IRS handling autoworkers' tax protest circumspectly
Chicago — Just as regularly as income tax time rolls around every year, various traveling "tax experts" keep popping up with schemes to avoid paying income taxes.
Last fall, the Internal Revenue Service (IRS) noticed a flurry of dubious tax advice being offered in Michigan, particularly to workers in the General Motors plants in Flint and Pontiac. Following well-established IRS procedures, the IRS alerted employers in the area. So the employers were ready when some 3,500 workers filed new W-4 forms claiming either special exemption or scores of dependents to avoid having taxes withheld from their paychecks.
The employers advised the workers against filing fraudulent W-4 forms and warned them that the IRS would be notified.
As a result of employers' warnings and follow-up warnings from the IRS to workers refusing to have taxes deducted, the IRS reports that more than half of those who filed false forms now have turned in corrected W-4s.
how did Michigan's "tax revolt" start? According to young GM worker Dean Hazel in Pontiac -- who has not paid federal income taxes for three years -- the spark was a 1977 network television interview of a Connecticut Yankee named Irwin Schiff. That appearance led to a local radio call-show featuring Mr. Schiff, who operates a tax advisory service from Hamden, Conn.
Last week, after a three-year battle with the IRS, Schiff's appeals against criminal conviction "for willful failure to file a proper return" where rejected and he began a six-month penitentiary sentence.
His Michigan supporters say they are not surprised or discouraged by Schiff's imprisonment and $10,000 fine. This is simply one more IRS attempt to undermine the protest movement through harassment, they claim.
Dean Hazel was intrigued by Schiff's theories that federal income taxes violate the US Constitution -- and that in any case the tax shouldn't apply to "greenbacks" which have no constitutionl standing as legal currency.
So Hazel stopped paying his own taxes. Next he set up a club in Pontiac. Called We The People ACT (American Citizens Tribunal), the club holds tax-advice meetings and helps distribute Schiff's $35 "tax liberation kit" of pamphlets and tapes.
Hazel is convinced that "we have a lot of good law to stand on, enough so that the IRS is afraid to come into court." He also insists that the government's indirect taxes generate "three times what they need to defend the country, which is their only legitimate function."
He sees excessive taxation as a Communist plot "to pull down a free nation by destroying free enterprise with taxes."
Such arguments don't impress the IRS. "Throughout the years we have encountered pockets of noncompliance," IRS spokesman Larry Batdorf told the Monitor from Washington. He says protest numbers peaked at 15,000 six years ago , fell to 4,000 in 1976, then reached 14,250 last year.
Avoidance schemes promoted through local meetings regularly center around "Fifth Amendments arguments, mail-order minister schemes, and gold and silver," Mr. Batdorf explained. He noted that even the advisers who argue that greenbacks are an unconstitutional substitute for gold and silver "still insist on being paid in greenbacks."
Batdorf sees nothing unusual or unmanageable in the Michigan protest, which is minuscule when he set against the 93 million individual tax returns the IRS expects citizens to submit this year. But he does warn protesters that criminal charges were brought against 130 "flagrant cases" last year, with other tax protesters "at an absolute minimum, having to pay their tax, interest at 12 percent, and a penalty."
One recent recruit to the Michigan tax protest says his anti-income tax arguments are in line with President Reagan's philosophy. An active member of the We The People ACT club in Flint, GM worker Jack Ver Wiebe spends a good deal of his free time doing research in the Flint law library. He warns others not to join the protest without first digging into the law and understanding the consequences.
Mr. wiebe bases his main arguments on common sense, however, not law. He hopes to sway the nation before he has to face IRS charges in court. He sees evidence that the country is moving in his direction because "I go along with President Reagan that the working people are being taxed right out of existence."
He fully supports taxes on business profits -- and continues to pay taxes on hi s own part-time business.