We the People Foundation - Tax Court Warns re 6673 Penalty

[AndyK]

Alternatively, dismissal for failure to have proper representation just postpones the inevitable.

If the Commissioner allows the two cases to proceed and be decided on their (ahem) 'merits', it cuts off a potential avenue of escape for Bob.

Unless he later appeals claiming HIS cases should have been dismissed because he was pro se which wouild get laughed out of any court in the land.

But, not to worry -- as long as Bob can find donors, he'll continue to find dead horses to beat..

[LPC]

The Court notes initially that in reviewing the record for purposes of respondent's motion it appears to the Court that petitioner may intend to advance frivolous and/or groundless statements, contentions, questions, and/or arguments in this proceeding.

Reading this again, it strikes me as somewhat odd.

I've seen petitioners warned *after* making frivolous arguments, but I think that this is the first time I've seen a warning about the arguments that a petitioner *may* *intend* to make in the future.

I wonder what in the record (e.g., the petition) tipped off the court as to what was coming.

[Famspear]

.....Now would be the perfect time for someone to publish a book regarding all these de-tax scams and their purveyors, prior to the next wave when the economy improves and unemployment returns to more normal levels.

Of course, we don't want to be seen as trying to rush anybody unnecessarily......

[AndyK]

Bob’s PETITION:

5. Explain why you disagree with the IRS determination in this case (please list each point separately):
1. The Notice of Deficiency, mailed 12/30/08, was time-barred. The Statute of Limitations expired on 11/15/07.
2. The Notice of Deficiency was invalid, ab initio, lacking "sufficient information from which to compute the taxpayer's liability" [Reg. 301.620-IT(2)].
3. The Notice of Deficiency was invalid, ab initio, failing to "purport to be a return." [Reg. 301.620-IT(3)].
4. No person was in position to claim the Notice of Deficiency allegedly mailed 12/30/08.
5. The Revocation of WTPF's 501(c) 3 exempt status, retroactive to 2003, was arbitrary and capricious. See Better Business Bureau v. United States, 326 U.S. 279, 283. WTPF's primary activities fully met the requirements of all relevant Treasury Regulations.

6. State the facts upon which you rely (please list each point separately):
1. A signed Form 872, "Consent to Extend Time to Assess Tax" was not mailed to the Foundation until 8/26/10.
2. There was no Form 4549-E,"Income Tax Examination Changes" attached to the Notice of Deficiency.
3. There was no Form 13496, "lRC Section 6020(b) Certification" attached to the Notice of Deficiency.
4. The office was closed from 12/24/08 to 2/1/09. The mail was held by elderly neighbors. There was no sign of any trouble with the IRS. The 2006-2007 Audit went well. The Foundation had not received from the IRS a signed copy of Form 872, which WTPF had signed in July of 2007.Up to 2009, all extensions to file were accepted.
5. By any criteria, the alleged "non-exempt activity" was an insubstantial part of WTPF's overall activity.[see Better Business Bureau v. United States, 326 U.S. 279, 283.]

CDP HEARING LETTER:

A Statutory Notice of Assessment (SNOD) was issued to you presenting you the opportunity to challenge the assessment in Tax Court if you disagreed with the Examination division's determination.

You did not petition the court. Tax, penalty and interest were assessed. Notice of the assessment was issued to you. You did not pay the balance shown due on the notice. An NFTL was filed on February 9, 2009. Notice of the lien filing, which included notice of your right to a CDP hearing, was issued to you. You responded with a timely request for a hearing.

A notice of intent to levy, which also included notice of your right to a CDP hearing, was issued on February 12, 2010. Your response requesting a hearing was timely.

Correspondence was issued from the Appeals office scheduling a phone conference for you to call on July 8, 2010 regarding the notice of intent to levy. In response, you submitted a letter dated July 5, 2010, indicating the hearing request is not entirely about the proposed levy action. You indicated the CDP hearing request is in regard to the revocation of the corporation's exempt status for the year 2003, and the assessment of the income Tax Form 1120 for the same period. You indicated the corporation and others are seeking the federal government to remedy violations to the Constitution. You requested the hearing be rescheduled for a face-to-face conference.

A second conference letter was issued rescheduling a phone conference for July 29, 2010. The correspondence advised you, the issue you raised in you request for a hearing is:
1. a "specified frivolous position", identified by the IRS in Notice 2008-14 (for Notice 2008-14, refer to the IRS Internet website at http://www.irs.gov/newsroom/article/0,, ... 19,00.html); or
2. a reason that is not a "specified frivolous position," but is a frivolous reason reflecting a desire to delay or impede federal tax administration; or
3. a moral, religious, political, constitutional, conscientious, or similar objection to the imposition or payment of federal taxes that reflects a desire to delay or impede the administration of federal tax laws
Additionally, the Appeals correspondence advised you, "You will be allowed a face-to-face conference on any legitimate issue you raised if you withdraw in writing within 30 days from the date of this letter, the frivolous issues or issues reflecting a desire to delay or impede the administration of federal tax laws".
You were also advised, if you were interested in the Settlement Officer considering collection alternatives during your hearing process, you needed to submit:
• A completed Collection Information Statement Form 433-B for businesses
• Signed Form 1120 Corporate Income Tax Returns for the years: 12/31/2004, 12/31/2005, 12/31/2006, 12/31/2007, 12/31/2008 and 12/31/2009
On July 29, 2009, date of the rescheduled telephone conference, Mr. Schultz appeared in person to Albany Appeals Office. He indicated he did not appear for a face-to face conference, but only to deliver additional correspondence to the Settlement Officer.
In the letter you continue your attempt to challenge the liability. You also questioned what issue that you raised in writing has been determined to be a "specified frivolous position". The corporation has listed grievances they consider are unconstitutional acts by the government.
You again requested the phone conference regarding the levy issue be re-scheduled for a face-to-face conference. However, you did not withdraw the frivolous issues, or the issues reflecting a desire to delay or impede the administration of federal tax law, nor did you offer a collection alternative and submit the necessary forms as indicated.
The Settlement Officer called Mr. Schultz on August 23, 2010. A phone conference was conducted regarding the NFTL.

You were extended two opportunities for a telephone conference regarding the notice of intent to levy. In both instances you asked that the conference be rescheduled and requested a face-to face conference: Since-it was determined that the issues you raised was a frivolous position, or an attempt to delay or impede the administration of the tax laws, a face-to face conference was denied. You also did call for the telephone conference.

What are the issues you raised?
On your hearing request you stated, "THE DEFICIENIES, ASSESSMENTS, LIENS AND LEVYS SPRING FROM THE REVOCATION OF EXEMPT STATUS. THE REVOCATIONS ARE BEING CHALLENGED IN A TIMELY 7824 DECLARATORY JUDGMENT ACTION IN FEDERAL DISTRICT COURT FOR THE DISTRICT OF COLUMBIA".
Mr. Robert Schultz, Chairman for the corporation, had called the Appeals' Settlement Officer on May 10, 2010 to ask about the Appeals process. The procedures were explained as well as the taxpayer's right to petition Tax Court if they disagree with Appeals determination concerning collection alternatives.
Mr. Schultz indicated he disagrees with the examination assessment. He was advised that the corporation had a prior opportunity to dispute the liability when the SNOD was issued by the Examination division. Additional he was informed the SNOD was issued
to the corporate address by certified mail. He stated he does not go to Post Office to pick up certified mail unless the sender is identified. He indicated he did not receive the certified letter. He was also informed, as long as the SNOD was properly mailed to the address of record, whether he picked up the mail or not, the legal requirement was met.
You were extended the opportunity to challenge the liability in Tax Court. The corporation does not have another opportunity to challenge the liability in the CDP forum.
The Settlement Officer secured a copy of the SNOD along with the envelope in which the notice was sent by certified mail. The Settlement Officer provided you with a copy of the SNOD and the envelope. The envelope was noted by the U.S. Post Office that they attempted delivery on three occasions. You did not go to the Post Officer pickup the letter.
On the Appeals correspondence issued to you scheduling the conference, you were again reminded that you previously had the opportunity to challenge the liability when the SNOD was issued by the Examination division, and that you do not have another opportunity to dispute the assessment in the CDP forum. Despite that advice, in your correspondence and in phone conversations with the Settlement Officer, you continued to argue the assessment. You indicated you did not receive the SNOD and therefore did not have a prior opportunity to challenge the liability.
You again advised the Settlement Officer that you do not pickup certified mail at the Post Office unless the sender is identified. Furthermore, you indicated you were out of town during the three week period the Post Office indicated they attempted delivery and therefore could not have received the notice.
The Examination division followed the legal requirements for issuing you the SNOD by certified letter, and extending you the opportunity to petition Tax Court. The notice informs the taxpayer, if they disagree with the Examination division's determination, and wish to petition Tax Court, you must file your petition within 30 days of the date of the letter. The fact that you may have refused to pickup the letter, or were out of town at the time the letter was issued, does not extend the timeframe for petitioning the court.

In your correspondence dated July 5, 2010, you stated the Appeals letter indicates the CDP hearing request is regarding the proposed levy action on the tax period, Form 1120, for the period December 31, 2003. However, you argue that, "The CDP hearing request is in regards to the revocation of the exempt status of the corporation retroactive to 2003, and the conversion from 990 (not-for-profit) tax return to a Form 1120 (for profit) tax return, the assessment of tax and the imposition of a lien on assets as well ass the notice of intent to levy".
You stated that the tax assessment was a direct consequence of the unlawful revocation of the exempt status retroactive to 2003. You propose that the first issue to be resolved is the legality of the revocation. You argue that, before you are able to challenge the revocation in court the corporation has to exhaust all administrative remedies. Therefore, you advised that you submitted the CDP request due to the lack of jurisdiction of any Court to determine the legality of the revocation.
You advised the Settlement Officer that you had signed the Form 872, Consent to Extend the Time to Assess Tax, and gave it to the Revenue Agent. However, you stated you never received a copy of the form signed by the appropriate IRS official. In your correspondence, you indicated you have the right to see and know that the form was signed by the appropriate IRS official. Otherwise, you noted the IRS exceeded the period to complete the examination. Appeals verified the form was properly signed by the authorized official. A copy of the form has been mailed to you for your records.
In your correspondence, you argue that the government is in violation of the articles of the Constitution, including what you indicate is an un-apportioned tax on labor in violation of the Internal Revenue Code (IRC). Furthermore, you stated that you have requested the IRS and other government officials to reconcile, what you believe, are well documented discrepancies between the Constitution, statutory requirements of the IRC and associated regulations.
The constitutional arguments you have made have often been tested in the courts and have been determined to be without merit. Before you decide whether to petition this notice of determination, you should know that the tax court is empowered to impose monetary sanctions up to $25,000 for instituting or maintaining an action before it primarily for delay or for taking a position that is frivolous or groundless. Pierson V.
Commissioner , 115 T.C. No. 39. (2000). It is our view that the position you have taken has no merit and is groundless.
No other issues were raised.

[notorial dissent]

Just me, but I would say the "record" is pretty clear that,

it appears to the Court that petitioner may intend to advance frivolous and/or groundless statements, contentions, questions, and/or arguments in this proceeding.

was pretty much what "petitioner" Bob had in mind from the start. I think "may" is a little over generous, when we know quite well that is exactly what Bob was going to do from the start. As KCB so rightly pointed out, "You can't fix stupid."

[LPC]

Trial has now been scheduled for 10/22/2012 in New York.

(And I merged the two threads on the Tax Court proceedings.)

[Famspear]

We recall that the Internal Revenue Service revoked the tax exempt status of "We the People Congress, Inc." and "We The People Foundation for Constitutional Education, Inc." Around March of 2010, the Foundation reported that its tax exempt status had been revoked effective retroactively to the year 2003, and that the IRS was preparing to execute levies for alleged tax deficiencies stemming from the revocation. Robert L. Schulz, on behalf of these two "organizations," has been fighting the collection actions in U.S. Tax Court.

Here is a Bench Opinion from the U.S. Tax Court in the cases of We the People Congress, Inc. v. Commissioner, case no. 020999-10L, and We The People Foundation for Constitutional Education, Inc. v. Commissioner, case no. 020998-10L:

Bench Opinion by Special Trial Judge Lewis R. Carluzzo

October 31, 2013

We the People Foundation for Constitutional, Inc. et al.,

Docket No. 20998-10L, 20999-10L

THE COURT:

The court has decided to render oral findings of fact and opinion in these consolidated cases, and the following represents the Court's oral findings of fact and opinion (bench opinion).

Section references contained in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period. Rule references are to the Tax Court Rules of Practice and Procedure.

Prior to consolidation, by Order dated October 18, 2012, each of these section 6330(d) cases was assigned "for the purpose of resolving whether petitioner is entitled to challenge the underlying liability giving rise to the instant collection action." By order dated November 2, 2012, the cases were consolidated and otherwise assigned for trial or disposition. See sec. 7443A(b)(4). These consolidated cases are subject to, and are conducted in accordance with Rules 180, 181, and 182. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. Except as provided by Rule 152(c), this bench opinion shall not be relied upon as precedent.

Robert L. Shulz [sic; should be spelled "Schulz"], an officer of each petitioner, appeared on their behalf. Shawna Early appeared on behalf of respondent [Commissioner of Internal Revenue].

In an Order dated April 19, 2013, the Court ruled that petitioners are not, in this proceeding, entitled to challenge the existence or the amount of the underlying liabilities to which the collection actions here in dispute relate. See sec. 6330(c)(2)(B). The pleadings in this case show, as confirmed by Mr. Shulz [sic] at trial, that there are no other issues in dispute in this proceeding. Other issues that could have been raised by petitioners under section 6320 or 6330 are therefore deemed conceded by them. See sec. 6330(c)(2)(A).

It follows that respondent may proceed with the various collection actions proposed in the various notices of determination that form the basis for the Court's jurisdiction in these cases.

To reflect the foregoing and the ruling in the Order dated April 19, 2013, decisions will be entered for respondent.

This concludes the oral findings of fact and opinion in this case. And I believe that concludes all of our proceedings on the New York and Westbury trial section as well as the two special sessions. So all of our sessions are adjourned.

Here is the related order on December 13, 2013:

Pursuant to the determination of the Court as set forth in its bench opinion rendered on October 31, 2013, it is

ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript of the further trial in the above case before Special Trial Judge Lewis R. Carluzzo at New York, New York, (Special Trial Session), containing his oral findings of fact and opinion rendered at the trial session at which the case was heard.

In accordance with the oral findings of fact and opinion, decisions will be entered for respondent.

[signed] Lewis R. Carluzzo
Special Trial Judge
December 13, 2013

[AndyK]

Strange how the "Latest News" sections on both the Foundation and Congress web sites don't seem to feel that the ongoing -- and now resolved -- Tax Court case is worthy of mention.

Then again, if the news was posted, it would have to include Bob's monumental foul-up which laid victory at the feet of the IRS.

[LPC]

From another thread, almost 2 years ago:

And I still can't find any evidence (other than Schulz's own vague and unverifiable assertions) that Schulz ever filed a declaratory judgment action on the exempt status issue.

If Schulz didn't contest the exempt status revocation in court, and didn't file a Tax Court petition to contest the assessment of corporate taxes, isn't he SOL now, because he can't challenge the tax liabilities in a collection due process hearing if he had a previous opportunity to contest them?

I still can't find any evidence of any declaratory judgment action, so it looks like WTP is SOL.

[LPC]

Update: Schulz appealed the Tax Court decision to the Second Circuit, and filed motions to be allowed to represent the two corporations pro se. The motions were denied, and the appeal was dismissed on 4/17/2014.

We The People Foundation for Constitutional
Education, Inc., Robert L. Schulz, Chairman,
We The People Congress, Inc., Robert L. Schulz, Chairman,
Petitioners-Appellants,

v.

Commissioner of Internal Revenue,
Respondent-Appellee

Nos. 13-4727 (L) and 14-717 (Con).

Appellants, pro se, move for permission to be represented by a non-attorney, Robert Schulz, on appeal. Appellants also move, in No. 13-4727, for the Court to accept their late reply to the Appellee’s opposition to their motion for non-attorney representation. Upon due consideration, it is hereby ORDERED that the motions are DENIED and the appeals are DISMISSED. See Rowland v. Cal. Men’s Colony, 506 U.S. 194, 202 (1993) (corporations, partnerships, associations, and all artificial entities may appear in federal court only through licensed counsel); Jacobs v. Patent Enforcement Fund, Inc., 230 F.3d 565, 568 (2d Cir. 2000) (dismissing an appeal as “not properly before [the Court]” because the notice of appeal, filed by an individual on behalf of a corporation, was “not adequate to initiate an appeal” by either the corporation or the individual).

FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk

And now, cert. denied. We the People Foundation for Constitutional Education Inc. v. Commissioner, S. Ct. Dkt. No. 14-994 (3/23/2015).