Doreen Trial Set for August 20, 2013

[JamesVincent]

SFR:
Thus, an SFR usually ends up being the worst possible case for the taxpayer.

True dat. When I started going through my own personal IRS adventure when they decided to dis-allow my claiming of my children as dependents they filed SFRs to replace my own filed returns. Me, being a business owner, had business expenses, mileage and other things written off. When they filed the SFRs they didnt even have your normal write-offs for personal exemptions, much less any business expenses. Went from me possibly having a refund of $5k to me owing $2k. So, yeah, their no fun.

[operabuff]

While I do not doubt it could happen, I have never even seen the SFR used with respect to persons who actually have filed frivolous returns (the kind the IRS argues do not count as tax returns for purposes of starting the statute of limitations).

With respect to persons who have filed incorrect returns, if this is discovered on audit, the IRS ordinarily issues a notice of deficiency, asserting the additional tax. I think the government was attempting to avoid having an Examiner expend substantial resources to determine the actual tax liability by having the Hendricksons take the first stab at it.

The SFR is usually based solely on information items provided to the IRS - W-2s, 1099s, 1098s, etc. In my experience (the bulk of which is outside the bankruptcy context) the IRS often prepares SFRs a couple of years after the tax return was initially due, ordinarily after soliciting tax returns from the taxpayer and receiving no response.

The preparation of the SFR does not allow the IRS to assess and collect tax; it must first issue a Notice of Deficiency (and wait for the taxpayer to default or have the matter resolved in the Tax Court). The filing of an SFR does serve a couple of important functions: it allows the IRS to assess a late payment penalty from the date of the SFR, and it prevents the taxpayer from discharging any tax due from that year in bankruptcy (even if later correct returns are filed). In at least one gift tax case, we had a taxpayer file a protective return disclosing the existence of the transaction (and explaining why it was not a gift) prior to the preparation of a SFR, in order to ensure that a late payment penalty would not apply should the IRS ultimately prevail.

There's a certain confusion between an "SFR" and a section 6020(b) return. An SFR is really not much more than a space holder on the IRS computer systems that forms the basis for computing a deficiency when a taxpayer has either filed no return or filed a document that purports to be a return that the Service regards as not a return (usually the Service applies a four prong test based on the Tax Court case Beard v. Commissioner 82 T.C. 766 (1984)). It is (or was) the first two pages of a 1040 filled with zeros and unsigned. The Service then must issue a notice of deficiency before assessing any tax. So generally section 6020(b) does not benefit the Service at all with respect to taxes subject to deficiency procedures - income, estate and gift, etc.

Where section 6020(b) comes into play is with regard to assessable taxes, such as employment tax and excise taxes. There the Service can execute a return and use it as a basis to assess taxes, and then send notice and demand to taxpayers.

Congress managed to muddy the waters in 1996 when they enacted section 6651(g), which says that a section 6020(b) return can form the basis for application of the section 6651(a)(2) penalty (for failing to pay an amount shown as due on a return). Because the Service didn't really create 6020(b) returns for income taxes, there was some question as to whether this provision would have any application in the income tax world - even though it was clear that Congress intended it to be so used. Rather than change its procedures to create a otherwise useless 6020(b) return, the Service adopted the litigating position that the totality of documents in the administrative file contained all of the essential elements of a return and therefore could be considered the equivalent of a 6020(b) return. The Tax Court rejected this approach in a case called Cabirac (120 T.C. No. 10 (2003)). The Service responded by creating a special form that is used just for the purpose of meeting the section 6651(g) requirement - it shows the amount of tax due and is signed.

So even though Doreen's argument is nonsense, there always has been considerable confusion regarding SFRs. Most people think that "SFR" and "section 6020(b) return" are synonymous terms, but they aren't.

[LPC]

The Hendricskson's SFR argument is just silly. Pete and Doreen filed false returns; they didn't fail to file a return. Section 6020(b) only applies when the taxpayer fails to file a return. While I do not doubt it could happen, I have never even seen the SFR used with respect to persons who actually have filed frivolous returns (the kind the IRS argues do not count as tax returns for purposes of starting the statute of limitations).

I think I've seen cases in which taxpayers filed frivolous returns, the IRS imposed frivolous return penalties, and then the IRS later prepared section 6020(b) returns, but I haven't searched to confirm that.

It seems to be possible under the literal language of section 6020(b), which states that "If any person fails to make any return required by any internal revenue law or regulation made thereunder at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, ..."

And the judgment against the Hendricksons does refer to the 2002 and 2003 returns as "false."

But it may be too late for the IRS to disregard the returns already filed for 2002 and 2003 because they were processed and "refunds" (actually credits against other years) were issued.

And the injunction in this case orders the Hendricksons to file *amended* tax returns. You can't file an amended return unless a return has already been filed.

There's nothing in section 6020 that allows the IRS to file an *amended* return, so the section can't even be applied in a literal way, and the argument seems to fall apart right there.

[operabuff]

Perhaps I was too oblique in my prior post. If the Service has received a purported return that submission processing decides is not a valid return (using the Beard test factors referenced above), the "return" will be referred to the Frivolous Return Program in Ogden. Ogden will correspond with the taxpayer, asking if he wants to withdraw the "return" and replace it with a valid return. If the taxpayer fails to withdraw the "return" within the specified time frame, the section 6702 penalty will be imposed. At that point, the FRP is pretty much done with the "return."

But from that point forward, other parts of the Service will proceed as though no return has been filed. For example, if infodocs are received showing income for the taxpayer, the Automated Substitute For Return program will correspond with the taxpayer seeking a return. If none is filed, and no satisfactory explanation is received as to why the taxpayer does not owe tax on the reported income, ASFR will create an SFR and send the taxpayer a statutory notice of deficiency.

Alternatively, the taxpayer might be examined and the examining agent or revenue officer would create an SFR and issue a stat notice.

So it is quite possible to have an SFR when a frivolous return has been filed.

But again, please don't confuse the SFR in this situation with the section 6020(b) process. The authority for the assessment of tax in these situations is by virtue of the deficiency process, section 6211. There doesn't need to be a return of any sort for a deficiency to be determined. If you look at how a deficiency is computed in section 6211(a), the amount shown on a return is only used if it's a return made by the taxpayer. If the taxpayer has not made a return, the "amount of tax shown on the return" is zero. The Service could validly assess the tax based on the stat notice, regardless of whether it had happened to create an SFR.

Section 6020(b) comes into play with employment taxes and excise taxes, which are not subject to deficiency procedures. With those taxes, the Service can make a section 6020(b)
return which will serve as the basis for an assessment under section 6201(a).

[Afterthought - there are some returns that are invalid that would not be referred to Ogden FRP. A simple example is a return lacking a signature. In those cases, I believe that the Service will correspond with the taxpayer seeking a signed return or a signed ratification of the return that was filed. All of this stuff only applies in the paper return world, of course.]

[Second afterthought. None of this may really apply to the returns submitted by Doreen. Her return could easily be valid under the Beard test - just fraudulent. A fraudulent return may still be a valid return. See Badaracco v Commissioner 464 US 386 (1984).]

[Famspear]

On her behalf, Doreen's court-appointed lawyer has filed motions to allow Doreen to represent herself, with her lawyer serving as stand-by counsel. She has requested a Faretta hearing.

[notorial dissent]

Well, this ought to be entertaining, not quite the right word, but you get my drift, and my feeling is that it doesn't bode well for her coming out of this in any kind of good shape. Considering where things landed with Pete "helping" with his case, not a good precedent.

[The Observer]

...[A]nd my feeling is that it doesn't bode well for her coming out of this in any kind of good shape.

Your feelings are correct. What is more foreboding is the feeling that Prevaricatin' Pete is directing all of this from behind the scenes, and Doreen is going along for the ride...or more accurately is being thrown under the bus.

[AndyK]

The following are an exact quotes of all discussions to date on Lost Horizons of Doreen's upcoming trial: "chirp, chirp, chirp"

[notorial dissent]

I feel I can say, without qualm or reservation, that I truly believe, that Prevaricatin' Pete will bring to bear all of his scintillating wit and intellect as well as his deep and profound and thorough knowledge of the tax laws to Doreen's defense.

With any luck, she'll only get life.

[jcolvin2]

On her behalf, Doreen's court-appointed lawyer has filed motions to allow Doreen to represent herself, with her lawyer serving as stand-by counsel. She has requested a Faretta hearing.

Doreen filed a Motion to Dismiss on Friday, June 28, 2013. (The motions cutoff was July 1, 2013). The motion contains a lot of Hendricksonian nonsense. I can see why the public defender did not want to be associated with the filing, and would prefer to be standby counsel.

Unfortunately, the Motion was scanned in, and cannot be easily excerpted. If anyone wants a copy, feel free to PM me.

[Famspear]

I've skimmed over Doreen's motion, and the best way to describe its contents -- without going into the detailed specifics (which would be fun, and which might come later) -- is to use the description that at least one Court has used in the past to describe similar filing frivolity in another case, which is to say that this tripe is........

"heavily larded!"

Yes, she made the mistake of lettin' Preposterous, Pontificatin', Prevaricatin' Pete help her with her motion.

What a surprise....



It's not just a motion.

It's a "loco-motion".

[wserra]

Everyone deserves the opportunity to read stuff this stupid.

It's not only the content of the motion, although God knows both it's idiotic and goes out of its way to insult Judge Roberts' colleagues, on the MIED bench and on the Sixth Circuit. But this stuff has all been argued four times before - in the civil injunction case and in the Peter Hendrickson prosecution, both times at trial and on appeal - and lost every time.

So here we go again. What Cracking the Code says isn't what it really says. Making poor Doreen file accurate returns violates her First Amendment right to free speech and her Fifth Amendment right to due process. The trial court had no jurisdiction to enter the order she is charged with violating, therefore it is invalid, and she had no obligation to obey it. There are several reasons why each of these notions is bullshit. But what strikes me is that Doreen is basing her freedom on positions that have all been decided against her.

"Insanity is repeating the same thing in the same way and expecting different results."
- Attributed to Albert Einstein, Ben Franklin and Narcotics Anonymous.

[grixit]

Doreen claims she's being pressured to lie under threat of punishment. Looks to me as if she's being offered a chance to stop lying, and avoid the punishment she's already made herself subject to.

[webhick]

Judge: Why is there a cat on your head?
Doreen: There are no cats here.
Judge: You've got one on your head.
Doreen: That's a lizard.
Judge: Mrs. Hendrickson, do I have to remind you that you're under oath?
Doreen: I'm telling the truth. I have a lizard on my head.
Judge: If you don't admit that you've got a cat on your head, I'm holding you in contempt.
Doreen: YOU HAVE NO PERSONAL KNOWLEDGE OF THIS ANIMAL! IT'S ILLEGAL FOR YOU TO COMPEL ME TO LIE UNDER OATH! OBJECTION!

[Lambkin]

Everyone deserves the opportunity to read stuff this stupid.

Thanks for the opportunity but I couldn't make it to the end. I think someone has already mentioned that PH is a gasbag.

I'm a little surprised the LH crowd have not adopted her as a martyr and condemned the federal courts for hitting girls. She would make a much better martyr than Pete ever could.

[Burnaby49]

Same story as Ed Brown, the fantics can't go down alone so they had to drag their wives into it. Elaine could easily have disavowed Ed and got on with her life and, frankly, he was such a repugnant character that would have been the best course even without his criminal behaviour. But, by the end, she virtually forced the court to give her a 35 year sentence. Doreen is following the same path at Pete's instigation.

[The Observer]

Somehow I think it is safe to say that this is not what Tammy Wynette had in mind when she sang, "Stand By Your Man."

[Cathulhu]

Somehow I think it is safe to say that this is not what Tammy Wynette had in mind when she sang, "Stand By Your Man."

For Doreen (and Elaine Brown) we need to write "The Doormat Song".

[notorial dissent]

And this all worked so very well for Preposterous Pete.

A question for the tax law and legal types, does signing that jurat on the tax form actually constitute "testimony", rather than a certification that the information has been filed and handled according to the law and the instructions given?

I have just never seen how it could constitute testimony, when they are not actually testifying about anything, but have always understood it as certifying that the information is correct and proper, basically to the best of your knowledge, or in this case as you were informed and directed by the court.

[Cathulhu]

I think the distinctive rhythm tells you which song this was set to...

Five years for me and ten for you
Lie to the judge and swear it's true
Cuz' you're a doormat,
Yeah, a doormat...

Don't believe in the laws
Martyr yourself for my cause
Cuz' you're a doormat,
Yeah, a doormat...

When you go to jail, I'll blog on it
When you get sentenced, in a bit
When you get ten years, I still won't quit
Mainly because I'm an abusive sh*t
Doormat!

Cuz' you're a doormat
Yeah, a doormat...
Don't ask me why I always lose
(yikes, poor Elaine)
Because you're all I've got to use
(yikes, now Doreen)
Cuz' you're a doormat
Yeah, a doormat...

Prepare to spend much time in jail
Doormat!
Your marriage is an epic fail.
Doormat!
Cuz' you're a doormat, yeah, a doormat...
And you hide from reality until it imprisons you
Doormat...




Jeeze, now I've depressed myself. Need coffee.