Continentalarmy stumps the LoserHeads

[Quixote]

continentalarmy asks:

The 'service' likes to allege a lot of returns are frivolous. If most people are rebutting the characterization of "employment" taxes (Subtitle C), how does that reconcile with the fact that Sec 6702 addresses only Subtitle A?

What am I missing?[/b]

He has yet to receive a response addressing his question, so I thought I'd help out. His problem is that he is trying to find a correlation between two unrelated matters. Most LostHeads do attempt to dispute their employers' characterization of their wages as wages, but that has nothing to do with the frivolous return penalties CTC returns attract like flies. CTC returns are not frivolous because they mischaracterize wages as something else, but because they mischaraterize gross income as something else.

That raises a question of my own. Are LostHeads as clueless as they appear in their posts or are they all just polishing their Cheek defenses?

[Famspear]

continentalarmy asks:

The 'service' likes to allege a lot of returns are frivolous. If most people are rebutting the characterization of "employment" taxes (Subtitle C), how does that reconcile with the fact that Sec 6702 addresses only Subtitle A?

What am I missing?[/b]

He has yet to receive a response addressing his question, so I thought I'd help out. His problem is that he is trying to find a correlation between two unrelated matters. Most LostHeads do attempt to dispute their employers' characterization of their wages as wages, but that has nothing to do with the frivolous return penalties CTC returns attract like flies. CTC returns are not frivolous because they mischaracterize wages as something else, but because they mischaraterize gross income as something else.

That raises a question of my own. Are LostHeads as clueless as they appear in their posts or are they all just polishing their Cheek defenses?

Another thing that "continentalarmy" is missing -- with respect to the subtitle C versus subtitle A argument -- is that he/she is referencing OLD section 6702 -- as worded PRIOR to the amendments increasing the penalty amount from $500 to $5,000.

Here is "old" section 6702 (in part):

6702. FRIVOLOUS INCOME TAX RETURN

(a) CIVIL PENALTY. --If --

(1) any individual files what purports to be a return of the tax imposed by subtitle A [essentially, a federal INCOME tax] but which --

(A) does not contain information on which the substantial correctness of the self-assessment may be judged, or

(B) contains information that on its face indicates that the self-assessment is substantially incorrect; and

(2) the conduct referred to in paragraph (1) is due to --

(A) a position which is frivolous, or

(B) a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws,

then such individual shall pay a penalty of $500.

Here is NEW section 6702 (only in part):

6702. FRIVOLOUS TAX SUBMISSIONS

(a) CIVIL PENALTY FOR FRIVOLOUS TAX RETURNS. --A person shall pay a penalty of $5,000 if --

(1) such person files what purports to be a return of a tax imposed by this title [i.e., imposed by any provision of the Internal Revenue Title, which means not just income taxes but any federal tax] but which --

(A) does not contain information on which the substantial correctness of the self-assessment may be judged, or

(B) contains information that on its face indicates that the self-assessment is substantially incorrect, and

(2) the conduct referred to in paragraph (1) --

(A) is based on a position which the Secretary has identified as frivolous under subsection (c), or

(B) reflects a desire to delay or impede the administration of Federal tax laws.

If I recall correctly, the old $500 penalty applies to filings made on or before March 15, 2007. The new $5,000 penalty applies to filings, etc., made on or after March 16, 2007.

[Famspear]

Maybe "continentalarmy" is arguing (incorrectly) that because the typical CtC scammer is asking for a refund of federal income tax withheld, that section 6702 does not apply because the tax is a subtitle C tax not mentioned in "old" section 6702????

Even under "old" section 6702, the individual income tax would be a subtitle A (income) tax (even though withheld under subtitle C), not a subtitle C (employment) tax, at least as between the individual and the IRS.

EDIT: Arguing that the federal income tax withheld from MY paycheck is a "Subtitle C" tax as between me and the Internal Revenue Service is like arguing that my father is my BROTHER merely because my father happens to be my UNCLE'S brother. The fact that my father's relationship with my uncle happens to be the relationship known as "brother" does not mean that my father is EVERYBODY'S brother.

I would argue that the actual dollars withheld are Subtitle C taxes as between the employer and the IRS, but they're Subtitle A taxes as between ME and the IRS.

[Quixote]

I would argue that the actual dollars withheld are Subtitle C taxes as between the employer and the IRS, but they're Subtitle A taxes as between ME and the IRS.

Once withheld, the actual dollars withheld are, as between you and the IRS, no kind of tax whatsoever. The actual dollars become the corpus of a trust to the benefit of the IRS with the employer the trustee. The employee has no claim on them or obligation with regard to them. The act of withholding entitles the employee to a credit under IRC §31. It is that credit that must be the basis of any claim for refund of "withheld taxes". IRC §31 is, of course, in Subtitle A, so continentalarmy is wrong regardless of when the frivolous return was filed.