From the February 2003 Idaho Observer:

Schiff Raided

Desperate to avoid a jury trial, feds raid tax honesty advocate, seize records, defense documents

LAS VEGAS -- The bookstore of tax honesty movement icon Irwin Schiff's was raided the morning of February 11, 2003. Some 25 armed IRS “special” agents served an unsigned search warrant on Schiff at Freedom Books on E. Sahara Ave. around 7 a.m. The agents seized files and documents and loaded them into a rented U-Haul trailer per the defective warrant. The warrant specified the seizure of all documents from 1991 to present which had anything to do with Schiff, his partner Cindy Neun, Freedom Books, and anything that may contain information leading to conclusions that he may be attempting to defraud the IRS by hiding “income.”

“Their actions today were totally illegal,” Schiff said after the special agents left. “According to IRS Code Section 7608, an IRS agent is only authorized to seize items subject to forfeiture under Subtitle E. My personal records are not subject to forfeiture under their own rules,” Schiff explained.

Schiff also cited how, under the same IRS code, the IRS agents were not authorized to carry firearms.

Apparently satisfied they had seized everything they desired to seize, the posse and its hired van full of documents left the scene by 3 p.m.

Schiff, 74, has been challenging the legality of the income tax for 30 years and is revered by many for his dedication to the cause of freedom. The raid has sent shockwaves through the national tax honesty movement. “It is shameful to have a government that would resort to these tactics in order to avoid public disclosure of its tax collection procedures,” said We the People Congress Chairman Bob Schultz. “They were suing him, and were in the discovery phase of the lawsuit. There is simply no justification for the government's actions today,” Schultz stated over the phone from his New York office.

“The IRS may have made a serious blunder by raiding Freedom Books at this juncture. The tax honesty movement, which has come a long way in the last few years, was in need of a new rallying point. I think the IRS just gave it to us,” commented Don Harkins of The Idaho Observer.

Curious timing

Schiff is currently in the discovery phase of defending himself against a civil action the IRS filed against him in Nevada District Federal Court. Schiff believes that his arguments are so compelling the IRS is doing everything in its power to avoid this case being heard in front of a jury.

The IRS claims Schiff owes the government $2.5 million in taxes and penalties from tax returns he filed under duress in 1991. Unable to collect, the IRS is suing Schiff for the money in a maneuver called, “reducing assessment to judgment.”

“The fact that they have to sue me civilly before they can collect is proof the IRS needs a judgment before its agents can collect income taxes from anyone,” Schiff explained.

Curiously, 1991 -- the year he filed tax returns for 1980-1982 under duress to prevent Judge Peter Dorsey from throwing him back in jail on a probation violation (a failed tactic as the judge threw him back in jail anyway) -- is the only year for which the IRS is seeking to collect taxes from Schiff. For 11 years he has been filing his “zero” tax returns and the IRS has never challenged them. “By law the government must challenge a taxpayer's return within three years. So the IRS has tacitly approved eight of my last 11 returns,” Schiff said.

According to Schiff, the IRS has a statute of limitations of 10 years to collect assessed taxes. “That's why they chose the 'reduce to judgment' approach -- they have 20 years to seek judgment,” Schiff explained.

On January 30-31, depositions were held in the courtroom of Federal Magistrate Leavitt in preparation for a trial. U.S. Department of Justice attorneys Henry Darmstadter and J. Patrick Jennings, who traveled from Washington, D.C., to Las Vegas to conduct the depositions in this case, represented the IRS. Schiff was representing himself.

The government had already indicated it intended to glean enough information from the depositions to move for summary judgment and avoid a jury trial. “The government was not confident enough to move for summary judgment after the depositions so it raided our bookstore, seized as many files as its agents could carry and took them away hoping to find something, anything, that will help the IRS avoid Irwin's case being heard in front of a jury,” said Neun.

Obstruction

The government, with the help of the judge, is doing everything in its power to avoid a jury trial, apparently sensing that Schiff holds the litigation key that could expose the IRS' criminal tax collection racket. Conversely, Schiff, wants a big, open, well-attended and well-reported jury trial and is doing everything in his power to accomplish that end.

Before depositions began the first day, Schiff cited Rule 30(b)(3) which provides that another record of the proceeding may be made and he had a video camera ready for that purpose. “I wanted an accurate record of the proceedings so that the government isn't tempted to alter the record in any way,” Schiff explained.

Darmstadter and Jennings objected, claiming that Schiff might, “publish for commercial purposes” his record, and that he should not be allowed to do that considering he has built a “cottage industry” with his propounding that the income tax is being imposed illegally in America.

Magistrate Leavitt stated that he would “reject” the rule and ordered Schiff to proceed without being allowed to make his own record. “Irwin asked Magistrate Leavitt if he would be putting the 'Order' in writing, and whether or not his 'Order' would be subject to appeal,” Neun explained.

Magistrate Leavitt reportedly, “snapped” and said, “I don't have time for this! I did this as a courtesy to you. I've got a settlement case waiting for me right now! I'm not writing an 'Order' for you.”

Schiff explained to the judge that before he arrived the U.S. attorneys had agreed to an audio recording as a compromise and asked that he allow an independent audio recording. “The U.S. attorneys strongly denied having offered that compromise,” Neun recalled. “They lied in unison and at the same volume and pitch! They have obviously 'practiced' this technique,” she added.

The bomb

“They are doing all this to disrupt my operation. I have spent $10,000 on advertising this week. We have ads scheduled to run during the Michael Reagan show and the Michael Savage show and we obviously need to have our doors open to earn that money back. They even seized my rolodex -- not because it was related to their lawsuit against me, but to disrupt my operation.”

Then Schiff dropped the bomb. He was going to wait until his new book came out but decided not to wait because it is tax season again and he felt that the American people should know: “The income tax was repealed in 1954,” he said -- “And you can quote me on that,” he added.

The 1939 tax code was replaced by a substantially revised code in 1954. Mandatory filing provisions were dropped and, Schiff explains, Congressional Record reveals that the code was revised so the tax would be “constitutional.” According to Schiff, the changes in 1954 effectively repealed the income tax because the only people subject to the tax are those who voluntarily file a tax return.

The plan

Schiff will immediately file a motion to get his records back. Many of those records are of no relevance to the case in the first place and others are necessary for preparation of his defense.

He is also considering filing a motion for Declaratory Judgment on Magistrate Leavitt's Rule 30 ruling. “By denying us the right to make an independent recording of the proceedings they are 'setting the stage' as far as I am concerned. By ignoring a federal rule of civil procedure, the 'judge' is, in essence, rewriting them. I think we must call them on every infraction. We must cry foul when they foul, or waive our rights to a fair and equitable trial,” Neun said.

Isn't it interesting that Schiff, an American citizen, wants a fair and open and public trial and a just verdict while the U.S. government, which claims to represent the people of the United States of America, wants an unfair trial that gets a ruling in its favor -- no matter what rules and laws are broken along the way.

Schiff can be contacted at (800) 829-6666, or visit his website at www.paynoincometax.com