http://www.losthorizons.com/phpBB/viewt ... 03ca#24809Right or wrong, Mr. Hendrickson was convicted of knowingly filing false documents with the IRS.
When you read the IRS’ complaint, it specifically points out that Mr. Hendrickson received Forms W-2 from his employer but choose to declare $0 wages earned even in the face of evidence that he did in fact earn wages. And that’s an interesting point I’d like to explore. How was the DOJ able to declare that Mr. Hendrickson did in fact earn wages even though his first-hand sworn testimony was just the opposite? Well, let’s look at his history (it may be incomplete but I believe the essentials are covered).
History
Mr. Hendrickson started using Form 4852 to correct his “payer’s” Forms W-2. In Mr. Hendrickson’s published Forms 4852 (on his web site), he stated that he didn’t earn wages as defined in 26 U.S.C. §§ 3121 and 3401. He wasn’t an employee and didn’t work for an employer. For sure, during 2002 and 2003, the DOJ didn’t believe this for a second. And they took him to court over it.
In the “flurry of motions” (as Dr. Graves likes to call them), one of the items filed by Mr. Hendrickson’s company was a declaration by Ms. Halbrook, the Payroll/Human Resources Manager. She basically stated that her company paid Mr. Hendrickson wages. The IRS moved for summary judgment shortly after this because, in their view, there were no facts in contest. The IRS met their burden under 26 U.S.C. § 6201(d), that when a taxpayer provides a reasonable dispute to any item on an information return, the IRS must bring credible and probative evidence in addition to the information return. Well, Ms. Halbrook was that credible evidence. As for probative, a quick view in the dictionary says, “serving to prove, substantiating.” Now, if I were on the jury and Mr. Hendrickson claims he made no wages but the company writes a document stating otherwise, I’d like to hear from an authorized representative of the company to state what they believe (true or false).
Imaginary Direct by the DOJ
DOJ: “Ms. Halbrook, did your company pay Mr. Hendrickson wages?”
MH: “Yes.”
DOJ: “Ms. Halbrook, are the amounts you paid based on the business records of your current company?”
MH: “Yes.”
DOJ: “Ms. Halbrook, do you have any knowledge or belief that these records are incorrect?”
MH: “No.”
DOJ: “Ms. Halbrook, are the amounts you paid Mr. Hendrickson accurate?”
MH: “Yes.”
DOJ: “Ms. Halbrook, are the Forms W-2, which your company made in the course of its regular business activities, accurate in every detail?”
MH: “Yes.”
DOJ: “Ms. Halbrook, are you the custodian of these records now?”
MH: “Yes.”
Mr. Hendrickson’s Response
Mr. Hendrickson’s appeal stated that Ms. Halbrook had no personal knowledge of his activities since she didn’t work there when he worked and she cannot attest to the accuracy or the veracity of the records upon which the assignment of wages was made. Mr. Hendrickson believes her declaration is the IRS’ sole evidence. However, what I didn’t see, and this is where things are unclear, is where Mr. Hendrickson denies the six presumptions present on a Form W-2:
· The form itself (a “Receipt for Employees”, 26 U.S.C. § 6051) presumes that he engaged in a taxable activity
· The form has the name of an employer who an employee provides services and receives remuneration of any kind, typically wages (26 U.S.C. § 3401(d))
· The employer is a source of gross income (26 U.S.C. § 61)
· The employer is a source of taxable income (26 U.S.C. § 63)
· The form has the name of an employee who provided services to an employer for remuneration of any kind, typically wages (26 U.S.C. § 3401(c)).
· The form has wages, the amount received by an employee from his employer for services performed (26 U.S.C. § 3401(a)).
In addition, the form is internally consistent and reinforces the existing presumptions: federal income tax withheld, Social Security tax withheld, and Medicare tax withheld. Withholding (26 U.S.C. § 3402) is defined as amounts withheld as taxes from an employee’s wages by his employer. Thus, if a person declares he had withholding, he was necessarily presumed to be in an employer-employee relationship. In the case of FICA taxes, Social Security and Medicare withholding also presumes an employer who provided employment for wages to an employee. Without providing a complete rebuttal of ALL these presumptions (the six presumptions above + the withholding presumptions), the DOJ can assert that wages were paid, whether they were in fact wages or not.
District Court Decision
With the seemingly un-rebutted declaration from Ms. Halbrook, the court ruled that there were no facts in contest and awarded summary judgment to the IRS. This meant that the Forms W-2 and their contents were a judicial fact and the amounts were judicially determined to be true. The court instructed Mr. Hendrickson to make his prior year filings conform to the judicial findings of fact. That meant that his Form 4852 was no longer a valid submission. But what else is also true? Well, the six presumptions of the Form W-2 are now facts, not presumptions any more: Mr. Hendrickson engaged in a taxable activity, had an employer, had a source of gross income, had a source of taxable income, was an employee, and earned wages.
One of Mr. Hendrickson’s Potential Errors
Look at the title of the Form 4852: “Substitute for a W-2.” That means that in the absence of a W-2 or to correct a W-2, this form has the same weight and presumptions on it as a Form W-2. What’s worse, this form is submitted by the taxpayer himself. In effect, Mr. Hendrickson is saying to the IRS, “Don’t listen to my company. The W-2 is wrong. I engaged in a taxable activity because the Form 4852 says so. I had an employer because this form is correcting a Form W-2. My employer is a source of gross income and a source of taxable income. I am an employee (don’t believe me? Look! I had withholding.) And, I earned wages.” When Mr. Hendrickson declares $0 wages, which presumption is he rebutting? Does taxable activity relate to how much was paid or rather, what activity Mr. Hendrickson performed? If Mr. Hendrickson had withholding, how can he claim $0 wages? Is it possible to have earned ZERO wages and yet had hundreds or even thousands of dollars withheld from $0 wages? Is that a mathematical possibility that $0 wages x 7.65% = $1,000?
Knowingly Filing False Documents
Fast forward to the most recent criminal trial against Mr. Hendrickson. Since Mr. Hendrickson was offered an opportunity to conform his returns to judicial findings of fact, he could then be accused of knowingly filing false documents. In fact, this is exactly what the DOJ accuses Mr. Hendrickson of doing. In view of the judicial findings and the evidence on his employer’s Forms W-2, Mr. Hendrickson, according to the DOJ, chose instead to file false and fraudulent Forms 4852 claiming he didn’t earn any wages.
Motions for Person and Others
Mr. Hendrickson appealed the decision for a variety of reasons, one of which was that he wasn’t a person as defined in 26 U.S.C. § 7343, Person. “The term “person” as used in this chapter includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.” Mr. Hendrickson could not use this argument because, as you see, a Person includes an employee(!) and by judicial findings in his prior trial (res judicata), Mr. Hendrickson was found to be an employee, hence a Person as defined here.
Summary
Mr. Hendrickson was precluded from arguing he wasn’t an employee by res judicata. He was also precluded from claiming he wasn’t an employee for the purposes of 26 U.S.C. § 7343. However, one issue that I believe remained uncontested was that Mr. Hendrickson did not adequately rebut presumptions on the Forms W-2, but rather, reinforced them with the submission of his Form 4852, which left many presumptions unchallenged. As a result, the DOJ, in a real sense (and a deplorable statement about our current system of justice) had to take advantage of the situation.
Pablo Rodriguez
Pablo's "analysis" is of course riddled with errors, not the least of which is his argument that Hendrickson was precluded, in his criminal case, from arguing the "employee" issue by the doctrine of res judicata.