It’s been a hard year for jackbooted thugs. In the last six months the IRS has lost a string of, what are for them, high profile cases. The losses have generally been jury trials. Jury decisions do not set precedent for other cases. But if you lose enough of them people start noticing.
Two cases, though widely ignored by the media, are certain to effect at least the moral at the IRS and the attitudes of Americans who become aware of the decisions.
The first is the case of former IRS Criminal Investigation Division agent Joseph Bannister. After years of exemplary service, Mr. Bannister’s investigation of the tax laws led him to question much of what the IRS was doing. Bannister concluded that the IRS was deceiving and intimidating Americans into paying taxes they did not owe. When he confronted his superiors with his conclusions, rather than explain where he was in error, they fired him.
Mr. Bannister is an accountant. When he lost his job at the agency, he became a tax adviser. Naturally, he advised his clients based on his reading of the tax laws, which the IRS has never refuted. One of his clients, following Mr. Bannister’s advice, filed a “0” income return, because he had no taxable income.
A grand jury indicted Mr. Bannister for having given that advice. They charged him with conspiracy to defeat the tax laws and defraud the government of its cut of his client’s income.
Essentially Mr. Bannister had challenged the legality of the entire income tax system. The jury acquitted him when the government did nothing to confront or rebut his claim that there is no law that requires most Americans to pay a tax on wages. Mr. Bannister is a free man.
The second case is that of Mr. Robert Schultz, who has been fighting with the IRS for years at the head of the We the People Foundation for Constitutional Education. Mr. Shultz’s foundation regularly sponsors debates, conferences and symposia to examine the legal foundations of the income tax. He ran full page ads in USA Today promoting his ideas until the paper suddenly and without explanation refused to run them.
Like Mr. Bannister, Mr. Shultz maintains that Americans are not required by law to file tax returns. Like Mr. Bannister, he believes that people are deceived into filing voluntarily. And logically, he further claims that workers who owe no income tax are not required to have taxes withheld from their pay, nor are employers required by any law to act as unpaid tax collectors.
Mr. Shultz thinks of himself as a legal researcher. The IRS thinks of him as a “tax protester.”
The IRS has never answered Mr. Shultz’s questions but it has shown great interest in his personal finances. The Service sent him a summons for his records. He challenged it in court. The court found that he did not have to produce his records without a court order.
Mr. Shultz trumpets the decision as a great victory, but it is nothing new. It is, however, something the IRS doesn’t want to become widely known. Hundreds of “summons enforcement proceedings” take place every year. In most cases the court orders production of documents. But the IRS has no interest in having hundreds of cases become thousands. The Service prefers timid, obedient taxpayers. They don’t want to have to fight for every self-incriminating receipt and check stub.
For that reason the Service was a little panicky in its motion for the Appeals court to reconsider its decision about Shultz. The DOJ stated in its motion that, “…the Court's opinion threatens to seriously impede the effective administration and enforcement of the nation's tax laws.”
The DOJ scolded the Court for and “misapprehending” and “misunderstanding” and “misstating” the case. It’s hard to believe they didn’t know any better. But there it is. Makes you wonder what else the IRS might like to keep quiet.
The court confirmed its original ruling. An IRS summons can only be enforced by court order. Whether they will bother to get a court order to examine Mr. Shultz’s records or even whether there is any point in doing so, may depend in large part on the outcome of a third case.
It’s a case I’ve mentioned before in this column, that of Larken and Tessa Rose. The IRS is after the Roses for the most basic offense in its vast constellation of possible crimes, “willful failure to file.”
For years Mr. and Mrs. Rose have claimed that nowhere in the thousands of pages of income tax statutes is there a specific law that requires Americans to pay tax on income earned in the United States. They have published reports, created a website, created CD’s and produced video explaining in detail their position.
It seems odd, but prosecutors don’t want to debate the law in a courtroom. The judge tells the jury what the law is, not the defendant. But in this case, since the defendants’ beliefs are based entirely on their reading of the law, it may be impossible and certainly unfair to exclude what Rose has to say about the law.
To carry its case the government must prove that the Roses are willfully ignoring a known duty to file. For over 10 years they have explained to any and all, including the IRS in many taped interviews, that they are not protesting the law, but following it. Unless the government can convince a jury that the Roses have been lying about what they believe, convicting them of “willfulness” will be impossible.
On his website, www.taxableincome.net, where there is an excellent, concise explanation of his position, Mr. Rose requests, not support, but only that you watch what happens at the trial.
Unfortunately we will not be able to watch via video, despite thousands of requests to broadcast the trial. The government vigorously opposed having the trial shown to the public outside the courtroom. That also makes me wonder what it is the government doesn’t want us to see. To watch the wheels of justice grind the Roses to dust you will have to be there.
Larken’s trial begins August 9, 2005, at the federal courthouse at 610 Market Street, Philadelphia, PA. The mainstream media pointedly ignores tax cases, particularly if the defendant wins, which has happened a lot lately. But the internet has made the law and taxpayer victories harder to hide. The IRS has too much riding on this case to let Mr. Rose win. If he doesn’t go to jail, the repercussions could be serious. As Mr. Rose said in a recent e-mail, it won’t be boring. I plan to be there. I’ll let you know what happens.