Mr. Gary Patriot
Greer, SC 29165
August 12, 2007
Ronald Urban SC DOR
Office of the General Counsel
301 Gervais St, PO Box 12265
Columbia, SC 29211
RE: Gary Patriot, Docket #07-ALJ-xxx
Dear Mr. Urban:
You sent me your letter dated July 23, 2007.
I do not have many documens pertaining to my business expenses, deductions etc. I will send you what I do have.
Your agency demands from me strict documentation under stringent rules of evidence. However, you have no W-2 or wage statements to prove your case. If you seek a waiver of the requirements for the admissions of documentation, why are opposed to mine?
I would like to reconstruct my business expenses under the Cohen doctrine below. In my construction work, I had business expenses for supplies, tools, equipment, truck, etc of about 80% of my gross. If you can not accept a reconstruction or percentage, please let me know so I can make appropriate motion to the court.
The Cohen v. CIR case shows that in tax court, a taxpayer can use reasonable figures, instead of figures conjured up by the tax collectors that cannot be correct. A taxpayer can also reconstruct lost paperwork to substantiate his deductions and business expenses.
Further, the taxpayer can claim a percentage of business expenses and profit for a business enterprise, even if he had no records to substantiate his 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.
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.”
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 occupation and business type, 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.
I request an out of court settlement. Please give me by business expenses, waive penalties, and I will sign what you want.
CC: Judge SC, Administrative Law Court