Thread: U.S. to turn up heat on tax protesters

U.S. to turn up heat on tax protesters
Officials say movement costs government many millions
Feb. 20, 2008, 6:44PM
By ROBERT SCHMIDT
Bloomberg News

The Justice Department, on the heels of a split verdict in its tax evasion prosecution of actor Wesley Snipes, is planning a crackdown on the so-called tax protester movement.

The protesters, or tax deniers, assert a constitutional right to avoid federal taxes, relying in part on century-old Supreme Court decisions. Their ranks are growing to include white-collar professionals, and they are costing the government millions in revenue, officials say.

"Too many people succumb to the fallacy, the illusion, that you don't have to pay any tax under any set of conditions," said Assistant Attorney General Nathan Hochman, the new head of the Justice Department's tax division. "That is a growing problem."

The movement has been given a boost by the faltering economy and politicians' vilification of the Internal Revenue Service. The Snipes verdict may also have helped.

The actor, best known for starring in action movies like Blade and U.S. Marshals, was acquitted on Feb. 1 by a federal jury in Ocala, Fla., of felony fraud and conspiracy charges.

He was convicted on three misdemeanor counts of failing to pay income taxes, and he faces up to three years in prison at his sentencing in April. He could also be forced to pay millions in back taxes and penalties.

Hochman declined to comment on the case, which was filed in 2006 and predated the department's new initiative.

Snipes' attorney didn't return a call seeking comment.

Internet inspires growth
The Internet has also spurred interest in the tax protest movement as firms sell strategies online and believers encourage others to sign on.

"Any kooky tax protester can put up their theories," said Jonathan Siegel, a professor at George Washington University's law school who has a Web site that debunks tax denier arguments. "It is much easier to get their message before a mass audience."

Tax protesters rely on a range of legal arguments, including that the Constitution's 16th Amendment giving Congress power to "lay and collect taxes on incomes" wasn't properly ratified.

Among other Supreme Court decisions, they cite an 1895 opinion that struck down a federal tax — a ruling that predated the 16th amendment. The protesters also claim that wages aren't legal income, that only residents of the District of Columbia, U.S. territories or federal workers must pay income tax or that foreign, but not domestic, income is taxable.

Those arguments, though rejected by courts, are presented by tax deniers with legal citations and other historical evidence.

The advice is "easy to believe" and is often followed by the naive, Hochman said. "These cases pop up in virtually every jurisdiction in the United States."

New cases coming
The Justice Department plans to announce its stepped-up enforcement program next month. Officials will bring many new criminal and civil cases against promoters of the illegal schemes and their clients, Hochman said.

The details are still being worked out, he said, though it will involve working with U.S. attorneys' offices and the IRS. Enforcement "is going to be amped up," he said.

The agency already has had success in civil cases. Since 2001 it has obtained orders from judges barring more than 300 individuals from preparing tax returns for others or promoting illegal tax strategies.

In prosecuting criminal cases, the Justice Department must prove someone "knowingly and willfully" broke the law. Defendants can win acquittal by arguing they didn't know what they were doing was illegal.

Still, according to agency statistics, prosecutors have a 97 percent conviction rate in tax denier cases. In civil and criminal cases, protesters can be ordered to pay back taxes, plus penalties and interest.

Shared beliefs
According to court documents, Snipes subscribed to some of the theories espoused by protesters. Two others charged in the case, Eddie Ray Kahn and Douglas Rosile, promoted a tax denial strategy known as the 861 argument, prosecutors said.

Protesters say that section 861 of the Internal Revenue Code only requires Americans to pay taxes on some kinds of foreign income. Snipes also allegedly tried to pay some of his taxes with fake checks, labeled "bill of exchange," a common tax denier tactic.

The government said Kahn and Rosile prepared and filed two amended tax returns for Snipes using the 861 theory and requesting almost $12 million in refunds. The IRS never paid.

Snipes also failed to file his 1999 through 2004 federal returns as he made more than $38 million in income, prosecutors said.

Kahn and Rosile, an accountant whose license had been revoked, were convicted of conspiracy to defraud the IRS and face up to 10 years in prison.

Michael Minns, an attorney in Houston who has represented defendants in tax cases, said tax deniers tend to fall into two categories: "con artists" or "crooks" who market the bogus strategies, and "idealists" who believe the schemes are valid.

The Justice Department crackdown, Minns said, is going to "put a lot of nuts in jail" without addressing larger concerns such as corporations using illegal tax shelters or wealthy people moving money overseas to avoid taxes.

"What they are really doing is going after the victims and leaving the billionaires alone," he said.

http://www.chron.com/disp/story.mpl/hea ... 57039.html

The Justice Department, on the heels of a split verdict in its tax evasion prosecution of actor Wesley Snipes, is planning a crackdown on the so-called tax protester movement. (Return to story)

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ShallNotBeInfringed wrote:
If they really want to collect taxes from *everyone*, they should just go to a consumption based instead of income based tax... Eventually, you or your descendants will have to spend your money on *something* and the government can get its share at that point...
2/21/2008 3:47 AM CST
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Tiff wrote:
"What they are really doing is going after the victims and leaving the billionaires alone," he said.


EXACTLY!!!

2/21/2008 5:58 AM CST
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tuckerdawg wrote:
If a person who made $38 million in five years is an average Joe, then I am grossly underpaid. A co-worker of mine paid in $300 dollars this year and got back $2500. We make the same amount, yet my tax bill was nearly three grand. Yes, he has a wife and child, while I do not, but that was his decision and yet I (and other singles) pay the price. Additionally, I own my home and pay property taxes to support schools, though I have no children. The most maddening part is this so-called tax rebate the government is espousing. A rebate is defined as "a return of part of the original payment for some service or merchandise; partial refund". If you got more money back than you paid in...there is no rebate, it is a gift. Call it what it is, communism. This is redistribution of wealth at it's worst. So while EIC boy anxiously awaits his additional $1800 dollars, I just stew. So, while I pay my taxes and don't try to cheat the government, I can certainly understand the mentality that grips those who refuse.
2/21/2008 7:04 AM CST
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jason11 wrote:
Obviously people will come up with every possible way to avoid paying the consumption tax if the country were to switch to that. A new market will spring up that will give people a way to get their goods without paying the consumption tax. Plus there will probably be hundreds of government sponsored loopholes to get around paying some of the consumption tax.

A consumption tax is not a magic wand. People will always try to find a way to get around their responsibilities.
2/21/2008 9:55 AM CST
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k3456789 wrote:
they leaving rich asholes intact and going after the poor
welcome to nwo bush world
vote ron paul for going back from empire to republic
2/21/2008 10:57 AM CST
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cook73 wrote:
Watch "America: Freedom to Fascism" on YouTube or Google Video. It'll open your eyes to just how bad we've been swindled and who the greedy bastards are who are behind this crooked scheme.
2/21/2008 11:45 AM CST
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Rubbereagle wrote:
The US government can claim what they want. They can make whatever laws they want. The simple facts are, once they started committing crimes against the citizens of this nation and against other nations in violation of treaties, which in turn violates the Constitution, the supreme law of this land, they became illigitimate and irrelivent. This my fellow country men is a declaration of WAR on the american people. I say let's have at it! We are now in the midst of an obstinate and disobedient federal government who have illuded themselves into thinking that WE THE PEOPLE work for them!!!! I remind each and everyone of you that THEY work for WE THE PEOPLE! We can fire every last one of them and expel them from this nation and hang the name of traitor around their necks! I refuse to fund a criminal empire! I refuse that my name be tied to the 30 pieces of silver that is used to crucify my fellow patriots! I refuse to pay the hangmen who murder the children of other nations! The US government has declared war on us! They have screamed from the roof tops that WE THE PEOPLE no longer matter, that we were weak stewards of the land of our fore fathers, not deserving of our inheritence! They have appointed "super delegates" that no longer represent the people. I say NO! No taxation without representation! No! No money for conquest! No! No money to spy on me and my neighbors! "Those who fail to learn from history are doomed to repeat it." There was once an empire that ruled over this land. WE THE PEOPLE said over 232 years ago "NEVER AGAIN!" I say it again "NEVER AGAIN!"!
2/21/2008 11:56 AM CST

..look out Huckleberry..... they're a comin'.

How much does the government lose in taxes each year when the employer pays workers in cash without any deductions?

How much does the government lose in taxes each year when a large business hires illegal immigrants to do the same work at half the salary as the former employee who is a citizen?

How much does the government lose in taxes each year when big business outsource to foreign countries?

How much does the government lose in sales taxes each year when billions are sent out of the country as remittances?

good points

I believe snipes filed false returns -which to me is not a tax protestor

Why does not this government go after the illegal invaders who protest in our streets while waving the Flag of Mexcio, demaning rights they are not entitled to with the same zeal.

Besides, what are we paying taxes for. So Washington can give 1.4 billion to Mexico.

I'm quite capable of flushing my own money down the toilet, I do not need Washington to do it for me....

I have a different outlook on taxes. Since our government is not stopping a foreign invasion (in fact they are assisting it), and our Congressional districts are Unconstitutional since they pack non-citizens into a few "Democratic" districts, they have abrogated the Constitution and hence have no authority to tell us to do anything.

Of course you don't want to let them know what you are doing, there are ways, many of them legal, to greatly reduce your tax liability.