How to Stop an IRS Levy in 24 Hours and Get Your Money Back!

WINNING THE COLLECTION GAME

How to Stop an IRS Levy in 24 Hours and Get Your Money Back

Published byLINDEN SERIES LLC

All Rights Reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any scanning, storage, or retrieval system without permission from the publisher, except by a reviewer who may quote brief passages in a review.This publication is informational and not advisory. This publication does not constitute legal advice nor is it an attempt to solicit clients. No person or entity should act or forbear any act based on the information contained herein. YOU SHOULD ALWAYS CONTACT AN ATTORNEY AUTHORIZED TO PRACTICE LAW IN YOUR STATE FOR SPECIFIC LEGAL ADVICE. The information and materials contained in this publication are provided by the publisher. The member providing such information and materials represents that such information and materials are true to the best of each such member's knowledge. Any member, governor, manager and agent providing information is not responsible for inaccuracies with respect to such information and materials and nothing in this site constitutes legal advice by any members, governors, managers or agents.The purpose of this publication is to inform, educate, and entertain, and it is not intended to support, induce, or condone any activity that might violate local, state, or federal law, nor to deprive any company of its lawful income. Neither the author nor publisher or copyright holder shall have any liability to any person or entity derived from any alleged loss or damage arising from the use or misuse of the information contained herein. The author and the publisher have exerted their best efforts to ensure the accuracy of the information presented herein, yet there are no doubt errors – which are sincerely regretted.Copyright © 2002 – 2011 by LINDEN SERIES LLCFifth editionISBN: 1-930420-08-0

Printed in the United States of America1 2 3 4 5 6 7 8 9

How to Stop an IRS Levy in 24 Hours and Get Your Money Back!

CONTENTSCONTENTS .............................................................................................................VIII

INTRODUCTION ............................................................................................................10

LIBERTY HAS NO NUMBER.........................................................................................12Eliminating the numbering scheme in practice............................................................................14

W-4 WITHHOLDING.................................................................................................22

REQUESTING RECORDS .............................................................................................44Request Forms:...........................................................................................................................44FOIA Exemptions and Exclusions: .................................................................................53IRS Disclosure Offices: ...................................................................................................55

DECODING YOUR IMF ............................................................................................65Basics:.........................................................................................................................................65PINEX .............................................................................................................................80Analysis of Form 5546: ...................................................................................................81

EXEMPTION – ACCEPTED FOR VALUE ...............................................................89

EFFECTIVE LETTER WRITING ....................................................................................94Elements Of An Effectively Written Letter: ................................................................................125Problem Resolution Office: ...........................................................................................129The Analogy:.................................................................................................................132

CIVIL DAMAGE CLAIMS .......................................................................................150TAXPAYER ADVOCATE ........................................................................................................156

I’M NO FOOL, NO SIREE! .....................................................................................165OMB ..........................................................................................................................................165Sixteenth Amendment ..................................................................................................170Tax Return Is Not A Contract........................................................................................170Wages...........................................................................................................................171Summons......................................................................................................................172Fifth Amendment Return...............................................................................................176No Immunity for State Citizens or Fifth Amendment Returns .......................................180

THE SKY IS FALLING............................................................................................185

How to Stop an IRS Levy in 24 Hours and Get Your Money Back!

Pre-Audit Notices: .....................................................................................................................185The Summons And Audit Process: ...............................................................................207Third Party Summons, Form 2039:...............................................................................213Appeals Hearings: ........................................................................................................213Notices of Deficiency, or 90 day letters: .......................................................................213U.S. Tax Court: .............................................................................................................214Five Ways To Stop A Levy: ..........................................................................................226Federal Court: ...............................................................................................................248Notices of Federal Tax Lien and Tax Liens: .................................................................252File Segregation Defeats Notices of Federal Tax Lien .................................................256Can I Sue The IRS?......................................................................................................257

BUSINESS REORGANIZATIONS AND ESTATE PLANNING..............................262Unincorporated Business Organizations...................................................................................262Limited Partnerships .....................................................................................................263The No EIN Business Checking Account: ....................................................................264Sales Tax Reduction Strategies: ..................................................................................267

APPENDIX A ..........................................................................................................269

APPENDIX B................................................................................................................278

INTRODUCTIONKnowledge will forever govern ignorance, and a people who mean to be their own governors, must arm themselves with the power knowledge gives. A popular government without popular information or the means of acquiring it, is but a prologue to a farce or a tragedy or perhaps both.-- James Madison

It is an unfortunate circumstance when the labor and intellect of a population is strenuously diverted toward publications such as these so as to correct the effects of a government that has lost its way. However, as I’ve said before, “All this aside, let’s work the problem.”Having been involved in the resolution of thousands of IRS collection disputes since 1993, I have written this edition to further expound upon the methods that have worked for so many of us over recent years. It is my intent with this writing to help both the IRS and citizens improve their methods of communication so as to avoid unnecessary expense and wasted time over the many unfounded misconceptions maintained by both sides. The procedures discussed in this book have been used by thousands.Contrary to what some have claimed, I do not work for the FBI, the IRS or any function of any government, nor have I ever. The closest “three letter” organization I’ve worked for was IBM. I believe the source for these misguided rumors is fear of discussing the issues with me directly and typical paranoia associated with confronting the government. My methods are different than most simply because I’ve been successful at resolving so many cases and because I study the agency’s internal operating manuals. I also believe that the best way to win a case against the IRS is to avoid the conflict altogether. I will also say that the cause for this writing has its origin in the fact that so many people jump onto the “non-filer” bandwagon without first interviewing the driver. If more people would consider the consequences of "removing" themselves from, or boycotting the tax system before they make the attempt, many of the problems discussed in this book would not occur so frequently.I do not encourage anyone to either file a tax return, or not file a tax return. There are civil and criminal consequences for not filing and this is a risk you must calculate on an individual basis. This book does not contain any dissertations about whether or not the filing of an income tax return is voluntary. I believe that any brief or series of arguments directed to such end is frivolous because it is a simple fact that an individual is not required to file a particular return until a particular return is filed. Each year is different. No brief can make this any less ambiguous, and anyone who puts forth such misinformation has no competence in this subject.This publication is not intended to give or supplement legal advice. I am not an attorney. This information is from my own personal experience and the successes I have enjoyed through my own research and process of trial and error. If you believe you need legal advice or have a question about your rights, you should consult with a licensed professional.The objective of this publication is to take a responsible approach to restoring a necessary function of our government. There is no need to destroy what we have,

or allow it to collapse. There is, understandably, an incredible level of animosity toward the IRS because it has been involved in so much abuse and because the system lacks the basic foundation to legally compel individual participation. I was very surprised to learn that there is no law, nor has there ever been any law, compelling my testimony on a federal income tax return and that there are no application or disclosure requirements for a social security number. These conditions are suspiciously absent from the tax code and you will discover many more inconsistencies as you complete the reading of this book. The United States is a bankrupt corporation, it has been bankrupt since its inception around Lincoln's term in office and continues to operate in bankruptcy under the reorganization plan codified into the Administrative Procedures Act found in Title 5 of the United States Code, Section 552(a). Because so many people are affected one way or another, including foreign organizations, there is a desperate need for a reliable accounting function. This is the function provided by the IRS, the accounting organization for the United States bankruptcy.It is my sincere hope that this information enables you to resolve any disputes you may have with the Internal Revenue Service, and that it helps these agents understand what role each of them play in this national concern.

Liberty Has No NumberWithout privacy, we have no sanctuary from government intrusion. The social security number, or any numbering scheme imposed by common business practice, culture, ignorance or law necessarily destroys every possible aspect of our freedom by abdicating the privacy of the individual.There have been many successful methods developed for the purpose of avoiding the use of a social security or other tax identification number. It is becoming more difficult to defeat the use of the social security number now that state government agencies are using state statutes to require the social security number as a condition for licensing and working in certain occupations. Some cases have been won, but the problem persists. We have a desperate need to sunset the Social Security Act or destroy the perceived integrity of the system by legal means such as publishing numbers.We have managed to find solutions engaging in nearly every type of activity without a social security number, but two major obstacles remain. The first is state licensing and the second is payee certification requests (W-9). I am not encouraging anyone to use the same approach to obtaining a license that you might use to opening a bank account, but at this time, I can offer no administrative solutions. We need to sue the state agencies and we need to eliminate the source of the problem, public policy standards. We need to eliminate the state’s ability to require the use of a federal identification number for state licensing applications. I have referred to this as leapfrogging legislation, using one law to enact another law that would otherwise be ruled unconstitutional.It would be unconstitutional or otherwise prohibited by law to be compelled to produce a social security number, fingerprint or other biometric information that could be used for identification, for no reason. The state is using licensing statutes to require disclosure of this type of information where it would otherwise be prohibited or found unconstitutional. I am proposing the following legislation:

_____________________________________________An Act To Compel The Statistical Justification Of New Legislation And Policy Making

To be known as the “Statistical Justification Act of 2000”Be it enacted by the United States Congress, that:(a) Definitions, for purposes of this Act,

A. the term “agency” shall include any agency under the executive

branch of the United States Government,

B. the term “population” shall include the class or classes of individuals intended to be affected by the proposed legislation or policy,

C. the term “policy” shall include any rule, procedure, practice statute or regulation of any agency,

D. the term “statistics” shall include all mathematical records relating to conviction rates.

(b) Notwithstanding any provision of law, any new or amended legislation

or agency policy making proposed for the purpose of reducing or eliminating criminal

activity, or which, in any manner, affects individual privacy rights,

A. shall be supported by a conviction rate increase of no less than

six percent of all populations considered to be affected, for each successive

year, beginning three years preceding, and not including, the year of the

proposed legislation or agency policy; and,

B. shall identify the affected populations by geographic location; and,C. shall not result in any uniform or standard method of identification to be used by more than one agency; and,D. shall not compel application or disclosure of any social security or other taxpayer identification number; and,E. shall not compel disclosure of any physical characteristics such as fingerprints, retinal patterns, deoxyribonucleic acid (DNA) information; and,F. shall specifically identify the conduct to be affected.

(c) Any proposed legislation or agency policy meeting the requirements of

this Act, shall not be enforceable during any calendar year in which the particular

legislation or policy shall fail to meet any of the criteria set forth in this Act. When

this condition occurs, the enactment will have no force or effect of law until these

criteria are once again satisfied.

(d) If the enactment has no positive affects upon the statistics used to

justify the act itself, within three years following the date of its enactment, then it

shall be deemed null and void.

(e) The statistics shall be obtained exclusively from the courts, with the

Chief Justice of the Supreme Court being ultimately responsible for their accuracy.

This information shall be submitted under penalty of perjury by the Chief Justice of

the Supreme Court and published in an annual report to the United States Congress

and the Chief justice of the United States Supreme Court shall be held accountable

for the accuracy and timeliness of the information reported.

SEPERABILITY

(e) Any provision of this Act which may be determined to be null and void

shall not affect any other provision of this Act.

_______________________________________

If the government wants to write these types of laws in the name of protecting us from fraud, terrorism, or whatever, then we must impose these types of limitations or lose everything. Today, simply manipulating the "stupid people" through the news and entertainment media can support the enactment of many laws. We need to force the government to justify its claims that more laws are needed to protect us from ourselves, and the new proposals need to be justified by real and relevant statistics.

Eliminating the numbering scheme in practiceLet's discuss practical means of avoiding the problems associated with refusing to disclose a social security number. It's quite simple to have utilities such as your electricity, telephone, water, and cable service registered in your name without disclosing any social security number. Many companies are amenable to giving you service if you just tell them you don't have a social security number and are willing to make a standard deposit.Renting a house or apartment is a different situation because of the risk involved. Leasing management companies want to be sure they can calculate a good risk by reviewing your credit history. The value of that lease agreement is twelve times your monthly rate plus deposits and home rental companies want to have a fair expectation of getting paid on time. It has been my experience that a letter of credit will satisfy or replace a review of your credit history.Credit file segregation will not eliminate the practice of using a nine-digit number in the process of applying for credit, but it will avoid using a social security number. I refer to the scheme as a "penal" system. This penal system is based on reward and punishment. You are rewarded for being a good "slave" by going into debt and paying your debts every month. You are not rewarded for not going into debt or not paying your debts. Today, it is nearly impossible to engage in any professional or personal business without a good credit history. Remember that credit equals debt. Good credit is not an asset; it is nothing more than liability. The credit reporting system allows creditors and debt collectors to damage or cloud your good name and title to your property without incurring the expenses of litigation or using the county records. Because of the system lack of substantial liability for creditors and debt collectors in reporting false information, it usually results in a great deal of abuse.Americans have the absolute right to choose their own name, diet, lifestyle, and anything else that does not give the state a compelling interest. In other words, as long as what I do is not expressly prohibited by law or does not end in damage or loss to another individual, the state cannot regulate me in that activity. As you have learned by reading this book, credit bureaus that maintain records about your buying patterns or private lifestyle are heavily regulated. That’s because they don’t have the absolute right to collect information about citizens.Americans have the absolute right to control information that businesses and other people maintain about them; and therefore, are not prohibited by any law in creating new credit histories as long as it does not involve the elements of fraud. The elements of fraud can easily be found in case law in your local law library. But it’s something you’ll never need to be concerned with when doing simple credit file segregation.Segregation ProcessI do not encourage credit file segregation for the reason that it can be used as one element in proving a fraud case. This would only be your concern if you really were involved in fraud. In any case, you should be aware of the potential liabilities. The

Federal Trade Commission has published several informative articles about this on the Internet. The FTC explains that applying for a new taxpayer identification number and using it to create a new credit history may be construed as fraud using the mail system or telephone fraud depending upon the methods used.If you do this for yourself, you must be cautious about using the United States Mail and telephone system; but more importantly, do not apply for a new taxpayer identification number for the purpose of using it in place of the government’s social security number issued for your use. If you wish to withdraw from the social security system, simply discontinue the use of a social security number. If you wish to continue your use of the credit and banking system without a social security number, but are having difficulty, it is important to make your disputes publicly known. Filing complaints with the responsible Federal Reserve Bank or the Comptroller of the Currency where national banks are concerned can accomplish this. It is also important to sue companies for denying you rights for refusing to disclose a social security number.I also recommend seeking opinion letters from attorneys, namely criminal defense attorneys, stating which particular elements of fraud or other crimes would be present in a proposed activity. An example of using this type professional of advice would be, if you want to open a bank account in person, and intend on using an alternative number in place of your social security number on the application without informing the bank. You may ask the attorney to explain in writing how this might be construed as criminal behavior, or how it could be changed to avoid the accusation. There is no certain method of boycotting the use of the social security number, but you must use discretion and prudence to reduce the risk of being penalized for doing something that is morally right.Several of our subscribers have questioned whether or not opening a bank account without a social security number would constitute fraud. Some have accused me of working for the IRS or the government to publish misinformation. It is my hope that this portion of the chapter will dispel these fears and paranoia, not for the purpose of convincing anyone to open such an account, but to demonstrate that it is not illegal in itself.The elements of fraud include false representation of a present or past fact made by the defendant, action in reliance thereupon by the plaintiff, and damage resulting to the plaintiff from such misrepresentation. The authority for this is Citizens Standard Life Insurance Company vs. Gilley, Tex.Civ.App., 521 S.W.2d 354, 356.This is the reason I encourage those using this type of strategy in the course of removing yourselves from the social security system, to use accounts where there is no substantial monetary gain; not that it would be a problem, but it would be an element in a case of fraud. Another element is to prove intent, and that is very difficult. Many subscribers have done this for themselves to create a new credit file with no social security number and to restore their ability to do business.When I completed my credit file segregation in 1996, I stopped using my middle name, so that also helped to further separate my current activities from my former credit history. You may also consider renting a private mail drop for a year and use that address on your bank applications for the account and secured credit card. The fact that some creditors can check a database of private mail drops to see if yours is one of them should not really affect you because you’ll be applying for a secured credit card. Many creditors now accept the fact that more and more people use private mail drops as opposed to their home addresses.

You must understand that creating a new credit file using an alternate nine digit number means that any credit inquiry using that number will be compared against the credit bureaus or Social Security Administration's database with the assumption that it is a social security number. It is not your responsibility that this is the process they use; however, you should understand what is happening so you can make clear distinctions in your mind. First of all, no law requires anyone to apply for or use a social security number in this country, it's just another government lie perpetrated by the system. If you question this read 26 CFR 301.6109-1(c). Second, you have the right to privacy and to be treated with fairness, and if your credit file allows administrative access to your personal information, it can lead to abuse. I do not recommend establishing a new credit file for the purpose of hiding from child support enforcement or misleading licensing authorities. Overcoming the SSN disclosure policies can be accomplished using other methods that are beyond the scope of this publication.You will first need to select a nine-digit number that is not currently being used in a decedent's estate or life insurance claim. It should have been validly issued during your lifetime, before you or your parents would have had occasion to use it as a social security number. It should at least have been issued in your lifetime. You can select a number based on the geographic region in which you were living at the time the number was recorded as being issued. This database can be found in Appendix D or on the Internet. Once you find the right number, request an "SSN" verification on the Internet or through a mortgage broker to be sure the number is okay for use.After you review Appendix D, you should realize that the total available social security numbers are limited to one billion and that the database has been exhausted over the years. If you consider that no number is supposed to be re-used and that nine-digit numbers are also assigned to businesses, trusts, and passports, you can easily conclude that there are not enough for everyone. The IRS has secretly overcome this problem by appending the first four letters of an individual's last name to the beginning of his social security number in order to separate his records from the next individual. It's similar to the problem of identical telephone numbers until the phone company added area codes.You should receive your denial with a ten days, or immediately if done online. Then you will confirm your new credit file and should not have any problems opening a bank account with that information. The bank will simply verify the number you give with a credit bureau's database, usually Equifax. Try to be sure that when you apply for credit, the inquiry goes through Equifax. The bank should not scrutinize your information at all, but if there is any question, a brief explanation will help.You can explain that you were the victim of credit card fraud or identity theft in the last two years and this might be the reason why there is some question as to the information you disclosed. Don't say anything else. Use this same explanation if the bank asks for your home address. Explain that you were advised by your attorney to avoid disclosing your home address to anyone. Once you have a bank account, open a secured line of credit and begin rebuilding your credit history.Deposit enough money to use as collateral for a secured credit card. The quickest and simplest way to apply for this secured credit card is through the Internet. If you don’t have access at home, use the one at your local public library. Just use your checking account number on the application so that the card issuer can freeze your checking account and use it for collateral on the credit account. The last step is to just use your credit card frequently. This credit reporting process to begin restoring your credit history takes between six and nine months to complete.

Even though this might be a solution to your credit problems, I do encourage people to learn negotiating techniques so that they do not rely solely on their credit history for doing business.Technical Aspects of the SchemeThe social security number consists of nine digits. The first three denote the area (or state) where the application was filed. Within each area, the group number (middle two digits) range from 01 to 99 but are not assigned in consecutive order. Within each group, the numbers are assigned in serial (sequentially) from 0001 through 9999, like this:

000 00 0000area group serial

For administrative purposes, group numbers issued first in a state or territory consist of the odd numbers. After all numbers in group 98 of a particular area have been issued, the even groups 02 through 08 are used, followed by odd groups 11 through 99. The chart below shows how group numbers are assigned:

ODD EVEN EVEN ODD01, 03, 05, 07, 09 10 to 98 02, 04, 06, 08 11 to 99

Here is the mathematical derivation of how I arrived at the total available numbers: Looking at the chart on the next page, you can see that each state has a limited number of “areas” for which applicants can be assigned numbers. These must be “areas” relating to the federal government, but in any case, three digits would normally result in a combination of ten to the third power, or n x n x n = n3. Remember that each “n” means “10” because in a range of 0 through 9, you can count ten numbers, 0, 1, 2, 3, 4, 5, 6, 7, 8, and 9. The exponent 3 represents how many digits (n). You can see that this yields a possible of 1,000 combinations for each area. You can see that New Hampshire has three areas, 001, 002 and 003 in which it can assign numbers, so this leaves a total possible remaining combination of social security numbers which may be assigned in New Hampshire at: 3 x (n x n) x (n x n x n x n) = 3 x (10 x 10) x (10 x 10 x 10 x 10) = 3 x 106 = 3 x 1,000,000 = 3,000,000. You can see by the chart on the next page that for each area, there are one million available numbers.Notice also that the 622 numbered areas are all consecutive, which should mean that there are actually 622 million possible social security numbers available (notice there are none allocated for 596-599); however, Mississippi shares 76 million of its 102 million with 21 other states and three other territories (see box under Mississippi), and Missouri shares 14 million of its 15 million with Mississippi. This allows a deficient state to share from a surplus state, thereby increasing the availability of the social security number across the entire nation and federal territories, but diminishing availability for the particular state having the surplus.Temporary numbers are assigned for areas 900 through 999 by a service center. The fourth and fifth digits are the code of the particular service center assigning the number. The last four digits are numbers assigned consecutively beginning with 0001. The printed format is TXXXXXXXXX* (T indicates a temporary social security number, and the asterisk (*) indicates the number is invalid). This demonstrates that there can be 100 million temporary numbers in existence at any one time among the total number of service centers.

State or territory Area Comb.

New Hampshire 001-003 3 mil.

Maine 004-007 4 mil.

Vermont 008-009 2 mil.

Massachusetts 010-034 25 mil.

Rhode Island 035-039 5 mil.

Connecticut 040-049 10 mil.

New York 050-134 85 mil.

New Jersey 135-158 24 mil.

Pennsylvania 159-211 53 mil.

Maryland 212-220 9 mil.

Delaware 221-222 2 mil.

Virginia 223-231 9 mil.

West Virginia 232-236 5 mil.

North Carolina237-246 10 mil.

South Carolina 247-251 5 mil.

Georgia 252-260 9 mil.

Florida 261-267 7 mil.

Ohio 268-302 35 mil.

Indiana 303-317 15 mil.

Illinois 318-361 44 mil.

Michigan 362-386 25 mil.

Wisconsin 387-399 13 mil.

Kentucky 400-407 8 mil.

Tennessee 408-415 8 mil.

Alabama 416-424 9 mil.

Mississippi 425-428 4 mil.

Arkansas 429-432 4 mil.

Louisiana 433-439 7 mil.

Oklahoma 440-448 9 mil.

Texas 449-467 19 mil.

Minnesota 468-477 10 mil.

State or territory Area Comb.

Iowa 478-485 8 mil.

Missouri 486-500 15 mil.Mississippi 487-588 102 mil.North Dakota 501-502 2 mil.South Dakota 503-504 2 mil.

Nebraska 505-508 4 mil.

Kansas 509-515 7 mil.

Montana 516-517 2 mil.

Idaho 518-519 2 mil.

Wyoming 520-520 1 mil.

Colorado 521-524 4 mil.

New Mexico 525-525 1 mil.

Arizona 526-527 2 mil.

Utah 528-529 2 mil.

Nevada 530-530 1 mil.

Washington 531-539 9 mil.

Oregon 540-544 5 mil.

Cal fornia 545-573 29 mil.

Alaska 574-574 1 mil.

Hawaii 575-576 2 mil.

Washington D.C. 577-579 3 mil.

Virgin Islands 580-580 1 mil.

Puerto Rico 581-584 4 mil.

New Mexico 585-585 1 mil.

All Pacific Territories 586-586

American Somoas 586-586

Guam 586-586 1 mil.

Florida 589-595 7 mil.Arizona 600-601 2 mil.

Cal fornia 602-626 25 mil.

Total SSN availability:722 mil.

The actual available is more likely to be c oser to 622 million.

Look at the columns below and you’ll find that in some states, there aren’t enough numbers available for the current population (negative numbers). I suspect that these numbers are being re-allocated from other states.

State or territory available SSNs 1997 population unusedAlabama 9,000,000 4,319,000 4,681,000Alaska 1,000,000 609,000 391,000

All Pacific Territories 333,333 0 333,333

American Somoas 333,333 0 333,333

Arizona 4,000,000 4,555,000 -555,000

Arkansas 4,000,000 2,523,000 1,477,000

California 54,000,000 32,268,000 21,732,000

Colorado 4,000,000 3,893,000 107,000

Connecticut 10,000,000 3,270,000 6,730,000

Delaware 2,000,000 732,000 1,268,000

Florida 14,000,000 14,654,000 -654,000Georgia 9,000,000 7,486,000 1,514,000Guam 333,333 0 333,333

Hawaii 2,000,000 1,187,000 813,000

Idaho 2,000,000 1,210,000 790,000

Illinois 44,000,000 11,896,000 32,104,000

Indiana 15,000,000 5,864,000 9,136,000

Iowa 8,000,000 2,852,000 5,148,000

Kansas 7,000,000 2,595,000 4,405,000

Kentucky 8,000,000 3,908,000 4,092,000

Louisiana 7,000,000 4,352,000 2,648,000

Maine 4,000,000 1,242,000 2,758,000

Maryland 9,000,000 5,094,000 3,906,000

Massachusetts 25,000,000 6,118,000 18,882,000

Michigan 25,000,000 9,774,000 15,226,000

Minnesota 10,000,000 4,686,000 5,314,000

Mississippi 102,000,000 2,731,000 99,269,000

Missouri 15,000,000 5,402,000 9,598,000

Montana 2,000,000 879,000 1,121,000

Nebraska 4,000,000 1,657,000 2,343,000

Nevada 1,000,000 1,677,000 -677,000New Hampshire 3,000,000 1,173,000 1,827,000New Jersey 24,000,000 8,053,000 15,947,000

New Mexico 2,000,000 1,730,000 270,000

New York 85,000,000 18,137,000 66,863,000

North Carolina10,000,000 7,425,000 2,575,000

North Dakota 2,000,000 641,000 1,359,000

Ohio 35,000,000 11,186,000 23,814,000

Oklahoma 9,000,000 3,317,000 5,683,000

Oregon 5,000,000 3,243,000 1,757,000

Pennsylvania 53,000,000 12,020,000 40,980,000

Puerto Rico 4,000,000 0 4,000,000

Rhode Island 5,000,000 987,000 4,013,000

State or territory available SSNs 1997 population unusedSouth Carolina 5,000,000 3,760,000 1,240,000South Dakota 2,000,000 738,000 1,262,000

Tennessee 8,000,000 5,368,000 2,632,000

Texas 19,000,000 19,439,000 -439,000Utah 2,000,000 2,059,000 -59,000

Vermont 2,000,000 589,000 1,411,000Virgin Islands 1,000,000 0 1,000,000

Virginia 9,000,000 6,734,000 2,266,000

Washington 9,000,000 5,610,000 3,390,000

Washington D.C. 3,000,000 529,000 2,471,000

West Virginia 5,000,000 1,816,000 3,184,000

Wisconsin 13,000,000 5,170,000 7,830,000

Wyoming 1,000,000 480,000 520,000

It was Grace D. Owen from Concord, New Hampshire, who was issued the lowest possible numbered social security card. The number was 001-01-0001. And the first official Social Security record is that of John D. Sweeney Jr. of New Rochelle, New York, and that number was 055-09-0001. In 1938, a sales representative at E. H. Ferree Company of Lockport, New York made the mistake of publishing the number of one of the company’s secretaries on an insert for its new wallets (078-05-1120). Although it was a mock card, half the size of the social security card itself, and was marked “specimen”, it has become the most abused number in the history of the social security scheme. More than 40,000 people have used this number at one time or another, some as recently as 1977. The Social Security Administration has now reserved this number along with the following range of numbers to be officially identified as bogus social security numbers: 987-65-4320 through 987-65-4329.The scheme’s first monthly beneficiary was Ida May Fuller of Ludlow, Vermont. She received $22.54 per month from 1940 until the cost of living increase was issued. She died in 1975 at age 100, and had received more than $20,000 in benefits. Since the beginning of the scheme, over four trillion dollars has been paid out in benefits.

W-4 Withholding“Because of what appears to be a lawful command on the surface, many citizens, because of their respect for what only appears to be law, are cunningly coerced into waving their rights due to ignorance.” U.S. v. Miller, 350 US 179, 187.

"No law requires a 'Protected Individual' to complete a W-4 Form or tofurnish a social security number to obtain or keep a job." EEOC v.Information Systems Consulting CA3-92-0169T in the United States District Court Northern District of Texas Dallas DivisionIn December of 1999, United States Tax Court attorney Rosemary Schell admitted that compensation paid as wages does not compel an employer to withhold for federal income tax purposes. Monaghan v. Commissioner 9981-99 (South Texas District).In December of 1999, United States Tax Court attorney Rosemary Schell admitted that no law compels disclosure of an individual's social security number as a condition of working. Monaghan v. Commissioner 9981-99 (South Texas District).In December of 1999, United States Tax Court attorney Rosemary Schell admitted that the United States Government cannot compel anyone to sign any document under penalty of perjury. Monaghan v. Commissioner 9981-99 (South Texas District)."… the Employer is not authorized to alter the [W-4] form or to dishonor the employee's claim. The certificate goes into effect automatically." United States v. Malinowski, 347 F. Supp. 352 (1992)"The employer has no legal obligation to intervene with the employee. … The IRS could not enforce a penalty on employers who refused to cooperate with the IRS with regard to the employee's withholding." (Herbert Mosher, District Director Massachusetts, pub. Associated Press, October 31, 1980.)"… Indeed, the IRS not only has failed to pursue these businesses but has in some cases given refunds after they claimed they did not owe taxes that had been paid earlier. In at least two cases, the businesses say they even received apologetic letters from the IRS for not rescinding penalties and issuing refunds sooner. Many tax experts express astonishment at the idea that the IRS is aware that legitimate businesses are cheating [editor's words], yet is not pursuing them. How many businesses are taunting the IRS this way is impossible to know. At least 23 have made their decisions public. Sixty business owners and their advisers met on the weekend of Nov. 11 [2000] in California to plan how to persuade thousands of others to join them. … Michael Graetz, a tax-policy adviser under President George Bush and now a professor at Yale, added that he thought it was a big mistake that the IRS had not moved immediately against these employers. 'They have to act,' he said, 'or this will get out of hand very, very quickly." David Cay Johnston, N.Y. Times News Service, November 19, 2000.

The current withholding and taxation scheme is nothing more than a rouse created and implemented by the United States for the sole purpose of collecting information about Americans. It's not about taxation because that could have been accomplished through a national sales tax many years ago. The current income tax system is about government surveillance and manipulating human behavior. The reason why these basic elements of the scheme are not required by law is because it allows the government to avoid the limits imposed against it by Constitutional prohibitions. No court can test the constitutionality of something that is not required by law. Government and corporate policies and accounting practices cannot generally be tested under Constitutional limitations under these circumstances because of the individual's guaranteed right to contract. Once you know the truth, you'll see that the IRS is nothing more than a "paper tiger" supported entirely by the ignorance and fear of Americans.The "W-4 withholding system" is a government surveillance scheme that causes employers to collect and report information to the IRS about individuals on a periodic basis. As long as the IRS is receiving a Form W-2 report about you, they will assume you have a federal income tax liability and the state will assume you have a state tax liability if prescribed by law (some states do not have an income tax). The system is perpetuated by fear and intimidation tactics practiced by the IRS. Corporations routinely adopt policies conducive to the government's unwritten demands under this scheme. The posting of Form W-2 data to the Information Returns Master File (IRMF) Component of the Individual Master File is what causes the IRS to begin the audit/examination and subsequent collection process against non-filers or against those whose reported income (i.e. 1040) differs with the IRMF. The law is very clear about distinguishing between what is taxable and what is not.Wages are taxable as gross income as defined under Section 61 of the Internal Revenue Code; however, not everyone earns a wage simply because he gets paid for working. The regulations control the status of “wage earner.” The Code defines a wage to mean compensation paid to an employee. An employee is defined as one who receives a wage and an employer is defined as one who pays a wage to an employee. This method of defining the terms is equivalent to defining a word by using the word in its own definition, or, like a dog chasing its tail. I call it a molestation because, just like a child being molested, most of us are unable to explain it to someone else (a court) in an intelligible manner so as to obtain a remedy. It’s written in such a way that when you make the attempt to explain it to someone, they think you must be creating your own theory because their brain cannot follow the three different concepts, each defined by the other one. It’s a psychological trick, a fraud.This is the problem facing us today. I have convinced some companies to accept the fact that there is no penalty imposed when one of their workers does not submit a Form W-4, an I-9 or a social security number. There are several well-known methods that have worked to terminate withholding agreements, but there is only one that is enforceable in court.I don’t necessarily agree with using the statement of citizenship method but it has worked for some people in the past. My objection to it is that you must claim to be a

U.S. Citizen under 26 CFR 1.1441-5 but the definition of the United States under that particular regulation includes the under water coastal regions of the pacific coast. I also believe it applies only to former nonresident aliens, who have just gained citizenship, so I don’t believe this can be enforced against a company in court if they refuse to accept it. As far as I can see, the only enforceable process is when you follow the notice requirements under 26 CFR 31.3402(p)-1.That’s another concern I have. I can’t understand why anyone would want to define his status as that which he is not. When I introduce myself, I don’t say I’m not the President of Zimbabwe, I introduce myself by my name. I’m not a nonresident alien, even though it could be argued that it’s not a term negatively defined, that it’s actually an affirmative definition of one’s status, it’s just too complicated. Life is much easier if you let it be simple. If you claim to be some defined status within the tax code, then you’ll be seeking some exemption from regulation. This can be a never-ending battle. Exemptions under the tax code apply only to taxpayers included within the tax code. Individuals who are not subject to the tax code cannot have an exemption under the code, it’s that simple! You shouldn’t be signing federal forms, such as the Form W-4, and claiming any exemption from withholding. Either you’re subject to it or you’re not. You can’t have it both ways. That is the purpose for obtaining a letter ruling or an information letter from the IRS.The request for information letters explained here would enable you to obtain information from authorized sources that prove the truth about the withholding and disclosure requirements of the tax code. These two examples can be made to the IRS and your local CPA. Most CPAs will agree to answer these questions in writing for a small fee.

[Subscriber][Address][City state zip]Secretary of the TreasuryInternal Revenue ServiceAttn: CC:DOMP.O. Box 7604Ben Franklin StationWashington, DC 20044[Date]Re request for general informationGreetings:

Thank you for taking a moment to issue the requested information letter. This request is made to satisfy a need for general information and does not meet the requirements of the applicable revenue procedure for requesting letter rulings or determination letters. The subject of this request is under the exclusive jurisdiction of the Associate Chief Counsel, Domestic.Which tax regulation imposes a penalty against an employer for not obtaining a signed Form W-4 from new employees?Which tax regulation imposes a penalty against an employer for not withholding from an employee?Which tax regulation penalizes an employer for not obtaining disclosure of an individual's social security number as a condition of employment?Best regards,

[Subscriber]

[Subscriber][Address][City state zip]

Secretary of the TreasuryInternal Revenue ServiceAttn: CC:DOMP.O. Box 7604Ben Franklin StationWashington, DC 20044[Date]Re request for general informationGreetings:

Thank you for taking a moment to issue the requested information letter. This request is made to satisfy a need for general information and does not meet the requirements of the applicable revenue procedure for requesting letter rulings or determination letters. The subject of this request is under the exclusive jurisdiction of the Associate Chief Counsel, Domestic.According to 26 CFR Part 31.3121(e)-1, the terms “State,” “United States” and “citizen” are defined as follows:

“(a) When used in the regulations in this subpart, the term ‘State’ includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, the Territories of Alaska and Hawaii before their admission as States, and (when used with respect to services performed after 1960) Guam and American Samoa.

(b) When used in the regulations in this subpart, the term ‘United States’, when used in a geographical sense, means the several states (including the Territories of Alaska and Hawaii before their admission as States), the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands. When used in the regulations in this subpart with respect to services performed after 1960, the term ‘United States’ also includes Guam and American Samoa when the term is used in a geographical sense. The term ‘citizen of the United States’ includes a citizen of the Commonwealth of Puerto Rico or the Virgin Islands, and, effective January 1, 1961, a citizen of Guam or American Samoa.”

My request relating to this information is: Why were Alaska and Hawaii excluded from this definition of State and United States after their admission as states?Best regards,

[Subscriber]

[Sender][Address][City state zip][CPA][Address][City state ZIP][Date]Re request for general informationGreetings:Thank you for taking a moment to issue the requested information letter. Please keep a record of your time and invoice me when you return your answer.1. Which tax regulation imposes a penalty against an employer for not obtaining disclosure of a social security number from new employees?2. Which tax regulation imposes a penalty against an employer for not entering into a withholding agreement with new employees?3. Which tax regulations imposes a penalty against an employer for not withholding from an employee when there is no withholding agreement?4. Which tax regulation imposes a penalty against an employer for not obtaining a signed Form W-4 from new employees?5. Which tax regulation imposes a penalty against an employer for not reporting a wage Form W-2 for an employee at the end of the tax period?6. Which tax regulation imposes a penalty against an employer for not reporting a Form 1099 for an independent contractor at the end of the tax period?7. Does filing a federal income tax return require that I waive certain rights?8. Does any law compel me to waive certain rights?Thanks again for answering my questions.Best regards,

[Sender]

Remember that it's not so important to get an admission from the IRS or any tax-professional. A non-responsive answer would be sufficient to prove your point.If the IRS would issue an official determination on the matter, it would establish the fact that because you were not earning “wages,” as recognized by the tax code, you were not an employee for that same year. Likewise, if you’re not an employee, then the company for which you work is not you’re employer, within the meaning of the tax code. The twenty common law principles defining employment are not relevant to this determination.If you’re fired or denied a job because of this, you should sue the company causing you the damage. If that same company disregards your termination of the W-4 agreement, they may also be subject to a damage claim. You should do your research before making a claim and this book will help you understand the legal principles behind the subject. It is important to pursue this type of case because if you let it go, the same problem will be much more difficult for the next person. If you take the time to study this material, you should be competent enough to make a claim in court and win. The objective is not to proceed to trial, it should not go that far, and it should not be because you expect to set a precedent. You cannot set a precedent at the trial court level, just make your claim and get it resolved and be finished with it. This type of case involves merely a contract dispute.When confronted on the issue, an IRS agent in Sarasota Florida admitted to me that even though it’s not required as a condition of contract, when the employer believes it is and makes the employee sign it, the IRS processes the form as if the person was earning wages and was required to submit the W-4. Two other agents in Ft. Myers admitted that the subscriber did not have to sign one, but then hounded her for months about it after the meeting. She finally had to quit her job and after several complaints, with no real resolution, they stopped harassing her.I have never found any legal requirement that anyone must sign a Form W-4, even if that person is earning “wages.” It just makes good sense to submit one if you really are earning wages so that less has to be paid at the end of the year. After you read this book, you’ll find that most people do not earn wages and therefore, do not incur any obligation to file a return at the end of the year.Be careful as to how you classify your activities. Instead of saying that you receive “wages” and risk it being misunderstood as taxable wages within the meaning of the tax code, don’t use the phrase. Describe what you do by using the definition instead of the defined word. I don’t earn wages and I’m not self-employed; however, I simply work for a living. I’m not a person or a U.S. Citizen, I’m a human being, a creature of reason.Many of our subscribers have submitted false W-4 Forms, claiming more exemptions than would actually be permitted if it was a legitimate submission in the first place. You should remember that if you claim an exemption under a statute, you create the presumption that you are subject to the statute so you must then comply with its requirements. In other words, you accomplish the exact opposite objective by signing a false Form W-4, tax return (known as a “zero tax return”) and other similar document. Don’t do it, it’s just plain stupid. Either don’t sign the form and/or sue your company.

Section 11.00 of the Criminal Tax Manual published in 1994 will help you understand the caveats involved with submitting W-4 Forms, or their substitute. The manual refers to certain forms as “false forms.” Remember, if you’re signing one, it’s only because you must be earning taxable wages within the meaning of the tax code, and the presumption is created that you must file a tax return at the end of the tax period. I’ve found no law requiring anyone to sign a Form W-4 but it’s convenient to have withholding if you truly are engaged in a taxable activity, such as earning wages. Otherwise, you shouldn’t be signing any federal form, not even a Form I-9 from the Immigration and Naturalization Service.The signing of a federal Form W-4 is an “admission of employee status”, so this is how you create the presumption of being an “employee.” It’s not so much that everyone is an employee and then they each admit it upon signing the form, it’s that you actually become an employee when you sign the form and then the agency treats you as if you’ve “admitted” to being an employee. The term “admission” implies that you are disclosing something that was true before you did the act of signing the form; this is the psychological scheme. Remember that those earning wages determine the status of employee and the status of employer is determined by those paying wages. The whole game devolves upon the meaning of wages. You cannot be an employee until you are paid a wage. If your pay is not a wage as defined by the Code, then you cannot possibly become an employee; however, when you elect to sign a Form W-4, you agree to treat your pay as a wage within the meaning of the tax code. Everything else after that is irrelevant.The question that usually follows is: “Well, if I’m not receiving a wage, then what am I receiving?” The answer is that you can call your pay anything you want, bananas, moola, dough; whatever, you can even call it a wage; however, it is not a wage within the meaning of the tax code! I don’t use the term “wage” at all because those who only have an eighth grade education, reading level and attention span get confused. I explain it like this: When I do work for this company, the company pays me for my labor. Stay away from using keywords like “wage.” The law tells us that it’s the circumstances under which you are being paid that determines whether or not you’re earning a wage, so just be aware of this when you communicate with people.A second element creating a presumption that you are earning a wage is the amount of income stated on a Form W-2 that is reported to the IRS at the end of the tax period because you signed a Form W-4. Please review Fed. R. Evid. Rule 801(2); and 26 U.S.C. § 6064 for a better understanding. Your company should not be reporting what you are being paid on the Form W-2 unless it truly is a wage. When you sign a Form W-4, you also make the company you’re contracting with, into an “employer”, by presumption.I’ll just suggest that you find a copy of the Criminal Tax Manual in your local library and read this policy for yourself. The bottom line about the requirements for the Department of Justice necessary to get a conviction against you under 26 USC § 7205(a) or 18 USC § 3571 (formerly 3623) are as follows:

1. The defendant was required to furnish an employer with a signed withholding exemption certificate (Form W-4) relating to the number of withholding exemptions claimed;

2. The defendant supplied his or her employer with a signed withholding statement [or failed to supply the employer with a signed withholding exemption certificate];3. The information supplied to the employer was false or fraudulent;4. The defendant acted willfully.These are the elements that need to be proven by the Department of Justice before they can convict you for any alleged violation. Remember, it does not matter so much as to what is right, or how the law works, it just matters how the policy of the government can influence a jury against you. We live in a lawless society, and the government commits most lawless acts.

At about the same time you begin collecting evidence or making the inquiries explained above, you may send a notice terminating your withholding agreement. If you have already expressed your intention of doing this and have not signed another W-4 or an exempt W-4, you can begin with the following correspondence:

[Company]Attn: [attorney for company][Address][City state zip][Phone][Date]Re withholding agreementDear Mr. [attorney or other representative]:

Thank you for taking a moment to review this correspondence.Part 31 of Section 3402(p)-1 of the Code of Federal Regulations allows

taxpayers to terminate withholding agreements upon notice, please see the attached facsimile of this regulation.

Please attach [Sender’s] statement made pursuant to this regulation to Form W-4 that he had previously filed with your company and terminate withholding on the date specified. [Sender] has also indicated to me that he is willing to post an indemnity bond and sign a release agreement, at his own expense, if you perceive some liability for complying with this federal regulation.Best regards,[Sender]

[Code of Federal Regulations][Title 26, Volume 14, Parts 30 to 39][Revised as of April 1, 1998]From the U.S. Government Printing Office via GPO Access[CITE: 26CFR31.3402(p)-1]TITLE 26--INTERNAL REVENUECHAPTER I--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY—PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE—Table of ContentsSubpart E--Collection of Income Tax at SourceSec. 31.3402(p)-1 Voluntary withholding agreements.

(a) In general. An employee and his employer may enter into an agreement under section 3402(b) to provide for the withholding of income tax upon payments of amounts described in paragraph (b)(1) of Sec. 31.3401(a)-3, made after December 31, 1970. An agreement may be entered into under this section only with respect to amounts which are includible in the gross income of the employee under section 61, and must be applicable to all such amounts paid by the employer to the employee. The amount to be withheld pursuant to an agreement under section 3402(p) shall be determined under the rules contained in section 3402 and the regulations thereunder. See Sec. 31.3405(c)-1, Q&A-3 concerning agreements to have more than 20-percent Federal income tax withheld from eligible rollover distributions within the meaning of section 402.(b) Form and duration of agreement.(1) (i) Except as provided in subdivision (ii) of this subparagraph, an employee who desires to enter into an agreement under section 3402(p) shall furnish his employer with Form W-4 (withholding exemption certificate) executed in accordance with the provisions of section 3402(f) and the regulations thereunder. The furnishing of such Form W-4 shall constitute a request for withholding.

(ii) In the case of an employee who desires to enter into an agreement under section 3402(p) with his employer, if the employee performs services (in addition to those to be the subject of the agreement) the remuneration for which is subject to mandatory income tax withholding by such employer, or if the employee wishes to specify that the agreement terminate on a specific date, the employee shall furnish the employer with a request for withholding which shall be signed by the employee, and shall contain--

(a) The name, address, and social security number of the employee making the request,

(b) The name and address of the employer,

(c) A statement that the employee desires withholding of Federal income tax, and applicable, of qualified State individual income tax (see paragraph (d)(3)(i) of Sec. 301.6361-1 of this chapter (Regulations on Procedures and Administration)), and(d) If the employee desires that the agreement terminate on a specific date, the date of termination of the agreement.If accepted by the employer as provided in subdivision (iii) of this subparagraph, the request shall be attached to, and constitute part of, the employee's Form W-4. An employee who furnishes his employer a request for withholding under this subdivision shall also furnish such employer with Form W-4 if such employee does not already have a Form W-4 in effect with such employer.

(iii) No request for withholding under section 3402(p) shall be effective as an agreement between an employer and an employee until the employer accepts the request by commencing to withhold from the amounts with respect to which the request was made.(2) An agreement under section 3402 (p) shall be effective for such period as

the employer and employee mutually agree upon. However, either the employer or the employee may terminate the agreement prior to the end of such period by furnishing a signed written notice to the other. Unless the employer and employee agree to an earlier termination date, the notice shall be effective with respect to the first payment of an amount in respect of which the agreement is in effect which is made on or after the first ``status determination date'' (January 1, May 1, July 1, and October 1 of each year) that occurs at least 30 days after the date on which the notice is furnished. If the employee executes a new Form W-4, the request upon which an agreement under section 3402 (p) is based shall be attached to, and constitute a part of, such new Form W-4.(86 Stat. 944, 26 U.S.C. 6364; 68A Stat. 917, 26 U.S.C. 7805)[T.D. 7096, 36 FR 5216, Mar. 18, 1971, as amended by T.D. 7577, 43 FR 59359, Dec. 20, 1978; T.D. 8619, 60 FR 49215, Sept. 22, 1995]

[Employee]Social Security No. 000-00-0000[Address] [City state zip][Company]Attn: [attorney for company][Address][City state zip][Date]Re withholding agreementGreetings:

This statement is made pursuant to Part 31, Section 3402(p)-1 of the Code of Federal Regulations, paragraph b. Please terminate the withholding agreement on [date] and attach this statement to Form W-4 that I have previously filed with your company. This change shall terminate on December 31, [year]. I do not wish to have any withholding from my paycheck during this period.Best regards,

[Sender]

After sending this notice to terminate your withholding agreement, the company will probably continue withholding at the same rate, or at least FICA, just as they were before the notice. Because they are not withholding a tax and have no immunity under the tax code (as one would for withholding a tax) the difference in what they continue to withhold for purported taxes and the remaining payment you receive (after considering all automatic deductions for things like insurance and child support) is the deficiency in your salary that you are owed.Just like any unpaid bill, you would need to send your company an invoice for the difference. The following language would probably be what you need:[Subscriber][Address][City state zip][Phone][Company]Attn: Payroll[Address][City state zip][Phone][Fax][Date]Re Invoice - Goods Sold & DeliveredGreetings:

During the pay periods of _____ through _____, I received $_______; for goods sold and delivered; however, our agreement was that I was to receive $___. The difference between what you paid me and what you owe me is $_______. Please send me a check for this difference within the next thirty days.Best regards,

[Subscriber]

The purpose of this invoice is to further establish that the dispute arises over an unpaid invoice for goods sold and delivered and not withheld tax payments under some withholding agreement, since there is no such agreement any longer.Non-covered Labor Leasing:This seems to be the best means of entirely avoiding the W-4/W-2 problem. Beyond the legal issue of whether or not someone earns wages in determining whether or not he is an employee earning taxable income (wages), the law requires that employers classify their workers as employees if the work they perform meets any of the twenty common law principles that define employment. The way to avoid this question is to lease employees from a company established for the sole purpose of leasing employees. There are many companies doing this today as it provides a cost effective way to meet the needs of business while simultaneously avoiding the liabilities and expenses normally attached to employment arrangements. A special type of leasing company, those engaged in “non-covered” leasing meets this demand much more effectively because non-covered employment is excluded from all withholding and matching programs administered by both the state and federal government.Release Agreements:Anytime you’re in a situation where someone wants you to file a federal form or disclose a social security number, and you know it’s not required by law, you may offer to release them of any liability, which they perceive to have, by an agreement.This is a very simple contract and most attorneys have the form in a file format where it’s readily available. If you’d like to prepare one in advance, Am Jur Pleadings and Forms have excellent forms that you can use. I would highly recommend that you read about release agreements in Am Jur if you are considering this option.A release agreement would relieve one party of liability for acts done by another party in good faith. If you’ve been hired for a job, but the company wants you to sign a withholding agreement, an I-9, or disclose a social security number because it’s believed there is some liability for not doing these things, a release agreement might be the solution. Once the agreement is signed, you would be liable for any fines imposed against the other party by the government along with any costs or other losses attributable to your acts of not signing the federal forms or disclosing a taxpayer identification number.You may find that some companies will not be willing make this agreement, even though they will recover any losses that might be incurred. If the labor agreement or other contract is valuable enough to each of you, you might offer to post a reasonable bond or make a deposit of cash or assets to secure this release agreement. Here is an example of what a bond may look like, but you may also find more examples in your local count recorder’s office.

BONDIndemnity bond

I, (obligor) as principal, and (obligee), as surety, is bound to (obligee) in the

sum of $ ________ for the payment of which I bind myself, my heirs, personal

representatives, successors, and assigns, jointly and severally.

THE CONDITION OF THIS BOND is that if (obligor) shall pay all costs and damages that (obligee) sustains in consequence of any claims arising out of the release agreement herein, then this bond is void; otherwise it remains in force.SIGNED AND SEALED on _______________, 19___.

___________________(SEAL) By _____________________As Principal As Attorney in Fact, As Surety

__________________________________________________

RELEASE AGREEMENT

For valuable consideration given, the undersigned hereby agree to the

following:

1. (Releaser) agrees to hold harmless, and release (Releasee), its heirs, personal representatives, successors, and assigns, jointly and severally, from all liability resulting from not withholding state and federal income taxes from (Releaser).

These items include the following taxes, but are not limited to: wage, social security, medicare, FUTA, supplemental unemployment compensation benefits, and third-party payments of sick pay, state and federal unemployment tax.2. (Releaser) agrees to incur all liability resulting from (Releasee), its heirs, personal representatives, successors, and assigns, jointly and severally, not withholding state and federal income taxes from (Releaser)

These items include the following taxes, but are not limited to: wage, social security, medicare, FUTA, supplemental unemployment compensation benefits, and third-party payments of sick pay, state and federal unemployment tax.3. If any provision of this agreement shall be deemed to be null and void, it shall not affect any other provision and reasonable opportunity shall be made by the parties to amend its terms to bring this agreement into conformity with the original intent of the bond and this agreement.

4. The term of this agreement shall not exceed any length of time beyond the last day for the year in which this agreement becomes effective.5. (Releaser) shall execute a bond for $______ as security for this agreement

within thirty days of the date when this agreement becomes effective.

______________________________Obligor

______________________________Obligee

State of ___________ )) ss

County of _________ )

Subscribed and Sworn (or affirmed) to before me a notary public this ___ day

of _______, _____.

______________________________ (ls)signature of notary

I’ve made this offer in the course of resolving several cases, and it was declined every time, but my subscribers’ requests were still upheld. I think that when you show you’re willing to assume all the liability, you have a tendency to be taken seriously. There are related issues to the W-4 problem and I’ve included examples of the types of language you might use in corresponding with your company:

[Sender][Address][City state ZIP][Company][Address][City state ZIP][Date]Re request for social security numberHello [attorney for company]:

Thank you for your recent inquiry.The law requires you, or your company who is the payer, to request

disclosure of his taxpayer identification number. If he refuses, the law requires you to make a second request stating to him that its disclosure is required by law (even though it’s not). If he refuses a second time, you are required by law to submit the requested forms to the IRS, together with an affidavit so stating that you have complied with these requirements. There is no penalty and there is no 31% withholding rate until disclosure is made. Please review 26 USC § 6109 and 26 CFR Part 301.6109-1(c), relating to identifying numbers.

I am also prepared to sign a release if you still believe there is some liability to your company.

Further, many people are unaware that applying for and using a social security number is not required by any law in this country. I have a letter from Congressman Davis in which he makes this admission.

I hope you’ll accept our apologies for any confusion caused because of this misunderstanding.Best regards,

The next example is a response to a Form W-9 request and on the next several pages. I’ve included an example of the type of letter we would draft on behalf of a subscriber for the purpose of terminating a withholding agreement. The "EIN" mentioned in this next letter is an "Entity Identification Number" created by the business, not issued by the government.

[Sender][Address][City state ZIP][Company][Address][City state ZIP][Date]Re W-9 requestHello ___,In order to comply with federal tax regulations, you are required to request disclosure of an identifying number twice. The law does not compel disclosure nor does it compel testimony on Form W-9. Please review 26 CFR 301.6109-1(c) or consult competent counsel if you have questions about the law.Backup withholding is defined under Section 3406 of the tax code. It applies only to payments of interest or dividends where there has been a payee certification failure with respect to the payment of interest or dividends, underreporting of interest or dividends, a failure to report interest or dividends or an incorrect submission of a taxpayer identification number with respect to the payment of interest or dividends. Please review 26 USC 3406 and its applicable regulations to gain further understanding, or consult with competent counsel if you have more questions.Fear of the IRS does not justify breaking the law. The law does not require me to disclose any taxpayer identification number to you, nor does it require me to produce testimony as a condition for working or being paid. If you wish to impose these unlawful conditions I will seek damages against your company for lost pay.The EIN used by my company is ___________. If you wish to use this number for your records only, you may do so.

Best regards,[Sender]

We want to avoid a lawsuit but if that is not an option, there is a particular strategy we recommend. In some cases, your company may agree to voluntarily default on a judgment where you would cover all the related expenses and they would be able to stop withholding without fear of reprisal .In many cases, you will need to argue the case in court on the merits. The problem you will face is the statutory immunity provided to employers relating to tax issues. It is important to present your argument as if it did not relate to any tax disputes, but merely involved an unpaid invoice, goods sold and delivered or open account. The balance of this subject is adequately addressed in Volume 3, Courtroom Code Breaker 1st Ed.

Requesting RecordsI want to make a very important point about attempting to use records obtained under the Freedom of Information and Privacy Acts to challenge a purported tax liability. The supreme court in some states has ruled that records obtained under these acts cannot be used to challenge a purported tax liability because such challenges are barred by statute, 26 USC § 7852(e). I know many people like decoding master files, but none of that work will help support your challenge to any purported tax liability.This chapter will show you how to go about obtaining information maintained about you by the IRS. The addresses listed on the following forms and instructions are generic and you must use the addresses that are located closer to your area. Substitute the sending address with the appropriate one from the list. I’ve also included form letters for you that will make your work much easier, but you should also review the regulations cited in the request for further instruction.

Request Forms:1) Freedom of Information and Privacy Act Request2) Freedom of Information Appeal3) Privacy Act Appeal4) Privacy Act Amendment and Correction Request5) Privacy Act Corrective StatementThis section is followed by an explanation of exemptions and exclusions, established under both Acts, upon which the agency may rely for any of its denials. The records requested in these forms are just a few of the records available; there are many records maintained about each individual. Records maintained about individual people are called “entity modules” and are created when the particular person files a statement or other information with the agency. The actual entity name is created in the same name as the citizen, but in all capital letters and is known as the “taxpayer.” When information is subsequently reported to the agency about activities taking place for that “entity module”, or taxpayer, a “taxpayer module” is then appended to the entity module. Examples of these types of information are W-2 Forms and 1099 Forms which state amounts of income received under your entity name and identifying number. The identifying number is usually the taxpayer’s social security number.The Internal Revenue Service does not maintain records relating to people; its records are only maintained for taxpayer entities. The example records that you’ll find on page two of the FOIA request are only requested under certain circumstances.I’ve found that when I ask for the Individual Master File together with the record of assessment, the Disclosure officer replies by submitting the IMF but not the record of assessment, claiming that the elements necessary for the record of assessment are included in the IMF and there is no need to disclose it. The Disclosure Officer will also sometimes admit that the record of assessment is not maintained for

individuals, but only for a region, and will only be created when it is summoned by a court for evidence. Therefore, I ask for them separately and cite the Robinson case to establish that they have a legal duty to produce a valid record of assessment as defined by the court under Section 6203 and its regulation.We know that without an assessment, there can be no tax liability. That means that the IRS cannot begin any deficiency or collection procedures; however, when you file a return, you are assessing yourself. Your filed tax return is the record of assessment but the Secretary must agree with the assessment and enter a Transaction Code (TC) 166 as the first transaction in the tax module of your IMF. As a general rule, the IRS doesn’t make an assessment when you don’t file. You should also make a special note to remember that TC 166 is the correct code for the filing of a tax return for an individual, but you will find that TC 150 is posted instead. This is a BMF transaction code. It’s for business entities having an EIN. Remember this and it will better help you understand the whole scheme of things as you learn more.After they complete deficiency procedures, like the ninety-day letter, they begin collection procedures. If you don’t respond properly to the notice of deficiency, they will make what they call an “assessment” and file a substitute return for you. A TC 150 and a Substitute for Return (SFR) will be recorded in your IMF. A proper response does not include a notice stating something like “refused for cause without dishonor.” The UCC is strictly for banks, warehouses and those dealing in chattel mortgages, papers and notes. It’s for commerce, not for private citizens! You’ll find further instruction on this in the chapter titled, “Effective Letter Writing.”Please allow me to digress for a moment. This type of letter writing (refused for cause…) is nonsense and has no foundation in law and doesn’t have any effect on the IRS or the collection procedure. I can’t understand why people continue to send those letters after so many years of having no success with them. Moreover, I can’t see how anyone of these patriots can justify selling these form letters for money, unless they truly are profiteers and care nothing about fixing the problem. I’ve even asked subscribers if they could explain the meaning of the “refused for cause” phrase to me, because I really don’t know what it means, and they can never explain it. We don’t have time for this type of brainless letter writing; we need to make our efforts calculated and purposeful and we need to work the problem.The work that I do is necessary; and in order for me to be successful, I must offer my services in the same manner as any business. My problem with it is that Due Process owes its existence to problems created by this out of control government; and its only saving grace is that we don’t create them but instead, help people have a better chance of not being victimized by the government and other corporations. It just makes my job much more difficult when these patriots for profit instigate litigation just like any ambulance-chaser-attorney used to do before the supreme courts began regulating them. Sometimes I can help a subscriber, but by the time they finish getting shuffled through the patriot circuit, following just plain stupid advice, and spending most of their money on useless and worthless letter writing, they don’t have enough money for the retainer. Additionally, some of them want our paralegals to work for free! I hope you’ll pardon my vignette but it’s rational and well deserved.

Instructions for completing FOIA Request:

1) Record the certified mail receipt number in the blank on the request form.

2) Write in the date that you will mail this request in the space provided.

3) Print your correct legal name in the blank across from “Other Requester.”

4) Write in your social security number in the blank across from “Identifying Number.”

5) Print neatly, your correct return mailing address at the bottom of the form.

6) Sign this request and attach a photocopy of your driver’s license, passport or other form of identification.

7) Make one photocopy of this completed request form and keep it for your records.

8) Re-fold the original completed form and seal it into a #10 business envelope.

9) Write your return address on the envelope and write the following sending address:Director, ________ DistrictInternal Revenue ServiceFOIA Request, Attn: Disclosure OfficerP.O. Box (or street) ________, Stop _______(city), (state) (zip)

FOIA Appeal Procedure:

1) If you do not receive the records you requested within 45 days from the date on which you mailed the request, then send in the appeal form to the address on the top left corner. Do this by certified mail and make a copy of your completed form just as you did for the original request.

2) You must attach the copy of your original request to the appeal.

Instructions for certified mail receipts:

1) On the green and white receipt slip, write in the following three lines for the “sent to” address:Director, ________ DistrictInternal Revenue ServiceFOIA Request, Attn: Disclosure OfficerP.O. Box (or street) ________, Stop _______(city), (state) (zip)

The postal clerk will complete the rest and give you the date stamped receipt portion, this is for your records only.

2) On the green card, the one which will be stamped by the Disclosure Officer and returned to you in a few days, write in the following address in box 3 on the side which does not have the white adhesive strips:Director, ________ DistrictInternal Revenue ServiceFOIA Request, Attn: Disclosure OfficerP.O. Box (or street) ________, Stop ______(city), (state) (zip)

3) In box 4a, write in the full certified mail number found on the green and white receipt slip, for example: “Z 302 887 564.”

4) In box 4b, only check the box labeled “Certified.”

5) On the reverse side that just contains one large box, print your name, address and ZIP code. You must do this to receive this green card back from the Disclosure Officer.

6) Do not write any other information on these receipts. If you make a mistake, you can always obtain another card at the post office. Just remember to use the correct certified mail number if you need another green and white receipt slip.

7) Take the sealed envelope and your completed green card with the green and white receipt slip to the post office and the clerk will help you mail your request. Keep the stamped receipt with your FOIA copy.

Director, ________ District Certified Mail No. ___________Internal Revenue ServiceFOIA Request, Attn: Disclosure OfficerP.O. Box (or street) ________, Stop _______[city state zip] [Date]

“Other Requester”: ____________________________

“Identifying Number”: ______-____-________

Re FREEDOM OF INFORMATION ACT and PRIVACY ACT REQUEST

NOTICE TO DISCLOSURE OFFICER:

This request is made pursuant to both the Freedom and Information Act and the Privacy Act, must be processed under both Acts, and does meet all procedural requirements of 31 CFR Subtitle A, Part 1, Appendix B, Subpart C, Appendix B; 26 CFR 601.702, and those listed on the Federal Register. I am requesting that you submit all of the items listed on the back of this request that are maintained under this Requester’s assigned name and Identifying number, as stated above, pertaining to each of the years, 1991 through 2000 inclusive:

(Please see the back of this request form for a list of the records requested.)

If there are any fees for searching for, or copying any of these items, please inform me of them before you complete this request. I am requesting this information so that I may better understand the operating policies and procedures of your agency. As you know, the Freedom of Information Act permits you to reduce or waive fees when the release of the information is considered as “primarily benefiting the public.” I believe that this request satisfies that criteria and ask that you waive any fees.

I understand the penalties for requesting information under false pretenses. I believe that the documents requested herein are publicly available, within the custody of your Commission’s Office, and not exempt or excluded under any statute, e.g. “the documents are not exempt under exemption (b)(5) as they represent a purely factual record of the agency’s post decisional file in this matter.” I also believe that reasonable grounds do not exist for withholding, in accordance with § (a)(4)(F) of the Act’s penalties section. If all or any part of this request is denied, please provide me with indexing, itemization and return to me a detailed statement citing the specific exemption(s) which you believe would justify your refusal to release the information, and inform me of the appeal procedure available to me as prescribed by law.

Please remember that it is the policy of the Department of Justice (FOIA Update spring/summer 1993) to refuse to represent your agency when it has failed to comply with regulations pertaining to this request, and because the Congress has not authorized the Secretary to appear on behalf of your agency, I would be awarded my claim plus all costs if the need to file a civil complaint in the U.S. District Court arose. However, I am very optimistic that I can obtain the information requested without such action.

I would appreciate your processing this request as quickly as possible, and I look forward to your written acknowledgment within twenty (20) days, as provided by law.

Best regards, return ______________Address: ______________

___________________________ ______________Signature of Requester

1. Information Returns Master File (IRMF) Transcript2. Form 5546, Examination Return Charge-Out form3. Form 4340, Certificate of Assessments and Payments.

Freedom of Information Appeal, D.O. Certified Mail No.: ______Commissioner of Internal Revenue Servicec/o Ben Franklin StationP.O. Box 929Washington, DC 20044 [date].“Other Requester”: ________________________“Identifying Number”: ______-____-________

Re FREEDOM OF INFORMATION APPEALNOTICE TO DISCLOSURE OFFICER:

This appeals the denial of information requested by me pursuant to the Freedom of Information Act, Privacy Act and agency regulations. My letter of request, mailed on the ___ day of ____________, 1997, was denied by the Freedom of Information Officer at the Chief Disclosure Branch for the Internal Revenue Service, a copy of such request is attached.

The issues on this appeal are framed by the fact that no answer was made by the Disclosure Officer within the twenty (20) day limit. This denial is incapable of withstanding close scrutiny by the courts, should judicial de novo review be sought. It has been the policy of the Department of Justice to refuse the represent the IRS after this type of refusal to answer or denial (see FOIA Update, 1993 spring/summer edition).

The Internal Revenue Service has failed to disclose records pertaining to the years ending ______ through ______; yet, my original request included these years.Furthermore, because the Freedom of Information Act exemptions do not cover the requested material, I request that the agency review the record and order the documents to be disclosed to me. In the event that any portions are withheld or deleted, I request a specific statement of the portions withheld, an index or similar statement of the scope of the material withheld, and a citation of the exemption sections of the initial denial upon which the denial on appeal is based. Pursuant to the Act’s requirements on administrative appeals, I request a response to this appeal within twenty (20) working days. In the event of any denial, I further request that the agency obtain the opinion of the Justice Department as a precondition denial under the terms 28 CFR § 50.9.Best regards, return __________________________

address: __________________________

__________________________________ __________________________signature of requester

Privacy Act Appeal, D.O. Certified Mail No.: ____Chief Disclosure BranchDepartment of the Treasury1500 Pennsylvania Avenue NWWashington, DC 20220 [date].“Other Requester”: _________________________“Identifying Number”: ______-____-________

Re PRIVACY ACT ACCESS APPEALNOTICE TO DISCLOSURE OFFICER:

This will present my appeal from your agency’s denial of access to my individual file, a denial that was received from Agent _________ of your agency on the ___ day of ________, [year]. In that denial letter, a copy of which is attached, I was advised that your office would handle my appeal.The denial of my access request frames the issues on this appeal. In his letter, Agent _________ states that the agency is withholding my personal file from access because it is allegedly exempt under the Privacy Act exemption for [subject]. This exemption is not applicable to the information requested, because that information of the type Congress intended to cover under the Privacy Act. The material is not within the claimed exemption because [state reasons]. Furthermore, the agency denial is unlawful because the agency regulations upon which it is permitted fail to have valid support in the statutory exemptions, since the regulations impermissibly expand a statute that the Congress directed to be construed narrowly on behalf of individuals seeking access to their own records.

The other exemption claimed by the agency is a general exemption from coverage of the Privacy Act for your agency’s activities. In the court of the activities in which you apparently compiled this file, your agency was not acting as a criminal law enforcement authority within the very narrow confines of the general exemptive authority in Privacy Act section (j). The agency’s conduct of an investigation was civil in nature and your agency has no blanket immunity from operation of the Privacy Act access provisions.

I advise the agency that withholding of this information, on grounds of the law enforcement exemption among specific exemption, may prejudice my future rights and privileges as a citizen and worker. Included in the rights protected by the proviso to Privacy Act section (k) (2) is my continuing right to be free of the adverse effects of incorrect or inflammatory government file information, including the right not to have incorrect information disseminated to potential employers. In the exercise of my protected rights I request that the agency void the determination below, and grant this appeal. Access to the documents is requested immediately, and your prompt response would be appreciated.Best regards, return _____________________

address: _____________________

__________________________________ ______________________signature of requester

Privacy Act Officer Certified Mail No.: _____Chief Disclosure BranchDepartment of the Treasury1500 Pennsylvania Avenue NWWashington, DC 20220 [date].“Other Requester”: ________________________“Identifying Number”: ______-____-________

Re PRIVACY ACT AMENDMENT AND CORRECTION REQUESTNOTICE TO DISCLOSURE OFFICER:Greetings:

On the ___ day of [month] [year], your agency provided me with a copy of agency records pertaining to me which your letter identified as coming from agency system (number). I disagree with the statements contained in this agency record and demand corrections as follows:

Page ____, item ____ is incorrect. I have never been engaged in any taxable activity known as “xxx”, nor have I ever applied for a license to engage in this particular taxable activity, nor have I ever derived income from this taxable activity and I demand that this be corrected immediately.

Page ____, item ____ is false and misleading. This record states that during the years ___, I was engaged in the taxable activity of ______; however, I have never been engaged in any taxable activity known as “xxx”, nor have I ever applied for a license to engage in this particular taxable activity, nor have I ever derived income from this taxable activity. This statement is false and recklessly inaccurate, and I demand that it be deleted from this file and corrected immediately.

In accordance with your agency’s regulations, I request that you supply me with a formal statement agreeing to these deletions within ten days or that you provide me with an opportunity to file a full rebuttal. As to the second statement above, regarding this taxable activity, I categorically deny that statement and I hereby request an explanation of its presence in your agency’s file, including the source and date of inclusion of the statement into this file. Your agency is hereby given notice that unless prompt corrective action is taken I fully intend to seek damages in an appropriate legal action.Best regards, return _______________________

Address: _______________________

__________________________________ _______________________Signature of requester

Privacy Act Officer Certified Mail No.: _____Chief Disclosure BranchDepartment of the Treasury1500 Pennsylvania Avenue NWWashington, DC 20220 [date].“Other Requester”: ________________________“Identifying Number”: ______-____-________

Re PRIVACY ACT CORRECTIVE STATEMENTNOTICE TO DISCLOSURE OFFICER:Greetings:

Your letter dated [date] denied my appeal for reconsideration by the agency of my formal request for correction of inaccurate, false and misleading file information about me which is contained in your agency’s system of records number _________. A copy of the denial letter is attached. Under the terms of section (d) (3) of the Privacy Act, I am entitled to file a statement of my disagreement with those records. Please reproduce the following statement immediately and insert it with any and all agency records pertaining to me:

“STATEMENT OF DISAGREEMENT. Pursuant to the terms of the Privacy Act, I _____________ have had an opportunity to examine the contents of my agency file. The statements made in that file are false, incorrect, and misleading, and should be deleted or changed by the agency to conform to true facts. Since the agency has refused, I advise users of this record that (explain errors and made correction). This statement is filed as a matter of legal right and must be made a part of the record on any future release of this record. Filing of this statement is without prejudice to my rights for judicial review and damages.”

Best regards, return __________________

Address: __________________

__________________________________ __________________Signature of requester

FOIA Exemptions and Exclusions:Each request for agency records made under the Freedom of Information Act is processed under both this Act and the Privacy Act. This means that an employee analyzes the records you’ve requested and tests them against each exemption and exclusion under both Acts, and against exemptions from withholding of records allowed under 26 USC § 6103. If none apply, the records you’ve requested will be disclosed to you, provided that you owe no fees from prior requests. You will only owe a fee, for private use, when your requests involves the disclosure of records exceeding one hundred pages and/or two hours of research. Here is a list of the particular exemptions but you will want to purchase a copy of the Freedom of Information Act Guide & Privacy Act Overview from the Government Printing Office (GPO) for sale on written request made to: Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328 (the ISBN is: 0-16-048853-2). These exemptions can be overcome when any reasonably segregable portion of a record can be provided to any person requesting such record after deletion of the portions which are exempt under these provisions. You can research specific case law found in this GPO publication for instructions as to how this type of partial disclosure might be accomplished in the event that a request is denied. Records will not be disclosed under the following conditions:FOIA Exemption 1: any withholding specifically authorized under criteria established by an executive order to be kept secret in the interest of national defense or foreign policy, which are properly classified under such an order;FOIA Exemption 2:any withholding related solely to the internal personnel rules and practices of an agency;FOIA Exemption 3:any withholding specifically exempted from disclosure by statute (other than section 552b of Title 5 USC)FOIA Exemption 4:any withholding of agency records relating to trade secrets and commercial or financial information obtained from a person and privileged or confidential;FOIA Exemption 5:inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency;FOIA Exemption 6:personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy;FOIA Exemption 7:records or information compiled for law enforcement purposes, but to the extent that the production of such law enforcement records or information (A) could reasonably be expected to interfere with enforcement proceedings, (B) would deprive a person of a right to a fair trial or an impartial adjudication, (C) could reasonably be expected to constitute an unwarranted invasion of personal privacy, (D) could reasonably be expected to disclose the identity of a confidential source, including a State, local, or foreign agency or authority or any private institution which furnished information on a confidential basis, and, in the case of a record or information compiled by a criminal law enforcement authority in the course of a criminal investigation or by an agency conducting a lawful national security intelligence investigation, information furnished by a confidential source, (E) would

disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law, or (F) could reasonably be expected to endanger the life or physical safety of any individual;FOIA Exemption 8:contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions; orFOIA Exemption 9:geological and geophysical information and data, including maps, concerning wells.(c)(1) Whenever a request is made which involves access to records described in subsection (b)(7)(A) and –FOIA Exclusion 1: (A) the investigation or proceeding involves a possible violation of criminal law; and (B) there is a reason to believe that (i) the subject of the investigation or proceeding is not aware of its pendency, and (ii) disclosure of the existence of the records could reasonably be expected to interfere with enforcement proceedings,FOIA Exclusion 2: Whenever informant records maintained by a criminal law enforcement agency under an informant’s name or personal identifier are requested by a third party according to the informant’s name or personal identifier, the agency may treat the records as not subject to the requirements of this section unless the informant’s status as an informant has been official confirmed.FOIA Exclusion 3: Whenever a request is made which involves access to records maintained by the Federal Bureau of Investigation pertaining to foreign intelligence or counterintelligence, or international terrorism, and the existence of the records is classified information as provided in subsection (b)(1), the Bureau may, as long as the existence of the records remains classified information, treat the records as not subject to the requirements of the section.FOIA Exemption under 26 USC § 6103: is codified from the language of the previous sections and pertains to disclosures in which the requester is not properly identified or does not have the standing due to lack of power of attorney or similar circumstances.The items requested in the first FOIA request shown at the beginning of this chapter are described in that manner because of the trouble usually encountered when requesting them. You don’t usually need to be so elaborate when requesting other records. Just remember not to request a record of assessment in the same request with one for the IMF because the IRS will claim that the IMF transcripts contain all the elements of the record of assessment, and then refuse to produce it. On the next several pages, you will find a complete list of offices from which you can request records. These offices are divided into two sections; the first is a list of disclosure office locations and the second is a list of the ten service center locations.

IRS Disclosure Offices:A FOIA request should generally be addressed to the IRS Disclosure Office that services your current address. If you know that the records that you are requesting are located in another area you should direct your request to the Disclosure Office where those records are kept. IRS Disclosure Offices are listed below. If you are requesting headquarters IRS policy documents please write to the Headquarters Disclosure Office included at the end of the address list.IRS Disclosure Office AddressesAlabama IRS FOIA RequestNew Orleans Disclosure OfficeMail Stop 40600 S. Maestri PlaceNew Orleans, LA 70130

Alaska IRS FOIA RequestOakland Disclosure Office1301 Clay Street, Suite 800-SOakland, CA 94612

Arkansas IRS FOIA RequestNashville Disclosure OfficeMDP 44801 Broad Street, Room 48Nashville, TN 37203

Arizona IRS FOIA RequestPhoenix Disclosure OfficeMail Stop 7000 PHX210 E. Earll DrivePhoenix, AZ 85012

California IRS FOIA RequestLaguna Niguel Disclosure OfficePost Office Box 30207Laguna Niguel, CA 92607-0208

IRS FOIA RequestLos Angeles Disclosure OfficeMail Stop 1020300 N. Los Angeles StreetLos Angeles, CA 90012-3363 IRS FOIA RequestOakland Disclosure Office1301 Clay Street, Suite 800-SOakland, CA 94612 IRS FOIA RequestSan Jose Disclosure OfficeMail Stop HQ-460355 South Market StreetSan Jose, CA 95113

Colorado IRS FOIA RequestDenver Disclosure OfficeMail Stop 7000 DEN600 17th StreetDenver, CO 80202-2490

Connecticut IRS FOIA RequestHartford Disclosure OfficeWilliam R. Cotter F.O.B.Mail Stop 140135 High StreetHartford, CT 06103

Delaware IRS FOIA RequestBaltimore Disclosure OfficeGeorge Fallon Fed. Bldg.31 Hopkins Plaza, Room 1210

Baltimore, MD 21201

District of Columbia IRS FOIA RequestBaltimore Disclosure OfficeGeorge Fallon Fed. Bldg.31 Hopkins Plaza, Room 1210Baltimore, MD 21201

Florida IRS FOIA RequestFort Lauderdale Disclosure Off.Mail Stop 40307850 SW 6th Court, Rm. 260Plantation, FL 33324-3202

IRS FOIA RequestJacksonville Disclosure OfficeSuite 35045, MS 4030400 West Bay StreetJacksonville, FL 32202-4437

Georgia IRS FOIA RequestAtlanta Disclosure OfficeMail Stop 602D, Room 926401 W. Peachtree Street, NWAtlanta, GA 30308

Hawaii IRS FOIA RequestLaguna Niguel Disclosure OfficePost Office Box 30207Laguna Niguel, CA 92607-0208

Illinois IRS FOIA RequestChicago Disclosure OfficeMail Stop 7000 CHI, Room 2344230 S. Dearborn Street

Chicago, IL 60604

Indiana IRS FOIA RequestIndianapolis Disclosure OfficeMail Stop CL 658575 N. Penn. AvenueIndianapolis, IN 46204

Iowa IRS FOIA RequestSt. Paul Disclosure OfficeStop 7000316 N. Robert StreetSt. Paul, MN 55101

Idaho IRS FOIA RequestSeattle Disclosure OfficeMail Stop 625915 2nd AvenueSeattle, WA 98174

Kansas IRS FOIA RequestSt. Louis Disclosure OfficeMail Stop 7000 STL, Room 9.2061222 Spruce StreetSt. Louis, MO 63103

Kentucky IRS FOIA RequestCincinnati Disclosure OfficePost Office Box 1818, Rm. 7019Cincinnati, OH 45201

Louisiana IRS FOIA RequestNew Orleans Disclosure OfficeMail Stop 40600 S. Maestri Place

New Orleans, LA 70130

Maine IRS FOIA RequestBoston Disclosure OfficeMail Stop 41150JFK BuildingPost Office Box 9Boston, MA 02203

Maryland IRS FOIA RequestBaltimore Disclosure OfficeGeorge Fallon Fed. Bldg.31 Hopkins Plaza, Room 1210Baltimore, MD 21201

Massachusetts IRS FOIA RequestBoston Disclosure OfficeMail Stop 41150Post Office Box 9112JFK BuildingBoston, MA 02203

Michigan IRS FOIA RequestDetroit Disclosure OfficeMail Stop 11Post Office Box 330500Detroit, MI 48232-6500 Minnesota IRS FOIA RequestSt. Paul Disclosure OfficeStop 7000316 N. Robert StreetSt. Paul, MN 55101 Mississippi IRS FOIA Request

New Orleans Disclosure OfficeMail Stop 40600 S. Maestri PlaceNew Orleans, LA 70130

Montana IRS FOIA RequestDenver Disclosure OfficeMail Stop 7000 DEN600 17th StreetDenver, CO 80202-2490 Missouri IRS FOIA RequestSt. Louis Disclosure OfficeMail Stop 7000 STL, Room 9.2061222 Spruce StreetSt. Louis, MO 63103

Nebraska IRS FOIA RequestSt. Paul Disclosure OfficeStop 7000316 N. Robert StreetSt. Paul, MN 55101

New Hampshire IRS FOIA RequestBoston Disclosure OfficeMail Stop 41150Post Office Box 9112JFK BuildingBoston, MA 02203

New Jersey IRS FOIA RequestSpringfield Disclosure Office955a South Springfield AvenueSpringfield, NJ 07081

New York(New York City, and counties of Nassau, Rockland, Suffolk, and Westchester) IRS FOIA RequestBrooklyn Disclosure Office10 Metro Tech Center625 Fulton StreetBrooklyn, NY 11201-5404

(All other areas)IRS FOIA RequestManhattan Disclosure Office110 W. 44th StreetNew York, NY 10036

IRS FOIA RequestBuffalo Disclosure OfficePost Office Box 180Niagara Square StationBuffalo, NY 14201

Nevada IRS FOIA RequestPhoenix Disclosure OfficeMail Stop 7000 PHX210 E. Earll DrivePhoenix, AZ 85012 New Mexico IRS FOIA RequestPhoenix Disclosure OfficeMail Stop 7000 PHX210 E. Earll DrivePhoenix, AZ 85012

North Carolina IRS FOIA RequestGreensboro Disclosure Office

320 Federal Place, Room 409Greensboro, NC 27401

North Dakota IRS FOIA RequestSt. Paul Disclosure OfficeStop 7000316 N. Robert StreetSt. Paul, MN 55101

Ohio IRS FOIA RequestCincinnati Disclosure OfficePost Office Box 1818, Rm. 7019Cincinnati, OH 45201

Oklahoma IRS FOIA RequestOklahoma City Disclosure OfficeMail Stop 7000 OKC55 N. RobinsonOklahoma City, OK 73102

Oregon IRS FOIA RequestSeattle Disclosure OfficeMail Stop 625915 2nd AvenueSeattle, WA 98174

Pennsylvania IRS FOIA RequestPhiladelphia Disclosure Office600 Arch Street, Room 3214Philadelphia, PA 19106

Rhode Island IRS FOIA RequestHartford Disclosure OfficeWilliam R. Cotter F.O.B.

Mail Stop 140135 High StreetHartford, CT 06103

South Carolina IRS FOIA RequestGreensboro Disclosure Office320 Federal Place, Room 409Greensboro, NC 27401

South Dakota IRS FOIA RequestSt. Paul Disclosure OfficeStop 7000316 N. Robert StreetSt. Paul, MN 55101

Tennessee IRS FOIA RequestNashville Disclosure OfficeMDP 44801 Broad Street, Room 48Nashville, TN 37203

Texas IRS FOIA RequestAustin Disclosure OfficeMail Stop 7000 AUS300 East 8th Street, Room 262Austin, TX 78701

IRS FOIA RequestDallas Disclosure OfficeMail Stop 7000 DAL1100 Commerce StreetDallas, TX 75242

IRS FOIA RequestHouston Disclosure Office

Mail Stop 7000 HOU1919 Smith StreetHouston, TX 7 7002

Utah IRS FOIA RequestDenver Disclosure OfficeMail Stop 7000 DEN600 17th StreetDenver, CO 80202-2490

Vermont IRS FOIA RequestBoston Disclosure OfficeMail Stop 41150Post Office Box 9112JFK BuildingBoston, MA 02203

Virginia IRS FOIA RequestRichmond Disclosure Office400 North 8th Street, Room 1068Richmond, VA 23240

Washington IRS FOIA RequestSeattle Disclosure OfficeMail Stop 625915 2nd AvenueSeattle, WA 98174

West Virginia IRS FOIA RequestRichmond Disclosure Office400 North 8th Street, Room 1068Richmond, VA 23240

Wisconsin IRS FOIA RequestMilwaukee Disclosure Office

Mail Stop 7000 MIL310 W. Wisconsin AvenueMilwaukee, WI 53203-2221

Wyoming IRS FOIA RequestDenver Disclosure OfficeMail Stop 7000 DEN600 17th StreetDenver, CO 80202-2490

All APO and FPO addresses, American Samoa, nonpermanent residents of Guam or the Virgin Island*, Puerto Rico.

IRS FOIA RequestHeadquarters Disclosure OfficeDirector, Freedom of InformationPost Office Box 795Ben Franklin stationWashington, DC 20044

IRS Headquarters (for IRS headquarters policy documents)

IRS FOIA RequestHeadquarters Disclosure OfficeDirector, Freedom of InformationPost Office Box 795Ben Franklin stationWashington, DC 20044Service Centers at the Internal Revenue Service. You may request your records of assessment by directing your requests to the Accounting Branches within each of these offices.

Director, Andover Service CenterDirector, Andover Service CenterIRS, FOIA RequestAttn: Disclosure Officer310 Lowell Street Stop 218Andover, Massachusetts 01812

Brookhaven Service CenterDirector, Brookhaven Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 400, Stop 241Brookhaven, New York 11719Philadelphia Service CenterDirector, Philadelphia Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 245, Drop Point 590ABensalem, Pennsylvania 19020Atlanta Service CenterDirector, Atlanta Service CenterIRS, FOIA RequestAttn: Disclosure Officer4800 Buford HighwayChamblee, Georgia 30006Memphis Service CenterDirector, Memphis Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 30309, Stop 30Memphis, Tennessee 38130

Kansas City Service CenterDirector, Kansas City Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 24551 Stop 7Kansas City, Missouri 64131

Cincinnati Service CenterDirector, Cincinnati Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 267 Stop 68Covington, Kentucky 41019

Austin Service CenterDirector, Austin Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 934 Stop 70000 AUSCAustin, Texas 78767Ogden Service CenterDirector, Ogden Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 9411 Stop 7000 OSCOgden, Utah 84409Fresno Service CenterDirector, Fresno Service CenterIRS, FOIA RequestAttn: Disclosure OfficerP.O. Box 24014 Stop 891Fresno, California 93779

Decoding Your IMFThe Individual Master File is a magnetic tape record of all individual income tax filers, in Social Security Number sequence, and is maintained at the Martinsburg Computing Center (MCC). All tax data and related information pertaining to individual income taxpayers are posted to the Individual Master File so that the file reflects a continuously updated and current record of each taxpayer’s account. All settlements with taxpayers are effected through computer processing of the Individual Master File account and the data therein is used for accounting records, for issuance of refund checks, bills or notices, answering inquiries, classifying returns for audit, preparing reports and other matters concerned with the processing and enforcement activities of the Internal Revenue Service.

Basics:The Individual Master File is designed to accumulate in each taxpayer’s account, all data pertaining to the income taxes for which the taxpayer is liable. The Account is further sectionalized into separate tax periods (Tax Modules) each reflecting the balance, status, and transactions applicable to the specific tax period. This includes the returns filed, assessment, debit and credit transactions, and all changes made to the filed tax returns.Each taxpayer account has an Entity Module and one or more Tax Modules. In addition to MFT 30 tax modules, an IMF account may have Civil Penalty modules (MFT 55) effective 1/1/85. The Entity Module contains data which describes the taxpayer as an entity and which applies to all records of the taxpayer. Detailed processes for establishing and maintaining the Entity Module are contained in Project 439 (IMF Account Numbers). This entity module contains groups of data which are maintained in separate sections as follows.

1. Entity Section - Contains Taxpayer’s Name Control, Check Digit, SSN, and Spouse’s SSN; name under which each income tax return was filed; current address and ZIP Code; District and Area Office handling the account (and District and Area Office holding TDA’s if different); month in which taxpayer’s tax year ends; type of tax return package to be mailed to taxpayer; indicators to show presence of open balance tax modules and/or TDA modules; account freezes and holds. Civil Penalty Name data may also be present.

2. Transaction Section - contains transactions which created or updated the entity module

3. Deferred Action Section - Shows the cycle during which specified action are to be taken, e.g., mailing 2nd notices, placing an account in TDA status, etc.

4. Audit History Section - contains information on the two most recent years which were under audit examination. The data retained include the tax period, disposal code, audit results, and no change issue codes.

5. Offset Section - Used in communicating between different Programming Runs for the purpose of Offsetting between different Tax Modules of a taxpayer’s account. When it has served its purpose, it is dropped from the file.

6. Vestigial Section - Shows data related to Tax Modules removed and recorded on the “Retention Register”. Contains the tax class, cycle removed, control district office and tax period.

7. Energy Credit Tracking Section - Used by Examination Division for IMF Accounts containing residential energy credits.

8. IDRS Section - Shows modules under IDRS control indicating specific MFT, tax period and service center.

A Tax Module contains records of tax liability and accounting information pertaining to the income tax and/or civil penalty for one tax period. Each Tax Module contains groups of data that are maintained in separate sections as follows.

1. Balance Section - This section contains the Module Balance (i.e., current debit or credit balance of tax and penalties); assessed and paid interest; Total Interest; Total Late Payment Penalty and Late Payment Penalty Assessed; Control DLN; and numerous indicators representing information pertaining to the module, some of which are: a duplicate or amended return was filed, taxpayer claimed more or less ES credit on the return than appear in the module, refund is being withheld, refund check was undelivered or redeposited, offsetting is being attempted, taxpayer claim is pending, IRS suit filed, closing code, Accounts Uncollectible, etc.

2. Status History Section - This section contains the current status of the module (i.e., current debit or credit balance of tax penalties); if collection or refund action has been suspended, and if so why.

3. Settlement Section - Contains data necessary for return settlement such as AGI or total income, balance due or overpayment, tax liability per return, self-employment tax, ES credits claimed, overpayment credit elected to be applied to next year’s estimated tax, penalties, etc. This section is deleted after settlement has been effected. The settlement section is not present for MFT 55.

4. Transaction Section - contains a transaction representing the filing of a return. This transaction contains only enough data to provide a historical record of the filing of the return and of the liability reported, late payment start date, and selected permanent audit data. In addition, the transaction section contains all transactions pertaining to the Tax Module. They are derived from accounting input documents (i.e., tax liabilities, payments, assessments, abatements) and non-accounting transactions (i.e., Waivers, military deferment, etc.). Each tax transaction contains at least the Transaction Code, Cycle Posted, Document Locator Number, Transaction Date and Transaction Amount.This chapter will give you a decent idea of what those different codes mean in your Individual Master File and its components. It’s not exhaustive by any means as an entire encyclopedia could be written on the subject. In fact, you can order this encyclopedia from the IRS by requesting each IRM. This is just a cursory overview. The basic structure the IMF was defined in the previous chapter but I did not

mention the Non Master File (NMF) which is a component of the IMF. It’s a transcript of an account that is not the master file, because the account has been removed to the Retention or Non-Master file. The transcripts are hand written or typed. You can request this component the same way as you would any other record just by listing it in your FOIA request.I’ll begin by explaining a few basic items found in just about any IMF. When an audit has been completed, a component known as the AMDISA is created and posted to your IMF. One of the items indicated on the record is the taxable activity code for that particular year. You can obtain a copy of IRM 6209 from the IRS published for that year and decode the meaning of the three digit activity code found in that record.The Form 5546, “Examination Return Charge-out,” or AIMS Weekly Update also indicate whether or not your case is a collectible one, or worth pursuing.On the face of your IMF entity module, you’ll find the title of the record, e.g., “IMF MCC TRANSCRIPT SPECIFIC” centered, and to the right of that you’ll notice the employee number of the agent who been assigned the duty to request or review these records. Just below a few more coded lines you’ll see the dividing line of asterisks. The entity module is just below this line but let’s look just above it for a moment and find the account number next to the left hand margin. There, you will see your social security number and just below that, the first four letters of your last name encrypted into a filed known as the “NAME CONT.” Follow in a straight line across to the right margin, past the cycle code and you might find the “illegal tax protester” encryption, if you’ve been labeled as one. It would appear as “TC 148 HOLD IS P.” If it has an entity indicator of 7, it would identify a false refund case in which there is a pending Taxpayer Delinquency Investigation (TDI). There are other indicators but we don’t need to cover them at this time. The new IRS Restructure and Reform Act of 1998 now prohibits this type of labeling and files containing it must be corrected beginning in January of 1999. I believe they will then substitute this term with “non-filer” and accomplish the same end.Now let’s go below the line of asterisks which divide the header from the entity module. You’ll find the same employee number appearing once again next to the left margin, with another agent’s number and a date. I think this is the date when the records were generated from the computer because of your request. One tab further to the right you’ll find the tax period encrypted as YYMM, where the month means the last month of the tax period so it’s usually 12. On the second line below this you’ll find a reference to the tax module. If it’s a requested record from a period which has been archived or if no return was filed, you’ll see an encryption that reads “REQUESTED TAX MODULE NOT ON MF.” A quick look at the bottom of the entity module (about the middle of the page) will tell you where this record has moved or if it has been requested from archives. It should read something like “MODULES MOVED TO RETENTION REGISTER… A MICROFILM REQUEST HAS BEEN GENERATED.”On the right side of the middle of the page, just below and opposite your mailing address, you’ll find the encryption for Mail Filing Requirement, “MFR- “ with a two digit number. There are a series of two digit numbers that signify types of returns which must be filed and one of them 01 which translates to “1040 not required for

the IMF File, or Return not required to be mailed [to you by the IRS] or filed, for Form 1040 - U. S. Individual Income Tax Return. This usually happens when you stop filing. This code usually reflects the types of returns you’ve been filing over the years. Remember, you’re not required to file until you actually file a return. The agency then just takes your word for it and makes it a matter of record so that if you change your pattern of filing, they will be able to track it.The next item will require a little bit of time to understand. It’s known as the Document Locator Number, or DLN. It has fourteen digits which are divided into seven groups. The first group a has two digits and identifies the Filing Location Code (FLC) of the particular service center or district office assigning the number to the particular return or document input through the Automated Data Processing (ADP) System. The fourteenth digit, or seventh group g, is the last digit of the year of processing and is assigned by the service center computer at the time of the original input.The second group b, or the third digit, is the tax class which identifies the type of tax each transaction involves. The categories are: 0 - Employee Plans Master File (EPMF), 1 - Withholding and FICA, 2 - Individual Income Tax, Fiduciary Income Tax, Partnership return, 3 - Corporate Income Tax, 990C, 990T, 4 - Excise Tax, 5 - Information Return Processing (IRP), 6 - Non-Master File (NMF), 7 - CT-1, 8 - FUTA, and 9 - Mixed - Segregation by tax class not required.note:The IRP is now identified as the Information Returns Master File (IRMF)The fourth and fifth digits, Group c, are the document codes and I’ve listed the most commonly used here: 17 - Subsequent payment input by Service Center, 18 - Subsequent payment input by District Office, 47 - Examination Adjustment, 54 - DP Adjustment, and 63 - Entity changes.The sixth, seventh and eighth digits, Group d, is the Julian (day in serial) date as measured against the nth day of the particular year for the creation of that document. A true Julian date is the nth day from the beginning of the millennium; but apparently, it has been truncated for use in these computer files. On occasion, you may find that the Julian date in any one DLN exceeds the number of days in a year. If you need to know the nth day of that year, just subtract 400.The ninth, tenth and eleventh digits, Group e, are the block numbers, or blocking series. This bit of information is quite involved but I’ll just summarize it here. The blocking series 600-699 represents a non-taxable transaction, as does the 200-299 series. The blocking series 000-199 represents taxable transactions while the portion under this series from 190-199 represents penalties resulting from examinations where abusive tax shelters, aiding and abetting and frivolous incomes tax returns were discovered. The blocking series 420-424 represents child support assessments. The series 000-099 represents documents showing where an audit return preparer submitted a case closing document. The blocking series 960-989 represents the EP (5500 series) penalty assessments, for things like filing amended returns to claim all the taxes withheld during a tax period as a refund.

An example is from an IMF in which a notice of lien has been filed, in which a TC code appears with DLN 29254-638-98064-4 which translates to the following information: The File Location Code for the service center or district office assigning the DLN is 29, the tax class is 2 “Individual Income Tax, Fiduciary Income Tax, Partnership return”, the 54 is the document code for “DP Adjustment”, the 638 is the Julian date, the 980 is the penalty for filing a frivolous return (amended return, $500 penalty), the 64 is the serial number and the 4 represents that the lien was filed in 1994.I’ll review just a few more encryptions. “ASED” means Assessment Statute Expiration Date, “CSED” means Collection Statute Expiration Date and “RSED” means Refund Statute Expiration Date. Also, “FZ>” means Freeze Code and if it is followed by nothing, there is no freeze on your file. There are many reason why a freeze code may be entered but it’s usually because there’s some type of investigation taking place. You can check your IMF for a TC 606 which means you’ve met the “TC 606 criteria” for being labeled as an “illegal tax protester.” Those criteria are reviewed in the next chapter, “Effective Letter Writing.”One other code you may find useful for those of you having the initiative, or at least interesting to those of you who don’t, is the Collectibility Indicator Codes. A collectibility indicator will be placed in the entity section of the Master File whenever there has been collection field activity (Collection Status 26). This information will be communicated to AIMS (reflected on Form 5546 or AIMS Weekly Update), along with any subsequent updates to bankruptcy or currently not collectible status. (AIMS is Audit Information Management System)Additionally, whenever any taxpayer (not limited to CS26) is updated to bankruptcy or currently not collectible status AIMS will reflect that action and place an indicator either on the Charge-Out (Form 5546) or on an AIMS Weekly Update Report.Indicator Code Order of Precedence Weekly AIMS Update Reports Changes in IndicatorsB=Bankruptcy 28=BankruptN=Currently Not Collectible 29=Currently Not CollectibleC-Collection Status 26 30=Collection Status 26.

You can test to determine if you are suspected of fraud by following these steps:

1. If agent does not solicit tax returns - ask the agent: “Are you asking me to file tax returns?”

2. Ask agent which course of action he would recommend following. The agent should refuse to give this type of advice.

3. Ask the agent what types of penalties may be involved under the circumstances. Ask the agent if he suspects fraud. Ask the agent if there is a possibility of referral.

If the agent does not discuss these questions with you, your case will probably be referred to the Criminal Investigation Division (CID).

Under the IRM 5200, the agent is required to “establish firm indications of fraud” by taking the following actions:

1. Interview you to determine the reason or the intent of your alleged “non-compliance.” Ask the agent what he means by “non-compliance.” Ask the agent which specific conduct would be considered “compliance.”

2. The agent will record your statements verbatim. He will identify personal characteristics such as:

a. your ageb. physical and mental healthc. educational leveld. occupationThese are considerations to help the agent determine “a taxpayer’s ability to

comply,” whatever that means.The agent will verify income from sources such as TDI Supplements, CC

TSIGN D, CC SUPRQ and copies of W-2s and 1099s. The agent will review your records pertaining to personal income and expenses. The agent will also review previous returns to verify income sources to be used in tax computations.

The agent will also review public records and make a physical inspection of your home, or place of business. He will use this information to determine if you are “prospering” and have the ability to pay.

If this information leads the agent to believe fraud exists, that is, gives him “firm indications” of fraud, he will prepare Form 3212 which is a Referral Report used in a potential fraud case.

Here are some other forms you might find useful:

Form 3449, contains verification of actual income received - will not be estimated or based on previous filing - prepared for referral caseForm 3212, Referral Report of Potential Fraud CaseForm 5604, Section 6020(b) Action Sheet contains information on wages paid, income tax withheld and FTDsForm 4443, Summons Referral used on summons follow-up action when there is a refusal to comply with summonsForm 3198, Special Handling Notice attached to each delinquent return to determine if delinquency penalty should be assessedDocument 6469, Expedite Processing Cycle for each period in which delinquent return is filed - attached to front of each BMF return submitted.

The two most important records you can ask for at the very beginning of a dispute appear on my sample FOIA request form. They are:1. Information Returns Master File (IRMF) Transcript2. Form 4340, Certificate of Assessments and Payments.

Every 1099, W-2, K-1, 1098 and other income reporting form is posted to the IRMF Component. This will tell you exactly which records the IRS has about you and those are the only records you’ll want to bring with you to any summons, especially if you’re a non-filer.The Certificate of Assessments and Payments is what the government uses to certify that an assessment was made against you. There is no record of assessment, it does not exist. But by their own manuals it’s known as the 23C, yet they will never produce it. This 23C “document” has a creation date and it’s specific to a certain day of the week. I’ll quote from their own manual:

“(7) The Assessment ’23C’ date will ordinarily be the Monday of the 2nd week following the week in which these transactions are processed and posted to the IMF Accounts, unless otherwise designated by Accounts Division in appropriate publications.”In other words, the assessment date is always on a Monday. And every

certificate I’ve seen over the years has complied with this procedure. You will want to review these four cases regarding the assessment process: Brewer v. U.S., 764 F.Supp. 309, Curley v. U.S., 791 F.Supp. 52, Robinson v. U.S., 920 F.2d 1157 and Portillo v. Commissioner, 932 F.2d 1128. These are “must read” cases if you want to understand this aspect of the tax collection process.The United States will provide a Certificate of Assessments and Payments when compelled to do so under court process or the Freedom of Information Act. They will use this record in lieu of any actual assessment, or 23-C, because they never create this record. The court will presume the certificate to be sufficient unless challenged as to its failure to be supported by any investigate history documents, affidavits completed by revenue officers, or other records substantiating the correctness of the certificate. Treasury regulations require that the Form 23-C contain the taxpayer’s name, social security number and address, the name of the corporation, the character of the liability assessed, the amount of tax, the taxable period involved, and the signature of a responsible officer (26 CFR § 301.6203-1). An incorrect amount stated on the actual 23-C, if produced, is not sufficient to invalidate the assessment, nor will it be insufficient if the objection fails to show the assessment to be entirely arbitrary. As long as the procedures and evidence upon which the government relies to determine the assessment have a rational foundation, the court will not look beyond the assessment. The inquiry focuses on the merits of the tax liability, not on the IRS procedures.The Certificate of Assessments and Payments must be completed and signed by an assessment officer and contain the actual 23C assessment dates which would allow the court to conclude that a Form 23C was signed on the date alleged.

SFR AssessmentsThe authority granted to the Commissioner of Internal Revenue, by 26 CFR 301.6020-1(b) and 26 CFR 301.7701-9 to execute returns required by any internal revenue law or regulation made thereunder when the person required to file such return fails to do so, is delegated to: 1. Revenue Agents; 2. Tax Auditors; 3. Revenue Officers, GS-9 and above; 4. Collection Support function managers, GS-9 and above; 5. Automated Collection Branch managers, GS-9 and above; and 6. Service Center Collection Branch manager, GS-9 and above. The authority delegated herein may not be redelegated. This is found in Delegation Order No. 182 which became effective on January 8th, 1987. The agents are authorized to file many different kinds of substitute returns such as the 1120 series, 720 series and other business returns; however, no agent has ever been authorized to file a Form 1040 substitute for anyone. This information was obtained from IRS Manual 1229, Handbook of Delegation Orders.To continue what I’ve mentioned before about IRM 5200 relating to substitute returns, Section 5290 “Refusal to File – IRC 6020(b) Assessment Procedure” establishes the scope of the procedure. Section 5291 establishes that “…The procedure applies to employment, excise and partnership tax returns. Generally, the following returns will be involved. (a) Form 940, Employer’s Annual Federal Unemployment Tax Return; (b) Form 941, Employer’s Quarterly Federal Tax Return; (c) Form 942, Employer’s Quarterly Tax Return for Household Employees; (d) Form 943, Employer’s Annual Tax Return for Agricultural Employees; (e) Form 11-B, Special Tax Return – Gaming Devices; (f) Form 720, Quarterly Federal Excise Tax Return; (g) Form 2290, Federal Use Tax Return on Highway Motor Vehicles; (h) Form CT-1, Employer’s Annual Railroad Retirement Tax Return, (i) Form 1065, U.S. Partnership Return of Income. You should immediately make a request for records, under the Freedom of Information Act, and ask for Substitute For Return (SFR) forms prepared under authority of 6020(b) with the “Form 5604, Section 6020(b) Action Sheet.” The Form 5604 is generated when a taxpayer fails to file any of these returns and contains a complete explanation of the basis for the “assessment.” The explanation should appear in Section 1 of the completed Form. When you obtain these records, you might consider drafting a criminal complaint to the FBI, based on what you find, as instructed in this book.On October 1, 1986, the collection branch was delegated the authority to assess an “IMF tax” (appears like that in IRM) and the Service Center Collection Branch began substitute for return (SFR) processing. An SFR “assessment” is an audit process where the initial action by SCCB (Service Center Collection Branch) is to file, what’s technically known as, a dummy return for the taxpayer for -0- amount and then assess the tax with a TC 290. This assessment is based on IRMF (Information Return Master File, formerly IRP) information from the TDI Supplement file or the IRMF transcripts. These particular agency records can be obtained using the FOIA process. To learn more, you should obtain a copy of IRM 5200. This is easily obtained from any official reading room. A list of locations for the reading rooms can be obtained from your local IRS office or the regulations.The CP 22E is currently the notice of assessment and it is dated the same as the purported assessment. Most people receive the Notice the Thursday, Friday or

Saturday before the assessment is alleged to have occurred (i.e. when the RACS 006 or 23C is signed by the assessments officer). It does not seem to alert anyone, despite the fact that the law, Section 6303 provides that the Notice will be sent after the assessment and not later than 60 days after.Collectively, we have seen hundreds of "We Changed Your Account" notices (CP 22E) that are dated the same date as the TC 300 or 290 Code in the IMF (Note: the MF Stat 21 (first notice) date is the same as the assessment date). Many times the postmark on the envelope was the Tuesday or Wednesday before the assessment date. Each time those Notices were received on the Thursday, Friday or Saturday and even on the day of the assessment, I had the people go down and open the envelop in front of a Notary and notarize that the Notice was dated a particular date and was received before the date. Still doesn't concern the court.One of our subscribers even received his IMF that was generated on 9-17-90 that showed a TC 300 date of 9-28-90. The transaction was obviously posted to the IMF at least 11 days prior to the actual event. This still does not seem to have any adverse affect on a collection proceeding. There are also problems in the accounting under the Generally Accepted Accounting Principles.Looking at the Individual Master File as the accounts receivable, consider the RACS 006 or the 23C as the general ledger. The IRS can go from the IMF on a particular "taxpayer" to the RACS 006 or the 23C; however, there appears to be no way, at least as far as anyone has been able to explain it satisfactorily to me, to go from the RACS 006 or the 23C.My recollection of general accounting was that you must be able to go from the accounts receivable/payable to the general ledger and then take the general ledger standing alone and work back and find particular accounts receivable/payable, that would fall within the general ledger entries for that particular time period.In order for there to be an accounts receivable, there must be an original billing. The assessment certificate amounts to the original billing. It has to meet criteria of the regulation to create the liability. If the original instrument that creates the liability was never executed, the ledger is in error. This poor record keeping may give rise to a federal question, lack of due process.The IRS's failure to employ a specific agent to accept responsibility and liability for claiming that someone owes a certain amount of taxes does not provide the individual a fair opportunity to question the purported liability. The IRS has developed a ruse to overcome the possibility of having to argue these challenges on the merits by created a "Certificate of Assessments and Payments" or Form 4340.I think "4340 presumption" is insufficient to allow a fair opportunity for hearing. I would say that the fact that no officer certified the purported assessment prior to the collection (CP 501-504 & levy/lien notices) has worked to deny the individual the opportunity to question the responsible officer, because there is no responsible officer. It denies the individual a fair opportunity for a meaningful hearing. In a case called United States v. Dixon, 672 F.Supp. 503 (M.D. Ala), aff'd 849 F.2d 1478 (11th Cir., 1988), the government got the 4340's admitted under the secondary evidence rules. What happened was the government filed a suit to reduce the taxes to judgment and foreclose its tax lien. At the time the Collection Statute Expiration

Date (CSED) was six years (now it is ten) from the date of the assessment, not the tax year, but the date of assessment.If the IRS fails to provide the assessment certificate, the regulation provides the remedy and a cause of action. The problem we've been confronted with is shifting the burden of proof.The Form 4340 and other such secondary documents still constitute "presumptive" rather than "conclusive" evidence of liability so we have to have the means to get around pandering judges who accommodate the fraud. From the offensive position, the due process issue becomes the cause of action rather than a tax issue. Several years ago, I did an IMF translation and a 4340 translation and comparison. One of the ways to overcome the presumption on the 4340 is to show that no Notice of Deficiency ever posted to it. TC 494 would be the NOD. Another way is to show the discrepancies between the "description' provided for the transaction codes on the 4340 against the definition in the 6209 manuals. TC 300 / 290 will generally post on the 4340 as collection of a default on a 90-day letter as opposed to the definition provided in the 6209. There are several ways to show errors. Another way to attack it is on the 'best' evidence rule. The IMF being the 'master file' from whence the 4340 is extrapolated, you can show that the certification on the 4340 is merely that it is a 'true and correct copy of the record' and the IMF is the record. It says so in the manuals.In a bankruptcy proceeding, a subscriber lost on the FRCP Rule 12(b)(6) dismissal, but the government wouldn't submit the order to the court. We pulled certified copies of the docket once a month, checked it weekly to be certain they didn't slip one in on us. The case sits in the dead file at the court, they don't collect and she doesn't pay. We told the US Attorney we'd go for sanctions if they tried any more of this crap in court. It worked.The following is the model letter we are using to obtain disclosure assessment Certificates.

[Sender][Address][City state zip]SSN: [000-00-0000]

Assessment OfficerAustin Region Service CenterInternal Revenue ServiceP.O. Box 934Austin, Texas 78767

[Date]

Re records request under 26 CFR § 301.6203-1 and 5 USCS § 552a

Greetings:

This request is being made under authority of 26 CFR § 301.6203-1, which states that, "If the taxpayer requests a copy of the record of assessment, he shall be furnished a copy of the pertinent parts of the assessment which set forth the name of the taxpayer, the date of assessment, the character of the liability assessed, the taxable period, if applicable, and the amounts assessed," and the Privacy Act at 5 U.S.C. § 552a for support documents for assessment certificates.

This request pertains to the years [year] through [year]. Please send me the following records:

1. Procedurally proper assessment certificates for the principal for each class of tax assessed;

2. Procedurally proper assessment certificates for the interest for each class of tax assessed;

3. Procedurally proper assessment certificates for the penalty for each class of tax assessed;

4. Any and all jeopardy assessments;

5. Any and all deficiency assessments;

6. Procedurally proper non-tax penalty assessments for such things as frivolous filing, etc.;

7. Procedurally proper assessments for non-tax penalty interest;

8. Support documents for each assessment.

If classified, you may redact information on each assessment certificate not required to be disclosed by 26 CFR § 301.6203-1 other than the assessment officer signature, certification and date of execution.

Your response may be used in official forums. Therefore, please certify all documents with the Form 2866 Certificate of Official Record, or in the event there are no assessments for any given calendar year specified above, certify your response with the Form 3050 Certificate of Lack of Records. You have my firm promise that I will pay the cost of certification and/or photocopying, up to an amount not to exceed $50 without prior written agreement. The requested documents are for my own use.

The current edition of the Internal Revenue Manual posted on the Internal Revenue Service website verifies the necessity of procedurally proper assessments for seven of the eight classes of tax administered by the Internal Revenue Service. Item #2 for each class stipulates, "All penalty [or principal or interest] assessments must be recorded on summary Records of Assessment (Assessment Certificate). The Assessment Certificate is the legal document that permits collection activity."

Radinsky v. United States of America and United States of America v. Miller address the necessity of procedurally proper assessment certificates sufficiently to resolve any question concerning the lawful requirement for assessment certificates. Do not send documents other than actual assessment certificates and support documents as computer-generated compilations and other secondary documents are merely presumptive evidence where only procedurally proper assessment certificates constitute conclusive evidence of liability.

Please send the requested documents, or certification that the requested documents do not exist, within twenty (20) days.

Best regards,[Sender]

I hereby certify that on the ___ day of [month] [year], [Sender], known to me, endorsed this request for assessment certificates and other documents.

______________________ (ls)Signature of Notary

1. SPECIFIC

2. OPEN

3. COMPLETE

4. ENTITY

5. STEX (B Freeze)

6. RFND LIT (TC 520)

7. REFUND (TC 846)

8. REFUND-E (TC 846)

9. $1,000,000 Refund Transcript

10. TDI-REFUND

11. Refund-S (TC 846)

12. TRANS-844 (TC 844)

13. LITIGATION (TC 520)

14. EXES-TC 840

15. OIC (TC 480)

16. NMFL (TC 480)

17. KITA (TC 480)

18. COMBAT ZON

19. UNREVTC 520 (TC 520)

20. TDI RESRCH (See Project 720)

21. INTEL (See Project 735)

22. REACT NMF (TC 130)

23. CSED

24. MARRIED FILED SEPARATELY (TC 424)

25. MULTIPLE FILER (TC 424)

26. Cr El Decd (See Project 439)

27. TRFPENACT

28. VIRGIN IS (TC 150)

29. STAT TRANSCRIPT

30. QUEST W-4 (See Project 411)

31. FOLLOW-UP W-4 (See Project 411)

32. AMRH (See Project 712)

33. AM-X (See Project 712)

34. CV PN CRED

35. SC ADDRESS

36. Hostage

37. NRPS

38. DECDESCR

39. STIM

40. UNP 71 REL

41. RSED

42. A/R Clean-Up (See Project 713)

43. LPCANCEL

44. PMTOVERCAN

45. OICDEFAULT

46. DEFAULTFSC

48. TDIFRZ-150

49. TDI-EXAM

50. HighRisk

51. Deferral

52. HighDollar

I don’t know why item number 47 is missing; this is just the way it appeared in the manual. Don’t be too concerned about the meanings of these other components; you’ll probably never need them to actually solve a problem. The most important ones are those that I’ve already indicated.

PINEXI was unpleasantly surprised on one case when I thought I could get an abatement for a math error and then was informed by the agent that the subscriber owed interest and penalties which were not reflected in the IMF we requested. They did appear on the PINEX Component and I’ll explain what this is here:The Taxpayer Correspondence Study recommended that the IRS provide explanations of all penalty and/or interest charges to the taxpayer when a balance due notice or a refund is issued. This recommendation resulted in the development of the Penalty and Interest Notice Explanation (PINEX) Project.PINEX provides the capability to generate a notice of explanation to the taxpayer upon request. This notice includes a computation of selected computer generated penalties, debit interest charged and credit interest paid. The notice generation capability was made available in all Service Centers and District Offices in July 1989, except for computations and explanations of failure to deposit penalty. PINEX notices will be reviewed by the tax examiner requesting the notice and, if correct, will be mailed to the taxpayer.PINEX also provides the ability to obtain screen displays of penalty and interest computations for an immediate response to telephone inquiries or walk-in requests made to the District Offices. IRS personnel may also find the screen displays helpful in analyzing penalty and interest transactions in general. You can request that a PINEX Notice be mailed to you or you can obtain one at your local IRS Office.I’m not going to get into too much detail on decoding. This should be more than sufficient information for you to use in the course of applying what you learn in this text toward resolving any disputes you might have with the IRS.

Analysis of Form 5546:This internal form is also known as the Examination Return Charge-Out form. It’s generated when a taxpayer’s return, or IMF, is selected for examination. According to the IR Manual under AIMS - Use of Forms and Special Handling Procedures, this Form has the following item of data. This is also an important record to request and you can include it in your first one. There may be none available however, it just depends on whether or not any of your returns were selected for audit, or where your IMF was selected for audit because you didn’t file.Item 1 on Form 5546 contains the EIN or SSN of the taxpayer. Line 2, Element 2 contains the Master File Tax Account Codes and Form Numbers. The form numbers include the CT-1, 11 (obsoleted), 11-C, 706, 706GS(D), 706GS(T), 706NA, 709, 709A, 720, 730, 940, 940-EZ, 940-PR, 941, 941E, 941PR, 941SS, 942, 943, 943PR, 1040, 1040NR, 1040PR, 1040SS, 1040A, 1040EZ, 1040NR, 1040PR, 1040SS, 1040EZ, 1041, 1042, 1065, 1066, 1120, 1120F, 1120S, 1120L, 1120M (obsoleted), 1120A, 1120PC, 1120REIT, 1120RIC, 1120FSC, 1120POL, and 2290. I did not include the two digit MFT Codes.For the Non-Master File Tax Account Code and Form Numbers, I’ve include again, only the form numbers: CT-1, CT-2, 11 (obsoleted), 11-B, 11-C, 678, 706, 706A, 706NA, 709, 720, 730, 940, 941, 941SS, 941PR, 942, 943, 943PR, 957 (obsoleted), 958 (obsoleted), 959 (obsoleted), 1040, 1040C, 1040PR, 1040SS, 1040A, 1040NR, 1040PR, 1040SS, 1041, 1042(1), 1065, 1066, 1120, 1120F, 1120S, 1120L, 1120M (obsoleted), 1120DISC (obsoleted)/IC, 2290, 2438, 3780 (2) (obsoleted), 3845 (obsoleted) 4638 (obsoleted), and 8288. The (1) designation means that the form is centrally processed at the Philadelphia Service Center (PSC) and (2) means that the form is centrally processed at the Andover Service Center (ANSC).There are other account codes and form numbers but they are not worth mentioning at this time. The next chart is the District and Service Center Codes and appear on Form 5546 in Line 3, Element 54 and Line 5, Element 69 and so on AMDISA. They are most helpful when decoding a Document Locator Number (DLN).

Numerical ListingCode District SC Code District SC01 Augusta (Maine) ANSC 52 Baltimore (Md.) PSC02 Portsmouth (N.H.) ANSC 54 Richmond (Va.) PSC03 Burlington (Vt.) ANSC 55 Parkersburg (W Va.) CSC04 Boston (Mass.) ANSC 56 Greenboro (N.C.) MSC05 Providence (R.I.) ANSC 57 Columbia (S.C) ATSC06 Hartford (Conn.) ANSC 58 Atlanta (Ga.) ATSC07 Atlanta SC ATSC 59 Jacksonville (Fla.) ATSC08 Andover SC ANSC 61 Louisville (Ky.) CSC09 Kansas City SC KCSC 62 Nashville (Tenn.) MSC11 Brooklyn (N.Y.) BSC 63 Birmingham (Ala.) MSC13 Manhattan (N.Y.) BSC 64 Jackson (Miss.) MSC14 Albany (N.Y.)ANSC 65 Fort Lauderdale (Fla.) ATSC16 Buffalo (N.Y.) ANSC 66 Puerto Rico PSC17 Cincinnati SC CSC 68 Sacramento (Ca.) OSC18 Austin SC AUSC 71 Little Rock (Ark.) MSC19 Brookhaven SC BSC 72 New Orleans (La.) MSC22 Newark (N.J.) BSC 73 Oklahoma City (Okla.) AUSC23 Philadelphia (Pa.) PSC 74 Austin (Tex.) AUSC25 Pittsburgh (Pa.) PSC 75 Dallas (Tex.) AUSC28 Philadelphia SC PSC 76 Houston (Tex.) AUSC29 Ogden SC OSC 77 San Jose (Ca.) FSC31 Cincinnati (Ohio) CSC 81 Helena (Mont.) OSC33 Laguna Niguel (Ca.)FSC 82 Boise (Idaho)OSC34 Cleveland (Ohio) CSC 83 Cheyenne (Wyo.) OSC35 Indianapolis (Ind.) CSC 84 Denver (Colo.) OSC36 Chicago (Ill.) KCSC 85 Albuquerque (N. Mex.) AUSC37 Springfield (Ill.) KCSC 86 Phoenix (Ariz.) OSC38 Detroit (Mich.) CSC 87 Salt Lake City (Utah) OSC39 Milwaukee (Wis.) KCSC 88 Las Vegas (Nev.) OSC41 St. Paul (Minn.) KCSC 89 Fresno SC FSC42 Des Moines (Ioaw) KCSC 91 Seattle (Wash.) OSC43 St. Louis (Mo.) KCSC 92 Anchorage (Alaska) OSC

45 Fargo (N. Dak.) OSC 93 Portland (Oreg.) OSC46 Aberdeen (S. Dak.) OSC 94 San Francisco (Cal.) FSC47 Omaha (Nebr.) OSC 95 Los Angeles (Cal.) FSC48 Wichita (Kans.) AUSC 98 International PSC49 Memphis (Kans.) AUSC 99 Honolulu (Hawaii) FSC51 Wilmington (Del.) PSC

Special Messages appear on Line 11, Element 16 as the Examination Information Report. This field just indicates if returns have or have not been requested, or if another record is on the AIMS file for the same TIN and file source of taxpayer. DIF Selection Codes appear for item 19. There appear to be no DIF codes for a 1040, but are for BMF activities only.The next line is the most interesting and it’s the reason why I’m including this discussion at all. It displays Activity Codes on Line 14, Element 20 of Form 5546. These activity codes are categorized by taxable activity. According to the IR Manual, here is a list of all the taxable activities identified by their respective codes:Taxable Activity CodeForm 1040A 530Form 1040, 1040C, 1040NR, 1040PR, 531, 532, 533, 534, 535, 536, 537,1040SS, 1040 with Form 2555 538, 539Form 1041 495, 496Form 1065 480, 481, 483Form 1066 489Form 1120 DISC 224Form 1120 (including 1120L, 1120M, 1120PH) 203, 209, 213, 215, 217, 219,

221, 223, 225Form 1120-F 259, 263, 265Form 1120-FSC 241Form 1120S 202Form 1120S 287, 288, 289, 290Estate 415, 417, 419, 420, 421Gift 435, 437, 439Employment 464, 465, 466, 467, 468, 469,

470, 471, 472Excise000 - 198Miscellaneous 501 - 510, 588, 591 - 599Other Taxes 991, 992

The reason for the different codes in each category under the Form 1040, 1041, 1065, 1066 and 1120 series is because of levels of income. Higher levels of income categories have higher activity codes.Answering the question of what constitutes income, or a source of income, is not sufficient to determine whether or not someone has a filing requirement. The government taxes benefits, and they do it in such a way as to make it appear as if the benefit can be traced back to the government, as if the government can be credited with your intellect or labor. There is a firm indication that it’s the filing of a tax return that is the taxable activity. Everywhere I turn, this realization strikes me. When you read the actual manual from which this information was obtained, you’ll find that for activity codes 531 through 539, there is no description as to the actual, real activity or business enterprise as there is for all the other forms under Estate, Gift, Employment and Excise. It appears as if the government has categorized levels of income, assigned them activity codes under the Form 1040 series, and when you file, you become a taxpayer under that particular category relative to what you report.You can also review Section 861 of the tax code and 1.861 of the federal regulations you’ll find a list of income sources which are taxable. I would think these are mandatory taxes and that when you receive compensation for non-government work within any of the fifty states, it’s not taxable income because it’s not recognized by the tax code. This is true even though your pay is defined as a gain that has been realized; it’s just not recognized, the third requirement before any tax liability can attach.Under 26 CFR § 861-8(f)(1), these sources include foreign source items of tax, foreign mineral income, foreign oil and gas extraction income, citizens entitled to the benefits of section 931 and the section 936 tax credit, resident of Puerto Rico, income tax liability incurred to the Virgin Islands, income derived from Guam, China Trade Act corporations, income of a controlled foreign corporation, income from the insurance of U.S. risks, international boycott factor … attributable taxes and income under section 999 and income attributable to the operation of an agreement vessel under section 607 of the Merchant Marine Act of 1936.On Line 15, Element 22 of this Form 5546, you’ll find one of many Source Codes indicating various types of information about a taxpayer or what usually posts to the IMF or BMF for a particular taxpayer. It includes the following codes and explanations: 01 for Automatics, 02 DIF (Discriminate Function), 03 Unallowable Items, 04 Multiple Filers, 05 Related Pick-Up—DIF Related, 06 DIF—CORR—Returns, 07 Type B Claims—Medium Examination Potential, 08 Self-Employment Tax Returns, 09 Type C Claims—Low Examination Potential, 10 DIF Related Multi-Year Examination, 11 Studies, Tests and Research, 12 Delinquent Return—DIF Related, 13 Married Taxpayers Filing Separately, 14 High Underreporter, 15 Math/Clerical Error Abatement, 16 DEA Class 1/Other Narcotics, 17 Tax Shelter Program, 20 Regular Classification, 23 IRA Recovery, 24 Known Nonfiler—Examinations initiated to known nonfilers, 26 Minimum Tax Program.It’s interesting to note how they keep track of married couples filing separately, DEA cases, non filers, late filers and so on. There are at least thirty-three other source codes of a similar nature, but I don’t see listing them as being all that helpful to your

further understanding of this Form 5546. You can obtain the IR Manual relating to AIMS—Use of Forms and Special Handling Procedures, probably through the Freedom of Information Act or at any Reading Room. Mine was obtained from a subscriber who visited the IRS Reading Room in DC. These source codes are also grouped by category as you’ll find if you do further research.Item 25 deals with sort keys that indicate the sequence in which the charge-out documents are sorted for computer printing. Item 26 deals with form numbers and legends; for example, this item would display 424 when there is an examination request for any of the forms. The form number corresponds to a legend which describes the charge-out account status of IMF or BMF.Items 27 and 28 reflect prior examination results. If Master File has a record of a prior examination action, a record of the most recent tax period will appear in Item 27 and the next most recent in Item 28. Item displayed are month and year of tax period, disposal code, and the amount of examination results. A minus sign indicates over-assessment.Elements 27 through 28, Lines 19 through 20 reflect disposal codes which indicate file status such as whether or not it’s an agreed case, if a tax court petition was filed, if the taxpayer is in default, etc. Organization Codes appear on Line 19, Element 29 and represent returns filed by revenue agents. Item 30 is a table of status codes telling where the IMF or its records are physically located with regard to the service.Project Codes appear on Line 23, Element 34 and are assigned at National Office Examination (EX:F:O) for use in monitoring Examination programs. I’ll just list a few of them here: Code 001 is described as “Drug Enforcement Task Force”, 009 is described as “Foreign Controlled Corporation”, 101 is described as “Oil and Gas”, and 149 is described as “Nonfiler—Fraud”. There are about 250 of these codes.Push Codes and Special Handling Message Codes appear on Line 23, Element 34 on Form 5546. A push code is used to generate a Transaction Code (TC) 424, Examination Request Indicator at Master File to bring the account under AIMS control even though no record of filing is present. When push codes are used, requests for returns and assemblies will not be immediately rejected even when no record of filing has posted to Master File.When a TC 150 (Return Filed and Tax Liability Assessed) is posted, these push codes automatically establish the full account on AIMS. All codes are erased from the AIMS data base as soon as a full AIMS record is established.Because the purpose of the push code is to keep the request at Master File until the return has had a chance to be processed, it can be used for current year pick-ups, delinquent returns or substitute for returns, but should not normally be used for prior year tax returns. A listing of all skeletal records is generated quarterly.All push codes remain on the AIMS data base for 26 months after the input of the request unless replaced by a full record.A notice is generated at the service center when no record that a return, requisitioned using a push code, has posted at Master File. A CP 187 is also issued if Push Codes 010, 109-041, or 121 posts and a TC 590/591 is present in the module. A Notice CP 87 is issued for an IMF return, a Notice CP 187 for a BMF

return. These notices are titled “No Return Posted, TC 424 Request Posted.” The push code number is printed on the CP Notice. Procedures for processing these notices are in text (10)42 of IRM 48(13)2. AIMS—District Office and Service Center Processing Handbook.If a TC 150 is not posted to the module, the CP 87/187 will generate the same cycle as the TC 424 if a Push Code 010 is used. One copy of the CP notice resulting from Push Code 010 is routed to the related return district as notification that no return has been processed. One copy is sent to the principal entity district.If TC 150 is not posted within 12 cycles of the TC 424 transaction date, CP-87 or CP-187 is generated.If the TC 150 is not posted to the module within 8 cycles of the return due date as extended, CP—87 or CP—187 is generated.Push code 039 (Item 8) is used to intercept file subsequent year filed returns. When the return is filed, it will be associated with Form 5346, Examination Information Report. Organization code 1000 or 2000 must be used with this push code.Push code 037 (Item 9) is used to establish AIMS control of returns that have potential of being referred to CID. A TC 424 will post to Master File which will alert other District Offices that an examination is being conducted. A CP 187 will be generated for BMF account only. The record will age off to AIMS after 26 months.If code 041 was used to requisition the return, CP 87 is generated after 20 cycles and CP 187 is generated after 22 cycles.Push code 049 is used to establish AIMS control of returns with a 91X freeze. CID’s approval should be secured before establishing the case on AIMS. The return may, however, be closed as nonexamined or protested to Appeals before the 91X freeze is reversed.Push code 121 is used for BMF accounts only, by the Tax Shelter Prefiling Notification Program. This code freezes refunds and generates subsequent year returns to examination.Requests containing special handling message codes generate processing instructions on Form 5546. These codes are used in the service center in the association of requests for multi-year case files before delivery to examiners and also to indicate that the attached return requires special handling. These codes are specified by the Chief, Service Center Classification.

Exemption – Accepted for ValueI'd like to begin this explanation by defining the title of the chapter. The

“settlement of claims” refer to what most people term “payment of debt”. I'm going to introduce you to some facts and history that should match with some things you already know and then force you to rethink some things you thought you knew about money and the United States.

At this time in history, the United States is bankrupt, it is not going to be, but has been operating in bankruptcy since 1791. It was reorganized in 1861 (70 years later) and then again in 1931 (another 70 years later) and then once again, exactly on September 11th 2001 (another 70 years later).

The Federal Reserve Act of 1913 and the Internal Revenue Act of 1913 is each “a head of the same monster” and did not come into full operation until 20 years after their enactment. Twenty years is the time needed for objection by the people who would be adversely affected (us), but since no one objected, the bankruptcy continued. It's my belief that the American Civil War was only about taking the property of the southern farmers to satisfy claims being made upon the United States by the Rothschilds. The farmers refused to give up their rights so they were taken by force and this is the reason we now have “deed ownership” to our land, what they know call “property”. I also believe the purpose of the 1931 bankruptcy was take add to the taxation scheme with entitlement programs such as social security and you can see how this bankruptcy reorganization plan appears in Title 5 of the United States Code, Section 552(a), The Administrative Procedures Act, now known mostly as Homeland Security.

Technically, there can be no payment of any debts in the United States economy every since FDR's “New Deal” (1933-1936). Literally there is no money, and you cannot “purchase” anything in this economy. We are left with only being able to “discharge” debts, that is, transfer the liability of the debt from “person” to “person”. Please also see House Joint Resolution 192. The medium through which we do this is the Federal Reserve Note, it's not a dollar, it's a note, an IOU or technically, a perpetual annuity bond (debt).

Instead of purchasing, we are conducting our business through transactions known as “bailments”. It is the same type of transaction involved with exchanging an item of value with a pawn shop for a receipt and cash, it's a bailment, not a purchase. And everything in our economy is a bailment and not a purchase unless you are paying in gold or silver or trading items or services of like value that are not denominated in Federal Reserve Notes.

I know this is probably enough to make your head spin, but if you can follow along, I'll introduce you to a new world of economic freedom.

Because there is no money, and because the United States has pledged your property, the land, resources and your life's labor (birth certificate or foreign situs trust) for the debts of the United States, the supreme court held in 1936 that the United States must provide you with a remedy, or a means to settle claims using the same type of money that the banks use, “money of account”. Right now, we are

paying our debts using money we earned, money with equity or value. The banks pay with money of account, they just create it from our signatures, and up until recently, this put you at a huge economic disadvantage to those few bankers who created this system and understand it.

The remedy is provided through what is technically known as a cestui que trust (ses'-tu-kay), or your social security account. The social security account includes a pension fund, but we are not talking about this at all. The aspect of the account I'm talking about here is commonly known as a “pre-paid” or “set-off” account. Many times this is referred to as your “exemption”. It is used for the settlement of claims, or debt “in the public”. Normally, we use our personal checking account (represents our equity or labor) to set off claims or debts. But this “pre-paid” account allows us to make an order (accounting instruction) to settle claims of debt from banks, tax collectors, courts, traffic tickets, debt collectors, insurance companies, student loans, any debt that is registered in the public forum. The pre-paid account cannot be used for “buying” items or services; it can only be used for the settlement of existing debts.

One example is that while you cannot use your pre-paid account to “pay” your cable bill, you can pay your cable bill with a credit card and use your pre-paid account or exemption to settle that claim. I'm going to walk you through the method and then show you an example.

First, this is an accounting procedure, and it involves making a restrictive endorsement on a bill. We should all be familiar with endorsing a check for deposit; this is the same thing except we're now going to add some terms to it, or to our signature on the endorsement. The endorsement should be written in blue ink, but I've heard red and combinations, but you are safe using only blue. You want to write at a 45 degrees angle on the top center two-thirds of the page where the balance owed appears. Try to write in the white space and legibly.

This endorsement allows the claim to “pass through” to your pre-paid account so you can access the funds, or so the IRS can settle the claim for you. This is the language: “Accepted for Value, Exempt from Levy, Deposit to The U.S. Treasury and Charge the Same to: FIRST M. LAST 000-00-0000”, where the name you print here should be identical to how it appears on the social security card.

Next, you need to write what is known as a “Money Order”, it tells them how much to transfer or at least gives them a “blank check” so that they can enter the correct amount. There are many technical names for this, a note, a check, a bill of exchange, but let's just call it a “money order” for now. In most cases you will find a payment coupon or voucher as the bottom third of the page, many times with a perforation or indication to cut across the line. There is no need to separate this section although some people do. Instead, you will need to locate the best space in the top center where you can write “MONEY ORDER”. Then if the date does not appear on the top right corner of that section, write it in that location. There is sometimes an amount of money stated already, if you want to use that, use it. Or, sometimes the amount is left blank, so you can write in an amount up to the limit of the total debt. Keep in mind that if the total debt is settled this way on a credit card debt it might result in your account being closed.

Many people make the money order for just under the total debt. If there is not payment voucher demarcated on the last third of the page, the entire page or document then becomes the money order and you can prepare it just the same.

Next, find a good spot to write out the “Pay to” line. It should read “Pay to:" and then the name of your creditor or the claimant, such as “Bank of America”. And then underneath the amount write out the amount in words just like in a check, “so many dollars and so many hundredths of a dollar” (or cents or xx/100).

At the very bottom of this money order, in the right corner, you want to write “By:” in blue ink and then sign your name in blue ink. Then write “EIN” in blue and write out your social security number again with no dashes, 000000000. Underneath this line and in the last possible space of the money order, write “Authorized Representative”. Everything is written in blue ink and signed in blue ink.

If the back of the billing statement is not part of the bill showing how much is due, write (SEE REVERSE) and nothing more. Do this for every page of the bill, but what I prefer is to take only the portion of the bill with the total balance and place the endorsement on that.

Finally, you will need to create a voucher order using IRS Form 1040-V. You can download the most recent for from www.google.com by searching on “Form 1040-V” and you should find the one for the previous year, for example, if this is the year 2012, look for the 2011 revision.

You will need to include another set of instructions just above the document title “1040-V” and be sure to use all capital letters and write in blue ink only. Of course this is an example, so put the current date and correct information for your situation.ACCEPTED FOR VALUEEXEMPT FROM LEVY

PAY TO: THE U.S. DEPARTMENT OF TREASURY

EXCLUSION ID: 000000000 06/29/2012

In box 1, write your SSN with no dashes, 000000000, draw a line in box 2, leave box 3 blank so that the IRS c an determine the correct amount and then in box 4, enter your first name and middle initial in all capital letters and then your last name in all capital letters in the next box.

Draw another line for the spouse name and then enter your address, city, state, ZIP and “USA” where indicated. At the very bottom right corner, sign just like you did on the money order, but omit your SSN this time. Remember to flip it over and endorse the 1040-V just like a check. You can cut off the top part showing the instructions first or last, but just remove them either way before you mail it. It will look like a check that you can attach to the bill/money order.

This is legally sufficient to create a security, or today's definition for “money of account”. In many cases you may need to resubmit the money order, some people have reported having to send this a dozen times and I believe that “the system” doesn't want people to use this remedy, so the IRS deliberately refuses to process the settlement claims. This is the same as unlawfully withholding your money, but we'll learn more about that later.

You can use a new bill with a different date or amount without a problem, but if you are using a certified copy of your original, it must be noted in some kind of sequence number on the face of the instrument so as to avoid being considered a forgery. Keep a copy for your records so you can log which debt you settled with your exemption and follow up if necessary.

I prefer to send these via certified mail in a 9” x 12” white envelope. The accounting function is the Internal Revenue Service, it's their responsbility to ensure that all accounts and claims presented and filed with them are settled. The IRS manages the accounting for the bankruptcy of the United States and the Canadian tax system. The IRS is subordinate to the International Monetary Fund (IMF). The IMF is the accounting function for the world. If the IRS fails to perform or fulfill its duties for the accounting under the bankruptcy provision, the IMF will impose penalties and enforce the obligations.The are the addresses where you can mail your exemption claims. The most recommended is Ogden Utah.IRS Technical Support Division Internal Revenue ServiceC/o Treasury UCC Contract Trust Stop 4440Internal Revenue Service P. O. Box 90361500 Pennsylvania Avenue, NW Ogden, UT 84201Washington, DC 20220Internal Revenue ServiceCriminal Investigation DivisionBox 192Covington, Kentucky 41012

Choose one address and send all of your settlement claims at the same time to that one address. Many of the people I've spoken with use the Ogden address, so do I. It's your choice however. The IRS is required to process these claims within sixty days, and typically it has been known to complete them within two to six weeks. If you're using this for a credit card or mortgage, request a payoff statement and continue making your regular payments (unless you've chosen to default). Make them online, or via phone or with a copy of the original bill so that you can use the original bill for the set off instrument (money order). That way, if the settlement extends beyond the payment due date, you won't be late. And eventually you can expect a refund check or credit for an overpayment once the debt is settled. Expect to make two more payments before you receive some indication of the settlement having been completed. This is not a friendly process so be patient, sometimes you'll have to resubmit several times. Many times the IRS will try to intimidate you or discourage you from filing the settlement claim, remember that the system wants to take your equity and it doesn't like to let you out, and more than likely your creditor is using your exemption, stealing it I should say. I'll explain how to respond if the IRS sends you a frivolous return notice.

Keep a black and white copy for your records. I like to keep a color image on my computer and make a notation on the copy that it is in fact a copy of the original, using the date as the sequence number.

Once the settlement is completed, the IRS will post the amount to your Individual Master File incorrectly as taxable income. The banks do this all the time and we never hear about it, but as for the IRS, you can correct the file by including a Form 1099 A Corrected and a voucher with your tax return. This is not necessary if you want to simply use your exemption to settle whatever claims the IRS wants to send you. I prefer to do things the right way, so I recommend correcting the record with the 1099 A Corrected Form.

What happens if the set off claim is not processed within sixty days? The only thing I can suggest at this point is to continue to send the claims until the account is settled. I am not aware of any legal action you can take to force the IRS to perform its accounting as required under HJR 192 and the bankruptcy provisions of Title 5, Section 552(a).

If you do receive a frivolous return penalty notice (LTR 3175 & 3176C), respond with a Form 843, Claim for Abatement and Refund. Enter your SSN as indicated, legal name, and enter your SSN as an EIN in the space following as indicated, e.g. 000-00-0000 and then 00-0000000.

For line 1, enter “none” to “none” and line 2 is “$5,000” or whatever the proposed penalty is, and notice that the first 3175 is just a warning. Skip line 3 for Type of tax and on 4, “none identified”. On line 5a, select “Reasonable cause or other...” and for b, “LTR 3175C is not relevant, sent in error”. Skip line 6, and for Line 7, put “Your notice fails to identify specific frivolous arguments and fails to respond or pertain to any tax return or identify any applicable penalty statute. Please review IRS Bulletin 2007-14. Your letter is erroneous as it appears to respond to an exemption claim for settlement and closure of an accounting. Please refer this matter to trained personnel who understand how to process exemption claims pursuant to HJR 192. Please also be advised that failure or refusal to settle claims is against public policy and constitutes the unlawful withholding of funds. Please note also that I received your letter around _______ but your letter is dated __________.”

Remember to put the relevant dates you received the notice and when it's dated in the blank lines and remove the lines. Include a copy of their letter and keep copies for your records.

Effective Letter WritingThis chapter will show you how to write a letter to the IRS, ask a question and get an answer every time! I’ve had the most success in working through the Problem Resolution Office and they never question my standing to assist a subscriber. They don’t bother me about any power of attorney and they always call and respond in writing in response to my inquiries and complaints.This office will assist you when you can present a factual dispute to them meeting at least one of the following criteria:

1. Refund - a second or subsequent refund inquiry received 90 days after the first filing of an original or amended return or a claim. NOTE: An inquiry received prior to the 90 days should not be counted in applying the criteria. Both the first and second inquiries must be received after the 90 days to be counted in applying the criteria.2. Inquiry - A question (except a refund inquiry) received in person, by telephone or correspondence, requiring assistance or information on the same issue and (a) the taxpayer has not received a response by the date promised in the acknowledgment, or (b) as least 45 days have passed since the initial inquiry and the taxpayer has not received an acknowledgment or final response.This also includes inquiries or complaints received in response to Service-generated correspondence or notices, if action or response to the taxpayer would be required and the Service’s failure to do so would adversely affect the taxpayer.

3. Notice - an inquiry in response to a third (such as 503, 517 IMF or 504, 517 BMF) or subsequent notice, which indicates a problem with incorrect action or lack of action by the service to resolve a complaint with a prior notice or notices.

You will find that when you receive a CP 515, 516, 517 or 518, and request a determination letter as I’ve explained in this book, the PRO will be able to assist you if you don’t get the answer or if they realize they’ve been caught and try and avoid making the determination.4. Administrative Recourse - a taxpayer is unable to discuss the recommendations or actions of a Service employee with that employee’s manager (or higher level manager), or, having had the discussion, the situation remains a problem for the taxpayer and there are no established formal appeals procedures, or the taxpayer’s right may have been abridged.5. Other - a contact indicating that the use or normal channels, established systems or procedures has not been successful in resolving the complaint or inquiry of the taxpayer; or it is in the best interest of the Service to include the complaint or inquiry in the PRP program. For example: failure to deal with an extreme hardship or a gross Service error.Any complaint that satisfies the above criteria, and meets any one of the following criteria would be excluded from requiring a response from the Problem Resolution Office.

1. if an established administrative or formal procedure should be used;2. if an appropriate response has previously been provided to the taxpayer;

3. if the resolution of the problem is solely the responsibility of another Federal, state or local agency;4. if a nontax administrative matter with the Service is involved, such as, Inspection, Disclosure or Personnel;5. if the case is under the jurisdiction of the Criminal Investigation Division;6. if a tax protester related issue is involved;7. if a resolution was achieved and the taxpayer advised the same day the inquiry meets the PRP criteria;8. if the taxpayer indicates he or she cannot or will not pay (except for requests to make arrangements to pay).In categories 1, 4, 5 and 8 above, which must be handled by another IRS office, the employee receiving the inquiry will immediately put the taxpayer in touch with the proper office. In category 4 above, which must be handled by another IRS office, the employee receiving the inquiry will immediately put the taxpayer in touch with the proper office. In category 3 above, where the taxpayer must be referred to the proper agency, the taxpayer must be advised of the referral. In category 6 above, the taxpayer must be referred to the illegal tax protester function.Items meeting the PRP criteria may be discovered at any point in the processing cycle. If the item or case meets any of the above criteria, the case should be referred to the supervisor for referral to PRP.There are other avenues in which you can get a response when the Problem Resolution Office is not the proper one to assist you. I contacted the IRS in Texas and asked how I could request a letter ruling or determination letter on particular questions of law and they sent me a manual! It was called Revenue Procedure 98-1 (Rev. Proc. 98-1) and gave instruction on how to write a letter asking questions to the IRS and make them answer within thirty days. The reality however is that they will answer, but it takes about twice as long as the manual allows.Here is an example of how we recently replied to an IRS form letter titled “Please Call Us About Your Overdue Taxes or Tax Returns.” This is a “Letter 2050” and allows only ten days in which to respond. I have included several examples of responses. One of the agents asked for records and other information and this was our response.

[Sender][Address][City state]District DirectorPROBLEM RESOLUTION OFFICEAttn. E:PRO:DNP.O. Box xxxxFt. Lauderdale, FL 33318954-111-1111Fax: 954-111-1111[Date]

Re your reply dated [date]entity module- SSN000-00-0000

Dear Mr. [Agent]:Thank you for assisting me in this matter. This correspondence involves an

unanswered inquiry or complaint requiring administrative recourse resulting from your agency’s failure or refusal to answer my previous inquiry concerning a service-generated notice I received from “W. H. Gregory” dated [date].

No resolution has yet been reached and there are no other established administrative or formal procedures that could be used in the resolution of this dispute, nor has your agency previously responded to this particular matter. Its resolution is not the sole responsibility of another federal, state or local agency. This dispute does not involve any non-tax administrative matter with your agency such as inspection, disclosure or personnel. The CID is not involved and this dispute is not concerned with any “tax protester” issues. I have not indicated that I cannot or will not pay any alleged tax liability.The records you’ve requested from me are maintained under the IMF component known as: “Information Returns Master File” (IRMF) Transcripts. All returns have been properly filed and all taxes have been paid in full for the entity module identified herein. Please correct your records and inform me as to when you have satisfied this request.Best regards,[Sender]

[Subscriber][Address][City state zip][IRS][Address][City state zip][Date]Re [identify related correspondence]Hello [Agent's first name]:

Thanks for your [date] response (see attached) to my correspondence. I do not challenge nor disagree with the tax code. As confusing as it might be at times, the application of its provisions is the reason you have a job and the government's sole means of support. I am an advocate of the federal income tax code. It is responsible for protecting citizens against abusive collections and allowing the government the necessary authority to collect public revenues to repay the national debt to the Federal Reserve Bank.In response to your frivolous penalties for [year] and [year], I have requested copies of the returns alleged to be frivolous yet you have failed or refused to provide them to me at every occasion. These penalties cannot be enforced against me absent proof that these purported frivolous returns were filed. Also, please send me copies the IMF, IRMF and all "Substitute for Returns" filed in connection with this collection. If you fail to produce these returns again but pursue the collection of these penalties, I will file a formal complaint against you with the Inspector General.In response to your claim that I owe more taxes for [year] than I already paid, please review this brief explanation of my previous correspondence. I have included an explanation as to the basis for my argument that an "SFR" is insufficient to support your notices of lien and levy for 1995.The authority granted to the Commissioner of Internal Revenue, by 26 CFR 301.6020-1(b) and 26 CFR 301.7701-9 to execute returns required by any internal revenue law or regulation made thereunder when the person required to file such return fails to do so, is delegated to: 1. Revenue Agents; 2. Tax Auditors; 3. Revenue Officers, GS-9 and above; 4. Collection Support function managers, GS-9 and above; 5. Automated Collection Branch managers, GS-9 and above; and 6. Service Center Collection Branch manager, GS-9 and above. This authority cannot be re-delegated. This is found in Delegation Order No. 182 that became effective on January 8th, 1987. The agents are authorized to file many different kinds of substitute returns such as the 1120 series, 720 series and other business returns; however, no agent has ever been authorized to file a Form 1040 substitute for anyone. Please see IRS Manual 1229, Handbook of Delegation Orders.

Furthermore, the IRM 5200 relating to substitute returns, Section 5290 “Refusal to File – IRC 6020(b) Assessment Procedure” establishes the scope of the procedure. Section 5291 establishes that “…The procedure applies to employment, excise and partnership tax returns. Generally, the following returns will be involved. (a) Form 940, Employer’s Annual Federal Unemployment Tax Return; (b) Form 941,

Employer’s Quarterly Federal Tax Return; (c) Form 942, Employer’s Quarterly Tax Return for Household Employees; (d) Form 943, Employer’s Annual Tax Return for Agricultural Employees; (e) Form 11-B, Special Tax Return – Gaming Devices; (f) Form 720, Quarterly Federal Excise Tax Return; (g) Form 2290, Federal Use Tax Return on Highway Motor Vehicles; (h) Form CT-1, Employer’s Annual Railroad Retirement Tax Return, (i) Form 1065, U.S. Partnership Return of Income.

On October 1, 1986, the collection branch was delegated the authority to assess an “IMF tax” (appears like that in IRM) and the Service Center Collection Branch began substitute for return (SFR) processing. An SFR “assessment” is an audit process where the initial action by SCCB (Service Center Collection Branch) is to file, what’s technically known as, a dummy return for the taxpayer for -0- amount and then assess the tax with a TC 290. This assessment is based on IRMF (Information Return Master File, formerly IRP) information from the TDI Supplement file or the IRMF transcripts.

"Taxpayers," as the term is applied under the Internal Revenue Code, are individuals required to file a federal income tax return. The requirement to file a federal income tax return falls upon those who file a federal income tax return for any particular tax period. Those who do not file do not have the requirement. This conclusion is supported by federal jurisprudence in that the United States is without any power to compel the testimony of an individual, and is without any power to compel an individual to disclose or apply for a social security number.

Likewise, agents of the Internal Revenue Service are not authorized to substitute their own statements, or even testimony, for those of individuals who do not voluntarily do so by filing a federal income tax return. This type of testimony is incompetent and inadmissible under the hearsay rule. Similarly, an individual is not authorized to perform an official government function by assessing himself a tax.

I have paid all of my taxes in full for each tax period and I will not pay any more than the law requires. If you are aware of some law that either compels me to pay more taxes than I owe or have paid, or compels my testimony, please cite it for me. If I don't receive your response with the requested information within the next thirty (30) days, I will construe your failure to respond to be a waiver of all claims against me.Best regards,

[Sender]

[Subscriber][Address][City state zip][IRS][Address][City state zip][Date]Re CP 540 dated [date] (TIN xxx-xx-xxxx) Form 1040 [year]Greetings:

Thank you for your recent inquiry. Your records are correct with respect to a [year] tax return. I did not file a federal income tax return for this year because I was not required to file. The only time any one is required to file a federal income tax return is when an individual files a particular federal income tax return. At the moment the return is filed, the individual filing the return is required to file that return. Otherwise, there is no law requiring that anyone, including myself, file a federal income tax return.

Please admit or deny the following statements in writing and submit your reply to me within thirty days. If you do not admit or deny these statements within thirty days, they will be deemed admitted.1. Signing any document under penalty of perjury requires that I waive certain rights, otherwise guaranteed by law.2. The government cannot compel me to waive any rights.3. The government cannot compel me to sign any document under penalty of perjury, including a federal income tax return.

Your letter also alludes to a potential liability under the backup withholding statute, Section 3406, of the Internal Revenue Code. Please be advised that backup withholding applies only to the payment of interest of dividends when any of the following four conditions are true:1. There has been payee underreporting, or2. The payee has failed to report income earned from interest or dividend payments exceeding $10 for one tax period, or3. There has been a payee certification failure, or4. The payee has submitted an incorrect EIN.

A review of your Individual Master File and the component currently known as the "Information Returns Master File (IRMF)" will clearly establish that none of these conditions is true. You can review 26 CFR 31.3406(c)-1 if you need more information.

Please feel free to contact me by mail or in writing only, if you have any questions about the merits of my response.Best regards,[Sender]

[Address][City state zip][Phone]Internal Revenue Service Office of the Taxpayer AdvocateAttn: [sender] 1111 Constitution Avenue, N.W.[Address] Room 3017, C:TA[City state zip] Washington, DC 20224[Fax] fax: 202-622-4318[Date] Certified Mail No.: _______________

Re your recent inquiryGreetings [agent]:

Thank you for your recent inquiry, a copy of which is attached. Because our public school system does not teach law, for some suspicious reason, I have sought the professional advice of several tax practitioners and attorneys on this matter.

Your letter accuses of me committing a crime for not filing federal income tax returns for the years [year] through [year]. I do not have a tax liability for these years beyond that which I have already satisfied. I have paid my taxes in full, for each of these years, regardless of what your records indicate. I am not responsible for your system of records management and I have fully complied with the law.

These tax professionals have informed me that there is no legal duty to pay a tax until it has been assessed. I have also been advised that the method of paying a tax liability once it has been assessed is to file an income tax return. Because I have paid my taxes for these years, according to my records, no further tax liability has been assessed against me by your agency. If you believe my records to be incorrect, please explain to me in writing why they are incorrect. You have thirty days to disclose these records.

Furthermore, the law does not require anyone, including myself, to perform a duty beyond that which is required by law. If I have no legal duty, as an American, to register my automobile with the government of Zimbabwe, then I cannot be penalized for not doing so. Your inquiry appears to be based upon inaccurate conclusions of fact. If you can produce a record showing a tax liability that has been assessed in excess of that which I have already paid, and which would subsequently impose a legal duty upon me to file these tax returns, then you have thirty days to provide these records. I will file the appropriate income tax returns and pay the correct amount of taxes when you can satisfy this request. I am not refusing to comply with any law, as alleged in your letter. Your allegations are patently frivolous.

If you think this is a game of intimidation, I suggest you review the testimony given by your own IRS agents before the Senate Finance Committee in 1997 and 1998. I would also suggest, based upon the professional advice given to me by these practitioners, that you review the federal criminal code regarding the sending

of threatening communications through the federal mail system. You may also wish to apprise yourself of the new IRS Restructure and Reform Act of 1998.

I am not intimidated by your threats, but if you wish to pursue this without providing the requested records in order to allow me to correct any possible oversights, then make your claim; otherwise, please do not contact me about this matter again. I do not interfere with your business, and I will not tolerate your interference with mine.

We have the best government in the history of mankind, and I fail to understand why your agency continues to bring it into public scrutiny and disrepute.Best regards,

[Sender]

I’ve inserted another form letter I’ve created using the revenue procedure to get a determination on a point of law involving the code of federal regulations. To obtain your free copy of this manual, write to the address in Washington DC found within the body of this sample letter.You will also find examples of other types of letters we’ve used over the past five years to get answers and communicate effectively with the IRS.This first example is the Request for Letter Ruling and the first section is a checklist that must be completed as per the manual and attached to the cover of the actual letter. You will then see that it is followed by a deletions statement and then the actual request as prescribed by their procedure. DO NOT attempt to use this sample letter without first obtaining a copy of the most recent Revenue Procedure. This was written under Rev. Proc. 98-1 but you’ll need to write to the Ben Franklin Station in DC to obtain an updated one.Let me make one more point about letter writing. Many of us have a tendency to view government as this big monster and that we will need some huge machine or weapon with which to destroy it or restore its purpose. Because of this, we have a tendency to write letters that “bring the house down” or are aimed at exposing the entire fraud behind the international bankers. This is not necessary. First of all, these types of letters are never read and most people working for government don’t understand them anyway. It’s not so bad that they are not understood; but, because they are not understood, the writer is labeled as being some kind of “wacko, protester, right-wing, extremist.” We just need to state the facts and address the proper person with the proper issues. Give them only one problem at a time to help you with and you’ll go much further at accomplishing your goal. When you can change your perspective of a problem, you can increase your opportunities for being able to resolve it. Professional comedians practice a similar technique as a matter of course. They tell about tragic situations in such a way as to make them funny. Taken about of context, you would indeed see the tragedy of events used in most comic routines.

CHECKLIST

TAXPAYER’S NAME __________

TAXPAYER’S I.D. NO.

DISTRICT HAVING AUDIT

JURISDICTION

ATTORNEY/P.O.A. N/A

PRIMARY CODE SECTION 26 CFR 31.3121(b)-3(c)

Yes 1. Does your request involve an issue under the jurisdiction of the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (International)? See section 3 of Rev. Proc. 99-1, 1999-1 I.R.B. 15. For issues under the jurisdiction of other offices, see section 4 of Rev. Proc. 99-1. (Hereafter, all references are to Rev. Proc. 99-1 unless otherwise noted.)

No 2. Have you read Rev. Proc. 98-3, 1999-1 I.R.B. 100, and Rev. Proc. 98-7, 1999-1 I.R.B. 222, to see if part or all of the request involves a matter on which letter rulings are not issued or are ordinarily not issued?

N/A 3. If your request involves a matter on which letter rulings are not ordinarily issued, have you given compelling reasons to justify the issuance of a letter ruling? Before preparing your request, you may want to call the branch in the Office of the Associate Chief Counsel (Domestic), the Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Office of the Associate Chief Counsel (Enforcement Litigation), or the Office of the Associate Chief Counsel (International) responsible for substantive interpretations of the principal Internal Revenue Code section on which you are seeking a letter ruling to discuss the likelihood of an exception. For matters under the jurisdiction of--

(a) the Office of Associate Chief Counsel (Domestic) and the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations), the appropriate branch to call may be obtained by calling (202) 622-7560 (not a toll-free call);

(b) the Office of the Associate Chief Counsel (International), the appropriate branch to call may be obtained by calling (202) 622-3800 (not a toll-free call).

(c) the Office of the Associate Chief Counsel (Enforcement Litigation), the appropriate branch to call may be obtained by calling (202) 622-3600 (not a toll-free call).

N/A 4. If the request deals with a completed transaction, have you filed the return for the year in which the transaction was completed? See sections 5.01, 5.05, 5.06, 5.07, 5.08, and 5.09.

No 5. Are you requesting a letter ruling on a hypothetical situation or question? See section 7.02.

No 6. Are you requesting a letter ruling on alternative plans of a proposed transaction? See section 7.02.

No 7. Are you requesting the letter ruling for only part of an integrated transaction? See sections 7.03 and 8.01(1).

No 8. Are you requesting the letter ruling for a business, trade, industrial association, or similar group concerning the application of tax law to its members? See section 5.11.

No 9. Are you requesting the letter ruling for a foreign government or its political subdivision? See section 5.12.

Yes 10. Have you included a complete statement of all the facts relevant to the transaction? See section 8.01(1).

N/A 11. Have you submitted with the request true copies of all wills, deeds, and other documents relevant to the transaction, and labeled and attached them in alphabetical sequence? See section 8.01(2).

N/A 12. Have you submitted with the request certified English translations and a copy of all applicable foreign laws? See section 8.01(2).

Yes 13. Have you included, rather than merely incorporated by reference, all material facts from the documents in the request? Are they accompanied by an analysis of their bearing on the issues that specifies the document provisions that apply? See section 8.01(3).

Yes 14. Have you included the required statement regarding whether the same issue in the letter ruling request is in an earlier return of the taxpayer or in a return for any year of a related taxpayer? See section 8.01(4).

Yes 15. Have you included the required statement regarding whether the Service previously ruled on the same or similar issue for the taxpayer, a related taxpayer, or a predecessor? See section 8.01(5)(a).

Yes 16. Have you included the required statement regarding whether the taxpayer, a related taxpayer, a predecessor, or any representatives previously submitted a request involving the same or similar issue but withdrew the request before the letter ruling or determination letter was issued? See section 8.01(5)(b).

Yes 17. Have you included the required statement regarding whether the taxpayer, a related taxpayer, or a predecessor previously submitted a request involving the same or similar issue that is currently pending with the Service? See section 8.01(5)(c).

Yes 18. Have you included the required statement regarding whether, at the same time as this request, the taxpayer or a related taxpayer is presently submitting another request involving the same or similar issue to the Service? See section 8.01(5)(d).

Yes 19. Have you included the required statement of relevant authorities in support of your views? See section 8.01(6).

Yes 20. Have you included the required statement regarding whether the law in connection with the request is uncertain and whether the issue is adequately addressed by relevant authorities? See section 8.01(6).

No 21. Does your request discuss the implications of any legislation, tax treaties, court decisions, regulations, notices, revenue rulings, or revenue procedures that you determined to be contrary to the position advanced? See section 8.01(7), which states that taxpayers are encouraged to inform the Service of such authorities.

Yes 22. If you determined that there are no contrary authorities, have you included a statement to this effect in your request? See section 8.01(7).

N/A 23. Have you included in your request a statement identifying any pending legislation that may affect the proposed transaction? See section 8.01(8).

Yes 24. Is the request accompanied by the deletions statement required by § 6110? See section 8.01(9).

Yes 25. Have you (or your authorized representative) signed and dated the request? See section 8.01(10).

N/A 26. If the request is signed by your representative or if your representative will appear before the Service in connection with the request, is the request accompanied by a properly prepared and signed power of attorney with the signatory’s name typed or printed? See section 8.01(12).

Yes 27. Have you included, signed, and dated the penalties of perjury statement in the form required by section 8.01(13)?

N/A 28. Are you submitting your request in duplicate if necessary? See section 8.01(14).

N/A 29. If you are requesting separate letter rulings on different issues involving one factual situation, have you included a statement to that effect in each request? See section 8.02(1).

N/A 30. If you want copies of the letter ruling sent to more than one representative, does the power of attorney contain a statement to that effect? See section 8.02(2)(a).

N/A 31. If you want the original of the letter ruling to be sent to a representative, does the power of attorney contain a statement to that effect? See section 8.02(2)(b).

N/A 32. If you do not want a copy of the letter ruling to be sent to any representative, does the power of attorney contain a statement to that effect? See section 8.02(2)(c).

N/A 33. If you are making a two-part letter ruling request, have you included a summary statement of the facts you believe to be controlling? See section 8.02(3).

N/A 34. If you want your letter ruling request to be processed ahead of the regular order or by a specific date, have you requested expeditious handling in the manner required by section 8.02(4) and stated a compelling need for such action in the request?

Yes 35. If you are requesting a copy of the letter ruling to be sent by facsimile (fax) transmission, have you included a statement containing a waiver of any disclosure violations resulting from the fax transmission? See section 8.02(5).

Yes 36. If you want to have a conference on the issues involved in the request, have you included a request for conference in the letter ruling request? See section 8.02(6).

N/A 37. Have you included the correct user fee with the request and made your check or money order payable to the Internal Revenue Service? See section 15 and Appendix A to determine the correct amount.

Yes 38. If you qualify for the reduced user fee when gross income or gross receipts, as applicable, is less than $150,000, have you included the required certification? See paragraphs (A)(4) and (B)(1) of Appendix A.

N/A 39. If your request involves a business-related tax issue and you qualify for the reduced user fee when gross income is less than $1 million, have you included the required certification? See paragraphs (A)(4)(b) and (B)(1) of Appendix A.

N/A 40. If you qualify for the user fee for substantially identical letter rulings, have you included the required information? See section 15.07(2) and paragraph (A)(5)(a) of Appendix A.

N/A 41. If you qualify for the user fee for a § 301.9100 request to extend the time for filing an identical accounting method change on a single Form 3115, have you included the required information? See section 15.07(3) and paragraph (A)(5)(c) of Appendix A.

N/A 42. If your request is covered by any of the guideline revenue procedures or notices, safe harbor revenue procedures, or other special requirements listed in section 9, have you complied with all of the requirements of the applicable revenue procedure or notice?

Rev. Proc. List other applicable revenue procedures or notices, including checklists, used or relied upon in the preparation of this letter ruling request (Cumulative Bulletin citation not required).

N/A 43. If you are requesting relief under § 7805(b) (regarding retroactive effect), have you complied with all of the requirements in section 12.11?

Yes 44. Have you addressed your request to the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, at:

Internal Revenue Service; Attn: CC:DOM:CORP:T; P.O. Box 7604; Ben Franklin Station; Washington, DC 20044

The package should be marked: RULING REQUEST SUBMISSION. Improperly addressed requests may be delayed (sometimes for over a week) in reaching CC:DOM:CORP:T for initial processing.

__________________________ ________________signature date

DELETIONS STATEMENTPursuant to § 8.01(9) of Revenue Procedure 01-1, I, ___________, request that only

my address, phone number and social security number be deleted from the published copy

of the letter ruling requested herein.

_____________________________ ________________signature date

Internal Revenue Service [Date]Associate Chief Counsel DomesticAttn: CC:DOM:CORP:T

P.O. Box 7604

Ben Franklin Station

Washington, DC 20044 Certified Mail No.: _____________

Greetings to the Secretary:

I, _______, request a ruling on the proper treatment of employment status under

section 26 CFR 31.3121.

A. STATEMENT OF FACTS

1. Taxpayer information

a) name: _______________________

address: _______________________

_______________________

telephone: ____________

facsimile:

(The undersigned hereby waives the right to pursue disclosure violations.)

social security number: _______________________

b) The annual accounting period is the tax year ending December 31, ____.

c) The location of the district office that has or will have examination jurisdiction over the return is the Fresno District Office.

2. Description of Taxpayer’s Business Operations:

d) I am a private citizen living in ___________.

e) The complete transaction includes the involuntary signing of a voluntary withholding agreement (Form W-4) OMB No. 1545-0010. The company with which previously contracted for my livelihood told me that signing this voluntary withholding agreement is a condition of contract. There are no business reasons for this transaction. This is a complete description of the transaction and is not part of some larger integrated transaction.

3. The facts relating to this transaction are that the company for which I previously contracted for my livelihood was located in ___________. I received compensation for my labor in ___________. The work in which I was involved was not effectively connected with any trade or business within the United States, nor did it involve activities which might be construed as affecting any aspect of interstate or intrastate commerce.

There were no contracts, wills, deeds, agreements, instruments, trust documents, proposed disclaimers, or other documents pertinent to the transaction. There are no applicable foreign laws to this transaction.

This request does not concern a corporate distribution, reorganization, or similar transaction, or any prospective transaction.

B. RULING REQUESTED

“______________ was not an employee earning taxable wages for the tax

period ending December 31, _____.”

C. STATEMENT OF LAW

Index of Authorities

Exhibit 1: 26 CFR Part 31.3121(b)-1

Exhibit 2: 26 CFR Part 31.3121(b)-3

Exhibit 3: 26 CFR Part 31.3121(b)-4

Exhibit 4: 26 CFR Part 31.3121(d)-2

Exhibit 5: 26 CFR Part 31.3401(c)-1

Exhibit 6: 26 CFR Part 31.3401(a)-1

Exhibit 7: 26 CFR Part 31.3401(d)-1

Exhibit 8: 26 CFR Part 31.3121(e)-1

ARGUMENT

This request does not question nor relate to the legality of the tax code or the federal

income tax system.

Compensation for services is taxable as wages. Wages are recognized by the Internal Revenue Code of 1986 as being taxable. Wages are defined to mean “remuneration for employment,” Exhibit 6. Title 26 CFR 31.3401(c)-1 defines “wages” to mean all remuneration for services performed by an employee and it defines “employee” to include “every individual performing services if the legal relationship between him and the person for whom he performs such services is the legal relationship of employer and employee.” And finally, the term “employer” is clearly defined under 26 CFR Part 31.3401(d)-1 to mean “any person for whom an individual performs or performed any service, of whatever nature, as the employee of such person.”

If one is receiving wages, he is also an employee receiving wages from an employer.

Under these definitions, one becomes an employee performing services for an employer

when he receives wages and his compensation is recognized by the tax code and being

taxable.

The term “employment” is further defined more clearly under Part 31.3121(b)-3 to mean services performed after 1954 within the United States by an employee for his employer, unless specifically excepted. It goes on to state that the employee and employer may be citizens and residents of a foreign country and the contract of service may be entered into in a foreign country, and yet, if the employee under such contract performs services within the United States, there may be to that extent employment. This regulation refers to § 31.3121(e)-1 for the definition of United States.

Paragraph c of this same part states that services performed outside the United

States as defined under Part 31.3121(e)-1 do not constitute employment. In other words,

services performed outside the United States and wages resulting therefrom are not

recognized by the Internal Revenue Code of 1986 as being taxable. Part 31.3121(e)-1

defines State, United States and citizen as follows:

“(a) When used in the regulations in this subpart, the term ‘State’ includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, the Territories of Alaska and Hawaii before their admission as States, and (when used with respect to services performed after 1960) Guam and American Samoa.

(b) When used in the regulations in this subpart, the term ‘United States’, when used in a geographical sense, means the several states (including the Territories of Alaska and Hawaii before their admission as States), the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands. When used in the regulations in this subpart with respect to services performed after 1960, the term ‘United States’ also includes Guam and American Samoa when the term is used in a geographical sense. The term ‘citizen of the United States’ includes a citizen of the Commonwealth of Puerto Rico or the Virgin Islands, and, effective January 1, 1961, a citizen of Guam or American Samoa.”

As you can see, if one is receiving compensation for services performed within

Hawaii and Alaska, after their admission as states, his pay is not recognized as being a

taxable “wage.” Likewise, he would not be considered an employee because wages can

only be paid to employees; and, the company for which he performed services would not be

considered an “employer” simply because his pay is not recognized as a taxable wage.

Thanks to the late admission of these states and the Alaska and Hawaii Omnibus

Acts which changed all the federal legislation regarding the definition of the United States,

we can clearly see that pay received within any of the fifty states is not recognized as a

taxable “wage”

Part 31.3121(d)-2(c) and 31.3121(b)-3 state the following:

“(c) Although a person may be an employer under this section, services performed in his employ may be of such a nature, or performed under such circumstances, as not to constitute employment (see § 31.3121(b)-3).”

So it’s true. There are some contractual arrangements for which people receive

payment for their labor that are not considered employer/employee relationships within the

tax code because of one fact, their pay is not recognized by the tax code as a taxable wage.

E. CONCLUSION

There are three basic requirements which must be satisfied before income is

considered taxable income. These requirements are gain, realization, and recognition.

Although I had realized a gain in compensation for my services under the circumstances

described herein, this gain has not been recognized by the Congress, nor by the income tax

code. This is a factual matter and does not raise any questions of law, except those

involving jurisdiction.

In conclusion of the foregoing, it must be agreed that the compensation for my labor,

received by me for this tax period, is not by any means, recognized by the tax code as a

taxable wage; because, federal regulations promulgated by the Secretary define wages to

be compensation for services performed within the District of Columbia, Guam, the

American Samoa, the Commonwealth of Puerto Rico, the Virgin Islands and the territories

of Hawaii and Alaska before their admission as states. I did not perform services within the

United States, 26 CFR 31.3121(e)-1, and because of this fact, I could not possibly have

earned “wages” for this tax period under these circumstances. Because I did not earn

“wages” as recognized by the tax code, I was not an employee, nor was I engaged in any

employer/employee relationship as recognized by the tax code.

F. PROCEDURAL MATTERS

1. Statement regarding whether same issue is in an earlier return.

a) This issue, to the best of my knowledge, is unique and not contained in an earlier return, nor in any return for any year of a related taxpayer within the meaning of § 267, nor of a member of an affiliated group of which I might be a member within the meaning of § 1504. I am not a member of any such group. This statement is not affirmative.

b) This issue, to the best of my knowledge, has not previously been ruled upon by the Secretary for me or a related taxpayer within the meaning of § 267, or any member of an affiliated group of which I may be a member within the meaning of § 1504 or a predecessor. I am not a member of any such group. This statement is not affirmative.

c) This issue, to the best of my knowledge, has not been previously submitted for a determination or letter ruling by either myself, any related taxpayer, a predecessor, nor have any representatives previously submitted a request involving the same or similar issue to the Service, withdrawing the request before a letter ruling or determination letter was issued. This statement is not affirmative.

d) This issue, to the best of my knowledge, has not been previously submitted for a determination or letter ruling by either myself, any related taxpayer, a predecessor, nor have any representatives previously submitted a request involving the same or similar issue to the Service, which is currently pending with the Service. This statement is not affirmative.

e) This issue, to the best of my knowledge, is not currently being submitted by any related taxpayer involving the same or a similar issue to the Service. This statement is not affirmative.

f) I advocate the position stated in my Statement of Law, Analysis and Conclusion as set forth herein. The law in connection with this request is absolutely clear and has no indication of being ambiguous. My explanation of the grounds for this conclusion is that I have an absolute right to rely upon the laws and legal determinations of Congress, the rules established by the United States Supreme Court and the federal courts and I have a right to rely upon the authority of the rule making powers conferred upon the Secretary by the United States Congress under its authority, which has been well established and respected by virtually every citizen and nation in the world for more than two centuries.

g) After careful review of the Internal Revenue Code and numerous rules established by our courts, I have found absolutely no contrary authority to the position which I have taken in this request.

h) I would like to have a conference on the issues involved in this request.

i) I would like a facsimile of the letter ruling sent to me upon its completion. My fax number is indicated in the Statement of Facts.

j) I am not requesting separate letter rulings on multiple issues.

k) I am not seeking to obtain the user fee provided in paragraph (A)(5)(a) of Appendix A of Revenue Procedure 99-1.

2. Administrative

a) The deletions statement and checklist required by Rev. Proc. 99-1 are enclosed.

b) I am exempted from the user fee under § 15.04(2) of Revenue Procedure 99-1.

c) There is no power of attorney enclosed as I am requesting this ruling myself.

Very truly yours,

_____________________________ ________________signature date

DECLARATION

Under penalties of perjury, under the laws of the United States of America, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete.

By:

_____________________________ ________________signature date

Sec. 31.3121(b)-1 Employment; services to which the regulations in this subpart apply.

(a) The provisions of the regulations in this subpart relating to the term ``employment'' apply with respect to services performed after 1954. Certain provisions also apply with respect to services performed before 1955 for which the remuneration is paid after 1954 (see paragraph (b) of Sec. 31.3121(b)-2. For provisions relating generally to services performed before 1955, see paragraph (a) of Sec. 31.3121(b)-2. For provisions relating to the circumstances under which services which do not constitute employment are nevertheless deemed to be employment, and relating to the circumstances under which services which constitute employment are nevertheless deemed not to be employment, see Sec. 31.3121(c)-1. For provisions relating to who are employees and who are employers see Secs. 31.3121(d)-1 and 31.3121(d)-2, respectively.

(b) The taxes apply with respect to remuneration paid after 1954 for services performed before 1955, as well as for services performed after 1954, to the extent that the remuneration and services constitute wages and employment. See Secs. 31.3121(a)-1 to 31.3121(a)(13)-1 relating to wages.

[T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 6983, 33 FR 18015, Dec. 4, 1968]

Exhibit 1

Sec. 31.3121(b)-3 Employment; services performed after 1954.(a) In general. Whether services performed after 1954 constitute employment is determined in accordance with the provisions of section 3121(b).

(b) Services performed within the United States. Services performed after 1954 within the United States (see Sec. 31.3121(e)-1) by an employee for his employer, unless specifically excepted by section 3121(b), constitute employment. With respect to services performed within the United States, the place where the contract of service is entered into is immaterial. The citizenship or residence of the employee or of the employer also is immaterial except to the extent provided in any specific exception from employment. Thus, the employee and the employer may be citizens and residents of a foreign country and the contract of service may be entered into in a foreign country, and yet, if the employee under such contract performs services within the United States, there may be to that extent employment.

(c) Services performed outside the United States—

(1) In general.

Except as provided in paragraphs (c)(2) and (3) of this section, services performed outside the United States (see Sec. 31.3121(e)-1) do not constitute employment.

(2) On or in connection with an American vessel or American aircraft. (i) Services performed after 1954 by an employee for an employer ``on or in connection with'' an American vessel or American aircraft outside the United States (see Sec. 31.3121(e)-1) constitute employment if:

(a) The employee is also employed ``on and in connection with'' such vessel or aircraft when outside the United States; and

(b) The services are performed under a contract of service, between the employee and the employer, which is entered into within the United States, or during the performance of the contract under which the services are performed and while the employee is employed on the vessel or aircraft it touches at a port within the United States; and

(c) The services are not excepted under section 3121(b).

(ii) An employee performs services on and in connection with the vessel or aircraft if he performs services on such vessel or aircraft which are also in connection with the vessel or aircraft. Services performed on the vessel by employees as officers or members of the crew, or as employees of concessionaires, of the vessel, for example, are performed under such circumstances, since such services are also connected with the vessel. Similarly, services performed on the aircraft by employees as officers or members of the crew of the aircraft are performed on and in connection with such aircraft. Services may be performed on the vessel or aircraft, however, which have no connection with it, as in the case of services performed by an employee while on the vessel or aircraft merely as a passenger in the general sense. For example, the services of a buyer in the employ of a department store while he is a passenger on a vessel are not in connection with the vessel.

(iii) If services are performed by an employee ``on and in connection with'' an American vessel or American aircraft when outside the United States and the conditions listed in paragraph (c)(2)(i) (b) and (c) of this section are met, then the services of that employee performed on or in connection with the vessel or aircraft constitute employment. The expression ``on or in connection with'' refers not only to services performed on the vessel or

aircraft but also to services connected with the vessel or aircraft which are not actually performed on it (for example, shore services performed as officers or members of the crew, or as employees of concessionaires, of the vessel).

(iv) Services performed by a member of the crew or other employee whose contract of service is not entered into within the United States, and during the performance of which and while the employee is employed on the vessel or aircraft it does not touch at a port within the United States, do not constitute employment under this subparagraph, notwithstanding services performed by other members of the crew or other employees on or in connection with the vessel or aircraft may constitute employment.

(v) A vessel includes every description of watercraft, or other contrivance, used as a means of transportation on water. An aircraft includes every description of craft, or other contrivance, used as a means of transportation through the air. In the case of an aircraft, the term ``port'' means an airport. An airport means an area on land or water used regularly by aircraft for receiving or discharging passengers or cargo. For definitions of ``American vessel'' and ``American aircraft'', see Sec. 31.3121(f)-1.

(vi) With respect to services performed outside the United States on or in connection with an American vessel or American aircraft, the citizenship or residence of the employee is immaterial, and the citizenship or residence of the employer is material only in case it has a bearing in determining whether a vessel is an American vessel.

(3) By a citizen of the United States as an employee for an American employer. Services performed after 1954 outside the United States by a citizen of the United States as an employee for an American employer constitute employment provided the services are not specifically excepted under section 3121(b). For definitions of ``citizen of the United States'' and ``American employer'', see Secs. 31.3121(e)-1 and 3121 (h)-1, respectively.

(4) By a citizen of the United States as an employee for a foreign subsidiary corporation. For provisions relating to the extension of the Federal old-age, survivors, and disability insurance system established by title II of the Social Security Act to certain services not constituting employment which are performed outside the United States by citizens of the United States in the employ of a foreign subsidiary of a domestic corporation, see section 3121(1) and Part 36 of this chapter (Regulations Relating to Contract Coverage of Employees of Foreign Subsidiaries).

[T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 6744, 29 FR 8309, July 2, 1964]

Exhibit 2

Sec. 31.3121(b)-4 Employment; excepted services in general.(a) Services performed by an employee for an employer do not constitute

employment for purposes of the taxes if they are specifically excepted from employment under any of the numbered paragraphs of section 3121(b). Services so excepted do not constitute employment for purposes of the taxes even though they are performed within the United States, or are performed outside the United States on or in connection with an American vessel or American aircraft, or are performed outside the United States by a citizen of the United States for an American employer. If not otherwise provided in the regulations relating to the numbered paragraphs of section 3121(b), such regulations apply to services performed after 1954.

(b) The exception attaches to the services performed by the employee and not to the employee as an individual; that is, the exception applies only to the services in an excepted class rendered by the employee.

Example. A is an individual who is employed part time by B to perform services which are specifically excepted from employment under one of the numbered paragraphs of section 312(b). A is also employed by C part time to perform services which constitute employment. While no tax liability is incurred with respect to A's remuneration for services performed in the employ of B (the services being excepted from employment), the exception does not embrace the services performed by A in the employ of C (which constitute employment) and the taxes attached with respect to the wages (see Sec. 31.3121(a)-1) for such services.

(c) For provisions relating to the circumstances under which services which are excepted are nevertheless deemed to be employment, and relating to the circumstances under which services which are not excepted are nevertheless deemed not to be employment, see Sec. 31.3121(c)-1.

[T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 6744, 29 FR 8310, July 2, 1964]

Exhibit 3

Sec. 31.3121(d)-2 Who are employers.(a) Every person is an employer if he employs one or more employees. Neither the number of employees employed nor the period during which any such employee is employed is material for the purpose of determining whether the person for whom the services are performed is an employer.

(b) An employer may be an individual, a corporation, a partnership, a trust, an estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture, or other unincorporated organization, group, or entity. A trust or estate, rather than the fiduciary acting for on behalf of the trust or estate, is generally the employer.

(c) Although a person may be an employer under this section, services performed in his employ may be of such a nature, or performed under such circumstances, as not to constitute employment (see Sec. 31.3121(b)-3).

Exhibit 4

Sec. 31.3401(c)-1 Employee.(a) The term employee includes every individual performing services if the relationship between him and the person for whom he performs such services is the legal relationship of employer and employee. The term includes officers and employees, whether elected or appointed, of the United States, a State, Territory, Puerto Rico, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing.

(b) Generally the relationship of employer and employee exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is not an employee.

(c) Generally, physicians, lawyers, dentists, veterinarians, contractors, subcontractors, public stenographers, auctioneers, and others who follow an independent trade, business, or profession, in which they offer their services to the public, are not employees.

(d) Whether the relationship of employer and employee exists will in doubtful cases be determined upon an examination of the particular facts of each case.

(e) If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus, if such relationship exists, it is of no consequence that the employee is designated as a partner, coadventurer, agent, independent contractor, or the like.

(f) All classes or grades of employees are included within the relationship of employer and employee. Thus, superintendents, managers and other supervisory personnel are employees. Generally, an officer of a corporation is an employee of the corporation. However, an officer of a corporation who as such does not perform any services or performs only minor services and who neither receives nor is entitled to receive, directly or indirectly, any remuneration is not considered to be an employee of the corporation. A director of a corporation in his capacity as such is not an employee of the corporation.

(g) The term employee includes every individual who receives a supplemental unemployment compensation benefit which is treated under paragraph (b)(14) of Sec. 31.3401(a)-1 as if it were wages.

(h) Although an individual may be an employee under this section, his services may be of such a nature, or performed under such circumstances, that the remuneration paid for such services does not constitute wages within the meaning of section 3401(a).

[T.D. 6516, 25 FR 13096, Dec. 20, 1960, as amended by T.D. 7068, 35 FR 17329, Nov. 11, 1970]

Exhibit 5

Sec. 31.3401(a)-1 Wages.(a) In general. (1) The term ``wages'' means all remuneration for services performed by an employee for his employer unless specifically excepted under section 3401(a) or excepted under section 3402(e).

Exhibit 6

Sec. 31.3401(d)-1 Employer.(a) The term employer means any person for whom an individual performs or performed any service, of whatever nature, as the employee of such person.

(b) It is not necessary that the services be continuing at the time the wages are paid in order that the status of employer exist. Thus, for purposes of withholding, a person for whom an individual has performed past services for which he is still receiving wages from such person is an employer.

(c) An employer may be an individual, a corporation, a partnership, a trust, an estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture, or other unincorporated organization, group or entity. A trust or estate, rather than the fiduciary acting for or on behalf of the trust or estate, is generally the employer.

(d) The term employer embraces not only individuals and organizations engaged in trade or business, but organizations exempt from income tax, such as religious and charitable organizations, educational institutions, clubs, social organizations and societies, as well as the governments of the United States, the States, Territories, Puerto Rico, and the District of Columbia, including their agencies, instrumentalities, and political subdivisions.

(e) The term employer also means (except for the purpose of the definition of wages) any person paying wages on behalf of a nonresident alien individual, foreign partnership, or foreign corporation, not engaged in trade or business within the United States (including Puerto Rico as if a part of the United States).

(f) If the person for whom the services are or were performed does not have legal control of the payment of the wages for such services, the term employer means (except for the purpose of the definition of wages) the person having such control. For example, where wages, such as certain types of pensions or retired pay, are paid by a trust and the person for whom the services were performed has no legal control over the payment of such wages, the trust is the employer.

(g) The term employer also means a person making a payment of a supplemental unemployment compensation benefit which is treated under paragraph (b)(14) of Sec. 31.3401(a)-1 as if it were wages. For example, if supplemental unemployment compensation benefits are paid from a trust which was created under the terms of a collective bargaining agreement, the trust shall generally be deemed to be the employer. However, if the person making such payment is acting solely as an agent for another person, the term employer shall mean such other person and not the person actually making the payment.

(h) It is a basic purpose to centralize in the employer the responsibility for withholding, returning, and paying the tax, and for furnishing the statements required under section 6051 and Sec. 31.6051-1. The special definitions of the term employer in paragraphs (e), (f), and (g) of this section are designed solely to meet special or unusual situations. They are not intended as a departure from the basic purpose.

[T.D. 6516, 25 FR 13096, Dec. 20, 1960, as amended by T.D. 7068, 35 FR 17329, Nov. 11, 1970]

Exhibit 7

Sec. 31.3121(e)-1 State, United States, and citizen.(a) When used in the regulations in this subpart, the term ``State'' includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, the Territories of Alaska and Hawaii before their admission as States, and (when used with respect to services performed after 1960) Guam and American Samoa.

(b) When used in the regulations in this subpart, the term ``United States'', when used in a geographical sense, means the several states (including the Territories of Alaska and Hawaii before their admission as States), the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands. When used in the regulations in this subpart with respect to services performed after 1960, the term ``United States'' also includes Guam and American Samoa when the term is used in a geographical sense. The term ``citizen of the United States'' includes a citizen of the Commonwealth of Puerto Rico or the Virgin Islands, and, effective January 1, 1961, a citizen of Guam or American Samoa.

[T.D. 6744, 29 FR 8314, July 2, 1964]

Exhibit 8

The IRS will attempt to overlook the issues raised in this type of correspondence and use the following factors to claim that you are an employee, even if you are not as determined by this request for letter ruling:EMPLOYEE OR INDEPENDENT CONTRACTOR? IRS GUIDELINESThe IRS has established 20 guidelines to help employers determine whether a worker should be treated as an employee or an independent contractor for tax purposes. Those 20 guidelines are:1. Instructions. Employees comply with their employer's instructions about when, where and how to work, or the employer has the right to control how a worker's work results are achieved. Independent contractors have more flexibility.2. Training. Employees may receive training from their employers to perform services in a particular manner. Independent contractors usually use their own work methods and receive no training from those purchasing their services.3. Integration. Employees' services are usually integrated into the business's operations because they are key to the success or the continuation of the business. Independent contractors are independent of the business's operation.4. Services Rendered Personally. Employees render services personally. Independent contractors render services as contractors.5. Hiring Assistants. Employees work for an employer. Independent contractors can hire, supervise and pay assistants under a contract that requires them to provide materials and labor and to be responsible for the results.6. Continuing Relationship. Employees generally have ongoing relationships with their employers. Independent contractors' relationships will usually be more sporadic.7. Set Hours of Work. Employers usually set their employees' work hours. Independent contractors usually set their own hours.8. Full-Time Required. Employees may be required to work or to be available full-time. Independent contractors may work when and for whom they choose.9. Work Done on Premises. Employees usually work on their employers' premises or on a route or at a location approved by their employers.10. Order or Sequence Set. Employees may be required to perform services in the order or sequence set by their employers. Independent contractors can establish their own sequence.11. Reports. Employees may be required to submit reports to their employers. Independent contractors are not required to submit reports to their subscribers.12. Payments. Employees are paid by the hour, week or month. Independent contractors are usually paid by the job or through a commission.13. Expenses. The business and travel expenses of employees are generally paid by their employers. Independent contractors are responsible for paying their own expenses.

14. Tools and Materials. Employers normally furnish their employees with the key tools, materials and other materials they need to do their jobs. Independent contractors normally furnish their own tools and materials.15. Investment. Employees normally do not invest in the facilities. Independent contractors have a significant investment in the facilities they use to perform services for someone else.16. Profit and Loss. Employees do not experience a profit or loss; independent contractors can.17. Works for More Than One Person or Firm. Employees usually work for one firm at a time. Independent contractors may work for multiple persons or firms at the same time.18. Offer Services to the General Public. Employees usually work for one employer. Independent contractors make their services available to whomever they want.19. Right to Fire. Employees can be fired by their employers. Independent contractors cannot be fired as long as they produce a result that meets the specifications of their contract.20. Right to Quit. Employees have the right to quit a job at any time without incurring liability. Independent contractors usually agree to carry out specific tasks or series of tasks and are responsible for completing those tasks satisfactorily, or are legally obligated to make good for failing to do so.It is important to remember that when trying to obtain information from the IRS (outside of FOIA procedures) or get an answer to a legitimate question, they may attempt to evade your efforts by just not answering. You have a better chance of getting an answer by either going through the Problem Resolutions Office or Taxpayer Advocate. If it is a question that, when answered, will expose the fraud or defeat an abusive attempt to get your property, they might respond to a third party such as your congressman, advocate, or Problem Resolutions Officer saying that your request is frivolous.It is possible to avoid this problem by not making legal conclusions in your correspondence and not citing case law or statutes. Requests where this type of information is necessary can be made using the revenue procedure governing requests for information letters.Here is an example:

[Sender][Address][City state zip]Secretary of the TreasuryInternal Revenue ServiceAttn: CC:DOM:CORP:TP.O. Box 7604Ben Franklin StationWashington, DC 20044[Date]Re request for information letter, Rev. Proc. 99-1 §2.04Greetings:Thank you for taking a moment to issue the requested information letter. This request is made to satisfy a need for general information and does not meet the requirements of the applicable revenue procedure for requesting letter rulings or determination letters. The subject of this request is under the exclusive jurisdiction of the Associate Chief Counsel, Domestic.According to 26 CFR 1.863-1(c), a taxpayer’s taxable income, whether it be from sources within or without the United States, is determined under the rules of 1.861-8 through 1.861-14T. These regulations determine taxable income from sources within the United States. My question is, do these regulations limit or exclude all other categories of income, not specifically defined in these regulations, from being defined as taxable income?Best regards,

[Sender]

Elements Of An Effectively Written Letter:In order to accomplish the objectives for which your letter is written, it must first meet certain criteria and contain certain elements. Most of the letters I’ve used with great success are letters of complaint and letters of inquiry. The remedy sought in a letter of complaint is usually some action to be taken by its receiver. If I received poor service from an airline, and there was some incident that was “the last straw” behind my inclination to write them a letter of complaint, then I will demand that they take some action to remedy my complaint.A letter of inquiry, on the other hand, is essentially a complaint letter, but it’s written in such a way so as to create less controversy. Remember that because you’re corresponding in writing, you cannot rely upon facial expressions or verbal intonations to convey your message; therefore, a letter of inquiry may go much further to accomplishing your objective simply because it appears to be more friendly.Suppose that I wanted to return a product to the store because I was not satisfied with it for some reason. I could walk in and talk to someone at the customer service desk and explain that I have a complaint about one of the store’s products. However, that might place the clerk in a defensive frame of mind. I might get much better results by going to the same customer service desk and making an inquiry as to the store’s return policies with the product in hand. The natural tendency for people is to try and answer a question the moment it’s asked but to try and defend themselves when confronted with a complaint. If you put the clerk in a defensive frame of mind before you even begin explaining the situation, you will have to work that much harder to get the results you want. You would do much better going into the store with the attitude that this is one of your favorite stores and you regret having to return one of its products; however, it may benefit them in the future to know which products have these types of results. You want to go into that store thinking that you’re not just concerned about getting a remedy for yourself, but that you’re also concerned that the store maintains its good image by correcting the problem before it happens to someone else. You’re their friend, not their adversary.The same is true when dealing with the real people who work for the Internal Revenue Service. Remember that even though each of them is holding a public office, they are still human beings, many of whom have children and families to go home to. They bleed just like anyone else, although sometimes I have my doubts. In general, the most effectively written letter, when dealing with the IRS, is a letter of inquiry.The letter of inquiry is usually distinguished from a letter of complaint by the “Re” line just below the date and above the greeting. You might write something like:

“Re inquiry concerning your recent correspondence dated [date]”Or you might write something like:“Re inquiry concerning procedure for requesting an extension”This type of letter is enough to bring a matter to someone’s attention who can help you resolve a potential conflict. If you direct it to the right office, a letter of complaint will almost never be necessary. Once you understand that government is a

machine, or that it operates mechanistically, and that each component functions one way, you will realize that many times, if you just bring the right person’s attention to a problem, he will take steps to help you resolve it.This is not always true with the IRS because I can tell you from experience that many of my letters have gone unanswered until I called meetings with their agents in person. Sometimes we must take that route; but in general, you should first give them a fair chance to answer you. I recently met with an agent who answered an inquiry that was six months old. Even under the statutory guidelines of the Privacy Act, Freedom of Information Act and Revenue Procedure 98-1, they consistently exceed the time allowed for an answer by double what is permitted.A letter of inquiry must contain only one or two questions relating to a factual subject matter. Do not send a letter demanding them to confess that you’re not required to file a return, or to interpret the significance of how federal regulations govern the implementation of statutes. The letter must be written to someone with an eighth grade reading level and an attention span of no more than sixty seconds. Therefore, it should be no longer than one page in just about every case. Don’t give the agent too much to answer on any one inquiry and be fair with your expectations for results.Before you begin writing the letter, take a moment to write down the essential elements of your concern on a piece of notebook paper. Give them to someone else and ask that person to restate these elements as they understand them. If the person is accurate in restating the points that you wanted to make, then number them in order of importance. Then ask yourself whether or not the agent to whom you’re addressing the inquiry would be capable, or have the authority to provide you with answers or a solution, or at least work with you to reach that end. Many times the auditor or examiner is just not able to address your concerns so you may need to involve the agent’s supervisor, a problem resolution officer or someone else in the taxpayer advocate’s office.If the inquiry concerns a recent summons or a discussion you had with the agent about something like this in which he was directly involved, you may only need to correspond to that agent. If you rationally believe you were treated unfairly or that the agent exceeded a guideline that is supposed to be followed under the agency’s own policies or statutory guidelines; and, if this adversely affected the conclusion of the summons or your tax liability, then you may need to involve the taxpayer advocate. After reviewing the sample letters of inquiry and complaint included in this book, you should get a better idea of how this works.Timing is important, don’t be presumptuous, and make an effort to avoid attacking the agent or his work performance unless he is just unable to be communicated with, belligerent or disruptive to your efforts to resolve a conflict. You must use your best judgment and remember to be fair to the agent. Give them the benefit of the doubt, maybe the agent was having a bad day from dealing with someone else. But make sure that your inquiry (or complaint) is relevant to one issue and justified by the facts surrounding it.Your complaint should be based only on a set of facts, and based on those facts, you should be asking for assistance to remedy the problem. The time to raise points of law are when you’re at an appeals conference or tax court. Don’t believe an auditor will even consider answering these types of concerns, let alone be

competent or have the authority to do so if he even did. Always begin your letter by showing your gratitude for the time taken to review it. Then begin by stating the date on which the problem or concern began. Include the names of the agents involved and make a clear and concise statement of only the facts relating to that particular issue. It will help you to write your letter within the subject matter identified in your “Re” line. Use it for that purpose and it will help you write an effective letter which does not raise irrelevant issues to its purpose.If you are unable to write this letter in one page, you should review it to further extract only the most important points and begin again. Trust me, it’s well worth the time in preparation compared with the wasted time in waiting for the IRS to respond, especially when there’s an increased chance that they will not understand what you want. Sometimes I cheat by changing the font size of my word processor document to eleven-point and this is enough to squeeze it on one page. Just be reasonable.The timing of your letter means that you normally don’t need to file a complaint with the PRO from your first correspondence with an auditor. Try and work with the auditor to help him do his job and if you are placed in a situation that you feel might be prejudicial to you, then explain that to the agent. Ask if he can help you in some way. I’ll give you an example: Every agent wants you to file a tax return, regardless of whether or not you actually have a tax liability. Remember, it’s not about the money; it’s about regulating human behavior. Try and give the agent all the information he already has about you. You can find out what this information is by requesting your IRP, IRMF and IMF Transcript Complete records before the interview. If you received a Form 1099, 1098 or W-2 during any year being examined, you can be sure that the agent already has a record of it. The conflict would occur when the agent wants more information than he already has. It’s your call but you have certain rights when it comes to disclosing information about yourself. Sometimes the agents will threaten you or indicate that you’ll receive some kind of punishing assessment if you don’t “comply.” You’ll find more about this process in the next chapter called “The Sky Is Falling.”Once you determine that you are not making any progress with the agent, you might consider other alternatives. Remember that it’s not necessarily the agent’s fault because you can’t resolve a dispute. He is simply a part of the machine and auditors and examiners are not authorized to assist you with legal questions or when you don’t file. Their only function is to get you to file and collect information relating to tax liabilities. If the solution you seek is not something which can be addressed by this level agent, then you must reevaluate the circumstances.Ask yourself what is in jeopardy. If you don’t file but someone has reported a Form W-2 about you stating you earned an amount of wages, the agent will refer your case to an examiner and create a substitute return on your behalf. We all know this is illegal in a Form 1040 case, but we need to focus on the reality of what may follow. The property that is in jeopardy of being taken by the IRS is anything in your name, including your paycheck (in W-2 or 1099 situations), houses, cars, bank accounts, insurance, annuities, interest or dividend payments, &c.The agent or his superior may create a substitute return under 26 USC 6020(b) and most of us know that there is no authority for this. No delegation of authority has ever been issued authorizing an IRS Agent to file a substitute 1040 on your behalf.

But that information by itself is not sufficient to accomplish anything. IRM 5200 states that “…If the taxpayer fails to file employment, excise and partnership tax returns by the specified date, the return should be prepared under the authority of IRC 6020(b) using Form 5604, Section 6020(b) Action Sheet….”, (see IRM Section 5293.1)After the examination, the agent may decide to send you a notice of proposed assessment. If you do not respond properly and request an appeals conference, a notice of deficiency will then be generated. At that point, you will have at least ninety days to respond. During this time, you can ask for an appeals conference as well, just as if you had done before; however, if you don’t at this stage and you do not file an appeal in tax court, an assessment will be made against you. Once the assessment has been filed, your case will be processed through their Automated Collection System (ACS) and you will begin receiving notices of intent to levy. Any property you have in your name is a potential target for levy at this point. And depending upon the amount of assessment as weighed against the value of your property, they may send notices of levy to the holders or payers of such property. We also know that a notice of levy is not a valid levy but everyone is so afraid of the IRS that they will quickly turn over the property without question. I’ve only had two cases to date in which the payers of compensation had enough fortitude to challenge the IRS on a notice of levy against a worker, and the IRS backed down both times.During the ACS process, you can request that a local agent review your case and they might move it off track into a slower process. But this rarely happens because the agents may determine that you showed bad faith at the early stages of their assessment and collection efforts. I have been able to do it before but only when there were glaring errors made by the IRS. One good example is when an older gentleman and his wife were reaching their retirement years and began doing less business because they wanted to shut it down instead of selling it. They were also unable to continue doing all the work at their age. They were filing every year and their income went from about $80,000 to $12,000 over a reasonable period of time. The IRS decided that even though they submitted these returns under penalty of perjury, that they would be taxed as if their income was still at the $80,000 mark! They assessed higher amounts based on statistics obtained from the Bureau of Labor. I did an analysis of their IMF and showed the IRS that they were being taxed for approximately 115% of their income! This put a stop to the levy process and we are still waiting for a determination from the Problem Resolution Office. In this case, they may just let it go without any confirmation; they don’t like to admit a wrongdoing.Notice one important element of this next letter. It’s called the analogy, and greatly overlooked today. I stated that:

“It’s difficult for me to believe that in view of all the scrutiny your agency is under these days, that you still employ agents who would do these things. Is it any wonder why so many people are choosing not to file tax returns in recent years?

I compared this problem to those experienced by other people around the nation to show that our complaint was not just spurious or unfounded. There are many other analogies that I’ll cover later.We followed it with a certified letter in the mail. This was the first correspondence I sent in the case and it received immediate attention. The IRS froze the collection process and we are now working through it with that Office. The only reason I took this action was because I was not given the case until it reached the levy process and the subscribers’ social security payments were in jeopardy. This was the correct timing and the proper forum in which to make this type of complaint.It’s equally important to choose the proper forum in which to make your case. You would not do well to tell an auditor that there is no implementing regulation requiring you to keep records, he doesn’t care. He just wants the records. The whole system is a well-designed scheme to limit your control in dealing with the IRS. You need to know the extent of the authority for each officer during each stage of an administrative proceeding, not so you can harass him or challenge his authority to talk to you, but so you know what remedies are available if you should have a problem.Another tack in a levy situation is to file a Form 911, (Application for Taxpayer Assistance Order) with the Office of the Taxpayer Advocate. You can obtain the appropriate forms from the Internet under http://www.irs.ustreas.gov. Read the instructions carefully before submitting this form. You must be able to show that a particular levy action will cause an undue hardship. That’s the only controlling information that will allow the advocate’s office to help you. Once you’re in a levy situation, it’s already assumed that you owe, so don’t be concerned about making arguments as to why you believe you don’t owe. Just state the facts behind your hardship situation. The advocate will assign an agent to assist you if he finds good cause based on your assertions and they will usually ask you to complete Form 433-A or 433-B. You should do this in advance and attach it behind the Form 911. This will assist the agent in better helping you.If you’re not willing to disclose this type of information as requested on these forms, then don’t bother applying for an assistance order. The IRS cannot help you unless you give it enough information to exercise its discretion.

Problem Resolution Office:An Application for a Taxpayer Assistance Order (ATAO) can be used to relieve a hardship situation (Form 911). An ATAO may be initiated by an IRS employee on behalf of the taxpayer to request that an account be reviewed because (a) the taxpayer is experiencing or about to experience a “significant hardship”; and, (b) the non-PRP employee dealing with the problem cannot or will not relieve that hardship immediately.Cases that qualify for an ATAO may be received (a) directly from the taxpayer or the taxpayer’s authorized representative on Form 911; or, (b) through telephonic contact or correspondence. Normal procedures and appeal processes should be used before resorting to an ATAO. However, if these procedures or processes are not appropriate because they will not be timely in resolving the hardship or were not followed and a “significant hardship” exists, the ATAO should be considered. It is

never incorrect to invoke the stop and review aspect of an ATAO. You letter might tell them that your dispute requires the exercise of their discretion and the invoking of the “stop and review” aspect of the ATAO process.“Significant hardship” is a highly subjective determination. A number of factors are considered when making a determination of “significant hardship”. Enforcement action, in and of itself, is not a hardship without additional factors. For this reason, the PRO is required to use good judgment after reviewing the pertinent facts and circumstances. They are trained to regard these facts as being the most important in making their finding. The following points may be relevant in determining if a hardship exists. The Problem Resolution Office will make the final decision on significant hardship. This determination must always be determined on a case by case basis:

1. Hardships could include, but are not limited to, exceptional emotional stress experienced by taxpayers in dealing with tax problems, the threat of a poor credit rating by erroneous enforcement action, gross disservice to the taxpayer, pending eviction, possible loss of job, the refusal to rescind a Statutory Notice of Deficiency when the statute is not in jeopardy, significant personal emergencies, or other situations of similar magnitude to the taxpayer.2. In addition, imminent bankruptcy and failure to meet payroll could be considered hardship in specific circumstances. An example of a hardship causing imminent bankruptcy could be in the situation where a delay occurs in processing a refund causing a poor cash flow situation that will force the taxpayer into bankruptcy. An example of a hardship causing failure to meet payroll could be a situation where a levy is served on a payroll account when there are alternative sources of collection.Here are some examples of potential “significant hardship” cases:

1. A wage levy that impaired the taxpayer’s ability to purchase needed medical care. The Service’s unawareness causes an unintentional negative impact and would qualify for an ATAO if the employee contacted cannot or will not relieve the hardship.2. A payment is not property applied to a taxpayer’s account, thus prohibiting the taxpayer’s receipt of a refund. After numerous contacts with the Service, supplying dates, the taxpayer is suffering emotional stress and files a Form 911 for relief. An ATAO is appropriate to request action to substantiate the credit and authorize the refund.3. If a taxpayer is experiencing a hardship in full paying an outstanding liability but is able and willing to enter into a part-pay agreement while dealing with the Service, an ATAO would not be appropriate. If the taxpayer is facing impending enforcement action but is able to resolve the problem with the functional contacted, the case does not warrant an ATAO.The agents are supposed to take the following actions, whether or not they are working on the Problem Resolution Office:Immediately prepare Form 911 upon receipt of telephone calls, correspondence, or claims which indicate an ATAO is needed and the non-PRP employee cannot or will

not provide relief, even if the taxpayer does not specifically ask for an ATAO. Attach the source document for Form 911. The agents are permitted to have the matter reviewed by functional management, but should not delay for Form 911 in getting to the PRO. If functional management decides to provide the relief requested for internally identified Forms 911, they need not go to the PRO. All other Forms 911 must be sent to the PRO.The agents are required to route all Forms 911 (including statute imminent cases) to the PRP office. They cannot advise any taxpayer that his case is being made an ATAO. The PRP staff will acknowledge the cases as necessary. They also have requirements relating to acknowledging and responding to those submitting complaints and inquiries to be handled by the PRO.The PRO is required to respond to all correspondence received from the taxpayer requesting research, information or adjustment action. The response should identify the date of the taxpayer’s correspondence. It should also indicate the tax form, period and the action taken. EXCEPTION: If a notice to the taxpayer will be generated as a result of the adjustment the taxpayer has requested, do not write the taxpayer an additional letter.The PRO’s Office will not send an acknowledgment letter if the taxpayer is only submitting information that has been requested by the PRO. Acknowledgment letters are no longer required, per the Action 61 Executive Committee recommendations (11-90). Correspondence must be answered and a quality response mailed within thirty calendar days of the initial IRS received date (counting the date received). If it is not possible to resolve the taxpayer inquiry and respond with a final response within this prescribed time limit, the taxpayer must be send an interim response within thirty days of the initial IRS received date (counting the date received).A quality acknowledgment letter or interim response must indicate a reason for delayed response and a date when final action can be expected. All correspondence to taxpayers requesting further information should indicate the following:

1. a response is needed within the applicable time frame, not to exceed 30 days from the date of the correspondence;2. the action IRS will take if a timely response is not received;3. request for taxpayer’s phone number and the most convenient time for IRS to call for further information;4. they will also enclose a bar-coded envelope and inform the taxpayer of their mail stop number, asking taxpayer to reference the stop number if unable to use the envelope provided;5. inform the taxpayer of any balance due, including penalty and interest, remaining on the module. They will always inform the taxpayer to what date the balance is due, including penalty and interest, and when it was computed.In summary, there is a proper time, place and method of corresponding with the IRS so as to resolve particular disputes. If you do not choose them well, you will not

obtain the assistance you need. Here are the elements of an effectively written letter:1) it’s no longer than one page2) it’s addressed to the proper person who has the capacity to assist you3) it’s mailed within time limits imposed by the administrative procedure or other statute or reasonable time period4) it’s dated properly, and clearly identifies the person it concerns, whether by SSN or some other important information in the “Re” line5) it’s opening statement thanks the reader for taking a moment to review it6) it states a clear account of the facts surrounding the subject and the dates and names which are pertinent.7) it states your complaint in one or two sentences8) it makes an analogy about the circumstances9) it requests that a particular course of action be taken to effect a remedy10) it’s signed by the one having the problem or his official representative11) you’ve attached only the important documents necessary for the reader to be assisted in understanding your claim.

The Analogy:An analogy enables someone to easily compare what he knows to a new concept by his understanding of how the two might be related. I believe this is the most important technique because it’s helped me to win or successfully resolve more disputes than anything else. By following my instructions in this chapter, you will lay the groundwork necessary for making a good analogy in a letter, an argument or presentation to a court.It was Arthur Hogue’s, Origins of the Common Law in which he cites an English principle of court about the analogy: “…the courts will grasp at a mere analogy to conceal the fact that they are pouring new wine into old bottles.” This is not an exact quote but it will suffice to give you an understanding of the idea so you can put it into practice. It functions as a psychological diversion and serves the purpose of gaining a tactical advantage over the listener or reader by evoking an emotional response or discreetly clouding the issue.An analogy can be used a distraction that appeals to someone's emotion. One of the more effective ways to present an analogy is in a question. A question automatically prompts the one to whom it is directed to begin thinking about the answer. The analogy takes the person’s thoughts out of his normal perceptual paradigm and nearly compels him to briefly analyze the issue in a different perspective. What about pink elephants? See, you started thinking about pink elephants and then my stupid question, "what about them." It happens so quickly that we don't realize it so easily. It can be a simple question such as one directed to a collection agent, "Would your parents approve of what you're doing?"

Here is an example using a simile: "Our interstate system today is very much like the human circulatory system. It has volume and circulation and an ambulance rushing to a collision is not unlike a white blood cell finding its way to an injury."How can someone apply this in real life, like resolving an IRS collection problem? Believe it or not, the IRS seems to be quite responsive to hand written letters. In general, they are not very cooperative with people sending form letters or protest letters that have been circulated for years with the information.The trick with doing this under practical circumstances is that you need to make an analogy in one sentence. I’ve already listed many examples in “Life Without The Number.” This is easily done when you use information, or a paradigm, which you believe the recipient is fairly certain to be familiar with. For example, most people understand what is meant by the word “street gang.” We know it as a group of people who organize themselves together and identify with similar interests. They usually have their own set of metaphorical or encrypted slang, colloquialisms or other language. They sometimes wear similar types of clothing, jewelry or other indicia signifying their membership in the gang.While arguing a traffic case in Arizona, we actually had a definition of “street gang” in the criminal code and I used it to accuse the officer of being a member of a criminal street gang as defined by the statute. In fact, I tricked him into admitting it himself. You could hear a pin drop for a few moments when I made the point after setting him up for it. I won the case by the way.Would a corporation meet the criteria for a gang? It uses a corporate seal, is organized for a common purpose, maintains a hierarchy, and uses its own set of rules and acronyms. It also uses its size as a strength in society to obtain political advantages over other organizations not so well organized or financed, very similar to how a gang functions on the street. The only distinction between the two might be that the state authorizes the existence of one by charter and regulates the other by the criminal code, isn’t that interesting? Would the state government qualify as well? How about the federal government? How about any nation or other organization?I thought you’d like that method of analogy. I like to make an analogy with current events published on C-SPAN or national newspapers. The IRS is such a good target these days that I don’t hesitate to compare the events of a particular case with those testified to by IRS agents before the Senate Finance Committee. You’ve got to realize that the IRS is a wounded animal; in fact, it’s a dying animal. I like to recognize some of the antics taken by certain agents as thrashing. It’s what a dying animal does just before it takes its last breath. This can be seen in their idle threats and attempts to coerce people into filing or signing agreements, or their ambiguous replies to letters.You should place your one sentence analogy in the last third of your letter, just after you state the facts and make your complaint and just before requesting a particular remedy. It would sound something like this: Thank you for reviewing this, on May 1st, agent Bob miscalculated my deductions and it cost me a bunch of money. How would you react when one man’s mistake causes you or your family a detriment and

he refuses to correct it? I would like this mistake corrected by another agent. Thank you.I made the analogy by asking the reader to think about how he would be affected by this careless and costly mistake. This pulls the reader in and evokes an emotional response because he becomes personally involved by the question. It changes the perspective from which he will view the problem facing you by causing him to put himself in your place.There are many types of analogies that I’ve used with great success and some are beyond the subject matter of this book. Here is a list of analogies you might consider using or modifying for use in some of your correspondences to the Problem Resolution Offices of the IRS:

1. “This is not unlike the abuses testified to during the Senate investigations.”2. “If I were your mother, would you do these things under the guise of “doing your job?””3. “Can you honestly say to yourself that you’ve been fair and impartial in this matter?”4. “Would you have conducted an audit for the President of the United States in the same manner of you’ve conducted your audit of my tax returns?”5. “Does it make sense that we pay 115% of our income in taxes because you’ve based your estimate on an aggregate of national labor statistics when even the President pays less than 20% in taxes each year?”6. “In regard to your refusing our Offer in Compromise for 75% of what you say we owe, how can you justify us paying what amounts to 47% of our income in taxes because of your agency’s additions from interest and penalties? Don’t you think this is rather discouraging compliance as opposed to your stated goals of encouraging voluntary compliance?”7. “Is it good practice to destroy a taxpayer’s business in the name of collecting overdue taxes, thereby leaving him without any source of income by which to pay the balance of those taxes? Even loan sharks know better than to disable their debtors, for what good is a debtor who is rendered unable to labor and pay his debts?”I hope this chapter has been informative. The next chapter deals with frivolous arguments used by people over the years in fruitless efforts to forestall the IRS from assessing and collecting taxes or other property. I’ve included a directory of IRS Problem Resolutions Offices on the following pages to which you may address your inquiries and complaints.

The Taxpayer Advocate Service is an IRS program that provides an independent system to assure that tax problems, which have not been resolved through normal channels, are promptly and fairly handled. The program is headed by the National Taxpayer Advocate. Each state and service center has at least one localTaxpayer Advocate, who is independent of the local IRS office and reports directly to the National Taxpayer Advocate. The goals of the Taxpayer Advocate Service are to protect individual taxpayer rights and to reduce taxpayer burden. The Taxpayer Advocate independently represents your interests and concerns within the IRS. This is accomplished in several ways:The Taxpayer Advocate ServiceIf you have an ongoing issue with the IRS that has not been resolved through normal processes, or you have suffered, or are about to suffer, a significant hardship as a result of the application of the tax laws, contact the Taxpayer Advocate. Generally, the Taxpayer Advocate can help if, as a result of the application of the tax laws, you:Who may use the Taxpayer Advocate Program?Ensuring that taxpayer problems, which have not been resolved through normal channels, are promptly and fairly handled. Identifying issues that increase burden or create problems for taxpayers: bringing those issues to the attention of IRS management and making legislative proposals where necessary. Making legislative proposals where necessary in an annual report to Congress. Are suffering, or are about to suffer, a significant hardship; Are facing an immediate threat of adverse action; Will incur significant cost (including fees for professional representation);Will suffer irreparable injury or long-term adverse impact; Have experienced a delay of more than 30 days to resolve the issue; or Have not received a response or resolution by the date promised. Hardship situations and other issues that are referred to the Taxpayer Advocate are reviewed on the individual merits of each case. The Taxpayer Advocate Service is not a substitute for established IRS procedures or the formal Appeals process. The Advocate cannot reverse legal or technical tax determinations. Additionally, you may contact the Taxpayer Advocate if all established systems or procedures have failed to operate as intended to resolve the problem or dispute.How do I reach a Taxpayer Advocate?TTY/TTD help is available by calling: 1-800-829-4059. OR File Form 911, Application for a Taxpayer Assistance Order, Send a written request for assistance (if Form 911 is not available), or Request that an IRS employee complete a Form 911 on your behalf (in person or over the phone). Call the telephone number listed (at the end of this brochure) for the office closest to you - or the office with which you have been dealing, Call the Taxpayer Advocate’s toll-free telephone number: 1-877-777-4778 Call the general IRS toll-free number (1-800-829-1040) and ask for Taxpayer Advocate assistance. Write or FAX - Addresses and FAX numbers for local Taxpayer Advocate offices are listed at the end of this brochure. Form 911 is available by calling the IRS forms-only number, 1-800-829-3676, or may be obtained through the IRS internet web page: www.irs.gov.irs.gov

An Application for a Taxpayer Assistance Order requires the Advocate to determine if significant hardship exists and to review the case to determine what action should be taken to relieve the hardship. In certain situations, enforcement action may be suspended while your case is being reviewed. The majority of cases are resolved administratively by the Taxpayer Advocate. Even when hardship is not a factor, the Advocate is often able to help resolve the taxpayer’s problem You may FAX a Form 911 (or written request) to your local Taxpayer Advocate.What can I expect from the Taxpayer Advocate?Your assigned personal advocate will listen to your point of view and will work with you to address your concerns. You can expect the advocate to provide you with: A “fresh look” at your problem; Timely acknowledgment; The name and phone number of the individual assigned to your case; Updates on progress; Time frames for action; Speedy resolution; and Courteous service.

What information should I provide to the Taxpayer Advocate?If you want to authorize another person to discuss the matter or to receive information about your case, send us Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization. You can get these forms at most local IRS offices or by calling the IRS forms-only number, 1-800-829-3676. Your name, address, and social security number (oremployer identification number), Your telephone number and hours you can be reached, Your previous attempts to solve the problem, and the office you contacted, The type of tax return and year(s) involved, and Description of the problem or hardship (if applicable). Address any correspondence to: Taxpayer Advocate, Internal Revenue Service, using the P.O. box numbers, where provided. Street addresses are provided if you wish to send correspondence by courier. FAX numbers are also listed. Please note that addresses and telephone numbers may change over time. The most current information is available on the Taxpayer Advocate page of the IRS internet web page: .To contact the Taxpayer Advocate, call the number listed for your local area, the Service Center where you filed your return, or the last office your return with which you were dealing. You may also call the Taxpayer Advocate toll-free phone number (1-877-777-4778)Office of the National Taxpayer Advocate1111 Constitution Ave., NWRm 3031, C:TAWashington, DC 20224(202) 622-4300(202) 622-6113-FAX

Congressional Liaison Contact (202) 622-4321

Alabama801 Tom Martin Dr., Room 150-PR, Birmingham, AL 35211(205) 912-5631(205) 912-5091-FAX

Alaska949 E 36th Ave., Stop A-405, Anchorage, AK 99508(907) 271-6877(907) 271-6824-FAX

Arizona

210 E. Earll Dr., Stop 1005 PHX, Phoenix, AZ 85012-2623(602) 207-8240(602) 207-8250-FAX

Arkansas700 West Capitol St., Stop 1005 LIT, Little Rock, AR 72201(501) 324-6269(501) 324-5183-FAX

California (Laguna Niguel)24000 Avila Rd., Room 3362, Laguna Niguel, CA 92677-3491(949) 389-4804(949) 389-5033-FAX

California (Los Angeles)300 N. Los Angeles St., Room 5206, Stop 1005A,Los Angeles, CA 90012(213) 576-3140(213) 576-3141-FAX

California (Oakland)1301 Clay St., Suite 1540S, Oakland, CA 94612-5210(510) 637-2703(510) 637-2715-FAX

California (Sacramento)4330 Watt Ave., North Highlands, CA 95660(916) 974-5007(916) 974-5902-FAX

California (San Jose)55 S Market St., Rm. 710, San Jose, CA 95113(408) 817-6850(408) 817-6851-FAX

Colorado600 17th St., Stop 1005, Denver, CO 80202-2490(303) 446-1012(303) 446-1011-FAX

Connecticut135 High St., Stop 219, Hartford, CT 06103(860) 756-4555(860) 756-4559-FAX

District of Columbia (Maryland Office)PO Box 1553, Rm. 940, Baltimore, MD 21203 or31 Hopkins Plaza, Rm. 940, Baltimore, MD 21201(410) 962-2082(410) 962-9340-FAX

Florida (Ft. Lauderdale)P.O. Box 17167, Plantation, FL 33318 or7850 SW 6th Ct., Rm 285, Plantation, FL 33324(954) 423-7677(904) 665-1802-FAX

Florida (Jacksonville)400 West Bay St., Stop TAS, Jacksonville, FL 32202(904) 665-1000(904) 665-1818-FAX

Georgia401 W. Peachtree St., NW, Summit Bldg., Stop 202-D, Rm. 1520,Atlanta, GA 30308-3539(404) 338-8099(404) 338-8096-FAX

Hawaii300 Ala Moana Blvd., #50089, Room 1-214, Honolulu, HI96850-4492(808) 539-2870(808) 539-2859-FAX

Idaho550 W. Fort St., Box 041, Boise, ID 83724(208) 334-1324(208) 334-1977-FAX

Illinois (Chicago)

230 S Dearborn St., Rm. 2300, Stop 1005-CHI, Chicago, IL 60604(312) 886-9183(312) 886-1564-FAX

Illinois (Springfield)320 W Washington St., Stop 1005SPD, Springfield, IL 62701(217) 527-6382(217) 527-6373-FAX

IndianaPO Box 44976, Stop TA770, Indianapolis, IN 46244 or575 N Pennsylvania St., Stop TA770, Indianapolis, IN 46204(317) 226-6332(317) 226-6222-FAX

Iowa210 Walnut St., Stop 1005, Des Moines, IA 50309-2109(515) 284-4780(515) 284-6645-FAX

Kansas271 W. 3rd St, North, Stop 1005-WIC, Wichita, KS 67202(316) 352-7506(316) 352-7212-FAX

KentuckyP.O. Box 1735, Stop 120, Louisville, KY 40201 or600 Dr. Martin Luther King Jr. Pl., Federal Bldg, Rm. 622,

Louisville, KY 40202(502) 582-6030(502) 582-6463-FAX

Delaware409 Silverside Rd., Wilmington, DE 19809

(302) 791-4502(302) 791-5945-FAX

District of Columbia (Maryland Office)PO Box 1553, Rm. 940, Baltimore, MD 21203 or31 Hopkins Plaza, Rm. 940, Baltimore, MD 21201(410) 962-2082(410) 962-9340-FAX

Florida (Ft. Lauderdale)P.O. Box 17167, Plantation, FL 33318 or7850 SW 6th Ct., Rm 285, Plantation, FL 33324(954) 423-7677(904) 665-1802-FAX

Florida (Jacksonville)400 West Bay St., Stop TAS, Jacksonville, FL 32202(904) 665-1000(904) 665-1818-FAX

Georgia401 W. Peachtree St., NW, Summit Bldg., Stop 202-D, Rm. 1520,Atlanta, GA 30308-3539(404) 338-8099(404) 338-8096-FAX

Hawaii300 Ala Moana Blvd., #50089, Room 1-214, Honolulu, HI96850-4492(808) 539-2870(808) 539-2859-FAX

Idaho550 W. Fort St., Box 041, Boise, ID 83724(208) 334-1324

(208) 334-1977-FAX

Illinois (Chicago)230 S Dearborn St., Rm. 2300, Stop 1005-CHI, Chicago, IL 60604(312) 886-9183(312) 886-1564-FAX

Illinois (Springfield)320 W Washington St., Stop 1005SPD, Springfield, IL 62701(217) 527-6382(217) 527-6373-FAX

IndianaPO Box 44976, Stop TA770, Indianapolis, IN 46244 or575 N Pennsylvania St., Stop TA770, Indianapolis, IN 46204(317) 226-6332(317) 226-6222-FAX

Iowa210 Walnut St., Stop 1005, Des Moines, IA 50309-2109(515) 284-4780(515) 284-6645-FAX

Kansas271 W. 3rd St, North, Stop 1005-WIC, Wichita, KS 67202(316) 352-7506(316) 352-7212-FAX

KentuckyP.O. Box 1735, Stop 120, Louisville, KY 40201 or600 Dr. Martin Luther King Jr. Pl., Federal Bldg, Rm. 622,Louisville, KY 40202(502) 582-6030(502) 582-6463-FAX

Louisiana600 South Maestri Pl., Stop 2, New Orleans, LA 70130(504) 558-3001(504) 558-3492-FAX

Maine68 Sewall St., Rm. 313, Augusta, ME 04330(207) 622-8528(207) 622-8458-FAX

MarylandPO Box 1553, Rm. 940, Baltimore, MD 21203 or31 Hopkins Plaza, Rm. 940, Baltimore, MD 21201(410) 962-2082(410) 962-FAX

MassachusettsJFK PO Box 9112, Room 775, Boston, MA 02203 or25 New Sudbury St., Room 775, Boston, MA 02203(617) 316-2690(617) 316-2700-FAX

MichiganPO Box 330500, Stop 7, Detroit, MI 48232-6500 orMcNamara Federal Bldg., 477 Michigan Ave., Rm 1745,Detroit, MI 48226-2597(313) 628-3670(313) 628-3669-FAX

Minnesota316 N. Robert St., Stop 1005 STP, St. Paul, MN 55101(651) 312-7999(651) 312-7872-FAXMississippi100 W. Capitol St., Stop JK31, Jackson, MS 39269

(601) 292-4800(601) 292-4821-FAXMissouriPO Box 66776, Stop 1005-STL, St. Louis, MO 63166 orRobert A. Young Bldg., 1222 Spruce St., Stop 1005-STL,St. Louis, MO 63103(314) 612-4610(314) 612-4628-FAX

MontanaFederal Bldg., 301 S. Park, Helena, MT 59626-0023(406) 441-1044(406) 441-1045-FAX

Nebraska1313 Farnam Street, 2 nd Floor, Stop 1005OMA, Omaha, NE68102-1836(402) 221-4181(402) 221-3051-FAX

Nevada4750 W. Oakey Blvd., Stop 1005LVG, Las Vegas, NV 89102(702) 455-1241(702) 455-1216-FAX

New HampshirePO Box 6667, Portsmouth, NH 03802 orT.J. McIntyre Building, 80 Daniel St., Portsmouth, NH 03801(603) 433-0571(603) 430-7809-FAX

New JerseyP.O. Box 745, Springfield, NJ 07091 or 955 S. Springfield Ave.,Springfield, NJ 07081

(973) 921-4043(973) 921-4355-FAX

New Mexico5338 Montgomery Blvd., NE, Stop 1005 ALB,Albuquerque, NM 87109(505) 837-5505(505) 837-5519-FAX

New York (Albany)Leo O’Brien Federal Bldg., Rm 354, 1 Clinton Square, Albany,NY 12207(518) 427-5413(518) 427-5494-FAX

New York (Brooklyn)GPO Box R 10, Brooklyn, NY 11202 or10 Metro Tech Center, 625 Fulton St, Brooklyn, NY 11201(718) 488-2080(718) 488-3100-FAX

New York (Buffalo)PO Box 219, Buffalo, NY 14255-0219 or201 Como Park Blvd., Buffalo, NY 14227-1416(716) 686-4850(716) 686-4851-FAX

New York (Manhattan)PO Box 408, Church Street Station, New York, NY 10008 or290 Broadway, 7th Fl., New York, NY 10007(212) 436-1011(212) 436-1900-FAX

North Carolina320 Federal Pl, Rm. 125, Greensboro, NC 27401

(336) 378-2180(336) 378-2495-FAX

North Dakota657 2nd Ave., N. Stop 1005-FAR, Fargo, ND 58102(701) 239-5141(701) 239-5323-FAX

Ohio (Cincinnati)PO Box 2057, Cincinnati, OH 45201 or550 Main St., Rm. 3530, Cincinnati, OH 45202(513) 263-3260(513) 263-3257-FAX

Ohio (Cleveland)PO Box 99709, Cleveland, OH 44199-07091240 E. Ninth St., Room 423, Cleveland, OH 44199-2001(216) 522-7134(216) 522-2947-FAX

Oklahoma55 N. Robinson, Stop 1005OKC, Oklahoma City, OK 73102-9229(405) 297-4055(405) 297-4056-FAX

Oregon1220 SW 3rd, Stop O-405, Portland, OR 97204(503) 326-2333(503) 326-5453-FAX

Pennsylvania (Philadelphia)600 Arch St., Room 7426,Philadelphia, PA 19105(215) 861-1304(215) 861-1613-FAX

Pennsylvania (Pittsburgh)PO Box 705, Pittsburgh, PA 15230 or1000 Liberty Ave, Rm 1102, Pittsburgh, PA 15222(412) 395-5987(412) 395-4769-FAX

Rhode Island380 Westminster St., Providence, RI 02903(401) 525-4200(401) 525-4247-FAX

South Carolina1835 Assembly St., Room 466, MDP 03, Columbia, SC 29201(803) 253-3029(803) 253-3910-FAX

South Dakota115 4th Ave. SE, Room 114, Aberdeen, SD 57401(605) 226-7248(605) 226-7246-FAX

TennesseeP.O. Box 1107, MDP 22, Nashville, TN 37202 or801 Broadway, Room 481, Nashville, TN 37202(615) 250-5000(615) 250-5001-FAX

Texas (Austin)300 E. 8th St., Stop 1005-AUS, Austin, TX 78701(512) 499-5875(512) 499-5687-FAX

Texas (Dallas)1114 Commerce St., 10 th floor, MC1005DAL,Dallas, TX 75242

(214) 767-1289(214) 767-0040-FAX

Texas (Houston)1919 Smith St., Stop 1005-HOU, Houston, TX 77002(713) 209-3660(713) 209-4779-FAX

Utah50 South 200 East, MS1005, Salt Lake City, UT 84111(801) 799-6958(801) 779-6957-FAX

VermontCourthouse Plaza, 199 Main St., 1 ST Floor,Burlington, VT 05401-8309(802) 860-2089(802) 860-2006-FAX

VirginiaPO Box 10113, Rm.916, Richmond, VA 23240 or400 North 8th St., Room 916, Richmond, VA 23240(804) 916-3501(804) 916-3535-FAX

Washington915 2nd Ave., Stop W-405, Seattle, WA 98174(206) 220-6037(206) 220-6047-FAX

Wisconsin310 W. Wisconsin Ave., Stop 1005-MIL, Milwaukee, WI 53203(414) 297-3046(414) 297-3362-FAX

Wyoming5353 Yellowstone Rd., Rm. 206A,Stop 1005CHE, Cheyenne, WY 82009(307) 633-0800(307) 633-0918-FAX

Taxpayers Living Abroad or in US Territories(A/C International) (A/C International) (A/C International) (A/C International) (A/C International)P.O. Box 193479San Juan, P.R. 00919OrSan Patricio Office CenterRoom 2007 Tabonuco St.Guaynabo, P.R. 00966

Service Centers

AndoverPO Box 9055, Stop 121, Andover, MA 01810-9055 or310 Lowell Street, Stop 121, Andover, MA 01812(978) 474-5549(978) 691-6961-FAX

AtlantaPO Box 48-549, Stop 29A, Doraville, GA 30362 or4800 Buford Hwy., Stop 29-A, Chamblee, GA 30341(770) 936-4500(770) 234-4443-FAX

AustinPO Box 934, Stop 1005, Austin, TX 78767 or3651 S Interregional Hwy., Stop 1005, Austin, TX 78741(512) 460-8300(512) 460-8267-FAX

BrookhavenPO Box 960, Stop 102, Holtsville, NY 11742 or1040 Waverly Ave., Stop 102, Holtsville, NY 11742(631) 654-6686(631) 447-4879-FAX

West Virginia425 Juliana St., Room 3012 , Parkersburg, WV 26101(304) 420-6616(304) 420-6682-FAX

Kansas CityPO Box 24551, Stop 1005, Kansas City, MO 64131 or2306 E. Bannister Rd., Stop 1005, Kansas City, MO 64131(816) 926-2493(913) 696-6390-FAX

MemphisPO Box 30309AMF, Stop 13, Memphis, TN 38130 or5333 Getwell Rd, Stop 13, Memphis, TN 38118(901) 395-1900(901) 395-1925-FAX

OgdenPO Box 1640, Stop 1005, Ogden, UT 84402 or1160 W. 1200 South St., Stop 1005, Ogden, UT 84201(801) 620-7168(801) 620-3096-FAX

PhiladelphiaPO Box 16053, DP 1300, Philadelphia, PA 19114 or11601 Roosevelt Blvd., DP 1300, Philadelphia, PA 19154(215) 516-2499(215) 516-2677-FAX

Operating DivisionTaxpayer Advocate401 W. Peachtree St. N.W.Room 600, Stop 143-RAtlanta, GA 30308-3539(404) 338-8677(404) 338-8689-FAX

CincinnatiPO Box 1235, Cincinnati, OH 45201-1235 or201 W River Center Blvd., Stop 11-G, Covington, KY 41019(859) 292-5316(859) 292-5405-FAX

FresnoPO Box 12161, Stop 01, Fresno, CA 93776 or5045 East Butler Ave. Stop 01, Fresno, CA 93888(559) 443-7590(559) 443-7809-FAX

CIVIL DAMAGE CLAIMS

The Treasury Inspector General’s Office for the Internal Revenue Service is responsible for reviewing and investigating any complaints for violations of the Fair Debt Collection Practices Act by IRS employees. I have included what is probably the first report to Congress from that office (TIGTA) on violations of the FDCPA for the purpose of commenting and suggesting future courses of action that can be taken against IRS employees for violations of the Act.

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Management Advisory Report: No Violations of the Fair Debt Collection Practices Act Resulted in Administrative or Civil Actions (Fiscal Year 2001)July 2001Reference No. 2001-10-081Executive SummaryThe Fair Debt Collection Practices Act (FDCPA) includes provisions that restrict various collection abuses and harassment in the private sector that did not apply to the United States (U.S.) Government at the time the FDCPA was enacted. However, the Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98) requires the IRS to comply with certain provisions of the FDCPA and to be at least as considerate to taxpayers as private creditors are required to be with their customers. In addition, taxpayers who believe their FDCPA rights were violated can file a civil action against the U.S. Government under the Civil Damages for Certain Unauthorized Collection Actions statute.Section 1102 (d)(1)(G) of the RRA 98 requires the Treasury Inspector General for Tax Administration (TIGTA) to include in one of its semiannual reports to the Congress information regarding any administrative or civil actions related to FDCPA violations. The semiannual report must provide a summary of such taxpayer actions and include any judgments or awards granted. Accordingly, the objective of this review was to obtain information on IRS administrative and civil actions resulting from violations of the FDCPA by IRS employees. The TIGTA reviewed cases coded as FDCPA violations on IRS computer systems opened after July 22, 1998, and closed during the period April 1 through December 31, 2000. ResultsBased on a review of information coded as potential FDCPA violations on the IRS’ computer systems, there were no violations that resulted in the IRS taking an administrative action against an employee. In addition, the IRS did not have any closed civil actions involving FDCPA violations. Accordingly, the IRS did not pay any money to taxpayers for civil actions resulting from FDCPA violations.

No Fair Debt Collection Practices Act Violations Resulted in Administrative ActionTo determine if any FDCPA violations resulted in an administrative action, the TIGTA reviewed cases coded as FDCPA violations on the Automated Labor and Employee Relations Tracking System. Review of all 28 cases coded as FDCPA during the audit period did not identify any FDCPA violations that resulted in an administrative action being taken against an IRS employee. These 28 cases were either miscoded as FDCPA violations (19) or closed without administrative action (9). No Civil Actions Coded as Fair Debt Collection Practices Act Violations Were Closed During Our Audit PeriodCivil actions filed by taxpayers against the IRS are input to the Counsel Automated System Environment (CASE) for tracking. During the audit period, the CASE did not contain any closed civil actions coded as FDCPA. As a result, the IRS did not pay any money to taxpayers for civil actions resulting from FDCPA violations during the period of this review. Case information from the Department of Justice’s (DOJ) Tax Division was obtained to better ensure civil actions involving FDCPA violations were captured on the CASE. Because the DOJ does not track FDCPA violations separately, the TIGTA reviewed the cases filed under Civil Damages for Certain Unauthorized Collection Actions, which allows taxpayers to sue the IRS for violations of the Internal Revenue Code related to collection actions. Seven cases were opened on or after July 22, 1998, and closed during the period April 1 through December 31, 2000. None of the seven cases involved FDCPA violations.Management’s Response: IRS management agreed with the observations in the draft report. Management’s complete response to the draft report is included as Appendix IV.This is actually a summary of the report, but it is sufficient for our purposes. It just seems like it is a record of what happens when “the fox is left to guard the hen house.” If you are going to file a complaint against an IRS employee with the TIGTA, be sure to send a copy to your Congressman and let the IRS know that you did send a copy somewhere on the first page of your complaint.The Internal Revenue Code requires the IRS to comply with certain sections of the Federal Fair Debt Collection Practices Act (FDCPA). These deal with contacts regarding unpaid tax, and harassment and abuse of taxpayers.The Fair Debt Collection Practices Act (FDCPA) applies to communication with all taxpayers, including corporations and partnerships. Specifically 26 USC § 6304 requires the IRS to comply with certain sections of the Act in the course of communicating with taxpayers to collect unpaid taxes, and issues involving harassment and abuse of taxpayers.Section 7433 of the Internal Revenue Code permits the district court to take jurisdiction over claims arising because of violations of the FDCPA and impose sanctions against responsible agents or the agency itself.Some communications require the taxpayer's consent and include the following possible situations: a. contacting the taxpayer at work, if there is reason to believe

the employer does not allow it, b. contacting the taxpayer at any unusual time or place, or a time or place an employee knows or should know, is inconvenient to the taxpayer, or directly contacting a taxpayer who has a known, authorized representative or one that can be readily identified. There are exceptions to these requirements. If the representative does not respond within a reasonable time, they can be bypassed or the taxpayer can be contacted directly with the consent of the representative. The communication may also be authorized by a court.Employees can generally assume that it is convenient to contact the taxpayer after 8:00 a.m. and before 9:00 p.m. local time at the taxpayer's location, unless there is reason to know otherwise.An IRS employee is considered to know about the representative if the taxpayer says there is one. This can be written or oral. If the taxpayer is represented, this requires the employee to ask for a written power of attorney or disclosure authorization form, or ask the taxpayer to provide the name and address of the representative. There may be doubt whether a person still represents the taxpayer or an issue is covered. If so, contact the representative and ask.You should know that if the IRS employee does have the power of attorney or some other written authorization, the representative may be contacted, but no more can be disclosed than what is authorized in IRC 6103(k)(6).It is IRS policy not to use methods which are threatening or harassing to the public. Policy Statement P-1-1. IRC 6304 prohibits employees from harassing, oppressing, or abusing any person in connection with the collection of any unpaid tax. The following actions are considered violations: a. the use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person, b. the use of obscene or profane language to abuse the hearer or reader, c. causing a telephone to ring or engaging any person in telephone conversation with the intent to annoy, abuse or harass any person at the called number, d. placing telephone calls without meaningful disclosure of the caller's identity, except as similar to rules in Section 804 of the FDCPA.There are exceptions to this rule. If the telephone call is only for the purpose of acquiring location information about the taxpayer, the employee cannot: tell any third party that they are an employee of the IRS, or provide their title (R/O, TE, etc.) to the third party unless , that information is requested by the third party. "Location information" is defined as the taxpayer's place of abode and phone number at such place, or place of employment. IRS employees can assume that, in absence of knowledge of circumstances to the contrary, a taxpayer may be contacted between the hours of 8 a.m. and 9 p.m., local time at the taxpayer's location. IRS employees cannot, without prior consent of the taxpayer or the express permission of a court, communicate with a taxpayer in connection with the collection of any unpaid tax (1) at an unusual place or time or a time or place known or which should be known to be inconvenient to the taxpayer; (2) if the Service knows that the taxpayer is represented by any person authorized to practice before the Service with respect to such unpaid tax or can readily ascertain such person's name and address, unless such person fails to respond within a reasonable period of time to a

communication from the Service or unless such person consents to direct communication with the taxpayer; or (3) at the taxpayer's place of employment if the Service knows or has reason to know that the taxpayer's employer prohibits the taxpayer from receiving such communication. The IRS cannot engage in conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of any unpaid tax. Such conduct specifically includes (but is not limited to ) the use or threat of violence or harm, the use of obscene language, causing a telephone to ring continuously with harassing intent, and the placement of telephone calls without meaningful disclosure of the caller's identity. It should also be emphasized that this provision, as distinguished from the FDCPA, is not limited in application to individual taxpayers, but applies to all taxpayers with respect to any unpaid tax-- i.e., including corporate or partnership tax.TIGTAAnother function of the TIGTA Office is to receive and investigate reports of fraud, waste and abuse. If you are aware of fraud, waste, mismanagement, and abuse in the IRS programs and operations, it can be reported to the TIGTA. The kinds of things you should report include mismanagement or violations of law, rules, or regulations by the IRS employees or contractors. The office keeps your report or complaint confidential if it is received on the phone, through the mail, or in person, but not if you send it via email). If you submit your complaint online (through e-mail), it is possible - though unlikely - that others could read it since the internet is not secure. You can make your report via telephone by calling toll free: 1-800-366-4484 or via fax: 202-927- 7018 or via mail addressed to: Treasury Inspector General for Tax Administration; P.O. Box 589; Ben Franklin Station; Washington, DC 20044-0589The following pages show an example of how a complaint may be written for the district court to hear a claim arising from violations of the Fair Debt Collection Practices Act. It should be modified to match your particular circumstances. You must attached affidavits and other evidence to your complaint.

IN THE UNITED STATES DISTRICT COURTCOUNTY, STATE

[CITIZEN]PLAINTIFF, Case No. ____________

v.INTERNAL REVENUE SERVICE AND[NAME OF RESPONSIBLE AGENT OR AGENTS]

DEFENDANT(S).___________________________________________/

COMPLAINT FOR UNAUTHORIZED COLLECTIONS

AND CIVIL DAMAGES, 15 USC §1692Plaintiff, [Name] sues Defendant, [Name of Agent], and alleges:

1. Jurisdiction and venue are proper and sovereign immunity has been

waived under 26 USC § 7433.

2. This is an action for unauthorized collections that does not exceed the jurisdictional limit for this court, excluding interest, costs and attorneys fees.3. Plaintiff requested a validation of the purported debt verbally from the counter defendant on the following dates: __________. An affidavit stating the facts about such requests is attached.4. Plaintiff requested a validation in writing from the defendant on the following dates: __________. Copies of such request or requests are attached.5. The Fair Debt Collection Practices Act imposes an obligation upon the defendant to validate its claim within thirty days or a reasonable time following the request for validation.6. Defendant failed to validate its claim as required by the Fair Debt Collection Practices Act.7. Defendant has made threatening and harassing phone calls to plaintiff at his home and place of business.8. Defendant has defamed plaintiff’s good name and reputation by telling his neighbors and business colleagues that plaintiff does not pay his fair share of taxes.9. Defendant has made false statements and representations regarding the collection attempts.10. [state other violations]11. [state other violations]12. [state other violations]

13. [state other violations]14. [state other violations]15. Plaintiff demands a jury trial.WHEREFORE plaintiff demands judgment for damages against defendant.DATED this ___ day of [month] [year]

______________________________[Counter plaintiff][Address][City state zip][Phone number]

Taxpayer AdvocateOffice of the Taxpayer Advocate1111 Constitution Ave NW,Room 3017, C:TAWashington, DC 20224FAX 202 622-4318PROBLEM RESOLUTION PROGRAM DIRECTORYThe Office of the Taxpayer Advocate will consider your problem or review your Form 911 and advise you of the action taken. If you write, please address your correspondence to:Taxpayer Advocate, Internal Revenue Service. Street addresses are provided if you wish to send correspondence by courier. FAX numbers are also listed if you prefer to send information by facsimile transmission.

OFFICE OF THE TAXPAYER ADVOCATE1111 Constitution Ave NW, Room 3017, C:TAWashington, DC 20224FAX 202 622-4318SERVICE CENTER PROBLEM RESOLUTION OFFICES

ANDOVER SERVICE CENTER310 Lowell Street, Stop 120Andover, MA 05501FAX 508 474-5640

ATLANTA SERVICE CENTERPO Box 48-549, Stop 29ADoraville, GA 30362or 4800 Buford Highway, Stop 29-AChamblee, GA 30341FAX 770 455-2527

AUSTIN SERVICE CENTERPO Box 934, Stop 1005 AUSCAustin, TX 78767or 3651 S Interregional Hwy, Stop 1005 AUSCAustin, TX 78741FAX 512 460-1930

BROOKHAVEN SERVICE CENTERPO Box 960, Stop 102Holtsville, NY 11742or 1040 Waverly Avenue, Stop 102Holtsville, NY 11742FAX 516 447-4879

CINCINNATI SERVICE CENTER333 Scott Street, Stop 11Covington, KY 41019FAX 606292-5405FRESNO SERVICE CENTERPO Box 12161Fresno, CA 93776or 5045 East Butler AvenueFresno, CA 93888FAX 209456-5272KANSAS CITY SERVICE CENTERPO Box 24551, Stop 1005KSCKansas City, MO 64131or 2306 E. Bannister Rd, Stop 1005Kansas City, MO 64131FAX 816 823-1932MEMPHIS SERVICE CENTER5333 Getwell Road, Stop 13Memphis, TN 38118FAX 901546-2181OGDEN SERVICE CENTERPO Box 9941, Stop 1005Ogden, UT 84409or 1160 W 1200 South St, Stop 1005Ogden, UT 84201FAX 801 620-6319PHILADELPHIA SERVICE CENTERPO Box 16053, DP 111Philadelphia, PA 19114FAX 215 516-2677DISTRICT PROBLEM RESOLUTION OFFICES

Alabama BIRMINGHAM OFFICE801 Tom Martin Drive, RM-268-PRBirmingham, AL 35211205 912-5631FAX 205 912-5632

Alaska ANCHORAGE OFFICE949 East 36th Avenue, Stop A-405Anchorage, AK 99508907 271-6877FAX 907 271-6824Arizona PHOENIX OFFICE210 E. Earll Drive, Stop 1005 PXPhoenix, AZ 85012-2623602 207-8240FAX 602 207-8250Arkansas LITTLE ROCK OFFICE700 West Capitol Street, Stop 1005 LITLittle Rock, AR 72201501 324-6269FAX 501 324-5183California LAGUNA NIGUEL OFFICEPO Box 30207Laguna Niguel, CA 92607-0207or 24000 Avila RoadLaguna Niguel, CA 92656-3491714 360-2175FAX 714 360-2463

California LOS ANGELES OFFICEPO Box 531791Los Angeles, CA 90053-1791 or 300 N Los Angeles St, Room 4352Los Angeles, CA 90012 213 894-6111FAX 213 894-6365

California SACRAMENTO OFFICE PO Box 2900, Stop SA 5043Sacramento, CA 95812or 4330 Watt AvenueNorth Highlands, CA 95660916 974-5007FAX 916 974-5902

California SAN FRANCISCO OFFICE1301 Clay Street, Suite 1540SOakland, CA 94612-5210510 637-2703FAX 510 637-2715California SAN JOSE OFFICEPO Box 100, Stop HQ0004San Jose, CA 95103or 55 S Market St, Room 900 San Jose, CA 95113408 494-8210FAX 408 494-8065Colorado DENVER OFFICE600 17th Street, Stop 1005Denver, CO 80202-2490303 446-1012FAX 303 446-1011Connecticut HARTFORD OFFICE135 High Street, Stop 219Hartford, CT 06103860 240-4179FAX 860 240-4023

Delaware WILMINGTON OFFICE409 Silverside RoadWilmington, DE 19809302 791-4502FAX 302 791-4511

District of Columbia BALTIMORE OFFICEPO Box 1553, Room 620ABaltimore, MD 21203or 31 Hopkins Plaza, Room 620ABaltimore, MD 21201410 962-2082FAX 410 962-9340

Florida FT. LAUDERDALE OFFICEPO Box 17167Plantation, FL 33318or One N University Dr, Room A-312Plantation, FL 33324954 423-7677FAX 954 423-7685Florida JACKSONVILLE OFFICEPO Box 35045, Stop D:PROJacksonville, Florida 32202or 400 West Bay Street, Room 116Jacksonville, FL 32202904 665-1000FAX 904 232-2266Georgia ATLANTA OFFICEPO Box 1065Stop 202-D, Room 1520Atlanta, GA 30370or 401 West Peachtree Street, NWSummit Bldg, Stop 202-D, Room 1520Atlanta, GA 30365404 331-5232FAX 404 730-3438Hawaii HONOLULU OFFICE300 Ala Moana BoulevardStop H-405 Room 2104Honolulu, HI 96850-4992808 541-1158FAX 808 541-3379

Idaho BOISE OFFICE550 West Fort Street, Box 041Boise, ID 83724208 334-1324FAX 208 334-9240Illinois CHICAGO OFFICE230 S Dearborn StreetRoom 3214, Stop 1005-CHIChicago, IL 60604312 886-9183FAX 312 886-1564Illinois SPRINGFIELD OFFICE320 W Washington Street, Stop 1005SPDSpringfield, IL 62701217 527-6382FAX 217 527-6332Indiana INDIANAPOLIS OFFICEPO Box 44687, Stop 11Indianapolis, IN 46244or 575 N Pennsylvania St, Stop 11Indianapolis, IN 46204317 226-6332FAX 317 226-6222Iowa DES MOINES OFFICE 210 Walnut Street, Stop 1005Des Moines, IA 50309-2109515 284-4780FAX 515 284-6645Kansas WICHITA OFFICE271 W. 3rd Street, North, Stop 1005-WICWichita, KS 67202316 352-7506FAX 316 352-7212Kentucky LOUISVILLE OFFICE600 Dr MLK Jr Pl, Federal Bldg, Room 363Louisville, KY 40202502 582-6030FAX 502 582-6463Louisiana NEW ORLEANS OFFICE600 South Maestri Place, Stop 12New Orleans, LA 70130504 558-3001FAX 504 558-3250Maine AUGUSTA OFFICE68 Sewall Street, Stop 1010

Augusta, ME 04330207 622-8528FAX 207 622-8458Maryland BALTIMORE OFFICEPO Box 1553, Room 620ABaltimore, MD 21203or 31 Hopkins Plaza, Room 620ABaltimore, MD 21201410 962-2082FAX 410 962-9340Massachusetts BOSTON OFFICEJFK PO Box 9112Boston, MA 02203617 565-1857FAX 617 565-4959Michigan DETROIT OFFICEPO Box 330500, Stop 7Detroit, MI 48232-6500or McNamara Federal Building477 Michigan Avenue, Room 2492Detroit, MI 48226-2597313 628-3670FAX 313 628-3669

Minnesota ST. PAUL OFFICE316 North Robert Street, Stop 1005St. Paul, MN 55101612 290-3628FAX 612 290-4236

Mississippi JACKSON OFFICE100 West Capitol Street, Stop 31Jackson, MS 39269601 965-4800FAX 601965-5251

Missouri ST. LOUIS OFFICEPO Box 66776, Stop 1005-STLSt. Louis, MO 63166or Robert A. Young Building1222 Spruce Street, Stop 1005-STLSt. Louis, MO 63103314 539-6770FAX 314 539-2362Montana HELENA OFFICEFederal Building301 South ParkHelena, MT 59626-0016406 441-1022FAX 406 441-1035Nebraska OMAHA OFFICE106 S 15th Street, Stop 1005-OMAOmaha, NE 68102402 221-4181FAX 402 221-3051Nevada LAS VEGAS OFFICE4750 West Oakey Blvd, Room 303Las Vegas, NV 89102702 455-1241FAX 702 455-1216

New Hampshire PORTSMOUTH OFFICEPO Box 720Portsmouth, NH 03802or Federal Office Building, 80 Daniel StPortsmouth, NH 03801603 433-0571FAX 603 433-0739

New Jersey NEWARK OFFICEPO Box 1143Newark, NJ 07102or 970 Broad StreetNewark, NJ 07102973 645-6698FAX 973 645-3323

New Mexico ALBUQUERQUE OFFICE5338 Montgomery Blvd. NE, Stop 1005 ALBAlbuquerque, NM 87109-1311505 837-5505FAX 505 837-5519New York ALBANY OFFICELeo O’Brien Federal Building, Room 617Clinton Avenue & N. Pearl StreetAlbany, NY 12207518 431-4596FAX 518 431-4697New York BROOKLYN OFFICEGPO Box RBrooklyn, NY 11202or 10 Metro Tech Center, 625 Fulton StBrooklyn, NY 11201718 488-2080FAX 718 488-3100

New York BUFFALO OFFICEPO Box 500, Niagra Square StationBuffalo, NY 14201or Thaddeus J. Dulski FOB, 111 W Huron St.Buffalo, NY 14202716 551-4574FAX 716 551-5473

New York MANHATTAN OFFICEPO Box 408Church Street StationNew York, NY 10008or 290 Broadway, 7th FloorNew York, NY 10007212 436-1011FAX 212 436-1900

North Carolina GREENSBORO OFFICE320 Federal Place, Room 125Greensboro, NC 27401336 378-2180FAX 910 378-2495North Dakota FARGO OFFICEPO Box 8Fargo, ND 58107or 657 Second Av, N. Stop 1005-FARFargo, ND 58102701 239-5141FAX 701 239-5104Ohio CINCINNATI OFFICE550 Main Street, Room 7010Cincinnati, OH 45202513 684-3094FAX 513 684-6417Ohio CLEVELAND OFFICEPO Box 99709Cleveland, OH 44199-0709or 1240 E Ninth StreetCleveland, OH 44199-2002216 522-7134FAX 216 522-2947

Oklahoma OKLAHOMA CITY OFFICE55 North Robinson Stop 1005OKCOklahoma City, OK 73102-9229

405 297-4055FAX 405 297-4056

Oregon PORTLAND OFFICE1220 SW 3rd, Stop O-405Portland, OR 97204503 326-2333FAX 503 326-5453Pennsylvania PHILADELPHIA OFFICEPO Box 12010Philadelphia, PA 19106or 600 Arch Street, Room 7214Philadelphia, PA 19106215 597-3377FAX 215 597-7341Pennsylvania PITTSBURGH OFFICEPO Box 705Pittsburgh, PA 15230or 1000 Liberty Avenue, Room 1102Pittsburgh, PA 15222412 395-5987FAX 412 395-4769Rhode Island PROVIDENCE OFFICE380 Westminster StreetProvidence, RI 02903401 528-4492FAX 401 528-4312South Carolina COLUMBIA OFFICE1835 Assembly Street, Rm 571, MDP03Columbia, SC 29201803 253-3029FAX 803 253-3910South Dakota ABERDEEN OFFICE115 4th Ave. Southeast, Stop 1005-ABEAberdeen, SD 57401605 226-7248FAX 605 226-7270Tennessee NASHVILLE OFFICEPO Box 1107 Stop 22Nashville, TN 37202or 801 Broadway, Stop 22Nashville, TN 37203615 736-5219FAX 615 736-7489

Texas AUSTIN OFFICE300 E 8th Street, Stop 1005-AUSAustin, TX 78701512 499-5875FAX 512 499-5687Texas DALLAS OFFICE1100 Commerce Street, MC1005DALDallas, TX 75242214 767-1289FAX 214 767-0040Texas HOUSTON OFFICE1919 Smith Street, Stop 1005-HOUHouston, TX 77002713 209-3660FAX 713 209-3708Utah SALT LAKE CITY OFFICE50 South 200 East, MS1005Salt Lake City, UT 84111801 799-6958FAX 801 779-6957Vermont BURLINGTON OFFICECourthouse Plaza, 199 Main StreetBurlington, VT 05401802 860-2008FAX 802 860-2006Virginia RICHMOND OFFICEPO Box 10113, Room 5502Richmond, VA 23240or 400 North 8th StreetRichmond, VA 23240804 771-2643FAX 804 771-2008

Washington SEATTLE OFFICE915 2nd Avenue Stop W-405Seattle, WA 98174206 220-6037FAX 206 220-6047

West Virginia PARKERSBURG OFFICEPO Box 1040, Room 1004Parkersburg, WV 26102or 425 Juliana Street

Parkersburg, WV 26101304 420-6616FAX 304 420-6682Wisconsin MILWAUKEE OFFICE310 West Wisconsin AvenueRoom M-28, Stop 1005-MILMilwaukee, WI 53203414 297-3046FAX 414 297-3362Wyoming CHEYENNE OFFICE5353 Yellowstone Road, Room 206ACheyenne, WY 82009307 633-0800FAX 307 633-0880Taxpayers Living Abroad or in US TerritoriesA/C INTERNATIONALPO Box 4817, L’Enfant Plaza StationWashington, DC 20224-4817or 950 L’Enfant Plaza, SWWashington, DC 20224202 874-1930FAX 202 874-1752

I’m No Fool, No Siree!I remember clearly those reel to reel films we were shown in elementary school during the mid seventies. Jimminy Cricket would narrate an ongoing cartoon for a cartoon character that would get himself in all kinds of trouble because he didn’t use common sense. He would go swimming in the ocean in spite of a notice indicating that rip tides would pull him out to sea. He was known as the fool and when he’d suffer the consequences, Jimminy Cricket would sing his song, “I’m no fool, no siree! I’m gonna live to be 23.” And for each incident, he would add ten years, finishing the film by singing, “I’m no fool, no siree! I’m gonna live to be 103! I play safe for you and me ‘cause I’m no fool!” Many can learn a great deal from the fool when it comes to not following instructions, not doing our homework and failing to plan.This chapter should put a rest to many of the frivolous arguments used by tax protesters that wages are not taxable or that those who earn wages or other gross income defined under Section 61 of the Code do not have to file a tax return. In the Hicks case, found on the next several pages, it may have been true that Hicks had no obligation to file a tax return; however, he did not properly present his case to the court and I believe he waited too long to hire an attorney.The Court correctly found that the OMB requirement does not apply to the Form 1040 and that the form itself is not a “rule” requiring publication in the federal registry. The Paperwork Reduction Act regarding OMB numbers applies to forms created by the agency under rules promulgated by the agency, for example, the Form 9358 used to collect information from taxpayers falls under this requirement while the tax return form does not.

OMBU.S. 9th Circuit Court of Appeals

U.S. v. HICKS, 947 F.2d 1356 (9th Cir. 1991) UNITED STATES OF AMERICA, PLAINTIFF-APPELLEEv.ROBERT W. HICKS, DEFENDANT-APPELLANT. No. 90-10564. United States Court of Appeals, Ninth Circuit. Argued and Submitted July 16, 1991. Decided October 16, 1991.Donald W. MacPherson, MacPherson & McCarville, Phoenix, Ariz., for defendant-appellant.Robert L. Miskell, Tucson, Ariz., and Darcy A. Cerow, Phoenix, Ariz., Asst. U.S. Attys., for plaintiff-appellee.Appeal from the United States District Court for the District of Arizona.Before CHOY and SNEED, Circuit Judges, and KELLEHER,*

District Judge.[Footnote *] Honorable Robert J. Kelleher, District Judge for the Central District of California, sitting by designation.SNEED, Circuit Judge:Robert W. Hicks appeals his conviction for willful failure to file tax returns for the four years 1983 through 1986. Hicks argues that the Internal Revenue Service's alleged failure to comply with the Paperwork Reduction Act precludes his being penalized for failing to file a return, that the charges against him must be dismissed because the IRS did not publish the 1040 tax return form as a rule in the Federal Register pursuant to the Administrative Procedure Act, that he was not granted jury panel tax information to which he was entitled, and that venue was improper. The district court found no merit to Hicks' arguments. We agree, and affirm.

I.FACTS AND PROCEEDINGS BELOWHicks, an Arizona resident, was charged in the district of Arizona with four counts of willful failure to file tax returns, one count for each of the years 1983 through 1986, in violation of 26 U.S.C. 7203. Before trial, Hicks represented himself. He retained court-appointed counsel at trial.Hicks filed a pretrial motion that we interpret as a motion to dismiss the charges for lack of proper venue. The district court denied this motion.Hicks also filed a pretrial motion seeking a list of prospective jurors, so that he might obtain tax information about the jurors pursuant to 26 U.S.C. 6103(h)(5).1 Rather than furnishing Hicks with the juror list, the district court responded to Hicks's motion by ordering the list to be sent directly to the IRS, along with an inquiry whether any of the prospective jurors had ever been subject to a criminal investigation or had been subject to a civil investigation within the last six years. Hicks did not object to the form of the court's order. On the morning of trial, the court supplied Hicks and the prosecution with the IRS inquiry responses. During voir dire, the court asked the panel whether they or their family members had ever been audited or investigated by the IRS. The record does not indicate how many prospective jurors, if any, responded affirmatively to these questions. One prospective juror who said his son had been investigated for failure to pay payroll taxes was not selected for the panel. At the conclusion of voir dire, Hicks remained silent when given the opportunity to raise any problems he might have had with the list he received. He also never requested a continuance.At the close of the prosecution's case in chief, Hicks filed motions for judgment of acquittal, arguing, as he does here, that the IRS violated the Paperwork Reduction Act by its failure to display Office of Management and Budget (OMB) control numbers and expiration dates on Form 1040 and associated instruction booklets and regulations, and that the IRS violated the Administrative Procedure Act by failing to publish Form 1040 and associated instruction booklets and regulations in the Federal Register. The district court denied these motions.

The jury found Hicks guilty on all four counts. The court sentenced Hicks to three consecutive one-year sentences for the first three counts, followed by five years' probation for the fourth count. The court also levied a $10,000 fine for each count.On appeal, Hicks does not contest the finding that he did not file personal income tax returns for the years in question. However, he renews the legal arguments he raised in his motions, and asserts that he should be acquitted as a matter of law, or, alternatively, that his case should be reversed and remanded for a new trial.

II.JURISDICTION AND STANDARD OF REVIEWThis court has jurisdiction pursuant to 28 U.S.C. 1291. Hicks raises only issues of law, which this court reviews de novo. See United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, 469 U.S. 824, 105 S.Ct. 101 (1984).

III.ANALYSISA. From 1040: Compliance with the Paperwork Reduction Act (PRA)The public protection provision of the Paperwork Reduction Act of 1980, Pub.L. No. 96-511, 94 Stat. 2812 (codified at 44 U.S.C. 3501 et seq.), states: "Notwithstanding any other provision of law, no person shall be subject to any penalty for failing to . . . provide information to any agency if the information collection request involved . . . does not display a current [OMB] control number. . . ." 44 U.S.C. 3512. The PRA and regulations promulgated under the PRA require that federal government agency information collection requests display OMB control numbers and, when appropriate, expiration dates. 44 U.S.C. 3504(c)(3)(A); 5 C.F.R. 1320.4; see 5 C.F.R. 1320.7 (defining "display"). Hicks argues that the IRS failed to comply with the PRA by not putting control numbers on the regulations associated with tax return Form 1040 in 1983. He argues further that the public protection provision of the PRA should be read together with OMB regulations to require that expiration dates as well as control numbers be displayed, and points out that Form 1040 and its associated regulations dates.2 Therefore, Hicks believes that while he may be made to pay his back taxes, he cannot be fined or imprisoned for his violations.We cannot agree. The IRS, like any federal agency, must comply with the PRA and, in particular, must display OMB control numbers on its tax return forms and on its regulations. See Dole v. Steel-workers, 494 U.S. 26, 110 S.Ct. 929, 933, 108 L.Ed.2d 23 (1990) (tax forms are typical of the information requests subject to the PRA). But even assuming without deciding that the IRS failed to comply with the PRA here, its failure does not prevent Hicks from being penalized.The legislative history of the PRA and its structure as a whole lead us to conclude that it was aimed at reining in agency activity. See S.Rep. No. 930, 96th Cong.2d Sess., reprinted in 1980 U.S.C.C.A.N. 6241 (legislative history of PRA). Where an agency fails to follow the PRA in regard to an information collection request that the agency promulgates via regulation, at its own discretion, and without express prior mandate from Congress, a citizen may indeed escape penalties for failing to comply with the agency's request. See, e.g., United States v. Hatch, 919 F.2d 1394 (9th

Cir. 1990); United States v. Smith, 866 F.2d 1092 (9th Cir. 1989). But where Congress sets forth an explicit statutory requirement that the citizen provide information, and provides statutory criminal penalties for failure to comply with the request, that is another matter. This is a legislative command, not an administrative request. The PRA was not meant to provide criminals with an all-purpose escape hatch. See United States v. Burdett, 768 F.Supp. 409 (E.D.N.Y.1991); see also United States v. Wunder, 919 F.2d 34, 38 (6th Cir. 1990) ("Defendant was not convicted of violating a regulation but of violating a statute which required him to file an income tax return.").Moreover, the provision of the tax code under which Hicks was convicted predates the PRA by over 25 years. If, in enacting the PRA, Congress had intended to repeal 26 U.S.C. 7203, it could have done so explicitly. Repeals by implication are not favored. Morton v. Mancari, 417 U.S. 535, 549, 94 S.Ct. 2474, 2482, 41 L.Ed.2d 290 (1974). Congress enacted the PRA to keep agencies, including the IRS, from deluging the public with needless paperwork. It did not do so to create a loophole in the tax code.We hold that the public protection provision of the PRA, 44 U.S.C. 3512, constitutes no defense to prosecution under 26 U.S.C. 7203. To hold otherwise - to interpret the PRA without reference to Congress' purpose - would be to elevate form over substance.

B. Form 1040: Compliance with the Administrative Procedure Act (APA)Hicks argues that IRS Form 1040 is a "rule" under the Administrative Procedure Act, 5 U.S.C. 551-559, and must, therefore, be published in the Federal Register according to 5 U.S.C. 552(a)(1). The IRS's failure to publish, he argues, eliminates any legal duty that might have required him to file income tax returns. Further, because the IRS did not promulgate Form 1040 according to the APA notice and comment procedures, 5 U.S.C. 553, the "rule" is invalid and there is no duty for any taxpayer to file a tax return.Hicks's argument is meritless. It confuses law with regulations with respect to such law. It is the tax code itself, without reference to regulations, that imposes the duty to file a tax return. See United States v. Bowers, 920 F.2d 220, 222 (4th Cir. 1990) (upholding defendants' conviction under 26 U.S.C. 7201). However, even if we suppose that the duty to file tax returns can be understood only with reference to regulations, the IRS has duly promulgated sufficient regulations, e.g., 26 C.F.R. 1.6011-1, 1.6012-1, to make that duty clear. The meaning of "willful failure to make a tax return" is apparent without reference to the contents of Form 1040 or its instructions. Hicks cannot complain that he did not know what was expected of him. He had a duty to make a tax return, and chose to ignore that duty.Hicks's reliance on United States v. Reinis, 794 F.2d 506 (9th Cir. 1986), is misplaced. As the Fourth Circuit noted in Bowers, Reinis involved unpublished rules (specifically, instructions for a Currency Transaction Report Form) that imposed "substantive obligations beyond those created by the statute itself." Bowers, 920 F.2d at 222 n. 2. Only by publication could this obligation become known. The 1040 form, by contrast, did not add to Hicks's basic substantive obligation. That

obligation is to comply with the applicable provisions of the Internal Revenue Code. The code requires that persons such as Hicks make a return. 26 U.S.C. 6012. While it is true that the regulations state that filing a Form 1040 is the preferred manner of making a return, it is by no means the only manner of filing. 26 C.F.R. 1.6012-1(a)(6). Knowing the code and the regulations, and no more, is enough to enable Hicks to attempt to comply with the obligation to file a return. He did not need to consult a 1040 form or its instructions. See also 26 C.F.R. 1.6011-1(b) (taxpayer is not penalized for filing a makeshift return pending the filing of a proper return). It follows that Form 1040 is not a "rule" subject to the complicated publication, notice, and comment requirements of the APA.

C. Disclosure of Juror Information Under 26 U.S.C. 6103(h)(5)Hicks argues that it was improper for the trial court, rather than a party, to issue the request for juror tax information to the IRS. He argues further that the trial court improperly limited the scope of its request to a term of years, citing in support United States v. Sinigaglio, 942 F.2d 581, 583 (9th Cir. 1991) (as amended) (holding that trial court erred when it limited audit history request to last six year).This court has recognized that the trial court may need to issue a 6103 request to assure the IRS that the request is legitimate. See United States v. Hashimoto, 878 F.2d 1126, 1132 (9th Cir. 1989). As long as each side receives the prospective list with the relevant answers in a timely manner, there is no error.Hicks is correct in his assertion that the trial court improperly limited the scope of its request. However, Hicks failed to allege any prejudice arising from the trial court's decision, and cannot demonstrate that he was prejudiced in any way. In contrast to the situation in Sinigaglio, no serious discrepancy arose between the information received from the IRS and the information elicited in voir dire. We find that any error by the trial court was harmless. United States v. Hardy, 941 F.2d 893, 896 (9th Cir. 1991) (adopting a harmless error analysis for this type of case).

D. VenueHicks asserts that his motions regarding improper venue were erroneously denied. He argues that as an Arizona resident, he was required to file his tax returns with the IRS service center in Ogden, Utah, and that therefore the site of his offenses was Utah. Because he is entitled to be prosecuted in the district where his offenses were committed, he says, venue properly lay in Utah, not Arizona. This argument, although superficially plausible, is meritless. "Failure to file a tax return is an offense either at the defendant's place of residence, or at the collection point where the return should have been filed." United States v. Clinton, 574 F.2d 464, 465 (9th Cir. 1978) (per curiam), cert. denied, 439 U.S. 830, 99 S.Ct. 106, 58 L.Ed.2d 124 (1978); see 18 U.S.C. 3237. Hicks's place of residence is Arizona, and the collection point for his returns was the IRS center in Utah. Thus Hicks's offenses could be deemed to have occurred in either Arizona or Utah. Venue was proper in Arizona.

AFFIRMED.Footnotes

[Footnote 1] This section states:In connection with any judicial proceeding described in paragraph (4) [tax proceedings] to which the United States is a party, the Secretary shall respond to a written inquiry from an attorney of the Department of Justice (including a United States attorney) involved in such proceeding or any person (or his legal representative) who is a party to such proceeding as to whether an individual who is a prospective juror in such proceeding has or has not been the subject of any audit or tax investigation by the Internal Revenue Service. The Secretary shall limit such response to an affirmative or negative reply to such inquiry.[Footnote 2] Hicks makes much of the fact that 5 C.F.R. 1320.4, 1320.7 state that an expiration date is required "unless" the OMB says otherwise. He argues that this should be interpreted to mean that an expiration date must be present unless the agency receives an explicit dispensation from OMB. We note that Hicks ignores the language of the statute itself, which says that an expiration date is to be displayed "when appropriate" rather than "unless inappropriate." However, in view of our holding that IRS noncompliance with the PRA cannot exonerate Hicks from his 26 U.S.C. 7203 violation, we need not decide whether a "when" or "unless" interpretation is preferable.

Sixteenth AmendmentSo many people are stuck on the idea that because the Sixteenth Amendment allegedly was not properly ratified, that the income tax is not enforceable. Here is what the United States Supreme Court said in Stanton v. Baltic Mining Co., 240 US 103 (1916):"...by the previous ruling, it was settled that the provisions of the 16th Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of INDIRECT taxation to which it inherently belonged.."The Sixteenth Amendment did not change the Constitution in any way, so stop beating a dead horse. If you are promoting this frivolous argument, you're wasting everyone's time, especially those who are just learning about the system.The only thing to be changed by repealing this amendment is the public's perception of the federal income tax system. The source of the taxing power is not the 16th Amendment; it is Article I, Section 8, of the Constitution. Penn. Mutual Indemnity Co. v. Commissioner, 32 T.C. (1959), CCH at page 659

Tax Return Is Not A Contract"Federal income tax is not contractual or otherwise consensual innature." McLaughlin v. C.I.R., 832 F.2d 986 (7th Cir.1987)."The notion that the federal income tax is contractual or otherwiseconsensual in nature is not only utterly without foundation but... hasbeen repeatedly rejected by the courts." Id., at 987.

WagesThe District Court had a field day with two other tax protesters, Norman Coleman and Gary Holder; and thank goodness for these idiots because if we can learn from them, their sacrifice is well justified. Consider the case of Coleman v. C.I.R., 791 F.2d 68 (7th Cir. 1986). After looking at the record, it appears that the court could have declined jurisdiction and been done with Coleman; however, I think they wanted to set an example for everyone else headed on that same path. After filing twelve amended complaints, the court finally considered Coleman’s last amended complaint which raised the following issues, among others, numbered accordingly:1) “Wages are ‘income’ for purposes of internal revenue. 26 U.S.C.A. § 61”2) “Tax on wages is constitutional. 26 U.S.C.A. § 61; U.S.C.A. Const. Amend. 16.”3) “General tax levy by Internal Revenue Code does not offend Fifth Amendment taking clause. U.S.C.A. Const. Art. 1, § 2, cl. 3; Art. 1, § 8, cl. 1; Amends. 5, 16.”10) “Taxpayers’ contentions that wages may not be taxed because they come from taxpayer’s person, which is depreciating asset, and because Sixteenth Amendment authorizes only excise taxes, were objectively frivolous, so that tax court and Internal Revenue Service were entitled to impose sanctions. U.S.C.A. Const. Amend. 16; 26 U.S.C.A. § 6702.”

Circuit Judge Easterbrook began the court’s ruling with the following opening statement:

“Some people believe with great fervor preposterous things that just happen to coincide with their self-interest. ‘Tax protesters’ have convinced themselves that wages are not income, that only gold is money, that the Sixteenth Amendment is unconstitutional, and so on. These beliefs all lead – so tax protesters think – to the elimination of their obligation to pay taxes. The government may not prohibit the holding of the beliefs, but it may penalize people who act on them.”The rest of the ruling follows this same vain and I highly recommend that you

copy and read it, following each of its references.Another protester, Leonard A. Peth, tried to represent himself in Wisconsin

and this is what the court found. Peth v. Breitzmann, 611 F.Supp. 50:2) “Taxpayer, who claimed that only federal officers and employees were subject to levy of income taxes, failed to state a claim for relief. 26 U.S.C.A. § 6331.”3) “Taxpayer was a person liable to pay taxes, although he contended that any tax under the Internal Revenue Code [26 U.S. C.A. § 1 et seq.] was an indirect tax upon some right, privilege or corporate franchise and that taxpayer was not a privileged person nor had he taken any corporate franchise. 26 U.S.C.A. § 6001.”4) “Wages constitute taxable income.”

5) “Taxpayer was an ‘employee’ under Internal Revenue Code liable for income taxes, although he contended he was not a federal officer, employee, elected official, or corporate officer, since definition of employee does not exclude all other wage earners. 26 U.S.C.A. § 3401(c).”6) “Taxpayer’s wages were not excluded from withholding under statute excluding remuneration for services rendered to nonfederal employer by United States citizen within United States possession since Wisconsin, where taxpayer worked, was not a United States possession. 26 U.S.C.A. § 3401(a)(8)(B).”

There were many more ludicrous assertions made by Peth and you can read them for yourself. They are exhaustive. He even sued the Clerk of the Court for issuing a summons allowing the government sixty days to respond to his complaint. Of course the sixty-day answer time was proper for the United States! It’s unscrupulous people like this who make it more difficult for those of us who want to use the courts in legitimate claims. In that sense, I am an advocate of the government’s status of immunity. On the other hand, I would like to see the Congress waive sovereign immunity for just four years so as to allow the few of us, who bring claims against the IRS in good faith, to fix some big problems. This idiot even filed common law liens against the agents. The court properly found that “… The so-called ‘Notices of Common Law Lien’ are worthless scraps of paper and have no legal effect.”We should all do our homework before making claims against the government.Going back to the Hicks case, the “OMB argument” can be properly used for forms such as 9358 that is a form promulgated by the agency and is subject to the Paperwork Reduction Act.In summary, the OMB and Federal Register arguments are wrong, the “wages are not taxable” argument is wrong, the lawful money argument is wrong, the Sixteenth Amendment argument is wrong, “UCC refused for cause” is stupid, and “the tax only applies to federal employees” argument is wrong, so do your homework and don’t be a stupid patriot. We don’t have time for it. Here is an example of how to correctly apply the “OMB argument” which was used in a response to the IRS in December of 1997.“And finally, Form 9358 does not display an approved control number and I cannot be required to complete this form with this reply.”

It really did nothing toward resolving anything, but I just wanted to show you an example of the correct application.

Summons915 F.Supp. 1227 UNITED STATES of America

Petitioner, v. Larry A. HARTMAN and Marguerite C. HartmanRespondents. No. 95-3-CIV-OC-10United States District CourtM.D. Florida, Ocala Division. Jan. 10, 1996

Charles R. Wilson, United States Attorney, Bonnie Glober, Assistant United States Attorney, United States Attorney's Office, Jacksonville, FL, Benjamin A. de Luna, District Counsel, Internal Revenue Service, Jacksonville, FL, for United States of America. Larry A. Hartman, Floral City, FL, pro se. Marguerite C. Hartman, Floral City, FL, pro se. ORDER HODGES, District Judge.This case is before the Court on the United States' petition to enforce summonses (Doc. 1). The petition was considered by the United States Magistrate Judge pursuant to the general order of assignment, who has filed his report (Doc. 9) recommending that the petition be granted and the summonses enforced. The Hartmans, who style themselves as "Non-Consenting Persons," have filed objections (Doc. 10) to the report, the primary thrust of which is that the payment of income taxes to the United States is voluntary, and they have not consented to make such payments. Accordingly, upon this Court's independent examination of the file and upon due consideration of the Magistrate Judge's report and recommendation, the report and recommendation is adopted, confirmed and made a part hereof.The petition (Doc. 1) is GRANTED, and the summonses which are the subject of the petition shall be enforced as issued, and the Hartmans are directed to forthwith comply with those summonses as directed by the issuing Revenue Officer. IT IS SO ORDERED. DONE and ORDERED.REPORT AND RECOMMENDATION [FN1] FN1. Specific, written objections may be filed within ten (10) days after service of this document. Rule 6.02, Local Rules, United States District Court, Middle District of Florida. Failure to timely serve objections shall bar the party from a de novo determination by a district judge and from attacking factual findings on appeal. Status SNYDER, United States Magistrate Judge.This cause is before the Court on the United States' Petition to Enforce Internal Revenue Service Summonses (Doc. # 1; hereinafter Petition), filed on August 23, 1995. According to the Declaration of C. Little, Revenue Officer, Internal Revenue Service (hereinafter Declaration), attached to the Petition as Exhibit A, two Internal Revenue Service (hereinafter IRS) summonses were issued by the revenue officer to Larry A. Hartman and Marguerite C. Hartman. The summonses were issued as part of an IRS investigation into the Respondents' tax liability and required them to appear on July 1, 1994, and provide testimony as well as books, records, papers or other data. An Order to Show Cause (Doc. # 2) was entered by the under signed on August 30, 1995, directing the Respondents to appear and answer why they should not be compelled to obey the IRS summonses served. It also ordered them to respond to the Petition. On October 4, 1995, at the show cause hearing, Respondents filed their Court Order Refused for Cause Without Dishonor (in affidavit form) (Doc. # 5; hereinafter Response).In their Response Mr. and Mrs. Hartman indicated they were refusing to "accept the Court's Show Cause Order." Id. at 1. Respondents' refuse always based upon the following claims: (1) the summonses did not provide the required implementing regulations; (2) the summonses did not grant use immunity for the testimonies sought; (3) that C. Little is not an individual authorized to perform functions listed in 26 U.S.C. s 7608; and (4) several arguments that the regulations applicable to the

Internal Revenue Code do not require them to pay taxes. The show cause hearing on this matter was continued until October 20, 1995, at which time the Respondents argued they were not required to comply with the summonses because the payment of income taxes in the United States is voluntary. Summons Enforcement Title 26, United States Code, ss 7402(b) and 7604(a), provide jurisdiction to the district courts to issue appropriate process for enforcement of Internal Revenue Service summonses.To obtain judicial enforcement of a summons, the Internal Revenue Service must establish: (1) the investigation is being conducted for a legitimate purpose; (2) the inquiry may be relevant to that purpose; (3) the information sought is not already in the IRS' possession; and (4) the administrative steps required by the Internal Revenue Code have been followed. United Statesv. Medlin, 986 F.2d 463, 466 (11th Cir.), cert. denied, 510 U.S. 933, 114S.Ct. 347, 126 L.Ed.2d 311 (1993); United States v. Leventhal, 961 F.2d936, 939 (11th Cir.1992) (per curiam). "The IRS may satisfy its minimal burden 'merely by presenting the sworn affidavit of the agent who issued the summons attesting to those facts.' " Medlin, 986 F.2d at 466 (quoting La Mura v. United States, 765 F.2d 974, 979 (11th Cir.1985)).Once the IRS has made this showing, "the burden shifts to the party contesting the summons to disprove one of the four elements of the government's prima facie showing or convince the court that enforcement of the summons would constitute an abuse of the court's process." La Mura, 765 F.2d at 979-80. The United States has made a prima facie showing Revenue Officer Little declares under penalty of perjury that an investigation is being conducted "to determine the tax liability of the respondents, Larry A. and Marguerite C. Hartman, for the years 1986 through 1993, for which years no individual income tax returns have been filed." Declaration at 1. Such a purpose is specifically endorsed in the statute giving rise to the power to issue summonses. See 26 U.S.C. s7602(a). It is further declared the instant summonses were issued in furtherance of the investigation and that they are necessary to obtain the Hartmans' testimony and examination of the requested documents to properly determine the Respondents' tax liability. Declaration at 1, 3.Therefore, the proposed inquiry is relevant to the revenue officer's investigation. Revenue Officer Little avers: Except for some Forms W-2, Wage and Tax Statement, and Forms 1099, which may already be in the possession of the [IRS], but which are not readily accessible without undue administrative burden and expense, the information, books, records, papers and other data sought by the summonses are not already in the possession of the [IRS] for the years 1986 through 1993. The [IRS], is however, in possession of some wage income information for Marguerite Hartman for the years 1991 and 1992. Declaration at 2-3. It is stated "[a]ll administrative steps required by the Internal Revenue Code for issuance of... summons[es] have been taken," id. at 3, and that "[a] Justice Department referral, as defined by Section 7602(c)(2) of the Internal Revenue Code of 1986, is not in effect with respect to Larry A. Hartman or Marguerite C. Hartman for the years under investigation." Id.Because Revenue Officer Little's Declaration addresses each of the elements outlined above, the United States, on behalf of the IRS, has met its burden of

making a prima facie showing the summonses were properly issued and should be enforced. Respondents' Arguments:VoluntarinessRespondents, a gospel minister and his wife, contend they are neither tax evaders nor tax protesters. They state it remains their wish "to comply with all laws which apply to us, and pay any and all taxes for which we are liable." Response at 5. The Hartmans assert, however, that "[t]hrough our years of study of the U.S. Constitution and the IRS Code, we have come to understand and fully believe that 'voluntary compliance 'to the tax code is without obligation or mandatory requirement. Therefore, we have no tax liability or requirement to file a 1040 return." Id. Stated another way, in one of the exhibits Respondents presented to the Court, "[s]ince [the income tax system] is based on 'voluntary compliance', we choose not to 'volunteer'."Exhibit G, attached to Response. Any assertion that the payment of income taxes is voluntary is without merit. It is without question that the payment of income taxes is not voluntary. United States v. Gerads, 999 F.2d 1255, 1256 (8thCir.1993) (per curiam); Wilcox v. Commissioner of Internal Revenue, 848F.2d 1007, 1008 (9th Cir.1988). The assertion that the filing of an income tax return is voluntary is, likewise, frivolous. Title 26, United States Code, Section 6012(a)(1)(A), "requires that every individual who earns a threshold level of income must file a tax return." United States v. Pottorf, 769 F.Supp. 1176, 1183 (D.Kan.1991). Failure to file an income tax return subjects an individual to criminal penalty. Id.(citing 26 U.S.C. s 7203).Lack of Implementing RegulationsRespondents argue the summonses are deficient because they do not provide "the required implementing regulations." Response at 1. It is asserted the only regulation corresponding with the Internal Revenue Code sections authorizing summonses to be issued "deal[ ] exclusively with taxable alcohol, tobacco, or firearm activities. The IRS records show, or should show, that we are not involved in any taxable alcohol, tobacco or firearm activities." Id. at 3. The Internal Revenue Code authorizes the Secretary of the Treasury to issue administrative summonses for the purpose of ascertaining the correctness of any return or determining the liability of any person for any internal revenue tax. 26 U.S.C. s 7602.The Internal Revenue Service is not required to make any showing of tax liability as a prerequisite to the issuance of an administrative summons. The authority to issue administrative summonses is part of the Secretary's broad statutory charge to "inquire after and concerning all persons ... who may be liable to pay any internal revenue tax." Id. s 7601. Respondents' contention that the summonses cannot be enforced because no implementing regulations have been promulgated concerning the issuance of IRS summonses is incorrect. Madgev. United States, Consolidated Misc. File No. 3-94-34, 1995 WL 313653,1995 U.S.Dist. LEXIS 2355 (D.Minn. February 13, 1995) ("With respect to the assertion that no regulations have implemented the statute, the Court finds as a matter of law that no implementing

regulations are necessary for a statute empowering the IRS to issue summonses"); see also Cocozza v. United States, Case No. 95-2529, 1995 WL 610684, 1995 U.S.Dist. LEXIS12660 (E.D.Pa. August 14, 1995); United States v. Stoecklin, 848F.Supp. 1521, 1525-26 (M.D.Fla.1994).Revenue Officer's Authority to Issue SummonsesThe contention that the revenue officer lacked the authority to issue the summonses in this matter is likewise without merit. Revenue officers of the Internal Revenue Service are authorized to serve summonses under the authority of the United States. 26 U.S.C. s 7608(a); Stoecklin, 848 F.Supp. at 1527. Use Immunity The Response filed by Respondents states: [T]he U.S. Supreme Court has established that the act of producing information by way of testimony or documents cannot be compelled without a (bona fide) grant of use immunity by the agency of the U.S. Government making the request, and that it was proper for the Court to reject the Government's attempt to compel delivery of documents when the Government failed to make a formal request for use immunity under 18 U.S.C. Sections 6002 and 6003 (U.S. v. Doe, 465U.S. 605 [104 S.Ct. 1237, 79 L.Ed.2d 552] (1984)). No grant of use immunity was included with the Summons, nor was there any evidence that a formal request was made by C.L. Little to a person competent to provide such immunity. Response at 4. Respondents' argument misses the mark.The determination of whether to request use immunity is within the discretion of the United States under 18 U.S.C. ss 6002 and 6003. Absent a grant of use immunity, the Hartmans must assert, if they reasonably believe it to be applicable, their Fifth Amendment privilege if they wish not to provide self-incriminating information. Furthermore, "a blanket refusal to produce records or to testify will not support a fifth amendment claim. "United States v. Argomaniz, 925 F.2d 1349, 1356 (11th Cir.1991) (citing United States v. Roundtree, 420 F.2d 845, 852 (5th Cir.1969)). Instead, the taxpayer must respond to the summons and " 'present himself with his records for questioning, and as to each question and each record elect to raise or not to raise the defense.' " Id. (quoting Roundtree, 420 F.2d at852). Despite their apparent knowledge of this rule, see Exhibit I, attached to Response, at [unnumbered] 3- 4, Respondents have yet to assert specifically their Fifth Amendment privilege against self-incrimination; thus, the Court need not address this issue at present.RECOMMENDATION Based on the foregoing, it is recommended: (1) the Petition (Doc. # 1) be GRANTED; (2) the summonses which are the subject of the Petition be ENFORCED as issued, and that Respondents be directed to comply with same forthwith.ENTERED at Jacksonville, Florida, this 8th day of December 1995.

Fifth Amendment ReturnUnited States v. Edelson, 604 F.2d 232 (3rd Cir. 08/22/1979)

UNITED STATES COURT OF APPEALS, THIRD CIRCUITNo. 79-1209604 F.2d 232 decided: August 22, 1979.

UNITED STATES OF AMERICAv.EDELSON, JOSEPH, APPELLANTON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEYMichael J. Mella, Fair Lawn, N. J., for appellant.Robert J. Del Tufo, U. S. Atty., Kenneth N. Laptook, Asst. U. S. Atty., Maryanne T. Desmond, Asst. U. S. Atty., Chief Appeals, Div., Newark, N. J., for appellee.Before Adams, Rosenn and Higginbotham, Circuit Judges.Author: Per CuriamOpinion OF THE COURT[12] In recent years an increasing, if still small, number of our citizens have placed themselves in open defiance of the Internal Revenue Code, justifying their positions on the basis of a variety of legal theories that have, for the most part, been rejected by the courts. The present appeal may be fairly classified as such a case and, just as our sister courts of appeals that have considered similar arguments have done, we reject appellant's position.[13] Joseph Edelson was convicted by a jury on three counts of willful failure to file tax returns in violation of 26 U.S.C. § 7203. On this appeal Edelson urges that his signed income tax forms containing only identifying data, with the balance of the requested information answered with bald assertions of Fifth Amendment privilege constitute legitimate tax returns. Edelson inserted only his name, address, occupation, and social security number on the forms. He also provided a figure for his total income computed on the basis of his interpretation of "constitutional dollars" by which he meant those dollars backed by silver. All other requested information was refused, with assertions of a Fifth Amendment privilege. Inasmuch as he filed such documents, he argues, he may not be convicted of willful failure to file income tax returns.[14] Further, even if such a use of the Fifth Amendment privilege is found to be invalid, Edelson insists that he was entitled to have the question of his subjective "good faith" exercise of the privilege put to the jury. Edelson claims that a good faith finding in this respect would provide a legal justification for his act, and that the trial judge's charge was inadequate in this regard.[15] We will affirm the judgment of the district court.[16] First, it is now well established that tax forms that do not contain financial information upon which a taxpayer's tax liability can be determined do not constitute returns within the meaning of the Internal Revenue Code. Florsheim Bros. Dry Goods Co. v. United States, 280 U.S. 539, 50 S. Ct. 17, 74 L. Ed. 600 (1930); United States v. Johnson, 577 F.2d 1304, 1311 (5th Cir. 1978); United States v. Daly, 481 F.2d 28 (8th Cir. 1973); 10 Mertens, The Law of Federal Income Taxation, § 55.22 (1964 revision).

[17] Second, contrary to Edelson's apparent belief, there is no Fifth Amendment privilege negating one's duty to file a tax return. A tax form requires disclosure of routine information necessary for the computation of tax liability and does not ordinarily compel testimony about facts that might lead to a criminal prosecution. Federal income tax information is sought in a non-accusatorial setting and is not, as a general matter, extracted from a "highly selective group inherently suspect of criminal activities." California v. Byers, 402 U.S. 424, 430, 91 S. Ct. 1535, 1539, 29 L. Ed. 2d 9 (1971). That such filings or the information contained therein may later appear in court to the detriment of the declarant does not, Ipso facto, justify an assertion of the Fifth Amendment privilege. As the Supreme Court noted in Byers :[18] "Information revealed by these reports could well be "a link in the chain' of evidence leading to prosecution and conviction. But under our holdings the mere possibility of incrimination is insufficient to defeat the strong policies in favor of a disclosure called for . . . ." Id., 428, 91 S. Ct. at 1538.[19] Edelson relies on cases recognizing a Fifth Amendment privilege to refuse to answer questions on a tax return. See U. S. v. Garner, 424 U.S. 648, 96 S. Ct. 1178, 47 L. Ed. 2d 370 (1976); U. S. v. Sullivan, 274 U.S. 259, 47 S. Ct. 607, 71 L. Ed. 1037 (1927). In order to claim this privilege, however, the taxpayer must have a real basis for fearing that he would be subject to criminal prosecution if he were to answer the question in response to which he asserted the privilege. Edelson, in contrast, states only in a generalized manner that, absent his use of the Fifth Amendment, he may be prosecuted for tax fraud.[20] We find no justification for Edelson's blanket invocation of the Fifth Amendment privilege. One who uses the Fifth Amendment to protect his refusal to provide the disclosures required in a tax return should confine that use to specific objections to particular questions on the return for which a valid claim of privilege exists. He may not use the Fifth Amendment extravagantly to draw a "conjurer's circle" around the obligation to file a return. United States v. Sullivan, 274 U.S. 259, 264, 47 S. Ct. 607, 71 L. Ed. 1037 (1927). Of course, the mere fact that the privilege is asserted as to many, most or almost all of the questions on a return, does not deprive the taxpayer of his right to an opportunity to show that the privilege really was properly asserted as to all these questions. But Edelson had the requisite opportunity to submit his claim of privilege to the court for a determination of validity. Hoffman v. United States, 341 U.S. 479, 486-87, 71 S. Ct. 814, 95 L. Ed. 1118 (1951). See Garner, supra, 424 U.S. 659, n.11, 96 S. Ct. 1178, citing Marchetti v. U. S., 390 U.S. 39, 61, 88 S. Ct. 697, 19 L. Ed. 2d 889 (1968). He did so by means of a Fed.R.Crim.P. 12(b) motion seeking dismissal of the indictment, and the broad assertion of a Fifth Amendment privilege was rejected by the trial judge. This was not error. Even if a case should arise in which very broad assertions of the privilege might be justifiable, one seeking such protection must provide the trial judge with more than mere averments of possible tax-related prosecutions. Edelson does not appear to have done so before the district court, nor has he indicated to this Court any substantial non tax-related reasons that might have justified his actions. A vague possibility of prosecution for tax fraud may not properly be used as an excuse for engaging in a course of conduct that itself amounts to tax fraud.

[21] Edelson also challenges the jury instructions on the question of his "good faith" reliance on his Fifth Amendment rights. Even if he is adjudged to have gone beyond any legitimate assertion of the constitutional privilege, he argues, he may not be convicted of willful failure to file tax returns inasmuch as he sincerely believed that his actions were consistent with the law. In fact, the trial judge appears to have put this question to the jury with considerable precision:[22] In the context of § 7203, the element of willfulness is established by proving that the defendant had knowledge of his legal obligation to file that tax return but, nevertheless, he voluntarily, deliberately and intentionally chose not to do what the law required.[23] The defendant maintains because of his beliefs, his actions were justified.[24] It is not a defense that the failure to furnish tax information required by the internal revenue law was done for the purpose of protesting government policies, even if such protest is with good motive.[25] I further instruct you, the term "willful" in the context of this case is the intentional violation of a known legal duty.[26] The defendant's conduct is not willful if he acted through negligence, inadvertence or mistake or due to his good faith misunderstanding of the requirement of the law.[27] I further instruct you that the defendant's statement of defense in this case is that . . . he did not willfully and knowingly fail to file said returns in violation of a known legal duty, but rather, failed to submit said returns in the good faith belief that he had the legal right to submit a Fifth Amendment return . . .[28] If you find the defendant believed in good faith that he was acting within the law, that the defendant's conduct was not marked by careless disregard as to whether he had the right to so act, you must find the defendant not guilty for lack of willfulness.*fn1[29] We can find no error in this charge. The definition of "willfulness" set forth therein is in accord with the Supreme Court's pronouncement in United States v. Pomponio, 429 U.S. 10, 97 S. Ct. 22, 50 L. Ed. 2d 12 (1976). Insofar as the defendant may be said to rely on a "good motive" defense,*fn2 the district court's instruction is in accord with this Court's opinion in United States v. Malinowski, 472 F.2d 850, 855 (3d Cir.), Cert. denied, 411 U.S. 970, 93 S. Ct. 2164, 36 L. Ed. 2d 693 (1973).*fn3 As for his "good faith" argument, the trial court correctly reasoned that if Edelson truly believed he was under no legal obligation to provide the Internal Revenue Service with anything more than the returns he filed, he could not be guilty of Willful failure to file that is, he could not have intentionally violated a known legal duty. See United States v. Pohlman, 522 F.2d 974, 976 (8th Cir. 1976). As we read the instruction, this was the precise question that was put to the jury, and it was resolved against the defendant.[30] Accordingly, the judgment of the district court will be affirmed.Opinion Footnotes

[31] *fn1 A-32-A-38.[32] *fn2 "The only good faith defense to a charge of failure to file a required return is one where the defendant alleges "a bona fide misunderstanding as to his liability for the tax, as to his duty to make a return, or as to the adequacy of the records he maintained . . .' United States v. Murdock, 290 U.S. 389, 396, 54 S. Ct. 223, 226, 78 L. Ed. 381 (1933)". United States v. Matosky, 421 F.2d 410, 413 (7th Cir. 1970), Cert. denied, 398 U.S. 904, 90 S. Ct. 1691, 26 L. Ed. 2d 62. Defendant's motives in failing to file are immaterial so long as the government proves beyond a reasonable doubt that defendant was required to file a return; that he knew this obligation; and that he willfully or purposely failed to file such return. Thus defendant's arguments of good motive, i. e. protest against taxation or government use of paper money not backed by silver, or good faith but mistaken belief in the law of Fifth Amendment are material and relevant only to the statutory element of "willfulness", the specific intent which the government must establish. United States v. Johnson, supra. United States v. Silkman, 543 F.2d 1218 (8th Cir. 1976), Cert. denied, 431 U.S. 919, 97 S. Ct. 2185, 53 L. Ed. 2d 230 (1977); United States v. Jordan, 508 F.2d 750 (7th Cir. 1975); United States v. Ming, 466 F.2d 1000 (7th Cir. 1972), reh. denied, Cert. denied, 409 U.S. 915, 93 S. Ct. 235, 34 L. Ed. 2d 176; United States v. Hawk, 497 F.2d 365, 368 (9th Cir. 1974), Cert. denied, 419 U.S. 838, 95 S. Ct. 67, 42 L. Ed. 2d 65; United States v. Pohlman, 522 F.2d 974, 976 (8th Cir. 1975) (en banc).[33] *fn3 In Malinowski, defendant was a college professor who had provided false information on his tax return because his taxes were used, in part, to fund the war in Vietnam, which he opposed. Malinowski reasoned that his good faith exercise of what he considered to be a First Amendment right of symbolic protest immunized him for prosecution because of his good purpose. Nonetheless, the trial court's refusal to give such a "good purpose" instruction was affirmed by this Court.

No Immunity for State Citizens or Fifth Amendment ReturnsSochia v. Commissioner of Internal Revenue, 23 F.3d 941 (5th Cir. 06/24/1994)

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUITNos. 93-5601, 93-8805, Summary Calendar23 F.3d 941decided as corrected: June 24, 1994.MAURICE H. SOCHIA AND BEATRICE M. SOCHIA, PETITIONERS-APPELLANTS,v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT-APPELLEE. MAURICE H. SOCHIA AND BEATRICE M. SOCHIA, PLAINTIFFS-APPELLANTS, V. UNITED STATES OF AMERICA, ET AL., DEFENDANTS-APPELLEES.Appeal from the Decision of the United States Tax Court. Appeal from the United States District Court for the Western District of Texas. TC # 14176-93

Maurice H. Sochia, (Pro Se), San Antonio, TX.Beatrice M. Sochia, (Pro Se), San Antonio, TX.For Respondent-Appellee: David L. Jordan, Acting Chief Counsel, IRS, WA/DC. Gary R. Allen, Chief, Sally J. Schornstheimer, Atty., Richard Farber, Robert L. Baker, Appellate Section, Tax Division, DOJ, WA/DC.For Defendants-Appellees: A. Ellouise Niblo, Dept. of Justice, Tax Div., Dallas, TX. For USA, IRS Et Al: Gary R. Allen, Chief, Sally J. Schornstheimer, Richard Farber, Robert L. Baker, Appellate Sec., Tax Div., Dept. of Justice, WA/DC.Before Politz, Chief Judge, Jolly and Duhe, Circuit Judges.Author: PolitzPOLITZ, Chief Judge:[14] These two appeals are consolidated for today's Disposition. In docket number 93-5601, Maurice H. and Beatrice M. Sochia appeal the decision of the Tax Court dismissing their action and affirming the Commissioner's determination of a tax deficiency and additions thereto. In docket number 93-8805 the Sochias appeal the summary judgment dismissal by the district court of their action seeking a refund of a $500 penalty imposed for filing a frivolous tax return. For the reasons assigned we affirm the Tax Court and district court in the actions appealed, and impose sanctions for these patently frivolous appeals.[15] Background[16] On their 1989 federal income tax return the Sochias supplied only their names and those of their dependent children, address, signatures, and amount of federal tax withheld. They failed to provide any information about their income and expenses. Instead, they inserted the phrase "Object--5th Amend" on each line of the Form 1040 that called for specific financial information. The Internal Revenue Service assessed taxes at $16,013, imposed $2,793 and $720 as additions to the tax for failure to file a return and for failure to pay estimated taxes respectively, and penalized the Sochias $500 under 26 U.S.C. § 6702 for the filing of a frivolous return.[17] The Sochias filed suit in the Tax Court seeking a redetermination of the federal income tax deficiency and additions to tax determined by the Commissioner. After the Sochias refused to follow the court's order directing an amendment of their pleadings, the Tax Court dismissed for failure to state a claim upon which relief could be granted and sustained the Commissioner's determination of the deficiency and additions thereto. The Sochias timely appealed.[18] The Sochias also filed a complaint seeking the refund of a $500 penalty assessed against them for filing a frivolous tax return for 1989.*fn1 The IRS moved for summary judgment; the magistrate Judge recommended granting the summary judgment. Over the objections of the Sochias the district court adopted that recommendation. The Sochias timely appealed. We consolidated the two appeals.[19] Analysis

[20] A. Tax deficiency and additions to tax [21] Relying upon the Federalist Papers and invoking natural law, the Sochias allege in their pro se petition to the Tax Court that a " "Fifth Amendment Return' is a valid, legal, legitimate, proper, and correct tax return," that they had filed the "Fifth Amendment Return" in good faith, that the Commissioner wrongfully ignored their "Fifth Amendment Return" and issued notice of deficiency in violation of their due process rights, and that "being State Citizens of the sovereign State of Texas, they were not subjected to the jurisdiction of the Internal Revenue Code produced by the United States Congress, and therefore, ... could not legally report on Form 1040 ... what the Commissioner had alleged is "Income'." The Commissioner moved to dismiss the petition for failure to state a claim upon which relief can be granted under Rule 34(b)(4) of the Rules of Practice and Procedure of the United States Tax Court for failure to set forth justiciable allegations of error and, under Rule 34(b)(5) for failure to allege any facts in support of such allegations. The Tax Court ordered the Sochias to file an amended petition setting forth with specificity each claimed error of the Commissioner and a specification of the facts upon which they based each claim of error. The Sochias, however, responded to the court order contending that the facts set forth in their petition were sufficient to satisfy the Tax Court's rules and they reiterated the contentions set forth in their petition.[22] The Tax Court held a hearing on the Commissioner's motion to dismiss; the Sochias opted not to attend. Following the hearing the Tax Court issued an order of dismissal and decision affirming the Commissioner's assessment of deficiency and additions to tax. The Tax Court concluded that the Sochias failed to allege any justiciable error in the determinations upon which the notice of deficiency was based or any facts tending to support any such error. We agree. Deficiency determinations of the Commissioner enjoy a presumption of correctness; the burden of proof rests upon the taxpayer to demonstrate error.*fn2 The pleadings by the Sochias clearly fail to satisfy the requirements of Tax Court Rule 34(b). The remaining issues raised by the Sochias on appeal from the Tax Court decision totally lack merit and require no comment. That decision is affirmed in all respects.[23] B. Frivolous filing penalty[24] The Commissioner assessed a $500 frivolous return penalty under 26 U.S.C. § 6702 for the filing of the 1989 tax return. The Sochias filed a pro se complaint seeking a refund, claiming that in declaring their return frivolous the Commissioner violated their fifth amendment rights. Under section 6702, the IRS may impose a $500 penalty on any individual filing what purports to be a tax return when the filing (1) does not contain information on which the substantial correctness of the self-assessment may be Judged, and (2) is based on a frivolous position.*fn3 We have upheld penalty assessments for "protest returns" filed with blanket fifth amendment objections.*fn4 Further, the Sochias' challenge to the validity of the sixteenth amendment has been rejected repeatedly by the courts.*fn5 We now uphold the penalty assessed under section 6702.*fn6[25] As the income tax form as filed is frivolous within the meaning of section 6702, the IRS lawfully assessed a $500 penalty. Accordingly, the district court properly granted summary judgment in favor of the government.

[26] C. Sanctions[27] The government seeks sanctions for frivolous appeals, underscoring the waste of time and effort by the judicial officers and support personnel and by staff and counsel for the government in response to these appeals. We find the government's argument persuasive. More than a decade ago,*fn7 we repeated a warning given three years before*fn8 that frivolous challenges to the sixteenth amendment and income tax legislation and regulations would result in the imposition of the full range of sanctions provided by Rule 38 of the Federal Rules of Appellate Procedure. Apparently our caution has gone unheeded. Sanctions are warranted herein. We therefore impose upon Maurice H. Sochia and Beatrice M. Sochia double costs in these appeals plus the sum of $500 in damages in each appeal, this total of $1000 being payable to the Treasury of the United States.[28] The judgments challenged in these consolidated appeals are AFFIRMED in all respects.[29] Disposition[30] AFFIRMED.Opinion Footnotes [31] *fn1 The Sochias' federal court action sought the following: (1) a statement from defendants that there is such a thing as a "Fifth Amendment Right"; (2) a statement from defendants that there is such a thing as a "Fifth Amendment Return"; (3) a statement from defendants that a "Fifth Amendment Return" is not a frivolous return because a "Fifth Amendment Return" must be examined and analyzed under standard Constitutional law and not Tax law; (4) a statement from defendants that the "Fifth Amendment Right" may be invoked by both the guilty individual and the innocent individual; (5) a statement claiming that the United States Constitution is still the Supreme Law of the Land; (6) a statement that a person claiming the "Fifth Amendment Right" does not need to demonstrate how a particular question could incriminate that person; (7) a statement that statutory and administrative law must not violate the Constitution; (8) a permanent injunction; (9) actual, special, and punitive damages; and (10) costs.[32] *fn2 Sandvall v. C.I.R., 898 F.2d 455 (5th Cir.1990).[33] *fn3 Mosher v. I.R.S., 775 F.2d 1292 (5th Cir.1985), cert. denied, 475 U.S. 1123, 106 S. Ct. 1645, 90 L. Ed. 2d 189 (1986).[34] *fn4 See Parker v. C.I.R., 724 F.2d 469 (5th Cir.1984) (penalty under 26 U.S.C. § 6653(a)).[35] *fn5 See Knoblauch v. C.I.R., 749 F.2d 200 (1984), cert. denied, 474 U.S. 830, 106 S. Ct. 95, 88 L. Ed. 2d 78 (1985) (noting that every court that has considered this argument has rejected it).[36] *fn6 See Miller v. United States, 868 F.2d 236 (7th Cir.1989).[37] *fn7 Parker v. C.I.R.[38] *fn8 Lonsdale v. C.I.R., 661 F.2d 71 (5th Cir.1981).

The Sky Is FallingAs we all learned by reading the fairy tale about "Chicken Little" the sky is not

falling. This is analogous to real-life experiences our people have with their perception of an IRS collection. Many of us are simply not familiar enough with the collection process to think anything but that our lives will be ruined forever or that our assets and fortunes cannot be protected.

This chapter describes the entire collection process, from the audit and examination and through the collection; post collection and claim for refund stages. I have found that many people don't understand or don't know what to expect from the IRS during an examination or collection process and this exaggerates their fears and decreases their ability to effectively resolve the problems normally associated with an IRS collection.

Pre-Audit Notices:This chapter will help you understand how to respond to an audit summons,

whether you are a non-filer or not. We'll look at it from the perspective of the non-filer. After a few years of not filing, the IRS will send you inquiries as to why you have not filed. You should first receive a Computer Paragraph notice such as a CP 515. About one hundred twenty days later, you should receive a CP 518. The reason you don’t receive a CP-516, CP 517 or CP 519 and why they are not in sequence is because when you don’t file a return, the IRS categorizes you as a “non-filer.” This term is now being used to replace the former “illegal tax protester” designation. To my knowledge, the CP 519 is the fifth notice under 26 CFR 31.3406(c)-1 but is never sent because only four are required to meet the obligation of notified payee underreporting.

The issuing of a computer paragraph letter is governed by 26 USC 3406 which relates to backup withholding. This section relates to a requirement to withhold when a) a payee fails to furnish his TIN properly, or b) when notice is received that the TIN is incorrect, or c) there has been underreporting with respect to dividends and interest, or d) when there has been a payee certification failure. It’s more or less a penalty measure enforced against payees or business entities having an Employer Identification Number (EIN).You’ll definitely want to answer and inquire as to the source of these notices but you need an extension of time because each notice only gives you ten days. Here is a sample of this type of request. Remember to address and send it to the office which sent you the notice and keep a copy for your records. Where you see “AAAA” below, it should be replaced with the first four letters of the entity module’s last name.

[Sender][Address][City state zip][Phone]

Internal Revenue Service[_____] Service Center[City state zip][Date]Re CP-515 Notice dated ______

ENTITY MODULE: AAAA000-00-0000Greetings:

I received your CP-515 (and/or 518) Notice(s) dated [date], for tax period ending December 31, [year], please see attached. Please grant me a thirty-day extension of time in which to answer. No reply is necessary if extension is granted.Best regards,[Sender]

You will never receive a reply to this because your request creates an automatic thirty-day extension. This will give you time to follow this administrative procedure:

“A payee can stop backup withholding once it has started, by showing that there was no underreporting, correcting any underreporting, showing that backup withholding will cause undue hardship and that it’s unlikely he will underreport again, or showing that a bona fide dispute exists as to whether there has been any underreporting. (Reg § 35a. 3406-2(g)(1) Reg § 31.3406(c)-1(g)). If [the] IRS determines that backup withholding should stop, it will give the payee a written certification to that effect and notify payors and brokers to stop withholding (Reg § 35a. 3406-2(h)(1); Reg § 35a. 3406-2(d)(1); Reg § 31.3406(c)-1(g)(1))”

Chapter 12 / 1998 RIA Federal Tax HandbookAt this time I see no advantage or disadvantage to completing Form 9358; however, most people would only be answering the first question which states: “If you are not required to file, please complete this section.” I would assume that the IRS already knows your filing status, so I wouldn’t foresee any problems by telling them you’re not required to file and indicating your previous filing status. They might even change the MFR in your IMF. I just don’t like signing things under penalty of perjury because of the jurisdiction issue.While this excerpt from the RIA Federal Tax Handbook focuses on the stopping of backup withholding, if you were a non-filer for the year in question and make a timely response as this book instructs, you will be stopping the audit and examination process.The request is made under 26 CFR 35a.3406-2(g) and I’ve attached a template of the actual request for determination letter that was obtained from the IRS.

REQUEST FOR DETERMINATION LETTER INSTRUCTIONS(DO NOT INCLUDE THESE INSTRUCTIONS WITH YOUR

REQUEST)1. This request must only be used when responding to a CP 515, 516, 517 or 518 notice from the IRS, and it will only be effective if the request is made within thirty (30) days of when the request for an extension of time was made.2. You have first requested an extension of time within ten (10) days of the date of the CP notice.3. The request must be mailed to the district director’s address for your area.4. The order of the pages of the request must not be altered in any way. It is important that the checklist precede the other pages and that the answers to the checklist statements not be changed.5. The request is made for the entity module, not you. If the notice was mailed to BILL SMITH, the request must be made for that entity. If the request was made for BILL SMYTHE, and the individual’s name is spelled “Bill Smith,” the request must still be made for “BILL SMYTHE.”6. Remember to include the date on which the request is mailed via certified mail, along with the certified mail number.7. Each blank must be completed with the appropriate information.8. Telephone and fax numbers are not important.9. Paragraph 2(e) must be edited to correctly identify which notices were sent, by number. A copy of each notice must be attached with the request.10. Section B must identify the taxpayer entity and the tax period.11. The first paragraph of Section D must be edited to correctly reflect the circumstances, that is, which notices were sent and on which dates.12. Keep a copy of your completed request for your records.13. The user fee for this request, as of the year 2000, is $275 but it is not necessary to pay it to get the results. In over sixty cases out of about sixty-five, the IRS never continued the examination after receiving this request.The following is a list of the mailing addresses for district directors' offices around the United States. You should verify whether or not the address you select is correct by telephone is possible. The “district posts of duty” line appearing as the second line of each address may be eliminated for purposes of requesting the determination letter.

Paul BeenePacific-Northwest District Posts of DutyDistrict Director915 Second Ave.Seattle, WA 98174Phone: (206) 220-6010

Robert D. Ah NeeNorthern California District Posts of DutyDistrict Director1301 Clay St., South Tower, 16th Fl.Oakland, CA 94612Phone: (510) 637-2700

Marilyn SoulsburgSouthern California District Posts of DutyDistrict Director24000 Avila Rd.Laguna Niguel, CA 92677

Phone: (949) 360-2069Jack B. CheskatyRocky Mountain District Posts of DutyDistrict Director600 17th St.Denver, CO 80202-2490Phone: (303) 446-1000

James J. WalshSouthwest District Posts of Duty

District Director210 E Earll Dr.Phoenix, AZ 85012-2623Phone: (602) 207-8289

Pamela C. BigelowSouth Texas District Posts of DutyDistrict Director300 E Eighth St.Austin, TX 78701Phone: (512) 499-5201

Paul CordovaHouston District Posts of DutyDistrict Director1919 Smith St., MS 1000HOUHouston, TX 77002-8049Phone: (713) 209-3704

Richard AubyArkansas-Oklahoma District Posts of DutyDistrict Director55 N Robinson Ave.Oklahoma City, OK 73102Phone: (405) 297-4411

David B. PalmerKansas-Missouri District Posts of DutyDistrict Director1222 Spruce St.St. Louis, MO 63103

Phone: (314) 612-4004

Tom PalmerNorth Central District Posts of DutyDistrict Director316 N Robert St., Federal Bldg. & Court HouseSt. Paul, MN 55101Phone: (651) 312-7777

Lenda M. PappillionMidwest District Posts of DutyDistrict Director310 W Wisconsin Ave.Milwaukee, WI 53203-2221Phone: (414) 297-3321

Roger BurgessVirginia-West Virginia District Posts of DutyDistrict Director400 N Eighth St.Richmond, VA 23240Phone: (804) 771-2255

James E. Rogers Jr.Indiana District Posts of DutyDistrict Director575 N Pennsylvania St.Indianapolis, IN 46204Phone: (317) 226-6016

Gayle Morin

Kentucky-Tennessee District Posts of DutyDistrict Director801 BroadwayNashville, TN 37203Phone: (615) 250-5731

Richard F. MoranGulf Coast District Posts of DutyDistrict Director600 S Maestri Pl., MS 6New Orleans, LA 70130Phone: (504) 558-3344

James E. DonelsonGeorgia District Posts of DutyDistrict Director401 W Peachtree St., NW, Peachtree Summit Bldg.Atlanta, GA 30365Phone: (404) 338-8100

Edward WeilerUpstate New York District Posts of DutyDistrict Director111 W Huron St.Buffalo, NY 14202Phone: (716) 551-5500

Ellen MurphyBrooklyn District Posts of DutyDistrict Director625 Fulton St., 10 MetroTech Ctr.

Brooklyn, NY 11201Phone: (718) 488-2000

Benjamin F. RogersPennsylvania District Posts of DutyActing District Director600 Arch St.Philadelphia, PA 19106Phone: (215) 597-4210

Stephen L. DaigeNew England District Posts of DutyDist. Dir.JFK Federal Bldg.Boston, MA 2203Phone: (617) 565-1628

Deborah M. NolanConnecticut-Rhode Island District Posts of DutyDistrict Director135 High St., MS 204Hartford, CT 6103Phone: (860) 240-4236

Charles R. BaughManhattan District Posts of DutyDistrict Director290 BroadwayNew York, NY 10007Phone: (212) 436-1000

Paul M. Harrington

Delaware-Maryland District Posts of DutyDistrict Director31 Hopkins Plz., G. H. Fallon Federal Bldg.Baltimore, MD 21201Phone: (410) 962-3084

Benjamin F. RogersPennsylvania District Posts of DutyActing District Director600 Arch St.Philadelphia, PA 19106Phone: (215) 597-4210

CHECKLISTTAXPAYER’S NAME ___________________________TAXPAYER’S I.D. NO. _______________DISTRICT HAVING AUDITJURISDICTION ____________ATTORNEY/P.O.A. N/APRIMARY CODE SECTION 26 USC 3406Yes 1. Does your request involve an issue under the jurisdiction of the

Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (International)? See section 3 of Rev. Proc. 99-1, 1999-1 I.R.B. 15. For issues under the jurisdiction of other offices, see section 4 of Rev. Proc. 99-1. (Hereafter, all references are to Rev. Proc. 99-1 unless otherwise noted.)

No 2. Have you read Rev. Proc. 98-3, 1999-1 I.R.B. 100, and Rev. Proc. 98-7, 1999-1 I.R.B. 222, to see if part or all of the request involves a matter on which letter rulings are not issued or are ordinarily not issued?N/A 3. If your request involves a matter on which letter rulings are not ordinarily issued, have you given compelling reasons to justify the issuance of a letter ruling? Before preparing your request, you may want to call the branch in the Office of the Associate Chief Counsel (Domestic), the Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Office of the Associate Chief Counsel (Enforcement Litigation), or the Office of the Associate Chief Counsel (International) responsible for substantive interpretations of the principal Internal Revenue Code section on which you are seeking a letter ruling to discuss the likelihood of an exception. For matters under the jurisdiction of--

(a) the Office of Associate Chief Counsel (Domestic) and the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations), the appropriate branch to call may be obtained by calling (202) 622-7560 (not a toll-free call);

(b) the Office of the Associate Chief Counsel (International), the appropriate branch to call may be obtained by calling (202) 622-3800 (not a toll-free call).(c) the Office of the Associate Chief Counsel (Enforcement Litigation), the appropriate branch to call may be obtained by calling (202) 622-3600 (not a toll-free call).N/A 4. If the request deals with a completed transaction, have you filed the

return for the year in which the transaction was completed? See sections 5.01, 5.05, 5.06, 5.07, 5.08, and 5.09.

No 5. Are you requesting a letter ruling on a hypothetical situation or question? See section 7.02.

No 6. Are you requesting a letter ruling on alternative plans of a proposed transaction? See section 7.02.No 7. Are you requesting the letter ruling for only part of an integrated transaction? See sections 7.03 and 8.01(1).No 8. Are you requesting the letter ruling for a business, trade, industrial association, or similar group concerning the application of tax law to its members? See section 5.11.No 9. Are you requesting the letter ruling for a foreign government or its political subdivision? See section 5.12.Yes 10. Have you included a complete statement of all the facts relevant to the transaction? See section 8.01(1).N/A 11. Have you submitted with the request true copies of all wills, deeds, and other documents relevant to the transaction, and labeled and attached them in alphabetical sequence? See section 8.01(2).N/A 12. Have you submitted with the request certified English translations and a copy of all applicable foreign laws? See section 8.01(2).Yes 13. Have you included, rather than merely incorporated by reference, all material facts from the documents in the request? Are they accompanied by an analysis of their bearing on the issues that specifies the document provisions that apply? See section 8.01(3).Yes 14. Have you included the required statement regarding whether the same issue in the letter ruling request is in an earlier return of the taxpayer or in a return for any year of a related taxpayer? See section 8.01(4).Yes 15. Have you included the required statement regarding whether the Service previously ruled on the same or similar issue for the taxpayer, a related taxpayer, or a predecessor? See section 8.01(5)(a).Yes 16. Have you included the required statement regarding whether the taxpayer, a related taxpayer, a predecessor, or any representatives previously submitted a request involving the same or similar issue but withdrew the request before the letter ruling or determination letter was issued? See section 8.01(5)(b).Yes 17. Have you included the required statement regarding whether the taxpayer, a related taxpayer, or a predecessor previously submitted a request involving the same or similar issue that is currently pending with the Service? See section 8.01(5)(c).Yes 18. Have you included the required statement regarding whether, at the same time as this request, the taxpayer or a related taxpayer is presently submitting another request involving the same or similar issue to the Service? See section 8.01(5)(d).Yes 19. Have you included the required statement of relevant authorities in support of your views? See section 8.01(6).

Yes 20. Have you included the required statement regarding whether the law in connection with the request is uncertain and whether the issue is adequately addressed by relevant authorities? See section 8.01(6).No 21. Does your request discuss the implications of any legislation, tax treaties, court decisions, regulations, notices, revenue rulings, or revenue procedures that you determined to be contrary to the position advanced? See section 8.01(7), which states that taxpayers are encouraged to inform the Service of such authorities.Yes 22. If you determined that there are no contrary authorities, have you included a statement to this effect in your request? See section 8.01(7).N/A 23. Have you included in your request a statement identifying any pending legislation that may affect the proposed transaction? See section 8.01(8).Yes 24. Is the request accompanied by the deletions statement required by § 6110? See section 8.01(9).Yes 25. Have you (or your authorized representative) signed and dated the request? See section 8.01(10).N/A 26. If the request is signed by your representative or if your representative will appear before the Service in connection with the request, is the request accompanied by a properly prepared and signed power of attorney with the signatory’s name typed or printed? See section 8.01(12).Yes 27. Have you included, signed, and dated the penalties of perjury statement in the form required by section 8.01(13)?N/A 28. Are you submitting your request in duplicate if necessary? See section 8.01(14).N/A 29. If you are requesting separate letter rulings on different issues involving one factual situation, have you included a statement to that effect in each request? See section 8.02(1).N/A 30. If you want copies of the letter ruling sent to more than one representative, does the power of attorney contain a statement to that effect? See section 8.02(2)(a).N/A 31. If you want the original of the letter ruling to be sent to a representative, does the power of attorney contain a statement to that effect? See section 8.02(2)(b).N/A 32. If you do not want a copy of the letter ruling to be sent to any representative, does the power of attorney contain a statement to that effect? See section 8.02(2)(c).N/A 33. If you are making a two-part letter ruling request, have you included a summary statement of the facts you believe to be controlling? See section 8.02(3).N/A 34. If you want your letter ruling request to be processed ahead of the regular order or by a specific date, have you requested expeditious handling in the manner required by section 8.02(4) and stated a compelling need for such action in the request?

Yes 35. If you are requesting a copy of the letter ruling to be sent by facsimile (fax) transmission, have you included a statement containing a waiver of any disclosure violations resulting from the fax transmission? See section 8.02(5).Yes 36. If you want to have a conference on the issues involved in the request, have you included a request for conference in the letter ruling request? See section 8.02(6).N/A 37. Have you included the correct user fee with the request and made your check or money order payable to the Internal Revenue Service? See section 15 and Appendix A to determine the correct amount.Yes 38. If you qualify for the reduced user fee when gross income or gross receipts, as applicable, is less than $150,000, have you included the required certification? See paragraphs (A)(4) and (B)(1) of Appendix A.N/A 39. If your request involves a business-related tax issue and you qualify for the reduced user fee when gross income is less than $1 million, have you included the required certification? See paragraphs (A)(4)(b) and (B)(1) of Appendix A.N/A 40. If you qualify for the user fee for substantially identical letter rulings, have you included the required information? See section 15.07(2) and paragraph (A)(5)(a) of Appendix A.N/A 41. If you qualify for the user fee for a § 301.9100 request to extend the time for filing an identical accounting method change on a single Form 3115, have you included the required information? See section 15.07(3) and paragraph (A)(5)(c) of Appendix A.N/A 42. If your request is covered by any of the guideline revenue procedures or notices, safe harbor revenue procedures, or other special requirements listed in section 9, have you complied with all of the requirements of the applicable revenue procedure or notice?Rev. Proc. List other applicable revenue procedures or notices, including checklists, used or relied upon in the preparation of this letter ruling request (Cumulative Bulletin citation not required).N/A 43. If you are requesting relief under § 7805(b) (regarding retroactive effect), have you complied with all of the requirements in section 12.11?Yes 44. Have you addressed your request to the Associate Chief Counsel

(Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, at:Internal Revenue ServiceDistrict Director, ACC DomesticFederal Office Building[Address][City state zip]The package should be marked: DETERMINATION REQUEST SUBMISSION.

_____________________________ ________________signature date

DELETIONS STATEMENTPursuant to the pertinent sections of the current Revenue Procedure, I,

_________, request that only my address, phone number and social security

number be deleted from the published copy of the determination letter requested

herein.

_____________________________ ________________signature date

Certified Mail No.: ___________________ [Date]Internal Revenue ServiceDistrict Director, ACC DomesticFederal Office Building[Address][City state zip]Greetings to the District Director:

I, __________ request a determination that I am not subject to backup

withholding for the tax period indicated.

A. STATEMENT OF FACTS1. Taxpayer informationa) Name:

Address: __________________

Telephone: (N/A)Facsimile: (N/A)(The undersigned hereby waives the right to pursue disclosure violations.)Social security number: ____________

b) The annual accounting period is the tax year ending December 31, _______.c) The location of the district office that has or will have examination jurisdiction over the return is the _________ District Office.2. Description of Taxpayer’s Business Operations:d) I am a private citizen living in __________.e) The complete transaction includes the receipt of one (or two) Computer Paragraph Notice(s), CP ____. There are no business reasons for this transaction. This is a complete description of the transaction and is not part of some larger integrated transaction.3. The facts relating to this transaction are that the circumstances surrounding these notices do not meet the requirements under 26 USC 3406 for backup withholding.

There were no contracts, wills, deeds, agreements, instruments, trust documents, proposed disclaimers, or other documents pertinent to the transaction. There are no applicable foreign laws to this transaction.This request does not concern a corporate distribution, reorganization, or similar transaction, or any prospective transaction.

B. DETERMINATION REQUESTED“ is not subject to backup withholding for tax period ending December 31, _____.”

C. STATEMENT OF LAWFederal regulations limit the government's authority to enforce backup

withholding to cases involving only payments of interest or dividends.

Index of Authorities1: 26 CFR Part 35a.3406-22: 26 USC § 34063: 26 CFR Part 31.3406 et seq.

D. ANALYSISThis request for determination is made pursuant to 26 CFR 35a.3406-2(g). I

received a Computer Paragraph (CP) 515 notice from the ________ Service Center

dated [date], and received another Computer Paragraph (CP) 518 notice dated

[date], both for tax period [year] (copies of which are attached). I made a timely

request for extension of time in which to answer and the service center granted me

an automatic thirty day extension of time in which to file this request.

Your CP 515 notice is the first in a series of five such notices provided by 26 CFR 31.3406(c)-1(b)(ii), only four of which are required to be mailed within a period of 120 days. These notices are numbered, 515, 516, 517, 518 and 519; however, you will send, or have only sent, two of these notices to me because you have labeled me a “non-filer,” the new term now being used to replace “illegal tax protester” because of the IRS Restructure And Reform Act of 1998. As you can see, these notices relate only to backup withholding under Section 3406 of the Internal Revenue Code. Please see 26 CFR 31.3406(c)-1(a) for an overview of the correct application of this procedure. It does not apply when there is simply no return filed, it applies only when there is underreporting with respect to interest or dividend payments.I am not subject to backup withholding as indicated by these notices as I received no reportable payments for the tax period in question, nor did I receive any interest or dividend payments exceeding an amount which would require the filing of a tax return.There was no failure to furnish any TIN to any payor for this tax period in question.The Secretary has failed to notify any payor that any TIN was furnished incorrectly.There was never any notified payee underreporting as described in 26 USC § 3406(c). The Secretary has never complied with this subsection by mailing at least

four notices (over a period of at least 120 days) with respect to the alleged underreporting for this tax period in question.There has never been any payee certification failure as described in 26 USC § 3406(d). I had no new accounts or instruments requiring such certification for the tax period in question.There are no agency records maintained within my Individual Master File (IMF), nor its NMF or IRMF components which indicate that I could be subject to backup withholding for the tax period in question.

E. CONCLUSIONThe Internal Revenue Service has made a mistake of record and it needs to

be corrected immediately. This conclusion is based entirely on § 3406 and

applicable regulations promulgated by the Secretary.

F. PROCEDURAL MATTERS1. Statement regarding whether same issue is in an earlier return.a) This issue, to the best of my knowledge, is unique and not contained in an earlier return, nor in any return for any year of a related taxpayer within the meaning of § 267, nor of a member of an affiliated group of which I might be a member within the meaning of § 1504. I am not a member of any such group. This statement is not affirmative.b) This issue, to the best of my knowledge, has not previously been ruled upon by the Secretary for me or a related taxpayer within the meaning of § 267, or any member of an affiliated group of which I may be a member within the meaning of § 1504 or a predecessor. I am not a member of any such group. This statement is not affirmative.c) This issue, to the best of my knowledge, has not been previously submitted for a determination or letter ruling by either myself, any related taxpayer, a predecessor, nor have any representatives previously submitted a request involving the same or similar issue to the Service, withdrawing the request before a letter ruling or determination letter was issued. This statement is not affirmative.d) This issue, to the best of my knowledge, has not been previously submitted for a determination or letter ruling by either myself, any related taxpayer, a predecessor, nor have any representatives previously submitted a request involving the same or similar issue to the Service, which is currently pending with the Service. This statement is not affirmative.e) This issue, to the best of my knowledge, is not currently being submitted by any related taxpayer involving the same or a similar issue to the Service. This statement is not affirmative.f) I advocate the position stated in my Statement of Law, Analysis and Conclusion as set forth herein. The law in connection with this request is absolutely clear and has no indication of being ambiguous. My explanation of the grounds for this conclusion is that I have an absolute right to rely upon federal law and the

Internal Revenue Code which has been well established throughout the history of this country.g) After careful review of the Internal Revenue Code and numerous rules established by our courts, I have found absolutely no contrary authority to the position which I have taken in this request.h) I would like to have a conference on the issues involved in this request.i) I would like a facsimile of the letter ruling sent to me upon its completion. My fax number is indicated in the Statement of Facts.j) I am not requesting separate letter rulings on multiple issues.k) I am not seeking to obtain the user fee provided in paragraph (A)(5)(a) of Appendix A of Revenue Procedure 99-1.2. Administrativea) The deletions statement and checklist required by Rev. Proc. 99-1 are enclosed.b) I certify that my combined gross income, as defined under paragraph (B)(2) of Appendix A (Rev. Proc. 99-1), as applicable, is less than $150,000 for the last full (12 months) taxable year ending before the date this request is filed. I am seeking a reduced user fee.c) There is no power of attorney enclosed.Very truly yours,_____________________________ ________________Signature dateDECLARATION

Under penalties of perjury, under the laws of the United States of America, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete.By:_____________________________ ________________Signature dateBe sure to include the correct mailing address for the responsible district director. The cost for requesting this determination letter is $275 under Rev. Proc. 99-1. None of our subscribers have had to pay the user fee simply because properly filing the request is sufficient to stop the audit and examination process. We have had the exact same successful results in nearly fifty cases between March of 1998 and October of 1999.If you don’t file a timely request for a determination letter and establish that you are not subject to backup withholding under those circumstances, the IRS will determine that you, the “payee” had underreporting as defined under paragraph (a)(3) of Title 26 CFR § 35a.3406-2. In other words, the assumption will be made that the four required notices were sent and that you are subject to backup withholding, even though you may have not met none of the criteria for the penalty. Additionally, the

audit and examination process will proceed as if you had a W-2, failure to pay a tax on wages, liability. Many subscribers and subscribers ask the reason for this, and I can only guess that some agent or some automated system files a bogus Form 1040 in the IMF under your entity module. I think this generates the subsequent notices.The last paragraph of Section 3406 explains this, § 3406(h)(10). It states that “… payments which are subject to withholding under this section shall be treated as if they were wages paid by an employer to an employee (and amounts deducted and withheld under this section shall be treated as if deducted and withheld under section 3402).” It will be assumed that you are a payee who is subject to backup withholding if you are unable to correct this problem with a determination letter. No other response to a computer paragraph letter will be sufficient to resolve a mistake of record. Like I’ve explained before, those “refused for cause” letters will be treated as a non-response and you won’t get any answer; however, you will get levies, that’s almost certain.If you don’t respond to the IRS CP notices properly, you will begin receiving notices of proposed changes to your tax returns (whether or not you filed) or notices of proposed assessment. The IRS will send these collection notices unless 1) you obtain a determination showing that there was no payee underreporting, 2) correct any underreporting, 3) show that backup withholding will cause or is causing an undue hardship and that such underreporting will happen again because of the hardship, or 4) that a bona fide dispute exists as to whether any underreporting has occurred. Read section (g) of 26 CFR § 35a.3406-2 for more information. Section 3406(c)(3)(D) of Title 26 directs the Secretary to prescribe procedures under which a payee may request a determination under subparagraph (A), like I’ve explained above, and how a payee may provide information with respect to such request. As you’ve already learned, the procedure is to request a determination letter from the district director. I’m not assuming you’re always a payee, that’s something you must establish in your statement of facts with your request.After working about sixty-five these cases, we noticed a peculiar trend in the nature of responses our subscribers and subscribers were receiving from the IRS. At first, the IRS was writing back saying that the subscribers had to pay a $5,000 user fee. But this was coming from the same office of T. Wayne Thomas, who had previously told me in writing that the cost was only $275. So this was not a problem to correct. Another interesting point is that although the district director’s office is commissioned with the responsibility of answering these requests, the DC office was telling us that the copies we were sending them could not be process at the DC office and that they were being forwarded to the district director’s office for answer. This tells us that the IRS does not read its own procedures manual. We were not supposed to be getting any reply from DC, only from the appropriate district director’s office. In any case, they are now getting closer to the merits of the request. Since that time, I have discussed this with Mr. Thomas and we have agreed to remove his office from the distribution list.The only exception to using this process successfully is when the requester has a record with the IRS of earning more than ten dollars in interest or dividends for the year in question. You can check your Information Returns Master File (IRMF) to determine which records the IRS maintains about you.

One of our subscribers paid the user fee of $275 just to work the process to its conclusion. In the process of convincing the IRS of the correct user fee, we discussed the matter with a Problem Resolution Officer and she had the idea that the notice was generated because the subscriber did not file a return for that year. I explained to her that this was not the issue that it was exclusively limited to backup withholding under the criteria stated in the request. Since June of 1999, the IRS has never answered the request and we have had several other instances where the IRS has made the same incorrect conclusion. I am including a sample letter, drafted on Due Process letterhead, specifically addressing this problem. The referenced regulation can be reviewed in Appendix A.

Internal Revenue ServiceProblem Resolution OfficeOne North University Drive, Room A-312Plantation, FL 33324FAX: 954-423-7685[Date]Re CP 515 for [subscriber] 000-00-0000, tax period [year]Hello:

Thank you for reviewing this inquiry. This correspondence involves an unanswered inquiry or complaint requiring administrative recourse resulting from your agency’s failure or refusal to answer our subscriber’s previous inquiry concerning a service generated notice he received from the Austin Service Center dated on or about [date] and then a subsequent notice from C. E. Jones dated [date]. [Subscriber] is not a “customer” of the IRS as implied in this last notice.

No resolution has yet been reached and there are no other established administrative or formal procedures that could be used in the resolution of this dispute, nor has your agency previously responded to this particular matter. Its resolution is not the sole responsibility of another federal, state or local agency. This dispute does not involve any non-tax administrative matter with your agency such as inspection, disclosure or personnel. The CID is not involved and this dispute is not concerned with any “tax protester” issues. [Subscriber] has not indicated that he cannot or will not pay any alleged tax liability.Agent C. E. Jones has compiled a proposed income tax assessment; however, this would not have been generated had you not made the mistake of sending [subscriber] a CP notice as if he had underreported interest or dividend payments. This problem originated because of your mistake in sending him two CP notices and failing or refusing to correct your records at his request.If you’ll review the attached exhibit, you will clearly see that this conclusion is incorrect. The filing of income tax returns, as it relates to resolving this type of issue, is limited only to those set forth in your agency’s own regulations, 26 CFR 31.3406(c)-1. This regulation states very clearly that the problems responsible for generating the CP notices can be resolved when the taxpayer files returns reporting the correct amount of interest dividends received for the tax period in question. I’ve attached a copy for your reference. [subscriber] had not received any interest or dividend payments for the tax period in question and this can be verified upon a brief review of your Information Returns Master File maintained under the entity module identified with social security number 000-00-0000.The four notices mentioned in the second bold/underlined portion of the attached regulation identify your CP notice series; however, you have failed to submit your second and third CP Notices 516 and 517. These are procedures that you should already know, assuming you are performing the functions of your office with competence and diligence as required by law.[Subscriber] is not responsible for your agency’s mistakes and demands that you correct them immediately, or a complaint to the commissioner will be filed against all

agents involved in this scheme to knowingly falsify records. Please notify him when you have finished correcting this problem.Best regards,

[Sender][Address][City state zip]

(Here is an example of another similar letter)Internal Revenue Service Internal Revenue ServiceNorth Florida Taxpayer Advocate District Director400 West Bay Street, Suite 35045 Federal Office BuildingJacksonville, FL 32202-4437 400 W Bay ST, Suite 35045904-665-1009 Jacksonville, FL 32202fax: 904-665-1801[Date]Re CP 515/518 failure to answer request for determination letter for 1997

AAAA000-00-0000Hello:

Thank you for reviewing this inquiry. This correspondence involves an unanswered inquiry or complaint requiring administrative recourse resulting from your agency’s failure or refusal to answer our subscriber’s previous inquiry concerning a service generated notice recently received from your audit division. Please review the attached records.

No resolution has yet been reached and there are no other established administrative or formal procedures that could be used in the resolution of this dispute, nor has your agency previously responded to this particular matter. Its resolution is not the sole responsibility of another federal, state or local agency. This dispute does not involve any non-tax administrative matter with your agency such as inspection, disclosure or personnel. The CID is not involved and this dispute is not concerned with any “tax protester” issues. I have not indicated that I cannot or will not pay any alleged tax liability.You sent our subscriber a CP 515/518 notice and a request for extension of time in which to answer was timely filed. We subsequently prepared a request for determination letter as directed by 26 CFR Section 35a.3406-2 and you have failed or refused to answer the request on the merits as required by law.Your CP 515 and 518 notices made under Section 3406 would require one or more of the following conditions to be true:1. If our subscriber failed to file required returns with respect to reportable interest or dividend payments, or2. If our subscriber failed to file a payee certification (Form W-9) with respect to a taxpayer identification number, or3. If our subscribers underreported interest or dividend payments with respect to any tax return, or4. If our subscriber failed to provide any taxpayer identification number to the payor in the manner required.None of these criteria are true and you can verify this for yourself upon a brief review of our subscriber’s IRMF Transcript for this tax period.

This notice process is explained quite well under Section 3406 of the Internal Revenue Code. Under the present circumstances, the IRS is wrong and has mailed these notices in error, but apparently, refuses to correct this mistake. The law requires the District Director to answer the submitted request for determination letter on the merits, and discontinue the audit and examination process when this type of mistake is present.If this is not done immediately, we will file a complaint against the District Director for proceeding upon false records or information, or for creating false records in an attempt to collect more taxes than are actually owed.Correct your records immediately and notify our subscriber, or we will proceed with the complaint process under the new IRS Restructure and Reform Act of 1998. You have thirty days in which to comply.Best regards,

The Summons And Audit Process:An audit summons may follow a computer paragraph notice if it is not answered properly. Here are a few cases you will need to read in order to understand the purpose of an audit:1. Reisman v. M. Caplin, 375 US 4402. Zimmer v. Connett, 640 F.2d 2083. Rafter v. Carrier Corporation, 309 F.Supp. 5174. McCrone v. United States, 307 US 615. United States v. Hartman, 915 F.Supp. 1227 (M.D.Fla. 1996)In summary, the purpose of an administrative audit has two functions. The first is to allow the IRS to determine your tax liability and the second is to allow the individual being audited to assert certain rights and privileges with respect to producing records and disclosing other information in response to questions.There are several ways you may be called into an audit. Sometimes you will receive a simple, unofficial letter in the mail asking you to attend a meeting or interview at a certain place and time. And other times, you will be summoned by an official summons. The process happens like this; in the case of your choosing not to go for each of them, you may first receive the unofficial letter, then, anywhere from a week to six months, you may receive an official summons, then within thirty to ninety days, you will receive another summons, this time signed by the district counsel. This is the last step taken before the IRS files a claim in federal court asking the court to order you to appear at the time set for the summons and produce records. If you are summoned into court, you’ve done something wrong. This should not happen if you understand the process of and follow my instructions.If you do not attend at the time set by the court, you will be ordered to appear before the court on a order to show cause as to why you should not be held in contempt of the court. I know of one case where the IRS filed a “secret” complaint so the individual did not even know he was being ordered by the court to appear and answer the summons because it was never served or did not have a case number on its face. If you are ever in this situation, you should go to the district court and ask the clerk for a case number naming you as the defendant.You should be smart about this and make the time to meet with the IRS at the first chance you are given. Most of those reading this book are probably non-filers so I can safely say that the audit will consist of the IRS asking you why you haven’t filed tax returns. The agents always believe that everyone must file returns so expect them to be recalcitrant when it comes to trying to get you to go along with their scheme.Absent any showing of a contumacious refusal to comply with the summons, the auditor will simply refer your case to the examiner. If the district counsel believes that the agency could obtain a district court order compelling you to testify before the IRS, you might be subpoenaed to appear in court on a order to show cause. The judge will order you to appear at the summons. If the agency still finds that you have contumaciously refused to “comply” with the summons, the will move the court to find you in contempt. Even though the federal courts only have civil contempt

jurisdiction, that is, to impose a fine, the judge will threaten you with confinement. They will say you “failed or refused to comply” but will ever tell you what would meet the requirements of compliance. They want you to guess that it means file returns, not just assert your rights and attend the summons.The purpose of an audit, when you haven’t filed, is to allow the agent to collect information from you so that he can establish a tax liability and so that he can learn what property you have for the taking, in the name of a tax. The second purpose of the audit is to allow you a forum within which to assert your rights and privileges about disclosing this information. Remember that the less records you have, the less information you can be compelled to produce. In other words, I have heard of judges tell individuals facing an audit summons that if they do not have possession or control of the records sought, that they could not be compelled to produce them.You should know that you have the right to remain silent when asked any question or to produce records and the way to assert that right is for each particular question that has been asked, one at a time. You cannot assert that right for all questions that might be asked but you must specify as each one is asked. You cannot be compelled to testify against yourself, even in a civil or administrative proceeding. The reason for this protection is that information obtained voluntarily during a civil or administrative proceeding may be used against you in a subsequent criminal proceeding. If you are an officer of a corporation and the question is about that corporation or your corporate capacity, you have certain privileges, but you will probably have to produce the information at some point (read Hale v. Henkle, 201 US 43 for a better understanding).Remember to answer only questions which pertain to the subject matter of the audit as stated on the request or summons. Each of the agent’s questions must pass this test. You should ask yourself the following questions before answering:1. Does the question pertain to the subject matter of the audit, summons or meeting?If you don’t believe it does, you can make that statement and ask the agent to clarify it. An example would be if they summoned a husband but not his wife, and then asked questions about his wife at the meeting. The husband cannot be compelled to answer questions about his wife and the IRS is just being lazy and trying to collect as much information as they can by playing upon your inexperience.2. Do you have possession or control of the information or records sought?If you have no possession or control of the records sought, you cannot be held liable for producing them.3) Could it be used against me in any civil or criminal proceeding?You can choose to remain silent in response to those types of questions by stating: “I choose to remain silent with regard to that particular question, this is not a ‘blanket fifth amendment’ statement.”4) Does the agency already have that information, or at least have access to it?If yes, you can explain this to the agent and also explain that you don’t have custody of such information or records, but the information can be easily obtained from the agency’s own records or from the public records.

A good way to prepare for the types of questions you may be asked is to complete Form 433-A and 433-B. Don’t give these to the IRS agents, just use them for your own preparation because they contain the closest approximation to the types of questions you will be asked. It is good to be prepared because they even make a record of the way in which you respond and record whether or not you hesitate to answer.They will ask you if you are a citizen of the United States. If you say no, which I would, they may ask you why. I would respond to this question by stating that they asked me so I gave them the answer. If they already have an answer, why ask? They may also ask the following other questions:2. What is your occupation?3. Do you have any other means of employment?4. Do you or have you received compensation?5. Does your wife work?6. Do you or your wife have a bank account for which either of you are a signer?7. Do you have any foreign investments or deposits?8. Do you have a passport?9. Do you own property?10. Do you have safe deposit box?11. How much cash do you have on hand?12. Do you have any money tucked away in a mattress or in the yard?13. Do any friends keep money for you?14. Do you receive alimony?15. Do you receive any dividends or interest?16. Do you Gamble?17. Do you play the Lottery?18. Do you receive any Veteran’s benefits?19. Do you receive any welfare?20. Do you or have you received any pensions or annuities?21. Have you sold any business assets?22. Do you or have you sold any personal property such as a car, boat or airplane?23. Have you received any compensation for any type of service?24. Do you or have you engaged in any form of bartering?25. Have you received any Insurance proceeds or settlements?26. Have you received any inheritance or large gifts?27. What other services have you been involved in for the last several years?

28. Have you purchased real estate?29. Have you refinanced any loans?30. Have you filed any homestead exemptions?31. If yes, what was the latest year?32. Who pays the mortgage on the house in which you live?33. Do you pay rent?34. Who pays the utilities?35. In whose name are the utilities?36. Do you own any personal property such as a car, boat, truck or airplane?37. Do you have any employees?38. Do you lease any employees?39. If yes, for which years?40. And if yes, what was the purpose of leasing employees?41. Do you give customers a receipt or invoice for sales?42. Do you obtain permits for work you do?42. Are you a licensed subcontractor?

Be careful on questions like this, it implies you are personally under contract for compensation at that time.43. Do you have a business license?44. Who prepares state sales tax returns for your business?45. Does your business have a state sales tax identification number?46. Does your business maintain a list of customers?47. How do you pay for supplies for your business?48. How are business expenditures recorded?49. Do you maintain any records of these expenditures?

The agent may then ask specific questions about third parties with whom he believes you might have done business.50. How do you pay for groceries?51. How do you pay for meals at restaurants?52. How do you pay for laundry or dry cleaning?53. How do you pay for recreation and entertainment54. Do you visit a barber shop and pay for haircuts?55. Do you go hunting or fishing?56. If yes, who pays for travel expenses and bait and gun shells?

57. Do you have any life, health or accident insurance?58. Have you bought any stocks or bonds?59. Have you purchased any furniture or appliances?60. Have you lent money?61. If yes, were there any large amounts loaned?62. What other records did you bring today?Probably the most difficult question to answer is “Why have you not filed tax returns?” The reason why I think it is the most difficult is because the IRS agent already believes you are required to file, without exception, and that your answer could be used against you, or may be the cause of a referral to the Criminal Investigation Division. I can only tell you what my response would be to this question and you might be able to better gauge your answer from mine.The penalty of perjury clause puts me in a precarious situation. It is common practice for the IRS to audit and re-examine a tax return and determine that the amounts reported were either insufficient, overstated or that there is some other error in reporting. Because the statements and facts reported are made under penalty of perjury, and because examination findings may have more credibility than those reported by an individual, I could very easily be accused of perjury. By filing a federal income tax return, I must waive certain rights, I must testify against myself, and this is the basis for the unreasonable risk associated with making statements under penalty of perjury. No margin for error is allowed under the penalty of perjury clause. This is true even if I have a return prepared by a tax professional. The one filing the return assumes all the liability. Even the IRS escapes all liability under the scheme because no agent ever makes an actual assessment.Furthermore, there is no law requiring me to affix my signature to any federal form or document. In order for me to file a federal income tax return, I must affix my signature, testifying under penalty of perjury, as to the truth and correctness of the information reported. There is no law requiring me a make any statements under penalty of perjury. The filing of a federal income tax return requires me to waive certain rights that are otherwise protected by law. The government cannot compel me to waive any rights, and I must conclude that the government cannot therefore, require me to file any federal income tax return.Many people have been convicted of various crimes for not filing federal income tax returns, and I personally know many people who do not file these returns, and some who have been acquitted of indictments charging them with not filing. I think the reason for the convictions is due in large part to the fear and prejudice people have about the subject. Many jury members are chosen because of their ignorance of the law. Many jury members maintain the prejudice that if one does not file that it is not fair to those who file, and subsequently, agree that such conduct must be punished. This has nothing to do with whether or not there is some law requiring an individual to file a federal income tax return. It has everything to do with what circumstances a prosecutor might convince a jury to be just. This is the basis for my position, but you should seek a legal opinion from an attorney, CPA or enrolled agent to be sure for yourself.

I would also explain that while there are many types of income that is taxable, my labor and the product of my labor, is not. Wages are taxable, but I do not earn wages. Interest and dividends are taxable, but I make it a point not to earn any interest or dividends. I would go on to say that the belief of having to sign a document to claim a tax liability is quite absurd. If I have a tax liability, then why would I have to sign something claiming to have the tax liability when it’s already been established?In short, I am suspicious of the whole scheme. I am aware of how the IRS parades some famous person around during tax time, April 15 each year, someone who may have not paid enough taxes according to the IRS. I see how they indict that person and I think the timing is important because it reminds everyone else of the possible consequences of not doing what they are told… by the media, not by a law.The fact that I appear to be educated, articulate and knowledgeable of the law, may be used against me to claim that “I should know better” as if there really were some legal duty for me to file a federal income tax return. The fact that I do not file for the reasons I just stated is enough to show that an educated individual, such as myself, can learn the truth and analyze the circumstances for himself. Essentially, I would either have to be insane or stupid to file a federal income tax return. I am neither.Before attending the audit, you should have already obtained your Information Returns Master File (IRMF) Transcripts to determine what information they already have about you. This will help you answer these types of questions with information they already have.After the interview, you have the right to receive a copy of the affidavit or transcript of each question you answered and it should be furnished promptly upon your request. This is established under Title 5 USC § 555(c) and is a matter of internal policy under Section 663.4 of the Legal Reference Guide for Revenue Officers (1991).This is the information you want to disclose. You don’t really need it if you have already received W-2 and 1099 Forms for the years in question because there’s a very good chance they have records of that in your IRMF component, so that much can be assumed. It may also help to prepare spreadsheets that restate this information, just so you can hand the IRS something more than only these forms. The reason why you want to disclose redundant information to them is so that you will be able to meet the requirements of the audit summons and reduce the chance that the agent will refer your case to the district counsel to pursue the case for a contempt hearing. Even though the audit statute does not give the federal courts criminal contempt jurisdiction, the judges will threaten you with jail time if you do not act like a good slave and waive all your rights for the agency.Depending upon some of the circumstances, it might be advantageous to ask the agent to bring an action in the federal court so that you can go talk to the judge about the situation. I don’t recommend that for everyone, but only for those who really understand the law or have competent counsel who are not afraid to defend you. As a general rule, you’ll want to avoid going to court. If you are summoned but did not request it, you’ll need to get a copy of the Federal Rules of Civil Procedure and learn how to respond. Generally, the court will order you to attend the summons and answer questions and produce records unless there is an obvious

abuse of process or it is clearly not allowed by the rules. I would recommend that you take advantage of legal advice from an attorney, but that you make the appearance yourself. Generally, motions to dismiss will be denied under the rule established in United States v. Hartman, 915 F.Supp. 1227 (M.D.Fla. 1996).

Third Party Summons, Form 2039:A third party summons cannot be enjoined under almost every circumstance so don’t waste your time and resources trying to stop one. If you follow the guidelines set forth in this book properly, a third party summons will be of no consequence to you.

Appeals Hearings:If you have not exhausted your administrative remedies at an appeals conference, the tax court will normally request that you attempt settlement with an appeals officer prior to the time set for hearing in tax court. You can file a written protest and have this conference scheduled by following the procedures in IRS publication 5, catalog number 46074I. Here is an example of the language used in a written protest letter requesting a conference with an appeals officer.

“This is my formal request for an appeals conference with the Regional Office of Appeals in the matter involving year [year]. I agree with the tax code and do not protest its validity or authority. My disagreement under these circumstances is not based solely on moral, religious, political, constitutional, conscientious, or similar grounds. It is based upon my disagreement with the facts appearing on Form 4549OA-CG for this year. I received no wages for this year; however, an amount of “wages” exceeding $0.00 was incorrectly reported by [company]. I earned no wages for this year. I have recently made a Request for Letter Ruling, pursuant to the appropriate revenue procedure to establish this fact and have not yet received an answer.

Please notify me within thirty days by mail as to when a conference will be scheduled so that I may present my case in support of my disagreement.”You should obtain a copy of this procedure from your local IRS office if you plan on following this administrative appeals process.

Notices of Deficiency, or 90 day letters:You can still avail yourself of an appeals conference after receiving a notice of deficiency but you must be a little more diligent. It’s been my experience that most people in this situation have already been labeled an “illegal tax protester” and their requests for an appeals conference go unanswered. I believe the court has the discretion to remand the case back to an appeals officer once your petition is filed so you will have your opportunity if you follow the procedure.

U.S. Tax Court:There are times when it appears tax court might helpful. I would assume you know by now that tax court is not really a court, but an administrative hearing forum within the agency of the Internal Revenue Service. The IRS cannot sue you from this court because it has no powers to enforce a summons from this court.Tax Court has a set of rules all by itself and if you plan on challenging a notice of deficiency without first paying the tax, then that’s the place to start. You should order a copy of the rules from the address stated on your petition if you plan on filing one. I don’t like the idea of going there but if you can’t pay what they say you owe and then sue for a refund in federal court, this is about your only option.I have yet to be in this situation, but I believe you can go through the motions in tax court, get your petition dismissed and appeal to the federal court of appeals for a review on the tax court’s jurisdiction to hear a factual dispute over a W-2. If you can get the federal court to force the tax court to hear that issue, you’ll probably get an opportunity to have your case heard on its merits before the federal appellate court on a second appeal. Remember that after your petition is dismissed, your property may be subject to lien and levy at any time, without regard to your appeal.If you’re a non-filer, just about the only argument you can make is that your pay was not recognized by the tax code as being a taxable income. If you allege that no assessment was made, the federal courts will not accept jurisdiction. The only two purposes for which I would consider filing a petition in tax court, is 1. to get an adverse agency ruling and appeal it to the federal court of appeals for a review (complaint for review de novo) and 2. for delay. If you’ve filed returns for the years in question, one argument that might have standing is that the Secretary cannot make examination changes unless he first reviews the returns. This type of case depends upon the facts but you would be left with merely challenging the amount they say you owe.I’m inclined to believe that it’s actually the filing of the tax form that is the taxable activity. This is explained in my analysis of Form 5546. This goes back to what I explained previously, they desperately need you to file because they cannot legally impose a tax against you without your signed return. The authority for this was the following ruling made in tax court, Toll v. Commissioner IRS (1991, CA9) 1991 US App LEXIS 17529.

“Deficiency notice is fatally defective where it states that deficiency is being assessed because taxpayer’s original return is unavailable, since statement established that IRS failed to examine return, and such failure is sufficient to make notice invalid; case is not remanded to Tax Court since IRS cannot prove that it made proper determination if it did not actually review return.”

I’ve included petition forms on the next several pages but still highly recommend that you obtain a copy of the rules from which these forms originated in case you get into the discovery process.You also want to include an affidavit itemizing all of the income (federal excise) taxes you've paid

[Sender][Address][City state zip]United States Tax Court400 Second Street, NWWashington, DC 20217[Date]Re petition and filing feeGreetings:

Thank you for receiving this petition. Please find the enclosed payment for the filing fee of $60, file this petition and notify me as to the docket number.Best regards,

[Sender]

UNITED STATES TAX COURT

[Petitioner],Petitioner

v. Docket No. __________COMMISSIONER OF INTERNAL REVENUE,

Respondent.__________________________________/

DESIGNATION OF PLACE OF TRIALPetitioner hereby designates [city state] as the place of trial of this case.

____________________________Signature of Petitioner or Counsel

Dated:

[The following locations are designated as places to hear original petitions: Birmingham and Mobile Alabama; Anchorage Alaska; Phoenix Arizona; Little Rock Arkansas; Los Angeles, San Diego and San Francisco California; Denver Colorado; Hartford Connecticut; Washington, District of Columbia; Jacksonville, Miami and Tampa Florida; Atlanta Georgia; Honolulu Hawaii; Boise Idaho; Chicago Illinois; Indianapolis Indiana; Des Moines Iowa; Louisville Kentucky; New Orleans Louisiana; Baltimore Maryland; Boston Massachusetts; Detroit Michigan; St. Paul Minnesota; Biloxi and Jackson Mississippi; Helena Montana; Omaha Nebraska; Las Vegas and Reno Nevada; Albuquerque New Mexico; Buffalo and New York City New York; Winston-Salem North Carolina; Cincinnati, Cleveland and Columbus Ohio; Oklahoma City Oklahoma; Portland Oregon; Philadelphia and Pittsburgh Pennsylvania; Columbia South Carolina; Knoxville, Memphis and Nashville Tennessee; Dallas, El Paso, Houston, Lubbock and San Antonio Texas; Salt Lake City Utah; Richmond Virginia; Seattle and Spokane Washington; Charleston/Huntington West Virginia and Milwaukee Wisconsin.]

UNITED STATES TAX COURT

[Petitioner]Petitioner

v. Docket No. _________COMMISSIONER OF INTERNAL REVENUE,

Respondent.__________________________________/

PETITIONPetitioner disagrees with respondent’s Notice of Deficiency for the years

[xxxx, xxxx], dated [date of notice], a copy of which is attached. The basis for

petitioner’s disagreement is as follows:

1. The petitioner is an individual with mailing address now at: [address] [city

state zip], and this petitioner does also reside at this address. The taxpayer

identification number issued for petitioner’s use is 000-00-0000.

2. The notice of deficiency or liability, a copy of which is attached as Exhibit 1-P, was dated for [date of notice], and was issued by the Office of the Internal Revenue Service at [address city state zip].3. The deficiencies or liabilities as determined by the Commissioner are excise taxes.4. The determination of the tax set forth in the said notice of deficiency or liability is based upon the following errors:

Form W-2 was reported incorrectly. This Form reports that petitioner received wages; however, no wages were received by petitioner for tax period [year(s)].

LEGAL ARGUMENT

5. Petitioner’s income for [year(s)] was not recognized by the tax code as being

a wage [or taxable]. Petitioner has paid all income taxes for these years.

WHEREFORE petitioner requests judgment against Commissioner.

By: __________________Petitioner

[Petitioner]

[Address][City state zip]

[Phone]

Filed: ___________

Abatements of Interest and Penalties:

This information was taken from the instructions attached to Form 843:Department of the Treasury Internal Revenue Service

Instructions for Form 843 (Revised January 1997)

Claim for Refund and Request for AbatementSection references are to the Internal Revenue Code.

Paperwork Reduction Act Notice We ask for the information on this form to carry out the Internal Revenue laws of the United States. Internal Revenue Code sections 6402 and 6404 state the conditions under which you may file a claim for refund and request for abatement of certain taxes, penalties, and interest. Form 843 may be used to file your claim. Section 6109 requires that you disclose your taxpayer identification number (TIN). Routine uses of this information include providing it to the Department of Justice for civil and criminal litigation and to cities, states, and the District of Columbia for use in administering their tax laws. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by Code section 6103. The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is: If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Tax Forms Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001.DO NOT send Form 843 to this address. Instead, see Where To File below.

General InstructionsA Change To Note New rules apply in certain cases to abatement of interest accrued on deficiencies or payments for tax years beginning after July 30, 1996. See Line 4 under Specific Instructions for more information.Purpose of Form.— Use Form 843 to file a claim for refund of certain overpaid taxes, interest, penalties, and additions to tax. For example, if on your employment tax return you reported and paid more Federal income tax than you actually withheld from an employee, use this form to claim a refund. Also use Form 843 to request abatement of an over assessment (or the unpaid portion of an over assessment) if more than the correct amount of tax (except income, estate, and gift tax), interest, additions to tax, or penalties have been assessed. Do not use Form 843 to claim: A A refund or to request an abatement of your income tax. Individuals must use Form 1040X, Amended U.S. Individual Income Tax Return. Corporations that filed Form 1120 or 1120-A must use Form 1120X, Amended U.S. Corporation Income Tax Return. Other income tax filers should file a claim on the appropriate amended tax return. A refund of excise taxes reported on Form 720, 730, or 2290. You must use Form 8849, Claim for Refund of Excise Taxes. Form 8849 is also used to claim refunds of excise taxes imposed on fuels, chemicals, and other articles used for

nontaxable purposes or for which there is a reduced rate of tax. A refund of the required payment under section 7519. Instead, file Form 8752, Required Payment or Refund Under Section 7519. Generally, you must file a separate Form 843 for each tax period and each type of tax. Exceptions are provided for certain claims in the Specific Instructions below.Who May File.— You may file Form 843 or your agent may file it for you. If your agent files, the original or a copy of Form 2848, Power of Attorney and Declaration of Representative, must be attached. If you are filing as a legal representative for a decedent whose return you filed, attach to Form 843 a statement that you filed the return and you are still acting as the representative. If you did not file the decedent's return, attach certified copies of letters of testamentary, letters of administration, or similar evidence to show your authority.File Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, with Form 843 if you are the legal representative of a decedent.Where To File.— File Form 843 with the Internal Revenue Service Center where you filed your return.

Specific Instructions Social Security Number.— If you are filing Form 843 to request a refund or abatement relating to a joint return, enter social security numbers for both you and your spouse.Line 3Line 3a.— Check the appropriate box to show the type of tax, penalty, or addition to tax. If you are filing a claim for refund or request for abatement of an assessed penalty, check the box and enter the applicable Internal Revenue Code (IRC) section. Generally, you can find the IRC section on the Notice of Assessment you receive from the service center.Line 3b.— Check the appropriate box to show the type of return, if any, that you filed.Record keeping ........................... 26 min.

Learning about the law or the form ............................................. 7 min.

Preparing the form..................... 20 min. Copying,

assembling, and sending the form to the IRS ..... 28 min.

Cat. No. 11200I

Caution: You must attach Form 941c, Supporting Statement To Correct Information, or an equivalent statement, if you are claiming a refund of taxes reported on Form 941, 941-M, 941-SS, 943, or 945.Line 4 Requesting Abatement or Refund of Interest Under Section 6404(e) Section 6404(e) gives the IRS the authority to abate interest when the additional interest is attributable to IRS errors or delays. Section 6404(e) applies only if there was an error or delay in performing a ministerial act (defined below) and only relates to taxes for which a notice of deficiency is required by section 6212(a). This includes income, generation-skipping, estate and gift taxes, and certain excise taxes imposed by chapter 41, 42, 43, 44, or 45. Section 6404(e) does not allow abatement of

interest for employment taxes or other excise taxes. Get Pub. 556, Examination of Returns, Appeal Rights, and Claims of Refund, for more information.Ministerial Act.—The term “ministerial act” means a procedural or mechanical act that does not involve the exercise of judgment or discretion and that occurs during the processing of your case after all prerequisites of the act, such as conferences and review by supervisors, have taken place. See Rev. Proc. 87-42, 1987-2 C.B. 589, for more information. If you are requesting an abatement of interest, write “Request for Abatement of Interest Under Rev. Proc. 87-42” at the top of Form 843. On line 1, state the tax period involved. Check the first box on line 4a. On line 4b, show the dates of any payment of interest or tax liability for the tax period involved. On line 5, state the type of tax involved, when you were first contacted by the IRS in writing about the deficiency or payment, the specific period for which you are requesting abatement of interest, the circumstances of your case, and the reasons why you believe that failure to abate the interest would result in grossly unfair treatment. Only one Form 843 is required if the interest assessment resulted from the IRS's error or delay in performing a single ministerial act affecting a tax assessment for multiple tax years or types of tax (for example, where 2 or more tax years were under examination).Tax Years Beginning After July 30, 1996 For interest accruing on payments or deficiencies for tax years beginning after July 30, 1996, section 6404(e) will apply to certain managerial acts as well as ministerial acts, but the errors or delays must be unreasonable. Follow the instructions for line 1 through line 5 above, but do not refer to Rev. Proc. 87-42.Requesting Abatement or Refund of a Penalty or Addition to Tax as a Result of Erroneous Written Advice

Section 6404(f) gives the IRS the authority to abate any portion of a penalty or addition to tax attributable to erroneous advice furnished to you in writing by an officer or employee of the IRS, acting in his or her official capacity. The penalty or addition to tax will be abated only if:1. You reasonably relied on the written advice;2. The written advice was in response to a specific written request you made for advice; and3. The penalty or addition to tax did not result from your failure to provide the IRS with adequate or accurate information. If you are filing a request for abatement or refund of a penalty or addition to tax because of erroneous written advice, write “Request for Abatement of Penalty or Addition to Tax Pursuant to Section 6404(f)” at the top of Form 843. Complete lines 1 through 3. Check the appropriate box on line 4a. On line 4b, show the date of payment if the penalty or addition to tax has been paid. Send Form 843 to the Internal Revenue Service Center where your return was filed. If the erroneous advice does not relate to an item on a tax return, Form 843 should be sent to the service center where your return was filed for the tax year you relied on the erroneous advice. You must attach copies of the following information to Form 843:1. Your written request for advice;

2. The erroneous written advice you relied on that was furnished to you by the IRS; and3. The report, if any, of tax adjustments identifying the penalty or addition to tax, and the item(s) relating to the erroneous advice. An abatement of any penalty or addition to tax under this section will be allowed only if you submit the request for abatement within the period allowed for collection of the penalty or addition to tax or, if you paid the penalty or addition to tax, within the period allowed for claiming a credit or refund of such penalty or addition to tax.Line 5 Explain in detail your reasons for filing this claim and show your computation for the credit, refund, or abatement. Also attach appropriate supporting evidence.

This form neglects to explain the other conditions under which the Secretary is authorized to abate the unpaid portion of an assessment of any tax or any liability. The ones which might be of interest to you are listed under § 6404(a), (b) and (c) of the Code. They include circumstances where the amount of tax is excessive, or is assessed after the expiration of the period of limitation properly applicable or is erroneously or illegally assessed. This would include situations where there is no assessment. In every case I’ve handled, I can say with great certainty that no assessment was ever made!

You’ll also find under paragraph b that no claim for abatement can be filed by a taxpayer in respect of an assessment of any tax imposed under subtitle A or B. Therefore, if it was a “withholding tax” under § 3402, subtitle C, you could make the request. And the last condition which would most likely apply to readers of this book are when the unpaid portion of the “assessment” of any tax, or any liability in which the costs for collection would exceed the amount which might be collected, the Secretary is authorized to make an abatement.

The penalty assessment and abatement issue was addressed as a problem in the Taxpayer Advocate’s Annual Report to Congress for Fiscal Year 1996, published in December of 1996. The Advocate, Lee R. Monks, made these findings:7. PROBLEMS IN THE ADMINISTRATION OF PENALTIES

Responsible IRS Official: Chief Compliance OfficerA large number of penalties are imposed and then abated each year, causing

an unnecessary burden on both taxpayers and IRS.The Chief Compliance Officer has indicated that it may be premature to conclude that, because a large number of penalties are abated each year, an unnecessary burden is being placed on taxpayer and the IRS. Generally, civil penalty statutes require that penalties be imposed (for certain infraction of the law) unless the taxpayer establishes ‘reasonable cause.’ In all such instances taxpayers must be contacted, in some manner, to be provided an opportunity to establish reasonable cause.The vast majority of civil penalties are computer assessed. Computer generated penalties, such as the failure to file and failure to deposit penalties, are assessed when returns are processed and notices are generated affording to the taxpayer the opportunity to request abatement for reasonable cause. In the absence of a reasonable cause determination, the penalty stands. In the case of information

reporting penalties, a “proposed” assessment notice is sent, affording taxpayers an opportunity to establish reasonable cause prior to the penalty assessment. In either instance, the Service would be remiss if it did not afford the taxpayer the opportunity to respond to the penalty assessment. If this opportunity results in the taxpayers establishing reasonable cause and having the penalty removed, the Service has reduced at least a portion of taxpayers’ burden attributable to cost.It is acknowledged that the Service can improve its processing of penalties to minimize the frequency of erroneous assessments (resulting in additional abatements) due to such things as misapplied payments and other systemic errors. Steps are being taken to improve our penalty management information system and to better determine the reason penalties are removed. In 1993 IRS established “penalty reason codes” which break down the reasons, to categories, such as reasonable cause, taxpayer error, Service error, or Appeals settlement. These codes were operational in service center processing in 1993 and in examination processing in 1994. In 1996, these penalty reason codes were refined to provide more meaningful data.In 1993 the Service also introduced a cross-functional Penalty Internal Revenue Manual (PIRM) to be used by all Service employees who handle penalties. The objective of this manual was to improve the consistency with which penalties are addressed. This PIRM is currently available on the Penalty Bulletin Board and on the CARTS system.My office believes the data derived from the PROMIS system, which indicates penalties are a continuing source of taxpayer and PRP problems, clearly establishes the need for more action in this area. We have sponsored an advocacy project in the Northeast Region which will be looking at the Federal Tax Deposit penalties to avoid or minimize instances of non-productive imposition. We are also working with the Office of Small Business Liaison to initiate a more comprehensive review of penalty policies and procedures and hope to report more in this area in our next report.8. LACK OF UNDERSTANDING OF TAXPAYERS’ CONCERNS”

Responsible IRS Official: Chief Management and AdministrationIRS does not fully understand the concerns taxpayers have with tax administration and therefore cannot adequately address them.

The IRS recognizes the importance of identifying taxpayer concerns and creating strategies to improve our services. To date, our efforts to explore taxpayer concerns have been focused on opinion research; since 1989, we have devoted considerable resources to taxpayer opinion data collection. Although exploring taxpayer opinions has led to improved services, we recognized a need to examine concerns through means other than opinions. We are in the process of expanding our efforts to include the systematic capturing of taxpayer complaints. The Taxpayer Advocate’s Office is currently developing a system to track complaints and actions taken to respond to them. We believe that the analysis of this data will lead to a better understanding of taxpayer concerns and will allow us to better meet the needs of our customer.

Even before Executive Order 12862, requiring federal agencies to survey customers about satisfaction levels with services, was enacted in September 1993 the IRS was taking steps to systematically survey taxpayer opinions. Since 1992, the Service has conducted five customer satisfaction surveys with individual taxpayers and three with small business taxpayers. We have also trained employees to moderate structured focus groups and have sponsored or conducted more than forty public opinion and customer satisfaction surveys. The Value Tracking Core Business System was created to centralize the collection of qualitative data on taxpayer satisfaction. Recently, the section tasked with this responsibility was renamed the Opinion Research Group, and this group currently resides in the Strategic Planning Division.One initiative that resulted from opinion research is the creation of a small business assistance center, established as a three-year research test in the fall of 1993 in Buffalo, New York. Since it opened, the Center has provided assistance to more than 11,000 small business taxpayers and received the Hammer Award in April 1996 because of their new and innovative taxpayer services. Currently, an evaluation is being conducted to measure the Center’s impact on compliance. Once the evaluation is completed, decisions will be made on the continuation of the Center in Buffalo and on the creation of centers in other locations.To follow-up on the results of the 1993 customer satisfaction surveys, the Opinion Research Group conducted focus group projects to gather in-depth information on two issues: the burden of record keeping and taxpayers’ perceptions of the fairness and integrity of the IRS.The Opinion Research Group actively involves IRS executives in identifying and prioritizing key issues of concern to taxpayers. The Opinion Research Group also designs surveys for specific purposes at the request of individual executives. As a part of a National Performance Review effort during fiscal year 1995, the Opinion Research Group helped develop and conduct the “Out of Washington” events to obtain direct feedback from the public. The Opinion Research Group is currently partnering with IRS field offices on several data gathering efforts. They also have conducted focus groups with individual and small business taxpayers to gather opinion data concerning four processes identified by the Tax Settlement Reengineering Project. Following is a list and description of the four processes:• Enable Taxpayers to Fulfill Their Tax Obligations (the process of proactively

educating the general public about the tax process and motivating taxpayers to fulfill their tax obligations);

• Provide Assistance (the process used by taxpayers to voluntarily fulfill their tax obligations); and• Perform IRS Quality Control (the processing and perfecting of the taxpayers’

returns and pipeline documents).Analysis of the data collected through these focus groups will assist the reengineering project employees to achieve their objective of designing, prototyping, and implementing a tax settlement process that reduces cost, and improves quality and cycle time.

My office strongly endorse [sic] the actions being taken and in FY 1997 will sponsor focus groups in conjunction with Strategic Planning Division on the problems taxpayers experience with IRS. Information from these groups will be used in developing our FY 1997 report.

Because this is an annual report, you might want to download your copy from the internet (http://www.irs.ustreas.gov). It would be a good idea to request the other reports and projects referred to in this publication.

I have a problem with the agency’s reference to taxpayers as “customers.” Taxpayers are the employers of government, not its customers. You should also review those last few objectives mentioned for the reengineering project. Why do “taxpayers” need to be educated about the collection process and motivated to voluntarily fulfill their tax obligations? The implication is that everyone has a tax liability or that everyone must “comply,” whatever that means. They let your mind fill in the blank because they can’t actually say, you must file some particular form. I know because I’ve asked them before an could never get a direct answer.

When you make a claim for refund, you will need to wait until the six months expire or until your claim is officially denied in writing before you can file a complaint in federal court. More discussion on this in included under the Federal Court subheading, “Can I Sue The IRS?” included later in this chapter.

Five Ways To Stop A Levy:Many times I have the great fortune of getting a case right in the middle of a levy. It’s like entering into a fistfight by first laying on your back with a large stone over your chest and the opponent standing over you. Those types of cases are still workable but with a little extra effort.The first way to stop a levy is to request a Due Process Hearing or use the Collection Appeals Program to obtain a hearing. This procedure can also be used to forestall or stop the filing of a notice of lien as well as a levy.Collection Appeals Program:Under the IRS Restructure and Reform Act of 1998, the IRS has two more appeals forums to hear arguments over levies and notices of lien. The first is available to those against whom the notice was made who request a hearing within thirty days after notice is served. This forum is known as the Collection Due Process Hearing. Using this process, you can appeal many IRS collection actions if you receive any of the following notices:1. Notice of Federal Tax Lien Filing & Your Right To a Hearing Under IRC 6320 (Lien Notice),2. Final Notice – Notice of Intent to Levy And Your Notice of a Right to A Hearing, or3. Notice of Jeopardy Levy and Right to Appeal (Levy Notices).

The procedures are codified under 26 USC §§ 6320 and 6330. The Due Process Hearing Program is one aspect of the Collection Appeals Program and allows you to appeal any IRS collection action at any time with the IRS Office of Appeals. You can also appeal that office’s determination to the Tax Court or U.S. District Court of Appeals if you object to it. Appeals will attempt to give you a decision within five business days after they receive the appeal on this type of case. If a collection employee tells you that a Notice of Federal Tax Lien will be filed, you can appeal that action under CAP but you must do it timely.

The law provides you the right to a fair hearing by the IRS Office of Appeals after a Notice of Federal Tax Lien is filed and before a levy on your property is issued. You also have the right to contest determinations made by the Appeals Office in Tax Court of the U. S. District Court as appropriate. You may request a hearing for each taxable period for one or both of the following IRS actions:

· LIEN Notice. IRS is required to notify you that a Notice of Federal Tax Lien has been filed within five days after filing. You then have thirty days from the date of the lien to request a hearing with the IRS Office of Appeals; however, they have been known to schedule hearings well beyond this time period.

· LEVY Notice. IRS is required to notify you of its intention to collect a tax liability by taking your property or rights to property. The IRS does this by sending you a levy notice. No levy or seizure can occur within thirty days from the date of mailing of the levy notice or the date the levy notice is given to you or left at your home or business. During that thirty-day period, you may request a hearing with the IRS Office of Appeals. There are two exceptions to this levy or seizure notice provision.

When the collection of tax is in jeopardy or when the IRS issues a levy to collect from a state tax refund, the IRS may issue a levy without sending a levy notice or waiting thirty days after it sends the notice.You can request a Collections Due Process Hearing with the Office of Appeals by completing Form 12153 and mailing it to the address shown on your lien or levy notice within thirty days. Identify the IRS action(s) you disagree with (levy and/or lien notice) and explain why you disagree. You may appeal both actions, if you received both a lien and levy notice. You must identify all of your reasons for disagreement with the IRS at this time. To preserve your right to file a claim in court, you must send the IRS the completed Form 12153 within the thirty-day time limit. You must also include a copy of you lien and/or levy notice. List all tax(es) and taxable periods for which you are requesting a hearing under Due Process for each taxable period. If you receive a subsequent lien or levy notice after you request a hearing on a lien or levy notice, Appeals can consider both matters at the same time. A facsimile of this Form is included in this section, and you can obtain the actual Form 12153 from the IRS by calling 1-800-829-3676.At the hearing, you may raise an relevant issue relating to the unpaid tax including 1. Liability, provided that you have raised the issue at previous hearings such as a re-examination hearing and tax court; 2. Appropriateness of collection actions; 3. Collection alternatives such as installment agreement, offer in compromise, posting a bond or substitution of other assets; 4. Appropriate spousal defenses; 5. The existence or amount of the tax, but only if you did not receive a notice of deficiency or did not have an opportunity to dispute the tax liability.You may not, however, raise an issue that was raised and considered at a prior administrative or judicial hearing, if you participated meaningfully in the prior hearing or proceeding. This is an important consideration because while you may have raised the issue of liability at a previous hearing, whether a re-examination hearing, tax court or in response to a Letter 2050, if the IRS refused to consider the merits of your argument and claimed it to be frivolous, there is a chance for it to be re-heard. By making another presentation of the argument within the Collection Appeals Program, it will preserve your defense if you receive another adverse determination, whether on the merits or not.Before you formally appeal a lien or levy notice by sending us Form 12153, you may be able to work out a solution with the Collection function that proposed the action. To do so, contact the IRS employee whose name appears on the lien or levy notice and explain why you disagree with the action. This contact, however, does NOT extend the thirty-day period in which you can request an appeal.Unless the IRS has reason to believe that collection of the tax is in jeopardy, they will stop the collection action during the thirty days after the levy notice and, if you appeal is timely, during the appeal process. They will also suspend the collection statute of limitations, which is ten years, from the date they receive a timely filed Form 12153, until the date the determination become final. Your appeal is timely if you mail your request for a hearing on or before the thirtieth day after the date on which the IRS lien or levy notice was postmarked.

If you appeal request is not timely, you will be allowed a hearing, but there will be no statutory suspension of collection action and you cannot go to court if you disagree with the determination reached at Appeals.The Appeals Office will contact you to schedule a hearing, either in person or by telephone. At the conclusion of the hearing, Appeals will issue a written determination letter. If you agree with the decision reached by the Appeals office, both you and the IRS are required to comply with the terms of the decision. If you do not agree with the decision reached at the appeals hearing, you may request judicial review of the decision by initiating a claim in federal court (or Tax Court depending on the circumstances) on or before the thirtieth day after the date of the decision. If the decision issued by the IRS in tax court is adverse, you will have an opportunity for judicial review provided that you were able to set the hearing on Form 12153 (within the thirty day limit).The appeal can be made to the federal district court for the circuit designated to hear cases in your area, or to the United States Court of Appeals, each under Rule 15 of the Federal Rules of Appellate Procedure. I have included a template of how the appeal would appear if made to the United States Court of Appeals. You should read the rules to decide whether to go to the district court first, or directly to the United States Court of Appeals. The first is for tax court and the second is to the federal court system.

[Petitioner][Address][City state zip]Clerk of the United States Tax Court400 Second Street, N.W.Washington, DC 20217[Date]Re petition for lien or levy actionTo the Clerk:

Please file the enclosed petition. I have included a money order for the filing fee of $60. Please let me know if this is sufficient.Best regards,

[Petitioner]

UNITED STATES TAX COURTIn re[Petitioner]

Petitioner, Case No. _________________________________________________/

PETITION FOR LIEN OR LEVY ACTION

UNDER CODE SECTION 6320(c) OR 6330(d)1. Petitioner's name is [Petitioner] and mailing address of legal residence

is [Address]. The social security number issued for his use by the United States is

[SSN].

2. The date of the determination made by the IRS is [date]. The City and

State of the Office from which such determination was made is [City state].

3. The total amount of the purported tax liability is approximately $____ for [year] and $____ for [year].4. The following errors were made in the determination:Petitioner was accused of being a tax protester and the IRS refused to hear any dispute on the merits for the above stated years.WHEREFORE, petitioner requests a meaningful hearing on the merits of the disputed amounts.DATED this ___ day of [month] [year].

________________________________[Petitioner][Address][City state zip]

INSTRUCTIONS FOR FILING REVIEW PETITIONRules 15 - 21, Fed. Rules Civil Procedure

1. Sign and date the petition and enter the mailing address on the certificate of service.2. Attach a copy of the respondent’s letter denying your hearing along with all other correspondences relating to the tax periods in question.3. File the original petition and three copies with the clerk of your local district court of appeals. When the filing fee is paid ($105), the clerk will docket the petition and submit it to the court.4. The clerk will issue the summons.5. Serve the United States Attorney for the district in which the court is located.6. File affidavits or proof of service with the clerk.7. The court may deny the petition without an answer, or it will order the respondent to answer within a fixed time.8. The clerk will serve the order to respond on the respondent.

UNITED STATES DISTRICT COURTFOR THE DISTRICT OF _________

In re[Petioner]

PETITIONER, Case No. ________vs.UNITED STATES OF AMERICA

DEFENDANT._________________________________________/

PETITION FOR REVIEW

Petitioner requests review of respondent’s order.

1. The relief sought includes ordering respondent to hold a meaningful

hearing on the merits of the dispute involving tax period [year] and make an

objective review of relevant evidence, and issue an order based on the record made

at the hearing and the evidence presented.

2. The issues presented by petitioner include the failure of respondent to hold a meaningful hearing with petitioners on the merits of the disputed tax liability as required by the IRS Restructure and Reform Act of 1998.3. The facts include respondent’s failure or refusal to give petitioner any meaningful opportunity for a hearing on the issue liability.4. The reasons why this court should issue the writ is so that petitioner’s right to be heard (due process) can be protected and the respondent can be compelled to comply with the IRS Restructure and Reform Act of 1998.DATED this ___ day of [month] [year].

___________________________[Petitioner][Address][City state zip]

The IRS Office of Appeals will retain jurisdiction over its determinations and how they are administered. You may also return to Appeals if your circumstances change and impact the original decision; however, you must exhaust your administrative remedies first. You may also represent yourself at your Due Process hearing or an attorney, certified public accountant or a person enrolled to practice before the IRS, may represent you. If you want your representative to appear without you, you must provide a properly completed Form 2848, Power of Attorney and Declaration of Representative.

Request for a Collection Due Process Hearing

Use this form to request a hearing with the IRS Office of Appeals only when you receive a Notice of Federal Tax Lien Filing & Your Right To A Hearing Under IRC 6320, a Final Notice - Notice Of Intent to Levy & Your Notice Of a Right To A Hearing, or a Notice of Jeopardy Levy and Right of Appeal. Complete this form and send it to the address shown on your lien notice for expeditious handling. Include a copy of your lien or levy notice(s) to ensure proper handling of your request.(Print) Taxpayer Name(s): __________________________________________________________________(Print) Address: __________________________________________________________________

Daytime Telephone Number: ______________ Type of Tax/Tax Form Number(s): _Taxable Period(s): __________________________________________________________________Social Security Number/Employer Identification Number(s): ______________________Check the IRS action(s) with which you do not agree. Provide specific reasons why you don’t agree. If you believe that your spouse or former spouse should be responsible for all or a portion of the tax liability from your tax return, check here [__] and attach Form 8857, Request for Innocent Spouse Relief, to this request.____ Filed Notice of Federal Tax Lien (Explain why you don’t agree. Use extra paper if necessary.)__________________________________________________________________________________________________________________________________.____ Notice of Levy/Seizure (Explain why you don’t agree. Use extra paper if necessary.)____________________________________________________________________________________________________________________________________.I/we understand that the statutory period of limitations for collection is suspended during the Collection Due Process Hearing and any subsequent judicial review.Taxpayer’s or Authorized Representative’s Signature and Date: __________Taxpayer’s or Authorized Representative’s Signature and Date: __________IRS Use Only:IRS Employee (Print): _____________________ IRS Received Date: ______________Employee Telephone Number: ______________

Instructions for Completing Form 12153Where to file your requestIt is important that you file your request using the address shown on your lien or levy notice. If you have been working with a specific IRS employee on your case, you should file the request with that employee.How to Complete Form 121531. First, you should obtain the most recent version of this form from the Internet by searching on “IRS Form 12153”. Enter your full name and address. If the tax liability is owed jointly by a husband and wife, and both wish to request a Collection Due Process Hearing, show both names.2. Enter a daytime telephone number where we can contact you regarding your request for a hearing.3. List the type(s) of tax or the number of the tax form(s) for which you are requesting a hearing (e.g., Form 1040, Form 941, Trust Fund Recovery Penalty, etc.)4. List the taxable periods for the type(s) of tax or the tax form(s) that you listed for item 3 above (e.g., year ending 12-31-98, quarter ending 3-31-98).5. Show the social security number of the individual(s) and/or the employer identification number of the business(s) that are requesting a hearing.6. Check the IRS action(s) that you do not agree with (Filed Notice of Federal Tax Lien and/or Notice of Levy/Seizure). You may check both actions if applicable.7. Provide the specific reason(s) why you do not agree with the filing of the Notice of Federal Tax Lien or the proposed Notice of Levy/Seizure action. One specific issue that you may raise at the hearing is whether income taxes should be abated because you believe that your spouse or former spouse should be responsible for all or a portion of the tax liability from your tax return. You must, however, elect such relief. You can do this by checking the indicated box and attaching Form 8857 to this request for a hearing. If you previously filed Form 8857, please indicate when and with whom you filed the Form.8. You, or your authorized representative, must sign the Form 12153. If the tax liability is joint and both spouses are requesting a hearing, both spouses, or their authorized representative(s), must sign.9. It is important that you understand that we are required by statute to suspend the statutory period for collection during a Collection Due Process Hearing.

Duties of the Hearing OfficerThe hearing officer is required by law to be fair and impartial. Many are not, especially when the appellant is a non-filer. We should have anticipated the types of appeals as shown the example below:

Copyright 2000, Tax Analysts2000 TNT 248-76, (CTS), Court OpinionsCourt Documents86 AFTR2d Par. 2000-5660Docket: No. 00-B-851MESA OIL, INC., Plaintiff, v. UNITED STATES OF AMERICA, Defendant.Judge: Babcock, Lewis T.Court: United States District Court for the District of ColoradoName: Mesa Oil Inc. v. United StatesSubject: Corporate taxation; Litigation and appeals; Practice and procedureCode Section: Section 6320 -- Hearing on Filing Lien Notice;Code Section: Section 6330 -- Hearing Before LevyCourt Remands Case Due to IRS Impartiality ViolationsSummary

A U.S. district court has remanded a corporation's tax liability case to a new IRS appeals officer, finding that the officer who initially heard the company's appeal failed to meet the statutory requirements of officer impartiality. Mesa Oil Inc. fell behind on its payroll taxes. The IRS issued a notice of intent to levy and a hearing notice under section 6330. The IRS also issued a federal tax lien notice to Mesa and a section 6320 hearing notice. Mesa's president requested a collection due process hearing and proposed making installment payments so the lien could be released. Mesa argued that any levy would shut down its business. The IRS's appeals settlement officer (AO) held a due process hearing and concluded that the lien was appropriate and that the collection action could proceed. Mesa appealed to the district court.Chief U.S. District Judge Lewis T. Babcock remanded the case, finding that the AO failed to: make the proper balancing analysis in finding the lien valid and provide a statement of facts, legal analysis, or an explanation of how or why the proposed levy balanced the need for collection with Mesa's interests. The court held that even if a proper analysis were conducted, the case would still require remand due to statutory violations. Here, the determination letter indicated that the AO prejudged the case by making conclusions before Mesa's statutorily mandated hearing. The court also held that the AO failed to make an adequate record of the proceedings, depriving Mesa of its right to judicial review. The court noted that, although hearings are meant to be informal, informality does not obviate the need for a record. The court stated that there must be enough information in the IRS's documentation to allow a court to draw conclusions about compliance and whether the AO abused discretion. Such

information was absent here and the court ordered the case reheard by a new appeals officer and that an adequate record be made.

Administrative Collection Appeal Rights:The IRS Collection Appeal Program (CAP) is available under more circumstances than the Due Process hearing procedure. It is important to note that you cannot obtain judicial review of Appeals’ decision following a CAP hearing.IRS Collection Actions You Can Appeal

· Notice of Federal Tax Lien – You may appeal before or after IRS files a lien. You may also appeal denied requests to withdraw a Notice of Federal Tax Lien, and denied discharges, subordinations, and non-attachments of a lien. If IRS files a Notice of Federal Tax Lien, you may have additional Due Process appeal rights. See the preceding information regarding Hearing Available Under Due Process.

· Notice of Levy – You may appeal before or after the IRS places a levy on your wages, bank account or other property. Before a levy is issued, you may have additional Due Process appeal rights. See the preceding information regarding Hearing Available Under Due Process.

· Seizure of Property – You may appeal before the IRS makes a seizure. However, if you request an appeal after IRS makes a seizure, you must appeal to the Collection manager within ten (10) business days after the Notice of Seizure is provided to you or left at your home or business.

· Denial or Termination of Installment Agreement – You may appeal when you are notified that IRS intends to deny you an installment agreement or terminate your installment agreement.How to Appeal One of These IRS Collection Actions If Your Only Collection Contact Has Been A Notice or Telephone Call1. Call the IRS at the telephone number shown on your notice. Be prepared to explain which action(s) you disagree with and why you disagree. You must also offer your solution to your tax problem.2. If you cannot reach an agreement with the IRS employee, tell the employee that you want to appeal their decision. The employee must honor your request, and will refer you to a manager. The manager will either speak with you then, or will return your call with twenty-four hours.3. Explain which action(s) you disagree with and why you disagree to the manager. The manager will make a decision on the case. If you do not agree with the manager’s decision, the IRS will send your case to an Appeals Officer for review.How to Appeal One of These IRS Collection Actions If You Have Been Contacted By A Revenue Officer1. If you disagree with the decision of the revenue officer, and wish to appeal under CAP, you must first request a conference with a collection manager.2. If you do not resolve your disagreement with the collection manager, you may request Appeals consideration by completing Form 9423, Collection Appeal Request.3. On the Form 9423, check the action(s) you disagree with and explain why you disagree. You must also explain your solution to resolve your tax problem. The

IRS must receive your request for an appeal within two days of your conference with the collection manager or they will resume collection action.Normally, the IRS will stop collection action related to the IRS action(s) with which you disagree until the Appeals Officer makes a determination, unless they have reason to believe that collection of the amount owed is at risk. You may represent yourself at your appeals conference or an attorney, certified public accountant or a person enrolled to practice before the IRS, may represent you. If you want your representative to appear without you, you must provide a properly completed Form 2848, Power or Attorney and Declaration of Representative. You can obtain Form 2848 from your local IRS office or by calling 1-800-829-3676.Once the Appeals Officer makes a decision on your case, that decision is binding on both you and the IRS. This means that both you and the IRS are required to accept the decision and comply with its terms. You cannot obtain judicial review of Appeals Officer decisions following a CAP hearing. If you provide false information, fail to provide all pertinent information, or engage in fraud, the appeals’ decision will be void.Another process that requires a preliminary review by the collections manager may be initiated by filing Form 9423 with the collections manager responsible for the particular collection action being taken against you. We typically use Form 9423 with the following attachment in stopping levies after the thirty-day appeals time limit has expired:___________________________________________________________________

After a careful analysis your examination changes report, I find that it does not include certain information requisite to the alleged tax liability. With respect to (RRA98) Section 3401, I am questioning the report. I am requesting the production of these documents, together with the missing information as listed herein.1. the full name and employee number of the assessment officer for these tax periods2. a complete facsimile of the assessment certificate for each of these tax periods.3. Furthermore, I am demanding that you produce the proper Form 23C in strict compliance with 26 CFR 301.6203 for the tax periods included on your examination changes report.4. I am demanding that you produce the Notice of Assessment (Form 2162) as required by 26 USC 6303(a). This record must be certified and dated by an authorized assessment officer.5. You must include all other supporting records as required by 26 CFR 301.6203-1 including the Proof of Claim completed Form 4490.6. I am also demanding that you produce each record of decisions amending, revoking, rendering obsolete or otherwise affecting Form 23C, authority of “Account 6110 Tax Assessments” with respect to Internal Revenue Manual 3(17)(63)(14).1.NOTICE: Do not substitute these documents with RACS 006 as it fails to include the elements which would determine the character or kind of tax with respect to the

entity and tax modules maintained by your agency about me, individually. If you do this, I will appeal this request.7. Furthermore, if you have filed a Notice of Federal Tax Lien against my property, I demand that you produce a facsimile of any Treasure Decisions amending, revoking, rendering obsolete or otherwise effecting Treasure Decision 1995 pertaining to “Assessed taxes—Notice and demand, Form 17.”Please also be advised of the following:

INTERNAL REVENUE MANUAL 3(17)(63)(14).1Account 6110 Tax Assessments(2) All tax assessments must be recorded on Form 23C Assessment Certificate. The Assessment Certificate must be signed by the Assessment Officer and dated. The Assessment Certificate is the legal documents that permits collection activity…

INTERNAL REVENUE MANUAL 3(17)(46)2.3Certification(1) All assessments must be certified by signature of an authorized official on Form 23C, Assessment Certificate. A signed Form 23C authorizes issuance of notices and other collection action…(2) Some assessments are prescribed for expeditious action and can be certified on a daily basis. These assessments will require immediate preparation of Form 23C from RACS…Form 23C is described in Document 7130, IRS Printed Product Catalog as:23C - Assessment certificate-Summary Record of AssessmentsForm 23C is used to officially assess tax liabilities. The completed form is retained in the Service Center case file as a legal document to support the assessment made against the taxpayer. This status notice is reissued to update the status notice file. TR:R:A Internal Use.___________________________________________________________________

The following excerpt was taken from the October 1999 IRM. “1.3.13.3.7 Requests for Form 23C, Form 4340, Computer Generated Notices, and Delegation Orders(2) Responses to requests for Form 23C which merely advise the requester that "there is no Form 23C with (his or her) name on it" open the door for the requesters to utilize a "no assessment response" when challenging a statutory notice of deficiency.(a) To avoid this problem, Disclosure Officers should be making the Forms 23C or RACS Report-006, whichever is used (and related assessment records, such as Form 4340, Certificate of Assessments and Payments, Form 8166, Revenue Accounting Control System Input Reconciliation Sheet, etc.) available even though, technically speaking, the requester's name does not appear on them.

Note: Records should be made available to requesters which show the same information that would have been shown on Form 23C if one with the requester's name on it had existed.”The second way to stop a levy involves filing Form 911, Application for Taxpayer Assistance Order. It is not necessary to use the official form if you indicate on your correspondence that you are applying for a taxpayer assistance order.This form is used to apply for relief from a significant hardship after your efforts to get this relief from the collector have failed. This means that if you are unable to provide the necessities of life for you or your family, you will have good chance of getting an order after a hearing. You can submit this form to the Problem Resolution Office in the district in which you live. These locations are provided earlier in this book. You should receive a response within one week of your submission of this completed form. You can also fax it to the phone number that I have listed with each address.The form must be attached to the front of whatever else you are sending into the agency. The most important elements of this request are that you give a clear and concise description of the actions taken by the agent that are causing you significant hardship. If you know it, you should include the name of the person, office, telephone number, and/or address of the last contact you had with the IRS regarding this problem. Be specific. If your remaining income after paying expenses is too little to meet an IRS payment, give the details, then describe the action you want the IRS to take. This is one way to arrange to make an installment agreement, but the IRM 5200 requires the agents to refuse to accept the agreement until you file returns. It’s been my experience that this is not always true, so I would guess that not all agents have read their manual. Also, the chapter on Effective Letter Writing will give you a great deal of detail about the best way to make your application. I’ve included guidelines found in the agency’s own internal operating manual.The third way to stop a levy is by filing a bankruptcy. It is enough to merely file the petition to create an automatic stay of collections. The filing fee can even be paid in fourths. The notice to creditors will cause the IRS to stop collections and suspend your IMF from that date and six months following your withdrawal from bankruptcy. I.R.C. § 6503(b) suspends the collection statute until six months after dismissal of the proceeding. You can withdraw your petition sometime before the creditors meeting so as to preserve your right to file again if you need more time.If you do this with the intention of not following through, you should work diligently at preparing, either an Application for Taxpayer Assistance Order or an Offer In Compromise as explained next. Either way, you must have filed tax returns (unless you are just submitting the application for taxpayer assistance order). That’s not to say that you are required or not, but when you ask for a privilege, you have to play the game. Don’t waste your time or the court’s time thinking that you can go into bankruptcy court and expose the entire fraud and get the court to allow you to proceed without filing returns.The purpose of having the debtor file tax returns is so that the government can make a meaningful determination of any tax liabilities and file appropriate proofs of claim. It’s also so that the court can determine tax claims litigation, if need be, before the confirmation hearing. If the debtor fails to file his tax returns and thereby delays

confirmation, the taxing authority is prejudiced because the automatic stay prevents it from collection activities despite the fact that the debtor is delaying the resolution of his dispute with the IRS or other taxing authority. The delay in the resolution of the dispute inhibits payment to the taxing authority if there is a tax liability. This delay will prejudice all other creditors, as well, because no distribution to any creditor may be made until a plan is confirmed, 11 U.S.C. § 1326(a)(2). If you don’t intend to file returns, you can use the court to forestall the enforced collection until you can get some help, but that is the limit.If the rules of bankruptcy were amended to protect the government from being prejudiced, we could force the bankruptcy court to discontinue its policy of requiring the filing of tax return.The fourth way to stop a levy is to submit a good faith Offer In Compromise. In fact expect to have to include this along with your initial Form 12153 once the IRS responds. An agent will be assigned and send you a notice along with Form 656 and its inserts 433-A and 433-B. Keep in mind that in almost every situation, unless the IRS determines you are indigent and they cannot collect anything at this time, you will be expected to make some kind of payment arrangement. So while you may begin the collection due process hearing request and question the liability, ultimately your best chance of dealing with the IRS is an offer in compromise based on doubt as to collectibility. The two criteria under which it might be accepted are 1) doubt as to collectibility and 2) doubt as to liability.The easiest claim of course is to establish facts supporting doubt as to collectibility. Most people don’t know enough to argue doubt as to liability so the first option may get better results. Generally, I have found that when someone knows this subject well enough, he’s usually able to avoid the situation of having to file an offer in the first place.Keep in mind that with the submission, there is a waiver to the statute of limitations normally imposed against the IRS, which tolls the time pending the review of the submission Section 462 of the Legal Reference Guide for Revenue Officers (1991) states that:

“… An offer submitted by a taxpayer on Form 656 to compromise his/her liabilities contains a collection waiver provision which suspends the normal statute of limitations for collection of taxes included in the offer for the period of time that the offer is pending and for one year thereafter. The period commences to run on the date the acceptance of the waiver is signed by the District Director, not the date of receipt of the offer. In situations involving cumulative offers, or other statute problems involving offers, the advice of District Counsel may be sought.”

I don’t recommend this unless you’ve already filed returns. This is governed by Section 6305(i) of the Code.When you make an offer based upon doubt as to liability, you will be required to submit a statement supporting your conclusions as to why you doubt having a liability. Don’t try and be a legal historian or scholar, just make an ambiguous statement which makes no sense but satisfies the requirement. If you try and

expose the fraud, it will more than likely cause the agent to deny your offer just because he can or because he simply may not agree with you. In other words, be smart and act ignorant. Remember that the IRS is in the record keeping business and the only reason for requesting your “opinion” is to make a record of it for future reference. They may use it against you, maybe in court or by labeling you a tax protester, even though this practice is now illegal. The new term now being used by the IRS for people they would have called “tax protesters” is “non-filer.”The fifth way to stop a levy involves writing letter of inquiry or complaint directed to the Problem Resolution Officer, first by facsimile, and then by certified mail the same day. This however is dependent upon whether or not your dispute warrants their attention, it must be a legitimate inquiry. Therefore, your ability to make your problem known in the least number of words is crucial. Please review the chapter on Effective Letter Writing for better detail on these elements. The following language contains the criteria necessary to cause the Problem Resolution Office to take some action.

No resolution has yet been reached and there are no other established administrative or formal procedures that could be used in the resolution of this dispute, nor has your agency previously responded to this particular matter. Its resolution is not the sole responsibility of another federal, state or local agency. This dispute does not involve any non-tax administrative matter with your agency such as inspection, disclosure or personnel. The CID is not involved and this dispute is not concerned with any “tax protester” issues. I have not indicated that I cannot or will not pay any alleged tax liability.Here is an excerpt from the Internal Revenue Manual explaining the

internal operating procedures for levy situations:Part 34: General LitigationChapter 7, Suits to CollectSection 7, Enforcing the LevyContents34.7.7 Enforcing the Levy34.7.7.1 (Reserved)34.7.7.2 (Reserved)34.7.7.3 (Reserved)34.7.7.4 (Reserved)34.7.7.5 Writs of Entry 1. Liability for Failure to Comply with Levy.Failure to comply with a levy imposes upon the person served a liability equal to the value of the property, or equal to the tax liability, whichever is less. The liability bears interest from the date of levy, and includes costs. This liability is not assessable but must be collected by suit.2. When to Resort to Suit A.A suit for failure to honor a levy should not be recommended if use of an administrative process to collect the tax would be adequate. Due consideration should be given to the amount involved, the reasons

for failing to honor the levy, if the failure to comply is one of open defiance to the United States or if the failure to follow the levy through may cause difficulty in effecting collection from other taxpayers in a community. B.As a general rule, suit under I.R.C. § 6332 will be required when the party in possession of the taxpayer's property disposes of it subsequent to the levy. If the property is still in possession of the party, consideration should be given to a suit to enforce the Government's lien against the property under I.R.C. § 7403. The two counts can be recommended in one letter. Some advantages of the levy action are that the taxpayer is not a necessary party and the merits of tax cannot be raised. However, a foreclosure suit should resolve questions of title.If the notice of levy was duly and timely served prior to the expiration of the period of limitations on collection, under I.R.C. § 6502(a) the personal liability arising from a dishonor of that notice of levy may be enforced at any time notwithstanding the subsequent expiration of the statute of limitations on collection against the taxpayer.3. Specific Requirements of Suit Letter

A. In addition to the usual tax documents and copies of the levy, the following points should be discussed:1. The circumstances of the service of the notice of levy;2. The nature of the taxpayer's interest that was attempted to be seized by the levy and the reason given for non-compliance;3. The name and address of the person levied upon, as well as the names of any other claimants to the property;4. What other defenses might be urged; and5. How these defenses are not proper in response to the levy.B. The person levied upon cannot raise any question as to the merits of the tax, validity of assessment, or statute of limitations. Furthermore, the taxpayer need not be named a party defendant to this action.One of the two defenses permitted in an action to enforce a levy is that the person levied upon was not in possession of any property of the taxpayer. The other is prior judicial attachment or execution under a judicial process. Accordingly, the letter should set forth the facts and the law to support the assertion that a debt was owing from the person levied upon or that the property was held in possession of the party.

D. All letters recommending suits for failure to honor a levy must affirmatively state whether the 50% penalty is being recommended and must be pre-reviewed in General Litigation. See (34)613. If the penalty is being recommended the letter should specifically state why and contain as much evidence as possible to support it. In cases where the penalty is not being recommended suit letters should state specifically that the 50% penalty under I.R.C. § 6332(c)(2) is not recommended. These later cases may be sent directly to the Department of Justice.34.7.7.1 (8-22-97)(Reserved)34.7.7.2 (8-22-97)(Reserved)34.7.7.3 (8-22-97)(Reserved)

34.7.7.4 (8-22-97)(Reserved)34.7.7.5 (8-22-97)Writs of Entry1. As a result of the holding in G.M. Leasing v. United States, 429 U.S. 338 (1977), the service adopted procedures and guidelines for levies or seizures of property located on private property. If a proposed target of a search for distrainable assets exhibits a reasonable, objective expectation of privacy that society is willing to recognize, the Fourth Amendment will be implicated and the revenue officer must either obtain consent or obtain a court order permitting entry, i.e. a writ of entry, before entering the premises or object. A writ should only be used to seize property belonging to the taxpayer that the Service intends to sell. A writ enables to Service to enter premises or property in order to carry out its administrative collection powers under I.R.C. § 6331 et. seq. When the revenue officer determines that a court order is needed, he will forward the matter to district counsel.2. District counsel should counsel revenue officers to seek legal advice in questionable cases before the officers decide whether a writ is necessary to enter taxpayer's property. A writ will usually be required where there are reasonable expectation of privacy - i.e., entry into the home, private portions of commercial offices and buildings. IRM 56(12)4.1(1). Seizure of assets located outside of taxpayer's personal and business premises may in certain limited circumstances require a writ because of the expectation of privacy. Seizure of a motor vehicle parked in an unobstructed driveway or front yard is permissible without consent or writ. IRM 56(12)4.8(3)(a).3. In order to obtain a writ of entry from a court, the service must establish probable cause. While the law in different jurisdictions varies, the standard or probable cause for obtaining a writ of entry is generally not the same as the standard of probable cause for conducting a search or obtaining a search warrant in a criminal case. Matter of Carlson, 580 F.2d 1365 (10th Cir. 1978). To establish probable cause, the revenue officer generally must show in his affidavit that the Service has complied with the Code provisions for levy and distraint (i.e., a liability for tax, the issuance of notice and demand, and the notice of intent to levy) and that there is reason to believe assets of the taxpayer are located in or on the property for which the revenue officer is seeking the writ of entry.4. Upon receipt of the matter from the revenue officer, district counsel should open a file and review the documents to ensure that the facts support a writ of entry and the submitted affidavits meet the requirements imposed by the local district courts. The pleadings and affidavit must provide the court with sufficient information to support the issuance of a writ. Although jurisdictions vary in the degree of specificity concerning the facts that must be in the application for a writ, each jurisdiction requires essentially the same information to issue a writ. Internal Revenue Manual at Exhibit 5600-28 contains a sample affidavit. See Also Chief Counsel Macros General Litigation User Guide. Writ of Entry Documents - GA at 11 and 14 (October 1, 1996). District counsel should closely review the affidavit of the revenue officer to assure that it includes all the following information. See IRM 56(12)4.5.

The affidavit should contain specific information concerning the amount and taxable periods of the liability, the dates of assessment and notice and demand, and

the date notice of intent to levy was given. The affidavit should also contain a description of the taxpayer's business, the taxpayer's interest in and the address or location of the premises to be searched, and a description of the assets expected to be found on the premises. After review, district counsel should refer the case to the U.S. Attorney for handling (within 24 hours if practicable).The letter to the U.S. Attorney should include the following documents: revenue officer's data sheet; the affidavits of the revenue officer; a proposed order; where required under local rules, a proposed application for such order; and any other items required under local procedures. See Chief Counsel Macros General Litigation User Guide, Writ of Entry Documents - GA as 2, 4, 5, and 9 (October 1, 1996). District counsel should monitor the case to make sure the order is quickly presented to the court and signed.5. The court's authorization governs the revenue officer's authority to search for and seize distrainable assets once his is lawfully on premises pursuant to a writ of entry. This includes both the explicit language of the writ and what the court, based on the application and the government's communication with the court, understood was the authorized scope of the search. Once the revenue officer is lawfully on the premises, the authority to seize assets is governed by I.R.C. § 6331.6. Once the order is granted and the revenue officer has completed his search, district counsel's involvement is terminated and the legal file may be closed. If the order is denied, the matter should be reviewed by district counsel to determine whether an appeal is warranted or whether, in the alternative, a writ of mandamus might be sought.7.Writ of entry procedures may be used to obtain access to safe deposit boxes (see (34)7(13)2).Internal Revenue ManualI have included a template to further assist you in preparing this type of correspondence:

[Sender][Address][City state zip]PROBLEM RESOLUTION OFFICEInternal Revenue Service[Contact name][See address list][Phone][Fax][Date]Re [state issue in dispute]Greetings:

Thank you for reviewing this inquiry. This correspondence involves an unanswered inquiry or complaint requiring administrative recourse resulting from your agency’s failure or refusal to answer my previous inquiry concerning a service generated notice I received from [agent or office] dated [________].

No resolution has yet been reached and there are no other established administrative or formal procedures that could be used in the resolution of this dispute, nor has your agency previously responded to this particular matter. Its resolution is not the sole responsibility of another federal, state or local agency. This dispute does not involve any non-tax administrative matter with your agency such as inspection, disclosure or personnel. The CID is not involved and this dispute is not concerned with any “tax protester” issues. I have not indicated that I cannot or will not pay any alleged tax liability.[Briefly state the problem and what you want as a resolution]Please correct your records and inform me as to when you have satisfied this request.Best regards,[Sender]

Federal Court:I’ve only sued the IRS twice in the last five years, and both times the government’s motions to dismiss were denied. The second one was accomplished by filing a complaint focused on defeating the government’s expected motion to dismiss. Their motion was filed under Rule 12(b)(1), lack of subject matter jurisdiction. I then requested leave of court to amend the complaint, alleging that I was certain to be able to overcome the government’s motion to dismiss. The judge granted my request and denied the government’s motion to dismiss.Remember that you cannot sue the government (or at least maintain an action) for an injunction against the assessment or collection of a tax. I filed this claim for an injunction anyway, and didn’t quite state my claim very clearly because I wanted to beat their motion to dismiss first. Well, it worked. I submitted an amended complaint which sought an injunction, not to enjoin the collection or assessment of any tax; but rather, to enjoin the government from refusing to make an assessment and proceed under normal statutory guidelines. Under this cause, the government cannot avail itself of the Anti-Injunctive Act. I served the amended complaint and then my first set of interrogatories and requests for production of documents the following day.On a motion to dismiss for failure to state a claim, Rule 12(b)(6), the court will sometimes make its ruling as if it was considering a motion for summary judgment. This is a tricky situation and you must be cautious as to how you respond or argue. A motion for summary judgment undergoes two tests: the first is whether or not the complaint, or the record, shows any genuine issues of material fact, and the second, whether or not the moveant is entitled to judgment as a matter of law. You can object or make an oral argument based on defeating this motion in any of several ways. You must either show that there are, on the record, genuine issues of material fact. This can be accomplished by filing an affidavit. The next matter is to show that the moveant is not entitled to judgment as a matter of law.In the Davis v. United States case I prepared in April, I demonstrate how to approach this situation that is more completely explained in the Chapter Due Process Case Histories.

If you read the Radinsky v. United States, 622 F.Supp. 412 case, you’ll find where the court ruled that there was no requirement for the Radinskys to be taxpayers as a condition upon suing to recover the payment of any tax, penalty or sum alleged to have been wrongly collected under the Internal Revenue Code. This is an incredible case because the IRS argued that the Radinskys were not taxpayers because they had not filed returns. The purpose of them raising this argument was to try and get the court to refuse assuming jurisdiction under 28 USC § 1346(a)(1).

The court’s memorandum states the following:“The IRS insists that only ‘taxpayers’ have recourse against the United States under 28 U.S.C. § 1346(a)(1), and that the plaintiffs are not ‘taxpayers’ because no tax has been assessed.”

The record of assessment is the key to collecting a tax but the IRS never compiles one until they are ordered to produce it for evidence in court, and then they only produce a “certificate of assessments and payments.”

The problem with this is that the court will presume that this is a valid replacement for an actual assessment. If you can get the IRS to admit on the record that the supporting documents for this certificate were destroyed, you might be able to have it stricken as being immaterial. Please study the annotations to 26 USCS § 7422 if you want to have a clearer understanding of this.In the Radinsky case, the court further found that it was too late for the government to argue that the plaintiffs were not taxpayers because everything in the record indicated that the IRS attempted to collect, and succeeded in collecting, the disputed money as a “tax.” The court even referred to a letter from the IRS addressed to “Dear Taxpayer” which used the Radinsky’s TIN. I believe this shows beyond all question that the whole fraud is dependent upon your participation by filing a tax return. Once you file the return, you become a taxpayer and subsequently, have the legal duty to file. This is also discussed later in this chapter dealing with tax court and the rule under Toll v. Commissioner.Let me cover this again; most people are not required to file until they actually file! The reason for this is because once you file, you create the record of assessment and become a taxpayer. Only taxpayers are required to file! It’s like the requirement to have a driver's license. You’re not required to have one until you become a resident driver of a particular state. I won two cases for myself on the right to travel without registration in Arizona in 1996 basing my defenses on this principle. The first judge told me I wasn’t required to have registration because I had no valid drivers license, even though he imposed a fine against me for not having a valid license (noting the humorous irony on the record); and the second judge didn’t even appear for the hearing which he scheduled! The way you become a resident is by applying for a license! So you’re not required to have a drivers license until you have one; just like, most people are not required to file until they actually file!In Robinson v. United States, 920 F.2d 1157, the court found that the assessment must be created when certain circumstances occur. If the taxpayers do not file a petition in the Tax Court within the specified ninety-day time limit given with a notice of deficiency, the IRS is supposed to make an assessment. A duly designated official for the district or regional tax center does this by signing the summary record of the assessment, which identifies the taxpayers, the type of tax owed, the taxable period and the amount of the assessment. The court cited 26 U.S.C. § 6203 and 26 CFR 301.6203-1.Here are some examples of what other notable people have had to say about the tax system over the years:"In a recent conversation with an official at the Internal Revenue Service, I was amazed when he told me that ‘If the taxpayers of this country ever discover that the IRS operates on 90% bluff the entire system will collapse’". – Henry Bellmon, Senator (1969)"...the key question is: can we define ‘income’ in a fair and reasonably straightforward manner? Unfortunately we have not yet succeeded in doing so." – Shirley Peterson, former IRS Commissioner, April 1993"I don’t like the income tax. Every time we talk about these taxes we get around to the idea of ‘from each according to his capacity and to each according to his needs’.

That’s socialism. It’s written into the Communist Manifesto. Maybe we ought to see that every person who gets a tax return receives a copy of the Communist Manifesto with it so he can see what’s happening to him". – T. Coleman Andrews, Commissioner of Internal Revenue, May 25, 1956 in US. News & World Report"Our federal tax system is, in short, utterly impossible, utterly unjust and completely counterproductive [it] reeks with injustice and is fundamentally un-American...it has earned a rebellion and it’s time we rebelled." – President Ronald Reagan, May 1983, Williamsburg, VA"If no information or return is filed, [the] Internal Revenue Service cannot assess you." – Gary Makovski, Special IRS Agent, testifying under oath in US. v. Lloyd"Our tax system is based upon voluntary assessment and payment, not upon distraint." – United States Supreme Court, in Flora v. United States"Our tax system is based on individual self-assessment and voluntary compliance." – Mortimer Caplin, Internal Revenue Audit Manual (1975)"The United States has a system of taxation by confession." – Hugo Black, Supreme Court Justice, in U.S.A. Kahriger"Only the rare taxpayer would be likely to know that he could refuse to produce his records to IRS agents...Who would believe the ironic truth that the cooperative taxpayer fares much worse than the individual who relies upon his constitutional rights." – Judge Cummings, U.S. Federal Judge, in US. v. Dickerson (7th Circuit 1969)"Let me point this out now. Your income tax is 100 percent voluntary tax, and your liquor tax is 100 percent enforced tax. Now, the situation is as different as night and day. Consequently, your same rules just will not apply..." – Dwight E. Avis, former head of the Alcohol and Tobacco Tax Division of the IRS, testifying before a House Ways and Means subcommittee in 1953"The purpose of the IRS is to collect the proper amount of tax revenues at the least cost to the public, and in a manner that warrants the highest degree of public confidence in our integrity, efficiency and fairness. To achieve that purpose, we will encourage and achieve the highest possible degree of voluntary compliance in accordance with the tax laws and regulations..." – Internal Revenue Manual, Chapter 1100, section 1111.1"Fear is the key element for the IRS in achieving its mission. Without fear, the IRS would have a difficult time maintaining our so-called system of voluntary compliance...". "Given the opportunity, the IRS will take the easy way out and grab whatever it can...the IRS does not really care about you and what your future...may be." – Santo Presti, former IRS Criminal Investigation Agent and author of "IRS In Action""The IRS is an extraordinary example of the end justifying the means. The means of this agency is growth. It is interesting that the revenue officers within the IRS refer to taxpayers as ‘inventory’. The IRS embodies the political realities of the selfish human desire to dominate others. Thus the end of this gigantic pretense of officialdom is power, pure and simple. The meek may inherit the earth, but they will never receive a promotion in an agency where efficiency is measured by the number

of seizures of taxpayers’ property and by the number of citizens and businesses driven into bankruptcy." – George Hansen, Congressman and author of "To Harass Our People""I have sat on many a promotion panel where the first question of panel members was ‘How many seizures have you made?’". Joseph R. Smith, eighteen-year IRS agent, testifying before Congress"The agency that is so strict on the way Americans keep their books cannot even pass a financial audit." – Ted Stevens, Republican Senator from Alaska"Eight decades of amendments...to [the] code have produced a virtually impenetrable maze...The rules are unintelligible to most citizens...The rules are equally mysterious to many government employees who are charged with administering and enforcing the law." – Shirley Peterson, former IRS Commissioner, April 14, 1993 at Southern Methodist University"some techniques can be used only in connection with a full-scale program due to the nature of the tax situation and the need to avoid unnecessary taxpayer reaction. An example would be income tax returns compliance efforts aimed at the non-business taxpayer." – Internal Revenue Service Manual, section 5221 "Returns Compliance Programs""This [audit] was made extremely difficult because [IRS] existing Systems were not designed to provide reliable financial information...on their operations." – Comptroller Bowsher, Government Accounting Office, on the first-ever audit of the IRS in 1993."The wages of the average American worker, after inflation and taxes, have decreased 17% since 1973, the only Western industrial nation to so suffer." – Martin Gross, author of "The Tax Racket: Government Extortion >From A to Z"

Notices of Federal Tax Lien and Tax Liens:There is a clear distinction between a tax lien and a notice of federal tax lien. “The federal tax lien is not valid against persons falling within these categories until notice thereof has been properly filed,” page 57(16)0-22, Legal Reference Guide for Revenue Officers. The District Counsel is responsible for answering inquiries about the lien process. This manual contains specific procedures governing the lien process and a separate set of specific procedures governing the “notice of lien” process. It further states that “Even though a notice of lien has been filed, the federal tax lien is not valid as against certain interests.” The notice is filed only for the purpose of protecting the government’s right of priority as against a purchaser, holder of a security interest, mechanic’s lienor or judgment lien creditor. The lien can exist, even without any notice of lien having been filed. The filing of the notice of lien merely establishes the date of the government’s claim in the event another competes with it; the filing dates will lend superiority to the oldest notice filed.If you’re thinking about a way to attack the filing of a Notice of Federal Tax Lien, my advice, keep in mind that your options are limited. Unless you can show that it would be in the government’s best interests to delay the filing of the notice or to release it, you will suffer the problems cause by such filing. Supposing you actually get a notice released, it will remain on your credit history and will not prevent the IRS from enforcing any levies. It is usually not worth the effort or expense.If you are willing and able to get into some payment arrangement, provided you have the proper form of agreement, the IRS will be required to delay or remove notices of federal tax liens while you are current on the payments. Another way to begin resolving problems caused by the government’s filing of a Notice of Federal Tax Lien against your name is to do a “file segregation” on your credit history.I have seen a trend in Florida recently where someone figured out how to get nearly fifty default judgments canceling notices of federal tax lien in state court under the mechanics lien statute. Some of them are under appeal by the Department of Justice at this time. My question is whether or not those orders canceling the notices of federal tax lien will have the expected effect of clearing the title to real property once they are filed. That is, will the title company understand and acknowledge them or just ignore them. Remember that because the IRS has never responded to these complaints, they have been defaulted, so we don't know if the complaint would withstand a motion to dismiss or a notice of removal to district court and subsequent motion to dismiss. The fortunate aspect of a default judgment is that it is a judgment on the merits as viewed by the rules. I've included an edited sample of the complaint here, but I have not had the opportunity to try it myself:

IN THE ____ COURTIN AND FOR ________ COUNTY, STATE OF _______

[Plaintiff],PLAINTIFF,

v. Case No. _________[IRS agent], a/k/a IRS

DEFENDANT.______________________________/

COMPLAINT TO SHOW CAUSE FOR CLAIM OF LIENAND TO DISCHARGE BY CANCELLATION

Plaintiff __________ sues defendant _________ and alleges:

1. This is an action to show cause for a claim of lien and to discharge it by

cancellation, exclusive of costs and fees.

2. Jurisdiction is under [state statute] and [state statute]. The actions of the defendant that give rise to this complaint include official filings in the official records within this county that are unsupported by the required order from the court. Plaintiff's property is adversely affected by defendant's filing.3. Upon information and belief, there exists no equitable or legal basis for defendant's actions. Defendant has failed or refused to respond or answer to plaintiff's Notice of Contest of Lien (see attached copy).4. Plaintiff contests the purported validity of defendant's actions claims such to be void from inception.5. Plaintiff relies upon the attached Certificate of No U.S. Tax Liens on Record as being true, correct and complete and applies to this court to show cause why defendant's actions should not be cancelled or set aside.

WHEREFORE plaintiff respectfully requests judgment against defendant to

have defendant show cause as to why said claims of lien or debt should not be

cancelled and an ordering discharging, canceling or setting aside said claims of lien

or debt if defendant fails to show cause why they should not.

DATED this ___ day of [month] [year]_______________________[Plaintiff][Address][City state zip][Phone]

IN THE ____ COURTIN AND FOR ________ COUNTY, STATE OF _______

[Plaintiff],PLAINTIFF,

v. Case No. __________[IRS agent], a/k/a IRS

DEFENDANT.______________________________/

AFFIDAVIT

STATE OF ____________ )) SS

COUNTY OF __________ )

I _____ hereby solemnly affirm that the statements herein are true and

correct in substance and in fact to wit:

1. I am competent and qualified to testify.2. On [date] I applied received a Certificate of No U.S. Tax Lien on Record from the Office of Tax and Revenue in Washington, D.C. (see attached copy)

3. On [date] [IRS agent] filed a claim of lien against me on book ____, page ___ of the county records. 4. On [date] I filed a Notice of Contest of Lien in response to this claim of lien

5. [IRS agent] has failed or refused to respond with sixty (60) days as required

under [state statute]. No action to enforce this claim of lien has been filed within the

one-year limit imposed under [state statute].

STATE OF ____________ )) SS

COUNTY OF __________ )

Subscribed and sworn to before me a notary public this ___ day of [month] [year].

______________________

Signature of notary [ls]

File Segregation Defeats Notices of Federal Tax LienThe least expensive way to defeat a Notice of Federal Tax Lien is to create a new credit history under a different identification. Most of the time, you only need to stop using your social security number. The safest way to do this is to apply for a U. S. Passport without a social security number. Use all zeroes in the social security number field and Customs will issue you a different number but with the same format. In other words, you won’t have the risk of using someone else’s social security number and it will be on an official document so you won’t be questioned about it. By the way, the 6039E IRS notice on the back of the application, which states that if you don’t use your social security number you’ll be fined, has never been enforced in any the cases I’ve worked nor has it been enforced against anyone to my knowledge.I do not encourage a credit file segregation for the reason that it can be perceived as fraudulent depending upon your circumstances. The Federal Trade Commission has published several informative articles, one of which appears at: http://www.ftc.gov/opa/1999/9902/consumerweek2.htmThe FTC explains that applying for a new taxpayer identification number and using it to create a new credit history may be construed as fraud using the mail system or telephone fraud depending upon the methods used.If you do this for yourself, you must be cautious about using the United States Mail and telephone system; but more importantly, do not apply for a new taxpayer identification number for the purpose of using it in place of the government’s social security number issued for your use. If you wish to withdraw from the social security system, simply discontinue the use of a social security number. If you wish to continue your use of the credit and banking system without a social security number, but are having difficulty, it is important to make your disputes publicly known. Filing complaints with the responsible Federal Reserve Bank or the Comptroller of the Currency where national banks are concerned can do this. It is also important to sue companies for denying you rights for refusing to disclose a social security number.I also recommend seeking opinion letters from attorneys, namely criminal defense attorneys, stating which particular elements of fraud or other crimes would be present in a proposed activity. An example of using this type professional of advice would be, if you want to open a bank account in person, and intend on using an alternative number in place of your social security number on the application without informing the bank. You may ask the attorney to explain in writing how this might be construed as criminal behavior, or how it could be changed to avoid the accusation. There is no certain method of boycotting the use of the social security number, but you must use discretion and prudence to reduce the risk of being penalized for doing something which is morally right.Several of our subscribers have questioned whether or not opening a bank account without a social security number would constitute fraud. Some have accused me of working for the IRS or the government to publish misinformation. It is my hope that

this portion of the chapter will dispel these fears and paranoia, not for the purpose of convincing anyone to open such an account, but to demonstrate that it is not illegal.The elements of fraud include false representation of a present or past fact made by the defendant, action in reliance thereupon by the plaintiff, and damage resulting to the plaintiff from such misrepresentation. The authority for this is Citizens Standard Life Insurance Company vs. Gilley, Tex.Civ.App., 521 S.W.2d 354, 356.This is the reason I encourage those using this type of strategy in the course of removing yourselves from the social security system, to use accounts where there is no substantial monetary gain; not that it would be a problem, but it would be an element in a case of fraud. Another element is to prove intent, and that is very difficult.Due Process has done this for many subscribers and their personal banking accounts, and for business trust accounts where the business was not one having any filing or employer identification number requirements.When I did a file segregation in 1996, I stopped using my middle name, so that also helped to further separate my current activities from my former credit history. You may also consider renting a private mail drop for a year and use that address on your bank applications for the account and secured credit card. The fact that some creditors can check a database of private mail drops to see if yours is one of them should not really affect you because you’ll be applying for a secured credit card.

Once you receive your passport, submit an application for credit. You should apply in person to a large, well known national bank. You will be denied and in the process and your new credit file will be created. Then take a second form of official identification, which does not have a social security number on its face, into a bank and open a checking account with it. Use your passport number as your social security number.Deposit enough money to use as collateral for a secured credit card. The quickest and simplest way to apply for this secured credit card is through the Internet. If you don’t have access at home, use the one at your local public library. Just use your checking account number on the application so that the card issuer can freeze your checking account and use it for collateral on the credit account. The last step is to just use your credit card frequently. This credit reporting process to begin restoring your credit history takes between six and nine months to complete.It will give you a new credit history and the Notices of Federal Tax Lien should not attach to your credit history any longer, but they will remain against any real estate or other property you had titled in your name in the county and at the time the notice was filed. This same result can be accomplished using business trust organizations. It is possible to buy and sell as a trustee for a business entity using that entity’s identification.

Can I Sue The IRS?The answer to this question is yes, of course you can sue the IRS. Anyone can sue anyone in this country and you don’t even need an attorney. However, suing someone, or the filing of a lawsuit, is accomplished by simply paying the filing fee, having your complaint accepted by the Clerk of Court and having your complaint

properly served on the defendant. This alone will not win your case. The question you want to entertain is, can I maintain a suit against the United States for the recovery of property taken? Good news, the answer is still yes, but with a clause.That clause is, you must be able to state a claim for relief which would give the court jurisdiction to hear your case on its merits; otherwise, your complaint will be dismissed on a motion by the government known as an affirmative defense. Stating a claim involves alleging certain facts in your complaint. These allegations determine what type of jurisdiction the court will assume. If you state them properly in a claim for refund (damage claim), you will be in a court of law. If you state them correctly in a claim for injunctive relief, you will give the court equity jurisdiction. It’s very unlikely that you would prevail in this type narrow jurisdiction (equity), which is a good indication that you should be filing a claim for refund instead.In a damage claim, or claim for refund, you must allege that the court has jurisdiction while citing your authority, that you are the plaintiff, that the United States is the defendant, that you are seeking recovery of taxes paid, that an assessment was done, that you filed tax returns and paid the tax allegedly owed and that you timely filed a claim for refund which was denied or expired after six months. You also have to bring the lawsuit within two years of either the denial of your administrative claim for refund, or within two years following the date on which you filed a notice of waiver of disallowance on Form 2297. This notice must be either filed with your claim or sometime thereafter, within the six month period. There is a possibility of getting by the issue of not filing, provided that you pay what they say you owe, if you use the rule in Radinsky v. United States, 622 F.Supp. 412 as I’ve previously explained. Your best source for instruction on this process is 11 Federal Forms §§ 43:221 through 43:277.The problem we have today in suing the IRS is not the court system, it’s the legislatures and the Congress. They have written laws that have made seeking a remedy in court conditioned upon filing a tax return, paying the “tax” and claiming that a proper assessment was made when it was not. If you wish to bring a damage claim against the IRS, these are the conditions which must be met or the court will not accept jurisdiction to hear your case.The Congress legislated away our refund remedy in federal court, making it a necessary element of invoking the jurisdiction of the federal court to allege that a correct assessment has been made, even though this is not usually true. I’ve included the language that must appear in a claim for refund made in federal court. If you cannot complete the blanks, you will not be able to invoke the court’s jurisdiction, except for the filing of returns issue covered by Radinsky, supra.

COMPLAINTCOUNT I

Plaintiff sues defendant and alleges:

1. This is a claim for refund made pursuant to 26 USC § 7422; 28 USCS § 1346(a)(1) and FRCP 8(a).

2. Plaintiff is an American Citizen and of adult age who resides in ___ County ___3. The Defendant is the United States.4. This is an action for the recovery of internal revenue taxes. This Court has jurisdiction of the matter by reason of 28 USC § 1346(a). This is not a claim for abatement of interest.5. Recovery is sought for federal income taxes for the years ended December 31, [year(s)]. On or about [date], plaintiff filed federal income tax returns for such periods with the Internal Revenue Service in [city state]. For each such year, plaintiff paid income taxes on account of such returns as follows: [list amounts levied or paid].6. On or about [date], the Director of the Internal Revenue Service Center in ______ _____, assessed against this Plaintiff additional taxes and the interest for the years and in the amounts as follows: ________.7. On or about [date], plaintiff paid to the Internal Revenue Service at the Internal Revenue Service in [city state], on account of such assessments, the foregoing sum of tax deficiencies and interest.8. Such additional income taxes and interest were erroneously and illegally assessed and collected.9. On [date], plaintiff filed with the Internal Revenue Service Center in [city state], the location at which plaintiff filed his original returns, claims for refund for each period ending December 31, [year(s). Copies of such claims for refund are attached, marked Exhibit _____ and made a part of this complaint. ______ [six months have elapsed since plaintiff filed such claims for refund, and the Internal Revenue Service has taken no action on them. Or, if action taken and claims disallowed, outline proceedings that took place.]10. Plaintiff has overpaid his federal income taxes for the taxable years ended December 31, [year(s)]; are the sole owners of the aforementioned claims for refund, and have no assignment of such claims.11. For plaintiff’s statement of claim for relief, plaintiff’s incorporate herein each and every allegation of facts set out in claims for refund attached as Exhibit ___.

WHEREFORE, the Plaintiff requests judgment in the amount of $ ____,

together with such interest and costs as are allowed by law and such other relief as

the Court may deem just and equitable.

Respectfully submitted this ____ day of _______, [year].

______________________________[plaintiff]

If you stop filing returns, there are two types of possible liability, civil and criminal. You should be prepared to lose any property you might have in your name when the government decides that you owe a tax. If you decide to stop filing, you can reduce your risk of losing property by divesting yourself of ownership rights through trust systems. It’s very important however that you understand how to operate the trusts and what to expect the IRS to do when you’re being questioned. The only property that I’ve not been able to remove from liability is any “W-2 income” and any social security or pension payments. Just about everything else can be conveyed out of your name and into the title of a trust. This is the reason behind my request for letter ruling that compensation received for non-government employment in the fifty states is not recognized by the tax code as taxable income. Sometimes we have no choice but to get to the merits of the issue, but the best way to beat the IRS is to avoid the fight.You can avoid the criminal liability by getting an attorney or CPA to answer the following types of questions for you in writing:1. Which law penalizes me for not producing statements under penalty of perjury?2. Which law would compel or penalize me for not using a social security number as a condition for working?3. Does making statements under penalty of perjury requires that I waive certain rights?You probably will not get answers such as, "No, you're not required to file a return." The question and response should relate to a specific year or tax period, and your questions should lead to answers, non-responses or confusing responses that would lead a reasonable person to conclude he had no filing requirement. Do not send any of these letters to the IRS, keep them in a safe place.

Business Reorganizations And Estate Planning

Did you know that the largest and most successful business organization in the history of mankind is an unincorporated business organization? Did you know that the name of its trust document is the Constitution of the United States of America? It is true. And because this organization affects so many people and was foreseen to have that potential, it was designed to be political in its very indenture. It was defined as having a republican form of government because of the large amount of land over which it was anticipated to govern. Democracies have long since shown themselves to be the most destructive form of government as was agreed among the creators of this nation and as was recorded in the Federalist Papers, and so this is the reason for the structure of our republic.

Unincorporated Business OrganizationsA growing trend in America, but not around the world or in history, is to create

business organizations outside the framework of statutes. Most business organizations are doing this to avoid tax and other liabilities associated with ownership of property. The United States of America is a businesses trust in which fiduciary obligations were created under three branches of its government for the two-fold purpose of furthering its international commercial activities and for protecting the citizens from invasion and from the intrusion against certain natural rights. Remember that any organization of people, whether it be a family, team, company, or gang, must have be a government unto itself in order to secure its survival. The most basic system of government is the family.

The creation of the United States of America was a political and business reorganization, the necessity of which was brought about by the tyrannical acts of King George III. These reasons are well defined in the Declaration of Independence. No other document, aside from possibly The Federalist Papers, is more expositive as to the reasons behind the creation of this new enterprise. Basically, he monopolized trade with the colonists, thereby inhibiting them from trading with other nations by taxing them out of existence. Does this sound familiar?Let’s not doubt the genius and brilliance with which our Constitution was written. It can only be likened to the greatness of J. S. Bach’s canons and fugues. To this day, we can avail ourselves of its protections once we understand the foundations of our government. We have the right to organize and reorganize our affairs in such a way as to avoid the intrusions of an oversized government.Remember that the people who wrote the tax code were and are still the ones controlling the majority of the wealth in this country and around the world. The major limitation of the code is that it cannot tax a right; essentially, the tax code can never regulate the right to contract. Therefore, two people can enter into an agreement and then appoint others to represent that agreement in a fiduciary capacity, the purpose of which could be to engage in business or simply hold title to property. This is known as a trust arrangement and these types of contracts are not permitted to become eligible for federal or state benefits. The reason for this is because the

state is not involved and has no interest in the agreement. You’ll find that the United States Supreme Court clearly establishes this in Hale v. Henkle, 201 US 43, 74 and in Elliot v. Freeman, 220 US 178.Here is a description of the criteria for a non-taxable, non-statutory business trust: It is an unincorporated business trust organization, not classified as a trust for purposes of the Internal Revenue Code. It’s an arrangement to protect or conserve any property for beneficiaries, does not have associates and is not organized to carry on business, dividing any gains resulting therefrom. It has no associated holders of beneficial interests and the board has exclusive control over electing and appointing board members. It cannot be organized as an association, nor a corporation, and does not file tax returns. Read 26 CFR Part 301.7701-4(b) and you’ll find that in its definition of business trusts, it states that “… There are other arrangements which are known as trusts because the legal title to property is conveyed to trustees for the benefit of beneficiaries, but which are not classified as trusts for purposes of the Internal Revenue Code, because they are not simply arrangements to protect or conserve the property for the beneficiaries.”You cannot write this trust agreement for yourself. You must be appointed to an existing business trust by at least two individuals who can never again be have a fiduciary obligation to the business and this cannot be accomplished through any pre-arranged agreement. It is also legal to have the trust created for the sole purpose of avoiding a tax liability and there is plenty of case law to establish this point.

Limited PartnershipsA limited partnership is another example of an unincorporated business. They are very simple to create and can be done by an attorney or by the actual partners themselves. This type of agreement is used primarily to divest ownership and liabilities that would normally attach to ownership.Many people call me and explain that they deeded over their property or titled their cars in the name of their wife or children or some other relative or friend (assignee) for the purpose of avoiding liability. This does nothing to eliminate the liabilities that might be incurred by the assignees to which the ownership was transferred. A partnership agreement effectively transfers liability in a closed system. In our previous example, if we are only concerned about limiting the liability of one person by transferring property out of his name, it necessarily increases the liabilities of others to which the property is transferred. A limited partnership is a new entity that incurs the entire liability of the ownership unless liability can be attached to all partners at the same time.In nearly every jurisdiction, the best standing any creditor can obtain against the assets of a limited partner is that of an assignee. In other words, if it were the IRS or a judgment creditor, the partners would decide payment in satisfaction of their claims collectively. In other words, no creditor could enforce a collection unless all the partners agreed to pay. I like to consider asset protection from the worst possible situation, an IRS levy.The Congress has given the IRS the power to levy on property and rights to property of taxpayers when the IRS claims the liability. The levy or seizure can be

accomplished with no court action; it's an administrative taking of property. If the individual they purport to have the liability has no assets to satisfy the taxes claimed to be owed, then the IRS takes nothing. This level of protection can be reached when the individual's property is contributed, sold or conveyed into the collective ownership of partners in a limited partnership. This is true only before the filing of a notice of lien for the particular individual levied against, and in the particular county where the notice is filed. The assets cannot be seized or levied upon provided that no one partner has exclusive rights to sell the property owned by the partnership. That is the key to using this tool effectively. No one individual partner can have the exclusive rights to sell, transfer or assign any assets owned by the partnership and this must be established in writing.If a notice of lien were filed against "Bob" in County A, any assets owned by Bob and transferred in that county after the date of recording in the public record would still be attached to the levy or seizure action and collectible by the IRS. This would be true only in County A where Bob had any exclusive rights to sell, assign or transfer property. The IRS could not collect in any other counties where the notice of lien was not filed, or did not encumber the property or rights to property. Further, the IRS could not collect on Bob's property if he had previously sold, assigned or transferred to the ownership of a partnership where he no longer had exclusive title or rights to sell, assign or transfer the property. It is very important to make these types of arrangements well before any anticipated levy actions by the IRS.

The No EIN Business Checking Account:To make matters simple, obtain a foreign mailing address for your trust or partnership but use a second mailing address in your area as its secondary mailing address. The bank will then accept your Certificate of Foreign Status on Form W-8 as long as you use these two addresses accordingly. Remember to avoid telling the bank that it’s a “trust” account. You just want them to understand that the board of trustees has hired you to maintain a business account for them in the states.The trust indenture can maintain a trust identification number (TIN) that can be created by the exchanger and creator. This may lead to problems or conflicts with another business that might have the same number, but as a real taxpayer identification number (TIN). It’s your call. I can’t ever remember having any of these types of conflicts but there is a possibility.

If you wish, have an adverse trustee apply for an EIN on behalf of the business trust. The IRS does not have a category under which to assign a taxpayer identification number to this type of business structure, so it will always be an incorrect assignment. But at least you’ll know it’s a unique number. Once you use this number to open your account, send a complaint into the Problem Resolution Office like the sample one below and you should be able to get it canceled. You may have to be persistent because the IRS doesn’t always like to admit that you’re correct.

Because a trustee is an agent, he can manage a bank account for the trust in his own name with a "doing business as" or "trading as" designation. Some banks will ask for a state business license for this type of account, but try and avoid this because the state licensing authority will give you a problem about requesting a social security number. You might also try opening a personal account using the

business name as your "nominee." In any case, it really doesn't matter because you are acting as an agent for the trust or the partner in a partnership when accepting deposits or doing business for your company. The bank doesn't really need to know the nature of your involvement with any business.

[sender][address][city, state]problem resolution officeIRS[address][city, state](date) certified mail no. _______

Re incorrect assignment of EINGreetings:

Thank you for reviewing this inquiry. Agent Schmidt had instructed me to write you this letter explaining the problem we have.

You assigned an EIN to an unincorporated business trust which is identified under 26 CFR Part 301.7701-4(b) as not being an entity requiring a taxpayer identification number nor having any filing requirements. This is an error because this business structure is not one having a requirement to file any of the following forms:

(a) Form 940, Employer’s Annual Federal Unemployment Tax Return; (b) Form 941, Employer’s Quarterly Federal Tax Return; (c) Form 942, Employer’s Quarterly Tax Return for Household Employees; (d) Form 943, Employer’s Annual Tax Return for Agricultural Employees; (e) Form 11-B, Special Tax Return – Gaming Devices; (f) Form 720, Quarterly Federal Excise Tax Return; (g) Form 2290, Federal Use Tax Return on Highway Motor Vehicles; (h) Form CT-1, Employer’s Annual Railroad Retirement Tax Return, (i) Form 1065, U.S. Partnership Return of Income.

It is not simply an arrangement to protect or conserve any property for beneficiaries, does not have associates and is not organized to carry on business, dividing any gains resulting therefrom. It has no associated holders of beneficial interests and the board has exclusive control over electing and appointing board members.

This business trust was never organized as an association, nor a corporation, or any other form of limited liability company, and it is not an entity ever having filed tax returns. To the best of our knowledge, no entity module has ever been created for this trust organization.It is not a nominee or a grantor trust having any principals or owners. It is its own principal as recognized by your regulations.

Please correct your records accordingly and we will expect your response within thirty (30) days.Best regards,

Sales Tax Reduction Strategies:This part of the book will probably be very useful for those not having any problems with the taxing authorities. If you’re a real estate agent, you will be able to use this information to beat your competition hands down. If you’re about to sell your car, or manage a dealership, you will probably have the same interest. And if you’re just an average citizen wanting to reduce your liabilities and save a few dollars, this information should help you go a long way toward that end.I’m going to demonstrate a simple business structure so that you can grasp the idea, and then you will be able to expand on it as you learn more. There are many types of complex business structures, but the ones described here operate to accomplish the same end as all of them.An unincorporated business trust organization can be used to hold title to your property. But “your” property can no longer be yours. You might maintain fiduciary control over it through the trust, but you must divest yourself of all legal right, title and interest you might have otherwise maintained. In my opinion, all corporate structures such as corporations, limited liability companies, non-profits, “dba”s and most trust structures have a tax liability and most of them create tax liabilities for the owners and principles, because they need owners and principles to be valid. A true unincorporated business trust organization that is created for profit and gain, for the benefit of beneficiaries, and is conveyed property by its trustees in an irrevocable agreement, is a business trust which is not owned, but is the owner. This type of structure is not a grantor when created by third parties who relinquish all future rights to accept fiduciary obligations for that particular trust arrangement.An irrevocable trust arrangement that is not created by the trustees is a non-grantor trust as long as it is created for the purpose of deriving profit and gain and for the benefit of beneficiaries. A grantor trust arrangement, or nominee, is one created by the trustees, does not meet these requirements relating to profit and beneficiaries and is taxable under federal and state law. You can learn more about these terms in any good law dictionary.As the fiduciary for an unincorporated business trust organization, you are an agent. An agent incurs no tax liability while acting in that capacity. In other words, you can enter into agreements by signing your name as trustee instead of just signing your name like you have been taught all of your life. If you are signing as trustee for a this type of trust, then the trust is the principal and incurs all of the liability. That is the purpose for which this type of organization is created. The Internal Revenue Service issued Internal Revenue Ruling 76-479 that states that:

“The Internal Revenue Service has recognized that amounts received by an Agent on behalf of a Principal and turned over to the Principal are not taxable to the Agent, under Sec. 61(A) of the code.”

Other revenue rulings dealing with this subject matter include 69-274, 65-282, 58-515, 58-220 and 74-581. You’ll also find this principle of law recognized in Volume 33A Am Jur 2d ¶ 13352.Using trust arrangements, it is possible to reduce or eliminate taxes on the sale of certain property. The principal behind this is to change what would be a sale, to a mere conveyance of property where there is no sale, but a simple assignment and

reassignment of trustees. This is not taxable in most cases, and where there might be a “conveyance tax” you can still create a situation where the conveyance is simply “not able to be taxed.” The simplest way to “sell” your car or boat for example, without telling anyone and without incurring any tax liability, is to register the property in the name of a trust. As long as the trust indenture is valid, the property will never change ownership until it is conveyed from the ownership of the trust. You can be the trustee who conveys title to the trust and maintains fiduciary control over that property; however, without ownership rights, you have none of the liabilities associated with an ownership status. The trust can then be operated privately and no member of the public nor the state can ever have knowledge of the fiduciaries unless under court order, and even that can be avoided.Instead of selling the property, you can sell an appointment to the board of trustees for the trust that own it. If you then resign, the new trustee will assume fiduciary control over the property by contract and the owner will remain the same. This also works for real estate or property of great value, but a little more planning is necessary.Not everyone has the financial ability to purchase real estate without involving a mortgage lender or bank. The added complexity to involving trusts in these types of transactions, that is, where there is a secured loan, is that the lender needs security in the property before it will make the loan. If the trust you’re using has been around for a long time, is well known, has good credit standing or a large amount of assets, then the lender could easily involve the trust in the arrangement. This is usually not the case but if we had learned these things when we were younger, it probably would be true in many situations today.As a real estate agent, you can have a third party who may or may not also work for your firm, create a business or real estate trust with some other person who is not related in the same capacity. These two people, the creator and exchanger for this new trust arrangement, can then appoint the seller of the property to the board of trustees for the trust, and they can resign. The title to the real estate can then be conveyed in the ownership of the trust by the board of trustees, the “former seller” of the property.Supposing the “buyer” has the money, he can buy a position on the board of trustees for the trust and the “seller” could then resign. If the “buyer” does not have the money, one of two things is possible. Before the financing is available, the “seller” can appoint the “buyer” to the board and they can both apply for a mortgage with a lender as the board of trustees, and with the “former buyer” as co-signer on the mortgage agreement. Or the lender can accept an appointment to the board for a term equal to the life of the mortgage agreement. The only remaining problem would be if the “seller” has an outstanding mortgage agreement, but that could be resolved in the new mortgage contract. The real problem is trying to deal with people who are not accustomed to doing business this way. You will also reduce your liabilities to damage claims through the use of trust arrangements. The owner usually has the liability in a damage claim so that liability would be reduced through the proper use of trusts.

APPENDIX ACode of Federal Regulations

Revised as of April 1, 1998CITE: 26CFR31.3406(c)-1TITLE 26--INTERNAL REVENUECHAPTER IINTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURYPART 31EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCETable of ContentsSubpart E--Collection of Income Tax at SourceSec. 31.3406(c)-1 Notified payee underreporting of reportable interest or dividend payments.

(a) Overview. Withholding under section 3406(a)(1)(C) applies to any reportable interest or dividend payment (as defined in section 3406(b)(2)) made with respect to an account of a payee if the Internal Revenue Service or a broker notifies a payor under paragraph (c) (1) or (2) of this section that the payee is subject to withholding due to notified payee underreporting (as defined in paragraph (b)(1) of this section), and the payor is required under paragraph (c)(3) of this section to identify that account. After receiving the notice and identifying accounts, the payor must notify the payee, in accordance with paragraph (d) of this section, that withholding due to notified payee underreporting has started. Paragraph (e) of this section describes the period for which withholding due to notified payee underreporting is required. Paragraph (f) of this section provides rules concerning notices that the Internal Revenue Service will send to a payee before notifying a payor that the payee is subject to withholding due to notified payee underreporting. Paragraph (g) of this section provides rules that a payee can use to prevent withholding due to notified payee underreporting from starting or to stop it once it has started. Paragraph (h) of this section provides special rules for joint accounts of payees who have filed a joint return. See section 6682 for the penalties that may apply to a payee subject to withholding under section 3406(a)(1)(C).(b) Definitions--(1) Notified payee underreporting. Notified payee underreporting means that the Internal Revenue Service has-- (i) Determined that there was a payee underreporting (as defined in paragraph (b)(2) of this section); (ii) Mailed at least four notices under paragraph (f)(1) of this section to the payee (over a period of at least 120 days) with respect to the underreporting; and (iii) Assessed any deficiency attributable to the underreporting in the case of any payee who has filed a return.

(2) Payee underreporting--(i) In general. Payee underreporting means that the Internal Revenue Service has determined, for a taxable year, that-- (A) A payee failed to include in the payee's return of tax under chapter 1 of the Internal Revenue Code for that year any portion of a reportable interest or dividend payment required to be shown on that tax return; or (B) A payee may be required to file a return for that year and to include a reportable interest or dividend payment in the return, but failed to file the return. (ii) Payments included in making payee underreporting determination. The determination of whether there is payee underreporting is made by treating as reportable interest or dividend payments, all payments of dividends reported under section 6042, all patronage dividends reported under section 6044, and all interest and original issue discount reported under section 6049, regardless of whether withholding due to notified payee underreporting applies to those payments.

(c) Notice to payors regarding backup withholding due to notified payee underreporting--(1) In general. If the Internal Revenue Service or a broker notifies a payor that a payee is subject to withholding due to notified payee underreporting, the payor must-- (i) Identify any accounts of the payee under the rules of paragraph (c)(3) of this section; and (ii) Notify the payee and withhold under section 3406 on reportable interest or dividend payments made with respect to any identified account under the rules of paragraphs (d) and (e) of this section. (2) Additional requirements for payors that are also brokers--(i) In general. A broker must notify the payor of a readily tradable instrument that the payee of the instrument is subject to withholding due to notified payee underreporting if-- (A) The broker (in its capacity as a payor) receives a notice from the Internal Revenue Service under paragraph (c)(1) of this section that a payee is subject to withholding due to notified payee underreporting and the broker is required to identify an account of the payee under paragraph (c)(3) of this section; (B) The payee subsequently acquires the instrument from the broker through the same account; and (C) The acquisition of the instrument occurs after the close of the 30th business day after the date that the broker receives the notice (or on any earlier date that the broker may begin applying this paragraph (c)(2) after receipt of the notice described in paragraph (c)(1) of this section). (ii) Transfer out of street name. For purposes of this paragraph (c)(2), an acquisition includes a transfer of an instrument out of street name into the name of the registered owner (i.e., the payee). (iii) Method of providing notice. A broker must provide the notice required under this paragraph (c)(2) to the payor of the instrument with the transfer instructions for the acquisition. See Sec. 31.3406(d)-4(a)(2).

(iv) Termination of obligation to provide information. The obligation of a broker to provide notice to payors under this paragraph (c)(2) terminates simultaneously with the termination of the broker's obligation to withhold (in its capacity as payor) due to notified payee underreporting on reportable interest or dividends made with respect to the account. (3) Payor identification of accounts of the payee subject to backup withholding due to notified payee underreporting--(i) In general--(A) Notice from the Internal Revenue Service. If a payor receives a notice from the Internal Revenue Service under paragraph (c)(1) of this section, the payor must identify, exercising reasonable care, all accounts using the same taxpayer identification number for information reporting purposes as the one provided in the notice. The notice may provide, however, that the payor need only identify the account or accounts corresponding to any account number or designation and related taxpayer identification number used for information reporting purposes as that listed on the notice. (B) Notice from a broker. If a payor receives a notice from a broker under paragraphs (c) (1) and (2) of this section, the payor is not required to identify any account other than the account identified in the notice. (ii) Exercise of reasonable care. If an account identified pursuant to paragraph (c)(3)(i)(A) of this section contains a customer identifier that can be used to retrieve systemically any other accounts that use the same taxpayer identification number for information reporting purposes, the payor must identify all accounts that can be so retrieved. Otherwise, a payor is considered to exercise reasonable care in identifying accounts subject to withholding under section 3406(a)(1)(C) if the payor searches any computer or other recordkeeping system for the region, division, or branch that serves the geographic area in which the payee's mailing address is located and that was established (or is maintained) to reflect reportable interest or dividend payments. (iii) Newly opened accounts. (A) In general, a new account is not subject to withholding under section 3406(a)(1)(C) if the payee provides to the payor a Form W-9 (or other acceptable substitute) on which the payor may reasonably rely (within the meaning of Sec. 31.3406(h)-3(e)(2) without regard to Sec. 31.3406(h)-3(e)(2)(v)), unless the payor has actual knowledge (within the meaning of paragraph (c)(3)(iii)(B) of this section) that the statements made on the form are not true. (B) For purposes of paragraph (c)(3)(iii)(A) of this section, a payor is considered to have actual knowledge that a payee's statement that the payee is not subject to withholding under section 3406(a)(1)(C) is not true if-- (1) The employee or individual agent of the payor who receives the payee's certification knows that the statement is not true; (2) In conducting the investigation, if any, required by paragraph (c)(3)(iii)(C) of this section, the payor identifies any other accounts of the payee that are already subject to withholding under section 3406(a)(1)(C); or (3) In the course of processing the certification or in administering an account to which a certification relates, the payor discovers that the payor was previously notified by the Internal Revenue Service that the payee is subject to withholding

under section 3406(a)(1)(C) and no notice was received to stop withholding pursuant to section 3406(c)(3) prior to the time of the discovery. (C) Except as provided in this paragraph (c)(3)(iii)(C), a payor is not required to investigate whether the statements made on the Form W-9 described in paragraph (c)(3)(iii)(A) of this section are true. If, however, in opening a new account, the payor relies on the same Form W-9 (or appropriate substitute) that it relied on previously in opening another account, the payor must investigate whether any such existing account is subject to withholding under section 3406(a)(1)(C). Similarly, if the payor utilizes a universal account system described in the first sentence of paragraph (c)(3)(ii) of this section, and in opening a new account the payor searches its records to determine whether the new account should be identified under an existing identifier (because the payee has existing accounts with the payor), the payor must investigate whether any existing accounts identified with the same identifier are subject to withholding under section 3406(a)(1)(C).

(d) Notice from payors of backup withholding due to notified payee underreporting--(1) In general. If a payor receives notice from the Internal Revenue Service or a broker under paragraph (c)(1) of this section and is required to identify an account under paragraph (c)(3) of this section as an account of the payee, the payor must notify the payee in accordance with paragraph (d)(2) of this section that withholding due to notified payee underreporting has started. (2) Procedures. The payor must send the notice required by paragraph (d)(1) of this section to the payee no later than 15 days after the date that the payor makes the first payment subject to withholding due to notified payee underreporting. The payor must send the notice by first class mail to the payee at the payee's last known address. The notice to the payee required by paragraph (d)(1) of this section must state-- (i) That the Internal Revenue Service has given notice that the payee has underreported reportable interest or dividends; (ii) That, as a result of the underreporting, the payor is required under section 3406(a)(1)(C) of the Internal Revenue Code to withhold 31 percent of reportable interest or dividend payments made to the payee; (iii) The date that the payor started (or plans to start) withholding due to notified payee underreporting under section 3406(a)(1)(C); (iv) The account number or numbers that are subject to withholding due to notified payee underreporting; (v) That the payee must obtain a determination from the Internal Revenue Service in order to stop the withholding due to notified payee underreporting; and (vi) That while the payee is subject to withholding due to notified payee underreporting, the payee may not certify to a payor making reportable interest or dividend payments (or to a broker acquiring a readily tradable instrument for the payee) that the payee is not subject to withholding due to notified underreporting.

(e) Period during which backup withholding is required--(1) In general. If a payor receives notice from the Internal Revenue Service or a broker under paragraph (c)(1) of this section, the payor must impose withholding under section

3406(a)(1)(C) on all reportable interest or dividend payments with respect to any account of the payee required to be identified under paragraph (c)(3) of this section made after the close of the 30th business day after the day on which the payor receives that notice and before the stop date (as described in paragraph (e)(2) of this section). A payor may choose to start withholding under this paragraph (e)(1) at any time during the 30-business-day period described in the preceding sentence. (2) Stop withholding--(i) When no underreporting exists or undue hardship exists--(A) Stop date. In the case of a determination under paragraph (g)(3) (i) or (iii) of this section that no underreporting exists or that an undue hardship exists, the stop date is the day that is 30 days after the earlier of-- (1) The date on which the payor receives written notification from the Internal Revenue Service under paragraph (g) of this section that withholding is to stop; or (2) The date on which the payor receives a copy of the written certification provided to the payee by the Internal Revenue Service under paragraph (g) of this section that withholding is to stop. (B) Acceleration of stop date. A payor may choose to stop withholding at any time during the 30-day period described in paragraph (e)(2)(i)(A) of this section. (ii) When underreporting is corrected or bona fide dispute exists. In the case of a determination under paragraph (g)(3) (ii) or (iv) of this section that the underreporting has been corrected or that a bona fide dispute exists, the stop date occurs on the first day of January (immediately following a period of at least twelve months ending on October 15 of any calendar year in which the determination has been made) or if later, the stop date determined under paragraph (e)(2)(i) of this section. (3) Dormant accounts. The requirement that a payor withhold under this paragraph (e) on reportable interest or dividend payments made with respect to an account terminates no later than the close of the third calendar year ending after the later of-- (i) The date that the most recent reportable interest or dividend payment was made with respect to that account; or (ii) The date that the payor received notice under paragraph (c)(1) of this section.

(f) Notice to payees from the Internal Revenue Service— (1) Notice period. After the Internal Revenue Service determines under paragraph (b)(2) of this section that payee underreporting exists, the Internal Revenue Service will mail to the payee at least four notices over a period of at least 120 days (the notice period) before payors will be notified under paragraph (c)(1) of this section that the payee is subject to withholding due to notified payee underreporting. The notices may be accompanied by, or incorporated in, other notices provided to the payee by the Internal Revenue Service. (2) Payee subject to backup withholding. After the Internal Revenue Service provides the notices described in paragraph (f)(1) of this section, the Internal Revenue Service will send notices to payors under paragraph (c)(1) of this section unless--

(i) A payee obtains a determination under paragraph (g) of this section; or (ii) In the case of a payee who has filed a tax return, the Internal Revenue Service has not assessed the deficiency attributable to the underreporting. (3) Disclosure of names of payors and brokers. Pursuant to section 3406(c)(5) the Internal Revenue Service may require a payee subject to withholding due to notified payee underreporting to disclose the names of all the payee's payors of reportable interest or dividend payments and the names of all of the brokers with whom the payee has accounts which may involve reportable interest or dividend payments. To the extent required in the request from the Internal Revenue Service, the payee must also provide the payee's account numbers and other information necessary to identify the payee's accounts. (4) Backup withholding certification. After a payee receives a final notice from the Internal Revenue Service under paragraph (f)(1) of this section, the payee is not permitted to certify to any payor or broker, under penalties of perjury, that the payee is not subject to withholding under section 3406(a)(1)(C), until the payee receives the certification from the Internal Revenue Service under paragraph (g) of this section advising the payee that the payee is no longer subject to withholding under section 3406(a)(1)(C). A final notice will contain the information described in this paragraph (f)(4). See sections 6682 and 7205(b) for civil and criminal penalties for making a false certification.

(g) Determination by the Internal Revenue Service that backup withholding should not start or should be stopped— (1) In general. A payee may prevent withholding due to notified payee underreporting from starting, or stop the withholding once it has started, by requesting and receiving a determination from the Internal Revenue Service under one or more of the provisions of paragraph (g)(3) of this section. Following its review of a request for a determination under paragraph (g)(3) of this section, the Internal Revenue Service will either make the determination or provide the payee with a written report informing the payee that the request for determination is being denied and the reasons for the denial. If a determination is made during the notice period (as defined in paragraph (f)(1) of this section), the payee is not subject to withholding due to notified payee underreporting with respect to any taxable year for which a determination was made. If a determination is made after the notice period, the Internal Revenue Service will, at the time prescribed in paragraph (g)(2) of this section, provide written certification to a payee that withholding is to stop, and will notify payors who were contacted pursuant to paragraph (c)(1) of this section to stop withholding. A broker who (in its capacity as payor) under this paragraph (g)(1) receives a notice from the Internal Revenue Service or a copy of the certification provided to a payee by the Internal Revenue Service is not required to provide a corresponding notice to any payors whom the broker has previously notified under paragraph (c)(2) of this section. (2) Date notice to stop backup withholding will be provided--(i) Underreporting corrected or bona fide dispute. If the Internal Revenue Service makes a determination under paragraph (g)(3) (ii) or (iv) of this section during the 12-month period ending on October 15 of any calendar year (as described in paragraph (e)(2)(ii) of this section), the Internal Revenue Service will provide the certification

and the notices described in paragraph (g)(1) of this section no later than December 1 of that calendar year. (ii) No underreporting or undue hardship. If the Internal Revenue Service makes a determination under paragraph (g)(3)(i) or (iii) of this section, the Internal Revenue Service will provide the notices described in paragraph (g)(1) of this section no later than the 45th day after the day on which the Internal Revenue Service makes its determination. (3) Grounds for determination. The Internal Revenue Service will make a determination that withholding due to notified payee underreporting should not start or should stop once it has started if the payee-- (i) Shows that there was no payee underreporting (as provided in paragraph (g)(4) of this section) for each taxable year with respect to which the Internal Revenue Service determined under paragraph (b)(2) of this section that there was payee underreporting; (ii) Corrects any payee underreporting (as provided in paragraph (g)(5) of this section) for each taxable year with respect to which the Internal Revenue Service determined under paragraph (b)(2) of this section that there was payee underreporting; (iii) Shows that withholding will cause or is causing an undue hardship (as defined in paragraph (g)(6) of this section) and that it is unlikely that the payee will underreport interest or dividend payments again; or (iv) Shows that a bona fide dispute exists regarding whether any underreporting has occurred (as provided in paragraph (g)(7) of this section) for each taxable year with respect to which the Internal Revenue Service determined under paragraph (b)(2) of this section that there was payee underreporting. (4) No underreporting. A payee may show that no underreporting of reportable interest or dividends payments exists by presenting-- (i) Receipts or other satisfactory documentation to the Internal Revenue Service showing that all taxes relating to the payments were reported; or (ii) Evidence showing that the payee did not have to file a return for the taxable year in question (e.g., because the payee did not make enough income) or that the underreporting determination was based upon a factual, clerical, or other error. (5) Correcting any payee underreporting--(i) Before issuance of a statutory notice of deficiency. Before a statutory notice of deficiency is issued to a payee pursuant to section 6212, the payee may correct underreporting-- (A) By filing a return if one was not previously filed and including the unreported interest and dividends thereon; (B) By filing an amended return in the event a return was filed and including the unreported interest and dividends thereon; or (C) By consenting to the additional assessment according to applicable notices and forms sent to the payee by the Internal Revenue Service with respect to the underreporting, and paying taxes, penalties, and interest due with respect to any underreported interest or dividend payments.

(ii) After issuance of a statutory notice of deficiency. After a statutory notice of deficiency is issued to a payee-- (A) The payee may correct underreporting at any time, by filing a return if one was not previously filed and paying the entire deficiency and any other taxes including penalties and interest attributable to any payee underreporting of interest or dividend payments; or (B) The payee may correct underreporting after the mailing of the statutory notice of deficiency but before the expiration of the 90-day or 150-day period described in section 6213(a) or, if a petition is filed with the United States Tax Court, before the decision of the Tax Court is final, by making a remittance to the Internal Revenue Service of the amounts described in paragraph (g)(5)(ii)(A) of this section. The payee must specifically designate in writing that the remittance is a deposit in the nature of a cash bond. (iii) Special rules. For purposes of paragraph (g)(5)(ii) of this section, the payee will not be deemed to have corrected the payee underreporting under paragraph (g)(5)(ii)(B) of this section after the remittance is returned to the payee in the manner described in any applicable administrative procedure. For further guidance on a deposit in the nature of a cash bond, see subparagraph 2 of section 4.01 of Rev. Proc. 84-58 (1984-2 C.B. 501). (See Sec. 601.601(d)(2) of this chapter.) Once the remittance is returned to the payee, the rules of this section will apply. If the Internal Revenue Service previously contacted payors of the payee to start withholding with respect to the notified payee underreporting, however, the Internal Revenue Service will recontact those payors to start withholding under paragraph (c)(1) of this section with respect to the payee underreporting without regard to paragraph (f) of this section. (6) Undue hardship--(i) In general. A determination of undue hardship will be based on the overall impact to the payee of having reportable interest or dividend payments withheld at a 31 percent rate under section 3406. In addition, a determination of undue hardship will be made only if the Internal Revenue Service concludes that it is unlikely that any payee underreporting will occur again. (ii) Factors. Factors that will be considered in determining whether withholding causes undue hardship include, but are not limited to, the following-- (A) Whether estimated tax payments, and other credits for current tax liabilities, or amounts withheld on employee wages or pensions, in addition to withholding under section 3406, would cause significant overwithholding; (B) The payee's health, including the payee's ability to pay foreseeable medical expenses; (C) The extent of the payee's reliance on interest and dividend payments to meet necessary living expenses and the existence, if any, of other sources of income; (D) Whether other income of the payee is limited or fixed (e.g., social security, pension, and unearned income); (E) The payee's ability to sell or liquidate stocks, bonds, bank accounts, trust accounts, or other assets, and the consequences of doing so;

(F) Whether the payee reported and timely paid the most recent year's tax liability, including interest and dividend income; and (G) Whether the payee has filed a bankruptcy petition with the United States Bankruptcy Court. (7) Bona fide dispute. The Internal Revenue Service may make a determination under this paragraph (g)(7) if there is a dispute between the payee and the Internal Revenue Service on a question of fact or law that is material to a determination under paragraph (g)(3)(i) of this section and, based upon all the facts and circumstances, the Internal Revenue Service finds that the dispute is asserted in good faith by the payee and there is a reasonable basis for the payee's position.

(h) Payees filing a joint return--(1) In general. For purposes of this section, if payee underreporting is found to exist with respect to a joint return, then the provisions of this section apply to both payees (i.e., the husband and wife). As a result, both payees are subject to withholding on accounts in their individual names as well as accounts in their joint names. Either or both payees may satisfy the criteria for a determination that no payee underreporting exists, that the underreporting has been corrected, or that a bona fide dispute exists (as provided in paragraph (g)(3) (i), (ii), or (iv) of this section). Both payees, however, must satisfy the criteria for a determination that withholding will cause or is causing undue hardship (as provided in paragraph (g)(3)(iii) of this section). (2) Exceptions--(i) Innocent spouse. A spouse who files a joint return may obtain a determination that withholding should stop or not start with respect to payments made to his or her individual accounts, if the spouse shows that-- (A) He or she did not underreport income because he or she is a spouse described in section 6013(e), i.e., innocent spouse; or (B) There is a bona fide dispute regarding whether he or she is an innocent spouse and hence did not underreport income. (ii) Divorced or legally separated payee. A payee who, at the time of the request for a determination under paragraph (g) of this section, is divorced or separated under State law may obtain a determination that undue hardship exists (or would exist) under paragraph (g)(3)(iii) of this section with respect to reportable interest or dividend payments made to his or her individual accounts if the divorced or legally separated payee satisfies the criteria for a determination under paragraph (g)(6) of this section.

(i) Reserved.(j) Penalties. For the application of penalties related to this section, see sections 6682 and 7205(b).[T.D. 8637, 60 FR 66119, Dec. 21, 1995]

APPENDIX BRadinsky v. United States

Summary: Radinsky was not required to file a tax return and pay a tax because he did not file a tax return and there was no assessment of a tax. The tax return is the assessment, as expressed in Form 4490, unless the IRS creates a fake one under 6020(b).Albert E. and Henrietta R. Radinsky, Plaintiffs, v. United States of America 622 F. Supp. 412; 1985 U.S. Dist. LEXIS 16824; 86-1 U.S. Tax Cas. (CCH) P9161; 56 A.F.T.R.2d (RIA) 6157 August 14, 1985, DecidedAugust 14, 1985, Filed JUDGES:Richard P. Matsch, Judge.OPINIONBY:MATSCH OPINION:[*413] MEMORANDUM OPINION AND ORDER FOR JUDGMENT Richard P. Matsch, Judge.This is an action brought by Albert and Henrietta Radinsky to recover $8,012.17 wrongfully collected by the Internal Revenue Service (IRS) under threat of levy. The facts in the action are undisputed and set forth in the Memorandum Opinion and Order of May 2, 1985, denying the United States' motion to dismiss, and are incorporated herein by reference. The matter is now before the court on the parties' cross motions [**2] for summary judgment.28 U.S.C. § 1346(a)(1) confers jurisdiction upon this court and waives the sovereign immunity of the United States regarding claims for sums wrongfully collected under the internal revenue laws. In a suit under this section, a plaintiff "may challenge the constitutionality, legality or fairness of any tax statute or amount assessed or collected." White v. C.I.R., 537 F.Supp 679 (D.Colo. 1982). In the two briefs filed in this action, the IRS has not explained where it finds statutory authority to employ its tax collection procedures to collect from the plaintiffs a sum of money that has never been assessed as a tax. Since the IRS had no authority to adjust the plaintiffs' account or employ deficiency procedures in these circumstances, it is self-evident that the collection of the sum in this manner was wrongful.The IRS insists that only "taxpayers" have recourse against the United States under 28 U.S.C. § 1346(a)(1), and that the plaintiffs are not "taxpayers" because no tax has been assessed. "The United States agrees that taxpayers do have recourse

against the United States under 28 U.S.C. § 1346(a)(1). But in this case, the plaintiffs are not taxpayers." [**3] (Defendant's motion for summary judgment at 2).[If you read the full text in your law library, you will learn that the reason why they were not recognized as taxpayers for the disputed tax periods is because they did not file any tax returns] – this note added by editor]The government is wrong on both counts. First, the statute provides federal district court jurisdiction for a civil action to recover any tax, penalty, or sum alleged to have been wrongfully collected under the internal revenue laws. There is no requirement that the plaintiffs be taxpayers challenging some assessment. The government's interpretation of the statute would make "sum" superfluous. In the course of holding that § 1346(a)(1) requires full payment of an assessment before an income tax refund suit can be maintained in federal district court, the Supreme Court has noted: . . . We believe that the statute more readily lends itself to the disjunctive reading which is suggested by the connective "or." That is, "any sum," instead of being related to "any internal-revenue tax" and "any penalty," may refer to amounts which are neither taxes nor penalties. Under this interpretation, the function of the phrase is to permit suit for recovery of items which might not be designated as either "taxes" or "penalties" by Congress or the Courts.Flora v. United States, 362 U.S. 145, 149, 4 L. Ed. 2d 623, 80 S. Ct. 630 (1960). [**4] Accepting the argument that the amount in question is not a tax or penalty, this action is clearly maintainable to recover a "sum." Therefore plaintiffs who are not "taxpayers" as defined by the United States in this action, i.e. persons who are challenging an assessment, can indeed use § 1346(a)(1). The plaintiffs have standing to bring this action since they were the target of the IRS's collection efforts. Second, it is too late for the government to argue that the plaintiffs are not taxpayers. Everything in the record indicates that the IRS attempted to collect, and succeeded in collecting, the disputed money as a "tax." The February 1984 letter received by the Radinskys, attached as exhibit "E" to the complaint, after reciting the plaintiffs' "Taxpayer identification number" stated (emphasis added)Dear Taxpayer We have previously written to you about the Federal tax shown below. It is overdue and you should pay the total amount due immediately . . . .[*414] We have enclosed a copy of Publication 568A, The Collection Process (Income Tax Accounts), which provides information about our collection procedures and your rights in relation to them. Your attention [**5] is specifically directed to our Enforced Collection policy on page 2.Additionally, Exhibit D attached to the complaint is a "STATEMENT OF ADJUSTMENT TO YOUR ACCOUNT AND BILL FOR TAX DUE". The statement noted that the plaintiffs had no balance due before the adjustment. After the "adjustment" they owed $ 5,444.00 for an "erroneous credit" and $ 2,380.20 interest. The IRS always treated this matter as the recovery of tax. The United States cannot argue that because an assessment was erroneous, or an assessment was never made, a person from whom the IRS has collected money cannot employ §

1346(a)(1) for the semantic reason that only individuals correctly assessed can be "taxpayers."The United States misperceives the issue in this matter as whether the plaintiffs were initially entitled to the money. The dispositive issue is instead whether the IRS has followed the law in collecting the money it mistakenly sent to the plaintiffs. While this court is aware that the plaintiffs may receive a windfall, the IRS can only recover the sum pursuant to powers granted by Congress. The United States Code allows the IRS to bring a civil action under 26 U.S.C. § 7405 to recover refunds mistakenly [**6] paid to the wrong taxpayer. See United States of America v. Young, 79-2 U.S.T.C. para. 9609 (D.Del. 1979). The IRS cannot ignore this statutory requirement, obtain the money by threat of levies and enforced collection proceedings, and then raise in actions such as this the defense that the plaintiffs are not entitled to the money. The short answer to the defense is that the Radinskys are entitled to the money unless the IRS brings a civil action within two years. 26 U.S.C. 6532(b). Congress certainly knew that by imposing a strict statute of limitations persons who, for example, received erroneously large refunds could "keep money that did not belong to them" (defendant's motion at 2 n.2) unless the IRS promptly brought a civil action to recover the money. Any windfall is a result of Congressional action, and there is no convincing distinction between a refund that is too large and a refund that is sent to the wrong person.Finally, the United States suggests that the plaintiffs should not have paid the money but rather should have contested the threatened levy. This contention is totally without merit. Payment of the amount and the filing of a refund claim are prerequisites to [**7] jurisdiction under § 1346(a)(1). The United States has spent considerable energy over the years arguing that a fundamental principle in tax litigation should be "pay first and litigate later." See e.g., Flora v. United States, 357 U.S. 63, 75, 2 L. Ed. 2d 1165, 78 S. Ct. 1079 (1958), aff'd on rehearing, 362 U.S. 145, 4 L. Ed. 2d 623, 80 S. Ct. 630 (1960). It is wrong to fault the plaintiffs for following a procedure long advocated by the IRS.Congress has provided in 28 U.S.C. § 2411 for recovery of interest on any "overpayment" of "any internal-revenue tax." Having concluded that this is an action to recover a sum improperly collected by the IRS that bore no relation to the tax liability of the plaintiffs, there is no basis for an award of interest. Nor is there any statutory or other basis for attorney's fees.Accordingly, it isORDERED, that the defendant's motion for summary judgment is denied, and it isFURTHER ORDERED, that the plaintiffs' motion for summary judgment is granted, and it isFURTHER ORDERED, that the clerk enter judgment in the amount of $8,012.17 in favor of the plaintiffs against the defendant. Plaintiffs shall have costs of action, upon the filing [**8] of a bill of costs within ten days.