False Returns and Mortgage Applications

[Joey Smith]

Found this gem at lostheads:

bettyroug54

Joined: 19 Oct 2007
Posts: 2
Location: Kennewick, WA
Posted: Wed Jan 16, 2008 2:22 pm Post subject: 2006 Return Question

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Pleae forgive, I am very new to posting to forums and am not sure if this is where I should address my question. I filed for an extension to my 2006 taxes in order to read the entire CTC book several times (I have problems with verbiage of law and am still not sure I have done the right thing). In October of 2006 I sent in my return with form 4852 attached (no I didn't physically take it in and have it stamped "received"....probably a big mistake). To date (1/16/2008) I have heard nothing, though I assume they have my return as I went to the IRS site and submitted info to find out "Where is my Refund?" and got an answer that I should call a certain phone number...YOIKES! I fully expect to have to fight to receive my money back, but how long does it usually take the IRS to let me know I have filed a "frivilous" return? In 2005 my husband received a large back payment of Social Security Disability monies (I claimed that as I know that is taxable) and with that payment and my wages from my private sector employer we would have owed almost $2000.00. However, I did a corrected information form with my return and requested all withheld monies resulting in a refund of over $4000.00. Since this is the first time I have ever done anything like this I am of course, concerned. In addition, my husband and I are now in the process of buying a new home. Last year's 1040 of course is requested as part of the mortgage loan application. Can the loan company deny us a mortgage based on my 2006 return? If anyone can give me advice, I'd really appreciate it.

[Judge Roy Bean]

What she doesn't know is that nowadays the mortgage company will probably be pulling her returns from one of the data services whether she provides them or not. What underwriters have discovered is it's just too easy to make up a phony tax return, i.e., with TurboTax, etc., and they can get them in less than 48 hours.

[Disilloosianed]

What a tangled web we weave....

[Agent Observer]

It may not show up for the underwriters, but sure looks like "betty" is going to end up with a big old bill..

In 2005 my husband received a large back payment of Social Security Disability monies (I claimed that as I know that is taxable) and with that payment and my wages from my private sector employer we would have owed almost $2000.00. However, I did a corrected information form with my return and requested all withheld monies resulting in a refund of over $4000.00.

So not only did she file a frivolous return for 2006, she filed one for 2005 and got a refund. She'll probably get dinged for 2 frivolous returns (possible $5000 fine each), plus have to pay back the $4000, and have to pay the taxes she owed for 2005 ($2000), plus penalties and interest. So right off the top, she's on the hook for potentially $16,000 and change, which doesn't even include whatever her she owed for 2006 (plus penalties and interest) and didn't pay. I wasn't an accounting major, but it seems to me that paying $16,000 to avoid paying $2000 in taxes (plus whatever the balance was in 2006) isn't the best way to balance the ledger.

[webhick]

Pleae forgive

Not until you repent.

I am very new to posting to forums and am not sure if this is where I should address my question.

I don't care how "new" you are - if you manage to post something in the wrong place on a forum where there's only one place to post anything then you have torn a hole in the space-time continuum and will be solely at fault for when the fluffy pink gorillaphants fall from the sky.

I filed for an extension to my 2006 taxes in order to read the entire CTC book several times

Wow. You needed six months for that? Um, "Dear IRS, Please grant me my automatic six month extension because I'm trying to get through a book I just bought. No, I'm not going to tell you what book, but just to be sporting, I'll give you a hint. It's by a convicted mail-bomber. All My Love, Betty"

(I have problems with verbiage of law and am still not sure I have done the right thing).

More than likely, it's not the verbiage of law that you have a problem with. It's Pete's verbiage and misunderstandings of law. Don't feel bad. I don't even think Pete understands it. Several Illuminati translators have run screaming from the building in trying to hammer out the contradictions in his book. We've decided to just give up and let the courts handle it.

In October of 2006 I sent in my return with form 4852 attached (no I didn't physically take it in and have it stamped "received"....probably a big mistake).

Okay...so you really did need that six month extension.

To date (1/16/2008) I have heard nothing, though I assume they have my return as I went to the IRS site and submitted info to find out "Where is my Refund?" and got an answer that I should call a certain phone number...YOIKES!

1-8-LUV-ME-TNDR? Whatever you do, don't call that number.

I fully expect to have to fight to receive my money back, but how long does it usually take the IRS to let me know I have filed a "frivilous" return?

If you want to find out, call the number. I'm sure they'll be more than happy to tell you when they decided that your return was a marvelous work of fiction. Then if you keep up your position, they'll send you love letters. "Intent to Levy" is really code for "If I can't be with you, no one can."

In 2005 my husband received a large back payment of Social Security Disability monies (I claimed that as I know that is taxable) and with that payment and my wages from my private sector employer we would have owed almost $2000.00. However, I did a corrected information form with my return and requested all withheld monies resulting in a refund of over $4000.00.

So, instead of having enough withheld to cover the amount of taxes you would have owed at the end of the year, you chose to instead file a frivolous return. Excellent choice. You'll never see that $4k. You'll be lucky if you don't get fined. In the end, you could very well owe $7k+ (that's your original $2k plus the $5k penalty). I hope you realize that your greediness has dug your hole deeper.

Since this is the first time I have ever done anything like this I am of course, concerned.

And you should be. And not because its your first time.

In addition, my husband and I are now in the process of buying a new home.

You know, mortgage interest and property taxes are great write-offs. Oh, but that's right...you file your taxes according to Pete's Rule Of Law.

Last year's 1040 of course is requested as part of the mortgage loan application.

Duh. You should have thought about that before you filed a frivolous return.

Can the loan company deny us a mortgage based on my 2006 return?

Survey says: YES. You put down that you had no income. Either you lied to the IRS, or you're lying to the mortgage company. And on top of that, I couldn't really blame them, because falling for a scam like CtC demonstrates an inability to recognize those debt elimination scams for what they are. One day, you could be trying to screw over the mortgage company.

If anyone can give me advice, I'd really appreciate it.

Wake up to reality. Burn CtC. Go back and amend your CtC tax returns and this time report all your income. If you owe money, set up a payment arrangement.

But you won't do any of that, because you're drinking the kool-aid.

[LPC]

What she doesn't know is that nowadays the mortgage company will probably be pulling her returns from one of the data services whether she provides them or not.

How would a tax return show up in a "data service" unless the taxpayer has provided a copy to a lender?

[The Observer]

What she doesn't know is that nowadays the mortgage company will probably be pulling her returns from one of the data services whether she provides them or not.

How would a tax return show up in a "data service" unless the taxpayer has provided a copy to a lender?

I wondered the same thing myself. The IRS isn't allowed to share taxpayer return information with any credit reporting agency or other "data" services. While the IRS can share limited information with state/local government taxing agencies, that information cannot be forwarded by those agencies to any other entity.

What some lenders do will require the taxpayer to execute a waiver giving disclosure authority to the IRS to share tax information with them. That is the only way a lender can be assured that they are getting what the taxpayer actually filed.

[Famspear]

For what it's worth, Internal Revenue Code section 7213, "UNAUTHORIZED DISCLOSURE OF INFORMATION," provides (in part):

(a) RETURNS AND RETURN INFORMATION. --

(1) FEDERAL EMPLOYEES AND OTHER PERSONS. --It shall be unlawful for any officer or employee of the United States or any person described in section 6103(n) (or an officer or employee of any such person), or any former officer or employee, willfully to disclose to any person, except as authorized in this title, any return or return information (as defined in section 6103(b)). Any violation of this paragraph shall be a felony punishable upon conviction by a fine in any amount not exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the costs of prosecution, and if such offense is committed by any officer or employee of the United States, he shall, in addition to any other punishment, be dismissed from office or discharged from employment upon conviction for such offense.

(2) STATE AND OTHER EMPLOYEES. --It shall be unlawful for any person (not described in paragraph (1)) willfully to disclose to any person, except as authorized in this title, any return or return information (as defined in section 6103(b)) acquired by him or another person under subsection (d), (i)(3)(B)(i) or (7)(A)(ii), (l)(6), (7), (8), (9), (10), (12), (15), (16), (19), or (20) or (m)(2), (4), (5), (6), or (7) of section 6103 or under section 6104(c). Any violation of this paragraph shall be a felony punishable by a fine in any amount not exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the costs of prosecution.

(3) OTHER PERSONS. --It shall be unlawful for any person to whom any return or return information (as defined in section 6103(b)) is disclosed in a manner unauthorized by this title thereafter willfully to print or publish in any manner not provided by law any such return or return information. Any violation of this paragraph shall be a felony punishable by a fine in any amount not exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the costs of prosecution.

[ . . . ]

(bolding added). The detailed rules on allowed disclosure are found in IRC section 6103. That one code section (on my Hewlett Packard printer) comes out to over 40 pages (if I recall).

[Famspear]

Section 6103 ("CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN INFORMATION") provides (in part):

(a) GENERAL RULE. --Returns and return information shall be confidential, and except as authorized by this title --

(1) no officer or employee of the United States,

(2) no officer or employee of any State, any local law enforcement agency receiving information under subsection (i)(7)(A), any local child support enforcement agency, or any local agency administering a program listed in subsection (l)(7)(D) who has or had access to returns or return information under this section or section 6104(c), and

(3) no other person (or officer or employee thereof) who has or had access to returns or return information under subsection (e)(1)(D)(iii), paragraph (6), (12), (16), (19), or (20) of subsection (l), paragraph (2) or (4)(B) of subsection (m), or subsection (n),

shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section. For purposes of this subsection, the term "officer or employee" includes a former officer or employee.

[ . . . ]

[Judge Roy Bean]

What she doesn't know is that nowadays the mortgage company will probably be pulling her returns from one of the data services whether she provides them or not.

How would a tax return show up in a "data service" unless the taxpayer has provided a copy to a lender?

Just one of many:

http://www.rapidreporting.com/pages/products/incomechek

[Judge Roy Bean]

...The IRS isn't allowed to share taxpayer return information with any credit reporting agency or other "data" services. While the IRS can share limited information with state/local government taxing agencies, that information cannot be forwarded by those agencies to any other entity.

What some lenders do will require the taxpayer to execute a waiver giving disclosure authority to the IRS to share tax information with them. That is the only way a lender can be assured that they are getting what the taxpayer actually filed.

You must have missed what's been going on for the last year or so:

http://www.rapidreporting.com/articles/ ... onic-boost

They aren't doing that without the cooperation of the IRS.

[Famspear]

The point is that it cannot be legally done without the cooperation of the taxpayer. If the taxpayer authorizes the IRS to disclose the information, that's permitted under 6103, etc. Nothing in the material you linked says that the IRS is going to give any kind of 6103 return or return information to anybody without taxpayer approval.

By the way, there are lots and lots of exceptions to that rule in 6103. I don't think this program would qualify as one of the exceptions. Does anyone have any contrary info?

[Famspear]

PS, if you read the fine print in the linked material, they're talking about verification requests using a Form 4506-T. In other words, you need either a taxpayer approval, or some independent means under 6103 of obtaining the information.

[The Observer]

You must have missed what's been going on for the last year or so:

http://www.rapidreporting.com/articles/ ... onic-boost

No, what you missed was the qualifying reference on those web pages that specified that Form 4506T is a prequisite to obtaining that information.

They aren't doing that without the cooperation of the IRS.

And they aren't doing that without the cooperation of the taxpayer as well - Form 4506T requires the taxpayer's signature.

Tell me, JRB - do you research this stuff in full before you start making the accusations? Or is this the typical way you run your courtroom - from the hip?

[Famspear]

One of the ways that people can obtain copies of your Form 1040 returns without your permission is for you to file bankruptcy. For example, if you file an individual Chapter 7 bankruptcy, the Trustee appointed by the Justice Department can, under 6103, obtain copies of all prior Form 1040 returns directly from the IRS without your permission. Likewise, the Trustee's attorney or CPA can obtain those tax returns directly from the IRS without your permission by obtaining a 2848 power of attorney from the Trustee and then ordering the returns.

Kinda cool, eh?

[Judge Roy Bean]

FYI - a dose of mortgage production reality applies here.

The process is supposed to provide the data service operator with a signed copy of the 4506-T before they submit their batch of requests electronically.

Where the clever, in-a-rush (and in particular in today's environment, suspicious) lenders go is to simply scan the signature off the loan app, put the image on the form and shoot it into the data service. Putting a 4506-T right up front in the app package can scare off a borrower, especially one who wants a no-doc or low-doc loan.

The risk? Maybe one in a million that the IRS will actually call the taxpayer. In the mean time, for very little expense, the lender has already either verified the income or has discovered they're about to be scammed.

That's an upside.

The downside is there is no regulation about whether or not the information obtained from the IRS is retained by the service provider or what they do with it.

[The Observer]

But that is a far different scenario than the one you implied by suggesting that these data services can simply get anyone's return by asking for it and that the IRS was in bed with the data services. Now you are clarifying that the data services are, in effect, forging documents to obtain that information and misleading the IRS into believing that the applicant signed the 4506T to the detriment of the lender, the applicant and the IRS.

So please get in touch with the Treasury Inspector General's Office and tender your evidence about what is happening. And recommend a simple law change that the IRS can no longer accept 4506's by fax or e-mail and that they must be filed by the taxpayer in person and signed in front of the IRS after verifying the ID of the taxpayer through the local Disclosure Office.

[Judge Roy Bean]

...Tell me, JRB - do you research this stuff in full before you start making the accusations? Or is this the typical way you run your courtroom - from the hip?

This from the same person who insists no one in the IRS is keeping a list of TP's just because they can't be labeled that way on the master file.

Are you willing to bet a really good bottle of reposada tequila that someone can't get someone's 1040 without them signing a 4506-T?

And where do you suppose the information goes after it's been requested the first time? Into the ozone? Erased? No, because it can be sold again, and even better, bits and pieces and factoids from it can and are sold, i.e., did the prospective borrower file an individual return for year "X?" Did company "XYZ" provide a 1099 for "Taxpayer Smith?" What companies provided W2's for "Taxpayer Jones" in 1999? What was "Taxpayer Smith's" filing status for 1995 - married or single?" Does "Taxpayer Smith's" name appear on any corporate filings for 2001?"

You need to get out of your concrete tower more.

[The Observer]

Anything is possible. All it takes is for a couple of corrupt individuals agreeing to break the law. But that does not mean that the sky is falling and that the entire IRS and the entire lending industry and the entire data gathering industry is engaging in systemic dispersal of the tax information of the entire US population. So you need to really tone down your Chicken Little act.

And once information is received, there is no genuine fool proof method to ensure that the information is forgotten or purged. Again, all it takes is one crooked individual to break the law. But again that doesn't mean everyone needs to be painted with the broad brushstrokes you have been dealing out here.

Again, if you have evidence that any of the above is happening, you should be doing the civil thing and reporting it so that the malicious lender is investigated and innocent consumers are protected. If anything, you need to get out of that Pecos storefront you have been issuing decisions from and start targeting the real wrong doers - it might even help with the occasional paranoia attacks you get when you think someone has edited your posts here.

[Judge Roy Bean]

... Now you are clarifying that the data services are, in effect, forging documents to obtain that information and misleading the IRS into believing that the applicant signed the 4506T to the detriment of the lender, the applicant and the IRS.

I think you're confused. The data services aren't forging anything, and it isn't to the detriment of the lender - just the opposite. And it doesn't affect the IRS one way or the other. It's only a detriment to the applicant if what they say their income is doesn't add up to what their tax return said and the lender becomes wary.

...And recommend a simple law change that the IRS can no longer accept 4506's by fax or e-mail and that they must be filed by the taxpayer in person and signed in front of the IRS after verifying the ID of the taxpayer through the local Disclosure Office.

The answer is to keep income taxes private. Period. There are better (and we should all know) more accurate ways of determining income and financial viability. Underwriters know this, but they've been hammered to expedite production and sought out the asbestos underwear that the tax filing and credit scores allegedly provide.

As this mortgage disaster continues to unfold, I think we're going to see this reliance on quick-and-easy data and rapid automated underwriting has come with a horrible price for our economy. (Seen your 401K or IRA lately?)

I beleive it was Will Rogers who said the only thing that created more liars than golf was the income tax. We need to add to that automated loan underwriting and the ease of obtaining what may be worthless data.