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Exposing A Page Out Of The Bad Guys' Playbook

Trolls keep struggling to discourage educated filings-- "1040 alternatives" is one such attempt.

MANY PEOPLE ENCOUNTER ENCOURAGEMENT BY TROLLS to not file 1040s or other government forms on the argument that doing so created a vulnerability to "frivolous return penalties". Instead, went the counsel, the marks should file "alternative" instruments of some kind, on the notion that the non-1040 instruments can't qualify for any penalty.

It's a clever trick. Convince people that CtC-educated 1040s are penalized, and that they can get the same beneficial result of educated filings without using the vulnerable forms, and you can get them to leave "income" allegations unrebutted and able to be exploited for as many years as you can keep these poor folks frightened and fooled.

The whole concept is nonsense, of course. Attempting to file with some document imagined to not be a return, and therefore not vulnerable to "frivolous return penalty" threats is fundamentally futile. Consider:

  • The law provides that the form and manner by which someone can meet tax reporting obligations is as directed by the Secretary of the Treasury*;

  • The Secretary has directed that this be done by something which purports to be a return (and meets a couple of other qualifications)**;

  • Only something purporting to be a return, then, can address tax liability allegations; and

  • The law concerning the "frivolous return penalty" (26 U.S.C. § 6702) provides that the penalty can be brought to bear against anything which purports to be a return (and which meets a few other qualifications as well, of course)***.

Thus, any "alternative" document used in hope of immunization from the FRP threat either won't avoid that threat, or, if it does, will only do so because it is of no value in addressing tax liability allegations.

NOW, OF COURSE, CtC-EDUCATED RETURNS AREN'T actually subject to the FRPs. This is unambiguously shown by the IRS having found it necessary to resort to a fake "frivolous positions" list hoax to pretend that they are, so as to make the "alternative instrument" ploy work.

But, of course, the targets of the "alternative return" ploy don't get told to go look at ANYTHING on losthorizons.com, and particularly not anything concerning the "frivolous return penalties". In fact, those poor folks get told to avoid losthorizons.com entirely, 'cause, well, you know... Pete went to prison, so he clearly doesn't really know what he's talking about...

So, these poor folks won't just either not protect themselves from the tax or not protect themselves from "frivolous penalty" threats; they also won't learn how to respond to such threats, thus possibly allowing even hoax threats to become real hazards.

Further still, the use of a so-called "alternative" instrument in lieu of a normal form is as much as to put a sign on one's back announcing oneself to be both scared (and therefore a ready target for intimidation), and ill-grounded in legal principles and tax law in particular. These are the things corrupt "ignorance tax" schemers look for when choosing who to harass, threaten and resist, so the use of "alternative" instruments is an invitation to all of these things.

PRETTY SHABBY STUFF, and a real tragedy since this nonsense has successfully driven a lot of good people off the field of battle and onto the pointless sidelines. There they sit, imagining that they have fired the "silver bullet" and all will be well.

These folks even become spokespeople themselves for the same ruinous "alternative return" mistake. All-in-all, the "frivolous return penalty" scam has become one of the "ignorance tax" schemers' best weapons.

Maybe the points made above explaining the mistakes underlying the "alternative return" error-- simple facts about the law that reach past ignorance of the kangaroo-court shenanigans resulting in my poster-child imprisonment-- will help put an end to this problem and bring its victims back into play. I hope everyone will share this article with anyone they know or suspect to have fallen prey to the "alternative return" scam, and help make that happen.

NOTE: Further material related to the "alternative return" scam can be found here and here.

* "Provided, that any party, in his or her own behalf, or as guardian or trustee, as aforesaid, shall be permitted to declare, under oath or affirmation, the form and manner of which shall be prescribed by the Commissioner of Internal Revenue,..." Revenue Act of 1862, § 93

*** "First, there must be sufficient data to calculate tax liability; second, the document must purport to be a return; third, there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and fourth, the taxpayer must execute the return under penalties of perjury." Beard v. Commissioner , 82 T.C. 766, 777 (1984), aff’d per curiam , 793 F.2d 139 (6th Cir. 1986) (defining a valid tax return)

*** "(a) Civil penalty for frivolous tax returns: A person shall pay a penalty of $5,000 if— (1) such person files what purports to be a return of a tax imposed by this title but which—..." 26 U.S.C. § 6702 - Frivolous tax submissions