Anti-tax author appears in Vegas federal court on tax charges

Las Vegas Sun ^ | 4/14/04 | Christina Almeida

[Modernman]

LAS VEGAS (AP) - As millions of taxpayers prepared to meet the April 15 filing deadline, an anti-tax author attempted to argue Wednesday in federal court that no American is required to pay taxes.

Tax opponent Irwin Schiff and two of his associates appeared in U.S. District Court on charges they helped thousands of taxpayers file bogus returns.

Schiff told U.S. Magistrate Judge Peggy Leen that he would plead guilty if federal prosecutors could show a tax requirement exists.

"I will not accept your plea of guilty at this time," Leen said and entered a plea of not guilty on his behalf.

A 33-count indictment issued last month charges Schiff, Cynthia Neun and Lawrence Cohen with aiding and assisting in the preparation and filing of fraudulent tax returns.

Schiff, the 76-year-old author of "The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes," and Cohen, a 63-year-old employee of Schiff's, also were charged with tax evasion.

Neun, Schiff's 50-year-old girlfriend who helps him conduct seminars, also was charged with willfully failing to file federal income tax returns, Social Security disability fraud and theft of government property.

A not guilty plea was entered on Cohen's behalf; Neun's arraignment was postponed until Friday so she could decide whether to represent herself or hire a lawyer. All three were released on their recognizance, and a June 21 trial date was scheduled.

In the indictment, prosecutors allege the three were responsible for nearly 5,000 tax returns that fraudulently reported no income. The "zero returns" included zeros on every line related to income and expenses and often claimed a full refund of all federal taxes withheld or paid.

After filing the "zero returns," many of Schiff's clients faced Internal Revenue Service audits and tax collections.

The indictment says Schiff's Freedom Books business generated $3.7 million from 1997 to 2002. Schiff didn't report any income on federal tax returns from 1987 to 2002, and placed money in an offshore bank account, according to the indictment.

Before Wednesday's hearing, Schiff's supporters gathered outside the federal courthouse. One had a sign reading "April 15 - The Real April Fools' Day," while another sign said "Please Don't Feed the Vultures."

Inside, dozens packed the small courtroom, and many were forced to wait outside the overflowing chambers.

The hourlong hearing was filled with interruptions and objections by Schiff, who was chastised numerous times by Leen.

"Mr. Schiff, I will take your objection. You will have your opportunity to have your say, but you will not interrupt," said Leen, pointing her finger at Schiff.

Outside court Schiff said he will appeal.

"It was a farce," Schiff said. "(The judge) did not let me raise objections to the indictment. ... There is no law that requires me to pay income taxes."

Schiff has been a regular visitor in federal court since the IRS raided Freedom Books in February 2003. He is involved in a handful of civil proceedings involving the Justice Department's Tax Division. Among them, government lawyers are seeking an injunction that would bar him from selling his book and from holding tax seminars.

If convicted of the criminal charges, Schiff faces a maximum sentence of 43 years in prison and $3.25 million in fines. Neun could receive a 51-year sentence and $3.4 million in fines, while Cohen faces a maximum 27 years and $1.5 million in fines

[Modernman]

Well, I'm off to Vegas this afternoon. Maybe I'll run into this guy. Too bad I already filed my taxes this year :-)

[kellynla]

I hope he appeals his case to the Supremes...maybe then we'll find out finally if the government has the legal right to tax income or not...


Meanwhile, my extension is in the mail. LOL

[Modernman]

I hope he appeals his case to the Supremes...maybe then we'll find out finally if the government has the legal right to tax income or not...

The 16th Amendment is pretty clear (even if the tax code is a monstrosity):

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

[kellynla]

Ya just had to ruin my day with the legality of income taxes...LOL

[Modernman]

The problem with guys like this dude in Vegas isn't that they ruin their own lives. Rather, their scams end up ruining the lives of a lot of naive people who buy into their hare-brained schemes.

[kellynla]

well you know more about it than I...
I would like to see a national sales tax and the elimination of the fed income tax altogether...
it came out in one of the articles today that almost forty percent of the population doesn't pay ANY income tax at all.

[Modernman]

It's kind or ironic that Russia, the former bastion of communism, now has a flat income tax while supposedly capitalist America has a socialist "progressive" tax.

A consumption tax might work, too. One bonus side effect of a consumption tax is that it would encourage saving, to a certain extent.

[Cultural Jihad]

A 33-count indictment issued last month charges Schiff, Cynthia Neun and Lawrence Cohen with aiding and assisting in the preparation and filing of fraudulent tax returns.

Boo hoo hoo! No one should be forced to be responsible for the consequences of their own freewill choices!

[Modernman]

Huh? Aiding somebody in the commission of a crime is a crime in of itself. If you help someone prepare a tax form you know is fraudulent, why should you get off scot-free?

Or am I misreading your post?

[candeee]

The 16th amendment is apparently not clear at all. Is it saying that congress can tax incomes derived from activities over which congress has no jurisdiction? Does the term income mean what the supreme court said it did at the time of the passage of the 16th amendment or does it have a living definition that changes with the times? As the taxing clauses of the constitution were not repealed, is it proper to read the 16h amendment to be in conflict with (and overriding) the taxing clauses? Or, because the taxing clauses were not repealed, should the 16th amendment be read so as to not conflict?

[Cultural Jihad]

Hehehe. I forgot the "/sarcasm" tag. Sometimes some moral-liberal UberKonservative types will try to advocate against societal consequences, arguing that only natural consequences should be allowed.

[Modernman]

Is it saying that congress can tax incomes derived from activities over which congress has no jurisdiction?

By allowing Congress to tax "income" that means all income, even income that Congress could not tax before the passage of this Amendment.

Does the term income mean what the supreme court said it did at the time of the passage of the 16th amendment or does it have a living definition that changes with the times?

The definition of "income" can change over time to accomodate changes in the types of income available, just as the definition of "speech" can change to also include posting on the internet.

As the taxing clauses of the constitution were not repealed, is it proper to read the 16h amendment to be in conflict with (and overriding) the taxing clauses?

To the extent the 16th Amendment conflicts with previous taxing clauses, the 16th governs. If there is no conflict, the old provisions stay in.

[2nd_Amendment_Defender]

I would like to see a national sales tax and the elimination of the fed income tax altogether.

I would only support a flat tax change if it were no higher than 15%.

Our tax system is in dire need of a change. However, it is only a sign of how our Federal Government really operates:

It's messed up, nobody knows what's exactly going on, and it is out of control.

[candeee]

You are incorrect on every count. Do you realize that you just insinuated that congress can tax citizens of China that earn income only in China? Congress cannot constitutionally tax an activity unless they have jurisdiction over that activity. They cannot Constitutionally grant themselves jurisdiction over something by taxing it where no jurisdiction exists. As far as a changing definition of income, wrong again. You misunderstood my question on the definition of income. I agree that all new kinds of activities can crop up to produce income. However, regarding the general definition of income, can it change? (Hint, the answer is no). No part of the Constitution my conflict with another. The original taxing clauses have not been repealed and the 16th amendment does not override them. The USSC has ruled as to exactly what the 16th amendment did or did not do. They ruled that it did not give the government any new taxing power, that it only clarified the income tax. The USSC has ruled that the 16th amendment put the income tax back into the category of an excise tax where they say it always belonged.

[jammer]

You are correct, but I would say that the wording of the 16th Amendment is not at issue. Don't mistake my pointing out the following as advocacy of the arguments, but as grist for discussion.

I don't know this man's arguments, but a general argument is that Ohio did not ratify the 16th Amendment, which is therefore not a valid Amendment. Of course, that dog isn't hunting.

A second argument has to do with the exact wording of the Amendment. What is "income?" Income is NOT revenue in an accounting sense. Only in the federal tax code interpretations is the word "income" bastardized to mean revenue less allowed deductions rather than revenue less expenses.

BTW, I keep hearing about these tax cuts, but my tax bite this year with the same deductions from lower revenue is HIGHER. Anyone else with the same experience?

[taxtruth]

There are tons of court cases from 1915 to 1925 that expose what the 16th Amendment was about.I have the 1916 Brushaber decision sitting here on my computer and the Flint vs. Stone and Tracy Co. 1911 here also.The 16th amendment conferred NO NEW POWER of taxation.The governments case is very weak and filled with a bunch of double talk.They seem to think people are retarded in America but it's going to catch up with them sooner or later.What comes around goes around.