Transcription
[Music] Hello. As members of the bar, we've all accepted responsibilities beyond those we have to our clients or to our employees. And while we, attorneys and other professionals appearing on this video, are not here to lecture anyone on how they should fulfill their obligations, we do hope that the information we are bringing to you will better enable you to do so.
This brief video is primarily directed at those of us who have chosen to serve as Department of Justice prosecutors and those of us who have been chosen to serve as federal judges. But every attorney, no matter what role he or she plays in our criminal justice system, benefits by having a better understanding of the challenges we face. Like the engineer who, finding himself up to his waist in alligators, often has difficulty remembering he came to drain the swamp. Those of us who are responsible for prosecuting lawbreakers and those of us who are responsible for deciding their punishment are often so preoccupied with pursuing the guilty that it is difficult to remember that, first and foremost, we came to protect the innocent.
One area where this is happening with alarming regularity is in the prosecution and punishment of citizens for tax crimes. Now, hold on to your conclusions for a minute. We're not here to defend criminal behavior or persuade you that all accused of tax crimes are innocent, or that anyone is justified in engaging in deception or fraud. All we hope to accomplish here is to help you to discern which are the criminals you must prosecute and which are the innocents you must protect.
"Tax protester" has become a term that is often erroneously assigned to those who make up the tax honesty movement, and "frivolous" is the adjective that is immediately assigned to their beliefs without any investigation into the basis, or absence of basis, for their positions. Your past reaction to those accused of tax crimes may be, in some instances, correct. But in many instances, a "tax protester" brush is used to paint those to whom it does not apply.
First, you should know that there are two completely different groups of people that are often incorrectly lumped together under the label of "tax protesters" or "tax defiers." And if all this video does is to help you to distinguish between them, then we will have done our duty to help you to do yours, both with respect to prosecution of the guilty as well as to protection of the innocent.
So, we would like to start by suggesting to you that we designate new labels for these two distinct groups of people. There are those who are defying tax simply out of a desire to escape payment, who make wild, unsupported claims, relying on conjured-up theories and almost voodoo-like devices that somehow magically render them immune from government action. Most of those who promote such delusional theories and sell their "get out of taxes free" gimmicks are nothing more than con artists, and their followers are those willing to accept any excuse to refuse to pay taxes. Let's call them the "tinfoil hat brigade."
On the other hand, there are also those who have read the law and conducted extensive research into the tax laws as they are written and as they have been interpreted and applied by the United States Supreme Court. After determining what the letter of the law itself says, they have concluded, correctly or incorrectly, that the IRS is misapplying the income tax to those upon whom the law imposes no liability; that the IRS is demanding personal financial information from citizens who are under no legal obligation to disclose their private financial details; and that the IRS is, through deception, intimidation, and even by force of arms, illegally exacting payment from citizens.
Those of this second group are not motivated by avarice or desire to evade their duty to obey the law, but rather by their duty to uphold and obey the law of the land. This is true even if their understanding of the law is askew or incorrect. This group of people find themselves, nevertheless, compelled by their beliefs to resist what they have a sound, authoritative basis for believing is to be a violation of the law. Their beliefs are based upon actual and current statutes and actual and extant Supreme Court decisions, not on some gimmick or theory. And just as their basis for those beliefs are genuine, their beliefs are genuinely and honestly held. Their intent is to support, not to defy or violate, the rule of law. These people make up what we call the "tax honesty movement."
The "tinfoil hat brigade" could be categorized as tax protesters or tax defiers, if you like. But those comprising the tax honesty movement are not opposing taxation, but rather are opposing what they genuinely perceive as the IRS's misapplication of the law. These two groups could not be more opposite: one seeking and accepting any excuse to break what they believe to be the law, and the other seeking the observance and obedience of what they believe to be the law.
I think you will agree that while the former may be guilty and deserving of prosecution, the latter, without any criminal intent and indeed acting on a noble intent that is identical to yours – to uphold and support the Constitution and laws of the United States – are innocent.
In this video, we will show you what the "tinfoil hat brigade," without any lawful basis, contends. We believe you will immediately recognize those contentions as baseless and even asinine. We will then list for you the contentions of those in the tax honesty movement and show you a brief summary of the legal authorities on which their contentions are based. You may agree or disagree with those conclusions, but we believe you will also recognize that the beliefs and conclusions of those within the tax honesty movement are not without authoritative support.
Our first expert on these matters is Larry B. Craft, if not the, then certainly one of the best and most experienced tax crime defense trial attorneys in the country. A consummate researcher and one who has devoted the last 30 years of his life to exposing and debunking the "tinfoil hat brigade."
I'm a lawyer from Huntsville, Alabama. For most of my professional career, I have been interested in defending those who are charged with the commission of white-collar crimes. In the course of representing these white-collar criminal defendants, I have represented a number of people that have been charged with the commission of income tax crimes. Based on my experience, I've represented a lot of people that have truly, honestly, sincerely believed that they owed no federal income tax, that they weren't required to file income tax returns, and therefore, they have demonstrated that they haven't acted willfully, that they have acted in good faith, and they haven't committed any tax crime.
Now, often I have encountered, either on my own or during the course of representing some of these criminal defendants, I have encountered what Mr. C has described as arguments that are promoted, fostered, literally sold by gurus who were in this camp that he named the "tinfoil hat brigade." In 1993, I had brought to my attention an argument that since then I have labeled, named myself, the "name and caps argument." The source for this argument is this: when you take a look at the pleadings, the style of a case, the style of pleadings in a civil case, you will see that, as all lawyers have done for a number of years, hundreds of years, we print the parties' names in the style with capital letters. We not only do that in civil cases, but we also do it in criminal cases.
Now, some of these gurus that are promoters of these "tinfoil hat brigade" arguments sell this argument here about names and caps, and they try to make an appeal to people that are being sued civilly or that are defendants in criminal cases, and they want to foster this type of defense. They want people to, you know, change their name in some respects. They want them to walk into court and say, "Well, the defendant in this case is a nom de guerre, the defendant in this case is an alter ego, the defendant in this case is a straw man," and they believe that since their name is not in all caps, that constitutes a defense to any proceeding in which they may be a party.
Another argument that I've learned about came up about the same time frame, 1993. It is, it's an argument that I have labeled myself, and a number of other people label it the same way. We call it the "UCC argument" or the "Uniform Commercial Code argument." Here are its major features: In 1933, the international bankers of the world got together and made a decision to go after the governments of the world and take them over, supposedly. In 1933, the international bankers apparently threw the United States government into an involuntary bankruptcy. As a result of this takeover of the government by the international bankers, they now use this is the law that relates to the relationship of and governs the relationship between a citizen and his government, and it's all commercial law. And the commercial law that governs the relationship between the international bankers, acting as the government itself, the law that applies in that situation with the citizen is this commercial law known as the Uniform Commercial Code.
So, whereas a lawyer in a civil case would assert, you know, well-accepted defenses, just like a lawyer would in any criminal case of utilizing well-accepted defenses, the promoters of this UCC argument say, "Well, you know, those lawyers don't know what they're talking about. They have absolutely no conception that the real law that applies in this transaction is commercial in nature. It is based on the UCC, and you better be looking for your defenses based upon the Uniform Commercial Code and the defenses they're set forth therein." To me, this is an argument that is absolutely baseless. The courts around America have soundly and rightly so rejected this UCC argument. Nonetheless, you have these gurus, these promoters, these kind men, these liars, crooks, and thieves in the "tinfoil hat brigade" out selling these types of arguments to innocent and gullible Americans.
Another argument that's had some wide acceptance that's been promoted by the gurus is something that is labeled and named by the promoters of this process itself. They call it the "Redemption Process." It is built somewhat on the prior two arguments that I've talked about: the "name and caps argument" and the "Uniform Commercial Code argument." Now, here are the basic features of this argument: In 1935, after the international bankers had thrown the government into bankruptcy and taken over the government itself, and they were using commercial law as the most prominent law in America, the Social Security Act was enacted, and it created an account for every American. That account is called the "Treasury Direct Account." And in each Treasury Direct Account, there's funds that are put there for each American.
Now, this Treasury Direct Account has a public side and a private side, and the money in this account is on the private side. And if you find yourself in poor circumstances, if you're running out of money, there is a way to access the money in this account that the government holds for every American. Now, depending on the promoter that you encounter, years ago, the sum was alleged to be $600,000 was in your Treasury Direct Account. Here in more recent times, you can find promoters that are saying, "Oh, there's $25 million in your Treasury Direct Account." But if you want to get your money out of your Treasury Direct Account, you've got to use these Uniform Commercial Code procedures to recapture your straw man. And once you have recaptured your straw man, then you can start writing hot checks drawn on the Treasury of the United States to buy whatever you want. And that means cars, boats, houses, TVs, whatever your heart desires. You can use a hot check drawn on account, a non-existent account, supposedly held by the Treasury of the United States, and you can get whatever you want.
Now, I think you will realize that that argument, as well as the others that I've mentioned, is utterly without any foundation. There's the 1099-OID income tax return that has gotten a lot of people into trouble. There are people that are making arguments about this Act of 1871 that created the United States of America, Incorporated, as a private corporation. There are people out there that are asserting arguments that the admiralty, contrary to what lawyers believe, that it only is law applicable in the high seas and navigable rivers in this country. They believe that maritime law, admiralty law, has invaded inland, and the real law that governs the relationship between citizen and government is maritime law.
As Mr. C said at the beginning of this video, we are concerned with two classes here. We're concerned with the members of the tax honesty movement. How do they act? They act only after they have engaged in a study of cases, a study of the Constitution, a study of statutes. In sharp contrast to these people, the members of the tax honesty movement, you have the gurus who are, in my opinion, nothing more than liars, crooks, conmen, and thieves. They are the leaders of the "tinfoil hat brigade" movement. When you listen to them, they don't build their arguments based upon provable facts. They don't base their arguments upon constitutional provisions. They don't base their arguments on any law. It's pure fabrication.
The tax honesty movement raises a number of issues. And based upon the Internal Revenue Code and U.S. Supreme Court decisions, members of this movement genuinely hold good faith beliefs regarding those issues. In this presentation, however, we will explore only one issue that we believe will clearly demonstrate that those who comprise the tax honesty movement, whether correct or incorrect, are not criminals deserving of prosecution, but rather innocents who deserve our protection.
First and foremost among the beliefs of the tax honesty movement is that the law does not make them liable for the federal income tax. For many years now, tax honesty proponents have pressed the IRS to admit that there is no law, no statute, that makes the average working American liable for the federal income tax. For as many years, the IRS has refused to respond, simply calling the question a "frivolous tax protester argument." The tax honesty movement contends that there is no statute imposing liability on the American citizen working here at home. So, is there such a liability statute, or isn't there? This would appear to be the simplest of claims to either bear out or disprove. So why hasn't the IRS been able to eradicate this claim? Is there a basis for this tax honesty movement contention? If there is a basis for this claim, then it wouldn't be frivolous, would it? A reason to believe would make a belief reasonable, wouldn't it?
The IRS refuses to respond to the question, stating it is not required to say what statute imposes liability and that it is not required to answer such questions. When a servant sits mute and sullen when answers are demanded by its master, can you fault the master for doubting the servant and conducting an inventory of the family silverware? The IRS is also silent with regard to the absence of a specific liability provision in its list of frivolous arguments. Interestingly, the IRS webpage on frivolous arguments does not list the absence of a liability provision as a frivolous argument. So, is it frivolous to assert the fact that federal income tax law does not make the average American liable for the federal income tax, or is there a legal basis for this assertion?
One U.S. Senator responded to a constituent's inquiry by admitting that no such liability provision exists. But the Senator then went on to claim that liability for the federal income tax is implied. But as attorneys and tax professionals, not Senators, we know that tax laws are required to be strictly construed, and that there is no such thing as an implied tax or an implied tax liability. The letter of the law alone rules, regardless of legislative intent. And if there is any ambiguity in the tax law, that ambiguity must be resolved against the government and in favor of the citizen. This rule of strict construction applies to issues of not only what is taxed and how the amount of tax is calculated, but to who is liable for its payment as well.
Large rewards have been offered to anyone who can produce any statute imposing liability for the income tax on the average American working citizen. One of those, a reward of $100,000, is still offered and outstanding. No one, not a single person, has stepped forward to claim any of those rewards. Why not?
A search of the Internal Revenue Code reveals many references to liability. And every single tax in the code has a specific section, usually titled "Liability for Tax" or "Persons Liable," that clearly and plainly identifies all those who are liable for that particular tax. Well, almost every single tax except the one and only exception: the federal income tax. In subtitle A of the Internal Revenue Code, is it necessary to have a liability provision? Well, yes. Important enough that every tax has a specific statute that clearly and plainly identifies who is liable to pay it. A tax that fails to make anyone liable for its payment will not generate very much revenue.
The Supreme Court has held that unless one is clearly and plainly made liable by the letter of the law, he is free of the tax, even if it was the intent of the legislature to tax him. The Internal Revenue Code makes liability for the federal income tax pivotal in many respects. For example, section 601 provides that "Every person liable for any tax imposed by this title shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary may from time to time prescribe." And wouldn't any tax imposed by this title include the federal income tax? Of course, it would. So, if the law says you are liable, you must keep records. But obviously, if you are not liable, you are not required to maintain any records. If the law says you are liable, you must make a tax return. But what if the law does not make you liable? Then, of course, no tax return would be required from you. If the law says you are liable, then the regulations apply to you. But what if you are not liable? Then the regulations regarding the time and manner for filing tax returns would not apply to you either. That is a pretty big difference.
If one person is required to file an income tax return, but his neighbor is not, don't you think Congress has imposed all these duties but only on those whom the law says are liable for a tax? So it would be important for Congress to say who all those liable persons are, wouldn't it? Since knowing whether one is liable for the federal income tax determines whether one is required to file a federal income tax return, what does the IRS say about who must file a federal income tax return? In its 1040 instruction booklet, the IRS's Privacy Act Notice explicitly states, "Our legal right to ask for information is Internal Revenue Code sections 6001, 6109, and 6012(a) and their regulations. They say that you must file a return or statement with us for any tax you are liable for."
What else on being a liability provision? Well, section 6321 of the Internal Revenue Code says that "If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount, including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto, shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person." No liability imposed on the person, no lien. Liability is pretty important, wouldn't you say?
How about section 6331 of the Internal Revenue Code? "If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax and such further sum as shall be sufficient to cover the expenses of the levy by levy upon all property and rights to property." So, knowing who the law says is liable is very important, wouldn't you say?
One would think that is why nearly every tax has a specific liability provision to say who is liable, so that each person will know whether he or she is required to keep records, render statements, make returns, and comply with regulations; whether a lien can be imposed on his property; and whether property can be seized for payment of the tax.
Let me show you an example to demonstrate how the law tells us who is liable for a tax. Section 5001 imposes a tax on distilled spirits. "There is hereby imposed on all distilled spirits produced in or imported into the United States a tax at the rate of $13.50 on each proof gallon and a proportionate tax at the like rate on all fractional parts of a proof gallon." Notice that this tax is on all distilled spirits produced in or imported into the United States. Do you have any distilled spirits that were produced in or imported into the United States? There is a tax imposed on all distilled spirits, domestic and imported. All would certainly include those in your liquor cabinet. So where are your distilled spirits records? Why haven't you been filing a distilled spirits tax return?
Well, before you reach for your nitro pills or your distilled spirits, let's look at section 5005. First, notice the title: "Persons Liable for Tax." And then the statute itself: "The distiller or importer of the distilled spirits shall be liable for the taxes imposed thereon by section 51 A1." Are you a distiller or importer? No. Then perhaps that is why, even though you have distilled spirits and the taxes imposed on all distilled spirits, you are not required to keep records or to file the distilled spirits tax return. Is this an exceptional or unusual provision? No. Every tax in the Internal Revenue Code, with the sole exception of the income tax, has a specific statute stating exactly who is liable for that tax.
Tax on petroleum, section 4611. How about this one? Excise tax on failure to satisfy continuation coverage requirements of group health plans. Is not doing something a taxable activity? When something does not happen, is that a taxable event? I don't know. But when it isn't done or doesn't happen, 4980B, subsection C, "Liability for Tax," tells us who is liable. Do you smoke, chew, or dip? Section 5703 makes the manufacturer or importer, not you, liable for the excise tax on tobacco products.
So, who does the law say is liable for the income tax? Who is liable, and therefore must keep records, render statements, make returns, and comply with the regulations? Who can have liens for income tax placed against their property or their property seized for the payment of the income tax? Income tax is imposed by section one. First, let's note the title of the subchapter: "Determination of Tax Liability." So, wouldn't you expect that some section in this subchapter would tell us who is liable for income tax? Then note the part: "Tax on Individuals," which also would suggest that the tax is going to be imposed on someone, not just something. Titles and headings are not law, but that would lead one to believe we are at least in the right part of subtitle A, the income tax law, to expect to see exactly who the law says is liable for that tax.
Now, let's look at the letter of the law. Section one, "Tax Imposed." Heading: "Married Individuals Filing Jointly and Surviving Spouses." Heading. And finally, the statute: "There is hereby imposed on the taxable income of— (1) not on every married individual as defined in section 7703 who makes a single return jointly with his spouse under section 6013, and (2) every surviving spouse as defined in section 2(a), a tax determined in accordance with the following table." Then it goes on to set the rate of taxation. Section 1B, the same thing, except the tax is imposed on the taxable income of heads of households, and a different set of rates is provided. Section C is on the taxable income of unmarried individuals. The taxable income of married individuals filing separately. And finally, E, the taxable income of estates and trusts. In all of those subsections, the tax is not imposed on individuals, as the heading suggests, but is on taxable income.
So, what is taxed? Taxable income. That is income within the meaning of the Constitution and the 16th Amendment, that is derived from engaging in an activity that is within the taxing authority of the federal government, is subject of the tax. Do you have income? Does having income make you liable according to section one? Did having distilled spirits make you liable for tax on all distilled spirits? No. It takes a statute to do that. A statute like section 5005. The problem is that if you were to read all 59 sections of subchapter 1, "Determination of Tax Liability," you will find no statute that says who is liable for the income tax. It is not there.
Why does it matter? Why? Unless the letter of the law makes you liable, then you are free of the tax. Look at what the Supreme Court said in *United States v. Merriam*, citing and quoting *Gould v. Gould*: "On behalf of the government it is urged that taxation is a practical matter and concerns itself with the substance of the thing upon which the tax is imposed rather than with legal forms or expressions. But in statutes levying taxes, the literal meaning of the words employed is the most important, for such statutes are not to be extended by implication beyond the clear import of the language used. If the words are doubtful, the doubt must be resolved against the government and in favor of the taxpayer."
The court goes on to quote Lord Cairns in *Partington v. Attorney General*, saying, "I am not at all sure that in a case of this kind, a fiscal case, form is not amply sufficient, because, as I understand the principle of all fiscal legislation, it is this: if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be."
Now, are those in the tax honesty movement advancing a frivolous argument? Is there no basis for their belief? The "tinfoil hat brigade" misrepresents the law, manufactures non-existent case quotes, and conjures up theories and fantasies that have never occurred, such as an American bankruptcy and the wholesale enslavement of all Americans by issuing birth certificates. But those in the tax honesty movement are basing their beliefs on the written, black-letter law and the clear pronouncements of the law by the Supreme Court in cases that are still in full force and effect today.
Our object here today is not to convince you that the tax honesty movement is correct. You're all attorneys, and you can research the law, draw your own conclusions, and form your own opinions. And we urge each of you to do just that. To help you, we're including with this DVD a companion CD, which not only provides you with a searchable Internal Revenue Code and its regulations, but also the full text of some of the cases upon which the tax honesty movement bases its beliefs.
There are other issues that the tax honesty movement has raised with respect to the income tax that we will not delve into in this presentation, such as what exactly is income within the meaning of the Constitution and the 16th Amendment, and whether any income, profit, or gain can be derived from monies personally earned and received in exchange for one's labor. What are the limits of the federal taxing authority? That is to say, which activities are within the federal sovereignty, taxable, and without the federal sovereignty, exempt?
It should come as no surprise to you that, according to the Supreme Court, as held in scores of cases, that working for a living is a fundamental, constitutionally protected right, and therefore constitutionally exempt from taxation. This is one of the key issues raised by the tax honesty movement. The companion CD also provides you with the cases and other authorities upon which the tax honesty movement bases its beliefs that no income can be derived from personal earnings, that their engaging in their chosen occupation is outside the federal sovereignty and its coextensive taxing authority, and that the exercise of their fundamental right to earn a living is constitutionally exempt from taxation. Their conclusion and belief is then that since the tax is only on income, and even then only on such income that is taxable by the federal government, they have no taxable income to report or return, and no taxable income upon which a tax can be or has been imposed.
So, what's the point? Those of you who have litigated, presided over the prosecution of a tax crime, are familiar with the case of *United States v. Cheek*. For those of you who have not yet done so, we urge you to read the full text, which is included on the companion CD. In that case, the United States Supreme Court held that in order to be guilty of a tax crime, the defendant must have acted willfully. That means that the failure to file or the act of evasion must have been committed by a defendant who knew and intended to violate the law. The Court held that if willfulness was not present, the defendant is not guilty. He is innocent.
Where he genuinely believes that he is under no legal duty to file a return and pay an income tax, those in the "tinfoil hat brigade" can hardly claim that they truly believe their wild and unsupported claims. But the beliefs of the tax honesty movement are not baseless. Each belief is founded upon compelling and persuasive legal authorities and on multiple levels, involving not only liability but the very meaning of the term "income" and the constitutional limitations on what is taxable. Each of those issues, fully able to stand alone, lend support and credibility to the others.
The beliefs held by those in the tax honesty movement are genuinely and honestly held beliefs. They have no intent to violate any law and truly believe that, to the contrary, they are supporting and defending the law, standing in opposition to what they truly and sincerely believe to be a violation of the law by the IRS and its application of the income tax to those who, in the tax honesty movement, believe are not liable, have no income, and are beyond the constitutionally limited scope of Congress's authority to tax.
You may draw a different conclusion from your reading of the statutes and cases relied upon by the tax honesty movement in the formulation and adoption of their beliefs. But we believe you must be able to see how compelling and convincing those authorities are to those in the movement, and that genuinely believing that they are not in violation of any legal duty, knowing of no such duty, they are innocent of any crime. Consequently, they are entitled to your protection.
Many of us make our living defending tax crime cases. Some of you have probably handled cases with some of us. Your sorting the innocent out and preventing their unjust prosecution will surely eliminate cases and fees for us. But our duty as attorneys transcends our personal financial considerations. Although defense and prosecution attorneys and attorneys on the bench serve different roles, our goals are, or at least should be, identical. All of us are charged with the often difficult task of applying law we did not write to facts we did not make to produce justice. If justice is served, we have succeeded. A win for all of us. But if justice is not served, we have all failed. A tragic failure that must be paid for, not by those of us who have failed the system, but by an innocent defendant.
As prosecutors and judges, you're not afforded an opportunity to know these men and women who have bravely confronted the IRS with the letter of the law and resisted what they genuinely believe are unlawful exactions. But we who represent them do see and understand that, correctly or incorrectly, they are genuine in their beliefs, and their intentions are not criminal, but noble. We become intimately familiar with them, their parents, their wives and husbands, their children and grandchildren, and we see their innocence. We also see our failure when, in spite of that innocence, they are branded criminals and torn from their lives and families. It breaks our hearts, not merely for the tragic injustice to the innocent, but also for our collective failure to succeed in our quest for justice.
Thus, our purpose in making this presentation and compiling these materials for you is to help you recognize the innocents caught up in the IRS's wide nets and to protect them from inappropriate prosecution. When a prosecution is referred to you, or a case is assigned to your court, it is not enough that you review the evidence of income or tax due and owing, or the affirmative acts of evasion. You are part of the filtration process, the system's insulation that is intended to protect the innocent from being subjected to such trials and perils.
As prosecutors and judges, you owe a duty to the innocent and to our system to investigate and examine whether the evidence proves that the accused intended to violate a known legal duty, or if the accused intended, as you and we intend, to support and defend the law which he genuinely and in good faith believes imposes no such duty on him. Yes, he filed tax returns at one point in his life because, at that point, he believed what he had been told by those who never saw the law. Just as your knowledge continues to grow and your beliefs are altered by that ever-growing body of knowledge, at some point, that accused citizen's belief could very well have changed. Is he guilty only of relying on the written letter of the law? Did he form new beliefs in reliance on legal advice from the highest court in the land? More importantly, has the investigation produced evidence that he still believes as he did when he was filing tax returns? What evidence has the IRS's investigation produced for you that would prove that, at the time of the alleged offense, his previous belief had not changed? Any? None.
In most cases involving members of the tax honesty movement, the only evidence is that, correctly or incorrectly, they no longer believe that they are under a duty to file and pay income taxes. How can they knowingly and intentionally violate a duty they truly believe does not exist? Is there any difference between this and waiving a right of which one is not aware? We expend great amounts of time and attention to ensure that a guilty plea is knowingly and voluntarily made and that the defendant is aware of the rights he waives by so doing. Isn't an accused entitled to as much effort on your part to ensure that at least some evidence is produced showing that, at the time of the offense, he believed he was under a duty to file and pay and knowingly intended to violate that duty?
Prosecutors, would you advise or ask a grand jury to indict someone for armed robbery where there was no evidence that a weapon was involved or at least implied by the robber? Of course, you wouldn't. Judges, would you refer a case to the jury when the government's case in chief failed to produce any evidence, not one iota, regarding the defendant's contemporaneous, knowing intent to violate the law, where that is an essential element of the crime charged? Of course, you would not. But that is exactly what has been happening with painful regularity in these cases. Even worse, we routinely see exculpatory evidence proffered by the defense excluded, and non-probative, prejudicial, and inflammatory evidence proffered by the prosecution allowed in. In short, we routinely see gross miscarriages of justice in tax cases that most judges and prosecutors would never even consider in other criminal trials.
Perhaps they are wrong. Perhaps they do owe a tax, just as millions of others who are being pursued by the IRS for collection of taxes. But without a knowing and intentional violation of a duty to file and pay, they are no more criminals than one who, in a good faith mistaken belief, filed an erroneous return and owes a difference. There are tax courts for that problem, and the government is certainly not without ample means and measures at its disposal to collect its due. Criminal prosecution, however, should be reserved for criminals, not the innocent.
The ripples of injustice that keep going beyond the deed, through the victim's family, his friends, employers, and clients, and any who might have otherwise had benefit, direct or indirect, of his contributions to society. And piece by piece, and wrongful conviction by wrongful conviction, these citizens lose respect for the rule of law and for our system of justice. The means to obtain a tax crime conviction will never justify the end if the means employed are unjust and subvert the law and the very notions of due process, substantial justice, and fair play. On the contrary, anytime the process is manipulated to ensure an unfair prosecutorial advantage, the means themselves will destroy the system.
Normally, when you receive a referral for a prosecution or have any case assigned to your court for trial, you examine it carefully, ensuring that every element of that crime is supported by trustworthy, admissible evidence. All we are suggesting here is that you do the same when you receive a referral from the IRS asking you to prosecute a citizen for tax crimes or receive an assignment for trial of such a charge. Did the IRS investigation produce proof that the accused was acting knowingly and willfully, intending to violate a law with criminal intent? What trustworthy, admissible evidence has the IRS produced to prove that essential element? What is your duty to the law and to the accused? What must you do?
Thank you for taking the time to view this presentation. We hope you will continue your investigation into the issues and make use of the materials we are providing to assist in that investigation. Above all, when you are up to your waist in criminals, we hope you will remember that we all of us came to protect the innocent. This justice machine you and we comprise is huge, but it depends on each and every one of us. So long as each and every one of us does his part, it works. Thank you.
[Applause] [Music] [Applause] [Applause] [Music] [Applause] [Music]