CtC users - Abandon All Hope!

[Florida]

I think this is less a cult of personality and more an s&m relationship.

I think if Richard Pryor were here, he'd take one look at the CtC folks and ask, "Is there an asshole convention in town?"

[Famspear]

Another CtC follower is losing hope.

This post is from losthorizons user "enemycombatant":

Mood: Frustrated, tired, confused, depressed.
First I'd just like to say that no matter what is reflected in the following message, I DO believe in CtC and how it pertains to most peoples tax situations. I also admire those that have had success, and those that continue to keep up the good fight against a department of the government that lives in bizzaro world. As far as that goes, most if not all of our government has come to live in bizzaro world, the likes of what I've not seen in my lifetime of 53 years. I believe we are not heading for, but now live in a fascist country where freedom is just an illusion.

BUT, after keeping up the fight for nearly a year for my 2006 tax year (frivolous) I've only come to the point of being assessed a $5000 penalty and threats of an intent to levy my assets. I had a marvelous victory for my 2007 tax year, only to have that deemed as frivolous as well nearly a year later. I expect that to go down the same path as my 2006 return.

My journey began by buying Pete's CtC book and reading it twice, as well as reading the monthly newsletters and making frequent use of this forum for advice as how to respond to the assault. I've always considered myself a person of principle and one that tries my best to resist oppression. That is what had driven me down this path trying to stand for the "rule of law" and the "truth" as I saw it. At times, I'm sad to say, I wished I would have remained ignorant of the "truth".

It took a long time for me to understand and believe what CtC promoted and to embrace it. Now I am faced with the question as to why the "rule of law" would ever be respected by the IRS anymore than the Constitution is respected by our elected officials. The supreme law of the land has become nothing more than a "god damn piece of paper" for our elected officials to wipe their asses with. Therefore I have come to the conclusion, that for my own mental piece of mind, I must somehow make this nightmare go away and set CtC aside. I do believe that more of the American people are becoming aware of what is truly happening in our "system" and that someday justice may be done. I just don't know if it will be in my lifetime. I don't promote violence, but as bad as things have become in our nation, I believe the only way for true change is a revolution by the people in the streets. Unfortunately, I know the American people are not ready for that.

In any event, the more I read this forum, the more I believe people are scrambling for the one statute, law case, IRC code, regulation, whatever, that will finally bring the IRS to it's knees. One they will have to accept as insurmountable, and bring all the nonsense to a halt. Actually, it's all there in black and white, they just disregard it. I respect all the grand efforts of the members here that evidently put in endless hours of research not only for themselves, but for others. But at the end of the day the story is the same. The government will do as they wish and will change the rules of the game if they deem it necessary.

Just as Pete wrote the book on the truth about taxation in America, I think someone needs to write a concise book on what to do when the "rule of law" isn't respected and the assault begins. I don't have the time to do the endless research that some people do. I might as well go back to school and study law. It's been enough pressure just keeping up with the letters the IRS is sending.

Tell me when the revolution in the streets begins and I'll gladly join you. Until then, I must go to work.

(bolding added)

http://www.losthorizons.com/phpBB/viewtopic.php?t=1844

[Doktor Avalanche]

And now we bid farewell to another LostHead who will be permanently banned in about five minutes.

[The Observer]

I had a marvelous victory for my 2007 tax year, only to have that deemed as frivolous as well nearly a year later. I expect that to go down the same path as my 2006 return.

The question in my mind is whether this person has filed or will file his 2008 return via the CtC method. It is so hard to know if any TP ever sees a cause/effect relationship between their actions and the results that they receive. To whit:

I've always considered myself a person of principle and one that tries my best to resist oppression. That is what had driven me down this path trying to stand for the "rule of law" and the "truth" as I saw it. At times, I'm sad to say, I wished I would have remained ignorant of the "truth".

It took a long time for me to understand and believe what CtC promoted and to embrace it. Now I am faced with the question as to why the "rule of law" would ever be respected by the IRS anymore than the Constitution is respected by our elected officials.

Here we see that "enemy combatant" was already on the path to Whackostan, somehow believing that the judicial and executive systems, under the control of the people whom he is resisting, will respond to the CtC method and acknowledge its interpretation of the tax laws. He only came to this belief because he was told by Hendrickson that it would work. Now that it hasn't worked, instead of believing that Hendrickson might be wrong, he is going to believe that it has to do with a myriad of government officials just ignoring the law.

Does enemycombatant do this with every product that he buys that fails to work? When his Westinghouse washing machine malfunctions, does he go back to the manufacturer and ask for satisfaction or does he immediately blame it on the government and their wilful ignoring of the Constititution? Maybe it is just me, but if I had bought Hendrickson's crap and it failed for me, I would be asking Hendrickson for a refund. Amazingly, I never see anyone demand a refund from any of these con artists - although it is in the back of my mind that one of Schiff's adherents asked for their money back after they landed afoul of the law.

[Famspear]

Here we see that "enemy combatant" was already on the path to Whackostan, somehow believing that the judicial and executive systems, under the control of the people whom he is resisting, will respond to the CtC method and acknowledge its interpretation of the tax laws. He only came to this belief because he was told by Hendrickson that it would work......

One of the things that continues to astonish me is that so many Whackostanis never seem to recognize an important logical flaw in their thinking -- the flaw of starting with the conclusion that they don't want to pay taxes, of starting with the conclusion that taxation is illegal, of starting with the conclusion that the Authority Figure is bad, or corrupt, etc., and then hopping from one Whackotheory to the next one -- in search of "evidence" that "proves" the preconceived conclusions -- or at least a "method" that will seemingly "work". The Whackostanis are so caught up in the Magical Mystical World of Whackostan that they are oblivious to what should be obvious.

[Pottapaug1938]

One of the things that continues to astonish me is that so many Whackostanis never seem to recognize an important logical flaw in their thinking -- the flaw of starting with the conclusion that they don't want to pay taxes, of starting with the conclusion that taxation is illegal, of starting with the conclusion that the Authority Figure is bad, or corrupt, etc., and then hopping from one Whackotheory to the next one -- in search of "evidence" that "proves" the preconceived conclusions -- or at least a "method" that will seemingly "work". The Whackostanis are so caught up in the Magical Mystical World of Whackostan that they are oblivious to what should be obvious.[/quote]

I call these nutcases "Procrusteans" -- no matter what the fact, they insist on stretching, distorting, twisting or explaining it away in order to fit it in with their preconceived, cast-in-stone beliefs. They cannot admit to any doubt, because once they do that, their entire belief system collapses like a house of cards that has one of the bottom cards removed.

[LPC]

Amazingly, I never see anyone demand a refund from any of these con artists - although it is in the back of my mind that one of Schiff's adherents asked for their money back after they landed afoul of the law.

Steve Swan (aka inmate #00259-049, due to be released in October 2009) sued Schiff for misrepresentation, fraud, and negligence, but the suit was dismissed summarily. Steven A. Swan v. Irwin A. Schiff, No. 2:02-cv-00697 (U.S.D.C. Nev. 3/29/2004). Showing his typical compassion for his victims, Schiff publicly referred to Swan as “an idiot.” (Jason Pierce, “Author of ‘Voluntary’ Income Tax Theories Sued for Millions,” CNSNews.com (5/29/2002).)

[Duke2Earl]

One of the things that continues to astonish me is that so many Whackostanis never seem to recognize an important logical flaw in their thinking -- the flaw of starting with the conclusion that they don't want to pay taxes, of starting with the conclusion that taxation is illegal, of starting with the conclusion that the Authority Figure is bad, or corrupt, etc., and then hopping from one Whackotheory to the next one -- in search of "evidence" that "proves" the preconceived conclusions -- or at least a "method" that will seemingly "work". The Whackostanis are so caught up in the Magical Mystical World of Whackostan that they are oblivious to what should be obvious.

I call these nutcases "Procrusteans" -- no matter what the fact, they insist on stretching, distorting, twisting or explaining it away in order to fit it in with their preconceived, cast-in-stone beliefs. They cannot admit to any doubt, because once they do that, their entire belief system collapses like a house of cards that has one of the bottom cards removed.[/quote]

I wish I could say that the type of logical hogwash you describe was limited to tax deniers. In fact, I see the exact same insane thought patterns in allegedly reputable tax practitioners on almost a daily basis. These folks don't deny the income tax but they use the same insane analysis methodology on items within the tax system. For example, some client of theirs gets some large payment and they "find" some idiotic argument as to why that item isn't taxable or at least can be deferred. And... surprise, surprise... the bigger the number, the more "creative" they get with dubious arguments to get to the preordained answer that they don't have to pay tax on that item or at least not now. I usually call the approach the "Answer in search of a rationale" method. And it is aided and abetted by the fact that if you go to enough tax practictioners and offer a large fee for an preordained answer, sooner or later you will find someone that will say just about anything.

[grixit]

I believe! *CLAP* *CLAP* I believe! *CLAP* *CLAP*

[Famspear]

I wish I could say that the type of logical hogwash you describe was limited to tax deniers. In fact, I see the exact same insane thought patterns in allegedly reputable tax practitioners on almost a daily basis. These folks don't deny the income tax but they use the same insane analysis methodology on items within the tax system. For example, some client of theirs gets some large payment and they "find" some idiotic argument as to why that item isn't taxable or at least can be deferred. And... surprise, surprise... the bigger the number, the more "creative" they get with dubious arguments to get to the preordained answer that they don't have to pay tax on that item or at least not now. I usually call the approach the "Answer in search of a rationale" method. And it is aided and abetted by the fact that if you go to enough tax practictioners and offer a large fee for an preordained answer, sooner or later you will find someone that will say just about anything.

Duke, can you give a specific example of one of the worst of these you have seen (i.e., without naming names or violating any confidentiality rules, etc., of course)?

[Prof]

I wish I could say that the type of logical hogwash you describe was limited to tax deniers. In fact, I see the exact same insane thought patterns in allegedly reputable tax practitioners on almost a daily basis. These folks don't deny the income tax but they use the same insane analysis methodology on items within the tax system. For example, some client of theirs gets some large payment and they "find" some idiotic argument as to why that item isn't taxable or at least can be deferred. And... surprise, surprise... the bigger the number, the more "creative" they get with dubious arguments to get to the preordained answer that they don't have to pay tax on that item or at least not now. I usually call the approach the "Answer in search of a rationale" method. And it is aided and abetted by the fact that if you go to enough tax practictioners and offer a large fee for an preordained answer, sooner or later you will find someone that will say just about anything.

Duke, can you give a specific example of one of the worst of these you have seen (i.e., without naming names or violating any confidentiality rules, etc., of course)?

OLD JOKE: What is the difference between a bookkeeper and an accountant?

If you ask a bookkeeper, "What is 2 + 2?", then he will answer, "4."

If you ask an accountant, "What is 2 + 2?", she will think a minute, and ask: "What
do you need it to be?"

[Quixote]

Answers in search of rationales are not limited to those attempting to avoid taxes. The IRS is adept at the technique. In the refund hold program, the IRS holds refunds to offset potential tax liabilities on unfiled returns. Whatever the actual rationale, it has nothing to do with IRC 6402(a), which allows offsets only for established tax liabilities (e.g., the tax has been assessed, a NOD has been issued or a court has determined the amount of the liability).

IRM 25.12.1.1 (09-25-2008)

Program Overview
Purpose: This section of the IRM contains processing guidance for working Refund Hold inventory. Refund Hold (RH) inventory occurs when the Service holds individual income tax refunds and credit elects when a current year refund return is filed and the taxpayer's account has at least one unfiled tax return within the five years prior to the RH tax year. This includes modules where no Transaction Code (TC) 140 is present. This section of the IRM contains the delinquency criteria for holding a taxpayer's refund while the Service investigates the delinquent return(s) and the functional procedures for screening, working and monitoring these cases.

Scope: The RH Program is under the direction of Wage and Investment (W&I) Filing and Payment Compliance. The program is consolidated at the Austin site for Compliance Services Collection Operation (CSCO) and is worked in collaboration with (W&I) and Small Business/Self Employed (SB/SE) Compliance Services Examination Operation (CSEO). The refund is used to offset any balance due on the delinquent return(s). If there is no balance due, or an amount remains after offsetting, the refund is released to the taxpayer.

The Refund Hold Program is based on IRC Section 6402 (a) which provides that the Secretary may, within the applicable period of limitations, credit the amount of any overpayment against any tax liability of the person who made the overpayment. ...

[LPC]

if you go to enough tax practictioners and offer a large fee for an preordained answer, sooner or later you will find someone that will say just about anything.

Duke, can you give a specific example of one of the worst of these you have seen (i.e., without naming names or violating any confidentiality rules, etc., of course)?

The KPMG "Blips" case might be an example. A partner, senior tax manager, and a lawyer were sentenced to prison on 4/1 because of a "tax shelter" that a jury found to be "tax evasion."

[webhick]

OLD JOKE: What is the difference between a bookkeeper and an accountant?

If you ask a bookkeeper, "What is 2 + 2?", then he will answer, "4."

If you ask an accountant, "What is 2 + 2?", she will think a minute, and ask: "What
do you need it to be?"

These days, bookkeepers like to think they know more than the CPAs even though have these bookkeepers can't even tell you the difference between accrual and cash basis, so their answer is more likely to be "Tell me what you want it to be and I'll find a place to hide it."

[Gregg]

And it is aided and abetted by the fact that if you go to enough tax practictioners and offer a large fee for an preordained answer, sooner or later you will find someone that will say just about anything.

Duke, can you give a specific example of one of the worst of these you have seen (i.e., without naming names or violating any confidentiality rules, etc., of course)?

Enron was the client, David Duke of AA was the Accountant

[Cpt Banjo]

Several years ago, a client and I sat through a presentation of a phony-baloney tax shelter from one of the attorneys from Jenkens & Gilchrist. Although I was able to persuade my client not to come within a mile of this piece of trash, J&G and its accomplice Ernst & Young were able to sell this sham arrangement to a lot of people. Thus wasn't stupidity -- it was pure greed.

[Duke2Earl]

if you go to enough tax practictioners and offer a large fee for an preordained answer, sooner or later you will find someone that will say just about anything.

Duke, can you give a specific example of one of the worst of these you have seen (i.e., without naming names or violating any confidentiality rules, etc., of course)?

The KPMG "Blips" case might be an example. A partner, senior tax manager, and a lawyer were sentenced to prison on 4/1 because of a "tax shelter" that a jury found to be "tax evasion."

Yes, that's a good example. LILO's and SILO's are other instances where the whole thing smelled real bad from the outset but practitioners hid their heads in the sand while collecting big fees. The one that was on my mind when I wrote above is one I am working on at the moment. Unfortunately it's still in the newspapers so I can't comment but I will say of the Big 4 accounting firms, one firm is at "should" that the taxpayer will win, 2 are at substantial authority at best (in other words it is their considered opinion that if litigated the taxpayer will lose) and one is wavering. Personally, If you look at it straight up without considering fees, I think it's a stretch to get to reasonable basis (in other words, you have to stretch real hard to get above frivolous). The problem is that the numbers are HUGE... well into 10 figures... and the client pressure is way beyond enormous. And if a large client really turns the screws, one will find that the firms have jellyfish as backbones. And simply stated, that's the way it is in the "real" world.

Another thing to be considered is that law firms can basically say anything they want. They can be aggressive as hell and basically have nothing to lose. And in fact it's good for their business if their position is challenged by the government because they really make the big money if there is litigation. On the other hand, the accountants have to sign off on financial statements and the question of whether you can book the tax benefit can be crucial not only in dollars and cents but in this environment even to a company's very survival. And we all know who is going to be sued if the financial statements are wrong.... and it's not the lawyers. The essential problem to the system of financial disclosure is that auditors are paid by the companies they audit. And even more audits aren't all that profitable... where the real profit is for accounting firms is in the lots of other additional projects that they can do for their clients... everything from consulting to tax services to IT and lots of other projects. Therefore the client really has the auditor by the short hairs. And EVERYONE knows it. And for an object lesson on that, just follow the Arthur Andersen story... and if you think anything has really changed since then, you are making a BIG mistake.

But this is all really off topic. But if anyone wants to discuss it further I'd be happy to in another thread.... probably in the tax practice forum

[Imalawman]

Well, I for one think that SILOs and LILOs were completely misrepresented. People forgot that theses lilo and silo transactions partially funded a good majority of the public transit authorities in the major cities. D.C.'s metro infrastructure was a lilo transaction. These transactions were making millions for local governments - providing a direct benefit for many US citizens. I thought the proper response would have been to prevent the overseas LILOs but keep this local government investing in place.

[Duke2Earl]

Well, I for one think that SILOs and LILOs were completely misrepresented. People forgot that theses lilo and silo transactions partially funded a good majority of the public transit authorities in the major cities. D.C.'s metro infrastructure was a lilo transaction. These transactions were making millions for local governments - providing a direct benefit for many US citizens. I thought the proper response would have been to prevent the overseas LILOs but keep this local government investing in place.

I have absolutely no objection to financing public transportation. But in any rational world you don't do it by a tax trick. If the essential deal is a sham, then whether it is foreign or domestic should make no difference.

[Red Cedar PM]

And if a large client really turns the screws, one will find that the firms have jellyfish as backbones. And simply stated, that's the way it is in the "real" world.

On the other hand, the accountants have to sign off on financial statements and the question of whether you can book the tax benefit can be crucial not only in dollars and cents but in this environment even to a company's very survival. And we all know who is going to be sued if the financial statements are wrong.... and it's not the lawyers. The essential problem to the system of financial disclosure is that auditors are paid by the companies they audit. And even more audits aren't all that profitable... where the real profit is for accounting firms is in the lots of other additional projects that they can do for their clients... everything from consulting to tax services to IT and lots of other projects. Therefore the client really has the auditor by the short hairs. And EVERYONE knows it. And for an object lesson on that, just follow the Arthur Andersen story... and if you think anything has really changed since then, you are making a BIG mistake.

I may just be speculating since I don't work in the publicly-traded world, but I would bet a large public company would not want to go through the pain, hassle, and cost of changing auditors because the auditor took a hard line with them on a tax issue though. It's not like just hiring a new lawyer because you didn't like the advice you got from your current one. Audit firms are very tied into a public company's business and there is a significant transition cost. Usually in my world we would just qualify the opinion if we felt it was material and move on.

We do have clients that are very important to us that want to take agressive positions in the private world, but there is obviously a little less risk there. Additionally, no one client of ours is big enough to make us bend over and sacrifice our professional standards in order to not lose them. It probably gives us a little more leverage to take a firm stance on an issue. We have to be able to do that to stay independent.