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"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
~ Learned Hand, Judge, U.S. Court of Appeals 2nd Circuit (1872-1961) Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)
To write an article that casts the Internal Revenue Service in a bad light may have its obvious consequences – retaliation by the IRS. So this report is written anonymously.
Sadly, America is fast becoming a fascist country without recognition by its citizens. Public anger is misdirected and divides the nation, which insulates the government from public pressure. Division is how government keeps the pressure off of itself – rich vs. poor, black vs. white, immigrant vs. non-immigrant, union vs. non-union worker. In the following report, it’s tax-payer vs. tax evader.
Furthermore, government can even violate the Constitution with impunity because it picks off dissenters one by one, breaching the rights of one, not all. It was Martin Niemoller (1892-1984), born in Lippstadt, Germany, who wrote the following:
"In Germany, they came first for the Communists, And I didn’t speak up because I wasn’t a Communist;
And then they came for the trade unionists, And I didn’t speak up because I wasn’t a trade unionist;
And then they came for the Jews, And I didn’t speak up because I wasn’t a Jew;
And then . . . they came for me . . . And by that time there was no one left to speak up."
The story of a tax evader versus the IRS is generally not sufficient to attract the attention of most Americans. Most Americans don’t side with tax evaders, feeling they are cheating others. Furthermore, most Americans cannot distinguish tax evasion from tax avoidance. Pay your fair share of taxes, just like all the rest of us! That is the common sentiment.
Even when Americans are asked if they know of any specific law which requires citizens to pay income taxes, most Americans look perplexed as to why a law would be needed in the first place. What is often heard is that every good American citizen should pay their taxes regardless of whether there is a law or not.
America has drastically changed from its earliest beginnings. America actually started out as a tax protest, the Boston Tea Party being the best specific example. Today, protest taxes and you are considered unpatriotic!
Onerous tax code
The IRS’ Taxpayer Ombudsman says the U.S. tax code has become so onerous, so complex, it costs Americans about $193 billion a year to fill out tax forms, and if improperly filed, the consequences could be forfeiture of property or garnishment of wages. As recently as the year 2000 almost half of U.S. wage earners filled out their own tax forms. Today 80% of tax filers must rely upon assistance in the form of software or a tax consultant. This means the tax code is beyond the comprehension of most citizens.
An estimated 7.6 billion hours a year are spent filling out tax forms for the IRS; and that figure does not even include millions of additional hours that taxpayers must spend when they are required to respond to an IRS notice or an audit (7.6 billion hours consume the equivalent of 3.8 million full-time workers).
The U.S. tax code is so complex that almost any tax filer could be found in violation of some rule and be subject to fines and penalties. Furthermore, the IRS can extend its reach beyond the Tax Code and employ laws intended to track down illicit drug dealers. In the case presented below, laws which require banks to report transactions of $10,000 or more.
Case in point
In the case presented below, laws require banks to report transactions of $10,000 or more to the IRS. The IRS claims the alleged offenders attempted to skirt around this law by writing checks just under $10,000 so as to avoid detection by authorities and to evade taxation on income. In legal terms, this violation is called "structuring." It was initially defined in the context of drug dealers who would use many small bank transactions to evade detection. The IRS has elected to use this structuring law to prosecute anyone whom they can make it appear has attempted to evade government detection and therefore, taxation.
Now it is used against a Christian ministry that had no intent to defraud, and individual checks for $9500 and $9600 were cherry-picked over a 2-year period from among weekly checks written to make payroll. The employees were paid in cash and the checks were sometimes written for amounts as low as $2000 or as high as $12,000. Checks written for $6200 and $7800 were not considered "egregious enough."
Any citizen who writes checks for amounts just under $10,000 could be sent to jail. In some instances, even when all taxes are paid, the IRS has deemed transactions under $10,000 to be structured.
How would those accused of structuring have prevented the problem? They would have had to demand that their bank report these less-than-$10,000 transactions to the government so as to avoid potential prosecution. There is no law that would force banks to report transactions below $10,000.
What about privacy? Must the government know everything its citizens do? But citizens serving on a jury panel are likely to ask, what have you got to hide?
Assume for a moment there is no argument that the "tax evader" was actually "evading" taxes. Does that give the Federal government the right to over-prosecute a citizen, tax him for every dime he ever made, use laws intended to deal with drug dealers, and invoke penalties and fines that even convicted drug dealers don’t face?
Who cares, he’s a tax evader, right? That’s just what must have been going through a jury’s mind two years ago in Pensacola, Florida.
The ordeal
Without warning, in the early morning on a day in 1996, Internal Revenue Service agents, sporting seizure papers and accompanied by police officers, towed away cars parked on Cummings Road in Pensacola, Florida. So began a long ordeal between a Christian ministry and the Internal Revenue Service (IRS) that continues today.
IRS agents seized the property in a claim for $10,000 of unpaid taxes. The alleged tax violators had mailed written responses to the IRS, but IRS agents chose to seize property without notice rather than write a reply to the accused. What would become years of intimidation had begun.
The vehicles were later returned. But the accused had to take advantage of Florida law and file for personal bankruptcy to regain their vehicles.
Today the accused, a man and his wife, convicted of tax fraud, are spending their time in separate federal prisons. He won’t get out of jail till 2015. His wife has just now entered federal prison and will spend a year in jail.
Just how this couple was found guilty of tax fraud extends beyond a family dispute with a local branch of the IRS to public privacy and punitive issues as well as the right to a fair trial that deserve attention in a country that is fast losing its Constitutional freedoms.
Setting the stage
This story is not just that of a crank tax protestor, but that of a retired public school teacher who started a ministry for children to learn about dinosaurs.
In 1989 Kent Hovind and his wife Jo had begun a ministry to educate Christians that they did not evolve from monkeys but rather were made in the image of God, in a six-day creation as spelled out in the Bible.
The Hovind’s called their ministry Creation Science Evangelism (CSE), and they produced videotapes that have been played worldwide. The tapes were not copyrighted and anyone was invited to duplicate them free of charge. Hundreds of thousands of these tapes were copied and distributed throughout the world.
Kent Hovind fondly became known as "Dr. Dinosaur" for his popular presentations to young children that the dinosaurs did not live millions and millions years ago but rather were created thousands of years ago as the Bible describes.
Kent became known for his public presentations where he demonstrated for children how to launch a paper airplane that would fly over a building, and how to shoot rubber bands to hit an object the size of a light bulb from 30 feet away. This wowed children.
Kent was frequently late for appointments because he stopped to help someone stranded on a roadside with a flat tire or a dead battery.
Hovind went so far as to challenge biology professors and teachers of evolution to open debates. Videotapes of these debates made for interesting viewing as time after time Hovind tore into the holes in evolutionary thinking. Hovind even offered a $250,000 reward for anyone who could provide empirical evidence for evolution.
Vow of poverty
Back in 1989, Kent Hovind officially took a vow of poverty, as Roman Catholic priests who belong to an "order" do today. Catholic priests who take a vow of poverty, which is recognized by the IRS, are exempt from paying Federal income tax. For those who have taken such a vow, earnings are considered the income of the religious order, or in Hovind’s case, part of his ministry. In essence, Hovind owned nothing, had no salary, and all of his needs, housing, food, transportation, were met by the ministry. He had no personal wealth, and he was not an owner of any real estate or other property, the ministry was. All of CSE’s real estate was put into a trust. Years later, newspaper reports nebulously reported Hovind failed to pay his taxes. It was a moot point. Hovind, like ordered Catholic priests, officially had no income.
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