Tax Protester’s Defense: I’m Delusional

A convicted tax evader is using an unusual defense in a government lawsuit that seeks $2.5 million in unpaid income taxes, penalties and interest — he says he’s delusional.

In court papers filed in federal court in Las Vegas, Irwin Schiff says his delusions include the fantasy that only he can properly interpret tax laws, the New York Times reported. Schiff claims no law requires the payment of income taxes, and he writes books and lectures extensively on the subject, instructing taxpayers to report zero income.

Schiff cited the opinion of his psychiatrist, Dr. Luis Carlos Ortega, who wrote to the court last year that his client has suffered from paranoid delusions about the tax system for decades. Ortega says the delusions resulted from Schiff’s business failures as owner of a Connecticut insurance brokerage firm. Schiff lost his own money and that of his clients in a tax shelter that turned out to be a Ponzi scheme, the Times reported.

But Schiff's girlfriend, Cindy Nuen, said in an e-mail sent to his thousands of supporters that the defense is the only way for Schiff to escape fraud penalties. That’s because, she wrote, his lawyers are "scared" to tell judges that "the income tax law is meritless and frivolous."

Schiff’s claim of being delusional comes as the U.S. Court of Appeals in San Francisco is set to hear arguments today on whether Schiff can be stopped from selling his book, "The Federal Mafia: How the Federal Government Illegally Imposes and Unlawfully Collects Federal Income Taxes."

Support for his appeal has come from the American Civil Liberties Union and publishing groups. Judge Lloyd D. George of Federal District Court in Las Vegas had issued a summary judgment in favor of the U.S. Department of Justice, which says Schiff owes $2.5 million. The judge’s order bars Schiff, Nuen and an associate from selling the book and required Schiff to turn over the names of all those who brought the book to the IRS. Schiff is asking that the summary judgment be denied.

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