TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, August 13, 2005

Federal Court Jury Convicts Larken Rose of Willful Failure to File, Rejects § 861 Defense

A federal court jury in Philadelphia on Friday convicted Larken Rose of five counts of willfully failing to file tax returns and rejected his § 861 defense.  From the Department of Justice press release:

At trial, Rose claimed that he failed to file returns and sought refund claims based on his determination that his income received inside the United States was not taxable under § 861. The judge instructed the jury that this § 861 argument is incorrect as a matter of law....

Courts have consistently held that § 861 does not provide authority for United States citizens to fail to file income tax returns on income earned in the United States, as was highlighted by evidence at trial. The trial evidence also showed that Rose received more than a dozen notices from the IRS that rejected his 861 argument. Further, there were more than ten letters from members of Congress, found at Rose's residence during execution of a search warrant, that provided notice to him that his 861 argument was invalid. In addition, Rose was aware of two district court cases that had rejected the 861 argument. In one case, the district judge informed Rose directly that Rose's view of the law was incorrect. There was also considerable evidence presented at trial, through email correspondence, that Rose intended to create a mass movement of non-compliance to obstruct the enforcement of the tax laws.

In convicting Rose, the jury rejected his claim that he held a good faith belief that the federal income tax laws do not apply to him. District Judge Michael M. Baylson ordered Rose to remain under home detention and set sentencing for November 15, 2005. Rose faces a possible sentence of 12 months on each of the five Counts of which he was found guilty.

For more details, see Tax Analysts' report.


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Tracked on Aug 13, 2005 5:47:19 AM