Ex-IRS agents testify about agent training courses conducted by IRS that fraudulently and deceptively train them to create "Substitute Returns" under 26 USC 6020(b).  There is NO legal authority for IRS agents to create "Substitute Returns" for American citizens who choose not to file a individual Form 1040.  "Substitute Returns" become the vehicle of IRS fraud for unlawful tax assessments, fraudulent penalties and even criminal prosecution by DOJ. 

	Watch the Video Testimony		Read the Transcript
	Section Summary
	Question & Evidence Overview
	Findings & Conclusions
Questions 301 - 330

Under sworn affidavit (Exhibit 190), John Turner, a former IRS revenue officer, submits training materials from among many IRS instruction courses he took during his initial training to become an IRS Revenue Officer.  The "yellow notes" help clarify important points on telling omissions, misleading statements, etc. in the material.

A Peak Under the Rock

301. On page 23-1, under REFERENCES, "Circular E" is listed. Would you agree, besides the Circular E, there are no other reference materials listed?
     
     Exhibit 191a, page 23-1
     
     
302. "Circular E", more fully known as Circular E, Employer's Tax Guide, is also designated by IRS as Publication 15. Would you agree that "Circular E" deals essentially with employer withholding requirements and Form 941, Employer's Quarterly Federal Tax Return?
     
     Exhibit 193
     
     
303. In Lesson 23 page 23-1, under CONTENTS, three types of tax returns are listed: Employment Tax Returns, The Partnership Return, and Excise Tax Returns. Would you agree that Income Tax Returns are not included?
     
     Exhibit 191a, page 23-1
     
     
304. In Lesson 23 page 23-1, under INTRODUCTION, would you agree that the purpose of this Lesson 23 is to instruct the revenue officer trainee about how to deal with situations involving the occasional taxpayer who refuses to voluntarily file returns, using an important administrative tool referred to as 6020(b) procedure?
     
     Exhibit 191a, page 23-1
     
     
305. Would you agree that in Lesson 23, Figure 23-1 on page 23-2 is a reprint of Internal Revenue Code Section 6020(b) and the Regulation at Section 301.6020-1?
     
     Exhibit 191b, page 23-2;
     Exhibit 161, Title 26 Internal Revenue Code, Section 6020(b);
     Exhibit 305c, IR Regulation 301.6020-1
     
     
306. Lesson 23, Figure 23-2, page 23-3, contains a reprint of Delegation Order 182. Would you agree that the Order lists revenue agents and revenue officers as having delegated authority to execute returns under the authority of 6020(b)?
     
     Exhibit 191c, page 23-3
     
     
307. Would you agree that the Internal Revenue Manual restricts the broad delegation of Delegation Order No.182 to employment, excise, and partnership taxes?
     
     Exhibit 191c, 191d pages 23-3 and 23-4;
     Exhibit 194, D.O. No. 182 (Rev. 7) IRM Part 1.2.2.96)
     
     
308. Would you agree that the Secretary has recognized that the delegation authority of D.O. No. 182 is restricted to employment, excise, and partnership taxes because of constitutional issues?
     
     Exhibit 191c, page 23-3
     
     
309. Is it true that the Internal Revenue Manual lists the following tax returns Form 940, Employer's Annual Federal Unemployment Tax Return; Form 941, Employer's Quarterly Federal Tax Return; Form 942, Employer's Quarterly Tax Return for Household Employees; Form 943, Employer's Annual Tax Return for Agricultural Employees; Form 720, Quarterly Federal Excise Tax Return; Form 2290, Federal Use Tax Return on Highway Motor Vehicles; Form CT-1, Employer's Annual Railroad Retirement Tax Return; Form 1065, U.S. Partnership Return of Income - as being appropriate for action under 6020(b)?
     
     Exhibit 191c, 191d page 23-3 and 23-4;
     Exhibit 196, IRM 5.18.2.3
     
     
310. Would you agree that Form 1040, U.S. Individual Income Tax Return is NOT included in IRM 5.18.2.3 as a return appropriate for action under 6020(b)?
     
     Exhibit 196, IRM 5.18.2.3
     
     
311. Is it true that when recommending assessments under 6020(b) the revenue officer will prepare all the necessary returns?
     
     Exhibit 191d, page 23-4;
     Exhibit 161, IRC Section 6020(b)(1)
     
     
312. Would you agree that the balance of Lesson 23 IRC SECTION 6020(B) for Revenue Officer Phase One training explains the 6020(b) procedures for computing the tax for Employment, Excise, and Partnership returns?
     
     Exhibit 191e, 191g, 191i pages 23-5, 23-7 and 23-9
     
     
313. Would you agree that Lesson 23 IRC SECTION 6020(B) does not contain any references to preparing income tax returns under 6020(b)?
     
     Exhibit 191a, 191b, 191c, 191e, 191g, 191i, Lesson 23
     
     
314. Would you agree that Lesson 23 IRC SECTION 6020(B) makes the statement to the revenue officer trainee, "You have already studied audit referrals as a means to enforce compliance on income tax returns?"
     
     Exhibit 191c, page 23-3
     
     
315. Would you agree that the trainee is told that by the end of the lesson he will be able to identify situations when action under IRC section 6020(b) is appropriate?
     
     Exhibit 191a, page 23-1 under OBJECTIVES
     
     
316. If the revenue officer is expected to identify situations when action under IRC 6020(b) is appropriate, logic then, would hold that this necessarily implies that the revenue officer would also be expected to identify situations when action under IRC 6020(b) would not be appropriate.
     
     Would you agree that Lesson 23 IRC SECTION 6020(B) made it clear that it is not appropriate to use 6020(b) for income tax, Form 1040 non-filers?
     
     Exhibit 191a, 191b, 191c, 191e, 191g, 191i, Lesson 23;
     Exhibit 194, D.O. Order No. 182 (Rev. 7) IRM Part 1.2.2.96
     
     
317. Is it true that there are no training instructions within Lesson 23 that pertain to using 6020(b) to prepare and assess Form 1040, U.S. Individual Income Tax Return?
     
     Exhibit 191a, 191b, 191c, 191e, 191g, 191i, Lesson 23
     
     
318. Is it true that Lesson 23 points to Lesson 25 REFERRALS for instructions on dealing with income tax non-filers?
     
     Exhibit 191c, page 23-3
     
     "You have already studied audit referrals as a means to enforce compliance on income tax returns."
     
     
319. The language of IRC 6020(b)(1) is very broad, "…if any person fails to make any return…" Does the IRS purport that there are ways (plural) to resolve cases for nonfilers with different situations, different types of taxes and different types of tax returns?
     
     Under WHY THIS LESSON IS IMPORTANT,
     Exhibit 192a, page 25-1
     
     
320. Does IRS make a distinction in the procedures for dealing with nonfilers of income tax returns as opposed to employment, partnership and excise tax returns?
     
     Under WHY THIS LESSON IS IMPORTANT,
     Exhibit 192a, page 25-1
     
     
321. Is it true that IRS uses "6020(b) procedures" to enforce compliance of nonfilers of employment, excise, and partnership returns, and uses "Referral to Exam" procedures to enforce compliance of income tax nonfilers?
     
     Under WHY THIS LESSON IS IMPORTANT,
     Exhibit 192a, page 25-1
     
     
322. Do you agree that the stated focus of Lesson 25 REFERRALS is the referral process?
     
     Second paragraph under WHY THIS LESSON IS IMPORTANT,
     Exhibit 192a, page 25-1
     
     
323. Do you agree that an objective of Lesson 25 is for the trainee to be able to select which cases should be referred to the Examination Division?
     
     Under LESSON OBJECTIVES,
     Exhibit 192a, page 25-1
     
     
324. Do you recall that Lesson 23 IRC SECTION 6020(B) made it clear that the revenue officer is not to use 6020(b) for enforcing compliance of income tax nonfilers, but instead is to use the referral process in?
     
     Exhibit 192c, Lesson 23, page 23-3
     
     
325. In Lesson 25, the reference materials to be used for the lesson are listed under REFERENCES, and the lone item listed is IRM 52(10) 0.
     
     Do you agree that there is no reference to any statute or any internal revenue code section?
     
     Exhibit 192b page 25-2
     
     
326. In Lesson 25, page 25-3, under OBJECTIVES, would you agree that the trainee is told that after completing this lesson he will be able to select those cases which should be referred to the Examination Division?
     
     Exhibit 192c, page 25-3
     
     
327. Lesson 25 pages 25-4 through 25-9 contain instructions, with examples, showing the trainee how to complete referral forms. This section of the lesson on the subject of making referrals to Exam for income tax non-filers concluded with the statement.
     
     Exhibit 192d

"Remember: Refusal to file cases involving Forms 940, 941, 942, 943, 720, 1065, 2290, or CT-1 will not be referred to Exam. These returns should be prepared under authority of IRC Section 6020(b)." Clearly, IRC section 6020(b) is to be utilized to enforce compliance of specified business master file returns. In this lesson, is there mention anywhere of the statute that authorizes IRS preparation of Form 1040 U.S. Individual Income Tax Returns?

Exhibit 192a, 192b, 192c, 192d, Lesson 25

The Smoking Gun

328. (no question)
     
     
329. IRC 6020(b)(1) is written in very broad language and if taken literally it seems to give authorization to IRS to make any return for any person who fails to make one. However, we have seen how the statue is, in fact restricted in its application. Revenue officers, and specified other IRS employees do have delegated authority to make returns under 6020(b). But, we have seen that the delegated authority limits the types of returns that can be prepared under 6020(b). We have seen that the exclusion includes income tax returns, corporate or individual. Since 6020(b) does not permit preparation of income tax returns, and, since the SFR program is merely a program, with no basis in law, what is the authority for IRS to make an income tax return when a citizen fails to make his own? (None)
     
     Exhibit 191a, 191b, 191c, 191e, 191g, 191i, Lesson 23;
     Exhibit 192a, 192b, 192c, 192d, Lesson 25;
     Exhibit 197, IRM Part 5, Chapter 11 Delinquent Return Accounts;
     Exhibit 198, IRM Part 5, Chapter 18 Liability Determination;
     Exhibit 200, IRM Part 4 Chapter 23 Section 11;
     Exhibit 201, IRM Part 4, Sect. 9 Delinquent & Substitute Return Processing;
     Exhibit 199, Handbook 4.3.20 Frivolous Nonfilers; Title 26 and its regulations
     
     

330. It is well settled in law that government employees need proper delegated authority to operate in their capacities. Do IRS employees have delegated authority to make "Substitute for Returns"? (No)
     
     Exhibit 195, IRS letter dated November 2, 1993
     
     Phase One Revenue Officer training material, Lesson 23 IRC SECTION 6020(B) clearly demonstrates how and why 6020(b), in spite of its language, is not able to allow IRS to make proper, legally valid, 1040 income tax returns for nonfilers.

Yet, another IRM claims that IRS does have authority for income tax returns under 6020(b). Exhibit 202 IRM 5480, states, "SCCB prepares Forms 1040 under authority of Internal Revenue Code 6020(b)…"

Since both manuals cannot both be correct, how can this be rectified?      ANSWER. It cannot be rectified.

For BMF returns under 6020(b), IRS employees complete the return with all necessary data. The returns include an employee's signature where the taxpayer would normally sign. 6020(b) returns also disclose the computed tax liability.

With IMF returns (income tax) done via SFR procedures, income information is never disclosed on the return, tax liability is not disclosed on the return, and there is never a signature by an employee on a 1040 return.

What this really implies is that bona fide "constitutional issues" are involved with the income tax, so IRS cannot use the same procedures as they do with BMF returns.

Exhibit 330a, 330b, 330c, 330d, 330e

331.  Additional Material on IRS Agent "Pocket Commission" Hearing Testimony:

Summary:  Pocket Commissions are the identification badge used by Treasury IRS Revenue Agents to establish their legal authority with the public.  As the testimony and evidence shows these agents do NOT have legal authority to seize property or otherwise "enforce" the income tax laws on ordinary Americans.

In addition to the testimony, the following evidence is offered:

See Copy Dept. Of Treasury Pocket Commission,
Exhibit 331a;

See IRM 1.16.4, Ch 3,
Exhibit 331b;

See IRS Agent Standard Position Description
Exhibit 331c