The irrepressible Irwin Schiff loses again (IRS seized bank account)

Las Vegas Review Journal ^ | 04/07/02 | Vin Suprynowicz

[LarryLied]

Judge Allan R. Earl of Clark County District Court on March 18 dismissed Las Vegas tax educator/tax resister Irwin Schiff's civil suit against Bank of America, in which Schiff contended the bank acted improperly when it turned over funds in his account to the IRS after receiving a "Notice of Intent to Levy" from IRS agent James L. Gritis.

Judge Earl had blocked the bank's attempt to have the case dismissed last fall, ruling Schiff should have a chance to depose agent Gritis, which he did on Jan. 15.

Schiff had hoped to get Gritis to admit he had no written delegation of authority from the Secretary of the Treasury to demand or enforce such levies -- and had not shown any such written authority to bank officers. In the end, Schiff insists he did indeed get Gritis to make precisely that admission, under oath.

Yet Judge Earl ruled, in throwing out the case, that it's not up to his court to decide whether the IRS or its procedures are constitutional.

Schiff, who vows to file for reconsideration, insists that's not what the case was about, at all. "If some guy in coveralls showed up at the bank and said, 'Hi, I work as a janitor over in the IRS building, and I'd like all the money out of the following depositors' bank accounts,' what the bank is saying is that they'd give that guy your money, and it's OK for them to give him your money," Schiff argues.

"B of A isn't unique. Every state has laws that say they can only turn over your money based on receipt of a writ of garnishment issued by a court, and all these banks ignore those laws. ... All I asked him to find was that the bank didn't comply with the law."

Judge Earl responds: "When Mr. Schiff first walked in I didn't know his extensive background of dealings with the IRS. I thought it would be interesting to let him depose the IRS agent and see if they could present a color of authority for taking the money. And in the case law and statutes they cited, they did that. ... They did not send a janitor. According to the IRS, the agent did have the authority. ...

"But I'll tell you, the IRS almost went nuts when I let him depose the agent. They just couldn't believe any judge would allow that to happen. ... I think too many times Mr. Schiff has just been treated like a nut or a rabble-rouser, so I wanted him to be able to say someone had heard him out. I'm not that fond of the IRS, but I had no choice; the bank could have been indicted for violation of federal law if they did not comply."

But under the 10th Amendment, doesn't state law -- NRS 31.291, which states that bank accounts can be garnished only by serving a court order on one of the officers of the bank -- take precedence over federal law?

"No, whenever there's a conflict the federal law takes precedence," responded Judge Earl, a state judge.

Schiff contends that he does at least have the satisfaction of knowing the bank changed its deposit agreement based on his lawsuit, though.

"A month after I filled my lawsuit," Schiff says, "the bank substantially rewrote its agreement which now includes an outrageous provision that depositors won't hold the bank liable even if it wrongfully turns over their money to someone else. ... And the bank even added a provision that by leaving your money in that bank you have agreed to these new provisions even if you're unaware of them."

Tax accountant Michael Snell of the California firm Michael R. Snell & Associates (Tax-Man@PacBell.net) says he has found considerable interest in the Schiff case, and is now advising his clients via e-mail: "Bank of America most certainly can take your money and give it to someone else and you don't have any recourse. ... I have a copy of Bank of America's deposit agreement (it is current and I received it at a Bank of America branch in Santa Ana, California on March 27, 2002). ...

"There is no question in my mind that the bank is specifically disclaiming liability in the event they give your money to a third party. ...

"On page two of the deposit agreement it states in plain English (not legalese): 'If another person or entity makes a claim against funds in your account, we may take one or more of these actions without any liability by us to you (emphasis mine): honor the competing claim upon receipt of evidence we deem satisfactory. ...'

"There is some question about whether the bank changed the deposit agreement as a result of Schiff's lawsuit," Snell notes. "However, the official date of the new revision is ... just after the filing of the lawsuit by Schiff."

Bank of America spokesperson Shirley Norton acknowledges the bank's branches received a revised deposit agreement last November, but insists: "I can tell you for a fact we didn't change our deposit agreement as a result of this lawsuit. There is a provision on page two of the deposit agreement, and that provision is designed to keep us out of the middle of disputes between holders of joint bank accounts. There were no changes in that section. The bank is required by federal law to act on an IRS levy, and we do not require a court order. It is federal law."

Accountant Snell is careful to note: "I do not endorse any schemes (including Schiff's) that claim to legally keep people from paying income taxes. None. ... Unquestionably, each time one of these kinds of schemes has been scrutinized by the courts somebody has gone to jail for tax evasion or failure to file a return. ...

"While I wish Mr. Schiff well in his pursuit of justice I also recognize that if he prevails against the IRS the laws are likely to change quickly. Whatever loophole he has exploited will be closed because the government will never give up its ability to tap into the wallets of the citizenry. ..."

[kiryandil]

Unquestionably, each time one of these kinds of schemes has been scrutinized by the courts somebody has gone to jail for tax evasion or failure to file a return. ...

I wonder if "each time" the judges in the case acknowledge where their paycheck is coming from?

Oh, that's right - the judges have a vested interest in making sure the taxation machinery continues to squeeze the serfs smoothly and quietly.

[citizenx7]

This case points out several things: First, the Bank Of America is not interested in looking out for the best interest of their customers, their only concern in a matter such as this should be that their customer's rights are not abridged. Therefore, I would withdraw from any bank that has such a policy in force.

Secondly, and most importantly, the Judge here did not do his duty when he avoided the question of a properly served court order being necessary. No short cuts are allowed in a lawful, constitutional society, such as ours is supposed to be. Both State and Federal law upholds Mr. Schiff on this point. Our laws are not supposed to be designed to make government efficient, but rather that they should be fair and constitutional.

[ancient_geezer]

Oh, that's right - the judges have a vested interest

If that were true, any protestation that taxes do not apply to you is nonsense. For those judges will be certain to make the tax law apply to you;

Alternatively the law does apply to you and is constitutional and the judges will make certain the tax law applies to you.

Notice, in both evaluations exactly the same result will be obtained from the Courts.

Furthermore:

1) Federal judges are appointed for life, and good behaviour. The pay cannot be taken away from them.

2) Federal judges have ruled their pay is subject to income tax, though at any time they could rule otherwise if they so desired and believed otherwise.

3) It would be in the personal and financial interest for the courts to rule that the income tax is unconstitutional and illegal. In so doing the law would be void, the IRS which is authorised under that law would ceased to exist or have power over the people or the courts.

4) Judges are ruling against there own personal interest in support the income tax against you in the courtroom. For if it did not apply to you, it cannot apply to them.

Something is lacking in your analysis and it is called reason and credibility. It does not pass the test of Occum's razor, nor the laugh test.

[LarryLied]

the Judge here did not do his duty when he avoided the question of a properly served court order being necessary. No short cuts are allowed in a lawful, constitutional society, such as ours is supposed to be.

Where is Alan Dershowitz, the ACLU and all the others who are so concerned about violations of the Bill of Rights?

[ancient_geezer]

Secondly, and most importantly, the Judge here did not do his duty when he avoided the question of a properly served court order being necessary.

Sorry to disabuse you of that notion, but the Supreme Court disagrees with you:

BULL v. UNITED STATES 295 U.S. 247 (1935)

", the usual procedure for the recovery of debts is reversed in the field of taxation. Payment precedes defense, and the burden of proof, normally on the claimant, is shifted to the taxpayer. The assessment supersedes the pleading, proof, and judgment necessary in an action at law, and has the force of such a judgment. The ordinary defendant stands in judgment only after a hearing. The taxpayer often is afforded his hearing after judgment and after payment, and his only redress for unjust administrative action is the right to claim restitution. But these reversals of the normal process of collecting a claim cannot obscure the fact that after all what is being accomplished is the recovery of a just debt owed the sovereign."

---

How does this come about? Tthe Congress has been granted the Constitutional authority to make the procedural rules the courts must abide by:

Constitution for the United States

Article 1 Section 8: The Congress shall have Power ...

clause 9: To constitute Tribunals inferior to the supreme Court;

Article 3 Section 2

clause 2: In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction. In all the other Cases before mentioned, the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.

And those procedures for the national tax laws are laid out in Title 26 of the U.S. Code.

---

The Supreme Court has also told us precisely who to go to to get any grievence with this process corrected:

McCulloch v. Maryland (1819), 17 U.S. 316

• "The power of taxing the people and their property is essential to the very existence of government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the Government may choose to carry it. The only security against the abuse of this power is found in the structure of the Government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation."

Springer v. United States(1880), 102 U.S. 586

• "If the laws here in question involved any wrong or unnecessary harshness, it was for Congress, or the people who make congresses, to see that the evil was corrected.
  The remedy does not lie with the judicial branch of the government."

Champion v. Ames(1903), 186 U.S. 321

• 'But if what Congress does is within the limits of its power, and is simply unwise or injurious, the remedy is that suggested by Chief Justice Marshall in Gibbons v. Ogden [21 US 1, 9 Wheat. 1, 6 L. ed. 23], when [195 U.S. 27, 56]   he said: 'The wisdom and the discretion of Congress, their identity with the people, and the influence which their constituents possess at elections, are, in this, as in many other instances, as that, for example, of declaring war, the sole restraints on which they have relied, to secure them from its abuse. They are the restraints on which the people must often rely solely, in all representative governments."

---

I would submit, it is time to pound on Congress Critters to abolish the Income Tax and replace it with something more suitable to a free Republic, and appropriate to a free people.

Alan Keyes refers to the income tax as the slave tax that should be abolished as a moral imperative, and replaced with a National Sales Tax:

Keyes on Taxes & Government Spending:

• "The income tax in effect makes us vassals to the government – the politicians decide how much income we can keep. No mere “reform” of this slave tax, such as flattening the rate, can correct its fundamental denial of control over our own money. Only the abolition of the income tax itself will restore the basic American principle that our income is both our own money and our own private business - not the government's."

• "Replacing the income tax with a national sales tax would rejuvenate independence and responsibility in our citizens. True economic liberty and moral revival go hand in hand."

• "A national sales tax would also put the American citizen back in control of national fiscal policy. The best way to curtail government spending is to cut taxes, because they can’t spend what they don’t get. But with a sales tax, we could deny funds to a spendthrift government – and give ourselves a tax cut – whenever we make the private choice to alter our spending and saving habits."

Alan Keyes Interview with Des Moines Register:

• Conservative commentator Alan Keyes said Thursday one of the first things he would do as president would be to replace the federal income tax with a national sales tax.

• The Republican presidential candidate said he favors a national sales tax of about 23 percent that would also replace the payroll tax that pays for Social Security.

The intent of the structure of the individual income tax is for political and social mainpulation not revenue collection. The Individual Income tax is maintained to establish and hold every person in the country in perpetual legal jeopardy and to create artificial divisions among the electorate (rich vs. poor; big business vs. the little guy; etc).

It is time to push for repeal of the income/payroll tax system in this Nation and return to true consumption based taxes.

Thomas Hobbes from Leviathan

• It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income.

[Free the USA]

Check the Bump List folders for articles related to and descriptions of the above topic(s) or for other topics of interest.

[kiryandil]

It would be in the personal and financial interest for the courts to rule that the income tax is unconstitutional and illegal.

Really! If the tax is not collected, the judges would not be paid. Perhaps you would be so good as to point out how exactly that would be in their "personal and financial interest".

You lose the laugh test, old guy. Right about now you sound like a shill for the current tax structure.

[ancient_geezer]

If the tax is not collected, the judges would not be paid.

They would quite certainly be paid off the printing presses for sure if not by sale of assets, fees for federal services, etc. There are sufficient sources of revenues to pay judges in accord with Constitutional mandate, they have first option on all funds by Constituional mandate.

Course under those conditions, Judges really would rule.

Your objection does not stand.

[VRWC_minion]

How long does a guys losing streak have to be before his followers admit to themselves they are following a loser ?

Schiff has been reduced to arguing that a federal levy on his bank account isn't legal. He lost all his other arguments regarding federal constitutional and statutorial arguments and now he has retreated to arguing local state laws.

But it doesn't matter. His duped customers will follow this pied piper by giving money away and 3-5 year's of their lives for tax fraud.

[ancient_geezer]

If the tax is not collected,

Perhaps you can tell me how corporate taxes, excises, tariffs, and fees and real assets suddenly just disappear because an individual income tax fails in a Courtroom.

The individual income tax does not even provide 50% of the revenues of Government:

 

The FY2001 Federal revenues by source
( yellow highlited values are taxes replaced by NRST HR2525):

FY 2001 Revenue Source	Amount Billions	Percent of total
Individual Income Taxes	972	48.15%
Corporate Income Tax	195	9.66%
Payroll Taxes (SS/Medicare)	682	33.78%
Estate & Gift Taxes	32	1.58%
Excise Taxes	77	3.81%
Customs Duties	21	1.04%
Miscellaneous Revenues	40	1.98%
Total	2019	100.00%

 

It is guaranteed the Congress will be acting very fast to create a new tax system to provide the rest of the revenues to keep the ball rolling.

I can see at least one sitting in the wings right now:

John Linder (R Texas) offers a comprehensive bill to kill all income and payroll taxes outright, and provide a revenue neutral replacement:

H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org

[jsraggmann]

Oh really? Where does the Constitution mention "Federal Judges"? I could only find reference to the Supreme Court.

[ancient_geezer]

Oh really? Where does the Constitution mention "Federal Judges"? I could only find reference to the Supreme Court.

You really ought to read the Constitution instead of just spout off about it. That is why I provide links you know. Or maybe you should learn how to read?

Article 3 Section. 1 clause 1:

"The judicial Power of the United States shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services a Compensation, which shall not be diminished during their Continuance in Office."

[kiryandil]

You still have offered no refutation of the fact that judges are ruling on their source of income, a clear conflict of interest. All I see is a bunch of NRST spam, as per the tradition.

[kiryandil]

Schiff has been reduced to arguing that a federal levy on his bank account isn't legal. He lost all his other arguments regarding federal constitutional and statutorial arguments and now he has retreated to arguing local state laws.

Apparently, I'm one of the few that find it disquieting that a person's assets can be seized by the gummint over any pretext. If that isn't a definition of slavery, I don't know what is.

[ancient_geezer]

You still have offered no refutation of the fact that judges are ruling on their source of income, a clear conflict of interest.

You have shown no evidence that they are or that there is any conflict of interest in their rulings.

While I have shown that their compensation is in no jeopardy whatsoever of diminishment what ever there rulings.

You had better take a look at Reply #13 above as well. Their compensation is mandated by the Constitution itself, and more solid than any other official of government or citizen of this nation.

[ancient_geezer]

Apparently, I'm one of the few that find it disquieting that a person's assets can be seized by the gummint over any pretext.

Non-payment of taxes is hardly "any pretext".

Constitution for the United States of America:

• Article VI: "This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding."

• Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
  to pay the debts and provide for the common defense and general welfare of the United States;
  but all duties, imposts and excises shall be uniform throughout the United States; "

• Article I Section 8: "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof."

Consideration received in exchange for labor or product is commerce, subject to an indirect tax.

[kiryandil]

You FairTaxers are very tiresome. You're apparently NEVER wrong, and you can go on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on......

[ancient_geezer]

You're apparently NEVER wrong,

I, at the least, have spent the requisite time and scholarship required to know my subject.

If you wish to debate on the basis of fact, reason and historical record. I stand ready.

Otherwise you are just adding to the noise level.