Schiff still under restraining order

Jace Radke

Monday, April 14, 2003 | 9:21 a.m.

Irwin Schiff left federal court Friday minus his attorney, but he retained his belief that income tax payment is optional and remained under a temporary restraining order.

Halfway through a 2 1/2-hour hearing before U.S. District Judge Lloyd George, Schiff dismissed his lawyer and began defending himself, an arrangement that led to him debating the judge.

"There is no law in the Internal Revenue Code or the Constitution that says that people must pay income tax," Schiff said.

George told Schiff that was only an opinion, but Schiff disagreed.

"It's also my opinion that two and two is four," Schiff said. "There is no law. It's a fact."

George is expected to rule next month on the government's request to change a temporary restraining order into a preliminary injunction. The temporary restraining order restricts Schiff, 75, and his associates from preparing tax returns or selling material that specifically advises people to break the law.

The order also bars Schiff from selling one of his books, "The Federal Mafia," because it allegedly provides step-by-step instructions for filling out income-tax returns falsely listing no income and no tax due, Justice Department attorney Evan Davis said.

Schiff is the subject of an IRS investigation into allegations that he and his associates, Cynthia Neun and Lawrence N. Cohen, conduct seminars and sell materials designed to help customers evade federal taxes.

During Friday's hearing Schiff's attorney, Noel Spaid, of San Diego, declined to argue Schiff's tax theories citing the monetary penalties that judges have placed on lawyers for making frivolous arguments. At that point Schiff declared that he wanted to take over his own defense and discharged Spaid as his attorney.

For about 90 minutes Schiff made his case, and constantly challenged Davis or George to point out a law that states that taxes are not voluntary. At one point Schiff objected to Davis refusing to call any witnesses so that he could cross-examine them, and then tried to call Davis to the stand, but George denied the request.

Schiff also brought copies of the Constitution, and asked Davis to point to laws in the Constitution to make the government's case. He then tried to give a copy to George, saying that he publishes the document at his Las Vegas bookstore, Freedom Books.

"I've seen it," George said. "I don't care if you publish it. You should read it."

Schiff later stated that he was the nation's leading authority on income taxes, asking George to question an audience of about 50 of his supporters on his expertise.

"I would counsel them to approach the nation's leading tax expert with caution," George said.

George said he would allow both sides to file additional information by May 1, and that after that he would make a decision.

Schiff said he plans to continue fighting the tax system, and may start to sell materials even though they are prohibited by the temporary restraining order.

"The government doesn't tell the truth, but I do," Schiff said.