From the February 2002 Idaho Observer:

Schiff files $59 million counterclaim against U.S. government

Author/dissident cites lucid arguments, encourages others to sign onto suit

LAS VEGAS -- On February 7, 2001 Irwin Schiff, the author of many books on how the IRS illegally imposes and enforces the federal income tax, filed a $59,000,000 counterclaim lawsuit against the United States. Schiff stated that his counterclaim was based on 23 years in which the United States subjected him to, “Illegal arrests; illegal imprisonments; illegal parole and probation violations; abuse of process; malicious prosecution; the imposition and extraction of illegal fines and penalties; the illegal seizure of his property without court hearings of any kind, without court orders, without writs of garnishment or attachment, all in connection with a 'tax' that does not exist and which no law required Schiff to pay” as well as other deprivations of rights.

Schiff also stated in his counterclaim that the “Actions of the United States place it squarely within the Racketeering (RICO) statutes as contained in the U.S. Criminal Code, 18 U.S.C 1951 & 1961, and, without a doubt, establishes the United States government itself as the primary source of organized crime in the United States.”

Schiff's $59 million counterclaim was in response to a lawsuit filed against him on August 2, 2001, in which the United States seeks to reduce to judgment assessments it made against him for the years 1979-1985. The assessments were based on returns that Schiff was coerced into filing during the course of a probation hearing held on August 1, 1991. Schiff filed the returns (while indicating they were coerced and that he didn't believe the amounts shown on them), believing that they would prevent him from being held to have violated the terms of his probation. The judge held that they were not returns for that purpose, sent him back to jail anyway, and then the government proceeded to assess the taxes shown on those returns -- which, with interest and penalties, has now grown to the government's $2,276,244.78 claim.

It is significant to note that while Schiff has filed “zero” returns ever since and has not paid a penny of income taxes for all those intervening years, the government has never claimed that Schiff owes income taxes for any year subsequent to 1985.

Some of Schiff's affirmative defenses to the government's suit are: Estopple, constitutional and statutory violations, fraud, duress, unclean hands, and failure to state a claim upon which relief can be granted.

Schiff is the author of such books as “How Anyone Can Stop Paying Income Taxes,” “The Great Income Tax Hoax,” and “The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes.”

Schiff opened his 29-page Answer and Counterclaim to the government's complaint as follows:

Since exhaustive research on the part of Defendant/plaintiff and others revealed that the payment of income taxes was, by law, voluntary, the federal government fraudulently and maliciously branded individuals who understood the truth about the federal income taxes, “illegal tax protestors,” and illegally persecuted them in order to mislead and intimidate the rest of the population into paying a tax that didn't exist. Numerous knowledgeable, patriotic, and loyal Americans were thus illegally persecuted and financially destroyed so the government could perpetuate the myth involving the federal income tax. It is to such people that Schiff dedicates his prosecution of this case, and invites all Americans who have suffered at the hands of the federal government in connection with its illegal enforcement of the income tax to join as counterclaimants in this action.

In reality, it has been the federal government's destructive and illegal enforcement of the income tax that has destroyed thousands of American businesses, led to America's vanishing industrial base and to its projected $500,000,000,000 trade deficit for 2003. Where once all of the products Americans used were made in America, today one is now hard pressed to find anything made in America. Apparently the federal government thought that Chief Justice John Marshall was kidding when he said in McCulloch v. Maryland, “The power to tax involves the power to destroy.” The sorry state of the American economy in contrast to the economic powerhouse it once was is tragic confirmation of John Marshall's prophetic admonition.

In demanding a jury trial Schiff stated:

A trial is an attempt to uncover the truth in the litigation before the court. However the last thing this Court wants uncovered is the truth, since it can only reveal that the federal government has, with the help of its courts, been illegally extracting income taxes from the American public. Therefore Schiff's principal adversary in this litigation will be the Court itself, with the government's lawyers playing only a minor and supporting role. Defendant/Plaintiff has been involved in too many federal tax trials and appeals to expect (as shown in Exhibit AA) any other kind of treatment from this Court. In actuality, this “trial” will be conducted in something more akin to a Star Chamber than a Court of Law - and it would be the height of hypocrisy for this Court to pretend otherwise.

Actually all trials involving federal income taxes should be held in State courts and vise versa, since how can a litigant get justice in a court where the judge, himself, is in the employ of his adversary? Besides, this Court has already revealed its partiality toward the government when it denied Schiff's Motion for a More Definite Statement, which would have required the government to specifically identify “the laws” that the government claims that Schiff violated. How could any objective court have denied such a reasonable request?

In addition, as the court observed in Lord v. Kelly, 240 F. Supp. 167, 169 (1965)

“And a judge who knows the score is aware that every time his decisions offend the Internal Revenue Service he is inviting a close inspection of his own returns. But I suppose that no one familiar with this Court believes that intimidation, direct or indirect, is effective.”

In line with this Court's observation, remember what happened to Nevada District Court Judge Harry Claiborne. He was about the only Federal Judge in the Country who didn't let the IRS get away with murder in his courtroom. And what did the federal government do about it? They removed him from the bench by charging and convicting him of income tax evasion. Had Judge Claiborne been more cooperative and accommodating to the Justice Department in tax litigation, the Justice Department would not have cared one iota what Judge Claiborne reported or didn't report on his income tax returns.

There is ample evidence that the federal judiciary is primarily interested in protecting the government's revenue, rather than upholding the Constitution and protecting the rights of Americans. For example, in U.S. v. Carlson, 617 F2d. 518, 520 both the prosecutor and the Court agreed that if Carlson had filed a “truthful return” instead of the 5th Amendment return he filed, he “could have been prosecuted under 26 U.S.C. 7205.” The Court stated, “We are thus confronted with the collusion of two critical interests; the privilege against self-incrimination, and the need for public revenue.(and the).urgency of the public interest in raising revenue through self-reporting weighs heavily against affording the privilege to Carlson.” Therefore the court concluded, “Carlson failed to assert the privilege in good faith,” even though he obviously had. In addition, Carlson had raised his “right” not to be a witness against himself, as filing a tax return would compel him to do (See Exhibit N). He did not merely “assert” a “privilege” as the court falsely claimed. In this manner, the Court egregiously perverted a “right” to a “privilege” and then concluded that Carlson was entitled to neither, because it “collided” with the government's need for revenue.

Buck v. U.S., 967 F.2d. 1060 involved an appeal of a district court's award of a summary judgment to the government in connection with the imposition of a frivolous penalty by the IRS. The Bucks had filed a tax return in which they reported and paid the amount of taxes shown on their 1040, but they refused to sign the jurat under penalty of perjury, because they did not believe the amount shown on their return constituted “income” within the meaning of the law. They claimed that the 1st, 4th, and 5th Amendments protected them from having to swear that something was true, which they did not believe was true. Whether their return warranted a “frivolous” penalty was an obvious issue of fact for a jury to decide. Realizing that no American jury would ever hold that the government could compel Americans to swear to something they did not believe was true, the Court took it upon itself to decide the issue, and sustained the IRS penalty -- which had been imposed without hearings of any kind. On appeal, the Appellate Court sustained the decision of the trial court and held that, “The maintenance of a functional federal tax system is a sufficiently important governmental interest to justify incidental regulation of first Amendment rights.” Does the First Amendment read, “Congress shall make no law.abridging the freedom of speech, except that incidental abridgments are permitted even if made by lower court, federal judges?” The Appeals Court also fined the Bucks an additional $1,500 for filing a “frivolous appeal” -- even though their appeal was totally justified. So the courts compelled the Bucks to pay $2,000 in penalties, when it is clear that no American jury would have ruled against them and sustained the original $500 “frivolous” penalty. Such is the shameless duplicity of the federal judiciary when it comes to protecting the federal government's lawless enforcement of the income tax.

In addition, the fact that federal judges can themselves be prosecuted for tax evasion and have all their personal and financial transactions scrutinized by the IRS, has obviously robbed the American public of having an independent and supposedly incorruptible federal judiciary as envisioned by our Founding Fathers. In order to make the federal judiciary independent and free from political and economic pressure, the Constitution provided that federal judges were to be appointed for life (subject to good behavior) and their “compensation.not. diminished during their continuance in office.” However, how can the Nation have an “independent” federal judiciary when federal judges can be subject to having all their personal and business transactions scrutinized by the executive branch of government (using the IRS as its tool), to make certain that all their expenditures, transactions and receipts truthfully and accurately reflect what they have sworn to on a 1040? Thus it is obvious that in matters involving income taxes, an independent and unbiased federal judiciary does not exist.

In view of all of the above, Schiff demands, in conformity with the 7th Amendment to the United States Constitution, that a jury of 12 Americans be convened to hear this case. Certainly a federal judge, who is employed by the Plaintiff; whose salary is derived from the very funds being extorted from the American public by the United States, and whose own income tax return is subject to audit and scrutiny by the IRS, can hardly be relied upon to have the objectivity and impartiality required of a judge, as that term is generally understood. Therefore, by all of the principles of law, equity and common sense, no federal judge can be allowed to make a final determination of the issues in this case.

For more information on the suit or books by Irwin Schiff, contact Freedom Books at: 702-385-6920;

web: www.paynoincometax.com