|This article is outdated. (November 2010)|
Joseph Ronald Banister is a former special agent of the Criminal Investigation Division of the Internal Revenue Service (IRS) and IRS whistleblower. Banister resigned from the IRS and later appeared on the television program "60 Minutes II" challenging the conduct of the IRS concerning legal issues with taxation. Banister's books and other material challenge the legality of some aspects of the income tax.
The Banister/Thompson case
In 2004, Banister was charged with one count of conspiracy to defraud the United States and various counts of willfully aiding, assisting counseling and procuring the filing of a false amended income tax return in connection with his alleged assistance of a client, Walter Allen Thompson. Thompson owned and operated Cencal, an aviation and flight bag manufacturing business. Cencal employed a number of hourly wage workers who were predominantly seamstresses, production workers and office workers. In July 2000, Thompson removed all of the employees from the taxpayer rolls by no longer withholding employment taxes from wages and salaries, by not filing Forms 941, and by not providing employees or the IRS with annual wage or other income statements, Forms W-2 or 1099.
Thompson was charged numerous tax-related offenses. On January 28, 2005, he was found guilty of two counts of knowingly filing false claims against the United States under 18 U.S.C. § 287, ten counts of willful failure to collect and turn over taxes under 26 U.S.C. § 7202, and one count of willfully filing a false income tax return under 26 U.S.C. § 7206. Thompson was acquitted on one count of conspiracy to defraud the United States under 18 U.S.C. § 371. Thompson was sentenced to serve 72 months in prison and was fined $7,500. The case against Banister continued, and Banister was eventually acquitted of the charges against him.
Revocation of CPA license and disbarment from practice before the IRS
The web site for the California Board of Accountancy notes that in December 2003, the U.S. Department of the Treasury ordered Banister disbarred from practice before the Internal Revenue Service (IRS), and that the disbarment was finalized in June 2004. The California Board of Accountancy also states:
- On December 24, 2003, a decision in United States Department of Treasury Complaint No. 2003-2, Director, Office of Professional Responsibility v. Joseph R. Banister, ordered Mr. Banister disbarred from practice before the Internal Revenue Service (IRS). Mr. Banister appealed the decision. In a June 25, 2004, decision, the Department of Treasury denied Mr. Banister's appeal and adopted as its final agency action the underlying decision disbarring Mr. Banister from practice before the IRS.
- The Department of Treasury found that Mr. Banister provided erroneous advice to taxpayers, including improperly advising them that tax returns were not required because IRS Code sections 861 through 856 define "source of income" in a manner that excluded the income of United States citizens residing in the United States from United States tax.
The revocation of Banister's California CPA license was affirmed by the Court of Appeals of California.
IRS investigation of alleged abusive tax scheme
The Internal Revenue Service is investigating Joseph Banister "to determine whether Banister promotes abusive tax schemes that would subject him to penalties under 26 U.S.C. § 6700 or subject him to injunction under 26 U.S.C. § 7408," and has issued a summons to an attorney named Robert Bernhoft in connection with the investigation.
Other personal tax problems
On August 27, 2008, the United States Tax Court ruled that Banister was liable for federal income taxes and penalties for failure to file his 2002 federal income tax return and report, as income, $23,000 in a distribution from a retirement plan and other income. Banister appealed, and the United States Court of Appeals ruled against him. In a later case, the Internal Revenue Service determined that for tax years 2003 through 2006, Banister had tax deficiencies of $179,786.00, plus section 6651(a)(2) penalties for failure to timely pay of $44,946.50, plus section 6651(f) penalties for fraudulent failure to file of $130,344.86, plus penalties of $6,022.84 for failure to timely pay installments of estimated income tax. In that case, the Tax Court ruled that Banister was liable for a penalty of $25,000 under Internal Revenue Code section 6673(a)(1), for engaging in frivolous litigation.
- 18 U.S.C. § 371.
- 26 U.S.C. § 7206(2).
- Financial & Tax Fraud Associates, Inc. "Quatlosers Hall of Shame - Joe Banister". Financial & Tax Fraud Associates, Inc. Retrieved 5 October 2013.
- Verdict, Jan. 28, 2005, entry 59, United States v. Thompson, case no. 2:04-cr-00435-WBS, U.S. District Court for the Eastern District of California (Sacramento Division).
- Walter Allen Thompson is incarcerated at the Federal Correctional Institution at Lompoc, California, and is scheduled for release on February 8, 2010. Prisoner no. 15089-097, Federal Bureau of Prisons, United States Department of Justice, at .
- Verdict, June 23, 2005, entered on docket on June 24, 2005 as entry 154, United States v. Banister, case no. 2:04-cr-00435-WBS, U.S. District Court for the Eastern District of California (Sacramento Division).
- California Board of Accountancy, at .
- Disbarment of an individual with respect to authorization to practice before the Internal Revenue Service is a procedure under 31 C.F.R. sec. 10.60 et seq.
- California Board of Accountancy, at .
- Banister v. California Board of Accountancy, No. C062435 (Sept. 21, 2010), at .
- Petition, June 13, 2008, docket entry 1, paragr. 6, United States v. Robert Bernhoft, case no. 2:08-cv-00515-RTR, United States District Court for the Eastern District of Wisconsin.
- Banister v. Commissioner, T.C. Memo 2008-201, CCH Dec. 57,522(M), docket no. 1356-06 (Aug. 27, 2008).
- Banister v. Commissioner, Memorandum Decision, U.S. Court of Appeals for the Ninth Circuit, March 4, 2011.
- Banister v. Commissioner, T.C. Memo 2015-10 (2015).