Re: [tips_and_tricks] Near-frivolous return and fun with an IRS agent
- ----- Original Message -----From: rule_of_law_rocksSent: Monday, April 06, 2009 5:37 PMSubject: [tips_and_tricks] Near-frivolous return and fun with an IRS agentAgent Said:
What you are trying to do is completely eliminate all your income and wages from taxation and that's illegal!FACT: What the agent said is true! "Income" and "wages" are taxable. But what you received is neither. You received "receipts" which is from an equal exchange of labor for money. Money is property which is not taxable under an "income tax."
I told him briefly that I was correcting bad payer data, per the IRM, which requires a recalculation of my taxable income. The 1040X is the correct form to use, so I used it.FACT: Read the section of the IRM you are referring to. It basically says "Income" that is not taxable..." "Bad payer data" is within that list. You just admitted that you received "income." YOU DID NOT receive "income" if your "receipts" were from the "exchange of labor" for money. "Income" that is NOT taxable under an "income" tax is "income" derived from property. A 1099 submitted to the IRS for the sale of your home is "income that is not taxable" and could be considered as "bad payer data" for the purpose of an "income tax."
You Said:He told me I couldn't use a Form 4852 to correct bad payer data. I had to get the payer to issue a W-2C.Did you ask him where it said that in the law??? Or are you letting the agent lay the burden of proof back on you? KEEP THE BURDEN OF PROOF ON HIM. THE LAW DOES! The IRS is the "proponent of the rule or order." 5 USC 556(d)
Well, if you didn't earn wages, what did you earn? I did not participate in any taxable activity resulting in taxable income and I did not earn taxable "wages".
How About This?Mr. IRS Agent, What is the definition of "wages" in the IRC?So Mr. Agent, are you telling me that what I received is in fact wages that are taxable under an "income tax." (I do not think he would answer yes) but IF he answers yes, then ask him if he has any first hand knowledge of the events that took place that generated your "receipts" from the third party payer, or did the "payer" make an oath that what I received was in fact "wages" as defined in the IRC?You Said:I then asked him what the purpose of the Form 4852 was. He said it was to be used if the "employer" went out of business and didn't issue a W-2, I was unable to contact the "employer", and some other reasons.Does the law state that this is the only purpose for this Form?
You Said:I also told him that I offered to submit them as evidence at the local IRS office on 12 March but the agent refused to accept my Payers' testimonies.Sounds like this agent needed to be reminded that he himself is personally responsible for his own actions and unless he has IRC Section 7491 type evidence to support HIS claim that what you received is in fact wages then he personally will be held liable for not processing legal documents that are an exercise of your right to rebut and correct information that you do not believe is true and accurate. Call him back and tell him that you will be forwarding a rebuttal and correction that will be much easier to understand for those that are not familiar with tax law and if the documents and the new 1040X return are not processed then he personally will be held accountable for denial of due process. Remind him that it is the US District Court that presides over due process issues and not the tax court. If you are SURE that the rebuttals and corrections are properly worded and the 1040X return is NOT truly considered a frivolous return then the tax court will uphold the 1040X as valid. You are not requesting the tax court to determine whether you are entitled to your refund. You are merely asking them to determine whether your return is frivolous or not.