Tax-evasion teacher convicted (U.S. income tax is voluntary, man says)

The Associated Press | Article published Feb 13, 2004 | By KATHY MCCORMACK

[Jim Robinson]

Article published Feb 13, 2004 Manchester

Tax-evasion teacher convicted

U.S. income tax is voluntary, man says

By KATHY MCCORMACK

The Associated Press

A tax preparer who ran hotel seminars designed to teach people how to avoid paying federal income taxes was convicted yesterday of multiple counts of preparing false returns.

Steven Swan of Manchester was convicted in U.S. District Court in Concord on 15 counts of preparing false tax returns and amended returns, two counts of preparing false amended returns for himself and one count of corruptly impeding the administration of the federal tax laws. He faces three years in prison and a fine of up to $250,000 for each count - up to 54 years and $4.5 million.

Swan, who was released in his own custody, is scheduled to be sentenced on May 19.

Prosecutors said that from 1997 to 2002, Swan, 51, prepared more than 200 so-called "zero-income"tax returns for clients, making false claims for refunds of more than $1 million. Swan, who represented himself at trial, did not dispute the government's case. He testified that he was a former disciple of tax protester Irwin Schiff, who wrote The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes.

Swan said he met Schiff in New Hampshire in 1995, when Schiff was campaigning in the '96 presidential primary as a Libertarian. He bought Schiff's books and studied his material. "I believed in Schiff's information so much that I began disseminating his information to others myself," Swan said in a court document.

[Jim Robinson]

Received via email from Steven Swan

[Prodigal Son]

Prosecutors said that from 1997 to 2002, Swan, 51, prepared more than 200 so-called "zero-income"tax returns for clients, making false claims for refunds of more than $1 million.

How does this work? How do you get a refund on zero income?

[Keith]

Someone tell this moron about the 16th amendment...sheesh.

[Jim Robinson]

I don't know, but apparently, it doesn't work very well.

[ServesURight]

The 16th Amendment was never ratified by the states.

[Prodigal Son]

LOL, yeah, I suppose you're right.

[Abe Froman]

As I understand it, that the 16th amendment was properly ratified is in some doubt, and while it is commonly accepted as law, that doesn't de-legitimize the arguments of those that point this out. There is also some questions about whether the 16th amendment, as interpreted now, means what the authors meant.

None of this means that I am going to stop paying taxes on these grounds anytime soon, but it is telling to point out that often improper and subtle ways are used to enslave the people (re-interpretation, abuse of procedural vagaries or outright ram-rodding, etc...) That this guy has the balls to risk almost certain punishment by the state to expose a shadily conceived law is commendable. Radical reform often requires radical measures.

[Abe Froman]

I believe the basis for this is that they received no "taxable" income, under their (possibly correct??) interpretation, and as such, all their withholdings would be returned to them.

[kevkrom]

Tax reform bump

[Poohbah]

As I understand it, that the 16th amendment was properly ratified is in some doubt, and while it is commonly accepted as law, that doesn't de-legitimize the arguments of those that point this out.

However, the courts have long held (from well before the 16th Amendment) that disputes about the ratification status of any Constitutional Amendment are political affairs, to be resolved by the Congress of the United States and the legislatures of the several states.

And that's a good thing, IMNHO, because the ratification record of the Bill of Rights is extremely poorly maintained. Do you really want the 9th Circuit deciding that the 2nd Amendment doesn't even exist?

[Prodigal Son]

Ok, that makes sense- sort of. But if you're using the legal tax form to fill out your return, how do you itemize your deductions in a way that works out to you having zero income? I mean if you use the correct legal method, it works out to what it works out to and you either owe more taxes, none at all or you get some of what you paid back. But if that's the case, it's all legit. How do you use the tax form in such a way to say I made $50,000 but I claim I made nothing in taxable income?

For me, it would be one thing to never claim any income at all (regardless of whether you did or not)- but then you wouldn't get a refund either. But to claim you DID make the money and you invent a deduction, this is just fraud. I mean, you're lying and signing your name to it.

Seems a better dodge to just try to hide your income in the first place. If you go telling the IRS "I made X amount but I just aint going to pay you" you're just asking for trouble. They know you made the money because you just told them.

I can't figure out how this dodge was supposed to work.

[Grit]

How does this work? How do you get a refund on zero income?

If you have "regular" job, you claim all your income as non-taxable (a la Schiff) and get the refund equal to the amount withheld for the year.

[Prodigal Son]

Ok, but what deduction scheme are you using? If you're using a real deduction then it's legal. If you're making one up- you're just asking for trouble.

[Chewbacca]

"I can't figure out how this dodge was supposed to work."


I think it is supposed to work on the principle that working for an hourly wage is not taxable because no income was receive. Income being a profit. If you work for someone they agree to pay you for the time worked, which is a compensation for your labor. Where is the profit? Now, if you work and make something and sell it for more than the cost of production, then you have received an income.

[Abe Froman]

It's based on withholding. Obviously if they're withholding your money, yet none of your income is taxable, then it should all be returned. I've skimmed over a couple of the tax-protest sites and it appears that the argument is over some language that defines what taxable income is, and the protesters claim (IIRC) that it means only foreign income or something.

[Abe Froman]

I'm not aware of any dispute about the ratification of the 2nd amendment. I will say this---who would be more interesting in continuing the sham, if there was one; the courts, or the legislature/s that originally ramrodded a false ratification? They're the ones who want to get their hands on the money anyway.

With regard to the Bill of Rights in general----we get back to Jefferson's argument that they weren't neccessary, those people's rights are inherent in the Constitution by virtue of the lack of any power listed by the constitution to regulate them. Of course that leaves the door wide open to state governments to regulate them. In short, just because the 9th circuit decides that there's no 2nd amendment doesn't mean the right doesn't exist, so theoretically, it wouldn't matter what they ruled. Of course they should be impeached for usurpation when it happens too.

[Abe Froman]

Of course this is the principle reason that withholding should be abolished. Frankly I think government has to right to know how much money anyone makes, and by extention, tax them proportionally. That information should be proprietary to the earner.

[Poohbah]

I'm not aware of any dispute about the ratification of the 2nd amendment.

There isn't--but the record-keeping deficiencies identified in The Law That Never Was are applicable to the 2nd Amendment's ratification paperwork--in spades.

I will say this---who would be more interesting in continuing the sham, if there was one; the courts, or the legislature/s that originally ramrodded a false ratification?

If the legislatures actually wanted to ratify the thing, they wouldn't need to submit "false ratifications."

If they had NOT intended to ratify the amendment, they had more than enough opportunity to tell Mr. Knox that they had not done so.

[MegaSilver]

U.S. income tax is voluntary, man says

He's in for a surprise.

[Abe Froman]

I am not very knowledgeable about this subject but isn't the claim of improper ratification dependent on the lack of state ratification which is disputed by the federal government? So wouldn't it not matter that the state governments didn't respond? Their lack of response is lack of ratification, not proof that they are OK with it.