As seminar crowds go, the one at the hotel in Irvine was eclectic. Longhaired men in suits and women in flowing dresses jostled with elderly people in wheelchairs and walkers as they sampled organic foods and anti-tax paraphernalia.
But they were united as they scrambled for their seats when a slim, dark-haired accountant named Joe Banister got up to speak at the Health and Freedom Rally.
Banister is their kind of hero. "I'm a big fan of his," said Robert Schulz, chairman of We the People, a Washington-based anti-tax group that helped organize the seminar.
For five years, Banister had been an IRS special agent, with a gun and a badge, sworn to uphold the tax laws of the United States. Then, in the mid-1990s, he began to have doubts about his calling.
He became convinced that the tax laws were unconstitutional. The 16th Amendment, which established the income tax, was improperly ratified by the states, he came to believe. And because the Internal Revenue Service doesn't collect taxes in person, a legal principle called "voluntary compliance" should, he decided, make tax payments optional.
"There are laws that have been passed by Congress that do require some classes of people and/or entities to pay the federal income tax," Banister said in an interview. "But that group of people is not as big or large a group as the American people have been led to believe."
Banister's theories have been discredited. The Supreme Court rejected the argument about faulty ratification in 1916, and other claims that the income tax is illegal have gone nowhere.
But schemes to dodge income taxes are proliferating on the Internet and at anti-tax seminars like the one at the Atrium Hotel in Irvine last month. And after a lapse in enforcement, the IRS is starting to crack down on tax violators like Banister and Irwin Schiff, author of "The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax," according to lawyers and others who track the agency.
"Schiff and Banister have been proselytizing their anti-tax philosophy for so many years that it has reached a boiling point," said Elliott Kajan, a partner at Beverly Hills tax law firm Kajan Mather & Barish. "It is the government's expectation that if the charges against them are proven, it will have a profound effect in communicating to others that the IRS now means business."
IRS officials won't say they have ever been soft on people who won't pay taxes. But they do acknowledge that enforcement took a hit from budget cuts in the late 1990s that forced deep reductions in staffing. Recent gains in staff productivity, partly because of Americans' increased use of the Internet for filing tax returns, have allowed the agency to free up additional resources for enforcement, IRS Commissioner Mark W. Everson said in recent testimony to Congress.
Criminal tax prosecutions in 2003 reached 1,353, a 32% increase from the year before.
Although the number of cases referred to the Justice Department for prosecution may still seem paltry, Dale Hart, an IRS deputy commissioner, pointed out that criminal prosecutions are a last resort. Most cases are either settled in civil court or resolved when the IRS sends tax violators a letter demanding that they pay up, said Hart, the IRS official in charge of individual taxpayer compliance.
"We take these people very seriously," she said, referring to anti-tax authors, lecturers and others. "We prosecute them; we get civil injunctions against them; we spend time searching the Internet trying to figure out who they are and stop them from selling this kind of stuff."
At the same time, Hart and others say, the IRS continues to concentrate its enforcement efforts on big-time tax cheats. After all, people who buy how-to books and videos to duck Uncle Sam tend to have smaller tax liabilities than those who hide money in offshore accounts or squirrel it away in complex tax shelters.
Armed With Credentials
Just how many people refuse to pay taxes as a kind of protest is unclear. Hart said the number was probably in the thousands. Schulz of We the People Foundation contends that there are tens of thousands -- and perhaps hundreds of thousands -- of Americans who thumb their noses at the IRS and refuse to file tax returns.
To this group, Banister is an icon, in large part because of his former career as an IRS agent.
"This person has credentials," Kajan said. "That makes him a little more dangerous to the government than a person off the street."
Banister, a graduate of San Jose State, joined the IRS in 1993 after spending several years in private practice as an accountant. His job as a special agent in San Jose was to chase down the most serious tax violators. This group includes drug traffickers and other criminals, which is why Banister packed a gun.
He said his conversion came after about five years on the job, while he listened to anti-tax activist Devvy Kidd on a talk radio program.