US Appeal Court Deals Blow To ‘861' Position

by Mike Godfrey, Tax-News.com, Washington

15 July 2005

A "professional tax protestor" who believes that US citizens are not legally obliged to pay income tax has failed to overturn a court ruling which ordered him to stop selling his tax advice to clients.

The opinion by the United States Court of Appeals for the Third Circuit upheld the decision by a lower court which allowed Thurston P. Bell of Hannover, Pa, to promulgate the view that, according to the wording of the relevant legislation, most Americans do not have to pay tax on income earned within the United States, but barred him from selling the information.

The appeal court also agreed that Mr Bell should turn over the names of his clients to the Justice Department and post the injunction on the front page of his website.

"Without this information Mr Bell's readers could expose themselves to criminal and/or civil liability for failure to declare income and pay taxes," explained the court. However, Mr Bell's website has since been shut down.

In addition, the court ordered Mr Bell to write to each of his clients warning them of the "falsity" of his theories and advising them that the Internal Revenue Service may pursue them for payment of back taxes.

Mr Bell had argued that the injunction infringed on his rights to free speech, a position rejected by Chief Judge Anthony J. Scirica, who wrote that "packaging a commercial message with token political commentary does not insulate commercial speech from appropriate restrictions".

Advocates of the '861' position believe that only those working for foreign-owned companies owe tax to the government under Subchapter N, Section 861 of the revenue code.

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