Motions to dismiss tax evasion charges
Cryer filed four motions to dismiss the case against him.
The government responded by stating that Cryer, "asserted various tax protester claims...and courts have rejected and discredited these claims" and countered Cryer's claim that the income generated from his law practice is not taxable, citing Commissioner v. Kowalski , 434 U.S. 77 (1977) (payments are considered income where the payments are undeniably accessions to wealth, clearly realized, and over which taxpayer has complete dominion); Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir. 1981) (rejecting taxpayer's contention that the "exchange of services for money is a zero-sum transaction"); Reading v. Commissioner, 70 T.C. 730 (1978), aff'd, 614 F.2d 159 (8th Cir. 1980) (monies received from the sale of one's services constitute income within the meaning of the Sixteenth Amendment). [5] [6]
The court rejected Cryer's first motion, in which Cryer had contended that the indictment had failed to allege "affirmative acts." [7] The court rejected Cryer's second motion, in which Cryer had argued that the Secretary of the Treasury had failed to comply with the Administrative Procedure Act by not publishing certain information in the Federal Register. [7] The court rejected Cryer's third motion, in which Cryer had asked for dismissal on the ground that he had not, with respect to a trust mentioned in the indictment, created that trust for the purpose of evading taxes. [7] The court rejected Cryer's fourth motion to dismiss, in which Cryer contended that his income, which was derived through the practice of law in Louisiana, was not "taxable income" as defined by the Internal Revenue Code, ruling the contention to be "without merit." [7]
Civil litigation
On December 26, 2007, Cryer instituted a civil suit against the United States government, alleging that criminal investigators with the Internal Revenue Service violated 26 U.S.C. § 6103 and other provisions of law by disclosing confidential information and injuring Cryer's reputation during their criminal investigation of Cryer. [12] Cryer alleged that IRS employees disclosed to approximately thirty of Cryer's clients that Cryer was under investigation, and that the disclosures violated the law.
Section 6103 generally prohibits disclosure of certain information by IRS employees, but also provides the investigative purposes exception of section 6103(k)(6). Under that exception, an IRS employee:
- [...] may, in connection with his official duties relating to any audit, collection activity, or civil or criminal tax investigation or any other offense under the internal revenue laws, disclose return information to the extent that such disclosure is necessary in obtaining information, which is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected or with respect to the enforcement of any other provision of this title. Such disclosures shall be made only in such situations and under such conditions as the Secretary [of the Treasury or his delegate] may prescribe by regulation. [13]
The related Treasury regulations provide that IRS employees:
- [...] may identify themselves, their organizational affiliation with the Internal Revenue Service (IRS) (e.g., Criminal Investigation (CI)) or TIGTA (e.g., Office of Investigations (OI)), and the nature of their investigation, when making an oral, written, or electronic contact with a third party witness [...] [14]
In May 2008, the court rejected Cryer's arguments, and his case was dismissed. The court ruled "that the disclosures at issue are covered by the 'investigative purposes' exception" of section 6103(k)(6). The court also rejected Cryer's claim that certain disclosures violated the rules on grand jury proceedings. [15]
Tax Court case
In 2009 Cryer's federal tax problems continued. On April 2, 2009, Cryer filed a petition in the United States Tax Court. Cryer's petition includes a copy of three statutory notices of deficiency issued by the Internal Revenue Service, all dated January 5, 2009, in which the IRS asserts that Cryer owes $1,719,436.71 in taxes and penalties for the years 1993 through 2001.
The IRS asserted that Cryer owed $848,806.00 in Federal income tax plus $615,384.37 in section 6651(f) penalties for fraudulent failure to file tax returns, $212,201.50 in section 6651(a)(2) penalties for failure to timely pay the taxes, and $43,044.84 in section 6654 penalties for failure to timely pay estimated taxes. [16]
Cryer's statement in the petition, in explanation of why he disagreed with the IRS determination, was: "The amount of the claimed deficiency is disputed. The correct amount is $0.00." The trial, originally scheduled for January 10, 2011 in New Orleans, was postponed to December 5, 2011. [17] On November 28, 2011, the Court granted a further delay to Cryer, with a requirement that both parties file a status report by January 9, 2012. [18] On February 15, 2012, the Court granted another delay,. [19] Trial had been re-scheduled for October 22, 2012, in New Orleans. [20]
Cryer died on June 4, 2012.
Kent E. Hovind is an American Christian fundamentalist evangelist and tax protester. He is a controversial figure in the Young Earth creationist movement whose ministry focuses on denial of scientific theories in the fields of biology (evolution), geophysics, and cosmology in favor of a literalist interpretation of the Genesis creation narrative found in the Bible. Hovind's views, which combine elements of creation science and conspiracy theory, are dismissed by the scientific community as fringe theory and pseudo-scholarship. He is controversial within the Young Earth Creationist movement, and Answers in Genesis openly criticized him for continued use of discredited arguments abandoned by others in the movement.
Tax returns in the United States are reports filed with the Internal Revenue Service (IRS) or with the state or local tax collection agency containing information used to calculate income tax or other taxes. Tax returns are generally prepared using forms prescribed by the IRS or other applicable taxing authority.
Irwin Allen Schiff was an American libertarian and tax resistance advocate known for writing and promoting literature in which he argued that the income tax in the United States is illegal and unconstitutional. Judges in several civil and criminal cases ruled in favor of the federal government and against Schiff. As a result of these judicial rulings Schiff was in a hospital prison serving a sentence of 162 months at the time of his death at the age of 87. The Federal Bureau of Prisons reported that Schiff died on October 16, 2015.
Income taxes in the United States are imposed by the federal government, and most states. The income taxes are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowable deductions. Income is broadly defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. An alternative tax applies at the federal and some state levels.
A tax protester, in the United States, is a person who denies that he or she owes a tax based on the belief that the Constitution, statutes, or regulations do not empower the government to impose, assess or collect the tax. The tax protester may have no dispute with how the government spends its revenue. This differentiates a tax protester from a tax resister, who seeks to avoid paying a tax because the tax is being used for purposes with which the resister takes issue.
The Law That Never Was: The Fraud of the 16th Amendment and Personal Income Tax is a 1985 book by William J. Benson and Martin J. "Red" Beckman which claims that the Sixteenth Amendment to the United States Constitution, commonly known as the income tax amendment, was never properly ratified. In 2007, and again in 2009, Benson's contentions were ruled to be fraudulent.
The Internal Revenue Service Restructuring and Reform Act of 1998, also known as Taxpayer Bill of Rights III,, resulted from hearings held by the United States Congress in 1996 and 1997. The Act included numerous amendments to the Internal Revenue Code of 1986. The bill was passed in the Senate unanimously, and was seen as a major reform of the Internal Revenue Service.
Tax protesters in the United States have advanced a number of arguments asserting that the assessment and collection of the federal income tax violates statutes enacted by the United States Congress and signed into law by the President. Such arguments generally claim that certain statutes fail to create a duty to pay taxes, that such statutes do not impose the income tax on wages or other types of income claimed by the tax protesters, or that provisions within a given statute exempt the tax protesters from a duty to pay.
Tax protesters in the United States advance a number of conspiracy arguments asserting that Congress, the courts and various agencies within the federal government—primarily the Internal Revenue Service (IRS)—are involved in a deception deliberately designed to procure from individuals or entities their wealth or profits in contravention of law. Conspiracy arguments are distinct from, though related to, constitutional, statutory, and administrative arguments. Proponents of such arguments contend that all three branches of the United States government are working covertly to defraud the taxpayers of the United States through the illegal imposition, assessment and collection of a federal income tax.
Marrita Murphy and Daniel J. Leveille, Appellants v. Internal Revenue Service and United States of America, Appellees, is a controversial tax case in which the United States Court of Appeals for the District of Columbia Circuit originally held that the taxation of emotional distress awards by the federal government is unconstitutional. That decision was vacated, or rendered void, by the Court on December 22, 2006. The Court eventually overturned its original decision, finding against Murphy in an opinion issued on July 3, 2007.
Internal Revenue Service, Criminal Investigation (IRS-CI) is the United States federal law enforcement agency responsible for investigating potential criminal violations of the U.S. Internal Revenue Code and related financial crimes, such as money laundering, currency violations, tax-related identity theft fraud, and terrorist financing that adversely affect tax administration. While other federal agencies also have investigative jurisdiction for money laundering and some Bank Secrecy Act violations, IRS-CI is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code, in a manner intended to foster confidence in the tax system and deter violations of tax law. Criminal Investigation is a division of the Internal Revenue Service, which in turn is a bureau within the United States Department of the Treasury.
We the People Foundation for Constitutional Education, Inc. also known as We the People Foundation is a non-profit education and research organization in Queensbury, New York with the declared mission "to protect and defend individual Rights as guaranteed by the Constitutions of the United States." It was founded by Robert L. Schulz. At the U.S. Department of Justice, he is known as a "high-profile tax protester". The Southern Poverty Law Center asserts that Schulz is the head of the leading organization in the tax protester movement. The organization formally served a petition for redress of grievances regarding income tax upon the United States government in November 2002. In July 2004, it filed a lawsuit in an unsuccessful attempt to force the government to address the petition. The organization has also served petitions relating to other issues since then.
Taxation of illegal income in the United States arises from the provisions of the Internal Revenue Code (IRC), enacted by the U.S. Congress in part for the purpose of taxing net income. As such, a person's taxable income will generally be subject to the same Federal income tax rules, regardless of whether the income was obtained legally or illegally.
The 861 argument is a statutory argument used by tax protesters in the United States, which interprets a portion of the Internal Revenue Code as invalidating certain applications of income tax. The argument has uniformly been held by courts to be incorrect, and persons who have cited the argument as a basis for refusing to pay income taxes have been penalized, and in some cases jailed.
Tax protester Sixteenth Amendment arguments are assertions that the imposition of the U.S. federal income tax is illegal because the Sixteenth Amendment to the United States Constitution, which reads "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", was never properly ratified, or that the amendment provides no power to tax income. Proper ratification of the Sixteenth Amendment is disputed by tax protesters who argue that the quoted text of the Amendment differed from the text proposed by Congress, or that Ohio was not a State during ratification, despite its admission to the Union on March 1st, 1803. Sixteenth Amendment ratification arguments have been rejected in every court case where they have been raised and have been identified as legally frivolous.
Tax protesters in the United States advance a number of constitutional arguments asserting that the imposition, assessment and collection of the federal income tax violates the United States Constitution. These kinds of arguments, though related to, are distinguished from statutory and administrative arguments, which presuppose the constitutionality of the income tax, as well as from general conspiracy arguments, which are based upon the proposition that the three branches of the federal government are involved together in a deliberate, on-going campaign of deception for the purpose of defrauding individuals or entities of their wealth or profits. Although constitutional challenges to U.S. tax laws are frequently directed towards the validity and effect of the Sixteenth Amendment, assertions that the income tax violates various other provisions of the Constitution have been made as well.
A tax protester is someone who refuses to pay a tax claiming that the tax laws are unconstitutional or otherwise invalid. Tax protesters are different from tax resisters, who refuse to pay taxes as a protest against a government or its policies, or a moral opposition to taxation in general, not out of a belief that the tax law itself is invalid. The United States has a large and organized culture of people who espouse such theories. Tax protesters also exist in other countries.
Tax protester arguments are arguments made by people, primarily in the United States, who contend that tax laws are unconstitutional or otherwise invalid.
The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting taxes and administering the Internal Revenue Code, the main body of the federal statutory tax law. It is part of the Department of the Treasury and led by the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States. The duties of the IRS include providing tax assistance to taxpayers; pursuing and resolving instances of erroneous or fraudulent tax filings; and overseeing various benefits programs, including the Affordable Care Act.
Tax protesters in the United States advance a number of administrative arguments asserting that the assessment and collection of the federal income tax violates regulations enacted by responsible agencies –primarily the Internal Revenue Service (IRS)– tasked with carrying out the statutes enacted by the United States Congress and signed into law by the President. Such arguments generally include claims that the administrative agency fails to create a duty to pay taxes, or that its operation conflicts with some other law, or that the agency is not authorized by statute to assess or collect income taxes, to seize assets to satisfy tax claims, or to penalize persons who fail to file a return or pay the tax.
