Irwin A. Schiff (b.
1928) is a prominent member of the
United States group which refers to itself as the "
tax honesty movement", and which has been referred to by the
Internal Revenue Service and other government agencies as the
tax protester movement. Schiff is known for writing and promoting literature that claims the United States
income tax is applied incorrectly. He has lost several civil cases against the federal government and has a record of multiple convictions for various federal tax crimes. Schiff is presently serving his 13 plus year sentence for tax crimes as Inmate #08537-014 at the Federal Correction Institution at
Fort Dix,
New Jersey, located on the Fort Dix/McGuire Air Force Base military installation. His projected release date is 7 October 2016.
[2]
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[edit] Background
In 1950, Schiff graduated from the
University of Connecticut with a Bachelor of Science degree in accounting and economics.<SUP class=reference id=_ref-47tcmcch1706_0>
[1]</SUP> He has two sons,
Peter Schiff, who is an investment advisor and broadcaster, and Andrew Schiff who works in public relations.<SUP class=noprint>[
citation needed]</SUP>
After college, Schiff was in the insurance business. In 1968 he testified before the Senate Committee on Banking and Currency in opposition to the removal of gold backing from
Federal Reserve Notes. In 1976, he published a book entitled
The Biggest Con: How the Government is Fleecing You.<SUP class=reference id=_ref-612f2d73_0>
[2]</SUP>
Schiff has a web site named "PayNoIncomeTax.com", which has previously offered his various books for sale. He is featured in Hollywood Producer
Aaron Russo's 2006 film:
America: Freedom To Fascism.
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[edit] Convictions for 1974 and 1975 tax years
Schiff had filed Federal income tax returns through the tax year 1973. For years 1974 and 1975, however, he refused to disclose his income. Instead, he sent unsigned<SUP class=reference id=_ref-47tcmcch1706_1>
[1]</SUP>
1040 forms to the Internal Revenue Service with the title ("U.S. Individual Income Tax Return") changed to read “U.S. Individual Income Confession.” Instead of disclosing income, he include assertions of various constitutional rights on the forms, claiming essentially that under the
Fourth,
Fifth,
Sixth,
Seventh,
Eighth,
Ninth,
Tenth, and
Thirteenth Amendments he would not be an “involuntary serf” of the U.S. government. Schiff contended that because Federal Reserve notes were not backed by gold, they were not “income” for purposes of the Federal income tax.<SUP class=reference id=_ref-612f2d73_1>
[2]</SUP>
Schiff began conducting seminars on Federal income taxes in 1977. On April 12, 1978, Schiff appeared on the NBC television program
The Tomorrow Show with host
Tom Snyder, arguing his views on Federal income taxes. Six days after his appearance on
The Tomorrow Show, Schiff was charged with willful failure to file tax returns for the years 1974 and 1975.<SUP class=reference id=_ref-0>
[3]</SUP> The modified, unsigned 1974 and 1975 forms – with no income information on them -- were deemed by the Internal Revenue Service not to be valid Federal income tax returns under
26 U.S.C. § 6012. During the resulting trial, a videotape of the television program was shown to the jury. Schiff was convicted on both counts, and appealed his conviction to the United States Court of Appeals for the Second Circuit.<SUP class=reference id=_ref-612f2d73_2>
[2]</SUP>
At the Court of Appeals, the admission of the videotape was ruled unduly prejudicial, the conviction was overturned, and the case was remanded for a new trial. He was convicted a second time for failure to file, and that conviction was affirmed.<SUP class=reference id=_ref-1>
[4]</SUP>
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[edit] Convictions for 1980 through 1982 tax years
In October of 1985 Schiff was convicted of
tax evasion<SUP class=reference id=_ref-2>
[5]</SUP> with respect to his personal income taxes for years 1980, 1981 and 1982, and willful failure to file<SUP class=reference id=_ref-3>
[6]</SUP> a corporate tax return for Irwin A. Schiff, Inc. (a company for which he served as president), and that conviction was affirmed the following year.<SUP class=reference id=_ref-4>
[7]</SUP> Schiff was released from the Federal prison system in June of 1993. Despite having spent four years in the system, he continued his tax protest related activities.
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[edit] Arguments raised by Schiff
Among the arguments raised over the years by Schiff are: (1) the argument that no statutory deficiency in Federal income tax can exist until an assessment has been made; (2) the argument that no tax assessment can be made unless a tax return has been voluntarily filed; (3) the argument that the Internal Revenue Service, in enforcing the income tax, seeks to impose a tax not authorized by the taxing clauses of the United States Constitution; (4) the argument that the
United States Tax Court has no jurisdiction over Schiff; and (5) the argument that the United States Tax Court is not a court. These arguments were ruled invalid in
Schiff v. Commissioner.<SUP class=reference id=_ref-5>
[8]</SUP>
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[edit] Civil tax problems for tax years 1979 through 1985
In June of 2004, a Federal court ruled that Schiff was liable for over $2 million in taxes, penalties and interest for the years 1979 through 1985. In that case, Schiff's attorney had filed a brief claiming a
diminished capacity defense, contending that Schiff had been diagnosed with a chronic, severe delusional disorder relating to his beliefs about the
federal income tax system. This was characterized by some opponents of Schiff's beliefs as a claim that those beliefs were the product of a delusion, or even
insanity, and that Schiff had willingly allowed his defense counsel to raise such an argument.
Schiff himself has responded to these claims, stating that this was an attempt to prevent the Judge from giving a summary judgement and instead allow a
jury trial. Schiff also asserted that this was different from an insanity defense.
(.pdf) Schiff, in his statement on the matter, asserts that the judge erred in not putting this question to the
jury, and insists that " (1) no one is required to pay income taxes; (2) the entire federal judiciary is involved in a monumental, criminal
conspiracy to collect income taxes in violation of law." As of November 2006, Schiff continues to state on his internet web site that the U.S. Federal income tax was repealed in the 1950s, and that U.S. officials are engaged in a conspiracy: "Since the income tax was repealed in 1954 when Congress adopted the 1954 Code, it is clear that for 50 years federal judges in conspiracy with U. S. Department of Injustice prosecutors have been illegally and criminally prosecuting people for crimes that do not exist in connection with a tax that nobody owes."<SUP class=reference id=_ref-6>
[9]</SUP>
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[edit] Case regarding The Federal Mafia
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The Federal Mafia is a book authored by Schiff, claiming that the
income tax system and
Internal Revenue Service are illegal. On August 9, 2004, the
Ninth Circuit Court of Appeals upheld an
injunction issued by a U.S. District Court in Nevada under
26 U.S.C. § 7408 against Irwin Schiff and associates Cynthia Neun and Lawrence Cohen, against the sale of this book by those persons.<SUP class=reference id=_ref-7>
[10]</SUP> This prohibition does not extend to other sellers of the book. The court rejected Schiff's contention on
appeal that the
First Amendment protects sales of the book, as the court found that the information it contains is
fraudulent. Schiff, Neun and Cohen are currently barred under the
preliminary injunction from selling or advertising material advocating nonpayment of tax, preparing a
tax return for others, and from otherwise providing assistance or encouragement to others in violating tax law. Schiff and his associates are additionally required to provide a copy of the injunction to each of their customers, to post it on their website, and to provide the government with a customer list.<SUP class=reference id=_ref-8>
[11]</SUP>
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[edit] Convictions for 1997 through 2002 tax years
On October 24, 2005, Schiff was convicted in the U.S. District Court in Las Vegas, Nevada, on multiple counts of filing false tax returns for the years 1997 through 2002,<SUP class=reference id=_ref-9>
[12]</SUP> aiding and assisting in the preparation of false tax returns filed by other taxpayers,<SUP class=reference id=_ref-10>
[13]</SUP> conspiring to defraud the United States,<SUP class=reference id=_ref-11>
[14]</SUP> and income tax evasion<SUP class=reference id=_ref-12>
[15]</SUP>,
[3] and he is again serving jail time
[4] (see below). Schiff responded with numerous complaints about the trial process, including a claim that Judge
Kent Dawson did not allow Schiff to present
evidence at his trial.
[5]
Despite Schiff's age (approximately 78 years old), on February 24, 2006, Schiff was sentenced to 151 months in prison and was ordered to pay over $4.2 million in restitution to the Internal Revenue Service; Schiff was also sentenced to 12 additional months for contempt of court. One of Schiff's co-defendants, Lawrence Cohen, was sentenced on February 3, 2006 to 33 months in prison and was ordered to pay $480,000 in restitution. On February 23, 2006, Cynthia Neun, another co-defendant, was sentenced to 68 months in prison and was ordered to pay over $1.1 million in restitution. Schiff's, Cohen's, and Neun's appeals are currently pending before the United States Court of Appeals for the Ninth Circuit.
According to the prosecutor's office, Neun sold materials encouraging people not to pay taxes, prepared false tax returns, and represented hundreds of taxpayers in dealings with the IRS where she promoted Schiff's arguments. She will be required to submit to three years of supervision following her release from prison, expected in September of 2010.<SUP class=reference id=_ref-13>
[16]</SUP>
In this last case Schiff's attorneys again asked that the court consider the claim that Schiff has a mental disorder relating to his beliefs about taxes (see .pdf link above). According to the prosecutor's office the evidence at trial showed that Schiff had attempted to evade the payment of over $2 million in taxes from 1979 through 1985, and that he had used offshore bank accounts using multiple tax identification numbers and had attempted to hide assets in connection with his tax protester related activity.
One of the more telling results of his conviction is the state of his former bookstore, "Freedom Books"
[6], which stood at 444 E. Sahara Avenue in Las Vegas, Nevada. The store had a large sign which boldly read "WHY PAY INCOME TAXES WHEN NO LAW SAYS YOU HAVE TO?". The building (as of December 2006) has been sold and is now the site of an interior decoration company. The sign's bold message had been covered by brown paint while it was for sale, and now advertises the present company there.
