No Income Tax paid - 3 years and counting.

[JohnnyCash]

Sure. Let's just say I have a certain skill set and ... I was convinced the Form 1099 was not appropriate, should not be filed in connection with payments between the client & I for that skill set. Form 1099 is to be used for trade or business reporting only. Trade or Business has a narrow definition in the tax code: The term "trade or business" includes the performance of the functions of a public office. Nothing else is listed or included. I do not perform the functions of a public office. For background see Pete's chapter Crafting a Trade or Business: A Guide For The Self-Employed starting at page 82. I would expand Pete's definition of federal to include Federal Reserve credit (in contradistinction to lawful money - US Notes in the form of FRNs). I think we all agree the Tax is an excise on Federal activity/stuff and if I'm not endorsing private credit (of the Fed Reserve) then where is the federal connection or nexus? There isn't any; I'm exercising my natural right to labor & trade without excise. So it was just a matter of convincing the client, no 1099. File the 1099 and the deal's off, you don't get the skill set. Breach of contract.

But even if the client issues a 1099 (to the IRS & you) I think you could stand your ground and prevail - although it might involve a contest. Ultimately the 1099 is third-party hearsay. You have a right to be heard, your consent is required. You, as the recipient of clients money, have superior facts & knowledge as to the exact nature of the payments. Why should the authorities place greater weight on the client's determination? Especially when you can provide evidence of redeemed Federal Reserve credit (lawful money). In fact, the Portillo case supports this:

“[T]he Commissioner's determination that Portillo had received unreported income of $24,505 from Navarro was arbitrary. The Commissioner's determination was based solely on a Form 1099 Navarro sent to the I.R.S. indicating that he paid Portillo $24,505 more than Portillo had reported on his return. The Commissioner merely matched Navarro's Form 1099 with Portillo's Form 1040 and arbitrarily decided to attribute veracity to Navarro and assume that Portillo's Form 1040 was false.”

"Therefore, the judgment below regarding unreported income must be reversed."

Portillo v. Commissioner of Internal Revenue, Fifth Circuit, 932 F.2d 1128 (1991)
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