Another CtCer hits the brick wall hard

[webhick]

Let's be realistic here a second.

John Bulten earns less than $10,000/yr and frequently bounces between temp agencies. He used Pete's method to get only a few hundred dollars back.

I think John is safe because the government would spend more money having one investigator work for a day than the amount they would get from prosecuting John.

Personally, I feel sorry for him. Someone who is that poor and uses CtC to get money to put food on the table isn't someone I'd like to see taken down.

I don't think he only earns $10k. Something tells me that's just what he got W-2'd for. He probably makes a lot more - just "under the table".

[The Observer]

Let's be realistic here a second.

Which is why I used the word "if." The government isn't likely to prosecute anyone involved in a scheme that only caused a loss of taxes in the amount of several hundred dollars. It is far easier to assess the tax loss and then collect it. In fact, criminal cases for tax evasion are based on being able to show that the government was harmed because there was a significant loss.

On the other hand, conspiracy is a far different matter - if the government has proof to show that John's activities rose to the level of conspiring with Pete to promote CtC.

[Kimokeo]

I would figure that a $5,000 penalty for frivolous filing would be a foolish act on an income of $10k.

[Famspear]

Dear Mr. Bulten:

I don't work for the Tax Division of the Department of Justice (DOJ), for any U.S. Attorney, or for the Criminal Investigation Division of the IRS, and maybe someone here does. Anything they would tell you would be more authoritative than what I say. My sense is that silversopp, The Observer and others are giving you good advice.

Based on my own analysis of statistics provided by Syracuse University (for government fiscal years 2001 through 2004), if the IRS does refer someone to DOJ, that person has about a 50% to 54% chance of having the case actually prosecuted.

According to the same statistics, of all those prosecuted, about 83% to 87% are convicted.

Maybe someone else has better statistics than I.

My sense is the same as the other folks here. From a practical standpoint, you need to have a somewhat "substantial" unpaid tax liability in order for the government to prosecute you. What is a substantial amount? I don't know.

Making yourself visible through tax protester activity might also make you more vulnerable, but I understand the government is pretty picky about who they prosecute. I believe the decision to prosecute is actually made in Washington -- the local U.S. attorney is on a relatively short leash within DOJ. Does anyone here know if this is correct?

--Famspear

[Demosthenes]

The decision to prosecute sometimes has nothing to do with the amount owed. Sometimes they go after big mouths because those getter more effective press, and sometimes they go after peanut sized cases in order to line up plea agreements which require testifying against a bigger fish.

[Joey Smith]

Excuse me if I've asked this before, but since I strive to obey all laws (with a rare exception for civil disobedience which I have not invoked), would anyone who is so interested in warning me against criminal behavior (ostensibly the purpose of this forum) please outline where my danger lies?

I do not advocate tax evasion, abusive tax shelters, perjury, failure to file, failure to withhold, unlicensed practice of law, or any crime.

Steven Swan said the exact same thing, and now he's spending the next decade in jail.

It isn't what you strive to do, but whether you stay actually stay within the law as it is (not as you believe it or want it to be). If you are following the CtC method, then you are outside the law no matter how much you believe you are within the law. Next, by your post on the LostHorizons.com bulletin board you have advocated to others that they also follow the CtC methods.

You and Steven Swan are doing the exact same things, except that Steven Swan believed 100% in Irwin's "constitutional income" theory just as you believe in CtC. Now, Swan is spending a decade in jail. There is no reason to believe that the outcome will be any different for you, especially since you have elevated your profile by posting here on Quatloos where a bunch of people in tax enforcement hang out.

I guarantee that you've made it onto the radar screen, and I would be that there is a missile with your name on it headed your way just like there was for Swan whether you realize it or not.

CtC is not about the rule of law; CtC is about filing false and fraudulent returns and taking advantage of the IRS's decrepit computer system.

[Famspear]

Dear Mr. Bulten:

I forgot to mention one more statistic. If you are convicted in a Federal criminal tax case, the likelihood of actually going to jail is very high. In a recent year in my area of the country, I believe 95% of all those convicted of tax crimes had to serve time. Yours, Famspear

[Demosthenes]

Swan was originally sentenced in 2004 to nine years in prison, but that sentence was reduced on appeal. His scheduled release date is now 10/24/2009.

[ASITStands]

There are "big-dollar" and "little-dollar" cases. And, though there is consideration of the costs of litigation, in my opinion, it has more to do with visibility and activity.

Those who spend more time and effort telling the IRS why they are not liable for an income tax (pick your argument), and those who rebut every notice or letter, find themselves in bigger trouble after a period of time than those who remain relatively silent.

They create a bigger paper trail. You can evade the "assessment" or "payment" of a tax. You can fail to file a required return. You can discuss avoidance and advise others, but sooner or later, you'll have to answer for whatever theory you espouse in doing so.

John J. Bulten is a target, in my opinion, because of his activity on Lost Horizons and his association with Pete Hendrickson.

[Joey Smith]

Swan was originally sentenced in 2004 to nine years in prison, but that sentence was reduced on appeal. His scheduled release date is now 10/24/2009.

That is a more reasonable sentence; I thought his first sentence was way too long.

[Doktor Avalanche]

Swan was originally sentenced in 2004 to nine years in prison, but that sentence was reduced on appeal. His scheduled release date is now 10/24/2009.

That is a more reasonable sentence; I thought his first sentence was way too long.

You're getting liberal in your old age, Joey.

[The Observer]

Yes, I remember in the good old days when Joey was burning TPs at the stake. He has gotten so mellow lately that I wouldn't be surprised to see him talking about retiring and living in a double-wide.

[Agent Observer]

The Captain:

then you will go down quicker than the Edmund Fitzgerald.

That's a pretty obscure reference. Are you from the Great Lakes region or are you showing your age with that one?

[Bud Dickman]

then you will go down quicker than the Edmund Fitzgerald.

History channel runs story of the Edmund Fitzgerald often.

[Famspear]

Dear Mr. Bulten: Getting back to your June 14th question about outlining where your danger lies, since you say that you "strive to obey all laws:" Although I have not read page of every thread here, and although I am not conversant with your entire situation, I would say that you could, at a minimum, have a theoretical problem with 26 USC 7206, which provides (in part):

-----"Any person who [ . . . ] Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter [ . . . ] shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution."

If you have actually filed that income tax return showing zero wages (I forget where the link is posted here in Quatloos) under the "Cracking the Code" theory when you really had wages (the way Quatloos posters have explained wages to you), then you theoretically could have a section 7206 problem -- or you would if the income and tax amounts had been much, much higher.

If you are indicted and you claim in court that you truly believed that the Internal Revenue Code did not purport to treat your gross wages as income, AND the jury believes you (and that's a key point), then you would be "not guilty."

However, in deciding whether to accept your claim that you had such a good-faith belief, the jury may legally consider any admissible evidence showing your (1) awareness of the provisions of the Code or regs; (2) awareness of court decisions rejecting your interpretation of the law; (3) awareness of authoritative rulings of the Internal Revenue Service; or (4) awareness of contents of tax forms and instructions stating that wages should be reported as income. Again, in a criminal case it might not be your personal belief or interpretation of these materials that determines whether you had a good-faith belief; it might instead be your awareness or non-awareness of what these materials SAY that could be crucial.

The general rule is that ignorance of the law is not a defense. Specific intent crimes, such as the tax crimes set out in the Internal Revenue Code, are an exception to that rule.

Some lower courts might, however, interpret the Supreme Court's language in the Cheek case to limit the benefit of the specific intent exception to defendants in cases where the defendant has a good faith misunderstanding based on the COMPLEXITY of the Code. A refusal to accept court rulings and other pronouncements -- of which you are actually aware -- as the authoritative legal interpretation of the law might negate a claim of a good faith misunderstanding caused by the complexity of the Code, even though you disagree with those interpretations. Indeed, your responses to posts explaining the law to you right here in Quatloos, to the extent that your responses can be demonstrated to have come from you, could theoretically be used against you.

You also might have a problem with 18 USC 1001 (five years in prison). I don't think this provision is used in tax cases very much, though. Yours, Famspear

[The Observer]

Very nice explanation, Famspear. I think a very similar one was given to Larken Rose and Tom Clayton a few years back. But they ignored it as well and had to report to the Graybar Hotel. Mr. Bulten will ignore your exposition as well, I fear - not because you made any serious error, but because...well it just doesn't square with the dreamworld he wants to live in.

[Famspear]

Yes, I think the prosecutor pointed out, upon Clayton's conviction, that Clayton had been warned by IRS notices and by two different CPAs that his theory (which was section 861) was wrong.

My feeling is that when you go to court as criminal tax defendant, you don't want to try to outsmart the jury. That means, you don't want to argue that your interpretation of the law is correct and that the courts and the IRS are wrong. Instead, you want to argue that you were unaware of the IRS instructions, unaware of the court decisions, and so on, OR you argue that you were just confused by the "complexity" of the Internal Revenue Code (to use the Supreme Court's terminology), or you argue that you were just stupid. Leaving behind a long evidence trail showing that you disputed the courts and IRS interpretations will probably hang you pretty fast.

Another thing that might hang a defendant pretty quick (but I don't specifically recall seeing Mr. Bulten doing this) is arguing that the tax law is invalid, unconstitutional, etc. Under Cheek these kinds of arguments -- if the prosecutor can prove that the defendant made them somewhere -- can really shoot the defendant in the foot. Per the Supreme Court in Cheek, arguments about constitutionality are not good faith misunderstandings caused by the complexity of the Internal Revenue Code, and instead might be used against the defendant as evidence of awareness of the known legal duty -- to show the defendant willfully violated that duty. -- Famspear

[LPC]

then you will go down quicker than the Edmund Fitzgerald.

I thought about suggesting a "go down quicker than" competition, but I'm afraid it would get real sleazy (and real libelous) real fast.

For example: "Then you will go down quicker than [name of skanky celebrity] on a first date."

And it would be all downhill from there.

Yep, better I should never even suggest it.

[John J. Bulten]

-----"Any person who [ . . . ] Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter [ . . . ] shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution."

If you have actually filed that income tax return showing zero wages (I forget where the link is posted here in Quatloos) under the "Cracking the Code" theory when you really had wages (the way Quatloos posters have explained wages to you)

See, that's just it. Do you mean Quatloos wages, or statutory wages, or case-law wages? You first need to recall that I believe I don't have statutory wages or case-law wages, and that I've read every case law presented and haven't found one that says I have such wages. I believed and believe that return to be true and correct as to every material matter. So I have no fear from the law, which, as you stated it, upholds my innocence. But I do have the threat that some robe will unjustly uphold someone's lie to the effect that I did not so believe. (But for injustice I have other recourse of which you may be unaware.)

If you are indicted and you claim in court that you truly believed that the Internal Revenue Code did not purport to treat your gross wages as income

What I believed and believe is that the IRC does not purport to treat my gross earnings as statutory wages.

However, in deciding whether to accept your claim that you had such a good-faith belief, the jury may legally consider any admissible evidence showing your (1) awareness of the provisions of the Code or regs; (2) awareness of court decisions rejecting your interpretation of the law; (3) awareness of authoritative rulings of the Internal Revenue Service; or (4) awareness of contents of tax forms and instructions stating that wages should be reported as income. Again, in a criminal case it might not be your personal belief or interpretation of these materials that determines whether you had a good-faith belief; it might instead be your awareness or non-awareness of what these materials SAY that could be crucial.

(At risk of ruining some reliance defense:) I am aware of the Code and regs, which show my earnings are not statutory wages. I am aware of many court decisions, all of which uphold my interpretation. I am aware of many IRS rulings, all of which uphold my position as valid and as not being a published frivolous position. I am aware of forms and instructions and agree with them that wages should be reported as income.

But let's say, arguendo, that there's a reg or case that I've seen once that says, contrary to my position, "All private-sector earnings in the 50 States are wages" (which there isn't). Are you saying that, once evidence is admitted that I've once read this case, my belief is no longer in good faith? Even if the judge is in another district, was drunk while making the ruling, and just hasn't been overruled yet? What if the judge was not speaking in a tax context and was just speaking of ordinary wages in general? It seems to me that, if I state my interpretation of the case law as not applying to me, and the US states its interpretation that it does apply, the jury must decide that question of law (does it apply) before it can determine the question of good-faith belief.

You see, if case law were authoritative as you say, the US attorney and I could both point to it as unambiguous. But if on every statute and case law we differ in interpretation, to whom can we appeal to settle our debate, since "case law" is an unconscious arbiter which either or both of us may twist to our ends? In a criminal trial the jury must decide. If the judge attempts to write jury instructions which presume to authoritatively choose between my and the US attorney's interpretations, are such jury instructions "case law" also? If not, the jury must decide; and if so, the judge has prejudicially decided before the verdict.

[Joey Smith]

You first need to recall that I believe I don't have statutory wages or case-law wages,

What you believe is irrelevant to the issue of liability, since it is the courts that interpret what constitutes "income" and "wages" and not each individual acting in their own selfish, self-interests.

You have a chance of persuading a jury on a Cheek defense that you really, really, really didn't believe that you were liable, but as other have discussed your odds of successfully asserting that defense is much less than 1 in 100 based on other prosecutions. However, that the IRS has already published a warning that the CtC method is bogus means that the jury will see evidence that you were told what the law was but that you simply didn't believe, meaning that the jury will most likely conclude that your belief was unreasonable.

The rest of your post is just so much nonsense as to not be worthy of any reply. But best of luck to you anyway; you'll need it.

P.S. -- Trying to save a few bucks in taxes in exchange for a felony conviction is not a good trade.