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Regarding IRS-Forged Documents In A Cover Up Of A Widespread Fraud

Oh, what a tangled web we weave...

AN EXPERT FORENSIC DOCUMENT EXAMINATION indicates forgeries and perjured declarations by persons in the United States Internal Revenue Service and a Treasury Department legal office. The presentation of the questionable documents by a government attorney as exhibits in a lawsuit in Tax Court brought the whole ugly affair to light.  

The evidence available so far suggests that IRS workers and at least one IRS Office of Chief Counsel attorney created fake signatures on back-dated documents, and then executed sworn statements declaring the documents to have been timely-made years prior. As found by Board-Certified Forensic Document Examiner William Flynn of Affiliated Forensic Laboratory, Inc. after analyzing the questioned exhibits:

From "Conclusions", Laboratory Reports #12-3179.1, Dec. 10, 2012, and #12-3179.2, Oct. 8, 2015, Affiliated Forensic Laboratory, Inc., William J. Flynn, B.S., D-ABFDE

Declarations were made under oath in filings in a 2011 lawsuit, Waltner v. Comm'r, US Tax Court #8726-11 L, that the fake signatures are those of various personnel at the tax agency and constitute "evidence" that seizures of property from Steve and Sarah Waltner had been authorized as required by law. The government's apparent need to contrive false documents strongly suggests that what was being "proven" is not true.

See the sworn declarations and purported authorization documents here. See the complete forensic report here.

BUT AS DISTURBING AS THESE APPARENT FORGERIES ARE ON THEIR OWN, there's a larger and darker picture here. The overall evidence suggests the questionable documents were made because the government's inability to produce real ones in this case threatened to expose an underlying fraud, by which a larger number of Americans have been victimized over the course of at least seven years.

The Waltners were in court challenging assertions of so-called "frivolous [tax] return" penalties against them. Threats of penalties so labeled are directed in a seeming scattershot, random manner against some of the tens of thousands of men and women who have been routinely securing complete refunds of all federal and state income taxes for many years now-- Social security and Medicare taxes included-- in accordance with critical tax-law "fine print" first revealed to modern America in 2003 in a book titled Cracking the Code- The Fascinating Truth About Taxation In America by researcher Peter E. Hendrickson.

The fine print identifies what is actually subject to the tax. This proves to be a much more limited and specialized class of gains than the government wants Americans to realize.

Those who have learned the tax law "fine print" have recovered or retained several billion dollars in the form of hundreds of thousands of refunds and other government acknowledgements since 2003. Unsurprisingly, the government wishes this information had never come to light and has been struggling to pull the shades closed.

HOWEVER, THE INFORMATION IN THE BOOK is accurate, and produces a constant stream of acknowledgements issuing from federal and state treasury departments in the form of refund checks. Thus, the revenue-hungry government's recourse in its efforts to discourage the spread and use of the inconvenient information has been a series of questionable practices, the most broadly-deployed of which are threats of "frivolous return" penalties.

In the penalty scheme, $5,000 penalties are threatened, and sometimes even seized in response to returns the IRS doesn't like. Both had happened to the Waltners, who were subjected to a number of threats, as well as a diversion of money from a complete refund for 2009 against an alleged penalty for a different filing.

The problem with the scheme is that the legitimate imposition of "frivolous return" penalties is statutorily-controlled. Such penalties can only be legally imposed if a return is based on a "frivolous position" identified by the Secretary of the Treasury on a list he is required to produce and publish for this purpose, as specified in section 6702(c) of Title 26 of the US Code.

The "fine-print" filings are perfectly legitimate. There is no "position" appearing on the Secretary's list by which they can qualify for the penalties.

Faced with the conundrum of very much wanting to discourage these inconvenient filings, but unable to do so legitimately, the IRS contrived a "workaround". The agency created a fake list of "positions".

The fake list contains versions of all of the actual "positions" found on the legitimate list produced by the Secretary of the Treasury, but features one unique agency addition, labeled "Argument 44". While purportedly a "position" (or "argument") on which a filing could be based (as is true of all the legitimate listed positions, and as is required for any listed item to serve its statutorily-specified purpose), Argument 44 is actually just a description of a typical "fine-print" filing.

Further, there is actually a real Argument 44 on the real list. The real Argument 44, the existence of which emphasizes the fraudulent character of citations to the fake one, bears not the slightest similarity or relationship to the one on the fake list. A comprehensive presentation of these lists, the real Argument 44 and the fake one, and the related law, can be seen here.

HERE IS AN EXAMPLE of an internal IRS record indicating the deployment of the "Argument 44" pretext in the assertion of an illegitimate "frivolous return" penalty (CVPN, for "civil penalty") in the Waltner case:


IT IS UNKNOWN just how much actual property has been seized under this "frivolous return penalty" scheme, although the aggregate total is known to exceed ten thousand dollars. The number of Americans threatened with the penalties unless they change the sworn testimony on their tax returns to something more to the liking of the IRS is at least in the several scores of individuals-- possibly even into the hundreds.

Steve and Sarah Waltner have been the first to knowledgeably challenge the assertion of these penalties, a challenge that prompted the apparent government attempt to cover-up with forgeries and perjury. The Department of Treasury, through its Office of Chief Counsel, the IRS, and the Tax Court judge in the Waltners' case, who, though put on notice of the questionable documents by the Waltners treated them as real and ruled against the Waltners in their suit, has hunkered down into a stonewall mode.

CLEARLY, THE AMERICAN PEOPLE have a great deal at stake in all this. If forgery and perjury have been deployed by government officials against citizens, this is far too much to tolerate.

Of even more potential significance is the prospect of fraudulent "frivolous return penalties" meant to be covered up by forgeries and perjury. More significant still would be that all of these other corrupt things are done in order to suppress the spread of accurate but government-disfavored information about the 800 lb. gorilla in American personal and political life known as the income tax.

Further, the big picture here could involve more and deeper corruption than just what is shown in this focused slice discussed above, from which the veil has fortuitously slipped. The evidence suggests that the rot might extend to the US Department of Justice and some federal district and circuit court judges, as well.



The complete forensic document examination report can be seen here, and the declarations for which the questionable documents were presented in support can be seen here. Or, see both as filed in the 9th Circuit as Excerpts of Record in support of the Appeal brief in case No. 16-71797.

Document Examiner Wm. Flynn's curriculum vitae can be seen here.

Links, documentation and a detailed explanation of the "Argument 44" scheme can be found here.

Well over 1,200 examples of the hundreds of thousands of complete "fine-print" refunds secured since 2003 can be seen here.

A selection of refunds and other successful applications of the "fine print" information only after focused tax agency resistance can be seen here.

To start learning about the "fine print", click here.

Have questions? Contact Pete Hendrickson here.


Initially the government attempted to have the publication of Hendrickson's book enjoined. When these efforts quickly failed by early 2005, the suppression effort changed course.

2006 saw Hendrickson and his wife targeted by a crudely-contrived but widely-publicized "civil lawsuit" by which the federal government purported to reclaim complete refunds made to the Hendricksons a few years earlier of amounts withheld from them in 2002 and 2003. In the suit, the government claimed that the refunds were made by mistake.

The suit was a complete sham. The government was not only unable to come up with even an IRS "examination report" disputing the Hendricksons' original refund claims, but it actually relied on a request in the suit for a court order commanding Hendrickson and his wife to make sworn declarations declaring themselves to owe taxes for the years involved (which would also comprise repudiations of Hendrickson's research). The couple was also to be made to conceal the fact that the perjurious statements were coerced and false.

The command was issued as requested, by a judge who never even laid eyes on the Hendricksons (or anyone else in the course of the sham "proceedings"). However, the Hendricksons have refused to make these false statements, and unfortunately for the government, the "lawsuit" was so transparently bogus that no one aware of the tax-law fine print was even briefly deterred from making their own claims. So, the government moved on to plan "C"-- the "frivolous return" penalty scheme the apparent forgeries and perjury in the Waltner case seem to have been intended to cover-up.

Nonetheless, even while pursuing the new "frivolous return" ploy, the government also leveraged the civil lawsuit affair into two subsequent kangaroo criminal trials. The first, apparently meant to hinder Pete Hendrickson's information-spreading efforts, took the form of an unsigned indictment (after a series of failures to secure the real thing) charging Hendrickson with not believing what he had said on his own refund claims.

Highlights of this trial include the witnessless delivery of government documents from the aforementioned "civil lawsuit" to Hendrickson's jury, including a ruling written by the DoJ and merely signature-stamped by the complicit judge which "finds" that the Hendricksons had filed "false returns". There were also the refusal to allow any expert testimony in trial, and an instruction to the jury to use prosecution-written "substitutes" for statutory definitions of key terms central to the case, denying even a direct juror request to see the actual statutory language.

Soon after Hendrickson rejoined the world after two years of durance vile his wife, Doreen, was charged with criminal contempt of court for refusing to create the false statements ordered at the government's request in the "civil lawsuit". In addition to the unprecedented charge of a crime for refusing to let sworn declarations of belief be dictated to her, Doreen's trial featured a government-requested instruction to her jury that the unlawfulness or unconstitutionality of the orders she was charged with resisting were not to be considered a defense to the charge (along with many other unique and disturbing things).

Doreen spent nearly 20 months in prison, after her appeal was denied by a 6th Circuit panel featuring one of Donald Trump's "short-list" Supreme Court nominees. The denial was based on the proposition that the speech- and due process-rights violations inherent in the orders she resisted were somehow not transparent to the court, and therefore their constitutionality could not be challenged on appeal, with the same reasoning being applied to the unprecedented jury instruction.

More details and complete documentation on the extraordinary history of this multi-year suppression campaign against information the federal and state governments routinely acknowledge as true and correct in the most concrete form possible-- billions of dollars in refund checks over the same multi-year period-- can be seen here.


A Bit More About The "Frivolous Return Penalty" Fraud

There's a lot be dredged up from this cesspool...

ABOVE YOU SAW A THOROUGHLY-DOCUMENTED exposé of IRS false-evidence production in a case involving CtC-educated returns. The perfectly legitimate filings had been attacked with fake "frivolous return penalty" (FRP) assertions of the sort used scattershot since around 2007 in the hope of discouraging the spread and use of CtC's individual-empowering and state-restraining information.

In the trial proceedings the government was faced with an apparently unexpected challenge to produce documentation of non-existent but required properly-completed approval paperwork for the asserted FRPs. Unwilling to simply drop the penalties, the government instead produced fake approval forms.

Happily, the faked documents were detected and exposed. Not so happily, the tax court judge hearing the case refused to take notice of the fact that the government had produced (and was relying upon) fraudulent evidence, ruling in the government's favor anyway. The filers are now seeking justice in the 9th Circuit Court of Appeals.

NOW I WANT TO SHOW EVERYONE another IRS false-document practice related to the "frivolous return" penalty. Here's the story:

Under the provisions of 26 USC § 6751(b), the assessment of any asserted penalty requires supervisor approval:

(b) Approval of assessment (1) In general No penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate.

However, under the "exceptions" provided for in 26 USC § 6751(b)(2)(B), penalties calculated electronically (that is, penalties in which the amount and application of the penalty can be considered variable-free and automatic), approval is not required.

(2) Exceptions

Paragraph (1) shall not apply to—

(A) any addition to tax under section 6651, 6654, or 6655; or

(B) any other penalty automatically calculated through electronic means.

"Frivolous return" penalties are neither "automatic"-- arising only upon human decision-making and conclusions about the purported "position" upon which a filing is based, whether directly or by programming a computer to treat a filing with certain characteristics as qualified for the penalty-- nor "calculated"-- being penalties of a fixed amount in all cases, rather than the product of any kind of computation. Nonetheless, the IRS rationalizes an application of the exception to "frivolous return" penalties under certain circumstances. Here is how the IRS explains this misconstruction ploy (from Office of Chief Counsel Notice CC-2014-004):

If the computer models through EFDS propose a penalty and the taxpayer does not reply to the automatically generated pre-notification letter [such as a "LTR 3176" -PH], then an assessment of the section 6702 penalty is made without any Service employee exercising independent judgment with respect to the applicability of the penalty. In these situations, the section 6702 penalty is automatically calculated through electronic means, and qualifies as an exception to the general rule requiring written supervisory approval of assessment.

To help clarify the reasoning used in this argument, here is another, more extensive expression of the same argument, from IRM (01-24-2012) Managerial Approval of Penalties, concerning the IRC 6662 accuracy-related penalties for negligence and substantial understatement:

9. Any penalties automatically calculated through electronic means are excluded from IRC 6751(b)(1) requirement.

1. When IRC 6662 accuracy-related penalties for negligence and substantial understatement are assessed under the Automated Underreporter (AUR) program without an employee independently determining the appropriateness of the penalty, then the penalty is one that is automatically calculated through electronic means and may be assessed without written supervisory approval.

2. However, if a taxpayer responds either to the initial letter proposing a penalty or to the notice of deficiency that the program automatically issues, an IRS employee will have to consider the taxpayer’s response. Therefore, the IRS employee will have to make an independent determination as to whether the response provides a basis upon which the taxpayer may avoid the penalty. The employee’s independent determination of whether the penalty is appropriate means the penalty is not automatically calculated through electronic means. Accordingly, IRC 6751(b)(1) requires managerial written approval of an employee’s determination to assert the penalty.

So, what is argued here is that as long as no reply is made to the "FRP proposal" letter (in which "proposal" is invariably replaced with the much more ominous-sounding word "assertion"), no supervisory approval of the penalty assessment is needed at all (since the recipient's silence can be taken as agreement that the penalty is appropriate). Convenient notion-- if there really is no reply made.

Now look at the "Remarks" section on this Form 8278 recently secured by a FOIA request, concerning an "FRP assertion" against a CtC-educated filing. I happen to know personally that the "proposal letter" was answered with a reply:

Here's another example concerning a penalty assertion against a different CtC-educated filer, and again, one in response to which a reply was made:

I can't read minds. So, I can't say for certain that these agency false statements were made in order to evade a challenge to the legitimacy of this penalty assertion (perhaps even from law-abiding workers at the IRS itself?).

But these lies certainly seem to serve that purpose, don't they? And I certainly can't think of any other reason they would be made...

Here, by the way, is an example of an 8278 which both asserts no response (a claim I can't persaonally speak to, in this case) and also includes the declaration of the penalty being based on the pretense of the fake "ARG44 position":

And here are a few more IRS documents on which it is acknowledged that the fake-list "Argument 44" was the pretext for their assertion of frivolous return penalties:




And here is an example of yet another aspect of the suppress-CtC "Frivolous Return Penalty" fraud-- a false characterization of copies of a return accompanying correspondences sent to the agency as being new filings subject to the penalty. (NOTE: Even if an original return actually qualified for the penalty, a reference copy sent with a correspondence cannot qualify.):

WHO KNOWS WHAT ELSE WILL COME TO LIGHT as the community-- and eventually litigants and law enforcement-- continue to drill into this FRP discouragement/suppression scheme? We'll see.

Toward that end, I urge everyone victimized by the scheme to vigorously and diligently participate in the accumulations and consolidation of evidence relevant to a suit, the utility of which evidence will be multi-dimensional. The details and procedures are here. Let's do this!

"It is not the function of our Government to keep the citizen from falling into error; it is the function of the citizen to keep the Government from falling into error."

-U.S. Supreme Court Justice Robert H. Jackson


“The greatest menace to freedom is an inert people.”

‑Louis Brandeis


‎Bad men need nothing more to compass their ends, than that good men should look on and do nothing."

-John Stuart Mill