Saturday, January 29, 2005

Tax Protester Convicted

Al Thompson, who refused to permit the 25 employees of his company file W-4s to withhold income tax because the tax system is illegal, was convicted on Jan. 28 in the U.S. District Court for the Eastern District of California (Sacramento) on 13 counts involving various tax violations. (Sacramento Bee article here)  Thompson became nationally known when he boasted to the New York Times and on Sixty Minutes II about how the income tax is not enforceable and the government's failure to pursue him demonstrated that his position was correct.  The company is now out out business, and Thompson was indicted along with former IRS Criminal Investigation Division Agent Joseph Banister, who worked with Thompson to advance the position that individuals do not have to pay income taxes. Banister's case was severed from Thompson's, and he is awaiting trial.

Thompson acted as his own attorney, and a New York Times article (here) notes that he avoided conviction on the conspiracy count by asserting to the jury that his public proclamation of his position meant that he could not have conspired. The article states: "Because he had publicly declared his actions, Mr. Thompson told the jurors that he did not see how they could convict him of conspiracy."  Although I don't think the argument is technically correct as a matter of law -- a conspiracy does not require secrecy even if it is a common feature -- there is a certain logic to the position that only a fool (or tax protester) would announce a conspiracy. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/01/tax_protester_c.html

Prosecutions, Tax | Permalink

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