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Quatloos! > Tax Scams > Tax Protestors > Exhibit: Tax Protestor Dummies > Otto Skinner

Otto Skinner's condemnation
of the frivolous patriot arguments

By Otto Skinner

[Editor's Note: Found at original page author unknown.]

For many years, individuals have been urged by various "patriot" promoters to complete a Form W-4 claiming an "exempt" status in order to prevent an employer from withholding money for taxes. However, for over 15 years, it has been well known by these promoters that when an individual claimed "exempt" on a Form W-4, it would, almost without exception, cost the individual a $500 civil penalty under 26 U.S.C. 6682, and in many cases, the individual would be charged criminally under 26 U.S.C. 7205 and subsequently incarcerated for having made false statements on the Form W-4.

Not only has the "false and fraudulent" "taxpayer" Form W-4 caused individuals to be charged criminally for a misdemeanor under section 7205, but it has also provided the government prosecutors the "proof" they needed to establish an affirmative act of attempted tax evasion (a felony) under 26 U.S.C. 7201.

Of course, in addition to the $500 civil penalty came huge interest penalties assessed against a "taxpayer" for not filing and paying on time. Just talk to the people who got into this mess.

All the while, the self-proclaimed "experts" would claim that their "legal" position was correct and that the individuals were being unlawfully penalized and incarcerated. The fact is, the courts have simply allowed the individuals to trap themselves with arguments that have no legal validity.

My estimate is that hundreds, if not thousands, of individuals suffered criminal charges under 7201, 7203 and 7205, and hundreds of thousands, if not millions, of individuals suffered $500 civil penalties under 6682; all for having blindly followed some rather bad "legal" theories promoted by the self-proclaimed "experts".

The purportedly correct "legal" theory (combined with some other rather wild and flawed "legal" theories) was based on the claim that if an individual was not liable for (subject to) the tax, the revenue laws allowed him to claim "exempt" on a Form W-4. However, this is like suggesting to 85-year-old grandmothers that they should file for exemption under the military draft laws, when in fact, 85-year-old grandmothers are not subject to the military draft laws in the first place. They are not required to file for an exemption in order to avoid the military draft.

In an attempt to prevent individuals from being devastated from the use of flawed "legal" theories and arguments, a few of us have tried to make known certain facts. For many years, we pointed out that the Form W-4 (withholding allowance certificate) and various other tax forms are provided for the "taxpayers" to use to claim certain allowances (benefits) which Congress has provided for "taxpayers" who qualify for such allowances. We have pointed out that the "exempt" status was provided by Congress for certain "taxpayers" who owed no taxes the previous year and did not expect to owe any taxes for the current year. We have pointed out that there is no law against a person paying more taxes than he owes; i.e., there is no law requiring anyone to claim a benefit that Congress has provided by statute. It has also been pointed out that there is no law even requiring one who is subject to (liable for) a tax to claim a benefit on a withholding allowance certificate. (If the employer does not understand this, the problem is with the employer, not with the law, so don't get sidetracked at this point on another issue.)

Especially from 1986 on, I have shown that the term "taxpayer" is defined in the Code as any person subject to the applicable revenue law, and that the courts have ruled the revenue laws relate to "taxpayers" as defined, and not to nontaxpayers. See Economy Plumbing and Heating v. United States, 470 F.2d 585, at 589 and Note 3 at 590 (Ct.Cl. 1972). I have also pointed out that the term "subject to" means "liable for". See Black's Law Dictionary. In Houston Street Corp. v. C.I.R., 84 F.2d 821, at 822 (5th Cir. 1936), the Court stated, "We see no distinction between the phrases 'liable for such tax' and 'subject to a tax'." Yet, the self-proclaimed "experts" (both in and out of the legal profession) have chosen to ignore these simple truths.

It has also been pointed out that the "exempt" status, or any exemption allowed by Congress, applies to persons who are actually subject to (liable for) the tax, and that Congress essentially chose to give these "taxpayers" a break. This is much like Congress allowing corporations a break on capital gains.

The "taxpayer" forms, such as the Form W-4, are to be used by "taxpayers" to claim the benefit. They are not for an individual to use to prove that he is not subject to (liable for) the tax. As an example, whatever forms were used to claim an exemption from the draft (such as in the case of a young man being needed at home to work on the farm), the forms were to be used by the young men who were actually subject to the draft, and who would be drafted if it were not for the benefit (exemption) provided by Congress. They were not for the use or benefit of the 85-year-old grandmothers.

Because many, many people have blindly followed the purportedly valid "legal" theories promoted by the self-proclaimed "experts", and submitted the Form W-4 claiming to be exempt, it has provided the revenue agents and government prosecutors with the prima facie evidence they needed which indicated that the individual was a "taxpayer" who did not pay his taxes. And because so many people were suckered into these "legal" theories, it has provided the government prosecutors with a never-ending supply of suckers to be prosecuted in order to set examples for the rest of the people of the nation. Getting a conviction has usually been a slam-dunk for the prosecutors, who should be quite fond of the self-proclaimed "experts".

And all the while, the self-proclaimed "experts" chose to ignore the fact that the revenue laws (including the forms) apply to those who are subject to (liable for) a tax, and not to those who are not.

Next, the self-proclaimed "experts" have promoted the idea of completing "zero income" tax returns. People have been getting convicted for years for trying this theory. See United States v. Moore, 627 F.2d 830 (7th Cir. 1980). And of course, the Form 1040 provides the agents and prosecutors with even more prima facie evidence of "taxpayer" status, and such a form places the burden of proof right on the shoulders of the one making the claim on the form.

And if all of the above was not enough, the self-proclaimed "experts" are now even urging individuals to go to Tax Court ("taxpayer's" court) and urging the individuals to use their "administrative remedies". (Remember, Grandma doesn't have any administrative remedies to exhaust because she is not subject to the darned draft law in the first place.) How does an individual get to Tax Court? By acting like a "taxpayer", of course.

The Tax Court has jurisdiction only when the Commissioner issues a valid deficiency notice, and the taxpayer files a timely petition for redetermination. Scar v. C.I.R., 814 F.2d 1363 (9th Cir. 1987). (Emphasis added.) Some of you have even been told that the best way to control the taxing agencies is to use the agencies' administrative procedures and process. But ask yourself, if you subject yourself to the rules and regulations of a taxing agency, who is really in control?

How long are patriots going to let others talk them into acting like a "taxpayer" on one hand by providing prima facie evidence of "taxpayer" status, and at the same time, claim they are not liable for (subject to) the tax? Common sense alone should negate this two-sided position.

And there is even more. Some of you are being urged to "establish" a good-faith belief that you are not required to make income tax returns because the Sixteenth Amendment was not properly ratified. By doing so, you would essentially be saying that you would be required to make tax returns if the Sixteenth Amendment had been properly ratified; an amendment which conferred no new power of taxation and which did not extend the taxing power to new or excepted subjects, but simply prohibited the courts from taking the power of "income taxation" out of the category of indirect taxation to which it inherently belongs. See Stanton v. Baltic Mining Co., 240 U.S. 103, 112; and Peck & Co. v. Lowe, 247 U.S. 165, 172. In other words, since the Sixteenth Amendment (properly ratified or not) did not do anything new which would affect you, you are, according to your argument, required to file. Such an argument also places the burden of proof on you to prove that the United States Supreme Court was wrong in ruling that "income taxation" is in the category of indirect taxation, and to prove that the Sixteenth Amendment was not properly ratified. More than one person who has used this approach has been incarcerated. (I might suggest that before you rely upon any attorney's opinion, you check out his or her win-loss record.)

Isn't it interesting how the arguments promoted by the self-proclaimed "experts" lead you right back into the "taxpayer" trap? Does it make you wonder whose side they are really on?

Patriots appear to be captivated by "extravaganza" rhetoric or theories. Forget the "extravaganza": go for the basics; go for the facts. Know your case law by getting copies of the cases and studying them for yourself.

Here's what Irwin Schiff has to say about Otto Skinner:

While everyone has a right to be wrong, Otto Skinner simply abuses this privilege.

Some time ago I sent out an e-mail in response to a slanderous e-mail sent out by Otto Skinner as described further on. More recently Otto Skinner posted on his Web site an alleged refutation of my labeling him a “liar.” My characterization of him occurred on my radio show and it was in connection with his obvious misstating of the court decisions, as covered in my e-mail (analyzed below) which I am now posting here.

Without wasting any more of my time addressing all of the fallacies contained in Otto Skinner’s most recent posting entitled “Irwin Schiff Calls Otto Skinner a Liar,” I will simply quote and address two paragraphs contained in that posting. However, these two paragraphs should convince anyone that no one should believe anything Otto Skinner says about income taxes. The following paragraph appears at the end of his posting.

Schiff offers a $5,000 reward if anyone can find a law that requires the payment of the (income) tax. I consider this to be an empty offer. Just because there is no such law, it does not prove a tax is not owed. [Then what does it prove? Anything?] If a person owes a tax, but simply cannot pay it, he cannot be legally incarcerated. We do not have debtor’s prisons in this country. Because of this, there could be no law requiring the payment of a tax. Schiff’s offer might sound impressive, until you analyze it. Will Schiff’s nonsense never stop? You should be aware of the fact that Section 7203 does make it a crime for a person to willfully fail to pay a tax that is owed. If a person owes a tax and can pay it, but willfully does not pay it, he can be charged with 7203.

If anyone can figure out what Otto Skinner is talking about, they are more perceptive then I am. What, I believe, we can conclude from the above is:

1) Otto Skinner believes that even though “there is no such law” as would require a person to pay income taxes, a person can still owe an income tax. (Otto keeps using the word “tax” without qualifying that it is an “income” tax. If he is not talking about “income” taxes, than what kind of taxes is he talking about?)

2) Otto’s reasoning is that that a person can still “owe” an income tax (even though there is no law that requires the payment of such a tax), because we don’t have “debtor’s prisons in this country.” (Do you see any connection? I don’t). But if there is a connection, how does Otto Skinner explain the fact that the Code still lists in its Index, some 40 other federal taxes that Americans can owe? Of course, an income tax is not included in that list.

3) Since Otto believes that there are laws making income tax violations crimes, he believes that, while “there is no such law” that requires the payment of income taxes, you can still be prosecuted and go to jail if you “willfully (do) not pay” a tax that no law requires you to pay.

I really should apologize to Otto; maybe he wasn’t lying after all. He obviously simply does not know what he is talking about.

Also in that posting he states

Schiff also claims in his books and articles that the federal district courts do not have criminal jurisdiction over alleged violations of Title 26. However, the United States Criminal Code states:

The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States.

18 U.S.C. 3231.

There seems to be no end to Otto Skinner’s ignorance when it comes to income taxes. The reviser’s notes for Section 3231 state that Section 3231 “Was formed by combining sections 546 and 547 of Title 18, U.S.C. 1940 ed…. with no change of substance.”

If you check Section 546 you will find that it states, “The crimes and offenses defined in this title shall be cognizable in the district courts of the United States…”. In other words, the jurisdiction referred to in Section 3231 only applies to crimes listed in Title 18.

Since income tax “crimes” are not listed anywhere in that Title (nor in Title 26 for that matter), Title 18 doesn’t apply to income taxes. The government left out “crimes and offenses defined in this title” when it combined both sections, so it could use this Section to illegally prosecute alleged offenses listed in Title 26 and in other Titles.

The government obviously relied on the general ignorance of the American public to get away with it. And Otto didn’t disappoint them.

Code Section 7401(f) of the Internal Revenue Code – which is the jurisdictional section of the Code - supplies more icing on this cake. It states: “For general jurisdiction of the district courts of the United States in civil actions involving internal revenue, see section 1340 of Title 28 of the United States Code.”

If Section 3231 gave the government the criminal jurisdiction that Otto Skinner believes it does, Section 7401(f) would have similarly stated, “ For criminal jurisdiction see 3231 of Title 18”; but no such reference appears in Section 7401(f) nor in any other section of the Internal Revenue Code.

These two factors alone prove that all of those who have been criminally prosecuted for committing alleged income tax crimes, were all prosecuted illegally. (And I haven’t bothered to list a number of other factors.) But Otto Skinner knows nothing about this at all.

All things considered, it should be obvious that people will get far better tax advise if they seek it from H.R. Block, rather than from Otto Skinner.

For more proof as to why you can’t believe anything that Otto Skinner says, read on.

The Following was an earlier response I made in connection with an E-Mail sent out by Otto Skinner, which I've now decided to post here.

Otto Skinner (who has a web site suggesting he knows something about income taxes), sent out a 6-page e-mail letter written by John Elizondo, a former colleague of mine, whose association I terminated.

John's letter was nothing but a tissue of lies from start to finish, which I will get to shortly. But how could Otto Skinner send out such a letter without first attempting to verify whether any of it was true?

I could actually sue Skinner for slander, but I am so busy litigating important suits against the government (including a devastating petition for a writ of certiorari to the Supreme Court) and trying to write a new book, that I can't afford to waste time on this dolt.

However, before turning to John's letter, I am compelled to put Otto Skinner in perspective. It is safe to say that Otto has probably mislead more people on the subject of income taxes than anyone else in the anti-tax movement with the possible exception of Dan Pilla.

He concocted the hair-brain theory that the labor of an ordinary worker was a "common right" and, therefore, not a "revenue taxable activity." What the people didn't know, who were struggling to understand this concept, is that the Internal Revenue Code didn't tax anyone's labor anyway.

So, Otto merely erected a straw man, which he then sought to rail against. But Otto Skinner's "theory" was wrong on a variety of grounds. First of all, if the federal government wanted to tax labor it could do so, as long as it apportioned the tax.

His theory that the government can't tax a "right" is also nonsense. People certainly have a right to live in a house, yet government puts property taxes on houses, which if you can't pay, you are forced to move.

A person certainly has a right to leave property to his children or make gifts; but the government imposes estate and gift taxes. A person certainly has a right to breathe; yet the Constitution allows the government to tax breathing.

Article I, Section 9, Clause 4 of the Constitution allows the government to impose a capitation tax - which is a head tax. But only people who are breathing would be required to pay the tax. So a head tax is tantamount to a tax on breathing.

Also, a number of cites actually have wage taxes - so Otto's "theory" that government can't tax occupations of a "common right" exists only in his muddled mind.

But to understand how little Otto Skinner really knows about income taxes, we need only turn to his latest book. I didn't buy the book, somebody merely faxed me pages 208-210, since they dealt with my "zero" returns and me. He calls this treatment of my "zero" return, "Flawed argument #12". He then writes:

"To support this frivolous, and dangerous position, the promoters (meaning me) list three appellate court decisions: (U.S .v. Moore, U.S. v. Long, U.S. v. Kimball, as listed in my "zero" return attachment along with a number of other legal references that support the legal validity of my "zero" return and its claim for refund for all income and wage taxes paid). This position is further supported with the flawed claim that the term "income" only means corporate profit."

So the first thing we discover here is that Otto Skinner doesn't even understand the legal meaning of " income," which means corporate profit, since only corporate profits can fall within the meaning of "income" as allegedly "defined" in Code Section 61. So this dolt, who hasn't the faintest idea of what "income," for tax purposes, actually means, presumes to write books on income taxes, and on "flawed arguments" no less.

He then writes:

"By submitting such forms, the individual is setting himself up for a $500 civil penalty for filing a frivolous return for each return filed, along with the distinct possibility of criminal charges for attempted tax evasion and also for filing false and fraudulent returns."

Here Skinner further misleads his readers into believing that IRS agents have the authority to assess civil penalties when they have no such authority. (All IRS agents are merely administrative clerks with no enforcement powers whatsoever.)

In addition, the attachment to my zero return cites no less than 15 court decisions and 10 statutes, as well as other authorities to support our claim of "zero" income and claim for refund; and, therefore, can not be considered frivolous (i.e., silly) on any basis.

In addition, even though thousands of people have filed "zero" income tax returns which have generated thousands of refund checks (see examples of some on my web site, ""), only one person has been charged with a crime for having done so - and he was about to be indicted for having failed to file tax returns and income tax evasion going back 4 or 5 years. So he filed zero returns for those back years hoping that this would stop his forthcoming indictment, but they indicted him anyway, despite the fact that the U.S. attorney did not present any evidence to the grand jury that any statements on his "zero" returns were incorrect.

However, had this individual understood what he was doing and had he enlisted my help, he never would have been convicted. But I have filed "zero" returns myself since 1993 and haven't paid a dime in income taxes and the feds haven't bothered me.

In addition, my "zero" returns have generated hundreds of thousands of dollars in refund checks for those filing them, and no one has been charged with filing false refund claims. But more important, if these refund claims were false, I would have been prosecuted under Code Section 7206, which makes it a crime for anyone to advise or counsel people to file false and fraudulent tax refund claims.

So, while Otto Skinner believes that a "zero" return represents a "false and fraudulent return," apparently the feds don't think so, since they haven't interfered with me in any way as I go about each day teaching more and more people how to do it.

Skinner then goes on to write:

"The Moore Case simply does not support the proposition that is purported by the promoters (me, again). Moore was convicted for failure to file returns. He had entered zeros on returns for the years 1972, 1973 and 1974. The Seventh Circuit Court of Appeals held:

It is not the false data which makes these returns defective, but the fact that there is no real attempt to comply with the filing requirement of filing a return…."

The above quotations from Skinner's book prove one of two things: either Otto Skinner can not read and understand simple English or he, like John Elizondo, is an unconscionable liar. It is clear from the Moore Case that Moore did not "enter zeros on his returns" as Skinner unabashedly claims. Quoting from the decision itself (627 F.2d 830) the Appeals court wrote:

In April 1973 defendant and his wife submitted a joint return for the 1972-year to the I.R.S. This form contained only their names, occupations, social security numbers and number of dependents. Fifth Amendment objections were written across the form and a packet of tax protestor literature was attached. The defendant and his wife signed the form, but the verification was scratched out (which we also don't do)….

In May, however, defendant submitted an amended 1040 form for the 1972 year…On the amended form defendant filled in the various blanks calling for numerical information with "none" except dividend income he put $41 and under dividend income he placed the figure $22. The Fifth Amendment objections were retained and more tax protest material was appended. Although signed, the certification on the Form was again marked over.

In 1974 defendant also filed a return for the year 1973, which was substantially the same as his amended form for 1972. It contained a small amount in interest income and the certification was scratched out…in 1975 defendant filed a similar return for the 1974 year.

Thus, there is absolutely no truth whatsoever in Skinner's claim that Moore "had entered zeros on returns for the years 1972, 1973 and 1974," let alone that his returns resembled in any way the "zero" returns we file. (See a sample of our "zero" return on our web site). Thus, Skinner and Elizondo are birds of a feather in that truth is immaterial to them.

In addition to the above, the Moore court went on to say:

In U.S. v. Long…the taxpayer submitted a form with zeroes in all the blanks. The court held that even if this information was false, a tax liability could be computed from it and it was, therefore, an adequate return…The Ninth Circuit is clearly correct in stating that a tax liability could be computed from zeroes…

Thus the Moore Court drew a distinction between the return that the Moores filed (which were not "zero" returns), and the "zero" return filed in the Long case, which the Moore court (agreeing with the 9th Circuit) stated constituted "an adequate return."

Apart from misrepresenting Moore, Skinner also misrepresented both the Long and Kimball decisions, but why go on beating a dead horse. The extent by which Skinner misrepresented the Moore decision is more than enough proof that Otto Skinner cannot be trusted to tell the truth on any issue.

As if the above were not enough, Skinner goes on to say:

"Now to the supposed "supporting argument" claiming that the term "income" only means corporate profit…the promoters of this flawed argument make a leap in logic to conclude that the term "income" only means corporate profit. This is truly a "frivolous position" because the United States Supreme Court has never held that the term "income" is limited to corporate profit. It has essentially held that "income" means what ordinary dictionaries say it means."

This paragraph alone proves that Otto Skinner knows nothing about income taxes, yet he presumes to write books on the subject. The Supreme Court never ruled, "'income' means what ordinary dictionaries say it means." They have ruled that "income," for tax purposes, means a corporate profit - and we cite 10 such Supreme Court decisions in the attachment to my "zero" return.

Prior to 1954, all Internal Revenue Codes (including the original 1913 statutes) included "wages," "salaries" and "compensation for personal services" as being taxable as income. However, these references were specifically removed from the 1954 Code, as Congress sought to bring the 1954 Code into conformity with prior Supreme Court decisions.

In making these changes from the 1939 to the 1954 Code, both the Senate and House committee reports stated that the word "income" as used in the 1954 Code was used "in its constitutional sense." Income, therefore, as used in the Code is "used in its constitutional sense" and not in its ordinary, economic, or dictionary sense.

And, in its constitutional sense "income" means a corporate profit. Proof of this can be seen from the fact that corporations can have millions of dollars worth of income, but only pay "income" taxes on their "profit." In essence, the so-called income tax is, in reality, a "profits" tax. If corporations don't have a "profit," they pay no income taxes - regardless of how much "income" they receive.

And, since Code Section 61 does not make a distinction between individuals and corporations, whatever applies to corporations must also apply to individuals. So, if corporations aren't required to pay income taxes on their "income," neither are individuals. What's hard about that?

This will give you a rough idea of how little Otto Skinner knows about income taxes.

~ Irwin Schiff

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