My chronicle of how the IRS and Tax Court affect taxpayers' daily lives.

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Friday, October 2, 2009

Taxpayer asserts he isn't a taxpayer - Court calls him "delusional"

Michigan resident, Brian Dimercurio, attempted to de-tax himself by submitting fraudulent statements to his employer, Compuware Corp.  Mr. Dimercurio notified his employer in February of 2000 claiming he was exempt from Federal income tax and submmitted a fraudulent W-4 which claimed sufficient allowances to prevent federal withholding. 

Mr, Dimercurio affirmatively began to de-tax himself by sending a letter to his employer to "hereby withdraw my authorization for Compuware to withhold tax from my personal earnings."  The requirement for an employer to withhold tax from employees is statutatory, and is not a voluntary initiative.  You may not elect out of Federal withholding unless your personal allowances are sufficient, and you can document them as such. 

HIs argument that he was not liable (instead, he claims his Social Security Trust was) was dismissed due to the lack of legal basis to support the argument that a trust existed and was the recipient of his wages.  He was fined $6,000 for the erronious argument.  Additionally, other actions before the Sixth Circut has received comment that "This argument, which is clearly fantastic and delusional, does not deserve extensive refutation." 

Nevertheless, Mr. Dimercurio continued restating his case and the court granted summary judgement in regard to the tax, resulting in the assessment of over $57,000 of income tax for years 2001-2004.  The taxpayer pentitioned the court for a reexamination of the failure to file penalty with an increased penalty for the fraudulent nature of his argument.  The penalty assessed equals 75% of the tax due, which would bring his total bill to over $100,000. 

The IRS was able to prove, by clear and convincing evidence, that Mr. Dimercurio's actions indicate fraud and the intent to evade taxes by concealing, misleading, or otherwise preventing the collection of taxes.  Though the court does allow for certain good-faith misunderstandings of the law, they determined the the college-educated taxpayer formulated his own conclusions, failed to consult with a professional, and took agressive steps to implement the failed plan. 

The Court sustained the IRS' position, and Mr. Dimercurio will owe taxes for many years to come!

Aaron's Take:  When a court, in a formal document, refers to your ideas as "fantastic and delusional," you know you're in trouble.  Representing himself pro-se (without counsel) before a district court only adds fire to the flames of Mr. Dimercurio's obvious inability to operate within the realms of reality.  Yesterday I blogged about a guy that researched, but wasn't able to provide any documentation to the court, and was then penalized.  Mr. Dimercurio did provide documentation, but it was clearly erronious and the court still assessed a significant penalty ... a very expensive lesson indeed.

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Aaron Blau, E.A. is the Vice President of the Central Arizona Chapter of Enrolled Agents and a member of the Government Relations Committee of the National Association of Enrolled Agents. The opinions and ideas expressed here are in no way representative of the official position of the National Association of Enrolled Agents, Arizona Society of Enrolled Agents or the Central Arizona Chapter of Enrolled Agents.

For official comments, please e-mail NAEA Director of Communications at or Arizona Society president

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