Tax Audit Procedure
Table of Contents
- Clarkson's Famous Confrontations & Tea Parties
- Confrontation in Atlanta Oct. 2004.
(Click here for pictures)
- Clarkson's First Tea Party
- Recipe for a Tea Party
- Tea Party in Columbia Nov. 04.
(Click here for pictures)
- Confrontation in Atlanta Aug. 2006.
- Confrontation in Atlanta Oct. 2004.
- How to Handle an Audit Conference.
- How to Confront the Buzzards
- Agent Questionaire
- TIGTA report on IRS Conference with Tax Victims
- Public Servant Questionaire (APS-7)
- Witnesses at Audit Conferences (Revenue Proc. 68-29)
- Affidavit of Witness to Proceedings
- Certificate of Witness to Proceedings
- Aliases by IRS Agents
- Explanation of Alias Letter
- Conference and Practice Requirements
- Earnest Letters
- Appeal of $500/$5000 Penalty
- Famous Court Cases & Decisions
- The Famous Schultz Pocket Summons Opinion (Requires Adobe Reader)
- Clarkson's Defense Procedures
- Instructions from Other Groups
- How to Fight Back (The Best Defense is a Good Offense)
All the information and roadblocks you need to beat an IRS audit
- Audit Procedure I - How to Handle the IRS. Clarkson's famous procedural method to beat the IRS; DVD or VHS $30
- Audit Procedure II - Tax Court, Collections, Pocket Summons $30
- Earnest Letter Writing and Sneaky Lawyer Tricks - CD Text $30 Shows you how to fend off bureaucrats and protect the record.
- How to Beat the IRS - Dr. Clarkson speech on successful and proven methods
The forms to use with these videos are found on the patriotnetwork website. Conatact Dr. Clarkson for details.
All of these for $100, including S&H. This is normally a $120 deal!
Send cash (wrapped in colored paper) or check/money order with payee line blank. Send to:
Robert Clarkson, 201B W. Butler Rd. #379, Mauldin, SC 29662
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Our Tea Party with the I.R.S. is a Success ! (Columbia, SC; Nov. 04!)
Full video is available. See bookstore for details.
Our fellow patriots behind IRS agent Carla.
Qui tacet consentit ~ He who is silent consents
Robert B. Clarkson
Patriots prepare for IRS offices in Charlotte, NC. March 06
Robert Clarkson, LT and war veteran Chris expose lies and criminality of SC DOR.
Tax Victim Chris was in a foxhole in the Gulf War when DOR stole his pay...[felony under Federal Law]
Dr. Clarkson wins another one for Patriot!
(Atlanta, GA; Oct. 04)
Patriot extraordinaire Robert Clarkson chastises IRS agents in Atlanta Federal building on Oct. 25th for their wrongdoing.
Picture by famed videographer RW Moore.
Our fellow Patriot, Prof. John, in the Lion's den with IRS Agents.
Confrontation at Atlanta IRS!
(Atlanta, GA; Aug; 06)
The folks that made it happen.
Historically Proven Method
In 209 B.C., the Roman General Maximus Verrucosus Fabius ultimately defeated the superior forces of the conqueror Hannibal, the famous Carthaginian military leader, through delay tactics thereby avoiding direct conflict and giving Rome sufficient time to muster a large army. Thus was born the phrase "to win like Fabius," meaning to wear out an opponent by delay and evasion rather than confrontation.
Request for Postponement
To: Stacey Houston,
IRS Revenue Officer 58-10399
2400 Herodian Way, Suite 450
Smyrna, GA 30080
November 16, 2006
Dear Ms. Houston,
My representative and I will not be able to meet with you on November 21st, 2006. This was a miscommunication on my part and entirely my fault. The handwritten note was that he would be in town on the 27th and able to meet Tuesday the 28th. I misread it. I just discovered the mistake yesterday afternoon when I called to confirm with him.
At this point I am going to ask you to reschedule our meeting for after the first of the year. You'll notice that I did not give any possible December dates because my 79-year-old mother had just been diagnosed with breast cancer at the time of that writing. She is a diabetic and does not heal well but is scheduled for a radical mastectomy December 1st in a different state. I hope to be with her then as it may be the last time I see her.
This past week my beloved partner and (common law) husband (since 1990) was triaged into Kennestone Hospital through the emergency room. Tests performed over the past week reveal that his anal cancer has returned with a vengeance. He requires an emergency colostomy, chemo and Wound Care. The radiation burns he has from 3 years ago have not healed and he has picked up some terrible infections that brought his immune system down dangerously low. He is being evaluated for surgery that will rebuild his scrotum, anus and thigh skin coverings. I am distraught over this situation, can't sleep at night or get anything done because of his care requirements. Right now I am trying to set up a surgeon for the colostomy, which is not easy since he only has hospitalization coverage and no office visits.
I am very sorry to have to inconvenience you on this matter. My full intention is to meet with you but until some of this gets settled into place I simply cannot guarantee any time availability. These are, in fact, life and death family matters. Would you be so kind as to verify your receipt of this letter (by fax as well as by mail) and to contact me after the first of the year?
THE UPDATE SERVICE FOR THE
TAX PATRIOT ACTIVIST
STEP BY STEP GUIDELINES ON TAX AUDIT
NETWORK AUDIT PROCEDURE by Dr. Robert B.
Clarkson. 515 Concord Ave.
Anderson, SC 29621 (864) 225-3061
If you are contacted by enemy agents, what should you do? What should you say, how should you act? This law course is designed for new Patriots, dealing with the enemy for the first time. More advanced procedures would be used by more experienced Freedom Fighters.
To properly understand the process outlined herein, you should read Clarkson's Audit Procedure Part I insert to the February 80 issue of 'The Patriot Cannon'.
- THC COMPUTER LETTER
- If your first contact with the IRS is a letter from the Service Center computer
or from audit section of local office, you normally would respond, but do
not furnish information. You merely ask a few simple questions.
Your first response would be "Why did you contact me?" (asking a few easy questions;) your later responses would include more complex questions, such as, "What does the code number 584 on your letter mean?''
Follow the proven and effective methods of "Clarkson's Earnest Letter Writing," i.e. deny, appeal, question and refer. See the article: The Importance of of Earnest Letter Writing'' in the Nov. 79 issue of The Cannon, or Dr. Al Steever's "Developing The Art of Earnest Letter Writing," $10 from the Patriot Bookstore, PO Box 2368, Anderson, SC 29621
- Exceptions to the Reply Rule. You should respond promptly in writing to all contacts by bureau-rats, with one sole, solitary exception: The computer letter from the Service Center inquiring whether you filed a tax return.
If you quit surrendering your rights and hard- earned money to the Infernal Robbery Squad and no longer annually submit your 1040 confession sheet, only the computer knows for years. No human being knows for years that you did not file your Marxist tax return-unl ess you tell them;
If you decide your children need the benefit of your hard work more than some wel fare loafer, and do not pay federal taxes, nobody will know for three years, if ever. Keep it that way; do not respond to unsigned form letters.
This is what happens when you quit filing:
In the months following the April Fools Day which you ignored, the IRS computer center for the region you live will maybe discover you did not file and send to your last known address a form letter asking whether you had some reason for not Filing. Actually less than one-half of the Americans who quit filing receive this letter—the rest are forgotten by the IRS and dropped off the computer.
To those who receive the first computer form, whether they respond or not, two more similar printouts will be sent, both of which can be ignored
The only exception to Clarkson's "Always Reply Rule" are the first three computer letters sent to non-filers.!!! Do not respond to these and alert your enemy of your existence, but do respond to all other letters (since they know you then) or you will lose valuable opportunities.
For years, thousands (millions according to the General Accounting Agency, the Congressional Watchdog) of taxpayers have simply dropped off the tax rolls, even though they had good jobs and owed revenue hundreds of tax dollars.
Generally, the IRS reciprocated, i.e. if you forgot them, they forgot you. So, those few who receive computer demands, most ignored them, others placed on the envelope "deceased" or moved, no forwarding address , etc. dropped in a mailbox.
Remember the Rule: Respond to all letters with "earnest writing." The above procedure is the only exception
- If your first contact with the IRS is a letter from the Service Center computer or from audit section of local office, you normally would respond, but do not furnish information. You merely ask a few simple questions.
- The Audit Letter
The audit form would be sent by a revenue agent in the local office where a file will be built on you. The tax-rat at this level does not know what he is doing, is more scared of you than you could imagine, is a despicable low-life (referred to by a historic person as a "notorious sinner ), and should not be feared. However, his manila file can be deadly - if you let it.
You may receive an IRS form letter announcing your selection for an audit instead of the form letter from the computer center, for your first letter, if you are (1) normal tax serf; (2) 5th Amendment filer; (3) non-filer who received three Service Center messages.
What goes in that file comes from you directly or indirectly and all information collected may - no, will harm you.
Consequently, start your "earnest letter writing NOW!! You must listen to the Clarkson-Arlen-Lowery "Tax Audit Procedure tape and Clarkson's "Patriot Protection Procedure' tape, both only $10.00 from The Patriot Bookstore, P0 Box 2368, Anderson, SC 29621. This article will not go over the subjects discussed in those tapes. To receive maximum benefit from this article, you should listen to the tapes.
When answering inquiries from the tax-rats remember the Supreme Court's admonition in the Miranda Decision: "You have a right to remain silent, and anything you say can be used against you.
You have a Constitutional right. God gave rights to you—and if you do not use them, you may lose them. Washington, Jefferson and Adams risked their lives for your rights, so use them.
The Fifth amendment to the U.S. Constitution guarantees all of us a right to remain silent and not to furnish information to the government. The Fifth Amendment right belongs to all of us, not just lawyers and criminals.
You do not have to furnish information to the government - so do not. Listen to the Cooley tapes, $25 from the Patriot Bookstore, PO Box 2368, Anderson, SC 29621.
- Stall 1st, then 5th
Even though you can invoke the Fifth Amendment when contacted by the Revenue, we do not recommend that at first, have some fun first.
You should exercise your guarantee in the Bill of Rights, but years away, not so soon. If you raise the Constitution at first contact, the trained and schooled revenue office will then proceed to his next step, speedily. Your principal weapon against the bureaucracy is non-cooperation and delaying tactics. You want to fight the enemy where he is weak and where you are strong.
- HIT WEAK SPOTS
Where is IRS strongest? Our adversaries have powerful computers, free postage, backing of the establishment, awesome powers - so do not tangle with them on their ground.
Where is IRS weakest? Bureaucratic "speed" , decisiveness, efficiency. The IRS operates with the swiftness of the U.S. Post Office; the IRS is a swollen, rotten, collapsing, over-weight, top-heavy federal bureaucracy.
Hidebound with regulations, operated by clockwatching, insolent bureaucrats, the IRS operates with the speed of a whale in the sands of the Sahara desert. However, its slovenly, dying gasp are no comfort to you if you are being squashed under it. The solution: STAY AWAY: Hit enemy where it is weak - select the correct weapons.
- Delay & Question:
Bureaucrats cannot make individual decisions, they must ask their superiors, confer with co-workers, i.e. "staff the problem. Let them, help them, encourage them as the years go by.
When the dying Revenue Corpse collapses, who cares if they claim you owe thousands, they will not be here to collect.
- Visited by Scare Artist:
What to expect and what to do when confronted by agents.
Terror tactics, harassment, and abuse are the characteristics of losers, misfits,reprobates, IRS agents. Expect the lowest, crudest conduct; the slimiest, most degrading tricks from the type of "human" who would even take a job with the IRS.
When you are visited by revenue employees, expect to find pushy, impolite bullies at your doorstep or workplace without courtesy of an appointment. Their own manual and procedural guide instructs them to come unannounced to you.
However, if you want to see them, your opponents demand that you set an appointment, so if they come calling, state clearly, unequivocally that you want an appointment.
If you find unwelcome visitors at your door, simply state: "Write me for an appointment." Do not say anything else. You are not trained and they are.
Good salesman are trained to just start their prospects talking, keep them talking and eventually resistance is lowered. Likewise, the s.l.a.t.s. (scum's, liars, and thugs) are trained to ease you into saying the wrong thing, to opening up, to keep you off guard.
However, you are not an expert. You are apprehensive, even afraid. You do not have full control over the interview, your senses, or your words, but the Constitution protects you - you do not have to make any statements, no matter how persistent; demanding or insulting your inquisitor may act.
If the scum persists, then proceed to statement two: "Discuss this with my attorney" or "See my attorney." Then give them the name and or card of your family attorney—or any local attorney.
Any stall works that gives you time to reflect, to think, to contact your local counselor.
- Work Abuse:
Lately, the favorite scum tactic is to pester honest, hardworking Americans at their place of employment. Unfortunately, the enemy contacts only one out of a thousand, so most of us are simply not prepared.
Remember, every IRS agent has 12,500 Americans to audit; we outnumber them. For every 100 of us who refuse to finance the socialist schemes, less than one-half even receive computer letters!! For every 100 of us who refuse to surrender our Constitution to the welfare state, only one will receive a personal visit!!
The Internal Robbery Squad now claims to audit only 2%. Actually, the percentage of real audits is .02% of all taxpayers.
In any event, the Editors of Clarkson's Law Course believe you should be informed and have a standard procedure available to you should you be contacted even if probability is small. George Meyers, President of Wisconsin Society of Educated Citizens says we should all be educated!
Nevertheless, if the finks accost you at your work place, simply and firmly tell them: "I am at work, contact me another time." Or, repeat message #6 above. But, do not talk, not even make excuses.
You do not have to make excuses, and anything you say when frightened will not do you any good—which the agent knows.
- Balance the Benefits:
Before you make a statement to a known adversary, weigh the risk, examine your words this way:
- Will my statement do me any good?
Now, stop and think, what admission or fact can you furnish to the KGB, the Gestapo, Iran's Revolutionary guards, the IRS that could yield any benefit to you? How could any affirmation help you?
Take Dr. Clarkson's word for it: Nothing that you say to the spineless vipers will help you. So, just do not make a statement- just put them off and stall. Let your local counselor help you, he is trained and certified to help you.
- Will any statement harm you? Before you answer IRS questions, THINK: not only
whether the answer would do you any good, but whether the answer would harm you.
Yes, the evil Internal Revenue System operates on INFORMATION - Information that only works to your detriment. Deny them that and the monster will wither away.
Do not cooperate, drive up the cost of collecting one cent of blood tax; destroy what little efficiency exists in the free world's worst bureaucracy. The slats cannot tax the substance from your family unless they know you (1) exist; (2) earn money, (3) owe taxes. Why bother to tell them even that?
- Now weigh the good against the evil, the benefit of answering the rats inquiry
versus the harm that the answer may later cause you. You will soon discover that
furnishing information of any sort is not good whatsoever; has no weight, can not
Then, should you not have learned by now, every iota of information furnished is somewhat harmful, by even answering you will be acknowledging to a skilled and trained snoop your opinion on the information. ALL must have harmful information.
Balance the scales—if harm or pressure outweighs the good—you lost.
- Will my statement do me any good?
- Deny them:
Keep the IRS from knowing anything about you; make them wonder about you; misinformation is still information; fear is based on lack of knowledge, keep them guessing.
Do not even let them know you are a Constitutionalist. Stay away from agent questionnaires, invoking 5th, as long as possible.
Once they discover you are a worthy descendent of Washington, Jefferson and Heyward, you will be placed in a special status, given priority and speeded up treatment.
The average, non-Patriot taxpayer who fails to file has a 50% probability that Revenue will tire and abandon them. The identified Freedom Fighter has only one-third a chance of being left alone.
Increase your odds of winning, do not give your enemy the slightest bit of information. However, once they discover you are one of us, then, get lousy with protection procedures, FOIA's, agent questionnaires.
Remember, winning means not financing your destruction, beating the IRS, then telling neighbors. When IRS abandons your case, even though knowing you refuse to submit to their jurisdiction, you have won.
- Make mistakes:
Your plan is to throw roadblocks in the IRS broken, underpowered steamroller-the more errors you make (little ones, not big ones that can harm you), the more time you and your assigned agent spend correcting them.
If you fill out a form, i.e. Form 2848, Power of Attorney correctly, that step is completed and settled in one or two days. However, if you send in that form omitting your socialist surveillance number and the address of your representative, the fink will be cruel, evil enough to call your error, to return your form and scold you for your error. This alone takes two weeks. As you fight back, dig in, appeal , you can spend years on this error on procedure tactic.
- Fight on Meaningless Procedural Points:
When the IRS persists in contacting you, or continuing an audit, your best tactic consists of being a nasty nitpicker, an uncompromising S.O.B., a perfectionist on their actions.
When they write you, respond with a list of errors in their letter, i.e. "not clear ambiguous, misspelled words, unsigned, etc.
Point out all the errors in their form letter: "not specific who to contact," "not defining who is to respond," "not furnishing definite location," and whatever you can imagine.
- Request a Decision:
Now one of the reasons you battle the bureaucracy, try to keep them away from your family and life because you understand, fear and despise the bureaucratic process and all its horrible attributes, one of which is the unwillingness of bureaucrats to make decisions.
You have learned the impolite postal clerk will not respond affirmatively to your request the uncaring courthouse clerk will not decide how to file your auto license paper without asking her boss who is always out-to-lunch; the indecisive auditor in past years keeps referring you to some vague code when you ask a humanly reasonable question.
IRS Agents Required to Identify Themselves
Internal Revenue Manual 18.104.22.168 ( 04-01-2003)
From: "Internal Revenue Service Restructuring and Reform Act of 1998" § 3705 (Taxpayer's Bill of Rights II)
- RRA98 § 3705 requires all employees to identify themselves upon initially contacting a taxpayer or representative. The first opportunity for Taxpayer Advocate Service employees to identify themselves will occur when they initially make telephone contact with their customers to clarify case issues and provide the customer with planned actions.
- Immediately upon telephone contact, tell the taxpayer or representative your name, your job title and your unique employee identification number. If you do not make telephone contact, your initial letter to the customer must contain the above identifying information. This will satisfy the requirements of this section of the law.
Aliases by IRS Agents
from: 2001 IRS Criminal Tax Manual Criminal prosecutors should be aware that IRS Revenue Agents and Officers are permitted to use officially-issued pseudonyms in their dealings with the public. The use of official pseudonyms was first permitted in 1992 pursuant to a decision of the Federal Service Impasse Panel (FSIP) [ FN8 ]. Department of the Treasury, Internal Revenue Service and National Treasury Employees Union, No. 91 FSIP 229 at 4 (March 10, 1992). As part of the IRS Restructuring Act of 1997, Congress codified the use of pseudonyms with an effective date of July 22, 1998. Pub.L. 105-206, Title III, Section 3706, July 22, 1998, 112 Stat. 778.
Use of pseudonyms is intended to prevent personal harassment of IRS employees by taxpayers and other members of the public, especially tax protesters. Among the problems identified by the Treasury Employees' Union, and upon which the FSIP relied, were assaults, threats, obscene phone calls at work and at home, and filing of false interest and dividend reports (Form 1099), and false liens, against IRS employees. The Union cited a 1988 Federal Bureau of Investigation Report, which found that more IRS enforcement officers suffered more assaults than any other law enforcement group in the Federal Government.
The FSIP held that "employees shall only be required to identify themselves by last name" and "[i]f an employee believes that due to the unique nature of [his/her] last name, and/or the nature of the office locale, that the use of the last name will still identify [him/her] [s/he] may 'register' a pseudonym with his or her supervisor." The IRS Restructuring and Reform Act of 1997 requires that an employee give "adequate justification. . . including protection of personal safety" and obtain prior approval from his or her supervisor before using a pseudonym.
The pseudonym may be issued only in place of the employee's last name; the real first name must be used. Once a pseudonym is issued, it is used by that employee at all times while on duty, whether working in the field or in the office. All history sheets, liens, levies and summonses are signed using the pseudonym. Pocket commissions (credentials) are issued in the pseudonym only.
However, the IRS-issued identification, which allows access to IRS facilities, may only be issued in the employee's real name.
There has been very little litigation concerning the use of pseudonyms and what has occurred involves summons enforcement. Generally, courts have not found fault with the practice. See, e.g., Sanders v. United States, No. 94-1497, 1995 WL 257812 (10th Cir. May 2, 1995); Springer v. Internal Revenue Service, Nos. S-97-0091 WBS GGH, S-97-0092 WBS GGH, S-97-0093 WBS GGH, 1997 WL 732526 (E.D. Cal. Sept. 12, 1997); United States v. Wirenius, No. CV 93-6786 JGD, 1994 WL 142394, at *n.2 (C.D. Cal. Feb. 11, 1994); Dvorak v. Hammond, No. CIV 3-94-601, 1994 WL 762194, at *n.1 (D. Minn. Dec. 5, 1994). But see United States v. Nolen, 4:96-CV-934-A (N.D. Texas, 1997) (refusal of District Court to allow a Revenue Agent to use a pseudonym to testify and stating that it would not allow such practice in the future).
In Nolen, the AUSA called the Revenue Agent to the stand, asked him to state his name for the record and then immediately had the RA identify that name as his pseudonym. The Court took issue with the fact that the RA gave his pseudonym as his name, despite previous disclosure of the pseudonym to the court in the declaration signed by the RA.
Obviously, as officers of the court, government attorneys should not submit declarations or affidavits signed by an IRS employee using a pseudonym without informing the court that a pseudonym is being used. Likewise, caution should be exercised when tendering any witness who is using a pseudonym. Particular care should be taken if your summary witness/IRS expert witness has used a pseudonym; in those instances the witness should either relinquish the pseudonym or not be used as a witness. In that regard, the IRS recognizes that the court must be informed about the use of a pseudonym and that the employee's legal name may ultimately have to be disclosed, depending on the circumstances of the case. Minimally, consultation with your supervisor and with the IRS about how best to proceed in these instances is advised.
THE PERJURY PROBLEM
How does the IRS turn a weak misdemeanor case into a multiple felony conviction? Answer: Find a false verbal or written statement and refer the perjury violation to the U.S. Attorney's office for criminal prosecution. Let's take a look at the arsenal of weapons the IRS can use to get a felony conviction for someone lying to an IRS employee and/or delivering false documents. The Internal Revenue Code (IRC) has two types of punishment for tax-related perjury violations: one is a misdemeanor; the other is a felony. To me, the misdemeanor charge is the appropriate charge for most IRS violations, but it is rarely used. The IRS prefers felony convictions whenever possible! Let us start by taking a look at 26 USC Section 7207 (misdemeanor):
"Anyone who willfully delivers or discloses to the [IRS] any list, statement or other document, known by him to be fraudulent or to be false as to any material matter, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both."
26 USC Section 7206(1) (felony):
"Anyone who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter shall... be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both, together with the costs of prosecution."
Now we enter the murky waters of double and triple charges for the same crime. If you think these draconian measures are cruel and unusual punishment, you will be surprised to know that multiple charges for the same crime are legal and have been approved by the U.S. Supreme Court. Multiple perjury violations are left to the discretion of the U.S. Attorney's Office and are oftentimes used as a club to punish aggressive taxpayers.
Examine 18 USC Section 1621 (felony):
"Whoever, (1) having taken an oath before a competent tribunal, officer, or person, on any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed is true, willfully subscribes as true any material matter which he does not believe to be true; is guilty of perjury and shall... be fined no more than $2,000 or imprisoned not more than five years, or both."
Together, the so-called tax perjury statute 7206(1) and the general perjury statute 1621 are very serious felonies, but as you have noted, the above statutes require the taxpayer to perform particular overt acts. The tax perjury statute requires the taxpayer to submit a document (such as a tax return, financial statement, or affidavit) signed under the penalties of perjury. The general perjury statute requires the taxpayer to commit perjury after taking an oath. Whenever the federal prosecutors have a weak case and know the jury is likely to acquit, they will crank up "old reliable," the general false statement statute. This is what 18 USC Section 1001 (felony) states:
"Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully makes any false... statements shall be fined not more than $10,000 or imprisoned not more than five years, or both."
Ironically, you can be charged with failing to file a tax return, which is a misdemeanor, and end up going to jail for up to five years under section 1001 for a careless statement you made to an IRS employee. Taxpayers who have not filed tax returns for three years or more and owe more than $75,000 in tax must exercise extreme caution when they attempt to re-enter the tax system. The tax returns you will be submitting will be signed under the penalties of perjury, and if the IRS later proves that you omitted income and/or disguised some of your deductions, the U.S. Attorney will attempt to prosecute you under multiple statutes such as section 7201 for tax evasion, section 7206(1) for tax perjury violations, and section 1001 for the general false statement statute.
Taxpayers attempting to re-enter the tax system must hire the very best tax advisors they can find. A preference should be given to professionals who specialize in failure-to-file cases and have 20 or more years of experience. The perjury statutes also affect taxpayers who file every year but take very aggressive positions on their tax returns. The following axiom must be adhered to at all times: Never attempt to explain, clarify, or deny any issue relating to your tax returns with any IRS employee. All communications must be through your advisors. If you are approached by IRS Special Agents, you should not open your mouth. The IRS Special Agent cannot compel you to give testimony or produce documents at this time. Anything you say or do will be used against you in federal court. Remember, most criminal tax cases are "made" within the first 20 minutes of conversation.
We have all heard about the "three great lies in the world"; today I am proposing the fourth great lie: "I am a government agent and I am here to help you." I can't begin to tell you how often taxpayers fall hook, line, and sinker for this lie. When I worked for the IRS, my first few cases with the IRS/Criminal Investigation Division (IRS/CID) were quick and easy because the taxpayers and their advisors did not fully understand they had the right to remain silent even after I read them their Fifth Amendment rights ! It was like stealing candy from a baby. Most Special Agents get sick of this type of work and transfer to narcotics, money laundering, or political corruption where they can use their skills and talents against the real criminals.
The best-kept secret when dealing with the IRS/CID is to know that its agents are under tremendous pressure to produce as many easy criminal cases as possible. Every year the IRS/CID likes to boast they initiate 3,000-4,000 investigations and have a 90% successful prosecution rate; to get these high numbers their agents must pursue many easy-to-work perjury cases. Conclusion: It is much more difficult to work a criminal case if the taxpayer declines to answer questions and declines to provide the records necessary for a successful criminal investigation. You have every right to take this position. Use it! Overview of IRS Criminal Investigations
|FY 2005||FY 2004||FY 2003|
|Percent to Prison||83%||84%||84%|
|*Sentence includes confinement to federal prison, halfway house, home detention, or some combination thereof. A fiscal year runs from October 1 through September 30.|
Let the Taxpayer Beware!
Caterpillar Tractor Company v. US, 589 F2d 1040 (also see GEHL Co. v. C.I.R. 795 F2d 1324):
"Informal publications of IRS all the way up to revenue rulings are simply guides to taxpayers and taxpayer relies on them at his peril."