That's a lot of zeroes

[Demosthenes]

__________________________________________________________________________
FOR IMMEDIATE RELEASE TAX
THURSDAY, JANUARY 8, 2009 (202) 514-2007
http://WWW.USDOJ.GOV TDD (202) 514-1888

TWO FORMER OREGON RESIDENTS NOW RESIDING IN ARIZONA INDICTED FOR OBSTRUCTING IRS INVESTIGATION AND OTHER TAX CRIMES

Tax Defiers Allegedly Filed Baseless Liens against IRS Employees Exceeding $1 Trillion and Used Fictitious Financial Instruments Totalling more than $9 Million

WASHINGTON – A federal grand jury in Portland, Ore., returned a superseding indictment against Micaela Renee Dutson and her husband, Tony Dutson, the Justice Department and Internal Revenue Service (IRS) announced today.
The Dutsons were originally indicted May 8, 2008, on charges that they conspired to defraud the United States of more than $8 million and failed to file income taxes. Both pleaded not guilty to all charges on June 5, 2008.
The superseding indictment adds charges that the Dutsons attempted to obstruct the IRS in its attempt to enforce the tax laws by filing lawsuits, baseless liens and multiple Forms 1099-OID against IRS employees. The indictment alleges that the baseless liens claimed a debt owed by the IRS employees to the defendants totalling $1,003,680,000,000. According to the superseding indictment, the Forms 1099-OID falsely claimed payment of millions of dollars to IRS employees who were investigating the defendants.
The superseding indictment also includes charges that the Dutsons presented five fictitious financial obligations totalling approximately $9,903,870 for use by their clients in purported payment of IRS debts. It further includes a charge that the Dutsons willfully aided and assisted the filing of a false 2002 federal tax return by clients.
“This indictment shows that the government will not tolerate taxpayers’ use of bogus financial instruments to pay tax debts and IRS forms as a means to harass IRS employees,” said Tax Division Assistant Attorney General Nathan J. Hochman. “Under the National Tax Defier Initiative launched in April 2008, the Tax Division has committed to vigorously investigate and prosecute tax defiers and all others who use baseless arguments and fictitious documents to evade their tax liabilities.”
“Obstruction is a crime that does not pay in Oregon - we will aggressively investigate and prosecute attempts by those who obstruct revenue agents and officers from doing their jobs,” said U.S. Attorney Karin J. Immergut, U.S. Attorney for the District of Oregon.
“The IRS works quickly to identify and stop these nuisance schemes aimed at harassing honest taxpayers and the government,” said IRS Criminal Investigation Chief Eileen Mayer. “We take seriously these types of actions that attempt to impede our ability to administer efficient tax administration. Today's indictment signals our determination to hold accountable those who engage in this type of frivolous activity.”
Conspiracy carries a maximum sentence of five years in prison. Failure to file tax returns carries a maximum penalty of up to one year in prison for each offense. Obstructing the internal revenue laws carries a maximum penalty of up to three years for each offense. Using fictitious financial instruments carries a maximum penalty of up to 25 years for each count. Aiding and assisting the filing of false tax returns carries a maximum penalty of up to three years.
A criminal indictment is only an allegation and not evidence of guilt. Each of these defendants is presumed innocent unless and until proven guilty. The charges stem from an investigation by the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Dwight C. Holton.

[notorial dissent]

Off hand, I would say two more candidates preparing to join Ed Family: really stupid at a Federal rest camp, particularly considering the new Fed laws about filing false instruments that went in to effect last year, really really stupid. Between the false lien and the even falser 1099-OID, which is currently the felony du jour in the tax stupid camp, they are not looking at a happy ending, at least for them.

[Nikki]

Why would they have to think when they can just use the Internet for profound legal advice?

After all, it something is repeated on thousands of sites, could it possibly be in error?

Especially where every one of those sites makes specific reference to a friend for who it worked or a case they saw somewhere which documented the success and the forms they copied.

[Quixote]

Off hand, I would say two more candidates preparing to join Ed Family: really stupid at a Federal rest camp, particularly considering the new Fed laws about filing false instruments that went in to effect last year, really really stupid. Between the false lien and the even falser 1099-OID, which is currently the felony du jour in the tax stupid camp, they are not looking at a happy ending, at least for them.

The 1099-OIDs also may have opened them up to civil suits under IRC §7434 by any or all of the victims. The minimum damage award under IRC §7434 is $5,000.00. I say "may" because §7434 does not apply to 1099-OIDs that were not required to be filed. Clearly, the bogus 1099-OIDs were not required to be filed, because there was no OID to report. More relevant, no 1099-OID is required for (real) debt instruments issued by natural persons.

[notorial dissent]

All true, but if I remember reading the actual act correctly, the act of creating or filing a false 1099, and if you had no legal reason to be able to-then it would be false, can garner not only civil, but criminal action as well-and I would say that filing a 1099 to harass a Federal officer constitutes fraud to my mind. They can be both fined civilly for having used them, and also treated criminally for having used them in what is an attempted fraud. If I have misread or misremembered the act then I apologize, but I do remember bits about criminal action and thinking at the time, people filing 1099's of any variety that weren’t valid could now be facing jail time as well as civil penalties for having done so.

[Quixote]

All true, but if I remember reading the actual act correctly, the act of creating or filing a false 1099, and if you had no legal reason to be able to-then it would be false, can garner not only civil, but criminal action as well-and I would say that filing a 1099 to harass a Federal officer constitutes fraud to my mind. They can be both fined civilly for having used them, and also treated criminally for having used them in what is an attempted fraud. If I have misread or misremembered the act then I apologize, but I do remember bits about criminal action and thinking at the time, people filing 1099's of any variety that weren’t valid could now be facing jail time as well as civil penalties for having done so.

I wasn't thinking about the criminal penalties. I was just contemplating the victims suing under 7434, winning judgments, and then filing judgment liens against those morons. Unfortunately, if the morons have no assets, that's an expensive route to poetic justice.

[notorial dissent]

Sorry, guess I’m just not as nice as you, but then I have NO sympathy for this sort of thing or the people who do it, since it can cause so much headache and expense for the “innocent” people involved, and there is no real easy remedy against the things.

As JRB said with regard to suing the Dorean dimbos, why bother, they have nothing to go after in most cases, and other than the satisfaction of getting the award, the court costs would be prohibitive I would think. The only thing that will ever get their attention is when they find themselves in jail for real, since it is obvious that the fines don’t seem to deter them.

[LaVidaRoja]

Bringing a civil action against these types is usually economically fruitless. They are already at zero equity. I have wondered if you could get a judgement, then issue them a 1099 for your forgivness of their debt, thereby causing them to "realize" income that would be taxable. A bit convoluted, but possibly worth the emotional satisfaction of putting the shoe on the other foot.

[notorial dissent]

I’ve often wondered myself if that would work, and since it is a real world debt, maybe it’s forgiveness could be considered as a taxable event. Considering the way the IRS is prone to looking at things it would seem likely, talk about a fitting punishment.

[grixit]

Can't we use extrordinary rendition to send them to, say, China? They can get hard labor there for being "social parasites".

[ClobberroTestii]

Can't we use extrordinary rendition to send them to, say, China? They can get hard labor there for being "social parasites".

Yeah...and I'd like to see the look on the faces of the Chinamen who receive all those 1099 OIDs!!!!

[Judge Roy Bean]

Bringing a civil action against these types is usually economically fruitless. They are already at zero equity. I have wondered if you could get a judgement, [sic] then issue them a 1099 for your forgivness [sic] of their debt, thereby causing them to "realize" income that would be taxable. A bit convoluted, but possibly worth the emotional satisfaction of putting the shoe on the other foot.

It wouldn't be the first time this kind of thing has happened. In any debt settlement exercise t's and c's need to include how the creditor is going to handle the reporting issue.

Most borrowers don't realize that when they settle with a creditor they could get a nasty surprise at the first of the following year, and in one mediation session I've been in, counsel for the servicer deliberately attempted to misconstrue the potential impact and at first refused to address it in the settlement terms. The problem was (at the tax rates of that time), the settlement proceeds would have put the borrower at the highest tax bracket, meaning the forgiven debt (six figures) would have then been taxed at more than 30%.

[johnnyrie]

Does anyone have access to PACER to check on the Dutsons? A little birdie told me something about them, in the District of Oregon.....

[wserra]

Day before yesterday, Tony and Micaela both guilty on all counts. Sentencing 9-20-10 as of now.

The last minute order before the verdict: "13 juror lunches ordered from Big Town Hero". That's always a bad sign. There used to be a place near the Manhattan courts called "Redemption Cafe". All the sovruns would insist that juror lunches come from there.

[grixit]

Could be worse. The jurors could have had a hankering for pate from Robspierre's.