It's Time To Demand An End To This "Frivolous" Nonsense

(As is always the case when studying on this site or in CtC or UtL, it is very important to read every word, even if you think you know what is being said, think something might not apply to you, or are impatient with long pages or passages.  Pages linked throughout and at the end of this page are also extremely important.  Read those pages carefully and thoroughly, too.)

• The IRS is just an accountancy and collections agency.  It's not a judge or court, or even just a legal department.  It has no authority to unilaterally determine anything about the application of any statute, including the "frivolous return" statute. (You HAVE carefully read through the FAQ pages, right?)

• Anybody can send out scary-looking pieces of paper, but the fact that they are scary-looking doesn't make them of any legal or practical significance.

• CtC-educated filers DON'T actually have "frivolous return" penalties taken from them in connection with their educated filings*, even though several dozen have been sent scary-looking notices threatening the imposition of such penalties, and, in some cases, subsequent notices threatening levies allegedly in connection with these threatened penalties, and a very few have had alleged "frivolous penalties" deducted from otherwise complete refunds of everything withheld or paid in-- that is, some property already in the possession of the government has been held back when the remainder has been returned to the filer.  These holdbacks are obnoxious, of course, but are anything but seizures.  Indeed, the circumstances of these cheap, "You don't like it? Sue us!" games simply emphasize the lack of legal substance to the "frivolous" assertions being made.  (There is one known exception to this, in which a CtC Warrior who had gotten a complete refund then had a loose-cannon-- and doubtless now "former"-- IRS agent seize $500 asserted to be a penalty concerning the same return on the basis of which the refund had been made.  No claim was made for the remainder of that refund, nor any assertion that any tax had actually been owed for that year...  This case is discussed in more detail below.)

*  Some who have subsequently become educated still suffer the lingering effects from past misunderstandings, and sometimes the timing of such ongoing ill effects can make them appear related to post-education actions.  See www.losthorizons.com/Help.htm#HelpII for more on this.

While the vast majority of returns filed by 'Cracking the Code-...' warriors are being met with lawful responses, the IRS and a few state tax agencies sporadically seek to thwart some filings by characterizing them as "frivolous" under the statutory definition at 26 USC 6702.  A few other filers are met with erroneous (and ridiculous) assertions that "We lost your return" or, "You failed to file..."; vague claims that "We need more time"; inaction in response to the filing for more than six months; or action which is taken in disregard of the evidentiary content of the filing.  All of these are of the same basic character, in that they are all an attempt on the part of a taxing agency to evade the law by keeping inconvenient evidence out of the legal record.  See the 'Every Which Way But Loose' collection for a number of examples and analyses.

Thus, while the observations that follow focus particularly of the "frivolous return" assertion, the principles and perspective discussed apply to every effort to deny (or appear to deny) a lawful filing the standing to which it is entitled under the law, regardless of the form by which such an effort is currently made manifest.  Anyone facing any effort to evade his or her lawful filing will benefit from reading this material through.

*****

Although it is easily demonstrated that a proper return-- whether claiming a refund or not-- does NOT meet the statutory definition of "frivolous" (which can be summarized as "self-contradictory"-- this is discussed in detail further along on this page), this practice nonetheless serves the interests of the 'service'-- in the short-term, anyway.  This is because a return which actually DID meet the requirements of 6702 would be invalid, and could be treated as 'un-filed'.  So, by mischaracterizing a return as "frivolous", a pretext for ignoring it-- and treating the contrary (and government-benefiting) assertions on a relevant information return as unchallenged, and therefore reliable-- is created.  This, in turn, supports the tax agency's continuation of 'deficiency' calculations, the issuance of threatening letters and notices, etc..  Classification of a return as "frivolous" can be contested, of course, so the 'service' can argue that no real harm is done, even while it delays the payment of any claimed refund and continues its efforts to intimidate the filer into resuming all fours.  Readers of 'Cracking the Code-...' will recall being warned of this cheap trick in the chapter 'About 1040s And Claiming Refunds'.

The legal algebra in a case like this is no different from that in the case of someone who has had a big charge recorded on his credit-card account for a purchase he never made (the information-return assertion as to "income" received), and whose evidence to the contrary and demand that the charge be removed (the accurate and proper return and correcting documents) are being answered with a bizarre counter-demand that he not only drop his insistence on the correction of his account, but instead affirmatively agree that he DID buy that new Buick after all.  (The announcement that a return is being treated as "frivolous", or otherwise pigeonholed, typically includes an instrument by which the original filing can be rescinded-- sort of a get-your-mind-right waiver by which the intimidated can declare that, "Oh, yes, I remember now!  I really DID get that nice new ride... and how shiny all that chrome is!... ...I'd like to take it out for a spin RIGHT NOW, in fact... ...but I can't seem to remember where I parked it...".)

Understand that I'm not making the analogy of a victim of the 6702 ploy to "someone who has had a big charge recorded on his credit-card account for a purchase he never made...", as a rhetorical device-- that's exactly what I mean.  Although Americans have been trained by a lifelong immersion in propaganda intended to mystify government into an amorphous, semi-magical thing, in reality it's just a person under the law like any American citizen or corporation.  Thus, the response to the 6702 ploy should be just the same as would be made to Visa if the credit company was demanding payment of a fraudulent charge and refusing to acknowledge contrary evidence because, based on that charge,  the company figured it could claim a big interest payment.

In other words, those being subjected to this nonsense should consider making a criminal complaint for mail fraud-- and any or all of several tax-administration-specific crimes (bearing in mind that such complaints can be taken directly to any member of a grand jury, without the participation or cooperation of a U. S. attorney); and, in a case in which previously withheld money is at stake, launching a lawsuit!  Isn't that what you'd do if Visa took the bizarre and self-serving position discussed in the model above, and had already gotten paid for the fraudulent charge-- say, by an automatic checking-account debit?  Responding to the assertions of the errant party with stern reminders of the requirements of the law, and giving it a chance to come into compliance, is appropriate.  But once this has been done, and a reasonable opportunity for self-correction has been measured out, go to court!  Prove that you filed, and demand that your filing be properly acknowledged!  At the very least, seek a writ of mandamus ordering the government to do what the law requires.

By the way, "frivolous" governmental responses typically include threats as well.  Other than that each and every correspondence received from a government should be responded-to in a timely manner until the issue is in a courtroom, it is my opinion at this point-- based upon both simple principles of law and what I have seen by being privileged to monitor a number of such cases for some time now-- that the blustery threats and demands contained in such correspondences are without legal substance and effect.  Typically these "threats" and notices lack a signature; and I have yet to see anyone who has meaningfully demanded due process in timely response to a "frivolous return" penalty levy notice in connection with a proper return lose any property to such a "levy".  In fact, the typical response to a proper due process demand in response to a "Notice Of Final Intent To Levy" over such a penalty threat is the 'service' dropping the matter without another word.  (See '(Things I Like To Keep In Mind When) Dealing With The Beast' for some important observations regarding relevant due process procedures.)

The simple fact is, when a timely, proper, and accurate return with correcting documents has been filed in answer to the assertions of all relevant information returns, a government's claims, threats and demands which presume to disregard that filing are-- from a legal standpoint-- little more than toothless ploys seeking to frighten the recipient into reversing his or her position or become paralyzed until the opportunity for legal recourse has expired; or are attempts to provoke an argumentative response in which some questionable or erroneous conclusion of law is asserted which can then serve as a pretext for justifying the government's original "conclusion" about the filing.  (I said "little more"-- such responses may also be felonies, as discussed in the portion titled "Regarding Crimes And Criminals", below.)

I'll say this again: a threat to fine, or even a notice declaring a "penalty owed" IS NOT ACTUALLY A FINE!  It's just a piece of paper.  Despite an intense effort to suggest the contrary by agent-provocateurs within the "tax-honesty" community, CtC-educated Americans ARE NOT being actually subjected to "frivolous" penalties in connection with standing up and acting on their new knowledge of, and renewed respect for, the law.  In fact, only one CtC filer has ever had a "frivolous" penalty actually taken from her.

In this case, the warrior had already received complete refunds for the years in question, but a loose-cannon IRS agent presumed to allege "frivolous" penalties against her for these years and, without a hearing or any other process, sent a "notice of levy" to the company for which she worked.  (The levy paperwork DID NOT allege that the warrior owed any taxes on her earnings for these years, or attempt to recapture the refunds she had received of everything that had been withheld during those years-- Social Security and Medicare 'contributions' included-- just the $500 penalties...)  The company cravenly and criminally complied, and the warrior is gearing up to sue.  I'm sure all will join me in wishing her justice.

Otherwise, a few warriors have received refunds which have been nicked for an alleged $500 penalty for a previous year's filing-- or even the same year!-- and that's it. (Obnoxious as these latter cases are, they merely involve the improper retention by the government of property already in its hands-- and of course, these warriors still ended up with a good deal more of their property back in their own hands than they would have had without standing up and acting...   Ultimately these improprieties will be resolved when the issues concerning the earlier years have been properly addressed, or through action in court.)

THERE ARE a small number of educated filers who have been made to endure inordinate delays in the return of their money, and a percentage of this small minority of filers have been the recipients of blustery "frivolous" letters and notices inviting them to stand down, and obliquely suggesting dire consequences for standing firm.  Those who wish to discourage the reading of CtC like to darkly refer to these correspondences, and nourish an impression among the unschooled that their occasional issuance proves that CtC-educated filings are somehow wrong.  This is like saying that if I start sending you letters which nearly (but never quite) declare that you owe me money, it must be true...

Actually, it is more exactly like saying that if I'm holding property of yours against the possibility that you will do something allowing me to claim that property for my own-- which question is to be resolved annually-- and you, having not done the "something", present a timely claim for the return of the money to which I respond by suggesting that your claim is mechanically defective (again, without ever actually saying so plainly, by the way-- you have to read these notices to know what I mean), my doing so means that you have no right to make your claim, and I get to keep your money (even though I haven't had the chutzpah to actually make a formal claim to the money myself, and am, in fact, barred by law from doing so...).  In short, the dark references to "frivolous" notices and penalties are of no more substance than the notices themselves (the deployment of which is increasingly rare, by the way), and just as mendacious.

By the way...

• "Frivolous penalties" must by assessed as taxes:

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

IF YOU HAVE BEEN SENT ANYTHING WHICH APPEARS TO ASSERT THAT A PENALTY HAS BEEN "ASSESSED" AGAINST YOU, CLICK HERE AND READ THE LINKED PAGE CAREFULLY AND THOROUGHLY.

*****

Putting an end to these cheap stumbling blocks being thrown in the path of those seeking to uphold the law is, I think, highly important.  Thus, I strongly encourage anyone facing an effort to evade the law of the sort addressed on this page to contribute to, and prepare to participate in, the class-action lawsuit being prepared in regard to this governmental misbehavior.  See Going On Offense for details.

However, no one should wait for the outcome of another proceeding while the window for launching a suit closes.  Bear in mind, this is not brain-surgery.  No proper return could be found to meet the definition of 6702, which is perfectly clear.  Even considering only subparagraph (a)(1):

Sec. 6702. - Frivolous income tax return

(a) Civil penalty

If -

(1)

any individual files what purports to be a return of the tax imposed by subtitle A but which -

(A)

does not contain information on which the substantial correctness of the self-assessment may be judged, or

(B)

contains information that on its face indicates that the self-assessment is substantially incorrect;

...that definition is clearly confined only to returns which are mechanically defective as affidavits (which is why those that DO qualify can be treated as nullities), and has nothing to do with the content of the testimony in the filing, outside of that area.  That is, the only content-related aspects of a return that can qualify it as "frivolous" are:

• A lack of figures or information needed to support a conclusion recorded in the filing, such as reporting a tax figure (of anything from $0 on up) but failing to report a corresponding "income" figure, or claiming a credit or deduction against or from a reported "income" figure for which an accompanying schedule is required-- and calculating the final tax figure accordingly-- but without attaching the schedule;

• Content that contradicts other content, such as by attesting to the receipt of $100,000 of "income" on the 1040 or an accompanying document but only showing $10 as tax, without having claimed sufficient legitimate deductions, adjustments, etc. to justify the low tax figure;

or

• Content that disables or renders uncertain the affirmation to the truth, completeness, and correctness of the content to the best of the filer's knowledge and belief (the jurat), such as the addition of "Signed under duress" or the like, or the attachment of arguments or statements suggesting the filer is not completing or signing the form(s) in good faith.

That's it.

To put it another way, a return which contains "income" and other figures which logically and mathematically coincide with the tax figure arrived at, and nothing which does not coincide with the tax figure arrives at; includes any and all attachments upon which content on the 1040 is reliant (and any and all attachments upon which content in relied upon attachments rely, etc.); and has nothing on or attached to it that calls into question the voluntary and sincere character of the affirmation does not meet the statutory definition of a "frivolous return" spelled out at 26 USC 6702, to which the penalty provided for in that section can apply.

Then, of course, there is subparagraph (a)(2), provisions of which must ALSO be met for any given return to qualify as a "frivolous return" subject to the penalty...  Those provisions require that in addition to being mechanically defective as discussed above, the defects must be deliberate, and based on a "position" (a conclusion or holding about the meaning or application of a legal principle or specification) which is "frivolous" (in this context meaning "having no basis in law" under the original version of 6702, or meaning "a "position having no basis in law" which is explicitly included on a list of such "frivolous positions" now published by the IRS as part of a proposed new version of the statute); or an overt desire (expressed on the face of the return) "to delay or impede the administration of Federal income tax laws".

Needless to say, no proper, accurate and educated return will meet either of these qualifications.  Nothing need be said about the overt "desire to impede or delay" provision, and to the best of my knowledge, even the IRS has never attempted to reference it in this context.

"LTR 3176s" (or "3175s", etc.) DO typically contain obscure references to an alleged "position" of the filer, but these are entirely disingenuous efforts to suggest that the "positions" element of 6702(A)(2) can somehow be invoked (irrespective of the fact that no element of (A)(1) can be demonstrated, and no attempt to do suggest the contrary is generally made), without the least explanation or elaboration-- there is just a reference to "the position you have taken".  It is no surprise that these obscure references lack any effort at substantiation.  Without spending too many pixels on the subject, it suffices to observe that the only "positions" that can rationally be perceived in a typical CtC-educated return are that, "Not every receipt is "income" as that term is meant in the context of the "income tax", "It is possible for 'information returns' to be wrong", and/or that "The specifications of the law provide that only earnings qualifying as "wages" under 3401(a) and 3121(a), or payments made in connection with a "trade or business", are to be listed on relevant "information returns"".  Not even the IRS would be so bold as to contest any of these plain and easily-demonstrated legal realities, of course-- and thus, unsurprisingly, they are not included on the list of "frivolous" positions that the IRS now publishes.  One can only assume that in referring to "positions" the 'service' desperately hopes that a recipient of a "LTR 3176" will simply be confused or intimidated by these vague references.

(NOTE: The proposed new subparagraph "c" version of 6702, with increased penalty amounts-- but no change in what qualifies as a "frivolous return"-- is discussed in detail here.)

Re-read 'Cracking the Code-...' pp. 181 - 184. Tom deSabla's excellent discussion of the subject in his recent reply to the state of Maryland (whose own version of 6702, like that of most, if not all, states, is identical to the federal statute in every important respect) is also a very good discussion of the subject.  Don't ever forget that the ONLY issue in regard to these threatening "letters" and "notices" is the indefensible 6702 assertion, and understand that even IF push ever came to shove, the burden lies on the government to prove that assertion (or, if denying the applicability of the following provision, to acknowledge the limited meaning and effect of "includes", due to the specifications of Sec. 6671 -Rules for application of assessable penalties [including "frivolous" return]: (b) Person defined- The term “person”, as used in this subchapter, includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs):

Sec. 6703. - Rules applicable to penalties under sections … 6702 [frivolous return]

(a) Burden of proof

In any proceeding involving the issue of whether or not any person is liable for a penalty under section 6700, 6701, or 6702, the burden of proof with respect to such issue shall be on the Secretary.

Also, closely read through the discussion titled "Regarding The Legal Contest" below, which, while specifically addressing the Colorado version of the "frivolous" statute, involves legal principles and points common to all such controversies.

(The government is also under a species of obligation to explain "disallowances", by the way.  Those facing efforts to thwart a lawful claim of refund by way of a meaninglessly vague assertion that it is "frivolous", etc., might want to make use of the following law, passed as part of the 'Income Tax Restructuring Act Of 1998':

26 USC 6402(k) (P. L. 105 - 206 § 3505):

Explanation of reason for refund disallowance.

In the case of a disallowance of a claim for refund, the Secretary shall provide the taxpayer with an explanation for such disallowance.

For instance, prior to suing, one might consider demanding that the 'service' meaningfully explain the "disallowance", citing 26 USC 6402(k) and the theory that Congress must surely have intended this requirement to apply to the “disallowance” of refunds to non-“taxpayers” as well as to “taxpayers”.  One would point out that if the ‘service’ feels that this theory is not sound, its ongoing failure to offer an explanation of the “disallowance” can only amount to an admission that the government has concluded that the claimant is not a “taxpayer” to whom such an explanation is owed.  Thus, the government’s silence in response to one demand or the other will serve a warrior well in a courtroom, if it should come to that.)

*****

The following three documents are memoranda regarding the IRS's official position on what does and does not qualify as a valid return, issued by the service's Office of Chief Counsel.  Everyone being subjected to the outrageous treatment discussed on this page should read these documents-- carefully, and thoroughly.

OCC0127045

OCC0114033

OCC0107035

Regarding the government's obligation to respond to and honor a proper, timely return:

“And be it further enacted,…that any party, in his or her own behalf,…shall be permitted to declare, under oath or affirmation, the form and manner of which shall be prescribed by the Commissioner of Internal Revenue,... ...the amount of his or her annual income,… liable to be assessed,… and the same so declared shall be received as the sum upon which duties are to be assessed and collected.”  Revenue Act of 1862, Sec. 93

 

Senator Clark: "Of course, you withhold not only from taxpayers but nontaxpayers."

Mr. Hardy: "Yes."

...

Senator Danaher: "I have only one other thought on that point. In the event of withholding from the owner of stock and no taxes due ultimately, where does he get his refund?"

Mr. Friedman: "You're thinking of a corporation or an individual?"

Senator Danaher: "I am talking about an individual."

Mr. Friedman: "An individual will file an income tax return, and that income tax return will constitute an automatic claim for refund."

(From a hearing before a subcommittee of the committee on finance, United States Senate, during the 77th Congress, Second Session on withholding provisions of the 1942 Revenue Act on August 21 and 22, 1942.  Missouri Democratic Senator Bennett Clark, Connecticut Republican Senator John A. Danaher and testifying witnesses Charles O. Hardy of the Brookings Institution and Milton Friedman of the Treasury Department Division of Tax Research.)

 

“Even if you do not otherwise have to file a return, you should file one to get a refund of any Federal income tax withheld.”

From the instructions for the 2002 Form 1040

 

26 CFR 301.6402-3 Special Rules applicable to income tax.

(a) In the case of a claim for credit or refund filed after June 30, 1976--

(1) In general, in the case of an overpayment of income taxes, a claim for credit or refund of such overpayment shall be made on the appropriate income tax return.

 

26 CFR 301.6203-1 Method of assessment.

...The amount of the assessment shall, in the case of a tax shown on a return by the taxpayer, be the amount so shown...

(...and even $0.00 is an amount.  By the way, those disturbed by the gratuitous use of the term "taxpayer" in this regulation should relax and read 'About 1040s And Claiming Refunds' in CtC.)

*****

Having to take this matter to the courts is an annoyance and an inconvenience, and the effort will be strongly resisted.  But it appears to be a necessary step.  As Frederick Douglass, a man well-acquainted with arrogant and self-serving power reminds us, 

"Power concedes nothing without a demand.  It never did and it never will.  Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed on them, and these will continue till they have been resisted with either words or blows, or with both.  The limits of tyrants are prescribed by the endurance of those whom they suppress."

So, let's demand an end to this "frivolous" nonsense.

THIS LETTER CONSTITUTES CONSTRUCTIVE NOTICE TO THE RECIPIENT

John Doe

123 Anywhere Drive

Anytown, FL 12345

Certified Mail # ______________________________________

July 22, 2008

INTERNAL REVENUE SERVICE

Attn: Maureen Green

Contact I.D. No. 29-12033

1973 North Rulon White Blvd.

Ogden, UT  84404-0040

Subject:  Your Letter 3176 dated June 20, 2008

Dear IRS Agent:

I am in receipt of your Letter 3176 dated June 20, 2008, a copy of which is enclosed.  This letter constitutes constructive notice to you the recipient.

Why I Am Writing You

Your letter alleges that:

(1) my 1998 Form 1040 individual income tax return is based on a position identified as frivolous under I.R.C. §6702(c), OR

(2) your letter alleges that my 1998 Form 1040 reflects a desire to delay or impede the administration of federal tax laws, OR

(3) Both (1) and (2) above.

My filed 1998 Form 1040 is my sworn testimony in an official proceeding.  Every fact contained in my 1998 Form 1040 is within my personal knowledge.  I swore under penalties of perjury that all the facts contained in my 1998 Form 1040 are true, correct, and complete to the best of my knowledge and belief.

My understanding of your letter is as follows:  You, Ms. Green, in your official capacity, are informing me that if I do not change my previously filed 1998 Form 1040 by "correcting" it within 30 days, you will make an assessment of tax against me in the form of a $500 civil penalty, and you will then take $500 from me.  Furthermore, when you say that I need to "correct" my return, you mean that you want me to redact and withhold factual information that I know to be true, and add and include lies that I know to be false, and then sign the "corrected" false return under penalties of perjury, and send you the "corrected" false return.  After I send you the "corrected" false return, you will stop threatening to take $500 from me.

What You Need To Do

Write back within 30 days of the date of this letter confirming that my understanding of your Letter 3176 is correct.  When you write, you should specify in detail which of the frivolous positions prescribed by the Secretary pursuant to I.R.C. §6702(c) apply to my return, and why they apply to my return, OR you should describe in detail the reasons why my 1998 Form 1040 reflects a desire to delay or impede the administration of federal tax laws.  Make sure you explain how and why these apply to my 1998 Form 1040.  Otherwise, it will be presumed that you sent your Letter 3176 for some other reason.  In addition, you should specify in detail one or more of the following:

(1) The reason(s) why my 1998 Form 1040 does not contain information on which the substantial correctness of the self-assessed determination of tax may be judged.

(2) The information contained in my 1998 Form 1040 that on its face indicates the self-assessed determination of tax is substantially incorrect.

What Happens If You Don't Respond

If you do not respond within 30 days with all of the information you should provide, your silence will create a legal presumption that you sent your Letter 3176 in bad faith, for no legitimate purpose, and does, in fact, constitute an attempt at witness-tampering and/or extortion.

See 18 U.S.C. § 1512(b), which imposes criminal penalties for tampering with my sworn testimony in official proceedings such as the filing of federal income tax returns:

§ 1512. Tampering with a witness, victim, or an informant

(b) Whoever knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to—

(1) influence, delay, or prevent the testimony of any person in an official proceeding;

            . . . shall be fined under this title or imprisoned not more than ten years, or both.

Also see 18 U.S.C. § 872, which imposes criminal penalties for acts of extortion by officers or employees of the United States:

§ 872. Extortion by officers or employees of the United States

Whoever, being an officer, or employee of the United States or any department or agency thereof, or representing himself to be or assuming to act as such, under color or pretense of office or employment commits or attempts an act of extortion, shall be fined under this title or imprisoned not more than three years, or both; but if the amount so extorted or demanded does not exceed $1,000, he shall be fined under this title or imprisoned not more than one year, or both.

This letter constitutes constructive notice to the recipient.

Sincerely,

John Doe

Enclosure:

Letter 3176 dated June 20, 2008

Regarding The Legal Contest

What follows is an edited version of a response I recently offered to a Cracking the Code Warrior who is preparing to file suit against a state Department of Revenue.  The state has characterized this American's tax filings as "frivolous", and used this arbitrary characterization as a pretext for failing to incorporate the filings into its process.

This material will be generally applicable to dealings with any state tax agency seeking to evade the law.

*****

G, the first thing that your correspondent needs to understand is that it is not the rightness or wrongness of your assertions that are directly at issue here.  What is directly at issue is the DOR's refusal to take official notice of those assertions, and work them into its calculations.  This is what the state is trying to avoid, because its calculations are highly programmed: If 'A' and 'B' are put into the pot, the 'C' that comes out is what the mechanics of the process dictate, and is outside the control of the department.  Thus, it wants to keep 'B' (your testimony) out of the pot.

Undoubtedly, the DOR will try to make the content of your testimony the issue.  This would be an attempt to defeat the statutory structure in which the overall revenue law operates, in consistency with which structure the legal definition of "frivolous" is confined to purely mechanical aspects of the filer's presentation of testimony.  The determination of whether a return is "frivolous" extends solely to the question of whether the return constitutes a valid, cognizable affidavit under the normal and logical standards by which such documents are judged-- that is, neither contradicting itself, nor lacking some information upon which something appearing upon the affidavit itself purports to be based.

" [A return is 'frivolous' if it] does not contain information on which the substantial correctness of the self-assessment may be judged;

 or,

Contains information that on its face indicates that the self-assessment is substantially incorrect". (From the federal version of the statute)

Nothing more is within the scope of the question.  

Nonetheless, if the state doesn't surrender before this question gets into the courtroom, it can be expected to try hard to suggest that your declining to incorporate someone else's testimony into your affidavit (that of the 'information return' creator, whose testimony serves the state's  interests a good deal more than yours does), means your return "does not contain information on which the substantial correctness of the self-assessment may be judged."  To simply observe the true nature of this suggestion is to defeat it.  No law can compel anyone to testify as to the knowledge and belief of someone else, nor can any law invalidate anyone's testimony for failing to do so-- and the revenue law makes no attempt to be an exception to these most fundamental of legal principles.  This "frivolous" statute allows a challenge as to whether the return's 'tax due' (or refund owed) figure is supported by the information in the filing, not whether that figure is what someone else imagines it should be.

Furthermore, since the state's structure adopts the "income" figure from a previously completed federal return as its starting point, there is no place for any consideration of any "income" allegations from any 'information return' (W-2 or 1099).  In fact, the only role any 'information return' CAN serve within the state's statutory scheme is that of supporting (or disputing) the amounts withheld.  Therefore, unless the figures on the copies of such information returns furnished to the state by the payer disagree with those entered on the return (and its supporting documents), the payer's 'information returns' have no place in the picture under any circumstances.

(Further still, and as regards both the state's structure and that of the federal government: It goes without saying that 'information returns' CAN be wrong.  Thus, it also goes without saying that it would be improper for a filer to include any assertions made on an 'information return' unless they were fully in keeping with the filer's own knowledge and belief; and it would be profoundly improper for any government to design, or seek to enforce, a statutory structure under which a filer's testimony is somehow required to incorporate or endorse such assertions.)

The state may attempt other diversions as well, in an effort to cloud the court's mind until it wearily finds ambiguity in the language of the "frivolous" statute where none actually exists.  Therefore, it is important that it is kept firmly in mind that you are bringing the suit.  You, therefore, control what question is being presented to the court-- which should be strictly confined to NOTHING except whether or not your return lacks "information on which the substantial correctness of the self-assessment may be judged;  or, Contains information that on its face indicates that the self-assessment is substantially incorrect".  Once that question is decided, the bureaucracy must proceed accordingly, by tossing 'B' into the pot and living with the 'C' that comes out.  That 'C' will be a victory for you (and the rule of law).

Finally, even if you don't succeed in engaging this particular fellow or anyone, for that matter, don't abandon the contest.  The state is trying to claim that you declined to testify in what amounted to a hearing regarding your tax liability, because if that were true, you lose, and the state gains.  That's all there is to it, and it is an OUTRAGE!!!  You DID testify, and you can and will prove it.  Keep the outrage alive, and keep moving forward.  Understand that when the only play your opponent's got relies on keeping you from taking the field, the game is yours to lose.

Best,
-Pete

Regarding Crimes And Criminals

I heard recently from a 'Cracking the Code-...' warrior who had received a form letter from the IRS which referenced his filed 1040 (more-or-less) and stridently suggested the return to be "frivolous", and his filing of it as fraught with peril.  This form letter is known as a 'Letter 3176', and is a standard type of nasty-gram by which an effort is occasionally made to scare an American who has submitted filings inconvenient to the government into rescinding his or her returns.

These "letters" have no legal stature-- they're just cheap, formulaic, "Better close those eyes and get back down on all fours, or  else!" shots-in-the-dark,  probably deployed simply because they might succeed in intimidating a filer who really doesn't know what he or she is doing into sinking back into quietude now and then, and the government doesn't pay for the paper and postage anyway.  (See 'The Empire Whiffs Back- Strike Two!' for more on these 'letters'.)  In the case of my correspondent, the snarl received was more obviously meaningless than usual-- it only ambiguously identified his return as the document about which it was whining in the fields provided for that purpose, and even had "N/A" entered where certain other identifying information is called for.

(This image of the 'letter' is condensed to display just the quirks noted above)

More to the point, two weeks or so after receiving the 'Letter 3176', my correspondent found his very substantial refund check in his mailbox, complete, with interest, and untouched by any penalty...

Prior to the arrival of that concrete expression of the situation, however, my correspondent had discussed matters with an apparent 'agent provocateur' belonging (in a particularly egregious expression of shameless corruption) to a WeThePeople group with which he has regular contact, who hissed and muttered in support of the 'Letter 3176's' dark threats.  This wormtongue suggested to my correspondent that if he didn't withdraw his filed return and change his testimony, he would doubtless face criminal charges.  This suggestion, ridiculous though it is, merits a little discussion-- in fact, it offers an opportunity to make a few very worthwhile points.

First, let's deal with the notion that filing a return properly and accurately reflecting what is known and believed by the filer can be a crime.  The relevant statutes, including those related to tax evasion, false claims, "frivolous" returns, etc., are all of the exact essential character as the example we'll look at, 26 USC 7206(1):

26 USC § 7206. Fraud and false statements

Any person who—
(1) Declaration under penalties of perjury
Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter;

It is clear that for the making of a statement, return, etc. to be criminal under this statute, the document must be made in willful error-- that is, deliberately contrary to what the filer knows and believes to be true.  The converse of this, of course, is that a document made in conformity to what the filer knows and believes to be true, is not criminal.  This reflects a most obvious and fundamental principle of law: No one can be penalized for the content of their testimony, no matter what it is, unless it is knowingly and deliberately false.  Period.  Furthermore, even all CIVIL penalties that can arise in connection with filed testimonial documents such as tax returns are subject to the same rules.

No one conversant with the information contained in 'Cracking the Code- The Fascinating Truth About Taxation In America' (and, further, with the large and growing body of confirming evidence issuing forth daily from federal and state authorities) who files accurate documents reflecting a knowledge and belief that that information is accurate, could credibly be accused of willful false testimony.  Indeed, the converse is actually true: Anyone conversant with the information contained in 'Cracking the Code- The Fascinating Truth About Taxation In America' (and, particularly, with the large and growing body of confirming evidence issuing forth daily from federal and state authorities) who files documents NOT reflecting a knowledge and belief that that information is accurate is at risk of being credibly accused of violations such as those being discussed above.

However, there certainly ARE crimes that can be committed with regard to filed returns and related testimonial documents.

For instance:

Title 18 § 1512. Tampering with a witness, victim, or an informant

(b) Whoever knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to—

(1) influence, delay, or prevent the testimony of any person in an official proceeding;

(2) cause or induce any person to—

(A) withhold testimony, or withhold a record, document, or other object, from an official proceeding;

shall be fined under this title or imprisoned not more than ten years, or both.

(d) Whoever intentionally harasses another person and thereby hinders, delays, prevents, or dissuades any person from—

(1) attending or testifying in an official proceeding;

 

or attempts to do so, shall be fined under this title or imprisoned not more than one year, or both.

(The filing of a tax return, particularly one which involves rebutting the testimony of another filer, is every bit an "official proceeding"-- but even if doubts were entertained in that regard, the testimony made on a return is unquestionably relevant to, and anticipatory of, more formal judicial contests of several varieties, and Congress has thoughtfully provided that, 

(f) For the purposes of this section—

(1) an official proceeding need not be pending or about to be instituted at the time of the offense;)

 

Furthermore, just to offer a few additional relevant statutes,

26 USC § 7214. Offenses by officers and employees of the United States

(a) Unlawful acts of revenue officers or agents

Any officer or employee of the United States acting in connection with any revenue law of the United States—

(1) who is guilty of any extortion or willful oppression under color of law;

18 USC § 872. Extortion by officers or employees of the United States

Whoever, being an officer, or employee of the United States or any department or agency thereof, or representing himself to be or assuming to act as such, under color or pretense of office or employment commits or attempts an act of extortion, shall be fined under this title or imprisoned not more than three years, or both; but if the amount so extorted or demanded does not exceed $1,000, he shall be fined under this title or imprisoned not more than one year, or both.

and,

18 USC § 876. Mailing threatening communications

(d) Whoever, with intent to extort from any person any money or other thing of value, knowingly so deposits or causes to be delivered, as aforesaid, any communication, with or without a name or designating mark subscribed thereto, addressed to any other person and containing any threat to injure the property or reputation of the addressee or of another, or the reputation of a deceased person, or any threat to accuse the addressee or any other person of a crime, shall be fined under this title or imprisoned not more than two years, or both.

Understand that none of these criminal offenses require that the actor involved be the direct beneficiary of the crime.  That is to say, extorting money by threat, or seeking to influence testimony, etc., is criminal even if it is only done as the agent of the direct beneficiary of the extorted money or altered testimony.  Thus, for a government agent even just to intimate (much less baldly declare) that unless a filer changes his or her honest testimony, they will-- or even could-- be charged with a crime, or suffer a civil penalty for having so testified, IS A FELONY; and to do so where the change in testimony would result in a financial benefit to the government is a multiple felony.  There's a reason why items like a 'Letter 3176' actually contain no direct accusations or declarations, but only carefully worded, and ultimately irrelevant, threats.

I STRONGLY URGE ANYONE WHO IS CONTACTED BY A GOVERNMENT PERSON AND IN ANY WAY MADE TO FEEL PRESSURED, THREATENED, URGED OR ENCOURAGED TO CHANGE OR RESCIND THEIR TESTIMONY TO TAKE CAREFUL AND THOROUGH NOTES OF THE ENCOUNTER.  IF THE ENCOUNTER IS LIVE, RECORD IT IF AT ALL POSSIBLE.  OTHERWISE, TAKE WRITTEN NOTES-- CONTEMPORANEOUSLY, IF POSSIBLE; IMMEDIATELY AFTERWARD IF NOT.  IF THE ENCOUNTER IS BY PHONE, GET THE NUMBER THE CRIMINAL IS CALLING FROM.  IF THE EFFORT TO INFLUENCE YOUR TESTIMONY IS BY MAIL, PRESERVE THE INSTRUMENT AND ENVELOPE, AND NOTE THE DATE OF RECEIPT.

WHATEVER FORM IN WHICH THE CRIME OCCURS, POST A REPORT OF THE EVENT, WITH AS MUCH DETAIL AS POSSIBLE, TO "crimes(at)losthorizons.com".  A GREAT DEAL OF GOOD MAY PROVE TO BE THE UNINTENDED CONSEQUENCE OF EACH SUCH DESPICABLE LITTLE OFFENSE.

This same very astute warrior makes the following observation: