Wednesday, May 30, 2018

Tax Court Hammers IRS CI Who Went Out Into The Cold

This post was originally published on Forbes

Not too many IRS agents rate wikipedia entries, but Joseph Banister does.  His fame is similar to that of Maria Monk.  Maria Monk was credited with the work Awful Disclosures of Maria Monk, or, The Hidden Secrets of a Nun's Life in a Convent Exposed first published in 1836.  If you believe in a massive conspiracy, hearing from someone who has seen the nefarious deeds from the inside is quite satisfying.

  The Income Tax In Cloud Coockoo Land

 There is something of an alternate reality out there where people can explain to you in depth why those of us, who are what I call conventionally tax compliant, are actually being duped into filing tax returns that are entirely voluntary.  The grandfather of the movement is Irwin Schiff, who will be nearly ninety when he is projected to be released from federal custody in 2017.  Joseph Banister was a real coup for the movement.  Here is how he is described on the site Agent For Truth
Joe Banister is the only IRS Criminal Investigation Division Special Agent ever to investigate allegations that the IRS fraudulently and illegally administers and enforces the federal income tax and report his investigation results to his IRS superiors. Rather than address legitimate concerns raised by one of the agency’s own criminal investigators, Banister’s IRS superiors suspiciously refused to address IRS wrongdoing raised in his report and instead encouraged him to resign. Observing that IRS management intended to cover up the deceit and illegal conduct alleged in his report and elsewhere, Banister had no choice but to resign from his position so that he could report his findings to the American public, in effect having to resign from his office in order to abide by his oath to support and defend the U.S. Constitution.
One of the things that promoters of packages, like Peter Hendrickson's Cracking The Code,  that tell you how to take advantage of their insights, neglect to mention is that pretty much the entire federal judiciary is part of the elaborate conspiracy.  That is why Irwin Schiff's sons Peter and Andrew, who agree with their father's interpretations, do not encourage others to emulate his behavior.  Another example of someone who might admire his father's stand on principle, but is himself conventionally tax compliant is Eric Hovind.  As Eric's father Kent, ending a long term in prison, faces new charges a Hovinidication movement has arisen.  The Hovindicators have put out a video that features Joseph Banister, at least briefly around 1:18 [youtubevid id="3AUVh_oYCwg"]

  The Income Tax In The United States Tax Court

Peter Hendrickson may have cracked the Code, but the Tax Court remains unmoved. Last month the Tax Court took up the matter of Mr. Banister's tax liability for the years 2003 through 2006.  The IRS was looking for around $180,000 tax and lots of penalties.  Things did not go well for Mr. Banister.
During the course of this case, petitioner did not deny receipt of the income determined in the statutory notice and did not identify deductions that had not been allowed. His arguments, his motions, his attempts to conduct discovery, and his cross-examination of respondent's witnesses at trial have been directed to his claim that the statutory notice was invalid because it was not signed by an authorized person and that, as a result, this Court lacks jurisdiction over his case.
That argument is kind of odd, because it is the taxpayer that invokes the Tax Court's jurisdiction by filing a petition. The Tax Court is an alternative to paying the tax and suing for refund. Nobody ends up in front of the Tax Court unless they ask to be there.
Petitioner has a history of pursuing frivolous arguments and rejecting the conclusions of every agency or court that has considered them. His argument that domestic income is not subject to Federal income tax has been restated by him in various filings, but the same conclusion has been rejected as frivolous in his administrative proceedings and in the Court of Appeals' opinion sustaining his disbarment by the OPR. No further discussion of petitioner's stale theories is warranted.
Mr. Banister did not put up any arguments that the Tax Court thought it worthwhile to consider on his tax liability, since he focused on a lack of signature on the statutory notice of deficiency.  The Court did have to consider whether the 75% fraud penalty should be assessed.  That is as bad as it gets short of forfeiting your liberty.  Mr. Banister was hit with it.
Because petitioner refused to testify, he has shown no plausible nonfraudulent explanation for his behavior. His arguments about the validity of the statutory notice are directed at events occurring long after the years in issue and do not reflect the relevant state of mind at the times his returns were due. By the time that the return for each year in issue was due, petitioner was clearly on notice that his positions regarding taxable income and duty to file returns were frivolous. His persistence in discredited arguments in the face of unanimous rulings by the courts negates good faith. Thus he has offered no defense to the inference of fraudulent intent to be drawn from the circumstantial evidence and objective facts found. Respondent's burden of proof has been satisfied.
The Tax Court gets to impose its own penalty for mishegas.  The maximum is $25,000, which is what they hit Mr. Banister with.  The Court was skeptical that the penalty would make much of an impression on him, but there is hope that it might dissuade others.
Petitioner has been undeterred despite loss of his privilege to practice before the IRS, loss of his [*13] license as a certified public accountant, and other losses in litigation. Adding a penalty to his substantial tax debt may not dissuade him. However, serious sanctions also serve to warn other taxpayers, particularly those that he purports to counsel, to avoid pursuing similar tactics.
Other Coverage

Joe Kristan, much quicker on the draw than I, covered the case right after it came out.  He shares my bewilderment at those who have drunk the "tax honesty" Kool-Aid never getting that whatever the intrinsic merits of their arguments they just don't work in court.
I doubt Mr Banister is done in court. It’s not typical of hard-core “tax honesty” adherents to just pay assessments. The IRS is likely to have to slog through the dreary process of levy and asset seizure now. For those who think that Mr. Banister actually understands the tax law, this dismal record of assessment and collection litigation should be instructional. Unfortunately, anybody who still buys tax protest thinking is by definition a slow learner.
Russ Fox EA also thought the case worthy of mention. Other than that I did not find much coverage.  Of course it takes a Hovindologist like me to make the connection to the video defending Doctor Dino.

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