Tax protester history
A tax protester, in the United States, is a person who denies that he or she owes a
taxbased on the belief that the constitution, statutes, or regulations do not empower the government to impose, assess or collect the tax. The tax protester may have no dispute with how the government spends its revenue. This differentiates a tax protester from a tax resister, who seeks to avoid paying a tax because the tax is being used for purposes with which the resister takes issue. This article discusses the history of tax protesters with respect to the U.S. federal income tax.
Origin of American tax protesters
People have protested taxation at various times in the history of the United States, sometimes violently. The
American Revolutionoriginated with protests against the Stamp Act and Townshend Actsby which Britain sought to tax the American colonies. In 1794, settlers in western Pennsylvaniaresponded to a federal tax on liquorwith the Whiskey Rebellion. The adverse effect of the Tariff of 1828on southern commerce led South Carolinato reject the tariff and threaten secession. In each of these cases, some opponents of the tax in question contended that it was not merely bad, but exceeded the authority of the body that enacted it.
The assertion of federal authority in the
American Civil Warput an end to the organized tax protests that had marked the republic’s early years. The war saw the enaction of the first federal income tax, future versions of which would become the federal government’s primary source of revenue. Nonetheless, tax delinquency was widespread during the presidency of Franklin D. Roosevelt, when income taxes increased dramatically to pay for New Dealprograms and U.S. involvement in World War II.
The modern tax protester movement
The modern tax protester movement originated later in the 20th century, as some came to assert that the federal tax on individual income is nonexistent, unconstitutional, or inapplicable to various forms of income such as wages.
Vivien Kellemswas an early advocate of the position that the tax laws were ineffective. In 1948, frustrated that the government had not reduced the historically high tax rates assessed during World War II, Kellems refused to withhold payroll taxes for her employees. She did not dispute the propriety of the tax at that time, but contested the power of the government to require her to collect taxes on its behalf.
Another early protester was Arthur J. Porth, who argued that the Sixteenth Amendment to the U.S. Constitution should itself be declared unconstitutional, under his theory that the income taxes under the Internal Revenue Code of 1939 imposed "involuntary servitude" in violation of the Thirteenth Amendment. That
argumentwas ruled to be without merit in "Porth v. Brodrick, United States Collector of Internal Revenue for the State of Kansas". [214 F.2d 925, 54-2 U.S. Tax Cas. (CCH) paragr. 9552 (10th Cir. 1954).] He continued his tax protester activities and was eventually convicted of willful failure to file returns and other tax crimes; see "United States v. Porth". [426 F.2d 519, 70-1 U.S. Tax Cas. (CCH) paragr. 9329 (10th Cir.), "cert. denied", 400 U.S. 824 (1970).]
Ideas associated with the tax protester movement have been forwarded under different names over time. These ideas have been put forth, for example, in the broader
Christian Patriotand Posse Comitatus movements, which generally assert that the Constitution has been usurped by the federal government. More recently, tax protesters have styled themselves as the "Tax Honesty Movement".
Current level of civil and criminal tax protester cases
Tax protester cases appear to be a relatively small percentage of total Federal tax decisions. An "unscientific" May 2, 2006 search of one database used by tax lawyers, certified public accountants, and other tax professionals revealed 56 likely decisions in the year 2003 where the term "tax protester" was used and 42 such decisions in 2004. Seventy-two likely tax protester decisions were rendered in 2005, or less than 7% of the approximately 1,121 Federal tax decisions (including Tax Court and all district court, bankruptcy court, appeals courts and U.S. Supreme Court tax cases) rendered during that year. These statistics do not take into account the fact that some reported, rendered decisions involve multiple levels (trial court, appellate court) of the same case. They also do not take into account cases where taxpayers presented tax protester arguments but the court did not mention the term "tax protester" in its decision (e.g., where the court instead used the legal term "frivolous" or another similar term). The statistics also do not take into account the decisions for which the courts rendered a judgment but no written opinion. The statistics include both civil and criminal tax cases.
Prohibition on IRS use of the designation
In 1998, the U.S. Congress passed a prohibition on the use of the term "illegal tax protester" by officers and employees of the
Internal Revenue Service. The prohibition stemmed from complaints about the excessive use of the term not only to describe persons who raised frivolous theories, but against any persons who protested the amount of their tax assessment. Specifically, section 3707 of the " Internal Revenue Service Restructuring and Reform Act of 1998" [Pub. L. No. 105-206, 112 Stat. 685 (July 22, 1998).] states that IRS personnel::(1) shall not designate taxpayers as illegal tax protesters (or any similar designation); and:(2) in the case of any such designation made on or before the date of the enactment of this Act [i.e., made on or before July 22, 1998] --::(A) shall remove such designation from the individual master file; and::(B) shall disregard any such designation not located in the individual master file."
Following this ban, some agents have resorted to euphemisms like "Constitutionally challenged" to replace the banned designation. [" [http://sniggle.net/Experiment/index.php?entry=19Sep04 The Picket Line] ", 19 September 2004] ] Further, subsection (b) of section 3707 specifically authorized IRS personnel to use the term "nonfiler" to describe certain taxpayers.
This prohibition has had no bearing on the courts, which continue to use the term. For instance, in "Hattman v. Commissioner", a
per curiamopinion issued in September 2005 (and joined by future Supreme Court Justice Samuel Alito), the United States Court of Appeals for the Third Circuit stated:
:It is readily apparent that Hattman's appeal and "petitions" in this Court, as well as his petition for redetermination filed in the Tax Court, are nothing other than the thinly veiled arguments of a tax protester. These types of tax protester arguments have been rejected as patently frivolous, and require no additional analysis here. ["Hattman v. Commissioner", No. 05-1376 (
3d Cir.2005) ("per curiam").]
Ironically, the Congressional Committee Report on the legislation that introduced the prohibition on the use of the term by the IRS used the term "tax protester" in a different section to describe frivolous anti-tax arguments that should be given no weight. In a section of the report discussing the
burden of proofin tax hearings, the Committee stated that although the IRS carries the burden of overcoming evidence that a tax assessed is not owed, "Implausible factual assertions, frivolous claims, or tax protestor-type arguments are not credible evidence." [ [http://www.hsco.com/archives/1998%20law%20summary.html] .]
Old arguments and new
Since the advent of the tax protester movement, all the arguments that have been raised in actual court proceedings have ultimately been deemed incorrect by the courts. Many tax protesters have taken these setbacks to mean that the courts, the Congress, and the executive branch are conspiring to continue receiving the revenue which pays their salaries and supports their benefits.
Within the tax protester movement, there has been discord as to which arguments are appropriate to bring, based in part on the belief that different courts will respond differently to certain arguments. Attorney Larry Becraft, who has spent much of his career defending tax protesters, has recently decried "innocents who today believe certain legal arguments popular years ago, but which were litigated by ill prepared, desperate people and lost. To continue going down such dead end roads and to follow these dead arguments will only result in disaster". [ [http://home.hiwaay.net/~becraft/deadissues.htm] .]
Furthermore, in addition to those who express heartfelt beliefs about the tax laws, some
con artists have been known to take advantage of the beliefs of tax protesters by profitably engaging in "tax scams". Such scams have included "the marketing of bogus trusts, 'untax' kits or other devices that would ostensibly allow people to avoid paying income taxes". [ [http://www.adl.org/learn/ext_us/TPM.asp?LEARN_Cat=Extremism&LEARN_SubCat=Extremism_in_America&xpicked=4&item=21] .]
Notable tax protesters
Some people who do not pay income taxes have been able to do so successfully for many years. Others have been arrested for
tax evasionor other tax crimes, and have been prosecuted, convicted and imprisoned. The following sections describe some notable proponents of tax protester arguments.
John L. Cheek
John L. Cheek was a pilot employed by
American Airlines. Beginning with the 1980 tax year, Cheek stopped filing Federal income tax returns. He was eventually charged with six counts of willfully failing to file Federal income tax returns under usc|26|7203 for 1980, 1981, and 1983 through 1986. He was also charged with tax evasion under usc|26|7201 for years 1980, 1981, and 1983. [" Cheek v. United States", 498 U.S. 192 at 194, 111 S. Ct. 604, 91-1 U.S. Tax Cas. (CCH) paragr. 50,012 (1991) (hereinafter "Cheek").]
At his criminal trial, Cheek represented himself. ["Cheek", 498 U.S. at 195.] He stated that he sincerely believed that the tax laws were being unconstitutionally enforced, and that his actions were lawful. Cheek specifically testified that he believed he was not required to file tax returns or pay taxes. He also contended that his wages from a private employer did not constitute income under the internal revenue laws. Cheek argued that he therefore had acted without the "willfulness" required for a criminal tax conviction. ["Cheek", 498 U.S. at 195-96.]
Cheek was convicted, but his conviction was reversed by the United States Supreme Court because of an erroneous jury instruction. The Supreme Court remanded the case for a re-trial with a correct jury instruction. ["Cheek v. United States", 498 U.S. 192 (1991).]
In the re-trial, the jury rejected Cheek's claim that he believed that wages were not taxable. He was again convicted. The second conviction was upheld by the
United States Court of Appeals for the Seventh Circuit, and the United States Supreme Court let that decision stand, denying Cheek's petition for a writ of certiorari. ["United States v. Cheek", 3 F.3d 1057, 93-2 U.S. Tax Cas. (CCH) paragr. 50,473 (7th Cir. 1993), "cert. denied", 510 U.S. 1112, 114 S. Ct. 1055 (1994).] John L. Cheek was sentenced to a year and a day in prison, and was released from prison in December 1992. [John L. Cheek, prisoner number 96657-024, Federal Bureau of Prisons, United States Department of Justice, at [http://www.bop.gov/iloc2/InmateFinderServlet?Transaction=NameSearch&needingMoreList=false&LastName=Cheek&Middle=&FirstName=John&Race=U&Sex=U&Age=&x=18&y=11] .]
Irwin Schiff has been convicted on three separate occasions in connection with Federal tax crimes: (1) for tax years 1974 and 1975; (2) for tax years 1980 through 1982 and, (3) most recently, for tax years 1997 through 2002, and has spent several years in Federal prisons. Among the arguments raised by Irwin Schiff in various court cases are the argument that no tax assessment can be made unless a tax return has been voluntarily filed; the argument that the Internal Revenue Service, in enforcing the income tax, seeks to impose a tax not authorized by the taxing clauses of the United States Constitution; and the argument (still displayed, as of early 2007, on Schiff's internet web site) that " [f] or tax purposes, 'income' only means corporate 'profit.' Therefore, no individual receives anything that is reportable as 'income.'" All the arguments were rejected by the courts.
Schiff's latest convictions came in late 2005, when he was found guilty of multiple counts of filing false tax returns, aiding and assisting in the preparation of false tax returns filed by other taxpayers, conspiring to defraud the United States, and income tax evasion. [ [http://www.usdoj.gov/tax/txdv05548.htm #548: 10-24-05 PROFESSIONAL TAX RESISTER IRWIN SCHIFF AND TWO ASSOCIATES CONVICTED IN LAS VEGAS TAX SCAM ] ] Schiff was sentenced to 13 years and 7 months in prison (including a year for contempt of court), and was ordered to pay over $4.2 million in restitution. He is scheduled for release in October 2016.
Bonita Lynne Meredith
Bonita Lynne Meredith was sentenced in June 2005 to ten years and one month in prison for conspiracy, four counts of mail fraud, two counts of using a false social security number, making a false statement in a passport application, and five counts of failing to file a tax return. In its press release following the sentencing of Ms. Meredith, the Department of Justice stated: "The evidence presented during a 13-week trial showed that beginning in 1991 and continuing until April 2002, Meredith conducted seminars at which she sold books and bogus 'pure trusts' to people with the purpose of leading them to believe they could legally shield income and assets from taxation. Meredith and her co-defendants encouraged and assisted taxpayers by forming phony 'pure trusts,' opening bank accounts with phony Taxpayer Identification Numbers, filing fraudulent income tax returns and encouraging taxpayers to stop filing income tax returns." Four other persons convicted of conspiracy in connection with the activities of Ms. Meredith were also sentenced to prison. [ [http://www.usdoj.gov/usao/cac//pr2005/086.html] .]
Ms. Meredith is imprisoned at the Victorville Federal Correctional Center (Victorville Medium II) near Adelanto, California, and is scheduled for release in February of the year 2013. [ [http://www.bop.gov/iloc2/InmateFinderServlet?Transaction=NameSearch&needingMoreList=false&LastName=Meredith&Middle=&FirstName=Bonita&Race=U&Sex=U&Age=&x=18&y=12] .]
Wayne C. Bentson
In May 2005, the IRS announced that Wayne C. Bentson was sentenced to four years in prison and three years of supervised release, and was ordered to pay the IRS over $1.1 million in restitution. In December 2004, Bentson was convicted on charges of conspiracy and willful failure to file his income tax returns. According to the U.S. Justice Department, Bentson told clients that he was a tax expert and falsely advised clients that the tax laws applied only to individuals living in the Virgin Islands, Guam, and Puerto Rico. According to the Justice Department, Bentson also falsely advised clients that they were not taxpayers, that they had not earned income, and that they were not required to pay federal income tax. Some witnesses reportedly testified during Bentson's trial that they also had been prosecuted after following Bentson’s advice. [ [http://www.usdoj.gov/opa/pr/2005/May/05_tax_275.htm] .] Bentson was released from prison in May 2008. [ [http://www.bop.gov/iloc2/InmateFinderServlet?Transaction=NameSearch&needingMoreList=false&LastName=Bentson&Middle=&FirstName=Wayne&Race=U&Sex=U&Age=&x=31&y=18 Federal Bureau of Prisons ] ]
Larken Rose, an adherent of the 861 argument, was sentenced to 15 months in prison for willful failure to file income tax returns in five years in which the government alleged he earned approximately $500,000 in income. [See U.S. Dep't of Jusice news release at [http://justice.gov/tax/txdv05626.htm] . See also rejection of Rose's request for release pending appeal, at "United States v. Rose", 96 A.F.T.R. 2d 2005-7276 (E.D. Pa. 2005).] He was released from prison in December 2006. [See Federal Bureau of Prisons web site, at [http://www.bop.gov/iloc2/InmateFinderServlet?Transaction=NameSearch&needingMoreList=false&LastName=Rose&Middle=&FirstName=Larken&Race=U&Sex=U&Age=&x=27&y=17] .]
Charles Thomas Clayton
Charles Thomas (Tom) Clayton, M.D., regularly filed Federal income tax returns until he became involved with a "tax protest organization." ["United States v. Clayton", 506 F.3d 405, 2007-2 U.S. Tax Cas. (CCH) paragr. 50,775 (5th Cir. 2007) ("per curiam"), "cert. denied", case no. 07-904 (April 14, 2008).] For the year 1992, he failed to file a return. [Id.] In October of 1996 he pleaded guilty and was sentenced to one year of probation for failure to file the 1992 return. [Id.]
Clayton filed tax returns for 1997 and 1998. [Id.] On August 29, 2006, he was found guilty by a jury in Federal court in Austin, Texas, of two counts of willfully making false statements on some returns that he had filed, and six counts of willfully failing to file tax returns. According to "The Courier of Montgomery County", "Clayton's defense at the trial centered on the '861 argument' -- a defense used numerous times in previous years, but never successfully [ . . . . ] " [ [http://www.hcnonline.com/site/news.cfm?newsid=17161773&BRD=1574&PAG=461&dept_id=532215&rfi=6] /] According to an April 7, 2006 Justice Department news release shortly after he was indicted, Clayton failed to file income tax returns for years 1999 through 2004 while receiving over $1.5 million in gross income. The government also charged that for years 1997 and 1998 Clayton filed false amended returns, claiming refunds of over $160,000. [ [http://www.quatloos.com/861_Goes_Down.htm] .] The conviction was upheld on appeal. ["United States v. Clayton", 506 F.3d 405, 2007-2 U.S. Tax Cas. (CCH) paragr. 50,775 (5th Cir. 2007) ("per curiam"), "cert. denied", case no. 07-904 (April 14, 2008).]
Criminal investigators of the Internal Revenue Service had gathered information on Clayton during the IRS investigation of Larken Rose (see above). According to the prosecutor's office, Clayton "disregarded multiple written notices from the Internal Revenue Service informing him that his 861 argument was without merit," and Clayton "had also been told the same thing by two
Certified Public Accountants." [News release, Dec. 15, 2006, Office of Johnny Sutton, United States Attorney for the Western District of Texas, U.S. Department of Justice, San Antonio, Texas. [http://www.usdoj.gov/usao/txw/press_releases/2006/clayton.sen.pdf] ]
On December 15, 2006, Clayton was sentenced to five years in prison and a fine of $50,000, plus a requirement that he pay over $7,400 in prosecution costs. Clayton is incarcerated at the Federal Correctional Institution at Bastrop, Texas, and is scheduled for release in June of the year 2011. [ [http://www.bop.gov/iloc2/InmateFinderServlet?Transaction=NameSearch&needingMoreList=false&LastName=Clayton&Middle=Thomas&FirstName=Charles&Race=U&Sex=U&Age=&x=23&y=16] .]
Under the sentence, Clayton will be subject to supervision for one year following his prison term. [Id.]
February 1 2008, actor Wesley Snipeswas found guilty on three misdemeanor counts of failing to file Federal income tax returns. He was acquitted on one felony count of conspiracy to defraud the government and one felony count of filing a false claim with the government. ["Wesley Snipes acquitted of federal tax fraud," MSNBC, Feb. 1, 2008, at [http://www.msnbc.msn.com/id/22955757/] .] [ [http://www.cnn.com/2008/CRIME/02/01/snipes.court.ap/index.html Snipes acquitted of tax-fraud, conspiracy] , CNN, February 1, 2006.] The allegations against Snipes had included charges that he filed a false amended return including a false tax refund claim of over US$4 million for the year 1996 and a false amended return including a false tax refund claim of over US$7.3 million for the year 1997, using the "861 argument." The indictment said Snipes used accountants who already had a history of filing false returns to obtain refund payments for their clients. [See [http://news.findlaw.com/hdocs/docs/tax/ussnipes101206ind.html Findlaw] .] On April 24, 2008, Snipes was sentenced to three years in prison. [cite news
title = Snipes Sentenced To 36 Months
url = http://www.wesh.com/news/15979487/detail.html
publisher = WESH
location = Orlando
date = 2008-04-24
accessdate = 2008-04-24 ] [See ABC Action News, 24 April 2008, at [http://www.abcactionnews.com/content/news/breakingnews/story.aspx?content_id=9f6b6b10-a2cb-451d-95ef-4749301acc8f] .] [See the "Orlando Sentinel", 24 April 2008, at [http://www.orlandosentinel.com/news/local/state/orl-bk-wesley-snipes-sentencing-042408,0,1299381.story] .]
William J. Benson
William J. Benson, the co-author of the book
The Law that Never Was(in which Benson had argued that the Sixteenth Amendment was not properly ratified), was convicted of tax evasion and willful failure to file tax returns in connection with over $100,000 of unreported income, and his conviction was upheld on appeal. He was sentenced to four years in prison and five years of probation. See "United States v. Benson". [67 F.3d 641, 95-2 U.S. Tax Cas. (CCH) paragr. 50,540 (7th Cir. 1995).] Benson's "Sixteenth Amendment was not properly ratified" argument was rejected. On December 17, 2007, the United States District Court for the Northern District of Illinois ruled that Benson's "Reliance Defense Package" (including Benson's Sixteenth Amendment non-ratification argument), constituted a "fraud perpetrated by Benson" that had "caused needless confusion and a waste of the customers' and the IRS' time and resources." [Memorandum Opinion, p. 14, Dec. 17, 2007, docket entry 106, "United States v. Benson", case no. 1:04-cv-07403, United States District Court for the Northern District of Illinois, Eastern Division.]
Robert B. Clarkson
Robert B. Clarkson was indicted in 1994 for conspiracy to impede, impair, obstruct and defeat the functions of the Internal Revenue Service under usc|18|371. Clarkson gave seminars in which he asserted that it was legal to claim false exemptions, to hide income, and to refuse to file income tax returns or pay income tax. He and two associates were convicted, and the convictions were upheld on appeal. [See "Fleschner v. United States", 98 F.3d 155, 96-2 U.S. Tax Cas. (CCH) paragr. 50,536 (4th Cir. 1996), "cert. denied", 117 S. Ct. 2484 (1997).] He was sentenced to 57 months in prison, ["United States v. Clarkson," No. 5:1994cr00010, Entry 137 (W.D.N.C. 1994),] and was released in 1999. [ [http://www.bop.gov/iloc2/InmateFinderServlet?Transaction=NameSearch&needingMoreList=false&LastName=Clarkson&Middle=&FirstName=robert&Race=U&Sex=U&Age=&x=22&y=21 Federal Bureau of Prisons ] ]
Richard M. Simkanin
Richard Michael Simkaninis a tax protester who became involved with the We the People Foundationand espoused the "income taxes are voluntary" argument. He is currently serving a seven year sentence for convictions on ten counts of willfully failing to collect and pay over employment taxes under usc|26|7202, fifteen counts of knowingly making and presenting false, fictitious or fraudulent claims for refund of employment taxes under usc|18|287 and usc|18|2, and four counts of willfully failing to timely file federal income tax returns under usc|26|7203. ["United States v. Simkanin", 420 F.3d 397, 2005-2 U.S. Tax Cas. (CCH) paragr. 50,507 (5th Cir. 2005), "cert. denied", 126 S. Ct. 1911 (2006).]
In November 2006,
Kent Hovindwas convicted of twelve counts of willful failure to collect, account for, and pay over Federal income taxes and FICA taxes under usc|26|7202, forty-five counts of knowingly structuring transactions in Federally-insured financial institutions to evade the reporting requirements of usc|31|5313(a), in violation of usc|31|5324, usc|18|2 and 31 C.F.R. sec. 103.11, and one count of corruptly endeavoring to obstruct and impede the administration of the internal revenue laws under usc|26|7212. [cite news | url=| title='Dr. Dino,' wife guilty | publisher= Pensacola News Journal| date= November 2, 2006 | first=Nicole | last=Lozare | accessdate = ; compare Indictment, "United States of America v. Kent E. Hovind and Jo D. Hovind", U.S. District Court for the Northern District of Florida, Pensacola Division, case no. 3:06CR83/MCR (dated July 11, 2006; filed at 12:55 pm, July 11, 2006).] Twelve of the charges were for failing to pay employee-related taxes, totaling $473,818, and 45 of the charges were for evading reporting requirements by making multiple cash withdrawals just under the $10,000 reporting requirement (smurfing).
Hovind had argued that he was not liable for taxes that and his ministry did not have to pay taxes because his workers were "missionaries" not "employees". [cite news | url=http://www.wdcmedia.com/newsArticle.php?ID=1514 | title=Tax Evasion Charges Baseless Says Ministry Leader | publisher=WDC Media News | date= 7 July 2006 | first= | last= | accessdate = 2006-10-18] In previous dealings with the IRS, Hovind had asserted tax protester arguments including the “income taxes are voluntary” argument. ["Hovind v. Commissioner", T.C. Memo 2006-143, CCH Dec. 56,562(M) (2006).]
The government charged that Hovind falsely listed the Internal Revenue Service as his only creditor in a bankruptcy case, and that Hovind filed a false and frivolous lawsuit against the IRS in which he demanded damages for criminal trespass, made threats of harm to those investigating him and to those who might consider cooperating with the investigation, filed a false complaint against IRS agents investigating him, filed a false criminal complaint against IRS special agents (criminal investigators), and destroyed records. [Indictment, page 8 (July 11, 2006).]
Former and current workers, IRS agents, a bank employee, and a lawyer of a non-profit Christian organization testified in the trial. Workers testified that they had to punch time cards, had vacation and sick days; while others testified Hovind claimed he had "beat" the tax system. [cite news | url= | title=Lawyer: Hovind detailed actions: Evangelist said he 'beat the system' | publisher=
Pensacola News Journal| date= October 21, 2006 | first=Michael | last=Stewart | accessdate = ]
January 19, 2007, Hovind was sentenced to ten years in prison and three years of probation, and was ordered to pay the federal government restitution of over $600,000.
Edward Lewis Brown and Elaine A. Brown
Tax protesters Edward Lewis Brown and his wife Elaine A. Brown "believe the IRS and the federal income tax are part of a deliberate plot perpetrated by Freemasons to control the American people and eventually the world." [Kristen Senz, "Brown say they will either walk free, or die," "New Hampshire Union Leader", June 19, 2007 at [http://www.unionleader.com/article.aspx?headline=Browns+say+they+will+either+walk+free%2c+or+die&articleId=a02db0e8-8042-474e-8a82-1fb5dc2f6306] .] On
January 18, 2007, Edward Lewis Brown, an ex-convict who previously served prison time for assault and armed robbery, [Kathryn Marchocki, "Dukakis granted pardon to Brown," "New Hampshire Union Leader", June 22, 2007 [http://www.unionleader.com/article.aspx?headline=Dukakis+granted+pardon+to+Brown&articleId=17623949-78af-47a6-961c-5ec9ae6dd813] ] was found guilty by a jury in a Federal District Court in Concord, New Hampshire of one count of conspiracy to defraud the United States under usc|18|371, one count of conspiracy to structure financial transactions to evade the Treasury reporting requirements in violation of usc|18|371, usc|31|5325 and usc|31|5324(a)(3), and one count of structuring financial transactions to evade the Treasury reporting requirements and aiding and abetting under usc|31|5324(a)(3) and usc|18|2. On that day the same jury found Elaine A. Brown guilty one count of conspiracy to defraud the United States under usc|18|371, five counts of tax evasion and aiding and abetting under usc|26|7201 and usc|18|2, eight counts of willful failure to collect employment taxes under usc|26|7202 and aiding and abetting under usc|18|2, one count of conspiracy to structure financial transactions to evade the Treasury reporting requirements in violation of usc|18|371, usc|31|5325 and usc|31|5324(a)(3), and two counts of structuring financial transactions to evade the Treasury reporting requirements and aiding and abetting under usc|31|5324(a)(3) and usc|18|2. [See Jury Verdict, docket entry 133, Jan. 18, 2007, "United States of America v. Elaine A. Brown and Edward Lewis Brown, Defendants"; case no. 1:06-cr-00071-SM-ALL, United States District Court for the District of New Hampshire (Concord); and Indictment, docket entry 1, April 4, 2006, "United States of America v. Elaine A. Brown and Edward Lewis Brown, Defendants"; case no. 1:06-cr-00071-SM-ALL, United States District Court for the District of New Hampshire (Concord).]
The Browns' stated that they had not been presented with any statute or law that required them to pay income taxes [cite news | url=http://www.wmur.com/news/10714938/detail.html | publisher= Associated Press | date=January 10, 2007 | title=Couple Charged With Evading Taxes For Years] (see
Tax protester statutory arguments). The tax evasion convictions of Mrs. Brown involved the failure to report income of $1,310,706 over a period of five years. [See Indictment, docket entry 1, April 4, 2006, "United States of America v. Elaine A. Brown and Edward Lewis Brown, Defendants"; case no. 1:06-cr-00071-SM-ALL, United States District Court for the District of New Hampshire (Concord).] . On April 24, 2007, Ed and Elaine Brown were sentenced to five years and three months in prison each. [cite news | url=http://www.wmur.com/news/13006420/detail.html | title=Plainfield Tax Evaders Sentenced To 63 Months In Prison | publisher=Associated Press | date=April 24, 2007] After a long standoff at their New Hampshire residence, the Browns were arrested by Federal law enforcement authorities on October 4, 2007, and began serving their prison sentences. [Associated Press,"U.S. Marshal: Convicted Tax Evaders Arrested," Oct. 4, 2007, WCAX-TV Vermont, at [http://www.wcax.com/Global/story.asp?S=7172194&nav=4QcS] ] [Associated Press, "Convicted Tax Evaders Arrested in New Hampshire: Couple who holed up at compound for months taken into custody," Oct. 4, 2007, MSNBC, at [http://www.msnbc.msn.com/id/21142564/] .]
Tom Cryeris an attorney in Shreveport, Louisiana. He was charged with two counts of willful failure to file tax returns (other tax charges having been dropped during the trial). The trial court rejected Cryer's arguments that the indictment had failed to allege "affirmative acts."Memorandum Order, March 19, 2007, docket entry 35, "United States v. Cryer", case no. 5:06-cr-50164-SMH-MLH-ALL, U.S. District Court for the Western District of Louisiana, Shreveport Division.] that the Secretary of the Treasury had failed to comply with the Administrative Procedure Actby not publishing certain information in the Federal Register,Memorandum Order, March 19, 2007, docket entry 35, "United States v. Cryer", case no. 5:06-cr-50164-SMH-MLH-ALL, U.S. District Court for the Western District of Louisiana, Shreveport Division.] and that the case should be dismissed on the ground that Cryer had not created a trust for the purpose of evading taxes.Memorandum Order, March 19, 2007, docket entry 35, "United States v. Cryer", case no. 5:06-cr-50164-SMH-MLH-ALL, U.S. District Court for the Western District of Louisiana, Shreveport Division.] The court rejected Cryer's fourth motion to dismiss, in which Cryer made the tax protester argument that his income, which was derived through the practice of law in Louisiana, was not "taxable income" as defined by the Internal Revenue Code, ruling the contention to be "without merit."Memorandum Order, March 19, 2007, docket entry 35, "United States v. Cryer", case no. 5:06-cr-50164-SMH-MLH-ALL, U.S. District Court for the Western District of Louisiana, Shreveport Division.]
On July 11, 2007, the jury found Cryer not guilty of willful failure to file tax returns. [Loresha Wilson, "Local attorney acquitted on Federal income tax charges," July 13, 2007, "Shreveport Times", at [http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=2007707130321] ] Cryer did not make any of his arguments about the legality of the income tax to the jury itself. According to the "New Hampshire Union Leader":
::Cryer convinced jurors that he genuinely believed he was not liable for the $73,000 in taxes the government says he owes for tax years 2000 and 2001. Absent proof of criminal intent, the jury acquitted him. [http://www.unionleader.com/article.aspx?headline=Louisiana+lawyer+beats+tax+charges%3B+worries+for+Browns&articleId=09c7b527-07d1-454d-b4d1-64a87b8fed0e Senz, Kristen. Louisiana lawyer beats tax charges; worries for Browns. "Union Leader" Thursday, Aug. 9, 2007.] ]
In December 2007, Cryer instituted a civil suit against the United States government, alleging that criminal investigators with the Internal Revenue Service had violated various provisions of law by disclosing confidential information and injuring Cryer's reputation during their criminal investigation of Cryer. [Complaint, docket entry 1, Dec. 26, 2007, "Cryer v. United States", case no. 5:07-cv-02206-DEW-MLH, U.S. District Court for the Western District of Louisiana (Shreveport).] In May 2008, the court rejected Cryer's arguments, and his case was dismissed. [Memorandum Ruling, docket entry 8, May 9, 2008, "Cryer v. United States", case no. 5:07-cv-02206-DEW-MLH, U.S. District Court for the Western District of Louisiana (Shreveport).]
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