Laurel Ann Curtis is the author of (take a deep breath) – IRS Exposed: Bullies, Liars and Thieves – The True Story of How One Woman Fought The IRS And Won. Clearly she was not referring to her latest appearance in Tax Court. She really got creamed. Tax deficiencies were over $400,000 for four years. Penalties including the 75% fraud penalty double the tax. I don’t even want to think how much interest there is. All in the total is probably over a million dollars. Here are a couple of highlights just to give you the flavor:
In April 1998 respondent contacted petitioner and requested that she provide bank records, business records, and other materials that would be relevant in determining her income for the years 1994 through 1998. The following month petitioner met with respondent’s revenue agent but did not provide the requested documents. Instead, she argued with the revenue agent and questioned her authority. On June 19, 2001, petitioner met with respondent’s revenue agent and the revenue agent’s manager but again provided no documents. At this second meeting, petitioner again argued with the revenue agent and questioned her authority.
Because petitioner did not provide the requested documentation, respondent’s revenue agent summoned banks and other third parties in an attempt to reconstruct petitioner’s income. The summonses indicated that petitioner had rental income and property sales income during the years 1994 through 1998. Respondent then prepared substitutes for returns (SFRs) on petitioner’s behalf pursuant to section 6020(b).
Petitioner stipulated that she received the income but asserts, using arguments that this Court has long deemed frivolous, that the income was not taxable income within the meaning of the law. Petitioner failed to show that the income was not taxable or that she received any less than the amounts stipulated during the years at issue. Accordingly, we sustain respondent’s adjustment in those amounts
Petitioner did not file Federal income tax returns for the years at issue and has an extended history of not filing returns, dating back to 1983. Considering the extent of her communication with various taxing authorities and her involvement in prior Tax Court litigation, it is clear that petitioner knew that her income was taxable and that she had a requirement to file income tax returns. Petitioner’s argument and testimony that she believed she should not have to file returns are irrelevant. A belief that the tax laws are unconstitutional and should not apply is not a sufficient defense to fraud.
Petitioner has based her entire case on frivolous and groundless positions. She made these arguments in several written submissions to the Court and through her testimony at trial. Petitioner’s numerous and lengthy filings have caused this Court and respondent to waste significant time and resources. She has maintained her positions for many years despite repeated warnings and the imposition of a $15,000 penalty pursuant to section 6673(a) in her first Tax Court case. We are convinced she has instituted and maintained these proceedings primarily for delay. Moreover, she has unreasonably failed to pursue available administrative remedies; as previously discussed, she refused to cooperate during her audit. Consequently, we shall grant respondent’s motion for a penalty and require petitioner to pay a penalty of $25,000 to the United States pursuant to section 6673(a)(1).
So What Makes Me Think The Protesters Might Be Winning ?
Ms. Curtis lost as badly as it is possible to lose in Tax Court. There is the 75% fraud penalty and the maximum sanction, $25,000, for frivolous arguments. She still might appeal, though. Presumably the Circuit will make relatively quick work of that and maybe pile on some more sanctions. Fine. Now the IRS has to start trying to collect from her. She can file a request for a collection due process hearing when they threaten to do anything sterner than asking her to pay (Doubt there are any refunds to offset). Then she can appeal the result of the hearing to Tax Court. The Tax Court will be really pleased to see her – again. Fine. Add another 25 grand to the tab. Still it might be another couple of years before the IRS collects dollar one from her on tax liabilities that are already old enough to start college.
It Does Get Worse For Some Of Them
Ms. Curtis was inspired in her beliefs by Irwin Schiff, whom she referred to as a “Moses”. He is currently in federal prison. It is not clear to me why someone like Schiff goes to prison, while Ms. Curtis just gets the penalties piled on. It seems that the number of hard core protesters who end up incarcerated is not large enough to discourage the rest. They just end up playing the role of martyrs.
The Part I Don’t Get
Many tax protester theories require the existence of a some sort of conspiracy in order for them to be credible. Their “victories” in court are limited to an occasional criminal acquittal and the scaling back of penalties. Nevertheless, they keep believing in their theories that, for example, the Sixteenth Amendment was never properly ratified or the Paperwork Reduction Act invalidates Form 1040. In order for them to be right, even though they keep losing, both the executive and judicial branches of the federal government have to be entirely corrupt. Now, it would seem that if some group or other – the Rothschilds for example – could control both the executive and the judiciary, it would not be that hard to take over Congress and make the actual law exactly what it needed to be. Nobody has ever explained that to me. I keep hoping.
You can follow me on twitter @peterreillycpa.
Afternote
I am happy to hear from any “patriots”, “sovereign citizens” or anybody else who thinks that the income tax does not apply to ordinary Americans who have sufficient taxable income. I would really appreciate it if you would first check out this website – Here Is The Law that makes the average American liable for the income tax, but it is not required.
Originally published on Forbes.com Jan 17th, 2013