Dan Pilla

[Demosthenes]

Posted on Wed, Apr. 11, 2007



Tax protesters keep up the fight




By Randy Furst

Star Tribune (Minneapolis)

(MCT)

MINNEAPOLIS - Brochures by the thousands, some decades old, clog Dan Pilla's basement. They are reminders of the battles he has fought - and continues to fight - against the Internal Revenue Service.

"The IRS represents theft of property," is the headline on one tract he wrote.

"For God and country, stop IRS organized crime," he declared in another flier.

Bumper stickers adorning the walls in the dimly lit St. Paul basement are critical of the government and the IRS.

"My kids want me to throw it (all) away," he said.

That's unlikely.

Pilla, 78, had his business seized by the IRS in 1974 for $200,000 in back taxes, interest and penalties. He went to prison for nine months in 1977-78 and later had his house seized by tax agents in 1982.

He's among a group of ideologically driven Americans in constant conflict with tax collectors.

In Minnesota, they number 400 to 500, perhaps a few more, say officials of the Minnesota Department of Revenue. "We are aware of them," said Pamela Dahlstrom, director of the state's individual income tax division. "They are not getting away with not filing and not paying."

As millions of taxpayers crunch numbers this week, finishing off their 1040 forms before the April 17 deadline to file 2006 tax returns, many of the ideologues will be submitting documents to the IRS, contending they owe no taxes because of obscure constitutional interpretations or legal decisions.

Many believe the U.S. Constitution's 16th Amendment, authorizing a federal income tax, was never properly ratified in 1913. Some contend the federal tax applies only to federal employees.

But not paying one's taxes tends to be a losing proposition. "We have ways of tracking them down," Dahlstrom said.

Unlike Pilla, tax ideologues rarely go to prison. "Almost all of them get caught, and they all settle," said William Raabe, a tax professor at Ohio State University. "They pay their back tax, they pay their interest and almost none of them are prosecuted."

Raabe, author of "Federal Tax Research," a book that has a chapter on protesters, observes that many don't call themselves that. He said there about 10,000 tax protesters nationally, most are men, and their numbers aren't growing. Interviews suggest they hold to various political views, from Republican to Democrat to Libertarian. Many dislike all parties.

Pilla is among the crowd of about 50 people that filtered into the monthly meeting of Common Law Venue recently to hear an earful about challenging the IRS and the courts. Pilla set up a table in the back with an assortment of brochures and pamphlets.

Fred Bond, an electronics technician, led the meeting, describing his recent speeding ticket and his verbal confrontation with a prosecutor. Cynthia Lea, who has worked for a car dealership, read off suggestions for taking on the IRS. John Pelton, a former police officer, told of his recent discussions with tax officials who claimed he owed taxes.

The group has been outspokenly critical of the tax system. Robert Beale, the CEO of a small Maple Grove, Minn., computer firm, spoke at three of its meetings in 2006 before skipping out on his federal tax fraud trial in August. A co-defendant was convicted; Beale, who questions the IRS on constitutional grounds, remains a fugitive.

Days before last month's meeting, Bond and Pelton sat down with a reporter to outline their views. "We're just a small group trying to wake up the masses," Bond said.

Bond said his income is garnished for taxes. Pelton said he pays his taxes unwillingly.

Said Pelton: "We are not tax protesters. We are constitutional individuals."

Bond insisted: "The IRS is not a member of the U.S. government. It is a private collection agency for the Federal Reserve and the International Monetary Fund. ... The Supreme Court has ruled many times that taxes on wages or property are illegal in this country."

The IRS has heard these arguments before. It puts out a 65-page document, "The Truth About Frivolous Arguments," and urges citizens to shun claims that taxation is illegal.

"If you are hearing arguments that the law hasn't been passed that allows us to enforce tax law, those are not true," said Janet Oakes, a special agent for the IRS in St. Paul, Minn. The 16th Amendment was ratified, she said, giving the IRS the right to collect taxes.

Terri Hilger, director of the collections division for the Minnesota Revenue Department, urges anyone who owes back taxes to settle up. "If they are cooperative, we will work with them on a payment plan," she said. But if they resist, investigators can seize property and bank accounts and garnish wages. "We don't need a court order," she said. "There are statutes that give us authority."

Oakes acknowledged that neither truth kits nor penalties nor criminal convictions will dissuade some ideologues (the IRS also doesn't call them protesters). "You can send them to prison, and they aren't going to change their mind," she said.

Indeed, officials said, some people would get refunds if they filed their taxes properly, but they prefer filing objections.

"It seems to be the case for many of them that the message is more important than the money," said Dan Lee, assistant director of the state's income tax division.

Terry Borchardt, 44, of Minneapolis, a salesman, said he's battled tax authorities since the 1980s, leading the state to tap his wages. "If I had complied, I would have paid far less in the last 20 years," said Borchardt, who is among scores of litigants in a suit against the IRS. It was filed nationally by We the People, a group that has several members in Minnesota.

Dan Pilla shows up at Common Law Venue meetings with a tableful of his pamphlets. "The bankers own America, the government and the politicians," he told the crowd at one gathering.

Later in an interview, Pilla told how he once owned a St. Paul printing firm with 22 employees, but he stopped deducting taxes from their paychecks for ideological reasons and because it was "inconvenient."

The IRS seized his company in the 1970s for failing to pay $200,000 in taxes and penalties. He was arrested and convicted of trying to remove equipment from his building and spent nine months in federal prison.

Years later, Pilla still rails against the tax system. "Look at the misery and grief it's caused for people," he said, tears in his eyes. "It's a moral battle."

As it turns out, Pilla's son, also named Dan, practices in tax court. The junior Pilla has written 11 tax books, including, "How to Get Tax Amnesty," which has been praised by the Wall Street Journal. His clients include people who adopted various schemes to avoid taxes, but with the IRS closing in, they want to settle up.

He got his start as a layman in the 1970s, combing books in a law library, where he found tax code provisions that he successfully cited in federal court that temporarily blocked the IRS from seizing his parents' house. A number of his father's supporters rushed to him for help in their own battles with the IRS, and he found a calling. In his office, the younger Pilla took off his shelves and piled on a table a dozen books, written by those he calls "tax gurus" and who offer schemes to avoid taxes.

"All garbage," he declared. "Their legal theories are misstatements of law, and ultimately they just don't work. They just get people in trouble."

He declined to comment about his father.

[LPC]

Raabe, author of "Federal Tax Research," a book that has a chapter on protesters, observes that many don't call themselves that. He said there about 10,000 tax protesters nationally, most are men, and their numbers aren't growing.

10,000 might be right if you're counting only the hard-core kool-aid drinkers.

I've guestimated the number to be as high as 200,000 (i.e., 0.067% of the population) if you include the dupes as well as the fanatics.