Infamous tax protester Irwin Schiff has died
His anti-tax tactics live on, as do penalties for those who insist on using them
Irwin Schiff, the man who mainstreamed the tax protester movement, has died.
His family said he passed away on Oct. 16 at a Fort Worth, Texas, hospital affiliated with the federal prison where he was serving, yet again, time for tax evasion. The cause was lung cancer. He was 87.
The latest prison sentence was Schiff's third, all of them connected with his claim that income taxes are unconstitutional.
Schiff made his anti-tax case in his books, including Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes (1992); The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax (1985); and How Anyone Can Stop Paying Income Taxes (1982).
Popular leader of no-tax groups: The books were primers for the tax protester movement and other groups that oppose the federal government in general.
"Everyone knows I believe no law requires me to pay taxes, so there is no willful intent to commit a crime," Schiff said when in was indicted for tax evasion in 2004. "And if I am wrong, then I am delusional, in which case I am not willful. So they can't legally convict me of tax evasion or any other crime that requires willful intent.”
To his followers, Schiff's anti-tax crusade was Quixotic. Since the income tax that we know today took effect in 1913 with the ratification of the 16th Amendment, no legal argument against the tax has been upheld.
The Internal Revenue Service, federal prosecutors and others in the tax and financial industries, however, don't have such a kind view of Schiff's cause.
"A lot of desperate people latched onto Schiff's schemes as a quick solution to their problems, and their lives were effectively destroyed," J J MacNab, a financial consultant and the author of Tinderbox, a critique of the tax-protest movement, told the New York Times. "When most tax-protest leaders go to prison, it's like they vanish, but he was such a charismatic figure in the movement that rather than being forgotten he was turned into a martyr."
Beware frivolous tax arguments: If you're looking for some reading (in addition to MacNab's book) to counter the claims of Schiff and other tax protesters, the IRS has its own publication.
The Truth About Frivolous Tax Arguments, updated in January, is the IRS' online description of and response to some of the common anti-tax arguments made by individuals and groups who refuse to comply with federal tax laws.
You'll find in the first section such tried but not true arguments as filing a tax return is voluntary, you can file a "zero return," only income from foreign sources is taxable, and the only employees subject to federal taxes are workers who are paid by Uncle Sam.
The IRS notes that while it has tried to be comprehensive in its examination of tax protester ploys, the online document is "not intended to provide an exhaustive list of frivolous tax arguments." And, warns the agency, just because a frivolous argument didn't make it into the publication, that doesn't mean it's an acceptable tax dodge.
"The government and courts are not precluded from penalizing taxpayers who raise a frivolous argument not addressed in this document," says the IRS.
And if after perusing the IRS document you're still insistent on following Schiff's example, you should pay close attention to the publication's final section. That's where you'll find explanations of the penalties that the courts may impose, including jail time, on folks who insist on taking the anti-tax route.
You also might find these items of interest:
- Italian businessmen drop trou to protest tax collector
- Tax protesters beware: The feds are coming after you
- Tax collectors planning to auction tax protesters' potentially booby-trapped property
Find more tax news and tips at the Don't Mess With Taxes home page.