IRS and Due Process

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This is a facsimile of a letter responding to an adverse decision on all appeal issues from IRS-Fresno. This was one of the IRS offices that originally and wrongfully assessed IRC 6702 penalties on a taxpayer return of tax.
March 29, 2006

Appeals Team Manager In Re:
Internal Revenue Service Collection Due Process-Levy,
Campus Appeals Office Decision Letter, Mar 01, 2006.
M/S 55201
5045 E. Butler
Fresno, CA 93727-5136

Dear Mr. ZZZZZ:

I am in receipt of your DECISION LETTER CONCERNING EQUIVALENT HEARING UNDER SECTION 6320 and/or 6330 of the Internal Revenue Code dated March 1, 2006 and received this Decision on March 3, 2006.

At the outset I am disappointed you did not reach a decision on any of the twelve outstanding issues expressed in my Form 12153 Request for a Collection Due Process Hearing. Because a levy was issued from two IRS offices on the same Social Security benefit for the same wrongfully assessed penalties for the same tax years, two Form12153’s were timely filed with IRS/Fresno and IRS/Cincinnati. Of course, you chose not to address this situation where I was not properly noticed prior to levy due to interference of documents by Social Security officers at Richmond, CA. (Note: SS officers refused to forward taxpayer pages of the Notice of Levy in order to assist IRS in collecting at the lowest default rate of exempt income category. A clear IRS and Social Security conspiracy to abuse taxpayer rights. )

Is your decision comprehensive or, as I read it, with respect to proper notice and opportunity to a hearing, only based on the document you referred to as “L1058, Notice of Intent to Levy and Your Right to a Hearing” and your statement it was sent per IRC 6331(a)? This document is part of the “lack of proper notification” issue raised in Form 12153. It would have been a simple matter to just give me the document(s) by regular mail to my residence at any time after liens were filed and prior to any levy. I believe it is the intent of Congress a person actually is “given” documents from the IRS and the IRS can establish the person has possession of any notices issued. As of this writing, I still have not been “given” proper notice of any lien or levy.

I believe it is improper to reach a decision on penalty assessments based on a document only you possess and intentionally, or neglected, failed to provide such documents or proper notice of the existence of such a document to a affected taxpayer.

I am also disappointed you reached for a decision, by expressing a false maxim, that all issues are “frivolous or groundless”. I believe your decision in this respect is flawed in the worst way. You failed to provide not one authority for a blanket dismissal of pertinent issues relating to wrongfully assessed penalties, failure of the IRS to meet its burden of proof for taxpayer liability, lack of proper notice for liens and levies, and failure to allow a taxpayer to meaningfully participate in appeals procedures.

You seem to base all your judgment on my filing of a “zero return” for tax years at issue. If I were given an opportunity to meaningfully participate with a face to face appeal hearing, my first request of you would be to produce any “zero return” filed by me for any tax year. You would be unable to meet this burden as I filed lawful income tax returns for all years at issue and not one return meets your definition of a “zero return.” (Note: tax returns for all years at issue are unavailable according to IRS records. IRS conveniently “lost” all returns apparently to conceal the fact all returns were not “zero returns” as the Appeals officer alleged.)

The second request I would make of you, had I been given an opportunity to meaningfully participate in a face to face appeal hearing, would be for you to establish I was not in full compliance with the filing of tax returns. I filed all required income tax returns for tax years at issue and continuously to the current tax year and received rebates for overpayment for tax years 1993, 1994, and 1995. Neither was I required to file any other type of return of tax nor did I have a duty to act with respect to filing a return of tax for any other person. And at issue, my liability for filing a return of tax as described under Section 6702, which I was not required to file, has yet to be established in a proceeding as required by Section 6703.

Of course, no notice and demand is required for a penalty under Section 6702, as you mistakenly stated in your decision, as it is for Section 6700 or 6701 pursuant to Section 6703. This is because when Congress implemented Pub. L 97-248, in its infinite wisdom, it included a penalty for an individual (who has a duty to act) who files what purports to be a return of tax claiming any deduction, credit, or other tax benefit by reason of a tax shelter or on behalf of a person assessed a penalty under Section 6700 or 6701. When a person is assessed a penalty under Section 6700 or 6701 requests a refund, refund is denied, files in district court for refund and proof of liability for penalties under Section 6700 or 6701 and 6702 by the IRS, the liability of an individual assessed a penalty under Section 6702 would also be at issue due to the fact a return of tax meeting violations outlined in Section 6702 are dependent on violations of a person under Section 6700 or 6701 and the fact the return of tax was signed and filed by such individual. So, the liability for a violation of Section 6702 depends on the liability of a person assessed a penalty for a violation of 6700 or 6701. I was not required to file a return of tax for a tax shelter nor did I have a duty to act on behalf of any person where such person was assessed a penalty under 6700 or 6701. Section 6702 was wrongfully assessed in my case.

And, of course, the individual referred to in Section 6702 may or may not be the same person assessed a penalty under Section 6700 or 6701 but must be a person such as a officer or employee of a corporation or a member or employee of a partnership or entity, plan, arrangement, or transaction where a significant purpose of the structure is the avoidance or evasion of Federal income tax for a direct or indirect potential participant (i.e. tax shelter) and such individual has a duty to act in respect of which the violation occurs like filing a return of tax which does not contain information on which the substantial correctness of the self-assessment may be judged and this conduct is due to a desire to delay or impede the administration of Federal income tax laws on behalf of an employer, or a corporation or a partnership, etc. A taxpayer can not delay or impede the administration of Federal income tax laws!

Once a taxpayer signs, under penalty of perjury, an income tax return the IRS has naught to do but collect the tax due amount stated on the return. A taxpayer need not make a self-assessment as IRC requires documents, statements, and even a return of tax to be filed with the IRS, by other persons [nontaxpayers], to attest to the income and taxes paid by a taxpayer. A taxpayer need only to make a statement as to filing status and number of exemptions claimed to complete an income tax return.

Not so with an organization that offers for sale interests in a tax shelter to participant investors. The tax shelter organizer (promoter) must provide a return of tax to investors that must be substantially correct as to the investments sold to investors.

However, when an person acts as an individual with a duty to act with respect to filing a return of tax on behalf of some other person (corporation, partnership, entity, trust, estate, etc.) the IRS would have some administration to perform due to the requirement to keep a list of investors which includes deductions, credits, or other tax benefits.

So, the individual referred to in Section 6702 is a person who is not subject to the payment of taxes for the person referred to in Section 6700 or 6701 and is therefore not a taxpayer as defined in Section 7701. It also follows, Section 6702 would not be an assessable penalty on a taxpayer’s income tax return. This is why Congress, in its infinite wisdom, deemed “deficiency procedures shall not apply to penalties under 6700, 6701, or 6702” because Congress wanted to insure these penalties were not to be applied to a taxpayer’s income tax return but only to a return of tax prepared by an individual who had a duty to act on behalf of another person whose statement, return, affidavit, claim, or other document were violations of Section 6700 or 6701. The Congress, in its infinite wisdom, even included provisions waiving penalties under Section 6694 for tax preparer penalties if a penalty was assessed under Section 6701 (understatement of taxes).

It seems the Congress was concerned taxpayer abuse could occur if the filing of a “frivolous tax return” penalty could be assessed on a taxpayer’s return of tax. If this was the intent of Congress, Congress would have said so when 6702 was codified and subsequently amended. This being said, a “frivolous tax return” penalty could conceivably be assessed on every tax return filed by any person to include “taxpayers” without any burden of proof having to be presented by the IRS as to liability for a violation of Internal Revenue Code. This situation would also allow the IRS to quash dissent, freedom of speech, and swing wide the doors of taxpayer abuse by over zealous IRS collection officers. I do not believe this situation is within the intent of Congress when it delegates its authority to administrative agencies. (Note: Actually, the Congress delegates its authority, with respect to applicable Public Laws in this case, to the Executive branch to administrate the provisions of passed legislation. The Executive branch then delegates its authority to administrate tax laws to the Department of the Treasury who then delegates tax collection to the Internal Revenue Service (IRS). The IRS is a low level administrative agency with the authority to collect tax due not to create a tax not due.)

There are no provisions in the Internal Revenue Code for the Internal Revenue Service to assess a “frivolous return” penalty on a taxpayer. However, the Internal Revenue Code does contain a penalty for taxpayers who present the Court, in a proceeding, a position which frivolous or groundless. Needless to say, only the proper Court can assess a taxpayer a penalty for presenting a frivolous or groundless argument.

Could the Congress have intended that a taxpayer “exhaust all administrative remedies” before petitioning the proper Court for relief? Could it be the Congress intended for taxpayers to resolve any misunderstanding concerning their tax liability or provisions of the Internal Revenue Code by having the delegated administrative agency provide all necessary assistance to resolve tax issues? Could it be the Congress did not want the Tax Court or other courts impacted with tax issues that should be reviewed extensively by the designated administrative agency and taken to a resolution amenable to persons required to file returns of tax, the Department of Treasury, and the intent of Congress.

With respect to the issues at hand, it would be presumptuous of me to insinuate IRS officers and other Federal officers would intentionally collaborate to deprive taxpayers of rights under the constitution and Federal law just because they could.

So, I will presume this is a situation where IRS officers mistakenly assessed a penalty and subsequent interest penalties, and, by oversight, withheld refundable overpayment of taxes, unknowingly did not provide proper notification to a taxpayer for filing of liens and issuing levies, and inadvertently denied a taxpayer meaningful participation in a hearing where IRS could not meet its burden of proof for liability for a violation of the Internal Revenue Code and thereby eliminated any avenue for a taxpayer to seek relief for taxpayer abuse in other tribunals.

This situation leaves no alternative but to continue to seek assistance from a higher level of bureaucracy. In order to do so, I will submit a Freedom of Information Act request for documents relied on in this Decision because the IRS has thus far circumvented delivering or refused to forward documents relevant to this appeal.

I realize this writing is falling on “deaf ears” but I need to get something in the record so I can move forward in search of a fair and equitable forum to express my deep concern and dissatisfaction for how unnecessary, time consuming, and resource depleting, this exercise has been for all parties. Given this experience, and taking the liberty to paraphrase the words of a great man, “I can hardly recommend the [Internal Revenue Service] to anyone.”

cc: National Chief of Appeals
law office

Appeal mailed to IRS/Fresno Appeals 7/19/2005 for Tax Years 1994 and 1995 within 30 days of proper notification.
Appeal mailed to IRS/Cincinnati Appeals 8/9/2005 for Tax Years 1991, 1992, 1993, 1994, and 1995 within 30 days of receipt of a facsimile of Form 668-W(c) dated 11/11/2004 from Social Security Admin., Richmond, CA.; no response from Cincinnati.
IRC 6703 (c) (1), (2)
Pub. L 97-248, Title III, Sections 320(a), 322(a), 324(a), 326(a)
IRC 6671(b); IRC 7701 (a)
IRC 6111 (b) (2 ), (d), (e); IRC 6112 (a), (b), (c)
IRC 6671 (b)
IRC 6703 (a), (b), (c)
IRC 6671 (b)
IRC 6111 (b), (c), (d), (e), (f)
IRC 6111 (c); IRC 6702(a)
IRC 6702 (a)
IRC 6702 (a) (1)
IRC 6673 (b); IRC 7433 (a), (d)

This is a facsimile of a letter sent to SSA-Richmond. The letter previously received from SSA-Richmond attempts to sidestep any responsibility for taxpayer/beneficiary abuse at the hands of SSA officers.

xxx xxxxxx xx
PO Box 2000 xxxxxx, XX xxxxxx
Richmond, CA 94802-1000 SN: xxx-xx-xxxx

Assistant Regional Commissioner
Processing Center Operations

I am in receipt, on June 15, 2006, of your letter dated June 12, 2006 responding to my letter dated January 23, 2006 regarding accounting errors on Form SSA-1099 2005 Social Security Benefit Statement issued by SSA-Western Program Service Center.

You state, in your letter, the Social Security Administration (SSA) merely assists the Internal Revenue Service (IRS) in levy collection. If you will review my initial letter, and those that followed, to you and other officers of SSA regarding this levy action by the IRS, I informed you that when the Social Security dons the cloak of the IRS by unconditionally accepting levy documents from the IRS, Social Security now has an obligation to preserve taxpayer rights as well as SSA beneficiary rights as outlined in Title 26 and Title 42 .

In order to preserve taxpayer/ beneficiary rights it is necessary to insure a taxpayer has actually received levy documents, you possessed since November, 2004, prior to any levy to fulfill proper notification requirements. SSA had possession of documents for four months prior to confiscating benefits beginning March, 2005. This was ample time for SSA to send pages 2-5 of Form 666-W(c) to a taxpayer/ beneficiary initiating the 30 day period of proper notification of a levy allowing a taxpayer to return pages 3 and 4 (Statement of Exemptions and Filing Status) to SSA, within the 30-day period, thereby also allowing a taxpayer to lawfully claim exemptions to levy. Because SSA refused to allow a taxpayer to timely claim exemptions to levy, SSA decided which exemptions SSA would allow thereby depriving a taxpayer a lawful claim of exemption to levy which constituted taxpayer/ beneficiary abuse in willing concert with ongoing IRS taxpayer abuse.

It should be noted, the IRS initially assessed a penalty on a return of tax I was not required to file and did not file. IRS has yet to meet its burden of proof I was required to file such a return of tax. Because IRS will not correct its wrongful assessment and in turn correct its wrong doing, IRS resorted to denial of due process and nefarious collection schemes in order to collect on wrongfully assessed penalties. This is not an unusual procedure for the IRS as a significant number of other taxpayers will attest to. This is not a delinquent tax issue. This is a taxpayer abuse issue with the IRS that, hopefully, the Treasury Inspector General for Tax Administration will resolve.

With regard to official misconduct, if SSA did not intentionally withhold and then refuse to send this taxpayer levy documents I would have lawfully been able to claim a filing status of Married Filing Jointly with two exemptions on the approved IRS forms. SSA intentionally withheld pages 2-5 of Form 666-W(c) even in the face of a Freedom of Information Request for the documents. This SSA misconduct intentionally and recklessly denied taxpayer/ beneficiary rights and fostered the ongoing taxpayer abuse conducted by the IRS.

Of course, initially, the levy documents could have been returned to the IRS unanswered and compelled the IRS to take-up the collection directly with a taxpayer. But, even though Social Security, an independent agency under the Executive branch of the Federal government, chose to become a cohort of the IRS, a low level administrative agency under the Department of Treasury also part of the Executive branch, to separately and jointly collaborate to continue IRS taxpayer abuse that, in this case, has spanned more than ten years. All this in conflict with the Mission Statements of both agencies.

I agree with your statement “Social Security has neither the authority nor obligation to question the correctness of an IRS levy.” However, I believe Social Security also does not have the authority to circumvent taxpayer/ beneficiary rights by slipping into bed with nefarious IRS collection schemes. SSA took on the obligation to honor an IRS levy, without question, that did not carry any authority to require the SSA to do anything. In doing so, SSA did not acquire any authority via the levy document or through authorization by this taxpayer/ beneficiary to confiscate any benefits to satisfy IRS schemes and foster taxpayer abuse. By SSA intentionally withholding pertinent taxpayer/beneficiary documents containing information of taxpayer rights and alternatives to a collection action by the IRS, SSA unlawfully prevented a taxpayer/ beneficiary the opportunity to exercise lawful rights and prevent taxpayer/ beneficiary abuse at the hands of unscrupulous IRS and SSA officers.

Your decision to confiscate my benefits was performed under color of office and clearly without regard for taxpayer/ beneficiary rights under federal law. Your actions denied proper taxpayer notification of a levy, a denial of an SSA appeal hearing to address your decision to withhold benefits, a refusal to provide pertinent documents in your possession containing approved forms that would allow a lawful exemption or alternatives to the levy, and falsifying federal tax documents to cover wrongdoing. Your circuitous C.Y.A. arguments will not change the facts of this issue and your disregard for taxpayer and beneficiary rights. SSA would not have suffered any harm by forwarding levy documents to this taxpayer/ beneficiary. By not forwarding such documents, SSA intentionally inflicted irreparable harm to a taxpayer/ beneficiary.

I believe your, and other SSA/IRS officers, coverup of official misconduct supports a position neither the SSA nor the IRS will brook no challenge to its’ wrongdoing. Not surprising, it is clear all this is falling on deaf ears at this level because it appears this situation is not unique but routine. It is also clear this issue needs to be brought to the attention of appropriate upper echelon of both the SSA and the IRS.

It is interesting that two administrative agencies under the Executive branch maintain policies advocating taxpayer and SSA recipient abuse contrary to the intent of laws passed by Congress and signed by the President. It, therefore, becomes more than paramount for the Congress to also be made aware, by any means, of routine official misconduct of administrative agencies of the Executive branch.


CC: SSA-OIG, Commissioner-SSA
TIGTA, Commissioner - IRS, Oversight Board
Law office

Copyright: Tengoku dojo, 2006.
NOTICE: Tengoku dojo is not affiliated with Freedom School.
NOTICE: If anything in this presentation is found to be in error a good faith effort will be made to correct it in timely fashion upon notification.
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