Tuesday, June 17, 2003
Copyright © Las Vegas Review-Journal

TEMPORARY INJUNCTION: Ruling blocks tax protester

Judge bans distribution of 'The Federal Mafia'

Tax protester Irwin Schiff was prohibited Monday from distributing his book or other materials that tell people they don't have to pay federal income taxes.

U.S. District Court Judge Lloyd George issued a preliminary injunction against Schiff, two colleagues, and his company that prohibits them from distributing Schiff's book, "The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes," or circulating information that encourages or instructs people how to avoid paying income taxes.

Schiff said the judge's ruling is nonsense and that it tramples his constitutional right to free speech.

"What they did was take the First Amendment and throw it out the window," he said. "The government proved nothing. ... I didn't give anybody false information. If I did, the federal government would have arrested me years ago."

George's ruling states, "Far from containing merely commentary, information and expression of opinion regarding the legitimacy of the tax system, the book is, in part, a how-to manual directed to specific individuals seeking instructions, sample forms, and attachable affidavits to be used in the filing of false income tax returns and submission of false W-4s."

Regarding Schiff's constitutional right to free speech, the ruling states, "It is well settled that the First Amendment protects an individual's right to disagree with the law and to advocate the violation of a law. ... There is no protection, however, for speech or advocacy that is directed toward producing imminent lawless action."

The ruling states that the government presented evidence that Schiff's advice persuaded others to violate the law. The IRS identified income tax returns filed by about 3,100 of Schiff's customers who listed zero income in federal returns during the past three years.

Department of Justice attorney Evan Davis, who in March said Schiff "is running one of the largest tax scams in U.S. history," could not be reached for comment. George also could not be reached.

Schiff plans to appeal the ruling to the 9th U.S. Circuit Court of Appeals if he doesn't prevail at a jury trial he said he is entitled to when the Justice Department pursues a permanent injunction against him and colleagues Cynthia Neun and Lawrence Cohen.

Schiff said federal prosecutors didn't prove their case against him. They didn't call any of their own witnesses to testify against him, and they didn't cross-examine him or any of his witnesses, he said.

The witnesses testified that Schiff simply sold them a book, not a "scheme" or a "tax shelter" as George states in his ruling, Schiff said.

Joining Schiff in fighting the government's case were the American Civil Liberties Union of Nevada, the American Publishers Association, the American Book Sellers Association and the American Library Association.

ACLU counsel Allen Lichtenstein said the ruling is interesting because it bans Schiff and his colleagues from circulating Schiff's book but doesn't stop others from doing it on the Internet and elsewhere.

The Associated Press contributed to this report.