I think the LMR remedy is correct as well, Brian. Some people on this forum seem to have gotten me all wrong on that point. The extent of how rigged and corrupt the system is should not be underestimated, however. I have seen it up close. I think I see a way to handle IRS that might make everybody happy.
Granted if IRS seems to be okay with what you are doing, you would seem to be in good shape. But we know the possibility for unlawful harassment will always be there. So get them to tell you if they are going to have a problem with your LMR remedy BEFORE you file anything.
Let's assume for the sake of argument that LMR is ALL you need to do to exempt yourself from income tax and that disputing information returns sent to IRS a la CTC is therefore unnecessary. I would love it if this turns out to be the case, BTW! I am just not convinced yet.
There is a good way to find out if IRS will honor your LMR remedy WITHOUT filing a return and risking frivolous return penalties or "false document" felony charges:
Let IRS know in a statement (not a tax return) that you redeemed all deposits for LM, include your copies etc. and that it is your understanding that this exempts you from income tax. Invite them to rebut this position if they disagree. Then ASK for a determination of whether you are required to file!! Tell them if they do not respond within 30 days or whatever, you will assume they agree you are exempt from all tax and are NOT required to file. Perhaps they will even send you a letter stating you are not required to file!!! A refund of withholding should then be issued automatically!! If not, you can make a claim for refund and attach their letter stating you are not required to file. You may separately request a refund of FICA withholding on Form 843 if you believe you are entitled to that.
If they do not reply within 30 days to your inquiry about exemption/filing requirement, you can default them and make an informal claim for a refund of all withholding, attaching a copy of your previous correspondence to show you are relying on their tacit agreement with your position.
Even better, you can now safely claim exempt on W-4, and you won't have to wait for a refund next year (except FICA).
Why is this way better than just filing a 1040 and taking a LMR deduction? Because you are not submitting anything that "purports to be a return" under IRC 6702 frivolous penalty provisions. If they still end up trying to hang a frivolous penalty on you later (or if you insist on filing a return to claim your refund and they claim it is frivolous) you will have a reasonable cause for abatement of the penalty on Form 843, since all you did was rely on their agreement/tacit agreement that this was okay for you to do!!