Tuesday, October 9, 2007

Tax Help: IRC 6020 – tax returns prepared by the IRS

If any person fails to prepare a tax retun, the IRS may file a tax return based on the available information.

United States of America, Plaintiff v. Richard C. Michael, Jeannette B. Michael, Citimortgage, Inc., Washington Mutual Bank, F.A., The Lakota Trust, Bruce Thompson, Debbie Thompson, Professional Holistic Healthcare Trust, Mitch C. Wallis, Defendants, U.S. District Court, Mid. Dist. Fla., Orlando Div.; 6:06-cv-820-Orl-18DAB, June 7, 2007.

[ Code Secs. 6020 and 6203]

26 U.S.C. §6020(b)(l) provides that "[ilf any person fails to make any return required by any internal revenue law or regulation...the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise." Moreover, a Certificate of Assessments and Payments submitted by the United States is accepted "as presumptive proof of a valid assessment." United States v. Chila, 871 F.2d 101 5.101 8 (1 lth Cir. 1989) ( quoting United States v. Dixon, 672 F.Supp. 503,506 (M.D. Ala. 1987), aff'd 849 F.2d 1478 (11th Cir. 1988)). "Once the United States has established that its assessments are valid though the submission of Certificates of Assessment, the burden then shifts to the taxpayer to show that the government's assessments were arbitrary or incorrect." United States v. Charboneau, No. 5:04-cv-442-0c-10GRJ,2006 WL 2346280, at *3 (M.D. Fla. July 18, 2006) ( citing Bar L Ranch. Inc. v. Phinnev, 426 F.2d 995, 999 (5th Cir. 1970)). 1 Given that the United States has submitted all required documentation to establish that its assessments against Mr. Michael are valid and enforceable, and given that Mr. Michael has failed to present any evidence that the tax assessments were arbitrary or incorrect, the Court finds that the tax assessments against Mr. Michael for the tax years 1992, 1993, and 1994 are valid and enforceable, and that the United States is entitled to judgment for the outstanding tax assessments against Mr. Michael for those tax years.

6020(a) PREPARATION OF RETURN BY SECRETARY. --If any person shall fail to make a return required by this title or by regulations prescribed thereunder, but shall consent to disclose all information necessary for the preparation thereof, then, and in that case, the Secretary may prepare such return, which, being signed by such person, may be received by the Secretary as the return of such person.


6020(b)(1) AUTHORITY OF SECRETARY TO EXECUTE RETURN. --If any person fails to make any return required by any internal revenue law or regulation made thereunder at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise.

6020(b)(2) STATUS OF RETURNS. --Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes.

Alvin S. Brown, Esq.
Tax Attorney
703 425-1400


To provide IRS transparency upload your IRS experiences at www.irsforum.org

1 comment:

Alvin Brown & Associates said...

When Taxpayer Fails to Make a Return: Returns by IRS personnel

A taxpayer was not entitled to mandamus relief to compel the IRS to use his delinquently filed tax returns in place of the substitute returns that were created and used by the IRS in assessing his tax deficiency. Instead of the equitable remedy of mandamus, the taxpayer had an adequate remedy at law: a suit for refund.

M.P. Georges, CA-1, 88-2 USTC ¶9527.

Absent proof that the IRS's determinations of deficiencies and penalties against an individual who failed to file a return were incorrect, the Tax Court did not err in sustaining the computations, which were based on the actual amount of income tax owed and not upon any estimated tax.

J.D. Webb, CA-9 (unpublished opinion), 95-1 USTC ¶50,127.

The belated filing of a tax return, after the IRS has filed a substituted return, does not require the IRS to start anew the assessment process. Accordingly, since the individual did not pay the full amount of tax owed, the court dismissed the action for lack of jurisdiction.

S.P. Ollarek, DC N.Y., 85-1 USTC ¶9184, 601 FSupp 815.

A revenue officer's proposal to prepare an individual's return, which the taxpayer failed to file, was not invalid because Code Sec. 6020 delegates authority to prepare substitute returns to the district director or any authorized IRS employee such as the revenue officer. Thus a writ of mandamus brought against two IRS revenue officers by the taxpayer claiming that notices of levy and a letter they sent did not comply with certain Code requirements and related regulations was dismissed.

L.C. Craig, DC Calif., 96-2 USTC ¶50,416. Aff'd on another issue, CA-9 (unpublished opinion), 97-1 USTC ¶50,316.

A taxpayer who failed to file tax returns was subject to summary judgment on his claim that an IRS lien was procedurally defective. The taxpayer argued that the substitute return executed by the IRS was defective because it was not completed in full. However, since the IRS was not required to complete a substituted return prior to assessing a deficiency, the incomplete substitute was not invalid. The taxpayer's argument that the substitute return proved he had no deficiency was meritless because, by failing to file, the deficiency amount was the tax due.

J.D. Meek, Jr., DC Ark., 92-1 USTC ¶50,238.


J.A. Viscuglia, BC-DC, 94-2 USTC ¶50,332.

Assessments arising from unsigned substitute income tax return forms prepared by the IRS are valid because there is no signature requirement.

J.E. Holland, DC La., 97-1 USTC ¶50,403.

Substitute returns prepared by the IRS pursuant to Code Sec. 6020(b) on behalf of an individual who failed to file returns for three tax years were not returns for purposes of Code Sec. 6211(a) and had no affect on whether a deficiency existed. In order for the references to the term "taxpayer" in Code Sec. 6211(a) to have any rational meaning, Code Sec. 6211(a) should be interpreted to exclude returns that are prepared by the IRS.

G.J. Spurlock, 118 TC 155, Dec. 54,654.

The contention that the IRS could have determined a deficiency only after it received a tax return filled out and filed by the taxpayer, who failed to file a return, was rejected as a tax-protester-type argument. Moreover, the IRS properly prepared returns, and the determination of the deficiency did not rest on the preparation of the substitute returns.

W.C. Reichenbach, 70 TCM 313, Dec. 50,811(M), TC Memo. 1995-369. Aff'd, CA-6 (unpublished opinion), 96-2 USTC ¶50,611.

A notice of deficiency based on returns prepared and filed by the IRS on behalf of a nonfiling taxpayer was valid because such returns were specifically authorized by Code Sec. 6020(b)(1). The validity of the notice was not undermined by any failure of the IRS to follow procedures outlined in the Internal Revenue Manual because IRS procedural rules do not have the force of law and are merely directory.

C. Grasso, 68 TCM 821, Dec. 50,143(M), TC Memo. 1994-479.

A taxpayer's argument that the IRS lacked authority to prepare a substitute tax return on her behalf was completely without merit where she originally submitted documents containing no information from which to make a determination as to her tax liability.

L.A. Marryat, 60 TCM 535, Dec. 46,807(M), TC Memo. 1990-438.

The argument that the preparation of a substitute return and the assessment of tax liability could only be made by the Secretary of the Treasury was considered frivolous and without merit.

W.C. Updegrave, DC Pa., 97-1 USTC ¶50,465.

An individual's pro se refund suit with respect to itemized deductions he claimed the IRS wrongfully denied was dismissed. Since the taxpayer failed to file his return, the IRS had authority to prepare his tax return and apply the standard deduction. Therefore, the taxpayer could not claim itemized deductions that he did not elect on the return.

W.F. Maxwell, DC Ga., 99-2 USTC ¶50,817.

Substituted returns prepared on behalf of an individual who filed zero income returns in two separate tax years were not valid returns under Code Sec. 6020(b) and, as a result, additions to tax under Code Sec. 6651(a)(2) were denied. The "dummy returns" prepared by the IRS were issued to the taxpayer without an IRS revenue agent's report and a notice of proposed tax documenting the taxpayer's estimated tax liability.

M.A. Cabirac, Dec. 55,124, 120 TC 163.

Additions to tax against a nonfiler under Code Sec. 6651(a)(2) were denied. The IRS failed to produce any evidence supporting its claim that it filed substitute returns prepared on behalf of the individual for the tax years in issue. Documents attached to the IRS's response failed to contain sufficient information from which to compute the individual's tax liability. As such, the file was not considered a "return" for purposes of Code Sec. 6020(b).

G.J. Spurlock, 85 TCM 1236, Dec. 55,134(M), TC Memo. 2003-124.

Since an individual did not file valid returns for the two years at issue, the government was entitled to make a substitute return from information available.

R. Wos, CA-7 (unpublished opinion), 2005-1 USTC ¶50,363, aff'g 86 TCM 138, Dec. 55,245(M), TC Memo. 2003-223.

The IRS could prepare substitute income tax returns for a married couple, and the Tax Court had jurisdiction to review the IRS's determination to collect taxes based on those substitutes.

B. Nicklaus, 89 TCM 1499, Dec. 56,076(M), TC Memo. 2005-156.

A roofing contractor who failed to file a tax return or make tax payments for several years, then ignored a court order to respond to the IRS's summary judgment motion and failed to appear at trial, was liable for the penalty under Code Sec. 6651(a)(2). Although that penalty applies only when there is a failure to pay the amount of tax shown on a return, the substitute returns that the IRS prepared for the taxpayer met the requirements of Code Sec. 6020(b) and so were treated as returns filed by the taxpayer.

D.W. Hennard, 90 TCM 536, Dec. 56,208(M), TC Memo. 2005-275.

The Tax Court had jurisdiction over an individual's request for redetermination of his tax liabilities. His argument that the notice of deficiency he received was invalid because the IRS failed to prepare a proper substitute tax return was meritless. There is no requirement that the IRS prepare a substitute return.

T.D. Selgas, CA-5 (unpublished opinion), 2007-1 USTC ¶50,219, aff'g an unreported Tax Court decision.

An individual who received distributions from his retirement plan and IRA but failed to file a return was not subject to the failure to pay penalty. The IRS failed to meet its burden of production with regard to the imposition of the penalty because this penalty applies only when an amount of tax is shown on a return. Because the taxpayer did not file a return for the year at issue, a substitute for return (SFR) that satisfied the requirements of Code Sec. 6020(b)) was required. The IRS did not prove that an SFR satisfying the requirements was made.

S.A. Lewis, 93 TCM 934, Dec. 56,847(M), TC Memo. 2007-44.

Documents prepared by the IRS did not constitute a "substitute return" under Code Sec. 6020(b) so there was no amount "shown as tax on any return" and owed by the taxpayer that would support imposition of the penalty under Code Sec. 6651(a)(2). The purported return prepared by the IRS contained only a Form 13496, IRC Section 6020(b) Certification, signed by an IRS official; a Form 4549, Income Tax Examination Changes; and a computer printout that was "substantially incomprehensible."

R.S. Brooks, 93 TCM 1078, Dec. 56,889(M), TC Memo. 2007-80.

An executed Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, or Form 4549, Income Tax Audit Changes, when accompanied by the schedules prepared by a revenue officer, constituted a return under Code Sec. 6020(a).

IRS Letter Ruling 200113026 (Chief Counsel Advise), February 7, 2001.