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SENATE HEARING ON TAX “SCAMS”
Group cries foul at not being allowed to testify.
Today's Senate hearing on tax-avoidance “scams” has sparked heated controversy among income-tax opponents, who have been excluded from testifying.
The Senate Finance Committee hearing, which begins at 10 a.m. Eastern, is intended to “educate taxpayers about tax fraud scams before the April 15 tax filing deadline,” according to the committee. Senators will also “explore ways to improve the federal governmen’qs policing of Internet-based tax schemes, scams and cons.”
As part of that education and exploration, the committee will have on hand a poster-sized version of an ad run several times in USA Today by the We The People Foundation. The ad outlines various arguments made by activists who believe the Internal Revenue Code does not require most Americans to pay income taxes or to have the taxes withheld from their paychecks. And regardless of the tax code, the 16th Amendment was fraudulently ratified, they say, so Congress has no power to tax citizens’ incomes.”
“There is strong evidence that the IRS is disobeying the laws and forcing citizens to pay taxes they are not, by law, required to pay.” said We The People Chairman Bob Schulz. “Both the IRS and Congress refuse to answer the questions and allegations raised by numerous tax researchers, based on credible evidence. We want the IRS to obey the tax laws. Researchers allege the IRS is operating the biggest hoax ever perpetrated on any people by any government.”
Explaining the background issues leading up to the hearing, which was not formally announced until late last week, the committee states: “The Internet provides an ideal venue for con artists to promote schemes aimed at tax avoidance. Both tax practitioners and the Internal Revenue Service agree that Internet-based tax fraud scams are on a sharp increase. They believe hundreds of thousands of taxpayers are either participating in these schemes or are seriously considering participating in them by receiving literature and attending seminars.”
But what exactly constitutes a tax “scam”? That is a question Schulz wants answered. Schulz -- whose request to be added to the committee's witness list was denied -- fears the committee will wrongly classify critics of the current tax system as scam artists.
The world of tax avoidance is populated by roughly two classes of people: those out to make a buck by knowingly selling misleading and even false tax information and those who genuinely seek intellectual debate on the meaning of the tax code and the validity of the 16th Amendment’s ratification. The latter group sincerely believes U.S. tax law does not require most Americans to pay income taxes and tries to make its research known to the general public. But should these people be labeled as promoters of “tax fraud scams”, which are the focus of today’s hearing?
According to the committee’s description of the hearing's scope, “Common themes for these scams are trust arrangements to illegally shelter trust incomes from taxes and other means of hiding assets. More off-beat scams include quick minister licensing to illegally claim tax benefits, as well as individuals establishing their own countries to seek to shelter assets and income.”
Committee spokeswoman Jill Gerber acknowledged the difference between the groups and said the distinction would “probably” be brought up in the hearing by one of the witnesses. But whether tax-avoidance groups are populated by scam artists or well-intentioned, intellectually honest folks grappling with the law, the result is the same, insists Gerber: People are not paying taxes they are legally required to pay. That often leads to huge financial penalties and ultimately lands tax avoiders in jail. For that reason, she said, the committee has denied We The People the opportunity to testify in person at the hearing.
“We don’t feel the need to provide a forum to a group that advocates breaking the law,” said Gerber, who noted the tax-attorney-staffed committee reviewed WTP’s material. Staff concluded the information was incorrect and determined the group is promoting “illegal efforts to avoid paying taxes.”
Income-tax opponents, including Schulz and his organization, do have the opportunity, however, to submit written statements to the committee, which will consider including the statements into the hearing record. Gerber clarified that such statements are not guaranteed inclusion into the record, since the committee does not believe it must necessarily give voice to “illegal” arguments.
Gerber also noted that WTP’s ad is not the focus of the hearing, but is merely being used to illustrate the arguments made by income-tax opponents and the venues used to promote them. The ad clearly spells out the arguments in one page, making it an ideal prop for the hearing.
Scheduled to testify at the hearing is Aaron Bazar, former seller of tax scams for the Institute for Global Prosperity who now operates a website alerting taxpayers to the scam he helped run. Other witnesses include two tax attorneys, two financial planners who keep abreast of tax scams, IRS Commissioner Charles Rossotti and two government bureaucrats.
Schulz takes exception to being lumped in with tax cheats and objects to his exclusion from the hearing's witness list.
“It is incongruous that the Senate would hold a hearing featuring our full-page ads and not invite us to testify,” he said. “They apparently have a message that they want to convey, which is [opposite] to our message. They apparently want to divert attention away from our questions of whether the IRS is collecting taxes without constitutional or statutory authority by trying to portray those who raise such questions as scammers.”
“We don’t tell anybody not to file or not to withhold taxes. We are just educating the public on the facts as we see them,” Schulz told the Glens Falls Post Star. “We’re trying to develop a critical mass of people demanding answers.”
He may have succeeded. Traditionally known as “tax protesters”, although today preferring the name “tax-honesty movement”, income-tax opponents are adding to their number every day and have now gained the attention of Congress. Though their legal arguments fail in court, they are drawing considerable attention to the income-tax system as a whole. Rossotti acknowledges the efforts of “tax protesters”, but suggests a failed attempt to prove income taxes are illegal could be replaced by a broader movement to change the current system.
“There are a lot of questions that people can raise about how the tax system in this country is structured, how the tax code is structured, but that’s why we have a democracy,” Rossotti is quoted by CBS News. “We have a Congress and everybody has the right to go talk to their congressman or senator about what they like and don’t like about the tax code.”
Calling leaders of the tax-revolt movement “foolish heroes”, tax analyst Roger Pilon of the Cato Institute said the government will ultimately win this battle. Income-tax opponents like We The People are “reading the tax law in so strained a way, and they will in time pay the price for it,” he told CBS. “But they’re heroes in the sense that they are bringing public attention to an issue that needs public attention.”More on this story here.
CITY LAWSUIT TO DEFEND COP PRIVACY: ADMINISTRATOR DEFENDS DISPUTED INTERNET SITE
Citing an invasion of employees' privacy and damage to its ability to hire and retain qualified employees, city officials are suing the author of a Web site that exposes personal information about law enforcement employees.
The city is asking King County Superior Court to shut down a Web site written by Bill Sheehan of Bothell, who compiled a list of information on Kirkland police officers and other law enforcement employees, including their Social Security numbers and home addresses.
"Their (the employees') salary, name and rank is all a matter of the public record," City Manager David Ramsay said yesterday.
"However, we believe information on private addresses, Social Security numbers and phone numbers -- particularly unlisted phone numbers -- is not."
Besides invading the privacy of employees, Ramsay said the existence of a site revealing personal information also may scare away potential future law enforcement hires.
"We run the risk of not being able to attract quality employees or having our quality employees leave," Ramsay said. He said the city has not ruled out seeking monetary damages, as well.
Sheehan's attorney, Elena Garella, told the Journal Saturday that she intends to countersue to defend her client's First Amendment rights.
Sheehan, who compiled the information but is not the administrator of the site, last night stood by the legality of the site, arguing it would be ironic for those charged with upholding the law to violate the First Amendment.
"They must defend the right for this site to exist," he said.
The site, which is not being named by the Eastside Journal, is registered to Mike Johnson, who also lists a Bothell address.
No one answered calls last night to a phone number to which the Web site is registered.
In addition to Kirkland police officers, the site also names officers in 14 other Washington cities, including Redmond, Bellevue, Clyde Hill, Snoqualmie, Bothell, Medina and Mercer Island. Criminal records of Kirkland officers as well as personal information on officers in the other cities will be posted, Sheehan said.
Ramsay said Kirkland will pursue its lawsuit aggressively to protect city employees.
"I have yet to hear anyone explain what is the public's need to know the personal information on that site," Ramsay said. "It is simply an attempt to put them (law enforcement workers) in harm's way."
Johnson disagreed, saying that lawyers have thanked him for making the information available so they can serve officers with subpoenas and court papers.
"Certainly I would feel bad if something were to happen," he told radio host Mike Webb on 710 KIRO last night, but he added that anyone who might retaliate against police officers would not need his help.
Johnson told KIRO that he put the site up to increase the accountability of law enforcement officials.
"I think it was probably years of watching stories of the bad cops and bad government officials do things and remain beyond the reach of ordinary people," he said.
"If we had a more open police department, we wouldn't have officers switching name tags at WTO," he said, referring to the 1999 clashes in Seattle.
Johnson told Webb he expects that his personal information also will become available on the Internet.
"That information, sadly, is available to people who want to look hard enough."More on this story here.
AMERICANS SUPPORT EMAIL MONITORING, STUDY FINDS
A survey released Monday finds Americans are worried about criminal activity on the Internet and willing to let law enforcement agencies intercept suspects' email despite misgivings about privacy protections.
The survey by the Pew Internet & American Life Project found 73 percent of those surveyed were worried about criminals using the Internet to plan and carry out crimes, with 43 percent very concerned.
Child pornography topped the list of online criminal activity that most worried Americans, followed by credit card theft, terrorism, wide-scale fraud, hackers accessing government and business sites, and computer viruses.
Over half of the respondents, 54 percent, approved of the FBI or other law enforcement agencies intercepting email over the Internet sent to and from people suspected of criminal activities.
The FBI's e-mail wiretap system, formerly dubbed "Carnivore," has been criticized by privacy and civil-rights advocates, who say it violates protections against unreasonable search and seizure.
Americans familiar with Carnivore were divided on its merits, with 45 percent supporting the system and 45 percent saying the potential for abuse outweighed any crime-fighting benefits.
Sixty-two percent said new privacy laws were needed to protect online communications against unwarranted surveillance, while 14 percent said existing laws covering telephone conversations were adequate.
The survey of 2,096 adults was conducted between February 1 and March 1, and has a margin of error of 2 percentage points.More on this story here.
IMF SURVEY ON FINANCIAL MARKETS PULLS IN OFFSHORE PARTICIPANTS
In January and February this year, the statistics department of the International Monetary Fund (IMF) organised five regional seminars for country authorities in support of the 2001 Coordinated Portfolio Investment Survery (CPIS). They included seminars held by the Central Bank of Costa Rica for the Latin American countries and the Cayman Islands Monetary Authority for small countries with international financial centres. This year's CPIS will see more than 20 offshore jurisdictions participating and it is hoped the survey will shed new light on the extent of money laundering.
Carol Carson, director of the IMF's statistics department, said she hoped more than 70 countries in all would take part in the IMF's second CPIS at the end of the year, the inaugural survey having been conducted in 1997. A statement from the IMF said: 'The broader participation in the 2001 survey helps fill some gaps in industrial country coverage and adds a wide range of emerging markets. A notable feature of this study is the inclusion of many small economies with international financial centres; these jurisdictions have significant holdings of portfolio investments. Bermuda is the only such country to have participated in the first survey.'
But interest in the 2001 CPIS seems to be much greater in offshore jurisdictions than it was in 1997. The IMF seminar hosted by the Cayman Islands Monetary Authority in early February, for example, atracted participants from Aruba, the Bahamas, Barbados, Bermuda, the British Virgin Islands, the Caymans, Guernsey, the Isle of Man, Jersey, the Netherlands Antilles and Vanuatu.More on this story here.
BAHAMAS: SUISSE SECURITY BANK AND TRUST CLAIMS NEW BANK AND TRUST COMPANIES ACT IS “UNCONSTITUTIONAL”
Following a failed bid by the Suisse Security Bank and Trust (SSBT) to challenge in court the Bahamas Central Bank's decision to suspend its licence, the beleaguered SSBT is still insisting that it will not go down without a fight as it has now decided to attempt to undermine the authority of the Central Bank Governor, which was awarded to him by the recently enacted Bank and Trust Companies Regulations Act.
According to a report in the Nassau Guardian the SSBT has addressed the Supreme Court with a plea to find the Act unconstitutional thus removing the Governor's new powers. It was under these new powers that the Governor, Julian Francis, suspended SSBT's licence on March 5, and on Monday April 2 formally revoked it.
This is the first time the Act has been brought into question and reflects the determination of the SSBT to retrieve its banking licence. Litigation was filed by SSBT on March 29 against the Central Bank, the Attorney-General and the bank's Receiver, accountant Raymond Winder.
Representing the bank in court was Raynard Rigby, who told the Nassau Guardian: 'The case is the first to be filed challenging the constitutionality of the Banks & Trust Companies Regulations Act ... The action raises several fundamental and constitutional issues and is a case of first impression ... Suisse Security is also hoping that the Court finds that the actions of the receiver amounted to a trespass, an unlawful search and seizure of its property, and that its fundamental rights were breached by the Governor of the Central Bank.'
When the Central Bank suspended SSTB's licence on March 5, and seized physical control of the bank, it did so, it said, because of the 'inability of said bank, at this time, to normally fulfill certain prudential requirements and satisfy the Central Bank of the Bahamas as to its affairs.'More on this story here.
U.S. GOVERNMENT DENIES OFFSHORE FREEDOM
Here a maddening catalogue of the many obstacles the government imposes on US persons who invest offshore. And it explains why we advise: "Go way offshore!"More on this story here.
HEDGE FUNDS EXPLAINED
Hedge funds are virtually the only form of economic endeavor to have escaped government regulation, partly because they are based offshore. Another reason to "go offshore."More on this story here.
OFFSHORE MUTUAL FUNDS
Almost US$1 trillion is invested in offshore funds, nearly all of that divided between Luxembourg and Switzerland. Why? They provide privacy, impose low or no taxes, guarantee good management and experience.More on this story here.
And in England, offshore mutual funds far outpace local investment funds.More on this story here.
THE DIAMOND GAME SHEDS ITS MYSTERY
A quiet revolution is underway in diamond sales and distribution as De Beers' control slips. Interesting assessment of changes at,More on this story here.
MEXICAN PESO SOARS
Despite the US slowdown, investment is pouring into Mexico, making its currency the strongest in the world against the dollar.More on this story here.
BRITISH POLLS TO TAX PROSTITUTES?
Legalizing prostitution, older even than politics, could raise at least Ł250m (US$350m) a year in tax revenues for the UK government.More on this story here.
SWISS BANK SECRECY EXPLAINED
The Swiss government officially answers FAQs about bank secrecy and confidentiality in Switzerland. Numbered accounts too!More on this story here.
I.R.S. ENFORCEMENT SLIPS 50%
Enforcement efforts against individual taxpayers by the US Internal Revenue Service have fallen by half or more since the early 1990's.More on this story here and here.
OFFSHORE LITIGATION INSURANCE
Here is a prepaid insurance policy that funds offshore litigation expenses, prevents freezing of offshore assets and is worded so claimants get zero.More on this story here.
NASSAU. A vacationing top Brit, smoothly using the excuse of alleged money laundering, praises the OECD the BAHAMAS sellout of its financial sector.More on this story here.
GEORGE TOWN. The Chief Justice of the CAYMAN ISLANDS begins hearing Ansbacher (Cayman) Ltd. bank’s request to rat on its clients.More on this story here.
RAROTONGA. The COOK ISLANDS Prime Minister underscores the news media's abysmal ignorance about the OECD campaign against tax havens.More on this story here.
WASHINGTON. Where is Treasury Sec. O'Neill on the OECD issue? Is he being held prisoner by holdover Clinton bureaucrats?More on this story here.
DOMINICA: GOOD CHOICE FOR ECONOMIC CITIZENSHIP
Why Dominica is desirable for second passports.More on this story here and here.
C.F.P. LEADS ANTI-OECD FIGHT; NEEDS YOUR HELP
WASHINGTON, DC. The Center for Freedom and Prosperity came out of nowhere last year and has single handedly led the battle against the OECD, with great success. But now it needs your HELP!More on this story here.
CHANCE RULES THE WORLD
PARIS. Who really runs the world? Experts could argue for hours over a question like that, but France's Foreign Minister Hubert VEDRINE has a revealing answer.More on this story here.
ITALY TURN TO THE RIGHT
ROME. Polls predict a win for Silvio BERLUSCONI, the conservative media magnate, in next month's Italian general election.More on this story here.
VANUATU P.M. OUSTED, SUES
PORT VILA, Vanuatu. Ex-PM Barak Tame SOPE sues opposition members of parliament after their successful no-confidence motion against him.More on this story here.
SOUTH KOREA FOR EXPATS
South Korea has been overlooked as a destination for expatriate living, but there's lots of OPPORTUNITY for profitable retirement here.More on this story here.
The April update of Canada's "Subversive Liberty: is now available at:More on this story here.
Economics and growing concern about personal information on the Web is causing a double pro-privacy backlash in the US.More on this story here.
And the Republican Leader of the US House of Representatives warns against government plans to enforce privacy by law.More on this story here.
U.S. COURTS EXTEND REACH OFFSHORE
Federal courts now approve using evidence obtained in warrantless searches abroad.More on this story here.
The US Supreme Court already approves US agents kidnapping persons in foreign countries and forcibly returning them to the US to stand trial.More on this story here.
CANADA CUSTOMS SNOOPS OPEN MAIL
Canadian Customs inspectors routinely open mail without a search warrant.More on this story here.
COMBAT E-MAIL 'SNIFFING'
Unauthorized gathering of e-mail information is called 'sniffing' and includes the FBI's infamous CARNIVORE.More on this story here.
Another example of sniffer software:More on this story here.
You can defeat sniffing by using a Web re-mailer. Examples here and here.
For absolute e-mail privacy we recommend Freedom Internet Privacy Suite 2.0. For information, see,More on this story here.
U.K. VIDEO SPYING EXPANDS
LONDON. The Labour government plans to increase the number of cameras monitoring people in public places to 2 million.More on this story here.
TELL THE U.S. TREASURY WHAT YOU THINK
You can send your own e-mail protest against US government support of the OECD attacks on tax havens to the US Treasury Dept. E-mail comments to: firstname.lastname@example.org
DOMINICA P.M. BLASTS F.A.T.F & O.E.C.D.
ROSEAU, Dominica. Prime Minister CHARLES tells US congressmen the OECD and FATF are bullying small nations without cause.More on this story here.
CLOSE YOUR ANSBACHER BANK ACCOUNTS
GEORGE TOWN, C.I. Court hearings continue on Ansbacher bank's request to reveal client information to Irish tax authorities. Top bank management in London and at its South Africa parent, Firstrand, ordered the client sell out.More on this story here.
U.K. LABOURITES HOUND LORD ASHCROFT
BELIZE. The government is under financial pressure from London to impose more taxes on Lord Ashcroft, Belize' major businessman.More on this story here.
PANAMA OFFSHORE BANK BUSINESS DOWN
According to the Banking Assoc., foreign funds in Panama banks in 2000 fell by US$1bn, possibly due to FATF blacklisting. Panama is not happy.More on this story here and here.
MANX FINANCIAL SECTOR HURT
DOUGLAS, Isle of Man. Corporate service providers are hurt by the decline in new company formations and abolition of exempt companies, results of Manx compromises to deflect OECD demands.More on this story here.
FINANCIAL POLICE LOVE JERSEY
ST. HELIER. Having appeased international "know your customer" and anti-money laundering dictates, the financial police now love this Channel Island.More on this story here.
COMMONS WANTS GIBRALTAR DEFENSE
LONDON. A House of Commons committee says the Blair government must stand up for its offshore haven, GIBRALTAR, against SPAIN.More on this story here and here.
SWISS LAW MAY FORCE RELEASE OF RUSSIAN
GENEVA. Ex-Kremlin official Pavel BORODIN, charged with money laundering, is released on bail by a Swiss court.More on this story here and here.
GOVERNMENTS TURN SCREWS ON C.F.C.s
Controlled foreign corporations were designed to keep profits offshore and relatively untaxed. OECD busybody bureaucrats want to stop that.More on this story here.
MONEY LAUNDERING NEWS
We often slam the excesses of the Financial Action Task Force (FATF). But here's their detailed definition of money laundering.More on this story here.
Are you unknowingly laundering money? Here's how to tell,More on this story here.
Charles A. Intriago, publisher of Money Laundering Alert, makes lots of money from dirty money -- but insists he is clean.More on this story here.
Long a bastion of Middle East secret banking, LEBANON adopts a major anti-money laundering law in response to FATF blacklisting.More on this story here and here.
ISRAEL, also blacklisted, reacts by expanding new anti-ML laws.More on this story here.
ANATOMY OF A PARDON
The campaign to persuade Ex-Pres. Clinton to pardon Marc Rich shows how Mr. Rich used every imaginable favor to win his goal.More on this story here.
A.C.L.U. TARGETS OFFICIAL CYBER SNOOPS
To expose Echelon, the worldwide electronic spy network, the American Civil Liberties Union launches a major campaign against government cyber-snooping.More on this story here.
CYBER TREATY THREATENS LIBERTY
The US may sign the Council of Europe's Cybercrime Convention that gives governments carte blanche for wiretapping and e-mail interception, threatening international free speech.More on this story here.
CANADA POLICE WARY OF POWERS
Police complain to the Canadian federal government about proposals that would allow officers to break the law during investigations.More on this story here.
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