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
Get Tickets To Vanguard’s Immigration Rights Event
The IRS can be political too as evidenced by the Obama IRS that went after Tea Party non profits while at the same time letting liberal non profits skate by.
What in the world does this have to do with this issue?
Keith is just trying to point out that the IRS is evil and goes after BOTH conservative white people and liberal people of color (if you just read the Vanguard or watch the mainstream media you will not be aware of this and think that cops only shoot people of color, courts only hate people of color and the IRS only targets people of color)…
“So here we have what would appear to be a clear cut case for the Sandovals”
When your sole source of information is their defense attorney that is not too surprising. Are the slew of people who have ruled against them all freemasons? That would certainly explain everything.
Have read the previous articles on this, that statement appears to be completely false. The court ruling and the pleadings of the prosecution are both cited.
“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”
All of whom ruled against them. But perhaps, in fairness to the defendant, they are all part of conspiracy?
One of the points that the attorney representing the Sandovals made to me is that a lot of those are not specifically tax courts, so the judges are not versed necessarily in tax law. The rulings I read, seem to bear that out. One of the previous articles on this I did, has links to most of the documents. If you hit the “IRS” tag, you should find it and can see for yourself.
My comment was “When your sole source of information is their defense attorney”. What information in the article did not come from the defense attorney?
I read all of the filings – defense, prosecution and rulings by the judge. If you read all the docs in the previous article, you’ll see why I concluded as I did.
Ok, thank you
I haven’t read anything about this, other than what’s written here. However, since David has researched this further, I’m wondering if he believes he has enough information to agree with this conclusion. (In other words, concluding that the courts are biased and arrived at their conclusions for the reason cited above (but who in fact are “recent Americans”, according to the article).
Left undiscussed is whether or not there were errors on the returns. (Not seeing this, at least.)
I don’t know if I have enough information to conclude they were biased against his clients. I do know that the process as described seemed overly aggressive by the agent particularly speaking to a man with limited English skills and no formal education. It would have been better for them not to have jammed him into signing the agreement and then they seemed to use dishonesty to now allow them to rescind the agreements. Mr. Colon believes that the agreement itself had errors. Process-wise, this was a mess. Because of bias? I’ll leave that to others.
To use the same language as the article, “recent citizens”.
Just saw your response. I wasn’t asking about the agent. I was asking about the conclusion mentioned above, regarding the court decision(s).
However, since you mentioned the agent, might there be other reasons for the allegations? (For example, frustration regarding the language barrier, heavy workload, lack of organizational support, including for those who are not fluent in English, etc.?) How can one conclude that racism was involved, even with the agent?
Also, in reference to this:
How much money are we talking about, here? Does the IRS normally assign highly experienced agents for relatively low-dollar, individual returns? (Assuming it’s low dollar.)
From what I read, the IRS already has challenges in going after higher-dollar individual and corporate targets. (Nor do they have adequate processes in place to prevent others from filing fraudulent returns, using someone else’s identity. That’s been in the news quite a bit, recently.) I believe they’ve also been subject to extended hiring freezes (but basing that on memory).
In short, the IRS has significant challenges, which aren’t related to racism. Pretty sure that I could cite articles, regarding this.
In any case, shouldn’t that be “understated”, at least from the IRS’ perspective?
Racism is usually not related to tax calculations. Hopefully, agents aren’t going through returns, scouring for names which are of a particular descent. (But, I doubt it.)
No what the defense is claim is that the IRS in “correcting” their tax errors overstated their liabilities substantially.
And, the IRS apparently disagreed.
Have the courts ruled on that, or just on the waivers?
The situation regarding the waivers does seem unfortunate, regardless of how it may have occurred. The returns are pretty old, at this point. Any idea how much the penalties and interest are? And, is the IRS showing any flexibility, regarding that?
And actually, I’m wondering why the IRS is auditing such old, low-dollar returns. Is there more to this story?
The court has never ruled on the facts, only the waivers.
https://www.irs.gov/businesses/small-businesses-self-employed/irs-audits
The returns mentioned in the article are for 2003-2005. Any explanation, regarding that?
The case has been going since 2006
O.K., thanks. Did they just recently hire the attorney? Did the attorney contact you, to run this story?
On November 1, 2007, Mr. Colon called Mr. Gann asking for audit reconsideration.
Ron: They hired the attorney in 2006 or 2007. He contacted me about the story.
Interesting that you feel free to accuse Mr Gann of several improprieties. Is it because he is dead?
I quoted the attorney accusing Mr. Gann of several improprieties. The attorney made those accusations in actual court filings.
Well, your article it titled:
And then there’s these statements (which seem to be from you):
Other than the courts who are “unwilling to enforce the laws”, as you put it, who are you referring to regarding your conclusions?
By the way, is Mr. McGann actually dead? Is there some reference to that, somewhere in the documentation that you referred to, earlier?
The point of the previous post is that the attorney felt strongly enough about those accusations to put them in actual court filings, under penalty of perjury, etc.
The citations that I quoted appear to be from you, not the attorney.
You seem to be not understanding my point.
There’s also this, from you:
Did you witness this interaction? If so, how did his anger manifest itself? And, when/where did it occur?
I’d say that it’s you, who’s failing to understand the difference between reporting, vs. automatically accepting what someone told you. And, that’s not a good quality, in journalism. Even in biased journalism.
It is in the court filings
O.K., thanks. If I were writing this, I probably would have specifically referred to that, including the comment regarding becoming “angry”.
It is difficult to determine where facts end and opinion begins here, let alone whose opinion you’re expressing. Many of the statements are from you, as I noted above. (Including but not limited to the title of the article, itself.)
I think if you read the March article first, you’ll see that I had extensively quoted Mr. Colon and then paraphrased it for this op-ed for the sake of brevity.
By the way, did the courts address the reason that the waivers were not voided? (The very heart of this entire article, and presumably – the court cases?)
Isn’t that the basic issue to address, here? What exactly did the courts state and decide?
That’s part of the baffling ruling. I’d have to look up the exact language.
That’s probably what I would cite and attempt to analyze, if I were writing this article. I might then ask the attorney to comment specifically on the legality/support, for the decisions. (Perhaps more applicable and effective, than simply reprinting allegations of court bias based upon race.)
So they were cheating on their taxes in a pretty big way. Maybe they should put those scumbags in jail in a nondiscriminatory way.
“Petitioners concede that they failed to report rents received of $5,700 on their Schedule E, Supplemental Income and Loss. Petitioners further concede that the deduction for other expenses claimed on their Schedule C, Profit or Loss From Business, should be reduced by $140,221, and the mortgage interest deduction claimed on their Schedule C should be reduced by $1,882. (continued…) – 2 – the issue for decision is whether petitioners failed to report $19,207 of income on their Schedule C, Profit or Loss From Business, for Future Satellite Communications (Future Satellite).”
That’s the point in dispute if they ever get to dispute it.
See above, they conceded to it. Note the “Findings of Fact”
https://www.ustaxcourt.gov/InOpHistoric/luasand.TCM.WPD.pdf
Sorry trying to do too many things at once.
“the issue for decision is whether petitioners failed to report $19,207 of income on their Schedule C, Profit or Loss From Business, for Future Satellite Communications ”
Jim, I don’t believe that you understood the issue. David Greenwald did a fantastic job in simplifying the facts. The issue is whether or not the agreements are valid if the taxpayers are misled to believe that the agreements are “substantially correct” when the facts show that they had material errors; their tax liabilities were overstated by $70,866. The IRS made tax assessments based on those agreements. I don’t believe that these liabilities are immaterial or insignificant. Nor did the IRS inform them of the correct process to which they could proceed. All taxpayers are entitled to proceed to the U.S. Tax Court. In this case, this was not done.