Anti-tax advocate Schiff indicted on tax-evasion charge

Jace Radke

Thursday, March 25, 2004 | 8:36 a.m.

The self-proclaimed leading authority on income taxes in the nation was named in a 33-count federal indictment released Wednesday charging conspiracy, tax evasion and aiding and abetting in the filing of false income tax returns.

Irwin Schiff, a 76-year-old Las Vegas man who federal officials allege has been running a tax scam that has cost the government an estimated $56 million, called the charges ridiculous when reached at Freedom Books, his East Sahara Avenue bookstore.

"This is nonsense," Schiff said. "They charge me with tax evasion, which is ridiculous. I haven't evaded; I've filed that I have no income, and so I haven't paid them anything."

According to the indictment, Schiff and his associates, Cynthia Neun and Lawrence N. Cohen, both of Las Vegas, conspired to file and cause others to file fraudulent tax returns, including more than 4,950 tax returns reporting no income.

The Justice Department alleges that Schiff, Neun and Cohen, through consulting, seminars, books, audiotapes and websites, help people file "zero-income" tax returns, even though these people have taxable income. The government alleges that Schiff has been selling his materials online and at his store, providing step-by-step instructions for filling out income-tax returns falsely listing no income and no tax due.

Schiff has argued that the paying of income tax is optional, and that there are no means to enforce the payment of the tax in the Internal Revenue Service's codes.

"I sell the tax code," Schiff said. "I highlight it. I sell about 100 code books every six weeks. Would I sell the code if it contradicted what I said?"

Schiff, Neun and Cohen are each charged in the indictment with one count of conspiracy, while Schiff is also charged with five counts of aiding and assisting in filing false tax returns, attempting to evade payment of taxes from 1979 to 1985 and six counts of filing false federal income tax returns.

Neun is also charged with nine counts of aiding and assisting in filing false tax returns, four counts of failing to file a tax return, Social Security disability fraud and theft of government property. Additional charges against Cohen include four counts of aiding and assisting and two counts of tax evasion.

If convicted, Schiff faces a maximum sentence of 43 years in prison and $3.25 million in fines, while Neun faces 51 years in prison and $3.4 million in fines and Cohen could receive a maximum of 27 years in prison and $1.5 million in fines.

"There is no magic way out of paying taxes," said Assistant Attorney General Eileen O'Conner of the Justice Department's tax division. "If you fall for a scheme to cheat the IRS, you may lose your money to a con artist. You may wind up in federal prison."

The indictment alleges that between 1997 and 2002 Freedom Books generated gross business receipts of more than $3.7 million, and that despite owning the business, Schiff did not report any income from 1987 to 2002.

Schiff is paid between $10 and $1,600 for product packages and charges up to $200 per couple for seminars and offers tax consultation at $300 an hour, according to court documents.

Schiff has long been an outspoken tax critic and has published several books that rail against the IRS and income tax, including "The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes."

Those calling Schiff's store who are put on hold can listen to a country song with the lyrics "I'm gonna sit right down and fill out my 1040 and send back a zero return. I'm sending back a zero, Irwin he's a hero, I'm sending back a zero return."

It is further alleged in the indictment that from 1997 to 2001 Schiff concealed assets in an offshore bank account.

Schiff said he does use an offshore account for obvious reasons.

"I have money in a foreign bank because any bank in America will turn money over to the IRS even though the IRS has no legal right to take it," Schiff said.

The indictment also charges Neun with making a false statement to the Social Security Administration and fraudulently receiving benefit payments. Neun is charged with telling a Social Security Administration claims representative that she was not employed at Freedom Books and was not paid for her work there, and continued to receive disability checks from May 2000 through February 2003.

Erick Martinez, special agent in charge of the IRS criminal investigation in Nevada and Utah, said that his office will continue to combat promoters of tax schemes.

"These tax schemes not only hurt those victims who buy into the promoter's schemes, but it hurts all American taxpayers who file timely, accurate returns," Martinez said.

Schiff, Neun and Cohen are scheduled to be arraigned on April 14 before a U.S. Magistrate Judge.