Court Date Set For $500 Billion Law Suit Against The IRS

It's a "go." Two national membership organizations that provide estate planning services will face the IRS in a courtroom next February. Heritage America and The Aegis Company filed a $500 billion lawsuit against the IRS in May, 2001, claiming the federal agency violated the civil rights of the 5,500 members of the two organizations when it raided the organizations' offices.

The lawsuit stems from a March 2000 raid on the offices of the two organizations during which, according to a press release by the organizations, armed IRS agents, "with guns in the air," allegedly separated staff members into separate rooms and "interrogated them for as long as two hours without ever reading them their rights or informing them they were not required to provide information." The lawsuit states that the IRS seized all files, computer files, and computers of the two organizations. The government tried to dismiss the case, but the federal court for the Southern District of Illinois has set a court date in February, 2004.

Apparently the IRS thought the suit would be dismissed as frivolous and didn't respond to motions filed by the estate-planning firms. But it appears that the U.S. District Court is taking the case seriously. On Tuesday of this week the U.S. Court scheduled a date for the trial in February. The court issued an order to begin discovery and Mr. Vallone stated, "We will shortly begin deposing multitudes of IRS agents."

Heritage America is a non-profit private member organization dedicated to working for the abolishment of the federal estate and gift taxes and to educating the American people about "the unfair, confiscatory taxation and expense of their estates." The organization offers estate planning seminars and workshops, access to legal counsel, and provides assistance in estate planning as part of its membership services, and claims that it can circumvent legal action that can befall estate planning professionals who sell certain types of trusts and other estate tax avoidance programs. The organization specifically denies that its Authors and Publishers are engaged in rendering legal or accounting services. Heritage America executive director Michael Vallone, for example, describes himself as "a certified paralegal and researcher in the field of business trusts."

The Aegis Company, of which Mr. Vallone is also the executive director, is also a non-profit member organization dedicated to disseminating financial planning information to those who become members. The Aegis Company promotes the fact that it contracts with numerous attorneys and CPAs who specialize in tax laws as they relate to the protection of assets, the maintaining of privacy, and the reduction of taxes. The organization brags that its records are protected from subpoena because it is a membership organization and that it "can do things that might be considered 'illegal' otherwise."

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