Memorandum
To: Participants in Conference on Tax Rebellion Movement
From: Regional Commissioner
Western Region
Subject: Tax Rebellion in California
I am sending you the minutes of our meeting of February 9,
1973, on the Tax Rebellion Movement. These minutes enumerate
action items for the Los Angeles and San Francisco District
Directors and for Regional Office officials.
I appreciate your past attention to this serious matter and
feel confident that all of us working together can successfully
overcome this challenge to our tax system.
/s/ Homer O. Croasmun
Regional Commissioner
Attachment
Croasmun Memorandum:
Page 1 of 6
Minutes of February 9, 1973 Conference on
Tax Rebellion Movement in California
Participants
Mr. Croasmun, Regional Director
Mr. Schwartz, Regional Counsel
Mr. Rowe, Regional Inspector
Mr. Kingman, District Director, San Francisco
Mr. Schmidt, District Director, Los Angeles
Mr. McCart, Acting Assistant Regional Commissioner, Intelligence
Mr. Hansen, Chief, Los Angeles
Mr. Howard, Chief, San Francisco
Mr. Monzon, Chief, Enforcement, Regional Office, BATF
Mr. Vargofcak, Assistant Special Agent-in-Charge, San Francisco
Mr. Dvorak, Assistant Regional Inspector
Mr. Pollock, Regional Protective Programs Manager
Mr. Busalacchi, Regional Public Affairs Officer
Mr. Krause, Regional Coordinator, Tax Rebellion Movement
Mr. Croasmun opened the conference with a review of the
history of the Tax Rebellion Movement. He stated we should set
up our metes and bounds to achieve our goals; that we do not
have unlimited manpower so we must focus on the total program and
concentrate on the leaders of the movement attacking IRS.
Mr. Croasmun pointed out that seven months ago we changed
our direction on Tax Rebellion cases from a defensive posture and
have now seized the initiative by infiltration of their
organization so we now know in advance of their plans before they
execute them. This is vital and we must continue to stay
aggressive if we are to enforce the revenue laws and to protect
the Service from attack by tax rebel militants.
Mr. Croasmun stated that we are not limiting ourselves to
the sanctions in the Revenue Code, but are using all the
available law enforcement machinery whether it be federal, state
or local laws: for example, if a tax rebel leader is violating a
state law by carrying a concealed weapon, we should use state
enforcement to prosecute him; and, if there is a firearms
violation, ATF agents should be alerted.
Mr. Howard advised that he had been advised by the Detroit
District that since ( ) spoke on the radio in Cleveland,
there had been a flood of General Motors employees submitting
false forms W-4. Mr. Busalacchi stated he had a report that
( ) had been active in Albuquerque.
Mr. Hansen advised that a ( ) of Ventura County had
attempted to file false forms [sic] W-4; that he is now leading
the Mariposa camp of militants organized by ( )
the ( ).
Mr. Vargofcak said the sheriff of Mariposa County had been
checking on the activities of ( ) since May 1972, when
the ( ) bought the Mariposa property from ( );
that ( ) is a close personal friend of ( ) that
( ) has a state criminal record; that he has three or
four firearms; and that the Bureau of Alcohol, Tobacco &
Firearms has a case on ( ).
Croasmun Memorandum:
Page 2 of 6
Mr. Schmidt pointed out that there are varying degrees of
militancy in the various tax rebellion groups; that in the Los
Angeles District, Taxpayers Anonymous in Orange County, led by
( ) and ( ) is the most militant; and that we
should keep this in mind in deciding our targets.
Mr. Monzon gave a summary of laws enforced by the bureau of
Alcohol, Tobacco & Firearms which could be used on tax rebel
cases. He pointed out it is not a federal violation to carry a
gun unless the person has a felony record; that an automatic
pistol is not an "automatic" gun under the definitions of BATF
unless one pull of the trigger will discharge multiple shots;
that explosives are a federal violation; and, likewise,
"silencers" are a violation. He said he wanted more information
about a report that tax rebels are able to buy silencers in
Phoenix, as this would be a clear violation.
Mr. Howard advised he has been conferring with state tax
officials who are anxious to cooperate with IRS in the attack on
tax rebels who also do not pay state taxes; often the state can
move quickly to close up a tax rebel's business or revoke his
license; that we should see that the state uses its enforcement
machinery on those cases which are not our targets.
Mr. Croasmun reported on his discussions with Assistant U.
S. Attorney Couris and Judge Crocker, Fresno, and of their
interest in enforcement of the law in tax rebel cases. Mr.
Hansen commented on the problem of federal judges appearing to be
anti-IRS based on a belief that IRS is "highhanded." Mr. Howard
reported on a change of attitude in federal judges in San
Francisco after he met with a number of them and discussed the
gravity of the Tax Rebellion Movement and the importance of
giving prison sentences as deterrents.
There was a general discussion of the importance of meeting
with U.S. Attorneys and federal judges to acquaint them with the
full picture of the tax rebellion movement. Mr. Croasmun pointed
out that after his meeting with Mr. Couris and Judge Crocker,
they requested background information on the Movement which was
furnished them.
Mr. Kingman suggested the possibility of requesting
religious leaders to warn their following against participation
in the movement, pointing to the beneficial effects of Mormon
Church President Lee's message.
Mr. Howard advised that after his discussion with the
federal judges they said they had not full background information
on some of the defendants to whom they had given light sentences.
Mr. Schwartz suggested that the Porth-type cases not
prosecuted should at least be considered for fraud penalties or
other civil penalties.
Croasmun Memorandum:
Page 3 of 6
Mr. Schwartz also advised the district directors that they
should instruct employers who receive false forms W-4 or W-4E
which they know to be false through admission of employee or
knowledge of previous employment that the employer should
disregard the false exemption certificate and withhold on the
basis of zero exemptions or on the basis of a former correct form
W-4.
There was a general discussion on the problem of detecting
false W-4 or W-4E cases where the taxpayer does not so advise the
government or the employer does not do so; and, particularly so
where the taxpayer completes his action by not filing any form of
1040 at year end, but becomes an "IRS dropout." With the present
limited matching at the Service Centers of the filing index with
prior years' returns, or employers' copies of W-2's with filing
indexes, such cases will probably never be detected. Suggestions
were made that we use all available means to reach employers to
advise them of their responsibility to advise IRS when they
receive a suspected false form W-4 or W-4E. Also, we should use
our liaison contacts with the Tax Executive Institute to get the
message to them of their responsibility in such cases and of
advising employer-clients. Also, we should use trade journals to
reach employers with this message. Also, we should use Circular
E for this purpose.
Mr. Krause pointed out the importance of close planning on
common targets by the tax rebellion project supervisors of the
Los Angeles and San Francisco districts with planning meetings as
needed.
Action Items for District Directors:
1. Maintain the initiative in the attack on the tax
rebels.
2. Know their plans before they arrive at our door to
execute them.
3. Identify the leaders of the Movement and concentrate on
them.
4. Have a plan of action in coordination with the Region
rather than hit and miss defensive reactions.
5. Continue and step up the infiltration in-depth of the
Movement.
6. Use all available federal, state and local laws.
7. Use civil penalties on Porth-type cases.
8. Wage a campaign to educate U.S. Attorneys and federal
judges with the importance of prison sentences on
cases.
9. District Directors to continue to follow up cases of
admitted or known false W-4's or W-4E's to advise
employers of responsibilities in such cases and follow
up to see that proper 1040's are filed at the filing
season.
10. Use State taxing agencies willing to cooperate on
enforcement of laws on tax rebels.
11. Los Angeles and San Francisco project supervisors to
hold periodic planning meetings on common targets.
Croasmun Memorandum:
Page 4 of 6
Action Items for Region:
1. Use Tax Executive Institute liaison to inform tax
consultants and their client-employers of their duties
on suspected false exemption cases.
2. Consider requesting legislation or an IRS published
ruling to require employers to file with service
centers a copy of amended W-4 or W-4E forms.
3. Use Circular E, The employer's Tax Guide on
Withholding, to inform employers of responsibilities on
suspected false exemption cases.
4. Use trade journals to reach employers for same purpose.
Croasmun Memorandum:
Page 5 of 6
Supplement 1 (Rev. 3)
RC-W Memorandum 12-24
Regional Objective RC-W4
PUBLIC AWARENESS OF THE ROLE OF THE
INTERNAL REVENUE SERVICE
The Service should be acutely aware of its responsibility to
enhance the belief of the American public that Internal Revenue
Service is an effective tax administration body, maintaining the
highest principles of integrity.
Heads of Office should take positive steps to insure that
appropriate managers are aware of and responsive to concerns and
contacts with professional groups, the communication media and
the taxpaying public. The Service must maintain the capacity to
respond timely and intelligently to concerns or issues raised by
the public.
Areas of Consideration
* Evaluate, appraise and react to the tax mood of the
nation and of local areas. Heads of Office should
impress on all employees the value of effective,
professional tax administration as a counterpoint to
attacks on the self-assessment system.
* Maintain an effective Public Affairs program designed
to produce pertinent and effective public information
concerning both tax and economic stabilization matters.
* Recognize the sensitive problems connected with the
organized tax resistance movement. Be aware of the
need for diligent enforcement action against organized
tax protestors who flagrantly violate the tax laws.
* Heads of Office should be aware of their roles as
public spokesmen in explaining to the general public
and to responsible business and professional groups the
Service's role in the administration of both our tax
system and the economic stabilization program.
Official Use Only
Croasmun Memorandum:
Page 6 of 6
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