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This Frivolous Return Penalty Protest letter was post to my Tips & Tricks for Court group. Since it is one of the best I have ever seen, I thought it warranted being posted here. An .rtf formatted version of this is posted to my Tips & Tricks for Court group.

This is a sample frivolous letter response for your education and amusement only and is not intended for any other purpose. Using this document for any other purpose may subject you to whatever adverse situation may apply. This document is not meant to be used as is. Doing so may needlessly cause you great harm.

<date>

Internal Revenue Service

S:C:CS:O:C:E

1973 North Rulon White Blvd.

Mail Stop 4388

Ogden, UT 84201-0040

Attn: Maureen Green, Operations Manager, Examinations

RE: <refer_to_number>-<year> LTR 3176C

TO THE COMMISSIONER OF INTERNAL REVENUE:

This is a timely reply to your letter dated <letter_date> wherein you propose asserting a frivolous return penalty in the amount of $5,000. Specifically, you propose the assertion of a penalty based on a document purportedly filed on <filed_date>. <as appropriate-àAdditionally, you assert that you have enclosed a copy of Publication 2105 and an envelope.

I deny receiving any such publication 2105 nor did I receive an envelope.ß->

I hereby protest your proposed assertion of a frivolous return penalty and I intend for this protest to receive Appeals Office consideration, to the extent that such consideration is available at this time.

On <date_you_called> I called your office at <office_number> and talked to a person who identified <him/herself> as <employee_name>- employee no. <employee_number>. This person clarified that if I were to file a return for <year> the penalty would not be asserted. I requested a transcript of information returns in the possession of IRS.

I disagree with your proposed assertion of a frivolous return penalty for the following reasons:

1.       Your transcript indicates a document purporting to be a Form W-2 made by <company_name> As a matter of law, documents purporting to be Forms W-2 must show, among other things, a valid payer (See 26 U.S.C. § 6051). Upon information and belief, <company_name>. was a corporation incorporated under <state_of_incorporation> law and resident in <state_of_residence>. (See certificate of fact attached hereto as Exhibit A- a true copy of an original in my possession). As such, <company_name> was not among those identified as employers paying wages subject to withholding(See 26 U.S.C. Subtitle C Chapter 24), nor, under the circumstances, among those identified as employers providing employment for wages subject to the Federal Insurance Contributions Act(FICA) taxes (See 26 U.S.C. Subtitle C Chapter 21). Thus the document purporting to be a Form W-2 made by <company_name> does not show a valid payer as a matter of law and is void. (See 26 U.S.C. § 6051(d)).

2.       Your transcript indicates a document purporting to be a Form 1098 made by <bank_name>. As a matter of law, documents purporting to be Forms 1098 must show, among other things, a valid recipient of mortgage interest (See 26 U.S.C. § 6050H), and a valid payer of interest on a qualified mortgage (See 26 C.F.R. 1.6050H-1). Upon information and belief, <bank_name> was a corporation incorporated under <bank_state_of_incorporation> law and under the exclusive supervision of the <state_banking_department>. (See certificate of fact attached hereto as Exhibit B- a true copy of an original in my possession). As such, <bank_name> was not among those identified as a trade or business (see 26 U.S.C. § 7701(a)(26)) recipient of mortgage interest. Additionally, I deny participating in any sole proprietorship. Because of this, <bank_name> did not receive interest on a qualified mortgage. Thus, as a matter of law, the document purporting to be a Form 1098 made by <bank_name> does not show a valid recipient of, nor a valid payer of, mortgage interest on a qualified mortgage and is void.

3.       With respect to <company_name> for the year <year>, I deny participating in any activity for which an Act of Congress has made me liable for any tax.

4.       With respect to <bank_name>  for the year <year>, I deny participating in any activity for which an Act of Congress has made me liable for any tax.

5.       Without the erroneous information provided by <company_name> and <bank_name>, IRS has no basis to conclude that I have gross income or taxable income sufficient to show a requirement to file a return of tax for the year <year>. For that reason alone I am not the responsible person contemplated by the Congress for the assertion of this penalty. Regardless, the proposed penalty is targeted toward a responsible person within an organized enterprise. (See 26 U.S.C. § 6671(b)). I deny participating in any such organized enterprise.

6.       For the year <year> I deny participating in any activity for which an Act of Congress has made me liable for any tax.

For all the foregoing reasons, the proposed assertion of a frivolous return penalty has no basis in fact and IRS has no lawful basis to proceed further with this proposed assertion of a frivolous return penalty.

I certify under penalty of perjury under the laws of the United States of America that the foregoing statements are true, except for matters stated upon information and belief, and as to those matters I believe them to be true.

Signed_________________________________________Dated____________________

<your_name>

Attachments:

Certificate of Fact-Exhibit A

Certificate of Fact-Exhibit B

Enclosures:

<year> LTR 3176C

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