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Tax denier/tax protestor nutz

These people are weird, but we like to find out what weird people are doing and thinking. It's a hobby.
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KickahaOta
Posts: 130
Joined: Wed Jun 09, 2021 9:17 pm

Tax denier/tax protestor nutz

#1

Post by KickahaOta »

We see a lot of complicated and outrageous legal scheming here. But sometimes it's nice to get back to the classics. Like people who are extremely convinced that they don't owe federal income taxes, for, well, reasons.

It used to be that these people would sometimes be on the receiving end of lengthy legal opinions explaining the error of their ways. These days the courts tend to just dismiss them with as little work and fanfare as possible. But it can still be fun to watch "play stupid games" lead to "win stupid prizes."

For example, there's Eric D. Clarkson, who went to Tax Court and won himself a very stupid prize indeed.

"Petitioner failed to file timely Federal income tax returns for every year from 2003 to 2016." The IRS duly took note. The collection process ground on. "As of June 2020 his total balance due was more than $250,000."

Mr. Clarkson hatched a cunning plot. He simply filed returns for all 14 years, claiming that he had received zero income. Each was accompanied by a self-created form 1099-MISC showing zero income, "correcting" the previous forms from his employers. With each 1099-MISC he included the following statement:
The form is NOT INTENDED to represent a corrected 1099–MISC filed by the party identified therein as “PAYER.” The corrected form 1099–MISC herein presented, is submitted to “rebut” a document known to have been submitted by the party identified therein as the “PAYER” which or who erroneously alleges a payment or payments to the party identified therein as “RECIPIENT” of “gains, profit or incomes” within the meaning of relevant law, which they ARE NOT.
The payments made to me by this “PAYER” did not result from any federally taxable activity whatsoever and do not constitute any taxable income under relevant income tax law . . . . [T]his payer is not connected with any activity or of any status which would render payments to me subject to federal income excise tax, nor am I.
Amazingly, the IRS did not see the error of its ways.
The IRS sent petitioner’s Forms 1040 for 2003–2016 to its Frivolous Returns Program (FRP). FRP, in turn, sent petitioner Letters
3176C warning him that his submissions constituted frivolous tax returns and that, if he did not withdraw them, he would incur a penalty
of $5,000 for each submission.
Petitioner neither amended nor withdrew the Forms 1040 he had submitted. Instead, in a reply dated March 24, 2018, he reiterated and elaborated upon the arguments he had made previously. He argued that he was not an “employee of a corporation or employee of a partnership” and that he had no “duty . . . concerning . . . tax-related matters of any kind.” He asserted that he had received no “wages as defined in section 3401(a)” and that his “corrected” Forms 1099–MISC were intended to “rebut allegations made by others” that he had been paid taxable compensation. He expressed disagreement with the IRS’s characterization of his Forms 1040 as “submissions,” insisting that they were proper “returns” that the IRS must accept and process. He asserted that these “returns” could not legally be “withdrawn and replaced” even if he had wished to do so.
In a stunning turn of events, the IRS... did exactly the thing it said it would do, and issued a $70,000 penalty.

Suffice it to say that the Tax Court was equally unimpressed with Mr. Clarkson's scholarship.
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