Lock-In Letters

[LPC]

Over the last few days, I have noticed several opinions coming out of the 10th Circuit affirming dismissals of Tax Court petitions because there was no notice of deficiency or collection action. Curious about the cluster, I checked into the Tax Court cases to see what was going on and learned something new (to me) which is that the IRS has a program to force accurate withholdings by issuing notices to employers requiring them to withhold from taxpayers who have claimed to be exempt from tax or have filed W-4s claiming large numbers of exemptions.

The IRS notice is letter 2800C, also known as a "lock-in letter," and some tax nuts have tried fighting the withholding by petitioning the Tax Court, where their petitions have been dismissed due to lack of jurisdiction.

The leading Tax Court opinion on this subject is Davis v. Commissioner, T.C. Memo. 2008-238, which has been reproduced in another thread in another Quatloos forum.

I haven't seen any cursing and whining about these letters from any of the usual sources, although there's a recent posting to SuiJuris with a passing reference to the letters. But I think that this is something we're going to see more complaints about in the future.

Here is one of the 10th Circuit opinions:

DEBORAH GHANI,
Petitioner - Appellant,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent - Appellee.

UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
No. 09-9005

(United States Tax Court)
(Tax Court No. 19615-08)

ORDER AND JUDGMENT*

Before HARTZ, SEYMOUR, and ANDERSON, Circuit Judges.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument.

Deborah Ghani, proceeding pro se, appeals the Tax Court's order: (1) granting the Commissioner of the Internal Revenue Service's motion to dismiss for lack of jurisdiction; (2) dismissing her case on the ground that no notice of determination was sent to Ms. Ghani; and (3) denying Ms. Ghani's motion to restrain assessment. We affirm.

The Tax Court properly concluded that it lacked jurisdiction because Ms. Ghani was never issued a Notice of Deficiency or a Notice of Determination. See 26 U.S.C. §§ 6213, 6330; Abrams v. Comm'r, 814 F.2d 1356, 1357 (9th Cir. 1987) (per curiam) (holding that a pre-filing notification letter from the Internal Revenue Service was not a Notice of Deficiency and therefore, the Tax Court had no jurisdiction over the taxpayer's petition); see also Tuka v. Comm'r, No. 09-1598, 2009 WL 3236066, at *1-2 (3rd Cir. 2009) (unpublished) ("[T]he lock-in letter . . . does not constitute a notice of determination."); Davis v. Comm'r, T.C. Memo. 2008-238, 2008 WL 4703706, at *7 (2008) ("[A] lock-in letter is not a levy.").

We have examined all of Ms. Ghani's arguments and find them unpersuasive.1

AFFIRMED.

Entered for the Court

Stephen H. Anderson
Circuit Judge

FOOTNOTES

* This order and judgment is not binding precedent except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

1 The motion to file reply brief out of time is granted, and the panel has taken the brief into consideration.

END OF FOOTNOTES

[LPC]

I have good news. For only $40, you can now purchase a form letter to respond to an IRS "lock-in letter." From IRSZoom.com:

A 7 page letter to the IRS employee who sent a lock-in letter to your employer telling him/her to disregard your claim of exemption and withhold from your pay at the rate of single and zero, that demands that you be sent a copy of ALL of the laws and records upon which the IRS employee relied to make the alleged determination that you are not exempt from withholding, citing the regulation that gives you the Due Process right, which has been violated, to participate in the determination process and be given a chance to defend your submission (claim of exemption) under the provisions of the statutes before any determination becomes final.

The instructions on how to apply the form letter to your own situation includes an interesting caveat:

Do not add any language or make any changes regarding the laws presented, or you may affect our ability to help you. If it is absolutely necessary, you may delete a line in the letter if it is not applicable to your specific situation, but DO NOT ADD ANY STATEMENTS OR ARGUMENTS.

(Emphasis in original.)

Yes, you do want the letter to have a shred of credibility. Adding references to the numerous Supreme Court opinions that have held that the income tax does not apply to wages, why the "United States" does not include the states, materials on sovereign citizenship, the "real" 13th Amendment, any of the ongoing and very relevant conspiracies, or the influence of shape-shifting lizards, would tip your hand too soon.