‘How Not To’ Book Taxes IRS

A federal lawsuit to ban a book that promotes income-tax evasion is generating debate on the 1st Amendment’s guarantee of free speech.

At issue is the conduct encouraged in the book “The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes” and Internal Revenue Service laws that prohibit advising the filing of false tax returns.

The book’s publisher and author, Irwin Schiff, admits that he has not voluntarily made federal income tax payments since 1973 and that he has been convicted twice of not filing tax returns.

He and two associates who also are targeted in the federal civil action -- Cynthia Neun and Lawrence N. Cohen -- now advise readers and clients to file returns but to claim no income.

“I’m the nation’s leading authority on income taxes,” Schiff told the court Friday, while serving as his own attorney. “Judges don’t know what the law is. Paying income taxes is by law voluntary.”

At the request of the Justice Department, U.S. District Judge Lloyd George last month issued a temporary restraining order barring the trio from promoting their plan.

After hearing more arguments Friday, he is weighing whether to order a preliminary injunction to halt promotion and sale of the book, first printed by Schiff’s company, Freedom Books, in 1990. A court ruling is expected in May.

The IRS says at least 3,100 people have used the precise language published in Schiff’s book to claim on their tax filings that they have zero income.

The government says based on those returns alone, $56 million in tax revenue was lost from 1999 to 2001. Many others may have adopted Schiff’s strategy without duplicating his language when filing their returns, the government said.

An IRS spokesman said Friday that laws prohibit disclosing whether any of the people who adopted Schiff’s tax advice are being pursued by the government on civil or criminal complaints.

The Justice Department complains that Schiff is “inciting others to imminently violate the law,” and that the conduct causes substantial revenue losses to the government and puts stress on the IRS’s auditing resources. The answer, it argues, is to ban the book and related materials.

“This is a rare situation, where the government tries to enjoin [anti-tax] advocacy,” said Beverly Hills tax lawyer Steve Toscher.

“It’s a big push by the Department of Justice and IRS to get out in front of these people who, in their judgment, are causing severe problems to the tax system.”

“I can’t think of a single example in recent years when a judge has banned a book,” said Beverley Becker of the American Library Assn.’s intellectual freedom office. “There’s an important distinction between writing about an activity and doing it. We hold people responsible for the actions they take, but they’re free to explore ideas.”

Books touting how to build bombs and make drugs are not banned, for instance, and even the book “Hit Man: A Technical Manual for Independent Contractors” was not banned. Its publisher admitted he intended to help criminals, and he was held liable for civil damages after a federal appellate court determined that the book “aided and abetted” a murderer in a triple homicide. The publisher took the book off the market.

But Schiff’s book is a different matter, argue some constitutional law experts, because it is based on his political philosophies, contains warnings that tax evasion can lead to prison and is not likely to immediately incite unlawful action.

“The existence of a specific IRS statute [prohibiting tax-evasion advice] could make a big difference here,” said Jonathan L. Entin, a law professor and 1st Amendment expert at Case Western Reserve University in Cleveland. “We’re talking about balancing the strong interest in free speech against the government’s strong interest in promoting compliance with tax laws.”

Erwin Chemerinsky, a constitutional law expert at USC, said a 1969 Supreme Court ruling, which held that a speaker can be punished only if he incites imminent illegal conduct, argues against banning Irwin’s book. “Here we have a situation where a person can read the book and reflect on it, rather than act on the exhortation with imminent passion.”

Indeed, two people who testified on Schiff’s behalf Friday said they decided, after reading his book, to study the IRS tax code and to declare no income.

“The reality is, people are allowed under the 1st Amendment to advocate that others break the law, so long as it doesn’t amount to incitement,” Chemerinsky said. “If the book is advocating illegal conduct -- tax fraud -- it’s still protected by the 1st Amendment.”

The ACLU of Nevada agrees, and it filed a brief in Schiff’s case in which it distanced itself from Schiff’s tax position but defended his right to publish it.

“No one could plausibly ... read ‘The Federal Mafia’ without coming away with an understanding that following up on Mr. Schiff’s ideas possibly or even probably would mire them in legal problems,” wrote Allen Lichtenstein, the ACLU’s general counsel here. “The point of the book ... is that, in Mr. Schiff’s view, the government is acting illegally.” Its core content is a political speech that is constitutionally protected, he added.

In defending his position, Schiff told the court: “I don’t sell a hair removal product. I sell ideas.”