Author of 'Voluntary' Income Tax Theories Sued for Millions

July 7, 2008 - 7:03 PM

( - Former Libertarian presidential candidate Irwin Schiff, who maintains the federal income tax is optional, is being sued by a New Hampshire man who says he lost his business after following Schiff's tax advice.

Steven Swan, a former real estate agent in Auburn, N.H., is suing Schiff for $1 million in compensation for the loss of earnings from his real estate business since 1997, $1 million for physical and emotional distress for the loss of his business and earning ability and $5 million in punitive damages.

The lawsuit was filed May 23 in U.S. District Court in Las Vegas, Nev., currently lives.

"If you do something where you encourage people to do something to their detriment, whether they believe it or not, it is called a tort, and so I filed a lawsuit for the torts I believe [Schiff] committed," Swan said.

Swan claims in his lawsuit that he first met Schiff at a Libertarian luncheon in New Hampshire in 1995 where Schiff was speaking. Afterwards, according to the suit, the two spent approximately three hours in the hotel lobby, during which time Schiff told Swan about his theories that the federal income tax was voluntary.

Swan says he then bought the books Schiff had authored on how to legally avoid paying income taxes, and even began teaching others about Schiff's theories at seminars.

In 1996, Swan's suit alleges, he used Schiff's theories to try to convince the Internal Revenue Service that he owed the government nothing and planned to pay nothing

Later, Swan was forced to close his business and IRS employees levied his bank accounts. When Swan used Schiff's theories to file two lawsuits against IRS employees, the U.S. District Court in New Hampshire dismissed both.

Last week, Swan directed his legal action at Schiff.

"He honestly believes what he is saying," Swan said. "But I think he is misconstrued. I don't think it is anything he is trying to do purposely, but he is guilty of misrepresentation, fraud and negligence."

Schiff, who ran unsuccessfully for the 1996 Libertarian Party presidential nomination, said Swann's lawsuit is "nonsense."

"My books point out that I went to jail for four years," Schiff said. "My books point out that I sued the government.

"There are disclaimers in all my books, but I stand by everything in my books," he said.

Schiff added that in teaching people about his theories, he gives those who listen the information necessary to avoid paying taxes, but has no control over what is done with the information.

"It can't take Steve six years to learn I am wrong," Schiff said. "Here's what I do: I bring them the law, the statutes and the code, but I tell them they are dealing with the federal government, which is a criminal government.

"If I told [Swan] to go rob a bank, would he do it? What is he, an idiot?" Schiff said.

Swan admitted Schiff did not force him to take any action.

"It's true that I didn't have to listen to him," Swan said. "I didn't have to listen to the guy, but he was so convincing that I did listen to him."

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