"Kensei" at losthorizons gets some disturbing documents

[Famspear]

User "Kensei" at lost horizons requested some information from the Internal Revenue Service under the Freedom of Information Act, and has received a "big envelope" of goodies from the IRS. On 26 October 2006, he writes about what he has received:

This letter has some oddities, not sure if anyone else has received this information back, here are some items of interest.

1. The cover letter is from Dept. of Treasury / IRS; of interest, on the left side of the header, under the Treasury logo, it says 'Small Business / Self-Employed Division.' Neither of us is involved in any 'trade or business,' nor do we 'work for ourselves' either. We work for a private-sector payer. Hm.

2. Page 2 is a Form 12616, Correspondence Examination History Sheet. It has various dates and stamps of 'K. Farr', and then several 'K. Wright' with a 5 digit number under the names in the left column. The last entry is a Sept. date, and 'Purge' is written in the 'Action' column.

3. Next is a copy of their 'birdcage' claim/questionnaire that they mailed to us AFTER sending LTR 3176SC (it requested to send it with our reply, which had been sent a month previously.) This is the claim where they claim we are saying that sections 3401 and 3121 are allowing for an 'exemption' of income reported on forms W2 and 1099. We obviously have not made such a claim.

4. Next a copy of LTR 3164SC is included, the one where it informs us they 'may contact other persons', etc. Photocopied scan of Maureen Green's signature is on it.

5. Next is page 1 and 2 of LTR 3176SC photocopied, signed by Dennis Paiz/Parizek.

6. Next is a copy of page 1 and 2 of our 1040, and 4852s for each of us.

7. Next is a Form 8278 "Computation and Assessment of Miscellaneous Penalties" form. Right under that it says, 'Non-Return Related Civil Penalties.' On the Frivolous Return' line, they wrote in '1040,'[/b] and also the date we filed it. Number of violations is filled in '1' and 'Amount Assessed' column has '5000' written in. This is the same on both my and my wife's sheets. In field 10 'originator' it has 'Mrs. Wright', and field 14 'reviewer' it has 'Barbara Brown.'

8. Then, there is the last page. The header says 'SFR SCANNING.' Does that mean 'Substitute for Return?' The left column has total income, etc., but of interest, it lists 'SE AGI DEDUCTION, and a few lines lower, 'SE TAX', total tax, withholding, then a box with a large balance due.

The column on the right has 'SELF-EMPLOYMENT TAX,' then 'TOTAL SE INCOME.' Several lines down, it has 'TOTAL SE TAX' and '1/2 SE AGI' all with dollar amounts. Of note, WE ARE NOT SELF-EMPLOYED. WE DO NOT EVEN 'WORK FOR OURSELF' but rather a private payer and only submitted 4852s to correct false W2's submitted by the payer. What the heck is going on?

There are no 'criteria' listed anywhere which would indicate how the return could be 'frivolous' - it is just filled in and checked. We are not 'self-employed' nor perform a 'trade or business.' We also filed a 1040, which is not among the forms for which a 'substitute for return' is authorized, particularly when one has been filed already. There is also no signed assessment by an assessing officer.

I plan to photocopy them and send Pete a set to see what he thinks too. I am wondering, depending on what correspondence the IRS next sends us, if I should bring up these strange issues in a letter to the IRS commissioner to ask what the heck is going on?!? (in a more diplomatic way, of course.)

http://www.losthorizons.com/phpBB/viewt ... d087e820f2

(bolding added).

[Nikki]

Door number one: Take the pile of papers into the local IRS office and ask some one to explaion what it all means and where to go from there.

Door number two: 'I plan to photocopy them and send Pete a set to see what he thinks too."

Which will he find behind the respective doors? The lady or the tiger?

Although I am SO TOTALLY not CtC-educated, I'd lean towards door number one.

For some strange reason, I think a disinterested IRS employee might be of significantly more help with my tax problems than a mail-bomber who is busy fighting for his own life in the courts.

Then again, I could be wrong -- on Planet Merrill.

PS: I think owls might be entering the designation of endangered species.

[ASITStands]

The appellation, "Department of the Treasury / Internal Revenue Service; Small Business / Self-Employed Division," invokes the "division" of the Disclosure Office not the taxpayer.

Another example of the great legal minds posting on Lost Horizons.

[.]

Hmm. I would have sworn that I saw the word "Ogden" somewhere in his mess. Perhaps he'll see it in the next mess he receives.

[Quixote]

The appellation, "Department of the Treasury / Internal Revenue Service; Small Business / Self-Employed Division," invokes the "division" of the Disclosure Office not the taxpayer.

Another example of the great legal minds posting on Lost Horizons.

As originally envisioned in the reorganization plan, Small Business / Self-Employed Division would also have referred tangentially to the taxpayer, i.e., employees of the Small Business / Self-Employed Division would deal only with small businesses, including the self-employed. Wage and Investment Division employees would deal only with people with earnings from wages and investments. It is not clear when, or even if, the decision makers at the IRS realized that the two groups were not mutually exclusive.

[Quixote]

8. Then, there is the last page. The header says 'SFR SCANNING.' Does that mean 'Substitute for Return?' The left column has total income, etc., but of interest, it lists 'SE AGI DEDUCTION, and a few lines lower, 'SE TAX', total tax, withholding, then a box with a large balance due.

The column on the right has 'SELF-EMPLOYMENT TAX,' then 'TOTAL SE INCOME.' Several lines down, it has 'TOTAL SE TAX' and '1/2 SE AGI' all with dollar amounts. Of note, WE ARE NOT SELF-EMPLOYED. WE DO NOT EVEN 'WORK FOR OURSELF' but rather a private payer and only submitted 4852s to correct false W2's submitted by the payer. What the heck is going on?

We may never know. As with all TP statements, Kensai's are filtered through his skewed world view, making it difficult to determine even what he thinks he's saying. The statement "WE ARE NOT SELF-EMPLOYED" is confusing given that the SFR document would refer to a married filing separate return of only one taxpayer. What "we" may or may not be is irrelevant.

It would be interesting if the IRS employee who prepared the SFR decided to take Kensai's word for it that the money he was paid was not wages. If his compensation was not wages, he was not an employee, so he must have been self employed. Alas, most IRS employees lack the sense of poetic justice that would require. It's more likely that Kensai worked one or more cash jobs and the Forms 1099-Misc never caught up with him.

[The Observer]

It is not clear when, or even if, the decision makers at the IRS realized that the two groups were not mutually exclusive.

It was realized early on when the IRS received the reorganization recommendations from Booz-Allen. Not wanting to appear like idiots for paying for the millions of dollars in consulting fees and then pointing out that the consultants really didn't understand how taxpayers don't fit into neat little categories, the IRS just accepted the labels and went forward. To get around this stovepiping, as an example, all Wage & Investment collection cases were dumped into the ACS inventory and if the cases could not be resolved there, were transferred to SB/SE where the old Collection division employees were assigned.

[ASITStands]

Two things I see in the comments:

As originally envisioned in the reorganization plan, Small Business / Self-Employed Division would also have referred tangentially to the taxpayer, i.e., employees of the Small Business / Self-Employed Division would deal only with small businesses, including the self-employed. Wage and Investment Division employees would deal only with people with earnings from wages and investments. It is not clear when, or even if, the decision makers at the IRS realized that the two groups were not mutually exclusive.

Yes. "As originally envisioned," the divisions would also refer to taxpayer status.

However, here's my question: Is a non-filer classed as W&I or SB/SE? And, what of someone who files what's considered an invalid, unprocessable ("zero") return? What of an SFR?

It was realized early on when the IRS received the reorganization recommendations from Booz-Allen. Not wanting to appear like idiots for paying for the millions of dollars in consulting fees and then pointing out that the consultants really didn't understand how taxpayers don't fit into neat little categories, the IRS just accepted the labels and went forward. To get around this stovepiping, as an example, all Wage & Investment collection cases were dumped into the ACS inventory and if the cases could not be resolved there, were transferred to SB/SE where the old Collection division employees were assigned.

It appears to me if W&I starts in ACS but is not resolved, then it would be SB/SE.