CtC "Warriors" Penalized?

[LPC]

A strange claim by "admin" (Pete Himself) on LH:

For everyone's general information, only one CtC warrior of whom I am aware has ever had a "frivolous" penalty actually taken from her. In this case, the warrior had already received complete refunds for the years in question, but a loose-cannon IRS agent presumed to allege "frivolous" penalties against her for these years and sent a "notice of levy" to the company for which she worked. (The levy paperwork DID NOT allege that the warrior owed any "normal" taxes for these years, by the way, or the "return" of the substantial refunds she had received-- just the $500 penalties...) The company cravenly and criminally complied, and the warrior is gearing up to sue. I'm sure all will join me in wishing her justice. (All of this happened several years ago, by the way.)

Otherwise, a few warriors have had a currently issued refund nicked for an alleged $500 penalty for a previous year's filing, and that's it. (In these latter cases, this was, of course, simply the retention by the government of property already in its hands-- and of course, these warriors still ended up with a good deal more of their property back in their own hands than they would have had without standing up and acting... These "deductions" are obnoxious, certainly, but are also nothing more than bad actors taking improper advantage of circumstances in which the filers were at a kind of Kafka-esque disadvantage.)

So, let's ignore the fact that the government is 7-for-7 in collecting erroneous refunds in court from "CtC warriors" and let's focus on a (claimed) small number of frivolous return penalties?

And yet the LH forum has numerous threads started by people who are asking what to do about frivolous return penalties. How have they been excluded from the statistical sample?

[Quixote]

The company cravenly and criminally complied, and the warrior is gearing up to sue. I'm sure all will join me in wishing her justice. (All of this happened several years ago, by the way.)

Is he saying he's reporting old news? Or is he saying that the levy occurred several years ago, but the warrior is just now gearing up to sue? I would hate to inject law into a CTC discussion, but I wonder if the warrior is aware of the limitation period on refunds, in this case 2 years after the levy was paid. Of course, it's possible, given PH's linguistic flexibility, that "several years ago" means "last week".

[John J. Bulten]

Just what Pete said. No one who has read CtC, understands the law, and continues to uphold it, has until now complained of money actually taken from them by any government on that ground. Pete only learned of this one exception recently, and announced it forthrightly. (It was presumably insignificant enough not to be reported for years, until the warrior was ready to sue.)

Given Pete's slightly utilitarian choice of statistic, the following people have not had money involuntarily taken. Former CtC warriors, who laid down their arms when asked, (whatever else can be said) chose to pay voluntarily and to agree with the allegations of error, instead of upholding their previous apparent understanding of the law. CtC warriors still fighting in court (Joy Ferguson, Pete and Doreen Hendrickson, and Jim Spitzer) have not paid a penny of alleged erroneous refunds. Recipients of frivolous penalty notices, with the one exception, have not had to pay, generally because they have administrative and judicial routes to appeal the base alleged deficiency.

And as for this exception, how can the IRS maintain that a frivolous return penalty applies when the return is processable, because processed? If she sues and the IRS hasn't sued first for erroneous refund, how can they maintain with any credence that the penalty was valid? Don't you think the warrior has some remedy for invalid penalty, particularly if she sues the workplace as well and if there is a legitimate reason for the delay?

[Imalawman]

Just what Pete said. No one who has read CtC, understands the law, and continues to uphold it, has until now complained of money actually taken from them by any government on that ground. Pete only learned of this one exception recently, and announced it forthrightly. (It was presumably insignificant enough not to be reported for years, until the warrior was ready to sue.)

Given Pete's slightly utilitarian choice of statistic, the following people have not had money involuntarily taken. Former CtC warriors, who laid down their arms when asked, (whatever else can be said) chose to pay voluntarily and to agree with the allegations of error, instead of upholding their previous apparent understanding of the law.

John, what do you know of state tax cases? I can say with certainty that quite a few CTC'ers have been forced to give up refunds, denied refunds, and assessments for additional taxes upheld. These have argued just like you have, John, and still have not won.

You're a liar John. I see the families that you and Pete are ruining, I see the financial devastation that you've placed upon many families. I have no tolerance for you. You're a sick man, upon whose head the ruination of several families rests. I hope you spend quite a few years behind bars along with your guru, Pete.

[Dezcad]

... particularly if she sues the workplace as well....

Now that is a good one. Exactly what would be the legal basis for this suit? And under what legal theories?

I'm referring to American jurisprudence theories as they exist today.

[jg]

Just what Pete said. No one who has read CtC, understands the law, and continues to uphold it, has until now complained of money actually taken from them by any government on that ground.

Nice try to worm out with the qualifier of "on that ground".

The fact is that there have been posts from more than a few in regard to levy, lien, locked in withholding and other collection activity for which CtC has not provided any remedy. Whether this qualifies as "complained of money actually taken" is another dodge as the due process of collection takes time.

Please provide any instance where CtC has been effectively used to do anything than obtain a refund on a return sent in or any court case that has ruled in any sense that is favorable to CtC. To date, there are no such cases that have been provided including the case of Hendrickson.

[Cpt Banjo]

... particularly if she sues the workplace as well....

Now that is a good one. Exactly what would be the legal basis for this suit? And under what legal theories?

I'm referring to American jurisprudence theories as they exist today.

Let's see...Section 6332(e) of the Code says:

(e) Effect of honoring levy.
Any person in possession of (or obligated with respect to) property or rights to property subject to levy upon which a levy has been made who, upon demand by the Secretary, surrenders such property or rights to property (or discharges such obligation) to the Secretary (or who pays a liability under subsection (d)(1)) shall be discharged from any obligation or liability to the delinquent taxpayer and any other person with respect to such property or rights to property arising from such surrender or payment.

To anyone with the intelligence of a cactus, this means that any suit against the employer would be fruitless. But Bulten, not having such a level of brainpower, feels otherwise. Is anyone surprised?

[John J. Bulten]

Lawman, I know you might not want to publicize their names, but you could at least ask them to email me and Pete about their troubles. If I were aware of any other verifiable exceptions I would investigate and report them.

Here, I'll make you a deal. I have an educational interest in learning about alleged exceptions to CtC. So every single person who emails me this month, with alleged proof of personal devastation or ruination for following CtC, I will prominently report on this forum. Of course, "proof" means scanned documentation or otherwise reasonably accommodated verified evidence, and "following CtC" excludes activity not reasonably traceable to the book, or to the website other than the forum. Since you seem to have some passion behind your charges, let's get the facts out in the open.

(Banjo, what if the property is not "subject to levy" and "upon which a levy has been made"?)

[The Observer]

(Banjo, what if the property is not "subject to levy" and "upon which a levy has been made"?)

John, the IRC is way ahead of you and has listed specific property that is exempt from levy. If the property falls into the categories specified in the IRC, good news for the taxpayer. This includes such things as disability payments. The list is rather small and limited. So CtCers are not going to be able to argue that their income, wages, earnings and whatever else comes into the household from the sweat of their brow is exempt from levy.

[Imalawman]

Lawman, I know you might not want to publicize their names, but you could at least ask them to email me and Pete about their troubles. If I were aware of any other verifiable exceptions I would investigate and report them.

Here, I'll make you a deal. I have an educational interest in learning about alleged exceptions to CtC. So every single person who emails me this month, with alleged proof of personal devastation or ruination for following CtC, I will prominently report on this forum. Of course, "proof" means scanned documentation or otherwise reasonably accommodated verified evidence, and "following CtC" excludes activity not reasonably traceable to the book, or to the website other than the forum. Since you seem to have some passion behind your charges, let's get the facts out in the open.

Well, I understand what you're saying, to a point. But I can't release names and I would never encourage contact with you. So, you'll just have wait in suspense. Point being that you know damn well people are failing at CTC, but then changing your story about what a true "CTC defense" is. Surprise, its never what loses, its always some mythical argument yet to be tried. I can't wait to see what you say when Petey loses on appeal.

[Quixote]

Don't you think the warrior has some remedy for invalid penalty, particularly if she sues the workplace as well and if there is a legitimate reason for the delay?

If she thought the penalty was invalid, she could have filed a refund claim. It would have been denied or ignored, because a frivolous return penalty is valid for all CTC returns, most of which are frivolous on their face. Once the refund claim was denied or 6 months passed, whichever came first, she could file a refund suit. But, she had to have filed that refund claim within 2 years of the date the penalty was paid. According to Pete, she didn't.

The only exception to the 2 year limitation period in this case would be "financial disability", which doesn't mean what it sounds like. A person is "financially disabled" if she suffers from a mental or physical condition that lasts for more than a year or is expected to lead to death that renders her incapable of handling her financial affairs. The running of the limitation period is suspended during periods of financial disability. A doctor must certify that she was financially disabled and identify the period of disability. Many CTC warriors seem to exist in a permanent state of financial disability, but a certification from the quack that adjusts their auras probably won't work.

[John J. Bulten]

Lawman, by my hitting the wrong button, you have been providentially spared a much longer analysis, complete with invocation of William Penn and Sam Adams, now lost in cyberspace.

In short, CtC is about upholding the law and demanding justice. Failure to achieve justice has only three causes: conscious abandonment; abandonment by deception; and deferral.

Anonymous unproveable allegations blaming CtC for someone's failure can only be supported if CtC were to be deceptive. But you're not even arguing deception: you're only laying devastation and ruin at my feet because their arguments are "just like" mine.

If you want to argue the law, let's have some more fun. If you don't, kindly cease making allegations you don't wish to prove.

[grixit]

War-REE-ors! Come out and PLAY-AY!

(or is that "pay"?)

[Duke2Earl]

Why is it that they want to argue about what has already been decided...not once but over and over and over again?

[jg]

Why is it that they want to argue about what has already been decided...not once but over and over and over again?

But Ctc does not say that my wages are not income like those before, it says that my income is not wages!

Can you not understand that this particular self decision of the law is unlike all those other cases that claimed the law meant what they wanted it to say ??

Do you not see that this denial of the law as applied and enforced is not mere disagreement with the law; but is the true and intended, but heretofore undiscovered, meaning???

and on and on and on ....

[Cpt Banjo]

(Banjo, what if the property is not "subject to levy" and "upon which a levy has been made"?)

If the property hasn’t actually been levied upon, then the employer can be liable if he turns it over to the IRS. But if the property has been levied upon, it’s not the employer’s duty to determine matters of exemption – that is, whether the nature of the property makes it subject to levy in the first place. In fact, the law precludes the employer from going to court to seek such a determination. If the taxpayer thinks the property isn't subject to levy, he can take the matter up with the IRS, but his employer is off the hook.

”A third party in possession of property upon which a levy has been issued must surrender the property or rights to property subject to levy. 26 U.S.C. § 6332(a). There are two, and only two, possible defenses for failure to comply with a tax levy. See National Bank of Commerce, 472 U.S. at 721-22. First, it is a defense that the property is already subject to judicial attachment or execution. 26 U.S.C. § 6332(a). The other defense is that the third party is neither "in possession of" nor "obligated with respect to" property or rights to property belonging to the taxpayer. National Bank of Commerce, 472 U.S. at 722. "Under the second defense, even if others claim an interest in the property and the taxpayer's interest may be quantified as a mere modicum," the property must be surrendered until ultimate ownership can be resolved. Congress Talcott Corp. v. Gruber, 993 F.2d 315, 319 (3rd Cir. 1993) (citing National Bank of Commerce, 472 U.S. at 727-728).” Allstate Financial Corp. v. U.S., 860 Fed. Supp. 653 (D. Minn. 1994).

“We will first address Moore's second claim on appeal: that the Notice of Levy served upon NBD was invalid for a variety of reasons, and therefore the immunity conferred by 26 U.S.C. § 6332(e) does not apply to the defendants. Moore argues that the defendants had a duty both to recognize these alleged deficiencies in the levy and to oppose the IRS on his behalf. Because the defendants failed to challenge the validity of the levy, Moore concludes, the immunity conferred by § 6332(e) does not protect them.

This line of argument is meritless. Once the IRS served a Notice of Levy on NBD, the bank had a legal obligation under § 6332(a) to turn over to the IRS Moore's accounts; NBD could not challenge the validity of the levy. "[A] bank served with a notice of levy has two, and only two, possible defenses for failure to comply with the demand: that it is not in possession of the property of the taxpayer, or that the property is subject to a prior judicial attachment or execution." United States v. National Bank of Commerce, 472 U.S. 713, 727, 86 L. Ed. 2d 565, 105 S. Ct. 2919 (1985) (emphasis added). Moore's challenge to the validity of the levy did not alter NBD's obligation to comply with the levy, Schiff v. Simon & Schuster, Inc., 780 F.2d 210, 212 (2d Cir. 1985); Allstate Financial Corp. v. United States, 860 F. Supp. 653, 656 (D. Minn. 1994), and thus, NBD could not have challenged the validity of the levy on Moore's behalf. NBD cannot be held liable for having failed to do what it could not legally do.

Furthermore, regardless of whether or not the levy served on NBD was valid, NBD and the other defendants are immune from liability. Allstate Financial Corp., 860 F. Supp. at 657. Section 6332(e) provides that:

any person in possession of [property] subject to levy upon which a levy has been made who, upon demand by the Secretary [of the Treasury], surrenders such [property] to the Secretary . . . shall be discharged from any obligation or liability to the delinquent taxpayer . . . .
26 U.S.C. § 6332(e).

There is no question in this case that Moore's bank account was "property subject to levy," that the IRS made a levy (whether valid or not) on that account, and that upon demand of the Secretary--acting through the IRS--NBD surrendered Moore's account. By its own terms, then, § 6332(e) applies to the defendants in this case; that statute is not limited to levies which survive challenges to their validity. Moore's interpretation of § 6332(e) reads in requirements which simply are not a part of the statute. We therefore cannot accept his interpretation, and hold instead that under § 6332(e), the defendants in this suit are immune from liability to Moore. The district court therefore correctly granted summary judgment in favor of the defendants.” Moore v. General Motors Pension Plans, et al. , 91 F. 3d 848 (7th Cir. 1996)

[Joey Smith]

Simple reminder that Pete and Doreen Henderson lost, big time, and that the only open question is whether they will next be fined for a frivolous appeal.

[John J. Bulten]

If she thought the penalty was invalid, she could have filed a refund claim. It would have been denied or ignored, because a frivolous return penalty is valid for all CTC returns, most of which are frivolous on their face. Once the refund claim was denied or 6 months passed, whichever came first, she could file a refund suit. But, she had to have filed that refund claim within 2 years of the date the penalty was paid. According to Pete, she didn't.

The only exception to the 2 year limitation period in this case would be "financial disability", which doesn't mean what it sounds like. A person is "financially disabled" if she suffers from a mental or physical condition that lasts for more than a year or is expected to lead to death that renders her incapable of handling her financial affairs. The running of the limitation period is suspended during periods of financial disability. A doctor must certify that she was financially disabled and identify the period of disability. Many CTC warriors seem to exist in a permanent state of financial disability, but a certification from the quack that adjusts their auras probably won't work.

Q, normally I don't dispute you, it's just that I chanced across this at Pete's appendix page, and was wondering if you had any comment. Oh, and what kind of frivolous returns are not frivolous on their face?

Two federal districts courts ruled in different cases during 2005 that in cases in which no tax was actually ever owed, claims for refund of amounts erroneously, illegally, etc. collected as tax were subject to the six-year statute of limitations which is the generic standard for claims against the federal government (see 28 USC 2401), rather than the shorter period provided within the "income" tax statutory scheme. Perfectly reasonable rulings. I don't know whether they have been appealed...

[grammarian44]

Oh, and what kind of frivolous returns are not frivolous on their face?

John, please define the word "frivolous" as that term is used in U.S. tax law. Only then will the claims you're making have any meaning.

I ask this question because I think--as illustrated by the above question--you fundamentally misunderstand the legal definition of the word "frivolous."

[Quixote]

Q, normally I don't dispute you, (sic) ...

Normally, you don't even try, a wise choice on your part.

it's just that I chanced across this at Pete's appendix page, and was wondering if you had any comment.

You want me to comment on the assertion, made by a man with a demonstrated inability to understand court opinions (and the works of Lewis Carroll), that two unidentified courts, in unidentified cases decided sometime in 2005, held that refund claims (by which he presumably meant suits) for the overpayment of some unidentified taxes are subject to the six year limitation period? Have I got that right?

Oh, and what kind of frivolous returns are not frivolous on their face?

I fail to see the relevance of that question to this discussion. Try to focus.