Simkanin trial in Fort Worth, Texas

Tax protesters plan to attend Bedford man's retrial By Toni Heinzl Star-Telegram Staff Writer FORT WORTH - For tax protesters across the country, Bedford businessman Richard Simkanin has become a hero and martyr for taking a stance against federal income taxes and rejecting the authority of the federal courts.

Simkanin has been jailed since June while awaiting trial on tax charges. He accepted a plea bargain that was later thrown out because of a technical error, saw his first trial end in a mistrial and will face a retrial Monday.

The 59-year-old owner of a small plastics-manufacturing company is "an American patriot persecuted by a tyrannical government," his supporters say.

In a show of solidarity, many of the protesters have vowed to come to the federal courthouse in Fort Worth on Monday for Simkanin's retrial.

They have posted a billboard message just a few blocks from the federal courthouse to send a message to U.S. District Judge John McBryde, the trial judge.

In large letters, the billboard proclaims: "USDC Judge McBryde. OBEY THE CONSTITUTION. FREE Dick Simkanin NOW!"

It gives the We The People organization's Web site address, www.givemeliberty.org., and features a head shot photograph of Simkanin's behind superimposed prison bars, with the caption, "Innocent until proven guilty."

McBryde has not been impressed by arguments made by Simkanin and other tax protesters. He compared the "tax honesty movement" to a cult, according to a scathing order issued July 14 in which McBryde stated his reasons for keeping Simkanin behind bars pending trial.

"He, and those who share his views, have a cult-like belief that laws that are generally accepted by citizens of the United States are not applicable to them," McBryde wrote. "Certain of them have joined Simkanin in publicly announcing that they are not complying with the internal revenue laws of the United States."

Until a few years ago, Simkanin was the little-known owner of Arrow Custom Plastics in Bedford.

But his life in obscurity ended in March 2001 when he took out a full-page ad in `USA Today' with a group of like-minded citizens who announced their opposition to federal income taxes.

Last summer, he was charged by federal authorities with failing to withhold taxes from his employees' paychecks and with filing fraudulent claims for tax refunds.

McBryde ordered Simkanin held in jail after an informant told authorities that Simkanin had threatened to kill federal judges. Simkanin also testified before McBryde that he did not believe that the federal courts had any jurisdiction over him.

On his Web site, a warning was published that spoke of the "fury of a fire" that would consume his adversaries. He once wrote to the treasury secretary that he had repatriated himself from the United States to the "Republic of Texas" and vowed to ignore the laws of the United States.

Prosecutors argued that a man with such views could not be trusted to obey bail conditions set by a federal judge.

Simkanin and other followers of the tax honesty movement believe that the vast majority of U.S. citizens working for U.S. companies are not required to pay federal income taxes under the Constitution or any current law.

They accuse the government, and particularly the Internal Revenue Service, of taking trillions of hard-earned dollars from average citizens in an unprecedented scam. The IRS and the Justice Department maintain that the arguments of the tax honesty advocates are bogus and popular ploys in a string of illegal tax evasion scams promoted by a few self-styled tax experts.

The fact that Simkanin's first trial ended in a mistrial in November because of a hung jury has galvanized this movement.

One of them, Ken Evans of Wilmington, Del., a salesman for a pharmaceutical company, said in a telephone interview that he instructed his employer two years ago to stop withholding federal income taxes from his paychecks. He said that he has not faced any administrative action from the IRS, but that a federal judge dismissed his civil lawsuit against the government in which Evans sought to force the IRS to explain his tax liability to him.

"The lawsuit against Mr. Simkanin is nothing more than a propaganda lawsuit by the government," Evans said. "I'm very confident that the government will lose this one because Mr. Simkanin is correct that the law does not require the majority of businesses in this nation to withhold for people who work for them."

Another tax honesty advocate, self-employed database manager Mark Yannone, of Phoenix, said in telephone and email interviews that he admired Simkanin's courage to take on the government, adding that he believes that millions of people share his views but are afraid to take action.

"More than 50 percent of American adults receive some kind of federal checks, including Social Security," Yannone said. "If they speak out against the government, they're cutting their own throats."

Phil Beasley, a spokesman for the IRS in Dallas, said the agency would not make any officials available to discuss Simkanin's case until the conclusion of his trial because it would be improper to comment on pending litigation. Instead, Beasley referred to IRS publications and Web site postings aimed at debunking common myths spread by the tax protesters.

In essence, the IRS response says that the constitutionality of the federal income taxes has been upheld by numerous court decisions and that the tax protesters deliberately misinterpret tax laws to advance their agenda.

"Some people find themselves irresistibly drawn to the anti-tax movement's illusory claim that there is no legal requirement to pay federal income tax," IRS Special Agent Mike Lacenski said in a statement Sept. 30 -- after Simkanin pleaded guilty to failing to collect and pay taxes on his employees' wages.

"The Courts have repeatedly rejected those arguments as frivolous," Lacenski said.

In a bizarre twist in this high-profile tax case, Simkanin's Sept. 30 plea agreement, negotiated by government and defense attorneys and approved by McBryde, contained a mistake regarding the potential maximum sentence.

The original plea agreement misstated the potential maximum sentence under the law as being three years when it should have said five years. When Simkanin refused to sign off on another plea offer with a potential maximum sentence of five years, McBryde threw out the agreement and allowed Simkanin to take his case to trial before a jury.

In court filings, Assistant U.S. Attorney David Jarvis has indicated that the government will seek to use additional evidence at the retrial to buttress its contention that Simkanin deliberately broke tax laws and that he had a documented history of rejecting federal and state jurisdiction.

Under a unique feature of criminal tax cases, jurors must decide whether a defendant unintentionally violated the law after trusting wrong advice in good faith. Ignorance of the law, in such cases, is a legal defense.

Prosecutors argued at the first trial, and again in court filings for the retrial, that Simkanin intentionally decided to shirk his tax obligations.

During the first trial, Simkanin's former accountant, Fred Taylor, testified that his firm stopped representing Simkanin when Simkanin refused Taylor's advice to continue withholding and paying taxes on employees' wages.

Taylor, an accountant with more than 25 years of experience, said he told Simkanin that it would be unlawful to drop out of the tax system.

Jarvis said that Simkanin searched for an accountant who shared his views about income taxes and found an ally in accountant Wayne Paul.

Defense attorney Arch McColl of Dallas said that Simkanin trusted Paul's advice.

"Mr. Paul advised my client he did not have a requirement to withhold because of the particular business he was in," McColl said after the first trial.

McColl did not return several messages left at his office during the past two weeks.

For the retrial, McColl's list of defense witnesses includes a California lawyer and tax honesty advocate, Eduardo Rivera, who is highly regarded in tax protester circles.

Rivera made headlines last April when the Justice Department filed suit in federal court in Los Angeles to stop him from promoting three major tax scams.

The lawsuit, filed April 10, accuses Rivera of selling opinion letters falsely stating that his customers are not liable for federal income taxes and of selling an "asset protection" service that he claims can shield his customers' assets from IRS levies. Justice Department attorneys also said in court documents that Rivera represents his customers before the IRS for the purpose of determining that they are not liable for all federal taxes.

According to court papers, Rivera argues that only federal employees have to pay federal income taxes. The IRS claims that six of Rivera's customers owe more than $9.5 million in taxes, interest and penalties.

"Tax scammers enrich themselves by helping others violate the law," Eileen O'Connor, assistant attorney general for the Justice Department's tax division, said in a statement after the lawsuit against Rivera. "The Justice Department will shut down abuses of the public trust by people who promote tax scams, including those run by licensed professionals."

In a telephone interview last week, Rivera, of Torrance, Calif., said he could not comment on Simkanin's case because he might be called as an expert witness for the defense.

He agreed, however, to email to the `Star-Telegram an advice letter he sends out to friends and clients in which he rejects the authority and legitimacy of the federal courts.

"Any litigant in any United States district court in any state of the Union is warned that these courts have no judicial power whatsoever," Rivera wrote.

He advises his tax clients against making voluntary appearances at a federal courthouse: "Your voluntary appearance at courthouse will be interpreted as a consent to territorial jurisdiction of that court, so, any appearance or acquiescence with a demand or request will constitute acceptance of jurisdiction."

ONLINE: IRS Nonfiler Enforcement Program, www.treas.gov/irs/ci/tax--fraud/docnonfilers.htm .

it's truly amazing that the author of this news article, like most from the establishment press, refer to many Americans who simply want the government to "follow the law" as "tax protesters".

these same reporters could not sight the exact portion of the Code that shows where American citizens "who live and work in the U.S." are required to file and pay. and, so even though the feds have been politely asked in the past 4-5 years in thousands of letters to explain their legal position, we are just supposed to blindly follow their (illegal) directives, well, because the feds say so.

many Amercians are learning how the Code was so deceptively written by treasury dept lawyers, who to this day, will not explain their own Regulations.

it is the Regulations that show Americans who "live and work exclusively in the U.S." that their domestic income is NOT LISTED as one of the items used to determine one's taxable income -- if any. and, as any attorney should know, if the law doesn't specifically state it, it ain't to be considered part of the law!!

this is not the result of a poorly written law, but the extreme limits our Constitution put on Congress to tax. Congress did not and could not tax the incomes of most Americans. that would be considered a "direct tax" which the Constitution forbids!

if my state wants to tax me, fine. but the feds can only legally use "indirect taxes" on me. if i choose not to drive my car as often as i do, i could pay less gasoline taxes as a form of "indirect taxes". same on alcohol and tobacco "indirect taxes".

what incomes the feds can tax is (1) the incomes of people who live in American Possessions (2) resident foreign aliens (3) Americans who make their money outside the U.S. as in any foreign transactions. we might as well throw in the 12 million plus "illegal aliens" as those who pay (they don't file obviously).

the fed govt is so-oo-oo big, it's out of control.
many Americans feel it is their duty as citizens to cut the feds down to size and make them accountable to the laws on the books.

again, the domestic income of most Americans is simply not taxable by the law as it is written.

the deceptive treasury dept lawyers never must have never thought the internet would come around 8 decades after they wrote the Regulations -- which are to be treated the same as the statutes themselves.

the feds have continued the great deception on most American citizens.

this is what the Simkanin trial is (hopefully) bringing out.

if we are to be a country of written law and a constitution, may the truth win out!!

you wrote:

"The Seventeenth Amendment to the U.S. Constitution:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived. . ."

The word "source", buster, is the legal meaning, not the common use of the word. Same is true for the word "firearm". See what Larken Rose (www.taxableincome.net) says here --

"As a good example, 26 USC § 5841 states that “[t]he Secretary [of the Treasury] shall maintain a central registry of all firearms in the United States which are not in the possession or under the control of the United States.” The law has a far more limited application than this section by itself would seem to imply. In 26 USC § 5845(a) it is made clear that the term “firearm” in these sections does not include the majority of rifles and handguns (while the term “firearm” in basic English obviously would), but does include poison gas, silencers and land mines. The average citizen reading the law will naturally tend to assume that he already knows what the words in the law mean, and may have difficulty accepting that the legal meaning of the words used in the law may bear little or no resemblance to the meaning that those words have in common English. For example, reading the phrase “all firearms” in Section 5841 in a way that excludes most rifles and handguns is contrary to instinctive reading comprehension. (But any lawyer reviewing Sections 5841 and 5845 would confirm that such a reading would be absolutely correct.) Reading one section of the law without being aware of the legal definitions of the words being used can give an entirely incorrect impression about the application of the law."

And, if you can read a few more words of truth and understanding, from Dr. Tom Clayton at his www.861evidence.com site,

"The income tax is imposed on “income from whatever source derived” (minus deductions). The mere receipt of income, by itself, is not (and could not be) the subject of this excise tax. It is the “source” which is the subject of the tax, and the amount of income received from that “source” is what is used to determine the amount of tax due. So, in order for an "item" of income to be taxable, it must come from a taxable "source" (see below).

OVERVIEW OF STATUTES AND REGULATIONS:

The statutes passed by Congress are often written using "general" language, which makes it possible for the precise meaning and application of the law to be misunderstood. In order to make sure that the public understood the correct application of the law (before there could be any enforcement for failing to do what the law required) Congress authorized the executive branch agencies that enforce the law (such as the Treasury Department) to create regulations.

The process of writing the statutes and regulations is quite precise. These "related" regulations are "supposed" to give the public more detailed explanations of the statutes so that they understand the correct application of the law. And that is what most of them do, with some exceptions (when stealing with no basis in law is what is desired). For federal taxes, career lawyers write the regulations.

The income tax is imposed on the "taxable income" of individuals. What the law writers managed to conceal was that there are multiple steps in the law that the reader must take to find out IF their income becomes "taxable income" or not. Not knowing this, the reader did not know that:

In order for income to become "taxable income," it must be derived from a taxable "source."

Since they MUST state the truth, the law writers had three options:

Put the words that show the truth to the reader where nobody knows to look, or

Use words that are deliberately convoluted so that although they tell the truth it is almost impossible for the average reader to understand what the correct conclusions are.

Do both.

They did both. Although the linguistic "art" of deception in Section 861 and following is quite advanced in the current law, the final conclusions are the same as in earlier times. But historically, the sections of this part of the law were written in such a way that the truth was much easier to see and understand. The problem was that most people never saw the law. Over time, it became the near exclusive playground of highly paid "experts," instead of being a place where the public could easily see what the law did or did not require them to do.

The truth that the incomes of most Americans are not (and have never been) taxed under federal law was hidden in the regulations under Subchapter N, Section 861 and following, using convoluted words and terms not found in the statutes under a topic deliberately entitled, "miscellaneous matters." This virtually guaranteed that most readers would ignore, overlook, or misunderstand the correct application of this part of the law (if they ever got to see it, when most did not).

The current technically correctly written regulations under 26 CFR § 1.861-8 that show the limited scope of the tax that are critical to correctly understanding who has "taxable income" or not were expanded and made almost impossible to understand in 1978. Yet, they remain the FINAL STEP in correctly determining who has "taxable income" or not (therefore who may owe federal income taxes or not after allowable deductions).

For most Americans, Subchapter N, Section 861 is THE critical part of the income tax law, because this is where DOMESTIC income is treated. But as shown above, the hardest thing to see in the law is that which is NOT SPECIFICALLY POINTED OUT. The rules (regulations) beginning at 26 CFR § 1.861-8 tell the reader quite specifically WHEN domestic income is taxable and WHEN foreign income is taxable. What do those rules say?

The only situations in which DOMESTIC income is taxable is when FOREIGNERS receive the income because this is specifically mentioned in the law (1.861-8(f)(1)(iv)).

The only situations in which FOREIGN income is taxable (for individuals) is when U.S. citizens receive the income because this is specifically mentioned in the law (1.861-8(f)(1)(i)).

In other words, the ONLY U.S. citizens with "taxable income" are those who have certain types of income related to foreign and international commerce. Why? Because that is what the law specifically points out. This makes it clear why those rules do NOT show that the domestic incomes of U.S. citizens earned ONLY from within the 50 states (most incomes) are taxed because they are NOT mentioned in the law.

Since the law does not lie and the evidence will not go away, it is only a matter of time before the public understands the evidence in the law that proves that they have been deceived, which will alter forever how Americans view their government and its laws. The key to ending this deception is mass education of the public. Help us spread the word!"

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