Tax activist faces charges: Ex-IRS agent contends federal returns not required

A former IRS agent who believes citizens are not required to pay federal income taxes will appear in U.S. District Court in Sacramento tomorrow to face charges for numerous alleged tax crimes.

Joseph Banister, 41, a leading figure in the "tax honesty" movement, was taken into custody Nov. 19 by IRS agents and released on $25,000 bond after pleading not guilty.

A Certified Public Accountant in San Jose, Calif., Banister has been telling his clients they don't need to file federal income tax returns because the 16th Amendment, which gives Congress "power to lay and collect taxes on incomes," was never properly ratified.

But IRS spokesman Anthony Burke insisted Banister's reasoning already has been thoroughly vetted.

"Many constitutional or legal arguments have been tried in the courts, and without fail, they have been held to be without merit," he told WorldNetDaily.

Asked if Banister's apparently sincere belief that he is following the Constitution makes his case different from other fraud indictments, Burke said he could not comment directly but pointed to Banister's remarks in a New York Times article after his arrest, implying that the California accountant knows tax payment is required.

Banister told the paper that while he does not file a Form 1040, he has advised the government of his income and deductions and has turned over sums equal to what he would owe in taxes.

The IRS spokesman said many courts are getting fed up with lawsuits brought by people who contend federal tax law is fraudulent and are slapping them with frivilous-lawsuit penalties.

In response to another common argument, the Department of Justice website says, "courts have both implicitly and explicitly recognized that the 16th Amendment authorizes a non-apportioned direct income tax on United States citizens and that the federal tax laws as applied are valid."

Banister's attorney Robert E. Barnes did not respond by press time to a request for comment.

Banister's website offers a defense of his views, including an 85-page report titled "Investigating The Federal Income Tax: A Preliminary Report."

The federal indictment accuses Banister and co-defendant Walter A. Thompson, 57, of Redding, Calif., of conspiring to defraud the United States of approximately $259,669 in income and employment taxes.

Banister is charged with three counts of aiding and assisting the filing of false tax returns for Thompson, owner of Cencal Sales, manufacturer of aviation travel bags. Thompson is charged with one count of filing a false income tax return and 10 counts of failing to collect and pay more than $176,000 in taxes from his employees.

If convicted of all counts, Banister could be sentenced to 14 years in prison and a fine of $1 million. Thompson could receive 68 years and a fine of $3.5 million.

In a statement, U.S. Attorney McGregor W. Scott said Banister and Thompson were guilty of "blatant and far-reaching defrauding of honest taxpayers," warranting aggressive prosecution.

"This case should serve as a stark reminder to our citizens that caution should be heeded when approached by those advocating wild theories as to why one does not have to obey federal tax laws," he said.

Banister left public practice as a CPA in 1993 to become an armed, criminal investigator in the IRS Criminal Investigation Division. But he says he resigned after six years because he was "unable to resolve conflicts" between the way the IRS administered the federal income tax and his oath of office.

As WorldNetDaily reported in March, Banister claimed the IRS was illegally using "enforcers" to monitor his political activities and build its case against him. The IRS filed a complaint against him March 19, 2003, and began what he calls the agency's "mission to silence and discredit me."

In an e-mail to supporters yesterday, Banister said, "In obvious desperation, the IRS has had to hunt around its slimy cave for a bigger club because the ones the agency had used in the past were not working as planned. The club now being swung against me is an attempt to take away my personal freedom."

Banister, noting he is married with two teenage boys, said he recognizes the personal price he is paying but believes his case has broad implications.

"In order to mount the best defense possible, a defense necessary to protect every conscientious American who yearns for honesty in taxation and honor in our public officials, I dearly need your spiritual and financial support," he said. "I believe those who wish to throw me in this lion's den have made one mistake – they do not realize that I am not alone there."

While working for the IRS in 1997, Banister's view of tax law changed after hearing radio talk host Geoff Metcalf interview activist Devvy Kidd on KSFO in San Francisco.

After receiving information from Kidd, Banister used his spare time over two-and-a-half years to compile a report for his superiors, telling them that if they cannot find anything wrong with his analysis, he would have to resign.

Banister said his superiors refused to respond to his report and told him they would facilitate his resignation.

"He didn't have to explore what I said on Geoff Metcalf's radio show, and then, when he did find out the whole income tax system is just one gigantic fraud, he could have kept quiet and continued to draw his $80 grand a year paycheck," she said.

"Instead, he choose the path of most resistance because as a man, he could not live with himself if he did otherwise."

Thompson was arrested Nov. 19 after a car chase at speeds of 80 to 100 miles per hour. The California Highway Patrol finally stopped him after laying a strip of spikes to flatten the tires of his car.

According to the New York Times, Thompson placed a call to associate Cindy Nuen while the chase was underway. Nuen, reporting to members of the movement in an e-mail, quoted Thompson saying, ''I'm going to make them take me.''

Thompson refused to leave his car for 10 minutes, said Lt. Jeff Lee of the California Highway Patrol, according to the Times. ''Eventually we persuaded him to come out and he was arrested without incident or injury."

Thompson has been jailed four times for refusing to cooperate with state tax auditors or file returns and pay federal taxes, the Times said.

If he doesn't somehow get this case into civil court and out of tax court, he won't stand a chance.

That only takes filing a motion to move it to federal court. However, his chances remain nil, because his belief rooted in a false premise, that payment of the income tax is not obligatory as a result of misconstuing and partial quoting of a basic case in tax law:

Flora vs U.S.(1960), 362. U.S. 145, and on pg. 176

"The question presented is whether a Federal District Court has jurisdiction under 28 U.S.C. 1346 (a) (1) of a suit by a taxpayer for the refund of income tax payments which did not discharge the entire amount of his assessment."

"the Government can collect the tax from a District Court suitor by exercising its power of distraint - if he does not split his cause of action - but we cannot believe that compelling resort to this extraordinary procedure is either wise or in accord with congressional intent. Our system of taxation is based upon voluntary assessment and payment, not upon distraint. A full-payment requirement will promote the smooth functioning of this system; a part-payment rule would work at cross-purposes with it.

In sum, if we were to accept petitioner's argument, we would sacrifice the harmony of our carefully structured twentieth century system of tax litigation, and all that [362 U.S. 145, 177] would be achieved would be a supposed harmony of 1346 (a) (1) with what might have been the nineteenth century law had the issue ever been raised. Reargument has but fortified our view that 1346 (a) (1), correctly construed, requires full payment of the assessment before an income tax refund suit can be maintained in a Federal District Court."

United States v. Melton, No. 94-5535 (4th Cir. 1996)
ARGUED: Lowell Harrison Becraft, Jr.[one of Schulz & Co. legal beagles], Huntsville, Alabama, for Appellants.

The jury heard not only the United States's evidence against the Meltons, but also the brothers' defense that they believed they were not "persons liable" for federal income tax. The jury rejected the excuse, however, and convicted them on nearly all counts.

[Subtitle A] "Section 1 of the Internal Revenue Code imposes a federal tax on the taxable income of every individual.
26 U.S.C. s 1."

[Subtitle A] "Section 63 defines "taxable income" as gross income minus allowable deductions."
26 U.S.C. s 63.

[Subtitle A] Section 61 states that "gross income means all income from whatever source derived," including compensation for services.
26 U.S.C. s 61.

[Subtitle F] Sections 6001 and 6011 provide that a person must keep records and file a tax return for any tax for which he is liable.
26 U.S.C. ss 6001
26 U.S.C. ss 6011.

Finally, section 6012 provides that every individual having gross income that equals or exceeds the exemption amount in a taxable year shall file an income tax return.
26 U.S.C. s 6012.

The duty to pay federal income taxes therefore is "manifest on the face of the statutes, without any resort to IRS rules, forms or regulations." United States v. Bowers, 920 F.2d 220, 222 (4th Cir.1990). The rarely recognized proposition that, "where the law is vague or highly debatable, a defendant--actually or imputedly--lacks the requisite intent to violate it," Mallas, 762 F.2d at 363 (quoting United States v. Critzer, 498 F.2d 1160, 1162 (4th Cir.1974)), simply does not apply here.
Each Melton brother had gross income in excess of the amount requiring the filing of a return in each of the years at issue. Therefore, each was a "person liable."

United States v. Sloan, 939 F.2d 499 (7th Cir. 1991)
Argued that there is no law imposing a tax on income

KANNE, Circuit Judge.

Like moths to a flame, some people find themselves irresistibly drawn to the tax protestor movement's illusory claim that there is no legal requirement to pay federal income tax. And, like the moths, these people sometimes get burned. Lorin G. Sloan believed these claims and because he acted upon them now faces four months in a federal prison; there can be little doubt that he has been burned.

The real tragedy of this case is the unconscionable waste of Mr. Sloan's time, resources, and emotion in continuing to pursue these wholly defective and unsuccessful arguments about the validity of the income tax laws of the United States. Despite our rejection of Mr. Sloan's legal analysis of the tax laws, we are not unmindful of the sincerity of his beliefs. On the other hand, we are less sure of the sincerity of the professional tax protestors who promote their views in literature and meetings to persons like Mr. Sloan, yet are unlikely ever to face the type of penalties incurred by him. It may be that our decision will not alter Mr. Sloan's views regarding the tax laws of this country, for he has stated that if we affirm his conviction without applying the law as he understands it, our decision will be "a sham to which I WILL NOT SUBMIT." It may also be that serving his sentence in prison will not alter Mr. Sloan's view. We hope this pessimistic assessment is incorrect.

We AFFIRM the conviction of Lorin G. Sloan on all counts.

VOLUNTARY in the Fed's eyes means:

You can choose to do it their way;
Choose to live on income below the povery line;
Choose to exhaust your resources in Court;
Choose to go on a Federal all expense paid vaction while you think it over;
Choose to hide out and play parasite until you make a mistake and expose yourself to their tender mercies.

The only way the income tax system is going to go away, is legislatively:

H.R.25, S.1493
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 for additional information: http://www.fairtax.org, http://www.salestax.org & http://www.geocities.com/cmcofer/ftax.html

And clear the way for enactment & ratification Sam Johnson's proposed amendment to the constitution:

H.J.RES.61
Title: Proposing an amendment to the Constitution of the United States to abolish the Federal income tax.
Sponsor: Rep Johnson, Sam [TX-3] (introduced 6/24/2003) Cosponsors: 5
Latest Major Action: 9/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on the Constitution.

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