The IRS has a difficult job to do in collecting taxes from citizens, but in order for the system to work, we have to have trust that the IRS is acting in a fair manner within the law. The alarming part of what has happened to Armando Sandoval and his wife Yadira is that the IRS took advantage of honest and hardworking people who were recent citizens of the US and then lied about it – repeatedly.
It all began one day when Mr. Terry Gann, IRS revenue agent, described as an extremely experienced Certified Public Accountant who also had a legal education, informed the Sandovals that their individual income tax returns had many errors.
The Sandovals do not speak English as their first language and the language barrier presented them with a problem.
They asked the IRS agent, after he informed them that there were errors on their 2003, 2004, and 2005 tax returns, if they could redo them, but were quickly informed that it was too late for them to correct it.
Instead, the agent insistent that they sign the agreements because “they were substantially correct.” Perhaps due to the language barrier and lack of tax representation, they believed him and signed the agreements.
These agreements had errors, but once they signed them, the IRS agent wrongfully denied their request to rescind the 2003 and 2004 agreements. However, the Sandovals were able to void the 2005 agreement and proceed to the U.S. Tax Court.
According to their attorney, Sean H. Colon of Woodland, “the 2003 and 2004 tax liabilities were substantially overstated by $29,778 and $41,088. The liabilities do not include interest and penalties.”
Instead of handling it properly, the IRS dug in despite the clear errors that were well documented by Mr. Colon.
The IRS agent became angry and told Mr. Colon that the 2003 and 2004 taxes had already been assessed and the cases closed. But the agent lied. Mr. Colon was able to demonstrate government records to the Vanguard which show that the 2003 and 2004 taxes were neither assessed nor closed until 25 days later.
Nor were the 2003 and 2004 agreements accepted by the government, because the Sandovals never received the formal acceptance letter (i.e., Form Letter 987 (Rev. 6-2007)) during the audit. Evidence that both the trial and appellate courts disregarded without explanation.
So here we have what would appear to be a clear cut case for the Sandovals. Mr. Colon can definitively show that the IRS’ 2003, 2004 and 2005 agreements had substantial errors, that they requested they rescind those agreements prior to their being closed, and yet the IRS was intractable and refused to yield.
Perhaps the more alarming aspect of that is that he was able to prove this to the U.S. Court of Federal Claims, Judge Charles F. Lettow, and the U.S. Court of Appeals for the Federal Circuit, Judges Sharon Prost, Evan J. Wallach and Raymond T. Chen, but the outcomes were no better.
Mr. Colon believes and argues that the appellate court overlooked “substantial evidence of affirmative misconduct” on the part of the IRS agent. First, he argues that “Gann knowingly and wrongfully informed unrepresented and unsophisticated Mexican immigrants that ‘[t]he adjustments made by agent over the three years had made these years substantially correct.’”
He also points out that “Gann knew or should have known that Appellants did not fully comprehend the explanation of the adjustments to income because he personally observed, ‘Appellant-husband who immigrated from Mexico, had a language barrier (Appellant-wife’s language barrier was more pronounced)….’”
In fact, a transcript of a trial court status conference showed Ms. Sarah Starling Marshall, attorney for the IRS, conceded that the 2003 and 2004 waivers were withdrawn because she stated, “We are not arguing that the waiver wasn’t withdrawn. So when the case was closed, everybody agrees that (the Sandovals) withdrew the waiver before the case was closed.”
On September 16, 2015, Judge Charles F. Lettow, trial court judge, asked IRS’ trial counsel during the final status conference whether or not they conceded that the waivers were withdrawn. The trial court stated, “There had been confusion over the government’s position on whether or not [the Sandovals] had successfully withdrawn their consent to assessment without notice.”
At this point, opposing counsel responded that she did not concede the waivers were withdrawn. Nine days later, the trial judge ultimately ruled that the IRS did not concede that the agreements were void.
Here we have clear evidence of government misconduct and a court ignoring that evidence for reasons unbeknownst to us.
The Sandovals have been repeatedly shut down in their avenues, but they do have one avenue remaining. They can prove the agreements are void but that would require their attorney, Sean H. Colon, to testify under oath.
That comes with a catch as well. As Mr. Colon explains, “[I]n order for a client’s attorney to be a witness in a contested matter, the attorney cannot be the client’s attorney.”
Unfortunately, neither a declaration nor an affidavit will allow for the examination of a witness.
Mr. Colon has resisted this option to this point, because it would require the Sandovals to obtain separate counsel and incur substantial legal costs. Moreover, he explained, “I did not reasonably believe that I needed to be a witness nor submit a declaration (or an) affidavit because the department of justice’s (DOJ) trial attorney conceded several times that the 2003 and 2004 agreements were withdrawn.”
Mr. Colon explained, “The testimony of the attorney is materially relevant to establish beyond any doubt that all of the agreements were withdrawn but for the IRS’ and DOJ’s lies.”
This is rather outrageous misconduct on the part of the IRS, compounded by the courts’ refusal to remedy the situation. The government can lie to lawful immigrants and make egregious errors and, yet, get away with it because the U.S. Court of Federal Claims and the U.S. Court of Appeals for the Federal Circuit are unwilling to enforce the laws.
Mr. Colon explained, “The courts disregarded the facts, Internal Revenue Code, the Income Tax Regulations, case law and the Internal Revenue Manual. Why? They were biased because my clients are Mexicans.”
In the meantime, innocent and vulnerable people get caught in the middle of these situations every day. The Sandovals have fought a court battle for a decade over three years of tax returns.
“The Sandovals now seek to disclose to the American people how the government has repeatedly taken advantage of them throughout this process and seek assistance from the media and legal community in moving this case forward,” Mr. Colon explained.
A copy of the Sandovals’ Corrected Petition for Panel Rehearing and Hearing En Banc is found here. Hyperlinks have been added so that the public (i.e., you) can view the physical evidence in this case. Kindly note that additional redactions have been made.
WILL BuzzFeed News, Dateline NBC, The Independent, Los Angeles Times, 60 Minutes, The Wall Street Journal, Jose Diaz-Balart, Megyn Kelly, Trevor Noah, Jorge Ramos, Geraldo Rivera, Laurence Tribe, Oprah Winfrey … HELP?
“The Sandovals understand that the laws must be applied equally to all Americans, including immigrants.”
—David M. Greenwald reporting