HOW TO DEAL WITH A REVENUE OFFICER

            Today I went with a friend of mine to the IRS to speak with a Revenue Officer.  As you know, Revenue Agents are the people who audit tax returns and Revenue Officers are the individuals who collect the money. My friend had received a notice of levy because he allegedly owed the IRS a lot of money.  He had filed an Exempt W-4 during 1984 and has been on one ever since.  He had not filed 1040 tax returns since 1984.  Several years ago, my friend lost a great job because he put exempt on a W-4.  

            Anyway, the IRS was about to levy his wages down to $75.00 and he was feeling really blue.  We went into the collection division and within two hours we worked out a payment plan of $100.00 a month on an alleged liability of $100,000.00. 

            We decided that it is much better to give the IRS some paper than to let them take the money.  Quite frankly, there are many patriots that are living on $75.00 a week when they could go into collections and solve the problem.

            We sat down with the revenue officer and showed him that my friend had about $100 a month to spare.  We filled out a 433A collection Statement and prepared the tax returns.  When the IRS asked us to prepare the returns we informed them that we would be happy to provide them with deductions but they had to fill out the returns because we didn't know how to do it.  They complied and the returns were prepared. Since all returns were filed and no fraud was involved; my friend will pay $100.00 a month for two years and then he will file a Chapter 7 Bankruptcy.  His problems are solved. (Warning, the IRS might raise the issue in Bankruptcy Court that a W-4 exempt prevents discharge because it is a fraudulent form, please do not file exempt W-4 Forms.

            Now the question remains. How can he fight the IRS in the future? He must wait until he is out of trouble. For now, he must voluntarily file returns. However for future years, he can obtain opinion letters showing that he is not required to file.  Since his employer is sending money to the IRS, and the IRS has the money, they will have difficulty proceeding against him either criminally or civilly.  Since he did not self-assess, the IRS must assess him.  At the end of the year he may choose to file a claim for a refund for the funds sent by the employer to the IRS.  He may choose not to file a tax return as he has been advised by counsel that he is not required to file.  The IRS will have possession of his money without an assessment in place.  Six months after the filing of the claim for the refund, he may file a refund lawsuit. (See Chapter RL in the IRS Technical Manual).  His argument may be that there has not been a proper assessment.  Now as you can see, if my friend chooses this course of action, he will be taking a front-line position that will be a safe one.  He will be on the offensive and he will have the opportunity to win.  At the very least, the IRS will spend more money  fighting my friend than he will have paid in taxes; and he will be protecting his wages, staying out of jail, and making a significant contribution to the Freedom Movement all at the same time.  (Warning:  Never file a zero return, there are huge penalties in place for filing zero returns.)

The secret of my friend's success in the collection division is that he is judgment proof except for wages.  He has no bank accounts, he has no real estate, he just has wages; and the collection division realized that it was better to play ball with my friend than to harass him.

            If you have a job, you are not judgment proof.  Don't let the IRS take your wages; you can stop that levy.  Then fight back.  Learn to fight smart.  You cannot put exempt on a W -4 and keep the IRS from collecting against you unless you are willing to either capitulate and make payments toward the alleged liability when collections attacks you or unless you are willing to quit your job and work underground.  Those patriots that are sitting still and letting the IRS take all their funds in a levy are simply feeding the malicious beast.  Please learn to fight back.  Don't be a victim: be a winner.

Should I go to Tax Court or Bankruptcy Court?

      If you decide to go to the Tax Court within 90 days after the receipt of the Statutory Notice of Deficiency, you have the option to use Tax Court.   If you have not taken advantage of the 90 day period to file your petition with the Tax Court, you will lose the option and will become dependent on the Bankruptcy Court.  It is possible that you will find a more friendly judge in the Bankruptcy Court because the court is required to balance the interests and rights of rehabilitating or reorganizing a debtor against those of the creditors, including taxing entities.  The taxpayer loses more often in Tax Court than in other courts.  In 1988, taxpayer victories occurred in 4.7 percent of the cases. During the same period, the taxpayer victory was 11.3 percent in U. S. District Court and the  Claims Court (See 1988 IRS Annual Report). 

      If you litigate in Tax Court, the burden of proof will be upon you.  See Tax Court Rule 142.  The burden of proof in bankruptcy court rests with the entity filing the claim (such as the IRS).  Once the IRS files a claim the burden shifts to the debtor, but when the debtor files an objection to the claim, the burden shifts back to the creditor.

See In re Butcher, 100 B.R. 363 (Tenn,1989): Cal. State Bd. of Eq. v. Official Unsecured Creditors Committee, 837 F.2d 696.  I.R.S. v. Levy, 130 B.R. 28.

IMF Transcripts

      Basically Federal Income taxes are dischargeable in Bankruptcy Court if they meet the three year rule for the tax year, the two year rule for the tax return and the 240-day rule for the assessment. In order to know what the IRS is thinking, you need to check out your IMF Transcript.  The following codes are important to know

150 Date tax assessed

290 Additional tax assessed

300 Additional tax assessed

308 Additional tax assessed

320 Fraud penalty

420 Audit indicated

460 Extension to file tax return to (date)

480 Offer in compromise filed

481 Offer in compromise rejected

482 Offer in compromise withdrawn

520 IRS litigation (may include bankruptcy)

521  IRS Litigation ended

560 Assessment statute ended

570 Additional liability pending

582 Tax  lien recorded

583 Tax lien released

594 Tax return previously filed this period

595 Account referred to examination

876 Additional return filed

977 Amended return filed

      Be sure to get your IMF  and check out your codes before you file bankruptcy.