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Regarding The "Frivolous Return Penalty" Ploy

The last-ditch defense of the crumbling "ignorance tax" scheme.

THE ACTUAL LEGAL NATURE OF THE INCOME TAX IN AMERICA has been fully revealed. The revelation makes clear that the tax is quite importantly different from what the always revenue- and power-hungry state wishes the people to believe.

At the same time, the operation of the "ignorance tax"-- the systematic misapplication of the income tax based on exploitation of widespread public ignorance of its real limits-- has been shown to rely entirely on deliberately-misled declarations of belief grounded in state-serving historical and legal myths by folks submitting tax forms (both "information returns" like W-2s and 1099s, and 1040s).

With the truth about all this inexorably spreading, the "ignorance tax" scammers have been watching the slow-motion derailment of their 75-year+ gravy train by the simple mechanism of more and more newly-educated Americans making declarations which no longer support the lies and abuses. While very good for everyone else, this is not a happy thing for the scammers.

NONETHELESS, HAVING NO ACTUAL "REMEDY" to the onslaught of the truth and its consequences, the scammers generally just bow to the inevitable. In the vast majority of cases, properly-claimed refunds are issued without fuss, in a display of respect for the law that is greater than many familiar with the behavior of these agencies over the years would expect.

At the same time, however, certain bad apples in the tax agency barrel have been sporadically testing last-ditch measures meant to discourage or evade the honest filings that lead to outcomes contrary to the institutional mission of maximizing revenue. Because it is the statements of belief by filers that drive the whole income tax structure, these bad apples have been trying to figure out pretexts for disregarding inconvenient statements.

Or, the bad apples seek to develop practices by which knowledgeable filers making these inconvenient statements can be intimidated into silence, or have their successful refund claims offset by spurious "penalty" claims. Tellingly, the only pretense available-- the assertion of "frivolous return" penalties (FRPs)-- involves reducing or offsetting portions of overpayments which are admittedly owed back to the claimant, in full acknowledgement that no "income" was received, and no tax was owed (and thus, that the return on which these claims are made is perfectly correct).

Briefly summarized, the relevant issues (which might also be called the "material facts") in an FRP assertion/contest are three:

1. Whether the penalty is asserted against an actual filed return (or purported return)-- rather than, for instance, a copy of a return sent to the agency as evidence of a previous filing;

2. Whether a targeted return lacks information sufficient for judging the substantial correctness of its self-assessment (as in missing numbers in places relevant places to the computation of the self-assessment) or contains information calling into question the substantial correctness of that self-assessment (as in having elements within it which contradict the self-assessment computation), and, IF either of these are true, bears evidence that such lack or such contradiction arises from the filer's embrace of a "position" listed on the Secretary of the Treasury's official list of penalty-qualified "frivolous positions" or from an intent to impede or delay the proper administration of the tax laws; and

3. Whether the penalty has been properly approved pursuant to 26 U.S.C. § 6751(b).

(BTW, let me make clear something misunderstood by many folks: There is no inherent legal relationship between a FRP assertion and the validity of a return. FRP assertions concern a special definition of "frivolous" meant to equip the IRS to extract a financial penalty whether a return is valid and the refund or other claims thereon are correct or not. For a return to be "frivolous" in the context of a FRP does not make it frivolous-- which, outside of the FRP context, means "without a basis in law"-- for purposes of processing or in regard to claims and declarations made thereon.)

MAKE NO MISTAKE: This effort by certain bad apples in the IRS (and more rarely still, by a few bad apples in state tax agencies, as well) to muffle the voices of those who know the law, and have a perfect and complete right under the law to introduce the testimony on their filings into the record, however inconvenient it may be to the revenue-hungry tax agencies, is the last battleground in the restoration of the income tax to its proper, limited application.

Further, don't miss the message in the fact that these resistance efforts by the "ignorance tax" schemers rest on evasions of the educated filers' claims, not rebuttals. These resistance efforts rest on contrived pretexts for removing the educated filers' testimony from consideration, not on disputing the grounds, content or conclusions represented in that testimony as would plainly be the duty (and in the interest) of the tax agencies if such disputations were possible.

SO, HAVING OBSERVED THESE BOGUS, REVEALING "frivolous" assertions become the singular escape-hatch of the "ignorance tax" schemers when trying to evade a CtC-educated filing, I have written a series of posts addressing them in various ways. What follows are links to these papers, each of which offers a drill-down or resource regarding one or another aspect of the "frivolous penalty" issue.

Read them all, even those that don't seem relevant to what you think are your particular circumstances. You want to completely own this subject. Start with the point-by-point summary of the overall subject here, follow up with this cognitive check, and then proceed to the papers below.

THE FIRST POST is a discussion of the real nature of the "frivolous return penalty" as laid out in the statute providing for it; a discussion of why these penalties do not actually apply to honest, educated filings; and a discussion of how the details of the notices by which they are threatened (in the effort to persuade a filer to reverse himself and discourage others) reveal the threats to be mere pretenses:

Regarding "Frivolous Return" Letters And Notices


NEXT WE HAVE a must-read revelation of the mind-blowing IRS fake-list hoax under which "frivolous return penalties" have been asserted against CtC-educated filers:

Regarding the "Frivolous Return Penalty" Hoax


IN THE POST BELOW is a discussion/exposé of a case of what is apparently a forgery and perjury gambit by IRS officials who had gotten caught in lies about the generation and assessment of a "frivolous return penalty":

The "Frivolous Return Penalty" Fraud Exposé


HERE WILL BE FOUND a detailed drill-down on legal considerations, provisions and limitations in the application of the "frivolous return penalty":

 The 6020(b) Requirement For The Assessment Of "Frivolous Return" Penalties


NOW WE TURN TO PRACTICALITITES. The post below offers some notions about how anyone targeted for "frivolous return penalty" abuse might prophylactically respond (something that really needs to be done within 30 days of receiving a "frivolous" assertion-- i.e., LTR3176C-- or as soon thereafter as is possible, if that deadline has been missed):

About Responding To "Frivolous Return" Letters And Notices

About Responding To "Frivolous Penalty" Threats Directed At Non-Return-Events


NEXT IS INFORMATION meant to help anyone victimized by improper "frivolous return penalty" assertions to address them in concrete ways, either through challenges to collections efforts or more proactively by bringing suit against those responsible:

The "Frivolous Return Penalty" Pushback Project


HERE WE HAVE some discussion about the overall Constitutional violations inherent in "frivolous return penalty" threats, even those not demonstrably resting on the "fake list" hoax:

On Suing Over FRP Threat Civil Violations


PRESENTED ON THIS PAGE is an analysis of a remedy provided directly in the tax statutory structure against the illegal collection of penalties such as the "frivolous return penalty":

A Frivolous Solution


FINALLY, here is a small (so-far incomplete) collection of union-state statutes reflecting some of the legal points discussed in the post above, in their criminalization of threats of the kind in we're talking about:

State Laws Criminalizing "Frivolous Return" Penalty Threats

"Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have the exact measure of the injustice and wrong which will be imposed on them, and these will continue till they have been resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they suppress."

-Frederick Douglass


P.S. Though each person must come to his or her own conclusions, and chart his or her own course about all such matters, the following brief comments based on my observations over the years might be of interest to anyone being harassed with these things.

IN MY VIEW, FRP notices/threats are best understood to be proposals (and universally insincere ones deployed for tactical and PR reasons). As with all such proposals/assertions/allegations, the initial allegation must be rebutted if incorrect.

Once an initial penalty proposal (which usually takes the form of a LTR3176C) is answered with a rebuttal (a relevant-point-by-relevant-point rebuttal affidavit, as in the examples here and here), the evidentiary burden is on the government, both as a matter of common-law and pursuant to 26 U.S.C. § 6703(a). In regard to a proper, accurate and honest CtC-educated return, that burden cannot be carried).

Sometimes a proper rebuttal to the initial penalty proposal puts an end to the harassment. However, as obnoxious as it may be, the fact that the notices/threats are neither sincere nor defensible, and even the fact that they may have been properly rebutted, do not serve as an insurmountable barriers to the continued issuance of scary letters and notices.

Sometimes bad apples in the tax agency barrel will just keep on keepin' on in the hope of hounding someone into paralysis, reversal, or at least wasting time and energy and becoming frustrated and weary sending pointless replies to persistent follow-up notices of the "CP504" or "CP15" variety, some of which contain scary and misleading statements for which no legal authority is cited, such as that the alleged penalty must be paid in full before it can be contested. (Also, sometimes the generation of continued harassing notices and so forth is happening on autopilot, because a button has been pushed at the "Automated Collection System", as discussed here.)

Either way, should such scary notices persist to the point of imminent threat of actual harm (that is, to the point of an actual Final Notice of Intent To Levy) an opportunity to compel a hearing arises as an operation of law. At that point the matter actually becomes a quasi-legal contest with the potential to move to a real legal contest. The victim of the attack then has full due process available, and the harassing government is then obliged to attempt to carry its burden. (See more about this progress of events and related material here.)

Responding to those Final Notices IS appropriate-- in fact, it is critically-important.

(BTW: every notice should be read carefully to determine if it is a final notice in disguise, as sometimes happens. The clue will be a declaration-- somewhere in the text on one or another page of the document-- of one's 30-day window for requesting a Collections Due Process Hearing. BTW II: A "Collections Appeal Program" opportunity is not the same thing as a CDPH, and will compromise one's ability to appeal adverse decisions...)

SO, TO SUM UP, everyone should rebut everything that appears to call for it, in their opinion (remembering that until an actual legal contest arises "argument" is both inappropriate and pointless). But at the same time, no one should let blustery harassment succeed in its purpose and get a grip on their spirit. Don't forget that it is not unknown for bureaucrats to do things that look fierce or meaningful which are not really even within the scope of their authority, or valid in any sense at all, as is reflected in the following two observations of the courts:

“Persons dealing with the government are charged with knowing government statutes and regulations, and they assume the risk that government agents may exceed their authority and provide misinformation.”

Lavin v. Marsh, 644 f.2d 1378 (9th CA, 1981)

"Anyone entering into an arrangement with the government takes the risk of having accurately ascertained that he who purports to act for the government stays within the bounds of his authority, even though the agent himself may be unaware of the limitations upon his authority."

Federal Crop Ins. Corp. v. Merrill, 332 US 380-388 (1947)