IN THE UNITED STATES TAX COURT
400 SECOND STREET, NW, WASHINGTON, DC 20217
JOHN C. CALHOUN, }
}
Petitioner, }
}
vs. } Case No. ______________________
}
COMMISSIONER OF INTERNAL } Complaint to Overturn Invalid IRS
REVENUE } Collection Due Process “Determination”
} Issued Pursuant to 26 USC 6330
Respondent.
}
___________________________________}
COMES NOW, John C. Calhoun, Petitioner in this action and invokes the jurisdiction of this Court pursuant to 26 USC 6330(d)(1)(A) to set aside two determinations at issue. Unless explicitly admitted, Petitioner denies all allegations of the IRS against him.
Each Notice of Determination at issue (attached as Exhibits A1 and A2), was issued on July 8, 2004 and by employees of the Respondent, in response to Petitioner’s request for a “Collection Due Process Hearing” (hereinafter: CDPH or CDP hearing). The first one was related to form 1040 for years 1991 and 1992 and any appeal was to be directed to U.S. Tax Court. The second one, with language essentially identical to the first, was related to form 6702 and any appeal was to be directed to U.S. District Court (where it currently stands). Those determinations were issued in violation of law, as the following will show.
Case Background
1. On May 26, 2002 Petitioner requested the CDPH guaranteed to him in 26 USC 6320(b) & 6330(b) both of which sections being captioned: “Right to fair hearing”. (See Petitioner’s request, attached as Exhibit B.) This hearing was never granted.
2. Internal Revenue Agent Mary Green (ID number 57-10049) had scheduled a “correspondence hearing” in Columbia, SC on June 9, 2004 (see Exhibit G). The “hearing” concerned whether or not the United States could legally seize Petitioner’s property pursuant to Internal Revenue Code Section 6331 even though no court order, writ of garnishment or writ of attachment had ever been issued by any court of law with respect to any of Petitioner’s property. The hearing would also be used as a means to discuss any proposed payment schedule or collection alternatives.
a) Petitioner requested that the hearing be changed to a face-to-face hearing in Greenville, South Carolina where he lives and where the IRS has an office (on Roper Mountain Road at Roper Mountain Extension). The IRS holds CDP hearings at that location frequently.
b) Petitioner also requested that the hearing be postponed until such time that (1) documents regarding the Petitioner and his case could be obtained from the disclosure office of the IRS under the Freedom of Information Act, which were requested on May 24, 2004 and promised by the IRS by July 30, 2004 (attached as Exhibit D), and (2) so that Petitioner would have adequate time to consult proper counsel in the matter. These requests were ignored or summarily denied. Petitioner requests that this Court reprimand the IRS agent for this unwillingness to allow Petitioner to obtain the documents necessary to prepare for his CDP hearing.
c) Mary Green lied and falsely claims (in government exhibit 6) that Petitioner made statements to her at the “correspondence hearing”. Petitioner made no statements at all during this “hearing” but instead requested a face-to-face hearing, which is his right, and which the IRS has repeatedly denied it to him. Petitioner did not submit any documents to Mary Green’s correspondence hearing because Petitioner was demanding his right to a face-to-face hearing instead. Thus, Mary Green’s sworn statement is perjured.
d) According to Black’s Law Dictionary, “hearing” means a “Proceeding of relative formality, generally public, with definite issues of fact or of law to be tried, in which parties proceeded against have a right to be heard, and is much the same as a trial and may terminate a final order.” Standard English dictionaries provide: “an opportunity to state your case and be heard…[by means of] the act of hearing attentively”; “To listen to in an official, professional, or formal capacity”; “An opportunity to be heard”; “A preliminary examination of an accused person”; “A session, as of an investigatory committee or a grand jury, at which testimony is taken from witnesses”; “a proceeding of relative formality at which evidence and arguments may be presented on the matter at issue to be decided by a person or body having decision-making authority”.
e) One dictionary annotation provides: “The purpose of a hearing is to provide the opportunity for each side of a dispute, and esp. a person who may be deprived of his or her rights, to present its position. A hearing, along with notice, is a fundamental part of procedural due process. Hearings are also held, as for example by a legislature or an administrative agency, for the purpose of gathering information and hearing the testimony of witnesses.” A fair hearing is “a hearing that is conducted impartially and in accordance with due process and for which the Respondent has reasonable opportunity to prepare, the assistance of counsel, the right to present evidence, the opportunity to cross-examine adverse witnesses, and often the right to a jury.”
f) Corpus Juris Secundum says that a hearing “contemplates an opportunity to be heard”, as one examines, explains, or refutes any evidence presented, and requires the privilege to be present and “the right to present one’s contentions and to support the same by proof and argument.” “It must be fair in all respects and not be a mere form to precede a predetermined result.” There is to be “a listening to facts and evidence for the sake of adjudication.” Even the IRS recognized that hearings are face-to-face when it discussed whether or not to reimburse the expenses of those traveling to personally present evidence before its examiners, To the Commissioner, Internal Revenue Service (1966), 1966 WL 1798 (Comp. Gen.), 45 Comp. Gen. 654.
g) A hearing has to occur at an IRS appeals office closest to taxpayer’s residence unless it is not staffed with “appropriate personnel”. I.R.C. 6320 “does not specify at what location the appeals hearing needs to take place or whether it can occur during telephone.” Being “almost an hour away” is not an “undue burden” when not substantiated as such. A telephone hearing is the only acceptable substitute mentioned, Katz v. Commissioner of Internal Revenue (2000), 115 T.C. 329, 335, 336. A correspondence hearing is not contemplated in the law.
h) The idea of having an audible, face-to-face hearing is well-established in case law, and the precedents regarding what constitutes a hearing have been continued and cited for decades. One of the essential characteristics about a “hearing” is the right to be heard, Wisconsin Telephone Co. v. Public Service Commission (1939), 287 N.W. 122, 133, 135, 138, 143; 232 Wis. 274. A hearing is a formal procedure where evidence may be adduced by both parties and where all have a right to be heard, In re Securities and Exchange Commission (1936), C.C.A.N.Y. 84 F.2d. 316, 318. Both parties must be able to adduce proof and argue inferences from evidence (1966), D.B. Clayton and Associates v. McNaughton (1966), 182 So.2d 890, 891, 892, and this must be done in person or by counsel, Fiorella v. State (1960), 121 So.2d 875, 878; 40 Ala.App. 587. In a hearing, the officer who makes determinations must consider and appraise the evidence presented, Joyce v. Bruckman (1939), 15 N.Y.S.2d 679, 681; 257 App.Div. 795.
i) An “opportunity to be heard” or hearing contemplates a listening to the facts and evidence for the sake of adjudication, Amerada Petroleum Corp. v. Hester (1940), 109 P.2d 820, 821; 188 Okl. 394. A hearing embodies the right to be heard on the controverted facts and on the law, Carpenters’ District Council, Detroit, Wayne, and Oakland Counties and Vicinity, of the United Brotherhood of Carpenters and Joiners of America, AFL-CIO v. Cicci (1958), C.A.Mich, 261 F.2d 5, 8. Furthermore, there is no hearing when the affected party does not know what evidence is offered and considered, and has no opportunity to test, explain, or refute it, and any subsequent finding without evidence is “arbitrary and baseless” (1948), Hyman v. Muller, 62 A.2d 221, 223; 1 N.J. 124 and, similarly, Moran v. School Committee of Littleton (1945), 59 N.E.2d 279, 281; 317 Mass. 591. The IRS is viciously denying Petitioner his right to a genuine hearing.
3. Hence, these legal proceedings revolve around Petitioner’s proposed remedy of forcing the IRS to grant Petitioner a face-to-face Collection Due Process Hearing. Petitioner was denied this hearing, even though he properly requested collection alternatives within the thirty (30) day period specified by Congress.
a) The Respondent has argued that the Treasury Department can modify what Congress has said, and now the issue is before this court to decide what the law means. However, Congress has not placed preconditions for exercising one’s right to a Collections Due Process Hearing. The IRS has unilaterally held that Petitioner is out of compliance but Congress has not said so.
b) The IRS is always trying to put itself above the law, and this case provides an example of their abuse. Petitioner should not have to jump through the IRS’s hoops. Their barriers are unlawful and self-serving, going beyond what Congress has enacted.
c) Furthermore, what would the IRS have Petitioner to do? Does it really want the inefficiencies of Petitioner filing form 1040 “zero” tax returns for years in which he had no tax liability from 1993 to 2003, especially given the fact that Petitioner was either a full time graduate student (with no significant earnings) or lived in South America for eight (8) of those years! If anything, Petitioner would have been due the Earned Income Credit and other welfare state benefits given that he had children plus a dependent wife during that period. But everyone knows that the IRS is not happy with so-called “zero” returns so why would they want them from Petitioner? The hypothetical exercise noted above is simply an analytical heuristic used to make a point. Petitioner contends, of course, that he has had no tax liability to report on a Form 1040.
d) The IRS has attempted to deny Petitioner his right to a face-to-face Collections Due Process Hearing by stating that Petitioner used, in Respondent’s erroneous judgment, “frivolous” arguments about tax liability over ten years ago. Yet the IRS did not so respond to Petitioner’s queries at that time. And what would such issues, even if they were true in 1991 and 1992 (though they are certainly not true), have to do with Petitioner exercising his right to have a face-to-face Collections Due Process Hearing twelve (12) years later? Petitioner asks this Court for relief from the IRS apparently thinking that there is no time limit on how far it can pursue civil matters against Petitioner.
e) How can it be possible for a taxpayer to have witnesses present at his CDP hearing by means of a correspondence hearing? In order for witnesses to be present, there must be a face-to-face hearing. The elected representatives of the people intended a face-to-face hearing in writing the CDPH legislation because they did not exclude the presence of witnesses. Likewise, the courts have permitted tape recording of such hearings which require a face-to-face meeting.
4. Petitioner had previously requested a face-to-face hearing in CA (where he previously lived) in letters dated December 11, 2003 and December 22, 2003 (attached as Exhibits E and C). But this request was likewise ignored.
5. In letters of December 11, 2003 and December 22, 2003 (attached as Exhibits E and C), Petitioner sent to the settlement officer a letter stating that he intended to make a tape recording of the meeting pursuant to I.R.C. section 7521 and publication 17, as well as have a witnesses present.
a) Petitioner was also denied his right under the law to make an audio recording of the meeting by virtue of the fact that a face-to-face hearing was summarily denied by the agent. I.R.C. section 7521 states in relevant part, “Any officer or employee of the Internal Revenue Service in connection with any in-person interview with any taxpayer relating to the determination or collection of any tax shall, upon advance request (see Exhibits C and E) of such taxpayer, allow the taxpayer to make an audio recording of such interview…The Secretary of the Treasury cannot by his regulation alter or amend a Revenue Law” (Morrill vs. Jones, 106 U.S. 466).
b) In Keene v. Commissioner, 121 T.C. No. 2, July 8, 2003, The U.S. Tax Court said, “Accordingly, we hold that, pursuant to section 7521(a)(1), petitioner is entitled to audio record his section 6330 hearing with the Appeals Office.” Petitioner’s CDP hearing was held in violation of law and the determination should be set-aside on this basis alone.
6. In IRS 6330, Congress says that Petitioner is entitled to a CDPH, but he did not get one. Instead, the IRS illicitly scheduled a “correspondence hearing”. Congress meant the CDPH would be a face-to-face meeting. Hence, the IRS is viciously denying Petitioner’s rights. A “correspondence hearing” was allegedly held on June 9, 2004 in Columbia, SC. Petitioner was not present, having made a timely request for postponement and change of venue as noted in item 2 above. There is no transcript of the hearing for that day, even though the events of that hearing are hotly contested.
7. Petitioner has collection alternatives. He has a wife and minor children to support. Petitioner owns no real estate and has no savings. At said hearing, Petitioner would have had a right to set forth collection alternatives. However, the settlement officer would not hear it. The appeals officer violated Petitioner’s rights. Therefore this case should be sent back to the IRS for a full and complete CDPH.
a) The government has claimed that Petitioner did not propose a viable collection alternative proposal or submit a “Collection Information Statement”. But by saying so, the IRS is making up requirements that were not mandated by Congress, forcing Petitioner to appeal to the U.S. Tax Court. The fact is that Petitioner did request collection alternatives on the application for his CDPH and in his other related correspondence. The term “collections alternatives” was used several times.
b) I.R.C. 6330 does not say that tax returns for all years have to be filed in order to get a CDPH. The fact is that Petitioner was not required to file tax returns for the years mentioned by the IRS appeals office, most of which coincided with Petitioner being a full time student or Petitioner living overseas for many years. Furthermore, there are no pre-conditions other than requesting the CDPH within the specified time period, which Petitioner did. The IRS is simply disobeying the law.
Application of New Law: Schulz II
8. Petitioner points out the important new decision by the Second Circuit, Court of Appeals: Court of Appeals, 2nd Circuit, June 29, 2005, case no. 04-0196-cv, __F.3d__, 2005 WL 152090 (2d Cir. June 29, 2005.
a) In Schulz II, the court held:
The rule of due process upon which we relied in Schulz I, and upon which we rely now, can be stated thus: any legislative scheme that denies subjects an opportunity to seek judicial review of administrative orders except by refusing to comply, and so put themselves in immediate jeopardy of possible penalties “so heavy as to prohibit resort to that remedy,” Oklahoma Operating Co. v. Love, 252 U.S. 331, 333 (1920), runs afoul of the due process requirements of the Fifth and Fourteenth Amendments. This is so even if “in the proceedings for contempt the validity of the original order may be assailed.” Id. 1 . at 335; see also Reisman, 375, 2 U.S. at 446; Ex parte Young, 209 U.S. 123, 147-48 (1908). [Emphasis in bold added]
In saying “any legislative scheme” and specifying “administrative orders”, the Court broadened its ruling to include not only IRS summonses but also all other IRS administrative edicts.
b) On account of Schulz II, the IRS must comply with the judicial decisions set forth for other institutions that attempt to collect debts. The debtor is entitled to an independent judge to scrutinize the enforcement activities of all collection agencies. Accordingly, Petitioner has requested independent review of the administrative action taken against him by the IRS. He has written to the IRS requesting that the appropriate and necessary forms for Petitioner to comply with the mandate of the 2nd Circuit in Schulz II.
c) Insofar as the regulations are concerned, Petitioner contends that the IRS is far too generous in granting itself wide authority to alter the statute passed by Congress or to create new law through regulations. The regulations are supposed to amplify the statute (or fill in the gaps) rather than replace or counter it. It is simply not fair for the IRS to bring up secret regulations that no one knows about and then to attempt to hold people accountable to those clandestine rules.
d) Congress set forth three preconditions for a Collections Due Process Hearing: (1) Petitioner must make a request, (2) Petitioner must make a request in a timely manner, and (3) Petitioner must state the purpose of the hearing which includes collection alternatives, procedure irregularities, spousal relief, and tax liability in some cases.
If Congress wanted to set forth the other preconditions that the IRS claims must be met, then why did they not so indicate in the statute? Petitioner complied with each of the three items set forth by Congress. The IRS has additional preconditions for a Collections Due Process Hearing, viz. that a taxpayer is not to raise political, constitutional and religious concerns. Petitioner complied with these preconditions too. So why is Petitioner being harassed by the IRS and denied a face-to-face hearing which is his right under the statute?
e) The IRS illegally and wrongfully withheld a Collections Due Process Hearing from Petitioner and the IRS violated Petitioner’s statutory rights and administrative due process right to appear at a Collections Due Process Hearing. Petitioner disagrees with all of the Notice of Determination, and never received a Notice of Deficiency until some 12 years after the tax years in question. The IRS mailed the alleged original Notice of Deficiency to a known bad address.
The law says that Petitioner is entitled to a face-to-face hearing if the request is made within the time period and if there are procedural irregularities or questions about the underlying tax liability. Petitioner’s request met these requirements. Magistrate Judge in the District Court cited the regulations as authoritative in saying that a face-to-face meeting could be replaced by a correspondence hearing but these regulations are not the law. Congress did not stipulate them. Furthermore, Congress did not specify that tax returns for subsequent years be filed as a precondition for a Collections Due Process Hearing.
If Petitioner had no underlying tax liability from 1993 through 2003 (as a full time student, living outside of the United States, or living upon the charity of others), and the government has not contested otherwise, then why would Petitioner file income tax returns for those years? The IRS knew that Petitioner was a student for many years and had four to six small dependent children during the period, often subsisting on gifts from others. There was no reason why Petitioner would have filed income tax returns during those years (or would the IRS have preferred that Petitioner file “zero returns”?), and Congress has not demanded that he do so in order to qualify for a Collections Due Process Hearing.
f) Magistrate Judge in the District Court continually brings up things that Petitioner said or did twelve to fifteen years ago as relevant to the current request for a Collections Due Process Hearing. Why does he not also bring up other old facts such as Petitioner getting his mouth washed out with soap thirty-five years ago for using foul language at school? Will he also look for other things that were done by Petitioner in the 1970s and 1980s that have nothing to do with the matter at hand? Magistrate Judge in the District Court brings up irrelevant past statements by Petitioner but has no proof that Petitioner was not in full compliance with the law.
g) Magistrate Judge in the District Court claims (on page 5) that Petitioner “failed to provide a viable collection alternative”. But why should Petitioner have done so, since he did not have a face-to-face hearing? He was prepared to do so at the hearing. The purpose of the Collections Due Process Hearing is to discuss collection alternatives. Congress did not say that he must do so beforehand. The Collections Due Process Hearing notice does not say that Petitioner had to do so. How was Petitioner supposed to know such a requirement existed? If Petitioner had had the Collections Due Process Hearing, he would have done all that the statute requires. Is the magistrate judge trying to overturn Congress with his insistence upon inapplicable regulations? The regulations he cites are just the opinions of the IRS on what Congress said, not the law.
h) Even the IRS regulations favored by Magistrate Judge in the District Court clearly provide that a face-to-face hearing is required when there are relevant issues. And there are relevant issues—such as not receiving the mandatory Notice of Deficiency (a standard argument accepted by the IRS) and Petitioner’s personal circumstances during the period in question. Magistrate Judge in the District Court simply has no basis to conclude that Petitioner would raise only frivolous issues if a face-to-face hearing were granted. How does Magistrate Judge in the District Court know that Petitioner’s position on the issue of nonresident aliens, for instance, has not changed since 1991-1992? Moreover, Petitioner had other evidence and witnesses to present during the hearing that would have bolstered his case. By Judge Hendrick’s recommendation, such would not be heard.
i) Petitioner recognizes that each U.S. Tax Court is at liberty to do what it wishes without being bound by U.S. Tax Court decisions. Nevertheless, it is interesting to note that in Keene v. Commissioner, 121 T.C. 8, 14, 19 (U.S. Tax Ct., July 8, 2003), the U.S. Tax Court ruled that a taxpayer’s right to a tape recorded hearing cannot be denied: taxpayers are entitled, pursuant to I.R.C. 7521(a)(1), to audio record I.R.C. 6330 hearings. In Keene, the taxpayer had refused to proceed with his Collections Due Process Hearing after he was denied the opportunity to record it, and so the case was remanded to allow a recorded Appeals office hearing.
j) Magistrate Judge in the District Court has cited several cases in support of his position, but none of these cases is pertinent to Petitioner’s case. In Tinnerman v. IRS, WL 1332314 2005 (M.D. Fla., May 10, 2005), a taxpayer was not offered a Collections Due Process Hearing because he did not request it. Alternatively, Petitioner did request a Collections Due Process Hearing in a timely manner. In Quigley v. U.S., 358 F.Supp.2d 427 (E.D. Penn. 2004), a taxpayer was offered an in-person hearing and did not take it. Petitioner was never offered an in-person Collections Due Process Hearing.
In Tilley v. U.S., 270 F.Supp.2d 731 (M.D. N.C. 2003), the Court ruled that a taxpayer was not entitled to a Collections Due Process Hearing because he was merely raising frivolous issues. Petitioner has not raised frivolous issues. Indeed, in his request for a face-to-face Collections Due Process Hearing, Petitioner clearly stated benign reasons regarding his student status and family circumstances, and has also raised the crucial fact that he had never received a Notice of Deficiency (since it was knowingly sent to a bad address). In Lunsford v. Commissioner, 117 T.C. 159, the U.S. Tax Court primarily held that they had no authority to deal with frivolous penalties and so the case should have been dismissed and sent to U.S. Tax Court. This case has little bearing on Petitioner’s case which is in U.S. Tax Court already to consider frivolous penalties and other matters.
Petitioner recognizes that the aforementioned cases, while not binding on the U.S. Tax Court for South Carolina, could be useful in adjudicating Petitioner’s case. However, the pertinent issues in Petitioner’s case are different than these cases because Petitioner did follow the correct the procedures to get an in-person (or face-to-face) hearing. Indeed, the IRS correspondence with Petitioner already presented in this case shows that the IRS knew that it had an obligation under the law to provide Petitioner with an in-person hearing at the appeals office nearest his home. That is what the IRS stated in its inter-agency notes when Petitioner’s case was transferred from Oregon to South Carolina. Then, after realizing the trouble the IRS would be in without proof of delivering a notice of Deficiency and the IRS’s acknowledgement that the Notice was sent to a known bad address, they have been taking great pains to avoid a tape recorded hearing at an Appeals Office.
k) In the final analysis, Petitioner disagrees with and objects to the recommendations of Magistrate Judge in the District Court. He should not be so imaginative in his analysis or trusting of an agency like the IRS that routinely lies. The IRS has to prove that Petitioner received the Notice of Deficiency in 1994 but cannot do so. They have no postal tracer bearing Petitioner’s signature to confirm receipt and the IRS never intended to do proper service anyway since they sent it to a known bad address. That reason alone should give Magistrate Judge in the District Court reason to doubt the Respondent’s position.
It is notable that the IRS has gone out of its way to prove that Petitioner received a copy of the Notice of Deficiency nine or ten years later, but has not done so for 1994—the only year which should be important to Magistrate Judge in the District Court. Clearly, Magistrate Judge in the District Court is receiving bad information from the agency. The IRS lied and the judge believed them.
9. One of the purposes of a Collections Due Process Hearing is to force the IRS to prove that Petitioner received a Notice of Deficiency. But they cannot do so and have sought to circumvent the law and justice in Petitioner’s case. The Magistrate Judge in the District Court became complicit in this wrongdoing by ignoring this fact. The IRS tried a sneaky trick and the magistrate judge fell for it.
CDPH Requirements
10. The establishment of the CDPH was enacted by Congress as a result of disclosures emanating from the Senate Finance Committee’s 1997 investigation of the Internal Revenue Service, which revealed widespread, lawless IRS seizures of property, and extensive violations by the IRS of taxpayers’ rights. [1]
11. Section 6330(a)(1) provides, in pertinent part, that “No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made.”
12. Section 6330(c)(1) provides “The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met.”
13. Section 6330(c)(2) provides that “The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy…”
14. Section 6330(c)(2)(B) provides that “The person may also raise at the hearing challenges to the existence…of the underlying liability” if the person “did not receive any statutory notice of deficiency for such tax liability…”
15. Section 6330(c)(3) specifically states (in pertinent part) that the “determination by an appeals officer under this subsection shall take into consideration―(A) the verification presented under paragraph (1).”
Petitioner’s Actions and Respondent’s Failures and Peccadilloes
16. In accordance with such provisions of Section 6330, Petitioner sent in a timely request for a CDP hearing as shown in Exhibits B, C, and E.
17. In a letter dated July 15, 2004 (attached as Exhibit F), Petitioner asked that the appeals officer provide the following information, which has yet to be answered:
a) An explanation why two different “Notice of Determination” letters were sent to Petitioner with identical dates of July 8, 2004 (attached as Exhibits A1 and A2). Although the determinations of the IRS’s summary judgment were largely the same in both letters, one letter directs that “to dispute the determination in court” a petition must be filed in U.S. Tax Court, while the other letter directs that the petition must be filed in U.S. District Court, within 30 days. Why should Petitioner have to file suit in two different court systems for the same case? Petitioner believes that the IRS intended to create inefficiencies within the legal system by arbitrarily deciding which court has jurisdiction in this matter.
Here again the IRS is being abusive and wasteful in trying to make Petitioner pursue identical cases in two different courts. Because this matter is procedural, Petitioner chose to file both cases in U.S. District Court originally. Petitioner is not merely appealing the IRS’s adverse determination, which could become a U.S. Tax Court issue, but also the nefarious behavior of the IRS in denying his procedural right to a face-to-face hearing. Issues regarding such procedure are the legitimate and proper subject of the U.S. Tax Court as well as U.S. District Court. The IRS has a history of running roughshod over citizens’ procedural rights and Petitioner appeals to the judges under I.R.C. 6330 for an independent judicial review.
b) The document that supported the imposition of the penalty or the “signed” document as referred to in 26 USC 6751(b)) which would reveal information about the “frivolous” penalty and how the determination was made that Petitioner’s arguments were “frivolous”.
c) The Delegation Orders from the Secretary delegating to those persons who imposed the “frivolous penalty” their authority for doing so [2] and to make a determination that Petitioner’s arguments are “frivolous.”
d) The official job description(s) of those IRS employees who imposed the “frivolous” penalty, (footnote [2] was also applicable to this request) and of those who made a determination that Petitioner’s arguments were “frivolous”.
e) Since I.R.C. sections 6001 and 6011 (sections to which the public is specifically directed to in the Privacy Act Notice of the 1040 booklet) advise the public that they need only “comply with regulations”, Petitioner requested that the appeals officer identify or produce the Treasury Department regulation that allows Respondent’s employees to impose the “frivolous” penalty, and the regulation that required Petitioner to pay such a penalty, and the regulation that allows Respondent’s employee to make a determination that Petitioner’s arguments are “frivolous”. Furthermore, I.R.C. section 6330 says that officers from the Appeals Division are to make the determination, so why are other IRS employees and settlement officers doing the work of the appeals officers?
f) Petitioner also notified Respondent that at the hearing he would challenge the “existence of the underlying liability” of the tax that generated the “frivolous penalty” as he was authorized to do by Code Section 6330(c)(2)(B) since Petitioner did not receive any Deficiency Notice with respect to such a “tax liability”. Petitioner will prepare a Notice to the Court to demonstrate why he has no such tax liability.
g) Petitioner also requested that the appeals officer produce documented proof that the Secretary authorized the instant collection action and that the Attorney General or his delegate “directed” that this collection action be commenced as they are required to do pursuant to I.R.C. section 7401.
h) No provision in 26 USC 6330 provides that appeals officers can dictate conditions under which they will agree to conduct the CDP hearings required by law, or that allows them to dictate to taxpayers the issues they will consider at the hearings prior to the CDP hearings being held.
IRS Sent the Notice of Deficiency to a Known Bad Address
18. In his letters of December 11, 2003, December 22, 2003, and May 26, 2004 (see Exhibits E, C, and B), Petitioner informed the appeals officer that he never received a valid Deficiency Notice―that is, one signed by the Secretary or someone with delegated authority from him. Moreover, since he never received a valid deficiency notice, Petitioner would be “challenging the existence of the underlying tax liability” as Petitioner is authorized to do in I.R.C. section 6330(c)(2)(B). Petitioner further informed the appeals officer that he never received the statutory “Notice and Demand” for payment in connection with the alleged taxes due.
a) The IRS willfully used a known bad address in order to make sure that Petitioner had no opportunity to contest the Notice of Deficiency’s false claims about his taxable income. Petitioner moved several times during 1993 and 1994, having addresses in several cities in Oregon (Grants Pass, Tangent and Alsea), as well as addresses near Centreville, Virginia and Harper’s Ferry, West Virginia. Petitioner was a graduate student during that time and his various familial, educational, and financial obligations created a need for his relocation on several occasions.
b) The IRS admits that it mailed a Notice of Deficiency to Petitioner’s known old business (not home) address in Rogue River, Oregon on March 31, 1994 (government exhibit 11 from the U.S. District Court case)—even though Petitioner had never lived at that address and had not used that address for well over a year! The IRS knew that Petitioner had moved since, as government exhibit 10 shows that around September 3, 1993 the IRS had a letter returned to them as undeliverable. Yet the IRS still sent the Notice of Deficiency letter seven months later to Petitioner’s previous office which would have been known to be bad address to any reasonable person. Petitioner was a graduate student living in Virginia in March 1994. The IRS knew that Petitioner was in Virginia too since Petitioner was informed by the university’s administration at that time that the IRS had tried to levy Petitioner’s meager graduate student stipend. Petitioner had never seen this Notice of Deficiency before January 2005, and then only in the government’s exhibit for their proceeding in U.S. District Court.
c) Modern Americans move frequently—especially those doing graduate studies. The IRS knew that they had not sent correspondence to Petitioner’s known good address. The IRS’s exhibits in this case demonstrate that the IRS knew about many of Petitioner’s address changes. Yet they did not make a good faith effort to ensure that Petitioner received the IRS’s Notices.
d) I.R.C. 6330 outlaws bad or incorrect IRS collection procedures. The IRS sent a Notice of Deficiency to a known bad address and thus did not fulfill its procedural obligations. Congress passed I.R.C. 6330 to stop such IRS abuses. Moreover, by saying that they have proof of sending a Notice of Demand letter, but have conspicuously left out the proof for the Notice of Deficiency letter, the Respondent has made an implicit admission by omission. The missing proof of the latter was left out and provides an indirect admission from silence.
e) Mary Green states that Petitioner “failed to dispute” these assessments. But how could Petitioner do so? He was never advised that the (errant) assessments were made since the IRS willfully mailed the Notice of Deficiency to a known bad address? In government exhibit 6, Mary Green admits that the IRS knew that the “Notice of Deficiencies were returned to the IRS because Taxpayer had moved from his business”, but the IRS made no effort to verify that Petitioner’s address was correct prior to sending said Notice, and in fact knew that he had moved since he had been corresponding with them from a different address in Tangent, Oregon for over a year!
f) The U.S. Attorney’s interpretation of the law in I.R.C. 6303 (in her Motion to Dismiss of January 18, 2004 in U.S. District Court for South Carolina, case number 6:04CV2455-26BI) invites further IRS abuse. The pertinent part of that section states: “Such notice shall be left at the dwelling or usual place of business of such person, or shall be sent by mail to such person’s last known address.” Congress did not intend that this code section provide the IRS a means of sending important correspondence to a known bad address and then, when impaling its victim, to claim immunity or innocence under the provision. Since the IRS has been negligent in its dealings with Petitioner, and is intentionally malicious in its intent to punish Petitioner with the tax law, Petitioner requests that this Court not stand for the IRS’s chicanery or attempts to candy-coat its bad behavior, despite attempts by the U.S. Attorney to finagle that Court with eloquent rationalizations.
g) In that same case, Magistrate Judge in the District Court claimed “all procedural requirements were met” by the IRS. But this statement is false. Petitioner never received the Notice of Deficiency allegedly sent to him on March 31, 1994. As Petitioner has already shown (backed up by government records), this Notice of Deficiency was purposely sent to three bad addresses. The IRS knew Petitioner had moved but issued a Notice of Deficiency and sent it to a known bad address in order to proceed against Petitioner under color of law.
h) The IRS evidently claims to have proof of sending the Notice of Demand letter more recently but still have not provided proof of sending the required Notice of Deficiency eleven or twelve years ago. Petitioner did not sign any postal tracer that indicated his receipt of such Notice of Deficiency. For all anyone knows, the Notice of Deficiency was returned to the IRS and they just filed it as if it were received anyway (even though it was not)—just to be spiteful.
i) Petitioner never received a Notice of Deficiency allegedly sent to him on March 31, 1994. According to government exhibit 19, this Notice of Deficiency was purposely sent to three bad addresses. The IRS states that they have proof of sending the Notice of Demand letter more recently but still have not provided proof of sending the required Notice of Deficiency twelve (12) years ago. Petitioner did not sign any postal tracer that indicated his receipt of such Notice of Deficiency. For all anyone knows, the IRS had their Notice of Deficiency returned to them and then they just filed it as if it were received (even though it was not) anyway—just to be spiteful. IRS Agent Pat Brown apparently has a sufficiently malicious character to do so.
j) I.R.C. 6330 outlaws bad or incorrect IRS collection procedures. The IRS sent a Notice of Deficiency to a known bad address and thus did not fulfill its procedural obligations. Congress passed I.R.C. 6330 to stop such IRS abuses. Moreover, by saying that they have proof of sending a Notice of Demand letter, but have conspicuously left out the proof for the Notice of Deficiency letter, the Respondent has made an implicit admission by omission. The 1998 taxpayers “Bill of Rights II” was enacted as legislation of Congress to prevent administrative agencies like the IRS from abusing their authority.
The 1998 taxpayers Bill of Rights II was enacted as legislation of Congress to prevent administrative agencies like the IRS from abusing their authority. Petitioner’s tax liability is clearly in doubt and no face-to-face hearing was granted to him. Therefore, the U.S. Tax Court has jurisdiction in this matter. Petitioner never received any 90 day notice of deficiency letter from the IRS in 1992, 1993 or 1994. If the IRS did send one, they sent it to a known bad address (Petitioner had moved on several occasions during that period). The “Bill of Rights II” legislation was designed to prevent the IRS from doing such things. They knew Petitioner’s correct address by virtue of his multitudinous correspondence with the IRS during that period. Petitioner seeks relief from this Court by forcing the IRS to prove Petitioner’s tax liability, by forcing the IRS to prove that procedure for determining such alleged liability was followed correctly, and to give Petitioner his rightful face-to-face collections due process hearing.
Congress enacted legislation in the Taxpayers Bill of Rights acts that require the IRS to send correspondence to a correct address. In violation of this rule, the IRS sent notices to a known bad address, as Petitioner explained at length in his Reply and Rebuttal to Motions of February 9, 2005 cited in the U.S. District Court. It is not simply a negative aspect of the IRS sending correspondence to Petitioner’s “last known address” that the law requires; the IRS also has a positive duty to send correspondence and notices to an identified good address (or to not send correspondence and notices to a known bad address).
Even if the IRS complied with the negative aspect of its duty, they did not comply with the positive aspect. While the IRS and some Congressmen like famed cheat Dan Rostenkowski opposed this legislation, it did pass into law—and the IRS (to its chagrin) must comply with it. Petitioner requests that the court admonish the IRS for treating the law with such indifference.
k) Petitioner’s tax liability is clearly in doubt and no face-to-face hearing was granted to him. The IRS knew Petitioner’s correct address by virtue of his multitudinous correspondence with them in 1992-1994. Petitioner seeks relief from this Court by forcing the IRS to prove Petitioner’s tax liability, by forcing the IRS to prove that procedure for determining such alleged liability was followed correctly, and to give Petitioner his rightful face-to-face collections due process hearing. Since Petitioner’s “underlying tax liability” is in question, and has been raised as an issue with the IRS, as well as the complaint and motion to dismiss submitted to this Court, this Court has jurisdiction in the matter at hand.
Petitioner Requests to Respondent Ignored or Refused
19. Based on all of the above in item 18, Petitioner asked the appeals officer for the following information in his letter dated July 15, 2004 (Exhibit F):
a) The “verification from the Secretary that the requirement of any applicable law or administrative procedure have been met” as required by 6330(c)(1).
b) Since Petitioner believed that “no valid assessment” for the income taxes allegedly due (to support the threatened levy action) was ever made, Petitioner therefore wanted to see “a copy of the ‘Summary Record of Assessment’ (Form 23C) together with the ‘pertinent parts of the assessment etc. etc. etc….’ as provided for in Treas. Reg. 301.6203-1)” and a copy of the tax return from which the alleged assessment was made.
c) Since all valid assessments must emanate from a filed return, proof that such a “filed return” exists is another “relevant” issue that Petitioner had a right to raise. Therefore, Petitioner requested that the appeals officer produce or identify the income tax return from which the alleged assessment for the income taxes at issue was made.
d) Petitioner asked for some documented proof that the statutory “Notice and Demand” for the payment of the income taxes allegedly due (as required by I.R.C. sections 6303, 6321 and 6331) be provided.
20. Petitioner has been exasperated by the refusal of IRS agents to answer written questions and concerns which they are legally obligated to answer. As a federal court ruled: “Silence can only be equated with fraud where there is a legal or moral duty to speak or where an inquiry left unanswered would be intentionally misleading...We cannot condone this shocking conduct by the IRS. Our revenue system is based upon the good faith of the taxpayers and the taxpayers should be able to expect the same from government in its enforcement and collection activities....This sort of deception will not be tolerated and if this is the ‘routine’ it should be corrected immediately” (U. S. v. Tweel, 550 F.2d 297, 299 [1977], citing U.S. v. Prudden, 424 F.2d 1021, 1032).
Miscellaneous Matters Requiring a Judicial Remedy
21. The Department of Justice has lied. Petitioner has never been a member of (or in any way involved with) “The Pilot Connection Society”, nor has he ever heard of such a group other than in IRS pleadings or letters. Government exhibit 16 does not show any connection between Petitioner and this society. Government exhibit 19 merely asserts this connection and that examination of Petitioner’s tax liability was therefore put into something known as the “Phoenix project”—whatever that was—but does not provide any proof of Petitioner’s alleged “connection”. Respondent is clearly fabricating spurious arguments in its case against Petitioner, and Petitioner requests that this Court force the IRS to disclose the nature of the “Phoenix project” and to stop these specious allegations against Petitioner.
a) In government exhibit 19 (Form 4318, page 2) IRS Agent Pat Brown calls Petitioner “an illegal tax protester.” His assertion is false; a mere fabrication. Petitioner has never been involved in any illegal or wrongful activity or association of any kind of “tax protest” scheme and denies being or having any nexus with an illegal or wrongful “tax protester” (as the term is used in IRS parlance and polemics, i.e., in the IRS’s view, one who breaks the law in some putative respect—the clear and only sense in which IRS uses such terms at all times—necessarily implying illegality with or without the adjective “illegal” on the IRS webpage).
On the contrary, Petitioner was endeavoring to comply with the law, and had undertaken regular correspondence with the IRS in order to make sure that his understanding of the law was correct. On the Forms 1040NR filed, as well as many other confirmatory writings, Petitioner asked the IRS to respond within 30 days if they did not agree with his conclusions. Petitioner usually sent 2nd and 3rd notices of the same correspondence. Yet the IRS did not respond (at least not with substantive answers) within 30, 60, or even 90 days. When Petitioner left Oregon for graduate school in Virginia, he had every reason to believe that the IRS agreed with his position after having sent such confirmatory writings.
b) Government exhibit 19 shows that IRS Agent Pat Brown falsely and maliciously asserted that Petitioner “has refused to cooperate” and “has actively attempted to thwart attempts to determine his substantially correct tax liability”. However, Petitioner wrote to the IRS on many occasions and will produce evidence of this correspondence and lack of substantial replies from the IRS during the trial phase. The IRS is lying. How can such refusals and thwarting be accurately said of one who is regularly corresponding with the IRS?
Petitioner asserts that such false accusations are typical of IRS bullying and demands that the IRS produce evidence of any membership in (or action with) the Pilot Connection Society or any tax protester activities. If the IRS is in fact engaged in a long-term program to chill pure First Amendment activity, this further belies its stated purposes of fair, honest tax collection, period, to the point that a formal investigation would theoretically be called for.
c) The Department of Justice has also lied about the Patriot Network. To Petitioner’s knowledge, this group has not had any cases thrown out for being “frivolous” during its thirty years of its operation. Petitioner is not a member of this network, although he has been invited on many occasions to lecture on the academic areas in which he has written (e.g., public policy, theologies about civil government, property rights, free-market economics, and market-based social institutions). In conversing with the group’s leadership, nothing has been said that has led Petitioner to believe anything that the IRS says about it.
Petitioner was initially asked to speak about his latest book, Bible and Government: Public Policy from a Christian Perspective, by the Patriot Network leadership. After completing what the leaders considered a very successful and fruitful lecture series, Petitioner was invited to speak on other subjects wherein he had some expertise. Moreover, Petitioner has also been invited to speak from his fields of knowledge to other highly varied organizations, many quite prestigious, both nationally and internationally.
In the last few years, for instance, he has been an invited speaker at the Cato Institute in Washington, DC, Instituto de Libre Empresa in Lima, La Fundación Atlas in Buenos Aires, and university seminars in Belgium, Aix-en-Provence, France, Prague, Czech Republic, Guatemala, and Belgrade. Locally, Petitioner has spoken before many groups including Americans for Constitutional Government, several homeschool association meetings, the Rotary Club, church groups, as well as at other meetings on an informal basis.
Absent evidence to prove Petitioner’s involvement in the Pilot Connection Society or a tax protest scheme or group, Petitioner hereby requests that this Court compel the IRS to remove all such assertion(s) and charge(s) from any and all of Petitioner’s record(s) and file(s) on file with any and all agencies and instrumentalities, including but not limited to the Internal Revenue Service.
d) In government exhibit 6, Mary Green flagrantly lies and falsely claims that Petitioner “conducts seminars around the country advancing arguments against taxes that Federal Courts have determined to be frivolous” and states that Petitioner “is a college professor who conducts seminars that advance frivolous argument [sic] against taxation.” These allegations are false. Neither Mary Green nor the IRS have any evidence to support these allegations and Petitioner avers that he has not conducted any such seminars. Petitioner has not been a “college professor” since 2002, even if he might become one again in the future, but he does have recognized expertise in conventional public policy and free market economics topics.
Petitioner’s books are published and are widely available. None of these books include any of the topics that Mary Green fraudulently stated. The IRS and Mary Green have chosen to make up lies rather than take time to review Petitioner’s books and articles, which would conclusively show that Petitioner has not written and advanced such “arguments against taxes”. Petitioner refuses to be a casualty of (or the brunt of) the IRS’s laziness in researching their allegations by not reading Petitioner’s work.
e) In government exhibit 15, IRS Appeals Agents Cathy Lacienski and/or Jeanette Amaker state that it “clearly appears” that Petitioner is “tax challenged and won’t get a face or face [sic] anyway.” Petitioner considers this language to be offensive and requests that this court require the IRS to issue a written apology for publishing such a judgment. Furthermore, Petitioner finds in this language more evidence of IRS abuse as they have evinced their intention to railroad Petitioner from the start, without allowing him a face-to-face hearing provided for him by Congress.
Petitioner also respectfully requests that the Court reprimand and admonish the IRS for using allegations that are known to be spurious or baseless. Petitioner further asks the Court to note that if such allegations are wrong then the court should likewise doubt the IRS’s other allegations against Petitioner.
22. The IRS and the government oppose Petitioner because he has been active in groups such as the Association of Christian Freeman, a trust formed in the early 1990s to promote the study of law with respect to Christian principles, as well as his academic pursuits, weekly newspaper column, books, and radio broadcast, all of which decry IRS abuses on occasion. The Respondent has been trying to punish Petitioner with the law for many years. And Petitioner thus seeks relief from the IRS’s tyranny by means of this Court.
23. What Petitioner knows about the law he learned through self-study, graduate studies, and through attending lectures on constitutional law. Petitioner has an impressive set of academic credentials and is able to do his own research. Petitioner does not follow a packaged plan for dealing with the IRS and gaining his understanding of the law. This fact should be apparent by reading this brief. Furthermore, Petitioner does not assist (and has never assisted) others in filing tax return pertinent documents with the IRS.
24. Respondent cites Treasury Regulation in defense of its use of a correspondence hearing instead of a face-to-face hearing. However, the Treasury Regulations are not law. The Collection Due Process Hearing is not similar to the Collection Appeal Program that the IRS used to have earlier. The former is an act of Congress while the latter was a mere internal procedure.
Congress did not intend that the Treasury Department should be able to trample on the rights of citizens by modifying the law to suit its needs best. The IRS is correct in bringing up that there were Constitutional, statutory and judicial arguments made by Petitioner over a decade ago. Petitioner raised those issues with the IRS on many occasions and never received anything but temporizing and obfuscating letters from the IRS. Petitioner has not thus far used such issues as arguments in this case, but he is willing to raise these issues now (since the IRS has opened the matter), and will be notifying the Court regarding his underlying legal basis for his actions ten (10) to fifteen (15) years ago.
25. Respondent has refused to hear or produce evidence that Petitioner has a tax liability and when confronted has made every effort to evade the process of law. For instance, Mary Green, IRS Appeals Officer in Columbia, SC, cannot possibly know the facts or testify to what happened in Oregon 12 to 14 years earlier. If this is how she operates, she must (as if to confirm the jaundiced public perception of things) be little more than a faceless bureaucrat processing paperwork in a rote manner without knowing any facts.
Likewise, in the recent case before the U.S. District Court (Case No. 6:04CV2455-26BI), the IRS endeavored to avoid discovery by refusing to completely answer Petitioner’s interrogatories and requests for the production of documents. In their responses of January 31, 2005, they have used colorful language such as “vague”, “overly burdensome”, “unclear”, and “argumentative” to describe Petitioner’s clearly straightforward requests. The IRS should be reprimanded for this attempt to derail the process of law. The IRS has something to hide in this case and the IRS knows it.
26. Petitioner corresponded with the IRS frequently during 1991 through 1994. Petitioner asked careful, responsible legal questions and received lame or put-off answers in reply. Petitioner disclosed precisely what he was doing (with filing Forms 1040NR, etc.) and told the IRS his good-faith belief about (and understanding of) the law (Cheek v. United States, 498 U.S. 192 (1991)). He asked the IRS to show him where he was wrong, which they failed to do. In July 2004, Petitioner once again corresponded with the IRS in Washington, DC in order to clarify matters of law but received no reply.
Yet the IRS still refuses to respond to correspondence from Petitioner regarding legal questions. In U.S. v. Tweel, 550 F.2d 297, 299-300 (1977), the court ruled that “Silence can only be equated with fraud when there is a legal or moral duty to speak, or when an inquiry left unanswered would be intentionally misleading... We cannot condone this shocking conduct...If that is the case we hope our message is clear. This sort of deception will not be tolerated and if this is routine it should be corrected immediately”. Petitioner realizes that he must consult both statute and regulations to find out what duty, if any, he owes with regard to the income tax (United States v. Mersky, 361 U.S. 431 (1960)). Petitioner has done so. The IRS refuses to treat Petitioner as a citizen with rights and legitimate questions.
27. The IRS has evidently extended the liens filed against Petitioner by two years and nine months based on a determination under I.R.C. 6503(c). The pertinent part of that code section says: “Taxpayer outside United States[:] The running of the period of limitations on collection after assessment prescribed in section 6502 shall be suspended for the period during which the taxpayer is outside the United States if such period of absence is for a continuous period of at least 6 months.” Petitioner admits that he was in Chile during the period indicated in government exhibit 27 (January 1998 to April 2000).
However, Petitioner occasionally returned during that time to the united States—California and Virginia in particular—generally to what amounted to his permanent address here. According to exit stamps in Petitioner’s passport, he left Chile and returned to America in early March 1998; mid September 1998; January 26-February 25, 1999; June 3-26, 1999; February 18-29, 2000; May 19-22, 2000, and returned permanently on August 14, 2000. Thus, Petitioner was not entirely living out of the country for purposes of the code section in question. He was teaching in Chile mainly, along with stints in Guatemala, Argentina, and Europe. Petitioner requests that the Court review the basis for the IRS’s extension of its liens against Petitioner (and the period of the statute of limitations to collect). These liens are illegal and based on incorrect information and thus should be removed entirely. In the mean time, however, Petitioner asks that this Court eliminate or significantly reduce the allowable time for the extension based on I.R.C. 6503(c).
28. The IRS claims that Petitioner has no right to challenge the alleged tax liability. They are mistaken and are trying to use a sly means of not dealing with the issue. They are now trying to bring up “Constitutional” or political arguments in order to divert the focus away from the face-to-face Collections Due Process Hearing matter.
Thus, while Petitioner realizes that this case is primarily about getting a face-to-face Collections Due Process Hearing, he is willing to file a substantial Notice of Underlying Legal Basis with the Court in order to counter the claims and “evidence” submitted by Respondent. Petitioner’s Notice of Underlying Legal Basis will demonstrate that Petitioner’s legal basis and argument is hardly unreasonable, “groundless”, “wrong”, or “frivolous”. Petitioner disagrees with the IRS that his “ten-page letter to the IRS dated May 11, 1993” fully outlines his position or legal basis, although he admits that it comprised part of such basis.
Petitioner denies and rejects the blundering assertion and income figures of the IRS: “Plainly, Petitioner is not a nonresident alien, and he was required to report his annual income (in excess of $100,000) on a U.S. Income Tax Return (Form 1040).” Petitioner denies the unsubstantiated and false claim of IRS Appeals Officers Mary Green and Pat Brown et al that he “had taxable income of $89,680” in 1991 and in 1992 “had taxable income of $176,601”. These figures are pure falsehood and ridiculous. The government’s exhibits show deposit receipts from different banks without taking into account the source of the deposits, including new mortgage loans deposited into the account, gifts, and transfers from one account to another. The IRS has no proof of such claims—only the wishful thinking and/or malicious intent of Mary Green over a decade later.
29. The IRS has argued that the IRS denied Petitioner a face-to-face hearing based on their belief that Petitioner held to “frivolous” arguments twelve or thirteen years ago.
a) Even if such were the case, why would it have any bearing on whether Petitioner should have a face-to-face hearing in 2005? Since Petitioner did not meet with the IRS for a hearing in 1993 or 1994, how is it that the IRS has determined that Petitioner’s arguments are frivolous?
b) Petitioner admits that he raised arguments in 1992 and 1993 that the IRS considered to be “frivolous”. But so what? Petitioner has not raised any recent arguments that would permit the IRS to deny a face-to-face hearing in June 2004 or sometime in 2005. The Notice filed in this court in February 2005 provides no grounds for an IRS appeals officer to have made a decision a year earlier to deny Petitioner a face-to-face hearing.
c) The Treasury Regulations are not the law, even if they are often treated with similar force— and even if the IRS would like them to be the law. The I.R.C. does not say that a face-to-face hearing may be disallowed by the caprice and whim of the IRS. It is precisely the proper function of this Court to handle disputes over what the law means and the intention of Congress rather than merely accept the fancies of the Treasury Department or the IRS.
30. The IRS has attempted to belittle their dishonesty in this case by saying that their allegations about Petitioner being involved in the Pilot Connection Society are effectively irrelevant. But this sentiment is not so. The IRS has tried to paint a picture of Petitioner as a “tax-protester” and therefore not entitled to a face-to-face hearing on account of his frivolous arguments. Therefore, the alleged Pilot Connection nexus is relevant to the case.
Petitioner pointed out other lies of the IRS in his Reply and Rebuttal to Motions of February 9, 2005 in U.S. District Court, as well as the IRS’s belligerent and bald-faced lawbreaking by calling Petitioner a “tax-protester”. Yet there has been no remorse or retraction of the lies and characterizations of Petitioner. Thus, Petitioner requests that this Court again reprimand the IRS for these wrongful actions.
31. IRS abuses continue to be widely discussed in the media. In the instant case, the IRS’s uncooperative behavior concerning discovery exemplifies its abusive, harsh attitude. Moreover, another specific example is found in government exhibit 5, “Appeals Transmittal Memorandum and Case Memo” from IRS Appeals agent Mary Green (July 8, 2004, page 3). Green says that Petitioner “operates a website ‘Policy of Liberty’ that is prohibited by the service”.
a) Yet just how can the IRS prohibit an academic website? Does the IRS not have to respect the First Amendment rights of American citizens? Petitioner is not sure what the word “prohibited” means in Green’s assessment, but perhaps she is referring to Department of Justice injunctions under I.R.C. 7600. If so, Petitioner has not received any injunction or correspondence regarding the Policy of Liberty website. Even if such correspondence were received, it would hardly be applicable as anyone visiting the site can plainly see.
b) Green is referring to Petitioner’s personal website www.policyofliberty.net which contains academic materials, viz. his books and articles, newspaper columns, as well as links to other websites and scholarly sources, famous quotations, photos, and family information. Hardly anything on this website has to do with the IRS directly. Does the IRS condemn Petitioner for being a civil libertarian? Once again, it is obvious that the IRS hates Petitioner’s free market stance and is trying to use the tax law to punish him. Petitioner seeks relief from IRS abuses from this Court.
c) The IRS failed to establish Petitioner’s underlying tax liability and has committed egregious procedural errors in violating Petitioner’s rights by failing to provide his CDPH. The U.S. Tax Court only has jurisdiction to review a CDPH if and when a taxpayer has been informed of his tax liability, Sapp v. Commissioner of Internal Revenue (2003), United States T.C. Memo 2003-207. Petitioner has not been so “informed” regarding his alleged tax liability, even though he has asked the IRS to provide this information on many occasions over the last 14 years. The IRS has to prove underlying tax liability when no form 1040 has been properly filed and there is a lack of evidence of income, Rivera v. Commissioner of Internal Revenue (2003), U.S. Tax Ct. 2003, 2003 WL 345341. Petitioner did not file a form 1040 in 1991 and 1992. Normally, a taxpayer’s underlying tax liability can only be contested by petitioning U.S. Tax Court after receiving a Notice of Deficiency, Pahamotang v. Commissioner of Internal Revenue (2003), U.S. Tax Ct. 2003, 2003 WL 21385204. However, Petitioner never received such Notice, since the IRS purposely and knowingly sent it to an incorrect (old) address.
32. For the years in question related to the two adverse determinations, 1991 and 1992, Petitioner was the father of four small dependent children and a dependent wife who was a homemaker. Petitioner, who finished an M.A. degree in 1987 at the age of 24, had only a short time earlier begun his financial consulting practice (without completing the rest of his formal graduate education), and had very low net income.
33. The IRS claims that Petitioner owes over three hundred ten thousand dollars ($310,000) in taxes for the years 1991 and 1992. This figure is preposterous and a travesty. Petitioner had not had even close to that much income in his whole life up to that point, especially since he had been a full time student from 1969 to 1987, and afterwards only had entry-level employment in community colleges and financial consulting. Petitioner requests that the Court rectify this vast injustice.
34. In 1991 and 1992, Petitioner filed the tax returns that he believed were correct and appropriate, and these returns indicated that Petitioner had no taxable income (especially due to his meager income with so many dependents). Petitioner further corresponded with the IRS on many occasions from 1991 to 1994 to ensure that his understanding of the statutes were correct. The IRS either did not respond at that time or only sent stall and/or off-putting letters in reply. Petitioner still has these letters. In July 2004, Petitioner petitioned the IRS under the Freedom of Information Act to provide him with his tax returns for 1991 and 1992 as well as any calculation of tax liability for those years. On September 8, 2004, the IRS Atlanta disclosure office replied that they could not find or secure any tax returns for 1991 and 1992 (Exhibit A). Thus, the IRS has admitted losing the tax returns Petitioner carefully prepared and filed timely.
35. Nevertheless, because of Dr.Calhoun’s strong political position against socialism and IRS injustices, the IRS has vindictively retaliated against Petitioner by inventing a baseless, grossly fictitious tax liability for such an outrageous amount. In addition to his seminal papers at that time, Dr.Calhoun is the author of many books and papers including Building Regulation, Market Alternatives, and Allodial Policy (Avebury Press, 1997); A Primer on Modern Themes in Free Market Economics and Policy (Universal Publishers, 1999); Bible and Government: Public Policy from a Christian Perspective (Alertness Books, 2003); “Market Provision of Highways: Lessons from Costanera Norte” (Planning and Markets, vol. 2, no. 1, September 1999); “Fire Safety and Building Regulation in Eastern Santiago, Chile” (Planning and Markets, vol. 3, no. 1, September 2000); and “Abortion Policy and the Market” (Journal of Interdisciplinary Studies, vol. 15, September 2003). Dr.Calhoun is also a regular columnist in Greenville, South Carolina’s The Times Examiner (a conservative weekly newspaper), and co-host of a radio talk show in Greenville that deals with public policy themes.
a) Notwithstanding the IRS’s hatred of Dr.Calhoun’s views, the tax law is not intended to be used by the IRS to punish Petitioner for his strongly-held political views but rather for the IRS to collect the proper taxes. Yet the IRS has chosen to punish Dr.Calhoun as he has developed into a more outspoken advocate of free markets, a supporter of constitutionally limited government and low taxes, and a sophisticated public policy theorist. The timing of this IRS attack is revealing.
b) The IRS basically ignored Dr.Calhoun’s correspondence during the first half of the 1990s, and then curiously did not attempt to contact Petitioner whatsoever for nearly a decade (until the end of 2003), just when Dr.Calhoun’s academic work was maturing. Dr.Calhoun has now become a noted author and scholar with regard to free market economics and policy, as well as the relationship between economics and the legal system. Due to Dr.Calhoun’s expertise, he writes regular columns and hosts radio talk shows. Even though Dr.Calhoun has responded to the recent IRS attacks, the IRS continues to run roughshod over Dr.Calhoun’s correspondence, ignoring his questions and appeals, and behaving in a malevolent manner.
c) The Court has jurisdiction because Petitioner is appealing a procedural matter of his right to a CDPH per I.R.C. 6330. The IRS has a history of running roughshod over citizens’ procedural rights and Petitioner appeals to the judges under I.R.C. 6330 for an independent judicial review.
d) The government also claims that Petitioner did not propose a viable collection alternative proposal or submit a “Collection Information Statement”. Here the IRS is making up requirements that were not mandated by Congress, so once again Petitioner deems it necessary to appeal to the U.S. Tax Court. The fact is that Petitioner did request collection alternatives on the application for his CDPH and in his other related correspondence the term CDPH was used several times.
e) I.R.C. 6330 does not say that tax returns for all years have to be filed in order to get a CDPH. The fact is that Petitioner was not required to file tax returns for the years mentioned by the IRS appeals office, most of which coincided with Petitioner being a full time student or Petitioner living overseas for many years. The IRS does not seem to think that Petitioner has any filing requirement or tax liability either, for any of the years mentioned, since it has never pursued Petitioner for alleged taxes owed for any years other than 1991 and 1992. Furthermore, there are no pre-conditions other than requesting the CDPH within the specified time period, which Petitioner did. The IRS is simply disobeying the law.
Conclusion
The IRS is trying to thwart the will and intention of elected officials and the will of the people. The bureaucracy has usurped the statutory words of Congress (the expression of the will of the people) in denying Petitioner a CDPH. The IRS is willfully ignoring, denying, and thwarting the law, stonewalling and throwing up imaginary roadblocks to Dr.Calhoun’s judicial remedy. Therefore, Dr.Calhoun appeals to the U.S. Tax Court for relief from these over-zealous bureaucrats by (a) order the reopening of a Collections Due Process Hearing, and that the Judge would require the IRS reschedule an in-person hearing as the statute requires, (b) compelling the IRS to provide proof of how they can pursue actions on old, doubtful liens that have expired under the statue of limitations and that have been unilaterally extended without merit (by falsely stating that Petitioner had remained outside of America for two years and nine months without returning during that period), and (c) admonishing the IRS agents for making their frivolous claims.
Furthermore, since Petitioner’s rights were violated the Notice of Determination should be overturned and new Collection Due Process hearing should be scheduled. Consequently, Petitioner requests that this Honorable Court: (d) declare invalid the IRS determinations of July 8, 2004, since no valid hearing was ever held, (e) order the government to reimburse Petitioner for all of (his) costs in bringing this action, (f) reprimand the IRS agent for this unwillingness to allow Petitioner to obtain the documents necessary to prepare for his CDP hearing, (g) compel the IRS to remove all assertion(s) and charge(s) that Petitioner has been involved wit the Pilot Connection or the Phoenix Project from any and all of Petitioner’s record(s) and file(s) on file with any and all agencies and instrumentalities, including but not limited to the Internal Revenue Service, (h) require the IRS to issue a written apology for publishing its offensive language and judgment that Dr.Calhoun is “tax challenged” and the like, (i) reprimand and admonish the IRS for bringing up such spurious or baseless allegations in its court exhibits and previous motions in U.S. District Court, (j) eliminate or significantly reduce the allowable time for the extension of liens filed against Petitioner’s based fraudulently on I.R.C. 6503(c) related to an extended foreign stay without returning to the America, and (k) relieve Petitioner from the IRS’s tyranny and attempts to punish him with the law, thrust upon him on account of his interest in promoting the study of law with respect to Christian principles, as well as his academic pursuits, weekly newspaper column, books, and radio broadcast—many of which decry IRS abuses on occasion.
Petitioner is a law-abiding citizen who has always endeavored to uphold the law and resents the IRS’s claims and insinuations that he is in any way a lawbreaker. The IRS Restructuring and Reform Act of 1998 (RRA 98) § 3707 and internal IRS guidelines prohibit the designation of taxpayers as “Illegal Tax Protesters” or any similar designations. Petitioner requests that the court reprimand the Respondent for its callous disregard of the law. The prohibition has been in effect seven years, and as of September 6, 2002—just three years ago—the IRS only then began to make mediocre progress in obeying it.
Executed on September 6, 2005.
___________________
John C. Calhoun, Ph.D., pro se
P.O. Box 25
Greenville, SC 29616