From Irwin Schiff:
It’s An Outrage
Books have been banned in America on pornographic grounds and Lenny Bruce was prevented from speaking on similar grounds, and, I believe, a book by Abby Hoffman was banned because it instructed people on how to make a bomb. However, never has an American judge ever banned a book simply because the Government didn?t like what it said, or prevented someone from speaking because the Government didn?t like what he intended to say. However both occurred on March 19, 2003 when Nevada District Court Judge, Lloyd D. George restrained me from distributing my book The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes,? which has an additional subtitle, And How American?s Can Fight Back. Why weren?t my other books such as How Anyone Can Stop Paying Income Taxes and The Great Income Tax Hoax banned? Because my other books did not contain specific ?instruction? on how to ?fight back.?
In 1980 I was prosecuted and jailed because I asserted my 5th Amendment right in connection with the information requested on my 1974 and 1975 income tax returns. This was done in accordance with a 1928 decision written by Oliver Wendell Holmes, U.S. v. Sullivan, 274 US 259, as fully described in How Anyone Can Stop Paying Income Taxes. In 1985 I was prosecuted for tax evasion on the basis that I had willfully failed to file returns for the years 1980, 1981, and 1982 coupled with the charge that I had also ?concealed? my ?income? for those years. However when the jury refused to convict me on these grounds, Connecticut Judge Peter J. Dorsey, reinstructed my jury that it could convict me even if the Government did not prove that I had ?concealed? my income, as charged in the indictment. This aspect of my 1985 frame-up is fully covered in The Federal Mafia, a book I can no longer sell or distribute. However, an article in the February 1987 issue of ?The Journal of Taxation? focuses on this, one aspect of my 1985 frame-up and explains why my 1985 conviction was ?in direct conflict with what had been settled law for over 40 years.? Despite this ?conflict?, I served 4 years in jail and 4 years on parole and probation.
I went to jail even after writing How Anyone Can Stop Paying Income Taxes and The Great Income Tax Hoax both of which deal with the question of whether or not there is a law requiring anyone to file and pay income tax. However, while both books contain extensive research (reproduction of numerous statutes and quotations from numerous court decisions), which could lead to the conclusion that the income tax is enforced in violation of numerous provisions of the U.S. Constitution and the Internal Revenue Code, it does not provide specific instruction for ?fighting back? such alleged, illegal enforcement. However, since I began filing ?zero? returns (which I have done for over 10 years) the Government has not sought to prosecute me either for ?failure to file? or tax evasion. Therefore, I concluded that my ?zero? return must have conformed with all the requirements of the law, otherwise the Government would have criminally prosecuted me as they have done in the past Therefore, I explained the basis for filing a ?zero? return in The Federal Mafia - which is the why the Government doesn?t want me to distribute that book. Apparently others have used the ?zero? return without encountering adverse legal consequences, as shown on the ?Testimonial Page? of this website.
Many people who have filed my ?zero? have received a full refund of all the taxes they paid for that year. However Section 7206(2) of the Internal Revenue Code provides that that ?Any person who?. willfully aids or assists in, or procures, counsels or advises the preparation of a return. ?which is fraudulent or is false as to any matter?shall be guilty of a felony and, upon conviction thereof, shall be fined not more that $100,000 ($500,000 in the case of a corporation) or imprisoned not more than 3 years, or both, together with the costs of prosecution.? So if I, or my book, The Federal Mafia advises people to file ?false? or ?fraudulent? returns why hasn?t the Government prosecuted me criminally for violating this statute? Or why hasn?t the Government charged me with tax evasion for reporting ?zero? income on all the returns I have filed for the last 10 years? They haven?t done so because the Government obviously must believe that I could prove to an impartial jury that my ?zero? return and claims for refund are legally correct. So, the Government is obviously resorting to a civil ruse to illegally shut me up. They are going to rely on one of their own judges (and, therefore, not risk a criminal trial before an impartial jury) who can arbitrarily and incorrectly decide the issue. Does anybody really believe a Federal judge is going to judge these proceedings ?impartially?? The Court already granted the Government a Temporary Restraining Order on the basis of perjurious affidavits filed by Federal employees. Government witnesses are generally free to commit perjury, since who is going to prosecute them for having done so? Perjury is a crime only defense witnesses need fear. Federal prosecutors routinely orchestrate the perjury that government witnesses, especially in tax cases, generally commit.
In any case, we didn?t find out until Monday, March 17th that there would be a ?hearing? on the 19th ? only 2 days later ? to shut us down. How is that for ?due process of law?? However if we refer to the restraining order itself, as the following will show, neither I, Cindy Neun, or Larry Cohen, could possibly have violated any of the statutes named in the Court?s Order, which the Government, on April 7, will seek to make permanent. The Restraining Order identifies 6 statutes, which have been allegedly violated: they are sections 7407, 7408, 6694, 6695, 6700, and 6701 of the Internal Revenue Code. Section 7402 is merely a jurisdictional statute so it really doesn?t count. So let us now look at each of these statutes and see why none of them applies to Schiff, Neun, and Cohen.
Section 7407 is entitled ?Action to enjoin income tax return preparers,? and section 7407 only applies to ?income tax return prepares.? However, Section 7701(a)(36)(B) limits the term to which an ?income tax preparer? applies, as follows: ?Exceptions. A person shall not be an ?income tax return preparer? merely because such person ? (i) furnishes typing, reproducing, or other mechanical assistance,? which is all we do at Freedom Books. So, by definition, neither Schiff, Neun, nor Cohen can legally be termed ?income tax return preparers,? within the meaning of the law.
Think about it. When a person goes to a typical tax preparer (say a CPA or H&R Block) that person hasn?t the faintest idea what his ultimate tax liability might be. He is hoping that the tax preparer will take advantage of deductions he might otherwise not know about and determine an income tax liability lower than he might determine if he prepared the tax return on his own. It is the ?tax preparer? who ultimately determines the figures that will go on that person?s return. based upon the preparer?s understanding of the law. Therefore, it is the ?tax preparer? who ultimately determines the tax due, not the taxpayer. Some tax preparers might employ fraudulent or false deductions in order to generate a lower tax due. Such ?creative? tax calculations might generate more business for the tax preparer and keep his clients coming back. Obviously these are the kinds of ?tax preparers? that are contemplated by section 7407. However when we at Freedom Books prepare a ?zero? return? we merely put on those returns the figures the person wants us to put down. Frankly, we don?t look for this type of business. How difficult is it for anyone to file his or her own ?zero? return? In doing so, one is not bothered with taking deductions of any kind. And one needs only to report ?zero? income. However, some people have a lousy handwriting and/or do not have access or skills to use a computer, so we provide this ?mechanical assistance.? I have filed, in this manner, no more than 10 returns; Larry can?t recall preparing more than 3; and, Cindy has not done more than 25. Cindy has such a magnificent writing style, (she has created her own font) some people wanted her to fill out their returns because of the clarity and neatness of her writing style. All we ever did was to put on those tax returns the figures that the person wanted us to put on those returns for them. Before we mechanically ?prepared? their returns, such persons already knew:
what was to be the amount of income they were going to report;
what was to be the amount and nature of the deductions they were going to take;
what was to be the amount of tax due they were going to report; and
what was the amount of refund, if any, they were going to ask for.
True, such persons were obviously persuaded to report these amounts and claim such refunds based upon the statutes, and court decisions that my books (and the Internal Revenue Code itself) brought to their attention. All those who filed ?zero? returns attached to their return a two page attachment that supported their ?zero? return with approximately 35 legal references, which included no less than 17 statutes, 10 Supreme Court decisions and other legal references. Therefore when we ?prepared? their returns we were only providing ?typing and/or mechanical assistance, ? and any claim that we were ?tax preparers? within the meaning of section 7407 is not only false, it is nonsense.
Section 7408 seeks to ?enjoin promoters of abusive tax shelters.? You will also note that in the ?Finding of Fact? (which is itself a false claim, since no testimony was given and no evidence, subject to cross-examination, was taken) you will see reference that we ?promote abusive tax scams.? In every case, tax shelters or alleged ?tax scams? always generate deductions on a tax returns in order to lower the taxes due. Some taxpayers pay accountants and tax lawyers thousands of dollars to set up ?shelters? and ?arrangements? that might create deductions to lower the taxes due as shown on their returns. Some of these ?arrangements? might be called tax ?scams.? During the 1960?s when oil, gas, cattle and computer leasing shelters were popular, tax ?shelters? were created where by investing $50,000 one might generate a $200,000 tax write off. All ?tax shelters? or alleged ?tax scams? would be a variation of this principle. Since those who filed ?zero? returns (and those we helped people to prepare them) took no tax deductions on their returns; obviously, no ?tax shelter? or ?abusive tax scams? were involved. A ?zero? return filer reported ?zero? income simply because he was persuaded that based upon the Internal Revenue Code and a number of Supreme Court decisions, that ?income? for income tax purposes, means a corporate profit. The Great Income Tax Hoax devotes two chapters as to why I concluded that ?income? for income tax purposes means a corporate profit. For example in Merchant?s Loan & Trust v. Smietanka, 255 US 509, the Supreme Court said ?The word (income) must be given the same meaning in all the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act of 1909.? And the only thing that was taxable in that Act was corporate profit. In the 1955 case of Commissioner of Internal Revenue v. Glenshaw Glass, 348 U.S. 426, the Supreme Court noted (in footnote 11) that the definition of ?income? as used in Section 61(a) of the 1954 Code is ?based upon the 16th Amendment and the word ?income? is used in its constitutional sense.? And it is my belief that income in a ?constitutional sense? means corporate profit as defined in Merchant?s Loan & Trust. Others, of course, others may hold a different belief. Therefore, it is my understanding that the Government uses the term ?income.? in connection with income taxes, in its ?ordinary sense,? not in its ?constitutional sense.? My research (as contained in The Great Income Tax Hoax) persuaded me that ?income,? in its ?constitutional sense,? means a corporate profit. Corporations can have billions of dollars of income, but unless they have a ?profit,? they pay no income taxes on all that income. However, Section 61 of the Internal Revenue Code (which purports to define ?Gross income?, but doesn?t) does not make a distinction between corporations and individuals. Therefore, since corporations do not pay income taxes on their ?income,? individuals who file ?zero? returns believe that this same principle applies to them. So how is a ?tax shelter? or ?abusive tax scam? involved in such a belief? If the Government believes that reporting ?zero? income amounts to filing a ?false or fraudulent return? the Government is authorized by Code section 6501©(1) to initiate ?a proceeding in court for the collection of such tax? or to prosecute such individuals for tax evasion under section 7201. Knowing this, why would anyone want to risk being prosecuted for tax evasion, by falsely claiming he had ?zero? income, if he didn?t believe that claim was legally truthful? In addition, none of those individuals whose tax returns we helped prepare had a belief that they received ?income? in a ?constitutional sense.? So their returns were based on their understanding of the law and on such Supreme Court decisions as Glenshaw Glass. Their ?zero? returns were not based on any ?tax shelter,? ?arrangement,? or ?scheme? but upon their understanding of the ?law,? as flawed as that understanding might be. What can be clearer than that?
Section 6694 is entitled ?Understatement of taxpayer?s liability by income tax return preparers.? Since, as I have already explained, neither Irwin Schiff, Cindy Neun or Larry Cohen are ?income tax return preparers? within the meaning of the law, this section can not apply to any of us. But even if we did fall within that meaning, we do not believe we could have understated anybody?s ?income tax liability? because we have never been able to find a statute that establishes any such tax ?liability.? For example, Code section 4401© states, with respect to the federal wagering tax, (a tax paid by bookmakers) ?Each person who is engaged in the business of accepting wagers shall be liable for and shall pay the tax under this subchapter.? (Both The Federal Mafia and the Great Income Tax Hoax lists other, such Code sections). However, no matter how thoroughly we examined the Internal Revenue Code we could not find a similar provision in connection with income taxes.
In any case Exhibit A (Click Here) is a letter sent by Congressman Dan Burton to one of his constituents. Notice the Congressman states ?You are correct in your assertion that the word ?liable? or the terminology ?liability for income taxes? is not included in any section of the Internal Revenue Code. So Congressman Burton could not find such a tax ?liability? either. Exhibit B (Click Here) is an excerpt from the Index of the Internal Revenue Code, as published by the Research Institute of America. Note that the Index lists some 30 Code sections that establish a ?liability? with respect to some Federal tax ? but an income tax is not included in that list. Since neither Schiff, Neun or Cohen have ever been able to find a statute that establishes an income tax ?liability? how could we have helped anyone to ?understate? a tax ?liability? that apparently does not exist? So Section 6694 cannot apply to Schiff, Neun, and Cohen on either basis.
Section 6695 is entitled ?Other assessable penalties with respect to the preparation of income tax returns for other persons.? As already explained, neither Schiff, Neun or Cohen can fall into this Code section since they are not ?tax preparers? within the meaning of the law. The actual penalties described in Section 6695 are for: (a) Failure to furnish a copy to taxpayer, (b) Failure to sign return, © Failure to furnish identifying number, (d) Failure to retain copy or list? (e) failure to file correct information returns, (f) has to do with preparers who ?endorse? or ?negotiate? checks issued to taxpayers, and, (g) Provides a penalty if the tax preparer fails to ?determine eligibility for the earned income credit.? All of these ?failures? provide for $50 penalties for each violation, except a $500 penalty applies to section (f) and a $100 penalty applies to section (g). Since the Government has never attempted to impose any of these penalties on Schiff, Neun and Cohen, how could this statute apply to us even if we were ?tax preparers? within the meaning of the law?
6700 deals with ?Promoting abusive tax shelters? As already explained, since the ?zero? return contains no deductions of any kind no tax shelter is involved. This section goes on to cover persons who ?organize a partnership or other entity, or investment or arrangement, or other plan which effect deductions or the excludability of income.? None of these elements exist in connection with the filing of a ?zero? return. Those who report ?zero? income do not do so, based upon any ?arrangement? or ?plan.? They report ?zero? income because they believe (rightly or wrongly) that they have no ?income? in a ?constitutional sense.? And they support that belief by citing no less than 35 legal citations, which they attach to their ?zero? returns. So, again, Section 6700 cannot apply to Schiff, Neun, or Cohen on any basis.
Section 6701 deals with ?aiding and abetting understatement of tax liability? Since, as I have already explained, there does not seem to be any Code section that establishes such a thing as an income tax liability?; neither Schiff, Neun nor Cohen could have been involved in the ?understatement? of a tax ?liability? that none of them believes exists.
Therefore, neither Schiff, Neun nor Cohen are in violation of any Section identified in the ?Temporary Restraining Order.?
In addition Exhibit C, (Click here) is a letter that Senator John Ensign (then a Congressman) sent to a constituent. Notice he states ?Let me start by saying I cannot point to a specific place in the law where it says you must pay income taxes.? When Senator Ensign made that statement he was a member of the House Ways and Means Committee, the very Committee that writes tax legislation. If there were a law requiring Americans to pay income taxes, one would suspect that Congressman Ensign could have found it? Therefore, his next statement is puzzling. Note that Congressman Ensign states that though he can?t find a law that says Americans ?must pay income taxes,? ?the courts have determined? that such a law exists. If Congressman Ensign couldn?t find such a law (with the help of the legal counsels of the House Ways and Means Committee and the Congressional Research Service CRS), I am at a loss to understand how ?the courts? could have done so.
Further support for Congressman?s Ensign observation is apparently supplied by the Index of the Internal Revenue Code, which deals with the ?Payment of tax.? Note that it refers to about 50 Federal taxes, such as: gasoline taxes, alcohol taxes, tobacco taxes, wagering taxes, manufacturers? excise taxes etc. etc. etc. but there is no reference to ?income? taxes in that list.
Note that paragraphs 2 and 3 of the Temporary Restraining Order indicates that any claim that paying income taxes ?is voluntary? or is based on ? voluntary compliance? is a ?false and frivolous? position. Therefore we can assume that the correct position is that Americans are required to file and pay income taxes. I initially formed my belief that the payment of income taxes was ?voluntary? because I ran across a number of official, Government documents that all said so. For example this one page from an Internal Revenue Manual (click here) states that the income is based on ?voluntary compliance? or ?voluntary? payment no less than 11 times. My confusion concerning what I believed was the voluntary nature of the income tax is the result of my belief that the Government used the term ?voluntary? in its normal sense. I never suspected that when the Government said that ?compliance? with respect to income taxes was ?voluntary,? they really meant ?compliance? was ?compulsory.? The Court?s Order that when the Government claims that the income tax is based on ?voluntary compliance? they really mean it is based on ?compulsory compliance? now persuades me that I was wrong. I therefore want to apologize to my students for misleading and confusing them on this issue.
However, I also find this excerpt (click here) from the United States Attorney Bulletin of April 1998 confusing. Notice how the Bulletin indicates that tax return information can be used against those who file in a variety of criminal prosecutions. It was my understanding of the 5th Amendment that Americans could not be compelled to be witnesses against themselves in this manner. However not being a lawyer or a judge my understanding of the 5th Amendment is obviously flawed.
As I stated before, never in our history has a book been banned and an individual prohibited from speaking simply because the Government didn?t like what he has written or what he intended to say. Unfortunately our ?court system? relies on ?precedent?. If the Government can get away with banning a book that deals with taxes, law, politics and related economic issues, a new and dangerous precedent will have been established. It will then become easier for the Government to ban any book or prohibit anyone from speaking or writing on these subjects. So not only has the income tax destroyed America?s industrial base (See The Biggest Con: How the Government is Fleecing You and the Social Security Swindle.) it has also undermined and continues to destroy our civil liberties as well.
In the meantime I stand ready to testify under oath (and be subject to cross-examination) in any court case involving the income tax. I will be happy to testify under oath concerning my understanding of the income tax. Hopefully I will also be able to lecture concerning what the Government is attempting to do here. For a comprehensive and realistic understanding of the nature of the income taxes and its destructive impact on America?s social and economic life, I suggest you read one of my other books that the Government has not ? as yet - banned.
Unfortunately, the Court was able to issue its Restraining Order on the on the same day the Iraqi war broke out, otherwise the media would have given this outrageous assault on the 1st Amendment far more attention then it has so far received For those wishing resurrect the 1st Amendment, in light of the Court?s Order, might write the following letter to newspapers and other media.
To the Editor.
The Government is now attempting to throw the 1st Amendment out the window. On March 19, 2003 Nevada, Federal District Court Judge, Lloyd D. George, granted the Government?s request for a Temporary Restraining Order? barring Irwin Schiff from distributing his book The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes & How Americans Can Fight Back and from even speaking on the subject.
No jury of impartial citizens was asked to pass judgment on the Government?s claim but a sole Federal judge, who had not even read the book, made the determination. On April 7, 2003 at 1:30 p.m., the Government will seek to make the Temporary Order permanent. The current Order cannot be allowed to stand, much less made permanent.
How much of our liberty must Americans lose before the public wakes up? I trust that this newspaper will take an editorial position strongly protesting this new and outrageous assault on the 1st Amendment.