Another LostHead on the road to ruin

[The Operative]

User 'dennisconn' has asked for input for his CDP hearing for Monday, April 20.

Info needed quickly

[Famspear]

Check out the responsive blather from "Kensei":

Dennis - yes, we [Kensei and his spouse] were "charged" a [penalty of] $5000 each. This is somewhat odd - note it is the frivolous RETURN penalty - not the frivolous PERSON penalty. Think about it - one return, one penalty for that return. Of note, 6702 mentions the return, but the IRM is where they allege "the penalty is charged to each filer on a joint return." IRC doesn't say that, and there is no CFR for 6702.

Reading comprehension is not one of his strong points. The subsection (a) of section 6702 clearly states (in part):

(a) CIVIL PENALTY FOR FRIVOLOUS TAX RETURNS. --A person shall pay a penalty of $5,000 if --

(1) such person files what purports to be a return of a tax [ . . . . .]

(bolding added).

The statute clearly applies to "a person" who files what purports to be a return. Nowhere does the statute state that in the case of a "married filing joint" return, the IRS is somehow required to treat the TWO PEOPLE who filed the ONE RETURN as ONE person for purposes of the $5,000 penalty. They BOTH filed the return, and BOTH are subject to a $5,000 penalty. Kensei and other protesters conveniently, and impotently, focus on the word "return" and ignore the phrase "a person."

Under Kensei's line of "reasoning," if both a husband and wife knowingly filed a fraudulent joint return (i.e., where both of them knew that the return was fraudulent), presumably only one of them could be convicted under section 7206, since only one tax return was involved.

The only possible material difference between the relevant language in section 6702 and the language of section 7206 is that section 6702 says "A person" while section 7206 says "Any person." (I doubt, however, that this is a meaningful distinction.)

Kensei continues:

The IRM [Internal Revenue Manual] is not the law, nor does it have the weight of a Treasury Decision (CFR) either.

That's correct. And that gets you nowhere, Kensei.

[notorial dissent]

I would suspect a prayer wouldn’t hurt, since he obviously hasn’t got one otherwise. Maybe laryngitis to keep him quiet so that he can’t dig his grave any deeper. Classes in reading comprehension would be a good start, although apparently too late to help now. A better class of friends wouldn’t be amiss either since this batch is helping him well on the way to wreck and ruin

[Nikki]

You are all wrong.

All they have to do is compose the correct letter.

Once that's done, all of their problems will vanish since the IRS will colapse in shock at the various legal citations underlying the letter.

Unfortunately, their idol with feet of clay is too busy covering his own tush to spend a second assisting them in their attempts to recover from his exhortations.

The only people who will benefit from CtC are the low-level drug dealers who will get early release from prison to make room rof Pete and all his friends.

[Weston White]

Reading comprehension is not one of his strong points. The subsection (a) of section 6702 clearly states (in part):

(a) CIVIL PENALTY FOR FRIVOLOUS TAX RETURNS. --A person shall pay a penalty of $5,000 if --

(1) such person files what purports to be a return of a tax [ . . . . .]

(bolding added).

The statute clearly applies to "a person" who files what purports to be a return. Nowhere does the statute state that in the case of a "married filing joint" return, the IRS is somehow required to treat the TWO PEOPLE who filed the ONE RETURN as ONE person for purposes of the $5,000 penalty. They BOTH filed the return, and BOTH are subject to a $5,000 penalty. Kensei and other protesters conveniently, and impotently, focus on the word "return" and ignore the phrase "a person."

Under Kensei's line of "reasoning," if both a husband and wife knowingly filed a fraudulent joint return (i.e., where both of them knew that the return was fraudulent), presumably only one of them could be convicted under section 7206, since only one tax return was involved.

The only possible material difference between the relevant language in section 6702 and the language of section 7206 is that section 6702 says "A person" while section 7206 says "Any person." (I doubt, however, that this is a meaningful distinction.)

No again you are incorrect in your statements: As stipulated within 26 USC 7701(p)(1)(1) and 26 USC 7701(p)(1)(2) and in accordance with 1 USC 1, the singular is the plural as the plural is the singular, (you do not get to bend the rules to suit your own self purposes, no you do not get to have your cake and eat it to). Therefore person carries onto persons. This means it is a per return charge not a per person charge. Within the IRM there is even conflicting information regarding this, there is one section which states the penalty is per person even if jointly filed and another that states the charge only applies once to those jointly filed [see IRM 4.10.12.4.7 as compaired to 20.1.10.9.2]. As well when the penalty was $500. double penalizing did not seem to be an issue (so far nobody has been able to post an incident were a couple was charged $1,000 under 26 USC 6702), even though the clauses remain virtually identical. Otherwise why stop there, why not place a penalty on every sheet of paper mailed to the IRS, just like the DOJ has done to that moron muncher Hendrickson?

However, it does not really matter because for "individuals" the charge does not apply, because they have specifically been excluded from the special term of "person" and "persons", clearly this is charge applicable only to fictitious entities and their members, this is something that an individual can never be:

6671
(b) Person defined
The term “person”, as used in this subchapter, includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.

The ‘term’ "Includes" only “includes” other classes or categories which are similar or the same as those defined therein. "Person" is a special 'term' that applies only to this body of law and to nothing else. Otherwise what you claim that it means, which I presume would be everybody, anybody, and anything, would not be necessary, because that is what it would have already meant if not defined for the specific purpose of this subchapter.

As an example this is from the Subtitle F, which applies throughout the IRC.

7701
(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—
(1) Person
The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.

Notice what was specifically left out of the definition that applies to 26 USC 6702? Here I will point it out to you "... an individual ...". They did this for a very specific purpose.

[Gregg]

Weston, we don't accept fantasies here, only laws as they have in the past been ruled by courts or lines of reasoning likely to be accepted by courts,,,,so, I think I speak for a few others when I say shut the fuck up.

Now, that's taken care of....

one of Kensie's many problems is that his return, filed jointly, is so out there in la la land that it was not accepted by the IRS who after they got done laughing at him tossed it and prepared a SFR, which cannot be filed joint, and thus 2 SFRs were prepared, both with stupid arguments behind them, ding ding ding, we have a $10,000 winner kids!
I think he's a Doctor, which may account for his arrogance, but I shudder to think that someone who has so little ability to understand simple concepts is treating patients...I wonder if he believes in germ theory (and you'd be surprised how many don't)
Someone needs very badly to learn that the the truth is what happens no matter what you think.
Oh well, maybe he can be the nurse's assistant in prison

[Famspear]

No, Weston. Here's IRM 10.12.4.7:

10.12.4.7 (11-09-2007)
Frivolous Return Penalties
Returns and/or documents meeting the criteria for frivolous return penalties should be worked under this category. IRC section 6702 provides for an immediate assessment of a $5000 civil penalty against individuals who file frivolous documents. The penalty is not based on tax liability. There does not need to be an understatement of liability in order for the penalty to be imposed in addition to any other penalty.

Penalties should be assessed on each frivolous filing received for which the filer does not file a corrected return or waiver of claim within the prescribed time period. Joint filing status frivolous filings will result in separate penalty assessments on the primary and secondary taxpayers.

Assess multiple IRC section 6702 penalties when the taxpayer files additional frivolous claims for refund and has been afforded the opportunity to rescind the claim at least once but has not responded with a reversal of the claim.

Penalties should be assessed without regard to whether the claim is a copy or an original, whether the signature on the claim is a copy or an original or whether there has been an IRC section 6702 penalty previously assessed for the same tax period.

If unable to determine whether the filing is an additional claim for refund or a response to a Service request for a copy of a previous filing, do not assess the penalty.

See IRM 20.1.6 and IRM 20.1.10.9 , "Penalty Handbooks" , for additional information.

Weston wrote:

However, it does not really matter because for "individuals" the charge does not apply, because they have specifically been excluded from the special term of "person" and "persons", clearly this is charge applicable only to fictitious entities and their members, this is something that an individual can never be [ . . . .]

No, Weston. The term "individual" (living human) is not excluded from the term "person" as used in section 6702. Nice try, but totally unoriginal -- and totally wrong.

And here's IRM 20.1.10.9, which applies to the old $500 penalty:

20.1.10.9 (01-01-2006)
IRC section 6702 Frivolous income tax return

1. IRC section 6702 provides for an immediate assessment of a $500 civil penalty against individuals who file frivolous income tax returns or frivolous amended income tax returns. The penalty is not based on tax liability. An underpayment of tax or understatement of liability is not essential for the penalty to be imposed in addition to any other penalty. The intent of the law is to stop the flow of returns, amended returns, and documents that purport to be returns, and contain altered line items, and/or claim clearly unallowable deductions or credits based on a frivolous position.

2. The penalty can be asserted on a frivolous Form 1040, Form 1040X, Amended Return, Form 843, Claim, and others that:

A. Do not contain sufficient information to judge the correctness of the tax, or

B. Contain information that on its face indicates the self-assessment is incorrect, and

C. The conduct referred to in (a) or (b) is due to a position that is frivolous, or a desire to delay or impede the administration of the tax laws.

3. Some of the schemes that may cause the assertion of the penalty are described in Notice 2005–30, 2005–14 Internal Revenue Bulletin 827.

4. The frivolous return penalty is not applied against partnerships, corporations or estates.

5. Statute of Limitations. A frivolous return:

A. Does not constitute a valid return when the Service is unable to process the return, therefore, the IRC section 6702 penalty may be assessed at any time.

B. Does constitute a valid return when the Service is able to process the return. Therefore, the IRC section 6702 penalty must be assessed within 3 years after the return was filed.

Neither of these provisions in any way states that there is a limit of "one" penalty "per return."

I wasn't aware that you had asked for an actual case where separate $500 penalties were asserted against husband and wife, and I haven't researched that. I would suspect that this would have occurred only rarely, if at all. But that's not the issue.

The issue is whether, under the statute, the IRS may legally impose separate penalties on husband and wife for filing the same frivolous return (or document that purports to be a return, etc., etc.). It appears that under the plain language of the statute, the IRS may legally impose separate $5,000 penalties on husband and wife with respect to the same joint return. Maybe that's not fair, but that does appear to be the state of the law unless the courts end up interpreting the statute otherwise.

[Gregg]

It appears that under the plain language of the statute, the IRS may legally impose separate $5,000 penalties on husband and wife with respect to the same joint return. Maybe that's not fair

I don't care if it's fair, I imagine there are a few tax idiots who never file "educated returns" because their spouse refuses to sign one...good enough for me

[Weston White]

Weston, we don't accept fantasies here, only laws as they have in the past been ruled by courts or lines of reasoning likely to be accepted by courts,,,,so, I think I speak for a few others when I say shut the fuck up.

Now, that's taken care of....

one of Kensie's many problems is that his return, filed jointly, is so out there in la la land that it was not accepted by the IRS who after they got done laughing at him tossed it and prepared a SFR, which cannot be filed joint, and thus 2 SFRs were prepared, both with stupid arguments behind them, ding ding ding, we have a $10,000 winner kids!
I think he's a Doctor, which may account for his arrogance, but I shudder to think that someone who has so little ability to understand simple concepts is treating patients...I wonder if he believes in germ theory (and you'd be surprised how many don't)
Someone needs very badly to learn that the the truth is what happens no matter what you think.
Oh well, maybe he can be the nurse's assistant in prison

It is OK, we all realize that you suffer from penis envy, you and your small mind... You know the old adage, a small mind equates a small penis.

[Weston White]

No, Weston. The term "individual" (living human) is not excluded from the term "person" as used in section 6702. Nice try, but totally unoriginal -- and totally wrong.

Sigh, yes it is look up 26 USC 6671 yourself, it is all right there in plain sight. Though I already provided the definitions for you above. However, that said, living humans are included within the definition, though only certain classes of humans, or those humans engaged in specific activities, such as those numerated and those that are like those numeration, not all, however. That is the point of including a revised definition of a legalese term to effect a specific section.

7701(a)(28) Other terms
Any term used in this subtitle with respect to the application of, or in connection with, the provisions of any other subtitle of this title shall have the same meaning as in such provisions.

Readers of this thread, see how the minds of the infidels work? Look at this I posted “20.1.10.9.2” and Mr. Smart Guy here posts this shit in turn:

“Neither of these provisions in any way states that there is a limit of "one" penalty "per return."”

That is because you are being willfully ignorant of the facts Famspear, you silly goose, right on queue.

Here permit me to aid you, yet again…

20.1.10.9.2 (01-01-2006)
Penalty Computation
1. The civil penalty is $500 per frivolous document.
2. A taxpayer can have multiple penalties; however, for a joint return, only one $500 penalty per frivolous document is assessed against the husband and wife.
3. See LEM 20.1.10 .

I wasn't aware that you had asked for an actual case where separate $500 penalties were asserted against husband and wife, and I haven't researched that. I would suspect that this would have occurred only rarely, if at all. But that's not the issue.

Yea, I am so sure penalizing married couples with dual fines only became an issue after the penalty was raised $4,500., yea, I am not buying that book. Total bullshit. If anything the number of 6702 filers has since dramatically decreased. And being that it use to be so high before, it stands as well that amongst those numbers were many more joint filers.

[Thule]

suffer from penis envy, you and your small mind... You know the old adage, a small mind equates a small penis.

What does a messed up, confused and dysfunctional mind equate, then?

[Weston White]

suffer from penis envy, you and your small mind... You know the old adage, a small mind equates a small penis.

What does a messed up, confused and dysfunctional mind equate, then?

I would have to surmise a Quatloosian member that actually donates their money to support this fucked up forum.

[Doktor Avalanche]

I would have to surmise a Quatloosian member that actually donates their money to support this fucked up forum.

Yeah this forum sure is f*cked up, but yet you always come back for more.

You remind me of the guy who was placed in a room piled to the ceiling with horsesh*t and eagerly grabs a shovel because, despite the room being piled high with the stuff, there just has to be a pony in there somewhere.

When are you going to wise up? If you think you're so damn right, then just do us both a favor: declare victory and be on your way - that is, of course, if your hubris and ego would allow for it.

Admit it, Westy - you secretly get off on this. You just couldn't get through your day without us.

[Joey Smith]

Weston, two points:

(1) You are wrong; and

(2) Nobody who matters agrees with your position.

So you can self-determine that you are right in your own selfish self-interest, just like Kensei, but at the end of the day the courts -- the final arbiters of questions such as these in our society -- will not sustain the positions of either of you.

Not because of any conspiracy grandioso, but simply because you are 100% Grade-A certified Wrong.

[Famspear]

No, Weston. The term "individual" (living human) is not excluded from the term "person" as used in section 6702. Nice try, but totally unoriginal -- and totally wrong.

Sigh, yes it is look up 26 USC 6671 yourself, it is all right there in plain sight. Though I already provided the definitions for you above. However, that said, living humans are included within the definition, though only certain classes of humans, or those humans engaged in specific activities, such as those numerated and those that are like those numeration, not all, however. That is the point of including a revised definition of a legalese term to effect a specific section.

No, it isn't. Look up 6671 yourself. Subsection (b) states:

The term "person", as used in this subchapter, includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.

Various Quatloos regulars have explained and been over the differences between the terms "includes" and "means" in the Internal Revenue Code on previous occasions. Those meanings have not changed since the last time we explained this. You were wrong before, and you're wrong again.

And it's not merely "certain classes of humans," Weston. And the word is "enumerated," not "numerated."

On the second IRM citation, though: For once, you are actually correct, though. And, on this rare occasion, I am wrong. I picked up the wrong citation on the IRM (should have been 20.1.10.9.2).

However, you quoted my comment here:

I wasn't aware that you had asked for an actual case where separate $500 penalties were asserted against husband and wife, and I haven't researched that. I would suspect that this would have occurred only rarely, if at all. But that's not the issue.

Again, the IRM is not "the law." Your point was essentially that old section 6702 and new section 6702 are being applied differently from each other. And you and I appear to be in rough agreement that they are being applied differently. However, you are reaching the false conclusion that new 6702 is being applied incorrectly. And I am pointing out that under the plain language of the new 6702, the IRS may well be correct. I don't write the law, Weston. It may not be fair, but I can't change the law for you to suit your taste.

You responded with:

Yea, I am so sure penalizing married couples with dual fines only became an issue after the penalty was raised $4,500., yea, I am not buying that book. Total bullshit. If anything the number of 6702 filers has since dramatically decreased. And being that it use to be so high before, it stands as well that amongst those numbers were many more joint filers.

Thank you for sharing that with us. Again, I don't write the law. Unfortunately, your feelings about this don't count. Section 6702 says what it says, and until and unless the courts provide an interpretation that agrees with your own, you are out of luck on this point.

And calm down, Weston.

EDIT: Corrected a typo.

[LPC]

Look up 6671 yourself. Subsection (b) states:

The term "person", as used in this subchapter, includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.

Various Quatloos regulars have explained and been over the differences between the terms "includes" and "means" in the Internal Revenue Code on previous occasions. Those meanings have not changed since the last time we explained this. You were wrong before, and you're wrong again.

If it is possible for their to be different degrees of wrongness, then not only is he wrong again, but he is even more wrong than he was before.

The reason that he is more wrong is that there is a definition of "person" in section 7701(a):

When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—

(1) Person

The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.

The usual tax denier argument about section 7701(c) and the use of "includes" in a definition is that they don't know what the "other things otherwise within the meaning of the term defined" might be. But in this case, 7701(a)(1) provides a clear "means" definition, and section 6671(b) does not exclude anything otherwise within the meaning of "person" as defined by section 7701(a)(1).

Having said all that, I have to point out that section 6671(b) is somewhat inartfully written. Of course an officer of a corporation is a "person," but that's not the point. The real point of section 6671(b) is to transfer the obligations of corporations and partnerships to the individuals responsible for the tax returns of the corporation or partnership. So that the failure of a corporation to do something can result in penalties not only for the corporation as an entity, but also for the officers of the corporation. That meaning would be clear to anyone who was willing to think about it rationally, but is obviously not clear to WW, and never will be.

[Kimokeo]

How do you apply IRC 6702 (b)(3) if only one spouse corrects the filing if you are of the mind that the penalty can apply only once to the joint filing?

6702(b) states any person. So, jointly, each could be charged.

If you can't look to 6702(b) to make the penalty charge to each under 6702(a), then is 6702(b)(3) only applicable to penalties charged under 6702(b) but not 6702(a)?

With that logic, 6702(a) has no grace for a corrected return (coming to your senses), if you exclude all of 6702(b).

[Famspear]

New, from losthorizons user dennisconn:

In 2006 I threw in the towel and ended up paying $2000+ for the frivolous penalties on our joint returns for 2001, 2002, 2003 and 2004. At the time I sent payment, I contacted IRS and was assured that there was only one penalty per return, even though notices were sent to both my wife and I. So I thought my problems with the friv pens for those years were over. Wrong. The notices kept coming, and it eventually was explained that both my wife and I had been assessed the penalty, effectively double-billing us for each return. Since so much time had elapsed since the Notice Of Intent To Levy threats for 2003 &2004 (I didn't file the returns in order), I could only request an appeals hearing for 2001 and 2002. IRS attempted to seize the money in my wife's bank account to cover the 2003 friv pen, and the same was likely to follow for 2004. My appeal was based on the info I found in the IRM that in the case of a joint return, only ONE penalty was to be assessed against the husband and wife.

When I received the letter scheduling my hearing, I called the Appeals Officer to reschedule and explained to her that I contested the double imposition of the frivolous penalty on our joint returns for 2001 & 2002 on the basis that I was told that there was only ONE penalty on each return, as well as the info I'd found in the IRM. I also told her that I felt I should be able to include 2003 and 2004 in the appeal request, since it was the IRS delays in responding to my contacts that caused me to miss the deadline for those years' appeals. Of course, she couldn't do that... I told her I'd call her again on the day of the hearing to let her know I was on my way and to confirm there was no problem in scheduling

Anyway, before driving from Toledo to Detroit for my hearing today, I called to let the Appeals Officer know I was on my way, but was running a few minutes late. To my surprise, she said she could save me the trip.

Uh oh. I wondered if she was going to try to slide out of the face-to-face and handle it over the phone.

She said it appeared to her that, even though the provision in the IRM had indeed been changed to allow for penalties against both my wife and I (and she cited the section), the change occurred sometime around the time I had been hassling over payment, and since I was informed at the time I paid that there was only supposed to be one penalty per year, she intended to give me the benefit of the doubt and abate the penalties for 2001 and 2002. She also said that since the issue was the same for 2003 and 2004, she would get IRS to abate those penalties as well, even though they weren't allowed as part of the appeal.

It appears that there may actually be people in the IRS who have the ability to be reasonable after all...

http://www.losthorizons.com/phpBB/viewt ... 5892#15892

[Famspear]

dennisconn wrote:

Anyway, before driving from Toledo to Detroit for my hearing today, I called to let the Appeals Officer know I was on my way, but was running a few minutes late. To my surprise, she said she could save me the trip.

Uh oh. I wondered if she was going to try to slide out of the face-to-face and handle it over the phone.

She said it appeared to her that, even though the provision in the IRM had indeed been changed to allow for penalties against both my wife and I (and she cited the section), the change occurred sometime around the time I had been hassling over payment, and since I was informed at the time I paid that there was only supposed to be one penalty per year, she intended to give me the benefit of the doubt and abate the penalties for 2001 and 2002. She also said that since the issue was the same for 2003 and 2004, she would get IRS to abate those penalties as well, even though they weren't allowed as part of the appeal.

It appears that there may actually be people in the IRS who have the ability to be reasonable after all...

In my experience, IRS employees sometimes waive penalties that they are not, strictly speaking, legally required to abate. If you present a reasonable case and act in a reasonable, non-emotional manner, you can often obtain a reasonable result.

[jkeeb]

So, Dennisconn only had to pay $2000 for following CTC (in addition to any taxes) and the nice Appeals officer abated $2000 of penalties.

I wonder if Dennisconn will now appeal to PH to have PH pay the stupid penalty for following PH's idiotic scheme.