A new legal whiz at losthorizons

[Famspear]

Losthorizons has a new legal whiz (joined just a few days ago) called “Weston White,” who says:

Assuming your [sic] are a non-taxpayer, from my understanding a "tax court" is merely an administrative court and has no powers to enforce an action only negotiate with the parties.

http://www.losthorizons.com/phpBB/viewtopic.php?t=642

Gee, I guess this statute regarding the United States Tax Court must be just my imagination:

The Tax Court and each division thereof shall have power to punish by fine or imprisonment, at its discretion, such contempt of its authority, and none other, as --

(1) misbehavior of any person in its presence or so near thereto as to obstruct the administration of justice;

(2) misbehavior of any of its officers in their official transactions; or

(3) disobedience or resistance to its lawful writ, process, order, rule, decree, or command.

It shall have such assistance in the carrying out of its lawful writ, process, order, rule, decree, or command as is available to a court of the United States. [ . . . ]

--26 USC 7456(c) (bolding added).

And I don’t see anything in the text that limits the scope of the Tax Court’s powers in terms of whether someone is a “non-taxpayer” versus a "taxpayer."

[Famspear]

Side note: For a case involving criminal contempt at the U.S. Tax Court, see: Williams v. Commissioner, 119 T.C. 276, CCH Dec. 54,956 (2002).

[Famspear]

A loserhead called "TaxResearcher" writes:

[ . . . ] I received my 3176 letter yesterday. It seems like they are cranking these out. Mine only took 6 weeks from the date I mailed my 1040x returns.

http://www.losthorizons.com/phpBB/viewt ... =5140#5140

Awwww.... TaxResearcher, I bet your parents are so proud of you now!

(TaxResearcher continues...)

1) Regarding the $5,000 penalty, does anybody know when this was increased from $500? I’ve seen many references to $500. Initially I thought they were just adding another zero by ‘accident’ but now think that they had the penalty proposal changed. Am I right?

(bolding added). OK "TaxResearcher", I see you're right up there on top of the changes in the law, aren't you? Let's see now, the law was changed over a year ago, effective as a maximum $5,000 penalty for certain frivolous positions made by tax protesters after March 15, 2007. See Internal Revenue Code section 6702(a) as amended by section 407 of the Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, 120 Stat. 2922 (Dec. 20, 2006), and see Notice 2008-14, I.R.B. 2008-4 (Jan. 14, 2008), Internal Revenue Service, U.S. Department of the Treasury (superseding Notice 2007-30). For frivolous positions taken on or before March 15, 2007 (and, presumably, for some frivolous positions presented after that date that have not been adequately specified by the IRS), the penalty is still "only" $500. (Note: However, even if the frivolous position is not "specified" in Notice 2008-14, it would seem that the $5,000 penalty could still be imposed if the submission of that position "reflects a desire to delay or impede the administration of Federal tax laws," as stated in section 6702.)

2) Anybody know the likelihood of fines actually being imposed? It certainly seems like a crap shoot with this agency.

Well, TaxResearcher, I'm thinking that it wouldn't be so much of a concern for you if you just refrain from taking frivolous positions on tax returns in the first place. But, I guess maybe that's just me.

3) Finally, what is the method of appeal should such fines be imposed? CDP hearing? TC? My case is currently with CDP – presumably on hold pending resolution of my updated returns. Who actually knows what they are doing.

I don't know, except it's clear that you, TaxResearcher, don't know what you're doing.

It seems to me that as more and more CTC-educated folks refuse to stand-down to the intimidation of the IRS, they are going to need to either come up with another ‘tactic’ or finally start paying up.

Yeah, right. Looks like you've got those bad ol' revenoors right where you want 'em.

[Quixote]

Mr. White may not last long on LH. He has annoyed several Lostheads by suggesting that Dave Champion and Pete Hendrickson are involved in the same struggle.

[LPC]

Assuming your [sic] are a non-taxpayer, from my understanding a "tax court" is merely an administrative court and has no powers to enforce an action only negotiate with the parties.

Not to be too picky, but this comment came in a thread about levies, liens, and collection actions, and the comment is correct in the sense that the Tax Court does not enforce liens or levies. In most cases, the IRS already has all the power it needs once it has assessed the tax and, if the IRS needs judicial help, it will go to District Court and not Tax Court.

The stuff about "non-taxpayer," "administrative court" and "only negotiate with the parties" is all crap, but the "has no powers to enforce an action" is correct if by "an action" WW meant liens and levies.

[Quixote]

2) Anybody know the likelihood of fines actually being imposed? It certainly seems like a crap shoot with this agency.

Whatever the base odds may be, they go up to 100% if the taxpayer uses any of the replies the Lostheads have developed.

3) Finally, what is the method of appeal should such fines be imposed? CDP hearing? TC?

Neither the IRC nor the regulations provides for a post assessment appeal. Due process is apparently provided for by the 30 day warning letter. If the TP files a non-frivolous return to replace the funny one, or if he can explain why his return is not frivolous, the penalty will not be assessed. The LH approach, sending a frivolous response, doesn't seem to work.


I just noticed a post by kensai in which he notes that IRC §6702(b) does not apply to frivolous returns. The 30 day warning letter, which IRS is sending in response to frivolous returns for which they have determined to assess the $5000 penalty, is provided for by IRC §6702(b)(3). IRS appears to be overstepping its authority in order to give the Lostheads a chance to come to their senses.

OK, IRC §6702(d), seems broad enough to cover any break the IRS cares to give the suckers.

The Secretary may reduce the amount of any penalty imposed under this section if the Secretary determines that such reduction would promote compliance with and administration of the Federal tax laws.

[ASITStands]

Neither the IRC nor the regulations provides for a post assessment appeal.

It's my understanding that IRC § 6703 governs penalties under IRC §§ 6700, 6701 & 6702.

The burden of proof is on the Secretary, which is generally not difficult to obtain, as it usually involves fact issues. For example, tax denier did thus and so; tax law says this.

After establishing fact issues, it's mostly a matter of substantial authority.

However, it could mean an action in court if the issues are undecided, as in the case of a section of tax law that's unsettled or not previously litigated. Litigation would likely come at collection either during the adjudication of a tax lien or enforcement of a levy.

Or, it could come in an injunctive or quiet title action brought by the taxpayer.

Deficiency procedures do not apply to the penalties under IRC §§ 6700, 6701 & 6702. That means there's no notice of deficiency and no opportunity for review in tax court.

And, for penalties under IRC §§ 6700 & 6701, not § 6702, the only appeal is to pay 15% and make a claim for refund on the remainder. That's where the issues might be litigated.

So, I'd say, "It's incorrect to say, 'There's no appeal!'" Just unlikely the target will prevail.

[LPC]

3) Finally, what is the method of appeal should such fines be imposed? CDP hearing? TC?

Neither the IRC nor the regulations provides for a post assessment appeal. Due process is apparently provided for by the 30 day warning letter.

Several courts have held that, because there is no opportunity to contest a frivolous return penalty before it is assessed, the penalty can properly be contested during a collection due process hearing. (In other words, as provided in section 6330(c)(2)(B), "The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability."

However, and to the best of my knowledge, not a single person has yet prevailed in contesting a frivolous return penalty.

[webhick]

Looks like Darth Hendrickson is getting a little upset with the legal genius of Weston:

Weston White, the admonitions about the misuse of the terms "employer", "employee", "wages" and so forth offered by a few others throughout this thread should be taken very seriously. Please refrain in future from using "employer" other than to refer to a federal entity; "employee" unless referring to a worker as defined in 3401(c) or per the relevant "employment" definitions in 3121; "wages" unless referring to the specific class of receipts defined in 3121(a) and 3401(a); and so on.

On a related note, though I would have imagined that I had already covered this ground adequately, I will reiterate that nothing inherent in completing a W-4 makes a worker who actually is not into an "employee", or makes that worker's pay into "wages", any more than applying for a fishing license makes one into a fisherman, or makes all of one's subsequent activities into "fishing". A fishing license has meaning and significance only when one IS in fact, fishing, and even then, only when one is fishing in the licensing entity's waters.

I strongly advise all interested in this thread's content to carefully re-read 'Withholding The Truth' in CtC, and the post at [link redacted].

A few posts later (after someone went through his sample letter and changed a bunch of terminology so that it is in compliance with CtC), Weston tempts Darth Hendrickson into jettisoning him out an airlock:

I really like many of the ideas you came up with I will be making those changes. Though I do not want to get into playing silly word games, frankly I find it disgenuine and moot.

What? Use of CtC terminology is silly, disingenuous, and moot? Give a big fat hug to deep space for me.

http://www.losthorizons.com/phpBB/viewt ... 0&start=15

Edit: It was genius of me to misspell genius.

[Imalawman]

I really like many of the ideas you came up with I will be making those changes. Though I do not want to get into playing silly word games, frankly I find it disgenuine and moot.

He must have forgotten to leave his common sense at the forum entrance. PH doesn't take to kindly to strangers and their new fangled common sense. I use that term lightly. What is astounding is that even a person like Weston, who is so very much lacking in common sense and logical thinking, can see through the mounds of BS that PH slings around. Weston cuts to the very heart of CTC - silly word games...

[grixit]

But inside a TP's head the acoustics are good enough for opera.

[webhick]

But inside a TP's head the acoustics are good enough for opera.

That's not much of a plus, considering the only thing ever playing is "Cats II: Pete in Heat"

[Famspear]

More drool from "Weston White" at losthorizons:

This is not verfied but there is a theory based upon supposed copies of actual documents which show that the IRC was actually Repealed on February 10th, 1939 through H.R. 2762 Public, No 1 and then later Revised on August 16th, 1954 through Public Law 591-Chapter 736, The Internal Revenue Code of 1954: “Bill H.R. 8300 an Act to Revise the Internal Revenue Laws”.

From my understanding as the functions of the Rule of Law, that a Repealed Act is not eligible or capable of being Revised. A new Act or Bill must first be reenacted through the appropriate legal process by Congress, thereby creating a new independent Act or Bill which is separate and distinct form the prior Repealed law. With this being true, the current Internal Revenue Act as it stands was obtained by way of a blatant and outright violation (perversion) of our Nation’s Due Process of Law.

This all serves to prove why nobody in the government including the courts can show the actual law as it stands.

http://www.losthorizons.com/phpBB/viewtopic.php?t=765

(bolding added).

Weston White apparently labors under the delusion that the 1939 Internal Revenue Code was repealed in 1939 -- and that the 1954/1986 Code, which he incorrectly believes was intended to "revise" a supposedly already-repealed Code - is therefore somehow invalid. Weston White is wrong. (Note: I assume that Weston is not referring to a repeal, if any, specified in the 1939 Code with respect any revenue acts enacted prior to 1939. I believe that even prior to 1939, various revenue acts were indeed "codified" in the United States Code. There may or may not have been various such repeals in the text of the 1939 Code. Either way, that would not seem to be germane to Weston's goofy, erroneous point.)

Clue to Weston White: Various revenue acts (which may have been codified in the United States Code prior to 1939 may indeed have been repealed in February of 1939. However, the Internal Revenue Code of 1939 was not "repealed" on February 10, 1939. It was ENACTED on that date.

And the 1954 Code was enacted by an Act of Congress, and was signed into law. As amended about a gazillion times (and as renamed the "1986" Code), the 1954/1986 Code is the law today. You yourself provided a citation to the original 1954 enactment (see above)!

Weston's argument -- that the 1954 Code is invalid because it somehow attempted to "revise" an already-repealed law -- is simply incorrect. The Internal Revenue Code of 1939 was very much "the law" at the time the 1954 Code was enacted.

Later, a loserhead user named "kilbey" writes:

One of the problems with the tax honesty community is that many believe that the government is obliged to show us the law or educate us. I don't believe they are under any such obligation, especially in the context of determining liability [ . . . ]

Excellent point, kilbey.

Kilbey continues:

Certain people (Joe Banister, Tom Cryer) have chosen words that can lead to confusion, saying "there is no law that makes me liable" for the income tax. This is true, but I have real disdain for people who take off from there and spread the word that "there is no law", rather than looking into it for some first-hand knowledge.

Except for the incorrect assertion that it's "true" that there is "no law" making you liable, you may be on to something here, kilbey.

But, now, alas, kilbey runs the train off its rails:

I would simply say "the law is Title 26, and only applies if you have 'income', which is not necessarily 'all that comes in'." Emphasize that anyone can be liable for the income tax, but mere work-for-pay in the private sector does not give rise to liability.

Sorry kilbey, but "mere work-for-pay in the private sector" does indeed give rise to federal income tax liability. You are wrong. Peter Eric (Blowhard) Hendrickson is wrong.

kilbey writes:

The average person also needs to know the difference between rights and privileges.

No, the average person does not need to know the difference between "rights" and "privileges". However, the average person who gets caught up in a tax protester scam like Cracking the Code does need to know that for federal income tax purposes, there is essentially no need to distinguish between "rights" and "privileges" (can you say "red herring"?).

[Famspear]

User "TruthBearer" (snicker, snicker) writes at losthorizons in the same thread:

The ForumAdmin [Peter Eric BlowhardMeister Hendrickson] would probably refer you to Lost Horizons. I've been messing with this income tax stuff for 10 years now, going back to TaxGate and Thurston Bell's and Larken Rose's misguided versions of the "861 argument." I was a hesitant believer but I kept witnessing these supposedly knowledgeable guys get sent to the federal clink. That was disconcerting, but also indicated to me logically that their theory had to be fatally flawed somehow--otherwise it wouldn't be all that difficult to prove in court. I read Tommy Cryer's trial transcript completely (he is a very lucky man, and not at all the hero he now makes himself out to be.) Then I stumbled on Lost Horizons and read CtC several times. It was a startling revelation! So, it is clear to me that, as PH implores again and again (why don't we listen and heed?), the most effective way to disabuse people of their flawed notions is to email them the New Horizons reports that PH provides us precisely for that use. Lead them to LH and CtC. Unless they're complete blockheads (in which case, they're hopeless anyway!) they will quickly see that, yes, there IS a law!

http://www.losthorizons.com/phpBB/viewt ... =6188#6188

(bolding added).

Uh-oh. If Peter Hendrickson is indicted for a tax crime again (AFTER having published and used his own Cracking the Code scam materials), is convicted, and gets thrown in the federal clink a second time, TruthBearer's words could come back to haunt TruthBearer, the rest of the loserheads, and the BlowhardMeister himself.

And, gee, if the Cracking the Code scam is not fatally flawed, how come nobody can "prove" that the scam is valid in court? Why has every loserhead who has raised it in court lost? And why did Peter Eric Henderson lose his own case?

EDIT: TruthBearer might be risking being banned by Petey for this kind of thinking.

[Red Cedar PM]

This is not verfied but there is a theory based upon supposed copies of actual documents which show...

You had me at "but." I'd like to see Mr. Whitey put the above sentence in one of his future court filings to give the clerk a good chuckle.