IRS FALSE-RETURN SCHEME
On Friday, July 31, 2015, three Defense Attorneys for Dr. William Bailey filed a Motion to Dismiss (MTD) the Government’s tax evasion case against him. The Motion is based upon the claim that the Indictment and the Prosecution were based upon false evidence, deliberately fabricated by the IRS in its deficiency procedures.
This MTD challenges the process which the IRS used to determine an income-tax deficiency on the Defendant for a year in which he did not file a Form 1040 income-tax return.
Sample quotes from the Motion:
Following extensive discovery proceedings, Dr. Bailey now alleges herein that the government deliberately fabricated false evidence critical to the prosecution of this case and that the government’s conduct was so outrageous that due process principles now bar the government from using this Honorable Court to obtain a conviction.
At the onset in 1998, the government first contacted Dr. Bailey via a civil audit; it then manufactured entries into the IRS computer system to make it appear that Dr. Bailey had filed tax returns and had tax deficiencies when the IRS had created a substitute for return (SFR) under IRC § 6020(b) which, in actual fact, the Commissioner’s safeguard procedures will not permit without the use of an override function which produced the false-return scheme. The Internal Revenue Manual, itself, notes that an SFR is not, in actual fact, a return under § 6020(b). “An SFR, in and of itself, does not constitute a return under IRC 6020(b).” IRM 18.104.22.168 (05-08-2012) Substitute for Return. LINK
The Motion has an Appendix attached to it titled
IRS COMPUTER PROCEDURES AND THEIR STRICT RULES
Here is a quote from that fascinating Appendix:
This Appendix seeks to unravel the information encoded in computer language in these transcripts so that this Court can discern how the Commissioner actually implements his Congressional mandate primarily by execution of “strict rules” in the IRS computer systems.
If an evidentiary hearing validates this finding, the inescapable conclusion would be that the IRS never actually created an SFR for 1998 and that the transcripts that reflect that an SFR was created have been intentionally falsified as part of a false-return scheme.
Some of my friends have been following this case since Dr. Bailey was indicted in August 2013. It appears to be coming to a crucial point.
I have never seen a tax evasion prosecution with the kind of issues raised in this Motion to Dismiss.
I obtained a copy of the actual Motion filed in Court. It is available on a donation basis by clicking on the button below.