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The Power To Tax Is The Power To Destroy:

Why The Income Tax System, and the
Tax Protest Movements, Must Be Scrapped 

by: Peter Kershaw © 2004


Part 2


The IRS has a long history of wrongdoing, abuse and outright tyranny against the American people, all of which is easy to substantiate. Just as easy to prove are the abuses of Congress in squandering the People's tax money. Ronald Reagan's Grace Commission Report well-proved it, and it was in that context that President Reagan spoke of a "tax rebellion." If a tax rebellion movement were launched, championed by men of such noble character as the tax protestors of the Colonial era, it could have a huge impact in issues of not only government taxation, but also government stewardship of the People's taxes, the ultimate result of which would be to forever end the federal income tax.

Why, then, do contemporary tax protest leaders expend their time and energies promulgating illogical, implausible and untenable theories that no one has ever won in court (e.g. the IRS is a Puerto Rican corporation)? Why do they promulgate theories that border on science fiction (e.g. the IRS is a wholly-owned subsidiary of the FRB)? Why is their demeanor often so shrill, wild-eyed and belligerent? Why, rather than attempting to build credibility with the American people, is their every action, and many of their theories, guaranteed to undermine credibility?

It appears that they're not particularly serious about vanquishing the income tax system. It even seems as if they're deliberately sabotaging their own movement. Indeed, the methods of many tax protest leaders have caused me to often ask tax protestors: "Who's that guy you're following really working for?" 5 If that's not in doubt, then it's often been the case that tax protest leaders are delusional or just plain nuts. I say this not in a figurative sense, but the literal sense. In the trials of several prominent tax protest leaders their attorneys have moved to have them declared insane. The evidence for doing so has been quite compelling. 6

This isn't to say that all tax protest leaders exude the persona of nut jobs. If that were the case the only people who would follow them would be nut jobs. Some tax protest leaders are highly polished and professional. They know that image is important, so they put forth considerable effort in producing slick multimedia presentations, such as Larken Rose's 861 Evidence. Such presentations may even include the opinions of CPAs, attorneys and former IRS agents. Opinions about the income tax that are backed up by such apparently credible witnesses can, for the average viewer, be most convincing.

However, the very first people who should be shown such evidence are federal judges, and people like Larken Rose should be using themselves as guinea pigs, testing their theories in court prior to selling them to others. Instead, they use their own clients as cannon fodder. In the final analysis it is the opinions of federal judges which really matter. Anyone else's opinion, whether CPA, attorney or former IRS agent, is irrelevant and will do nothing to keep the IRS from ruining your life. In point of fact, relying on the advice of tax protestors, like Larken Rose, is a surefire method for gaining firsthand experience under the iron fist of government retaliation.

Many people have been convinced by Larken Rose's slick puff piece, 861 Evidence, yet not a single person has ever prevailed with the IRS using the 861 argument, nor has anyone ever won in court, though many have tried. Indeed, people are having their lives ruined over the 861 argument, including some of the very people Larken Rose interviewed for his video presentation (e.g. Robert C. Welti CPA, Bryan Malatesta CPA). Any apparent credibility left in the mind of the viewer of one of these tax protest promotional pieces is, in reality, just marketing fluff.

Update 08-05: Larken Rose is convicted in federal court of multiple counts of Willful Failure To File, and for filing false amended returns. Like so many other tax protestors, Larken Rose denies being a tax protestor and says he's a part of the "tax honesty movement." Yet, like so many other "tax honesty" leaders, his own honesty is seriously lacking, particularly when it comes to how well his theories work. Even after he was criminally convicted over the 861 myth, he continues to push it on his web sites. Nor does he make any mention on his web sites that he was ever criminally indicted for Willful Failure To File and for Tax Fraud, and that he was convicted. So much for "honesty."

Undermining tax protest credibility further is the fact that it's difficult to find any two tax protest leaders that can agree on much of anything. The amount of bickering and mudslinging that takes place between tax protest leaders is unprecedented among protest movements. Tax protest leaders all claim to offer "the solution" for getting out of the income tax (and they all give the impression that no one has ever gotten into trouble for using their programs). Yet "the solution" of one tax protest leader often contradicts the others:

Tax protest leaders have a strong propensity toward, "I'm right and everybody else is wrong." So how is anyone to determine "the solution" when none of them can agree with any of the others? How can anyone determine if any of the tax protest leaders really know what they're talking about? This isn't to say that taxpayers shouldn't evaluate for themselves the issues that tax protest leaders are raising. I believe they should. Some of the issues and concerns they raise are valid. But I also believe that it's unwise to take any action based upon the advise of a cadre of self-styled "tax experts" who can't agree on much of anything, beyond the fact that they all hate the income tax system.

More important than the issue of whether or not tax protest leaders agree with one another is the issue of whether or not the courts agree with any of them. As I've told a number of tax protest leaders, "I'm not interested in your opinions. I'm interested in the opinions of federal judges. When any of your theories result in a win 7 for any of your clients, give me a call. We'll have something to talk about then. Until then, don't plan on using me, or any of my clients, as your guinea pig."

"But the federal courts are corrupt," they say, "and the judges will never admit the validity of our position. They're not interested in justice. All they're interested in is protecting an unjust and unconstitutional income tax system." Perhaps so. But if that's what tax protest leaders really believe, why do they keep engaging in conduct that practically guarantees that they and their clients will wind up in those "corrupt unjust courts"? My recommendation is you'd be wise to do all you can to avoid court.

"The curious thing about tax protesting is that it requires you to judge your government as immoral for attempting to tax your income, while at the same time counting on the morality of their courts to uphold your rights. This is a huge contradiction, but one that the tax protest people do not recognize or face." (Tax Protesting,

For the record, it's not tax protesting that I am opposed to. America's Founding Fathers were, each and every one of them, tax protestors, and they used tax protesting as a means of redressing their grievances:

"The privilege of giving or withholding our moneys is an important barrier against the undue exertion of prerogative, and all history shows how efficacious its intercession for redress of grievances and reestablishment of rights, and how improvident would be the surrender of so powerful a mediator."
Thomas Jefferson

A great many of the Colonial clergy were also tax protestors, and they regularly expounded from the pulpit what the Word of God has to say on the subject of lawful taxation versus "legalized plunder." Our own history teaches us that unless the People periodically rise up to challenge their government, an unchecked government will inevitably become corrupt and tyrannical. It's wholly inadequate to, just once every four years, "throw the bums out." Civil government can never be trusted to check itself, especially when it comes to the temptation of stealing the People's wealth through confiscatory taxation and do-gooder government–nanny "redistribution" programs.

"What country can preserve its liberties if its rulers are not warned from time to time that the people preserve the spirit of resistance?"
Thomas Jefferson

The question then becomes, what are the best methods for checking government abuse and getting rid of socialistic confiscatory taxation? Today's tax protestors believe it's by announcing their intentions to the IRS, and then refusing to pay the federal income tax (most of them also refuse to pay any state income tax 8). That's their form of "throwing the tea into the harbor." It would be one thing if they threw the tea into the harbor quietly, covertly and unobserved; but that wouldn't give them the sort of visceral satisfaction they're looking for. So they write the IRS letters and mail impressive-looking legal documents, and put the IRS on notice that they won't be paying their taxes anymore.

In their idealistic wishful-thinking ignorance they somehow believe that the IRS will respond, "Thanks, Mr. Jones, for writing us and putting us on notice that you figured out that you have constitutional rights, and that you don't have to pay the income tax. We at the IRS respect and honor the Constitution and we would never trample on your rights. We can't find the law that makes you subject to the income tax, or filing tax returns, so that must mean that you don't have to. This is the last you'll ever hear from us. Thanks, and have a nice life."

The IRS has never written such a response, or made such admissions, and they never will. Yet every month, hundreds (and perhaps thousands) of Americans become new converts to the tax protest movement, and they send off their own tax protest letters to the IRS, naively expecting there might be a happy outcome. If they really want to jab a sharp stick in the IRS' eye they'll even mail the IRS a 1040X amended return, demanding the IRS pay back their prior three years taxes (this is one of the best ways yet devised for getting handed a criminal indictment for tax fraud). It's for good reason that I say that there's a serious lack of common sense evident today in the tax protest movement.

The strategies, methods, and worldviews of modern tax protestors differ dramatically from the tax protestors of the Colonial era. Rather than being rooted in a biblical worldview, as were America's Founding Fathers, the worldview of modern tax protestors is frighteningly similar to the Libertine French Jacobins responsible for the bloodbath known as the French Revolution.

Today's tax protestors could learn a thing or two from history. Colonial-era tax protestors respected the power of the tyrant. Yes, they were willing to risk their, "lives, fortunes and sacred honor," but they never did so recklessly or naively. When they threw the tea into Boston harbor they first disguised themselves by dressing up as Indians and, thus, avoided prosecution and imprisonment.

Boston Tea Party

Moreover, throwing the tea in the harbor was their last resort. For years prior they protested taxes by redress of grievance, in the form of "remonstrances" to the British king, the only legal authority who had the power to change the tax laws and to rein in the abuses of the British Parliament.

Today's tax protestors only rarely ever protest the income tax to the proper legal authority -- the U.S. Congress. The IRS itself has little contention with those who protest the income tax to Congress. However, the IRS gets very agitated with nonfilers who demand a redress of grievance with the IRS. Their attitude has always been, "We don't write the tax laws, we just enforce them. We don't even write the tax enforcement laws. If you don't like the income tax, take it up with Congress." Such an attitude, on the IRS' part, is not particularly unreasonable or unjustified. 9

Rather than demanding a redress of grievances with the government body that writes the income tax laws, and the government body which has the authority to rein in IRS abuse, tax protestors take peculiar delight in protesting the income tax with mere tax collectors (IRS agents). What an exercise in futility! The IRS has no legal authority to change the tax laws, or to change the legal procedures used for collecting the income tax. For all intents and purposes IRS agents are little more than bean-counters with badges and guns (WARNING: bean-counters are easily agitated toward those who interfere with the process of getting their beans counted). Protesting against a branch of government which has no legal authority to change the tax laws will never result in the system changing.

In a very practical sense tax protestors provide job security to thousands of IRS Special Agents. Tax protestors are grist for the mill (or meat for the meat-grinder). As long as tax protestors continue engaging in futile protests with the IRS, they're just so much fresh meat for the meat-grinder. All they are doing is helping to maintain the status quo and giving the IRS Commissioner an excuse to hire more IRS Special Agents:

As IRS commissioner, Mr. Everson presides over the continued reorganization and modernization of the nation’s tax administration agency. His priorities include strengthening enforcement of the tax laws... (

IRS Commissioner Mark Everson has already made good on his threats of "strengthening enforcement." Mr. Everson is probably the single most aggressive IRS Commissioner in IRS history. This is one bad dude that you don't want to mess with. Times for tax protesters were relatively good when former IRS Commissioner Charles Rossotti was in charge, but the kinder and gentler days of the IRS are long gone.

Protesting against the IRS has ruined the lives of many thousands of Americans. At the very least it's likely to cost you all your worldly wealth, and it could also cost you some time in jail. Worse yet, if the IRS confrontation involves a married person it will usually result in a divorce. It's reckless and foolhardy to put the IRS on notice that you're refusing to pay income taxes. The almighty IRS wields considerable power. They've destroyed the lives of countless "non-compliant" Americans, and they enjoy doing it.

The IRS refers to the personal income tax as a system of "voluntary compliance." Many tax protestors have reached the erroneous conclusion that if they don't want to "volunteer" they don't have to; but that's not how the IRS views it at all. If you don't "voluntarily comply" the IRS will use everything in their bag of tricks to encourage your compliance, and the IRS can be most persuasive.

The entire income tax system is automated, and is based upon a system of reporting -- you report your income to the IRS, or your employer reports your income to the IRS, and usually a combination of the two. Most Americans have their earnings reported as income to the IRS using their SSN, via IRS Forms W-2 (employee) or 1099 (independent contractor). That data is input into the IRS' Direct Data Entry System (DDES) and is stored at the IRS National Computer Center (NCC) in Martinsburg, West Virginia. Local IRS offices, including IRS auditors, have access to this data via the IRS Integrated Data Retrieval System (IDRS).

The IRS system of records is a huge accounting system based upon open/close entries. What typically creates an income "open" entry for individuals is your employee W-2, or your independent contractor 1099. Every "open" entry must subsequently get "closed." In most cases about the only thing that will "close" an income entry is your income tax return. If you don't file a tax return in a year in which you have reported income, the IRS will ultimately mail you a tax assessment. The IRS categorizes all tax assessments as "accounts receivables," and the IRS is very aggressive about collecting their accounts receivables.

Separate and apart from tax protestors are non-taxpayers. Nontaxpayers are those who have just stopped filing and paying. Several former IRS Commissioners have acknowledged that there are millions of nontaxpers. For example, IRS Commissioner Roscoe Egger resigned in April, 1986 after publicly acknowledging that, "35 million Americans no longer file personal income taxes."

Congress, too, is well aware that there are many millions of nontaxpayers. They refer to them as "the underground economy." Congress avoids categorizing nontaxpers as part of a "black market economy" because they know that the vast majority of nontaxpayers aren't drug dealers or mafiosos, but are in fact hard-working honest people. Among these are 20 million home-based businesses, many of which are "out of the system."

Nontaxpayers either have never filed a tax return, or they were once income tax payers but have since dropped out of the tax system quietly and (in many cases) unobserved. Accomplishing that successfully is no small feat. Not only must the non-taxpayer successfully stay off the IRS radar screen, they must stay off their state radar, as well. In many states one actually has more to fear from their State Department Of Revenue than they do from the IRS. Furthermore, state tax agents routinely collaborate with the IRS. In fact, at present, the only states that do not have "partnership agreements" with the IRS are Wyoming and Nevada.

Most Americans receive W-2 or 1099 income statements, so relatively few Americans are good candidates for becoming nontaxpayers (not filing an income tax return in a year in which you have income reported is likely to have unpleasant consequences). Even relatively small income reports can draw unwanted IRS attention to the nontaxper. For example, having just $10 or more in "interest income" paid by your bank to your interest-bearing account will generate a 1099.

Avoiding income reports can prove to be a big challenge, and this is especially true of certain professions. Licensed professions, such as doctor, attorney, etc., find it exceedingly difficult to drop out of the system because, by the very nature of their profession, they are deeply entrenched in the system. This is also true of most "professional" vocations, whether or not they are licensed professions.

Nevertheless, there are millions of working Americans who labor in hundreds of different vocations where they never have anything reported as "income." The vast majority of them are sole proprietors, and even some informal partnerships, engaged in non-commercial 10 work for non-commercial clients 11, such as lawn-care, landscaping, window washing, handyman, carpentry, auto repair, web site development, pressure washing, wedding photography, bee-keeping, etc. These, and many other "cash vocations" can be lucrative, the earnings of which are limited only by one's own entrepreneurial ambitions. I've known many folks engaged in these and other vocations who earn six-figures.

On the other hand, most tax protestors I've run across are experiencing serious financial woes (and this even long before the IRS starts seizing their assets). A major contributing factor is they often spend so much time "studying" tax protest issues, as well as the plethora of other "personal sovereignty" stuff that is part and parcel of the "patriot movement," that there is little time left to earn a respectable living. Furthermore, the average tax protestor is not one who can keep all that wonderful "truth" he's discovered to himself. He's likely to spend a great deal of time evangelizing his friends, family, and coworkers; and this too encroaches upon not only earning a living, but even being able to keep his job (most bosses aren't fond of tax protestors and their propensity for fomenting tax rebellions on company premises).

Nontaxpayers, on the other hand, can often be quite successful at making a comfortable living. They stay focused on their first priority, which is to provide for their families, and not engaging in futile protests with agencies of government who take delight in destroying people's lives.

Becoming a nontaxpayer is a very personal decision and, in my observation, is often made as a matter of conscience. Moral people often make that decision for moral reasons, such as the government's pro-abortion, "safe sex" and pro-sodomy agenda. Paying taxes which pay for the slaughter of the preborn and sexual debauchery is morally repugnant and unthinkable for many Americans, and was certainly unthinkable for America's Founding Fathers:

"To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical."
Thomas Jefferson

Many Christians have had to take a similar stand in their own churches. I was once a member of a large denomination which started offering paid "family planning services" to denomination employees as part of their health care package. I went to my pastor and demanded assurances that not one penny of my tithe would ever go to pay for an abortion. He supported my position but was unable to secure any assurances from our denomination leaders. My pastor urged my continued membership, but encouraged me to find someplace else to contribute my tithe. With his blessing I started tithing to pro-life ministries.

Paying taxes to a government which uses tax revenue to shred the moral fabric of the nation is, for at least some Christians, as morally repugnant as tithing to a church which uses tithes to pay for "family planning services." Making such a decision entails certain risks, and so, it should only be made with a great deal of care, evaluation and strategic planning.

For obvious legal reasons I can't specifically advise or recommend that anyone become a non-taxpayer 12. However, I always advise folks not to become tax protestors. While it might "work" for some people to become nontaxpayers, becoming a tax protestor never works out.

The recklessness with which modern tax protestors pursue their agenda demonstrates how utterly naive they are. They usually have little regard for how their decisions and methods will undermine the lives of their own family members. One of the most important biblical responsibilities a man has is to protect and provide for his family. However, most modern tax protestors show a callous disregard for fulfilling the two most important roles God has ordained for them -- husband and father (I'm singling out men because the majority of tax protestors are men, and wives generally think their husbands are nuts for getting involved in tax protest).

Tax protestors frequently speak of "good government," as though the only form of government were civil government. Yet they are usually negligent in the first and most important of all governments -- family government. In my considerable exposure to tax protestors, and especially to tax protest leaders, it's clear to me that these are not people who are worthy of a following. If they can't even earn the confidence and respect of their own wife and children, why should anyone else respect them enough to follow them? The vast majority of tax protest leaders lost their wives and children a long time ago, and for good reason.

Most wives know that no good can come of their husband's tax protesting. They fully expect that their paychecks will be garnished, their bank accounts and investments will be levied, their house will be liened, and their husbands may even wind up in prison. But once a man has caught the tax protest bug most wives have little chance of talking any sense into hubby. He moves forward with reckless abandon and, eventually, all of her dire predictions come true.

Wives are "nesters," particularly if they're also mothers. They have a God-given compulsion to safeguard the family nest. When a husband engages in conduct that destroys the family nest he shouldn't be surprised when he gets served with divorce papers. I've confronted numerous tax protesting men, who claim to be Christians, with:

"But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel." (I Timothy 5:8)

Tax protesting has the net result of a man "providing not for his own." Husbands and fathers have a biblical obligation to ensure that the material needs of their families are met. If their reckless actions result in not fulfilling that obligation, "he hath denied the faith, and is worse than an infidel."

Tax protesting, and the numerous other "patriot" issues that inevitably get thrown into the patriot mix, often get cloaked in religious rhetoric. They often raise tax protesting to the level of a biblical imperative. They refer to the Constitution as though it were "holy," elevating it to a status virtually coequal with the Bible. The Constitution for the united States is a very fine document, and if the People knew it, and if the People held their public servants accountable to it, America would be a much better place to live. But to speak of the Constitution as "holy" is nothing less than idolatry.

Idolatry is a big problem within the modern patriot movement -- idolatry and even blasphemy. "Personal sovereignty" is widely spoken of, but again, this is the outgrowth of not the worldview of America's Founding Fathers, but the Jacobins of the French Revolution. The Jacobins were the product of the atheistic French "enlightenment" and "renaissance." So it was inevitable that in denying the existence and sovereignty of God these French "rationalists" would then refer to themselves, individually, as "sovereigns." Such a worldview inevitably results in antinomianism and anarchy.

None of America's Founding Fathers ever called themselves "sovereigns," 13 for they knew and understood that the only true Sovereign was the Lord Jesus Christ. They called themselves "freemen," apprehending that the liberty which was theirs was the gift of God, and came only as the result of their obedience and submission to the Sovereign Ruler and Lord of the Universe.

Until modern tax protestors adopt the worldview of America's Founding Fathers they have no chance, whatsoever, of becoming successful. In point of fact, far from being an asset, the modern tax protest movement has proven itself a liability in our efforts to abolish the federal income tax system.

As I've told scores of tax protestors over the years, there's much to be learned from the lessons of history. One of my favorite historical stories teaches a lesson about the influence that a single protesting constituent can have on his elected representative, and the consequent effect that representative can have on the entire Congress. It's the story of Farmer Bunce and Davy Crockett. Read it and then follow the example of Horatio Bunce. Feel free to make copies of the article and circulate it among friends, family, coworkers, your pastor, and don't forget all those tax protestors.

If tax protestors redirected their efforts into becoming like Farmer Bunce, this country would soon be restored into a Constitutional Republic with a very small, limited, and checked federal government. The costs to run that small government would be so insignificant that we could then easily justify to everyone the abolishment of the federal income tax system. 

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5. It's naive to suppose that IRS Special Agents don't routinely infiltrate tax protest organizations and engage in undercover operations at tax protest meetings. It goes with their job description, and many of them are very effective at it (see Internal Revenue Manual, Part 9, Chapter 4, Section 8, "Undercover Operations"). The IRS also has a long history of using sting operations against tax protestors, and it's remarkable how easily many tax protestors can be entrapped into doing something blatantly illegal (e.g. money laundering), based upon their own greed.

It's easy to demonstrate that many tax protest groups are infiltrated by IRS agents, or civilian informants on the IRS dole (the IRS refers to them as "stakeholders"), and this is especially true of the larger tax protest groups. The case files in federal cases filed against prominent tax protest groups are chock-full of testimony given by "confidential informants." The government's most useful confidential informants are those which work right in the offices of the tax protest groups. Because tax protest leaders are usually reckless and cavalier, confidential informants find it especially easy to infiltrate their organizations. They either volunteer to "help out" or they might even become a paid staff worker, all the while also being paid by the IRS to gather evidence, as well as the names of that tax protest group's clients.

There are few tax protest groups that ever escape IRS attention. If you affiliate yourself with a tax protest group it's very likely that you'll attract IRS attention to yourself.

6. The mental problems of prominent tax protest leaders are legendary; but since tax protest followers typically do nothing in the way of due diligence, they would have no way of knowing that their tax protest leader might be delusional, psychotic, or a pathological liar. According to the IRS the single largest tax protest group in modern history was The Pilot Connection Society (later changed to "The Liberty Foundation"), founded by Phillip Marsh (aka Milton Pilot). For a time I personally knew Phillip Marsh. Phil tried to hire me to paralegal for him. After investigating his organization and his methods I refused his offer. Phil's followers described him as "a bit eccentric, but a genius." I've known plenty of eccentrics and geniuses, and Phil was neither. Phil Marsh was just plain nuts, and he was greedy.

When Phillip Marsh was tried for the second time under a superseding indictment in federal district court (San Francisco), everyone in the courtroom figured out the first day he was insane, including the judge, the jury, the prosecution, his friends, his expert witnesses, and even his wife, Marlene. I had breakfast with Marlene during the trial and she raised the issue with me of Phil copping an insanity plea. It had become obvious to her that her husband had gone off the deep end. At the very least Phil was delusional and, in all likelihood, probably psychotic. Marlene was worried that Phil's bazaar demeanor in court was prejudicing the jury not only against Phil, but also against her, her daughter and son-in-law, and the other TPCS co-defendants. Phil's attorney, Bill Cohan, and I discussed over a meal what was apparent to everyone -- Phil was crazy, and the only right thing to do, for the sake of Phil's co-defendants, was to convince Phil to cop an insanity plea. For that good advice Phillip Marsh fired his attorney and proceeded pro se. Phil Marsh then proceeded to sink his own ship and take everyone else down with him.

Phil Marsh made millions of dollars and got thousands of people to follow him in his untax agenda. Phil had known for many months that his untax program wasn't working, but He continued lying to thousands of people, telling them, "No one has ever gotten into trouble for using our untax program. We have a 100% success rate." I confronted Phil Marsh with the proof that his program was anything but a 100% success and, in point of fact, his untax program was an utter failure (a number of TPCS clients had hired me to pull their bacon out of the fire). Others had tried to prove the same but Phil had always claimed, "We didn't cause their IRS problems. They had preexisting IRS problems." However, the evidence I laid before Phil included their IRS Individual Master File (IMF), and the IMF proved these were folks who had no "preexisting IRS problems." When I laid that proof in front of him he finally admitted to me that he knew his program often didn't work. I asked him how he could justify lying to all those people. "We're at war, Peter. Those are just the casualties of war."

The strongest evidence for the failure of Phillip Marsh's untax program came out in trial. Phil Marsh had received numerous letters from dissatisfied untax clients demanding their money back (referred to in the appellate court decision), and accusing him of fraud. He ignored each and every client letter.

Other prominent tax protest leaders also have a history of mental problems. Perhaps most legendary of them all is Irwin Schiff. Mr. Schiff claims to be "the grandfather of the tax protest movement." Indeed, he's been at it a long time and has authored numerous books on the subject. Some of his earlier works contained some interesting and perhaps even insightful research. Unfortunately, Irwin Schiff never developed any workable solutions, and most of his strategies were seriously misguided. For example, Irwin Schiff has long operated his businesses as Nevada corporations, of which he serves as President. Yet he argues that, even as a corporate president, he's not legally obligated to pay incomes taxes or file tax returns. Just as absurd Mr. Schiff holds that the IRS doesn't have jurisdiction over him (even though he's a corporate officer). Little wonder Mr. Schiff keeps winding up in jail.

Irwin Schiff is not alone when it comes to his lack of appreciation for the fact that a corporation is "a creature of the State." I've explained this legal principle to numerous tax protest leaders, but many of them just don't get it. They continue operating their organizations as corporations. In the case of We The People Foundation, not only are they organized as a corporation, We The People is also a 501c3. We The People founder Bob Schultz epitomizes the hypocrisy endemic in much of the tax protest movement. Schultz claims that, "there is NO legal or constitutional basis for the federal income tax," yet he goes to the IRS and asks their permission to not pay the income tax by securing a 501c3! Apparently Bob Schultz has little conviction for the legitimacy of his own position. I know I'm not the only one who sees through the mendacity of it all.

My attempt to debate Irwin Schiff, some years ago, during a panel discussion at a conference, proved to be a breathtaking experience in being led around in a line of circular reasoning and irrational argumentation. Mr. Schiff refused to acknowledge that a corporation is "a creature of the State," and that what the government creates the government may tax. This culminated with Schiff yelling and swearing at me. My comment to the audience, after Schiff stormed out of the room was, "I believe that what we have all just witnessed here are the rantings of a delusional man." The host of the conference later apologized and assured me, "This is the last time I'll ever invite Irwin Schiff to speak at any of my conferences."

On January 21, 2004 Mr. Schiff's Attorney, William Cohan, filed a brief in Mr. Schiff's case, supported by the expert testimony of psychiatric hospital psychiatrist, Dr. Luis Orgega, stating that his client has long suffered from a "mental defect or disease." Attorney William Cohan and Dr. Luis Orgega are merely affirming what I and numerous others have known for a long time -- "Mr. Schiff has exhibited symptoms of a chronic and severe delusional disorder." Just like Phillip Marsh, Irwin Schiff has lied hundreds of times by saying, "No one has ever gotten into trouble using my methods." Irwin Schiff appears to actually believe his own lies, which means he's a pathological liar.

7. By "win" I mean not only winning criminally but also civilly. FedEx pilot Vernice Kuglin was acquitted in her federal tax case when she was criminally indicted under IRC 7203, for willful failure to file tax returns. Since that time Vernie Kuglin has become the poster-child for the tax protest movement. But tax protest leaders fail to mention that while Vernie Kuglin, Lloyd Long, and several other tax protestors have beat the IRS criminally, they still always lose civilly. The IRS is garnishing practically all of Kuglin's $250,000 salary, and when Vernie retires from Federal Express in the near future the IRS will be garnishing her pension, as well. Vernice Kuglin managed to avoid jail, but considering she'll probably be destitute for years to come, it's hard to consider that much of a "win."

8. Few, if any, of the arguments that tax protestors use to justify nonpayment of federal taxes have any application to state tax laws. For example, the argument that the U.S. Constitution bars the imposition of direct federal taxation (such as an income tax) on individuals other than residents of Washington, D.C., Guam, Puerto Rico, and other U.S. territories is, even if it were true, irrelevant for state income tax purposes. Unless a state Constitution expressly prohibits a state income tax (e.g. Nevada, Texas, Tennessee, etc.) that state is free and unfettered to enact legislation imposing a state individual income tax. The preoccupation by tax protestors on the IRS, while usually ignoring their state income tax laws, is the result of their falsely believing that the federal Constitution serves as a prohibition against state income taxes. However, there is no such constitutional prohibition.

This serves to further demonstrate how woefully lacking most tax protestors are in legal acumen. There are states whose tax departments are actually far more aggressive in going after tax protestors than even the IRS (I put the California Franchise Tax Board on the short-list). I'd actually much prefer having to deal with the IRS than many state tax authorities. State Department Of Revenue due process violations are even more commonplace in some states than IRS due process violations, and it's easier for the states to get away with it. Moreover, losing against the IRS could mean incarceration in a federal prison "camp" (it's for good reason that Martha Stuart wasn't terribly frightened about going to "camp fed"). But losing against a State Department Of Revenue could result in going to a state penitentiary and getting locked up with some really bad dudes. Many states are far tougher on tax protestors than the feds are.

9. For many years the IRS applied the term "illegal tax protester" or "ITP" to anyone who wrote the IRS with any questions of any kind that indicated they were about to bail out of the income tax system (e.g. "Show me the law that says I have to pay income taxes"). However, under the Internal Revenue Service Restructuring and Reform Act of 1998 (Public Law 105-206) the IRS can no longer classify someone as an "illegal tax protester" or even just "tax protester." So the IRS has simply substituted the old term for a new designation, "non-filer." However, none of that restricts the terms that we apply to those who argue over the legalities of the income tax with the IRS. "Tax protester" is the term most commonly used and understood by the public, and so it is the term I have used throughout this article.

Tax protestors often resent being called tax protestors. They're often heard to say, "I'm not a tax protestor. I'm part of the tax honesty movement. I'm not protesting anything. I'm not opposed to the income tax laws. There's no reason I should protest the income tax because those laws don't apply to me. I just protest the IRS' illegal enforcement of those laws against me" (see It’s So Simple, It’s Ridiculous: Taxing times for 16th Amendment rebels). But, if they in any way communicate to the IRS, "The income tax laws don't apply to me," the IRS will immediately classify them as a non-filer and refer them to IRS CID (Criminal Investigation Division) for investigation and possible criminal prosecution. If you don't like the prospect of winding up on the IRS radar screen (i.e. becoming a "target of opportunity") don't write letters to the IRS.

If you're a non-taxpayer (as opposed to a tax protestor/nonfiler), be cautious what you say to whom about your tax status. Be prudent about expressing your opinions on the income tax system, especially at tax protest meetings. IRS agents routinely attend tax protest meetings, engaging in conversation (often for purposes of entrapment) and gathering names. It's not uncommon that I've seen suspicious characters in the parking lots of such meetings (and they're definitely not hotel employees), writing down license plate numbers.

Tax protest leaders often speak about "being at war with the tax system." But armed only with their irrational battle tactics it's not a war, it's a slaughter. Tax protest leaders are doing the equivalent of arming their troops with salad forks and ordering them, "Take that machine gun nest." They're not fighting a war that they have any reasonable expectation of ever winning. Furthermore, many of the tax protest leaders aren't willing to take the same risks they expect their followers to take. A large percentage of tax protest leaders actually pay income tax and file tax returns.

10. There are many things that working nontaxpayers do to unwittingly recharacterize their labors as "commercial business." For example, taking out an ad in the yellow pages often produces the unwelcome result of generating a letter of inquiry from your state business license office demanding to know why you haven't taken out a state business license. Working nontaxpayers avoid such problems by not engaging in "commercial" advertising, relying instead on word-of-mouth promotion and referrals.

11. Working for a "commericial business" will usually result in their sending you (and the IRS) a 1099, reporting what they paid you as "income." Most such commercial businesses are incorporated, and it would be imprudent of a nontaxpayer to think that they could work for a corporation and not have it reported. The filing of a 1099 is mandatory should that business wish to deduct what they paid you as a business expense from their own taxes, and the fact of the matter is they always want to deduct it. Non-commercial "residential" clients, on the other hand, cannot ordinarily deduct from their personal tax returns the kinds of expenses that commercial businesses can. For example, a business can deduct the cost of having their lawn mowed, whereas home law mowing is not deductible. As such, it would be rare that a residential client would even consider handing a worker a 1099.

12. My comments and observations here are just that, mere comments and observations, and nothing more. Nothing in this article should be construed as legal or tax advise or recommendation. Nor should anyone cease filing tax returns or paying income tax based upon anything contained herein. This article is strictly educational in nature and may not be relied upon for any form of legal advice or recommendation. If you require legal advice or recommendation regarding your personal tax liabilities, you may wish to consult with a tax professional.

13. Even the atheist Thomas Paine never referred to himself as a "soverign," at least not until after he fled America for France. Being a "rationalist" and an atheist (Paine became the author of the blasphemous book, Age Of Reason), it was only natural that Thomas Paine wished to assist the French Jacobins in the French Revolution. After it became ridiculed around the world as an "anarchistic bloodbath," Thomas Paine wrote The Rights Of Man in defense of the French Revolution. Paine is today given far more credit than he deserves for his influence in the American Revolution, because of his publication, Common Sense. The fact of the matter is that, only a relatively short time after publishing Common Sense, Paine become a pariah in the American Colonies, branded as a heretic, an infidel and a blasphemer. He had little choice but to flee America and seek refuge amongst fellow "rationalists." After the French Revolution he returned to America where he had few friends and many enemies. Even his closest former friends abandoned him (no one of that era wanted anything to do with atheists). Little wonder the "rationalist" academia of our own day lionize Paine.


Peter Kershaw is a paralegal and the founder of Heal Our Land Ministries. For more information on how to organize and operate as a free-church, contact:

Heal Our Land Ministries
PO Box 220
Bristol, Virginia 24203

 The Power To Tax Is The Power To Destroy, Part 1

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