TaxProf Blog

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

Saturday, February 25, 2006

Tax Protester Schiff Sentenced to 13 Years in Prison

Irwin_1Tax protester and author Irwin Schiff was sentenced yesterday to 13 years in federal prison for advising people that no U.S. law requires them to pay income tax.  From the AP story:

Schiff, 78, accused the government of trying to suppress the truth, while his lawyer argued he was mentally ill. Schiff's earlier boast from the witness stand that he had helped thousands of followers avoid paying $2 billion in taxes was used against him at sentencing. ''Thousands of tax returns, millions and maybe billions of dollars lost,'' U.S. District Judge Kent Dawson said as he branded Schiff and his Las Vegas company, Freedom Books, ''a flimflam operation'' that encouraged others to evade taxes. ''He took their money and left them holding the bag,'' the judge said. The judge also ordered Schiff to pay more than $4.2 million in restitution....

Schiff remained defiant on Friday, declaring: ''There is no law that required me to pay the tax.'' His lawyer, Michael Nash, promised an appeal. Nash said experts diagnosed Schiff with suicidal depression, bipolar mental disorder, paranoia and delusions that made him believe paying taxes was voluntary.

Tax Analysts reports:  "Schiff, who cited Socrates, Gandhi, and Nelson Mandela as other leaders who found themselves on the wrong side of the law, accused the courts and the IRS of misinterpreting the income tax rules and abridging his due process rights. He declined to yield to existing case law, insisting that his perception of the law has never been debunked."

Schiff's former girlfriend was sentenced to five years in federal prison for advising people that there was no federal law requiring them to pay income tax.  From the AP story:

Cynthia Neun, 52, also was ordered to pay $1.1 million in restitution and faces years' worth of back taxes, interest and penalties. Prosecutors cast Neun as a key administrator of Schiff's Las Vegas business, Freedom Books, which advised clients that they did not have to pay federal income taxes and that the Internal Revenue Service has no legal authority to collect them. Prosecutors estimate that the fraud cost the government as much as $57 million since 1999.

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Tracked on Feb 25, 2006 7:10:05 AM



Here's where you're wrong when it comes to the "income" tax. If the "income" tax were properly named and upheld then there would be no one in prison for failing to file or render a portion of their "income" to the government. The word "income," as closely as can be defined by those writing the laws for its (the tax) proportional delivery to them, is defined as "profit" for a corporation or individual (whose actions qualify them as "corporations). However, an action such as trading one's time for a reward (wages) is a non-taxable activity because there is the action of an equal trade (time for reward)...and therefore there is no "corporate profit" involved in this action !

Yes, there are many actions that qualify as "income" that a corporation or individual could do that would make them subject to delivering a portion to the government...rental income, capital gains, etc., anything that doesn't involve TRADING something for something.

But, the mere trading of one's time for a reward (as in most people who ONLY work for another) is NOT an action that qualifies for a portion of it to be delivered to the government !

The paradigm of using the word "income" over and over again has given that word "income" the same incorrect meaning as the REWARD that one gets from TRADING his/her time for a wage. This is WRONG and those who perpetuate this confusion, and yes, FRAUD, is unconscionable and those who perpetuate it should be convicted of committing FRAUD on the majority of "working" people in the united States of America and should be required to advance legislation that reimburses to every American who has been deceitfully FRAUDED out of a proportion of their rightful "wages"
the money that was STOLEN by FRAUD and DECEIT and are owed ab initio !

Posted by: Harvey Wharfield | May 4, 2008 12:23:35 PM