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IRS Agent Now Crusades Against His Old Boss


By Chris Bushnell


In December of 1996, you didnt want Special Agent Joe Banister knocking on your door. A visit from Banister, a criminal investigator for the Internal Revenue Service, usually meant that you were in big trouble; money laundering and tax evasion were his beat, and like most IRS agents he always got his man.


But it was in that month that Banister flipped on his radio and heard something that changed his life. His favorite radio host, Geoff Metcalf (then a personality on KSFO) was interviewing a woman who claimed the income tax system was illegal, the IRS had no authority based in law and that filing the dreaded 1040 every year was a completely optional procedure.


"I was taken aback by what I was hearing," says Banister. "I'd always thought Geoff Metcalf was on the level and now he's having this kooky lady talking about these crazy subjects like the income tax being voluntary."


Intrigued by the discussion and hell-bent on proving Metcalf's in-studio guest wrong, Banister ordered several of the anti-tax booklets the woman was selling. His intention was to disprove her ridiculous claims and set the record straight. But what followed surprised even Banister.


"I truly expected that I would get the information and I'd be able to dismiss it very quickly. I believed that this stuff can't be true," he recalls. "So I began reading, researching, taking trips to the law library and investigating her claims. I expected with the next turn of the page, Id say, 'Oh, theres the baloney.' And it'd be done. But after months and months of research, I started to abandon the hope that I was going to find something that was going to pierce these issues."


After a year and a half of fact-finding, Banister was persuaded some might say confused by a tidal wave of legal analyses, statutory dissections and judicial reviews that suggested, often vaguely, that the income tax was illegal.


Disillusioned, the husband and father of two then did the unthinkable: He resigned from his $80,000 a year job at the IRS.


"My whole life the accounting degree, working for a Big Eight [firm] at KPMG, my CPA certificate, working for the IRS everything professionally revolved around the income tax and its legitimacy," says Banister. "I never even questioned it. It was like getting a punch in the gut, it was just devastating."


Governmental Blackmail


What Banister uncovered during his freelance investigation was not merely a series of arguments that explained often with a wicked cleverness how the federal income tax was illegal, but an entire society of committed, vocal and well-funded tax protesters. The "kooky lady" he originally thought was a lone dissenter against the IRS was actually just one of dozens of professional anti-tax advocates, each publishing their own arguments against the legitimacy of the Internal Revenue Code.


Consider Irwin Schiff, one of the country's most notorious and committed tax protesters. From his website,, Schiff sells tickets to his expensive seminars, audio tapes of his anti-tax lectures, and his best-selling books, including The Federal Mafia and The Great Income Tax Hoax. Despite two previous stints in prison for tax-related crimes, Schiff continues to preach his anti-IRS message with fervor.


"Income tax represents the greatest program of organized extortion," said Schiff in a telephone interview from his Las Vegas headquarters. "The government is involved in blackmail. When you deal with the government, youre dealing with organized crime!"


Schiff, who hasnt paid income taxes in over 15 years (despite selling over 500,000 copies of his various books) and claims to have assisted thousands of others in filing "zero-income returns," uses an argument that above all others ranks as the most popular in anti-tax circles.


"Nowhere does it say you are required to file and pay income taxes," said Schiff, who sells the Internal Revenue Code on his website with a challenge to buyers to locate the section that makes tax payments mandatory. "The income tax is collected in violation of the law."


On his similarly bellicose webpage,, Bill Conklin even offers a $50,000 reward to anyone who can find the statute that requires income tax payment. It is a bounty that has stood uncollected for years, despite numerous attempts to claim it, including one by the late, great San Francisco attorney Melvin Belli. (When Belli's arguments failed, he sued to collect the prize. He lost that one, too.)


But the anti-tax protesters dont base their radical pay-no-taxes ideals on a single argument. In fact, numerous theories abound.


The We The People Foundation ( claims that income taxes violate the 13th Amendment to the Constitution (which abolishes "compulsory labor," a.k.a. slavery).


The group at feels that the mandatory disclosure requirements of the 1040 form violate the Fifth Amendment (the taxpayers' right against self-incrimination).


Tax protester Otto Skinner ( doesn't believe that the 16th Amendment (allowing taxation by Congress) was properly ratified. And Truth in Taxation ( believes that the income tax is 100 percent voluntary.


Additional arguments involving other Constitutional Amendments, federal statutes and appellate court decisions are also bandied about by these groups. The result is an avalanche of verbose, complex legal arguments that all suggest the IRS and the income tax exist for one reason only: because everyone has been fooled into thinking they are based in law.


"I'm Dead Serious"


"Resigning from the IRS wasnt easy," says Banister in his typically soft-spoken voice. "I was making $80,000 a year, I was working in my hometown, I was a federal agent. It was a fun job. But I felt that in order to abide by my oath and adhere to my principals, I had to resign."


Having come to the conclusion offered by the above books and websites (and dozens others like them), Banister submitted a 95-page report to his superiors before resigning. Needless to say, Bannister's memorandum a well-constructed outline of the various anti-tax positions was not well received.


"The chief called me into his office and looked at me like I had two heads. He said, 'Are you really serious about this?'" recalls Banister. "I told him I was dead serious. I had done the good-faith research, and this is what I found. I had an obligation to speak up."


Placed on immediate administrative leave and encouraged to tender his resignation, Banister began the arduous task of rebuilding his life. Unable to find steady work for nearly a year after his resignation, he eventually returned to the tax code.


Utilizing his CPA certification and expertise on the IRS' methods, Banister began advising clients who were in tax disputes, offering his knowledge as an expert witness in tax cases and publishing his legal-loophole discoveries. In large part due to his resumé as the only gun-carrying agent in IRS history to "flip," Banister has become one of the most sought after and respected names in the anti-tax movement. For now.


Unsatisfied with his merely leaving the IRS, the Treasury Department has recently begun to take further steps to silence Banister. Late last year, the Treasury began a process that could eventually disbar Banister from advising any clients on IRS matters. And while this process may take years to complete, Banister has already lost early rounds in tax court. He is currently appealing an earlier (and non-binding) ruling that would ban him from at least some of his new occupations.


"I tell people that the IRS is the 800-pound gorilla. If you make the gorilla mad, they will make your life miserable," says Banister. "But Im obviously not afraid of them and I obviously know how they operate and if were going to meet someday in a courtroom, then that's the way it has to be."


Frivolous Arguments


Indeed, if the IRS and Treasury Department have anything to say about it, that's exactly how it has to be. Clearly not amused by the proliferation and recruitment activities of the various anti-tax groups, the IRS has recently stepped up efforts in their already-heavy-handed crackdown on tax protesters.


"As far as these various arguments about not having to file or pay taxes, we put them in the category of 'frivolous arguments' and I would say that manure is manure no matter how far you spread it," says IRS spokesman Jesse Weller without a hint of humor in his voice. "People who advise that you can have your taxes dramatically reduced or eliminated by these schemes should be aware that not only will we enforce the law against the [anti-tax] promoters, but also the people who are following it. And they could be in a lot of trouble."


How much trouble? Three days after we spoke with Irwin Schiff, the Department of Justice handed down a 33-count criminal indictment against him and two of his business partners. The multiple charges of tax evasion, filing of fraudulent returns and conspiracy to defraud the government could land Schiff in the pen for 43 years (not to mention the millions of dollars worth of fines). Asked about the charges, the always-confident Schiff simply predicted, "Well kick their ass in court." Others aren't as confident.


"Whoever came up with these anti-tax arguments was pretty smart, because you can't just look at them and immediately dismiss them," says Santa Clara University School of Law professor Jeffrey Kahn. "But if you look at the big picture and the intent of the laws, the arguments are technical and have all been turned down time and time again by the courts."


None of this dissuades Joe Banister, who insists he will continue to fight against the IRS, even if his CPA license is revoked.


"As a former investigator, I know what a cover-up is. I can smell a cover-up," says Banister. "I havent filed [taxes] since 1999. I know what could happen, but Im not fearful. All I want is for the government to answer the [legality] questions I posed in my report."


"The IRS doesnt debate the tax law in the public or through the media," replies the IRS' Weller. "We present our case in court where we have had a 100 percent slam-dunk success rate against frivolous arguments."



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