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RESPONSE TO EVAN J. DAVIS’ LETTER OF JULY 1, 2003
A Brazen Assault on the 1st Amendment

To:  Evan J. Davis                                     July 8, 2003
Civil Trial Section, Central Region
P.O. Box 7238
Ben Franklin Station
Washington, D. C. 20001

Re: United States v. Schiff, et al (No. CV-S-03-0281-LDG-RJJ)
Your letter of July 1, 2003

Dear Mr. Davis:

             I will attempt to answer all of the issues raised in your letter of the above date.  First of all, central to the government’s claim in seeking the Injunction at issue was its claim that defendants have organized and “sell a plan or arrangement and makes in connection with organizing or selling the plan or arrangement, a statement regarding the excludability of income or securing of other tax benefits that the person knows or has reason to know is false or fraudulent as to any matter.”   (Paragraphs 36, 37, and 38 of the government’s  “Complaint for Permanent Injunction and Other Relief.”)  Central to this alleged scheme was your claim that we charge money (Pages 6 & 7) for such a “plan or arrangement.”   Indeed the Court’s order was based on its claim (Page 19, lines 7-8 of the Court’s Order) that “The first Amendment does not protect commercial speech which promotes an illegal activity or transaction,” and that the defendants “representations were made in connection with (their) efforts to promote and sell for profit [the plan] and thus constitute commercial speech” (Quoting White, 869 F.2d at 512)

However, nobody need buy any book or other information from me to discover why no American is legally required to pay income taxes.  All anybody has to do to understand why no American is legally required to pay income taxes is:  1) read my Motion For Reconsideration, 2) listen to the 3 ½ preliminary injunction hearing, and 3) check out my 2002 income tax return that I filed on June 17, 2003.  All this information is posted free of charge on my website.

In compliance with the Court’s order we are not selling  “The Federal Mafia” which is the book the Court examined and focused on, because it was the only book of mine which included the infamous “zero” return, which you claimed was a “road map for tax evasion.”  I don’t believe that it was the Court’s intention to ban “How Anyone Can Stop Paying Income Taxes” which was a 1982 best seller, has sold over 200,000 copies and was for a time distributed by Simon & Schuster, but only after it passed “legal muster.”  In addition “The Great Income Tax Hoax” has been in publication since 1985 and has sold over 30,000 copies.  It is in many law libraries and lawyers have told me that it is the most comprehensive book on the history and development of the income taxes ever written.   It devotes two whole chapters to the “constitutional meaning” of  “income” – which, of course, is the only type of “income” that is taxable under the 1954 Code, as established in House Report No 1337 and Senate Report No 1662.   The book devotes an entire chapter to both the Pollock and Brushaber decisions (the two most important decisions bearing on Congress’ power to tax “income”) as well as analyzing practically every important Supreme Court decision involving federal taxation handed down in the 18th and 19th Centuries and every important Supreme Court decision surrounding the meaning of the 16th Amendment, as well as providing illuminating congressional debates regarding its passage. Its Appendix includes (in their entirety) every direct taxing statute – involving apportionment – ever passed by Congress; the Revenue Acts of 1798, 1813, and 1861. The Revenue Act of 1861 contains the first income tax statute ever passed by Congress: it occupies four pages of that Act.  To my knowledge, this is the only book in the law literature that reproduces all three of these revenue statutes.  Is it your understanding that Judge George wants to deny all this information to the American public? 

As far as other provisions of the Court’s Preliminary Injunction is concerned; none of the defendant’s has prepared anybody’s tax return or represented anybody at the IRS.  Neither has Freedom Books sold any of its updated material – so both the IRS and the Justice Department will have a freer hand in extorting income taxes from the American public, since it will be collecting the tax based on using the term “income” in its “ordinary sense” and not using the term in its “constitutional sense” as dictated by Congress when it adopted the 1954 Code.

As far as your statement that my website “contains numerous false statements that suggest that the zero-income tax return and the ‘exempt’ Form W-4 strategies are legal and will successfully insulate your customers from owing or paying income taxes” is itself a totally false and fraudulent statement.   For one thing, I believe that filing a “zero” return is legal.  I have filed “zero” returns myself for the last 14 years (including 2002) and on that basis, I have not paid a dime income taxes for any of those years – and the government has not done a thing about it.  So, obviously, the  “zero” return has indeed “insulated me” from having to pay income taxes.  And if it has “insulated” me in this fashion, why shouldn’t it “insulate” others?  If it didn’t  “insulate” the public in this manner, the government would not have mounted this brazen assault on the 1st Amendment to try to stop such information from reaching the public.  I extolled the virtues of  “The Federal Mafia,” in thousands of radio shows and explained how it allowed people to avoid paying the income taxes even allowing them to get refunds for any income taxes they already paid  – and thousands of people received such refunds. I even supplied two such refund checks to you and Judge George (one for $41,000 and another for $60,000) together with affidavits certifying that they were received in response to “zero” returns.    I have made such claims and sent out that book ever since 1992.  If my claims were false and if that book were sold on that basis of fraudulent claims, why didn’t the Justice Department prosecute me for mail fraud, wire fraud, consumer fraud or for violating 26 USC 7206, 18 USC 1001 or for committing tax evasion? 

In any case, I have not sold that book since the Court awarded the government its Restraining Order on March 19th, 2003.  If any such references appear on my web site they are gratuitous opinions of mine and are not tied to the sale of any “plan or arrangement.”  Instead of selling the information that allows all Americans to stop paying income taxes, I am now giving the information away.  It is available free on my website.  My website contains the information that “income,” as used in the 1954 Code, means “income” in the “constitutional sense,” (a form of “income” that no American receives), so no one needs to buy a book of mine to understand why they don’t have to pay income taxes.  Of course the government misleads the public into thinking that “income,” for tax purposes, means  “income” received in the “ordinary sense” – which, of course, is not true.   It is in this manner that the government is able to extort income taxes from the American public.

As for your claim regarding my alleged W-4  “strategies”: I have no such “strategies.”  I sell the Internal Revenue Code which reveals in Section 3402(n) that all employees have a right to claim “exempt,” from withholding if they simply provide their employers with a statement (as provided on a W-4) that they incurred no income tax liability last year and anticipate no such liability this year.  I submit to you that there is no statute making anyone “liable” for income taxes.  I offered at the preliminary hearing to withdraw all my opposition to the preliminary injunction if you would just identify the law that made people “liable” for income taxes and you refused to do so, even though I handed you an Internal Revenue Code to make your task easier. Also, all three of my witnesses testified that based upon their independent research they could find no law making them “liable” for income taxes, and you didn’t attempt to impeach their testimony in any way.

In any case, the public does not have to buy any information from me to discover they have a right to stop the withholding of income taxes based on an “exempt” W-4: they can learn that from the Internal Revenue Code itself.  In addition there is an extensive description in my Motion for Reconsideration as to why I believe all Americans can claim “exempt” from income taxes for a variety of reasons – one of them being that withholding taxes are not even income taxes.  So nobody has to buy such information from me, they can get that information for free just by reading my Motion to Reconsider, or they can get the information right out of the Internal Revenue Code itself.  So none of this information is tied into any “plan, arrangement, or scheme” being marketed by Freedom Books.  And since all this W-4 information is being given away free (in my Motion to Reconsider) how can it be classified as commercial speech?

As far as my lecture at Toledo Law School is concerned, I offered to pay $50,000 to anyone who would produce (at any one of the three lectures I gave at Toledo University, one of them being at the Law School) any law requiring Americans to pay income taxes.  My offer was highly publicized by the campus organization that sponsored my lectures.  They published announcements in the campus newspaper and posted hundreds of flyers around the campus.  Yet no one came forward to claim the $50,000 - even though I made the offer at the Law School itself.   Therefore, why shouldn’t that episode “convince even the most skeptical that there is no law requiring anyone to pay income ‘taxes’”? But again, even if such a statement appears on my web site, it is not tied to the sale of any  “plan, arrangement, or scheme.”  As I have already explained, the public is free to download my Motion For Reconsideration and my 2002 tax return and discover, free of charge, why they receive no “income” that is taxable under present law.   So what difference does it make what conclusion I suggest might be drawn from my experience at the Toledo Law School?   

As far as your taking issue with the  “The Federal Mafia” stating “It will prove to you that the ‘Federal income tax’ represents the greatest hoax and organized program of extortion ever conceived by man”- that, of course, is a true statement.  The government is extracting an income tax from over 100 million people on income they never received.  Wouldn’t you say that, that qualifies as “the greatest hoax and organized program of extortion ever conceived by man.”?  In addition, check out the reviews of that book at www.amazon.com.  At my preliminary hearing, I asked you to produce one excerpt from my books that promoted tax evasion and you couldn’t do it.  As for “tax lawyers, C.P.A’s, HR Block and other tax preparers, ” how many advise their clients that in filing tax returns they consent to the government using all such tax return information against them, in all manner of civil and criminal litigation?   And how many “tax lawyers, C.P.A’s etc. etc.” advise their clients that they only have to pay income taxes on “income” received in a “constitutional sense”  - which means they don’ t have to pay any income taxes at all?   And of course, the government doesn’t want the public to know that they don’t have to pay income taxes on a variety of grounds.  Nor does the government want the public to know how they can effectively fight the IRS’s illegal attempts to extort income taxes from them – which is exactly the why the government is seeking to ban my book and other correct and truthful information I provide to the public regarding income taxes – an alleged tax that nobody (except me) understands anyway.

Regarding the article that appeared about me in the Las Vegas Chamber of Commerce bulletin, which you state “contains false and misleading statements about your services and the federal tax system.”  First of all, I disagree that their article contains any false statements, but how is that article tied to my “services” or the “marketing of any plan or arrangement” involving income taxes?     What services of mine does anybody need in order to understand they receive no “income” in a “constitutional sense”? And if they receive no “income” in a “constitutional sense,” they don’t owe income taxes on any basis - and they get this information “for free” on my website.  So why would anybody buy a “plan or arrangement” from me to avoid paying a tax on “income” they know they never received?  That makes no sense at all.

You then apparently indicate objections to the “testimonials and refund checks” shown on my website. These were unsolicited testimonials sent to me from people who used my information and it worked for them.  But these testimonials are not on my website to “market” a “plan arrangement or scheme” since I no longer sell the book that generated these testimonials and refund checks.   However I still have a right to use my website (without selling the information) to expose the criminal manner by which the government enforces the income tax and the obvious reason why the government is willing to throw the 1st Amendment out the window in order to illegally prevent me from providing this information to the American public.

In your next paragraph you again refer to “The Federal Mafia,” a book I no longer sell. So what I might say about it (I think it’s a great book.  I should have gotten the Pulitzer prize for writing it, since it exposes the greatest scam ever conceived by man – especially the Chapter on how the IRS illegally seizes property, which is why it is selling for up to $300 on E-bay ) can not be interpreted as being commercial speech.   You again repeat (Page 2, 2nd paragraph), “Your website contains other false commercial speech advertising for books and products which you are enjoined from selling.” Since I no longer sell the books and supplemental material that I believe I am enjoined from selling, what I might say about a book and tapes I no longer sell is really immaterial, and can not be regarded as “commercial speech” on any basis – unless it is the court’s intention to enjoin me from all speech, whether its “commercial” or not.

My website contains a number of archived radio shows to which I do not have the time to listen to.  To the extent they make claims regarding material I no longer sell, such speech can not be regarded as “commercial.”  My radio shows also contain a good deal of economic and social commentary and I am not about to listen to them to see what I said or didn’t say.  The fact is, if I do not sell the enjoined material they speak about then such speech on my radio show tapes cannot constitute “commercial speech.”

In regard to your claim that the statement on my web site which states “legally stop paying income taxes!” and that “none of your theories or methods permit your clients to legally stop paying income taxes, so this statement is false” is itself a false and fraudulent statement. My methods have allowed me to stop paying income taxes for 14 years.  Three of my witnesses at trial testified that they no longer pay income taxes as a result of my “methods” – and you did not challenge their testimony in any way.  The testimonials and refund checks posted on my web site are proof that my methods do work.  In your Motion for a Preliminary Injunction you couldn’t identify one person (from the thousands you claim use the “zero” return) who were ever criminally prosecuted for having done so.  But, again, this is immaterial, since I no longer sell the book that allowed them to do this; so such a claim no longer qualifies as “commercial speech.”  Incidentally the information on my website which explains why no one has to pay income taxes because no one receives “income” in a “constitutional sense” - information which I give the public free of charge – allows them to avoid paying income taxes on a very simple basis.  Are you saying that despite House Report No 1337 and Senate Report No 1662 people have to pay income taxes on income received in the “ordinary sense”? What products do people have to purchase from me in order to avoid paying income taxes once they understand they have no income in a “constitutional sense”?  What my books and tapes now do is to merely reveal the elaborate and criminal lengths to which the government has gone in order to illegally extract income taxes from the American public and how the public might prevent the IRS from illegally seizing their property pursuant to a “tax” that no American can possibly owe.  My books also reveal the extent to which federal judges and prosecutors  illegally prosecuted thousands of innocent Americans for crimes they couldn’t have committed.  Hopefully my books will pave the way to bring all such renegades to justice by compelling them to pay restitution (maybe out of their federal pensions) to all their victims.

As far as the “War Room” is concerned, I cannot find the flyer to which you refer.   As far as Dr. Ward Dean is concerned.  Dr. Dean is a West Point graduate with an outstanding combat record as shown on his website.  What he puts on his website is his business and the Court’s Order did not enjoin me from linking to other websites.  Dr. Dean along with many other Americans are concerned about this dastardly assault on the 1st Amendment that you and Judge George have mounted   What is important for the purposes of the Injunction is that I am not selling the book that you claimed provided “the road map” that was central to the alleged “plan or arrangement ” that allegedly allowed the public to evade the payment of income taxes.

As far as your claim that at the bottom of my website there is a statement “Legally stop paying income taxes!” followed by your comment that “none of your theories or methods permit your clients to legally stop paying income taxes, so this statement also is false” is utter nonsense.  Thousands of people have stopped paying income taxes using the procedures provided in my books and tapes.  If these procedures didn’t work, you wouldn’t have enjoined me from distributing the information that allowed them to do it – and anybody with only half a brain understands that.  But again, I have stopped paying income taxes for 14 years – and I will never again pay a dime in income taxes  – using, not my “theories.” but the laws as contained in the Internal Revenue Code. The government is able to extort the income tax from most Americans because they never check out the law for themselves.  That’s why I sell the Internal Revenue Code.  When are you going to enjoin me from selling that?

As far as your claim to links and documents are concerned.  As long as I am not selling information that specifically explains how the public can avoid paying income taxes, I believe I am within the Court’s order, since the order does not seek to ban all speech only “commercial speech” which is tied to the sale of information.  Since I no longer sell information that explains how to file a return and get a refund of all the taxes paid (which is what “The Federal Mafia” did) or how to protect yourself from illegal IRS procedures, which is also what “The Federal Mafia” is all about, I am no longer engaged in commercial speech (which I never was anyway) even applying the Court’s strained and contrived standard. 

As far as your claim that I “appear to be offering for sale (a $25.00 purchase masquerading as a ‘donation’) copies of Mr. Schiff’s 2002 tax return, containing the ‘latest’ attachment” and that, “To the extent that this offer constitutes commercial activity, it would violate the Court’s prohibition on selling any tax scheme,” is total nonsense. First of all, by no stretch of the imagination was I “selling” my 2002 tax return.  I sent it free of charge to anyone who sent me a stamped, self-addressed envelope, which I have every right to do.  And since you are preventing me from earning a living by denying me the right (under pain of imprisonment) to  sell a book and supplemental material I have every right to sell, I thought I might generate some funds in order to stay in business by offering to autograph (which takes additional time), for a donation of  $25.00 or more, all such requests for copies of my 2002 return.  But to lay this matter totally at rest, I have posted my 2002 tax return on my website, so everyone is free to download it at their pleasure.  Therefore no one has to buy “The Federal Mafia” to get the “road map” you refer to. They can download a more up-to-date version, free of charge, right off my website.

As far as my offering for sale “How Anyone Can Stop Paying Income Taxes” is concerned, I have already covered that.  The instruction it contains about claiming “exempt” on a Form W-4 is not “fraudulent.”  What is “fraudulent” is your claim that claiming “exempt” on a W-4 is fraudulent, and in the those rare instances where the Justice Department have prosecuted people for doing so, merely reveals the criminal character of the U.S. Department of Justice.  But, in any case, my Motion for Reconsideration provides the public with far more information on why they can legally claim “exempt” on a W-4 and how to protect themselves from the illegal attempts of the government to prevent them from doing so, than what is covered in “How Anyone Can Stop Paying Income Taxes.  In any case, I will continue selling that book until the Court orders me otherwise.

As far as “The Great Income Tax Hoax” is concerned, I already covered that book.  If you want a copy try Amazon.com or you can order it from Freedom Books – it is only $28.00 and a bargain considering all the information it contains.    Regarding the www.taxfreedomnow.com website, it is a totally independent website and does not operate under my control or direction.  Schiff employs his own Webmaster for www.paynoincometax.com and www.ischiff.com and has no control of any other website.  But, as I have stated before, many Americans are concerned about this brazen assault on the 1st Amendment, and so consider it their patriotic duty to help me in any way so as to expose and publicize what is going on here – as is further evidenced by the number of people who sent in affidavits to Judge George and the entry on my side of the ACLU and many other national organization who resent this assault on the 1st Amendment.  Such people are free to publicize what is going on here on their own websites in any way they see fit.  This is still a free country, though not as free as it used to be.

As far as the names of my customers are concerned, the only hard copies I have is what the government returned to me after their raid. So the government already possesses all of the original orders we received over a number of years.  I do not understand your claim that civil attorneys for the Justice Department do not have access to seized records without a court order?  If the records were seized for civil purposes I can see why a court order would be necessary for their use in criminal matters.   But where the records were seized for criminal purposes why would you need a court order to use them for civil purposes?  In any case you have my permission to use them for civil purposes.

But as I have already explained, I was able to locate a party who could download the names I had on my computer.  However this list contained over thirty-five thousand entries. Some names had 50 entries covering, books, tapes, seminar and other events sponsored by Freedom Books, which were ordered or signed up for by that party.  Many entries had no addresses.  Many entries were for bookstores, radio stations schools, colleges, and libraries .We hand deleted a number of these entries and got the list down to around 28,000 entries.  We then discovered a mailing service that said they had the capability of eliminating such multiple listings in a more automated manner than we were capable of doing by hand.   We have since turned our computer disks over to them and have made preparations to mail out 10,000 notices but, as of this date, we do not know what the final tally will be.

I trust this covers the issues raised in your letter of July 1, 2003.

Constitutionally yours,

Irwin A. Schiff,
And for all other defendants


 

 

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