Dave Artman's Story
Good news, yet again.....
.... and Pete Hendrickson’s analysis of the truly limited nature of federal income tax system is again re-affirmed.
I’m a contractor who receives payment of the full amount I’m owed for my services, i.e., no monies were/are withheld and then sent to IRS by any payer. Payers, however, have been submitting incorrect Forms 1099-MISC to IRS, making the claim that the payments are taxable. I’ve known for many years that my earnings do not constitute ‘taxable income’, and so haven’t filed a Form 1040 for many a year.
In mid April 2003, I received one of those “we didn’t get 2001 tax return” letters (CP-515) from our ‘friends’ at the internal revenue ‘service’. In early June 2003 I received a second letter (CP-518) claiming my tax return was ‘overdue’.
I timely responded to the CP-518 with a request for a ‘letter of determination’ regarding my being subject to ‘backup withholding’. (I believed at the time that this request would stop the collection process cold. I have yet to receive any response to this letter of request. And it didn’t stop the process.)
At about the same time, I began submitting a series of FOIA requests for records, to which IRS responded, more or less. I was looking for whatever information about me IRS had in its file. Some of the information was interesting, but of little use otherwise.
In late August 2003, IRS sent a LTR 2269C letter, again saying it still can’t find a return from me, and making their first claim that I had received $37,000 in “income” for 2001. I responded with a letter saying basically: My records indicate I didn’t receive any ‘taxable income’, IRS’s records are in error, and if IRS believes otherwise, prove it. Never got any response to the letter.
In mid December 2003, IRS in Holtsville, NY sent a ‘PROPOSED INDIVIDUAL INCOME TAX ASSESSMENT’, which claimed I owed $14,896 for income tax, social security, interest, and penalties. (That’s 40 percent of the alleged ‘income’! Can you say ‘slavery’?) I timely responded to the proposed assessment with a two-page letter making a number of points including: I did not receive any ‘taxable income’ for 2001.; Any IRS records indicating that I received ‘taxable income’ are in error.; IRS has statutory authority to “assess the amount of tax, penalties, and interest” where no return has been filed, but ONLY in the case of taxes “duly paid by stamp”.; IRS has NO statutory authority to prepare a ‘substitute’ form 1040 for me.; I can’t get any answer to any of my inquiries from anybody there at IRS.; and finally, I demanded an APPEALS CONFERENCE. Never got a reply to this one either.
In early February 2004, I received a short letter from IRS indicating my ‘inquiry’ (which one?) was being sent to the Ogden (Utah) Campus, and that I should receive a response from Ogden within 60 days.
In mid March 2004, I received, again from the Holtsville, NY IRS office, a NOTICE OF DEFICIENCY, giving me 90 days to petition TAX COURT. (So much for letting Ogden handle things.) The notice again said I owed about fifteen grand. In early July, I responded to this notice with a long-winded four-page letter, plus an affidavit, saying basically, that if IRS’s Lynne Walsh meets the fifteen conditions in my letter, I would agree to pay the full amount IRS claimed I owed. Never got any response to this one either.
In late August 2004, IRS sent me a “we changed your account” letter. The change included an increase of about $700 in penalties and interest, and curiously, a $7 credit. I believe the credit was due to a money order I had sent in months earlier, attached to a FOIA request which didn’t require a fee be paid.
A month later, in September, I received a ‘reminder’ letter with an increase of $110 in penalties and interests. Then in November, another reminder letter arrived, adding another $123, raising the total alleged liability to $15,887!
During the Fall of 2004 I purchased and read (several times) Peter Hendrickson’s book, “Cracking the Code: The Fascinating Truth About Taxation In America”. His explanation demystified much of what I had already read, and thought I knew, about federal tax law. More importantly though, I finally learned how to use the tax system itself to set the record straight about the fact that I haven’t received any taxable income for all these years. Based on my newly found knowledge, on December 13, 2004, I filed a Form 1040 (with seven corrected Forms 1099-MISC) showing the correct amount ($1.41 in interest) of taxable income for 2001.
Then the waiting began. Over the many weeks, I sent IRS three requests for account transcripts (via Form 4506-T) in order to get some clue as to whether my return was accepted and processed. The response (yeah, I actually got a response!) showed that IRS processed the return, and showed all my numbers, but gave no clues about whether IRS agreed with my filing. I continued the wait.
Today, two years after this odyssey began, I received my answer. Today the postman delivered to me a tax refund check for the year 2001 in the amount of $7.14. That’s the amount of the credit .... plus interest.
Can you say YIPPEEEE!?
The August 2004 Notice
Dave's Most Recent IRS Communiqué
(It is worth observing that this record, while significant in that it acknowledges Dave's 2001 'account' as zeroed out, appears to exist as part of a fabrication concocted to internally support the initial and subsequent actions of the 'service'. This is clear from several entries on the form. The law does not provide for the creation of a 'Substitute' 1040, for instance, nor did Dave file an 'amended' return, per his account. Dave was apparently being mischaracterized as an entity required to file one of the few return types for which substitutes CAN be produced by the service. This in and of itself is perhaps forgivable, as it will have been done based on the testimony of the payers who issued 1099s about Dave-- the only evidence on record until Dave filed his rebutting return documents. However, once that rebuttal was on record, the 'service' should have just corrected its initial mischaracterization and issued Dave's refund, rather than clinging to the pretense. The creation of this form is reminiscent of a cop who pulls over the wrong car for speeding and, faced with three passengers and a driver all prepared to go to court and testify as to his mistake, decides to let the driver off with a warning.)
An "Income" Tax Subject Site Map