Americans are obsessed with taxes.
Maybe it’s our libertarian streak. Maybe an anti-tax bias is in our DNA from the Boston Tea Party. In any event, no real American likes paying taxes.
And some people don’t like paying them even more than the rest of us. Like Donna Marie Kozak.
In Omaha Nebraska this week, Kozak was convicted of a number of tax crimes. She is a member of the “sovereign citizen group ‘Republic for the united States of America.’”
According to DOJ’s press release about the case,
since the late 1990s, Kozak has engaged in a long series of fraudulent schemes to obstruct the internal revenue laws. These included placing her property in sham trusts, establishing a sham charitable foundation, sending harassing correspondence to IRS employees and filing bogus tax returns, trust returns, private-foundation returns and other false documents with the IRS. In 2008, she filed a tax return based on fictitious income and tax withholdings on Form 1099-OID statements that claimed a refund of $660,000.
At trial, in addition to the questionable tax filings, she also seems to have filed a $19 million tax lien against a federal judge who oversaw the tax fraud prosecution against two of her friends. She also filed other multi-million dollar tax liens against the federal prosecutors who brought her friends’ case.
It seems Kozak did not have a legitimate claim to $19 million from that judge. And self-help to a fake tax lien is not how one should address a suspicion of prosecutorial overreach.
Like the folks who believe that the limits on maritime jurisdiction, explained by a talking salamander, holds the key to beating a federal criminal charge, the full tapestry of wacko tax fraud theories is a lovely thing to behold….
First, the Supreme Court encouraged a little bit of crazy here.
In Cheek v. United States, a man decided that he didn’t think wages were income. (how could they be?)
So, because he only had wages, and not income, he believed didn’t have to file tax returns. In his prosecution for willfully failing to file tax returns, he said that he didn’t fail to file willfully, because he didn’t think that wages were income.
Let’s step back for a minute. This belief that wages aren’t income is, generally, inaccurate. And it is objectively unreasonable.
But the Supreme Court, giving ammunition to every subsequent tax protestor, held that:
In this case, if Cheek asserted that he truly believed that the Internal Revenue Code did not purport to treat wages as income, and the jury believed him, the Government would not have carried its burden to prove willfulness, however unreasonable a court might deem such a belief.
It’s like a built-in reliance on expert advice defense, except you don’t have to actually have an expert!
Apres moi, le deluge.
And the flood did come.
Wesley Snipes may be the most famous example. Snipes beat felony tax fraud charges by claiming that he was the victim of bad tax advice and honestly believed he wasn’t obligated to pay taxes (though he lost on some misdemeanor failure to file charges and was sentenced to three years).
Of course, the argument there — unsuccessful for the government on the felony counts — was that Snipes didn’t actually believe the tax protestor position and that he knew it was “too good to be true.” But that’s what juries are for. Nonetheless, the case turned on what Snipes actually believed, and not on whether what he actually believed was bats**t crazy.
Probably the largest font of modern tax protestor advice comes from Lynne Merideth and her books “Vultures in Eagle’s Clothing: Lawfully Breaking Free from Ignorance Related Slavery” and “How to Cook a Vulture.” (she really likes that “Vulture” metaphor)
As a snapshot of the idea, Merideth “explains” that:
The Free Exercise of the Constitutionally guaranteed right to lawfully acquire property (earnings and other compensation) by lawfully contracting one’s own Labour to engage in lawful, innocent and harmless activities for lawful compensation cannot be (and therefore has not been) taxed for Revenue Purposes, and therefore, an individual who is only engaged in lawful, innocent and harmless activities is NOT subject toany “Income Tax” or any other Revenue Tax, and therefore is NOT a “taxpayer” as defined by law, and can therefore be properly and accurately described as a Non Taxpayer!
(emphasis of various kinds in the original)
These books are on sale in the most refined militia outfitters around the country, and in several sovereign lands within it.
Though Merideth made $6 million from the sale of her books, she was ultimately charged with various fraud offenses and sentenced to ten years in prison. At sentencing, the District Court described her theories about why wages aren’t income tax as “delusional.”
Though Merideth has other critics. See, for example, this Amazon review of one of her books:
Avoid this plagiaristic mess by a notorious “Patrioteer.” If only Lynne Meredith could research and write as well as she has marketed this atrocity… It’s bad enough to have freely looted from the works of Howard Freeman, Boston T. Party (Good-Bye April 15th!), and Irwin Schiff (The Greatest Con, etc.), but this Vulture simply doesn’t know “her” stuff! For example, her recommendation of using the IRC section 3402(n) W-4 Exempt tactic simply will not work, and has gotten many people in trouble. When this book lets you down, enjoy the busy signal you’ll hear when you try to call for some help. Lynne Meredith jumped on the untaxation bandwagon after many other people did the hard work, and didn’t even bother to get the facts right or quote vital court cases correctly.
It’s one thing to say tax laws don’t apply to you, but to steal someone else’s ideas that tax laws don’t apply to you?
That’s just not right.
Matt Kaiser is a partner at The Kaiser Law Firm PLLC, a boutique litigation firm in Washington DC, which handles government investigations, white-collar criminal cases, federal criminal appeals, and complex civil litigation. You can reach him by email at mattkaiser@thekaiserlawfirm, and you can follow him on Twitter: @mattkaiser.