US TAX COURT 

Julie Patriot	                             )				  		 
	Petitioners,                         )      DOCKET #	10677-06	
     V.                                      )   
Commissioner Internal Revenue                )      for Respondent CIR
       Respondent                            )

Petitioner hereby files her opposition to pretrial Memorandum dated October 19, 2007.

  1. Petitioner has cooperated fully with the commissioner and penalties are not warranted. The IRC is complex, confusing and no one understands it. Petitioner made a good faith effort to learn the tax law and file correct tax returns. Petitioner hired, in good faith, a self proclaimed expert in tax law and followed his instructions.
    Unfortunately the expensive tax adviser had petitioner, a non lawyer and non tax expert, file a tax return which was unpopular with the tax service. Unknown to taxpayer this type of tax return had been classified by the tax authorities as “frivolous and groundless.”
  2. Realizing her initial position was hopeless taxpayer abandoned it and adapted arguments acceptable to the tax service. Her petition and pleadings in this tax court are standard and acceptable to the tax court. District Counsel wants to continuously bring up taxpayer’s earlier position rather than deal with the real facts in this case.
  3. The IRS issued an incorrect Notice of Deficiency according to their motions. They made the big mistakes but want to penalize petitioner who has no tax education for making a minor error. Penalties should be applied against the CIR, which is using the overwhelming resources of the Federal Government against a solitary tax payer proceeding pro-se.
  4. Petitioner does not have all the records, receipts and documentation because that is impossible to maintain and produce. Instead, Petitioner relies upon the Cohen doctrine.
    This case shows that in tax court you can use reasonable figures, instead of figures conjured by the IRS that cannot be correct. You can also reconstruct lost paperwork to substantiate your deductions and business expenses.
    Further, you can claim a percentage of business expenses and profit for a business enterprise, even if you have no records to substantiate your business expenses. For example, a plumbing subcontractor could claim as expenses 60% of gross receipts from the form 1099s that the IRS received from the contractors.
    The 9th Circuit Court ruled in Cohen v. CIR, 266 F 2d 5(1959):
    ''We think our only proper course is to approach the problem indirectly by analysis of the record in the light of the principles established in Cohen v. Commissioner, 39 F.2d 540 (2d Cir. 1930). Our objective will be, after resolving any reasonable doubts against petitioner, to reconstruct his gross income as betting commissioner at a figure which in our judgment it would be unlikely to exceed in fact. (Petitioner, it is clear, has failed to establish a lesser amount.)''
    The purpose of the IRS is to collect taxes, not to browbeat hard-working citizens who are unable to keep records because they struggle to make a living and work hard at distant locations. Due to his occupational travels, the tax victim is unable to maintain all the records that you seek. However, we all know that the taxpayer did incur large expenses for out-of-town work. Let us figure out what the law says the tax victim owes so he can start paying.
  5. Petitioner offers a reasonable settlement of 20% of Gross as net income and 80% of gross going toward business expenses, cost of doing business, cost of charity work, unpaid insurance claims, etc. District Counsel takes position that the tax year in questions petitioner has no business expenses, no taxes on workers, no rent, no utilities. This is a frivolous and groundless position.
    Under the Cohen doctrine, Petitioner is entitled to claim a reasonable amount of business expenses. However District Counsel has been unreasonable and wants to collect taxes on the amount that everyone knows is not true.
  6. District Counsel bases her case on hearsay and documents that are unauthenticated. D.C. has met none of the rules for the hearsay exception and seeks to evade the requirements for the business records rule. Sworn affidavits do not comply with the federal rules of evidence and should not be admitted. Tax payer filed a tax return for her S corporation which was prepared by a CPA, a licensed tax expert. She should receive credit for complying with the IRS rules and regulations. However, the work of the tax expert is questionable.
  7. District Counsel wants to cover up the mistakes of the examination department who issued an incorrect 90 day letter. She seeks increased deficiency in the amount of $114,107.00 and an increase in taxes $22,821.00. Petitioner has filed an opposition to this outrage which is hereby incorporated by reference.
  8. The burden of proof under IRC §7491 should not shift because taxpayer has been most cooperative. Taxpayer has records and documents under the Cohen criteria which takes the place of the substantiation requirements of the said code section. Can anyone deny that taxpayer has substantial cost of doing business and that her net was approximately 20% of gross? The commissioner has refused to cooperate with the taxpayer and is acting like a bully!
  9. Respondent has not met their burden with respect to penalties, additions and increased deficiency.
  10. Issue 1 raised by the well educated tax lawyer for the tax service raises the issue of the definition of income. This is not an issue before the court. This is frivolous and groundless. Respondent should be penalized under IRC §6673 for raising frivolous issues.
  11. Penalty under IRC §6662 is not warranted because taxpayer in good faith, tried to obey an impossible tax code. However, the IRS issued an incorrect 90 day letter and they should be penalized as their NOD was not accurate.
    D.C is seeking to tax taxpayer an amount that everybody knows is untrue and excessive. Under the Cohen doctrine, the IRS can collect an approximate amount due without terrorizing an innocent citizen.
  12. For failure to agree with the Cohen case the Commissioner should be penalized under §6673 in the amount of $25, 000. The Cohen doctrine is an acceptable part of the tax system and the Commissioner is seeking to victimize a loyal American citizen. In this case, taxpayer has presented no frivolous or groundless arguments or raised the legality and application of the federal tax laws, regardless of D.C.’s false assertions.
  13. In conclusion, D.C has been unreasonable in refusing a settlement under the Cohen case and is sending a message to all Americans that the tax service is a bunch of bullies, taking advantage of those who cannot understand the tax system.

CERTIFICATE OF SERVICE: I do hereby certify on this date that a copy this pleading was sent to properly to opposing council.
___________________________
Dr. Julie Patriot, Petitioner Pro se
Bridgeport, West Virginia 26330

Date: October 26, 2007