This post was originally published on Forbes Aug 15, 2015
You don't have to agree with Irwin Schiff's views on the federal income tax, to feel sympathy for Peter Schiff's request that his father be released from prison. Irwin, now 87, has been diagnosed with lung cancer and it seems likely that he will not live to see his July 26, 2017 release date. Peter Schiff took his appeal to the Alex Jones show yesterday.
About Irwin Schiff And His Theories
Irwin Schiff is probably the father or, if not the grandfather of the modern tax protester (or you might prefer "tax honesty") movement. Irwin appears to be quite sincere in his belief that the federal income tax is extremely limited in its scope and most people who are what I like to call conventionally tax compliant are being tricked into compliance. Unlike most tax professionals I have taken the time to study Irwin's books and learn about his arguments. I remain unpersuaded.
Irwin Schiff's primary argument on the limited, voluntary nature of the income tax rest on his reading of a few Supreme Court decisions somewhat before and slightly after the passage of the Sixteenth Amendment. The best analysis I have ever seen of his arguments was done by his own attorneys appealing his conviction
…even though these cases, properly understood, do not support Mr. Schiff’s professed beliefs, they do contain language which, if honestly misconstrued and read out of context, could lead someone without legal training to believe that taxable income is limited to corporate profits
About Peter Schiff
Peter Schiff is the CEO and chief global strategist of Euro Pacific Capital Inc. He tends to be bearish on the prospects of the US economy and bullish on gold. He shares his father's view on the legality of the income tax as it is currently enforced. He also apparently believes that that discretion is the better of part of valor and is himself conventionally tax compliant. Peter's book The Real Crash: America's Coming Bankruptcy - How To Save Yourself And Your Country is dedicated to Irwin. Part of the dedication reads:
Unfortunately, as a quasi political prisoner, he can't speak for himself. I'm happy to be able to do it for him. Hopefully his courage and his idealism will play a part in restoring the American spirit...
Let Irwin Go Home
I can't help but sympathize with Peter Schiff's appeal. In the Alex Jones interview, Peter indicated that Irwin had resisted requesting compassionate release, since he still expects to be vindicated, but that he is now letting the request go through. BOP updated its compassionate release policy back in March and it seems like Irwin might qualify.
Does Harsh Treatment Of Tax Protesters Work?
The general impression I get is that once someone latches onto the "tax honesty" views, that may well have been developed by Schiff, there is no letting go. Doctor Ward Dean served a long sentence for embracing Schiff's views and still believes that he is right.
Kent Hovind, a friend of Doctor Dean's also served a long sentence. He no longer speaks about the income tax law being invalid, but tends to focus on his structuring conviction. Paul Hansen, a trustee of Kent Hovind's ministry, faces sentencing on August 21 for contempt of court for filings he made trying to affect title to property seized from Hovind's ministry. Ironically, a similar charge against Hovind was dismissed by the same judge who will be sentencing Hansen.
It seems to me that IRS collection action can make people's lives miserable enough and that in the end the criminal prosecutions end up penalizing people for their sincerity. On the other hand tax protesters end up taking IRS inaction as proof that they are right. It is a tough dilemma. Nonetheless, letting Irwin Schiff stay with his son does not appear to be something that will greatly damage the cause of conventional tax compliance, so I hope his request is granted.
Update - How Likely Is Compassionate Release?
I heard from one of my criminal law experts on how likely compassionate release is for Irwin Schiff.
As written, the federal sentencing law provides few and tightly defined occasions for the reduction of a sentence that has been imposed and upheld on appeal. The Bureau of Prisons is assigned the responsibility of identifying (or perhaps recommending; even that is a contested interpretation) prisoners whose "extraordinary circumstances" would/might (again, controversial) justify a reduction. A motion can then be filed with the sentencing court by the U.S. attorney on behalf of the director of the BOP, which opens the door to the judge (in his/her discretion, in light of the purposes of sentencing) to reduce the sentence. A terminal illness with a short remaining life expectancy has always been the paradigm example of this. The BOP recently relaxed their internal standards and policies, in response to sharp criticism of their rare deployment of this power.
Yet the current BOP Director -- who just recently announced his retirement -- approved fewer of these motions last year than the year before! Many prisoners die while awaiting approval by the Director of the BOP of their applications for this relief, more than receive the benefit of a motion. There are some rumbling of backlash against this situation by federal judges and others. Even so, the current situation is not good.
Be sure to check out JJ MacNab's critical comments on this piece. She points out that there is quite a bit of nonsense in the Alex Jones interview. JJ has focused a lot of attention on what is called the "sovereign citizen" movement, a pretty disturbing phenomenon. Although the Schiffs, father and son, are not advocates of violence the flood of frivolous filings unleashed by Irwin's notions sometimes threatens to swamp the system. Just as a country goes to war with the army it has, it funds its legitimate operations with the tax system that it has. The main reason Irwin's ideas are persuasive is because they support a notion that many people would like to be true. They really don't stand up to serious scrutiny and I don't think most of the believers apply any scrutiny to them. Peter Schiff seems to be a smart guy and an independent thinker, but, you know, it's his dad, so I'm inclined to give him a pass.
Further Update - Irwin Schiff Is Not A Political Prisoner
Saying that the income tax is a really bad idea or that it is unconstitutional is not a crime. That is not what Irwin Schiff was convicted of. He was convicted of aiding in the preparation of false income tax returns, conspiracy and failing to pay income tax. In its appellate decision the Ninth Circuit noted.
The overwhelming evidence at trial was that Schiff was aware his claimed beliefs lacked merit and that he simply disagreed with the law. Schiff had previously been punished for filing zero returns. He knew that numerous tax returns submitted by his clients had been returned as frivolous by the IRS and had resulted in penalties upheld by courts.