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FEDS GO AFTER 'WE THE PEOPLE'

April 04, 2007

The Tax Division at the Department of Justice kicked off the final two weeks of tax season with a frenzy of filings. In addition to the effort to close 254 Jackson Hewitt tax prep franchises accused of rampant cheating, the feds filed for an injunction to close down the "We The People" organizations efforts to help people "de-tax" themselves.

"We The People" is an organization run by longtime tax protester Robert Schulz. In addition to their political efforts against the income tax, the Department of Justice alleges that they sell tax fraud schemes:

The government’s complaint, filed in Syracuse with the U.S. District Court for the Northern District of New York, alleges that Schulz has used the two We the People entities to market a nationwide tax fraud scheme, called the Tax Termination Package, to employers and employees. According to the complaint, the Tax Termination Package includes We the People forms, which the defendants falsely tell customers can be used to replace forms the IRS requires employers and employees must use in connection with federal tax withholding from wages.

The suit says that Schulz and the We the People entities falsely state that use of the replacement forms will allow customers to legally stop tax withholding. According to the complaint, the defendants base the scheme on frivolous arguments about federal tax laws that federal courts have repeatedly rejected.

Of course this stuff doesn't work, but there are always new suckers willing to give it a try.

The government likes to file suits like these during tax season to remind people not to be suckers. Some people are beyond education, though:

Even after watching [tax protester Arthur] Farnsworth lose a federal tax evasion case, his job and much of his savings -- his West Rockhill Township house could be next -- members of the Pennsylvania Lawmen Committee for Public Interest, a support group for those who don't pay income taxes, remain undeterred.

Farnsworth is scheduled to be sentenced today in federal court in Philadelphia. His attorneys are seeking a prison term of less than one year. Federal prosecutors are asking for 21 to 27 months.

''I don't think there's anyone who is going to go back to the system because of his prosecution,'' Don McGeady, 48, of Dublin said last month. Like Farnsworth, he hasn't paid income taxes since 1996. He testified on behalf of Farnsworth at his trial.

Links:

Tax Protester FAQ

New York Post coverage

UPDATE: 27 months for Mr. Farnsworth (via Drudge)

UPDATE 2: The TaxProf has more.

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