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Justice Targets Tax Defiers

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[April 09, 2008]  WASHINGTON (AP) -- The Justice Department targeted tax "defiers" Tuesday, warning that Americans who refuse to pay up on April 15 could wind up spending even more later in costly penalties.

Prosecutors also sought to shut down a Florida-based marketing firm that made millions of dollars off advising people how to avoid paying annual income taxes.

"With the privileges that this country gives you, we have both obligations and responsibilities to give back," Assistant Attorney General Nathan Hochman told reporters in Washington. "Taxes are the lifeblood of the American civilized society."

Hochman oversees the Justice Department's cadre of tax prosecutors. He described claims by some groups that income taxes are unconstitutional as "bogus."

"If you owe taxes, you must pay them. Period," Hochman said.

Since 2001, the Justice Department has shut down more than 100 tax preparers and those who promote ways to evade taxes for intentionally filing fraudulent claims and frivolous returns. Hochman did not immediately know how much these so-called tax defiers cost the government in lost revenues.

Tax protesters argue the IRS has the authority neither to force employers to withhold federal income tax from their workers' paychecks nor to compel anyone to pay income taxes. They estimate tens of thousands of Americans agree.

Robert Schulz, founder of We The People Foundation for Constitutional Education, says the government has for years avoided answering questions about its specific authority to collect taxes.

"If they don't respond, then the people are free to withdraw their allegiance, their financial support, retain their money," said Schulz, of Queensbury, N.Y. "They are quick to portray everybody as anti-tax. It's not true -- they're not anti-tax, they're just pro-law."

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Schulz does not pay income taxes since deciding in 2002 to eschew any jobs that would pay him. He lives on revenue from selling parts of his property -- for which he pays capital gains taxes -- and embarked on a hunger strike in 2001 to protest the government's enforcement of the income tax.

On Monday, the Justice Department filed injunctions in federal courts to stop Pinnacle Quest International (PQI) and its agents from selling and marketing products that help customers bilk the IRS though shady tax shelters or by filing fraudulent claims.

The injunctions, filed in Pensacola, Fla; Tacoma, Wash.; and Portland Ore.; accuse the firm of selling $54 million worth of tax evasion materials between 2002 and 2006. Many of the products were sold at pricey resorts around the world, including during a Mediterranean Sea cruise last May that was attended by 400 people.

One of the PQI salespeople on that trip was a former IRS revenue agent who prosecutors said made an estimated $138,000 selling tax schemes before she was sentenced in February to four years in prison.

An e-mail message seeking comment from PQI was not immediately answered. Attempts to locate a valid telephone for its offices, based in Fort Walton Beach, Fla., were unsuccessful.

[Associated Press; By LARA JAKES JORDAN]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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