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8112RE: [tips_and_tricks] Re: Legal Fictions

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  • Dave Miner
    Apr 5, 2005
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      Gary --
       
      Good question, but its logic will lead you to what I have been saying.  I will explain, but first I will correct a fundamental misunderstanding you have concerning the IMF.
       
      An IMF is created when the first return is filed.  For most of us, this occurred when we were teenagers.  Since only businesses are required to file a return, the IRS creates the IMF and enters the individual as a business.  The IMF is a permanent file (for most people) and it consists of three sections.  The first section is the entity section, which establishes who and what you are, including what returns you are required to file.  The entity section remains pretty much the same every year, with only a few changes.  The second section is the module portion.  This is the section where the data from the return is entered.  There is a module section for each and every year.  If you do not file a return, the IRS will file one for you, based on the authority of the IRS to file returns for certain types of businesses, which you correctly noted is a Substitute for Return.  The third section is called the transaction section, and it includes transaction codes and status codes.  This section records almost every action the IRS takes against you, plus some other data.
       
      If you obtain your IMF-Complete, you will receive a stack of pages with one entity section and a whole bunch of module and transaction portions organized by year.  If you obtain your IMF-Specific, you will receive 2-6 pages (typical according to my experience with hundreds of them) for each year, with all three sections in each printout.
       
      The IMF is generated every year regardless of whether or not you file a return, on or about the first week in January.  The IRS creates the entity portion based on the previous year's IMF.  The module and transaction portions will remain blank until you file a return.  If you request your IMF-Specific in February of any given year, you will receive an IMF with the entity portion completed and the module and transaction portions will be blank.  If you do not file, your IMF will remain this way for usually two years.  Then the IRS will process a Transaction Code 424, which starts the process of completing the SFR with lots of other transactions that add taxes and penalties and interest.  Stat Codes recording the collection letters the IRS sends to you will be added over the next few months to a couple of years.  Sooner or later, the IRS will make an attempt to lien or levy your assets if the IRS deems you to be profitable (there are two fields in the IMF that render a "score" that tells the IRS if you would be a profitable account to pursue).  If the IRS deems you to be not profitable (assets hidden, or difficult to snatch), then sooner or later the IRS stops pursuing you for that year.  After 2 or 3 years of non-filing, the IRS will add everything together and go after you regardless of your assets, simply because the total amount due (in the eyes of the IRS) is large enough to warrant serious collection efforts.
       
      The IMF is created 2-3 years before the SFR is created, and maybe more.
       
      But you are correct in one thing.  If the IRS sees that you are not required to file returns, then it ignores you for 3 years.  After 3 years, the IMF is removed to what the IRS calls "retention" (which renders your account inactive) and it simply disappears.  There will then be no more IMFs created for you until you file another return, creating the whole process all over again.
       
      But the IRS would see in your IMF the fact that you are not required to file ONLY afar you have forced it to enter that item.  If you do not force the IRS to change your IMF to reflect that you are an individual not required to file, then your IMF will ALWAYS reflect several data entries that indicate you ARE required to file.  If you filed once, the IRS enters the fact that you ARE required to file based on the presumption that no one would be stupid enough to file unless they are REQUIRED to file. 
       
      So if you ever filed a return, your IMF will show that you are required to file.  And that won't change until you force the IRS to change it.
       
      Yours in financial freedom,
       
      Dave Miner
       
       


      From: gary [mailto:gary2666@...]
      Sent: Monday, April 04, 2005 9:53 PM
      To: tips_and_tricks@yahoogroups.com
      Subject: Re: [tips_and_tricks] Re: Legal Fictions

      Dave,
       
      Maybe my memory is failing me (it has been a few years since I dug into this) but as I remember it, an IMF is generated each year that a return is filed.  If no return is filed and there are W2s or 1099s, the IRS generates a substitute for return (SFR) which generates an IMF for that year.  If this is true, would I be correct in assuming that the reason they don't bother you is that they look at the last IMF and if that says you need not file then they don't ask you for a return and don't generate a SFR for the last tax year?
       
      Gary
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