CtC users - Abandon All Hope!

[Nikki]

In general, a change of auditors by a public company is a disclosable item on their SEC filings and their annual report.

Simply put, the documents usually include an addendum to the financial statements from the new auditor saying they are new with possible caveats regarding their lack of historical knowledge and experience with the company.

In any case, unless the reason for changing is disclosed, flags go up.

[Imalawman]

Well, I for one think that SILOs and LILOs were completely misrepresented. People forgot that theses lilo and silo transactions partially funded a good majority of the public transit authorities in the major cities. D.C.'s metro infrastructure was a lilo transaction. These transactions were making millions for local governments - providing a direct benefit for many US citizens. I thought the proper response would have been to prevent the overseas LILOs but keep this local government investing in place.

I have absolutely no objection to financing public transportation. But in any rational world you don't do it by a tax trick. If the essential deal is a sham, then whether it is foreign or domestic should make no difference.

But were they really shams? After all these transactions had been in place for years. The Lyons case was a few decades ago where the court found a LILO to be valid. What happened was that 20/20 started doing stories on them from a skewed, non-tax perspective and only looked at the egregious overseas transactions. Sure, there were motivated by tax breaks, but so what? Its the law, they complied with it. I think the current melodrama about tax shelters is overblown. Sure, there's some really bad transactions out there, but when did we get to the point that we cared so much that someone had a legal deal that got them tax breaks. Congress just went overboard around the time they enacted rent smoothing rules. I'm not alone in thinking that the economic substance is getting way more press and becoming way more important than it ought to be. Obama is trying to revive the efforts to codify the ES doctrine. That would only be a mess, in my humble opinion.

[Duke2Earl]

I may just be speculating since I don't work in the publicly-traded world, but I would bet a large public company would not want to go through the pain, hassle, and cost of changing auditors because the auditor took a hard line with them on a tax issue though. It's not like just hiring a new lawyer because you didn't like the advice you got from your current one. Audit firms are very tied into a public company's business and there is a significant transition cost. Usually in my world we would just qualify the opinion if we felt it was material and move on.

We do have clients that are very important to us that want to take agressive positions in the private world, but there is obviously a little less risk there. Additionally, no one client of ours is big enough to make us bend over and sacrifice our professional standards in order to not lose them. It probably gives us a little more leverage to take a firm stance on an issue. We have to be able to do that to stay independent.

It depends on lots of things. I agree that it is unlikely that the auditor would be fired over a single issue (although that is a possibility if the number was big enough) but there are lots of measures that could hurt the auditor badly. First, they could just take away some of the extra consulting projects (which are where the auditor often makes most if not all of its profit). Next, most companies do look at taking bids from competitors on a regular cycle and they could make it clear that you were hurting your chances. Next, you have to understand it's not often the firm we are talking about but a usually single audit partner in a firm. That single partner is usually compensated based on what numbers he is generating from his client. And that partner is VERY concerned about keeping that client very happy or it often has a direct impact on his personal compensation and future. That's exactly what happened to AA... one partner basically brought the firm down because he couldn't say no to a client because saying no would impact him directly. Case in point... I work in a national review capacity at my firm. Our entire national group has taken a position (after much deliberation) that a client is unhappy with. I have a meeting scheduled for a whole day next week where the audit partner for that client is coming into town to attempt to bludgeon us into changing our position. It's not the client that is coming... it's the audit partner... He's the client advocate because he is the one who will be personally hurt if the client is unhappy... now that's independence for you. Actually this is good... what gets really scary is when the audit partner just goes ahead and does what the client wants without even asking the national folks.

[Duke2Earl]

But were they really shams? After all these transactions had been in place for years. The Lyons case was a few decades ago where the court found a LILO to be valid. What happened was that 20/20 started doing stories on them from a skewed, non-tax perspective and only looked at the egregious overseas transactions. Sure, there were motivated by tax breaks, but so what? Its the law, they complied with it. I think the current melodrama about tax shelters is overblown. Sure, there's some really bad transactions out there, but when did we get to the point that we cared so much that someone had a legal deal that got them tax breaks. Congress just went overboard around the time they enacted rent smoothing rules. I'm not alone in thinking that the economic substance is getting way more press and becoming way more important than it ought to be. Obama is trying to revive the efforts to codify the ES doctrine. That would only be a mess, in my humble opinion.

Well, the courts seem to think they are shams. I also suppose it depends on how you feel about tax expenditures and using taxes for social engineering. To me, it perverts the entire system to allow deals that are solely designed to create tax benefits and would never happen (at least in that form) but for those benefits. I think this is one of the things that destroys trust in our tax system. In the world I want to live in, if we want to finance public transportation we do so directly, not through a behind the scenes run around that only some people know about that is designed to make lots of lawyers and wall street types rich without anyone knowing they are dipping into the public trough. I do agree that perhaps codifying an economic substance doctrine could be awkward and possibly self defeating... I think the courts are doing just fine on that.

[Famspear]

Getting back to the hopeless feelings of user "enemycombatant" at losthorizons, various other loserheads have responded to his post, and so he writes:

Thanks for the replies. I wasn't sure what kind of feedback I would get. To Chex, this is kind of what I was talking about. This forum is full of people citing the IRC code, etc. But what does it matter in the state of the country we're living in. If the former president and vice president of this country can commit war crimes and be above the law, what does the IRS care about upholding the "rule of law". There is no debate anymore, torture was committed, and still may be going on. Even our new president, who campaigned on change is already going back on everything he said he would do. They're just puppets in the grand scheme of things. To ENDteFED [i.e., another losthorizons user who had posted a responding comment], I think that should be the number 1 priority. If we didn't have the Federal Reserve, we probably wouldn't need to worry about the IRS and taxes anymore.

No Federal Reserve System would mean no taxes, and no IRS? Yeah. Right.



"enemycombatant" continues:

Unfortunately, we're living in an Orwellian society. Nothing makes sense anymore. There is no such thing as justice. People bitch about the condition of things, and think that writing to their elected representatives will make a difference. How naive can they be. I know of only one truly honest politician in Congress today, Ron Paul. He's for ending the Fed and the IRS. Of course he's considered a nut case. People need to do more than just bitch about the way things are, they need to get mad as hell and say they're not going to take it anymore. Probably not in my lifetime.

I guess what I'm really trying to say is that I think it's a waste of time to dissect the codeand think that it's really going to make any difference. It's not. I'm sorry if I offend anyone making that statement, but that's the way I feel. The "rule of law" just doesn't apply these days.

Well, "enemycombatant," if by "the rule of law" you really mean the Cracking the Code tax scam, then you're right -- it doesn't "apply." It's not "the law." It's just a tax scam. And you are delusional.

And "enemycombatant" continues:

I wish the best for Pete, but look what's happened to him. He's taken his case all the way to the Supreme Court. How many of us can, or want to do the same thing. I would like to think that he will make his case successfully, but I'm not going to place any bets in the country we're living in. If this offends some, or makes them mad, good. That's what really needs to happen. We need to forcefully take this country back.

(bolding added)

http://www.losthorizons.com/phpBB/viewtopic.php?t=1844

User "Submarine Veteran" responds:

There is no doubt that this war, like all wars, tries the souls of the men and women who are fighting on the front lines. You need to remember that the IRS is 90% bluff and that is how they win. They grind you down with a barrage of fire (fire for effect). We WILL grind these bastards down.

Elsewhere in the thread, the users compare themselves to the guy in Tienanmen Square who stood in front of the tank in the famous incident during the protests in China in 1989.

[Nikki]

There is no doubt that this war, like all wars, tries the souls of the men and women who are fighting on the front lines. You need to remember that the IRS is 90% bluff and that is how they win. They grind you down with a barrage of fire (fire for effect). We WILL grind these bastards down.

That may be true, but it's the remaining 10% (levies, siezures, incarceration) that really gets to you.

[Pottapaug1938]

(Nikki, quoting Submarine Veteran): "There is no doubt that this war, like all wars, tries the souls of the men and women who are fighting on the front lines. You need to remember that the IRS is 90% bluff and that is how they win. They grind you down with a barrage of fire (fire for effect). We WILL grind these bastards down."

Yeah--- but their grindstones are made of gypsum. And, I wonder how they can fight a war without any usable ammunition -- except reams of BS press releases and online rants to like-minded nutcases....

[Famspear]

Remember the bleatings of woe from losthorizon user "enemycombatant" from earlier in this thread? Now, "enemycombatant" writes:

It's wonderful to read about all the victories for refunds received. But I'd like to get some empirical evidence about the other side of the coin. I know that numerous people get the frivolous penalty slapped on them, including me. I've also read about numerous people getting Notices Of Intent To Levy, and Final Notices Of Intent To Levy, including me.

What I'd like to know is how many people have actually had property seized from them, be it money from bank accounts, garnishments, etc.

I also wish there was a way to know how many people listed on the Victories page of Lost Horizons have had problems down the line after securing a refund. In other words, it's nice to hear about the victories, but there's always more than one side to a story. A victory doesn't seem like such a great deal if you get hassled later on, as I have found out.

Let's get some input. Thanks.

(bolding added).

http://www.losthorizons.com/phpBB/viewtopic.php?t=1898

Careful there, enemycombatant. His Imperial PeterEricBlowhardiness might take a dim view of these kinds of comments.

Here are three users at losthorizons who I believe have indicated at various times in the past that they have had assets levied:

1. kesiroveki
2. spacebar
3. kensei

[.]

I know that numerous people get the frivolous penalty slapped on them, including me. I've also read about numerous people getting Notices Of Intent To Levy, and Final Notices Of Intent To Levy, including me.

As the very stark and ugly truth of what havoc you can wreak upon youself for a mere $24.95 slowly seeps into the foggy, delusional semi-consciousness of even the dimmest of the extremely dim.

We're gonna miss CrackHeads when they go dark after PH is convicted. All hail the next emperor with no clothes!

[Famspear]

I know that numerous people get the frivolous penalty slapped on them, including me. I've also read about numerous people getting Notices Of Intent To Levy, and Final Notices Of Intent To Levy, including me.

As the very stark and ugly truth of what havoc you can wreak upon youself for a mere $24.95 slowly seeps into the foggy, delusional semi-consciousness of even the dimmest of the extremely dim.

We're gonna miss CrackHeads when they go dark after PH is convicted. All hail the next emperor with no clothes!

(enlargement emphasis added).

Sung by those losthorizoners who eventually do become completely disillusioned among Hendrickson’s Heroes -- to the tune of You’re Gonna Make Me Lonesome When You Go, by Bob Dylan:

PeterMeister, don’t get sore;
We don’t buy your trash no more.
We want all our money back -- and more!
Been shooting in the dark too long.
C-t-C ain’t right -- it’s wrong.
You’re gonna make us lonesome when you go.

Tax evasion did we love--
But now we’re giving Pete the shove!
The IRS has hit us from below.
Now we see – we've been corrected,
Right on target, re-directed,
You’re gonna make us lonesome when you go.

Pete's tax theories? -- Way off base!
Yes, we cheated – what disgrace!
Liens and levies hurt -- if you don't know!
Can't remember what we was thinkin' of.
Delusions – we have had enough.
We’re gonna make you lonesome when we go.

-----All our friends could see we’re bloomin' crazy,
-----Jibber, jabber, back and forth in rhyme,
-----Yes, Pete's logic was completely hazy,
-----He thought we’d go on forever.
-----And never recognize he's lyin’.

Situations have ended sad,
All our tax returns were bad.
Ours have been a pain and a bore.
But there's no way we can compare
All those scenes to this affair,
We’re gonna make you lonesome when we go.

-----We’re gonna make you wonder what we’re doin',
-----Stayin' far behind, without you.
-----We’re gonna make you wonder what we’re sayin',
-----We’re gonna give ourselves a good talkin' to.

We’ll see Pete, then, in Fed’ral prison!
Are we sorry? No, we isn’t!!
Pete will have to leave us now, we know.
Pete, we'll think of you in the sky above,
In the tall grass, in the ones we love,
You’re gonna make US lonesome when YOU go!

[Famspear]

Losthorizoner "Badger" does not like the idea that user "enemy combatant" is making probing comments and asking questions about whether the CtC tax scam is really successful. Check out Badger's impatience:

I expect that, at least the Owls, would be intimately familiar with most, if not all, of the information on LH [losthorizons dot com]. Haven't any one of you posting in this thread looked at http://www.losthorizons.com/Help.htm#HelpII for guidance/reassurance in your efforts to understand what's going on? I believe that most, if not all, CtC readers who take on the parasites in the bureaucracy are committed to seeing it through, forcing the rule of law to be upheld.

On that note, this is the second thread of which I am aware that enemycombatant appears to be more accurately monikered enemywuss. I am bothered immensely by whiners trying to plant seeds based on their own impotence in the minds of serious warriors. It's more important to support one another, finding the appropriate information on the website.

Also, let's be scrupulously accurate about what is posted here. Kensei submitted that there was no assessment, therefore whatever happened is a documented anomaly, and finally will be resolved correctly. Woodwalker, you give no explanation, details, dates... Kae, same thing. Hughg, same thing. Are you latter three trying to correct erroneous past filings, such as is discussed on the 'Help' page? I think this might be true, since my (and my immediate family's) personal experience with initial CtC filings has been uneventful for years.

In any event, I re-iterate my observation that the forum should be supportive, not whiny.

(bolding added).

http://www.losthorizons.com/phpBB/viewtopic.php?t=1898

In other words, pay no attention to that man behind the curtain......

EDIT: To review, here's the post by "enemycombatant" that "Badger" apparently doesn't like:

It's wonderful to read about all the victories for refunds received. But I'd like to get some empirical evidence about the other side of the coin. I know that numerous people get the frivolous penalty slapped on them, including me. I've also read about numerous people getting Notices Of Intent To Levy, and Final Notices Of Intent To Levy, including me.

What I'd like to know is how many people have actually had property seized from them, be it money from bank accounts, garnishments, etc.

I also wish there was a way to know how many people listed on the Victories page of Lost Horizons have had problems down the line after securing a refund. In other words, it's nice to hear about the victories, but there's always more than one side to a story. A victory doesn't seem like such a great deal if you get hassled later on, as I have found out.

Let's get some input. Thanks.

[Demosthenes]

One of the poor bastards is trying to set up his own forum.

http://www.losthorizons2.com/

[wserra]

Losthorizoner "Badger" does not like the idea that user "enemy combatant" is making probing comments and asking questions about whether the CtC tax scam is really successful. Check out Badger's impatience:

... It's more important to support one another ... I re-iterate my observation that the forum should be supportive, not whiny.

Y'know, I actually believe that those are terrific sentiments. I take it that if a fellow Crackhead in Badger's neck of the woods (Wisconsin?) finds himself and his family homeless thanks to Hendrickson-induced tax evasion, Badger will offer them shelter and sustenance.

No? You don't think so? You think that all Badger means by "support" is being an Internet Rambo? I'd bet that, if Badger found himself and his family homeless thanks to Hendrickson-induced tax evasion, he would squeal like a pig.

[Doktor Avalanche]

One of the poor bastards is trying to set up his own forum.

http://www.losthorizons2.com/

A ban-free meeting place for the CtC-empowered.

Uh oh...all is not well in Peteyland.

[Nikki]

Well, let's see just how long "ban-free" stays in effect?

[Doktor Avalanche]

Well, let's see just how long "ban-free" stays in effect?

Seriously.

This doesn't bode too well for Uncle Petey. The minions are starting to wake up and ask questions, and if there's one thing Uncle Petey cannot stand is an inquisitive minion.

[webhick]

One of the poor bastards is trying to set up his own forum.

http://www.losthorizons2.com/

Well, it's certainly better organized than the original. I wonder if Pete will send them a cease and desist letter.

[Doktor Avalanche]

One of the poor bastards is trying to set up his own forum.

http://www.losthorizons2.com/

Well, it's certainly better organized than the original. I wonder if Pete will send them a cease and desist letter.

Oh, it gets worse. Check out the first post in the General Discussion board, a la Tax Man:

You have been sold a bill of goods.

Pete is not a tax law expert.

There is nothing magical or even accurate about Cracking The Code except that it took the IRS a long while to see what was happening and intercept it.

You have to realize that one of the most important parts of IRS' tax return processing system is getting refunds to taxpayers on a timely basis. For that reason, all of the early CtC "educated" returns slipped through the cracks.

However, once you all started submitting your "evidence" to Pete and he started posting it publicly on the Internet, the IRS took notice of it and started directing follow-up examinations at all the CtC victors.

As you have come to realize, this has resulted in a number of notification letters, frivolous filing penalties, liens, levies, and collection actions.

You can't resolve these by writing rebuttal or explanation letters to the IRS because your basic premise is wrong. The money you received as compensation for services is income, it is taxable, and you have to pay it.

Your only option, at this point, is to start working with your local IRS office, get a full accounting of what you owe, and set up some kind of payment plan. If you are very lucky, you might get some of the frivolous filing penalties reversed.

However, one thing which you must do, immediately, is re-file non-CtC educated returns to replace all the ones you filed before.

One thing which you should not do is look to any of the other self-professed gurus, such as Peymon, for assistance. All that will accomplish is to cost you more money for equally bad advice.

Remember, so far you are just subject to civil penalties and collection actions. Prolonging these evasion activities might just get the criminal arm of the IRS involved.

JMS chimes in with this little gem:

By way of background, I filed my first truthful returns and "wages" correction forms in 2006, and had some significant success. I received a full refund check for one year, and in a second year, my refund was applied to reducethe outstanding balance from a prior year.

Roughly a year later, the troubles started. A frivolous filing penalty, my wife is threatening to take the kids to her mother's, and my employer is glaring at me every time I walk into his office.

When I started posting a couple of questions about the nitty-gritty of why Pete recommended that certain things should be done in certain ways, I was banned.

I need help. I need constructive criticism, and I suspect others do so, and I believe that we should be able to ask questions without worrying about being shut out from the group.

Welcome all.

Welcome to the Great Unravelling.

[webhick]

Welcome to the Great Unravelling.

This is so exciting. Do you think I have time for popcorn?

[Doktor Avalanche]

Welcome to the Great Unravelling.

This is so exciting. Do you think I have time for popcorn?

You sure do. I got some popping right now, only take a minute.

How do you take yours? Butter and salt?