Larken Rose in Trouble Again

[AndyK]

After suffering through his ramblings a couple of times to try and comprehend what he was saying, it seems that he's taking a LoserHead approach to dealing with the IRS.

Upon receiving either proposed notices of adjustment or notices of deficiency, he ignored the procedural steps specified on the forms. Instead, he initiated a letter-writing campaign.

Unfortunately, none of his letters conformed to the actions he was supposed to take. If, for example, he was notified that he had to petition Tax Court to resolve his issue, he wrote a letter back to the IRS.

He has probably missed every statutory deadline to contest the deficiency and will next be participating in CDP hearings -- if he can follow the rules enough to do so.

Although he has clipped off his mullet, it's clear the damage was already done. The weight on the back of his head scrambled his brains.

[Arthur Rubin]

A minor point. US law doesn't require a written contract for either employer or independent contractor status. If there were a written contract, it would be evidence toward the factor of "intent of the parties", but that's not a major factor in the determination of whether the status is employer-employee or independent contractor.

This is based, not only on my experience with tax returns, but also on analysis of theory of "respondeat superior" in my torts class, which also requires determination of status.

In any case, I thought Larken denied any relationship with his employee/contractors. They worked out of the goodness of their hearts, and he gave them money our of the goodness of his heart.

[Thule]

In any case, I thought Larken denied any relationship with his employee/contractors. They worked out of the goodness of their hearts, and he gave them money our of the goodness of his heart.

...and it was purely coincidental that the people he decided to give money to happened to be the same people who volunteered to work for him.

[Lambkin]

Larken's cop-shooting advocacy is making the rounds, with some not-so-strange bedfellows.

I didn't bother to fix the embedded links. If you enjoy Nazi podcasts you can click through to the article.

http://www.digitaljournal.com/article/314638

Op-Ed: When is it okay to shoot a cop?

Last month, a leaflet called 'When Should You Shoot A Cop?' turned up at one of the Occupy Wall Street camps, in Arizona. Yesterday, the man who wrote it turned up in a podcast by America's leading Nazi.
The latest podcast by Wicked Harold Covington can currently be found here. Be advised that some people (as well as cops!) may find parts of it offensive.
For those who want to get straight to the issue at hand, the rant, with Covington's introduction, can now be found here.
The man behind this leaflet is Larken Rose. The original video - without Covington's introduction - can be found here.

[Lambkin]

Another blogger editorial, followed by a comment apparently from Mulletboy.

http://www.theblaze.com/blog/2011/10/28 ... the-right/

Beware: ‘Useful idiots’ are dangerous on the Left AND the Right

Posted on October 28, 2011 at 5:01pm by Meredith Jessup

The “When should you shoot a cop?” flier reportedly floating around Occupy Wall Street protests in Phoenix should give liberal protesters serious pause, but should be of even more concern for conservatives who are anxious to write off the movement as nothing more than a harmless bunch left-wing nutjobs.

As Mike notes, the disturbing anti-police message was prominently published months ago on the website of Larken Rose, a self-described conservative-turned-libertarian-turned-anarchist.

And the comment:

LarkenRose
Posted on October 31, 2011 at 1:46am

Yes, be very very afraid! Be terrified! For I am a despicable, horrible terrorist–the root of all evil, in fact! Why? Because I think people should interact NON-VIOLENTLY. Because I think theft and assault are still bad, even when “legalized.” And most of all, be terrified by what I say, because I want YOU to be allowed to spend your own money, and run your own life. Obviously, that idea scares the hell out of some people. As Voltaire put it, it is difficult to free fools from the chains they revere.

[LPC]

I gritted my teeth and listened to the whole damn video, and have the following comments:

1. The signal to noise ratio is very, very low. If you deleted three out of every four sentences, you would miss about three fourths of the references to "lying thieving fascist thugs" but would lose no semantic content.

2. The repeated references to the IRS "huffing and puffing" are very strange. I usually associate "huffing and puffing" with empty threats made by powerless people, which does NOT describe the IRS.

3. I believe that Larken is completely wrong about the rules and processes for the collection of employment (i.e., "trust fund") taxes from an employer. I don't think that any pre-assessment notice is required, although a collection due process hearing should be required if requested (I think), and the tax liability could be contested during that hearing because there was no previous opportunity to challenge the taxes.

4. Assuming that Larken did what he said and kept writing letters requesting hearings, it's difficult to explain why no hearing was granted in response to his requests. I suspect that Larken made his usually conclusory statements (e.g., "I had no employees") without explaining why he believed that the transcribers he paid were independent contractors, and not employees. That, plus the obvious attitude, might have made it easy for the IRS to treat his letters as meaningless noise and not CDPH requests.

5. I think that Larken is right about the transcribers being independent contractors and not employees. His description of their relationship makes sense to me. He (actually his wife, Tessa) sent medical records to transcribers who worked at home, on their own equipment and at their own pace and times, and who then delivered the transcriptions back to the Roses. Larken would specify the format of the transcriptions and perhaps a timeline for completion, but other than that, the transcribers were pretty much on their own. It sounds like classic independent contractor relationship to me, and I don't think that Larken would need written contracts to prove the nature of the relationship. (But he might need something more than his mere say-so, given his credibility problems.)

6. Larken says nothing about having filed Forms 1099-MISC, and that might be a major part of his problem. If he never reported the payments at all, it would be natural for the IRS to assume that he failed to comply with the responsibilities of an employer, given his history of non-compliance in other areas.

7. Larken says that his personal income tax returns, filed following his conviction, were audited and were ultimately accepted as filed. Larken never explains why the lawless, lying IRS didn't just double or triple his income taxes when they had the chance. After all, they do what they want and there's really no rule of law. (Could it be that the auditors didn't get the memo?)

8. As other's have pointed out, when Larken was finally notified of a hearing date and time, he decided not to bother going.

9. He obviously never consulted a CPA or lawyer with experience in dealing with these kinds of issues.

Conclusion: Stupidity, arrogance, and a desire for martyrdom can be a painful combination.

[ArthurWankspittle]

A minor point. US law doesn't require a written contract for either employer or independent contractor status. If there were a written contract, it would be evidence toward the factor of "intent of the parties", but that's not a major factor in the determination of whether the status is employer-employee or independent contractor.

5. I think that Larken is right about the transcribers being independent contractors and not employees. His description of their relationship makes sense to me. He (actually his wife, Tessa) sent medical records to transcribers who worked at home, on their own equipment and at their own pace and times, and who then delivered the transcriptions back to the Roses. Larken would specify the format of the transcriptions and perhaps a timeline for completion, but other than that, the transcribers were pretty much on their own. It sounds like classic independent contractor relationship to me, and I don't think that Larken would need written contracts to prove the nature of the relationship. (But he might need something more than his mere say-so, given his credibility problems.)

6. Larken says nothing about having filed Forms 1099-MISC, and that might be a major part of his problem. If he never reported the payments at all, it would be natural for the IRS to assume that he failed to comply with the responsibilities of an employer, given his history of non-compliance in other areas.

I tend to agree with the above and would add the following: Larken couldn't describe to a judge what a blank piece of paper was without going off at a tangent about the eebil gubbermint and the IRS mafia. The chances of him making a comprehensive argument about his staff being sub-contractors is nil, notwithstanding the feasibility of 5. being close to the truth. How much the lack of 1099s makes I suspect could be important (again as in 6. above). It also will matter how the general attitude of the IRS works in these situations. Is the categorisation of staff as sub-contractors something it loathes as it is frequently seen as an attempt to avoid employer responsibilities for withholding and similar obligations? Also, as I asked before, what happens if an "employee" says what they got paid was net and Larken told them he would take care of all the tax side of things?

[notorial dissent]

I agree wholeheartedly with LPC here. I think ole Barkin’ Larkin is telling the truth, or at least as much as he is capable of. I think the transcribers are/were contractors, and that he thought of them in that way, and I am sure they thought of themselves in that fashion, and it is a very reasonable and valid presumption. The fact that they were working from home and WITHOUT other supervision from him and at their own time and pace pretty much leads inescapably to that conclusion. I will also bet, with equal certainty, that he DIDN’T file any of the proper paperwork, specifically the 1099's as required, and therefore left the IRS no option, but to believe that they were in fact employees, which is exactly what they do since that is the default position in something like this.

It is really ironic, that for once Larkin is more or less in the right, and yet has managed through his own, overweening ego and overwhelming dumb assedness to not only shoot himself in the foot once again, but has then continued to do so repeatedly by not responding properly to the notices.

Arthur is equally correct in that Larkin can not get far enough away from his whining and petulance to actually do anything constructive on his own behalf, and thus rather than resolve the issue like a sensible adult, will only manage to make it, and by default, his position worse, when there was no need of it. But then, he wouldn’t be poor, persecuted Larkin.

[ArthurWankspittle]

I will also bet, with equal certainty, that he DIDN’T file any of the proper paperwork, specifically the 1099's as required, and therefore left the IRS no option, but to believe that they were in fact employees, which is exactly what they do since that is the default position in something like this.

As suspected then, thank you. (It's the same in the UK.)

[webhick]

If he filed 1099s for them then theyd be responsible for the tax no matter what argument anyone else brings up.

That doesn't matter. I knew a garage who decided to pay all his mechanics as 1099s so he could get out of paying employment taxes (not a tax denier, just cheap). Even had the CPA issue those 1099s. One day, he laid off one of the mechanics and the guy went to the state to collect unemployment only to find out that as a 1099, he couldn't collect. The person at the unemployment office forwarded the case to the state labor board. Labor board did an audit, put all the subs through the IRS employee test and save for the alignment company, they were all shifted to employees. The effect rippled back to the IRS within a few months and he ended up doing 941s, amending 1099s and issuing W-2s on all his employees for the prior two years.

Similar thing happened with a fence company, except the guy honestly wasn't trying to dodge taxes, he just paid people how he had been paid for the past twenty years by the fence company he worked for. Thankfully, the IRS has special rates for "oops, didn't know better."

Fact of the matter is, just because you put a sign on a turkey sandwich calling it a ham sandwich, but it doesn't change the fact that it's a turkey sandwich.

[notorial dissent]

Quite true, there are a whole set of rules you have to follow or meet in order to play that game, and if you don't, it can hurt.

[jkeeb]

LPC wrote:5. I think that Larken is right about the transcribers being independent contractors and not employees. His description of their relationship makes sense to me. He (actually his wife, Tessa) sent medical records to transcribers who worked at home, on their own equipment and at their own pace and times, and who then delivered the transcriptions back to the Roses. Larken would specify the format of the transcriptions and perhaps a timeline for completion, but other than that, the transcribers were pretty much on their own. It sounds like classic independent contractor relationship to me, and I don't think that Larken would need written contracts to prove the nature of the relationship. (But he might need something more than his mere say-so, given his credibility problems.)

This is a description of a statutory employee. IRC3161(d) (off the top of my head)

[Cpt Banjo]

Section 3121(d)(3)(C), to be exact.

(d) Employee
For purposes of this chapter, the term “employee” means...

(3) any individual (other than an individual who is an employee under paragraph (1) or (2)) who performs services for remuneration for any person ...

(C) as a home worker performing work, according to specifications furnished by the person for whom the services are performed, on materials or goods furnished by such person which are required to be returned to such person or a person designated by him...

[jkeeb]

So, according to 3121, Larken's payee's are statutory employees, therefore, he owes the employer share of FICA and should withhold the employee share. This specific issue does not rise to the usual "facts and circumstances with 12 factors" that are normal with the determination of whether or not someone is an employee.

[LPC]

LPC wrote:5. I think that Larken is right about the transcribers being independent contractors and not employees. His description of their relationship makes sense to me. He (actually his wife, Tessa) sent medical records to transcribers who worked at home, on their own equipment and at their own pace and times, and who then delivered the transcriptions back to the Roses. Larken would specify the format of the transcriptions and perhaps a timeline for completion, but other than that, the transcribers were pretty much on their own. It sounds like classic independent contractor relationship to me, and I don't think that Larken would need written contracts to prove the nature of the relationship. (But he might need something more than his mere say-so, given his credibility problems.)

This is a description of a statutory employee.

Oops. Didn't know that, and you're right.

And, now that I've seen the definition, I can also see the public policy behind the definition, and it makes sense to me.

There is an exception "if the services are in the nature of a single transaction not part of a continuing relationship with the person for whom the services are performed," but I doubt that applies.

If it doesn't, then Larken is dead meat.

I wonder if the IRS, TIGTA, or Taxpayer Advocate have cited the relevant law to Larken and he refuses to believe it, and so this is just another example of his self-righteous obstinacy?
Or if he hasn't seen the statute and he's simply ignorant? My guess is the former.

[Edited by DBE to correct last paragraph's ignorance/obstinacy dichotomy.]

[Dezcad]

I wonder if the IRS, TIGTA, or Taxpayer Advocate have cited the relevant law to Larken and he refuses to believe it, and so this is just another example of his self-righteous obstinacy?
Or if he hasn't seen the statute and he's simply ignorant? My guess is the former.

[Edited by DBE to correct last paragraph's ignorance/obstinacy dichotomy.]

I think Larken realizes that his audience doesn't know the relevant law, so he can easily portray it to his benefit. Larken doesn't really care what the law is because as he often says - it is just words written on paper.

[AFTP]

So since Rose owes 300K and has nothing to show for it. Will he go back to jail for having no money?

[jkeeb]

So since Rose owes 300K and has nothing to show for it. Will he go back to jail for having no money?

I wish.

[ArthurWankspittle]

So since Rose owes 300K and has nothing to show for it. Will he go back to jail for having no money?

No, but he could well be going back to jail for not doing things properly. Not being able to pay the tax man isn't an offence which would result in jail time. I think it's like a civil matter. Not sending in the required forms and pretending you don't need to pay money over to the IRS when you should is what gets you jail time. Don't forget - he said they are foreclosing or putting a lien on his house. He mutters something about possibly "losing" it I think.

[The Observer]

This has been an old dodge and not one that Larken created on his own. Of course the transcribers are employees since they are working on materials provided by Rose; one forum comment has Rose twisting the code section to say "to" rather than "on", his argument being that since the transcribers return the materials unaltered, they are not statutory employees. It is obvious why Rose is making this intellectually dishonest argument.

But Larken could have avoided all of this nonsense in the very beginning by asking the IRS to conduct an employer-employee relationship audit and to provide him with their determination. Then he could have decided to change the business arrangement to meet the criteria of an independent contractor relationship. Of course this most likely would have meant that it would be up to the ICs to pick up the materials directly from the customers and to deliver the finished product back, thus reducing Rose's role (and that of his wife) to being simply the "finders" for work for the ICs and receiving essentially a commission for the arrangement. But that route predictably leads to the ICs establishing their own relationships with the customers and eventually cutting out the middlemen, reducing the charges and increasing their income - none of which is in the Roses' interest to see happen. (There happens to be the issue of quality control and I will give Larken the benefit of the doubt that they don't want any of the services they are providing to degrade when they give up control of the employees.)