Hendrickson acolyte Carmen D'Agostino convicted

[operabuff]

Good point, Andy.

I believe the Long case involved a return that truly was all zeros.

In many respects, I think the Beard test is intended to be relatively easy for the IRS to administer using low level staff -- if it looks like a completed return, it's a return, so long as there are no signature/jurat issues. Nonetheless, this area of whether a document is a valid return has been a tricky one for the IRS over the years.

As I said in an earlier post, treating documents that are questionable as returns is a good safe strategy for the IRS. Assessments are made timely, and if it later turns out that it wasn't a return after all, then the IRS has an unlimited period of limitation (for civil purposes) to reassess, apply the proper penalty etc.

The problem has been, however, that those same low graded people are not authorized to make adjustments to returns unless a math error is involved, so if it appears that there is a problem return not addressed by math error, the IRS has two options - (1) go ahead and process it and issue the refund, figuring to catch up later as necessary; or (2) put it in suspense and refer it to the questionable return program, which will evaluate the return and then forward it to exam or criminal investigation, as appropriate. At least at the outset, the IRS seems to have handled CTC returns using option (1).

The National Taxpayer Advocate (Nina Olson) expressed concern that too many returns were being put in suspense and never acted on. So the IRS took steps to clean out the backlog.

The advent of electronic filing has added a few complexities as well, but the screening does catch a lot of problem returns and requires them to be filed on paper.

And, of course, there's identity theft. When one taxpayer files a return using another taxpayers identifying information, is that a valid return? The Beard test doesn't really seem to address this. Suppose you're an undocumented worker and you've filed a return where the only incorrect information is the SSN. It's pretty clearly not the theft victim's return, but it seems like it might be a valid return of the thief. Here's an IRS Chief Counsel memo addressing that problem, albeit from a disclosure standpoint. http://www.irs.gov/pub/lanoa/pmta2009-024.pdf (This memo should not be regarded as the final expression of IRS thinking, but it does lay out the issues pretty well.)

I fear I've wandered pretty far away from the CTC topic. But I've always found this return issue interesting. (I don't know what that says about me)

[Famspear]

...On the other hand, Pete's followers file returns (as described above) which attempt to recover all withholdings via fraudulent 4852s. As opposed to the Schiffies, they DO contain adequate information for the IRS to compute the taxes since there is a statement -- albeit a disavowal -- of income. So, they marginally qualify as legitimate returns enough to also qualify for the $5,000 penalty....

And merely containing adequate information to compute the tax isn't enough for a valid return, under the Beard test. The Beard element where Crackhead "returns" fall short is the element of an honest and reasonable attempt to satisfy the requirements of the tax law.

Further, the $5,000 frivolous return penalty (section 6702) applies even if the "return" is not a legally valid return. Both before and after the amendments enacted in 2006, the statute uses the phrase "files what purports to be a return..." (emphasis added).

[wserra]

I think the Beard test is intended to be relatively easy for the IRS to administer using low level staff

Absolutely.

Pass:



Fail:


Easy.

[Famspear]

According to the Federal Bureau of Prisons, Carmen D'Agostino was released, on schedule, on Monday, September 28, 2015.