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Sunday, February 7, 2010

IRS Can Reconstruct TIP Income

IRS Can Reconstruct TIP Income

 

      The IRS spends lots of time figuring out how to harass the weakest members of our society as they let the rich corporations get away with millions.  For example, the IRS routinely audits restaurants and attacks the waiters and waitresses.  To determine the tips received by taxpayers, individual waitresses in a restaurant, the IRS obtained the total sales of the restaurant and the number of hours worked by each waitress and then they figured the net sales of food and drink made by each.  Then the IRS assumed that the waitress made 10 percent of the sales as tips.  The Tax Court determined that such a determination was entitled to the presumption of correctness.  Since the waitresses didn't have records, the IRS won.  Anson, 328 F2d 703, 64-1 USTC 9293, 13 AFTR2d 858 (10th Cir. 1964).  In the case of Way, 60 TCM 124 90,590 P-H Memo. TC (1990), the IRS determined the tip income by using a formula from the case of McQuartrs, 32 TCM 1122; 73,240 P-H Memo, TC (1973).  The formula was based on the hours worked and the payouts to other staff workers to arrive at the net tip income. In Bartell, 48 TCM 461; 84,346 P-H Memo, TC (1984), the IRS reconstructed a hair stylist's tip income.  After conducting a nationwide investigation into unreported tip income of service industry employees, the IRS reconstructed the taxpayer's tip income based on the results of its investigation.  The taxpayer was a hair stylist in the beauty saloon of a New York City department store and he reported that he received the same amount of tips each month.  The amount that he reported as receiving was very small in relation to his gross sales.  The IRS reconstructed his income by claiming that he made 15% in tips and the Tax Court ruled in favor of the IRS.

 

      In Hascouet, 43 TCM 1347; 82,261 P-H Memo, TC (1982), the IRS reconstructed the income of the waiters based on the restaurant's records of gross sales.  The court ruled for the IRS.  In Rodriguez, 25 TCM; 66,118 P-H Memo, TC 1966, the IRS determined that the income of a waiter from tips was $2,400 by taking 12% of all food and beverage sales.  The Court ruled in favor of the IRS. In Martinez, 23 TCM 1263; 64,209 P-H Memo. TC (1964), the IRS reconstructed the tip income of waiters in New York City restaurants by taking a percentage of sales, adjusting the figure for amounts paid to busboys and allocating the net amount to each waiter on the basis of total wages paid each since all were paid on a uniform time basis.  The court ruled in favor of the IRS.

 

       In one case, the taxpayer did win.  In Payne, 23 TCM 670; 64,119 P-H Memo, TC (1964), and a hairdresser at R. H. MACY's beauty shop reported as tips 2 percent of the gross sales earned by him.  He kept a daily record of his tips in a notebook and the amount recorded therein agreed with the total reported.  The IRS increased the tips by applying a 2 percent rate to sales.  The IRS held for the taxpayer even though the 2 percent rate was suspicious because he had evidence of the figures.  The IRS' determination was "pulled out of the air" and was unreasonable.  (Payne, 23 TCM 670; 64,119 P-H Memo. TC (1964).

 

      The IRS can also reconstruct income based on hearsay from informants.  In Dellacroce, 83 TC 269 (1985), the Tax Court determined that a deficiency assessment based on hearsay from an informant was arbitrary without confirmation of other evidence.  The IRS cannot rely on the presumption of correctness to uphold an assessment based on hearsay evidence that connects the individual with a taxable activity.  It is not sufficient for the IRS to show that such a determination is not arbitrary and unreasonable if it fails to buttress the determination with substantive evidence.  The IRS' determination of the value of the stock was correct since it was traded on the market.

 

       In Jackson, 73 TC 394 (1970), a deficiency notice based on an informer's data was held to be invalid.  The court held that this was one of  "those rare occasions" where the exception to the rule that the Tax Court will not look behind a notice of deficiency was applicable. The individual who provided the data relied on by the IRS did not qualify as a "respectable third party citizen-informant."  He had been arrested for narcotics violations, thus giving rise to an inference that the information given was done in the hope of alleviating his punishment.  In addition, he later jumped bail and refused to cooperate at all. (Jackson, 73 TC 394 (1979).

     

 

1:25 pm mst 

Thursday, January 21, 2010

Double Speak and Uncle Sam
DOUBLE SPEAK AND UNCLE SAM

 

            Many years ago George Orwell predicted that governments would get more and more control over the thought of the people.  That day is here now.  The gravity of the situation is embraced in this statement by Governor Nelson Rockefeller of New York when he was campaigning for president.  When he was asked to explain his position on the Vietnam War, he said:

 

            My position on Vietnam is very simple. And I feel this way.  I haven't spoken on it because I haven't felt there was any major contribution that I had to make at the time.  I think our concepts as a nation and that our actions have not kept pace with the changing conditions. And therefore our actions are not completely relevant today to the realities of the magnitude and the complexity of the problems that we face in this conflict.

 

            Now what does that mean?  You've got me, but it sure sounds impressive. Nowadays doublespeak is so common that we expect it.  One of our best double speakers was Ronald Reagan. When he was asked if he could agree with the terms of the American hostages in Iran he said:

 

            If what I understand, if it is true, that I was told what I understood, yes, I thought that made sense.

 

            And we made this guy president?

 

            Good Ole' George Bush is also a master of Doublespeak. When he was asked what he thought about selling arms to Iran, he said:

 

            I think it's debatable, and I think on the surface you can make a case that it is wrong.  Having said that, when you look at the whole policy and look at Iran's geographic standing and look at the problems facing them, if a small shipment establishes contact with moderate elements, and if it results down the line in a solution to the Iran-Iraq war, I think we can argue that it was right. On the surface, selling arms to a country that state-sponsors terrorism, of course, clearly, you'd have to argue it's wrong, but it's the exception sometimes that proves the rule.

 

 

            The messages in political advertising are also tainted with Doublespeak.  For example when Bush was running for President, he used a commercial entitled "Presidential Temperament," The commercial contained Bush's best comments and Senator Dole's worst comments. Bush's words were framed in blue and Dole's were framed in black.  The people in Bush's pictures were dressed in colorful clothes.  The individuals in Dole's picture were washed out looking.  TV techniques can make sure hair is never out of place and can even erase a bald spot or change the shape of a candidate's nose.

 

            And of course, our favorite Agency, the IRS is famous for doublespeak.  The IRS stands for Internal Revenue Service.  Just what or who does the IRS Service?  Why us of course!  Remember when President Reagan said he wouldn't raise taxes and then he spoke about taxing the social security benefits of the wealthy?  The politicians referred to the issue as a "recapture of benefits" The White House called it a "replacement of revenues."  The favorite Doublespeak term for tax increase is "revenue enhancement." How about words such as "tax base broadening,"  "tax base erosion control," A gasoline tax is a "user's fee," or "increased receipts," and "offsetting collections," Are these an increase in tax?

 

            The Tax Reform Act of 1986 made things worse. For example it calls chicken coops and pigpens "single purpose agricultural structures," and gives farmers a special depreciation deduction that others don't get.  There were hundreds of deceptive passages written into the act to give special benefits to certain influential and wealthy individuals.  Take the following example:

 

            In the case of a partnership with a taxable year beginning May 1, 1986, if such partnership realized net capital gain during the period beginning on the first day of such taxable year and ending on May 29, 1986, then such partnership may elect to treat each asset to which such net capital gain relates as having been distributed to the partners of such partnership in proportion to their distributive share of the capital gain or loss realized by the partnership with respect to each asset.

 

            The above Doublespeak was written to apply to partners of a wall-street company that has influence in congress.

 

            And as we all know in the Freedom Movement, the IRS refers to the income tax as a "voluntary tax system," and yet prosecutes individuals under 27 USC 7203 for not volunteering.  The IRS Privacy Act Notice states that "you must file a return for any tax you are liable for," but it doesn't state which Code Sections make you liable." Furthermore the Notice purports to command the filing of a return and then inserts a "Miranda" type of warning telling individuals that any information they give to the IRS can be given to the Department of Justice.  The IRS purports to require the filing of a return through their Privacy Act Notice without ever saying that individuals must file returns.  If course they must keep the ambiguity so that the public doesn't catch on.  After all, the IRS can't tell the public that they are required to waive their Fifth Amendment Rights!

 

            Let's take other examples: Remember when President Reagan referred to the illegal guerrillas of Nicaragua as "Freedom Fighters!"  and claimed that he was providing "Humanitarian Assistance."

 

            The United States has long supported the use of military oppression and death squads in its client states in Central America.  To smooth over the situation, the State Department doesn't use the word "killing."  They say that the actions caused: "unlawful or arbitrary deprivation of life."

 

            The Supreme Court is even guilty.  In 1987, in United States v. Salerno, No. 86-87, the Noble Court ruled the constitutionality of the Bail Reform Act, which allows jailing persons who have been accused but not convicted of crimes.  Chief Justice William Rehnquist engaged in doublespeak to justify detention without trial.  He stated that the Excessive Bail Clause of the Eighth Amendment "says nothing about whether bail shall be available at all."  (The Eighth Amendment says that excessive bail shall not be required, nor excessive fines imposed nor cruel and unusual punishments inflicted.")  Rehnquist said that preventive detention is not punishment but "regulatory" because  "the mere fact that a person is detained does not lead to the conclusion that the government has imposed punishment...To determine whether a restriction on liberty constitutes impermissible punishment or permissible regulation, we first look to legislative intent."  He then found that "The legislative history of the Bail Reform Act clearly indicates that Congress did not formulate the pretrial detention provisions as punishment..." Thus, imprisonment without trial becomes "regulatory" and not "punishment" simply because Congress intended it that way. Rehnquist also stated that a person who is accused of a crime and denied bail is a "putative offender."  Therefore, now someone who is accused of a crime is now presumed guilty until proven innocent and he can be held in jail because of the "likelihood of future dangerousness."

 

            Isn't that incredible!

 

            And we can't forget the CIA.  Killing a double agent is known as "Elimination with extreme prejudice."  Latin American mercenaries are referred to as "unilaterally controlled Latino assets."  A report that is classified is called a "Secret Noforn Nocontract Orcon," which means that you have to have permission of the writer of the report to see the report.  Departments in charge of overthrowing foreign governments illegally are called  "Department of International Affairs."  Spying is called "intelligence gathering."  The CIA also has a quality control program which wiretaps and surveys its employees to make sure they are good little boys and girls.

 

            Of course we can go on and on, but I think you get the point!

 

 

8:06 am mst 

Wednesday, January 13, 2010

Cyberprivacy
CYBERPRIVACY

 

 

            Remember when George Orwell wrote his stuff about the future of government and how government would have incredible power over all of us at some point because of computer power? Well, the fact is that good old George didn't consider every possible advance in technology.  It is possible now that we have created a situation that will give us back the privacy that the Supreme Court has taken away.

 

            Let me explain.  As soon as telephones were invented, the government invented wiretaps.  Anybody could just listen in and the privacy issue was litigated in the court. However, now data is different.  Data can now be transformed by encryption so that a wire-tapper can't understand the 1s and 0s that he picks up off his tap.

 

            Now, millions of individuals have available to them very powerful encoding tools that cannot be busted by the government.  Several years ago there was a guy named William Steen in California who was busted for sending pornography pictures. However, he kept all his pictures and correspondence on his computer encrypted by a program called Pretty Good Privacy. The cops couldn't bust his files.  The National Security Agency was asked by the local cops to help but they wouldn't help.  They couldn't do the job.

 

            Clinton was worried about this privacy thing because government's biggest fear is the privacy of its people.  This is why the Supreme Court, over the years, has constantly eroded the privacy rights of Americans.  So Clinton and his buddies wanted to do something to keep privacy away from Americans.  They proposed a Clipper Chip that will allow the government to get in with a court order and decode the data of anyone they want to spy on.

 

            The great thing about the Clipper issue is that the hackers who want privacy could set up super-encryption.  This means they could encrypt the files before they get to the Clipper.  It is possible that the government try as it might, will not be able to do anything about the coming privacy boon.  Encryption has the potential to "nuke" the tax base.  How is the IRS going to spy on everyone if they can't make hide or hair out of the data they steal?  There is NO doubt that encryption decreases the power of government to monitor us.  It is a technological advance that is taking us back to the Supreme Court case of Boyd v. United States that private papers are off-limits to legal opponents, even government prosecutors.  Of course, the Supreme Court has long since wasted the Boyd case.  But in the future are prosecutors going to be able to force a defendant to relinquish a mental key?  And what if the defendant says: "I forgot."

 

 

            I think that Orwell was right that the government would monitor our every move.  He was wrong, however, because he didn't know that the cyber-privacy dudes would keep ahead of the fascists; so maybe the future will be more fun after all!

 

7:34 am mst 

Wednesday, December 30, 2009

IRS and Bogus Income Issues

IRS and Bogus Income Issues

 

      Many people have no idea of the power of the IRS to reconstruct income.  There are many cases that uphold the IRS' right to do this.  In Cummings, Jr., 437 F2d 796, 71-1 USTC; 9192,27 AFTR2d 71-597 (5th Cir. 1971).   In Blanton, 94 TC 491 1990), the taxpayer was issued a notice of deficiency asserting unreported income in the amount received in connection with a criminal violation.  The court held for the IRS and the taxpayer was collaterally estopped from denying receipt of the funds.  Sometimes the individual wins.  In Stewart, 59 TCM 704, 90,264 P-H Memo TC (1990), the court ruled that the IRS reconstruction of drug profits was arbitrary and that the IRS failed to introduce evidence to support its income calculations.

 

      In Armstrong, 59 TCM 632, 90, 247 P-H Memo. TC (1990), the IRS reconstructed income using the bank-deposits and cash-expenditures method. The taxpayer and the IRS arrived at different determinations of income levels.  The court determined that an estimated profit margin of 40 percent was to be used to determine the cost of goods sold. 

 

      The IRS can also invent an income based on the net worth method.  In Manzoli, 904 F2d 101, 90-1 USTC; 50,290,66 ATR2d 90-5030 (1st Cir. 1990), the court upheld the IRS' determination of an income based on the net-worth increase in the assets of the individuals.  In Mazzoni, 451 F2d 197, 71-2 USTC; 9764,28 AFTR2d 71-6059 (3td Cir. 1971), the court affirmed the IRS' use of the net worth method.  In Kramer, 389 F2d 236, the IRS determined the individual's income using the net worth method.  The individual objected to the determination but the court ruled in favor of the IRS.  The IRS assessed deficiencies against an individual by using the net-worth method to reconstruct income.  The individual argued that since he had a complete set of records, the net-worth method should not have been used.  The court ruled in favor of the IRS and stated that the net-worth method will not be limited to situations where taxpayers' records are inadequate, fraud penalties were sustained.  See Ehlers, 382 F2d 58, 67-2 USTC; 9612,20 AFTR2d 5338 (8th Cir. 1997).

 

      In Steiner, 350 F2d 217, 65-2 USTC; 9550, 16 AFTR2d 5174 (7th Cir. 1965), the court upheld the net-worth method to reconstruct income even though all the transactions that were examined appeared on the taxpayer's books.

 

      The IRS can also use the bank deposits method of reconstructing income.  Many times when they use this approach, they simply claim that all deposits are income.  In Armes, 74-2 USTC Section 9543, 34 ATR2d 74-5583 (5th Cir. 1974), the Tax Court approved reconstructing a private investigator's income by means of the bank deposits and expenditures method.  In Marcello, 380 F2d 499, 19 AFTR2d 1700 (5th Cir. 1967), cert denied, 389 US 1044 (1968), the IRS reconstructed the taxpayer's income and the Tax Court held that the IRS' resort to the bank-deposit expenditure method was justified.  In Brown, 58 TCM 310, (1989), the Tax Court upheld a cash hoard argument.  The taxpayer argued that the deposits made into his bank account were not unreported income but resulted from gifts from his deceased father, a frugal lifestyle and minimal expenses.  The court held that the taxpayer's lifestyle enabled him to save a substantial amount of his wages and the father had the means of making the alleged gifts.  In Sullivan, 49 TCM 194, the Court ruled that the use of the bank-deposits method to reconstruct income as assess penalties was sustained since the taxpayer did not keep records of all income received. 

 

      Another favorite method the IRS uses to invent bogus income is the Bureau of Labor Statistics method.  In Denson, 44 TCM 275, the taxpayer refused to turn over his records so the IRS reconstructed his income using the Bureau of Labor Statistics tables. The IRS used the "higher standard of living" table and the taxpayer argued that his standard of living required reliance on the "intermediate standard of living" table.  The court ruled in the taxpayer's favor and ruled that his living standards were more applicable to an intermediate budget family. 

 

      In Wheeling, 43 TCM 1302, (1982), the court ruled that the IRS' method of reconstructing income was reasonable for a self-employed carpenter who did not file returns.  The IRS reconstructed his income based on the Bureau of Labor Statistics average for a family of four.  In Kindred, 39 TCM 490 aff'd 49 AFTR2d 82-582 (6th Cir 1982), the Court ruled that the IRS' method of reconstructing income was reasonable.  The IRS used the BLS averages for a family of five.  The taxpayer refused to comply and did not give any information to the IRS.

 

 

8:26 am mst 

Tuesday, December 15, 2009

IRS Audit Cases

IRS Audit Cases

 

      The court ruled in Cardwell, 765 F2d 776, 85-2 USTC; 9528, 56 AFTR2d 85-5513 (9th Cir 1985), that fraud by IRS agents to gain consent to audit may make it invalid.  Any misrepresentation by the IRS, not only those related to prosecution, can make an audit invalid as an illegal search.

 

      The court ruled in Williams, 81-1 USTC; 9112, 47 AFTR2d 81-489 (6th Cir. 1980), that the taxpayer could assert Fifth Amendment objections only in response to specific questions or demands and that he could not take the Fifth Amendment to the audit process in general. 

 

      In Fensterwald, 553 F2d 231, 77-1 USTC; 9266, 41 AFTR2d 78-934 (DC Cir. 1977); the court ruled that the IRS must show reasons for selecting an individual for a Taxpayer Compliance Measurement Program Audit (TCMP).  This audit involves a complete review of every item on the return.  The court ruled that the IRS had to show by responding to the taxpayer's specific interrogatories, why he was chosen for a TCMP audit. 

 

      In Hicks, 62 TCM 1234, RIA TC Memo; 91,564 (1991), the court ruled that a consent form was invalid because the IRS and the taxpayers did not reach a mutual agreement when the consent form was signed. 

5:23 pm mst 

Wednesday, December 2, 2009

Failure to File Cases

Failure to File Cases

 

      The IRS cannot impose both failure-to-file and fraud penalties. The IRS imposed a fraud penalty against taxpayers who repeatedly failed to file returns and was convicted of failure to file returns.  The court ruled that the fraud penalties were proper, but the IRS had to refund or credit a failure-to-file penalty that was also imposed.  Section 6653(d) prohibits the charging of both penalties.  See:  Acker, 519 F. Supp. 178, 48 AFTR2d 81-5403 (ND Ohio 1981).

 

      This case is of interest to those who have chosen to follow the suggestions in: Why No One is Required to File Tax Returns.  A taxpayer did not file a federal income tax return for 1988 until 1992 after receiving a notice of deficiency.  She did not offer evidence to prove that her failure was due to reasonable cause and not due to willful neglect.  The taxpayer argued that she was not liable for the addition to tax under Section 6651(a)(1), because adequate withholding satisfied the joint tax liability.  The IRS argued that the "amount required to be shown as tax on such return" is not reduced by withholding credits when applying the minimum addition to tax for extended failure to file.  The court ruled for the taxpayer. The court ruled that for the minimum penalty to apply, the congressional intent is that there must be an underpayment of tax.  The taxpayer did not have an underpayment of tax because the withholding credits exceeded the tax liability.

 

      The Tax Court has ruled that withholding was reduced for purposes of determining the late filing penalty. The court ruled in favor of the taxpayer and held that in computing the addition to tax, the amount of tax required to be shown on the return is reduced by the tax paid before the return was originally due.

 

      The district court has ruled that a taxpayer may protest when filing a federal tax return.  On April 15, 1992, a taxpayer filed a federal tax return for the year 1991 but he wrote the words "under protest" beneath his signature. Because of of the protest, the IRS refused to recognize that the individual had filed a return.  It treated the return as a nullity and charged the individual penalties for filing a frivolous and a late return.  The court ruled that the First Amendment protects the right of protest to any branch of government.  The words "under protest" did not alter the meaning of the jurat.  The return was filed under the penalty of perjury and it was not frivolous.  The individual properly exercised his First Amendment right to protest the IRS while still complying with the obligation to file.  The return is to be accepted as filed.  See McCormick, 94-1 USTC: 50,026, 73 AFTR2d 94-597 (EDNY 1993).

 

7:22 am mst 

Tuesday, November 24, 2009

Tax Protestor Cases

Tax Protester Cases


      The courts have been increasingly unfriendly toward the exempt W-4 and the refusal to pay taxes. However, individuals who send reasonable letters to the IRS and who do not file exempt W-4 Forms will fare much better. The moral of the story is: don't file an exempt W-4.  The district court imposed the fraud penalty against an individual who specifically told the IRS that he was refusing to pay taxes.   The court agreed that mere not filing or nonpayment that is disclosed by a taxpayer to the IRS does not justify the fraud penalty.  But the taxpayer filed exempt W-4 forms and then informed the IRS that he was refusing to pay taxes.  The court imposed the fraud penalty.  See Zell, 763 F2d 1139, 85-2 USTC 9698, 56 AFTR2d 85-5128 (10th Cir. 1985).  Another individual sent various communications to the IRS informing them that he did not intend to participate in the income tax system but the IRS did not come up with any evidence to show fraud so the court ruled in favor of the individual.  See Raley, 676 F2d 980, 49 AFTR 82-122 (3rd Circuit.

3:53 pm mst 

Monday, November 2, 2009

Cross Examination and the Tax Trial

CROSS EXAMINATION AND THE TAX TRIAL

 

            The Sixth Amendment gives the criminal defendant the right "to be confronted with the witnesses against him." This right includes the right to cross-examine the government witnesses in a criminal trial. (In re Oliver, 333 U.S. 257 and Pointer v. Texas, 380 U.S. 400.

 

            During cross-examination, you may ask questions about the following two areas:

 

            1.  The subject matter of the witness' direct testimony.

            2.  The credibility of the witness.

 

            You have the right on cross-examination to try to impeach the credibility of the witness.  You can ask questions regarding prior convictions, the witness' personal interest in the case, bias or hostility, prior inconsistent statements, or a lack of capacity to understand.

 

            Leading questions are allowed on cross-examination.  As a matter of fact they are very important on cross- examination.  The selected fact should be stated and words such as "right," "true," and "were you not," should be added at the end of the question.  An example of a leading question would be the following:

 

1.  And you were in the room at  6:00 pm, right?

 2.  You were twenty feet away from the victim when he was shot, were you not?

 

            Remember that you do not have to cross-examine a witness.  Be sure that if you do cross-examine, you understand the purpose of the cross-examination.  The jurors have been conditioned by the media and they will expect a cross-examination so if you don't cross-examine it is possible that the jury may believe a witness who is not cross-examined because he has testified under oath or because they may believe that the opposing attorney believes the testimony to be accurate.

 

            A main thrust of cross examination is to ferret out the testimony that is favorable to your case and augment that testimony.

 

            For example:

 

     Q.  Mr. Smith, you testified that the Transaction Code of 150 on Mr. Jones' Master File means that a return was filed for that year, did you not?

 

            If some of the testimony of the witness has been adverse, then it is the purpose of the cross-examination to minimize its effect.  You can do this by emphasizing the defects in the witness' overall knowledge; the defects in the witness' conduct and the immateriality of the opposition testimony.

 

            The jury is generally very attentive as the cross- examination begins.  You have a good chance to make a lasting impression with the first question.  So ask a question that you can win!

 

            It is important to maintain control of the witness during the cross-examination.  Keep your questions brief, simple and clear. Also remember that the use of leading questions is the most important way of maintaining control.

 

            Questions like the following may be used by the government attorney against the patriot?

 

Q.  You filed a tax return in 1973, didn't you?

 Q.  You did not speak with an attorney before you quit filing returns, did you?

 

            Remember that you can style your questions against the government witnesses the same way.  You can maintain control of their testimony through the use of the leading question.

 

            Sometimes the witness will respond in a non-responsive way.  You must be aware of this problem or you may lose control of the witness.  Answers using the following words are non-responsive: May, might, possibly, usually normally, but, I guess so, etc.

 

            If the witness is non-responsive, you may want to demand a responsive answer or ask the judge to direct the witness to answer the question.  Good luck, practice makes perfect, so get your practice first in civil litigation.

 

 

12:23 pm mst 

Tuesday, October 27, 2009

Voir Dire and the Criminal Tax Case

VOIR DIRE AND THE CRIMINAL TAX CASE

 

 

     If you have been attacked criminally by the IRS, it is imperative that you begin to prepare your case as soon as possible.  In order to effectively counter  a criminal charge, you must understand the process of Voire Dire.

 

        At the beginning of the trial, the jury will be chosen.  In order to get the most appropriate jurors, there is a process used in the courts called    "Voire Dire"

 which refers to the process of questioning the jury to establish their appropriateness for the particular trial.  In a Federal District Court, the judge usually asks the questions to the jury, but sometimes the plaintiff and defense also get to ask questions.  In any event, however, you must be prepared to give the judge a list of questions that you wish asked on voire dire.

 

        The following questions are suggested for the defendant's use in a criminal tax trial.  Please read these over and note them.  You may wish to modify them to fit your particular situation.

 

        SAMPLE VOIRE DIRE QUESTIONS:

 

        1.  Do you understand that an indictment is not evidence of wrongdoing, but merely an accusation?

 

        2.  Do you understand what the defendant is charged with and do you understand generally the nature of the charge?

 

        3.  Do you understand that the defendant has entered pleas of not guilty, and you, the jury, will determine the facts of this case, guilt or innocence?

 

        4.  Would you be biased or prejudiced, one way or other, because of the nature of the offense?

 

        5.  Do you understand that the defendant is presumed to be innocent?

 

        6.  Do you understand that the defendant need not present any testimony in this case?

 

        7.  Do you understand that the defendant need not establish his innocence?

 

        8.  Do you understand that the government has a duty and a responsibility to establish the guilt of the defendant beyond a reasonable doubt?

 

        9.  Should the defendant not testify, do you understand that you cannot presume or guess what he might have testified to, or why he is not testifying, and that cannot even be a consideration in your deliberation?

 

        10.  Do you understand that the defendant is presumed to be innocent and that is a strong presumption in the law?

 

        11.  Do you understand that one side might have more witnesses than the other, and that you cannot determine the facts of this case merely on the number of the witnesses?

 

        12.  Do you understand that as the trier of the facts, you will determine the credibility of the witnesses --the witnesses that you care to believe or disbelieve under the Court's instructions?

 

        13.  Do you understand that what I tell you -- my words -- are not evidence, and the words of the attorneys are not evidence?

 

        14.  Do you understand that the evidence will come from the witness stand, or the exhibits you are allowed to see?

 

        15.  Have you ever been employed by local, state, or federal government?  If so, in what capacity, and for how long?

 

        16.  Do you have any friends or relatives who are employed or otherwise connected with any local, state or federal law enforcement agency?

 

        17.  Do you now receive money, or in the future expect to receive money, from the federal government for Social Security, Medicare, food stamps, pensions, disability benefits and the like?

 

        18.  Do you understand that simply because an investigation has been conducted by the Internal Revenue and the defendant has been charged and brought to trial that it does not necessarily follow that he is guilty of anything?

 

        19.  Have you formed any opinion as to the guilt or innocence of the defendant based upon information obtained through television, newspapers, or governmental reports concerning persons who have been charged with having failed to make tax returns or attempting to evade income tax?

 

        20.  Do you understand that you alone will be the judge of the facts, and if you have a reasonable doubt as to whether the defendant willfully violated the law, you must find him not guilty?

 

        21.  If after you have heard all the evidence, should you then find that the defendant acted or failed to act as charged in the indictment, but you do NOT believe that the defendant willfully did so, would you have any difficulty in giving

him the benefit of the doubt and voting "not guilty?"

 

        22.  The Constitution of the United States, and those federal laws made in accordance with it, are the supreme law of the land.  Would you be able to follow this law as the court instructs you even if you personally disagree with it, and even if it requires you to find the defendant not guilty?

 

        23.  Would any of you give any more weight or give less weight to the testimony of people connected with the government or Internal Revenue Service merely because they are from the Internal Revenue Service or a government agency?

 

        24.  Would you give a witness more weight because he or she is a government witness?

 

        25.  Would you judge the credibility of all witnesses by the same standard no matter for whom they might work?

 

        26.  If I were to require you to vote at this time whether the defendant is guilty or not guilty, do you understand, your vote would have to be "not guilty," because the defendant is presumed to be innocent?

 

        27.  Have any of you ever worked for the Internal Revenue Service in any capacity or in any tax-gathering agency of the state or other government?

 

        28.  Have any of you ever had contact with the Internal Revenue Service in the nature of follow-ups to your returns?  If so, is there anything about your experience that would make you biased or prejudiced one way or the other in this case?

 

        29.  Do you agree with the Court's statement that in the event that your income tax returns or lack of income returns are questioned by the Internal Revenue Service, that you have the right to question the IRS' position?

 

        30.  Do you understand that you have a right to question IRS handling of a matter according to procedure and automatically you cannot consider someone guilty of wrongdoing merely because he questions the IRS on the way something has been handled?

 

        31.  Do you understand that every citizen has a right to challenge a position taken by the Internal Revenue Service with respect to taxes, and a right to take

advantage of all exemptions and tax credits which have been provided by law?

 

        32.  Have you had exposure to the tax laws or the field of taxation or studied the income tax laws or their interpretation in academic courses or otherwise?

 

        33.  Do you agree with the proposition that there is nothing illegal about a person's endeavoring to reduce taxes?

 

        34.  Do you understand that the statutes or regulations might be subject to different interpretations?

 

        35.  Do you understand that there are many tax laws, and there is a question of interpretation at times, and there very well can be a difference of opinion as to the interpretation?

 

        36.  Are you prejudiced toward persons who have been labeled by the Internal Revenue Service as "tax protesters?"

 

        37.  Do you understand that any person has the right to study the laws of the United States and do you believe in this right?

 

        38.  Do you understand that because a person interprets the tax law different from someone from the IRS doesn't necessarily mean that person is guilty of any criminal offense?

 

        39.  Do you understand and believe that irrespective of what the IRS may think or say, the validity of a legal interpretation of a tax law cannot be legally determined until tested in a court of law such as this federal court?

 

        40.  Are you able and willing to analyze the tax laws upon which the defendant relied in order to understand the position of the defendant in this case?

 

        41.  If the evidence showed that the defendant had not filed tax returns, would you assume that the defendant intended to violate the law as charged, or would you be open minded and listen to the evidence bearing on why he failed to make those tax returns?

 

        42.  Do you agree with the proposition that a taxpayer has the legal right to decrease the amount of the tax incident to be paid according to legal means, and that those legal means might be subject to interpretation and difference of opinion, and would you follow the Court's instruction in that regard?

 

        43.  Do you agree with the proposition that taxpayers may challenge the IRS interpretation of the income tax laws and there is nothing illegal or improper?

 

        44.  Would you give any more weight to the testimony of someone connected with law enforcement should they testify in this case than anyone else, merely because of their position?

 

        45.  Have any of you done any extensive reading or study about recent public debate in Congress or in the Executive branch of government dealing with revisions or criticism of the income tax laws?

 

        46.  Have any of you ever attended any type of meetings concerning, or made any study of ideas and methods of, changing the income tax laws?

 

        As you can see, there are many questions that you can ask.  The above questions are designed to be a sample.  Good luck and win your case!

 

3:18 pm mdt 

Saturday, October 10, 2009

The IRS Criminal Investigation Division

THE ORGANIZATIONAL STRUCTURE AND FUNCTION OF THE CRIMINAL

INVESTIGATION DIVISION

 

 

     The CID is headed at the National Office level by the Director of the CID who reports to the Assistant Commissioner of Compliance (IRM 1113.55, MT 1100-249). The staff at the National Office decides on the long-term and short-term goals of the CID.  The CID also has its own lawyers who give the legal assistance needed before, during and after a recommendation for criminal prosecution has been made to the Justice Department.  The Regional Offices of the IRS also each have an Assistant Regional Commissioner who supervises the CID activities in his region.  At the district level, the CID is composed of the office of the Chief of CID and special agent groups. (IRM 1118.6, MT 1100-256).

 

     The CID is limited in the amount of criminal investigations that it can conduct each year. Their policy is to provide a balanced program of enforcement and to develop successful prosecution cases. (IRM, Policies of IRS Handbook,

P-9-18). The CID gives special priority to cases which involve the obstruction of internal revenue laws (attempts to rescue seized property is a typical example).

 

     Special agents are the agents of the CID that develop the criminal cases.  After a criminal case is developed, the target will get the chance to meet with the CID at a district conference. If the District Counsel then recommends prosecution, the case is forwarded to the Criminal Tax Section of the Department of Justice. The Department of Justice may decline to prosecute, in which case, it returns the case to the IRS.

 

    Many cases that are originally recommended are not prosecuted; as they are declined somewhere during the process.  If you are the object of a Criminal Investigation, it is not sure that you will eventually be indicted.  Check your IMF to see if there is a "-Z" after the "CRINV-" and if there is a 914 Freeze Code.  Remember also, that anything you tell a Special Agent, can and probably will be used against you. Good luck.

 

 

 

 

 

4:20 pm mdt 

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