Attacking the Taxman
If ever there was a best-case scenario for having the Internal Revenue Service take away your car for nonpayment of taxes, Houston attorney James Farmer probably experienced it April 22.
Farmer's long-running battle with the IRS came to a head that day, and for someone who sees himself eventually taking on the powerful agency before a jury of his tax-hating peers, things went pretty well.
For reasons known only to themselves, the IRS agents chose not to have the car towed from Farmer's house. Instead, they waited until he and his wife drove to church, of all places -- to watch his four-year-old son perform in something called an Early Childhood Ministries musical program.
That wholesome apple-pie scene was interrupted by IRS agents arriving with a tow truck, but any thoughts of a quick getaway were dashed when Farmer began indulging in his specialty -- citing chapter and verse of IRS rules and procedures; regulations that most citizens don't know and which the agency, in its typical arrogance, sometimes ignores for expediency's sake.
He also threw in some of his far-out constitutional arguments. The way Farmer and his lawyer read the laws setting up the income tax, only federal employees and residents of Washington, D.C., the Virgin Islands or Guam have to pay federal taxes on their incomes.
The argument, contained in a dense 17-page letter Farmer mailed to the IRS two weeks prior to the towing incident, is difficult for anyone to follow, much less a tow-truck driver and a federal bureaucrat standing on a parking lot on a spring morning.
After Farmer asked in vain for various obscure documents he says the IRS needed to show to take the car away, the scene quickly degenerated into a hair-splitting farce.
The IRS agent in charge "tried to trick me into violating the peace," Farmer said in a sworn affidavit. "She asked me pleasantly, 'Then you are not going to let us take the car?' Knowing that she was trying to set me up for charges of hindering federal agents, I answered, 'I am not going to break the peace, but you are stealing my car. You are all acting illegally, and you are nothing but thieves.' "
The IRS agent, Farmer continued, "then tried to trick me into voluntarily giving the car away. She said, 'Then you are voluntarily turning the car over to us?' I said, 'No, I'm not giving you the car, but I'm not going to disturb the peace. I'm putting the key on top of the car knowing that only a thief will steal it.' "
With that, the car was hooked up and towed away.
For Farmer, it was nothing new. Much of his recent life, it seems, has been devoted to tortured arguments with exasperated IRS officials. He's filed a $50million civil suit against the agency, including an organized-crime RICO claim; he's still fighting over $280,000 or so in back taxes the feds say he owes from the past ten years; and he's tying up the dockets of federal courts with arguments over what the Founding Fathers and Congress meant by such terms as "person" and "income."
Farmer got the car back this month: The IRS had indeed failed to follow its procedures properly, he says. But that temporary victory is likely to be one of few as he and some colleagues mount a quixotic, romanticized and sometimes ridiculous challenge to the powerful IRS, annoying judges and magistrates all along the way.
The 47-year-old lawyer is doing it, he says, because that's what those Founding Fathers would have wanted. "I look at it like this," he says. "How many people risk their lives on a daily basis to get to America? Freedom is worth more than life. My CPA asked me -- and I can't blame him, because I know the IRS has every CPA in its pocket -- he asked me, 'What would it take for you to stop all this?' I just said, 'They'll have to kill me.' "
Such flowery, melodramatic sentiments cause the IRS to do little more than roll its bureaucratic eyes. Although agents can't comment on specific cases, Farmer in their view is just another in a long line of tax protesters who misread history and the Constitution to get out of paying their fair share of taxes.
Broad challenges to the IRS code and income taxes in general have been heard in courts and dismissed, says agency spokesman Steve Yost. Taxpayers have tried to argue that filling out tax forms violates the Fifth Amendment, that the bill creating the IRS was never properly passed into law, or that only those declared citizens via the 13th, 14th or 15th amendments -- mostly freed slaves -- are subject to the law.
"As these things have been tried and ruled in favor of the government, a lot of judges will now just toss them out summarily," Yost says. "Unless you're bringing up things specific to your case, like the agency didn't follow proper procedures -- well, arguing that the tax system is unconstitutional isn't going to get anybody very far in 1998."
A set of talking points the IRS distributes about tax protesters connects the legal challenges to groups that appear at gun shows and other gathering places of the far right wing and offer seminars on how to beat the tax system.
"The tax burden for honest taxpayers grows because of those who choose not to participate in the system," the IRS handout says. "It is our goal to stop the flow of false information being circulated by these groups about the legality of the tax system in the United States."
The agency has lawyers who specialize in batting down the arguments when the cases hit the courtroom, but as Yost says, "I'm sure there are better ways the agency could be spending its money."
In Farmer's case, one of those specialized lawyers had to fly in from Dallas for a hearing. That fact tickles Farmer's colleague, Cliff William. "I consider that a compliment," he says.
If anyone epitomizes the IRS nightmare more than Farmer, it's William. A 45-year-old decorated Vietnam War vet who served with the 101st Airborne, William works out of Farmer's nondescript suite of offices off the Southwest Freeway.
Walk into William's office and you'll hear him on the phone, negotiating with an insurance adjuster who's trying to settle the case of an unlicensed driver who rammed into a client of William's while driving a car registered to, amazingly enough, the People's Republic of China.
The adjuster wants to settle for $5,000. William's client, who is claiming the kind of nebulous soft-tissue injury that sets tort reformers' teeth on edge, insists on something nearer $25,000 or he'll take the case to trial.
"If you want to go to trial, that's fine, but I can just see getting in front of 12 Texans and saying, 'This is the People's Republic of China, and we know they think it's all right to run over college students in Tiananmen Square," he purrs into the phone as he paces the office. "But do we think it's all right for them to come to Texas to run over college kids? You want to take that to 12 Texans? Bring it on, man."
The bluster is no different than that heard in any personal-injury lawyer's office. Except for one thing: William is not a lawyer.
"The state bar is unconstitutional, and I will not join that organization," he says. "A free citizen has a lawful, inalienable right to their choice of counsel, so I do not need to be a member of the state bar."
State laws require those who practice law to have a "license," he says; yet any lawyer asked to produce such a license can only show a "membership card" from the state bar. And if the bar tries to come after him for unauthorized practice of law, he says, he'll simply point out the massive conflict of interest: Any judge assigned to the case would be a member of the bar.
"A membership card is not a license. A license allows you to do something which would otherwise be illegal," William says.
Such arguments don't get far with the bar, of course. When a colleague of William's made the same claims to the state Supreme Court last year, he received an acerbic reply from the court's executive assistant: "The rigmarole your letter describes is one of the best explanations I have ever seen for the strict control of unauthorized practice of law and requiring judges to be lawyers," William Willis wrote on behalf of the court. "Anyone who would make such a dog's breakfast of discovering what a license to practice law is and how they are issued would surely do very serious damage to the rights of someone they undertook to represent."
Neither William -- nor, for that matter, Farmer, who has a law degree from South Texas College of Law -- is fazed. William is about to file a lengthy motion with U.S. District Judge Nancy Atlas outlining, in great detail and with much discussion of the Founding Fathers, why he should be allowed to represent Farmer in his $50million civil suit against the IRS.
It's probably not surprising that William's filing will be accompanied by a motion asking that Atlas recuse herself for showing bias. In an initial hearing on the case, Atlas expressed beliefs such as that everyone has to pay taxes.
If a transcript of the May 12 hearing is any indication, Atlas may be glad to get out of the case:
Atlas: Can I just ask you a point on that? The written law says when taxes are owed, they must be paid on April 15th of the year after the close of the tax year.
Farmer: Judge, who do those apply to?
Atlas: You, me, him.
Farmer: The definitions in the act say they apply to people who live in Washington, D.C., or the other territories, and federal employees. That is what the act itself says.
Atlas: What are you talking about?
Farmer: I am talking about Title26.
Atlas: I see you just believe you don't have to pay taxes.
Farmer: I am saying these things don't apply to me, Your Honor, and to a lot of other citizens.
Atlas: I am not sure I understand this. Your position in this lawsuit to the extent that you're fighting the merits of the tax assessment (against you) is that you don't have to pay taxes.
Farmer: Sure I do, Judge.
Atlas: Because you're special. I don't understand.
Farmer: I have to pay taxes if I come within the statute. If I buy or sell guns, I have to pay.
Atlas: We are talking about revenue-code taxes that apply for earned income.
Farmer: As defined in the act as interest off of principal.
Atlas: Okay. I'm sorry I got into this. Let's just move on.
Atlas, who showed more patience during the hearing than most other federal judges might have, also tried to warn Farmer that he shouldn't name as a defendant the towing company that took his car on behalf of the IRS.
"I would like you to think very carefully, carefully, carefully about pursuing that claim against the towing company," she told Farmer, "because if I should find against you, that would be grounds not only for me to assess not only their cost but possibly their attorney fees under Section 1927 for vexatiously pursuing litigation."
Not that it will make much difference. Farmer says he has no plans to drop the towing company from the suit. "My view is that if someone robs a bank, you just don't go after the guy with the gun, you also go after the driver of the getaway car," he says. "The company didn't ask the IRS for any information, whether they had a judgment or a lien against me; they just said, 'You got a badge, that's enough for me to tow it.'"
If Farmer is the low-key half of the tax-fighting duo, obtusely refusing to take broad hints from federal judges, William is the showman. With a preacher's fervor and a talk-radio-ready spiel that includes huge memorized chunks of the Constitution and what he sees as relevant documents, William is a performer who can string together talk of the Social Security System (he calls it the "Socialist Insecurity System"), the founding constitution of Delaware and the military coup that was the real reason behind Abraham Lincoln's assassination.
By the time he gets through with a monologue punctuated by a constant refrain of "You follow me?," a listener will have piled in front of him a dog-eared copy of the law that (putatively, in William's mind) established the income tax; faded photocopies of old case law; a regular dictionary and Black's Legal Dictionary. It all proves, among other things, that "person," as defined in the tax law, does not include most Americans.
He also has, he says, a 120-page brief discussing how Congress cannot "ordain" and "establish" lower federal courts as it has, because of the meaning of those two words. (His listener assures him he'll take his word for it.)
"These issues have been well researched and well thought out," William says. "I base all this not on theory but on fact."
William says he hasn't paid income taxes in years because he has had no income, as he defines it. He says he has signed tax-return forms with the notation "Signed Under Duress" so that he will not have entered into a contract with the government that would allow them to confiscate his property.
Voters take note: William says he'll run for the state Supreme Court soon.
His political involvement began, he says, in 1996 after California passed Proposition187, outlawing affirmative action, "and along comes one female federal judge who says it's unconstitutional."
That marked a turning point. "That's when I realized the vote wasn't working, and the only other alternative was to get directly involved yourself and run for office," he says. "I feel I'm more representative of the average guy on the street, not the status-quo people who are in office now. We have to have laws and a Constitution that makes common sense."
Ask where he got his legal education, and he'll say, "I got a degree through a correspondence school, like they have at Yale, at Harvard, at Princeton, UT, A&M, the University of California. Just about any prominent school on the globe has a correspondence school."
And which one, specifically, granted his degree? "Green Ridge University, in 1991," he answers.
Where's that? "They were in Hawaii and Louisiana, but from what I understand they've merged with another school, so I'm not sure where they are now."
He's looking forward to both his campaign for the Supreme Court and his fight on behalf of Farmer. "The IRS works on FEAR: False Evidence Appearing Real," he says. "They try to make it appear that what they say is the law."
He says his willingness to fight "is in the genes.... We know our Founding Fathers were definitely fearful of a strong centralized government, and now we have a system where they can come in and take your home without a warrant. It's maddening. People can't understand it."
Farmer says he relishes the upcoming fight as well, although his wife has asked that her name be taken off of the suit. "She's terrified," he says, of the IRS's power.
He says his normal law practice, which consists of both civil and criminal cases, "everything from traffic tickets to murder," has suffered. "I've had to not work on other cases that would have had income," he says. "I've put in tons of time on this. But we have found the statutes and the laws that show that what the IRS is doing and saying is just wrong, and we won't give up until we win."
That outcome seems highly unlikely, but any failure probably won't deter others from trying the same thing. William lectures on the subject before interested groups, and the Internet and talk-radio stations are full of tax-protester information.
The IRS brags that it has a handle on the problem, but the figures it cites aren't that impressive: In the last ten years, 2,000 tax protesters have been convicted. That works out to only 200 a year; 40 percent of those don't receive jail time.
Farmer and William realize they're painting big red targets on their backs with their probably pointless suit, but like all good martyrs, they say they are willing to suffer the slings and arrows.
"My grandfather said to me that trying to take power from politicians is like trying to take food from a saber tooth tiger," William growls. "But if you don't fight for what you believe in, what good are you?
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