|(NOTICE: The contents
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which no longer exists.)
|The following is a facsimile of excerpts from an actual Appeal
of a Levy on Social Security Old Age Benefits to Internal Revenue
Service, Fresno, CA. This IRS office issued penalty assessments
under IRC 6702 for tax years 1994 and 1995 while the tax returns
were filed in Ogden, UT. IRS-Ogden assessed IRC 6702 penalties for
1991, 1992, and 1993 in September, 1995. The penalty assessment
for 1991 was more than three years after IRC allows for such penalties.
No proceeding to determine liability were allowed due to nefarious
IRS procedures meant to deny due process. IRS uses IRC 6702 as a
“red herring” to incite taxpayers into court where federal courts
will judicially punish outspoken taxpayers without leaving any further
recourse for unruly taxpayers.
Penalties for all tax years
in question were assessed after IRS made a written determination
of any tax liability. Such a return replaces an original filed return.
Therefore, assessments of IRC 6702 were made on the IRS determination
of tax liability and not on the return filed by the taxpayer. Of
course, this was ignored by the IRS Appeals Manager.
July 19, 2005 XXXXXXXX
P.O. Box XXXX
Appeals SSN: XXXXXXXXX
Internal Revenue Service
REQUEST FOR A COLLECTION DUE PROCESS (CDP) HEARING
UNDER INTERNAL REVENUE CODE 6330(a)(3)(B).
This request will
address issues relating to:
• unpaid assessments,
• challenges to the appropriateness of collection actions,
• challenges to the existence of
civil penalty assessment liability,
• taxpayer did not otherwise have an opportunity to dispute tax
. . . (some original text
has been omitted for sake of brevity)
1. Lawful returns were filed for each year in question with overpayment
2. IRS made a determination of tax liability prior
to assessment of Civil Penalty pursuant to IRC 6702. [IRC 6020(b);
3. Assessment of Civil Penalty pursuant to IRC 6702
is not applicable to the type of tax return filed. [Public Law 97-248,
Title III, Subtitle C.]
4. Internal Revenue Service has the burden
of proof, in a proceeding, of whether or not any person is liable
for a penalty under IRC 6702. [IRC 6703.]
5. Federal Tax Liens
filed without proper notice and denial of right to a fair hearing.
[IRC 6320; 6321.]
6. Current seizure of Social Security Retirement
(SSR) benefits is without proper notice thereby denying a right
to a fair hearing. [IRC 6330(a), 6331(a)(d).]
7. IRS classified
SSR benefits as income, for purposes of levy, for Tax Years 1991,
[IRC 6331(a), 6334(a)(9), (d)(3), (f).]
unnoticed levy is imposed on income exempt from levy. [IRC 6334(a)(9),
(c), (d), (f)].]
8. IRS classified SSR benefits as Federal payments
not based on income, for purposes of levy, for Tax Years 1994 and
1995. [IRC 6331(h)(1), (2)(A).]
9. IRS has the authority to release
levy creating an economic hardship due to the financial condition
of the taxpayer. [IRC 6343(a)(1)(D).]
10. IRS can return the
amount of money equal to the money levied upon if it is determined
IRS has wrongfully levied on SSR. [IRC 6343(b)(2), (d)(1)(2)(A).]
11. Interest shall be allowed and paid at the overpayment rate established
[IRC 6343 (c)(1).]
12. Release all liens for
any assessment of Civil Penalties under IRC 6702.
ITEM 1. Lawful returns were filed for
each year in question with overpayments refunded.
Individual Tax Return was filed for Tax Years(TY) 1994 and 1995
with filing status of Single with one exemption. Income tax liability
was satisfied by wage withholding through payroll deductions. A
sequence of events follows:
April 15, 1995: Form
1040 mailed stating filing status of Single with one exemption.
October 3, 1997: IRS determination of tax liability and adjustment.
October 13, 1997: IRS levies Civil Penalty pursuant to IRC 6702
for filing a frivolous tax shelter return.
December 12, 1997:
Form 1040X mailed in response to IRS determination of October 3,
March 10, 1998: IRS proposed adjustment based on Form 1040X
mailed December 12, 1997.
March 31, 1998: Second Form 1040X mailed
in response to IRS proposed adjustment of March 10, 1998 to correct
IRS accounting errors.
Overpayment: Applied to return penalties.
April 14, 1996: Form 1040 mailed stating filing status
of Single with one exemption.
September 13, 1997: IRS determination
of tax liability and adjustment.
October 20, 1997: IRS levies
Civil Penalty pursuant to IRC 6702 for filing a frivolous tax shelter
December 19, 1997: Form 1040X mailed in response to IRS
determination of September 13, 1997.
Overpayment: Applied to
ITEM 2. IRS made a determination of tax
liability prior to assessment of Civil Penalty pursuant to IRC 6702.
[IRC 6020(b); IRC 6651(g), IRC 6702.]
IRC 6020(b) states in part:
. . .
(b) Execution of return by Secretary
(1) Authority of
Secretary to execute return
. . . Secretary shall make such return
from his own knowledge and from such information as he can obtain
through testimony or otherwise.
(2) Status of returns
return so made and subscribed by the Secretary shall be prima facie
good and sufficient for all legal purposes.
When IRS makes
a determination of tax liability it creates a replacement return
resulting in the initial tax return lacking relevancy. Any determination
by the IRS of liability of a taxpayer would include current relevant
penalties and tax due based on information from the initial taxpayers
return and IRS records of income and tax payments for the tax year.
Herein lies the issue. If IRS makes a return from its records
and information from the initial return filed by a taxpayer then
any subsequent penalty assessments would impose against the determination
of the IRS and cannot lie against the initial taxpayer return. For
Tax Years 1994 and 1995, it is evident the Civil Penalty was not
assessed in timely manner to lie against the income tax return of
Amended returns were filed, based on an IRS
determination of tax liability, resulting in overpayment refunds
due to income tax withholding on wages.
ITEM 3. Assessment
of Civil Penalty pursuant to IRC 6702 is not applicable to the type
of tax return filed. [Public Law 97-248, Title III, Subtitle C.]
In 1982, Congress passed Public Law 97-248. Title III, Subtitle
C, to address the promotion of abusive tax shelters. It is in this
Public Law we find the purpose of IRC 6700, 6701, 6702, 6703, and
6704. (An extended discussion of these sections of the Internal
Revenue Code is included in the APPENDIX to conserve brevity, as
much as possible, in this Discussion section.)
Public Law 97-248, the goal of Congress becomes clear. It is to
emphasize to promoters, organizers, information and tax return preparers,
and filers of tax returns for tax shelters that nothing short of
the highest level of fiduciary responsibility would be tolerated
in the management of tax shelters. This severe approach to regulation
is meant to be protection from nefarious schemes directed towards
consumers, investors, and affiliates of tax shelter plans.
At hand is the issue of whether the above sections of IRC are
applicable to a tax return of an individual filer declaring only
personal income and tax information?
IRC 6702 was levied
against this taxpayer who also organized, prepared, and filed a
Form 1040 Individual Tax Return with a filing status of Single.
If IRC 6702 is applicable to filing a return declaring only personal
income information by an individual then would not penalties under
IRC 6700 also apply for entities for organizing and preparing a
IRS has mistakenly taken IRC 6702 out of context,
with respect to the purpose of Congress to penalize promoters or
filers of abusive tax shelter returns, by assessing civil penalties
under IRC 6702 on individual taxpayers with no connection to an
abusive tax shelter.
A filer of a tax return could be liable
for civil penalties under IRC 6702 if the filed return could be
adjudged to be under the scrutiny of IRC 6700 or 6701. It is apparent
this is why Congress intrinsically linked 6700, 6701, 6702, and
6703. These sections of IRC were legislated solely for consumer
protection and are not applicable to filers of tax returns disclosing
only personal income and tax information.
ITEM 4. Internal
Revenue Service has the burden of proof, in a proceeding, of whether
or not any person is liable for a penalty under IRC 6702. [IRC 6703.]
IRS made a determination of liability for civil penalties pursuant
to IRC 6702. IRC 6703 mandates burden of proof for a taxpayer’s
liability under IRC 6702 shall be on the IRS. IRC 6703 also requires
this burden of proof be met in a proceeding where a taxpayer can
IRS has not provided any access to a proceeding/hearing
to meet its obligation of proving a taxpayer’s liability for civil
penalties under 6702. While not directly relating to the Notice
of Levy at the heart of this appeal, IRS has also assessed this
same penalty for Tax Years 1991, 1992, and 1993 and levied Social
Security Retirement benefits since April 3, 2005 thereby reducing
benefits from $1039.00 to $683.33. No Notice of Levy was provided
by IRS or forwarded by the Social Security Administration even in
the face of a Freedom of Information Act (FOIA) request for the
document. Without Notice of Levy, an opportunity for a hearing and
submittal of a “Statement of Exemptions and Filing Status” for income
exemption under IRC 6331(a), 6334(a)(9), and 6334(d)(3) were denied
even after repeated requests for due process. (See Exhibits)
Further, IRS has issued liens, levied on property, levied on
federal payments, and failed to provide a hearing to meet its burden
of proof for liability of a taxpayer pursuant to 6703 for civil
penalty assessments. Since 1995, when IRS assessed civil penalties
under 6702 for Tax Years 1991, 1992, 1993 and in 1997 assessed penalties
under 6702 for Tax Years 1994 and 1995, no Notice of a Hearing and
no proceeding/hearing, where a taxpayer could participate, was available
to address an “in-house” determination of liability.
5. Federal Tax Liens filed without proper notice and denial of right
to a fair hearing. [IRC 6320; 6321; 6323(f); 6326(a).]
tax liens were filed without first meeting a burden of proof, in
a proceeding prescribed by IRC 6703, to establish liability for
civil penalties under IRC 6702. The formal filing of a Federal tax
lien to allow levy on property is premature to a finding of liability
for civil penalties. Liens for civil penalties assessed for Tax
Years 1991, 1992, and 1993 were filed without proper notice and
opportunity for a hearing. If liens for Tax Years 1994 and 1995
were also filed, again there was no notice and opportunity for a
hearing to establish liability for assessments.
ITEM 6. Current
seizure of Social Security Retirement (SSR) benefits is without
proper notice thereby denying a right to a fair hearing. [IRC 6330(a),
There is currently a levy on Social Security
Retirement benefits for Tax Years 1991-1993. There is now an additional
levy on the same benefits for Tax Years 1994 and 1995. While Notice
of Levy was received for Tax Years 1994 and 1995, no Notice of Levy
and opportunity for a hearing was received for the current levy
concerning Tax Years 1991-1993. There are two levies running concurrently
on the same Social Security benefits.
ITEM 7. IRS classified
SSR benefits as income, for purposes of levy, for Tax Years 1991,
1992, 1993. [IRC 6331(a), 6334(a)(9), (d)(3), (f).]
unnoticed levy is imposed on income exempt from levy.
(c), (d), (f).]
The levy imposed, without notice, on benefits
since April 3, 2005 appears to consider Social Security benefits
as “a payment for which eligibility is based on income” and has
allowed an income exemption for Married Filing Separately with one
Exemption as a default. Despite several requests for a copy of the
Notice of Levy from Social Security and the IRS, to include an FOIA
request, and despite the fact the IRS is aware my current filing
status is Married Filing Jointly with Two Exemptions (Current tax
return mailed March 21, 2005), these agencies continue to deny proper
notice and the proper income exemption.
ITEM 8. IRS classified
SSR benefits as Federal payments not based on income, for purposes
of levy, for Tax Years 1994 and 1995. [IRC 6331(h)(1), (2)(A)]
IRS is collecting on two concurrent levies on a single Federal
While the Final Notice of Levy on Social Security
Benefits dated July 4, 2005 fails to state its specific authority,
it does state “the law allows the IRS to take up to 15% of your
benefits...”, presumably, the IRS is making reference to IRC 6331(h)(1).
A continuing levy on specified payments is allowed under
IRC 6331(h)(1), with the approval of the IRS, notwithstanding IRC
6334 income exemptions based on filing status and allowed personal
exemptions as declared on a current tax return. However, IRC 6331(h)(2)(A)
makes an exception for Federal payments “...for which eligibility
is based on . . . income...” to be levied continuously up to 15%.
Clearly, eligibility to receive a Social Security Retirement
benefit is based on income, income exceeding a certain amount will
reduce benefits, and a certain amount of income will make benefits
taxable under income tax laws. So, Social Security Retirement benefits
must qualify for an income exemption to levy under the provisions
of IRC 6334(a)(9), (d)(3). This analysis is confirmed by IRC 6334(f).
Then, it follows, IRS has levied on the same benefit and classified
the benefit in two different categories in two separate levies where
one improperly noticed of levy classified Social Security Retirement
benefits a specified Federal payment ...” for which eligibility
is based on income.”
The second levy is noticed for a 15%
continuous levy on the same specified Federal payment where IRS
declares eligibility is not based on income.
IRS has not
provided proper authority under IRC for this approach to issue more
than one levy on the same Social Security Retirement benefit while
declaring contrasting criteria for amount subject to levy.
ITEM 9. IRS has the authority to release levy creating an economic
hardship due to the financial condition of the taxpayer. [IRC 6343(a)(1)(D).]
Social Security Retirement benefits are my only ongoing source
of income. These two levies are creating an extreme economic hardship
on me and my spouse. Because a proper income exemption was not allowed
since April 3, 2005 on the first levy for Tax Years 1991, 1992,
and 1993, my benefits have been reduced by almost 50% without any
end in sight. The second levy will further reduce my benefits by
15% for at least another year or more.
Presently, my benefit
has been reduced from $1117.00 to $683.83 per month. If the second
levy is imposed on my benefit then a monthly payment would be reduced
even further. Either of these levies has and will impose an economic
hardship that is not warranted under the circumstances.
10. IRS can return the amount of money equal to the money levied
upon if it is determined IRS has wrongfully levied. [IRC 6343(b)(2),
Social Security Retirement benefits have been
wrongfully levied upon since April 3, 2005. There are provisions
in law for the IRS to return monies wrongfully taken and cure this
ITEM 11. Interest shall be allowed and paid at the
overpayment rate established under 6621. [IRC 6343 (c)(1).]
A reduction of Social Security Retirement benefits began on
April 3, 2005, through levy without notice and opportunity for a
hearing, and are continuing. IRC provides for not only a return
of wrongfully levied property but interest paid at the overpayment
rate prescribed by IRC 6621.
ITEM 12. Release all liens for
any assessment of Civil Penalties under IRC 6702.
(j)(2); 6325(a)(1), (f)(1)(A); 6326(a), (b).]
The IRS has
found neither liability, in a proceeding, for the amounts assessed
under IRC 6702 nor for all interest imposed on such assessments.
Without a finding of liability prescribed by IRC 6703 any lien is
The IRS may issue a certificate of
release in the same office where any notice of lien relating to
assessments under IRC 6702 has been filed. Any lien referred to
in a certificate shall be conclusive and contain a statement the
filing of such a lien was erroneous.
This is a written request
for the IRS to promptly notify credit reporting agencies of the
withdrawal of any notice of lien with respect to civil penalty assessments
under IRC 6702.
The unlawful imposition of liens on property,
levies on income, and unjustified debit reports to credit
agencies has caused loss of property, loss of employment credibility,
and loss of financial opportunities without due cause.
The opportunity to request this appeal is found in IRS Final
Notice Before Levy On Social Security Benefits dated July 4, 2005.
This request for an appeal is timely filed by certified mail and
return receipt to Office of Appeals, Internal Revenue Service, Fresno,
While this request for an appeal is allowed for Tax Years
1994 and 1995, an expanded appeal is requested to include a levy
on the same income, without notice and opportunity for a hearing,
for Tax Years 1991, 1992, and 1993. The issues for all years, 1991-1995
• Civil penalties assessed without a finding
of liability or notice and opportunity for a hearing.
penalties assessed after an IRS determination of tax liability.
• Civil penalties assessed under incorrect Internal Revenue Code.
• Liens filed without a finding of liability and without proper
notice or opportunity for a hearing.
• Levy imposed on benefits
without proper notice or opportunity for a hearing.
• Levy imposed
on benefits without allowing lawful income exemption.
levies imposed on a single income.
Log of Events
and List of Exhibits.
Exhibit A. to Exhibit N.
End of Document
AUTHOR’S NOTE: Some original
text has been omitted for sake of brevity.The Appeal decision only
stated the IRS nefarious collection procedure was proper and failed
to address whether any taxpayer liability exists for penalty assessments
under IRC 6702. It should also be noted this administrative appeal
was allowed only as a non-appealable decision in district court.
Using this subversive technique, IRS has effectively blocked any
court appeal of a bogus IRS administrative decision. Here we have
a clear C.Y.A. procedure obviously supported by IRS upper eschalon,
Department of Treasury, Federal courts, the Senate Finance Committee,
the House Ways and Means Committee, and the Social Security Administration.
The extent of corruption is astounding.
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