Freedom Lawyers of America

SCHIFF FIGHTS I.R.S. RESTRICTIONS
Can a man be held in contempt of court and jailed for selling copies of
public records?
LINK: http://www.nytimes.com/2003/08/16/national/16TAX.html

Tax Protester Faces Justice Dept.
By DAVID CAY JOHNSTON
LAS VEGAS, Aug. 15 - Can a man be held in contempt of court and jailed for
selling copies of public records?

Irwin Schiff, the nation's best-known proponent of the idea that people are
not required to pay income taxes, has put that provocative question to
Lloyd D. George, a federal district judge who held a hearing here on
Thursday on a Justice Department request that Mr. Schiff be put behind bars
for civil contempt.

On June 16, Judge George issued an injunction ordering the 75-year-old Mr.
Schiff, who has twice gone to prison for tax offenses, to stop promoting
his "zero tax return," which he says allows anyone to legally list no
income and so pay no taxes. At least 5,100 such returns have been filed in
recent years, the Internal Revenue Service says, costing the government $51
million in taxes and tying up law enforcement resources needed to pursue
the filers.

Judge George also ordered Mr. Schiff to stop selling his $38 book, "The
Federal Mafia: How the Federal Government Illegally Imposes and Unlawfully
Collects Federal Income Taxes." Judge George found the book to be false
commercial speech that incites people to evade taxes, although, contrary to
Mr. Schiff's assertion that the book had now been banned, the court did not
prohibit its sale by people unconnected to him.

Five days later Mr. Schiff certified to the court that he was obeying the
injunction, which also required him to post it prominently on his Web site.

But the Justice Department says he has flouted the order, noting that he
continues to assert on that site that zero income tax returns are legal. In
addition, he provides only a link there to the injunction.

Among the Justice Department's other evidence is a $150 "Commemorative
Injunction Packet," which went on sale at his Web site after the order was
issued.

The packet includes a copy of Mr. Schiff's 2002 tax return, showing zero
income, and his statement to the I.R.S. explaining his theory that no
individual has income under federal law, which, he says, defines income as
corporate profit.

The packet consists of the chief documents from the case before Judge
George. For those not inclined to wade through Mr. Schiff's book, with its
miasma of theorizing and digressions, it offers a crisp zero-tax-return
distillation, written for the court by Evan Davis, a lawyer in the Justice
Department's tax division.

Since Mr. Schiff already owes millions of dollars in taxes, the government
says fining him would be insignificant and has asked that he be jailed
instead and that two associates of his, Cindy Neun and Larry Cohen, each be
fined $5,000 a day until they, too, comply with the injunction.

Though the government cites a variety of evidence, Mr. Schiff has tried to
place the focus of the case on the fact that his packet is made up of
public records.

"The government wants to jail me for selling documents you can walk into
the courthouse and buy copies of for 50 cents a page," he said after the
hearing on Thursday, surrounded by three dozen supporters he had pulled
together on a day's notice.

Told of Mr. Schiff's tactic, Prof. Eugene Volokh, who teaches First
Amendment courses at U.C.L.A. Law School, said the public-document argument
would not shield the defendant if he was inciting people to commit crimes.

"If indeed what Schiff is doing is illegal commercial advertising -
fraudulent commercial advertising - it doesn't matter if he fraudulently
advertises using the public record," Professor Volokh said. "If the issue
is incitement to commit a crime, it doesn't matter if he quotes from the
public record. The real question is whether the content of the speech is
protected, not so much the source."

Mr. Schiff routinely applies the word "criminal" to federal judges,
including Judge George. His lawyer, Michael Stein, a First Amendment
specialist, said jailing someone for selling public documents - or for
expressing views about federal judges, whatever the merits of those views -
would set a dangerous precedent.

"The most clearly protected speech is the public debate about what is
happening in our court system," said Mr. Stein, who also plans to appeal
the court order. "This injunction is very broad, so broad that it basically
prohibits Mr. Schiff from saying what he believes."

Mr. Stein said the Justice Department was not acting simply on the ground
that Mr. Schiff's zero tax idea is unprotected false commercial speech.
Rather, he said, Mr. Schiff "is being prohibited from saying anything about
the tax laws that is contrary to what the Justice Department says those
laws say."

A notice of appeal from the order prohibiting Mr. Schiff and those acting
in concert with him from selling "The Federal Mafia" has been filed with
the United States Court of Appeals for the Ninth Circuit, said Allen
Lichtenstein, general counsel of the American Civil Liberties Union's
Nevada chapter. That chapter, as well as the American Booksellers
Association, the American Publishers Association, the American Library
Association and the writers' group PEN, will join in asking the appeals
court to vacate the order, Mr. Lichtenstein said.

On Thursday, some of the dozens of people who had turned out in support of
Mr. Schiff chuckled at how he had used public records to continue his
assault on the legitimacy of the tax system.

"He's a real troublemaker, isn't he?" said one of them, who declined to
identify himself.

In interviews, many of those supporters described the federal government as
a criminal organization systematically destroying economic opportunity for
all but the elite and using the tax code to undermine what they called a
right to not have their labor taxed.

Mr. Schiff's appearance at the hearing, held in a dark-paneled courtroom,
brought seven bailiffs and two plainclothesmen, although the supporters
were all polite and orderly.

Judge George began the proceeding with an unusual address lasting nearly 20
minutes. He indicated that he had received letters from many people
denouncing him for the injunction and that some, in crude language,
characterized him as lawless.

He explained that as a trial court judge, he was bound by the decisions of
the Ninth Circuit and the Supreme Court, and that in finding that Mr.
Schiff's zero tax return amounted to tax evasion, he had been following the
precedents of those higher courts.

The hearing on Thursday had not been scheduled until Tuesday, and so,
because Mr. Stein said he had been hired only Wednesday night and needed
time to develop a defense, Judge George set a new hearing for Sept. 4.

Mr. Stein said he expected that his client would be jailed after that
hearing, a view that Mr. Schiff said he unhappily shared.