We can hardly expect them to have gotten organized this quickly...

EVERY WHICH WAY BUT LOOSE- X.II

David shot off a cogent and articulate response to the last "We changed your account" nonsense from the 'service', which apparently gave them something to chew on during the 45-day time-out requested:

August 20, 2008
TY 2005 CP21A
David L. Nelson

Internal Revenue Service
Atlanta, GA 39901-0010

To Whom It May Concern:

I received an unsigned CP21A notice dated August 11, 2008 in which you state “We Changed your Account.

I filed timely Forms 1040 and 4852 with the Internal Revenue Service for TY 2005 in which I accurately accounted for all receipts under the excise laws of the United States of America. I do not and did not agree to any changes to my lawfully prepared and sworn return.

You do not have the authority to change my sworn testimony. Your letter alleged that I have incurred a revenue taxable liability but does not provide any facts or evidence of that liability. Your belief that I incurred this liability seems to have arisen out of an unconstitutional policy of acting under color of Amendment XVI to misapply the taxes codified in Title 26 as direct taxes on the income of a private sector individual, in violation of the Article I, sec 9, cl.4 express prohibition against direct taxation without apportionment according to representation, and in knowing disregard for the decision of the U.S. Supreme Court in Brushaber. If you have facts and evidence that I am incorrect in my assessment please provide me with those facts so I can respond.

If you do have authority to change my sworn testimony I can only guess the amount has been reduced because you agreed with me that I did not have “wages” as defined. What is the $9984.99 predicated on? I can only surmise that it is the FICA “contributions” which were long since properly refunded to me and that you agree I received none of the “wages” as defined by which liability for such contributions is measured.

I request and demand you correct your records to accurately reflect that I did not incur a revenue taxable liability for an excise tax for TY 2005.

Sincerely,

David L. Nelson

Finally, the 'service' got the message:

Way to go, Dave!

Watch out for that robot! I THINK IT'S GOING TO EXPLODE!!

"LOOK OUT, DOCTOR SMITH!! DANGER!! WARNING!!"

EVERY WHICH WAY BUT LOOSE- XI

This week's episode of EWWBL involves a gimmick so ludicrous as to strain my ability to comment upon it. In fact, I'll spare myself the effort, and let this incredibly hokey IRS mailing speak for itself (but those who have not been conscientiously following this series need to read through this page carefully before proceeding, or you'll not understand what it says).

All I'll do is advise a careful reading of the following "letter" received last week by Glenn and Pat Tanis, so as to avoid the agency-intended unconscious correction of what has to have been a deliberate use of the wrong form number in this text-- a use that a casual read will misunderstand to be making a statement about the use of a Form 4852 when what's really happening here is that such a statement about a Form 4852 is being explicitly AVOIDED here, even while it is hoped that that fact will be overlooked or misunderstood. (Not that it would make a great deal of difference anyway, as the IRS is hardly the arbiter of legal matters of this sort, but hey, that's expected to be misunderstood, too.)

Well, I guess I can't help but make one comment: One has to admire the craft here. The misspelling of "forms" in order to suggest that the use of the wrong form number immediately afterward is just a sustained "bad hair day" thing-- one long innocent mistake, don't you know; spellcheck was in the shop that day-- is a nice touch...

Regarding the last line in this bit of comedy, I guess that whatever "Froms 4952" are, they aren't intended for use when payers are unable or refuse to furnish accurate information-- unlike Forms 4852, which are explicitly and specifically intended for precisely that situation.

One other thing catches my eye, too. The careful vagueness and ambiguity of the line, "You may not change reported income amount..." is intriguing. Is this line intended to be read as saying, "You can't rebut incorrect figures reported by a payer by preparing Froms 4952"? Or that, "You can't change amounts you already reported on your original return by preparing Froms 4952"? Or how about, "You can't change someone else's report about you by preparing Froms 4952"? In regard to the last of these, if we substitute "Form 4852" for "Froms 4952", it's technically true. A rebuttal document is not a literal correction or replacement of someone else's document, it is a responsive and/or alternative instrument. On the other hand, the first two of these possible interpretations are NOT true, but a misreading of the line as saying one or the other is probably what is intended.

(After considering all this, maybe I should revisit my original take on this gimmick. Maybe the "Froms 4952" thing WAS just a sustained typo, due to a bad case of nerves being suffered by whoever was tasked with assembling the rest of this sleazy effort to deceive...)

P. S. There IS a FORM 4952, by the way-- it's an "Investment Interest Expense Deduction" form. Since Glenn and Pat aren't likely to have had anything to deduct anything else from, we can be pretty sure there wasn't any Form 4952 associated with their return...

Watch out for that robot! I THINK IT'S GOING TO EXPLODE!!

EVERY WHICH WAY BUT LOOSE- XII

Late in 2004, after many years of searching for the truth about the "income" tax (and traveling a ways down some dead-ends in the process), K. W. (who wishes to remain anonymous for the moment due to ongoing legal issues related to those "dead ends") found CtC. Shortly thereafter, in February of 2005, K. filed six belated, educated returns seeking to rectify past bad practices (and one timely return for 2004). Here is an example of these filings:

(This particular year's filing included 11 rebuttals of 1099s like the sample above.)

Unfortunately, most of these filings were made after opportunities to contest allegations of "deficiencies" for the years involved had already been foregone, and the 'service' went on with collections procedures already in train for calculated liabilities in connection with years where "notices of deficiency" had been issued and ignored.

However, just adding insult to injury, an eager-beaver at the tax agency handling K.'s case, who doubtless hadn't a clue as to the sea-change in K.'s knowledge and actions and probably wouldn't recognize an accurate, lawful filing in any event, decided to try piling-on and asserted that K.'s. CtC-educated filings were "frivolous" (per 26 USC 6702). K.'s responses to these ignorant assertions were disregarded, and the agency loose-cannon (who's probably now in trouble for having done so) proceeded to really put his foot in it by making a "determination" in favor of the penalties and issuing a "Notice of Federal Tax Lien" alleging a government interest in K.'s property for the penalties that would have applied if the "frivolous" assertion were actually true:

K. didn't sit still for this. He promptly petitioned Tax Court for some supervision over its errant agency:

He got it:

K.'s loose-cannon IRS agent really should've stuck with the substanceless-- and thus uncontestable-- "frivolous" threat/assertion/"charge" letters and notices that are usually discussed in this series...

Watch out for that robot! I THINK IT'S GOING TO EXPLODE!!

Also, see the Victories Highlights page for additional specially-notable CtC-educated victories, and, to enjoy hundreds and hundreds of straightforward "just-the-check-and-no-hassles" victories enjoyed by the CtC-educated for years now, click on the links below: