HISTORY OF CASEWORK — the historical record of responses to IRS notices


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The letters on this website represent, historically, the types of “form” letters sent by SAPF over the years 2000-2007 to the IRS, in response to specific notices that members received (some are even older). They represent some of the research that went into the positions of SAPF with respect to the law. The information the letters contain, and the challenges to IRS authority that they raise, may well become outdated or irrelevant with future changes in the law or in the regulations.


All the documents on this website are either in Microsoft Word format or Adobe Acrobat reader format (pdf). As a semi-guide to the letters and how they were historically used to document the actions of the IRS and raise challenges regarding the lawfulness of the agency’s procedures, please read below. You will find hyperlinks you can click on to take you to some of the documents in other folders on this website, so that you can immediately review the type of letter that is being discussed.


The most frequent questions asked by persons in the past with respect to writing letters to the IRS:


Q: When the IRS sends someone letters and notices claiming they are required to file a return, or claiming that the IRS has determined that they owe taxes, does writing to the IRS make them stop their assessment process? In other words, will the IRS ever ‘go away’?


A: There is no silver bullet that can make the IRS stop demanding returns and assessing amounts that it claims are due. There is almost nothing anyone can tell the IRS which will make them “see the light” and stop pursuing a person who does not file. This is because the IRS is aware of, and dismisses, the positions put forth in the letters, therefore, don’t expect them to go away because you write to them.


Q: If the IRS isn’t going to stop or go away, why write to them at all?


A: There are many reasons a person might still write to the IRS, but the main ones appear to be:

1. It is your right to petition the IRS or any other government agency for a redress of grievances, and so writing is a way to let your voice be heard and to exercise your First-Amendment rights.

2. Documenting the illegal actions of the IRS helps to establish, in one’s own case, evidence and a record of IRS wrong-doing, as well as evidence of a good faith belief in one’s own compliance with the tax laws as written. This record has been used by some people in the past when defending themselves against failure to file charges.


TWO-FOLD APPROACH TO DOCUMENTING IRS ACTIONS


PART I. Responses to IRS correspondence. These responses were used to:



PART II. Privacy Act Requests for IRS-held documents. These requests were:


1. Used to obtain documents which show improper procedure or improper application of the tax laws, such as:


2. Used to obtain documents which reveal information which may be useful in possible criminal or civil actions against agents


3. Show that the IRS disclosure office does not have the documents, or refuses to produce the information required by law, or the IRS has not followed procedures required by law. These types of requests are those such as:


*When requesting documents from the IRS disclosure office, either a copy of a photo ID (such as driver’s license or passport), or a notarial statement signed and executed that the requestor’s signature was duly witnessed by a notary was included so that the IRS disclosure office would not bounce the requests for lack of proper identification of the requestor.


IRS Case Flow


The IRS has two methods to pursue people who don’t file. One is CIVIL, the other is CRIMINAL. In the CIVIL method, the IRS opens an investigation, typically based on information returns that it received, and most of the notices are computer-generated. In a CIVIL matter, the IRS is interested only in collecting the revenues it claims are due, with all the penalties and interest it can charge according to the law. Most everything the IRS pursues is in the CIVIL area.


The letters on this website are specific responses that SAPF has historically used to raise legal challenges to IRS procedures at the various stages of an IRS CIVIL investigation: There are four main stages generally (these are somewhat more fluid if an IRS agent or revenue officer is pursuing the investigation personally): (1) TDI stage, which includes requests for returns and meetings, (2) Examination stage, which includes a 30-day letter (proposed assessment), and a 90-day letter (Notice of Deficiency), (3) Assessment, and (4) Collection, which includes Notices of Intent to Levy, a “Collection Due Process Hearing,” and post-hearing collection procedures (Levies, Liens).


Taxpayer Delinquency Investigation (TDI)

A TDI usually begins as a result of the IRS’ computerized return matching program, known as the Information Return Processing (IRP) program. This program matches all incoming information returns (such as W-2s, 1099s, etc.) against filed tax returns (1040s, etc.).


When the program finds an information return for which no tax return has been filed, it generates a transaction code 140 to the IMF (Individual Master File). This begins the TDI stage of the IRS investigation, which is generally recognized by the IRS sending between one and four requests for returns. These requests are usually in this order, but the interim reminder requests CP-516 and CP-517 are rarely sent:


1. Notice CP-515, “REQUEST FOR TAX RETURN”

2. CP-516

3. CP-517

4. CP-518, “YOUR TAX RETURN IS OVERDUE”


Sometimes, this initial request for a tax return is accomplished by a letter from an IRS agent, not computer generated like those above.


Sample responses used in the past have been:

TDI 1 (Response to a CP 515 or other initial request for tax return)

(There was also a version of TDI 1 for a person who has notified the Secretary of the Treasury by affidavit that they rescinded their signature from their SS-5 application.)

The Enclosures mentioned in this letter are included in the same folder.

TDI 2 (Response to a CP 516, 517 or 518)

TDI 3 and TDI 4 are more of the same types of letters.


Other responses which might have been made at this stage (each must be read to understand what they address) are in the TDI - request for returns folder.


In addition, IRS officers may personally request attendance at a meeting to discuss unfiled tax returns. Sometimes, they directly request information that they plan to use to prepare a return for you under IRC 6020(a). Responses used in the past include this meeting letter. Others that were used are listed in the Miscellaneous letters folder.


Examination

Examination is another term for audit. If the IRS doesn’t receive returns in response to the requests above, it typically generates a substitute for return, or SFR, for each year under investigation.


In times past, the IRS would “file” a blank, unsigned return with generally only the person’s name, address, and social security number listed on it, but no figures. This “return” shows up on the IMF as “SFR 150” transaction code and is assessed as “0” amount due. The IRS claimed that the blank forms are made under the authority of IRC § 6020(b), but they are neither made (filled out) nor signed. The IRS used these invalid returns as the basis for the audit.


Somewhere around 2002 or 2003, or perhaps a bit earlier, the IRS began an automated SFR process. Now, rather than filling out and filing a blank, unsigned return, the IRS technician enters a SFR 150 transaction code into the IMF so that a tax year module can be opened “to facilitate” the assessment of taxes. Now there is no “return” at all issued under the authority of IRC 6020(b). Instead, the IRS now makes a IRC 6020(b) certification “certifying” that the documents which are part of its proposed assessment “constitute” a return under IRC 6020(b), but the underlying statute has not changed, and no signed 1040 has been made.


The Proposed Assessment (“30-day letter”):

The IRS “audit” of a non-existent “return” (SFR) results in a “deficiency.” A Form 4549 is generated to show the proposed assessment resulting from the claimed “deficiency,” and a 30-day letter is sent with the Form 4549 and Form 886-A. This letter, if responded to generally within 30 days, allowed for a person to ask for a reconsideration of the audit through the internal revenue service appeals office. It is discretionary on the part of the IRS to forward the request to the appeals office, and for the appeals office to grant a hearing. (The Proposed Assessment letter is not required by the law to be sent, so it is not always used by the IRS).


Sample responses used in the past have been:

1. When NO sources of income (actual names of payers) are named on the Form 866-A (The general letter from the IRS is a Letter 1862):

Written protest when nonfiler received wages & salary, according to IRS

Written protest when nonfiler received NO wages or salary, just non-employee compensation or other types of income, according to IRS


2. When NO sources of income (actual names of payers) are named on the Form 866-A and no letters requesting a tax return were received earlier (The general letter from the IRS is a Letter 1862):

Written protest when nonfiler received wages & salary, according to IRS

Written protest when nonfiler received NO wages or salary, just non-employee compensation or other types of income, according to IRS

Enclosures to these letters are actually part of the enclosures to the CP-515 response above.


3. When sources of income (actual names of payers) are named on Form 866-A or elsewhere in the letter:

Written protest when nonfiler received wages & salary, according to IRS

Written protest when nonfiler received NO wages or salary, just non-employee compensation or other types of income, according to IRS


4. For a Letter 2566:

Written protest when nonfiler received wages & salary, according to IRS

Written protest when nonfiler received NO wages or salary, just non-employee compensation or other types of income, according to IRS


Other responses at this stage (each must be read to understand what they address) are in the 30 day letters folder.


Two privacy act requests which generally have been made at this stage are for the IMF Complete, and once it is received, the Substitute for Returns made by the IRS.



The NOTICE OF DEFICIENCY (“90-day letter”):

The IRC requires the IRS to send a notice of its proposed assessment by way of a Notice of Deficiency. Generally, but not always, this letter is a “Letter 3219.” A Notice of Deficiency begins a 90-day statutory period in which a person can petition Tax Court for a redetermination of the assessment. If no petition is filed with the Tax Court, then the case is sent to assessment so that the proposed assessment can be made.


Q: Why don’t many nonfilers file petitions with the Tax Court? A: Because the Tax Court has heard many, if not all, of the positions that persons who have read the Tax Code use, and has held them to be “frivolous.” They are unlikely to rule differently in the future, with the result that Tax Court determines, in virtually every instance, that the IRS is correct and that the amounts assessed are proper.


In the past, SAPF members have responded with letters to the Field Director of Compliance Services at the appropriate IRS office, petitioning for an abatement of the assessment actions. Responses used in the past have included:


1. When sources of income (actual names of payers) are named on Form 866-A or elsewhere in the letter, and a written protest has already been made at the 30-day letter stage:

Petition for Abatement, nonfiler received wages & salary, according to IRS

Petition for Abatement, nonfiler received only nonemployee compensation and other income (NO wages), according to IRS


2. When sources of income (actual names of payers) are named on Form 866-A or elsewhere in the letter, and no written protest was made:

Petition for Abatement, nonfiler received wages & salary, according to IRS

Petition for Abatement, nonfiler received only nonemployee compensation and other income (NO wages), according to IRS


3. When NO sources of income (actual names of payers) are named on the Form 866-A or elsewhere in the letter, and a written protest has already been made at the 30-day letter stage:

Petition for Abatement, nonfiler received wages & salary, according to IRS

Petition for Abatement, nonfiler received only nonemployee compensation and other income (NO wages), according to IRS


4. When NO sources of income (actual names of payers) are named on Form 866-A or elsewhere in the letter, and no written protest was made:

Petition for Abatement, nonfiler received wages & salary, according to IRS

Petition for Abatement, nonfiler received only nonemployee compensation and other income (NO wages), according to IRS


A privacy act request for the authenticated (signed) documents which identify the sources of the income used as a basis for the Notice of Deficiency has usually been made at this point. In SAPF’s experience, the IRS has never produced any signed, sworn documents as testimony that income was actually received from any individual in response to this type of request.


Assessment

At this stage, the assessment officer signs the Summary Record of Assessment (sometimes a 23-C, but usually a RACS-006), making the assessment final. The Summary Record of Assessment shows aggregate amounts of assessed revenues by type of tax; it does not show any individual amounts, or list any names of persons. Within 60 days of the signing of the Summary Record, the IRS must send a Notice and Demand for Tax. If the tax remains unpaid after 10 days from the sending of that notice, the case is moved into collections.


Generally, the only notification that the assessment has been signed is the receiving of a letter which merely states “We Changed Your Account.” Often, this notice is not even mailed out. In that case, the first notification that may be received is a CP-501 (“Important”), CP-502, CP-503, and finally, a CP-504 (“Urgent”).


In the past, SAPF wrote responses to the “We Changed Your Account” notice. One such type of response can be found here. Generally, SAPF members ignored the CP-501 through CP-503 notices, if they received them at all. Responses used in the past to the CP-504 are found under Collection.


A privacy act request for the supporting records to the summary record was often made at this point.


The regulation at 26 CFR § 301.6203-1 states, in part, “The summary record, through supporting records, shall provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment. The amount of the assessment shall, in the case of tax shown on a return by the taxpayer, be the amount so shown, and in all other cases the amount of the assessment shall be the amount shown on the supporting list or record.


Privacy Act Requests to obtain the “supporting records” to the Summary Record of Assessment generally are refused by the IRS Disclosure office. The IRS contends that a transcript of account (such as an IMF) is sufficient to provide evidence of the identification of the taxpayer, the liability, etc. They do so by falsely equating “supporting records” with “anything the IRS can slap together that has similar information on it.” Of course, this misses the essential point: the records referred to in the regulation above support the assessment by providing the chain of evidence between a particular taxpayer’s liability and the actual assessment certificate by which the assessment of that liability was made. They show the amount of such liability being added together with the liabilities of other taxpayers to arrive at the grand totals (often in the millions and billions of frns) which appear on the Summary Record of Assessment.


Typically, the IRS refuses to provide any of the documentation which would link the liability with the assessment, often pretending they don’t even understand what is being asked for.


A privacy act request for the Notice and Demand for Tax usually has been made at this point (this letter makes use of codes found on the IMF — which also had to be requested again by privacy act request and received prior to making this request.).


Notice and Demand for Tax:

IRC § 6303 requires the Secretary to send a notice of assessment and demand for payment within 60 days after the making of an assessment. However, whenever we request copies of such notice and demand through the Privacy Act, the IRS claims that it doesn’t retain any copies of it, because it is computer generated. Of course, most of their notices are computer generated, yet they keep copies of them in a taxpayer’s file. It seems like it is only this particular notice which they keep no copies of. In response to requests for the notice, the IRS typically gives a copy of an IMF which they claim shows that the notice was sent. Unfortunately for them, the status code they cite (“MF STAT-21”), according to their own decoding manual, doesn’t mean what they claim.



Collection

This stage is also known in the IRS as a Taxpayer Delinquent Account, or TDA. This is the longest stage of the process—it lasts for 10 years from the date of assessment. The notices sent by the IRS start out in the form notice series CP-501, CP-502, CP-503, and CP-504, as mentioned above.


Responses used in the past to the CP-504 “URGENT” Notice of Intent to Levy:

1. Response when a Petition for Abatement was made to the IRS at the 90-day letter stage (see above).

2. Response when NO Petition for Abatement was made to the IRS, or this is the first notice received from the IRS for the year in question


Other letters and follow-ups are found in the Notice of Intent to Levy Responses - CP504 folder. If a Notice of Deficiency had never been received prior to receiving the CP504, it was requested, and once received, a response was made.


A privacy act request for the authenticated (signed) documents which support the CP504 notice and which identify the sources of the income used as a basis for the Notice of Deficiency has usually been made at this point. In SAPF’s experience, the IRS has never produced any signed, sworn documents as testimony that income was actually received from any individual in response to this type of request.


Before the IRS can proceed to levy any property, the IRS must also send a notice informing an individual of their right to a Collection Due Process hearing under the provisions of IRC § 6330. This notice generally, but not always, is in the form of a Letter 1058, “Final Notice of Intent to Levy and Notice of Your Right to a Hearing” or a Letter 3172, “Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320.” If a CDP hearing is not requested within 30 days of the letter, there will be no hold placed on collections for the time during which a CDP hearing is being held.


Responses used in the past to request face-to-face CDP hearings:

1. Request in response to a Final Notice of Intent to Levy.

Attachment to letter: 12153 Form for Levy

2. Request in response to a Notice of Federal Tax Lien Filing

Attachment to letter: 12153 Form for Lien

SAPF former instructions on requesting CDP hearings.


The IRS often, but not always, sent out an acknowledgement that it received the CDPH request. However, the IRS rarely granted face-to-face hearings, and since about 2003 or 2004, only offered telephonic hearings in response to requests for hearings. The appeals office did not consent to recording these telephonic hearings, so no record was made of this type of hearing. Very recently, the IRS regulations were changed so the appeals office can now refuse to give a hearing if they determine that the issues raised in the CDP request are “frivolous.”


The general letter from Appeals where they offered a telephonic conference is here. The following response letters that were used to respond to this type of offer may now be out of date with respect to the regulation about face-to-face hearings cited:


Responses used in the past to Appeals letter offering only telephonic conference:

1. Response showing problems with IRS procedures (most typical).

2. Response showing problems with IRS procedures and protesting appeals conference far away from individual’s home


Once the IRS has sent a final notice offering a CDP hearing and it was NOT responded to, or once a “Notice of Determination” has been issued from the appeals office, or once an individual has received a judgment from a petition to the Tax Court to review the appeals office’s determination, as applicable, there is nothing more between an individual and attempted collections. IRS collection actions will continue, through levies for the most part, until the 10 years of statutory collection time have expired for the tax year in question.


Other letters, followups, and some of the scripts that were once used for face-to-face hearings are found in the Collection Due Process (CDP) Appeals folder.



THERE ARE MANY OTHER HISTORICAL DOCUMENTS ON THIS WEBSITE, many of which have not been explained above.


* In the historical letters on this CD, words that were highlighted in red in the letters were words that were typically changed depending on the circumstances.