U.S. v. Schiff

• Decision Date: 12 December 1979
• Docket Number: D,No. 49,49
• Citation: 612 F.2d 73
• Parties: 80-1 USTC P 9112, 5 Fed. R. Evid. Serv. 336 UNITED STATES of America, Appellee, v. Irwin A. SCHIFF, Appellant. ocket 79-1139.
• Court: U.S. Court of Appeals — Second Circuit

Page 73

612 F.2d 73

80-1 USTC P 9112, 5 Fed. R. Evid. Serv. 336

UNITED STATES of America, Appellee, v. Irwin A. SCHIFF, Appellant.

No. 49, Docket 79-1139.

United States Court of Appeals Second Circuit.

Argued Sept. 12, 1979.

Decided Dec. 12, 1979.

Douglas Gilmore, Westport, Conn. (Raymond W. Ganim, Stratford, Conn., of counsel), for appellant.

Richard Blumenthal, U.S. Atty., D. Connecticut, New Haven, Conn. (Michael Hartmere, Asst. U.S. Atty., New Haven, Conn., of counsel), for appellee.

Before LUMBARD, FRIENDLY and GURFEIN, Circuit Judges.

GURFEIN, Circuit Judge:

This case raises an issue never before considered in a federal court of appeals: the question of the admissibility in evidence in a jury trial on a criminal information of the videotape of a "talk show" which includes the opinions of unsworn strangers on the very issues before the jury. Appellant Irwin A. Schiff, a self-proclaimed iconoclast in the field of federal income taxation, and a prolix writer and lecturer on the subject of money, appeals from his conviction for willful failure to file personal income tax returns for the years 1974 and 1975. On April 18, 1978, a two-count information was filed against Schiff in the United States District Court for the District of Connecticut. The information charged Schiff with willful failure to file personal income tax returns in violation of 26 U.S.C. § 7203 for the calendar years 1974 and 1975. ¹ After a trial before District Judge Daly and a jury, Schiff was found guilty on both counts. He was not charged with tax evasion, or obstruction of the Government in its efforts to collect taxes, omissions which will become material in the later discussions of relevancy. ²

The principal claim on appeal is that the prosecution offered and the trial judge erroneously allowed in evidence, over objection, a videotape of Schiff's appearance on April 12, 1978 on Tom Snyder's NBC talk show "The Tomorrow Show" with Snyder and another guest.

We have viewed the videotape, as did the jury, and conclude that its admission was prejudicial and prevented Schiff from getting a fair trial. To understand why the United States Attorney should not have offered the videotape and why the judge should have refused to admit it we must describe the scene and define the issue.

Appellant was in the insurance business. He also fancied himself a "constitutionalist", an extremist who reserved the right to interpret the decisions of the Supreme Court as he read them from his layman's point of view regardless of and oblivious to the interpretations of the judiciary. One can describe his attitude either as contumacious of governmental authority for the purpose of advancing the common weal, or as that of a clever faker who used his own distortions of the Constitution as a flimsy excuse for failing to pay his income taxes.

In 1968 Schiff testified before the Senate Committee on Banking and Currency, registering his opposition to the removal of gold backing from Federal Reserve Notes. He wrote a book, first published in 1976, entitled The Biggest Con: How the Government is Fleecing You. The book includes such chapters as "U. S. Taxes How They Have Converted the American Worker into a Serf" and "Taxes: The Arsenic in Our System." Schiff's views on taxation and on Social Security ("The World's Biggest Chain Letter") have appeared in other publications as well. ³ Beginning in 1977, Schiff conducted seminars on taxation.

So long as he made his attacks on the system in appearances before congressional committees, in articles in current periodicals, and even in rather evangelistic seminars on tax resistance, he was probably protected by the First Amendment. But he went further and he took his own advice literally.

Though he had filed personal income tax returns through 1973, disclosing his income, he decided for the calendar years 1974 and 1975 to file a "return" on the printed form 1040, but without disclosure of his gross income.

Accordingly, for each of these years, Schiff sent to the IRS a Form 1040, but on each form the title was altered to read "U.S. Individual Income Confession." Neither form contained any income data whatever. Instead, the various boxes were filled with assertions of assorted constitutional rights. Each form opened with the statement: "The 16th Amendment giving Congress the right to 'collect taxes on income' in no way abolished the rights secured to me by the 4th, 5th, 6th, 7th, 8th, 9th, 10th & 13th (I will not be an involuntary serf of the Federal Government) . . . ." In the signature box at the end of each form appeared the statement, "FOR SHAME ! The I.R.S. is asking me to cast aside basic constitutional safeguards which as a patriotic citizen wishing to uphold and preserve the Constitution I cannot do."

The 1974 submission was accompanied by a 36-page statement of alleged illegal and unconstitutional acts of the federal government with exhibits marked A through T. Schiff charged, Inter alia, that the Government was guilty of illegally operating the Social Security "chain letter," counterfeiting coin in violation of article 1, section 8 of the Constitution, imposing involuntary servitude by means of an income tax and imposing an unauthorized tax by promoting inflation. The 1975 submission was accompanied by similar allegations.

Schiff's basic themes apparently were that Federal Reserve Notes are merely promises to pay since they were no longer required to be backed by any statutory gold reserve and that they are, hence, not "income"; and that the Sixteenth Amendment which permits the United States to lay a tax on income permits the Government only to tell him how much he owes but does not require him to compute the tax himself, with the corollary that compelling him to do so compels him to be a witness against himself in violation of the Fifth Amendment privilege against self-incrimination.

In 1976 Schiff filed Amended U.S. Individual Returns (Form 1040x) for the relevant years. The Amended Returns stated that Schiff could not compute and warrant the accuracy of the 1040s because he could not understand the complicated internal revenue laws and that "a law that is incomprehensible is invalid, unconstitutional and uninforceable (sic)." In 1977, he submitted additional 1040s for 1974 and 1975. He labeled each of these forms "PETITION FOR REDRESS OF GRIEVANCES" and stated on the forms, "I offer to amend or file again if you can show me how to do so without waiving my constitutional rights."

Each of these forms was accompanied by 100 pages of attachments consisting primarily of correspondence between Schiff and the Board of Governors of the Federal Reserve System as well as other federal agencies.

The Trial

The defense did not seriously contend that the conglomeration of papers filed along with the almost blank 1040 form constituted the tax return required by law. Instead appellant argued that he could not constitutionally be compelled to file a return disclosing his income (which by his dialectic regarding bank notes never did become income) because of his privilege not to be a witness against himself in any event. Relying upon his own gloss on case law like United States v. Sullivan, 274 U.S. 259, 47 S.Ct. 607, 71 L.Ed. 1037 (1927), ⁴ he asked the jury to find that his conduct was not willful in the criminal sense but was rather a good faith effort on his part to restore the Constitution to its rightful place.

There was no dispute that the defendant's wholly owned corporation, Irwin A. Schiff, Incorporated, filed corporate income tax returns for the years preceding 1974 and thereafter, and that the returns disclosed that the defendant had received, in 1974 and 1975, salary in the sum of Fifteen Thousand Six Hundred Dollars ($15,600), a sum sufficient to require the filing of a personal income tax return. 26 U.S.C. § 6012. The prosecution did not have to prove on this indictment that the defendant had any net income.

The case then was not one in which the defendant had failed to file any return that would alert the Government to his existence. This was a case where the Government was prosecuting criminally a person who disclosed his name and address, but who filed a form that was clearly inadequate under the statute and regulations. United States v. Johnson, 577 F.2d 1304, 1311 (5th Cir. 1978); United States v. Jordan, 508 F.2d 750 (7th Cir.), Cert. denied, 423 U.S. 842, 96 S.Ct. 76, 46 L.Ed.2d 62 (1975); United States v. Daly, 481 F.2d 28 (8th Cir.), Cert. denied, 414 U.S. 1064, 94 S.Ct. 571, 38 L.Ed.2d 469 (1973); United States v. Porth, 426 F.2d 519 (10th Cir.), Cert. denied, 400 U.S. 824, 91 S.Ct. 47, 27 L.Ed.2d 53 (1974).

Judge Daly knew that the issue for the jury was narrow: whether Schiff had acted in reasonable good faith. As he later charged the jury, income received in Federal Reserve Notes is taxable income under the law and "a taxpayer's return (which) does not contain any information relating to the taxpayer's income from which the tax could be computed, is not a return within the meaning of the law." The judge also charged that the Fifth Amendment does not give a person the right to withhold the required information on the return concerning items the disclosure of which would not incriminate him or tend to incriminate him, and that even as to items which might incriminate him, he is required to state the Amount of his income even if he does not reveal its illegal source. See United States v. Johnson, supra, 577 F.2d at 1311; United States v. Egan, 459 F.2d 997, 998 (2d Cir.), Cert. denied, 409 U.S. 875, 93 S.Ct. 123, 34 L.Ed.2d 127 (1972). These instructions disposed of much of the case, however the issue of willfulness had to be left to the jury. Cf. Morissette v. United States, 342 U.S. 246, 275, 72 S.Ct. 240, 96 L.Ed. 288 (1952) (charge of "presumptive intent" was error); United States v. Murdock, 290 U.S. 389, 393-94, 54 S.Ct. 223, 78 L.Ed. 381 (1933) (judge erred in expressing...