Hommel vs. IRS: Post Court Brief, pt. 2

JASON HOMMEL·MONDAY, OCTOBER 31, 201694 Reads

48. Due to the learned helpless trauma, I want to be compensated with enough money to be set up for life. The only question is how much, and in what forms that would be safe from future IRS persecution? As a financial newsletter writer, an advocate for gold, not even I know the proper forms of compensation. Gold could be raided and taken. Cash can be inflated away, or physically taken, or lost in a bankruptcy of a bank. A trust can be mismanaged or be put with an institution that goes bankrupt. There is no monetary security in this world when a group as powerful as the IRS can whimsically destroy a man’s life by either invading and stealing money in bank and brokerage accounts, or raiding his house with an armed invasion, prior to even going to court. I therefore ask for the IRS itself to be permanently abolished, disbanded, fired, sent home. Why not? Why not ask for the biggest thing? Then, everything else seems far more reasonable by comparison. And given the facts of my case, it’s not so unreasonable. The IRS abolished all of my businesses. That’s what justice requires, an eye for an eye. I would recommend that the Judge in my case read the book of Judges to understand what all of those judges did and had in common. Perhaps the IRS should have only taxed my eye, instead of completely destroying me financially. Perhaps the IRS should have been happy to take only a portion of my actual income, instead of seizing all of my assets when I was suffering no income at all, but only losses! I am not responsible for the IRS deciding to abolish my financial life; they decided to do that entirely on their own, and I’m not at fault for their bad behavior. It has taken me a while to be at peace with the fact that I’m not at fault for the bad behavior of other business owners who were in my life, also.
49. I had a maximum net worth of $15 million in 2006. I’m broke today. I suffered losses for ten years. Any “income” during that entire time period was very temporary, incidental, minimal, went to lawyers, and or businesses that were not mine, or under attack by the IRS. All of the tax returns I filed were under duress of the threat of the IRS stealing everything, and under time pressure from accountants and lawyers who were making mistakes as noted, such as the lack of disclosure of $336,000 coming out of my IRA account and going into another man’s business. Ugh. I therefore ask for a return of all the taxes that I have improperly paid during that entire time period, which I estimate at $1 million.
50. I ask to be compensated for the IRS destroying JH MINT, inclusive of the Grass Valley and Auburn locations, which was destroyed, which had a maximum asset value of $2 million liquid in gold, cash, and silver, and $1 million of minting machines, for a total of $3 million.
51. I ask to be compensated for the loss of my home on Brooks road, a house I paid for with cash, owned debt free, for $950,000, which had a vault of a $100,000 addition, let’s call this asset $1 million.
52. I ask to be compensated for the loss of my family’s Tahoe vacation home, which I sold for much less than it was worth, to have money to live on, during this time of waiting for justice, for a value of $1 million.
53. I ask to be compensated for my pain and suffering, sleeplessness, stress, anger, PTSD, ongoing trauma for a value of $1 million.
54. I ask to be compensated for my learned helplessness for a value of $1 million. That’s a grand total of $8 million.
55. Since I have asked for the elimination of the IRS, let me suggest a possible legal way to accomplish this. I ask for punitive damages in an amount of the court’s discretion to be levied and taken from the IRS’s operating budget (may I recommend from 10% to 100% of their budget) to be given to tax court, to be put towards efforts to protect people from tax abuse, to speed up the process of tax court, to allow for changes in processes, to prevent the IRS from engaging in collection efforts prior to tax court, and other things at the court’s discretion to help protect the people of the United States from similar future IRS abuse, in particular, targeting of political enemies. While I understand that the IRS has not engaged in collection efforts for 2009, they have engaged in collection efforts for all the surrounding years, which would not have taken place had my tax loss of $800,000 been originally accepted. So maybe the solution is to defer to the taxpayer first, and turn back to innocent until proven guilty, like the people are supposed to be in all the other courts, instead of the tax payer being presumed to be guilty, and the IRS presumed to be correct until proven wrong. After this punative fine is ordered, up to 100% of the budget of the IRS, then collection efforts against the IRS may begin, and then, the IRS can begin a long long long court battle to try to proclaim their innocence and claim how unjust the order is.
56. I’m not asking for a ban on tax collection efforts. Taxes could still be collected, just after due process, not before. That’s not really that radical of a change, but very appropriate. It is not unreasonable that if such a change takes place, to start over with an entirely new organization of people who never were a part of the old culture of abusing people first and asking questions later. Congress, of course, as a separate branch of government, would be free to start a new organization, imagine calling it something like “The US TAX enforcement agency”, to simply do a more competent and fair job. One of the benefits of cleaning house, and starting fresh with a new agency, is that everyone with the new agency would know and remember that if they don’t do a good job, their jobs can be eliminated. How else is corruption truly swept away? This, of course, would be a great positive change and great incentive for everyone else in government, as people in other agencies would watch one of the most powerful and dreaded agencies being completely disbanded. It is interesting that I get to ask for this in my lawsuit, on the heels of Trump declaring that he wants to clean up corruption in Washington D.C. One of the big changes that Trump has talked about in the tax code, is the 501c3 exemption on Churches, which puts on them a literal gag order for political speech. That might even be a bigger change for America than simply moving to “due process first, and tax collection efforts later”.
57. The court has asked me to look through the bank statements to show which expenses may have been bullion purchases. I am sometimes a slow thinker, I don’t think that well fast on my feet. As a writer, I like to really ponder things over. Some of my best articles are the result of thinking about issues for over 10 years. I don’t have much experience in the fast paced world of court in person. At first thought, in court, I was thinking that I was being given the chance to “write my own ticket” so to speak, which I felt was like nearly a win. However, upon further reflection, I see many reasons why trying to pick out bank transactions of purchases is not a valid way to estimate expenses. First, the other men’s businesses would buy silver and gold from the public, for cash. Those “costs of goods sold” would not show up in bank transactions. Second, the other men’s businesses would buy silver and gold from Tulving, for cash; by sending him cash in the mail. You might think nobody is allowed to send cash in the mail; however cash is sent in the mail the same way that gold and silver are sent in the mail; it is sent via “registered and insured” mail. These “costs of goods sold” would also not show up in bank transactions. Third, let’s assume the other men’s businesses sold $100,000 worth of silver and bought $100,000 worth of silver. The other men’s businesses would often do that. But does that mean there was no profit or that the cost of goods sold is the same? No. Let’s assume the other men’s businesses sold $100,000 worth of silver at $10/oz. with a 5% markup, at $10.50/oz., but then bought $100,000 worth of silver at $10/oz. exactly. The sale would be for 9523.8 ounces of silver, and the purchase, to replace the silver would be for 10,000 oz. Obviously, you get the full story of the profit of the trade as expressed as the difference in ounces, or as the 5% markup. It would not necessarily show up as a difference between the cash sales and the cash repurchases, which would balance out. This is another reason why is that the dollar values of sales and purchases on the bank transactions are meaningless. Fourth, where does the money to pay everyone’s salaries, and rent, and ads come from? It comes out of the inventory at hand, cash from the till that is no longer available to be used to repurchase silver and gold. So that “difference” if you will, is also not profit, as the IRS wrongly assumed, but loss and expense. When the other men’s businesses are paying themselves a cash salary out of the till, as they did, that expense would not show up in bank transaction purchases for silver and gold, it’s just not even there in the bank statements. Fifth, I started with a substantial amount of my own inventory of silver and gold, that was “lent” if you will, to the managers/owners of the bullion businesses. As I was losing inventory, taking losses, how would that show up on bank statements? It does not! Obviously, as silver and gold inventory shrinks, lost, and not replaced, to raise the cash to spend on the minting machines, the book, and the website, miningpedia. This is not “profit”, this is a draw down of existing inventory that is not being replaced–it’s losses. But a bank account analysis would wrongly count that as income. But finally, and this is a reason that trumps all the others, the biggest reason why this is an inappropriate and needless task, is that the bullion businesses were not mine; they were owned by M V, and D B; they claimed ownership; they claimed to own 100% of the profits, and thus, 100% of the tax liability as well. Perhaps this also explains why my losses for 2009 were not $1.6 million, but $800,000, because I’m sure there were some capital gains on some of the silver and gold I sold out of inventory and did not replace, to fund those losses. One more big reason, a man cannot be ordered to testify against himself. Well, a man can be ordered to testify against himself. But a man does not need to follow such an order. A man has the right to remain silent. If I were to comply with the court’s order, I would be tacitly accepting the validity of looking at bank transactions of other men’s businesses that appeared in my bank accounts as a method for estimating my tax liability. But I’m not remaining silent, I’m explaining clearly, patiently, appropriately, why this proposed method of determining my tax liability is inappropriate and woefully inaccurate. I hereby have denounced and refuted the looking at my bank transactions as a method to estimate my tax liability of the other men’s businesses. Finally, I even asked the IRS auditor how he determined that I owned the businesses in question, and he said my name was on bank statements. Before I could argue whether that was sufficient information to determine ownership, I asked him directly, and he admitted that it was not enough information to determine ownership of a business. In actual fact, when I later did own JH MINT, after D B left, and after I incorporated, I had a business manger by the initials KR put her name on a business account so that she would have the authority to do the job of reordering silver and gold. Her name of the account is not being used to impute ownership of the business to her. But let’s get back to the big picture. The IRS lists deposits of $7.6 million in my personal account. Deposits are not income. Sometimes, I would deposit cash, sometimes withdraw. But even if the court wishes to attribute this as income to me, instead of B as gross income, at 5% gross profit before expenses, after replacing bullion, that’s $380,000 not even counting wages and things like the $100,000 vault. Minus $1.6 million more in other losses, and I’d still have $1.32 million in losses instead of the $800,000 loss I reported. Should the IRS be forced to accept a revised return of $1.3 million loss instead of my $800,000 loss? My honesty on my tax return was astounding when you look at the details.
58. My original 2009 tax return should be accepted, and the IRS should be ordered to accept it. We have a system of voluntary tax compliance. I voluntarily complied. The IRS has shown no reasonable evidence that my tax return was inaccurate or invalid in any major way, except for the omission of about $300,000 of income from my IRA account, which was put directly into the bullion businesses and lost, which the IRS had previously accepted that as non taxable, and now has flip flopped and said that they do not.
59. Accuracy. Yes, my 2009 tax return, and the entire case “is a mess”. I’m sorry. It was not my negligence that created this mess. It was… and bear with me… it was the people who I put into business and funded, who refused to pay me any royalties, who refused to comply with their own tax obligations for the business I “gave” to them, that created this mess. It was the IRS, who violated their own settlement with me that created this mess. It was the IRS who targeted me, sorry, who fancifully invented… well, you get the idea, I don’t need to repeat myself. I am required to file the most accurate returns possible. My accountants and I did this by looking at my inventory losses. When all is said and done, inventory amounts trump even transaction records, because they are more accurate. The inventory, it’s the ultimate reality of the situation. A transaction might have been put into the computer wrong. But what’s in the vault is in the vault, the inventory does not lie.
60. Did I hide any wealth secretly? Just barely enough to live on to take this case to tax court. Neither the court nor the IRS has even asked me this question, but I will have to answer this question if or when I declare bankruptcy to the IRS. I already answered this in point number one, above. I have detailed my exact remaining wealth. I’m broke. You can request to pull my IRS file and determine how much money the IRS has obtained through collection efforts since April, 2014 since they have put me into collections. I would estimate the grand total is less than $5000 that they seized. I had been paying them $6000 per month voluntarily, up until that point, so you can see that the $2 million assessment did not generate any further revenue for the IRS, and was entirely counterproductive of them to treat me so horribly and give me an unpayable tax liability that breached their own agreement. This is even more evidence that their tax assessment was bogus and counterproductive to raising revenue; and thus, the sole purpose was to shut me down, and abuse me. I’m sure the court has heard of the concept of the laffer curve? The laffer curve states that there is an optimal rate of taxation that creates the most compliance. Obviously, a tax rate of 100% of income will result in no compliance, because it is impossible to expect people to work for nothing; as people must feed their families. Similarly, a tax rate of 90% will be disastrous. And as the rate goes down tax compliance goes up. Towards the other end, if taxes are 0%, obviously, taxes collected are zero. At 1%, taxes collected are complied with and so on suggesting that there is some sort of curve that somewhere between 0 and 100% tax rates would be the best rate, but not towards the ends. Well, the IRS, in my case, taxed me not on my income, but rather, they taxed me at about 10 times my net worth at the time. I was down to about $150,000 in stock in my last brokerage account, plus more metals in the vaults, when I got the tax assessment of $2 million. I was already stressed about paying the remaining $600,000 I owed, and really, the only way to pay that was if the IRS had accepted my tax loss from 2009, and allowed me to carry it forward, or backwards. So you can see even more reasons why and how the tax assessment was ridiculously unfair, and why it did not result in any increase in taxes paid by me. I just didn’t have it. And the IRS never gave me an appropriate settlement offer in light of my financial circumstances. There’s no businesses left! They broke me!
61. Further points of detail brought up in re-reviewing the IRS response: I did not claim any loss due to theft on my 2009 tax return as filed. We filed my 2009 return before the civil cases were resolved.
62. The IRS is looking at the civil cases in a very simple way. I spent a half a million on that litigation, so bear with me for just a second to explain in a few sentences more correctly how they apply to my taxes. The IRS assumes I alleged theft (correctly), and that the other parties claim no theft (correctly), and that the cases were settled without monetary transfers (correctly), and thus, I can’t deduct any theft losses (correctly) (page 21), but while that is all correct, it is the wrong conclusion, because it is irrelevant, since I did not claim theft losses on my taxes. That is not the full real story. The other side alleged that they were ENTITLED TO ALL THE BUSINESS PROFITS, which just so happened to very nearly exactly match the alledged theft amounts. I AGREED THAT THEY WERE ENTITLED TO ALL THE BUSINESS PROFITS. The IRS needs to agree to this as well, since it is established by the legal agreement. Wrongly, the IRS is imputing to me profits of these businesses, when they have no legal basis to do so, and contrary to the legal civil cases that established that the businesses, and profits, were owned by others.
63. If I was entitled to the profits, where are the IRS forms from V or B of any distribution from the alleged businesses to me? Surely, the other owners, if they were responsible for the businesses and if they paid me any profits, would would be likely to deduct those payments to me on their taxes? Neither the proprietor of R, nor the proprietor of JH MINT ever reported paying me any profits during 2009; in contrast, they claimed in the civil litigation that as the full and total owners, that THEY WERE ENTITLED TO ALL THE BUSINESS PROFITS.
64. I was paid $15,000 monthly and $50,000 a few times from the R Shop. V alleged that these were payments for bullion that he was buying from me, and that they were not profits. I had to agree. We often transferred bullion for cash, and cash for bullion, or bullion for bullion between shops as a matter of inventory swapping between shops as one shop would run low or high on certain forms of bullion, or low or high on cash.
65. The transfer of R did not take place on September 3, 2009. That was merely the date that we formalized the pre existing managerial / fiduciary / ownership relationship that existed at the beginning. As was noted, V’s name was placed on a R account in June of 2009, indicating that this fuduciary / ownership relationship started earlier than one such evidence of formalization for legal purposes. V was the fiduciary manager / owner from the beginning in April, 2009, being in charge of all receipts and transactions and tax filings. I am now forced, by legal agreement, to agree that this was simply the business of V all along, from the very beginning. Similarly, B owned the JH MINT coin shop from the beginning of operations from out of my garage in January.
66. Why must they own the businesses in question from the beginning of the year? Because I am legally forbidden to claim that they mismanaged and stole anything. It is illegal for fiduciary managers to operate a business that diminishes the financial interest of the one for whom they are managing things. Therefore, if I claimed that they were initially managing it for me, as my fiduciaries on my behalf, then how could they have moved to diminish my financial interest without breaking the law? They could not have done so without breaking the law. I cannot claim they broke they law, therefore, they must have managed and owned things from the very beginning.
67. IRS alleges that all JH MINT business was conducted through my personal account. Much did. But B had 4 personal JH MINT accounts when he finally left JH MINT, I do not know when they were all set up.
68. IRS alleges that JH MINT coin shop was successful in 2009; but no, it was a start up, and had low business volumes, and was not profitable in 2009. Only by 2010 did B allege that profits of $76,000 belonged to him.
69. B was not let go because of the failure of the separate minting business. I let B go because he was lying to me on inventory reports in an amount of $300,000, as I previously detailed, falsely claiming that was silver in the vaults, but it was cash in his accounts! While the men did claim to own the profits, they did admit to using my inventory. V claimed it was an “interest free loan”.
70. I was never a coin and silver dealer in 2009. I thought I was. Sorry for my confusion. I was forced, by legal challenge, to agree that I invested into, and helped start up, the businesses that belonged to the two other men, V owning R, and B owning JH MINT.
71. IRS says “neither party received any money as a result of the suit”. It is correct that no money was transferred at the time both lawsuits were settled. In actual fact, I believe V received the money he alleged he was entitled to, nearly $500,000 as profits from the store, and B received the money he alleged he was entitled to, profits of $76,000.
72. In fact, B and V may well have received more, it’s hard to trust the self reports of such distinguished businessmen! The IRS should use such self reports of profits, and go tax them on it. I believe that such men may well have profited more than they admit, but the IRS should at least tax them on their admitted profits, and not me! Especially not since I am forbidden from even claiming to ever have owned the businesses in question, lest I breach the settlement agreements.
73. Page 15 of the IRS response: IRS says “Petitioner produced no evidence at trial disputing the determined COGS.” I find this statement astounding. They report this as if they were not in court. They report this as if my testimony is not evidence, or as if the testimony of their IRS number cruncher is not evidence, which it is. Perhaps they mean to say I provided no written evidence? This is also incorrect, as I provided to the court, with IRS assistance, written evidence of the legal dispute of ownership of the businesses being audited. It is obvious that the IRS numbers are woefully inadequate, negligent, abusive, horrific, not based on any semblance of reasonableness or reality, even if it were determined that I owned the businesses in question, which I did not.
74. Page 16 of the IRS response has a table of when ownership of businesses was in dispute. The IRS produced no evidence from B or V at any time. I claim V owned R from the beginning, and I claim B owned the bullion management business from my garage from the beginning, prior to 2009, back in 2008. The cash running through my account was simply me acting as my own appointed cash manager, not an owner, just as KR had her name on JH MINT accounts, but was not the owner from 2011 to 2014. It was fully appropriate for me to act as a manager of my own inventory consisting of the cash; after all, even the inventory of the bullion was mine; although the profits were not. A name on a bank account is not sufficient evidence to show ownership, the IRS revenue agent, Yong Shin, conducting the bank account analysis admitted this on the stand. By the IRS agent’s own admission, they need more evidence than they have provided to prove ownership of profits (disputed), rather than ownership of inventory (not disputed), and they have failed to do so. The IRS could have gotten a letter from V or B, or their attorney, or looked at the court papers more than a day in advance of trial, but the IRS never did.
75. Page 17. “During the examination of his return, and at trial, Hommel did not provide any records pertaining to his gold and silver dealings.” Right. Because I had none, and did not own the businesses in question, as I have repeatedly said, and did not have any profits, nor ownership of any of the profits of any gold and silver dealings. My gold and silver was used by the other men, as an “interest free loan” and I did not profit.
76. Page 18. True, I did allege theft in 2010. This is part of the reason for late tax returns. The real reason is that I was suffering losses, and you don’t pay tax penalties on losses, but only on actual taxes due. Also, without the business owners filing taxes, and filing tax paperwork to me, showing the profits and/or losses to me, how would I know what the profits or losses would be? As it turns out, my expectations that they would impute profits or losses to me was my mistake, as they apparently, as sole owners of the businesses in question, felt no need to impute any profits or losses to me, as I wrongly expected, and I realized when I hired a tax attorney and CPA, and did not fully realize until the conclusion of litigation in 2012. Am I supposed to file taxes because I had a wrong expectation that I owned unknown losses in question, even though the IRS wrongly assumes wicked insanely high profits on a startup? Even if I am expected to file taxes on my losses, how can I be reasonably expected to do so without the assistance of the people in question who would have had the legal authority to initiate the process of filing taxes on their businesses? When one group of professionals hired to do a job is not doing the job, I had to turn to other professionals. It took a tax attorney, and CPA to educate me that I could file based on inventory losses, which, I hope, is now seen as fully appropriate. I agree I filed late; that is not in dispute.
77. Page 20. IRS says I had a right to the income in my own accounts. If so, then I have a right to the losses! Because the losses were real, and the income was not.
78. Page 21. The joint account with Hronis and myself is an EXPENSE ACCOUNT only, for the coin minting part of the business. No business sales were ever conducted through this account, therefore there is no income there. I know, and can assume without even looking, that all such deposits into that account are either cash deposits, or wire transfers from my other accounts. That the IRS is assuming that there is income shown in that account, and that they are attributing it to me, goes to further show their sloppy, negligent, abusive audit practices. That account helps to prove some of, but not all of, the expenses of running the coin minting side of the business, which was never successful, never made any money, and was a grand total expense of over $950,000. Nobody else ever claimed ownership of the minting machines or the minting side of the business in the back of the building. That the IRS is claiming that the joint Hronis/Hommel account, which is an expense account, shows income, goes to show that the IRS has no idea of what it is doing. That’s negligence. That they have failed to listen to this point, is abusive.
79. Page 22. IRS assumes my negligence. I believe this is a false accusation, to distract from their own clear negligence. I asked my CPA about the need to refile taxes after the lawsuits concluded. He said it was not needed, since we relied upon the declining inventory for my tax returns. The inventory is a more accurate record, since the inventory was indisputably mine, and is more accurate than using transaction records of other men’s businesses that are not mine, records I don’t have and can’t legally use. Furthermore, since no monetary transfers took place at the conclusion of the court cases, there was no need to enter in any new profits or losses at that time, since they were already accounted for in the declining inventory which we used to file my taxes. I don’t know enough to dispute that, but it makes sense to me.
80. Page 23. Burden of proof is on me to rebut. I did rebut, I have rebutted. Shouldn’t there be a burden on the IRS to listen to the many repeated rebuttals of the tax payer? Either way, maybe it should not be the burden is on me to rebut. Maybe the burden should be on the IRS to prove their case that they decide they don’t want to settle and decide they want to take to trial? Ultimately, they will have to prove the case that they decide is meritorious enough to be worth taking to court, rather than settling. Since they decided to not settle, and since they decided to go all the way to court, they should have to prove their case, and not have the presumption that insufficient evidence, and contradictory evidence should stand.
81. Page 24. I did admit, wrongly, that I was engaged in the bullion businesses. Because of my trauma from the entire situation, I have sometimes failed, even in court, to admit the legal conclusions that are emotionally difficult for me to admit to, that V owned R, and B owned JH MINT as well as the bullion sales from the location of my garage.
82. Page 24. IRS cites case saying they need to use “any reasonable method that accurately reflects actual income”. The IRS has been anything except reasonable or accurate in my case. From a negative $800,000 to a positive $4 million is far off any mark. Has there ever been a greater inaccuracy in the history of IRS audits? I wonder. I’m not impressed that they cited court cases showing they need to be reasonable, and yet, they demonstrate such gross unreasonable behavior. Yong Shin admitted that his bank account analysis was inadequate, and only a starting place to begin an audit. He never asked any of many reasonable and simple questions to determine business ownership, or business gross profit margins, never talking with me, nor the owners of the businesses, nor any of the people working for me, nor my CPA, nor my attorney.
83. Page 25. “The reconstruction of a taxpayer’s income need only be reasonable in light of all surrounding facts and circumstances.” It is clear that the IRS did not begin looking at the nature of the lawsuits determining ownership of the businesses until the day before open court. It is clear that the IRS did not begin looking at gross profit margins of the businesses until the day of court, if they even paid any attention to what happened in court at all! Let me say that again. It appears the IRS took no note of my testimony in court about the gross profit margins of the bullion business that they are 5%, and not 100%.
84. Pages 28-29. IRS is attempting to parse whether or not B and V owned the businesses. Obviously, the IRS does not want them to own the businesses, because then their case falls apart. But V and B sued me, claiming they owned the businesses and profits! It cannot therefore be construed as an agreement to defraud the IRS, when it was an extraordinarily costly disagreement involving cases of paperwork over two years?! How can the IRS construe a disagreement as an agreement? Furthermore, a criminal court, including police officers, DA’s, and a judge and jury, used the V ownership of the shop to presume that I was guilty of false imprisonment of the men I tried to arrest as thieves. I admit it is possible for a person to falsely put things into another’s name, for the purpose of hiding assets from the IRS. However, in this case, I vehemently protested the transfer, ultimately having to live with it. I did put my house into Shanna Hommel’s name, to prove to her that I loved her and to give her security in the relationship, but she ultimately conspired to attack me, and I willingly signed over the house to the IRS while I was in rehab, on the basis that she never paid for it, and there was no consideration given for the transfer.
85. Page 32. Re: $336,000. “Petitioner does not argue that this income should not be taxable.” How many times do we need to go over this? I do dispute it. I put it into the cash hungry businesses, and it was lost due to the losses taking place. Which ones? The mint. I’m sure it’s in the bank records, it’s where they found it. That money does not even exist anymore. Long gone. It seemed like so little at the time, and so much now.
86. Page 32. I’m “not entitled to additional Schedule C deductions”? Gotta love it when the IRS admits its abuse so clearly. Thank you! I like how they get to assume I earned $4 million in a startup at two locations with no employees, and no ads! I asked one of the IRS attorneys about that nearly two years ago, when he was trying to get me to transfer my case, and get a continuance, and he apologized, and said they were simply “preserving the rights of the IRS” to claim as much taxes against me as they possibly could! What an admission! I wish I had that on tape! I think they have preserved their right to be exposed and countersued for their own negligence and abuse! I think no legislator ever intended to give the IRS the authority to fraudulently invent income at fantasy sky high levels when they wrote laws that say an audit and reconstruction should be both reasonable and accurate!
87. Page 34. Again, I did not take a theft loss in 2009.
88. Page 35. Penalty for negligence. We have been over this. Penalties were already waived due to my alcoholism and rehab. The IRS in this case agreed they were waived, then now they are reversing course again. The IRS cites what a reasonable person would do under the circumstances. I hired people to take care of it; that’s what a reasonable person would do who runs businesses in multiple locations. V was a former bank manager who computerized the bank’s systems. B was a former police officer whose wife was an accountant. They were competent people. Too competent.
89. Page 37. I failed to provide records for time periods where ownership is not disputed? Regarding the months from April to September, 2009 for the R Shop. Let’s think about this. The law requires records to be held at the shop. Realistically, records are recorded at the shop, and remain at the shop. V acted as fiduciary/owner with name on a bank account in June, 2009, well before legal title was transferred in September, 2009. When I discovered a shortfall of inventory in September 2010, I moved to take repossession of the shop, which would include the records of the April to September 2009 period. I was legally denied by the police from taking repossession of such records, and remain legally denied to this day. I never received profits or records during that initial time period. V sued and claimed ownership. I believe the IRS is legally bound to believe him, and it seems extraordinarily improper to continue to demand trade records from a shop that are legally required to stay at the shop, and when I’m legally barred from getting them. Again, is the court seeing why all the surrounding tax years were settled in the first place?
90. Page 37. Records of transactions for seekbullion were under the control of B, again not me.
91. Page 38. It is not appropriate for me to provide transactions records for other men’s businesses.
92. Page 39. My CPA is Pete Oettinger. His credentials were found in a one second google search: https://www.wegnercpas.com/employee/pete-oettinger I did not have access to google when I was testifying in court, and did not know in advance that the IRS was going to make an issue as to his qualifications. His page says he is a Certified Public Accountant (CPA) and Chartered Global Management Accountant (CGMA). I can’t believe it. I slog to the end of the IRS 40+ page response, and this is their big reveal? That my CPA might not be a CPA? That’s their big clincher of an argument, saving the best for last? Oh, I admit, I failed to freaking prove that Pete was a CPA in court! But he is a CPA! You know, I think this helps my case! Wouldn’t the IRS know that Pete was a CPA if they ever bothered to contact him about my 2009 tax return to ask any questions about it to see why their bank account analysis was so far off the mark? This proves they were negligent; that they failed to return his calls, that they never wanted to contact him to know why we filed our return the way that we did, and that they never wanted to know the method we used to file the return! It was a shocking admission in court, the IRS tax guy says he always talks to the professionals of the people he audits, and that he did not do so in my case. The fact of IRS negligence is once again proven clearly enough.
93. Page 39. IRS states that I did not provide Pete with bank account statements. They have no idea of what I did or did not provide to Pete, because they never talked to Pete. I don’t know if I did, or did not provide Pete with bank account statements for 2009. It was a long time ago, and the tax returns were prepared by Pete with sufficient documentation that he could provide if he was ever asked. The IRS never bothered to ask him about the 2009 return, and therefore he never provided them anything, and neither did I, because I was never asked either what I provided to Pete. Pete keeps records of everything he is provided with. I’m not really able to answer the question as to what I provided Pete for 2009, since I provided Pete with all my available paperwork for all the years all at once just prior to going to rehab. If anyone wants to know what Pete has, or “was given”, then that’s an appropriate question for Pete. Why is this not basic communication basics, I have no idea. I hereby allege once again IRS negligence and abuse.
94. Page 39, continued. You know what I remember about this stuff? The IRS auditor who showed up at JH MINT to see that I spent money on machines seemed like a kid. Like early 20’s. Pete is older and more experienced than me. The IRS kid running the audit farmed out part of the audit to Yong Shin who showed up in court, who never asked us any questions. Pete was as frustrated as I was, because Pete could not make sense of the IRS’s unexplained numbers. How could a CPA understand what was unexplained? Pete was wondering why they never asked him about our 2009 tax return that was audited. Pete was wondering why the IRS did not return his calls. Pete was wondering if the IRS kids even knew that you could file a tax return based on the inventory method. Pete kept assuring me he could explain things to the IRS very easily and simply. I was thinking I would eventually hire Pete to come to court and testify if needed. One of the IRS guys I visited about 2008 was shocked that Pete was never consulted by the IRS over 2009, and he said I should document that! How? I asked Pete to write that up, and Pete never did. But I ran out of money to even have Pete come and testify, and at long last, it seemed irrelevant! The important point is that the IRS never wanted to contact Pete at all, and I got that part admitted in court, and now they are trying to challenge Pete’s competence? Absurd! It appears from the post court filing briefs that not even the IRS attorneys will acknowledge the filing of an inventory change as an appropriate, and most accurate accounting method!
94. Page 40. What is the “failure to file” penalty on taxes owed, when there is a $800,000 loss, instead of taxes due? That’s kind of a big question.
95. Page 40. Reasonable cause and not willful neglect, as far as penalties? This was already waived because I went to rehab for alcohol in 2011. I went to rehab for 3 months, 3 weeks, and then another 2 weeks at another rehab facility. I wanted to get it right. I’ve been sober since, not one drop of alcohol since October 31, 2011. This makes it 5 years exactly!
96. Page 41. I did drink more heavily in 2010, both heavily and regularly. But I’ve been an alcoholic my entire life, and will always be one. One reason why is that I drank to blackouts from the very first time I had a drink when I was 17. I had 11 blackouts in college. I had more blackouts starting when I got married in 2004, at least another 7 blackouts. A blackout is when you cannot remember the evening of drinking past a certain point, but you can remember everything else. Regardless of the IRS’s attempt to determine if I was an alcoholic for the appropriate years, the IRS already litigated, and already waived the penalties for 2007, 2008, 2010 because of my alcoholism. How they can waive those penalties for the surrounding years, but not 2009, staggers belief, and just shows the IRS is being abusive. The IRS admits I filed my 2009 return in October 2011, right before I left for rehab. They cannot reasonably settle all the other years, and waive penalties for all the surrounding years, while I’m in rehab, and not do so for 2009, that’s absurd, and showcases the BAD FAITH of the IRS negotiations and prior settlements! 97. In this 41 page filing, the IRS ignored all their wrongdoing that their tax guy admitted in court. They dug in their heels, ignoring all the big things that shows that they goofed up big time. They quoted two pages of court citations. They quoted cases that said they have to be reasonable and accurate, but they were anything but reasonable or accurate. The IRS was unreasonable, negligent, abusive, arrogant.
98. The judge, in court, perhaps off the record, said, based on my questions of the guy who ran the “preliminary bank analysis”, that he would obviously have to throw out the IRS’s numbers, and said, “What a mess!” I agree! That’s why there was a prior settlement! Yet the IRS stuck with their abusive numbers, when they never should have abused their own settlement in the first place.
99. One part of the IRS case appears to be that they are trying to paint me as “negligent”. This appears to be a way to distract from their own obvious fault of their own negligence.
100. How are we supposed to have the burden to rebut the IRS assumptions, when they fail to listen to our rebuttals–still to this day, even in their post court briefs, when they are continuing to fail to listen to the judge! Woah!
101. My big, big, fault is in doing business with men who ended up owning everything. I did hire them. That is my fault for hiring them. But their abuse of me is not my fault. To their credit, and this is an interesting thing that I’m able to credit men who I regard as my enemies; neither one of them reported to the IRS that they paid me any profits! They could have lied about that, to reduce their own tax liability, obviously. No, they claimed the profits as their own. That the IRS chose to abuse me further, to abuse me for sport or retribution, or whatever motive, is also not my fault. The IRS should bring upon itself the fruit of their own negligence and abuse.
102. I want to “zoom out” from the details to get back to the big picture. I don’t have access to the small details of the individual trade records; the records are either owned by V or B.
104. That the businesses ended up being owned by V and B was a trauma that I drank over, for a year, from the fall of 2010 to the fall of 2011, and I landed in rehab.
103. In rehab, there was a second trauma, and that is that after I had already paid a few hundred thousand dollars to the IRS through my attorney, I then gave up my $950,000 house to the IRS to settle tax years 2007, 2008, 2010, and no penalties, plus, I entered into a settlement to pay $600,000 over ten years and I was left with just over $600,000. There was a settlement with the state of CA, too. Why 2009 was not included is a mystery, because it was filed before I left.
104. There was not supposed to be an audit in the first place, because the IRS had already settled all the surrounding years, and the audit basically undid the settlement agreement with me, showing that the IRS audit was conducted in bad faith.
105. The 2009 audit was negligent and abusive, the IRS never listened nor took into account any of the nature of the disputes as to ownership of the businesses, and still are not doing so.
106. The 2009 audit demand for $2 million that was looming in the background, which was undoing the settlement agreement, and which was going to be completely unpayable was a key factor in closing up my two remaining bullion business locations under the corporation JH MINT Inc., in Grass Valley and Auburn, so that I could at least retain enough assets to feed my family while disputing the IRS abuse in tax court.
107. My CPA was never consulted by the IRS, and so I don’t think the IRS ever really considered how I filed my 2009 taxes, or why, and they have never argued that my 2009 tax filing method using declining inventory was inappropriate, as filed.
108. I somehow lost a $15 million net worth in 2006 to zero in 2016, and yet, I only had one year of a substantially negative tax loss, 2009, which was denied. I at least have $5 million of tax losses that were never appropriately accounted for, and I don’t really know why. Shouldn’t I have at least some tax losses over this time period? There were clearly no tax losses in 2006, 2007, 2008, or 2010! Quite suspicious.
109. Any tax calculation determination is ultimately uncollectible, and would be a waste of the court’s time to try to assess against me personally.
110. Letting the IRS get away with the abusive way they have ignored my many attempts to contact them and tell them the details of the tax years in question would encourage them to abuse any taxpayer as much as they wish, without any restraint.
111. I’m asking for a restraining order against the IRS, I’m asking for the IRS to be disbanded, and I’m asking for a total of $8 million in compensation for them destroying my businesses, homes, and my financial life, and emotional stress, over their negligent and abusive audit practices.
112. There are three other courts; bankruptcy court, the court of public opinion, and heaven. I see no reason why I, and the people of America, should not get justice in this court, now. This IRS abuse has gone on long enough.