[QUOTE=David Merrill;10745]Five or six suitors are CtC victims (Pete HENDRICKSON's Cracking the Code). A couple now have their current full refunds absorbed by past tax liabilities. This is a good verification that redeeming lawful money functions as it is described by law.

I have no doubt that redeeming lawful money should function as described by law. My doubt lies in the presumption that IRS has any respect for any law but the law of necessity for its own survival. On that basis, I predict diminishing returns (no pun intended) as more people employ this method of obtaining refunds, as happened with CTC.

Much ado is being made about the speed of delivery of these refunds but this is probably a function of an IRS clerk not knowing what else to do with the claim and just sending it on. Such a return does have the advantage over CTC filings of not claiming the income was zero (zero income on a return gets IRS very upset). But do you seriously think an IRS clerk has any idea what a lawful money filer is talking about? Such rapidly honored claims do not appear to be scrutinized at all by IRS. Yet.

Furthermore, the IRS computers will not recognize this deduction people are taking, and eventually these returns will automatically get flagged for an audit. And when the audit comes, these filers will learn the hard way about the other nexuses of taxation they ignored while they were hanging their hat entirely on lawful money redemption. It is flawed application of the knowledge that will lead to the opportunity for IRS to discredit the lawful money redemption remedy, as happened with CTC.

I have never promoted Redeeming Lawful Money as a silver bullet.

People who look to you for guidance are filing for 100% refunds based only on LM deduction and being told of others doing the same. What do you expect they are going to do with that information? They are using it as a silver bullet. This is the danger. These people are throwing out the baby with the bathwater in abandoning all things CTC and the very important aspect of the non-resident alien status (for tax purposes) of Americans. And totally ignoring the fact that there are multiple nexuses of taxation in effect. See Lawful Tax Avoidance by Richard DiMare.

The problem with your approach (and I only glance at the approach, because if the foundation is faulty that renders the remainder of the post immaterial) is that most people have to have a job, to be employed. Therefore the employer will send W-4 Withholdings or 1099 Reports to the IRS. The IRS makes sure this is done.

Yes they do have to have a job. And based on undue influence and economic duress, they sign agreements they would never sign of their own free will. Should we ignore this gigantic legal flaw in the tax system? Yes the IRS does intimidate employers into coercing their employees into the system. This is the easiest WRONG thing about the system to identify. Why ignore that?

My approach is very centered around those info returns and the need to dispute them with SSA and IRS due to duress and fraud, because of the independent nexuses of taxation those info returns represent. I have successfully gotten IRS and state tax agencies (after a couple of go-arounds) to beg off by simply disputing info returns. They don't give up easy, but if they can't get anywhere with you after a couple of letters asking why you didn't file, and pretending you did not dispute the info returns, all they are left with is to pretend you did not respond to them. Pretty flimsy and easy to counter--especially if one uses an evidence repository at the USDC (or merely warns IRS they are in the process of doing so).

Understandably people do not want to rock the boat at their job, but you are not required to agree with false third party reporting either. This area seems to me to be a serious gap in the understanding of the brain trust on this forum. People love the fantasy of the quick easy solution where you don't have to confront anybody and you get to be "nice" the whole way through. But I think it is very naive to believe you can just file your return a certain way and escape the tax system. Do you really think it is this easy? Who do you think you are dealing with? This was Hendrickson's problem--he recognized corruption only to a point. He actually expected to get a fair shake in the Courts. They are not going to just stand around and let you ruin their scam. Not without a fight. Sorry to burst anybody's bubble. Right now LM is not a serious threat. It has not warranted a memo to all personnel quite yet. But don't think it won't.

Therefore the employee is out about the same amount that would be due if he were to file, and may incur a criminal complaint for failure to file if he or she does not file a Return. In the instances of a self-employed individual he will file, even without any Withholdings due back to avoid presumption of a liability based on the 1099 Reports from clients (employers). Of course if you can get by prosperously without this paper train that is wonderful.

The employee should be claiming exempt on the W-4 to minimize withholding. After all, if you expect to get a 100% refund anyway, why are you NOT claiming exempt? You might want to note the duress with a TDC by your signature, because the employer has no lawful right to force you into a voluntary withholding agreement (per IRC 3402). The proper form is actually a W-8BEN. Maybe they won't accept it, but you should at least try.

As described in my approach, a properly made dispute of info returns (not with Forms 4852 attached to a return as CTC filers do) will eliminate the presumption one is required to file. If you are concerned about criminal complaints, you should pay close attention to how Hendrickson got snowed on felony charges for filing false documents. This is far worse than a misdemeanor for failing to file. And since most people will not ever be prosecuted, a more realistic concern is the audit and frivolous return penalty. All avoidable by establishing that you are not required to file in the first place. No one filing a LM return seems to understand non-resident alien status either. A 1040 with your signature establishes that you are a "U.S. Individual". i.e. a federal peon. Another unfortunate gap in the understanding of this brain trust.