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Trust for the tax years of 1995 and 1996. Based on
your response, it appears that these two entities are
required to file income tax return [sic] per Internal
Revenue Code Section 6012(a)(4). However, we have no
records of receiving these tax returns.
If you have filed these returns please provide us a
copy by May 21, 1997. If you have not filed these
returns, we are requesting these returns be filed by
May 28, 1997. * * * The following information should be
submitted to the address listed above by May 28, 1997:
- Completed returns
- A copy of the managing agent’s compensation
agreement referenced in the trust agreement
- A copy of Schedule A and the Addendum referred
to in the trust document.
On May 16, 1997, Mr. Barmes responded in writing (Mr.
Barmes’ letter dated May 16, 1997) to revenue agent Arnold’s
letter dated May 14, 1997. Mr. Barmes’ letter dated May 16,
1997, stated in pertinent part: “According to our CPA, Gregory
P. Karl out in California our Pure Trust organization has no tax
requirements according to the Internal Revenue Service.” Mr.
Barmes attached to that letter copies of the Karl letter and the
Felthaus letter, which Sovereignty included in its promotional
materials and provided to petitioners.
On August 4, 1997, revenue agent Arnold responded in writing
(revenue agent Arnold’s letter dated August 4, 1997) to Mr.
Barmes’ letter dated May 16, 1997. Revenue agent Arnold’s letter
dated August 4, 1997, stated in pertinent part:
We have reviewed your response to our letter of
May 14, 1997 requesting that you file trust returns for
the Sandbar Real Estate Trust and the Sandbar Wholesale
Trust. You replied by providing us with a letter from
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