The Chairman’s Report July 16, 2021

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  • Source: FAIRtax
  • 08/30/2021

In the June 11, 2021, Chairman’s Report, we discussed the fact that a totally unjustified tax lien was almost filed against me by the California Franchise Tax Board, their state income tax agency. My story had a happy ending and no tax lien was filed and the matter was dropped.

I received the information below from Dyane Smith. Dyane is an attorney who lives and works in Connecticut. Dyane’s story is very upsetting and if you saw it in movie you would not believe that it was even logical. After all, how could the government be this careless and vindictive—and why? Here is the account that Dyane sent.

This is a story of how the United States, by a combination of abuse of power by government agents and ineptitude, undermines the public confidence that tax laws are being administered in a fair and equitable manner to all. It offers good cause for abolishing the I.R.S.

I have filed a lawsuit entitled Smith v. United States, 3:21-cv-00914 AWT. My suit alleges that
the United States, by and through its agents, the Department of Justice (“DOJ”) and the Internal Revenue Service (“IRS”), engaged in negligent, inept, wasteful and deceptive conduct over a 20- year period. Their actions resulted in a failure to collect federal income taxes from a serial tax evader who owed the tax. Instead, they have harassed me for 20 years and have filed an invalid tax lien on my home.

The facts conclusively demonstrate:

  • The United States willfully abused its power, exercised poor discretion and caused irreparable economic harm and emotional distress to her, a non-liable third party.
  • The United States violated statutory law and disregarded IRS regulations and public policy that promote effective tax collection.

In 2003, my ex spouse, David R. Smith, (“David”) began a divorce action. During this process, David was assessed by the I.R.S. for $ 66,987.83 of unpaid federal income tax debt due to serial tax evasion on returns he filed solely in his name. These were not joint returns which I signed. He filed married filing separately and was 100% responsible for the underpayment of federal income taxes.

David had a retirement plan with $1,000,000 of assets. Under Connecticut law, the I.R.S. could have entered a claim with our divorce court. The court ordered distributions from his 401K to pay his other debts and the court would have almost certainly required that David pay or at least escrow the $66,987.83.

Instead, then IRS Chief Counsel, John R. Mikalchus, decided not to file a claim. I was not aware of David’s income tax assessment. The IRS waited to record its first tax lien against David on the marital home I was awarded by the court until the time to petition the divorce court for an order that David pay the tax debt had expired. This incompetent action by the IRS set in action a twenty year battle with the IRS to remove David’s liens from my family’s home.

Chief Counsel Mikalchus wrote a memo revealing that the IRS knew that David fraudulently transferred $60,000 to his mother during the divorce action. The IRS failed to pursue David or his mother for tax fraud but instead recorded new federal tax liens against me personally, without factual basis, labeling me David’s “alter ego, nominee and/or transferee.” And, despite David’s documented testimony as to offshore account passwords set up by a convicted felon and his Linkedin profile labeling himself as a principal at an investment firm, the I.R.S. next deemed David “uncollectible.”

Thereafter, I sued the United States in the U.S. District Court seeking to remove the federal tax liens, and the government counterclaimed demanding foreclosure upon my home. The district court granted a default judgment against David but exercised its equitable discretion to bar the United States from foreclosure of my home, citing the government’s dilatory conduct as a primary reason that the tax debt was not effectively collected. The court further advised the parties to settle. Nevertheless, the DOJ, who handles all court cases involving the IRS, refused to settle.

Notably, the IRS Advisory Group Chief Counsel John Carroll and the DOJ Attorney Julie C. Avetta submitted false sworn affidavits to the court declaring David’s debt to be $154,166.75 –more than double the actual amount; and when exposed, Avetta characterized the mistake as a clerical error when in fact the gross error was due to carelessly using the wrong tax years.

Eight years later David compromised with the IRS in an Offer in Compromise (“OIC”). Subsequently, the IRS failed to release the tax liens on my home as mandated by federal statute upon satisfaction of David’s debt. Upon learning of the settlement, I filed a Freedom of Information Act (“FOIA”) request to disclose the OIC, but the government failed to meet the FOIA deadlines to respond and impermissibly withheld the OIC.

When initially confronted with the threat of a FOIA lawsuit, the DOJ denied the existence of an OIC but also stated it would entertain any settlement offer by David. The DOJ further represented it would consider release of the federal tax liens on my home.

While this FOIA demand was proceeding, the DOJ realized that the IRS had violated their own rules by settling without a sign off from the DOJ. The DOJ promptly rescinded the OIC, that they said in the FOIA response didn’t exist, calling it “void,” and engaged in chaotic lien filings including revoking releases due to “mistake,” and recording a federal tax lien against yet another third party’s home that David once rented 20 years earlier.

My FOIA request did produce new incriminating evidence against the government in the form of a second internal memo (the “Angotta Memo”). The Angotta Memo clearly reveals that the government knew its declaration of debt was false because it states a balance due on David’s 2000 and 2001 federal tax liens of $39,028.00 as of that date – nearly half the amount encumbering my home. Notably the United States failed to disclose this memo during my quiet title action.

Importantly, Angotta’s signature is affixed to the 2011 lien recorded against the Plaintiff as “nominee and/or transferee of David R. Smith” stating the unpaid balance as $36,390.74. Despite this fact, the United States recorded a false Abstract of Judgment on my home in the amount of $66,987.83. That false Abstract of Judgment continues to encumber my Home.

Even after all of their mistakes and misstatements and although it is barred from foreclosure on my home and despite the recommendation of the former National Taxpayer Advocate and contrary to public policy, the DOJ and the IRS continue to refuse to release the tax lien on my home.

I am now a senior citizen. In early 2012, I was diagnosed with PTSD and anxiety disorder that was directly traced to my stress in dealing with the government’s outrageous conduct. The collateral damage to my family life is incalculable. I was slandered and defamed in the small town where I was building a new law practice and denied access to my home equity. My parents passed away thinking their grandson and I might lose our home.

Although I am now disabled with PTSD and past the normal retirement age, I work to pay the interest on a falsely inflated debt.

If they can do this to an attorney, imagine what they must be doing to millions of others who do not have the ability or the knowledge to fight for justice in federal in court. Worse, despite the incompetence, actual false statements and outrageous conduct that I have exposed, none of these government employees will lose their jobs nor probably even be disciplined due to government immunity.

If the FAIRtax was the law, I would have been spared the nightmare that has so adversely affected my life. Please join me in supporting the passage of the FAIRtax.

While I pray it is not too late to save me, we must take action to save our neighbors, children and grandchildren. PASS THE FAIRTAX.


Again, Dyane’s story sounds like it can’t possibly be true. How could our government be so brain dead and seem to delight in persecuting an ordinary law abiding American citizen?

Dyane’s complaint has all of the supporting documents that support what she says. The problem is not that Dyane will likely win and eventually get the tax lien removed from her home. No, the problem is that Dyane has been put through this living hell.

As Dyane says, the way to protect our neighbors, children, grandchildren and ourselves is to eliminate the power of the government to perpetrate on us what they have been doing to Dyane for nearly 20 years by PASSING THE FAIRTAX!

If you have friends who don’t know about the FAIRtax, send them to  Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.

Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.

Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:

“If you want a picture of the future, imagine a boot stamping on a human face—forever.”

Is it hopeless?  When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?”  But I dream things that never were; and I say “Why not?”

Isn’t it time for us to ask, “Why not?”
CR cover by N/A is licensed under N/A

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