IC1 – IRS Determination Letter Video 3

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0:09 OK, hello everyone, this is John. Jay, thanks for joining. This is actually part three of the Request for Determination letter. And we just have just a couple of people that looks like. And I want to open it up for questions and let you ask questions. And if you don't have any, I'm gonna go th...

OK, hello everyone, this is John. Jay, thanks for joining. This is actually part three of the Request for Determination letter. And we just have just a couple of people that looks like. And I want to open it up for questions and let you ask questions. And if you don't have any, I'm gonna go through more of a review, again, so that other people can benefit when they sign on it. Because I think we did this during the middle of the day, so probably will do this again in the future.
But for right now, I would assume that you've watched parts 1 and 2, and so I do have the, the letter that we're discussing here, I have it up here on the screen. Let me know if you have any trouble seeing that.
And we'll just open up for questions.
Alright, so that's fine. I'll go ahead talk and then maybe if something comes up, just let me know.
This is more of a review here. So I'm gonna go over this letter.
I think I explained the source of this later. It's not my brain. This comes right from the IRS. So I went to the IRS's 2017 manual. Now this letter is not outdated packets.
It's been this way I've been doing these since, gosh, late nineties. So it's almost unchanged. So what I did is I meticulously went and I answered all these questions here. This does not pertain to your situation at all, these are just statistics. I think the IRS tries to collect and maybe try to figure out if you are in the right place. I think that's what these questions are for.
Um, that's quite lengthy, and it requires that we sign it. So of course, we changed the date and put your actual name down there.
If you wanted to look these things up, I mean, go right ahead. It's not gonna make your life better. Just know that.
I literally spent many hours researching and answering these questions, and so I'm not going to change anything And I don't even remember why I answered the way I did. I just know that this is the right way to do it. And so then we get into the actual letter.
You'll see that the letter actually has to be sent to these three places. I didn't say that it comes right out of the IRS manual.
Of course, you know, this is where your name and address goes. You put the correct date. We do like to send them certified mail. It's just a formality.
Then we're quoting the revenue procedure.
Now you can look this up, you can go lookup revenue procedure, probably 2022 dash for whatever they have that has to do with this and also request for letter rulings. This is a little bit different than a letter ruling. And a determination letter, it's not like case law.
It's only for your specific transaction, for this particular tax period for you, individually.
You can't get a ruling or determination letter and then use it for the whole country, or a whole group of people, OK? No matter how similar their circumstances. So here we go. You know, we're just going into the stating the facts were writing this letter, according to the procedure where identify the taxpayer.
And this is in this example here. It's the Coinbase 10 99 K.
Um, I'm going to explain, like number two, I'm talking to the IRS. Hey, you guys to find this property. And so, here you go. And now, we get into the technical aspects of this.
What I did was, here, I, I, went in, read the regulations or the statutes and I found out what criteria they're using. So this is the interesting thing.
If this is interesting at all, it's that.
The whole thing about kryptos pig taxable dealing with the IRS can administer the tax on it is by what's called backup withholding.
So what you have to do, this is, this is why I'm getting the IRS to agree with me, is that I'm saying that the 1099 K, or whatever you got from the exchange, does not create a backup withholding situation.
See if you have to speak in double negatives.
But this is just how it works, so the payee, which is yourself, did not fail to include any portion that's reportable.
And that's why, as you'll see in the instructions, we add in your tax return.
So, you're going to file the tax return. You cannot do this without filing a tax return.
Um, then, we have to say that you are not required, because it didn't meet the criteria, OK, and these are the criteria. There are additional criteria.
We also certify the correctness of the taxpayer number, not doing that, causes possibly, what's called backup withholding.
So, at least Tabak withholding to this whole letter is about preventing backup withholding OK, so here's what I want.
I want to make the following determination, so I'm telling the IRS what to do.
I wanted to say there was no pay underreporting.
As you know, it's not.
There is a bonafide or real dispute as to whether there's been any pay under Reporting.
OK, and the record shows there's not in the pay is not substitute backup withholding. That right there is your is your goal.
That is the whole purpose of all these words and pages and so I've got in a box I separated this whole thing out in a box saying hey, this is what I want you to do.
OK, if you started withholding I want you to stop. If you haven't started withholding don't do it.
That's what this says. OK, And then I go into the legal aspect of it. There's a statement of the law, and, yeah, I spent years studying this.
It was helpful, because I started this back in the nineties, and when I did this first type of letter, it was Rebecca withholding on another issue.
And so I was very familiar with these regulations if you'd like to read this stuff, I mean, it's all there. It probably is gobbledygook. You may not make any sense out of it, but that at one time in the in the past I did understand this quite well. So, the analysis is that the 10 99 K does not correct report, the dollar amounts, I mean, this is what you heard me talk about in all the videos.
All right, I'm going to pause there for a second, on page four. So anyone, any questions?
So I've got a tendency to just keep on talking.
We're likely going to do another Q and A I want more people on the call. So this is kind of new. So we're still getting the word out, and not many people have joined us yet.
So I'm gonna make sure, if I'm not preventing you for asking questions, think everything's good, let me just unmute, you see what happens. Self muted, OK?
So, yeah, you can type, I believe you can unmute if you wanted to, OK?
That's fine, Just want to make sure I wasn't meeting you.
All right.
So this is what you hear me talk about as well.
There was no disbursement bright that we call the cause or constitute again.
Then the dollar amounts are earnestly stated on the 1099 K. They do not represent dollars paid to the pay scale.
Technical, that is, They do not represent dollars paid to pay.
It's that simple.
These would be considered settled transactions. These are not settled transactions.
Then there's all these other aspects or criteria for other reportable payments.
And those don't exist. That would be like from PayPal, things like that.
You can read this, too. This is interesting, I mean, it gives you all the criteria.
26 USC You can Google this, 650 W.
You really want to basically, if you want to check out what I'm saying, all right?
So, I tell them, Here's the conclusion.
Not subject to backup withholding, OK? And then this procedural thing here, we wanna make sure what we're trying to do here, but this procedural matters, are trying to make sure the IRS is not going to expect a filing fee of I think it's $275.
So by telling them all this stuff, I think somewhere in here talks about that, that's somewhere in there.
Yeah, there's a fee or some kind.
Anyways, There you go, that's your example.
Just like I said, in the first two parts, and again, this is part three for Q&A, now is your chance, if you want to ask any questions, I'm not going to cover this anywhere else, but I will do another Q and A with more people.
We want to open the door to see if there are some questions I have not covered. That's why I want to do these calls.
OK, um, take a yogi. Am I meeting the collar out? Are we good?
Now, you know, someone can ask them the in the window.
They don't have to come online, but they could just submit a text question if anybody wants otherwise.
Know, I know this is, this has barely been out for a week now. So, you want to Yeah, and you want to get everybody's questions answered, because I know what tax day is. Less than a month away. So I know this is going to be important for people that do get this done.
Yeah. So when do we use that?
We only use this later: When you receive a 1099 K personally, or some sort of 1099, such as the crypto, if the 10 99 is erroneous meaning it doesn't match the dollars you actually receive. We want to do this letter. It is for people that fall, 10, 40. So if you're not following at 10, 40, you're not going to be doing this. I would not recommend it doesn't do anything. It doesn't help you at all.
Of course. Then the types of responses we could expect.
Sometimes Iris does not respond, but I've never had a problem. I would imagine they responded a few times.
The one example I showed you in the part one is, or in the intro video, is from one of the. I think there's probably 20 by now, maybe 22 that I've done. one. At least, it's funny.
Because when, when people get what they want, or they perceive that there is no problem. Then I disappear. Let's not talk to John anymore. We don't need them anymore. So it was nice to that person to say, Hey, John, at work. Yeah, so I was able to share that with everyone so I don't like the bugging either. I'm not going to bug you and say, did you get a letter, you know?
So that's it.
Yeah. so and then.
Yes. So, that's all the time. That's when we use it. We do the 10, 40 we. If you have not followed your 10, 40, you can still do this. We send a copy, the completed 10, 40, whether or not you signed it, but still, it's when you plan on filing the 240 and hopefully you're filing a timely. That's the best time to do it. And, yeah, CPA should be doing this. They should understand this. They should not be lazy and not. You know, This should not just go, oh, yeah, you can't do it. You're trying to escape taxes, and yeah, we are trying to use the law.
Hopefully, CPA's would be open minded enough to want to do this work.
But anyways, that's all I have. If there's no questions, I think we'll just end it for now.
And then we'll just plan on a future date to do some more Q and A's. We have more people join.
That sounds like a great agent, John.
All right, well, thanks so much. I'm going to hit end, recording, I believe.
Stop recording.
All right, thanks for participating.


1. This video is part three of a series discussing an IRS determination letter, in which John is hosting a review and Q&A session for interested individuals.
2. John expects participants to have watched parts 1 and 2 and focuses on a specific IRS letter that has remained almost unchanged since the 1990s.
3. He explains that the IRS uses these letters for statistical purposes and emphasizes the importance of meticulous responses, as it has legal implications and requires the recipient’s signature.
4. John illustrates how the letter relates to tax issues associated with cryptocurrency, stating that the IRS administers tax on it through backup withholding.
5. He clarifies that an IRS ruling or determination letter applies only to a specific individual for a specific tax period and cannot be generalized to others, even in similar circumstances.
6. John shows the process of writing the letter according to IRS procedure, with the goal of preventing backup withholding, arguing that the 1099-K tax form does not create a backup withholding situation.
7. He emphasizes that the tax return must be filed in conjunction with submitting the determination letter.
8. The video also covers how to avoid a potential IRS filing fee of $275 by detailing procedural matters within the letter.
9. John mentions that the determination letter is used only when an individual receives a 1099-K tax form that incorrectly reports the amount received.
10. The video ends with a Q&A section, where John invites questions from the participants and mentions the plan to organize future Q&A sessions.

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