Source: http://tpgurus.wikidot.com/irwin-schiff
Timestamp: 2019-04-20 10:26:25+00:00

Document:
Irwin A. Schiff (1928 - 2015) was originally some kind of securities/insurance advisor and operated an insurance brokerage firm in Connecticut. In the late 1960s, he was ruined - losing his money and that of his clients — because of an investment in a tax shelter that was revealed to be a Ponzi scheme. See Jason Zengerle, "Hell Nay, We Won’t Pay!", March 27, 2009, The New York Times. He then somehow discovered that the federal income tax did not apply to him.
Irwin Schiff was convicted of criminal violations of the tax laws in three separate trials over a thirty year period, and served time in prison following each conviction. His last conviction, on October 24, 2005, was for conspiracy to defraud the United States, five counts of aiding and assisting in the filing of false federal income tax returns (i.e., the “zero returns” he prepared for his clients), attempting to evade and defeat the payment of tax, and six counts of filing false federal income tax returns, for which he was sentenced to 9 years and 7 months in prison and 36 months of supervised release, and ordered to pay $4,256,249.78 in restitution. United States v. Irwin A. Schiff, No. 2:04-CR-00119-1 (D.C. Nev. 3/14/2006), aff'd No. 06-10199 (9th Cir. 12/26/2007) (unpublished opinion). He was also convicted of 15 counts of criminal contempt for repeatedly refusing to comply with the rulings of the judge during his trial, for which he was sentenced to an additional one year in prison. Those convictions were vacated because of a procedural issue (see United States v. Cohen, 510 F.3d 1114, No. 06-10145 (9th Cir. 12/26/2007)), but the trial judge imposed a prison sentence of 11 additional months on remand. In a second appeal, Schiff argued that he was not competent to act as his own lawyer and should be granted a retrial, but that argument was rejected as well. United States v. Irwin A. Schiff, 2010 TNT 114-11, No. 08-10408 (9th Cir. 6/11/2010). Finally, his motion for post-conviction relief, claiming ineffective counsel because evidence of his bipolar disorder was not adequately presented during the trial, was rejected by both the district court and 9th Circuit Court of Appeals. United States v. Irwin A. Schiff, 544 Fed.Appx 729, 112 AFTR2d 6755 (9th Cir. 11/7/2013).
The United States also has a civil judgment against Schiff for back taxes, penalties, and interest totaling $2,651,187.51, plus interest and other statutory additions accruing after June 14, 2004. United States v. Irwin A. Schiff, No. CV-S-01-0895 (D.C. Nev. 7/12/2004), aff’d No. 05-15233, 2006 TNT 176-15 (9th Cir. 9/11/2006) (unpublished opinion; sanctions of $6,000 imposed), cert. den. No. 07-5812, 128 S. Ct. 321 (10/1/2007).
Schiff was enjoined from preparing tax returns, promoting his tax schemes, or selling additional copies of his book, The Federal Mafia. United States v. Irwin A. Schiff, KTC 2003-238, No. CV-S-03-0281-LDG (RDF) (U.S.D.C. Nev. 6/16/2003), aff’d 379 F.3d 621, KTC 2004-224, No. 03-16319 (9th Cir. 8/9/2004), cert. den. No. 04-1383, 546 U.S. 812, 126 S. Ct. 334 (10/3/2005).
For a fairly complete history of the losses of Irwin Schiff against the United States tax system, see Schiff v. United States, 24 Cl. Ct. 249, 252 (1991); Schiff v. United States, Civil No. N-86-354(WWE), 89-2U.S. Tax Cas. (CCH) par. 9551, 1989 WL 119410, 2, 1989 U.S. Dist. LEXIS 11807, 7 (D. Conn. Sept. 6, 1989) (summary judgment for United States in refund claim by Schiff for 1976 through 1978), aff’d 919 F.2d 830 (2nd Cir. 1990) (sanctions imposed for frivolous appeal), cert. denied, 501 U.S. 1238 (1991); United States v. Schiff, 876 F.2d 272 (2nd Cir. 1989); United States v. Schiff, 801 F.2d 108 (2nd Cir. 1986), cert. denied, 480 U.S. 945 (1987); Schiff v. Commissioner, T.C. Memo. 1992-183; Schiff v. Commissioner, T.C. Memo. 1984-223; Schiff v. Commissioner, 751 F.2d 116 (2nd Cir. 1984) (per curiam; sanctions imposed for frivolous appeal)); United States v. Schiff, 647 F.2d 163 (2nd Cir. 1981), cert. denied, 454 U.S. 835 (1981); United States v. Schiff, 612 F.2d 73 (2nd Cir. 1979).
While Schiff was in prison following his first criminal conviction, the IRS levied on his book royalties to pay his back taxes. Schiff tried to fight that also, but lost. See Schiff v. Simon & Schuster, Inc., 780 F.2d 210 (2nd Cir. 1985); Schiff v. Simon & Schuster, Inc., 766 F.2d 61 (2nd Cir. 1985) (per curiam; affirming order sanctioning pro se litigant damages and double costs).
In pleadings filed in federal court, Schiff himself cited the above history of failure, as well as the opinions of a lawyer, a psychiatrist, and a psychologist, as evidence that his actions are irrational and the result of a “mental disease or defect,” so that he is unable to form act “willfully” within the meaning of the provisions of the Internal Revenue Code relating to tax fraud. “Defendant Irwin A. Schiff’s Opposition to United States’ Motion for Summary Judgment,” United States v. Schiff, No. CV-S-01-0895 (D.C. Nev. 1/21/2004).
The only court case Schiff ever won was as a defendant in a civil action over a reward Schiff had offered. He had appeared on television and offered to pay $100,000 to anyone who could identify the section of the Internal Revenue Code that imposed any liability for tax. A man named Richard Newman identified sections 1, 6012, 6151, 6153, 7201, 7202 and 7203 in a telephone call to the television station the following morning and then sued Schiff when he refused to pay the $100,000. The 6th Circuit Court of Appeals agreed that Newman was right about the tax laws and that Schiff’s claim was “ridiculous,” but ruled for Schiff because Newman did not telephone the television station with the correct answer within the time specified in Schiff’s offer (i.e., during the time that Schiff was actually on the air). Newman v. Schiff, 778 F.2d 460 (8th Cir. 1985).
In 2007, while in federal prison, Schiff filed a petition in Tax Court appealing a collection due process determination by the IRS, and challenging IRS collection activities for his 1980-1985 tax debts. The government filed a motion for summary judgment, which caused the court to review the original petition and enter an order finding that Schiff's petition "contains certain statements, contentions, and/or arguments that the Court finds to be frivolous and/or groundless" and ordered the Schiff file a response to the motion. Irwin A. Schiff v. Commissioner, No. 21322-07L (U.S.T.C. 1/12/2010). Meanwhile, Schiff had filed a motion for sanctions against the government, the government had filed a response to the motion, and Schiff then filed a motion "to impose Rule 11 sanctions" and to strike "false and fraudulent" claims from the government response to Schiff's cross-motion for summary judgment. The court entered an order denying the motion for sanctions, finding that Schiff "continues to make certain statements, contentions, and/or arguments that the Court finds to be frivolous and/or groundless." (3/24/2010) The court later entered an order addressing Schiff's cross-motion for summary judgment in which the court found "virtually all of the statements, contentions, and/or arguments that petitioner makes in petitioner's cross-motion to be frivolous and/or groundless." Irwin A. Schiff v. Commissioner, No. 21322-07L (U.S.T.C. 8/6/2010). On March 10, 2011, the court granted the IRS motion for summary judgment, finding that Schiff was collaterally estopped from contesting IRS collection efforts by reason of the decision in United States of America v. Irwin A. Schiff, No. CV-S-01-0895-PMP(LRL) (U.S.D.C. Nev. 7/12/2004), affd. 240 Fed. Appx. 738 (9th Cir. 2006).
Irwin A. Schiff passed away in prison on October 16, 2015.
In his 2005 criminal trial, Schiff had two co-defendants: an employee and sometimes-girlfriend Cynthia Neun and another employee, Lawrence Cohen. Neun was convicted of conspiracy to defraud the United States as well as aiding and assisting in the filing of false income tax returns and sentenced to 68 months in prison. Cohen was found not guilty on charges of conspiracy, but was convicted of one count of aiding and assisting in the preparation of a false income tax return for one of Schiff's clients. His conviction was reversed on appeal because the trial judge erroneously excluded testimony offered by the defense (see United States v. Cohen, 510 F.3d 1114, No. 06-10145 (9th Cir. 12/26/2007). On June 16, 2009, Cohen pleaded guilty to aiding and assisting in the filing of a false tax return. Docket entry 582, June 16, 2009, United States v. Cohen, case no. 2:04-CR-00119, U.S. District Court for the District of Nevada. However, Cohen passed away on August 6, 2009, and his case was therefore dismissed. Docket entry 587, Aug. 17, 2009, United States v. Cohen, case no. 2:04-CR-00119, U.S. District Court for the District of Nevada.
Students of Mr. Schiff have not fared any better than Schiff in court.
United States v. Letscher, 83 F. Supp. 2d 367, KTC 1999-648 (U.S.D.C. S.D.N.Y. 1999), (footnotes and citations omitted).
United States v. Middleton, 246 F.3d 825, KTC 2001-185 (6th Cir. 2001), (conviction for attempting to evade or defeat income tax affirmed).
Lopez v. Commissioner, T.C. Memo. 2001-211, 2001 TNT 155-9 (civil fraud penalties upheld against taxpayer who stopped filing tax returns after reading Schiff’s book “How Anyone Can Stop Paying Income Tax”).
Steven Swan met Irwin Schiff in 1995 and, after hearing Schiff’s theories and talking with him, Swan bought Schiff’s books and even began teaching Schiff’s theories at seminars and preparing tax returns based on Schiff’s theories. The results were disastrous because Swan was forced to close his real estate business after the IRS assessed taxes and penalties against him and began levying on his bank accounts and other assets. Swan sued Schiff for misrepresentation, fraud, and negligence, but the suit was dismissed summarily. Steven A. Swan v. Irwin A. Schiff, No. 2:02-cv-00697 (U.S.D.C. Nev. 3/29/2004). Showing his typical compassion for his victims, Schiff publicly referred to Swan as “an idiot.” (Jason Pierce, “Author of ‘Voluntary’ Income Tax Theories Sued for Millions,” CNSNews.com (5/29/2002).) Swan himself was indicted and convicted for on 15 counts of preparing false income tax returns for others, two counts of filing false income tax returns for himself, and one count of corruptly impeding the administration of the tax laws, and was sentenced to nine years in federal prison. According to the Department of Justice, the federal judge increased Swan’s sentence above the federal sentencing guidelines because Swan obstructed justice by testifying falsely at trial and because the evidence at trial showed that Swan filed frivolous lawsuits against, threatened and sought the baseless criminal prosecution of IRS employees and other government officials who tried to assess and collect taxes from him.
United States v. Burdett, 962 F.2d 228 (2d Cir. 1992) (affirming conviction of defendant who was convinced in part by Schiff’s book entitled How Anyone Can Stop Paying Taxes that the filing of a tax return was voluntary, and that his wages were not taxable). In rejecting Burdett’s defense, the 2nd Circuit Court of Appeals stated “Burdett’s claim of a good-faith belief in his exemption was so baseless as to be a mockery of the good-faith defense. Measured by any known legal criteria, there is no support in the law for his view; it has been rejected so often that no one who, like Burdett, claims to have researched the question could still sincerely believe that someone in Burdett’s circumstances was exempt from the tax laws.” 962 F.2d at 229-230.
United States v. Payne, 978 F.2d 1177 (10th Cir. 1992) (affirming conviction of defendant who relied on Schiff’s books), cert. denied, 508 U.S. 950 (1993).
United States v. Dentice, 1999 WL 1038003 (9th Cir. 1999) (unpublished) (rejecting good faith defense in part because defendant could not reasonably rely on Schiff, who was neither a CPA nor an attorney and had himself been convicted of tax evasion).
Roth v. Commissioner, T.C. Memo 1992-563, 1992 TNT 194-22 (civil fraud penalties upheld against taxpayer who stopped filing tax returns after reading Schiff’s book “How Anyone Can Stop Paying Income Tax”).
United States v. Rowlee, 988 F.2d 1275 (2nd Cir. 1990).
United States v. Kenneth Heath, 525 F.3d 451, 2008 TNT 98-21, No. 07-1215 (6th Cir. 5/19/2008).
United States v. Robert L. Mosel, 738 F.2d 157 (6th Cir. 1984) (per curiam).

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