Gary Patriot
1776 Patriot Way
Greer, USA

June 4, 2007

Attachment to Notice of Request for Contested Case Hearing,
Tax Years 1999 and 2002

  1. I would like to reach a settlement in this case and pay all taxes I owe. For the tax years in question, I had a wife and two dependent children, tithe, charity, medical deductions, business expenses & cost of business, expenses for tax preparation and home office expenses. I would like to meet with the administrative agency to show them my records and discuss these specifics. Much of this has already been communicated to the department of revenue but ignored.
  2. I request a waiver of penalties, and credits for withholding, deductions and expenses. I do not have any tax liability, I deny their computations and I dispute their figures. For both tax years, the Department Determination is wrong.

  3. I am entitled to a real hearing on this matter before the SCDOR prior to the ALJ’s involvement. I request the case be remanded to them so we can reach a settlement in this case. I have requested from the DOR the source of the assessment against me; i.e. the certified form(s) from the IRS showing my alleged tax liability and other documentation to prove my AGI, etc. They have failed to furnish these essential documents to me as required by S.C. Code, Section 12-58-70. The DOR is attempting to use hearsay, unauthenticated documents, incorrect calculations and figures against me. This should be halted by the administrative court.
  4. The S.C. Department of Revenue should be held to the same standard regarding the substantiation of information as they are demanding of me. I repeatedly requested this level of corroboration of data they are relying on to support their assessment. They refused to understand that a number printed on a form is not support for the number in question (I suspect they do, in fact, understand it very well). Not only do they have nothing to substantiate their figures, it’s completely unreasonable, and therefore in violation of code section 12-60-430. If they had indeed relied upon sourced documentation (the likes they claim is required by me to support any deductions I claim), they would know I had many cost and expenses. This indicates a willful failure to accurately calculate the assessment and a refusal to use the best information available, resulting in an erroneous tax liability calculation.
  5. The SCDOR should abide by the same standards to which they require the citizens of the state to abide. The information they relied on to assess me was all second-hand with no substantiation. If this is a legitimate and acceptable standard I should be permitted to use the same to support all my expenses and deductions, and the DOR should be required to provide me a hearing to present this information to them and reach a settlement prior to proceeding to the ALC.
  6. Some illegal immigrant stole my social security number and DOR has his income figures, not mine.

  7. During these years, DOR records indicate that I had a small construction business. Therefore, I would have deductible cost of supplies, nails, paint, glue, boards, tools, drills, hammers, etc plus transportation expense.
  8. The Cohen v. CIR case shows that in a tax case, I can use reasonable figures, instead of figures conjured by the IRS that cannot be correct. I can also reconstruct lost paperwork to substantiate my deductions and business expenses.
  9. Further, I can claim a percentage of business expenses and profit for a business enterprise, even if I have no records to substantiate my 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. For construction business, I would take home 20% of gross.

  10. 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 Cohan 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.)''
  11. The purpose of the DOR is to collect taxes, not to brow beat hard-working citizens who are unable to keep records because they struggle to make a living and work hard at distant locations. Due to my occupational travels, I am unable to maintain all the records that you seek. However, we all know that I did incur large expenses for construction work. Let us figure out what the law says I owe so I can start paying.
  12. DOR refuses to allow me deductions for my construction expenses because I do not have documentation. However, DOR does not have any W-2 and 1099 forms against me. What is good for the goose is good for the gander.
  13. I received no monies from BJ University. A tuition break is not a gain. I did not work for those companies as I explained before to DOR.
  14. In the famous Clarkson case, the US Court of Appeals for Fourth Circuit held:
    “For example, Clarkson perceived baby-sitting by a grandmother as earned income for a parent given in exchange for garden produce grown by the parent. The IRS does not, of course, recognize the rendering of such services as earned income to the recipient.” Page 6 & 7. Dated June 24, 1982. Unpublished # 78-5213.
  15. Here the Fourth Circuit clearly stated that the exchange of services for other services or for money is not considered by the IRS as taxable income. For these words, Dr Clarkson served 11 years in jail and house arrest. Therefore, the circuit court must be correct. Now DOR is claiming that wages for services are recognize as income by the IRS. The Government should make a decision one way or another and stick to it.