Saturday, August 13, 2005
Tax protester Larken Rose was convicted in Philadelphia of five counts of failure to file a tax return. Rose is a leading advocate of the Section 861 position, which claims that income earned inside the United States is not subject to taxation. Section 861 (here) is entitled "Income From Sources Within the United States," and according to a press release (here) issued by the Department of Justice after Rose's conviction:
Courts have consistently held that Section 861 does not provide authority for United States citizens to fail to file income tax returns on income earned in the United States, as was highlighted by evidence at trial. The trial evidence also showed that Rose received more than a dozen notices from the IRS that rejected his 861 argument. Further, there were more than ten letters from members of Congress, found at Rose's residence during execution of a search warrant, that provided notice to him that his 861 argument was invalid. In addition, Rose was aware of two district court cases that had rejected the 861 argument. In one case, the district judge informed Rose directly that Rose's view of the law was incorrect. There was also considerable evidence presented at trial, through email correspondence, that Rose intended to create a mass movement of non-compliance to obstruct the enforcement of the tax laws.
A New York Times story (here) notes that Rose dared the Justice Department to charge him with a crime -- probably a double-dog dare -- and he defended himself at trial by denouncing the federal government by likening it to a bully in his closing argument. It took the jury just 90 minutes to return its verdict, although it is one that will likely only fuel the tax protest movement. Among other instructions, the judge told that jury that Rose's Section 861 argument is wrong as a matter of law, which only adds to the tax protester movement's view of the entire process as one rigged against those attacking the tax system. The TaxProf Blog (here) has additional links in this area. (ph)