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To The Readers of
The Biggest "Tax Loophole" of All

By Otto Skinner


I urge the readers of The Biggest "Tax Loophole" of All to, at some point, start reading the book page by page from the Introduction to the end, whether it takes two days or two months. The book has been put together by laying a solid foundation at the beginning, and building upon that foundation, step by step.

I urge the readers not to assume they know what will be in any particular part of the book simply because the information looks familiar. Even the readers of my first two books will find in "Tax Loophole" new information, new thoughts, new ideas, new ways to articulate the issues, and perhaps more importantly, court citations which may be new to the reader. If they skip, they are bound to miss something important, such as the Bothke and Bivens cases. .

I also urge the readers not to assume they know the answers to any of the 170 questions in Chapter 17 of the book, but rather compare their beliefs with my comments on the referenced pages. If their belief differs from mine, it is certainly an issue they should want to check out in a law library. They need to be able to articulate and document precisely why one belief is right and precisely why the other belief is wrong. This is the only way I know how to eliminate the confusion in the patriot community. If a person doesn't take the time to take the test in Chapter 17, it demonstrates that he is just looking for a quick fix. Unfortunately, there is no such thing as a quick fix. If there is such a thing as a silver bullet, it will be made up in large part of knowledge and understanding.

The response to the IRS agent who asks for books and records (as shown in the book) can be converted to a response to anything the agency sends you. You are demanding the agent provide documented proof, if he can, which will substantiate his claim. This is the proof the patriots have been demanding and the demands the agents have been ignoring. Without this proof, you are being denied your fundamental rights to due process of law, which are:
  1. Notice;
  2. Discovery (Disclosure) (which the agent cannot provide and he does not want to be deposed); and
  3. A full hearing (which the agency cannot provide).
Fundamental due process rights are to be distinguished from administrative due process rights as well as statutory rights. It has been pointed out to me that one should not invoke his fundamental due process rights until he can articulate precisely which ones he is being denied. It has also been pointed out to me that without fundamental due process rights, we have no rights at all. Argue fundamental due process rights first; then argue taxes, if necessary.

As many of you realize, over the years the patriot community has been inundated with false information. In my articles within this web site, you will find both my view and the views of others. I urge the reader not to believe anything anyone tells you about the so-called "income" tax. I urge you to not use any information in your own case until you have thoroughly checked it out for yourself. If one doctor suggests an operation, it is usually a good idea to get a second opinion. My books and articles certainly provide a second opinion for you to consider. The price is right, and checking it all out for yourself may save you a great deal in time, expense, the loss of property due to civil penalties imposed by the IRS because you used the wrong information, as well as a loss of your liberty.

Almost every patriot will agree that there is a lot of confusion in the patriot community as to what is true and what is not true about the so-called "income" tax. Most patriots will agree that much of the information which is floating around the patriot community is false information. What patriots will have a difficult time agreeing upon, however, is which information is true and which information is false.

Taking a legally flawed argument to court will almost always guarantee defeat, and in criminal cases, will usually provide a fast track to a place of incarceration. In spite of all of the confusion and false information, it is vitally important for patriots to stop wasting their time, effort and money pursuing legal theories which are invalid.

Finally, the readers are urged not to try to mix the information from my books with anyone else's information. The odds are about 99 chances out of 100 that the material will not mix.





WHO ARE YOU GOING TO TRUST?

by Otto Skinner


For many years, individuals have been urged by various "patriot" promoters to complete a Form W-4 claiming an "exempt" status in order to prevent an employer from withholding money for taxes. However, for over 15 years, it has been well known by these promoters that when an individual claimed "exempt" on a Form W-4, it would, almost without exception, cost the individual a $500 civil penalty under 26 U.S.C. 6682, and in many cases, the individual would be charged criminally under 26 U.S.C. 7205 and subsequently incarcerated for having made false statements on the Form W-4.

Not only has the "false and fraudulent" "taxpayer" Form W-4 caused individuals to be charged criminally for a misdemeanor under section 7205, but it has also provided the government prosecutors the "proof" they needed to establish an affirmative act of attempted tax evasion (a felony) under 26 U.S.C. 7201.

Of course, in addition to the $500 civil penalty came huge interest penalties assessed against a "taxpayer" for not filing and paying on time. Just talk to the people who got into this mess.

All the while, the self-proclaimed "experts" would claim that their "legal" position was correct and that the individuals were being unlawfully penalized and incarcerated. The fact is, the courts have simply allowed the individuals to trap themselves with arguments that have no legal validity.

My estimate is that hundreds, if not thousands, of individuals suffered criminal charges under 7201, 7203 and 7205, and hundreds of thousands, if not millions, of individuals suffered $500 civil penalties under 6682; all for having blindly followed some rather bad "legal" theories promoted by the self-proclaimed "experts".

The purportedly correct "legal" theory (combined with some other rather wild and flawed "legal" theories) was based on the claim that if an individual was not liable for (subject to) the tax, the revenue laws allowed him to claim "exempt" on a Form W-4. However, this is like suggesting to 85-year-old grandmothers that they should file for exemption under the military draft laws, when in fact, 85-year-old grandmothers are not subject to the military draft laws in the first place. They are not required to file for an exemption in order to avoid the military draft.

In an attempt to prevent individuals from being devastated from the use of flawed "legal" theories and arguments, a few of us have tried to make known certain facts. For many years, we pointed out that the Form W-4 (withholding allowance certificate) and various other tax forms are provided for the "taxpayers" to use to claim certain allowances (benefits) which Congress has provided for "taxpayers" who qualify for such allowances. We have pointed out that the "exempt" status was provided by Congress for certain "taxpayers" who owed no taxes the previous year and did not expect to owe any taxes for the current year. We have pointed out that there is no law against a person paying more taxes than he owes; i.e., there is no law requiring anyone to claim a benefit that Congress has provided by statute. It has also been pointed out that there is no law even requiring one who is subject to (liable for) a tax to claim a benefit on a withholding allowance certificate. (If the employer does not understand this, the problem is with the employer, not with the law, so don't get sidetracked at this point on another issue.)

Especially from 1986 on, I have shown that the term "taxpayer" is defined in the Code as any person subject to the applicable revenue law, and that the courts have ruled the revenue laws relate to "taxpayers" as defined, and not to nontaxpayers. See Economy Plumbing and Heating v. United States, 470 F.2d 585, at 589 and Note 3 at 590 (Ct.Cl. 1972). I have also pointed out that the term "subject to" means "liable for". See Black's Law Dictionary. In Houston Street Corp. v. C.I.R., 84 F.2d 821, at 822 (5th Cir. 1936), the Court stated, "We see no distinction between the phrases 'liable for such tax' and 'subject to a tax'." Yet, the self-proclaimed "experts" (both in and out of the legal profession) have chosen to ignore these simple truths.

It has also been pointed out that the "exempt" status, or any exemption allowed by Congress, applies to persons who are actually subject to (liable for) the tax, and that Congress essentially chose to give these "taxpayers" a break. This is much like Congress allowing corporations a break on capital gains.

The "taxpayer" forms, such as the Form W-4, are to be used by "taxpayers" to claim the benefit. They are not for an individual to use to prove that he is not subject to (liable for) the tax. As an example, whatever forms were used to claim an exemption from the draft (such as in the case of a young man being needed at home to work on the farm), the forms were to be used by the young men who were actually subject to the draft, and who would be drafted if it were not for the benefit (exemption) provided by Congress. They were not for the use or benefit of the 85-year-old grandmothers.

Because many, many people have blindly followed the purportedly valid "legal" theories promoted by the self-proclaimed "experts", and submitted the Form W-4 claiming to be exempt, it has provided the revenue agents and government prosecutors with the prima facie evidence they needed which indicated that the individual was a "taxpayer" who did not pay his taxes. And because so many people were suckered into these "legal" theories, it has provided the government prosecutors with a never-ending supply of suckers to be prosecuted in order to set examples for the rest of the people of the nation. Getting a conviction has usually been a slam-dunk for the prosecutors, who should be quite fond of the self-proclaimed "experts".

And all the while, the self-proclaimed "experts" chose to ignore the fact that the revenue laws (including the forms) apply to those who are subject to (liable for) a tax, and not to those who are not.

Next, the self-proclaimed "experts" have promoted the idea of completing "zero income" tax returns. People have been getting convicted for years for trying this theory. See United States v. Moore, 627 F.2d 830 (7th Cir. 1980). And of course, the Form 1040 provides the agents and prosecutors with even more prima facie evidence of "taxpayer" status, and such a form places the burden of proof right on the shoulders of the one making the claim on the form.

And if all of the above was not enough, the self-proclaimed "experts" are now even urging individuals to go to Tax Court ("taxpayer's" court) and urging the individuals to use their "administrative remedies". (Remember, Grandma doesn't have any administrative remedies to exhaust because she is not subject to the darned draft law in the first place.) How does an individual get to Tax Court? By acting like a "taxpayer", of course.
The Tax Court has jurisdiction only when the Commissioner issues a valid deficiency notice, and the taxpayer files a timely petition for redetermination. Scar v. C.I.R., 814 F.2d 1363 (9th Cir. 1987). (Emphasis added.)
Some of you have even been told that the best way to control the taxing agencies is to use the agencies' administrative procedures and process. But ask yourself, if you subject yourself to the rules and regulations of a taxing agency, who is really in control?

How long are patriots going to let others talk them into acting like a "taxpayer" on one hand by providing prima facie evidence of "taxpayer" status, and at the same time, claim they are not liable for (subject to) the tax? Common sense alone should negate this two-sided position.

And there is even more. Some of you are being urged to "establish" a good-faith belief that you are not required to make income tax returns because the Sixteenth Amendment was not properly ratified. By doing so, you would essentially be saying that you would be required to make tax returns if the Sixteenth Amendment had been properly ratified; an amendment which conferred no new power of taxation and which did not extend the taxing power to new or excepted subjects, but simply prohibited the courts from taking the power of "income taxation" out of the category of indirect taxation to which it inherently belongs. See Stanton v. Baltic Mining Co., 240 U.S. 103, 112; and Peck & Co. v. Lowe, 247 U.S. 165, 172. In other words, since the Sixteenth Amendment (properly ratified or not) did not do anything new which would affect you, you are, according to your argument, required to file. Such an argument also places the burden of proof on you to prove that the United States Supreme Court was wrong in ruling that "income taxation" is in the category of indirect taxation, and to prove that the Sixteenth Amendment was not properly ratified. More than one person who has used this approach has been incarcerated. (I might suggest that before you rely upon any attorney's opinion, you check out his or her win-loss record.)

Some of you have also been told by the self-proclaimed "experts" that they have already tried the approach which I present in The Biggest "Tax Loophole" of All, and claim it did not work. This is the time to challenge the purported "experts" and demand to see the papers they supposedly submitted to the courts. Whatever it was they submitted, it will not even resemble the Motion to Dismiss (by Special Appearance) which you will find in The Biggest "Tax Loophole" of All. Whatever they submitted will probably have placed the burden of proof on the poor defendant. At any rate, this is the time to call their bluff. For too long, far too many individuals have suffered tremendously because they have been suckered into using some very bad, but purportedly valid, "legal" theories promoted by the self-proclaimed "experts" and their cohorts.

Isn't it interesting how the arguments promoted by the self-proclaimed "experts" lead you right back into the "taxpayer" trap? Does it make you wonder whose side they are really on?

Patriots appear to be captivated by "extravaganza" rhetoric or theories. Forget the "extravaganza": go for the basics; go for the facts. Know your case law by getting copies of the cases and studying them for yourself.

I don't know who you are going to trust. I am going to trust myself and the 17 years of research that I have done. My conclusions make the most sense of all to me.





Federal District Courts DO have jurisdiction in criminal cases concerning violations of the Federal Income Tax laws as set forth in Title 26.

by Otto Skinner


The following is my response to just part of an article written by Irwin Schiff, as published in the AntiShyster News Magazine, Volume 7, No. 2, starting at page 44. Schiff has several issues very convoluted in this article. I will, however, address only three of the issues. I will address the federal court jurisdiction issue in this article, and two of the other issues in the next two following articles. Relating to the federal court jurisdiction, at page 45, Schiff states:
As incredible as it seems, there are no laws making alleged income tax offenses crimes, and no court was ever given jurisdiction to prosecute anyone for committing any such offense.
Schiff, as well as some other promoters, would lead the patriots to believe that the federal district courts do not have jurisdiction to try criminal cases for violations of the Internal Revenue Code, which is Title 26 of the United States Code. The reason given by the promoters of this argument is that there is no section in Title 26 granting the federal district courts jurisdiction in criminal cases. The true fact is, however, Congress did grant the federal district courts such criminal jurisdiction. Let me explain.

26 U.S.C. 7201 makes it a crime (felony) for any person to willfully attempt to evade or defeat a tax imposed by Title 26. 26 U.S.C. 7203 makes it a crime (misdemeanor) for any person required under Title 26 to make a return (report) to willfully fail to make such return. These are just two of the many crimes listed in Title 26.

The Criminal Code, Title 18 of the United States Code, grants federal district courts jurisdiction concerning criminal violations of Title 26, to wit:
The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States. 18 U.S.C. 3231. (In Part. Emphasis added.)
This issue has been heard and ruled on by the courts before. A rather thorough history and ruling regarding 18 U.S.C. 3231, as it applies to crimes listed in Title 26, is provided in the case of United States v. Sasscer, 558 F.Supp. 33 (D. Ct. Maryland 1982). The Sasscer Case shows that the ancestry of 18 U.S.C. 3231 can be traced to the First Judiciary Act of 1789 which also specified which courts would have original and exclusive jurisdiction of all crimes committed against the laws of the United States. Also, see United States v. Spurgeon, 671 F.2d 1198 (8th Cir. 1982).

I would find it difficult to believe that any of the promoters of the "no criminal jurisdiction for Title 26 crimes" argument who also know John Sasscer personally would not also be fully aware of the facts documented by the court in the Sasscer Case. John Sasscer has worked closely with, and even has written article for, the Save-A-Patriot organization. Since Schiff also has worked closely with this organization, I would imagine that Schiff knows John Sasscer personally and should be well aware of the Sasscer Case. This is especially so, since Schiff promotes himself as "the nations leading authority on the income tax". (See http://www.ischiff.com)

Over the years, I have strongly disagreed with Schiff on many issues. In my new book, The Biggest "Tax Loophole" of All, I list 18 flawed arguments in a chapter titled, Why Some People Go To Jail. Out of these 18 arguments which I consider to be legally flawed, I think you will find that Schiff has promoted about 15 of them as if they are legally valid. What is important is that you check everything out for yourself so that you will not use a legally flawed argument in your own case.

Nevertheless, the fact remains that the "no criminal jurisdiction for Title 26 crimes" argument should not be an argument a patriot would want to waste his time and effort on in a court case.





The United States Supreme Court DID NOT rule that the meaning of the term "INCOME" for Income Tax purposes is limited to Corporate Profits

by Otto Skinner
(Revised 11-30-98)


The following is my response to another issue in an article written by Irwin Schiff, as published in the AntiShyster News Magazine, Volume 7, No. 2, starting at page 44, in which Schiff has several issues very convoluted. I will now address Schiff's claim regarding the definition of the term "income" for income tax purposes. At pages 44-45, Schiff states:
"Therefore, no unincorporated American can have any "income" subject to an "income" tax, since the word "income," for tax purposes, means a corporate profit."
Schiff, and some other promoters, would lead the patriots to believe that the United States Supreme Court has ruled that the meaning of the term "income" for income tax purposes is limited to gain or profits derived from corporate activities. A careful reading of the court cases will, however, reveal that such a proposition is not true at all.

To support the supposedly "valid argument" claiming that the term "income" for income tax purposes only means corporate profit, the promoters cite the case of Merchant's Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921) wherein the court held that the word "income":
". . . must be given the same meaning in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act and what that meaning is has now become definitely settled by decisions of this court." Merchant's Loan & Trust Co. v. Smietanka, 255 U.S. 509, 519 (1921).
It is one thing to say that the term "income" must be given the same meaning as was given to it in the Corporation Excise Tax Act. It is entirely another thing to say that the term "income" for income tax purposes only means corporate profit. No place in all of the United States Supreme Court opinions, I submit, will you find where the Court limited the term "income" for income tax purposes to mean corporate profit.

In fact, in Merchant's Loan & Trust Co. v. Smietanka, supra, the Court refers many times to Eisner v. Macomber, 252 U.S. 189 (1920), wherein the United States Supreme Court said:
"For the present purpose we require only a clear definition of the term "income" as used in common speech, in order to determine its meaning in the Amendment...." Eisner v. Macomber, 252 U.S. 189, 206-207 (1920).

The Eisner Court,

After examining dictionaries in common use (Bouv. L.D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.)....
Eisner, supra, at 207,
The Court quite correctly proceeds to define the term "income" for purposes of the Sixteenth Amendment and a so-called "income" tax, as well as for purposes of the Eisner Case, to simply mean profit or gain derived by the person subject to the tax (the "taxpayer") for his separate use and benefit. If you check your dictionaries, you will find that "income" is simply profit or gain.

In other words, if you are subject to the tax, you can use the definition provided by the Eisner Court. If you are not subject to the tax, it doesn't really matter what the term "income" means for income tax purposes. To argue the definition of the term "income" is to argue as if you would be required to make a tax return (i.e., that you are subject to (liable for) the tax) if you just had some of this stuff called "income".

For the reader who might still think it is the property earned that is the subject of the tax, it is important to note that the name "income tax" is merely the name given to a particular excise tax. A taxable activity (never property) is the subject of an excise tax. See Flint v. Stone Tracy Co., 220 U.S. 107, at 151, 154, 165 (1911).

It is also important to note that the requirement to make a tax return is not based upon "income" (profit or gain), but rather it is based upon the "gross income" (gross earnings) of a person who has a "taxable year" and is subject to (liable for) that excise tax. See 26 U.S.C. 6012. Also, see 26 U.S.C. 441(b) and 1313(b).

As to the false proposition that the term "income" for income tax purposes is limited to corporate profits, it is just one more flawed, frivolous argument, which is based on neither fact nor law, and which will, if relied upon, help send more patriots to the poky.





Irwin Schiff Calls Otto Skinner A Liar

You be the judge
(Revised 11-30-98)


An Introduction and comments by Otto Skinner...

A friend of mine in Las Vegas sent me a copy of a tape of an Irwin Schiff radio show which was, according to the date marked on the tape, aired on 1-8-98. I had another friend transcribe the relevant portion of the tape for your review. Although this friend is a very capable secretary, absolute accuracy of the transcription, which you see below, is not guaranteed.

The main issues discussed in the tape involve my very strong disagreement with Irwin Schiff regarding the "zero" tax return (which is an idea he promotes) and his interpretation of the definition of "income" for income tax purposes. According to the tape, a caller had called his show the week before and had also disagreed with Schiff on these issues and had referred to my latest book, The Biggest "Tax Loophole" of All. I have very strongly disagreed with the Irwin Schiff material for many years.

There are many supposedly "legally valid" arguments promoted throughout the patriot community which I strongly believe to be legally invalid arguments, i.e., arguments with no legal foundation. I so strongly believe these arguments are not legally valid, that I list 18 of them in a chapter titled: "WHY SOME PEOPLE GO TO JAIL." If you compare material which Schiff has promoted with the 18 arguments that I list as flawed arguments, I believe you will find that Schiff has promoted about 15 of these as if they are legally valid arguments, and which I strongly consider to be legally invalid arguments. For example, Irwin Schiff has for years promoted the idea of filing W-4 forms claiming to be "exempt". It is my estimate that hundreds of thousands, if not millions, of people have suffered $500 civil penalties, and hundreds, if not thousands, of people have been convicted and incarcerated for having followed such advice. In my books, I explain why I believe a W-4 form should not be used by an individual who is not liable for a tax.

If one doctor recommends that you get an operation, it is usually a good idea to get a second opinion. My books certainly provide a second opinion. My strongly held personal opinion is that one should not follow the advice of Irwin Schiff. It is further my opinion that anyone who promotes Irwin Schiff's material doesn't even understand the nature of the so-called "income" tax, and further they do not really understand the precise difference between direct taxes and indirect taxes as ruled by the United States Supreme Court.

Schiff leads his followers to believe that certain court cases stand for the proposition that "zero" tax returns are legitimate returns. One such case is United States v. Moore Case, 627 F.2d 830 (7th Cir. 1980). If you read the case for yourself, you will see that the Court clearly did not hold to the proposition Schiff claims. In fact, the Court discusses "zero" returns and considers such returns to be invalid returns. Why, then, does Schiff call me a liar?

Moore actually had entered the word "none" in the spaces on his return rather than zeros. In my book, The Biggest "Tax Loophole" of All, at page 209, I mistakenly used the word "zeros" instead of correctly using the word "none". The important fact is that the 7th Circuit Court of Appeals considered returns with just zeros entered in the spaces just as invalid as they considered returns with the word "none". (The People who know me know that I try very hard to word things as accurately as I can. The mistake will certainly be corrected in the next printing.) Apparently, for this mistake, Schiff calls me a liar.

If I had used the correct word ("none"), the point I was making would have been made better; that is, the Court, in United States v. Moore Case, 627 F.2d 830 (7th Cir. 1980), did not hold that "zero" tax returns qualify as returns, contrary to what Schiff leads his followers to believe.

We pick up the tape just before Schiff enters the program. Two of Schiff's people are talking. I will make my comments as we go along.

Read the following and enjoy.



Schiff's nonsense...
Elizondo:Who's on the air? Hello.
Richard: Yeah, this is Richard.
Elizondo: Yes, Richard, give us an update.
Richard: We're on our way right now to Flamingo and Maryland Parkway.
Elizondo: Flamingo and Maryland Parkway.
Richard: We will be passing out free tapes -- tapes.
Elizondo: And what is contained in those tapes, Richard?
Richard: Uh, we'll be there til 5:30 --
Elizondo : O.K., tell us what's in those tapes.
Richard: It's everything that you need to know about the income tax itself, and if you're not thoroughly convinced that there is no law that requires anybody to pay income tax, just return the tape.
Elizondo: There you go --
Richard: Uh, just suppose, John, I told you that I could give you an immediate raise. Would something like this be of immediate interest to you?
Elizondo: Oh, you bet it would be.
Richard: Well, that's what we're talking about folks. There is no law that requires anybody to even file an income tax form, let alone to pay one.
Elizondo: Now, right --
Richard: However, we do file one for the simple reason that they cannot prosecute an individual that files a legitimate tax return. A zero return, has been declared a legitimate return not only by the 9th Court of Appeals right here in San Francisco, but also by Congress.



Otto Skinner's Comments...
The 9th Circuit Court of Appeals did not say a "zero" return was a legitimate return. The Court said:
Nothing can be calculated from a blank, but a zero, like other figures, has significance. A return containing false or misleading figures is still a return. False figures contain false information, but they convey information.
United States v. Long, 618 F.2d 74 (9th Cir. 1980)
In other words, the false information creates a false return; not a legitimate return. A person with no "gross income" is not required to file in the first place.



Schiff's nonsense...
Elizondo : Right, and we're in the 9th Circuit, too, right.
Richard : Right. And the term "income" defined by Congress means corporate profit.



Otto Skinner's Comments...
Congress has not, and cannot, define the term "income". I think even Schiff acknowledges the case of United States v. Ballard which stated that Congress had not defined the term "income", and the case of Eisner v. Macomber, wherein the United States Supreme Court explained why Congress has no constitutional power to adopt their own definition for a term used in the Constitution.

The Eisner Case not only explains a very sound principle of constitutional law, the Court explains the principle in such a way that almost anyone should be able to understand it. Apparently, Elizondo and Richard haven't read the cases for themselves. Yet, they are talking other people into following Schiff's material. The blind leading the blind.



Schiff's nonsense...
Elizondo : Right. Now, all --
Richard : Now if anybody thinks that they're a corporation, I've got news for them. O.K?
Elizondo : Yeah, well --
Richard : They are not.
Elizondo : The information is on that free sampler tape. You're going to be out at Flamingo and Maryland Parkway, and you'll see the public alert sign. Honk your horn if you want to stop paying income taxes and Richard will be out there with some volunteers. Thank you, Richard. Thank you for your telephone call. Let's go -- we also have a public alert system clear out in Henderson on Boulder Highway and Lake Mead and we're waiting for Wayne to give us a call, not unless he's already called in, but Wayne give us a call, give us an update. And, just walking in the studios -- Hello, Irwin Schiff. You just got off one radio show and here you are again.
Schiff : Yes, well -- ha, ha, ha --
Elizondo : You never stop, never stop.
Schiff : I was just interviewed -- nice station, it's a big station, KPRC in Houston, and it's going to be aired Saturday or Sunday, so when we go to our satellite and short wave I'll be able to notify our listeners in the Houston area that they can hear me. It's going to be aired either Saturday or Sunday. I don't know the time, but they're going to have to call KPRC if they want to hear the interview. But, pardon me -- what I would like to do right now is that last week, Sam the Radio Man, and I hope he's listening, called this show and he brought up the question of Otto Skinner and his book. Uh, and his latest book is called The Biggest "Tax Loophole" of All."
Elizondo : Who is Otto Skinner?
Schiff : Otto Skinner is an individual who has written a few books, a couple of books on the income tax, and in my view, he has really confused a lot of people and led them astray. But, in any case, I said last week, and I was criticized by a couple of people for doing so, that Otto Skinner was a liar.
Elizondo : Yeah --
Schiff : Now, frankly, I'm not the most diplomatic guy in the world, and I think I'm honest, and when a man comes out and lies, uh, you know, he's a liar. Now I know that you're maybe not supposed to call people liars. I once heard Thatcher -- what's her name --
Elizondo : Margaret --
Schiff : Margaret Thatcher called a guy a liar, but didn't say he was a liar. She was, uh -- this was in Parliament -- and she called him a liar in such diplomatic terms it was beautiful. But I'm not -- I don't have the eloquence of a Margaret Thatcher. So, --
Elizondo : Can I interrupt you for just for one minute.
Schiff : Yes.
Elizondo : Our Public Alert System out at Henderson we're expanding. Before you get into that subject, let's go to Wayne. Wayne, are you there? Wayne Shenk?
Wayne : Yes, I'm right here. Yes, I'm right here
Elizondo : Wayne, am I pronouncing your last name right?
Wayne : That's correct.
Elizondo : All right, Wayne, tell our folks out there where you're located.
Wayne : We're on the corner of Lake Mead and Boulder Highway right across from the Circle K.
Elizondo : O.K.
Wayn : Uh, also catycorner to St. Rose Dominican Hospital --
Elizondo : Uh, huh --
Wayne : And if you're looking for us, we're on the southeast corner, and we've got our public alert sign up --
Elizondo : Great --.
Wayne : And we have tapes to give away to give away to the people in Henderson.
Elizondo: Now, you can pick us up there. KLAV reaches out there to Henderson, right?
Wayne:It works excellent here.
Elizondo: Good. O.K. So honk your horn. Go out there. Do you have other volunteers with you, Wayne?
Wayne:Yes. We have two other volunteers and we're passing out tapes right now.
Schiff: Great. Now I want to tell the people who may be turning to tune us in for the first time because they heard the Public Alert. We're going to be explaining, folks, how you can file a tax return this April 15th and get back all the income taxes that you paid in 1997. And we're also going to explain how you can stop your employer from withholding taxes from your pay. In other words, there is no law requiring people to pay income taxes and this is what this show is all about. But, I want to explain, and I told Sam --
Elizondo: Wayne, thank you very much for your phone call. Keep us informed in another thirty minutes, O.K.?
Wayne:O.K.
Elizondo: Thank you, sir.
Schiff: Now when Sam brought up Otto Skinner and his new book, and I said he was a liar, again I was criticized. But if you have actual documented proof that the man is not telling the truth, and let me read --
Elizondo: You have documentation?
Schiff: Oh, yeah, right here, now listen. I'm quoting from his book, uh, The Biggest "Tax Loophole" of All, and if you want to write for his book, I'll even tell you the price he's charging, but --.
Elizondo: Why would you want to waste your time?
Schiff: No, no. I'm going to give -- P.O. Box 6609, San Pedro, CA
Elizondo: You're too fair.
Schiff: And he charges for the book, let me see, $39.95 he gets for this book plus $5.00, so it would be over $40.00 bucks.
Elizondo: Why fill your head with garbage. I don't understand this.
Schiff: Will you give me a chance? I don't want anybody to think that the reason I don't want him on --
Elizondo: It's your show, you can do it --
Schiff: If I had him on it would just waste time. Let me -- I'm going to read from this book. Now this book supposedly is exposing various, uh, various incorrect procedures in the claiming of taxes. So, flawed argument #12, he says -- and I'm reading right from the book. "The individuals file tax returns with zeros into the spaces provided under the theory that the zero tax return satisfies the requirement of making a required return." First of all, he quotes required as if you're required to file a return. Maybe, no, you're not required to file a return maybe that's why he has quotes. Let me read what it -- I'm going to read right from his book. "To support this frivolous and dangerous position, the promoters --" meaning me -- "list three appellate court cases, namely, the United States vs. Moore, United States vs. Long and United States vs. Kimball. This position is further supported with the flawed claim that the term 'income' only means corporate profit." Now this is coming from a person who is holding himself out, folks, as --
Elizondo: As an expert--
Schiff:: Yes. "By submitting such forms, the individual is setting himself up for a $500 civil penalty for filing a frivolous return for each return filed, along with the distinct possibility of criminal charges for attempted tax evasion and also for filing false and fraudulent returns." Now each one of these statements, I want to comment, is incorrect. First of all, he should know that the IRS is not even authorized to impose a civil penalty. Secondly, he should also know that there is no statute making anything in connection with the income tax criminal. And, thirdly, he says (inaudible) attack by filing a false and fraudulent return. You can't be file -- if you file my zero return, you can't be prosecuted for filing a false and fraudulent return because on the attached pages we say this return is not being filed voluntarily. We're filing it to avoid being charged with willful failure to file. So he should know that all of these statements are incorrect or misleading. Now, but listen to this -- now he cites the three cases that I cite, and this is what he says. "The Moore case simply does not support --" oh, in my zero return, we cite U.S. vs. Moore as one of the cases which, uh, states that filing a zero return is a legitimate return. Now he's trying to refute that. He says, "The Moore case simply does not support the proposition that is purported by the promoters." Now listen to this -- "Moore was convicted for failure to file returns. He had entered zeros on returns for the years 1972, 1973 and 1974." So he says that Moore had entered zeros on his returns for 1972, 1973 and 1974. Now he goes on to say, "The 7th Circuit of Appeals held, 'it is not the false data which makes these returns defective but the fact that there is no real attempt to comply with the filing requirement of filing a return. The conviction is affirmed.'" So now, here is Otto Skinner saying that Moore filed a zero return. That is a false statement. Let me read from the case itself, and now I'm reading from the case of U.S. vs. Moore, 627 F.2d 830. I'm reading from the case, "In April 1973, defendant and his wife submitted a joint return for the year 1972. This form contained only their names, occupation, social security number and the number of dependents. Fifth amendment objections were written across the form and a packet of tax protester literature was attached. The form was signed by the defendant and his wife. But the verification was scratched off." Incidentally, we don't scratch off the verification.
Elizondo: Uh, huh.
Schiff:"The IRS notified defendant in August 1973 that the forms were not sufficient returns. In a rather contemptuous January 1974 letter, defendant replied to the IRS stating that he considered dollars to be worthless and his tax return to be adequate. In May 1974, however, defendant submitted an amended 1040 form for the year 1972. This form was filed for himself only. On the amended form defendant filled in the various blanks for numerical information with 'None', except that under interest income he put $41.00 and in the dividend income he placed a figure at $22.00. The Fifth Amendment objections were retained and more tax protester material was appended. Although signed, the certification on the form was again marked over. In 1974, defendant also filed a return for the year 1973 which was substantially the same as his amended form in 1972. It contained a small amount of interest income and the certification was scratched off. The IRS notified defendant by letter in July 1974 that it did not consider this to be a return. In 1975 defendant filed a similar return for the 1974 year. The IRS again informed him that it did not consider this to be a return." So at no time did Moore file zero returns. He filed returns in which he showed None, he put Fifth Amendment, he inserted small amounts --
Elizondo: Right --
Schiff:At no time did he file a zero income return. Now either, um --
Elizondo: Skinner can't read --
Schiff: If Skinner commented on the case, how could he have said that Moore filed zero returns? He didn't. He claimed the Fifth Amendment, he inserted $22.00, $41.00. He did not file a zero return at all. So in his book, Otto Skinner says, "Moore was convicted for failure to file. He entered zeros on returns for the years 1972 --
Elizondo : That's a lie. That's an absolute lie.
Schiff: Am I wrong?
Elizondo: No, you're not wrong. He is a liar.
Schiff: Now let's continue. Let me read from the Moore case. See, the Moore case found Moore guilty because he didn't file a zero return. Now, let me read from the case. "It may have not even been necessary for the District Court to give this instruction. The IRS" -- oh, that's not -- Here, let me get -- Oh, let me find where they say -- Oh, now here's what he says in the Moore case. "The Ninth Circuit, however, has taken the opposite position. In United States vs. Long" (and he cites the case) "the taxpayer submitted a form with zeros in all the blanks. The court held that even if this information were false, a tax liability could be computed from it and it was, therefore, an adequate return. Part of the court's rationale appeared to be that a different penalty could be levied against those who took the chance of supplying false information." He says, "Where the same court affirmed the" -- in other words, the Ninth, and then he goes on to say, "The Ninth Circuit is clearly correct in stating that a tax liability could be computed from zeros." So, therefore, I cited the Ninth Circuit in my attachment by simply showing that the Ninth Circuit -- uh, that the Seventh Circuit agreed with the Ninth Circuit that filing a zero return was an adequate return. Now we're claiming that all the government can do is say -- well, the information is false and, therefore, charge us with tax evasion or, uh, charge us with perjury. But, this is proof that a zero return is a return. So, uh, Otto Skinner totally misrepresents the Moore case in his book. Now, let's continue. So now he totally misrepresents the Moore case and he lies about the return that was filed in this particular instance. Now, let's continue from his book. "The Long Case presents a different situation. The government claimed that they had no record of Long having filed returns. Long claimed that he had filed returns with zeros in the space provided. The court explains that during the years in question, 1972, 1973 and 1974, the Internal Revenue did not always keep copies of documents it considered invalid returns. Because of this, the government was not able to prove that Long had or had not filed, taking a different position than did the Seventh Circuit in the Moore case." Well, they didn't take a different position. The Ninth Circuit explains that since the zeros could be calculated, even a return containing false information is still a return." That's our point. So even Skinner acknowledges that. "The court goes on to explain that if the Service had kept the papers Long claimed he had filed, it could have brought some other charges." Well, O.K., sure. They can bring other charges. If they want, let them charge that the person filed -- let them charge him with tax evasion or charge him with committing perjury. But none of the people here or anybody else who has filed zero returns, and I'm sure we've filed thousands, nobody has been charged with tax evasion or perjury. Incidentally, if anybody's going to be charged with anything in connection with the zero return, it will be me. Because Section 7206 states that it is a crime for anybody to counsel or advise anybody to submit false claims to the government. And since I am the developer of the zero return, we've got hundreds of thousands of people filing claims to the government to get their money back --



Otto Skinner's Comments...
The facts are that the 9th Circuit in Long held that returns with just zeros on them would be considered returns, even if the information were false, and the government could bring other charges if they actually had the returns for evidence. The 7th Circuit disagreed with the 9th Circuit. The 7th Circuit points out, at page 834 of the Moore Case, that:
Varying positions have been taken by the Courts of Appeals.
United States v. Moore, 627 F.2d 830, 834 (7th Cir. 1980).

At page 835, the Court states:

The government should not have to guess whether it should take the position that a form is not a return and charge the taxpayer with failure to file, or that the form is a return and charge him with filing a false return or tax evasion. If the Courts of Appeals continue to disagree the Supreme Court will eventually have to decide the question, but it is our view that when it is apparent that the taxpayer is not attempting to file forms accurately disclosing his income, he may be charged with failure to file a return.
United States v. Moore, supra, at 835. (Emphasis added.)
The 7th Circuit considered returns with just zeros entered in the spaces provide as being no better than returns with "none" in some spaces and just a small amount of income reported in other spaces; which was one kind of return Mr. Moore had submitted.

In the three cases regarding the "zero" returns to which Schiff refers in supposed support of his argument, not a single one of these cases involved a hard-copy of a "zero" return. Moore had entered a small amount of income for interest and dividends, and he was convicted. Kimball had entered asterisks in the spaces provided. In United States v. Kimball, 896 F.2d 1218 (9th Cir. 1990), the 9th Circuit originally considered these to be returns, but after rehearing the issue in United States v. Kimball, 925 F.2d 356 (9th Cir. 1991), the Court stated:
We hold that the district court correctly ruled that Kimball's 1040 forms do not constitute returns.
United States v. Kimball, 925 F.2d 356, at 358 (9th Cir. 1991).
Long merely claimed he had filed "zero" tax returns, but the IRS had not kept these papers, and therefore, had no evidence to use against him in order to bring charges of filing false returns.



Schiff's nonsense...
Elizondo: That follow your method -- right, right --
Schiff: And if that's a crime, I'm the first one in line to be prosecuted. O.K. As it's said, could have brought some other charge. This, of course, would be felony charges for attempted tax evasion and filing false and fraudulent returns, but nobody has been charged for doing these things. Let's continue from the book -- from Otto Skinner's book. "We now come to the Kimball case. Kimball did not enter zeros on the returns which he filed but, instead, asterisks. At first, in United States vs. Kimball, the court held that the returns containing asterisks were valid returns. However, what the promoters of this flawed argument failed to say is that the Ninth Circuit changed its mind. On rehearing the issue in United States vs. Kimball on the re-hearing the court determined that because asterisks could not be used to calculate even a false return, returns containing only asterisks did not constitute returns. In other words, while zeros report zero income, asterisks do not report any income at all." Well, it's not important for me to have pointed out that this was reversed because this particular case involved asterisks. They first ruled that the asterisks were returns then they changed their mind. Uh, well this has nothing to do with the observation that had -- which Kimball said. Here's what Kimball said. "So even if a return contained only zeros it is considered a return it can be considered frivolous." So here is Kimball saying while though it can be a return, it still can be considered frivolous for the purposes of $500 civil penalty. But it's not frivolous because if he had looked at the 12 page -- 12 paragraph attachment, a zero return does not fall within the law talking about frivolous returns because the word frivolous means something silly -- something without any legal foundation. In our attachment on the zero return we cited no less than four Supreme Court cases which ruled that income is a corporate profit. Incidentally, on the new attachment we're increasing the number of Supreme Court cases to ten. So, we're going to on ten cases --
Elizondo: Oh, addition huh?



Otto Skinner's Comments...:
People who are considering filing "zero" returns should look up section 6702 of the Code. It explains quite clearly that for civil penalty purposes, if the return on its face indicates that the self-assessment is substantially incorrect, or that the position is frivolous (no foundation in law) a $500 civil penalty can be imposed.

When one claims he has zero wages, salary, tip, etc., and claims that this inaccurate information constitutes a legitimate return, and further claims that court cases hold what they do not really hold, thus providing a return based on no foundation in law, it is pretty easy consider such a return a frivolous return.

Also, Schiff apparently does not tell his listeners that there is currently a man in Michigan facing felony charges under section 7206 of the Code for filing "zero" 1040 returns. I suggest the readers look up both sections 6702 and 7206 in the Code.



Schiff's nonsense...
Schiff: Yeah. O.K. "A frivolous return is a document which purports to be a return but does not contain information on which the substantial correctness of the self-assessment can be judged." But our filing of zeros does contain accurate information because we say we have zero income because income is a corporate profit. "A position is considered frivolous when it is something that is contrary to established law and unsupported by reason (inaudible) argument for a change in the law." Well, who says our zero return is frivolous? We point out -- not only do we cite four Supreme Court cases, but we're upping this to about ten now in the new updated page, but we also cite no less than nine code sections, we cite about three or four references to Treasury Regulations and there's two or three references to the Privacy Act Notice -- so it's not frivolous, and in order to be frivolous it would have to be filed to delay the payment of the tax. Now, our statement makes it clear, we're not delaying the payment of the tax -- we're not paying. As a matter of fact, we want all our money back. Now, let's continue with this. So he's misrepresenting and misleading; every paragraph on here is either a lie or false or what have you. Now let's go to the next paragraph. "Now to the supposed supporting argument claimed that the term "income" only means corporate profit. The promoters cite the case of Merchants Loan & Trust Company vs. Smietanka, 255 U.S. 509 where the court held that the word income 'must be given the same meaning in all the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act and what that meaning is has now become definitely settled by decisions of this court.'" That was the most extensive -- that's correct -- he cited that correctly --
Elizondo: Quoted it, yeah --
Schiff: Yeah, he cited it correctly, but what did the courts say? The word income means a corporate profit. The word income means the same thing as the word income meant in the Corporation Excise Tax Act of 1909. Incidentally, not only do we cite this case but we cite about three or four other supporting cases. But now we're going to cite about nine, O.K.? Now, the above case he mentions that Merchants Loan & Trust refers to the Eisner case previously discussed, which shows that the term income means profit or gain. Now again he's admitting that in Eisner the Supreme Court said that income means profit or gain. "But promoters of this flawed argument make a leap in logic to conclude that the term income only means corporate profit." Well, what else can it mean? Now, here is Otto Skinner who, Sam the Radio Man, wants to put some credibility in, and apparently Otto Skinner doesn't even understand that the word income does mean a corporate profit. So here he says that, "But the promoters of this flawed argument make a leap in logic to conclude that the term income only means corporate profit." Well, why would that mean a leap in logic if the Supreme Court said in Merchant's Loan & Trust Co. that the word income must be given the same meaning in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act of 1909? Now he says, "This is truly a frivolous position." Well, again, how can it be -- it could be wrong, incidentally, but how can it be frivolous? Frivolous means based on nothing, it means silly. Well, let's assume I was wrong, O.K.? Well if I were wrong, it was certainly not frivolous. I could have misread the Merchant's Loan & Trust Co. vs. Smietanka, but how can you misunderstand what they said. They said income means a corporate profit. He says, "This is truly a frivolous position because the United States Supreme Court has never held that the term income is limited to corporate profit." Yes, they have. Well, how could it be -- how could it mean a corporate profit and not mean a corporate profit? If the Supreme Court in Merchant's Loan & Trust Co. says "must be given the same meaning -- what that meaning is has now become definitely settled by decision of this court" -- if they said the word income means a corporate profit, then if it can mean a corporate profit, what have they said? It means a corporate profit sometimes, but sometimes it doesn't mean a corporate profit? Sometimes she's pregnant and sometimes she's not pregnant? Sometimes it's white and sometimes it's black, but sometimes we can't tell what it is? O.K., let's continue with this Otto Skinner --
Elizondo: With this frivolous book, ha, ha, ha --
Schiff: And he charges, what, $38.00 for this book. O.K., let's continue.
Elizondo: Are the sheets real soft?
Schiff: "The above case refers to the Eisner case previously discussed which shows that the term income means profit or gain. But the promoters of this flawed argument make a leap in logic" -- O.K. "This is truly a frivolous position because the United States Supreme Court has never held that the term income" -- sure, sure they have. Other cases try to hide the true meaning of income, but Merchant's Loan & Trust Co. vs. Smietanka, if you want to Shepardize it, has never been reversed, never been repealed, never been overridden. "It has essentially held that income means what ordinary dictionaries say it means." That's nonsense. The word income cannot mean what an ordinary dictionary says. And if any court says that, then Otto Skinner should also know that that judge is not telling the truth. It can't mean what the ordinary dictionaries say it means. For tax purposes the word income means a corporate profit because when the government puts a tax on corporate profit it is taxing income separated from the source. A tax on wages or a tax on dividends is a tax on the source. See, Otto Skinner doesn't even know there's a difference between income as used in our tax statutes and sources of income. Now let's continue, this is the final paragraph. "The zero income return appears innocuous on its face, but will lead the follower down a primrose path which can place him in harms way of $500 civil penalties" -- meanwhile, look at all the money we've gotten back from people. Somebody even called my office today telling me he got back $8,000.00 with the zero return. He never told me this before. I mean I have --
Elizondo: Let them try to take $500, do it. We'll sue them.
Schiff: Yeah, let them take $500 -- he's way ahead -- "and the possibility of some very serious criminal charges." Nobody has been charged criminally for filing a zero return. "It would help if individuals remembered that tax forms are for those who are subject to (liable for) a tax." Meaning, don't file anything. Now, the reason why we file a zero return, we point out in the zero return - I know I'm not required to file, I know I'm not liable for the tax, but I am filing in order to prevent myself from being illegally prosecuted for failure to file. So there's Mr. Otto Skinner in every paragraph dealing with the zero return, he either didn't tell the truth -- deliberately didn't tell the truth -- or he filed false and fraudulent comments with respect to the zero return. So now you tell me what kind of a label you might put on Mr. Otto Skinner who has the nerve to want to charge for this new book -- what does he want to charge for this book?
Elizondo: Let me see, $38.00 something --
Schiff: Oh, let me see -- Folks, if you want to order his book --
Elizondo: Use it for camping.
Schiff: Yeah, wait a minute. If you want to order his book, wait a minute, what is he--Oh, yeah, he's getting for this book $39.95 --
Elizondo: Forty bucks, huh?
Schiff: And $5.00 shipping
Elizondo: For false information. What a deal. What a deal!
Schiff: If his book is worth Forty bucks then my book is worth no less than $200.00, probably more. Now just think of all the misleading and false information he was able to cram in -- in two pages of text. Now I defy anybody to take the Federal Mafia which is over 300 pages, I defy them to read me one sentence in that book that is misleading or not accurate.



Otto Skinner's Comments...
First, regarding the dictionaries, the Supreme Court did indeed use dictionaries to determine the meaning of the term "income". The Supreme Court said:
For the present purpose we require only a clear definition of the term "income" as used in common speech, in order to determine its meaning in the Amendment; and, having formed also a correct judgment as to the nature of a stock dividend, we shall find it easy to decide the matter at issue.

After examining dictionaries in common use (Bouv. L.D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton's Independence v. Howbert, 231 U.S. 399, 415; Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185)- "Income may be defined as the gain derived from capital, from labor, or from both combined," provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case (pp. 183, 185).

Brief as it is, it indicates the characteristics and distinguishing attribute of income essential for a correct solution of the present controversy. The Government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word "gain," which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. "Derived-from-capital"; - "the gain-derived-from-capital," etc. Here we have the essential matter: not a gain <>iaccruing to capital, not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value proceeding from the property, severed from the capital however invested or employed, and coming in, being "derived," that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal; - that is income derived from property. Nothing else answers the description.
Eisner v. Macomber, 252 U.S. 189 at 206-207(1920). (Emphasis added.)
In spite of a somewhat lengthy explanation of the definition of "income" for purposes of the Eisner Case, the most important point here is that the Court has stated that to determine the meaning of the term "income" as used in the Sixteenth Amendment, it only required the definition as used in common speech. The documents the Court relied on for the "common speech" were the dictionaries. I submit you will not find a court case that limits the definition of "income" to corporate profit or gain, contrary to what Schiff claims.

You will notice that "income" is received or drawn by the recipient (taxpayer) for his own use or benefit. By the Code's definition, a "taxpayer is one who is subject to (meaning liable for) a tax (See Houston Street Corp. v. C.I.R., 84 F.2d 821, at 822). The Eisner Court did not limit the term "income" to mean just corporate profit.

I wonder how many people who start filing "zero" tax returns, at Schiff's urging, actually go to a law library and read the court cases. I wonder how many of these people know just what it was that was being taxed in the Corporate Excise Tax of 1909? It sure wasn't "income" and it sure wasn't "corporate profit". Do you know what it was?
The tax under consideration, as we have construed the statute, may be described as an excise upon the particular privilege of doing business in a corporate capacity, i.e., with advantages which arise from corporate or quasi-corporate organization; or, when applied to insurance companies, for doing the business of such companies.
Flint v. Stone Tracy Co., 220 U.S. 107 at 151 (1911). (Emphasis added.)

Conceding the power of Congress to tax the business activities of private corporations... the tax must be measured by some standard...
Flint v. Stone Tracy Co., supra, at 165. (Emphasis added.)

It is therefore well settled by the decisions of this court that when the sovereign authority has exercised the right to tax a legitimate subject of taxation as an exercise of a franchise or privilege, it is no objection that the measure of taxation is found in the income...
Flint v. Stone Tracy Co., supra, at 165. (Emphasis added.)
As you can see, the "income" was merely the measurement of the tax. Actually, the so-called "income" tax is now measured by the gross earnings (such as wages) minus whatever deductions Congress has allowed the "taxpayer", as that term is defined in the Code. See Code sections 1313(b) and 7701(a)(14). "Income" is simply profit or gain derived by the recipient. Also, you can see that the argument that "income" for income tax purposes means only corporate profit is indeed frivolous, i.e., it has no foundation in law. (See any law dictionary.)

Schiff asks: "What else could it be?" This shows that it is merely his assumption when he claim that "income" for tax purposes only means corporate profit.

Schiff also claims in his books and articles that the federal district courts do not have criminal jurisdiction over alleged violations of Title 26. However, the United States Criminal Code states:
The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States.
18 U.S.C. 3231. (In Part. Emphasis added.)
For a full explanation of this issue, see United States v. Sasscer, 558 F.Supp. 33 (1980). Actually, I think Schiff knows Mr. Sasscer personally.

If you read my books and check out the information in a law library, you might have fun taking Schiff up on his challenge to find misleading or inaccurate statements in his book called The Federal Mafia, as well as in his other books.

In December 1997, I received a phone call from a lady who identified herself as Sally Burkhart, a co-host on a talk show on KLAV, Las Vegas. She stated she worked closely with Schiff and she wanted to have me on a show with him. I declined. I remembered an old saying that went something like this: "Never argue with a fool in public because some of the public will not be able to tell which one is the fool."

Since I have already declined to be on a show with Schiff, it seems to me that he is now protesting too loudly. He knows very well that I strongly disagree with most of his asserted "legal conclusions".

If anyone has been damaged by following Schiff's advice, let me know. I would like to add up some numbers.



Schiff's nonsense...
Elizondo: Come on, you attorneys, we'll open up that phone line -- 731-1230 --
Schiff: So, Sam, you're the one who suggested I get Otto Skinner on the program -- Why? Why?
Elizondo: We don't want to waste time, we want to take phone calls. All right, we're going to take a quick break. If you have a question or comment, those phone lines are open -- 731-1230. This is the time to call right now -- not later on in the program -- right now. The phone lines are open. 731-1230. This is Freedom Now. We'll be right back, stay with us.



Otto Skinner's Final Comments...
The Moore Case did not involve "zero" returns. Why, then, does Schiff reference this case as if it supports his "legitimate 'zero' return" theory?

The Moore Case states at page 835, "The Ninth Circuit has taken the opposite position." Why, then, does Schiff claim that the 7th Circuit agrees with the 9th Circuit?

The Kimball Case involved asterisks. Why, then, does Schiff reference this case as if it supports his "legitimate 'zero' return" theory?

The Long Case did not involve any hard-copy evidence of "zero" returns actually filed by Long which could be used against him in a criminal case. Why, then, does Schiff use this case to claim "zero" returns are legitimate?

The Moore Case shows that the 9th Circuit held that even if the information was false, a return with just zeros is an adequate return for purposes of calculating a tax liability. Why, then, does Schiff refer to such returns as legitimate returns?

Line 7, on Form 1040, asks for wages, salaries, tips, etc. In other words, it asks for gross earnings; not "income" or "profit" or "gain". By reporting "zero" in the blank on line 7, the individual is reporting that he had zero wages, salaries, tips, etc. If this report is false, it is still reporting false information. Just because a report of zero earnings is considered by the 9th Circuit to be an adequate return (an official or formal report) from which calculations can be made, it does not necessarily mean it is a legitimate report. This is certainly something to consider before filing returns with zeros in the spaces provided.

Before an individual relies upon any court case, he should get a copy of the case and study it for himself. This includes the cases I cite in my books.

It is my personal belief that many people who read Schiff's books will be so filled with incorrect legal conclusions that they may never get the facts straight.

Because there is so much confusing and misleading material being perpetrated throughout the nation, I strongly believe that people should not take anyone's word on anything that has to do with the so-called "income" tax, but instead, they should check out all the material and cases for themselves.

Schiff offers a $5,000 reward if anyone can find a law that requires the payment of the tax. I consider this to be an empty offer. Just because there is no such law, it does not prove that a tax is not owed. If a person owes a tax, but simply cannot pay it, he cannot be legally incarcerated. We do not have debtor's prisons in this country. Because of this, there could be no law requiring the payment of a tax. Schiff's offer might sound impressive, until you analyze it. Will Schiff's nonsense never stop? You should be aware of the fact that section 7203 does make it a crime for a person to willfully fail to pay a tax that is owed. If a person owes a tax and can pay it, but willfully does not pay it, he can be charged with 7203.


I submit that not one (I repeat, not one) of the cases Schiff supposedly relies upon to support his "Zero" tax return theory stands for the proposition Schiff claims it stands for.

Note: Of all the people I have talked to who followed Schiff's advice and filed "Zero" tax returns, not one these people had even bothered to actually read the court cases they supposedly relied upon before they filed those forms. These people did not call me until after they had been hit with the IRS penalties. This is very unfortunate.





MISSING OMB NUMBERS ON TAX FORMS OR TAX REGULATIONS
DO NOT PROVIDE A DEFENDANT A LEGALLY VALID DEFENSE
AGAINST CHARGES OF FAILURE TO MAKE A TAX RETURN.


by Otto Skinner


The following is my response to an article written by Attorney Larry Becraft, as published in the AntiShyster News Magazine, Volume 7, No. 2, at page 38. The last part of this article states:
This shows that the very regulations on which the prosecutions relies to assert that the Defendant had a duty to file some income tax return does not and never has had any assigned O.M.B. control number. Therefore, the duty to comply with this particular regulation has no real force of law and the same may be ignored by the public with impunity.
Well, I will tell you right now that I strongly disagree with the Becraft article, and I will tell you why. Also, it is my understanding that this OMB/PRA argument, which I consider to be extremely flawed, was developed by Vern Holland of Oklahoma and Attorney Jeffrey Dickstein. It is also my understanding that people were charged a hefty sum to "learn" to use this particular argument.

The fact that a tax form or a tax regulation is missing a required OMB number will not provide a defendant with any valid defense for failure to make a tax return, in spite of claims to the contrary. Let me explain.

The Paperwork Reduction Act (PRA) does require federal agencies to acquire a number from Office of Management and Budget (OMB) on all forms and regulations which are used to collect information from members of the public. However, proponents of the purportedly valid "OMB/PRA legal defense" theory present cases such as United States v. Smith, 866 F.2d 1092 (9th Cir. 1989) and United States v. Hatch, 919 F.2d 1394 (9th Cir. 1990), as if they stand for the proposition that an individual may ignore, with impunity, a requirement to make a tax return because either the applicable tax regulation or tax form is missing an OMB number or contains some other seemingly apparent flaw causing it to fail to meet the requirements of the PRA. But these two cases do not even come close to having the same or a similar fact situation that exists in a case of failure to make a tax return. For the proponents of this defense theory to use these two case as if they also apply to criminal charges for failure to make a tax return is misleading, at best.

In both the Smith Case and the Hatch Case, the defendants were facing criminal charges for failing to obey regulations issued by the National Forest Service. Each case involved mining operations (not failure to make a tax return). Each case involved missing OMB numbers. Each case involved a violation of a regulation, not a violation of a statute as is the case of failure to make a tax return.

Now let's list some cases that did involve criminal charges for failure to make tax returns; cases in which the defendants relied upon the purportedly valid "legal defense" of the OMB/PRA argument; cases in which the defendants learned this lesson the hard way. Some of these cases are: United States v. Wunder, 919 F.2d. 34, 38 (6th Cir. 1990) ("Defendant was not convicted for violating a regulation but of violating a statute which required him to file an income tax return."); United States v. Bowers, 920 F.2d 220, 222 (4th Cir. 1990); United States v. Bentson, 947 F.2d 1353 (9th Cir. 1991); and United States v. Hicks, 947 F.2d 1356 (9th Cir. 1991). These are the cases which address the issue. This is just a short list of patriots who unsuccessfully tried the OMB/PRA defense. Many others who were suckered into using this argument either did not appeal their convictions or abandoned this argument after the trial and appealed their convictions on other issues.

In all of the cases in which the OMB/PRA argument was used in an attempt to defend against criminal charges for failure to make a tax return, the supposed failure of the agency to meet the PRA requirements involved Form 1040. It apparently was presumed by these defendants and their defense attorneys that the term "return" means a Form 1040. But the term "return" does not mean a Form 1040. The Form 1040 is merely the form the regulation requires a "taxpayer" to use to make his income tax return.

What does the term "return" mean? In each of the three books I have written since 1986, I have explained that any decent dictionary will show in one of the many definitions provided for the term "return" that it means an official or formal report; much like an election return. So when a statute requires certain persons to make "returns with respect to income taxes under subtitle A" of the Internal Revenue Code (26 U.S.C. 6012), it is merely requiring such a person to make a report of his earnings ("gross income").

A government prosecutor in New York explained this in very plain language. The defendant was using the OMB/PRA argument. The government prosecutor correctly told the judge that a "taxpayer" could report his income on a roll of toilet paper and still satisfy the statutory requirement of reporting his income. In other words, if a "taxpayer" reports his earnings ("gross income") on something other than the required form, he might be sanctioned civil penalties for using the wrong form in violation of the regulation (26 C.F.R. 1.6012-1(a)(6)), but he could not be convicted or suffer any criminal penalties for failing to report his earnings ("gross income") as is required by the statute. Once these details are pointed out, the fact that the term "return" means a report, and does not mean a Form 1040, seems just too simple to ignore. Yet, defense attorneys and many others in the patriot community have chosen to ignore the simple truth. And all at the expense of unsuspecting, and often times desperate, patriots.

The indictments and informations charging individuals with failure to make tax returns all read pretty much the same, to wit:
"Defendant, Joe Patriot, well knowing and believing all of the foregoing [that he was (supposedly) required to make an income tax return], did willfully fail to make an income tax return to said director...."
I have never seen an indictment or information charging an accused with failure to report his "gross income" on a Form 1040. I have never read a court trial transcript where the prosecutor ever argued to the jury that the defendant failed to complete a Form 1040. The Form 1040 is simply not part of the statute enacted by Congress requiring certain persons to make a return (report) of their "gross income", and it is simply not part of the charges against an individual for failing to make an income tax return (i.e., a report of his "gross income").

The regulation, 26 C.F.R. 1.6012-1(a)(6), which is written pursuant to the statute, 26 U.S.C. 6012, does require a Form 1040 to be used for purposes of making a tax return. Civil penalties (not criminal penalties) apply to the "taxpayer" who actually reports his earnings on something other than the required form and who does not, within a reasonable time, correct the situation by supplementing the "tentative return" with a return made on the prescribed form. See 26 C.F.R. 1.6011-1(b).

But criminal charges are brought against individuals for violating a statute which merely requires the "taxpayer" to make a return (report) of his "gross income". Requirements to make tax returns, like the rest of the Code, can only apply to persons who are subject to (liable for) the tax. Whether or not you are a person subject to the provisions of the Code, regardless of OMB numbers, is an entirely separate issue. It simply will not mix successfully with the OMB/PRA argument.

Those who argue that they are not required to make a tax return and cannot be punished for failure to make a tax return because of some supposed flaw in the OMB number requirement, are essentially saying that they would be required to make a return if the silly agency would just get the OMB number requirement taken care of.

Given all of the appellate court decisions shown above, wherein the courts have clearly explained that the defendants were convicted for violation of a statute and not a regulation, I find it abominable and intolerable that such a purportedly valid, but totally unsuccessful, "legal defense" theory as the OMB/PRA argument is still being perpetrated upon the patriot community.

I think it is important for individuals in the patriot community to know who the defense attorneys were in some of these cases. If you get copies of these cases from a law library, I believe you will find that the attorneys on appeal were as follows:
United States v. Wunder, 919 F.2d. 34, 38 (6th Cir. 1990); Trisha Zeller James (argued), James & James, Louisville, KY., for defendant-appellant..

United States v. Bowers, 920 F.2d 220, 222 (4th Cir. 1990); Lowell Harrison Becraft, Jr., Huntsville, Ala., for defendants-appellants.

United States v. Bentson, 947 F.2d 1353 (9th Cir. 1991); William A. Cohan, Cohan & Greene, Encinitas, Cal., for defendant-appellant.

United States v. Hicks, 947 F.2d 1356 (9th Cir. 1991); Donald W. MacPherson, MacPherson & McCarville, Phoenix, Ariz., for defendant-appellant.
It is my personal opinion that after the Wunder Case, the other attorneys should have understood why the argument was not legally valid. I can only urge individuals to understand the substance of their own arguments, and to not rely upon anyone else to take care of them.

SUMMARY
The preceding articles show just a few of the issues upon which patriots have been provided with false or misleading information. Over the past 16 years, I have studied many, many court cases, including many cases wherein patriots were appealing their convictions. Case after case involved "legal" defense arguments which had no more basis in law or fact than in the examples shown in the above three articles. The patriots had simply relied upon what they had "learned" from one promoter or another; all to the detriment of the unsuspecting, and not so careful, patriots.

Over these years, I have come to the personal belief that just because a promoter of various "legal" arguments dances like a patriot, sings like a patriot or talks like a patriot, it does not necessarily mean that the promoter is a patriot. I also have come to the personal belief that each individual patriot must be willing to take off the rose-colored glasses, be willing to call a spade a spade, not take anyone's word on anything, and check everything out for himself before he relies upon it.

I have also considered the fact that the most effective scams, the most effective confidence games, the most effective fraudulent schemes, contain many truths. The parts that are not true are the parts that can cause problems for the unwary. Think about it.

I further believe that each individual patriot must realize that when he is in a legal battle, he is, in a sense, at war. In this war, the battle is over the minds, property and liberty of otherwise free individuals. If patriots can be led down the primrose path with one or more groundless "legal" arguments, will this not result in more victories for the other side? Is this not what in fact happened in the cases of Wunder, Bowers, Bentson and Hicks shown above? Is this not what in fact happened in many other cases too numerous to mention? I leave it to the reader to answer these questions for himself.

Please do not simply accept what I am telling you here at face value. Please go to a law library and check it all out for yourself. If you do, you will then know the facts for sure, your confidence in your personal position will skyrocket, nobody will be able to mislead you on these issues, and my credibility rating will go up. We both will win. Indeed, to some degree, the entire patriot community will win.





The Biggest
BREAKTHROUGH OF THE CENTURY
to understanding the language of the 16TH AMENDMENT


by Otto Skinner


How can it be said that an "income" tax (or taxation on income) is an indirect excise tax which is not on the tangible fruit, but on the happening of an event; that the income is not the subject of the tax, but that it is an excise tax which is collected from certain activities and privileges which is measured by reference to the income which they produce? How can all this be said and still call it taxation on income? How can the Internal Revenue Code state that there is hereby imposed on the taxable income, if the income is not the subject of the tax; if the income is not the thing being taxed? How can it be said that taxes on personal property are subject to the requirement of apportionment, when the "income" tax is not apportioned? Isn't your income your personal property? (Of course it is.) How is it possible for the United States Supreme Court, the lower courts, the Congressional record, the original Constitution, the Sixteenth Amendment, and the Internal Revenue Code to each make one or more of the following statements without them collectively being terribly inconsistent? Without one statement being in irreconcilable conflict with another?
  1. The conclusion reached in the Pollock Case recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such; 1

  2. The Sixteenth Amendment simply prohibited the power of income taxation from being taken out of the category of indirect taxation; 2

  3. The Congress shall have power to lay and collect taxes on incomes ... without apportionment among the several States; 3

  4. The Amendment contains nothing repudiating or challenging the ruling in the Pollock Case; 4

  5. The requirement of apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes; 5, 11

  6. Indirect taxes are laid upon the happening of an event as distinguished from its tangible fruits; 6

  7. The income is not the subject of the tax: it is the basis for determining the amount of tax; 7

  8. Excise taxes are in the class of indirect taxes; 1, 2, 8

  9. Excise taxes are collected from the same activities as those reached by the States; 9 and,

  10. There is hereby imposed on the taxable income; 10

How can it appear that the so-called "income" tax is imposed on property (income), and yet say the income is not the subject of the tax? If the income (property) is not the thing being taxed, why does it appear that way in the Sixteenth Amendment and in the Internal Revenue Code?

All of this doesn't even make any sense, unless there is a particular definition for the word "on" which is being used in the Sixteenth Amendment and the Internal Revenue Code whenever phrases such as "taxation on incomes" or "a tax on income" or "there is hereby imposed on the taxable income" are stated; a special definition for the word "on" of which most people are not even aware.

One of the definitions given in my Webster's Seventh New Collegiate Dictionary (1971) shows that the word "on" means "with regard or respect to". The dictionary also shows that the word "regard" means "an aspect to be taken into consideration".
So the Sixteenth Amendment could just as easily read as follows:

Congress shall have power to lay and collect taxes with regard to or with respect to or in consideration of or measured by the income, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
The above definitions reasonably and logically explain Chief Justice Edward Douglas White's statements in the Brushaber and Stanton Cases regarding taxation on income, wherein he explained that taxation on income was in its nature an indirect excise.

But let's dig a little further. Let's see what some other well respected dictionaries have to say.
on ... 22. a. In regard to, in reference to, with respect to, as to.
The Oxford English Dictionary, Second Edition, 1989, pg. 795.

on ... 12. with respect or regard to.
Random House Unabridged Dictionary, Second Edition, 1993, pg. 1352.

on ... (5) the object in connection with which payment, computation of interest, reduction or similar settlement is made. ... 7 a : with regard to : with reference or relation to : about.
Webster's Third New International Dictionary of the English Language, Unabridged, 1993, pg. 1575.
As used in the phrase "taxes on incomes", only if the word "on" means "with reference to" (the income which is to be used to measure the amount of tax due from indirect taxes such as duties, imposts and excises) can it be explained that the income (property) is not the thing being taxed, but that it is on some taxable activity upon which an excise can be imposed. This is the only way to explain how Chief Justice Edward Douglas White could justifiably state in Brushaber and Stanton that taxation on income was in its nature an excise tax and that the Sixteenth Amendment simply prohibited the power of income taxation from being taken out of the category of indirect taxation to which it inherently belongs.

Of course, this now clearly opens the way for the question as to which activity, if any, has there been an excise tax imposed, and which section of the Internal Revenue Code, if any, imposes a tax on that activity. It certainly raises the question now as to which of your activities, if any, would make you subject to (liable for) this tax which is merely called an "income" tax.

Is learning of a special definition for the word "on" really the biggest breakthrough of the century to being able to understand the language of the Sixteenth Amendment? You already have my opinion. What do you think? Ask your friends. What do they think? Maybe you can find an English professor's professor who will give an expert opinion on the issue. If you do, let me know what he or she says. Of course, the professor will have to understand that the United States Supreme Court has ruled that the "income" tax is an excise, that excise taxes are collected from activities, that the property is never the thing being taxed by an excise tax, and that property taxes (on real and personal property) must still be apportioned among the States according to population. Once he or she understands these facts, it should be easy to render an expert opinion regarding this special definition for the word "on" as used in the Sixteenth Amendment.

If this really is a valid conclusion, then this is information regarding the so-called "income" tax and the Sixteenth Amendment that the entire nation desperately needs.

Footnotes.
  1. Moreover in addition the conclusion reached in the Pollock Case did not in any degree involve holding that income taxes generically and necessarily came within the class of direct taxes on property, but on the contrary recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such....
    Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, at 16-17 (1916). (Emphasis added.)

  2. [B]y the previous ruling [Brushaber Case] it was settled that the Sixteenth Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning [of our national government under the Constitution] from being taken out of the category of indirect taxation to which it inherently belonged....
    Stanton v. Baltic Mining Co., 240 U.S. 103, at 112 (1916). (Emphasis and explanation added.)

  3. The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
    United States Constitution, Sixteenth Amendment.

  4. The Amendment contains nothing repudiating or challenging the ruling in the Pollock Case....
    Brushaber, supra, at 19. (Emphasis added.)

  5. Indeed, the requirement for apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes.
    Penn Mutual Indemnity Co. v. C.I.R., 277 F.2d 16, at 19-20 (3rd Cir. 1960). (Emphasis added.)

  6. A tax laid upon the happening of an event, as distinguished from its tangible fruits, is an indirect tax.
    Tyler v. United States, 281 U.S. 497, at 502 (1930).

  7. The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of tax.
    House Congressional Record, March 27, 1943, page 2580.

  8. "The Congress shall have power to lay and collect taxes, duties, imposts and excises." Art. 1, 8. If the tax is a direct one, it shall be apportioned according to the census or enumeration. If it is a duty, impost, or excise, it shall be uniform throughout the United States. Together, these classes include every form of tax appropriate to sovereignty.
    Steward Machine Co. v. Davis, 301 U.S. 548, at 581 (1937).

  9. We must remember, too, that the revenues of the United States must be obtained in the same territory, from the same people, and excise taxes must be collected from the same activities. as are also reached by the States in order to support their local government.
    Flint v. Stone Tracy Co., 220 U.S. 107, at 154. (Emphasis added.)

  10. There is hereby imposed on the taxable income of-[every individual]
    26 U.S.C. 1. (In part. Emphasis and explanation added.)

    Our conclusions may, therefore, be summed up as follows:

    First...
    We adhere to the opinion already announced, that, taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes.

    Second...
    We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.

    Third...
    The tax imposed by sections twenty-seven to thirty-seven, inclusive, of the act of 1894, so far as it falls on the income of real estate and of personal property, being a direct tax within the meaning of the Constitution, and, therefore, unconstitutional and void because not apportioned according to representation, all those sections, consisting of one entire scheme of taxation, are necessarily invalid.
    Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601, at 637 (1895). (Emphasis added.)






    Joe Banister, Purported To Be Ex-CID Agent
    Friend Or Foe???

    by Otto Skinner



    There is a lot of ballyhoo about the Special Agent from the IRS Criminal Investigation Division who quit working for the IRS and who has supposedly come over to the side of the non-filing patriots. All of this ballyhoo might be summarized as follows. "Oh goodie, goodie! Joe Banister, CID Agent, has left the IRS to come over to our side! Oh goodie, goodie!" But has he, really? Is he really on your side? Watch out!!!

    What has he really done? For one thing, he has written a book about his supposed investigation into the income tax issues. I not only question his motives and integrity, but I also question how well he actually "investigated" the issues.

    Two of the issues his book promotes, as if they are legally valid, are:

    1. An individual is not required to file tax returns because by doing so, the individual waives his Fifth Amendment rights.

    2. An individual is not required to file tax returns because the Sixteenth Amendment was never properly ratified.

    3. It is my firm belief that any CID agent knows, or at least should know, that these arguments are legally flawed and that they have failed non-filers in criminal cases over and over again for many, many years.

    As far back as 1986, in my first book, The Best Kept Secret, "Taxpayer" V. Nontaxpayer", I explained in very simple terms just why these arguments should not be used as an excuse for not filing tax returns. See www.goodbiz.com/tbks Yet, various promoters have continued to promote such arguments and now Banister has essentially "teamed up" with these promoters. What are Banisters real motives? Are they to entrap more and more non-filers into believing legally flawed arguments in order to set them up as easy targets for government prosecutors? (See the article Who Are You Going to Trust? on my web site at www.goodbiz.com)

    Let me give you an example of the Fifth Amendment issue found in Banisters book that causes me to question his motives and integrity. In his book, at page 6, Banister shows a letter apparently written by Bill Conklin as a news release. (I think you'll see where Conklin and Banister have the Fifth Amendment issue so convoluted it is no wonder why the average non-filer never figures out what is really going on.)

    The first part of Conklins letter discusses the Fifth Amendment issue as if it is an excuse for not filing tax returns. In the last part of the letter, Bill Conklin states:

    I have won six published wins against the IRS on my case alone. The cites are:

    LETTER MISLEADING: This letter would lead the reader to believe that Conklin actually won these cases, and that he won them based upon his Fifth Amendment argument. I submit that none of these cases actually involved the Fifth Amendment. In none of these cases was anything ever used against an individual in a criminal case. In none of these cases was any individual ever forced to provide any information that would tend to incriminate him.

    WHERE ARE THESE PURPORTED WINS? I challenge anyone to find in these cases where Conklin won anything of substance. Even in the cases that were reversed and remanded back to the district court, either Conklin or Tavery eventually lost their case. Except where Conklin obtained the $30 as a witness fee for witnessing in response to a summons, I submit that the appellate court eventually ruled against Conklin and/or Tavery in every other case. I dont see people lining up for an IRS audit just to collect a $30 witness fee, so I do not consider that accomplishment to be anything of real substance.

    As an example of Conklins purported "wins", in Church of World Peace, Inc. v. IRS, 715 F.2d 492 (10th Cir. 1983), Conklin filed an action for declaratory judgment. The federal district court dismissed his case. The appellate court affirmed the dismissal. How can Conklin call this a win?

    You can then check them out for yourself. Send $20 cash to Otto Skinner at PO Box 6609, San Pedro, California 90734, and I will send you a copy of the six cases listed above, plus Tavery v. U.S., 32 F.3d 1423 (10th Cir. 1994) discussed below. I think you will find in these cases that the financial information was supplied to the IRS and the deficiencies were paid. So what, if anything, of value was actually won by Conklin or Tavery? In my opinion, nothing.

    Conklin had gone to the government and obtained a government granted privilege of operating the "church" (TWP) as a 501(c) tax exempt organization. Conklin and Tavery had both filed tax returns. None of the cases listed above stand for or support the proposition that the Fifth Amendment provides an excuse for not filing a tax return.

    HOW ONE CAN FILE A 1040 FORM WITHOUT WAIVING HIS FIFTH AMENDMENT RIGHTS? While we are on this issue, I will tell you how an individual can file a 1040 form without waiving his Fifth Amendment rights. It is really quite simple.

    Lets use a fictitious Suzie Que as an example. Suzie has never done anything wrong. She hasnt so much as run a stop sign. Suzie is 22 years old. She is a legal secretary. She earned $27,000 in 1998. Can she put her age, occupation and the amount she earned in 1998 on a 1040 form and mail it to the IRS on March 30, 1999, without waiving her Fifth Amendment rights? Of course she can. There is nothing here that would tend to incriminate Suzie. The Fifth Amendment protects an individual from being forced to provide information that would tend to incriminate him.

    By providing the information above, Suzie has provided nothing that would even furnish a link in a chain of evidence needed to prosecute her for a crime. If no such link is furnished, it is not a waiver of Fifth Amendment rights. This principle has been around for a long time. See U.S. v. Neff, 615 F.2d 1235, 1939 (9th Cir. 1980) wherein the court quotes Hashagen v. U.S., 283 F.2d 345, 349 (9th Cir. 1960).

    If Suzie had robbed a bank, she would not be required to put that information on a tax return. But if you know Suzie like I know Suzie, you know that Suzie would never rob a bank.

    There is, however, a time and place for a non-filer to utilize the Fifth Amendment. This issue is more complex and is discussed in my books and in the past issues of Nontaxpayers United Newsletter. See www.goodbiz.com/tbks

    Now lets get back to Banisters book. On page 8, he states:

    In order to understand Conklins victory, .

    Two paragraphs down, he states:

    Conklins victories focused my attention on the fact that American taxpayers, without realizing it, apparently waive their 5th Amendment rights every time they submit information on their federal tax returns.

    What Victory? What Victories? I believe that what should be apparent to any CID agent, is that the Fifth Amendment argument as an excuse for not filing tax returns has been failing individuals since long before 1980.

    On page 10, Banister discusses another Conklin case (not one of the cases listed above) where Conklin had filed unsigned returns and was hit with a $500 penalty for filing a frivolous return. (Study 26 U.S.C. 7602 and you will understand the reason for the $500 penalty.) Banister states:

    Conklin even gave the Internal Revenue Service a power of attorney to sign the returns for him if they could do so without waiving his 5th Amendment rights.

    This may sound impressive, but I do not believe any IRS person has the authority to sign a return that an individual submits; with or without a power of attorney. In my opinion, to expect an IRS person to sign such a document is down right stupid.

    Banister goes on to say that Conklin sued in federal court, and that Judge Nottingham eventually ruled against him. This Conklin loss is apparently supposed to mean that Conklin proved his Fifth Amendment argument. Is the reader supposed to believe that a loss is a win? That a loss is a victory? I dont know about you, but I am sick and tired of double speak within the patriot community.

    In his book, Banister refers to Bill Conklins book, Why No One Is Required to File Tax Returns. At page 38 of this book, Conklin is discussing Tavery v. United States, 32 F.3d 1423 (10th Cir. 1994). Tavery (Conklins spouse) was arguing that information on her tax return should not have been used in Conklins contempt of court case regarding his eligibility for appointment of counsel. Both the district court and the appellate court ruled against her.

    Still at page 38, Conklin states:

    It is clear in this particular situation that Ms. Tavery waived her Fifth Amendment protected rights when she filed the tax return and disclosed the information that the government allowed into evidence. Could the government have used Ms. Taverys tax return information against her if she had been compelled to submit it? Of course not, if the Fifth Amendment means anything.

    Good grief! What kind of sophistry is this? The Fifth Amendment states:

    No person shall be compelled in any criminal case to be a witness against himself, .

    This means that no person can be required to provide evidence that would tend to incriminate him, and which could be used against him in a criminal case.

    Hello. Anybody home? The information was used against Tavery in a civil case and not a criminal case. No information was being used against anyone in a criminal case. Certainly no information was being used against Tavery in any criminal case. And providing she had not supplied false information on her return, or supplied any self-incriminating evidence of some other kind of criminal act, she had not incriminated herself. Since she did not supply information that would tend to incriminate her, she did not waive her Fifth Amendment rights, contrary to what Conklin claims.

    At page 31 of his book, Conklin states:

    I am a Communication Expert and have made an extensive study of the morpho-syntax of English. I have a Masters Degree >from the University of Colorado in Communications and I have over fourteen years of experience teaching English and Communications at the elementary, junior-high, high school, and college levels.

    Give me a break! Does Conklin not understand the difference between a civil case and a criminal case? Does he not understand the difference between incriminating evidence and information that is not incriminating? (Maybe I should be glad that I only have a Bachelor of Science degree and actually struggled with English, my one and only language.)

    I know a lot of people have been led to believe in this Fifth Amendment argument. But these people do not bother to actually study the cases upon which the promoters supposedly rely. By simply believing what someone says a case says has landed a lot of people in jail. Most of these promoters are quite clever at leading people down a primrose path to legally invalid conclusions.

    Who are some of the other people who have not only promoted the same kind of flawed information about the Fifth Amendment that Conklin has, but who are also promoting Joe Banister as if he is a wonderful addition to the freedom movement?

    Well, Irwin Schiff is one of these people. I personally believe that Schiff has very cleverly led his readers down the primrose path to legally flawed arguments on at least 16 different issues. The flaws in all but one of these arguments are covered in my books and newsletters. The 16th legally flawed argument (among others) is covered in my articles at www.goodbiz.com/tbks.

    Other people who are promoting Banister and his issues include Free Enterprise Society of Fresno, California (FES), and a guy named Peyman. It is my understanding that Peyman is charging people $140 to take a class wherein he "teaches" Bill Conklins material. Good grief! For that kind of money, a person can get all three of my books and have $55 left over for a really good meal. It is my understanding that Peyman has also charged a sizable amount to take people to Tax Court. To my knowledge, none of these people has won anything. It is also my understanding that Peyman lost his own case in Tax Court. Other than myself, has anyone asked who elected Peyman the "President" of his own self-concocted so-called "Freedom Law School"? Are there really non-filers who are so gullible that they are influenced by such a titles?

    There are even attorneys putting out opinion letters claiming that by filing tax returns one is waiving his Fifth Amendment rights. You should ask such an attorney how many non-filer cases, if any, he has won using the Fifth Amendment as a legal argument for an excuse for an individual to not file tax returns. Has any court, in any "failure to file" criminal case that the attorney has been involved in, ever ruled that the Fifth Amendment provides an individual an excuse to not file tax returns? Ask him.

    If this argument had any legal validity, it would require a directed verdict in favor of the defendant in every "failure to file" case. I think these attorneys should know that.

    THE SIXTEENTH AMENDMENT: As far back as 1986, in my first book, The Best Kept Secret, "Taxpayer" v. Nontaxpayer", I explained in very simple terms just why the argument that the Sixteenth Amendment had not been properly ratified should not be used as an excuse for not filing tax returns. Even before that, people were getting convicted for using this argument in criminal cases. A number of attorneys were, and I guess still are, unsuccessfully using this argument to defend their clients in "failure to file" cases. This issue is briefly discussed in my articles at www.goodbiz.com/tbks. It is more extensively covered in my books and newsletters.

    The reason that the non-ratification of the Sixteenth Amendment does not provide an excuse for not filing tax returns is really very simple. Once you see the reason explained, you will probably wonder why you didnt figure it out for yourself; if you havent already done so. I see no honest, justifiable reason for anyone who has done any research on the issue at all to continue to promote this argument.

    I believe the biggest promoters of this legally flawed argument include Banister, the Free Enterprise Society and Bill Benson, along with a few attorneys. What are the real motives of Banister and his buddies?

    It appears to me that there is a large group of promoters who are working hand in hand to promote false information to the patriot community. After over 19 years of being a non-filer and studying many, many court cases, I can only conclude that such false information is being purposely perpetrated upon the unsuspecting and often times gullible non-filing individuals.

    There is no question in my mind that Banister has teamed up with individuals who have been promoting false information. While I have only touched on small parts of Banisters book, I think I have provided enough information to help the reader start judging this situation for himself.

    What you see in this report (message) are my own personal opinions which are based upon my own research and knowledge. It is up to the reader to do his own research and form his own personal opinions.

    I would like to know the following:

    1. In how many trials, if any, has Banister testified?

    2. Who were the victims (defendants) in these trials?

    3. Did Banister lie in any of his testimony? (Show me the trial transcripts.)

    4. If so, was he told to lie, or did he make the decision on his own?

    5. If he believes that the victims (defendants) in these trials were wrongfully convicted (based upon his newfound "knowledge"), what is he doing to help those particular victims?

    6. His book does not provide the answers to these questions. Since criminal trials are public records, I dont think he can claim he is forbidden from revealing what is in these public records. I believe that truthful answers to these questions would be much more accurate, more interesting and more informative than his book proved to be.

      A lot of people are going to be unhappy over this message. Thats okay. Some of these promoters were mad at me even when I didnt name names, but just pointed out the legally flawed arguments they were promoting.

      Probably one of the most difficult things for an individual to acknowledge is that he has been hoodwinked. I really do believe that these promoters have hoodwinked a lot of people.

      I invite you to visit my web site at www.goodbiz.com/tbks. You can print out and STUDY my special articles from that site. You can review the rest of the information that is available. You can also see what other readers have to say about my material.

      This battle for freedom requires personal responsibility. The freedom and liberty you save may be your own. It is truly your responsibility to learn to separate the accurate material from the inaccurate material. It is truly your responsibility to separate and weed out the people who are promoting false information. I wish you the best.

    Constitutionally yours,
    Otto Skinner



Otto Skinner is the author of the following three books:

The Best Kept Secret, "Taxpayer" V. Nontaxpayer" (1986, revised 1996) - $24.95
If You Are the Defendant (1989, revised 1996) - $24.95
The Biggest "Tax Loophole" of All (1997) (A 2 pound book.) - $39.95

Add $5.00 S/H flat rate for all orders. - $  5.00

Get all three for a total of $84.85 and save $20.00
as compared to ordering each book separately.


Order from: Otto Skinner
PO Box 6609
San Pedro, CA 90734

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