Sunday, May 16, 1999

'Untax' group faces unfreedom


IRS defiance proves a loser in courtroom

BY BEN L. KAUFMAN
The Cincinnati Enquirer

        A handful of Tristate true believers face prison for buying into schemes to “untax” themselves.

        Among them is James C. Morris, a Kenwood insurance salesman who believed his own pitch and sold untaxing packages to others.

        Faced with the likelihood of a long prison term if he fought the four charges against him and lost, Mr. Morris elevated pragmatism over principle.

        He pleaded guilty to two charges: failing to file his taxes for 1992 and trying to impede tax collections. He is to be sentenced June 11.

THE SCOPE
  More than 50 people connected to Pilot Connection have been convicted nationally of such offenses as failure to file tax returns, tax evasion, conspiracy to impede tax collections and mail fraud.
  The Justice Department estimates that 3,800 to 4,000 people bought “untax” packages from James C. Morris and other Pilot Connection sales reps. At least 500 have been audited by the Internal Revenue Service (IRS) and assessed an estimated total of $10 million in unpaid taxes, plus penalties and interest.
  More than 12,600 taxpayers bought basic memberships but never paid for untaxing advice.
        W. Kelly Johnson is the assistant federal public defender appointed by the court as standby counsel for Mr. Morris and Edgar Francis Bradley of Madeira, another insurance salesman convicted on tax charges.

        “Mr. Morris and Mr. Bradley have have come to their positions based upon firm beliefs that the taxing system is improper,” Mr. Johnson said.

        Unlike Mr. Morris, Mr. Bradley has “never wavered,” Mr. Johnson said.

        One, two and three at a time, Mr. Morris's clients and other tax-averse Tristate residents are being pursued by prosecutors from the Justice Department's tax division in Washington.

        More are struggling to clear up tax problems created by their faith in Mr. Morris and the anti-tax group he represented, The Pilot Connection Society/Liberty Foundation.

        “In addition to facilitating the tax evasion of many,” Prosecutor Nanette L. Davis said, Mr. Morris “perpetrated a fraud on innocent people.”

        Mr. Morris could not be reached for comment, and as with others being prosecuted on tax charges, he has refused interviews in the past.

        IRS went after Pilot Con nection in 1991 when it became obvious the society was becoming one of the largest nationwide tax protest organizations.

        Phillip Marsh, then living in northern California, founded the society in 1990. He said the IRS was a private corporation that lacked congressional authority to collect income taxes and payment was voluntary. For a price, Pilot Connection told members how to opt out.

        Mr. Marsh and his wife, Marlene, practiced what Pilot Connection openly preached in advertised seminars around the country. As a result, they and their daughter and son-in-law have been convicted on tax-related charges in California.

        Pilot Connection — which took in millions — folded with their prosecutions.

        Some Tristate defendants deny being “tax protesters” (a term abandoned by the IRS but used by the Justice Department). Rather, like Mr. Morris, they say they have paid all of the taxes they are legally obligated to pay.

        Others are unflinching protesters, saying the 16th Amendment — empowering Congress to collect a federal income tax — never was ratified properly and the whole system, if not the whole government, is lawless.

        Mr. Morris became one of the society's two dozen area coordinators nationally. It is not clear how many people he recruited. The government says at least 300, he says far fewer.

        Mr. Morris sold some Phase II untaxing packages and what Prosecutor Davis called sham trusts.

        For instance, she said, one couple paid $2,100 to “untax” themselves and hundreds more for two trusts. Ms. Davis said the wife attributes her husband's suicide in part to subsequent tax troubles and she has hired a lawyer to “disentangle” her home from a trust sold by Mr. Morris.

- 'Untax' group faces unfreedom
Other Tristate tax prosecutions



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