Practical and Practice issues for Professionals who practice in the area of taxation. Moral, social and economic issues relating to taxes, including international issues, the U.S. Internal Revenue Code, state tax issues, etc. Not for "tax protestor" issues, which should be posted in the "tax protestor" forum above. The advice or opinion given herein should not be relied on for any purpose whatsoever. Also examines cookie-cutter deals that have no economic substance but exist only to generate losses, as marketed by everybody from solo practitioner tax lawyers to the major accounting firms.
- Endangerer of Stupid Species
- Posts: 877
- Joined: Sun Jun 05, 2011 9:09 pm
- Location: Hovering overhead, scanning for prey
I don't recall seeing this theory before. It seems the tax court hadn't either.
In re: Gary P. Herring, Docket No. 29141-11S
According to petitioner, he entered into an enforceable contract with the Internal Revenue Service (IRS) when he filed his 2008 Federal income tax return with the attached Form 5405 [Repayment of the First-Time Homebuyer Credit], claiming the FTHBC. According to petitioner, the IRS agreed to lend petitioner $7,500 at 0% interest, repayable in $500-a-year installment payments for a term of 15 years. He further contends that the IRS ratified the contract by accepting his 2010 and 2011 Federal income tax returns, both of which included a $500 repayment of the FTHBC.
Simply put, he is incorrect on the point. We are aware of no authority that, in general, provides that items shown on a Federal income tax return can give rise to a contractual relationship between a taxpayer and the IRS, or specifically, allows a taxpayer to establish a contractual relationship with the IRS by claiming the FTHBC on a Federal income tax return. For the most part, an item shown on a return does little more than to establish, at least as of the date of the filing of the return, the taxpayer’s position with respect to that item. See Wilkinson v. Commissioner, 71 T.C. 633, 639 (1979). Petitioner’s claim that he is entitled to the FTHBC because of a contractual relationship with the IRS is rejected.
"Never try to teach a pig to sing. It wastes your time and annoys the pig." - Robert Heinlein
- Quatloosian Master of Deception
- Posts: 1542
- Joined: Wed Mar 19, 2003 3:00 am
- Location: Sanhoudalistan
As the court noted in footnote 2.
Under the circumstances of this case, the first-time homebuyer credit, as
then allowable, resembled more a non-interest-bearing loan repayable through
increases to a taxpayer’s otherwise due Federal income tax for subsequent periods
than it did a credit
It wasn't that crazy an argument. I think the court should have pointed out that if a contract existed between Herring and the government, it was conditional on Herring meeting certain prerequisites. He didn't.
"Here is a fundamental question to ask yourself- what is the goal of the income tax scam? I think it is a means to extract wealth from the masses and give it to a parasite class." Skankbeat