Irwin Allen Schiff (February 23, 1928 – October 16, 2015) was an American tax protester known for writing and promoting literature in which he claimed the income tax in the United States is illegal and unconstitutional. Judges in several civil cases ruled in favor of the federal government and against Schiff. As a result of these judicial rulings, Schiff was serving a sentence of at least 13 years for tax crimes at the time of his death. The Federal Bureau of Prisons reported that Schiff died on October 16, 2015. Schiff was the father of businessman and former United States Senate candidate Peter Schiff.
- 1 Background
- 2 Arguments raised by Schiff
- 3 Convictions for 1974 and 1975 tax years
- 4 Convictions for 1980 through 1982 tax years
- 5 Civil tax problems for tax years 1979 through 1985
- 6 Case regarding The Federal Mafia
- 7 Convictions for 1997 through 2002 tax years
- 8 Convictions of Schiff's followers
- 9 Publications
- 10 See also
- 11 References
- 12 External links
Schiff was born to a Jewish family in New Haven, Connecticut. His parents were immigrants from Poland and his father worked as a carpenter. In 1950, Schiff attended the University of Connecticut where he obtained a B.S. with a double major in Accounting and Economics.
After college, Schiff was in the insurance brokerage business in Connecticut. In connection with his business, he was involved in a tax shelter in which he became the victim of a Ponzi scheme in which he lost money belonging to him and his clients. In 1968, he testified before the Senate Committee on Banking and Currency in opposition to the removal of gold backing from Federal Reserve Notes. In 1976, he published a book entitled The Biggest Con: How the Government is Fleecing You.
Arguments raised by Schiff
Among the arguments raised over the years by Schiff:
- That the Internal Revenue Service, in enforcing the income tax, seeks to impose a tax not authorized by the taxing clauses of the United States Constitution;
- That no statutory deficiency in Federal income tax can exist until an assessment has been made;
- The filing of income tax is voluntary, and "voluntary compliance" is a misleading phrase used by the IRS to mislead the public;
- That no tax assessment can be made unless a tax return has been voluntarily filed;
- That the United States Tax Court has no jurisdiction over him; and
- That the United States Tax Court is not a legal court, but is instead a part of the IRS.
These arguments were ruled invalid in Schiff v. Commissioner. Another argument made by Schiff on his web site is: "On the [Form] 1040 itself... you report 'zero' income regardless of how much you received in: wages, commissions, interest, alimony, capital gains or from operating a business. For tax purposes, 'income' only means corporate 'profit.' Therefore, no individual receives anything that is reportable as 'income'." This argument has been rejected by the lower courts, as well as the United States courts of appeal. See Cameron v. Internal Revenue Serv.; Stoewer v. Commissioner;Reinhart v. United States;Fink v. Commissioner;Flathers v. Commissioner;Schroeder v. Commissioner;Sherwood v. Commissioner; and Ho v. Commissioner.
Convictions for 1974 and 1975 tax years
Schiff had filed income tax returns through the tax year 1973. For years 1974 and 1975, however, he refused to disclose his income. Instead, he sent unsigned 1040 forms to the Internal Revenue Service with the title ("U.S. Individual Income Tax Return") changed to read "U.S. Individual Income Confession." Instead of disclosing income, he included assertions of various constitutional rights on the forms, claiming essentially that under the Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Thirteenth Amendments he would not be an "involuntary serf" of the U.S. government. Schiff contended that because Federal Reserve notes were not backed by gold, they were not "income" for purposes of the Federal income tax.
Schiff began conducting seminars on Federal income taxes in 1977. On April 12, 1978, Schiff appeared on the NBC television program The Tomorrow Show with host Tom Snyder, arguing his views on Federal income taxes. Six days after his appearance on The Tomorrow Show, Schiff was charged with willful failure to file tax returns for the years 1974 and 1975. The modified, unsigned 1974 and 1975 forms, with no income information on them, were deemed by the Internal Revenue Service not to be valid Federal income tax returns under 26 U.S.C. § 6012. During the resulting trial, a videotape of the television program was shown to the jury. Schiff was convicted on both counts and appealed his conviction to the United States Court of Appeals for the Second Circuit.
At the Court of Appeals, the admission of the videotape was ruled unduly prejudicial, the conviction was overturned, and the case was remanded for a new trial. He was convicted a second time for failure to file, and that conviction was affirmed.
Convictions for 1980 through 1982 tax years
In October 1985, Schiff was convicted of tax evasion with respect to his personal income taxes for years 1980, 1981, and 1982, and willful failure to file a corporate tax return for Irwin A. Schiff, Inc. (a company for which he served as president), and that conviction was affirmed the following year. Schiff was released from the Federal prison system in June 1993. Despite having spent four years in the system, he continued his tax protest related activities.
Civil tax problems for tax years 1979 through 1985
In June 2004, a Federal court ruled that Schiff was liable for over $2 million in taxes, penalties and interest for the years 1979 through 1985. In that case, Schiff's attorney had filed a brief claiming a diminished capacity defense, contending that Schiff had been diagnosed with a chronic, severe delusional disorder relating to his beliefs about the federal income tax system. That was characterized by some of his opponents as a claim that those beliefs were the product of a delusion or even insanity and that Schiff had willingly allowed his defense counsel to raise such an argument.
Schiff responded to these claims and stated that the diminished capacity defense was an attempt to prevent the judge from rendering a summary judgment and instead allow a jury trial. Schiff also asserted that this was different from an insanity defense. Schiff, in his statement on the matter, asserted that the judge erred in not putting this question to the jury and insisted that "(1) no one is required to pay income taxes; (2) the entire federal judiciary is involved in a monumental, criminal conspiracy to collect income taxes in violation of law." As of August 2015, Schiff's internet web site still included a claim that the U.S. federal income tax had been repealed in the 1950s and that U.S. officials were engaged in a conspiracy: "Since the income tax was repealed in 1954 when Congress adopted the 1954 Code, it is clear that for 50 years federal judges in conspiracy with U. S. Department of Injustice prosecutors have been illegally and criminally prosecuting people for crimes that do not exist in connection with a tax that nobody owes."
Case regarding The Federal Mafia
The Federal Mafia is a book written in prison by Schiff. In the book, Schiff contended that the income tax system and Internal Revenue Service were illegal. On August 9, 2004, the Ninth Circuit Court of Appeals found the book to be fraudulent and upheld an injunction issued by a U.S. District Court in Nevada under 26 U.S.C. § 7408 against Irwin Schiff and associates Cynthia Neun and Lawrence Cohen against the sale of this book by those persons. The prohibition does not extend to other sellers of the book.
The court rejected Schiff's contention on appeal that the First Amendment protects sales of the book, as the court found that the information it contains is fraudulent, as it advertised that it would teach buyers how to legally cease paying federal income taxes.
Schiff, Neun, and Cohen were barred under the injunction from selling or advertising material advocating nonpayment of tax, from preparing a tax return for others, and from otherwise providing assistance or encouragement to others in violating tax law. Schiff and his associates were additionally required to provide a copy of the injunction to each of their customers, post it on their website, and provide the government with a customer list.
Schiff and his associates responded by providing the book for free on their website.
Convictions for 1997 through 2002 tax years
On October 24, 2005, Schiff was convicted in the U.S. District Court in Las Vegas, Nevada, on multiple counts of filing false tax returns for the years 1997 through 2002, aiding and assisting in the preparation of false tax returns filed by other taxpayers, conspiring to defraud the United States, and (for his own income taxes for tax years 1979 through 1985) tax evasion, and he again began serving jail time.
Despite Schiff's age (he turned 78 years old on the day of sentencing), on February 24, 2006, Schiff was sentenced to 151 months (12 years and 7 months) in prison and was ordered to pay over $4.2 million in restitution to the Internal Revenue Service; Schiff was also sentenced to 12 additional months for contempt of court. On December 26, 2007, the United States Court of Appeals for the Ninth Circuit affirmed Schiff's convictions except for the criminal contempt convictions. The Court vacated the contempt convictions because of the failure of the trial court judge to file contempt orders under rule 42(b) of the Federal Rules of Criminal Procedure.
The Court of Appeals indicated that the trial judge could file the appropriate paperwork and re-sentence Schiff on the contempt convictions. On September 5, 2008, the trial judge re-sentenced Schiff to 11 months in prison in connection with the contempt of court, effectively lowering Schiff's overall original sentence by another month.
One of Schiff's co-defendants, Lawrence Cohen, was sentenced on February 3, 2006 to 33 months in prison and was ordered to pay $480,000 in restitution. On December 26, 2007, the United States Court of Appeals for the Ninth Circuit reversed Cohen's conviction because of the failure of the trial court to allow testimony from a psychiatrist regarding Cohen's mental state. The Court of Appeals remanded the Cohen case for a possible re-trial. On June 16, 2009, Cohen pleaded guilty to aiding and assisting in the filing of a false tax return. However, Cohen died on August 6, 2009, and his case was therefore dismissed.
On February 23, 2006, Cynthia Neun, another co-defendant, was sentenced to 68 months in prison and was ordered to pay over $1.1 million in restitution. Neun's conviction was affirmed by the United States Court of Appeals for the Ninth Circuit. According to the prosecutor's office, Neun sold materials encouraging people not to pay taxes, prepared false tax returns, and represented hundreds of taxpayers in dealings with the IRS where she promoted Schiff's arguments. She was required to submit to three years of supervision following her release, which occurred on December 28, 2010.
In this last case, Schiff's attorneys again asked that the court consider the claim that Schiff had a mental disorder relating to his beliefs about taxes. According to the prosecutor's office, the evidence at trial showed that Schiff had attempted to evade the payment of over $2 million in taxes from 1979 through 1985 and that he had used offshore bank accounts using multiple tax identification numbers and had attempted to hide assets in connection with his tax protester related activity.
Convictions of Schiff's followers
Other individuals who have been convicted of federal tax crimes after following Irwin Schiff include Warren J. Burdett; Christopher and Pamela Harrison; Scott D. Haynes; Kenneth Heath; Joseph Letscher; David Middleton; Robert L. Mosel; James C. Payne; David G. Pflum; and Steven A. Swan.
Schiff's books had combined sales of more than 250,000. Books written by Schiff include the following:
- Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes (1992) ISBN 0-930374-09-6
- The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax (1985) ISBN 0-930374-05-3
- How an Economy Grows and Why It Doesn't (1985) ISBN 0-930374-06-1
- The Social Security Swindle: How Anyone Can Drop Out (1984) ISBN 0-930374-04-5
- How Anyone Can Stop Paying Income Taxes (1982) ISBN 0-930374-03-7
- The Kingdom of Moltz (1980) ISBN 0-930374-02-9
- The Biggest Con: How the Government Is Fleecing You (1977) ISBN 0-930374-01-0
- Gattoni-Celli, Luca (October 2015). "Tax Protester Irwin Schiff Dies in Prison at 87". Tax Notes Today (2015 TNT 202-4).
- Inmate locator, Federal Bureau of Prisons, inmate # 08537-014, at .
- Hevesi, Dennis (October 19, 2015). "Irwin Schiff, Fervent Opponent of Federal Income Taxes, Dies at 87". New York Times.
- The American Conservative: "Dr. Doom Runs for Senate" By Michael Brendan Dougherty October 1, 2009
- Schiff v. Commissioner, 47 T.C.M. (CCH) 1706, T.C. Memo 1984-223, CCH Dec. 41,174(M) (1984), aff'd per curiam, 751 F.2d 116, 85-1 U.S. Tax Cas. (CCH) paragr. 9108 (2d Cir. 1984).
- Jason Zengerle, "Hell Nay, We Won't Pay," March 29, 2009, The New York Times, at .
- United States v. Schiff, 612 F.2d 73, 80-1 U.S. Tax Cas. (CCH) paragr. 9112 (2d Cir. 1979).
- Doubek, Madeleine (April 20, 1996). "Libertarian presidential hopefuls to debate". Daily Herald. via HighBeam Research. Retrieved February 25, 2014.
- Libertarian Presidential Candidates Debate, C-SPAN
- 63 T.C.M. (CCH) 2572, T.C. Memo 1992-183, CCH Dec. 48,108(M) (1992).
- Schiff, Irwin (2007). "What is Income?". paynoincometax.com (Schiff's webpage). Retrieved 2006-02-08.
- 593 F. Supp. 1540, 84-2 U.S. Tax Cas. (CCH) paragr. 9845 (N.D. Ind. 1984), aff'd, 773 F.2d 126, 85-2 U.S. Tax Cas. (CCH) paragr. 9661 (7th Cir. 1985).
- 84 T.C.M. (CCH) 13, T.C. Memo 2002-167, CCH Dec. 54,805(M) (2002).
- 2003-2 U.S. Tax Cas. (CCH) paragr. 50,658 (W.D. Tex. 2003).
- 85 T.C.M. (CCH) 976, T.C. Memo 2003-61, CCH Dec. 55,068(M) (2003).
- 85 T.C.M. (CCH) 969, T.C. Memo 2003-60, CCH Dec. 55,067(M) (2003).
- 84 T.C.M. (CCH) 220, T.C. Memo 2002-211, CCH Dec. 54,851(M) (2002), aff'd, 2003-1 U.S. Tax Cas. (CCH) paragr. 50,511 (9th Cir. 2003), cert. denied, 540 U.S. 1220 (2004).
- T.C. Memo 2005-268, CCH Dec. 56,200(M) (2005).
- T.C. Memo 2006-41, CCH Dec. 56,447(M) (2006).
- See 26 U.S.C. § 7203.
- United States v. Schiff, 647 F.2d 163 (2d Cir. 1981).
- See 26 U.S.C. § 7201.
- See United States v. Schiff, 801 F.2d 108 (2d Cir. 1986), cert. denied, 480 U.S. 945 (1987) and United States v. Schiff, 2003-2 U.S. Tax Cas. (CCH) paragr. 50,546 (D. Nev. 2003).
- Schiff, Irwin (2007). "http://www.paynoincometax.com/pdf/delusional_defense.pdf". paynoincometax.com (Schiff's webpage). External link in
- Schiff, Irwin (2007). "Pay no income tax- Home Page". paynoincometax.com (Schiff's webpage). Retrieved 2015-08-13.
- See generally United States v. Heath, opinion, May 19, 2008, case no. 05-81115, U.S. Court of Appeals for the Sixth Circuit.
- United States v. Schiff, 379 F.3d 621, 2004-2 U.S. Tax Cas. (CCH) paragr. 50,328 (9th Cir. 2004), cert. denied, 546 U.S. 812, 126 S. Ct. 334 (2005). The injunction relates to "specified conduct" subject to penalties under 26 U.S.C. § 6700 and 26 U.S.C. § 6701.
- See also footnote 1, United States v. Schiff, 2008-1 U.S. Tax Cas. (CCH) paragr. 50,111 (9th Cir. 2007), citing United States v. Schiff, 379 F.3d 621, 630 (9th Cir. 2004), cert. denied, 546 U.S. 812, 126 S. Ct. 334 (2005), regarding the Court's finding that the book The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes constituted "fraudulent commercial speech".
- United States Department of Justice press release regarding The Federal Mafia case
- Federal Mafia
- See docket in United States v. Schiff, case no. 2:04-cr-00119-KJD-LRL, U.S. District Court for the District of Nevada.
- 26 U.S.C. § 7206(1).
- 26 U.S.C. § 7206(2).
- 18 U.S.C. § 371, in this context, also known as a "Klein conspiracy."
- 26 U.S.C. § 7201.
- #548: 10-24-05 PROFESSIONAL TAX RESISTER IRWIN SCHIFF AND TWO ASSOCIATES CONVICTED IN LAS VEGAS TAX SCAM
- Las Vegas Now - Breaking News, Local News, Weather, Traffic, Streaming Video, Classifieds, Blogs - Convicted: Las Vegas Anti-Tax Advocate Irwin Schiff
- United States v. Schiff, 2008-1 U.S. Tax Cas. (CCH) paragr. 50,111 (9th Cir. 2007).
- "Tax rebel Irwin Schiff sentenced to 11 more months in prison," Sept. 5, 2008, Las Vegas Review-Journal, at .
- United States v. Cohen, 2008-1 U.S. Tax Cas. (CCH) paragr. 50,111 (9th Cir. 2007).
- Docket entry 582, June 16, 2009, United States v. Cohen, case no. 2:04-CR-00119, U.S. District Court for the District of Nevada.
- Docket entry 587, Aug. 17, 2009, United States v. Cohen, case no. 2:04-CR-00119, U.S. District Court for the District of Nevada.
- United States v. Neun, 2008-1 U.S. Tax Cas. (CCH) paragr. 50,111 (9th Cir. 2007).
- Register # 39011-048, Federal Bureau of Prisons, U.S. Dep't of Justice, at .
- Defendant Schiff's Objections to the Presentence Report, docket entry 373, Feb. 14, 2006, United States v. Schiff, case no. 2:04-cr-00119-KJD-LRL, U.S. District Court for the District of Nevada.
- United States v. Burdett, 962 F.2d 228 (2d Cir. 1992); Federal Bureau of Prisons inmate # 37866-053, released on August 13, 1993.
- Harrison v. Internal Revenue Serv. (In re Harrison), 91-1 U.S. Tax Cas. (CCH) paragr. 50,078 (Bankr. N.D. Ind. 1991); Christopher Harrison, Federal Bureau of Prisons inmate # 01338-027, released on October 31, 1984; Pamela Harrison, Federal Bureau of Prisons inmate # 01337-027, released on October 31, 1984.
- Two sets of convictions: for tax evasion in the 1998 case of United States v. Haynes, case no. 2:98-cr-00082-WFN-1, U.S. District Court for the Eastern District of Washington (Spokane Div.); and for failure to file or failure to pay tax in the 2010 case of United States v. Haynes, case no. 2:10-cr-00034-JLQ-2, U.S. District Court for the Eastern District of Washington (Spokane Div.); Federal Bureau of Prisons inmate # 09258-085, incarcerated at the United States Penitentiary at Atwater, California, released on May 16, 2013.
- United States v. Heath, 525 F.3d 451 (6th Cir. 2008); Federal Bureau of Prisons inmate # 40858-039, released on October 6, 2008.
- United States v. Letscher, 83 F. Supp. 2d 367 (S.D.N.Y. 1999); Federal Bureau of Prisons inmate # 30328-054, released on December 11, 1995.
- United States v. Middleton, 246 F.3d 825 (6th Cir. 2001); Federal Bureau of Prisons inmate # 53258-060, released on November 5, 2001.
- United States v. Mosel, 738 F.2d 157 (6th Cir. 1984) (per curiam); Federal Bureau of Prisons inmate # 60727-061, released on November 15, 1984.
- United States v. Payne, 978 F.2d 1177 (10th Cir. 1992), cert. denied, 508 U.S. 950, 113 S.Ct. 2441, 124 L.Ed.2d 659 (1993); Federal Bureau of Prisons inmate # 04491-091, released on December 11, 1992.
- United States v. Pflum, 2005-2 U.S. Tax Cas. (CCH) ¶50,603 (10th Cir. 2005) (not for pub.); Federal Bureau of Prisons inmate # 14685-031, released on September 15, 2009.
- United States v. Swan, case no. 1:03-cr-00036-PB, jury verdict, docket entry 118, Feb. 12, 2004, U.S. District Court for the District of New Hampshire; Federal Bureau of Prisons inmate # 00259-049, released on October 23, 2009.