Free Motion to Dismiss - Rule 12(b)(1) - District Court of Federal Claims - federal

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 1 of 46

.-~... Nobe201

'""n 843

=-~= .. Sø 5 ",ie In$lruCli.
or additions to w)( on line a.

Cla.lm for Refund and Request for Abatement

òM No 15-5.004

Use Form 843 only if you claim involves (a) on of ri raxes shown on lihe 3a (b) a ""fund oril/)lett of i/tere,;. pelties. or

. An overpaymnt dine e taxes;
Name ofclaimanl ~ UNICO SERVICES IN
Addrss ¡numbe. Sleet.

Do not use Form 843 if Ut cInim is 'Qr. II refund for nont8Xlbie use (or saIl'S) of fuel: or

. An overpyronr of exe¡ e wxes reprted on Form(s) II.C. 720. 730. or 22!J.
YouS$Nor lTN
Spouse's SSNoi ¡tIN

~ PO BOX 881

.. City or iow stale. and IP code
BENICIA. CA 94510 881 Name aM address sh n on return if different from above
i

Emp1o id nuber (EIN)
9S: 2lS5$Ø1

Day i.iephone numbe

Period. Prepare as ~ûr¡¡iii 843 ¡Of each tax periof'
3a Type of tax. penalty. or addition to tax:

From D4 / 01 i 2000 to 06 i 30 2000

ø Empioyment 10 Estate 0 Gift 0 Excise (see instructions)
b Type of return filed ( ee instctions):

o Penlty-IRC 'on ..

o 706 0 709 0 940 !l 941 0 943 0 945 0 990.PF
48 Request lQr abatem t or refund Of: o IntereSt as a fes It of IRS errors or delays. o A penalty or add tion to tax as a result of erronous advice from ri IRS.

o 4720

o Otler s if

b Dates of payment i
5 Explanation and a ditnal claims. Explain why you beliee this claim should be allowed. and

shw computati of tax

refund or abatemen of interest. penalty. or addition to tax. If you need more space. attach additional sheels;

SEEATTACHEDR ER

Signature. If you are fili Form 843 to request a refund or abatement relating to a joiii return, botl you and your spouse must sign the claim, Claims fi d by corpoations must be signe by a corporate offcer authorized to sign. and tM signature must be
accompanied by the off cr's title. Urid4 penaltes. of pejlJ, I Of. thaI I have exsmÌt thiscl3im. iiduding ilCl;pa"Ying schles and stel~S, end, to th be of tny kogean beliof. it is trúe, coect a c lete
Siure (Tite, if applicable. Cl ims by corations mot be signed by an ofllcer.j

..J1.......mmm__. :~__.-~..l..\C~'-.~~~..

Dale

'1 -,i.3-ûS ..............-.......-.---

,_._.. .......m.__.____.I... S'9o!tUfC ¡ ...... ______.__m__.__..__ "'m.m.. .__.____.____
For Prïvacy Act andPapetork Reductîon Act Notice. see separate iistructions. Cat. No. 10180R

Date

For 843 (Ra. l1-0021

...
ì

..
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EXHIBIT
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Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 2 of 46

Rider to Fomr 843
i i

UNICO SERVICES, INC.
95-ZSS5601

D. Gordon P ¡ iter is all iIldíVid.UâWithexpertise inthè rtechanical engineering industr
paricularly .th respect to the~~lIbly, repair,$~icing~lIdte.ÍJstaUation of pumps,

gearboxes an other rotatin~ equipfnentGOm1fòîiiyuseâwtheoil refuing and chemical
industres. D nng the contract andelationship with Pìxlêy Services Limited, a

year at issue, D. Gordon Potter entered into an employment company based in Dublin, Ireland. The . ghts obtaIned by Pixley Serce Limited from the employment
par. Pixley Serices Limited

relationship ith D. Gurdon Potter were trfera1:le in trnsferdcnainnghts to the employment servces ofDeati D. Gordon Release Me,c., a company

Potter to

engaged iithe busiess of emloyee leasing and employee

Release Me, Inc. dunng toe y r atÍ$sue. Releae Me, Inc. contracted with Unico Services, Inc. to provide skiled labOr. Pursuat to this contractual relationship with Pixley Services Limited,
temporase ices. Thus, D. GOrdon Potter beclle an employee of Release Me, c. paid to PixJey Servces

Limited a contrctul prce for the purhae of

certn rights to the employment serices ofD. Gordon Potter~ Aß par of the contrct between Uni 0 Services, Inc. and Release Me, tnc., Release Me, Inc. provided the

services of D Gordon Potter. Wliile provldingservices to Unico Services,lnc., D. Gordon P tter worked on multiple business projects.

Unico Servic ,Inc. made peòodicpayments to Release Me. Inc., puruant to the skilled labor contrc discussed above, and Release Me, Inc. included these amounts on its
income tax re . Release Me, Inc., in tu paid substantial wages to D. Gordon Potter

and paid the ployer's portìonofthe employment taxpUTuantto the Potter's contractual n ts set forth in theemploynent contrt with Pixley Services Limted,
which had be 1 assigned to Releae Me. Inc. D. Gordon POtterinCiuded these wages in

income and p id ìncome tax and the employee's porton oftheeiplo'yent tax,

accordingly.
SerVices Limited and for the future benefit ofD. Gordon Potter. The non~vested, retirement plan Was equivalent to a revocable tru t that was subject to the creditors of Pixley Services Limited. The non-vested, irement plan is a plan, and D. Gordon Potter has no non-trferable
Pursuant to contretpal employment agrement of D. Gordon P ter, Pixley Pixley estal:lisled lldfunded a nön-vested. retirement plan immediate n t to receive the benefits of contnbution 1 ade by Pixley Services Limited the non-vested, retireent

plan. Therefore, the

for the futu beiiefitofD. Gordon Potter

constitutes de ered compenstion, which is not includable as wages or income of

D. Gordon Po ter unti a futu date when the tetiremempla vests and disburement are
available to D Gordon Potter. St:e Ute. §§ 8$, 451. Therefòre, Unico Services, Inc. is
not liable for $Ie employer's portion of Services, Inc. ~o Release Me, Ir. in excess ofthe amouns

Gordon Potte~.
i

employment tax on the amounts paid by Unico paid by Release Me, Inc. to D.

l1ie Form of tre Transaction Must Be Respected
The commis~oner erneously assers that the above trsaction lacks economic
substance, an the above trnsaction

purposes. Th. Commissioner, instead of respecting the fQnn, desires to treat the
i

should be disregarded and re-written for federal tax

~i

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 3 of 46

Rider to. Fo.. 843 UNCO$~AV'CF¡IMç.
transaction~1 a diret emploYer-employee relatQiip betw D. Gordon Unico ServÌt:, Inc. Thus, the Coni$sione allegethml.ìiçoSeriçes,

u!9S~2885601
Pottr and

Inc. must pay theemP.lo yer s.. portion o. f. emloym.. . enUax, durgth.. epep.'od. atissue,on the.fu amount
.of payments om Unico Industrial Servces, Inc.. tQ the unlated employee

company, Re eae Me, Inc, .

leng

The Commis ¡öner's asserton thatthtrsactiöñ laèks econømicsubstace ãnd should
be disregade and. re.wrttenis in dItt conflict withrelevàt Case Jaw, In.Coltêè

Industr Ine v. 't tes, 62 Fed. Ct. 716 (2004), the GourruJed1ht a similar
amgementasvilid, in which

a company tranfered cot¡tingei lÍliltil3~iated
entity

with asbestos laims againsta.subsidiarto an at á loss. In sruling, the Cour state, "(W)bera tapayer requirements ~stalished by Congrs, as Coltec did in

the conipanyc¡:a!e and.thensold
has satisfied aU

the. stat\tory

substance' damne to trmp 'mere compliance with the coe' wøùldviolatethe sepa.ration of owers...." Seealsn TWD 1I.E. Inc. v.UnitedSttes,342 F. Supp. 94 (D.Conn. 2 . ).
I

this Çl,the use.Qf the !economic

respected, mar not be

:~£!=:s:~==i~i;!::
disregarded, and may not be re-wrtten.

Penalties Do fot Apply
If it is ultimat ly concluded that ünico Services, Inc. is notentitledio ârefud of iii the case at and, penalties do not

that has areas nable basis in law and fact, neither the negligence penalty nor the
substantial erstatement penalty

apply in this case. Whereá. tapa~ taies a positioii

the tå

§ i .6662-3(b) ), a return position is reasnable where bason c:me QT mOre of the

shall apply. I.R.C. § 6662. UnderTrea. Reg,

authorities list in Trea. Reg. § i.6662-4(d)((3)(iii). As set fort abçive, tIe plaiii language ofth statutes and published Case law support the return position ofUiúeo Servces, lnc.. ! The issues in this cae represent a previously untested complicated area
of the tax law that is subject to multiple

penalties shouki attach,

reaonable Interpretåtions. Therefore, no

Moreover, the teasonable cause and good faith exception in Treas. Reg. § 1.66644may
satisfy taxpayer shows that he reason ly relied on the advice of an accounlator attorney. Uiúted States v. Bovle, 469 U.. 241 (1985). In the cas at hand, taxpayer relied upon the advice of competent acc~untants and attrneys, and, therefore, satisfies the reäsna.ble cause
penalties even.iftheretunr.position do not established when a the réanable asis standard. Reasonable cause is relieve taxpay¡rs frm liability ftom

excetion.

For the above *lIted reasons, Unieo Services, Inc. respectfully requets that the

Commissioner ~ant it a refund of taxes paid durng the year at issue and reverse the assessment of nenalties and interest.

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Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 4 of 46

Rider to Ponn 1 MOX

Unico Serices Inc. 95-2885601

~ST FOR IMEDIATE RBFUNCLA DISALLWANCE

Pursu$t to I.R.M. 4.23.13.4 and IR 451 an. 30. 1987). tapayer Unico Serice, Inc. respetfully reuests that the Comm ínmedia'Wly disallow this
refud claim tithout adminstrtive considertion. $èe lR 1600 (Apr. 26, 1976),9

Stand. Fed. T4x Rep. (CCH) 'i6609 (1976).
In SUPt' o. rt of this R~qu. es.. .t..fo.r lle. fu.. d. C.. i. a.i...m......... D i.....S....ll.. ....11.0.... w........!l. ....c e. .......tll payee su bm its that

the merits of is refund claim have previously bCCi'fthei;ubjiitofanadinistrative
exaniination. .. e-'evaluation by the Commissioner of ths refud

and se.rve onl)! to delay commencement ofarefund. $uit~ytaJpayer.

clai would be frtlesi;

Ths R~uest for Refud CHùrt Disallowäne is faÏ'tbeerployer' s portion of

~;~~~:~\~~,~7~~t;~ periodendingJune 30, 2aOO.'Je.amoutit oftms tefucLclaim
Taxpa~r agrees that the COIDlJii;¡;çmer's gr!lting.~fthisRequest for Refund
Claim Disallo-.ance and issuace ofa Cerfie¡NotiÇl of commence thel running of Claim

Disallowimce wil
ñlinga

the two-year period of limitations for

pursuant to Pr~c. & Admin. Reg. § 50 1.6532- 1 (c).

refud suit

\VRIFORE, taxpayer respectfully requests tht the Commissioner
immediately is(ue a Certified Notice of Clai Disail.owace òh.anexpedited basis disallowing thl full amount, $122,778.75, of this refund claim.

g~

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 5 of 46

-Foo 843

~~ ~ .. Se se ate 1nkJ
(Rev. Nor 2(
or additons 10 tax on 48.
Do not use Form 843eC/aim is (or-

Claim for Refund and Request for Abatement

OMB No 1545-0024

Use Form 843 onl if claim invos (a) one of th taxes sho on lin 3a or (b) a reun or a/)tement of interst peltie,

. An ovepaymnt of . taxes;

. A refund fo nonixa e us (or sale) of ful; or
. An ovepaym of is taxes reed on Formls) H.C, 720, 73Q, or 2290.

Nam of clamant i
'C

YOI SSN or ITN
Spose's SSN or ITN
Emlo idnticat numbe (EIN) 95 : 2885601

1i UNICO SERVlES'INC.

õ Ad BOX 887 and roo or suite no.) PO (nbe. 5
i- Cit or lDn. stte. a ZIP Coe
BENICIA. CA 941 -081

Name aOd address wn on retum If difernt from abo
Period. Prpa alserate Form 843 ror each tax perio

Dayt teph numbr

From 06' , 2000 to 09, 30 2000
3a Type of tax. pel1 y. or addition to tax:

( ) Z Am to be refund or abated $ \O~ Ie 11,0:'

o Employment 0 Estate 0 Gift 0 Excise (see instcts)
o Penalty-IRC j;ctin ..

b Type of retun mej (se inctions):

o 706 0 7 0 940 II 941 0 943 0 945 0 gg-PF
4a Request lor aba an or refund of:
o Interst as a It of IRS errors or delys.

o 4720

o Other 5 Be'

o A penalty or a ilion to tax as a relt of errones advice fr the IRS.
b Dates of pay ..

5 Expanation and additional claims. Explain why you beieve this claim shou be allo. and show computtion or tax refund or abate nt of interst. penalt. or additin to tax. If you nee mor spac attch additionl shets.
SEE ATTACHED RIDER

Signature. If you are fi ing Form 843 to request a refund or abatement relatin to a joi return. both'yo. and yor spa must
sign the claim, Claims led by corptions must be sined by a corra ofcer authze to si. and th siature must be

accompnied by the 0 car's title.

belie. ft is tr. ooec an p1et..

Und pelI of pe. I elhat I have exmine ii. clm. induding iipo scheles and st.. an '01h bo cI my kne and

Signble (Te, If apC8 aims by corpo8tons mu be si by an ol.) I

~=t.. ----.-------- .--.un.--.~~.m.+.:0.':.~m..~.~i;:p,Q~U.U.h--.h.
Prvec)' Act and Pa
Reduc Ac Nollee. se sepaate inions. Ca No lOl8O

..........__._----_._-_..... 0t

'l-.l -0..

s¡g~-_.-..-u-..-...--;.-.........--.....-.--..-....-...-.-....---...---.--......-----.---......-...-----......
For

0..
fa 843 tRev.11.2(02)

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EXHIBIT
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Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 6 of 46

Rider to For 843

UNCO SERVICES, INC.
95-2885601

D. Gordn r. otter is an individua WI. 'th expemse in the mechancal engieerng industr

parcuarl~ with resec to the asembly, reai, sercing and reitallaton of pum,
indutres. !Durg the ye at issue, D. Gordon Potter entered into an employment

gearoxes and other rotatig equipment commonly used in the oil refig and chemcal

contrt ana relationship with Pixley Servces Lited. a company based in Dublin
Ireland. T1e rights obtaied by Pixley Serces Limte frm the emloyment
relationshi~ with D. Gordon Potter were tranferble in par Pixley Serces Lited
tranfer per nghts to the èmployment serces of

Dean D. Gordon Pott to

Release Mq, Inc., a comany engaged in the business of emloyee leaing and employee
Releae Me, Inc. durg the rear at isue. Releae Me, Inc. contracted with Unico Serces, Inc. to prvide
temporar ~ervices. Thus, D. Gordon Potter became an emloyee of

skilled lahq. Pursuant to ths contrtul relationsp with Piley Serce Limited Relea Ma, Inc. paid to Pixley Serces Limited a contrtu price for the purchae of
certai ngh-i to the emloyment sece ofD. Gordon Potter. As par of

the contrt

betwee Umco Serces, Inc. and Releas Me, Inc., Release Me, Inc. provided the

serices ofp. Gordon Potter. Whle providig aerces to Unico Serces, Inc., D. Gordon rotter worked on multiple business projects.
Unico se~ce, Inc. made peodic payments to Relea e Me, Inc., pursuat to the skilled
labor con ct discused above, an Release Me, Inc. included thes amounts on its

income tax etu. Releae Me, Inc., in tu paid substantial wages to D. Gordon Poltr

and paid th employer's porton ofthe employment tax puruat to the Potter's
contr . ghts set fort in the employment contrct with Pixley Serces Limited

which had een asigned to Release Me, Inc. D. Gordon Potter included these wages in
income andlpaid income ta and the employee's porton of

the employment ta,

acordingl)t
Pursant to;!the contrtual employment agreement of

Pixley Serces Limted and

D. Gordon ottr, Pixley established and fided a non-vested retient plan for the
futue bee t ofD. Gordon Pottr. The non-vesed, retirement plan was equivalent to a
revocable trst that was suject to the critors of

Piley Serce Lited. The

non-vestediretient plan is a non-transferble plan, and D. Gordon Potter has no

the non-vested, retement plan. Therfore, the contrbutio made by Pixley Serces Limted for the futu benefit ofD. Gordon Pott
immediatight to reeive the benefits of

constitutes eferred compention, which is not includable as wages or income of
D. Gordon ott until a futu date when the retiement plan vest and disburment are

available toiD. Gordon Potter. See lR.C. §§ 83,451. Therefore, Unico Serces, Inc. is
not liable fqr the employer's portion of employment ta on the amounts paid by Unico
Servces, Inp. to Releae Me, Inc. in exces of

the amounts paid by Release Me, Inc. to D.

Gordon Potter.

The Form or the Transaction Must Be Respected

The C0nisioner eroneously asert that the above trsacton lacks economic
substance, apd the above trsacion should be disregaded and re-wntten for feder tax

piuoses. 1je Commssioner, intead of respectig the form desires to treat the

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Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 7 of 46

Rider to Fob 843
,

UNCO SERVICES,

INC. 95-2885601

trantionias a dit cmployc-cmploycc relationshp beee D. Gordon Pott and

Unico Senlces, Inc. Thus, the Commsioner allege tht Unico Serces, Inc. must pay the empioi' r's poion of employment ta, durg the peod at issue, on the fu amount

ofpaymen frm Unico Industral Serces, Inc. to the unlated employe leasing
company, leae Me, Inc.

The Co~ssioner's aseron tht the transaon laks ecnomic substce and should

be direga ed and re-wntten is in diret confct with relevant case law. In Coltec Industres c. v. United States 62 Fed. Cl. 716 (200), the Cour rued tht a simlar

argem t was valid, in which a company trfered contingent liabilties asated with asbes s cla aga a subsidiar to an entity the company crte and then sold at a loss. i. so rug, the Cour staed "(W)her a tapayer ha satsfied al the statutory
require~' established by Congres as Coltec did in ths cas, the use of

the 'economic

substance' cte to trp 'mer compliance with the code' would violate the
separtion fpower...." See also TIF il-E. Inc. v. United States. 342 F. Supp. 94
(D.

Conn. 2 4).
i

The trsation set fort abve satisfies the pla language of the statutory requiements

set fort in ~.R.C. §§ 83, 451. Therfore, puruan to Colte and TI il-E. the
economic sfbstace doctre does not apply, and the trction set for above must be

respted, f8Y not be disrgared and may not be rewntten.

Penalties .ao Not Apply
i

If it is ultitely concluded th Unico Services, Inc. i5 not entitled to a reñmd of the tax

in the cas~had' penalties do not apply in ths case. Wher a taxayer taes a position
that has a asnable basis in law and fact, neither the neglgence penty nor the
substatial derstemcnt penalty shal aply. LR.C. § 6662. Under Treas. Reg.
§ 1.6662-3 )(3), a retu position is reasnable where bas on one or more of the authorities . sted in Tre. Reg. § 1.6662-4(d)((3)(iü). As set fort above, the plain languge of

the sttutes an published cae law 5upports the re position ofUnico

Serces, lrc.. The issues in th5 cas rept a previously untesed complicated area
of

the tax law that is subject to multiple reonable interpretations. Therefore, no

penalties s~ould atth.

Moreover, ~e reanale cause and good faith exception in Treas. Reg. § 1.6664-4 may

relieve taJlYer frm liabilty frm penties even if the retu position does not satisfy
the reasnaple basis stadad. Reanable caue is established when a tapayer shows
that he reaslmablyrelied on the advice of

an accountant or atorney. United States v.

Bovle. 469 U.S. 241 (1985). In the case at hand. taayer relied upon the advice of

compeent accountants and attorneys, and. therefore, satisfies the reanable cause
exception. ¡

For the abote stated reaons, Unico Services, Inc. respectfy requests tht the
Commssioler grt it a refid of ¡

taes paid durg the yea at issue an reverse the

assessment pf pealties and intert.

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Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 8 of 46

Rider

to Form 1040X

Unico Serces. me.

95-2885601

RfOUET FOR IMDIATE RE CLA DISALLOWANCE

Piiant to I.R.M. 4.23.13.4 and IR 4512(2)(g)(Jan. 30, 1987), tapaye Dnico

Servces, Ir. respectfuly reuests tht the Commoner imedately diow ths
refud claIr without adstrtive considertion. See I.R. 1600 (Apr. 26, 1976),9
Stad. Fed.jTaX Rep. (CCH), 6609 (1976).

In ~pport of ths Request for Refud Clai Disaowance, tapayer submits that
the merts o¡ ths refud cla have prevously been the subject of an adisttive
examinato*. Re-evaluation by the Conussioner of ths refud clai would be frtless
and sere o*ly to delay commencement of a refud suit by tapaye.

Th£eques for Refud Clai Disalowance is for the employer's porton of

employmen taes for the peròd endig Septembe 30, 200. The amount of ths refud
claim is eq. to $103,677.03.
Tax~. ayer agrees tht the Commssoner's grtig of

Claim Disal owane and issuce of a Cerfied Notice of Clai Disallowance will
commence e rug of the two-yea period of

ths Request for Refud

litations for filing a refud suit

pursuant to DC. & Adm. Reg. § 301.6532-1(c).

~REORE, tapayer reectfuy requests tht the Commissioner
immediatel)( isse a Cerified Notice of Claim Disallowance on an expeited basis
disaIJowing ~he full amount; $103,677.03 of

ths refud clai.

~8

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 9 of 46

-Fan 843

== ~~ ~ Se 58 Ins.
tRey. __ 20
Use Form 843 ony if~ claim invos (a) one of

Claim for Refund and Request for Abaement

OM No. 15l5.0024

or addirons ro tax on I e 4a.

!he taes sho on li 3a or lb) a refund or abatement of inerst pealties.

. An oveymt of ;S8 taes repo on Form(s) ii-C. 720. 730. or 229.
Name of clinnt I
yOI SSN or ITN L an roo or suie no.)

. An ovpaym of; coe tixes; . A refu fo nonxa US (or sales) of ful; or
UNICO SERVlCESIINC.

Do not use Form 843 yof da;m is for-

Spo's SSN or ITN

Emplyer ld num (EIN)
95 : 2185601

Dayt telep numbe

Perod. Prear a seprate Form 843 for each tax pe
3a Type of tax. pena y. or addition to lax:

(

From 09 I 0 I 2000 to 12 I 31

2 Amou to be refunded or abated
2000

$ b 0'" 1.7

II Employmnt I 0 Estate 0 Gif 0 Excis (se inson)
b Type of return fil~ (see inStctons):
o Penalty-IRe $eion ~

o 706 0 70 0 940 II 941 0 943 0 945 0 990-PF
4a Request for abet ment or refund of:
o Interet as a ull of IRS error or delays.

o 4720

o Other s

o A penalty or aflitln to tax as a relt of ers advice from the IRS. b Dates of paymenl'"

5 Expanatio and additnal claims. Explain why yo believe this daim shold be allowe. and show computtion of tax
refund or abatem nt of Interest pealty. or addition to tax. If you need mOl space. anach additinal shets. SEE ATTACHED IDER

Signature. If yo ar fi ng Form 843 to reques a refund or abatement relating to a joint ren. bo you and yor spouse must
si9n th claim. Claims ed by corporations must be signed by a cororate omer autorzed to sign. and th signature must be

~!r. oc an mpl... t'. . ~

accompanied bY th 0 icer's title.

u~ lJnalie of pe. I are tht I ha exmi th c1. inluding aecpeoy ~ an sti. en to til best d my know zind

Si... erni.. ~ applicable. Ims by coratios must be si by an oiCl.) Dale
si~~...---.-.._.-.....r.-.....-......--.--------..---.-...............---.----.------..........------.---....-For Pracy Ai: and paii R.duc: Act Noie. se sepate Insbutls. Ca. No 101BO

.--. ...__...__..__..n. __.__m__....~nn~~.________..:.~__ .:J.-:.~:_~~....__..
Da
Fo 843 (R. 11,202)

..

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51 '"

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EXHIBIT
13

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Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 10 of 46

Rider

to Fdnn 843 UNCO SERVICES, INC.
pumps,

D. Gordon~ott is an individua with exemse in the meccal engieeg indus
parcully with resect to the assembly, repai, sercing and restalation of

~ 95-2885601
Dean D. Gordon Potter to

gearxes æd other rota equipment commonly use in the oil refig and chemcal

induses. Dung the year at issue, D. Gordon Potter entered into an employment
contract an relaonship with Piley Serces Limted, a company baed in Dublin,

Ireland ~e rights obtaied by Pixley Serces Liited frm the emloyment
tranfered Icer righ to the employment seces of

relationsm.* with D. Goon Pott wer trferle in par. Pixey Serces Limited
Relea M~, Inc., a company engaged in the business of employe leasing iid employee tempra ferces. Thus, D. Gordon Pott became an employee of Releae Me, Inc. durng the rear at issue. Releae Me, Inc. contraced with UiuCO Serces, Inc. to provide

skilled ia~r. Puuat to ths contrctua relationsp with Piley Serices Lintcd
Release M ,Inc. paid to Piley Serce Limted a contrtual price for the purhase of
certin ri s to the emloyment servce ofD. Gordon Potter. AB par of

beeen U 'co Services, Inc. and Release Me, Inc., Releae Me, Inc. provided the
serices of . Gordon Potter. Whle prvidig serces to UiuCO Serices, Inc.,

the contrt

D. Gordon rotter worked on multiple business projects.

UiuCO Serlces, Inc. made peodc payments to Relea Me, Inc., puruat to the skilled
labor con*t discussed above, an Release Me, Inc. included thes amowits on its
income tax~etu. Release Me, Inc., in tu paid substantial wages to.D. Gordon Potter
and paid th employer's porton of

the emloyment tax puruat to the Potter's

contractu rights set fort in the employment contrt with Pixley Serces Limted, which ha en assigned to Relea Me, Inc. D. Gordon Pott included these wages in
incoe an paid income tax and the employee's portion of

the employment ta,

accordig! .
Pixley Serces Linuted and D. Gordon otter, Pixley established and fuded a non-ves retiement plan for the
Puuant to the contral employment agreeent of revocable t that was subject to the creditors of

futue bene t ofD. Gordon Potter. The non-vested reent plan was equivalent to a Pixley Servces Limted. The
non-vest retient pla is a non-trsferble plan, and D. Gordon Potter has no
imediate 'ght to receive the beefits of

the non-vested retiement plan. Therefore. the

contrbutio made by Pixley Serce Limted for the futu benefit ofD. Gordon Potter
constitutes~efeITed compenation. which is not includale as wages or income of D. Gordon otter until a futu date when the retrement plan vests and disburent are

Gordon PotJer.
i

available to D. Gordon Potter. See I.RC. §§ 83,451. Therfore, UiuCO Serce, Inc. is not liable r. r the emloyer's portion of emloyment tax on the amounts paid by UnIco Serices, Iq. to Releae Me, Inc. in exces of the amounts paid by Releae Me, Inc. to D.
The Form t the Transaction Must Be Respected

The co~ssioner errneously asser that the above traction lacks economic
substance, d the above trtion should be disregarded and re-wrtt for federa ta
puroses. e Commissioner, intead of

respecting the form, desirs to treat the

qO

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 11 of 46

Rider to Fqnn 843 UNCO SERVICES, INC.
95-2885601
trti0t a dit employer-employee relationshp beee D. Gordon Potter and

Unico Se . ces, Inc. Thus the Commssioner alleges that Unico Serces, Inc. must pay the emlo 's porton of employment tax durg the perod at issue, on the full amount of paymen frm Unico Industral Serces, Inc. to the unelated emloyee leasg

company, lea Me, Inc.
The Conissioner's ason th the traction lacks ecnomic substace an shuld

be disre ed and re-wrtten is in dict confict with relevant case law. In ~

Industres c. v. nite Sta 62 Fed. CI. 716 (200), the Court ruled tht a similar

argem t was vald, in which a company trferred contigent liabilities asiat
with asbestps claims agains a subsidiar to an entity the company crat and then sold

at a loss. Ib So rug, the Cour stte "(Where a tapayer ha satisfied al the statory
requireeats established by Congrss as Coltee did in ths case, the use of

substance' ~octre to trmp 'mer compliance with the coe' would violate the
(D.

the 'economic

separation ~fpower...." See also TI il-E. Inc. v. United Staes. 342 F. Sup. 94

Conn. 2P04).
i

The t:tion set fort above sasfies the plain language of

the sttutory reuirments

set fort in ~.RC. §§ 83,451. Therfore, puruat to Coltee and TI il-E. the

economic spbstae doctrie doe nòt apply, and the trction se fort above must be

respected ray not be disrgaded and may not be re-wrtten.
Penalties .qo Not Apply

If it is ultitely concluded that Unico Serces, Inc. is not entitled to a refud of the ta
in the cas~han' pealties do not aply in this case. Where a tapayer takes a position

that ha a r onable basis in law and fact, neither the negligen pety nor the
substatial dertateent penty shall aply. I.R.C. § 662. Under Tre. Reg.
§ 1.6662-3 )(3), a retu position is reasnale where based on one or more of

the

authorities . sted in Treas. Reg. § 1.6662-4(d)((3)(ii). AI set fort abve, the plai

languge 0 the statutes and published cas law supprt the retu position ofUnico Servces, In.. The issues in ths .case reresent a previously untesed, complicated ara
of the ta l~ that is subject to multiple renable interretatons. Therfore, no
penties shpuld attach.
i

Morever, ie reasnable cause an good faith exception in Tre. Reg. § 1.66 may
relieve tap yer from liabilty frm penalties even if

the reasona Ie basis stda. Reanable cause is established when a taayer shows that he reatnablY relied on the advice of an acuntat or attorney. United States v.
Boyle.

the re position does not satisfy

469 . .S. 241 (1985). In the case at had, taayer relied upn the advice of

comptent ~countants and attrneys, an, therfore, satisfies the reasonable ca exception. i
For the abo~e stated reaoIi, Unico Serces, Inc. respectfy reauests tht the
Commssioi¡er grt it a refud of

assessment ~f penalties and interest.

taes paid durg the yea at issue and rever the

qI

Case 1:05-cv-00955-LAS
I , i I

Document 27-7

Filed 04/28/2006

Page 12 of 46

Rider to F~nn 1040X UnIco Serces, mc.
$OUËST FOR IMDIATE REFU CLA DISALLOWANCE i
i I

~ant to lR.M. 4.23.13.4 and IR 4512(2)(gXJan. 30,1987): taayer Umco

Serices, c. reectfly reues tht the Commssoner imedately disalow th
refud elai without adnistative considertion. See l.R. 1600 (Apr. 26, 1976),9

I .
i i

95-2885601

Stand. Fed, Tax Rep. (CCH' 6609 (1976).
In~' ort of ths Request for Refud Clai Disallowance, tapayer submits tht the merits fths refud clai have prevously been the subject of an adinistrtive
examinti Re-evaluation by the Commsioner of

and sere y to delay commencement of a refud sut by tapayer.

ths refud claim would be frtless

Tht' Request for Refud Clai Disallowance is for the employer's po. rton of
employm t taes for the perod endig Decembe 31, 2000. The amount of

claim is eq to $67,042.27.

ths refud

Tax*ayer agrees th the Commssioner's grtig of ths Request for Refud Clai Dis lowance and issuce of a Cerfied Notice of Clai Disallowance will commence e rug of the two- yea peod of limitaons for filig a refud sut

puruat tolPrc. & Adm. Reg. § 301.6532-1(c).

~FORE, taayer resfuy requests tht the Commssioner
imedatel:r isse a Cerfied Notice of , disallowiglthe ful amount, $67,042.27 of i

Clai Disalowance on an expedted basis
ths refund claim.

q'J

"

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 13 of 46

GASAWAY

STIENT JESLLP

Suite B

41 S. Old Orchard Ave.
Webster Groves, MO 63119

Phone; 314.7° 5.2771

Fax: 314.918.7120

July 18, 2005

Mare Allen, RA !
Walnut Creek, CA 94598 i

185 Lemon Lane, Ste. 200, E~ 1674
i

Re: Refud Claim WI Request for Imediate Disallowance
Dear Ms. Allen:
!

-.-..,"- lhave enèiõ!ed a FOrn 843 -rèiid claim for empioYment taes'on behaitotÜnico-SerViees~'Inë:
for the period ended Septemb~r 30, 2001. Pursuant to IRM 4.23. i 3.4, a copy of which is attached to the

Claim Disallowance so that we may contest the merits of e underlying deficiency with a refud petition to the u.s. Federal District
refud claim, we respectfly~eqUest that you immediately issue a Notice of

Cour or the U.S. Cour ofCI ms.
I look foiward to receiving the Notice of Claim Disallowance immediately in accordance with the above citation to the Intedai Revenue Manual. i
I

INTERNAL r.~VENUE SERVICE

æl;~ yoms,

ROb::~t:

JUL 2 0 2005

Gasaway & Stientjes, LLP

~ EXHIBIT
E

..

d- ¿ 67 V1 A-/ 12. OJ

i

qj ,

14

!1-A¿L&

7(-l fur' 1t'f

~'",-"~

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 14 of 46
OMB No. iS~5.0024

Form 843
(Rev NOIembef 2002)

cia,m for Refund and Request for Abatement
~ See~. arate instrúetlons.

Deer\m9lt 01 'he T reo:l

Inlenll RB\Iue Str,e

Use Form 843 only if your ClaIm Inv~lves (a) one of the faxes shown on fine 3a or (b) a refund or abatemenr of intereSt. penalries,
or additons to tax on line 48. i Do not use Form 843 if your claIm f for-

.

. A refund for nontaxable use (or 50

A f'
PO BOX

n overpaymenc 0 Income taxes;'

les) of fuel; or
parred on Form(s) ll-C. 720, 730, or 2290.

. An overpayment of excise taxes ri
Name of claimant UNICO SERVICES INC.

Your SSN .or ITIN
: :

ë ! 'i: " Address (number. street and room If suite no.)
0
.,

to City,.or tawn, state. and ZiP code

887 ' '
i i

Spouse's SSN or ITN
: ;

Employer identificatlan nuniber (ËIN)
95: 2BBSEi01

BENICIA, CA 94510-0887

Name and address shown on re urn if different from above

Daytime telephane number
(

)

1

Period. Prepare a separate Fo m 843 for each tax period 09 I 20 1 to 07 I 01 I From

2

Am.ount t.o be refunded .or abated
S

30

I

2001

4073.15

3a Type of tax, penalty. or additior to tax:

o Employment 0 Estat~ 0 Gift 0 Excise (see instructions)
b Type of retun filed (see jnstr~iOnS);

o Penalty-IRe section ~ . i

o 706 0 709 0 940 i 1Z 941 0 943 0 945 0 990-PF
4a Request for abatement or refu d or:
o Interest as a result of IRS ~rrors or delays.

o 4720

o A penalty or addition to ta~ as a result of erroneous advice from the IRS. b Dates of payment ~ :
5 Explanation and additional aims. Explain why you believe this claim should be allowed. and show computation of tax

refund or abatement of ¡nteres penalty. or addition to tax. If you need more space. attach additionai sheets. SEE ATTACHED RIDER

Signature. If you are fiing Form 84 to request a refund or abatement relating to a joint return, both you and your spouse must
sign the claim. Claims riled by corpprations must be sIgned by a corporate offcer authOrized to sign, and the signature must be

accompanied by the offcer's title. .
9ltmi1led this claim, IliclUOng accompanyillQ scheaUles and SQtlimef\s. ana. to the be:; 0/ my knowleage and

D~t9

u.'I!k/q¿.....
............................
Form 843 (Rev.

............ a..................................... ...................... .................................................................................................................................... Sigll3(Ure
For Privacy Act and Paporwork Reduction Act Notice, see separate Instructions. Cat. No. i0180R

D3te

1'.2(02)

q1

~..,~-

Rider to Form 843 Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

'ica SERVICES INC.

Page 15 of 95-2885601 46

D. Gordon Potter is az individual with expertise in the mechancal engineering industr
paricularly with resp~t to the assembly, repair, servicing and reinstallation of

pumps. gearboxes and other r~tating equipment commonly used in the oil refining and chemical industres. Durng th~ year at issue, D. Gordon Potter entered into an employment contract and relations~p with Pixley Services Limited, a company based in Dublin,

Ireland. The rights o~tained by Pixley Services Limited from the employment
relationship with D. Qordon Potter were tranferable in par. Pixley Services Limited
transferred cerain riglts to the employment services of

Dean D. Gordon Potter to

Release Me, Inc., a c~hipany engaged in the business of employee leasing and employee temporar servces. llhus, D. Gordon Potter became an employee of Release Me, Inc. during the year at issu~. Release Me, Inc. contracted with Dnico Serice Co.t Inc. to provide skilled labor. ¡Pursuant to this contractual relationship with Pixley Servces Limited, Release Me, lIe. paid to Pixley Servces Limited a contractual price for the purchase of certain ~~ts to ~e employment services ofD. Gordon Potter. As p~ of the contract between Uniqo Service Co. and Release Me, Inc., Release Me, Inc. provided the
serices oiD. Gordon¡Potter. While providing services to Unico Serice Co.,

D. Gordon Potter worIted on multiple business projects.
Unico Service Co. ma~e periodic payments to Release Me, Inc., puruat to the skiled

labor contract discuss¥- above, and Release Me, Ine, included these amounts on its income tax retu. Release Me, Inc., in tur, paid substantial wages to D. Gordon Potter
and paid the employerrs portion of

the employment tax puruant to the Potter's

contractual rights set tprth in the employment contract with Pixley Services Limited,
which had been assi~d to Release Me, Inc. D. Gordon Potter included these wages in income and paid income tax and the employee's portion of the employment tax,

accordingly. .

Puruant to the contraC¡tual employment agreement of

Pixley Serces Limited and

D. Gordon Potter, PixIFY established and fuded a non-vested, retirement plan for the

futue benefit ofD. Gqrdon Potter. The non-vested, retirement plan was equivalent to a revocable trst that waS subject to the creditors of Pixley Services Limited. The
non-vested, retirement¡plan is a non-transferable plan, and D. Gordon Potter has no
immediate right to rec~ive the benefits of

the non-vested, retirement plan. Therefore, the

contrbution made by I1ixley Services Limited for the future benefit of D. Gordon Potter constitutes defered cotnpensation, which is not includable ~ wages or income of D. Gordon Potter untilla futue date when the retirement plan vests and disbursement are
available to D. Gordon! Potter. See I.R.C. § § 83, 451. Therefore, Unico Services, Inc. is

not liable for the empl~yer's portion of employment tax on the amounts paid by Unico Serices, Inc. to Releaie Me, Inc. in excess of the amounts paid by Release Me, Inc. to D. Gordon Potter.
The Form of

the Transf.ction Must Be Respected

The Commissioner errøneously asserts that the above transaction lacks economic
substance, and the abote tranaction should be disregarded and re-written for federal tax puroses. The Commssioner, instead of respecting the form, desires to treat the

q~

RIder to .Fonn l)43

i 'l\ilL.U ;:,CK v lL..r., li'OL..

Case 1:05-cv-00955-LAS
i

Document 27-7

Filed 04/28/2006

95-2885601 46 Page 16 of

transacion as a direct ¡employer-employee relationship between D. Gordon Potter and

Unico Services, Inc. Thus, the Commissioner alleges that Unico Seivices, Inc. must pay the employer's porton of employment tax, durg the perod at issue, on the full amount of payments from Unïpo Industral Services, Inc. to the unrelated employee leasing
company, Release Me~ mc.
i I

The Commissioner's asserton that the transaction lacks economic substance and should be disregarded and re-Iwtten is in direct conflct with relevant case law. In Coltec similar Industres Inc. v. Unit d States, 62 Fed. Cl. 716 (2004), the Cour ruled that a arangement was va1i ,in which a company transfered contingent liabilities associated
with asbestos claims ainst a subsidiar to an entity the company created and then sold

at a loss. In so ruling, the Cour stated, "(W)here a taxpayer has satisfed all the statutory
the 'economic substance' doctrne to trmp 'mere compliance with the code' would violate the
requirements establis ed by Congress, as Coltec did in ths case, the use of

powers. .¡.... See also TIFD III-E. Inc. v. United States, 342 F. Supp. 94 (D.Conn.2004).
separation of

The transaction set fO~' h above satisfies the plain language of the statutory requirements
set fort in I.R.C. §§ 3,451. Therefore, pursuant to Coltec and TIFD III-E, the

economic substance d ctrne does not apply, and the tranaction set fort above must be
respected, may not be. 'sregarded, and may not be re-written.

Penalties Do Not Appr
i If it is ultimately concluded that D. Gordon Potter is not entitled to a refund of

the tax in

the case at hand, pen~ties do not apply in this case. Where a taxpayer takes a position that has a reasonable tiasis in law and fact, neither the negligence penalty nor the substantial understateilent penalty shall apply. I.R.C. § 6662. Under Treas. Reg. the § 1.6662-3(b)(3), a retpm position is reasonable where based on one or more of authorities listed in Trta. Reg. § 1.6662-4(d)((3)(iii). As set fort above, the plain
language of

the statut~s and published case law supports the retur position of

D. Gordon Potter. Tht issues in tils case represent a previously untested, complicated
area of

the ta law that is subject to multiple reasonable interpretations. Therefore, no

penalties should attacl1.
i

Moreover, the reasona~le cause and good faith exception in Treas. Reg. § 1.6664-4 may
relieve taxpayers fromlliability from penalties even if the retu position does not satisfy

the rea. sonable basis stndard. Reasonable cause is established when a taxpayer shows that he reasonably reli d on the advice of an accountant or attorney. United States v. Boyle, 469 U.S. 241 ( .985). In the case at hand, taxpayer relied upon the advice of competent accountants and attorneys, and, therefore, satisfies the reasonable cause exception.

. 1

i

Taxpayer is also entitlM to additional deductions for real estate taxes paid during the year

at issue. i

q(p

Kider to l"orm lS43

_. (~

-'.'- ..l.. ~.i,--, i . CJU
'~i,-v .:.i."" .L\__J... .U~~.

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

95-2885601 46 Page 17 of

For the above stated rtasons, taxpayer respectfully requests that the Commssioner grant him a refud of ta."(es ~aid durng the year at issue and reverse the assessment of penalties

and interest. . .

a1

Rider to Form 843 Case 1:05-cv-00955-LAS

unico ~ervlCt;.s. ll~.

J.U J r ~ ~~~~ r . ~ (
Page 18 of 95-2885601 46

Document 27-7

Filed 04/28/2006

REQUEST FpR IMEDIATE REFUN CLAIM DISALLOWANCE

Pursut to I.~M. 4.23.13.4 and IR 4512(2)(g)(Jan. 30, 19&7), taxpayer Unico
Servces, Inc. respec ly requests tht the Commissioner immediately disallow this

refund claim without ministrative considertion. See I.R 1600 (Apr. 26, 1976),
9 Stand. Fed. Tax Rep.1 (CCH) ir 6609 (1976).
i

In support Of~'. s Request for Refud Claim Disallowance, taxpayer submits that
the merts of this i:efu claim have previously been

the subject ofan adiiùstrative

this' refud claim would be fritless and serve only to de1a)/ commencement of a refund suit by taxpayer.
examination. Re-eval ation by the Commissioner of i

This Request fqr Refud Claim!isallowance is for the employer's portion of
employment ta.-xes for ~e perod ending September 30, 2001. The amount of this refud

i

claim is equal to $4,07~.15.
! ¡ Taxpayer agre~ that the Commissioner's granting of

this Request for Refund

Claim Disallowance aid issuance of a Certified Notice of Claim Disallowance wil limitations for filing a refund suit the two-year penod of commence the ruingJ of pursuant to Proc, & Actin. Reg, § 301.6532-1(c). WHREFORE~ taxpayer respectfully requests that the Commissioner immediately issue a C~rtified Notice of Claim Disallowance on an expedited basis disallowing the full ~ount, $4,073.15, ofthis refund claim.

q~
TOTAL P. 07

l

SEP-01-20051:05-cv-00955-LAS Case 14: 43

i RS SAN FRANC i seD

415 522 6260 ~.¿4/¿~
Filed 04/28/2006 Page 19 of 46

Document 27-7

oepaent of the ireasul'
'nterna' Revenue SeriiC8
Tiø IdÇIOf Númber:

Fo;
!-: August 22. 2005

5326-3678
1 ()

Tax Pe) Enc end Cllm Ain
Decmber 31, 199

$41.631

Dean Gordon Potter

o. Cii~: June 22.2005
PefDn to eo
M. Allen

P. Q. Box 881 BenÌcia. CA 94510

co T..one Nurr:
510.637.3785

Employ IdcdOJ Hum
94'1434
l. -l tD~d to thMl i. september 22. 2005

De Mr. pott
i

We ex your cl an proose:
i I o Pa ~ as _ in 1b oi ei1na rert

if

yo _I ou fi.

ple si8"~ -i 1b .. Foi 229. Wøive Far im Fom 3363. Ac"" Fo..

th _.1fyo

Kl Foi diqw... _ in 1b en)o ."lion ie oi at 1b.. of

_I_~' pi.. si ai ie \b enose FOI1:1. W.i.. FDrm im Form 3363, Acceptancf Form

o poi ~ with iion ta due, ..th eisedin the12'l, _lna Far ai th shwn Foim .,ed W.i- rert If you ac o"¡ fi, pi.. si ai ie
examûbii rert
Note: If yor ckim!_1v . jDin ... both ia "\If Nip the form') ,

more. If you ar a "C' a/ni fier, Secon 6621() of th Jn Ro Ce piidl fo an jn rate
2% hiher than the $da interest i: on defiiencies t)f$100,OOO or

If yo don'l ag ~1h ou fi. yo ma rees a meot or toep\ie eo.. with th sur yo ,._I'~' ou 6ns, we yof th l" id,l in the hoo of th )e. ¡fyo st do~ aw wiwe wi f-- reiien
thI yo _t a ~ with our Ap O!l If

,. to th Ap Ofe im th wi- yo to sc an opin'
-: :i

i !
51

u

EXHIBIT
15

Letr

5& (DO) (Rev. 9-2000)

Catø Ni. 4024SG

qq

I

SEP-01-2005 14:44
. "

I RS SAN FRANC I seD

415 522 6260 P. 25/29
Filed 04/28/2006 Page 20 of 46

Case 1:05-cv-00955-LAS
the proposed chae to tp is:

Document 27-7

If

.

$25,000 or less fl1 each referce ta period; you may send US a leter requesti A.ppeas consideration, inftcating what you don't agree with and th reons why you don't agree.
More than S2S,oPO for ll referencd tu period; you must submit a form protest.

.

The .requirements for fi* a form protest are explaied in the enclose Publication 349&, The

Exmination Process. Publìcttion 3498 alo includes information on your Rights as a Taxpaer and th IRS

Collection Process.
th lett, we wil process your cae bas on the
If you don't respond by th~ date shown in the headìg of

adjusents shown in the enqlosed examation reort or the exlanations given at the en of ths letter.
If you have any questionsi.' : pleas contat the person whose nae and telephone number ar shown in the
heain of ths letter. Th roii for your coopertion

Enclosues:
o Exanation Report
Form 2297 ~ Form .3363

1~~
Revenue Agent

Sincerely your,

Publication 3498 Envelope

Letter 569 (DO) (Rev. 9~2000)

Cataog Ni¡r 40248G

tOO

SEP-01-2005 14: 44

i RS SAN FRANC I seD

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

415 522 6260 P. 26/29
Page 21 of 46

Reaon for Disalowance:
You have requesed that ths clai for re be denied imediately and without consideraon sÎnoe th merts of ths cla have already ben reviewed by the litern Revenue Serve.

Ctte Nuni~r ~
l 0 J

Lett 56IHDO) (RlN. g.2000)

..

ot~-~1-¿~~~ 14; 44 J ~o Case 1:05-cv-00955-LAS

oHN ~~HNC 1 OCU

41:J :J;¿;¿ b;¿b0 F . 2? /29

Document 27-7

Filed 04/28/2006

Page 22 of 46

.i

FonT 3363
(Re. NOmbØ 1Ø8)

~cceptance of Proposed

i for Refund or i

D8 of 1I Tre - ti Rt_ue 8Ice Disallowance of Claim Credit

Name(s), SSN or EIN, and addr ss of taayer(s) (Numbr, strt, CIty or Tow. Sta, zip COø)

Den Gordon Potte
P. O. Box 887 Beci. CA 94510
SS~:

Year or 'Penod
12131/1998

Dale Claî In

Filed

Kind ofTax

Amount of Claim
$431,631.00

Amount of Claim Amount of Claim

Disallow

A1lo

06121005 i
-T
! : i !

Incme

$431,631.00 .

SO.OO

only that I do not want the ser- ice to consider the cllm(s). It doe not waive my right to file sLllt on th dlsallowønce.

I accpt the proposal of the i temal Reenue Servic to disalloW ttë cl8lm(s) to th exnt debed above. This means

If you file this accptace fo a

jcrt rem. bo you an yo
return. If you ar acng under

. Your

spcUG mllt sign th orginal an dupliCB d this fcm. Sig yor

Slgn.ture
I

.~

(Deti)

~e ex as it ap on th
you ma sign as ag for him or

por of ator for your 1poust

. ' hø . !
i

Spouse'. Signature

If A Joint Rem Wa Filed

.
..

(Oa)

For an agent or attorney ~~
I

Taxer's
81gn Here

under a por of atom. a
fo If not prlouslyflle.

Represntativ

of atom mus be se wi this
Fo a partnership wi eXÎé or I
employment ta 1i8llty, all part- I
par may sign wi ilppropr

(Dae)

Parterhlpl

Corra
Name

ne mus sign. Howr, QI :i
evidénce of euhoatn to act ~
i i i

.. -

1he pertertip. i

Parter

tor, tree), file Form 56, Notic

,,-(_. ....1
Fo ii pe acng in a f1duci'

Corpra

Ofrs

Sign Her

Corning Fiducar Relatns ¡p,
IM this 10mi if no prVÎOLlSIy fi .
i I

c(Tit)

(Dale)

na of th coorati fol1o~
by th signature Md tie of th I

For a corptin, ent th i

(DB)

ots) 8Uoned to sign. .

Fo 338 (Rev. 11-98) 0a18 Numb 2240

ww.lI.gov

Cert of1h Trery. InIrm1 Jlvenue Servce

IO~

.... --- .,-_.........

~~~-~1-¿~~J 14.44

J ~o oHN ~~HNL! OLU

-

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

41J J¿¿ b¿b~ ~. ¿ö/~
Page 23 of 46

Fomi 2297 (RIl. Na 198)

i Dertent of l1 Ti-11N Re se
Waiv~r of Statutory Notifcation of

Claim Disallowance

I, Dea Gordon Pott - SSN ('í SSN tJ EIN)

of P. O. Box 88'. Benicia CA 94510

(Num, SI ClOl Taw ste, zip Co)

waive the requirement under Int mal Reveni. Coe sen 6532aX1 ) that a notce of çlaim disallowance be set to me
by cefied or registred mail for e clims fo crdit or rend show In Column (d), beow.

I understand that the filing of thi waiver is Irrévocble and it will begin the 2-yar peri for filing suit for refund of the
olaims disallowd a:s If the notlc of disallowance had ben sent by cer or register mail.

Claims
(e)
(b)
Kind of Tax

(el

(d)

Taxable Peri Ended
12ßl/1998
¡ i I i i I

Amnt of Claim
5431.631.00

Art rl Claim Disallo

Incme

$0.00

i

i i i i I i If yo fie Il war fo a jont i rem, bO ~ e!ØlJ mue si lh' an You Signre -. dupl-i of lh . 5ln yo nam ex IS It appe an lh ~_'s Sigtu i-. If )'~i dn un If A oit Ft po of .UO for your

(D1i uj

sp, yo mll sin as ager
fo him or her.

WII Flie ~
Tax ~r's

uner ~ of it!, 8

For .. agt or alr acg

file.

With tt, fo If not pr\1

pgr atomey mu ti se
For a partip -l Ii ot employnt la liabQlty, en

SIi Here
Part

R

.. er
li

lO .l
(Oe Il

on pa ~ or wI a¡l'at

pin mus sign. 1i,

Ni II:

aùtin to act fo li

C8 h8liitor, admlnhilrto.
trstee), Ie Fon 56, Co Fld .fo Ncca RE:i. ~ii If not

For a P.n ai In a fi

pa.

i

preYl filé.

For a of thcon. enteth nae co fo by th
$lMtil' anClll of th llii)

aull to ai ~ il NOTE - Flling th.Wlr wIn 6 monll frm the dele the cl8 wa flie wi. not penn Bin. a su fe re befo th 6-rnlh peod hU elps
un i de IS made by th Se WI tht tllne dslOlilh clim.

*c

(Iii;

/Dil fl

(f)

Call Numbe 1827T

IN.I/UBs.g

Fo 2287 (RBY. 3-19&2)

iD~

SEP-01-2005 14: 43

i RS SAN FRANC I seD

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

415 522 6260 P. 23/29
Page 24 of 46

~.
Internl Revenue service

Departent of the Treasury

DelD: AUQust 22, 2005

Taxye Nam Dean Gordon Potier

Taiye id Ni.:
For Nurn 104
veae):
1998
Pers II) cont Number.

Rober Stientjes I
41 S. Old Orhard Avenue, ~te B

St. Louis, MO 63119 i

Mari Allen 94384 com Tci Numbe
(510) 637-3785

cola Fa Númb
(510) 522.677

Dea Mr. Stientjes,

Wear sedig the enclosed bte un the prviions of your power of attrney or othr authoriaton we
have on fi. For your conve+ence, we have li the iie of th tayer to whm ths mate relats in the

hP.ing abve. !

i i

H you have any questions, pl~e call the contat pern at the telehone nuber shown in the bedin of ths

letter. !

Th you for your coope~on
I i

~~ ~~~~
Sincerely,

Revenue Agent

Encosues:
fi Let s)

o Reprts)

o Oter

1..ttr937 ~R.v.11.2004)
caiiio Numbe 3080)(

1D'

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 25 of 46

Internal Revenue Service

Department of the Treasury
Taxpayer Identicaon Number:

95-2885601
Form:

DMe: August 24, 2005

941
Tax Perlod(s) Ended and Claim Amount:

June 30, 2000

$122,778.75

Unico Services Inc.

P. O. Box 887 Benicia, CA 94510

Date Claim Received:

July 28, 2005
Person to Contact:

M.Allen
Contact Telephone Number:

510.637.3785
Employee Identication Number:

94-11434
Last date to Respond to this Letter:

September 24, 2005

Dear Unico Services Inc.

We examed your clai ~d propose:
i i

D Parial disallowajce, as shown in the enclosed exation report. If you accept our fidigs,
please sign and *tu the enclosed Form 2297, Waiver Form and Form 3363, Acceptance Form.
i i

IK

Full disallowan~e, as shown in the enclosed examtion report or at the end of ths letter. If you

Acceptance Fon,. .
D
examtion rep. rt.
i Note: If

accept our fidi4gs, pleae sign and retu the enclosed Form 2297, Waiver Form and Form 3363,

Full diSallOWan$' with additional ta due, as shown in the enclosed examtion report. If you

accept our fid gs, please sign and retu the enclosed Form 2297, Waiver Form and the

your claim involvfs ajoint return, both taxpayers must sign theform(s).

If

you are a "C" CorporatIn fier, Section 662l(c) of

2% higher th the stadad ~terest rate on deficiencies of $1 00,000 or more.

I i
¡

the Intern Revenue Code provides for an interest rate

If you don't agree with oui fidigs, you may request a meetig or telephone conference with the supervisor of the person identied in tht headig of ths letter. If you stil don't agree with our fidigs, we recommend that you request a conferenc~ with our Appeals Offce. If you request a conference, we wil forward your request to the Appeals Offc~ and they will contact you to schedule an appointment.
.. ,.

¡

i

EXHIBIT
16

Letter 569 (DO) (Rev. 9-2000)
Catalo Number 40248G

1(£

,

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 26 of 46

If

the proposed change to 4x is:
i I

. $25,000 or less f~r each referenced ta period; you may send us a letter requesting Appeals
consideration, in~icating what you

don't agree with and the reasons why you don't agree.

. More than $25,obo for any referenced ta period; you must submit a formal protest.
i j

The requirements for fiing a formal protest are explained in the enclosed Publication 3498, The Examination Process. Publication 3498 also includes information on your Rights as a Taxpayer and the IRS

Collection Process. i
If

i

you don't respond by thl date shown in the heading of

ths letter, we wil process your case based on the

adjustments shown in the enqiosed examation report or the explanations given at the end of ths letter. i
i

headig of

If you have any questions1 please contact the person whose name and telephone number are shown in the ths letter. Than rou for your cooperation.

~ Mare Allen

~~
Sincerely yours,

Revenue Agent

Enclosures: o Examtion Report
Form 2297

l& Form 3363

Publication 3498 Envelope

Letter 569 (DO) (Rev. 9-2000) Catalog Number 40248G

I

DiP

Case 1:05-cv-00955-LAS
Reason for Disallowance:

Document 27-7

Filed 04/28/2006

Page 27 of 46

You have requested that thisl claim for refund be denied immediately and without consideration since the merits of this claim have already b~en reviewed by the Internal Revenue Service.

Letter 569 (DO) (Rev. '9~2000)

Catalog Number 40248G

(Dry

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 28 of 46

Department of the Treasury -Intemal Revenue Service

Form 3363
(Rev. November 1983)

Acceptance

of Proposed

Disallowance of Claim

I for Refund or Credit

Name(s), SSN or EIN, and addr ss of taxpayer(s) (Number, Street, City or Town, State, zip Code)
Unico Services Inc. P. O. Box 887 Benicia, CA 94510
EIN: 95-2885601

Year or Period
6/30/2000

Date Clair n Filed
7/2812005
i I i I

Kind ofT ax

Amount of Claim
$122,778.75

Amount of Claim Disallowed
$122,778.75

Amount of Claim Allowed
$0.00

employment

I accept the proposal of the In~ernal Revenue Service to disallow the claim(s) to the extent described above. This means only that I do not want the Servipe to consider the claim(s). It does not waive my right to file suit on the disallowance.

If you file this accptance for a joint retum, both you and your spouse must sign the original and

Your

duplicate of this form. Sign your
name exacty as it appears on the retum. If you are acting under power of attorney for your spouse, you may sign as agent for him or her.
For an agent or attomey acting
i i

Signature
Spouse's Signature If A Joint Return Was Filed

~
.~

(Date)

(Date)

Taxpayer's under a power of attomey, a power Representative
of attomey must be sent with this I
form if not previously filed. i
For a partnership with exise or
i i i

Sign Here

~ ~

(Date)

employment tax liabilty, all part-

Partnershipl Corporate
Name

I ners must sign. However, one partner may sign with appropriate I

. the partership. I

evidence of authoriation to act fot
i i

Partnersl Corporate

For a person acting in a fiducia- I ry capacit (executor, administra- ' tor, trstee), file Form 56, Notice !
Concerning Fiduciary RelatiOnShi~,

Ofcers

Sign Here

with this form if not previously file .
i !

c-i
(Ttle)

(Date)

For a corpration, enter the

(Date)

name of the corporation followed

by the signature and tite of the offcer(s) authorized to sign.
wwJIS.90V
Department of the Treasury - Internal Revenue Service

Form 3363 (Rev. 11-1983)

Catalog Number 22240Y

lD~

Case 1:05-cv-00955-LAS
i

Document 27-7

Filed 04/28/2006

Page 29 of 46

Form 2297
(Rev. March 1982)

i Department of the Treasury-Internal Revenue Service

WaiVE r of Statutory Notification of Claim Disallowance
of P. O. Box 887, Benicia, CA 94510
(Number, Street, City

I, Unico Services Inc. EIN 9 -2885601
(Nam~, SSN or EIN)

or Town. State, zip Coe)

waive the requirement under int+mai Revenue Code section 6532(a)(1 ) that a notice of claim disallowance be sent to me
by certified or registered mail fo~ the claims for credit or refund shown in column (d), below.

I understand that the fiing of thi, waiver is irrevocable and it wil begin the 2-year period for filing suit for refund of the claims disallowed as if the noticf of disallowance had been sent by certified or registered maiL.

Claims
(a)
(b)
¡

(c)

(d)

Taxable Period Ended
6/30/2000

Kind anax
employment

Amount of Claim Amount of Claim Disallowed

$122,778.75 $0.00

I

i i I

If you file this waiver for a joint return, both you and your spouse must sign the original and duplicate of this form. Sign your name exacty as it appears on the Spouse's Signature return. If you are acting under If J Joint Return

Yo rSignature ~

(Date signe)

spuse, you may sign as agent for him or her.
For an agent or attorney acting

por of attorney for your

WcsFiled ~
Ta: payer's

(Date signe

under a poer of attorney, a

with this form If not previously filed.

por of attorney must be sent

Si~n Here ~
Pa rtershipl

Re~rentative

(Date signed

employment ta liabilty, all
one parter may sign with

For a partership with excise or

partners must sign. Howver,
appropriate evidence of

Corprate Naie:
I , i I

autorition to act for the partership.
For a persn actng in a fiduciary capaci (executor, administrtor, trstee), file Form 56, Notice
Concemini¡ Fiduciary Relationship, with this form if not previously filed.

P ers
i

C rprate

For a corpration, enter the name

of the corpration followed by the signature and tiUe of the ofcer( s) authorized to sign.

r~

ie
iOq

.

(Tite)

(Date signed)

(Te)

(Date signe)

NOTE - Filing this waiver within 6 months from the date the claim was filed will not permit filing a suit for refund before the 6-month period has elapse unless a decsion is made by the Servce wiin that time disallowing the claims.
Catalo Number 18287T

ww.lrs.ustres.gov

Fon 2297 (Rev. 3-1982)

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 30 of 46

Internal Revenue Service

Department of the Treasury
Taxpayer Identification Number:

95-2885601
Form:

Date: August 24, 2005

941
Tax Perlod(s) Ended and Claim Amount:

September 30,2000 $103,677.03

Unico Services Inc. P. O. Box 887 Benicia, CA 94510

Date Claim Received:

July 28, 2005
Person to Contact:

M.Allen
Contact Telephone Number:

510.637.3785
Employee Identcation Number:

94-11434
Last date to ResponCl to this Lettr:

September 24, 2005

Dear Unico Services Inc.

We examed your clai lmd propose:
I i o Paral disalow~ce, as shown in the enclosed examtion report. If

you accept our fidigs,

please sign andiltu the encIosed Form 2297, Waiver Form and Form 3363, Acceptance Form.
i

IK Full dialowancf, as shown in the enclosed examtion report or at the end of ths letter. If you
accept our fidigs, please sign and retu the enclosed Form 2297, Waiver Form and Form 3363,

Acceptance Foqi.

o Full disall?wanJ, with additional ta due, as shown in the enclosed examtion report. If you accept our fidntgs, pleae sign and retu the enclosed Form 2297, Waiver Form and the

examation repfrt.
Note: If your claim invoivts a joint return, both taxpayers must sign the form(s).
I If you are a "C" Corpora4m fier, Section 6621(c) of

the Inte Revenue Code provides for an interest rate
$100,000 or more.

2% higher th the stadad lterestrate on deficiencies of

If you don't agree with 0,* fidings, you may requést a meetig or telephone conference with the supervsor
of the person identified in tht headig of ths letter. If you still don't agree with our fidigs, we recommend

tht you request a conferenc~ with our Appeals Offce. If you request a conference, we wil forward your request to the Appeals Offc, and they wi contat you to schedule an appointment.

Lelter569 (DO) (Rev. 9-2000)
Catalo Number 40248G

llD

Case 1:05-cv-00955-LAS
¡ If

Document 27-7

Filed 04/28/2006

Page 31 of 46

the proposed change to + is:
i

'. $25,000 or less fdr each referenced tax period; you may send us a letter requestig Appeals

consideration, in~icating what you don't agree with and the reasons why you don't agree.

. More than $25,0~0 for any referenced tax period; you must submit a formal protest.
I

The requirements for filig la formal protest are explaied in the enclosed Publication 3498, The
Examination Process. Publica~ion 3498 also includes information on your Rights as a Taxpayer and the IRS

Collection Process. i
If

ths letter, we wil process your case based on the adjustments shown in the encl~sed examation report or the explantions given at the end of ths letter.
you don't respond by the ldate shown in the heading of

If you have any questions, blease contact the person whose nae and telephone number are shown in the heading of ths letter. Than y~u for your cooperation.
Sincerely yours,

! . ~~
I i

-l Marie Allen

Revenue Agent

Enclosures:

D Examtion Report
Form 2297

1& Form 3363 Publication 3498 Envelope

Letter 569 (DO) (Rev. 9-2000)
Catalo Number 40248G

l \.

Case 1:05-cv-00955-LAS
Reason for Disallowance:

Document 27-7

Filed 04/28/2006

Page 32 of 46

You have requested that this c~aim for refund be denied imediately and without consideration since the merits of this claim have already beef reviewed by the Internal Revenue Service.
i i

Letter 569 (DO) (Rev. 9-2000)
Catalog Number40248G

l\ ')

Case 1:05-cv-00955-LAS

Document 27-7

Filed 04/28/2006

Page 33 of 46

. Department of the Treasury -Intemal Revenue Service

Form 3363
(Rev. November 1983)

tccePtance of Proposed Disallowance of Claim

i for Refund or Credit
i

Name(s), SSN or EIN, and addrefs of taxpayer(s) (Number, Street, City or Town, State, zip Code)
Unico Services Inc. P. O. Box 887 Benicia, CA 94510
EIN: 95-2885601

Year or Period
9/30/2000

Date Clairr Filed
7/28/2005
i i I i

Kind of

Tax

Amount of Claim

Amount of Claim Amount of Claim Allowed Disallowed
$ 103,67703

employment

$103,67703

$0.00

i accept the proposal of the Int ßmal Revenue Service to disallow the claim( s) to the extent described above. This means only that i do not want the Serviqe to consider the claim(s). It does not waive my nght to file suit on the disallowance.
I i

.' ....
~ ~
~

If you file this accptance for a

joint retum, both you and your
spouse must sign the original and duplicate of this form. Sign your name exactly as it appears on the retum. If you are acting under power of attomey for your spouse, you may sign as agent for him or

Your

Signature
Spouse's Signature

(Date)

If A JointRetum
Was Filed

her.
For an agent or attomey acting under a power of attomey, a power of attomey must be sent with this form if not previously filed.
For a partnership with exise or

(Date)

Taxpayer's Representative Sign Here

(Date)

employment tax liabilty, all partners must sign. However, one partner may sign with appropriate evidence of authorization to act for
the partnership.

Partnershipl Corporate
Name

~

Partnersl Corporate
Sign Here

tor, trstee), file Form 56, Notice Conceming Fiduciary Relationship, wih this form if not previously filed.
i

Fora person actng in a fiduciary capacity (executor, administra-

Ofcers

(Date)

C ~.I
I

For a corpration, enter the

(Title)

(Date)

name of the corporation followed by the signature and title of the

offcer(s) authorized to sign.
ww.irs.gov
Department of the Treasury - Internal Revenue Service

Fonn3363 (Rev. 11-1983)

Catalog Number 22240Y

i\3

Case 1:05-cv-00955-LAS
i

Document 27-7

Filed 04/28/2006

Page 34 of 46

Form 2297
(Rev. March 1982)

! Deparbent of the Treasury-Internal Revenue Service

Waive'r of Statutory Notification of Claim Disallowance
of P. O. Box 887, Benicia, CA 94510
(Number, Street. City

I. Unico Services Inc. Ern 9 -2885601
(Name. SSN or EIN)

or Town. State, zip Coe)

waive the requirement under Int mal Revenue Code section 6532(a)(1 ) that a notice of claim disallowance be sent to me
by certified or registered mail for the claims for credit or refund shown in column (d), below.

I understand that the filing of thi waiver is irrevocable and it wil begin the 2-year period for filing suit for refund of the claims disallowed as if the notic, of disallowance had been sent by certified or registered maiL.

I Claims
(b)
I i i I

(a)

(c)

(d)

i

Taxable Period Ended

Kind ofTax

Amount of Claim

Amount of Claim Disallowed

9/30/2000

employment

$103,67703
.

$0.00

i

i i i ¡ I ¡ i i I i i i

If you file this waiver for a joint return, both you and your spouse must sign the original and

duplicate of this form. Sign your

VOL r

Signature --

(Date signe

name exacty as it appears on the Spc use's Signature return. If you are acting under If A Joint Return powr of attorney for your

spuse, you may sign as agent for him or her.

Wa Aled

under a ~r of attorney, a

For an agent or attorney acting

power 0 attorney must be sent with this form if not previously filed.
For a partership with excise or

T8) payets Re resentative Sig ~ Here

employment tax liabilty, all
parters must sign. However,

Pa ~ershipl Co Iprate
Na ",e:
i i I i i

--(fite)

(Date

signed

(Date sined

one parter may sign wit
appropriate evidence of

autrition to act for the
partership.
For a eersn acting in a fiduciary capaCl~ ~executor, administrator,
trstee, Ie Form 56, Notice

Concerning Fiduciary Relationship, wih this form if not
previously filed.
For a coration, enter the name
of th corpration followed by the

signature and title ofthe offcer(s)
autorized to sign.

t.c
Co rate

(Date signed)

sicel:re
i i

(Tlle)

(Date signed)

NOTE - Filng this waiver witin 6 months frm the date the claim was filed will not permit filing a

suit for refund before the 6-month period has elapse
Form.2297 (Rev. 3-1982)

unles a decision is m