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Business/Finance
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Title: Westminster man told to stop running tax scheme
Source: Baltimore Sun
URL Source: http://www.baltimoresun.com/news/lo ... story?coll=bal-local-headlines
Published: Dec 4, 2006
Author: AP
Post Date: 2006-12-04 18:32:27 by Starwind
Ping List: *unUsual Suspects*     Subscribe to *unUsual Suspects*
Keywords: Kotmair, Save-A-Patriot Fellowship
Views: 3192
Comments: 200

A Westminster man has been barred by a federal judge from running a scheme in which he promised to help members avoid paying federal taxes, the U.S. Department of Justice announced today.

The "Save-A-Patriot Fellowship" run by John Baptist Kotmair Jr. falsely advised that clients didn't have to pay taxes and could legally withdraw from the Social Security system, U.S. District Judge William Nickerson said in his ruling. Despite legal action by the U.S. Justice Department, Kotmair's organization continued to file frivolous protest letters with the Internal Revenue Service on behalf of more than 800 clients and showed "no inclination ... to cease their activities," Nickerson noted.

Nickerson's order, issued last week, permanently bars Kotmair and his organization from representing or assisting anyone in corresponding with the IRS, or preparing court filings relating to income taxes. Kotmair and his organization must also notify all individuals involved in the scheme of the injunction and provide the Justice Department with the names of the customers, their e-mail addresses and telephone and Social Security numbers.

The injunction also must be posted prominently on the organization's Web sites for a year, and fraudulent promotional materials must be removed from the sites.

Poster Comment:

Kotmair's defense and taxation arguments were inane to put it charitably. His website (where he's to post the injunction) is at http://save-a-patriot.org/

Stupid tax-protestors and their schemes just muddy the water for legitimate tax-protest arguments. Kotmair, Schiff, Schultz, Rose all will become boilerplate examples of tax schemes which will be used unfairly to broad-brush and defeat otherwise legitimate arguments, rasing the cost and complexity to properly take on the IRS.

I cite Joe Banister as an example of how to do it right, intelligently, and the above tax schemes just make it difficult if not impossible for people like Banister to prevail honestly on the merits. Subscribe to *unUsual Suspects*

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#2. To: Starwind (#0) (Edited)

Stupid tax-protestors and their schemes

Many of these "stupid tax protestors" are correct in their assertions. They have researched extensively and know the law. That matters not to the government. They can't let this information become known, let them win, and, of course, are going to make examples of them to scare anyone who may be considering not filing. In the courtroom, the judge's totally ignore the law and, worse, insure that the jury never knows it either. Their job is to protect the corrupt system. See Aaron Russo's Freedom To Fascism to see it in practice. Joe Banister and several other former IRS Agents and many in the Tax Honesty Movement are featured in the film.

christine  posted on  2006-12-04   18:53:17 ET  Reply   Untrace   Trace   Private Reply  

Many of these "stupid tax protestors" are correct in their assertions. They have researched extensively and know the law.

The ones I've listed do not. They haven't a clue. They think they do, but they seemingly can not (or will not) read what the law or code says, or understand court procedures, or how tax accounting is done and how accountants are limited and what lawful means are available to reduce tax liabilities. The "stuff" posted on most tax-protestor websites is some of the most assinine "legal" tripe I've read in years.

That matters not to the government. They can't let this information become known, let them win, and, of course, are going to make examples of them to scare anyone who may be considering not filing. In the courtroom, the judge's totally ignore the law.

Judges can be forced to address the law, but defendants have *no* leverage if their own arguments are incorrect or unsubstantiated on the law. Yes, the system is unfair and the government will indeed pull every trick possible. Yes, the government is trying to supress much of the so-called "information" proclaimed by tax-protestors, but not because the government is afraid of it, no. The government is trying to supress it because most of it is just plain wrong and many naive people are being hurt by it as well as tax revenues potentially taking a big hit if some of these illegal schemes were adopted en- mass, and the resulting prosecutions would further clog up the courts, to no good outcome.

There is a reason most tax-protestors represent themselves. They don't listen to their lawyers or accountants and end up postitioning themselves behind a legal eightball which has no legitimate defense, and most competent lawyers won't touch the tax-protestors "arguments" with a ten-foot pole.

It is said don't go into a gunfight armed with a pocket knife. The mistakes happen long before that. If all one understands is pocket knives, one would do well to listen to the advice of professional gunfighters.

Starwind  posted on  2006-12-04   19:10:01 ET  Reply   Untrace   Trace   Private Reply  

the IRS code is not the law.

watch Freedom To Fascism. it addresses everything i said above much better. listen in particular to the testimony of the several former IRS agents and the one female juror of the case featured in the film. btw, you wanna see stupid? look at the former IRS commissioner, whose name escapes me at the moment, Russo interviews.

christine  posted on  2006-12-04   19:21:38 ET  Reply   Untrace   Trace   Private Reply  

the IRS code is not the law.

It is a body of regulations and procedures intended by congress to have the weight of law and be construed as law when courts deem it necessary to review. Same as SEC regulations are "law" for how companies do their bookkeeping and stock transactions.

I won't argue with you that it is an arcane labrynth in which accountability for enactment and empowerment of the IRS (via the Treasury) is difficult to trace. But that doesn't change the reality of what the tax code is and that it has the weight of law. If it were as simple as tax-protestors delude themselves, companies, accountants, and tax lawyers would be using it like they use every other "loophole".

The only way I know to lawfully reduce tax liabilities is through common law establishment of trusts and foundations, but they have to be setup and correctly operated similar to a corporation's transactions being at "arms length" from its CEO and shareholders' personal finances. But the benefits to the individual (grantor) are one-time and the distributions to beneficiaries are taxable, as is any investment income the trust or foundation might subsequently have.

I've seen numerous tax-protestors who claim to be able to prove the law isn't the law, and every single one of them is grossly ignorant of how courts understand the law.

Reading a law dictionary and arguing specious definitions of legal terms of art, or arguing non-existant precedents, and ignoring opposing motions and court orders is the pocket knife in the gun fight.

Starwind  posted on  2006-12-04   19:52:02 ET  Reply   Untrace   Trace   Private Reply  

The only way I know to lawfully reduce tax liabilities is through common law establishment of trusts and foundations, but they have to be setup and correctly...

Just asking: Could you point me in some direction concerning this, ie, "proper setup?"

Thanks.

rack42  posted on  2006-12-04   23:35:05 ET  Reply   Untrace   Trace   Private Reply  

Just asking: Could you point me in some direction concerning this, ie, "proper setup?"

You want to investigate irrevocable pure-equity holder trusts or charitable foundations. Circumstances dictate which to choose (and how many).

I don't know any website or lawfirm to recommend. The trust library at BYU is very useful. You'll need very competant accounting and legal advice as well as careful selection of trustees and trust/foundation managers. You are essentially giving your money away to someone else to manage for the benefit of your chosen beneficaries.

The key to the one-time tax benefit is that trust is funded via an exchange of "shares" for whatever asset it is given. The shares then have a recognized but unrealized value equal to the corpus, hence the transaction is at arms length and no taxable benefit was transferred. The shares entitle the holder to receive distributions from the trust's corpus, *if* the trustees so vote. But you can't be one of the trustees. The trustees shouldbe 50% blood related (who ostensibly look out for your interests) and 50% independent (or adverse) to maintain the trusts impartiality from you.

Charitable foundations are less complicated to fund, but you must give away 5% of its assets each year for the foundations charitable purpose to eliminate tax liability. Again, you can't be the charitable purpose, but you can be the paid manager who oversees the giving.

Setting up trusts or foundations is similar to setting up a C-corp, in that "articles" are drawn up that describe the trusts purpose and management. These articles provide for replacement of trustees, listings of beneficiaries, and the wishes of the founder. But unlike corporations, th etrust is essentially a contract under common law between the founder and the trustees to operate the trust and invest and distribute the trusts assests among the beneficiaries from time to time as the trustees deem appropriate. It is irrevocable and the founder has no control other than the provisions of the trust articles and selection of trustworthy and competant trustees.

With both, the transactions of the trust or foundation must not be intermingled with your own finances (must be kept separate at arms length, like a corporation) and any payments to you as manager or consultant will be scrutinized and must be reasonable. For example a trust can't pay you 50% of its assets as a "managment fee" - that will invite IRS scrutiny and invalidation.

The above is essentially the kind of trusts/foundations setup by the Rockefellers, Carnegies, Morgans, etc and Hewletts & Packards, Bill & Melinda Gates foundations. They do it as a means to lawfully reduce tax liabilities on their "extra" cash and provide support to their respective heirs, or "give back to the community" (lol). They don't do it to keep their money for themselves and avoid taxes.

Starwind  posted on  2006-12-05   1:21:13 ET  Reply   Untrace   Trace   Private Reply  

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