The title of this post, “Send in the Clowns,” is admittedly a bit harsh. We have represented several tax protesters in both audit defense and criminal investigations. None of them are clowns, however the promoters feeding them bad advice often were.
To be clear, there is a grain of truth in some of the theories advanced by some of the “tax freedom movement” gurus. Unfortunately, under our judicial system the courts are the final arbiters of the law and the courts have soundly rejected all the theories advanced by the protesters. (The IRS now labels these folks as “tax defiers”.)
Last week Judge Richard Posner of the 7th Circuit Court of Appeals issued a ruling in yet another tax freedom case. (Although a federal appeals court judge, Posner was sitting as a trial court judge.)
Hakeem El Bey is a pro se litigant charged with defrauding the IRS. Although he is entitled to counsel, El Bay chose to represent himself. Posner, however, ruled that El Bey would lose that right if he continues to argue “utterly irrelevant, patently inaccurate, and sometimes unintelligible contentions.”
El Bey wants to argue that he is a sovereign citizen, that the federal courts have no jurisdiction over him because he is a member of the Cherokee nation, that the IRS has been dismantled and the U.S. government is insolvent. (We actually agree with El Bey on the latter point.) According to Judge Posner, El Bey also argues that an 1765 treaty with the Queen of England exonerates Americans to pay all taxes except those on alcohol or cigarettes.
Posner appears to make fun of El Bey in his opinion, pointing out that in 1765 the sovereign of England was a king and not a queen. The case is no laughing matter, however, as El Bey is charged with 8 felonies. Unfortunately, we see many audit defense cases – and a few criminal cases too – where clients have relied on similar arguments. In most instances, they do not end well for the taxpayer.
The tax freedom movement claims several victories. We personally know Joe Bannister, a former IRS criminal division special agent, who was charged with a felony count of defrauding the IRS. Bannister was acquitted but those victories are very, very few in number.
Bannister was charged over a decade ago. Since then, the courts have made it harder to win tax protester cases. The advent of “willful blindness” jury instructions sealed the fate of many would be tax defiers.
In criminal cases, the court acts as the gatekeeper. Just as Judge Posner ruled that El Bey couldn’t raise several defenses at his trial, judges routinely decide what information can be presented. Juries are the ultimate arbiters of guilt or innocence but judges determine what evidence a jury gets to hear.
Audit defense cases are worse. Appeals from an adverse ruling or tax assessment are first heard within the IRS. If that doesn’t resolve the matter, appointed tax court judges hear the case. Ultimately, a taxpayer can make it to federal court but the process is long, expensive and frequently just as hostile to tax defiers.
The method for change is through legislation and education. Taking your case to court on a theory that the Queen of England absolved Americans from paying taxes or claiming that federal courts only have admiralty jurisdiction or claiming that only people in the District of Columbia must pay taxes have been advanced many times. Those arguments don’t work.
While some tax freedom advocates are educated and make good points, many are simply clowns. Relying on either could be at your peril.
If you are charged with a crime or receive an audit notice, contact a good IRS tax lawyer immediately. Sending argumentative letters to the IRS doesn’t work. Good criminal and audit defense often means coming to grips would bad advice from the fringe.
Need help with audit defense or a criminal tax investigation? Give us a call. All inquiries protected by the attorney – client privilege and kept in complete confidence. Tax representation available worldwide.
For information on audit defense and other IRS civil matters, contact attorney Bethany Canfield at IRS criminal tax problem? Contact attorney Brian Mahany at Both lawyers can also be reached by telephone at (414) 223-0464.