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Tax Protestor Pleads Guilty

Discussion in 'Legal' started by TaxPhd, Oct 1, 2003.

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  1. TaxPhd

    TaxPhd Member

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    http://www.nytimes.com/2003/10/01/b...6800&en=d26444c6a40ec10b&ei=5004&partner=UNTD

    This issue has been discussed a number of times at TFL and THR. Arrow Plastics was one of the businesses in the forefront of the 861 movement.

    It would be interesting to read the case and see what laws are cited that he has broken, given that a key issue of this position is that there are no laws requiring most Americans to pay taxes.



    Scott
     
  2. Preacherman

    Preacherman Member

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    Now there's a wonderful way to pacify government officials investigating your taxes... :rolleyes: :scrutiny: :(
     
  3. Quartus

    Quartus Member

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    Idiot^2
     
  4. rock jock

    rock jock Member

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    Let 'em hang.
     
  5. Freedspeak

    Freedspeak Member

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    So, he's a religious fanatic, if they sontaniously combust, is he a perp or a witness?

    (sorry couldn't resist):evil:
     
  6. Tamara

    Tamara Senior Member

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    Unfortunately, they never caught those idiots who dumped that tea in the harbor, but they shoulda swung, too.
     
  7. hammer4nc

    hammer4nc Member

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    I'd like the tax experts/apologists to explain some things. The central charge against this business owner, was not withholding and forwarding taxes against his employees wages.

    Q1: How can the employer be prosecuted for unpaid taxes that are owed by someone else?

    This case is perhaps not as clearcut as the Indianapolis Baptist Temple case, a couple years ago. In that case, the defendant was a church, who by definition is tax exempt. Yet church property was confiscated by IRS because they failed to withhold. Also, in that case, the employees offered to individually pay any tax owed to the IRS. That offer was refused...so the issue wasn't one of finances, but rather subjugation of a defiant (and vocal) organization.

    Anticipating that the "experts" will respond with a citation from the tax code, detailing employers' obligations to collect and forward monies owed by employees, please answer

    Q2: How is this not involuntary servitude?

    Apparently employers are required to act as unpaid tax collection agents for their employees. Do the thousands of full-time IRS employees likewise volunteer their services? Do the thousands of "tax consultants" who make a living on the confusing complexity of the tax code, work for free? Lets hear the best arguments that this aspect of income taxes is not total hypocrisy.

    Now, lets talk about equal protection under the law. From the NYT article:
    Q3: Could it be that Simkanin was one of the few "vocal" 861 advocates?

    This pattern, of the IRS cracking down on "high profile" tax dissenters, rather than even-handed application of statutes, belies the weakness of their position. IRS could have answered Vernice Kuglin's question years ago. Have they even answered it yet? Experts please post the answer if I missed it.
     
  8. TaxPhd

    TaxPhd Member

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    "Q1: How can the employer be prosecuted for unpaid taxes that are owed by someone else?"

    And then,

    "Anticipating that the "experts" will respond with a citation from the tax code, detailing employers' obligations to collect and forward monies owed by employees. . ."

    You're correct. I don't have the Code and Regs handy, but an agent that is required to collect and remit is liable for those unpaid taxes if they do not collect and remit.

    "Q2: How is this not involuntary servitude?"

    This is a legitmate question that can be applied to the entire tax system. When someone else has a claim to the friuts of your labors, then you are indeed in servitude. Simplistic answers would be because it's the law, and it is simply a cost of doing business and having employees. There probably aren't better answers than that.

    "Now, lets talk about equal protection under the law."

    "Q3: Could it be that Simkanin was one of the few "vocal" 861 advocates?"

    Yes, it is likely because he was one of the vocal advocates. Equal protection doesn't mean that if one is prosecuted all must be prosecuted. The IRS has limited resources and will focus their audit efforts where they can get the most bang for their buck. Not at all unlike a DA deciding what to prosecute and what to let go.

    "This pattern, of the IRS cracking down on "high profile" tax dissenters, rather than even-handed application of statutes, belies the weakness of their position."

    How does this belie the "weakness" of their position?

    "IRS could have answered Vernice Kuglin's question years ago. Have they even answered it yet? Experts please post the answer if I missed it."

    Is the question "What law requires most Americans to pay taxes"?

    Asked and answered. I posted the applicable code sections here (or maybe at TFL - I can't remember). The same code sections have been cited by the IRS, and the courts, and the law has been consistently applied.

    Here are the code sections: 1, 6012, 6151, 6153, 7201, 7202 and 7203.

    Irwin Schiff, a very vocal proponent of the 861 scheme offered $100,000 to anyone who could identify the sections of the code requiring payment of tax. Someon took him up on the offer, and the preceeding code sections were offered. Schiff would't pay, and was sued (Neuman v. Schiff, 778 F.2d 460 (8th Cir. 1985). Interesting case. While the court agreed that Neuman was correct and that those sections did indeed require the payment of tax, Neuman lost the case for not having answered the question within the prescribed time limit (it was a call in radio show, and the time had expired before he called).

    Of all the various tax protest "models" out there, the 861 scheme is really pretty weak. The language is surprisingly clear (for the code) and the courts have ruled that it means what it says. And it has nothing to do wit a tax on wages being applied only to those who work for foreign corporations, or any other such nonsense.

    A tax revolt that will be successful will probably have to be along the lines of a modern day "Tea Party."
     
  9. LoneStranger

    LoneStranger Member

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    Everyone needs to reference the case brought against Virginia Kellems back around 1947.

    The USSC ruled that even though Tax Withholding was not a law but a regulation you still have to do it.

    Don't ask for cites cause I read about it many years ago in an old book in the library.
     
  10. TaxPhd

    TaxPhd Member

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    Withholding is law, passed by Congress in 1943 as the "Current Tax Payment Act" and is included in the IRC.

    Regulations are issued by the Treasury Department, and have the full force and effect of law. Regulations are interpretive in nature, and are official interpretations of the tax statutes.
     
  11. Futo Inu

    Futo Inu member

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    A regulation (promulgated by an agency) IS law, with the same full force and effect of statute - unless you can prove it was passed outside of the jurisdiction of the agency. What Tam said, though. A few here are quick to condemn, but I admit I think a lot like him, and he has my sympathies, even if he is a religious "nut". The income tax may be unconst. in theory, but in practice, it's the law. You can get along without paying taxes, like someone I know, and without seeing the other side of the locked bars, but ONLY if you are self-employed with many small clients (as opposed to one or just a few large contractors), so that your income is not garnishable, and ONLY if you file truthful, accurate returns each year, and ONLY if you accept the fact that the IRS will always have liens on everything you own, whatever that is (may be not much), and will always be seeking to levy your bank accounts and other valuable assets. If you do/accept all that, then you can go your whole life without making any VOLUNTARY payments.
     
  12. hammer4nc

    hammer4nc Member

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    UPDATE, Nov. 28, 2003
    ================
    The plea agreement reached last October was thrown out on a technicality. Since then, Simkanin opted for a jury trial, and the latest jury could not reach a verdict <mistrial>. Unfortunately, Simkanin is being held in jail on a charge of threatening the judge while in jail.

    So, the saga continues...here's the story: http://www.dfw.com/mld/startelegram/news/local/7354714.htm
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Mistrial is declared in tax case
    By Toni Heinzl
    Star-Telegram Staff Writer

    FORT WORTH - Bedford businessman Richard Simkanin remained in federal custody Tuesday night after jurors said they could not reach a verdict on a 27-count indictment accusing him of failing to withhold taxes from his employees' wages and of filing fraudulent claims for tax refunds.

    U.S. District Judge John McBryde declared a mistrial after jurors said they were deadlocked after eight hours of deliberations.

    Prosecutors said they would retry Simkanin, 59, who couched his opposition to federal income tax in the patriotic language of the Founding Fathers, publicly declared his contempt for the federal government and once wrote to the Treasury secretary that he had repatriated himself from the United States to the "Republic of Texas."

    On his Web site, Simkanin published a warning that spoke of the "fury of a fire" that would consume his adversaries. McBryde cited the warning in a scathing order issued July 14 in which he stated his reasons for keeping Simkanin in jail pending trial.

    Simkanin, 59, the owner of Arrow Custom Plastics, pleaded guilty Sept. 30 to charges of failing to collect and pay taxes on his employees' wages. The plea agreement was accepted by McBryde.

    But it was later discovered that the plea documents contained a mistake regarding the potential maximum sentence. The original plea documents said the maximum possible sentence was three years, but attorneys later realized that the document should have said five years.

    McBryde threw out the plea agreement, and Simkanin then decided not to accept another plea offer with a possible penalty of five years. He opted to go to trial.

    He went on trial Monday on 12 counts of failing to collect and pay $175,000 in taxes on his employees' wages from January 2000 through December 2002 and 15 counts of filing fraudulent claims for tax refunds totaling $234,515 for the years 1997 through 1999.

    Defense attorney Arch McColl of Dallas said seven attorneys and the judge overlooked the mistake in the original plea agreement.

    McColl and Assistant U.S. Attorney David Jarvis, the lead prosecutor in the case, said they had never known of a case going from a final plea agreement to a trial.

    Simkanin was a member of a group of citizens who took out a full-page ad in USA Today on March 2, 2001, declaring their opposition to the federal income tax. Members of the group call themselves "non-filers"-- the term they prefer over "tax protesters."

    Simkanin testified Monday that he followed the advice of a certified public accountant who told him it was legal to stop withholding taxes from his employees' paychecks. He said his tax views are based on his Christian faith.

    "I was robbing [the employees] of their opportunity if I withheld the fruits of their labor," Simkanin testified.

    Jurors in Simkanin's trial had to weigh the evidence in light of a unique feature of federal tax laws: Ignorance of the law is a legal defense if a taxpayer unintentionally violates the law after accepting wrong advice in good faith.

    Prosecutors argued that Simkanin knew that his employees' wages were taxable income.

    The government witnesses included Simkanin's former accountant, Fred Taylor, who testified that his firm stopped representing Simkanin when Simkanin refused Taylor's advice to keep withholding and paying taxes on employees' wages. Taylor, an accountant with more than 25 years of experience, said he told Simkanin that it would be unlawful to drop out of the tax system.

    Jarvis said Simkanin wrote a letter to U.S. Rep. Joe Barton, R-Ennis, on Aug. 2, 2000, urging Barton to support legislation to abolish the withholding requirement proposed by U.S. Rep. Ron Paul, R-Clute, the 1988 Libertarian Party candidate for president.

    "If Mr. Simkanin had a good-faith misunderstanding of the law, if he believed withholding wasn't required under the existing law, why would he ask Congressman Barton to support a change in the law?" Jarvis asked.

    McColl said his client trusted certified public accountant Wayne Paul.

    "Mr. Paul advised my client he did not have a requirement to withhold because of the particular business he was in," Mccoll said. "He relied on that opinion in good faith."
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Comment: While the jury system is not without faults, it really is the only hope for defendants in cases like this, where moral issues collide with technical violations.
     
  13. TheeBadOne

    TheeBadOne Member

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    Apples and Oranges. That was about "Taxation without Representation".
     
  14. hammer4nc

    hammer4nc Member

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    This case is about slavery, a.k.a. involuntary servitude. The tax code is prosecuting one person (employer) for unpaid taxes owed by another person (employee). When I asked this question before, our resident tax expert could only respond "its the law". Kind of like "Leave it to Beaver", saying "but everybody's doing it, Wally!" I'm sure some folks said the same thing concerning black slaves in the 1800's.

    So, TBO, go ahead and post your best arguments in favor of involuntary servitude, somehow being less evil than "taxation without representation"; as your rather glib posting implied.

    Apples and oranges indeed.
     
  15. TheeBadOne

    TheeBadOne Member

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    Have a nice soothing cup of warm tea and settle down. I stand by my post. The Boston Tea party is and apples/oranges argument when talking about US tax laws requiring payment of income tax.
    If you want to argue about slavery you'll have to do it with someone else (who has posted something about slavery).
     
  16. Edward429451

    Edward429451 member

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    It was not about slavery. It was about taxes. The King wanted the colnies to continue to pay tribute to the king. We refused to pay tribute citing that we were an independant nation and owed no such tribute.

    But everyone was big tea drinkers back then and had to get it from england cause Lipton hadn't built a plant here yet. So they applied a huge surcharge to the tea, to try and get money from us that way since we wouldn't pay their taxes. So we crept up dressed up like indians and dumped all their tea in the harbor to send a little message to the king that it was all BS, and we wont stand for it.

    Your history seems a little muddled.
     
  17. TheeBadOne

    TheeBadOne Member

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    Edward I agree with you and stand by my post (both talking about the same thing)
     
  18. hammer4nc

    hammer4nc Member

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    Apparently some confusion here, "this case" I was referring to above, was the simkanin case. To restate, requiring employers to act as unpaid IRS revenue agents, collecting and remitting taxes allegedly owed by by their employees, is involuntary servitude.

    Someone else earlier in the thread made the comparison to the Boston Tea Party, to which THEEBADONE made his "apples and oranges" remark, which stuck me as glibly dismissing the importance of the simkanin case. Unintentionally (?) missing the point.

    Saying "I'm standing by my earlier post" when that post is a vacuous, one line quip, advances the discussion how? This thread was about a current tax case. I offered a recent news update with my admittedly editorial comment. Minimize its importance if you choose, but at least try to offer something to back it up.
     
  19. TheeBadOne

    TheeBadOne Member

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    Exactly, I was NOT replying at all to the simkanin case nor was I talking about it. If you assumed I was Sir, the error is yours.
     
  20. Graystar

    Graystar Member

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    TITLE 26 - INTERNAL REVENUE CODE
    SUBTITLE C - EMPLOYMENT TAXES
    CHAPTER 24 - COLLECTION OF INCOME TAX AT SOURCE ON WAGES
    Section 3403. Liability for tax
    The employer shall be liable for the payment of the tax required to be deducted and withheld under this chapter, and shall not be liable to any person for the amount of any such payment.
     
  21. Edward429451

    Edward429451 member

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    (Tongue in cheek) A tax PHD with out a code book? Is that like a plumber with out a code book so wings it? An auto mechanic with no reference so sets your car by ear?:uhoh: :scrutiny:

    At any rate, I DO have the complete tax book Title 26 and will reference specific line items, as the entire sections would be too large to post.

    Sec. 6012. Persons required to make returns of income.
    (a) General Rule.
    Returns with respect to income taxes under subtitle A shall be made by the following:

    And goes on with specifics of marriage, spouses, heads of household and so forth. But wait just a doggone minute, aren't we getting ahead of ourselves here? It says persons required, intimating that not ALL people are required. If All persons were required, then wouldn't it say something to the effect of "All persons shall be required to make returns of income"? Keep in mind that you laid this out as proof of liability.

    With all due respect sir, I do not comprehend this as proof of liability. In regulated activities that do in fact impose liability for tax, it is stated plainly as so. Examples:

    Sec. 5005. Persons liable for tax.
    (a) General.
    The distiller or importer of distilled spirits shall be liable for the taxes imposed thereon by section 5001(a)(1).

    Sec. 5703. Liability of tax and method of payment.
    (a) Liability for tax.
    (1) Original liability. The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701.

    I find no such statement in section 6012. If ALL people are required to make returns, then why do they not state it anywhere in such a definitive way? Or perhaps I just do not know what section its in. If you could be so kind as to reference the exact section cite, then I will look it up and post it once and for all? I'll reference your other cites to see if a definitive statement is there somewhere, but I have my doubts that it's there cause they would scream it from the media if it was there. They would also let you tax experts know where it's at to quell the silliness of the tax protesters...
     
  22. Erik

    Erik Member

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    Employers are not being subjected to involuntary servitude in that they have a choice, namely to no longer be in the employment business. Slaves, last I checked, have no such option.
     
  23. Glock Glockler

    Glock Glockler Member

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    Employers are not being subjected to involuntary servitude in that they have a choice, namely to no longer be in the employment business. Slaves, last I checked, have no such option.

    The slave has he choice of starving to death if he doesnt want to work. Both situations involve the voluntary choice to extinguish one's existence, both for the business and the slave.

    Let 'em hang

    You really are brilliant, Rock Jock, advocating the killing of those who think they shouldnt be forced to be unpaid tax collectors for the IRS.
     
  24. BB93YJ

    BB93YJ Member

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    Quick question: What does the IRS define as income, as in income taxes?
    IIRC, corporations and businesses generate income, not individuals. Correct?

    Just curious is all.
     
  25. Edward429451

    Edward429451 member

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    As far as withholding goes,

    With all due respect sir, you are incorrect. The agent (employer) would only be liable for what was lawfully withheld. If no tax is withheld, there is no liability for the tax imposed upon agent. Example:

    A previous employer of mine was scared when I filed a "In lieu of W-4 form with him (her) for exemption from withholding. It scared her so much that they terminated my employment two weeks later. When I went in to get my paycheck, she said it was going to be held until she verified with the IRS about not having to withhold from my check. I went straight to the wage & labor board and explained the situation to them. Two phone calls to verify that a signed W-4 form was the actual permission slip that allows an employer to lawfully withhold monies, and then he called my employer and asked if they had a valid signed W-4 form on file for me (NO), and proceeded to tell her that If the employee has not given permission to withhold and she did anyway, or held up funds, then they could be charged with conversion of funds and prosecuted, and that if in fact I did owe money to the IRS, that it was between me and them. I had my money within the hour, all of it.

    Another (with no cite, 2nd hand). Similar situation, employee filed no W-4, employer withheld 500 bucks from employees checks Employee demanded his 500 bucks and was told too late, we sent it to the IRS. Employee filed conversion of funds charges against employer. The judge asked employer on what authority did you withhold this mans money and was told "The IRS." Well the employee whipped out a blank W-4 and asserted that this would have given the employer permission to withhold but he did not file it with the employer. The judge checked and found that this was the case and that the IRS held no liability to refund to employee or employer as all people are presumed to know the law and its therefore presumed that it was paid lawfully. The ruling was that the employer had to give the man his 500 bucks AND 2000 extra for punitive damages!

    Let's go to the tax code book and see what it has to say about liability for employers to withhold, shall we?



    Section 3402 (n)
    Employees incurring no income tax liability.
    Notwithstanding any other provision of this section, an employer shall not be required to deduct and withhold any tax under this chapter upon a payment of wages to an employee if there is in effect with respect to such payment a withholding exemption certificate (in such form and containing such other information as the Secretary may prescribe) furnished to the employer by the employee certifying that the employee-
    (1) incurred no liability for income tax for his preceding taxable year, and
    (2) anticipates that he will incur no liability for income tax imposed under subtitle A for his currant taxable year.
    The Secretary shall by regulations provide for the coordination of the provisions of this subsection with the provisions of subsection (f).

    The big question here is "If everyone is liable for the tax, then why does the tax code make refrence to people who have no tax liability?"

    Even on W-4 forms it has a place for marking yourself exempt. If no one is exempt, then who or what does this refer to?

    And how come I still cant find where the code makes me definitively liable?

    And if I am liable, why do I have to sign under penalty of perjury? I don't have to sign when paying sales tax.

    :neener: Prove me wrong if you can, and answer my questions. (You're local, you can borrow my my tax code book, if needed.)

    Anyone? Anyone? Bueller?
     
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