US Tax 'Defier' Banned From Selling Advice

by Leroy Baker, Tax-News.com, New York

24 October 2008

A federal court in Las Vegas has issued a permanent injunction barring famous (or infamous, depending on your point of view) 'tax defier' Irwin Schiff and his former associate, Cynthia Neun, from preparing federal income tax returns for others and from promoting his 'zero tax' and other tax minimisation plans.

The court order makes permanent a restraining order and preliminary injunction entered against the two tax defiers in 2003.

Schiff, author of "The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes" is a leading advocate of a group of anti-tax activists who assert that the constitutional amendment concerning income tax was never actually ratified, and therefore the government, through the IRS, does not have the legal right to enforce the law in this respect. They also argue that income tax applies only to corporate profits, and not an individual's income.

Schiff contended, unsuccessfully, that the court-ordered ban on his books is also contrary to his First Amendment rights, but Judge Lloyd D. Cole wrote in his 2003 judgment that: "The First Amendment does not shield criminal conduct in tax schemes."

The entry of the permanent injunction follows Schiff’s sentencing last month to 11 months in prison for criminal contempt of court. The 11-month sentence is to be served consecutively to a 151-month sentence that was previously imposed.

“The Internal Revenue Service and Justice Department have strong civil and criminal enforcement tools available to stop tax defiers who promote fraudulent schemes,” said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. “Under the National Tax Defier Initiative, the government has moved forcefully, effectively and strategically to shut down peddlers of illegal tax defier nonsense, like Schiff and Neun.”

According to the Justice Department, since 2002 it has obtained more than 355 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns.

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