Second Circuit Opines that Tax Protestor/Defier Arguments for Lack of Criminal Jurisdiction are Bogus (1/1/20)

In United States v. McLaughlin (2d Cir. Dkt 19-308-cr Opinion 12/30/19), here, McLaughlin was convicted of making false statements to IRS (presumably the charge was tax obstruction, § 7212(a)) by submitting false documents intended to have the IRS audit and assess penalties against a state judge.  McLaughlin appealed, claiming that the district court did not have jurisdiction, a genre of tax protestor/defier argument “consistent with a ‘Sovereign Citizen’ ideology.”

Courts are confronted with this genre of argument often and routinely bat them down.  So, why did the Second Circuit, which often issues summary orders in routine and frivolous cases, decide to issue a full opinion?  The Court says:

McLaughlin’s argument here goes to the very heart of our authority to hear Federal criminal cases. It raises an issue that warrants a clear statement from this Court, to deter future litigants from making similar claims.    

The bottom line, as readers of this blog would expect, that the Second Circuit holds that the district court had jurisdiction.

Short opinion.

JAT Comment:

Maybe the opinion will circulate in the communities of taxpayers to whom it is targeted.  But, I doubt that, if any are deterred by the opinion, it won’t be many and members of these communities will continue to undertake the underlying behavior resulting in their prosecution where their only or, at least, preferred "defense" is this genre of argument.

The opinion will give district court judges additional reason to summarily dispose of similar arguments.

DOJ Tax Testimony to House Oversight Committee (5/20/15)

Caroline Ciraolo, AAG DOJ Tax, has testified in a the House Subcommittee Hearing on Oversight of DOJ Tax.  Her prepared remarks are here.

I offer key excerpts for tax crimes (setting aside Stolen Identity Refund Fraud), and offer limited comments:

To help achieve uniformity in nationwide standards for criminal tax prosecutions, the Tax Division’s criminal prosecutors are broken into 3 sections and authorize almost all grand jury investigations and prosecutions involving violations of the internal revenue laws. The Division authorizes between 1,300 and 1,800 criminal tax investigations annually.  Alone or in conjunction with Assistant United States Attorneys, Tax Division attorneys prosecute these crimes after determining that there is a reasonable probability of conviction based on the existence of sufficient admissible evidence to prove all of the elements of the offense charged. And all criminal tax appeals are handled by our Criminal Appeals and Tax Enforcement Policy Section. 

JAT Comment:  I don't know what is meant by this sentence:  "The Division authorizes between 1,300 and 1,800 criminal tax investigations annually." I assume they mean that number of matters that are brought before the grand jury.  I have said before that I am not sure DOJ Tax has authority to conduct tax investigations independent of a grand jury.  More importantly, I would have thought that indictments or prosecutions would be the better metric rather than investigations.

Criminal Investigation and Prosecution 

Criminal Trial. In addition to our extensive civil practice, the Tax Division authorizes nearly all prosecutions arising under the federal tax laws except for excise taxes and criminal disclosure violations. In most cases, Tax Division prosecutors either conduct or supervise these prosecutions, often in partnership with prosecutors from the United States Attorneys’ Offices. The Division’s criminal goals are to prosecute criminal tax violations and to promote uniform nationwide criminal tax enforcement. In many cases, the Tax Division receives requests from the IRS to prosecute violations after the IRS has completed an administrative investigation. In other cases, the IRS asks the Tax Division to authorize grand jury investigations to determine whether prosecutable tax crimes have occurred. Tax Division prosecutors review, analyze, and evaluate referrals to ensure that uniform standards of prosecution are applied to taxpayers across the country. In the past few years, the Division has authorized between 1,300 and 1,800 criminal tax investigations and prosecutions each year. After tax charges are authorized, cases are handled by a United States Attorney’s Office, by a Tax Division prosecutor, or by a team of prosecutors from both. Tax Division prosecutors also conduct training for IRS criminal investigators and Assistant United States Attorneys, and provide advice to other federal law enforcement personnel, such as the Drug Enforcement Administration (“DEA”) and the Federal Bureau of Investigation (“FBI”). 

 The crimes investigated and prosecuted by the Tax Division include attempts to evade tax, willful failure to file returns, and submission of false returns, as well as other conduct designed to violate federal tax laws. The crimes may be committed by individuals, business entities, or tax preparers and professionals. These cases often encompass tax crimes where the source of the individual or business income is earned through legitimate means – as examples, a restaurateur who skims cash receipts; a self-employed individual who hides taxable income or inflates deductions; or a corporation that maintains two sets of books, one reporting its true gross receipts and the other - used for tax purposes - showing lower amounts. Prosecutions in these cases often receive substantial attention in the local and national media, and convictions remind law-abiding citizens who pay their taxes that those who cheat will be punished.  

 It is not uncommon for tax crimes to be committed during the course of other criminal conduct, such as securities fraud, bank fraud, identity theft, bankruptcy fraud, heath care fraud, organized crime, public corruption, mortgage fraud, and narcotics trafficking. Tax Division prosecutors work closely with the United States Attorneys' Offices on these issues. In addition, Tax Division prosecutors investigate and prosecute domestic tax crimes involving international conduct, such as the illegal use of offshore trusts and foreign bank accounts used to conceal taxable income and evade taxes. As tax crimes have become more complex and international in scope, so has the workload of Tax Division prosecutors. In addition to the traditional cases involving unreported legal source income, over the last several years a greater proportion of our cases involve high net worth taxpayers and tax professionals who sell and implement dubious tax schemes. During FY14 Division prosecutors obtained 121 indictments and 134 convictions (not including the additional criminal tax prosecutions handled exclusively by United States Attorneys’ Offices). The conviction rate for cases brought by Tax Division prosecutors generally exceeds 95%.

Strange Behavior Even by Tax Protestor / Defier Standards - Mens Rea for the Crime and Competence for Trial (2/3/14)

In United States v. McQuarry, 2014  U.S. Dist. LEXIS 9529 (D MN 2014),  here, the defendant "was indicted for conspiracy to defraud the United States in violation of 18 U.S.C. § 286 and for making false, fictitious, or fraudulent claims upon or against the United States in violation of 18 U.S.C. § 287."  (I quote these criminal statutes below.) The defendant fell in the category that the court described as "tax protestor," but "even by tax-protester standards, McQuarry's arguments have been strange and seem to have become stranger."  The Court gives examples of strange behavior in the pretrial skirmishing.  Focusing on the strange behavior even by tax protestor standards, the Court says:

Moreover, unlike many tax protesters, McQuarry appears to actually believe the frivolous arguments that she is making — not only to believe them, but to have become quite emotionally invested in them. In the Court's experience, some tax protesters do not appear to believe many of the arguments that they make, but appear instead to be trying to find some kind of a "loophole" to escape being held responsible for not paying taxes. Other tax protesters appear to be quite sincere, but they can at least carry on a rational conversation about their beliefs. They make arguments in a respectful and understandable way and, when their arguments are rejected, they accept the fact that the court has ruled and move on. But McQuarry appears to be unusually devoted to her views. 

For example, at a hearing on the morning of January 21, 2014, McQuarry displayed great emotion — indeed, started weeping — in frustration over the prosecutor's unwillingness to accept her offers to "settle" this case. These "settlement" offers appear to consist of McQuarry purporting to give the government permission to take money that does not really exist out of a trust account that does not really exist. Rather than take the advice of a respected and experienced defense attorney, McQuarry seems to troll the fever swamps of the Internet and to regard what she reads there not merely as presenting possible loopholes that she can exploit, but as presenting the Gospel truth — even in the absence of any evidence that these arguments have ever been accepted by a court or resulted in the acquittal of a defendant. 

McQuarry's comments at the January 21 hearing — and, more importantly, her many pro se filings — cause the Court to question whether she understands the nature of the proceedings against her. The Court has explained on multiple occasions that this is a criminal case, in which the government is accusing McQuarry of violating a criminal statute. Yet no matter how many times this is explained to McQuarry, she persists in treating this case as a private dispute over an alleged debt — a dispute that could be "settled" if the government would just take the make-believe money out of the make-believe trust account. And, indeed, someone reading McQuarry's papers — with their repeated invocations of the ancient maxims of equity and citations to archaic sources — might think that this case was being tried in 1814 in the Court of Chancery. 

McQuarry's demeanor before the Court has also become more erratic. As the Court has noted, McQuarry became highly emotional at the January 21 hearing, repeatedly interrupting the Court and weeping with frustration about the government's refusal to accept her offers to "settle." McQuarry has not before acted so emotionally during a hearing, but the government has informed the Court that McQuarry filed papers with the United States Supreme Court in which she threatened to commit suicide if she did not receive the relief she sought. Similarly, at the January 21 hearing, when the Court told McQuarry that it may have to order her detained because she rescinded her signatures on her appearance bond and on the order setting the conditions of her release [see ECF No. 144], McQuarry told the Court that it might as well "kill" her. These kind of statements are not typically made by competent litigants. 

The Court is also concerned that McQuarry gives her own highly idiosyncratic meaning to ordinary English words. For example, McQuarry told the Court at the January 21 hearing that she could not "represent" herself in this proceeding because it would require her to "re-present" herself as a human being, which, in turn, would somehow offend God. McQuarry's use of the English language is so idiosyncratic that it is difficult for the Court to carry on a conversation with her, because the Court is never certain what she is saying. 

Taken as a whole, McQuarry's behavior has raised sufficient doubt whether she lacks "a rational as well as factual understanding of the proceedings against [her] . . . ." Ghane, 593 F.3d at 780 (quotation omitted).

The Schiffs Think Their Dad is "Right" (12/20/13)

I have previously written on the quixotic -- even tragic -- adventures of Irwin Schiff.  See Irwin Schiff's 2255 Denial Affirmed on Appeal (Federal Tax Crimes Blog 11/14/13), here; and Schiff, a Tax Protestor, Loses 2255 Motion to Vacate Conviction (Federal Tax Crimes Blog 9/29/12), here.  Mr. Schiff has been for a number of years a prominent player in the tax protestor field.  He has been twice convicted for his conduct.  Peter Reilly who writes a blog on tax issues of individuals, businesses and more has written a couple of blogs on Mr. Schiff.  Peter's blogs focus on Mr. Schiff's sons who believe that, however quixotic, their father's basic constitutional claim is correct at some level.  See Andrew Schiff Does Not Recommend That You Imitate His Father Irwin (Forbes 12/20/13), here; and Euro Pacific Capital's Peter Schiff Defends His Tax Protesting Father Irwin Schiff (Forbes 12/15/13), here.  I highly recommend Peter's blogs to readers of this blog.

The general thrust of Peter's most recent blog is that the Schiff's claim that some early cases establish the unconstitutionality of the income tax as it is applied to most taxpayers.  Peter says:

I heard from Andrew Schiff, Peter’s younger brother who works at Euro Pacific Capital, the investment firm Peter founded.  He wanted to emphasize a point that his father raised in his appeal, but he agreed to answer a couple of my questions.  The most important one was whether he and his brother recommend that people imitate their father.  He said absolutely not.  ”Don’t do it.  It is a bad idea.” Andrew and Peter both think that their father’s interpretation is correct, with Peter being perhaps a bit more vehement about it.  Nonetheless, they both recognize that the whole weight of the judiciary is on the other side.  Many proponents of positions similar to Irwin Schiff’s neglect to provided this important caveat to those they preach to.

The federal courts have heard hundreds, probably thousands, of tax protestor arguments of variations of the same theme.  Those courts have rejected the arguments.  The Schiffs' position is that the courts are wrong.  Which, in turn, make those courts wrong in punishing Irwin Schiff.

The problem as I see it is that words are indeterminate.  I am not a big fan of the plain meaning of words.  Context and history and nuance contribute to the meaning of words.  Those of my generation learned in the first week of law school Justice Oliver Wendell Holmes famous quote (Towne v. Eisner, 245 U.S. 418, 425 (1918), here):

A word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used.

The meaning of words changes; meaning evolves, sometimes subtly sometimes dramatically.  It is all in interpretation.  Those who study the Bible know that it is all about interpretation which can make the words mean something that is not self-evident or even what the words might have originally meant (if we even know what they originally meant; too bad we don't have legislative history for the Bible).  The words that the courts have interpreted to mean that taxes are constitutional are their meaning today, regardless of what the constitution may have meant to earlier interpreters..

Save-A-Patriot Did Not Save a Doctor

Yesterday, the Fifth Circuit decided a case, United States v. Miller, 588 F.3d 897 (5th Cir. 2009), here, sustaining a medical doctor's conviction for tax evasion, § 7201. The issues decided are not novel, but should reinforce what the practitioner or student probably already knows. The key points are:

1. A misdemeanor failure to file case became a felony evasion case because, in addition to failure to file, there were significant affirmative attempts to evade. The Court of Appeals said in addressing the lower court’s denial of the motion for acquittal:

The evidence at trial sufficiently demonstrates Miller's evasion. It is undisputed that he failed to file tax returns for tax years 2000 and 2001, as charged in the indictment. Further, Miller acted affirmatively when he converted payments made to the clinic to cash, money orders, and cashier's checks. Witnesses testified that Miller's practice of converting payments made to the clinic made it difficult for the IRS to determine his income. These affirmative acts had the "likely effect of mislead[ing]" the IRS, and precluded the agency from effectively assessing his tax liability. Spies, 317 U.S. at 399; Robinson, 974 F.2d at 577. Moreover, Wolff testified that the Medical Manager software on Miller's clinic's computers included double sets of billing records. Viewing the evidence in the light most favorable to the verdict, the affirmative acts of keeping double records and conversion, coupled with the failure to file, support a finding of evasion.

2. The doctor joined a tax protestor / defier movement, called "Save-A-Patriot" to give his evasion some semblance of legitimacy, at least in giving his evasion the opportunity to assert the Cheek defense. He was the sole defense witness, testifying

that in 1995, after being audited by the IRS, he joined Save-A-Patriot. He also studied materials provided by Save-A-Patriot. Based on his study of the materials and of the Internal Revenue Code, he believed that the income tax system was voluntary and that he was not required to pay taxes, though he had filed tax returns in the past.

Tax Protestor or Tax Scholar - The Geithner Defense

I was reading yet another tax protestor criminal case (United States v. Hendrickson, 664 F. Supp. 2d 793 (ED MI 2009)), and found references to protestor or scholar, which reminded me of the old nursery rhyme:

Tinker, Tailor,
Soldier, Sailor,
Rich Man, Poor Man,
Beggar Man, Thief.

See Wikipedia entry here.

Tax protestors -- the bad amongst which DOJ now calls tax defiers -- are not normally noteworthy to mainstream tax practitioners or students, but in the nursery rhyme litany above, most would be characterized as thiefs, and certainly not protestors or scholars (OK, they are not in the litany, but perhaps we could insert them). These guys are just tax terrorists seeking to throw a monkey wrench or IED equivalent into the tax system. Still, I think a snippet from Hendricksen is interesting because it deals with the Geithner defense (you didn't prosecute Geithner, therefore you can't prosecute me). Hendricksen had published how to tax protest books made the standard arguments and even for himself had bought into and practised his assertions. In his criminal case, he asserted inter alia that the Government had selected him because of his prominence in the tax protestor community (through his book, Cracking the Code, and web site). On that issue, the defendant invoked a variation of the Geithner defense. Here's how the court dealt with the argument, nicely also handling his claims that he was a scholar rather than a protestor:

In any event, whether Defendant is more properly characterized as a "protestor" or a "scholar," the Government has precisely the same legitimate interest in prosecuting him. Regardless of whether Defendant has affirmatively sought notoriety, fame, or publicity, and regardless of whether he has urged others to follow his lead or has instead attempted to dissuade them from doing so, he acknowledges that "thousands" of people have read Cracking the Code, that a significant number of these readers have "filed tax forms consistent with" his analysis of the tax laws as elucidated in this book, and that this has resulted in the IRS issuing "millions in refund checks to filers who had claimed that money was improperly withheld." (Defendant's 1/15/2009 Motion to Dismiss, Br. in Support at 3 (footnote omitted).) Under these circumstances, the Government could permissibly conclude that the prosecution of Defendant would serve as an effective deterrent to those who might be inclined to apply his analysis to their own tax filings, and that this might staunch the flow of more widespread, but potentially harder to detect, submission of "zero wage" tax forms by readers of Cracking the Code. See Kelley, supra, 769 F.2d at 218. Indeed, the courts have recognized that prominence alone -- whether derived from protest activities or from political or social stature in the community -- is a permissible factor in selecting individuals for prosecution. See, e.g., United States v. Hastings, 126 F.3d 310, 314-15 (4th Cir. 1997) ("[A] person's public renown may be properly considered among other factors when deciding whether to pursue criminal sanctions for a violation of the law."). n16

n16 Notably, by citing Treasury Secretary Timothy Geithner and former Senate Majority Leader Tom Daschle as individuals who have "blatantly and admittedly violated the tax laws" but have nonetheless avoided criminal prosecution, Defendant's 5/22/2009 Suppl. Br. at 3), Defendant implicitly acknowledges the value of prosecuting prominent violators of the tax laws, regardless of whether such violations stem from any opposition to those laws. That the Government has failed to prosecute all such prominent violators surely does not detract from its legitimate interest in doing so in a particular case. [END OF FOOTNOTE]

Finally, the Court fails to see how Defendant could possibly strengthen his appeal to First Amendment principles, and thereby distinguish the rulings in Hazel and the other above-cited cases, by denying that he has engaged in any sort of protest against the Government, its laws, or its tax policies. These decisions, after all, do not recognize the Government's right to prosecute a defendant because of his or her protected First Amendment activity, but in spite of this protected activity. The First Amendment embodies "a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials." New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S. Ct. 710, 721 (1964). Moreover, the Supreme Court has emphasized that "[t]o punish a person because he has done what the law plainly allows him to do is a due process violation of the most basic sort." Bordenkircher v. Hayes, 434 U.S. 357, 363, 98 S. Ct. 663, 668 (1978). The law of selective prosecution rests upon precisely these principles, permitting limited judicial inquiry into a matter that ordinarily "rests entirely in [the prosecutor's] discretion" -- namely, "the decision whether or not to prosecute," Bordenkircher, 434 U.S. at 364, 98 S. Ct. at 668 -- in order to ensure that the exercise of this discretion remains within "constitutional constraints," Wayte, 470 U.S. at 608, 105 S. Ct. at 1531 (internal quotation marks and citation omitted). Under this law, a prosecutor has no greater (or lesser) latitude, and the relevant constitutional constraints are no weaker (or stronger), when the subject of prosecutorial discretion is a vehement protestor against the government than when he or she is engaged in scholarly discourse. To hold otherwise would be to permit what the law of selective prosecution is designed to prohibit -- namely, prosecutorial decisions based upon the nature or content of an individual's protected First Amendment expression.

Plainly, then, it is of no aid to Defendant to establish that he is a scholar engaged in a neutral study of the tax code, rather than a critic of or protestor against federal tax law or policy. Both "abstract discussion" and "vigorous advocacy" qualify as protected forms of expression under the First Amendment, see N.A.A.C.P. v. Button, 371 U.S. 415, 429, 83 S. Ct. 328, 336 (1963), so the proper disposition of Defendant's claim of selective prosecution cannot turn upon the characterization of Cracking the Code as one or the other. In either event, Defendant's burden is precisely the same -- to show that he was selected for prosecution on the impermissible basis of his protected speech, and not on grounds (such as prominence) that the Government may legitimately consider. As explained, Defendant has not made a sufficient showing on this point to warrant discovery on his claim of selective prosecution, much less dismissal of the charges against him on this ground.

Interestingly but perhaps not surprisingly, Hendricksen is represented in this judicial crusade by Mark Lane, an attorney and noted conspiracy theorist who wrote Rush to Judgement among other books. Mr. Lane's Wikipedia entry is here. Mr. Lane has also represented another well known tax protestor, Robert Schultz. See United States v. Schultz, 517 F.3d 606 (2d Cir. 2008) (Lane on brief for Schulz appearing pro se), and We the People Foundation, Inc. v. United States, 485 F.3d 140 (D.C. Cir. 2007) (with Schulz on brief).

Tax Defiers - Is Texas Governor Perry One?

Jonathan Turley this morning posted here a very interesting piece on Texas Governor Perry's rantings about Texas' right to secede from the union. Governor Perry of course hopes to fan the flames of discontent of the rabid conservative base to propel him into a potent national force in the Republican Party. Of course, you might guess that a major discontent among this group is the belief that they are being abused by taxes, which, as Justice Holmes said, are the cost of the a civilized society (apparently, their belief is that the United States' society is not civilized so they do not or should not have to pay the cost). Governor Perry is just pandering to a tax defier base (hopefully just a fringe subset -- albeit vocal subset -- of his party). Isn't this just another form of tax defiance which has given the IRS and DOJ so much angst and drawn civil and criminal cases? Certainly, these genre of ranting is just as societally objectionable as the mainstream, non-governor tax defiance claims. Should the IRS / DOJ bring out its anti-tax defier weapons here or should they just let the Governor rant into irrelevance?

DOJ Tax Division Promo Piece on 2008 Accomplishments

On April 13, 2008, DOJ Tax issued a self-promotion press release its accomplishements in 2008. Much of the release is related to criminal prosecutions. I excerpt those portions.

The Tax Division has assisted the Internal Revenue Service (IRS) in tracking down tax cheats who use offshore accounts, combating abusive tax shelters, stopping tax defiers and shutting down tax schemes and scams. During FY 2008, the Tax Division also successfully defended refund suits against the United States representing claims of nearly $803 million, and collected, through affirmative litigation, over $178 million. The Division’s budget in that period was less than $93 million.

* * * *

Combating Offshore Tax Evasion

The Tax Division has devoted significant resources this past year to combating offshore tax evasion and locating hidden offshore assets. In June 2008, Bradley Birkenfeld pleaded guilty to conspiring with an American billionaire real estate developer, Swiss bankers and his co-defendant, Mario Staggl, to help the developer evade payment of $7.2 million in taxes by assisting in concealing $200 million of assets in Switzerland and Liechtenstein.

In February 2009, the Tax Division, together with the U.S. Attorney’s Office for the Southern District of Florida, entered into an unprecedented deferred prosecution agreement (DPA) with UBS AG, Switzerland’s largest bank. As part of the agreement, UBS agreed to provide the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business. UBS also admitted in the agreement, in great detail, how it had conspired to defraud the United States by impeding the IRS. UBS also agreed to promptly exit its cross-border business with U.S. clients, to provide continuing cooperation with the government’s investigation, and to pay the United States $780 million.

As part of its continuing review of offshore account information received, in April 2009, the Tax Division, together with the U.S. Attorney’s Office for the Southern District of Florida, charged Steven Michael Rubinstein, of Boca Raton, Fla., with filing a false income tax return. According to court records, Rubinstein, a chartered accountant, failed to disclose in his 2007 Form 1040 that he had an interest in, or signature authority over, a financial account at UBS in Switzerland. Additionally, Rubinstein failed to report the income he earned on any UBS Swiss bank accounts. According to court records, from 2001 through 2008, it is alleged that Rubinstein repatriated approximately $3 million into the United States to purchase property and build a personal residence in Boca Raton. Additionally, it is alleged that Rubinstein deposited and sold more than $2 million in South African Krugerrands through his UBS Swiss bank accounts.

The Tax Division is also seeking from UBS approximately 52,000 additional names and account information of United States taxpayers. In February 2009, the Tax Division filed United States v. UBS (S.D. Fla.), a petition to enforce an IRS summons issued to UBS to obtain this information.

* * * *

Curbing High-End Tax Shelters

During the past year, the Justice Department and the IRS have continued their civil and criminal enforcement efforts against the promoters and facilitators of abusive tax shelters. Abusive shelters for large corporations and high-income individuals have cost the U.S. Treasury many billions annually, according to Treasury Department estimates. The Tax Division also has had great success in federal court defending the U.S. Treasury against tax shelter-related claims of large companies and individual investors. The Tax Division is currently litigating approximately 94 civil tax shelter cases or groups of cases. Among the successes during the past year in this area are the following:

• In September 2008, attorney Peter Cinquegrani pleaded guilty to conspiracy to commit tax fraud, aiding and abetting tax evasion, and aiding in the submission of false and fraudulent documents to the IRS, in connection with a fraudulent tax shelter called PICO.

* * * *

Stopping Tax Defiers

The Tax Defier Initiative, which the Tax Division announced in April 2008, targets persons who attempt to undermine our entire tax system. Tax defier cases traditionally involve individuals who spout rhetoric denying the fundamental validity of the tax laws as an excuse for not paying taxes, while also availing themselves of the benefits and rights that the United States provides to its citizens and residents. The number of tax defier cases referred for investigation or prosecution increased significantly during fiscal year 2008.

The success rate in tax defier prosecutions is very high. Some examples:

[Examples Omitted]