Thursday, April 24, 2008

Judge Orders a Web Site Selling Tax-Evasion Advice to Close

Published: August 30, 2007

A Web site that sells materials stating that individuals can legally stop paying taxes has been shut on the order of a federal judge.

Judge Thomas J. McAvoy, a senior judge in the Northern District of New York who issued the order on Aug. 9, wrote that the First Amendment did not protect the two organizations that operate the Web site, or their founder, because the site incited criminal conduct. Judge McAvoy ruled that some people who went to the Web site stopped paying taxes, causing the government harm.

Judge McAvoy also ordered that the names, addresses, telephone numbers, e-mail addresses and Social Security numbers of every person who received materials on how to stop paying taxes be turned over to the government.

This information would make it easy for the Internal Revenue Service to identify people who followed the illegal advice and for the Justice Department to prosecute them for tax crimes.

The civil court order is one of at least 245 permanent injunctions obtained by federal prospectors that prohibit individuals and organizations that deny the legitimacy of the tax laws or who sell tax evasion schemes from marketing their wares.

Robert L. Schulz of Queensbury, N.Y., the founder of both organizations behind the Web site — the We The People Foundation for Constitutional Education and the We The People Congress — posted the court order at the Web site givemeliberty.org, and closed the rest of the site even though he said yesterday that the order did not specify that he do so. He also said he had filed an appeal with the United States Court of Appeals for the Second Circuit.

His organization rose to prominence with a series of full-page newspaper ads, starting in 2001, asserting that the government tricks people into paying taxes. The ads solicited donations, which it said were fully tax-deductible.

Judge McAvoy, quoting from a declaration that Mr. Schulz sent to the court, said that Mr. Schulz wrote that he started “operation stop withholding” as “a national campaign to instruct company officials, workers and independent contractors on how to legally stop wage withholding.”

In a 25-page decision, the judge wrote that “undisputed evidence” established that Mr. Schulz and his organizations “knew, or had reason to know, that their statements were false.”

He said that because Mr. Schulz was taking $20 payments for a package of materials that supposedly showed how to legally stop paying taxes, the Web site could be shut down as commercial speech that urged criminal conduct.

Even if the Web site was not commercial in nature, Judge McAvoy said, it could be shut because people who followed the advice at the Web site engaged in criminal conduct.

“The First Amendment does not protect speech that incites imminent lawless action,” the judge wrote, citing a 1969 Supreme Court decision.

Because Mr. Schulz and his organization “are not merely advocating, but have gone the extra step in instructing others how to engage in illegal activity and have supplied the means to do so” the judge added, “their speech may be enjoined.”

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