Vehement Tax Resisters

Anti-tax activists are one thing and tax resisters are often another.  The difference is their willingness to work within the system.

The gentlemen noted below, Al Thompson and Joseph Banister, were the subjects of a Pulitzer Prize-winning article by New York Times reporter David Cay Johnston in late 2000.  They are prominent in the tax resistance movement, claiming that federal income tax laws are not mandatory.  Looks like they'll soon be doing most of their tax resistance from prison.

Tax resister Walter "Al" Thompson led federal agents up and down Interstate 5 Thursday morning before a spike strip laid by California Highway Patrol officers blew out his front tires just north of Highway 44.

The meandering pursuit, prompted by a 14-count federal indictment for tax crimes, was just the latest--and potentially the most serious--incident in the saga of Thompson, a one-time congressional candidate who found national prominence among those who believe that income taxes are illegal.

Although he's done short stints in jail for contempt of court, this time he faces up to 68 years in federal prison and a $3.5 million fine.

Thompson, 57, of Redding at first refused to get out of his car, but after about 10 minutes surrendered at gunpoint when officers sent a dog to remove him from his Buick Aurora, CHP Lt. Jeff Lee said.

What is it with Californians and seeking attention while running from police? 

Thompson believes that federal income tax laws were repealed in 1939, thus there is no longer a specific legal provision requiring him to pay the taxes.  Needless to say, the IRS does not agree.  He's been arrested twice this year for failure to pay $500,000 in back taxes and penalties.  To be specific, it was actually his refusal to fill out and sign the appropriate tax forms that landed him in jail.  Thompson claimed he was being forced to perjure himself by signing IRS forms containing information he believed to be incorrect. 

A judge released him earlier this month, essentially ruling that keeping him in prison wasn't going to force him to fill out the forms, sign them, and pay.  Thompson wrote of his experience here.

Speeds during the pursuit varied from 80 to 100 miles per hour, Lee said.

During the pursuit, the New York Times reported today, Thompson used his cell phone to call Cindy Nuen, the girlfriend of a Las Vegas tax protester, who later posted her version of the conversation on a Web site.

"Cindy, at this moment I am being chased by about five California Highway Patrol cars and at least one U.S. Marshal's vehicle," Thompson reportedly opened the call.

"I'm going to make them take me. I'm not pulling over," Nuen reported Thompson said, later adding "OK, they got the tires. They got my car. Now they are out -- they all have their guns pointed -- they got me."

Then the phone went dead, Nuen said, adding a plea that readers protest Thompson's arrest.

Cindy Nuen's beau is Irwin Schiff, another prominent tax resister who claims there are no laws that mandate the payment of income taxes.  He is also being prosecuted for various types of tax evasion.  His lawyers are using the insanity defense, noting that his psychiatrist has diagnosed him with paranoid delusions. 

The federal government has banned the distribution of a book Schiff wrote called "The Federal Mafia:  How the Government Illegally Imposes and Unlawfully Collects Income Taxes."  The book advocates that the payment of federal income taxes is voluntary.  The ACLU is amongst several groups opposing the ban on freedom of speech grounds.

Thompson, one-time owner of Cencal Sales, a flight-bag manufacturer in Shasta Lake, was taken to Sacramento, where he was to appear in court today, said Patty Pontello, a spokeswoman for the U.S. Attorney's office.

Also named in the indictment, announced Thursday, was a former special agent in the criminal investigation division of the Internal Revenue Service, Joseph Banister, 41, of San Jose.

Banister, a certified public accountant, and Thompson allegedly conspired to remove Cencal employees from the taxpayer rolls -- a scheme accomplished by Thompson's refusal to withhold employment taxes from their pay or to file quarterly tax returns.

In addition, Thompson did not give employees or the IRS annual wage or income statements, as required by law, authorities said.

Thompson allegedly met with employees on July 21, 2000, and told them they were not required by law to pay taxes.

Banister then joined Thompson for a second meeting with employees on Oct. 11, 2000, the indictment alleges. At that meeting, Banister allegedly assured the workers that Thompson would not lie to them about tax issues.

It's one thing to champion a personal cause and it's another to lead your 28 employees astray in pursuit of that goal.  It's bad enough how Thompson misrepresented tax law personally.  But, bringing in a CPA and former IRS agent in the guise of providing expert advice is truly disgusting. 

Amongst other things, Thompson and Bannister are accused of not making the proper withholding of employees' salaries.  Let's hope the IRS and is not too hard on the employees who were genuinely mislead.  Let's also hope the employees aren't facing some serious debt because they spent the money they should have been paying in taxes. 

Dozens of employees were affected by Thompson's and Banister's alleged assurances, said IRS Criminal Investigation Special Agent in Charge Roger Wirth in a statement urging taxpayers to be leery of "false descriptions of the law or misrepresentations of the facts."

In addition, Banister is accused of preparing false amended individual income tax returns for Thompson and his then-wife, Denise, for the years 1996 through 1998.

Thompson already had filed returns for those three years, reporting more than $300,000 in income, the indictment said.

But the amended returns reduced the amount of income and tax in each year to zero and requested refunds of $65,000 for 1996 and 1997 and also to eliminate a $15,500 tax liability for 1998, the indictment said.

Thompson and Banister both are charged with conspiring to defraud the government.

1996-8?  It's sure taken the IRS awhile to pursue this effort.  Evidently the 1998 IRS Reform and Restructuring Act, designed in part to curb overly-aggressive tax collection behaviors, has made it more difficult for the IRS to investigate and prosecute tax resisters like Thompson.

I wonder if Thompson started out to be a tax resister or whether financial problems drove him to rationalize his behavior?

In addition, Thompson is charged with two counts of filing false claims with the IRS, one count of filing a false income tax return and 10 counts of willfully failing to collect and pay more than $176,000 in taxes from Cencal employee wages.

Banister, who was arrested Thursday, also is charged with three counts of aiding and assisting the filing of false tax returns.

If convicted on all four counts, Banister faces 14 years in federal prison and a $1 million fine, Pontello said.

I've little doubt the federal government has spent far more to prosecute these individuals than it will ever collect from them.  However, if it lets these activists get away with their refusal to pay, a flood of copycats will join them in flaunting our tax laws.  This whole thing ends up being a frustrating, though worthwhile investment in an orderly society.

It's also a reminder that when dealing with anti-tax activists, things could be and sometimes are a lot worse. 

Comments

[Jose]

If people would start looking at the tax
laws themselves, you'd find that we truly DON'T
owe income taxes. The ONLY tax that the IRS is
legally required to collect is foreign income
taxes. Don't believe me? Then read the IRS's own
laws...http://www.fourmilab.ch/ustax/www/t26-A-1-N-I-861.html - Income from sources within United States-
Take out a sheet of paper and write down a yes or
no answer to this section. If all of them are
no's, then you DO NOT owe federal income taxes!

[Joe]

Dude (the previous commenter), that's the standard argument. Two things:
1. The US Tax Code is quite long. You've read it all to confirm this?

2. Since when are official US tax forms posted on Swiss web sites, as the one you linked to is?

[IRS Special Agent]

I am the agent in the picture making the arrest. All I will say is that Mr. Thompson endangered a lot of individuals with the stunt he pulled in trying to evade officers. Had he hit someone driving 100 mph we wouldn't be talking about a tax case...

[Kevin]

When the income tax was first introduced, it was to be a small tax on only the most wealthy. Since then, an unelected board of governors of the Federal Reserve has consistently watered down the money supply producing inflation.

A cup of coffee, back in '65 when we still had silver backed money, was a dime. Today it is a buck and a half. This, in essense made everyone rich, by 1913 standards, at least numerically speaking, even though the real purchasing power of the total amount of money we earn has gone down.

This is classic taxation without representation that was one of the main reasons for going to war with Britan. There is a maxim of law that says that what is delegated cannot be redelgated. The constitution delegates to congress the power to coin money and regulate the value thereof. Redelegating it to the Federal Reserve is illegal!

It is also illegal to have paper money because with it, the people are no longer able to keep control of their government (the very definition of "rebulican form"). How are you going to control someone who has your credit card and you are precluded from denying any of the charges?

The income tax is completely illegal but I would oppose it on these foundational basis rather than arguing the IRS code (although it could be stated that the code even recognizes this, or may be constitutional BECAUSE of the loopholes, rather than inspite of them).