New Notice with New Frivolous Positions

[LPC]

In Notice 2010-33, 2010-17 IRB 1, the IRS has re-released its notice of frivolous positions that can result in the $5,000 penalty for frivolous returns and frivolous submissions, and has added three new frivolous positions, as follows:

(21) A taxpayer may use a Form 1099-OID, Original Issue Discount, (or another Form 1099 Series information return) as a financial or other instrument to obtain or redeem (under a theory of "redemption" or "commercial redemption") a monetary payment out of the United States Treasury or for a refund of tax, such as by drawing on a "straw man" or similar financial account maintained by the government in the taxpayer's name (see paragraph (20), above); a taxpayer may file a Form 56, Notice Concerning Fiduciary Relationship, that names the Secretary of the Treasury or some other government employee as a fiduciary of the taxpayer and requires the Treasury Department to honor a Form 1099-OID as a financial or redemption instrument; or similar arguments described as frivolous in Rev. Rul. 2005-21, 2005-1 C.B. 822, and Rev. Rul. 2004-31, 2004-1 C.B. 617.

(22) A taxpayer may claim on an income tax return or purported return an amount of withheld income tax or other tax that is obviously false because it exceeds the taxpayer's income as reported on the return or is disproportionately high in comparison with the income reported on the return or information on supporting documents filed with the return (such as Form 1099 Series, Form W-2, or Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains).

[...]

(27) A taxpayer may claim a refund of tax based on purported advance payments to employees of the Earned Income Tax Credit as reported by the taxpayer on a filed Form 941, Employer's Quarterly Federal Tax Return, or other employment tax return that reports an amount of purported wages, tips, or other compensation but leaves other line items on the return blank (or with a zero as the amount).

[David Merrill]

In Notice 2010-33, 2010-17 IRB 1, the IRS has re-released its notice of frivolous positions that can result in the $5,000 penalty for frivolous returns and frivolous submissions, and has added three new frivolous positions, as follows:

(21) A taxpayer may use a Form 1099-OID, Original Issue Discount, (or another Form 1099 Series information return) as a financial or other instrument to obtain or redeem (under a theory of "redemption" or "commercial redemption") a monetary payment out of the United States Treasury or for a refund of tax, such as by drawing on a "straw man" or similar financial account maintained by the government in the taxpayer's name (see paragraph (20), above); a taxpayer may file a Form 56, Notice Concerning Fiduciary Relationship, that names the Secretary of the Treasury or some other government employee as a fiduciary of the taxpayer and requires the Treasury Department to honor a Form 1099-OID as a financial or redemption instrument; or similar arguments described as frivolous in Rev. Rul. 2005-21, 2005-1 C.B. 822, and Rev. Rul. 2004-31, 2004-1 C.B. 617.

(22) A taxpayer may claim on an income tax return or purported return an amount of withheld income tax or other tax that is obviously false because it exceeds the taxpayer's income as reported on the return or is disproportionately high in comparison with the income reported on the return or information on supporting documents filed with the return (such as Form 1099 Series, Form W-2, or Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains).

[...]

(27) A taxpayer may claim a refund of tax based on purported advance payments to employees of the Earned Income Tax Credit as reported by the taxpayer on a filed Form 941, Employer's Quarterly Federal Tax Return, or other employment tax return that reports an amount of purported wages, tips, or other compensation but leaves other line items on the return blank (or with a zero as the amount).

I like that #22 addition. If one reports zero income but $15K in withholdings they best include at least three non-endorsed paychecks; one from the beginning of the tax year, one in the middle and one at the end, then the IRS agent would logically refer the Return to an attorney, or write out a full Refund for the $15K!


Thanks for the update LPC! You guys are great.



P.S. LPC;


Would you please link us directly to the source .pdf or .doc file?

[The Observer]

...then the IRS agent would logically refer the Return to an attorney, or write out a full Refund for the $15K!

Nope. The IRS would open an audit on the return, correct the income amount and send out a notice of deficiency to the taxpayer, presuming that the audit resulted in a tax balance due, along with the frivpen assessment. Oh, by the way, the non-endorsed checks would have no effect on the audit.

[David Merrill]

...then the IRS agent would logically refer the Return to an attorney, or write out a full Refund for the $15K!

Nope. The IRS would open an audit on the return, correct the income amount and send out a notice of deficiency to the taxpayer, presuming that the audit resulted in a tax balance due, along with the frivpen assessment. Oh, by the way, the non-endorsed checks would have no effect on the audit.

This is why the taxpayer would keep the non-endorsed checks for the entire year - in case of an audit.

As far as no effect on the audit - that would not be up to you, but thanks for your opinion!


Regards,

David Merrill.


P.S. LPC;


I am having trouble finding that Notice. Please help me out here?


I may have gotten close - at the time of posting this link, the last posted Notice was 2010-28;

IRS Notices.


Yummy! I found this one from January 1, 2010:

Frivolous Positions in General.


FRNs are not Income.

[The Observer]

As far as no effect on the audit - that would not be up to you, but thanks for your opinion!

The same applies to your opinion that the non-endorsed checks would have an effect on the audit - it would be up to the agent. So let's ask the vital question:

Do you have any factual logical evidence to show that the agent doing the audit would make a decision to report an audit closed as a no-change result solely because the taxpayer submitted non-endorsed checks?

[ASITStands]

P.S. LPC;


Would you please link us directly to the source .pdf or .doc file?

Notice 2010-33

[David Merrill]

As far as no effect on the audit - that would not be up to you, but thanks for your opinion!

The same applies to your opinion that the non-endorsed checks would have an effect on the audit - it would be up to the agent. So let's ask the vital question:

Do you have any factual logical evidence to show that the agent doing the audit would make a decision to report an audit closed as a no-change result solely because the taxpayer submitted non-endorsed checks?

Sure. Nobody gets called in for an audit because they include evidence of non-endorsement. You should re-read my first post - the taxpayer includes three non-endorsed paychecks or in the alternative a copy of his Signature Card or electronic transfer authorization that specifies all transactions will be in redeemed lawful money.

Thank you ASITStands! - They kept the old number and modified Notice 2008-14!


Regards,

David Merrill.

[Nikki]

David is partially correct in that the evader wouldn't get called in for an audit.

Instead, the automated under-reporter system, or one of the IRS' other screening programs, would flag the return; it wopuld be reviewed; and the evader would receive a notice of deficiency giving him the opportunity to either pay or go to Tax Court.

David is overlooking the fact that the IRS receives copies of W-2 and 1099 forms sent to the evader and starts to question what is going on if the numbers on those forms don't match what's reported on the tax return.

David is also overlooking the fact that his theory only works on Planet Merrill.

[David Merrill]

David is partially correct in that the evader wouldn't get called in for an audit.

Instead, the automated under-reporter system, or one of the IRS' other screening programs, would flag the return; it wopuld be reviewed; and the evader would receive a notice of deficiency giving him the opportunity to either pay or go to Tax Court.

David is overlooking the fact that the IRS receives copies of W-2 and 1099 forms sent to the evader and starts to question what is going on if the numbers on those forms don't match what's reported on the tax return.

David is also overlooking the fact that his theory only works on Planet Merrill.

Goofy Nikki;

(21) A taxpayer may use a Form 1099-OID, Original Issue Discount, (or another Form 1099 Series information return) as a financial or other instrument to obtain or redeem (under a theory of "redemption" or "commercial redemption") a monetary payment out of the United States Treasury or for a refund of tax, such as by drawing on a "straw man" or similar financial account maintained by the government in the taxpayer's name (see paragraph (20), above); a taxpayer may file a Form 56, Notice Concerning Fiduciary Relationship, that names the Secretary of the Treasury or some other government employee as a fiduciary of the taxpayer and requires the Treasury Department to honor a Form 1099-OID as a financial or redemption instrument; or similar arguments described as frivolous in Rev. Rul. 2005-21, 2005-1 C.B. 822, and Rev. Rul. 2004-31, 2004-1 C.B. 617.

If you have no taxable income, then the only reason to file a return is to receive the withholdings back by refund. So it is presumed that the amounts reported on the 1040 and the W-2 or 1099 form would be the same amount, which is the amount of the refund check.



Regards,

David Merrill.


P.S. There is no Notice 2010-33:

IRS Notices.

[silversopp]

1. Did your mother ever have a restraining order against you? If yes, is it still in force?
2. Would your mother welcome you back into her home in the near future?
3. When was the last time you received a paycheck?
4. When have you last seen your daughter?
5. When was the last time your daughter said that she loves you?
6. In what type of accomodations do you currently live?
7. Do you own, rent, or bum your current accomodations?

Bonus question:

8. When was the last time you paid child support?

[bmielke]

1. Did your mother ever have a restraining order against you? If yes, is it still in force?
2. Would your mother welcome you back into her home in the near future?
3. When was the last time you received a paycheck?
4. When have you last seen your daughter?
5. When was the last time your daughter said that she loves you?
6. In what type of accomodations do you currently live?
7. Do you own, rent, or bum your current accomodations?

Bonus question:

8. When was the last time you paid child support?

Extra Credit:

9. Do you know or even care where your daughter is?
10. Does your Daughter know or even care where you are?

[The Operative]

Yummy! I found this one from January 1, 2010:

Frivolous Positions in General.


FRNs are not Income.

If you believe that either one of those links supports any of your ridiculous theories, it is only further proof that you do not comprehend what you read.

[David Merrill]

Yummy! I found this one from January 1, 2010:

Frivolous Positions in General.


FRNs are not Income.

If you believe that either one of those links supports any of your ridiculous theories, it is only further proof that you do not comprehend what you read.

Have you quit beating your wife?


[In other words I will not defend my theories - ergo admitting they are rediculous as framed by the question.]

If you like paying taxes and funding rediculous wars I guess you have that right to be evil.

[LPC]

(22) A taxpayer may claim on an income tax return or purported return an amount of withheld income tax or other tax that is obviously false because it exceeds the taxpayer's income as reported on the return or is disproportionately high in comparison with the income reported on the return or information on supporting documents filed with the return (such as Form 1099 Series, Form W-2, or Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains).

To me, this looks more like simple fraud than a frivolous position.

Is there a difference between fraud and frivolousness? (Or is it "frivolity"?) Does there need to be a difference?

Hendrickson filed what were clearly frivolous returns as defined by the Notices published by the IRS, and was later charged (and convicted) of filing false returns, so a frivolous return can be a fraudulent (or false) return if the IRS can show that it was willfully false.

Perhaps the IRS has decided to use the frivolous return penalty as an additional weapon against certain kinds of fraudulent returns, allowing the assessment of an additional penalty without needing to prove any actual fraud or willfulness.

[silversopp]

If you like paying taxes and funding rediculous wars I guess you have that right to be evil.

But it's not evil to neglect your daughter by not paying child support? What about what you did to your mother, that's not evil?

You avoid paying taxes not because of your legal theories, but because you are dirt poor and only survive by the good graces of others - including the people that you are violent towards.

[The Observer]

Sure. Nobody gets called in for an audit because they include evidence of non-endorsement

No, that is not what what the question is presupposing. I will repeat it:

Do you have any factual logical evidence to show that the agent doing the audit would make a decision to report an audit closed as a no-change result solely because the taxpayer submitted non-endorsed checks?

Or in other words, what is the taxpayer supposed to do when the IRS agent ignores the non-endorsed checks and decides that your silly theories have no weight in affecting the audit?

These are the questions that you typically ignore because they rebut the fantasy world that you try to spin for your suitors.

[Duke2Earl]

What suiters?... more figments of imagination?

[Nikki]

If you have no taxable income, then the only reason to file a return is to receive the withholdings back by refund. So it is presumed that the amounts reported on the 1040 and the W-2 or 1099 form would be the same amount, which is the amount of the refund check.

Regards,

David Merrill.

The W-2 or 1099 will report to the IRS a specific amount of funds transferred to the taxpayer.

If the would-be-evading follower of the Merrill School of Law and Aluminum Siding Repair does not report those same amounts on the tax return in the specifically specified lines, the Merrill acolyte will receive a computer-generated letter from the IRS.

This letter, known as a Notice of Deficiency, will give the suitor an opportunity to correct the return and pay what is due or to proceed to Tax Court to contest the IRS' determination. It might also include mention of a potential $5,000 frivolous filing penalty.

Nothing David has said refutes this. That is not surprising since David has not been required to file a tax return for years since his income (not counting his allowance) is well below the threshhold.

[Judge Roy Bean]

re: A non-endorsed check.

Non-cashed checks are not evidence of non-payment, merely that the instrument in question was not deposited by the payee.

They can also be considered assets.

[The Operative]

Yummy! I found this one from January 1, 2010:

Frivolous Positions in General.


FRNs are not Income.

If you believe that either one of those links supports any of your ridiculous theories, it is only further proof that you do not comprehend what you read.

Have you quit beating your wife?

Dear Dumbass,

I would never hit a woman. However, whether I would or not is irrelevant to your poor reading comprehension skills. There is no evidence on this forum, or anywhere else online, that would prove or disprove whether I beat my wife. However, with every succeeding post you make, it is further evidence that you cannot read.

[In other words I will not defend my theories - ergo admitting they are rediculous[sic] as framed by the question.]

If you like paying taxes and funding rediculous[sic] wars I guess you have that right to be evil.

I prefer to abide by the law. You are breaking the law. That makes you evil, not me.

From another thread...

There are only two valid types of endorsement on a check, open and restricted.

I will show you non-endorsement. - For all that is there is signature endorsement for the demand:



That cannot be construed to be endorsement of private credit from the Fed.

1. To the best of my knowledge, there is no legal basis anywhere that makes your phrase on the back of the check a valid restriction for an endorsement of a negotiable instrument.

2. Section 411 only allows for the redemption of FRNs at a Federal Reserve banks or the U.S. Treasury. Therefore, unless a person lives in one of the reserve bank cities or Washington, D.C., to redeem an FRN in lawful money in person, they would have to travel to the nearest Federal Reserve bank. A local Bank of America branch is part of a national bank association. While required to be a member of the Federal Reserve system, it is NOT a Federal Reserve Bank.

3. There is no basis in law anywhere that says that receiving or redeeming lawful money makes that money exempt from the federal income tax laws. If you think there is, I would be interested in seeing what code section, regulation, or case law that you believe supports that contention.

4. Please explain what you mean by "private credit from the Fed." I am interested in understanding your definition of the phrase.