Defiant Tax Protester Gets Seven Year Sentence

Convicted in January on 29 counts of violating U.S. income tax laws, Bedford businessman Richard Simkanin remained defiant in his anti-government stance at his sentencing Friday.

Simkanin, 59, told U.S. District Judge John McBryde that after spending thousands of hours studying federal tax laws, the Constitution and the Declaration of Independence, he concluded that he did not agree with the tax laws.

But McBryde had heard enough. Going beyond federal sentencing guidelines, McBryde sentenced Simkanin to seven years in prison and ordered him to pay $302,000 in restitution to the government.

In explaining the tough sentence, McBryde cited Simkanin's history of radical anti-government beliefs and his "contempt and disrespect" for the federal government and the federal courts.

"He and those who share his views have a cultlike belief that laws that are generally accepted by citizens of the United States are not applicable to them," McBryde said. "The defendant has entrenched himself in anti-government groups."

McBryde said Simkanin would continue to violate income tax laws. The judge recalled that Simkanin threatened to kill federal judges and that he surrendered his Texas driver's license but continued to drive with a home-made ID card.

On Jan. 7, a federal jury convicted Simkanin on 10 felony counts of failing to withhold about $139,000 in taxes from employees' wages at his company, Arrow Custom Plastics, and 15 felony counts of filing false tax refund claims for about $235,000.

He was also found guilty of four misdemeanor counts for failing to file individual income tax returns from 1998 to 2001. Simkanin had an estimated gross income of about $410,000 during these years, prosecutors said.

Arch McColl, the Dallas lawyer representing Simkanin, said he would appeal. McColl had asked for a sentence of 41 months at the low end of the federal guidelines. He described Simkanin as a non-conformist American in the tradition of Henry David Thoreau.

"He has a sincere, well thought-out position that is at odds with the government position," McColl said. "Reasonable people disagree about the tax laws. My client is an American citizen who, like Thoreau, walked to the beat of a different drummer."

But prosecutors pointed to Simkanin's long history of law-breaking, saying the last time he filed complete individual and corporate federal income tax returns dates back to the mid-1990s.

"We're going to have chaos in this country if individual citizens are allowed to decide unilaterally which laws are constitutional and which aren't," Assistant U.S. Attorney David Jarvis said. "The sentence for Mr. Simkanin was quite severe and appropriate."

Jarvis noted that Simkanin's defiance of the federal courts continued even after his conviction in January.

In a court judgment entered March 11, Simkanin and Arrow Custom Plastics' new owner, James Keffer, to whom he sold the business Feb. 17, agreed to file employment tax returns for the years 2000 through 2003 within 30 days. The judgment was issued by McBryde in a civil action filed by tax attorneys for the Justice Department in December to force Simkanin to comply with tax laws.

But the requested tax documents were not filed by the deadline, government lawyers said in a motion on April 21, asking McBryde to hold Simkanin and Keffer in contempt.

Simkanin rose to fame in tax protester circles -- and gained the attention of the IRS -- in March 2001 when he appeared in a full-page ad in USA Today with a group of like-minded citizens who announced their opposition to the federal income taxes. Later that year, prosecutors sent Simkanin a target letter notifying him that he was under investigation.

The group behind the ad, We the People, soon portrayed Simkanin as a martyr for the cause of freedom from IRS tyranny.

While under investigation, Simkanin posted a warning on his Web site that spoke of the "fury of a fire" that would consume his adversaries. He wrote to the Treasury secretary that he had repatriated himself from the United States to the "Republic of Texas." He vowed to ignore the laws of the United States.

While tax protesters from the We the People group crowded McBryde's courtroom during the trial, hardly a handful of supporters showed up for his sentencing.

Wearing an orange jail jumpsuit and a blue jacket, Simkanin invoked Scripture, James 5:4. In his view, the passage means that a laborer's wages are withheld through fraud.

His face showed an expression of defiance and sadness. He expressed no remorse for his actions but regretted the effect of his prison sentence on his severely ill wife, Carole.

"I do apologize to my wife for what she will go through in my absence," Simkanin said.

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What's it all mean? IMF...?

Impossible Missions Force -- Those cool spies from that late 60's early 70's TV show?

Or how about International Monetary Fund? Those questionable money-crats that make equally questionable loans?

Not quite. We're talking about the IRS Master File argument. The so-called IRS "code busters" have a great line of green cheese for sale. The problem is that it is green cheese and it won't work. They claim that computer codes on your IMF show that people don't have to pay tax. The problem is that computer codes, no matter what they stand for, are not the law. The law is made by the courts of appeals and there are no courts of appeals cases that take the position these scammers take.

The IMF code theories were litigated back in the 1980s. I was one of the original individuals that raised many of these issues in court. They don't work. For example, I saw individuals convicted of tax evasion even though the IRS witness testified that the MFR-01 on the Individual Master File meant the defendant didn't have to file returns.

These "code buster guys are great talkers, but their legal arguments do not work. Don't believe them!. You might as well follow my Green Cheese defense!.

As near as I can determine, the Congress has failed to write a law requiring the payment of an income tax but has written laws to punish those who don't pay income tax.

Too bad the federal courts disagree with that observation:

United States v. Melton, No. 94-5535 (4th Cir. 1996)
ARGUED: Lowell Harrison Becraft, Jr. 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.

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