Quickbooks withholds zero federal tax

[.]

As Nikki pointed out, "lorne" is playing with fire.

26 USC 6694 provides for a $1K penalty for each return by a preparer who knew or should have known that the argument was frivolous. $5K if the preparer willfully understated liability, or intentionally or recklessly disregarded rules or regs.

'CtC' has already been determined to be frivolous. Could a preparer using 'CtC' also be found to have violated the higher standard? Probably quite easily.

26 USC 6701 provides for a $1K penalty for aiding and abetting an understatement of tax. That would also be per return.

26 USC 7206 provides for criminal felony prosecution for assisting in the preparation of a false return at a cost per pop of $100K or 3 years in prison, or both.

If a tax return preparer prepares any return or claim of refund with respect to which any part of an understatement of liability is due to [an unreasonable position,] and knew (or reasonably should have known) of the position, such tax return preparer shall pay a penalty with respect to each such return or claim in an amount equal to the greater of $1,000 or (...)

Any tax return preparer who prepares any return or claim for refund with respect to which any part of an understatement of liability is due to [a willful attempt in any manner to understate the liability for tax on the return or claim, or a reckless or intentional disregard of rules or regulations] shall pay a penalty with respect to each such return or claim in an amount equal to the greater of $5,000 or (...)

http://www.law.cornell.edu/uscode/26/us ... -000-.html

Any person who aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim, or other document [and] who knows (or has reason to believe) that such portion will be used in connection with any material matter arising under the internal revenue laws and who knows that such portion (if so used) would result in an understatement of the liability for tax of another person, shall pay a penalty with respect to each such document in the amount [of] $1,000.

http://www.law.cornell.edu/uscode/26/us ... -000-.html

Any person who [w]illfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document (...) shall be guilty of a felony and upon conviction thereof shall be fined not more than $100,000 (...) or imprisoned not more than 3 years, or both

http://www.law.cornell.edu/uscode/uscod ... -000-.html

Nasty stuff. Prepare a hundred 'CtC' returns and perhaps wind up owing $500K+ in penalties and maybe a little time in a federal pen.

Go for it, "lorne." Assuming that you aren't a carefully constructed troll. You can easily beat the CtC clowns who only owe $30K or $50K and even the current record-holding CtC moron who admitted to owing over $100K of frivolous filing penalties.

[LPC]

I should have also added that the "government employee" argument is painstakingly refuted here:

http://evans-legal.com/dan/tpfaq.html#government

[Imalawman]

well yes, thats the point. The income tax started very slowly, took a long time to reach a trillion. It appears the IRS early on realized, hey wow folks not even liable for this are paying it, we might have something here.

I'd like to address this one as it happens to coincide with a particular point of interest for me. The evolution of the income tax in America is complex with numerous influencing factors. The income tax of the 20th century was promulgated largely by populists who wanted to redistribute the wealth from the tycoons of industry. Economists and other groups also saw the benefits of moving away from a tariff system due to its largely regressive nature and ancillary effects on the balance of payments. In any event, it is true that the income tax was only paid by the top 8-10% up to WWII. However, the income tax APPLIED to just about everyone. The exclusions and exemptions were the factors which precluded a higher percentage of American workers from paying the income tax - not definitions.

The evolution of 3401 and the "includes" language starts around 1940. Up until that point, there was not a withholding system. However, the US needed to collect revenue from the vast majority of the workforce to fund the war effect (the "V" tax). Despite propaganda films to encourage writing checks to the treasury, a year-end payment system was untenable. Thus, the IRS developed the withholding system. It worked so well, that the government stuck with it. (again, just stating facts, no commentary).

At the same time there was debate going on as to whether federal judges could be subject to the income tax since it amounted to a reduction in the wages - in direct contravention of the constitution. There was also a debate as to whether corporate officers were to be considered employees or not. Courts decided the judge issue and I'm not sure whether there was a court case for the corporate officer. These issues, along with a host of other areas of confusion, led to the promulgation of statutes and regulations designed to define who came within the scope of withholding. Thus, 3401, when it defined employee, did so only to emphasize that federal judges (and all federal employee as well) and corporate officers were subject to the withholding scheme. Had those two issues not still been fresh in the minds of people when 3401 was originally drafted, the term "employee" may not have been defined in 3401 - since it has an ordinary meaning and is defined elsewhere in the code.

At all times, 3401 was designed to clear up problems with how to apply the withholding scheme. It was never meant to be a fundamental statute describing the application of the federal income tax. I advise my business owners to stay away from sections of the IRC after 800. If they need to go further, they should call me or their CPA. Otherwise, you will not understand the statute and perhaps will come up with a strange interpretation that can land you in prison.

Ok, back to work....

[lorne]

ok, ok, relax Im just asking & researching here. I agree with much of your tax evolution Imalawman; that it was only paid by a small minority until WWII, and that populism was behind the effort to tax tycoon wealth. But I'm not convinced it APPLIED to just about everyone.

Im also reading someone elses take on these 'administrative regulations' but this is perhaps not the right forum to discuss. Im told this site is full of 'disinfo agents.' The response of 'bulls--" to my question regarding INCLUDES is interesting, do any of you have this CRACKING THE CODE book? Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

to the Nikki, there's a third option - quit the tax prep business and try to figure out what's gone wrong in Washington.

[Pottapaug1938]

"I'm told this site is full of 'disinfo agents."

I'm also told that I can get a plasma TV cheap, if I find the right guy in the Sears parking lot, but I'm not going to go to my bank just yet.

"...do any of you have this CRACKING THE CODE book?"

No; but I do have a copy of "Mein Kampf"; and I don't need to read it to know what an evil book it is. As for CtC, I only have to see their unbroken track record of losses to lose all respect for the book.

"Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too."

Which means precisely what? Are you saying that just because communist regimes were known to use legal "jokers" in their constitutional decks, and broad interpretations of what constituted crimes under their criminal codes, every U.S. court in every jurisdiction who convicts a self-proclaimed "dissident" is no different? If your answer is yes; then I have to conclude that you're either a troll, or else so clueless that I have to wonder how you ever got established in business. If the latter, I have one suggestion for you: stop guzzling the CtC Kool-Aid, before it's too late, and you wind up behind bars like the "legal genius" Petey.

And, by the way, if you read some of the old posts on the Quatloos forums, you will see numerous references to the concept that the term "includes" is one of expansion and specification, not one of limitation. If I were to say that the 50 states of the United States includes Massachusetts, for example, that does not mean that Massachusetts is the only state in the Union.

[jg]

If you want to actually discuss the legal basis for the income tax, rather than simply make a broad statement such as " I'm not convinced it APPLIED to just about everyone." please make a new topic with your specific question so that the new thread can stay on that one topic.

For example, you might claim that the income tax is a direct tax as it is being applied and post that claim (preferably with support in the law). One of the long decided of Hendrickson's reworded claims is that the income tax is limited, as an excise tax, to certain activity; since if it applied broadly it would constitute a direct tax. This is not what has been decided by the courts in ruling that the income tax is in the class of excise taxes.

Some of us may then address your specific question or point with meaningful replies. Others may chime in with derision or name calling; which is best ignored as not useful to the converstion. (Many have come here saying that they were just researching that already had a decided agenda; so some are quite suspect of such talk.)

If you only make a broad statement such as " I'm not convinced it APPLIED to just about everyone." there is no subtantive discussion possible. Neither you nor I need to be convinced for it to legally apply to everyone (or those with sources of income from within the United States). If you give no reson why it would not apply then little or no reasonable converstion can ensue.

[Famspear]

.....But I'm not convinced it APPLIED to just about everyone.

Why not? Why are you not convinced? Hendrickson's contention is, essentially, that the federal income tax does not apply, and has never applied, to earnings realized in an "activity" not involving a "federal privilege." Aside from the point that there is nothing the Internal Revenue Code or any prior tax statutes saying that, there is also no federal court case where a court ever ruled any such thing.

So, other than Hendrickson's own interpretation in his own book, what do you have to show that he could possibly be correct?

One of the basic tax protester delusional arguments -- and I believe Hendrickson may espouse this as well -- is that essentially no one paid federal income tax on earnings realized in an "activity" not involving a "federal privilege" back from 1913 to 1919, and into the 1920s and 1930s, and that it was only later that the Evil Government concocted a massive "scam" that "fooled" 99% of the people to pay the tax. The argument, if I recall, is essentially that everybody from 1913 to the 1930s just sort of "knew" that "income" didn't include earnings realized in an "activity" not involving a "federal privilege."

So, my question to you is: How do you explain the points that no none ever raised such an argument in a federal tax case in the period from 1913 to the 1930s? There is no record of a reported court case where anyone ever raised Hendrickson's argument in all those years, and yet lots of people paid federal income tax on earnings realized in activities not involving a federal privileges.

So, tell me, why were the big shots, the big earners in the 1920s and 1930s -- the guys who could afford the tax lawyers -- why were they paying taxes on private sector earnings back then, at the time when supposedly everyone "knew" that income supposedly didn't include such earnings?

Im told this site is full of 'disinfo agents.'

Oh, really? Who told you? Let me guess...... The crooks who espouse the very same tax scams that we debunk here! So, those people are your source for information about Quatloos?

The response of 'bulls--" to my question regarding INCLUDES is interesting, do any of you have this CRACKING THE CODE book? Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

Are you serious? You are actually suggesting that the federal court system from every year since the 1860s to the present day is comparable to the courts in communist regimes? You're saying that 100% -- not 99.9999% but 100% of all the judges who have ever ruled on these tax issues were doing so because the U.S. federal courts are simply in on some conspiracy to convict tax protester "dissidents"????

Do you have a copy of Hitler's Mein Kampf? Do you have to read Hitler's book to know how historians have treated it? No, you don't. You read what the historians have written -- not what Hitler wrote.

The same is true with law. In order to understand the legal status of Hendrickson's book, you do not need to read Hendrickson's book. You read the court decisions about the scam in that book. Hendrickson's views are not authoritative on what the law is. Court rulings are authoritative on what the law is.

I don't need to read Hendrickson's book (and by the way I have read the meat of what he writes in the book, anyway, in the portions he has published on his web site) to know that his theories are not the law, any more than I would need to read Irwin Schiff's books to know that his theories are not the law, or any more than I would need to read Phil Hart's materials, or Larken Rose's materials, to know that they are not the law.

With all due respect, you don't seem to understand how the U.S. legal system works, and how proper legal analysis is performed.

I'll repeat my question: How do you explain the points that no none ever raised such an argument in a federal tax case in the period from 1913 to the 1930s? There is no record of a reported court case where anyone ever raised Hendrickson's argument in all those years.

[wserra]

Im told this site is full of 'disinfo agents.'

Y'know, one of the good things about the law here is that you can look it up. Agreed, some points are easier to research than others. But Hendrickson's bullshit is amongst the easiest to disprove. Every time one of his acolytes has tried to litigate using Hendrickson's nonsense, s/he has lost. Hendrickson himself lost, over and over and over. In fact, his "arguments" have never won.

Given that track record, the "disinfo agents" are the morons who claim he's right.

Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

The rule of Pol Pot and the Khmer Rouge resulted in the deaths of one in five Cambodians. No, that doesn't have anything to do with anything. I just thought I'd throw it in, in the same manner as you threw your trenchant observations about "communist regimes".

Do you have any coherent point to make?

[bmielke]

Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

Ding Ding Ding we have a winner.

I wondered who would be the first to compare Blowhard to a political prisoner. You the first moron I've read who's done so. If someone else did it first sorry I've been sick and I haven't had much time around here lately.

there's a third option - quit the tax prep business and try to figure out what's gone wrong in Washington.

Does that pay well? I mean it must pay better than getting 500K+ in Penalities, which others here feel you could easily get but how's the pay other wise, can you live off of it or will my tax dollars be providing you food, shelter, and clothing?

[Imalawman]

ok, ok, relax Im just asking & researching here. I agree with much of your tax evolution Imalawman; that it was only paid by a small minority until WWII, and that populism was behind the effort to tax tycoon wealth. But I'm not convinced it APPLIED to just about everyone.

Im also reading someone elses take on these 'administrative regulations' but this is perhaps not the right forum to discuss. Im told this site is full of 'disinfo agents.' The response of 'bulls--" to my question regarding INCLUDES is interesting, do any of you have this CRACKING THE CODE book? Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

to the Nikki, there's a third option - quit the tax prep business and try to figure out what's gone wrong in Washington.

You do realize that I fight with the IRS everyday, right? My career is largely consumed with lowering my client's tax bill. Trust me, if I could find a way for clients to not pay the income tax on private sector earnings, I would. Also, consider this - I have spent the better part of each day for the last 11 years studying tax law. I even have an LLM from one the top law schools in the country. What credentials does Petey bring to the table?

I have read large portions of Pete's book. The glaring, and I do mean glaring, hole in his theory is that even if he could prove his point regarding 3401 and "includes", it would not make earnings exempt from tax. It would only exempt them from withholding. You would still be subject to estimated tax payments and year-end billing. So its flawed from the get-go.

The IRC is coherent and cohesive. It makes sense and describes the economy in which we live. However, to get this overall view, one must engage in a prolonged study of tax law. I have a hard time believing that you prepare taxes given that you would suggest that Petey has a "strong" argument. The analogy I've used before is a 1st grader coming up with a new math and suggesting that 2+2=5, then writing a book about it. A math professor would laugh at the assertion and have no need to read the book. Likewise, I scoff at the suggestion. I'll instead continue reading articles such as "Ninth Circuit Issues New Xilinx Opinion Affirming Tax Court" or "Subpart F Inclusion From Inbound Guarantees".

For us, you, and those that read and take Petey serious, are comic relief to brighten a dull day practicing tax law.

[Gregg]

Just can't stand it anymore.....


Okay, I know I'm not the first to think it, but I'm gonna say it because it has often been said of me that I'm "much more articulate than diplomatic".

You're nothing but a lying troll. You have engaged in a sneaky little deception where you come in here acting like you're a normal everyday tax professional who just by the by came across Hendrickson (I do like how you even misspelled his name in the beginning to make it look like you're SHOCKED that this guy may have figured it out and you've been deceived all these years) and NOW you see the light. A real epiphany for you eh? Sorry, too little too late for me, I'm calling BS like Dan did. You're one of Hendrickson's heros or some other species of sovrun tax denier wackadoodle who wanted to come and twist someone's chain, maybe even build your own credibility on some other forum populated by low life tax cheats, sovrun idiots and middle aged men who live in run down doublewides and masterbate to an old VHS copy of "Red Dawn" and can't wait until the revolution comes and all us elites get lined up against the wall and your neo-anarchist friends take over and restore us to "contitutional government"....

CPA? Oh come on, if you are making a living preparing accounting for other people you're a disgrace to your profession. Any CPA who can hold your expressed opinions is at best incompetent and more than likely criminal.

Go away troll, you're not even interesting.

[silversopp]

Gregg,

I believe you have just won the internet.

Congratulations!

[Famspear]

For what it's worth, I haven't seen an instance where lorne claimed to be a CPA. Maybe I just missed it.

[Evil Squirrel Overlord]

ok, ok, relax Im just asking & researching here. I agree with much of your tax evolution Imalawman; that it was only paid by a small minority until WWII, and that populism was behind the effort to tax tycoon wealth. But I'm not convinced it APPLIED to just about everyone.

Im also reading someone elses take on these 'administrative regulations' but this is perhaps not the right forum to discuss. Im told this site is full of 'disinfo agents.' The response of 'bulls--" to my question regarding INCLUDES is interesting, do any of you have this CRACKING THE CODE book? Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

to the Nikki, there's a third option - quit the tax prep business and try to figure out what's gone wrong in Washington.

Lorne,
As a former 1040 self-preparer, I cannot agree with you more. The system is rigged to place a crushing burden on the little guy just like Von Raschke's crushing grip on his opponent. Luckily I found out the REAL way to avoid paying Income taxes. It has been 100% effective for all those who have tried it. I'm too smart to post it here. Most Quatloosers know this secret, but they willn't tell you. If you really are a CPA, you know it too, but as CPAs depend on income from working for others, they will rarely let you know the secret.
-Evil Squirrel Overlord

[grixit]

Lorne: Stalin liked strawberry ice cream. That means that everyone who eats strawberry ice cream today is just looking for an excuse to throw you into a slave labor camp. And they're everywhere, so watch out!

[Imalawman]

ok, ok, relax Im just asking & researching here. I agree with much of your tax evolution Imalawman; that it was only paid by a small minority until WWII, and that populism was behind the effort to tax tycoon wealth. But I'm not convinced it APPLIED to just about everyone.

Im also reading someone elses take on these 'administrative regulations' but this is perhaps not the right forum to discuss. Im told this site is full of 'disinfo agents.' The response of 'bulls--" to my question regarding INCLUDES is interesting, do any of you have this CRACKING THE CODE book? Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

to the Nikki, there's a third option - quit the tax prep business and try to figure out what's gone wrong in Washington.

Lorne,
As a former 1040 self-preparer, I cannot agree with you more. The system is rigged to place a crushing burden on the little guy just like Von Raschke's crushing grip on his opponent. Luckily I found out the REAL way to avoid paying Income taxes. It has been 100% effective for all those who have tried it. I'm too smart to post it here. Most Quatloosers know this secret, but they willn't tell you. If you really are a CPA, you know it too, but as CPAs depend on income from working for others, they will rarely let you know the secret.
-Evil Squirrel Overlord

ESO - you are hereby order to pay the amount of 200 Q for revealing secrets of the Illuminati. You must also return any unused interns in your possession. Your monthly intern allowance is hereby docked by 50% until such time as you learn that you cannot reveal such secrets. These fines shall be in addition to any such fines or penalties as shall be imposed by Webhick.

[webhick]

Your monthly intern allowance is hereby docked by 50% until such time as you learn that you cannot reveal such secrets.

Considering that he only has one intern, he only has two options to this: send half back or trade in a whole intern for a brain-damaged pygmy hooker.

[LPC]

The argument, if I recall, is essentially that everybody from 1913 to the 1930s just sort of "knew" that "income" didn't include earnings realized in an "activity" not involving a "federal privilege."

So, my question to you is: How do you explain the points that no none ever raised such an argument in a federal tax case in the period from 1913 to the 1930s?

Actually, the argument was raised by the Supreme Court in 1911, and rejected.

In Flint v. Stone Tracy Co., 220 U.S. 107, 155 (1911), the Supreme Court upheld the constitutionality of the Corporation Excise Tax Act of 1909, which imposed a tax on the incomes of incorporated businesses, stating:

While the tax in this case, as we have construed the statute, is imposed upon the exercise of the privilege of doing business in a corporate capacity, as such business is done under authority of state franchises, it becomes necessary to consider in this connection the right of the Federal government to tax the activities of private corporations which arise from the exercise of franchises granted by the state in creating and conferring powers upon such corporations. We think it is the result of the cases heretofore decided in this court, that such business activities, though exercised because of state-created franchises, are not beyond the taxing power of the United States.

And that was *before* the ratification of the 16th Amendment.

[Gregg]

Gregg,

I believe you have just won the internet.

Congratulations!

FWIW I already owned it, I won it years ago at the Adams County Firemen's Carnival by knocking over a pyramid of milk bottles with an intern.

Considering that he only has one intern, he only has two options to this: send half back or trade in a whole intern for a brain-damaged pygmy hooker.

I have 5 interns I'd like to trade for 10 hookers, please.

Lorne: Stalin liked strawberry ice cream. That means that everyone who eats strawberry ice cream today is just looking for an excuse to throw you into a slave labor camp. And they're everywhere, so watch out!

George Washington also loved strawberry ice cream! Does that mean that Stalin and all the guys tossing the people who know the truth about the Internal Revenue Code into FEMA camps are trying to toss the king out of America, chopping down cherry trees and crossing icy rivers in boats?

[The Operative]

ok, ok, relax Im just asking & researching here.

Somehow, I really doubt that.

I agree with much of your tax evolution Imalawman;

And you should since he has about 11 years of formalized legal education on tax law. That is 11 years more than Hendrickson.

that it was only paid by a small minority until WWII, and that populism was behind the effort to tax tycoon wealth.

When the government was smaller, the income tax on the higher earning portion of the population was sufficient. However, two world wars, a long depression, and more government programs along with more technological advancements added to the costs to where more revenue from income taxes was necessary.

But I'm not convinced it APPLIED to just about everyone.

Of course it applies to everyone. A simple reading of section 1 shows that.

There is hereby imposed on the taxable income of— ...[followed by a list that includes practically all citizens and residents of the fifty states, and all other land that is a part of the United States.]

Im also reading someone elses take on these 'administrative regulations' but this is perhaps not the right forum to discuss.

If that "someone else" is not a lawyer, you should ignore whatever they are telling you.

Im told this site is full of 'disinfo agents.'

That is a problem with conspiracy nuts, tax deniers, sovereign citizens, etc. If someone says anything, even if backed by facts, that does not fit in with their preconceived ideas or delusions, that someone is a 'disinfo agent'. Do you not see how ridiculous that is?

Look, if you ask us about taxes, laws, or a large number of other things, we will be happy to provide an answer backed by VERIFIABLE FACTS. We will tell you exactly how it is and how things work. If you come here and try to tell us that a former arcade manager knows more about tax law than a group of lawyers and CPA, we will quickly tire of trying to explain things to you.

The response of 'bulls--" to my question regarding INCLUDES is interesting, do any of you have this CRACKING THE CODE book?

You got the 'bulls---' response because that is what Cracking the Code really is. LPC explains the "includes" argument and refutes it with several court cases at http://evans-legal.com/dan/tpfaq.html#includes I will not repeat it here. However, you said...

“[T]he words of statutes .. should be interpreted where possible in their ordinary, everyday senses.” but where a custom definition is given that definition should rule the statute no? And as I see it, everything is excluded except the list of included items and other things within the same class as the meaning of the term defined.

The statutes clearly state that 'includes' and 'including' "shall not be deemed to exclude other things otherwise within the meaning of the term defined." The way to read statutory definitions that use 'includes' or 'including' is to use the normal, everyday meaning of the word and ADD the items being included. NOTHING IS SUBTRACTED or EXCLUDED that is not already within the normal, everyday meaning of the word being defined.

By limiting a definition that utilizes 'includes' to only a "class" of items is, in effect, EXCLUDING items from the definition. Using 'includes' in that manner is not only grammatically incorrect, but makes it a term of limitation and not of expansion. Besides, who determines what the "class" is supposed to be? Since the statutes do not specify how this "class" is supposed to be determined, it makes sense to start with the normal, everyday meaning of the word and add to that. All other interpretations further obfuscate the matter. Do you not see that?

Yes the courts did not agree with Hendrickson, but communist regimes also disagreed with and convicted its dissidents too.

There is a big difference that you are omitting there. The dissidents in the communist regimes were protesting unfair and unjust laws. Their protests to have those laws changed and/or for a change in government are what got them convicted and imprisoned. Hendrickson is not working to change the law, he is attempting to have everyone view the law as he sees it. He has been imprisoned for breaking the law as it is. That is a big difference.

The problem with Hendrickson's view of the law is that it just happens to fit in with his own self interest. It isn't because he read the law correctly or interpreted history in any new manner. He reached a conclusion that he does not want to pay taxes and he developed a theory about tax law that he thinks supports that conclusion. In order to do that, he had to twist the English language to do it.