TAX DEPOSITION QUESTIONS: 13. 26 U.S.C. 6020(b): SUBSTITUTE FOR RETURNS

13.  26 U.S.C. 6020(b):  SUBSTITUTE FOR RETURNS

Introduction

Ex-IRS agents testify about agent training courses conducted by IRS that fraudulently and deceptively train them to create "Substitute Returns" under 26 USC 6020(b).  There is NO legal authority for IRS agents to create "Substitute Returns" for American citizens who choose not to file a individual Form 1040.  "Substitute Returns" become the vehicle of IRS fraud for unlawful tax assessments, fraudulent penalties and even criminal prosecution by DOJ.

Findings and Conclusions

With the following series of questions, we intend to prove that when an American stands up for his rights by choosing not to file tax returns, the IRS has to violate the law and produce a fraudulent assessment to create a liability.

  • The IRS has NO legal authority to create a "substitute return" for a citizen who chooses not file an individual income tax return.
  • Without a signed tax return from a citizen, no individual income tax may be legally "assessed" against a citizen by an IRS agent.
  • 26 U.S.C. Section 6020(b) "Substitute Returns" is NOT applicable to individual income taxes – only business related taxes.
  • IRS has propagated the tax fraud by willfully utilizing deceptive training methods and materials for their agents.
  • Although there is no legal authority, IRS Agents are fraudulently trained by the IRS to create "Substitute Returns" for individual income taxes. Substitute Returns are used routinely in the normal course of an agent’s workload.
  • IRS has put their agents at significant legal risk, civilly and criminally, for acting outside the scope of their delegated statutory authority.
  • U.S. Citizens have been falsely convicted of tax "crimes" based directly on assessment documents fraudulently certified by IRS agents as lawful evidence of proper assessments and presented to U.S. District Courts.

Bottom Line: ex-IRS Agents have publicly sworn under oath about deceptive training practices for IRS agents and have presented irrefutable documentation that they have NO legal authority to assess an individual income tax unless a return is first filed and signed by a citizen.

Section Summary

Witnesses:

  • John Turner
  • Irwin Schiff
  • Joe Bannister

PDF Transcript

PDF Acrobat version of this section including questions and evidence (large: 8.25 Mbytes)

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Under affidavit (Exhibit 190), John Turner, a former IRS revenue officer, submits training materials that comprise two of the many lessons he studied during his initial training to become a Revenue Officer during Revenue Officer Phase One training.  Designated as (Exhibit 191), the first lesson is entitled, "Lesson 23 Section IRC 6010(b).  The next 16 questions will arise from an inspection of this lesson.


13.1..  On page 23-1, under REFERENCES, "Circular E" is listed.  Would you agree, besides the Circular E, there are no other reference materials listed? (WTP #301)

13.2 . "Circular E", more fully known as Circular E, Employer's Tax Guide, is also designated by IRS as Publication 15. Would you also agree that "Circular E" deals essentially with employer withholding requirements and Form 941, Employer's Quarterly Federal Tax Return? (Exhibit 193) (WTP #302)

13.3.  In Lesson 23, page 23-1, under CONTENTS, three types of tax returns are listed:  Employment Tax Returns, The Partnership Return, and Excise Tax Returns.  Would you agree that Income Tax Returns are not included?  (WTP #303)

13.4.  In Lesson 23, page 23-1, under INTRODUCTION, would you agree that the purpose of this Lesson 23 is to instruct the revenue officer trainee about how to deal with situations involving the occasional taxpayer who refuses to voluntarily file returns, using an important administrative tool referred to as 6020(b) procedure?  (WTP #304)

13.5.  Would you agree that in Lesson 23, Figure 23-1 on page 23-2 is a reprint of Internal Revenue Code Section 6020(b) and the Regulation at Section 301.6020-1?  (Exhibit 191b, page 23-2; Exhibit 161, Title 26 Internal Revenue Code, Section 6020(b); Exhibit ___IR Regulation 301.6020-1).  (WTP #305)

13.6.  Lesson 23, Figure 23-2, page 23-3, contains a reprint of Delegation Order 182.  Would you agree that the Order lists revenue agents and revenue officers as having delegated authority to execute returns under the authority of 6020(b)? (Exhibit 191c, page 23-3).  (WTP #306)

13.7.  Would you agree that the Internal Revenue Manual restricts the broad delegation of Delegation Order No. 182 to employment, excise, and partnership taxes?  (WTP #307)

13.8.  Would you agree that the Secretary has recognized that the delegation authority of D.O. No. 182 is restricted to employment, excise, and partnership taxes because of constitutional issues?  

13.9.  Is it true that the Internal Revenue Manual lists the following tax returns:

  • Form 940, Employer's Annual Federal Unemployment Tax Return;
  • Form 941, Employers Quarterly Federal Tax Return;
  • Form 942, Employer's Quarterly Tax Return for Household Employees;
  • Form 943, Employer's Annual Tax Return for Agricultural Employees;
  • Form 720, Quarterly Federal Excise Tax Return;
  • Form 2290, Federal Use Tax Return on Highway Motor Vehicles;
  • Form CT-1, Employer's Annual Railroad Retirement Tax Return;
  • Form 1065, U.S. Partnership Return of Income-

as being the only forms appropriate for action under 6020(b)?  (WTP #309)

13.10.  Would you agree that Form 1040, U.S. Individual Income Tax Return is NOT included in IRM 5.18.2.3 as a return appropriate for action under 6020(b)? (WTP #310)

13.11.  Is it true that when recommending assessments under 6020(b) the revenue officer will prepare all the necessary returns? (Exhibit 191d, page 23-4; Exhibit 161, IRS Section 6020(b)(1)) (WTP #311)

13.12.  Would you agree that the balance of Lesson 23 IRS SECTION 6020(b) for Revenue Officer Phase One training explains the 6020(b) procedures for computing the tax for Employment, Excise, and Partnership returns?  (WTP #312)

13.13.  Would you agree that Lesson 23 IRS SECTION 6020(b) does not contain any references to preparing 1040 series income tax returns under 6020(b)?  (WTP #313)

13.14.  Would you agree that Lesson 23 IRS SECTION 6020(b) makes the statement that the revenue officer trainee,

"You have already studied audit referrals as a means to enforce compliance on income tax returns?"  (Exhibit 191c, page 23-3)

(WTP #314)

13.15.  Would you agree that the trainee is told that by the end of the lesson he will be able to identify situations when action under IRS Section 6020(b) is appropriate?  (WTP #315)

13.16.  If the revenue officer is expected to identify situations when action under IRC 6020(b) is appropriate, logic then, would hold that this necessarily implies that the revenue officer would also be expected to identify situations when action under IRC 6020(b) would not be appropriate.  Would you agree that Lesson 23 IRS SECTION 6020(b) made it clear that it is not appropriate to use 6020(b) for income tax, Form 1040 non-filers?  (Exhibit 191, Lesson 23 in its entirety; Exhibit 194, D.O. Order No. 182 (Rev. 7) IRM Part 1.2.2.5.3)  (WTP 316)

13.17. Is it true that there are no training instructions within Lesson 23 that pertain to using 6020(b) to prepare and assess Form 1040, U.S. Individual Income Tax Return? (Exhibit 191 in its entirety)  (WTP #317)

13.18.  Is it true that Lesson 23 points to Lesson 25 REFERRALS for instructions on dealing with income tax non-filers?  (Exhibit 191c, page 23-3 "You have already studied audit referrals as a means to enforce compliance on income tax returns.")

13.19.  The language of IRC 6020(b)(1) is very broad,

"...if any person fails to make any return..."

Does the IRS purport that there are ways (plural) to resolve cases for nonfilers with different situations, different types of taxes and different types of tax returns?  (Under WHY THIS LESSON IS IMPORTANT) (WTP #319)

13.20.  Does the IRS make a distinction in the procedures for dealing with nonfilers of income tax returns as opposed to employment, partnership and excise tax returns? (Under WHY THIS LESSON IS IMPORTANT) (WTP #320)

13.21.  Is it true that IRS uses "6020(b) procedures" to enforce compliance of nonfilers of employment, excise, and partnership returns, and uses "Referral to Exam" procedures to enforce compliance of income tax nonfilers?  (Under WHY THIS LESSON IS IMPORTANT) (WTP #321)

13.22.  Do you agree that the stated focus of Lesson 25 REFERRALS is the referral process?  (Second paragraph under WHY THIS LESSON IS IMPORTANT) (WTP #322)

13.23.  Do you agree that an objective of Lesson 25 is for the trainee to be able to select which cases should be referred to the Examination Division?  (Under LESSON OBJECTIVES) (WTP #323)

13.24.  Do you recall that Lesson 23 IRC SECTION 6020(b) made it clear that the revenue officer is not to use 6020(b) for enforcing compliance of income tax nonfilers, but instead is to use the referral process instead? (Exhibit 191c, Lesson 23, page 23-3)

13.25.  In Lesson 25, the reference materials to be used for the lesson are listed under REFERENCES, and the lone item listed is IRM 52(10)0.  DO you agree that there is no reference to any statute or any internal revenue code section?  (Exhibit 192b, page 25-2)  (WTP #325)

13.26.  In Lesson 25, page 25-3, under OBJECTIVES, would you agree that the trainee is told that after completing this lesson he will be able to select those cases which should be referred to the Examination Division?  (Exhibit 192c, page 25-3) (WTP #326)

13.27.  Lesson 25 pages 25-4 through 25-9 contain instructions, with examples, showing the trainee how to complete referral forms.  This section of the lesson on the subject of making referrals to Exam under income tax non-filers concluded with the statement: 

"Remember: Refusal to file cases involving Forms 940, 941, 942, 943, 720, 1065, 2290, or CT-1 will not  be referred to Exam.  These returns should be prepared under authority of IRC Section 6020(b)." 

Clearly, IRC section 6020(b) is to be utilized to enforce compliance of specified business master file returns.  In this lesson, is there mention anywhere of the statute that authorizes IRS preparation of Form 1040 U.S. Individual Income Tax Returns?  (Exhibit 192, Lesson 25 in its entirety)  (WTP #328)

13.28.  IRC 6020(b)(1) is written in very broad language and if taken literally it seems to give authorization to IRS to make any return for any person who fails to make one.  However, we have seen how the statute is, in fact, restricted in is application.  Revenue officers, and specified other IRS employees do  have delegated authority to make returns under 6020(b).  But, we have seen that the delegated authority limits the types of returns that can be prepared under 6020(b).  We have seen that the exclusion includes income tax returns, corporate or individual.  Since 6020(b) does not permit preparation of income tax returns, and, since the SFR program is merely a program, with no basis in law, what is the authority for IRS to make an income tax return when a citizen fails to make his own?  (None) 

13.29. It is well settled in law that government employees need proper delegate authority to operate in their capacities.  Do IRS employees have delegated authority to make "Substitute for Returns"?  (No)  (Exhibit 195, IRS letter dated Nov. 2, 1993)  (WTP #330)

13.30  It is well settled in law that government employees need proper delegated authority to operate in their capacities. Do IRS employees have delegated authority to make "Substitute for Returns"? (No)

Phase One Revenue Officer training material, Lesson 23 IRC SECTION 6020(B) clearly demonstrates how and why 6020(b), in spite of its language, is not able to allow IRS to make proper, legally valid, 1040 income tax returns for nonfilers.

Yet, another IRM claims that IRS does have authority for income tax returns under 6020(b). Exhibit 202 IRM 5480, states, "SCCB prepares Forms 1040 under authority of Internal Revenue Code 6020(b)…"

Since both manuals cannot both be correct, how can this be rectified?      ANSWER. It cannot be rectified.

For BMF returns under 6020(b), IRS employees complete the return with all necessary data. The returns include an employee's signature where the taxpayer would normally sign. 6020(b) returns also disclose the computed tax liability.

With IMF returns (income tax) done via SFR procedures, income information is never disclosed on the return, tax liability is not disclosed on the return, and there is never a signature by an employee on a 1040 return.

What this really implies is that bona fide "constitutional issues" are involved with the income tax, so IRS cannot use the same procedures as they do with BMF returns.

13.31.  Additional Material on IRS Agent "Pocket Commission" Hearing Testimony:

Summary:  Pocket Commissions are the identification badge used by Treasury IRS Revenue Agents to establish their legal authority with the public.  As the testimony and evidence shows these agents do NOT have legal authority to seize property or otherwise "enforce" the income tax laws on ordinary Americans.

In addition to the testimony, the following evidence is offered:

CONCLUSIONS:

Phase One Revenue Officer training material, Lesson 23 IRC SECTION 6020(b) clearly demonstrates how and why 6020(b), in spite of its language, is not able to allow IRS to make proper, legally valid, 1040 income tax returns for nonfilers.  Yet, another IRM claims that IRS does have authority for income tax returns under 6020(b). IRM 5480, states, "SCCB prepares Forms 1040 under authority of Internal Revenue Code 6020(b)..."  Since both manuals cannot both be correct, how can this be rectified?  It cannot be rectified.  For BMF returns under 6020(b), IRS employees complete the return with all necessary data.  6020(b) returns also disclose the computed tax liability.  With IMF returns (income tax) done via SFR procedures, income information is never disclosed on the return, tax liability is not disclosed on the return, and there is never a signature by an employee on a 1040 return.  What this means is that "constitutional issues" are involved with the income tax, so IRS cannot use the same procedures as they do with BMF returns.