Time: Sun Feb 23 14:10:36 1997
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	Sun, 23 Feb 1997 13:14:08 -0700 (MST)
Date: Sun, 23 Feb 1997 14:08:25 -0800
To: (Recipient list suppressed)
From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: Dan Pilla on the IRS

<snip>
>Weekly Update 
>Volume 4, Issue 5
>February 20, 1997
>
>
>Pilla Answers Pressing Questions on IRS, Taxes
>
>        Q: Your new book points out that Big Brother wants to spy on us and
>control us more than ever.
>        A: My book is an expose of the IRS plan to audit every aspect of your
>financial life. We have uncovered documents that show the IRS is in the midst
>of launching an audit invasion. It amounts to a spy operation on every
>American citizen.
>        They want to track every transaction you engage in. They want to know
>where and how you are spending your money, and who you are giving your money
>to. They have put forth a plan that will allow them to track every
>transaction with the long-term goal of eliminating cash and the paper tax
>return so they can follow every single move you make.
>        What is really staggering is they intend literally to reach into the
>living rooms, bedrooms and closets of every American citizen, and they want
>to reach into the file cabinets, back offices, and front meeting rooms of
>every business.
>        I have gone through about 600 pages of documentation in the manual
>that shows this. The first critical element is to have a number assigned to
>every citizen.
>        I have been talking about Social Security numbers and minors since
>the first law was passed in 1986. I have always maintained the IRS never had
>the legal authority to actually get or use that number for minor children.
>        Now things have changed. In 1996 Congress [gave] the authority to
>force every citizen to take a number. The IRS is trying to set up an
>economic system to allow the government to know everything you buy, how you
>buy it, where you buy it from, and what you are going to do with it once you
>get it.
>        The whole premise of this audit invasion is the notion that every
>citizen is cheating on his tax return. This is the one thing driving the IRS
>nuts about any cash in circulation at all. This is why the agency is working
>so hard to eliminate cash.
>        They believe people are cheating across the board - not from the
>standpoint of overstating deductions, but from the standpoint of under-
>reporting income. The IRS knows as long as there is cash in circulation,
>there is at least the possibility that somebody might earn a dollar and not
>report it on their tax return, and they can't possibly tolerate that.
>        Q: Is the issue one of money or of control?
>        A: It is both. Money is part of it: Congress has spent this country
>hopelessly into debt. The other element is control: they've got to be able to
>control people -- what they do, how they do it -- more importantly, how they
>react to the IRS.
>        The IRS has a plan to gain access to every mortgage application filed
>in this country; home loans, second mortgages on homes, home equity lines of
>credit. You tell the mortgage company your story; you give them your
>financial data. They have been running a test program in the Fresno district
>in California that is now being rolled out nationwide. The IRS is accessing
>private files and records almost on a full-time and continuing basis.
>        There are several things the IRS is trying to exempt itself from in
>order to expand its information-gathering practices. The IRS has [a plan] to
>exempt itself from the Privacy Act of 1994 so it does not have to reveal the
>information it has gathered about an individual -- that you have the right to
>be notified by the IRS that it is in the process of gathering information
>about you, or the sources of information that it is gathering about you.
>        Second, the IRS has a plan called the Automated Information
>Integrated On-line Resource Network. They want to gain on-time or immediate
>time access to every public and private data base in the country for the
>purpose of spying on people and finding out what is going on.
>        Third, they have a plan to actively, physically, plant spies in
>businesses for the purposes of observing their operations. The IRS has
>included the Small Business Administration, the Better Business Bureau, Dunn
>& Bradstreet, and trade associations like the Chamber of Commerce as part of
>this spy network. This means every bit of data you give to these
>organizations as a business person is going to end up in the hands of the
>IRS.
>        Fourth, they are building a dossier on personal finances. They want
>to do an analysis of every nickel you spend, every check you write, your
>assets, your personal property including furniture, clothing, jewelry, cars,
>recreational vehicles, your credit card, borrowing and spending habits.
>        They even want to go through personal files such as divorce records
>and talk to your friends and neighbors. This should be - to me it is - a very
>disturbing proposition.
>        Fifth is a lifestyle interrogation where they sit down with you to
>fill out what they call their Personal Living Expense analysis -- a PLE. It
>is a detailed analysis of how you are spending money.
>        They want you to list how much money you spend on groceries and
>outside meals, clothing, laundry and dry cleaning, barber, beauty shop and
>cosmetic supplies, educational supplies, recreation, entertainment,
>vacations, club dues, lodge expenses, gifts and allowances.
>        The IRS's tentacles are reaching out in every direction. Every time
>you spend money, you are potentially creating income for the person you give
>it to, and the IRS is certainly concerned about those people as well,
>particularly the small businesses, the self-employed operations, the men and
>women who are the backbone of this country that provide jobs for 80 percent
>of the people.
>        Q: You say there is "phantom income" they are looking for. What does
>that refer to?
>        A: "Phantom income" is the name I have given the income the IRS is
>going to assign to people who don't know how to defend themselves in the
>audit environment. They think everybody is hiding income. These new audit
>techniques are designed to uncover this alleged income and to assess people
>with the income.
>        The problem with this is that the vast majority of Americans are
>honest when it comes to reporting their income. That means people are going
>to be victimized by phantom income -- income that doesn't exist except in the
>minds of the IRS tax auditor.
>        The vast majority of what the IRS is going to try to do it does not
>have the legal authority to do.
>        It is going to rely on bluff, intimidation, misinformation,
>misinformation - in many cases it is going to lie to people concerning what
>your rights are and what their limitations are. It is vital that people
>understand they have the right to say "no" to this tax audit invasion, and
>they can make it stick when they do.
>        The American people are doing their level best with what everybody
>knows is a very complicated tax code. The motto of the IRS, as I see it in my
>coming-up on 21 years of experience in dealing with the IRS is: They don't
>care if you owe it or not, they just want to get the money.
>        Q: there any way the states and the people can devise a public
>disclosure commission to oversee the IRS as to what it is doing to the
>freedom of citizens?
>        A: That is a question more people need to be asking: why doesn't
>somebody oversee the IRS more carefully? I have testified and provided
>documentation before the House Ways and Means Committee on a number of
>occasions About a year ago the IRS had its Taxpayer Compliance Measurement
>Program Audit - the so-called TCMP audit - shut down. The reason is because
>of the testimony I provided to the oversight subcommittee on how outrageous
>those IRS audits were, considering that they are wrong more than half the
>time.
>        Q: What happened to the law they were going to put into effect that
>the IRS must prove we need an audit?
>        A: Rep. Jim Traficant had offered a proposal that would effectively
>shift the burden of proof to the IRS.
>        What the law says has changed ever so slightly. Under the new
>Taxpayers Bill of Rights, no longer can the IRS blindly rely on a W-2 or 1099
>(they have tremendous error rates), "The secretary shall have the burden of
>producing reasonable and probative information concerning such deficiency in
>tax in addition to the information return."
>        That means the IRS has to come up with something more than just the
>information return as evidence of the fact that you had the income when you
>the citizen claim that information is wrong.
>        What it does not say is that the burden to prove the case is on the
>IRS and that is what the bill's original authors intended. We are talking
>about the claim that the IRS knocks on your door and says, "We think you
>earned $20,000 and you didn't report it on your tax return." If you do it
>right you can force the burden of proof on the IRS now, legally and properly,
>and if they can't come in with some evidence, they are dead in the water.
>        Q: It's the federal government -- not the citizens -- who drove this
>country toward bankruptcy. Now the feds want to tax us to pay their bills.
>        A: You are exactly right. Congress spent the money and has put the
>average family in the U.S. in the position where they have to spend 45 cents
>of every dollar they earn on taxes at the federal, state and local level.
>People wonder why their standards of living have gone backwards.
>        The reason is taxation. For Congress to continue to look to the
>American people to fund this insatiable appetite for spending is insane -
>when is it going to end?

<snip>

========================================================================
Paul Andrew, Mitchell, B.A., M.S.    : Counselor at Law, federal witness
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