U.S. Tax Court Ruling Offers A Nice Summary Of A Key 'Cracking the Code-...' Point A correspondent of mine's eye was caught by language in a recent "income" tax case with which the court acknowledges, in its own way, one of the key realities about the structure of the federal revenue law that is revealed in 'Cracking the Code- The Fascinating Truth About Taxation In America'. Ruling in a case titled 'Terry I. and Louise Major v. Commissioner of Internal Revenue', the court admits that if the petitioners had rebutted the "information returns" on which the Commissioner was-- necessarily-- relying in asserting that the Majors had received "income" and were therefore liable for an amount of tax, the court would have been obliged to find in the Major's favor. Unfortunately for the Majors, they had not read CtC, and thus were probably not even aware of the evidence with which they were contending. They had offered no response to that evidence, and the court-- quite reasonably, under the circumstances-- ruled against them. Nonetheless, in its effort to appear magisterial by pontificating on the subject, the court reveals that it fully understands this aspect of the structure of the law. Here is the relevant portion of the ruling: "The Court finds that Forms 1099 demonstrate that Terry received income constituting sufficient evidence in this case. Likewise, Form 1099-B shows that Louise Major received income from "stocks, bonds, etc.", and Form 1099-INT reveals that Louise Major received income from interest. Consequently, respondent provided sufficient evidence linking petitioners to the income underlying the statutory notices of deficiency./8/
However, section 7491 may shift the burden to respondent in specified circumstances, for example, where the taxpayer produces "credible evidence". Sec. 7491(a)(1). The legislative history of section 7491 clarifies the meaning of "credible evidence":
Credible evidence is the quality of evidence which, after
critical analysis, the court would find sufficient upon which to
base a decision on the issue if no contrary evidence were
submitted (without regard to the judicial presumption of IRS
correctness). A taxpayer has not produced credible evidence for
these purposes if the taxpayer merely makes implausible factual
assertions, frivolous claims, or tax protestor-type arguments.
The introduction of evidence will not meet this standard if the
court is not convinced that it is worthy of belief. If after
evidence from both sides, the court believes that the evidence
is equally balanced, the court shall find that the Secretary has
not sustained his burden of proof. * * * [H. Conf. Rept. 105-
599, at 240-241 (1998), 1998-3 C.B. 747, 994-995.]"
(It will have been noticed that I speak somewhat disparagingly of the court despite its making clear that it understands and respects the important principle of law which we are discussing. This is because in citing 26 USC 7491 in its explanation, the learned court also makes clear that it is ignorant-- or embarrassingly sloppy-- regarding the actual statutes-in-force with which it deals every day. 26 USC 7491 represents a section of law originating with the federal marijuana tax, and appears to have no direct bearing on the instant case. However, 26 USC 6201(d), which provides for institutional obedience to the same principle, IS relevant. As explained in CtC, page 183: "Section 6201, the first part of which we looked at earlier, contains a useful subsection if IRS recalcitrance should force anyone into court: (d) Required reasonable verification of information returns In any court proceeding, if a taxpayer asserts a reasonable dispute with respect to any item of income reported on an information return filed with the Secretary under subpart B or C of part III of subchapter A of chapter 61 by a third party … the Secretary shall have the burden of producing reasonable and probative information concerning such deficiency in addition to such information return. (“Subpart B or C of part III of subchapter A of chapter 61” refers to sections 6041 - 6050S, among which are those we examined ‘Crafting A Trade Or Business Plan’ and ‘”W” Is For Weapon’; and section 6051, which we examined in ‘Lies, Damned Lies, And W-2’s’; as well as sections 6052- payment of wages in the form of group-term life insurance, and 6053- Reporting of Tips).")
To learn what constitutes the "credible evidence" to which Congress and the court refer; the legal meaning of "implausible factual assertions, frivolous claims, or tax-protestor type arguments"; why the Commissioner is obliged to rely on "information returns"; why, and how, the law must, and does, provide for their rebuttal and nullification; the legal meaning of the term "taxpayer" and why its use is in 6201(d) is irrelevant; and everything else important to most Americans concerning our tax structure, read 'Cracking the Code- The Fascinating Truth About Taxation In America' ***** The institutional acknowledgement of the principle discussed above (and the corresponding statutory structure reflected at 26 USC 7491, more relevantly at 26 USC 6201(d)-- and, indeed, throughout federal revenue law) is illustrated today by 'Cracking the Code-...' warriors Ed and Mary Suriano. The Surianos recently rebutted allegations made by others on the basis of which the state of New York had been presuming them to owe it "income" taxes. The state has abided by the law, and has returned to Ed and Mary everything withheld from them and paid over to it as "income" taxes during 2002, 2003 and 2004. These fine Americans share the evidence of their uplifting victories with us at www.losthorizons.com/tax/MoreVictories4.htm. Learn The Liberating Truth, And Join Ed And Mary In Upholding The Law! |
