SFR's Impossible

By Pitman Buck, Jr.

 The Internal Revenue Service (IRS) claims that it has authority under 26 U.S.C. 6020(b) to file an income tax return (called a "Substitute For Return,"or SFR) on behalf of someone who did not file a return. This claim has made me curious about the IRS’ use of the word "substitute." Black's Law Dictionary, 6th ed., defines the term "substitute" to mean, "One who or that which stands in the place of another person or thing; to exchange." (Bold added.) So, in the real world, to be a substitute for another person or thing, the other person or thing must already exist or must have existed. To illustrate, no spectator has ever seen, known or heard of an athletic coach sending a substitute into a game for another player who wasn't already in the game or for a player who does not exist and never existed. Likewise, in the real world, to be a substitute for a thing – let’s say the thing is John Doe’s 1995 tax return – then that thing, John Doe’s 1995 tax return, must already exist or must have already existed.

However, the IRS makes the incredible claim under section 6020(b) that it may exchange its own created 1995 return for one that John Doe did not file, i.e., for another return that does not exist. WOW! What magic! It is simply amazing to me that the IRS claims that the law empowers it with the magical ability to exchange a thing that it created for another thing that never existed and yet get something in return!

The evidence suggests that reality means little, if anything, to the IRS. The agency’s so-called "substitute returns" that it acquires in mystical exchanges for other things that do not exist -- "a something for nothing" exchange -- is another example of Orwellian newspeak and reminds me of the revealing transactions that the U.S. Tax Court uncovered in Phillips v. Commissioner, 88 TC 529 (1987):

"Respondent's [IRS's] counsel may not choose to litigate against officially published rulings of the Commissioner without first withdrawing or modifying those rulings. ... The forms ...were no more than dummy returns filed for processing purposes." The court continued: "The only evidence in the record that even suggested that any [IRS] substitute return existed was a transcript of account that reflected actions taken inconsistently with the law (86 T.C. at 437 n. 5) and consistently with the conclusion that the only paper filed by respondent [IRS] was a first page of a Form 1040 for the taxable year 1979. 86 T.C. at 437. This form reported only petitioner's name, address, and social security number, and was not executed by respondent [the IRS]. 86 T.C. at 437. ... It was, therefore, unreasonable for respondent [IRS] to pursue his groundless position that these dummy returns, which failed to meet the requirements of section 6020(b) and his own regulations, were 'returns' for purposes of section 6013(b). The record could not reasonably be viewed as supporting this argument [of IRS]." (Bold added)

  Last revision: August 14, 2009 08:07 AM
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