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Voluntary or Mandatory?
Her pitch revolves around a few basic principles: First, she says believe it or not federal income tax, isn't mandatory, but voluntary.
Second, Meredith claims the money you earn is not really "income," but an even trade for your labor, and thus not liable to tax. And finally, she says any assets you do have can be safely protected in a made-up version of a legitimate trust fund called a "pure trust." Is a pure trust legal? "Yes. A pure trust is perfect legal," she said, adding, "The pure trust legally is not required to file a tax return."
But that is not how the IRS sees it. Last April the 15th to be exact agents arrested Meredith and six colleagues on 16 counts of conspiring to defraud the U.S. government by, among other things, failing to file income tax returns and encouraging others to do the same. The indictment calls the trusts "bogus," Meredith's advice "misleading," their tax returns "fraudulent."
Living Large and Proudly
Meredith claims the IRS is simply harassing her, and has filed a civil suit against the agency for what she calls the violation of her liberties during a 1998 raid on her home. In defiance, she proudly flaunts her collection of vintage cars, garaged in her spacious apartment building just a block from the beach in Southern California. "I don't keep a low profile because you don't have to drive beat-up cars," she told me as we tooled around in her black Jaguar. "You don't have to live in squalor."
Meredith admits she's made money from her enterprise, but she doesn't call it "income" and she disputes the IRS charge that she earned at least $6.2 million. She also notes that she pays sales, auto and property taxes. But no income tax.
'A Great Big Lie'?
The IRS wouldn't discuss her case with us since it's pending, but attorney Jay Adkisson, who has tracked plenty of what he calls "tax scams" (including Meredith's) on his Web site, told us, "Lynn Meredith is a scam artist. Nothing more, nothing less.
Lynn Meredith says she's telling people "the truth" when she says that paying federal income tax is a matter of choice. (ABCNEWS.com) |
Waiting on the Courts
Today Lynne Meredith's operation has been shut down her offices are closed, her seminars ended by the IRS. It cost her brother half a million dollars to get her out on bail and even now, as she awaits her trial scheduled for June, her freedom is severely curtailed. Meredith is not permitted to sell her books, or her trusts, and must be home by 11 p.m. She is also prohibited from traveling outside the county, and her movements are tracked by a government-issue ankle bracelet.
Still, she says she remains confident, despite the fact that a number of other tax-avoidance promoters have been sent to prison. If she loses at trial in June, she said, "I will appeal it to the 9th Circuit, and then I will appeal it to the Supreme Court of the United States."
And if she loses there? "Well then I guess I'll have to go to jail."
This explanation about what voluntary is sounds pretty goofy to me. So if a armed robber sticks a gun in my face and demands that I hand over my wallet, it is really voluntary on my part as to rather or not I actually hand over the wallet. Of course, if I don't hand over my wallet to the robber, he will probably shoot me. Voluntary isn't supposed to mean that if you don't do something, you are going to face serious legal consequences, or worse, as a result.