Why Penalties are Illegal for Anything But Government Franchisees,
Employees, Contractors, and Agents, Form #05.010- Use this
as an attachment in response to a federal penalty collection
notice to prove that you aren't responsible to pay the assessed
penalty. Make sure you also follow the guidelines relating
to SSNs in the article entitled "About
SSNs/TINs on Government Forms and Correspondence"
The Constitutional Prohibition Against Bills of Attainder: A Waining Guarantee of Judicial Trial
Revenue Manual, Part 20: Penalty and Interest
Bills of Attainder-Thomas M. Saunders
U.S. Constitution, Article 1, Section 9, Clause 3:
“No Bill of Attainder or ex
post facto Law shall be passed.” (with respect to the U.S. Congress)
United States v. Wheeler, 254 U.S. 281, 65 L.ed. 270, 41 S.Ct.
The United States is
without power to forbid and punish infractions by individuals of the
rights of citizens to reside peacefully in the several states, and to
have free ingress into and egress from such states. Authority to deal
with such wrongs is exclusively within the power reserved by the Federal
Constitution to the states.
[United States v. Wheeler, 254 U.S. 281, 65 L.ed. 270, 41 S.Ct. 133. ]
Internal Revenue Manual, Section 18.104.22.168.2. Handling of Returns and Claims
Internal Revenue Manual
Handling of Returns and Claims
Screen returns/claims to determine if FRP criteria has been met. Ensure FRP Technical Coordinator determinations are input to FRP Master on notated frivolous return/claims. Refer to IRM 22.214.171.124, Identification of Frivolous Submissions for criteria.
Pursuant to a recent Tax Court opinion, we must obtain written supervisory approval of a civil penalty, including section 6702, before assessing a penalty. See Clay v. Commissioner, 152 T.C. 222 (2019). The Tax Court has ruled that the IRS supervisory approval for the section 6702 penalty does not need to be obtained before issuing Letter 3176C (Kestin v. Commissioner, 153 T.C. 14 (2019). The best time to obtain supervisory approval for the section 6702 penalty is after the expiration of the 30 day period provided in Letter 3176C (allowing the taxpayers to correct their frivolous filing). Supervisory approval must be obtained before sending any further written communication regarding the penalty to the taxpayer.
BMF returns require expedited handling (2 business days) to avoid interest on legitimate refunds.
[Internal Revenue Manual, Section 126.96.36.199.2. Handling of Returns and Claims
US v. Yunis, 924 F.2d. 1086 - Court of Appeals, Dist. of Columbia Circuit 1991
To be sure, courts should hesitate to give penal statutes extraterritorial effect absent a clear congressional directive. See Foley Bros. v. Filardo, 336 U.S. 281, 285, 69 S.Ct. 575, 577, 93 L.Ed. 680 (1949); United States v. Bowman, 260 U.S. 94, 98, 43 S.Ct. 39, 41, 67 L.Ed. 149 (1922).
[US v. Yunis, 924 F.2d. 1086 - Court of Appeals, Dist. of Columbia Circuit 1991]
U.S.C. §6673: - Sanctions and costs awarded by courts
26 > Subtitle
F > CHAPTER
68 > Subchapter
B > PART
I > Sec. 6673.
6673. - Sanctions and costs awarded by courts
(a) Tax court proceedings
(1) Procedures instituted
primarily for delay, etc.
Whenever it appears to the Tax
Court that -
(A) proceedings before it have
been instituted or maintained by the taxpayer primarily for delay,
(B) the taxpayer's position in
such proceeding is frivolous or groundless, or
(C) the taxpayer unreasonably
failed to pursue available administrative remedies, the Tax Court, in its
decision, may require the taxpayer to pay to the United States a penalty
not in excess of $25,000.
(2) Counsel's liability for
Whenever it appears to the Tax
Court that any attorney or other person admitted to practice before the Tax
Court has multiplied the proceedings in any case unreasonably and
vexatiously, the Tax Court may require -
(A) that such attorney or
other person pay personally the excess costs, expenses, and attorneys' fees
reasonably incurred because of such conduct, or
(B) if such attorney is
appearing on behalf of the Commissioner of Internal Revenue, that the
United States pay such excess costs, expenses, and attorneys' fees in the
same manner as such an award by a district court.
(b) Proceedings in other
(1) Claims under section 7433
Whenever it appears to the
court that the taxpayer's position in the proceedings before the court
instituted or maintained by such taxpayer under section 7433 is frivolous
or groundless, the court may require the taxpayer to pay to the United
States a penalty not in excess of $10,000.
(2) Collection of sanctions
In any civil proceeding before
any court (other than the Tax Court) which is brought by or against the
United States in connection with the determination, collection, or refund
of any tax, interest, or penalty under this title, any monetary sanctions,
penalties, or costs awarded by the court to the United States may be
assessed by the Secretary and, upon notice and demand, may be collected in
the same manner as a tax.
(3) Sanctions and costs
awarded by a court of appeals
In connection with any appeal
from a proceeding in the Tax Court or a civil proceeding described in
paragraph (2), an order of a United States Court of Appeals or the Supreme
Court awarding monetary sanctions, penalties or court costs to the United
States may be registered in a district court upon filing a certified copy
of such order and shall be enforceable as other district court judgments.
Any such sanctions, penalties, or costs may be assessed by the Secretary
and, upon notice and demand, may be collected in the same manner as a tax
U.S.C. §6694: Understatement of taxpayer's liability by
income tax return preparer
U.S.C. §6695: Other assessable penalties with respect to the preparation
of income tax returns for other persons
U.S.C. §6671(b): Definition of "person" for the purposes
of all penalties and sanctions
26 > Subtitle
F > CHAPTER
68 > Subchapter
B > PART
I > Sec. 6671.
Sec. 6671. - Rules for
application of assessable penalties
(a) Penalty assessed as tax
The penalties and liabilities
provided by this subchapter shall be paid upon notice and demand by the
Secretary, and shall be assessed and collected in the same manner as taxes.
Except as otherwise provided, any reference in this title to ''tax''
imposed by this title shall be deemed also to refer to the penalties and
liabilities provided by this subchapter.
term ''person'', as used in this subchapter, includes an officer or
employee of a corporation, or a member or employee of a partnership, who as
such officer, employee, or member is under a duty to perform the act in
respect of which the violation occurs
Black's Law Dictionary,
Sixth Edition, p. 165:
Bill of attainder:
Legislative acts, no matter what their form, that apply either to
named individuals or to easily ascertainable members of a group in such a
way as to inflict punishment on them without a judicial trial.
United States v. Brown, 381 U.S. 437, 448-49, 85 S.Ct. 1707, 1715,
14 L.Ed. 484, 492; United States v. Lovett, 328 U.S. 303, 315, 66 S.Ct.
1073, 1079, 90 L.Ed. 1252. An
act is a "bill of attainder" when the punishment is death and a
"bill of pains and penalties" when the punishment is less sever; both
kinds of punishment fall within the scope of the constitutional
prohibition. U.S.Const. Art.
I, Sect 9, Cl. 3 (as to Congress);' Art. I, Sec, 10 (as to state
legislatures). [Emphasis added]
[Black's Law Dictionary,
Sixth Edition, p. 165]
"PERSON" FOR THE PURPOSE OF PENALTIES UNDER THE INTERNAL REVENUE
of Federal Regulations]
26, Volume 17, Parts 300 to 499]
as of April 1, 2000]
the U.S. Government Printing Office via GPO Access
to the Tax and Additional Amounts--Table of Contents
301.6671-1 Rules for application of assessable penalties.
Person defined. For purposes of subchapter B of chapter 68, the
term ``person'' includes an officer or employee of a corporation, or a
member or employee of a partnership, who as such officer, employee, or
member is under a duty to perform the act in respect of which the violation
TABLE OF AUTHORITIES AND RULES
Look in this table for regulations implementing penalties under the Internal
Revenue Code. There are none!
IRS Due Process
Meeting Worksheet: Shows missing implementing regulations
relating to enforcement of income taxes!
26 C.F.R. §1.6661-6 Waiver of penalty.
(a) In general.
The Commissioner may waive all
or part of the penalty imposed by section 6661 on a showing by the taxpayer
that there was reasonable cause for the understatement (or part
thereof) and that the taxpayer acted in good faith. The circumstances taken
into account in determining whether to waive the penalty are described in
paragraph (b) of this section. In addition, paragraph (c) of this section
describes circumstances in which the penalty will always be waived.
Reasonable cause and good faith.
In making a determination
regarding waiver of the penalty under section 6661, the most important
factor in all cases not described in paragraph (c) of this section will be
the extent of the taxpayer's effort to assess the taxpayer's proper tax
liability under the law. For example, reliance on a
position contained in a proposed regulation would ordinarily
constitute reasonable cause and good faith. In addition, circumstances that
may indicate reasonable cause and good faith include an honest
misunderstanding of fact or law that is reasonable in light of the
experience, knowledge, and education of the taxpayer. Moreover, a
computational or transcriptional error would, in general, indicate
reasonable cause and good faith. Reliance on an information return or on
the advice of a professional (such as an appraiser, an attorney, or an
accountant) would not necessarily constitute a showing of reasonable cause
and good faith. Similarly, reliance on facts that, unknown to the taxpayer,
are incorrect would not necessarily constitute a showing of reasonable
cause and good faith. Reliance on an information return, professional
advice, or other facts, however, would constitute a showing of reasonable
cause and good faith if, under all the circumstances, such reliance was
reasonable and the taxpayer acted in good faith. For example, reliance on
erroneous information, (such as an error relating to the cost of property,
the date property was placed in service, or the amount of opening or
closing inventory) inadvertently included in data compiled by the various
divisions of a multidivisional corporation or in financial books and
records prepared by those divisions would, in general, indicate reasonable
cause and good faith, provided the corporation had internal controls and
procedures, reasonable under the circumstances, that were designed to
identify factual errors. Accordingly, waiver of the section 6661 penalty
attributable to an understatement caused by such an error would be
appropriate. Similarly, a taxpayer's reliance on erroneous information
reported on a Form 1099 would indicate reasonable cause and good faith, and
waiver would be appropriate, if the taxpayer did not know or have reason to
know that the information was incorrect. Generally, a taxpayer would know
or have reason to know that the information on a Form 1099 is incorrect
only if such information is inconsistent with other information reported to
the taxpayer or is inconsistent with the taxpayer's knowledge concerning
the amount and rate of return of the payor's obligation. In the case of an
understatement that is related to an item on the return of a pass-through
entity (as defined in section 1.6661-4(e)), the good faith or lack of good
faith of the entity generally will be imputed to the taxpayer that has the
understatement. Any good faith imputed to the taxpayer under the preceding
sentence, however, may be refuted by other factors indicating lack of good
faith on the part of the taxpayer.