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Taxing the First Amendment

A recent injunction prohibiting the sale of a tax protester's book raises thorny questions about the First Amendment.

The Internal Revenue Service (IRS) and the Tax Division of the Department of Justice (DOJ) have set their sights on scammers who market and promote tax-evasion schemes to the public. In May, Lynn Meredith, founding member of We the People (see also Don Quixote of Queensbury, Winter 2001 Intelligence Report), was convicted of several offenses, including conspiracy to obstruct the IRS by advocating tax evasion via bogus trusts.

Irwin Schiff is next on the anti-tax chopping block.

Described by a federal court as "an extremist who reserve[s] the right to interpret the decisions of the Supreme Court as he read[s] them from his layman's point of view regardless of and oblivious to the interpretations of the judiciary," Schiff has doggedly espoused anti-tax philosophies for more than three decades and has served time, twice, for tax evasion. [Schiff v. United States, 612 f.2d 73, 75 (2nd Cir. 1979).]

Recently, a federal district court halted the sale of Schiff's book The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes, raising the ire of First Amendment advocates nationally.

The Federal Mafia, primarily autobiographical but teeming with Schiff's antigovernment and anti-tax theories, instructs readers to file "zero-income" tax returns and includes attachments designed to accompany the returns.

According to the IRS, Schiff's adherents have filed nearly 5,000 zero-income federal tax returns, bilking the government out of $56 million in the past three years.

Schiff's newest tax scheme reportedly caught the attention of the IRS after advertisements were aired on the Michael Savage and Bill O'Reilly shows. Schiff and two associates now face criminal prosecution for tax evasion, conspiracy to defraud the government, and aiding and abetting thousands of fraudulent tax returns.

Free Speech Advocates Rally
While no one — except Schiff — is complaining about his criminal woes, he has found some allies in his civil battle with the DOJ.

In early 2003, after the government sought a preliminary injunction to stop Schiff from instructing others on how to file fraudulent returns through the sale and distribution of videotapes, Web sites, seminars, consultations and print materials — including The Federal Mafia — the American Civil Liberties Union of Nevada, the Association of American Publishers and others filed arguments on Schiff's behalf.

Despite their pleas, the district court granted the injunction. While the injunction has been stayed pending the appeal, debate over Schiff's First Amendment right to sell his book rages on.

The central tenet of the First Amendment is a prohibition on government restriction of speech because of the message or idea expressed. [See R.A.V. v. City of St. Paul, 505 U.S. 377, 382 (1992).] But even the First Amendment has its limits.

The DOJ asserts that The Federal Mafia is commercial speech — "expression related solely to the economic interests of the speaker and its audience." [See Central Hudson Gas and Electric Corp. v. Public Service Comm'n of New York, 447 U.S. 557, 561-563 (1980).]

Commercial speech is accorded less First Amendment protection than traditional forms of expression and enjoys no protection at all if it disseminates false information or is related to illegal activity. [See Central Hudson, 447 U.S. at 566; see also Pittsburgh Press Co. v. Human Relations Comm'n, 413 U.S. 376, 388 (1973).]

Free speech advocates, on the other hand, argue that The Federal Mafia is political, noncommercial speech and that the court's injunction violates the First Amendment as a "judicial order forbidding certain communications when issued in advance of the time that such communications are to occur." [Alexander v. U.S., 509 U.S. 544, 550 (1993) (citation omitted); see also Near v. Minnesota ex. rel. Olson, 283 U.S. 697 (1931) (extending prior restraint law to injunctions against future speech).]

At the district level, the court's decision to halt the book's sale rested on two major conclusions. First, it deemed The Federal Mafia commercial speech, because the publication contained advertisements for Schiff's other materials. Economic motivations or advertisements, standing alone, however, do not make speech commercial. [See Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 66 (1983); New York Times Co. v. Sullivan, 376 U.S. 254, 266 (1964).]

In New York Times Co. v. Sullivan, Montgomery, Ala., officials sued The New York Times for libel after it accepted and published an advertisement criticizing police actions against civil rights protesters. The Supreme Court rejected arguments that the advertisement was commercial speech because The New York Times was paid to run it.

In finding the advertisement to be political speech, the court considered that it "expressed opinion, recited grievances, protested claimed abuses, and sought financial support" for a matter of public concern. [Id. at 266.] Surprisingly, the factors highlighted in New York Times Co. v. Sullivan were not mentioned in the district court's ruling.

Second, the court declared that, even if The Federal Mafia were considered political speech, the injunction would withstand constitutional scrutiny. [See U.S. v. Schiff, 269 F. Supp.2d 1262, 1279-1282 (D. Nev. 2003).] Even political speech is not absolute and may be restricted if it incites imminent lawless action, as established in Brandenburg. [See e.g., R.A.V., 505 U.S. at 382-385; Brandenburg v. Ohio, 395 U.S. 444, 448 (1969).]

In Brandenburg, the defendant stated at a Ku Klux Klan rally that if the president, Congress and Supreme Court continued "to suppress the white Caucasian race, it's possible that there might have to be some revengeance [sic] taken." The Klansman was then convicted under a statute that barred advocacy of violence. [Brandenburg, 395 U.S. at 446-447.]

The Supreme Court deemed the statute unconstitutional and found that the First Amendment protects the advocacy of legal violations as long as it is not "directed to inciting or producing imminent lawless action and is [not] likely to incite or produce such action." [Id. at 447-448.]

Imminent Action or General Advocacy?
To meet the imminence requirement of Brandenburg, timing is crucial. [See McCoy v. Stewart, 282 F.3d 626, 631 (9th Cir. 2002).] Schiff's instructions in The Federal Mafia, however, are mere advocacy of lawless actions at some "indefinite future time." [See McCoy, 282 F.3d at 631 (quoting Hess v. Indiana, 414 U.S. 105, 108 (1973)).] The government failed to show that the words of The Federal Mafia were "so close in time and purpose to a substantive evil as to become part of the ultimate crime itself." [U.S. v. Freeman, 761 F.2d 549, 552 (9th Cir. 1985) (affirming aiding and abetting tax conviction of defendant who counseled tax evaders at seminar).]

The readers of The Federal Mafia had ample time to reflect on Schiff's theories, seek out corresponding viewpoints and make informed decisions as to whether to follow his advice.

Some might argue that Schiff's First Amendment rights should be analyzed in the context of Rice v. Paladin Enterprises, 128 F.3d 233 (4th Cir. 1997). In Rice, the defendant publisher sold Hit Man: A Technical Manual for Independent Contractors, which gave explicit instructions on how to murder people. Family members of murder victims killed pursuant to the book's instructions sued the publisher for civil aiding and abetting.

The defendant publisher stipulated that it intended for the book to be used by criminals and had assisted in the commission of the murders. [See id. at 241-243.] The appeals court, based on the specific facts of the case, held that the First Amendment did not protect Hit Man because it incited violent imminent lawlessness.

Unlike Hit Man, The Federal Mafia's advocacy of illegal activity is tied directly to abstract advocacy, political hyperbole and discourse on an issue of public concern, federal taxation; Schiff's book isn't a simple "how to" manual. Further, advocacy of tax fraud is a far cry from assisting in murder or other violent acts.

For once, Schiff may have the law on his side.

Catherine E. Smith is an assistant professor at the Denver University College of Law, where she teaches a course on extremism and the law.