TP goes to trial for not filing: income only $12,950

[Demosthenes]

Laurel tax protester, wife face trial
By CLAIR JOHNSON
Of The Gazette Staff

A Laurel tax protester and his wife are to stand trial starting Wednesday on federal charges of conspiring to avoid paying income taxes.

Henry Lynn Matthies and his wife, Judy Matthies, pleaded not guilty Monday to a second, superseding indictment charging them with conspiracy. Henry Matthies also is charged with two counts of willful failure to file income tax returns, a misdemeanor.

The latest indictment added the words "by deceitful and dishonest means" to the conspiracy count. The couple was first indicted in March.

The government alleges that for 10 years beginning in 1997, the couple defrauded and obstructed the IRS by hiding income and using trusts to create barriers to tax collection. According to the indictment, Henry Matthies improperly claimed nine deductions on his W-4 form from his employer, Big Sky Irrigation Inc., and submitted returns stating that he had no income or deductions. The couple also allegedly cashed work-related checks belonging to Henry Matthies instead of depositing them in a bank account.

The government further alleges that the couple transferred titles to a truck and their house to trusts in which Judy Matthies was a trustee.

The misdemeanor counts allege that Henry Matthies had $12,950 in income in 2000 and $13,400 in income in 2001 and failed to file a tax return.

If convicted, the defendants face a maximum of five years in prison and a $250,000 fine on the conspiracy count.

Nine years ago, Henry Matthies was sentenced to a year and a day in federal prison and was ordered to pay about $10,000 in prosecution costs after a jury convicted him of three counts of failing to file income taxes. Representing himself at trial, Matthies argued that he acted in good faith in not filing tax returns because his interpretation of the tax code convinced him he didn't have to.

This time, Matthies is represented by attorney Lowell Becraft Jr. of Huntsville, Ala., who in May defended Rolan Becker, a Ronan forester for the Confederated Salish and Kootenai Tribes, on three tax evasion charges.

Prosecutors said Becker filed false W-4 forms with the IRS so he wouldn't have federal taxes withheld and transferred his house and vehicles to limited liability corporations to put them beyond reach of the IRS.

Becraft argued that Becker sincerely believed that he didn't have to pay taxes based on information he got from seminars, books and tapes.

Earlier this month, Senior U.S. District Judge Charles Lovell in Helena sentenced Becker to 27 months in prison and ordered $91,700 restitution plus $1,700 in prosecution costs. Lovell said Becker could be viewed as an "economic terrorist" similar to the anti-government Montana Freemen.

[SteveSy]

Earlier this month, Senior U.S. District Judge Charles Lovell in Helena sentenced Becker to 27 months in prison and ordered $91,700 restitution plus $1,700 in prosecution costs. Lovell said Becker could be viewed as an "economic terrorist" similar to the anti-government Montana Freemen.

You realize this phrase is being used more and more in tax cases right? If the government wanted to it could use certain terrorist provisions of the law against these people. As much as you loathe TP's do you really think that's a good idea? Sad people are being put in the category of something serious as a terrorist simply for not filing a form.

This guy would get money back if he filed so its not an issue of paying his fair share if anything he's saving everyone money by not getting the EIC welfare. The only reason he's being prosecuted as are most TP's is his unwillingness to comply with government intrusion.

[Demosthenes]

You realize this phrase is being used more and more in tax cases right? If the government wanted to it could use certain terrorist provisions of the law against these people. As much as you loathe TP's do you really think that's a good idea?

What cases? I've only ever seen it in one.

[SteveSy]

You realize this phrase is being used more and more in tax cases right? If the government wanted to it could use certain terrorist provisions of the law against these people. As much as you loathe TP's do you really think that's a good idea?

What cases? I've only ever seen it in one.

I thought Nothaus had that termed used on him also....I seem to remember another tax case posted here with the same phrase. Maybe I'm having selective memory issues.....it's possible.


I'll take a look around.

[Demosthenes]

viewtopic.php?t=1679

It's the same case as the in the story at the beginning on this thread.

BTW, TPs have been referred to as "paper terrorists" for decades.

[.]

Nine years ago, Henry Matthies was [convicted of failure to file]

Some people never learn.

$12,950 in income in 2000 and $13,400 in income in 2001

Maybe this idiot will try it again whenever he figures out how to make more than $15K per year.

[Dezcad]

You realize this phrase is being used more and more in tax cases right? If the government wanted to it could use certain terrorist provisions of the law against these people. As much as you loathe TP's do you really think that's a good idea? Sad people are being put in the category of something serious as a terrorist simply for not filing a form.

If you took some time to actually look at the Becker case, you would realize that he did more than "simply not filling out a form". He made fraudulent transfers of real and personal property to put them out of the reach of creditors (including the IRS). Here's one quote from that case:

“In addition — and the number is quite large — the evidence showed that at one point he conveyed his property back to himself so he could take out a $168,000 loan on the property, after which he conveyed it back to the corporation so it no longer would be in his name.”

So, it is more than not filing, it was taking affirmative acts to avoid liabilities.

[The Observer]

This guy would get money back if he filed so its not an issue of paying his fair share if anything he's saving everyone money by not getting the EIC welfare. The only reason he's being prosecuted as are most TP's is his unwillingness to comply with government intrusion.

And Steve shows his famous inability to read and comprehend.

According to the indictment, Henry Matthies improperly claimed nine deductions on his W-4 form from his employer, Big Sky Irrigation Inc., and submitted returns stating that he had no income or deductions.

It wasn't simply a mattter of him not filing - many taxpayers who are owed refunds fail to file and don't end up in court for prosecution. Matthies took the extra step of filing false W-4s so that no tax would be withheld from his paychecks - tax that was legitimately owed by him.

[webhick]

You realize this phrase is being used more and more in tax cases right? If the government wanted to it could use certain terrorist provisions of the law against these people. As much as you loathe TP's do you really think that's a good idea? Sad people are being put in the category of something serious as a terrorist simply for not filing a form.

Honestly, I think it's just a catchy label and I doubt anyone would even think to go after an "economic" terrorist under the terrorism laws. Heck, I'm not even sure they could, since the economic terrorist isn't a physical danger to anyone. That being said, if the government tried, you sure as hell can bet that I'd have a problem with it since they're not even in the same class of criminal.

Besides, I'm a keyboard terrorist causing tens of dollars of property destruction and they haven't managed to indict me. Yet

[webhick]

The misdemeanor counts allege that Henry Matthies had $12,950 in income in 2000 and $13,400 in income in 2001 and failed to file a tax return.

The government alleges that for 10 years beginning in 1997, the couple defrauded and obstructed the IRS by hiding income and using trusts to create barriers to tax collection.

The government further alleges that the couple transferred titles to a truck and their house to trusts in which Judy Matthies was a trustee.

They had a house and truck on $13k a year? How, pray tell, did they manage such a thing? I can barely manage a car payment, rent and utilities on a single-bedroom apartment, cable, internet, and basic living expenses on a little more than twice that.

There's no way they only made $13k. That must be what's on their W-2s or something. They had to have had cash jobs.

[Demosthenes]

Perhaps the IRS CI guys have finally stopped trying to find every single penny of non reported income and are now stopping the investigation when they've found enough to prove the charges (they made more than the filing threshhold.)

Nah.

[Imalawman]

They had a house and truck on $13k a year? How, pray tell, did they manage such a thing? I can barely manage a car payment, rent and utilities on a single-bedroom apartment, cable, internet, and basic living expenses on a little more than twice that.

There's no way they only made $13k. That must be what's on their W-2s or something. They had to have had cash jobs.

You'd be surprised what people can purportedly live off of. I have had cases of people who make $15,000.00 a year from a part-time job, but manage to lose $75,000.00 on a schedule C business they run on the side. Meanwhile, they live in a better house than I do, and have more cars than I do.

[BBFlatt]

They had a house and truck on $13k a year? How, pray tell, did they manage such a thing? I can barely manage a car payment, rent and utilities on a single-bedroom apartment, cable, internet, and basic living expenses on a little more than twice that.

There's no way they only made $13k. That must be what's on their W-2s or something. They had to have had cash jobs.

You'd be surprised what people can purportedly live off of. I have had cases of people who make $15,000.00 a year from a part-time job, but manage to lose $75,000.00 on a schedule C business they run on the side. Meanwhile, they live in a better house than I do, and have more cars than I do.

I trust their financial situation was much better (at least on paper) by the time you concluded your engagement.

[Quixote]

The misdemeanor counts allege that Henry Matthies had $12,950 in income in 2000 and $13,400 in income in 2001 and failed to file a tax return.

They had a house and truck on $13k a year?

I suspect the article misquoted the indictment, which probably actually said (or at least meant) that Henry Matthies had at least $12,950 in income in 2000 and $13,400 in income in 2001. $12,950 and $13,400 are twice the exception amount plus the married filing joint standard deduction for 2000 and 2000, respectively, i.e.. the minimum amount needed to trigger a filing requirement.

[Dezcad]

The misdemeanor counts allege that Henry Matthies had $12,950 in income in 2000 and $13,400 in income in 2001 and failed to file a tax return.

They had a house and truck on $13k a year?

I suspect the article misquoted the indictment, which probably actually said (or at least meant) that Henry Matthies had at least $12,950 in income in 2000 and $13,400 in income in 2001. $12,950 and $13,400 are twice the exception amount plus the married filing joint standard deduction for 2000 and 2000, respectively, i.e.. the minimum amount needed to trigger a filing requirement.

You are correct. From the indictment:

COUNT II

During the calendar year 2000, the Defendant, HENRY LYNN MATTHIES, who was a resident of Laurel, Montana, had and received gross income in excess of $12,950, and by reason of such gross income.....

COUNT III

During the calendar year 2001, the Defendant, HENRY LYNN MATTHIES, who was a resident of Laurel, Montana, had and received gross income in excess of $13,400, and by reason of such gross income....

[Demosthenes]

Story available at http://www.billingsgazette.net/articles ... 52-tax.txt

Published on Saturday, December 01, 2007.

Laurel couple convicted of trying to avoid tax bills
By CLAIR JOHNSON
Of The Gazette Staff

A federal jury Friday evening convicted a Laurel couple of trying to avoid paying income taxes.

The panel deliberated nearly four hours before finding Henry Lynn Matthies and his wife, Judy Matthies, guilty of conspiring to defraud the IRS. Henry Matthies was also found guilty on two misdemeanor counts of willful failure to file income taxes for 2000 and 2001.

A jury in 1998 convicted Henry Matthies of three counts of willful failure to file income taxes, and he was sentenced to one year a day in prison.

Both Matthieses testified during their three-day trial and maintained that they held strong beliefs that Henry Matthies is not required to pay income taxes. The couple said they reached that belief after attending a meeting in Washington in 1985 about constitutional and income tax issues and doing their own research.

First Assistant U.S. Attorney Kurt Alme accused the couple of conspiring to hide assets by creating and improperly using trusts and filing frivolous documents to thwart IRS efforts to collect income taxes. The couple has been told too many times - by a jury, judges, tax attorneys and the IRS - that they are required to pay income taxes to believe they acted in good faith, he said. Rather, the Matthieses used deceit and trickery to avoid their legal obligations.

"They know exactly what the law is. They just don't agree with it, and that's not a defense," the prosecutor said in closing arguments.

Defense attorney Lowell Becraft Jr., of Huntsville, Ala., said the Matthieses have a right to read government documents and to act based on their understanding. In this case, Becraft said, the Matthieses were caught in the middle of conflicting government information that says the income tax is voluntary and also says it is not.

U.S. District Judge Richard Cebull set sentencing for Feb. 29 and continued the couple's release. The Matthieses face a maximum five years in prison and a $250,000 fine on the conspiracy conviction.

The indictment alleged that the conspiracy began in 1997, but evidence at trial showed the couple's dispute with the IRS spans more than 20 years.

The dispute escalated to where the IRS in 2002 filed two tax liens, totaling $320,695 for 12 years, against the Matthieses with the Yellowstone County Clerk and Recorder, according to IRS witnesses. The couple filed an appeal then withdrew it.

Also in 2002, Alme said, the Matthieses transferred the title to their house from trust to another trust to hide the property from foreclosure. Henry Matthies was not a trustee of either trust.

After the Washington meeting, Judy Matthies, a homemaker, said the couple bought books, with titles like "How to Fight the IRS and Win," and researched U.S. Supreme Court cases. She also bought the 1988 version of the IRS code book.

"We came to the conclusion Hank was not liable for the income tax and not required to file a return," she said.

Henry Matthies, a welder, said his previous conviction had not changed his belief that he doesn't have to file income taxes. Despite jury instructions from the judge that wages were income, wage earners are liable for taxes and that paying taxes is not voluntary, Henry Matthies said he still doesn't believe it.

The Matthieses denied creating trusts as a way to hide their house and vehicles from the IRS. They created the trusts, they said, for estate planning for their two daughters, not to obstruct the IRS.

Judy Matthies said they wrote the IRS numerous letters with questions but never got answers.

Henry Matthies choked up at the start of his testimony and became emotional several more times while answering his attorney's questions. But both Matthieses had testy exchanges when questioned by the prosecutor.

Judy Matthies denied that it was just a tactic to show good faith when they sent the Secretary of the Treasury and the commissioner of the IRS letters asking hundreds of questions.

"You had a good-faith question in all of this?" Alme said, fanning out the multiple-page letter.

"And if you could answer them, I'd appreciate it," Judy Matthies retorted.

Henry Matthies admitted that he contended at his first trial that claiming nine exemptions on his W-4 form was the best you could do without getting the IRS's nose in your business. He told Alme that he would have continued to claim an exempt status if he could have gotten away with it. Henry Matthies had claimed he was exempt until the IRS told him he couldn't and fined him $500.

Alme said Henry Matthies switched to claiming nine allowances, when he could have legitimately claimed up to five allowances, to keep more money. By claiming nine allowances, he "operated just under the radar screen" because further IRS scrutiny is triggered by 10 allowances, Alme said.

While on supervised release after prison, Henry Matthies was required to cooperate with the IRS and to file returns for 1987 to 1999, Alme said. The Matthieses complied, filed legitimate returns and told the probation officer they would work out a payment plan with the IRS, Alme said. But as soon as Henry Matthies completed his probation, he filed amended returns in which he listed no wages and attached an affidavit stating his beliefs.

"He never intended to pay that tax," Alme said.

[.]

In this case, Becraft said, the Matthieses were caught in the middle of conflicting government information that says the income tax is voluntary and also says it is not.

He can't possibly be serious.

[Doktor Avalanche]

In this case, Becraft said, the Matthieses were caught in the middle of conflicting government information that says the income tax is voluntary and also says it is not.

He can't possibly be serious.

You wish.