When you hear the words “abusive tax shelter”, you tend to think about large scale operations a la KPMG. But that may be changing.
Recently, a federal judge has ruled that groups that distribute materials claiming that people have a right not to pay federal income taxes (so called “tax protestors”) are doing little more than “promoting an abusive tax shelter.” The ruling was the result of a lawsuit filed in April against Robert L. Schulz and his two groups, We the People Foundation for Constitutional Education Inc. and We the People Congress.
In his ruling, Senior Judge Thomas J. McAvoy of the Northern District of New York permanently enjoined Schulz and his groups from continuing to promote schemes that encourage the nonpayment of taxes. Judge McAvoy reasoned that Schulz and his groups are inviting people to break the law.
More importantly, Judge McAvoy has also ruled that those groups must turn over to the U.S. government the names, Social Security numbers and other identifying information about people who received the “Tax Termination Packages” from the groups. The packages are available for a “donation” of $20 on Schulz’ site.
It’s also worth noting that for all of Schulz’ insistence that his beliefs are legal, he makes no such representation in his materials. In fact, he has disclaimers on the materials that it is not legal advice and is “presented solely for educational purposes.” The judge noted, however, that such a disclaimer, taken together with the other information in the package does not provide a legal protection for Schulz. He also ordered that the groups provide copies of his ruling to all people who had bought or received tax plans; post a copy of his ruling on its Web sites and provide the U.S. government with the names of people provided with We the People materials.
Schulz has appeared in court several times before arguing the merits of his belief that the federal income tax system is voluntary. He was nominated as a “tax scam artist” on quatloose.com - you can visit the site for some interesting tidbits.
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