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Wednesday, December 30, 2009
A Quiet Title Case A
Quiet Title Case
In Johnson,
990 F2d 41, 93-1 USTC; 5t0,201,71 AFTR2d 93-1456 (2d Cir. 1993), the court ruled that an assessment was invalid because it
was made before the Tax Court decision became final. The Tax Court determined that the taxpayer was liable for income
tax deficiencies for the years 1980 through 1984. Three days after the ruling, the IRS assessed the taxpayer for
the deficiencies. The taxpayer filed a quiet title action under Section 2410(a) of the Internal Revenue Code and he
claimed that the assessment was invalid because it was made before the Tax Court decision became final. The government
lost their case.
10:18 am est
Monday, December 21, 2009
Privacy, Miranda and the IRS Privacy, Miranda and the IRS
Many of you have heard of the famous Miranda case, which resulted, in the "Miranda
warning" used by law enforcement agencies. In the case of Beckith, 425 US 431, 96 S. Ct. 1612,
76-1 USTC: 9352, 37 AFTR2d 76-1232 (1976), the court ruled that Miranda warning does not have to be given
unless the taxpayer is in custody. That means that if a criminal investigation agent starts to ask you questions, he
is not required to tell you that the information can be used against you. Please don't talk to the criminal
investigation division!
In the case of Baker,
451 F2d 352, 72-1 USTC; 9128,28 AFTR2d 71-6041 (6th Cir. 1971): the court ruled that a taxpayer waived his right to challenge
the reexamination of books by voluntarily furnishing them.
6:47 pm est
Monday, December 7, 2009
Section 6702: The Frivolous Return Penalty Section 6702--The Frivolous Return Penalty
Several individuals have been running around the country in the last few
years advising individuals to file tax returns arguing that wages are not income and other similar issues. The IRS has
been imposing the 6702 penalty and the courts have been upholding the IRS' position. In Sochia, 94-2
USTC; 50,338 (5th Cir 1994), the court took the position that the 6702 penalty was proper when the income tax return contained
Fifth Amendment objections instead of specific financial information. In Fuller, 786 F2d 1437, 81-1
USTC; 9332, 57 AFTR2d 86-1224 (9th Cir. 1986), the court held that the legislative history of the Section 6702 penalty shows
that Congress expressly intended it to be used against individuals who file returns like the returns in these cases.
A taxpayer that has refused to answer questions concerning the amount of taxes due has made a self-assessment that no tax
is owing. Such a return does not contain information from which a substantial accuracy of that assessment can be judged.
Since the reasons advanced for the failure were spurious, the penalty provisions applied. The fact is that the government
and the courts are going to protect the income tax system. If you raise issues on a tax return that could overturn the
system, the IRS is likely to hit you with a 6702 penalty.
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