Las Vegas Sun

March 28, 2024

Anti-tax author Schiff hit with injunction

A 75-year-old Las Vegas man allegedly running a tax scam that has cost the government an estimated $56 million has been prohibited from selling his book, "The Federal Mafia."

A preliminary injunction issued Monday by U.S. District Judge Lloyd George stops Irwin Schiff and his associates from selling the book that Internal Revenue Service officials say provides step-by-step instructions for filling out income-tax returns falsely listing no income and no tax due.

"Far from containing merely commentary, information and expression of opinion regarding the legitimacy of the tax system, the book is, in part, a how-to manual directed to specific individuals seeking instructions, sample forms and attachable affidavits to be used in the filing of false income tax returns," the order reads.

The order, which replaces a similar temporary restraining order previously issued by George, also prohibits Schiff and his associates, Cynthia Neun and Lawrence N. Cohen, from preparing tax returns or selling materials that specifically advise people to break the law.

Schiff, who said he plans to eventually appeal the ruling to the 9th U.S. Circuit Court of Appeals, owns Freedom Books on East Sahara Avenue and argues that the income tax is voluntary.

"The whole thing is nonsense," Schiff said of George's order. "The whole preliminary injunction is a fraud. If I've committed a crime, why don't they arrest me?"

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. There have been at least 5,000 "zero-income" tax returns filed by 3,100 of Schiff's customers during the past three years, resulting in $56 million in unpaid taxes, Justice Department officials said.

"Today's order is another in the long line of court orders stopping the sale of fraudulent tax scams," said Eileen J. O'Conner, assistant attorney general in charge of the Justice Department's tax division. "As the Supreme Court recently held in a unanimous decision: 'The First Amendment does not shield fraud.' "

The American Civil Liberties Union of Nevada was joined by publishing groups and the American Library Association in protesting the portion of the original temporary restraining order that stopped Schiff from selling "The Federal Mafia."

"The ACLU would urge Mr. Schiff to appeal this part of the order, because we believe it is incorrect," ACLU attorney Allen Lichtenstein said. "The decision fails to demonstrate how the contents of the book are commercial speech."

The order argues that the book contains representations and advertising that promote the use of a tax scheme to profit Schiff, and is therefore commercial speech.

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

Lichtenstein also questioned the effectiveness of the order.

"The injunction prevents Mr. Schiff and his associates from selling the book, but not other outlets like Amazon.com," Lichtenstein said. "The logic escapes me."

The 35-page order also mandates that Schiff and his associates notify all their customers since 1999 of the preliminary restraining order, and post the order on their websites within 10 days. They must also provide the IRS with any names, addresses or other information associated with their customers over the last three years.

Justice Department attorney Evan Davis said the government will proceed with either a trial or a motion for summary judgement in the future, but no timetable has been set.

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