Tax Resistance and Constitutionalist Tax Protest Circa 1979

The now-defunct libertarian magazine Inquiry carried an article about American tax resistance, “Constitutionalist” tax protest, and tax evasion in its edition:

War resisters, libertarians, and rock stars have joined millions of other Americans in fighting the tax man.

Tax Revolt!

by Frank Browning

Once a week, a small but growing group of men and women in Billings, Montana, meet in each other’s houses. They are not there to hold Tupperware parties, organize church bingo games, or play bridge. Instead, they are discussing strategies for the organization of a revolt against the government of the United States.

These ranchers and storekeepers are not unkempt anarchists or the central committee of some international terrorist underground. On the contrary, they are the descendants of a grand American tradition: They are tax rebels who believe that government taxation has become little more than blatant confiscation of citizens’ property to feed the insatiable appetites of Washington politicians and bureaucrats.

Martin Beckman is a leader of the Montana tax resistance movement. His Billings-based group — Americans for Constitutional Government — counsels taxpayers who are fed up with handing over one-fifth of their earnings to the federal government each year. The IRS form 1040, Beckman has proclaimed, is an illegal “confession sheet” that the feds use to defraud ordinary, hardworking citizens. “No American has to sign a confession sheet,” he maintains. “The government has used form 1040 to extort billions of dollars from American citizens.” In Big Timber, a small town not far from Billings, Beckman met with a newly formed group of tax rebels . “The government is taking advantage of our lack of knowledge of our Constitution,” he told these new recruits to the movement, explaining further that IRS tax forms are a violation of the Constitution’s Fifth Amendment guarantee against self-incrimination. “You only have those rights you demand. You use those rights or you lose them. Our founding fathers were all tax rebels.”

Although the IRS and the federal courts have refused to consider the Fifth Amendment “self-incrimination” argument as justification for refusing to file tax returns, and although Beckman himself has been the butt of IRS investigations, his Montana group is thriving. Other independent tax protest groups are flourishing in other sections of Montana and in Connecticut, California, New York, New Jersey, and Virginia — in almost every section of the nation.

The ranks of these tax rebels are increasing so fast that the commissars of the Internal Revenue Service have begun to show signs of panic. For , the IRS had to order almost a million Americans to file income tax reports. And as the IRS deploys its agents and its computers in a new get-tough campaign, the tax resisters are themselves growing tougher. Like the people of Billings, they are organizing informal study groups, community meetings, taxpayers’ unions, instructional workshops, and fraternal associations, and are even lobbying in Washington.

Ten years ago, tax resisters were thought of as radicals or peaceniks who, like singer Joan Baez, were unpatriotically refusing to contribute to the Vietnam War efforts. Today the activist fringe has been swept aside by the anger of ordinary people who feel stymied by the rising cost of living and the falling value of the dollar. A Louis Harris survey conducted in found that Americans are more fed up than ever with the federal tax system. Sixty-six percent of those polled declared their tax burden had reached “the breaking point,” 87 percent believed that “the big tax burden falls on the little man,” and 84 percent agreed that “the tax system is set up to let the rich get the real breaks.” Little wonder that the tax rebellion is growing larger and stronger.

Jim Davidson, executive director of the National Taxpayers Union, a libertarian tax reform group, estimates that some 10 million Americans have refused to pay federal income taxes — 10 times the number the IRS says it has caught. Several years ago, the editors of U.S. News & World Report, quoting tax experts, estimated that the government loses around $30 billion in unpaid taxes annually. New studies made at Bernard Baruch College in New York City suggest that an immense “underground economy” exists in the United States, an economy that functions totally on cash and in produced some $195 billion, 10 percent of the entire gross national product. None of that income was taxed. Whether they are outspoken tax resisters or the clever tax evaders of the “underground economy”; whether they have set up tax-deductible family corporations or have bought up secret number “honor bonds”; tax rebels are fueling the biggest national insurrection since the armed farmers of Massachusetts launched Shay’s Rebellion to protest the unfair tax system of the new American government.

The use of all these devices reflects what many economists see as a return to the anonymity of a cash economy by millions of middle-class Americans who are struggling to fight inflation by moonlighting at extra jobs where no taxes are collected. “Our theory,” said a representative of Chase Econometric Associates, a subsidiary of the Chase Manhattan Bank, “and I must emphasize that it is still a theory, is that Americans are returning to self-employment as a means of support and not reporting the income to the government.” If he is right, it means that Americans are following in the footsteps of the French, the English, and the Italians for whom tax cheating is more the norm than the exception. According to Business Week: “Signs are increasing that as tax rates soar, and as inflation pushes people into higher tax brackets while it erodes purchasing power, Americans are starting to copy citizens of other countries in their efforts to evade the tax collector.”

Mike Tecton is typical of the tax rebels. A lanky architect from Oklahoma, he has been a tax resister for 19 years — although he prefers to call himself a “Constitutionalist.” He and his wife Jane live in a plain, unpretentious house in McLean, Virginia, a 15-minute drive from IRS headquarters in downtown Washington. In he made his tax protest public by founding the Thomas Jefferson Equal Tax Society, an organization dedicated to eliminating the graduated federal income tax through court action, on the ground that it is discriminatory. The IRS immediately began to close in, and last year Tecton found himself behind bars.

“For over a decade Mike didn’t file or pay income tax,” his wife explained. “For 11 years there was no response from the IRS. Then Mike spoke in 1974 at a tax seminar in Chicago and flew to California to speak at another. That’s when the IRS came after him.” In Tacton placed a small advertisement for his newly founded Thomas Jefferson Society in the Washington Star. His ad read: “I, MIKE TECTON, FREE BORN CITIZEN OF THE UNITED STATES, CHALLENGE THE IRS AGENTS OR ANY OTHER MEMBER OF CONGRESS TO A TV DEBATE ON THE ISSUE ‘CAN EQUALLY FREE CITIZENS BE FORCED BY CONGRESS TO SUBMIT TO UNEQUAL TAX CLASSES, INFERIOR TAX CLASSES, TAX PAYING CLASSES, OR ANY OTHER TAX CLASSES?’ I SAY NO!”

Four days after he ran his newspaper ad, IRS agents tracked Tecton down in Chicago where he was working on an architectural project. On , he was convicted of failing to file an IRS 1040 tax form, and was sentenced to three years’ probation and fined $300. In probation was revoked on charges that he failed to file tax returns in , which he disputes, and he was sentenced to six months in prison. He began serving time on .

Mike and Jane Tecton believe that the IRS is more interested in gagging opponents of the system than in collecting back taxes. At one point, agents came to their McLean home and announced that the Tectons owed $22,000 in back taxes. “Prove it!” Mike shot back. The agents left. So far the IRS has not pressed its claim. Nor have the Tectons been silenced.

While Mike was in the Allenwood federal prison camp, Jane kept in touch with members of the Thomas Jefferson Society and with other tax resister groups across the country. She published the first edition of USA, the society’s monthly newspaper, which she claims had a press run of 10,000. In the last three years the society has published 17 books and pamphlets with such titles as 101 Reasons Why the Income Tax is Unconstitutional, and I Charge Congress with These Crimes.

The Thomas Jefferson Society operates on the principle that the government is committing a crime by withholding the taxes of working people from their paychecks. He calls it “enforced slavery” by organized theft of citizens’ property. Across the Potomac River from McLean, in Washington, D.C., is another group of tax resisters who have formed a nonprofit cooperative print shop and who refuse to send their taxes to the IRS. Ed Guinan is a priest and the coordinator of the shop, called Collective Impressions. A year and a half ago Guinan and his colleagues decided to continue paying social security taxes but to send their withholding taxes to the U.S. Arms Control and Disarmament Agency.

“Every quarter, when taxes are due, we send a check to the Arms Control Agency,” Guinan says. “They return it with a polite note saying that they cannot accept it, and we put it into a tax escrow account which cannot be used for normal business expenses.” Collective Impressions owes only $500 per quarter to the IRS, but Guinan and his coworkers believe they are making an effective protest against U.S. military spending policies.

Ed Guinan and Mike and Jane Tecton see their refusal to pay taxes as a tough-minded fight against the U.S. government — a government that they believe is not honestly or legally representing its citizens. Collective Impressions in effect pays its taxes — but not to the U.S. government. “It’s wrong to try to damage or defraud someone,” Jane Tecton argues. “An honest belief based on something is different. Our game isn’t money. Money, big cars, they don’t mean anything to us. We don’t bother with people who aren’t sincere.”

For every staunch, unyielding tax resister, of course, there are untold numbers of “tax avoiders.” A tax avoider is someone who opposes paying taxes to the federal government, and who has chosen a wily strategy rather than a simple declaration of resistance. The biggest tax avoiders are large corporations and their executives. For example:

  • Pepsico Corporation and Owens-Illinois, Inc. take care of their top brass by leasing an exclusive salmon stream for them in Iceland.
  • A New York executive claimed business lunch deductions for 338 days in one year — skipping Thanksgiving Day but deducting lunches for Friday, Saturday, and Sunday of Thanksgiving weekend. His meals usually ran above $20 each for an annual total deduction of almost $10,000.
  • An executive at Time magazine took his five-course lunch at New York’s exclusive Chambord every day; for dinner he usually drank a milkshake or ate a boiled egg. The restaurant sent his bill directly to Time, which deducted it as a corporate expense.

Nick Panagi, a writer, sometime university lecturer, and occasional carpenter, is the consummate tax avoider. He is now in his late fifties, his close-cropped beard graying slightly at the fringe. He lives in a simple, modern oceanfront apartment on one of the elegantly funky beaches west of Los Angeles. Born in Rumania of Greek-Sicilian parents, he grew up in the Hell’s Kitchen district of New York City where he shed his accent in a record six months to avoid being beaten up at school. Since he came to southern California, he has been a legal consultant, a lecturer, and a professor at one of the city’s largest universities. “Nick Panagi” is of course a pseudonym.

“Do I operate on some set of great political principles?” he asked. “I have only one principle and it’s very simple: I don’t like the government. The taxes are usually used for things that help the rich and never help the poor.”

Panagi takes his argument about taxes a step further than the tax rebels at the Thomas Jefferson Society or the Taxpayers Union. “Their kind of ‘principled’ stand to refuse to pay taxes never achieves anything. It didn’t stop the Vietnam War; it won’t end pollution and it can’t correct the corrupt welfare system. Until there are massive, powerful organizations controlled by the working people in this country and dedicated to fighting the system, the only hope is to create more and more rebels.

“I never pay taxes,” Panagi proclaims with pride. This is the 17th year in which he claims indeed not to have given a cent to the U.S. government. For many of those years he worked as a writer or a consultant and no taxes were deducted from his paychecks. But even in those salaried years when tax was withheld, the IRS refunded it all to him. The principle Panagi uses to avoid taxes grew out of his experiences as a young man when he commuted every week between Boston and New York.

“In those days, before there were fast freeways, I’d always speed like a hellion Monday mornings and Friday nights. Of course, I’d get stopped at least twice a month; the cop would walk up to the car with some line like, ‘Hey, buddy, what’s the hurry?’ I’d answer, nervous and embarrassed, ‘Oh, yeah, I guess I was going 85’ — when I knew I had only been driving 75 or 80. I always admitted going faster than I was actually driving, and immediately the cop would be off his guard, ask me if something was wrong and be ready to believe any story I told him. That’s the key to avoiding taxes in this system: The more you flaunt it, the more respectable you appear. The richer you are, the more you deserve. If you made $5000 last year and had legitimate expenses of $4500, the IRS won’t believe you. But if you earned $150,000 and post illegitimate expenses of $138,000, they will. So always make your income appear as high as possible.”

, as in the last several years, Panagi has earned about $18,000. Following his method, he has never reported an income below $30,000. How? Any check he receives, he records as income. An out-of-town friend asks him to cash a $50 check for the weekend. A girlfriend lends him $500 or $1000 for “a trip to Las Vegas.” He pays her back immediately but records her check as income. Eight friends go out to dinner. He takes the tab and pays the check. The seventh collects cash from the other six and writes him a check, which he records as income. The restaurant tab he marks as research and entertainment for a story and deducts the whole amount as expenses. A friend signs over his paycheck and Panagi writes the friend a personal check for a few dollars more in return. The original payroll check deposited in Panagi’s account is reported as income. By the end of the year, he has accumulated at least $12,000 in “outside income.”

And then what?

“As a free-lancer or consultant, everywhere I go, practically everything I eat, most of my clothes, my auto expenses, the books and periodicals I buy — they’re all deductible expenses. And since I earned $12,000 outside my salary, that income is itself proof that I operate a personal consulting business — even if I don’t write a single article or deliver a single lecture. As a matter of fact I really do all those things each year — and I lose money operating that personal business.”

Panagi has other write-off tricks. Frequently he picks up the tab for eight or ten people in a fancy restaurant — and nobody pays him back. Since a wife is not deductible as a secretary, he is not married. “Two years ago I went to Puerto Rico and I took a woman with me. The ‘salary’ I gave her as my secretary and all her expenses there could be deducted. Every trip I make, I usually take a companion, and she’s always deductible.”

Panagi admits that he has been audited, and frequently. The IRS auditors always seem puzzled that he can spend as much or more than he earns. “I tell them I borrow money — and I do. I live on credit, credit cards, and bank loans. Some of my friends say, ‘But look how much interest you pay.’ That’s true too. for example, I paid almost $2000 in interest on credit cards and loans. But if I didn’t live as extravagantly as I do, I wouldn’t get back as big an income tax refund — almost $6000. So even with the high interest payments, I made a net profit last year of $4000.”

Panagi’s formula reduces to two maxims: Operate some kind of independent consulting business (even though you earn a regular salary) in order to file a self-employment tax return, and live as high as possible.

The Panagi formula, of course, requires certain privileges many people lack. Bank credit may take years to establish. Not everyone can get credit cards, and maintaining a family of five may also raise the stakes of the Panagi system dangerously close to disaster. A more modest device for the beleaguered family is the “family corporation.”

Family corporations are simply small, home-town versions of U.S. Steel, Chase Manhattan, and Pan American Airways — none of which paid any federal income tax in . The only taxes family corporations owe are on profits and capital gains. The officers of the corporation may be members of the family and any others whom the incorporators wish to name. The key to the success of the family corporation is a careful assessment of the marketable skills each family member may have.

“Anyone who has expert knowledge in some field of endeavor can become a consultant in that field,” says Stephen Angell, an adviser to the War Resisters League. “Sales, manufacturing, and management are all legitimate objects of a business enterprise, and each of these categories should be given broad interpretation. For example, manufacturing includes handmade articles, and management encompasses property management. Most family corporations of course have business property, usually houses, which may be partially leased for residential purposes. A proportionate share of all house expenses — insurance, repairs, heat, light, telephone, taxes, depreciation, and mortgage interest, becomes a deductible business expense.” He also points out that many family members’ hobbies can be adapted to business purposes. Family members who like pets may be paid a fee by the corporation each month to raise stock, which, when it reaches maturity, is offered on the market. The expenses are deductible, and it may take several years to develop a profitable enterprise.

“If you enjoy gardening, then farming and selling produce could become a part of your business,” he notes. “You could also garden for yourself on the side. If you are a stamp collector, become a dealer in stamps. A skier can rent skis.” Group life insurance, health insurance, and IRS-approved retirement plans can also be removed from personal budgets and made deductible business expenses.

A growing number of married couples in which both partners work have found it valuable to fly off to some Caribbean island for a Christmas divorce; because they are single on December 31 they can file their taxes independently at a much lower rate than would have applied to their combined incomes. If they are so fortunate as to remarry after January 1, so much for the rewards of marital bliss. Many couples have found that their tax savings more than offset the cost of their holiday divorces.

Anxious to cash in on the burgeoning rushed to offer what has been called “the little guy’s legal way to cheat on taxes.” For years wealthy globe-trotters have beaten the tax racket by stashing their wealth in numbered bank accounts abroad where their money is safe from IRS scrutiny. The favorite tax havens for the superrich have been Switzerland, Lichtenstein, Panama, and some Caribbean islands. , however, a number of small U.S. banks have begun offering so-called “Honor Bonds” to their customers.

Originated in Columbus, Ohio, these honor bonds are low-denomination certificates of deposit issued without names, payable to “bearer” and identified by code numbers. They are transferable from one owner to the next without any notice to the issuing bank-and, unlike most savings accounts, no interest record is forwarded to the IRS.

“Why go to Switzerland?” asked one Camden, New Jersey, bank in its ads for the special bonds. “The bank will not issue an IRS 1099 form,” promised a Columbus, Ohio, bank, adding, “Since NO name appears on the bond and no customer identification number is required, the Honor Bond you buy is completely anonymous. They can be used as gifts or to pay debts.” Another bank was even blunter: “Numbered Savings are issued by Serial Number only TO PROTECT YOUR PRIVACY! They’re perfect gifts because no transfer notice is necessary — no names, no notice…” By honor bonds were available from banks in 14 states in denominations of $25 up to $5000. According to Representative Benjamin Rosenthal, a New York Democrat who held hearings into the use of the bonds in , “Hundreds of millions of dollars in ‘No-Name’ bonds have been issued. The potential tax loss to the Treasury as a result of the issuance of these negotiable instruments,” he warned, “relates not only to income taxes, but to estate and gift taxes as well.”

Rosenthal is not alone in his fear of what honor bonds may do for the little man. The IRS is working itself into a veritable lather. A year ago it proposed changing tax filing regulations on the bonds to require banks to report the names of the bonds’ owners as well as the amount of interest paid on them. As Acting Assistant Secretary of the Treasury Donald Lubick told a congressional subcommittee, “This non-compliance diminishes public respect for the operation of the tax system and could jeopardize our system of voluntary compliance.” It is hard to imagine how public respect for the IRS could be any lower than it is already, but given the tax collectors’ penchant for belligerence against the ordinary American taxpayer, Lubick may be right. Within its proposed change of the rules governing honor bond reporting, the IRS does plan of course to allow wealthy investors (those who buy over $100,000 in bonds) to continue the advantages they have always had. Although the IRS will probably eliminate the tax evasion opportunities on the smaller honor bonds, they will still guarantee anonymity to the original owners of the bonds. All of which makes one wonder whose interests the IRS has at heart.

The sallow-faced folk from the IRS are increasingly alert to the tactics of tax-avoiders. Harry Margolis is a San Francisco area tax lawyer, a man whose clients have included both political radicals and the fabulously wealthy; he was brought to trial in on a charge of conspiracy. Margolis, near retirement, was facing the possible prospect of spending the rest of his life in prison. When he was indicted, the Justice Department called the case “the biggest breakthrough we’ve had in the whole area of fraud and the widespread use of offshore tax havens.” The IRS witnesses testified that Margolis had channeled the money of his rich clients into phony companies in the Bahamas and the Netherlands Antilles, both offshore tax havens, thereby defrauding the United States of $1.4 million in taxes.

His acquittal notwithstanding, Margolis admits that he’s spiriting his clients’ money out from beneath the noses of the taxmen. His clients, often entertainers, are actually paid by foreign-registered corporations that are in turn paid by the film companies and nightclubs where the entertainers perform. No taxes are deducted by the clubs when the checks are sent to the foreign corporations. “The tax money you earn,” Margolis explains, “will go to an area where some tax is paid, but that is a low tax area.” Margolis agrees that the system is “criminal,” and that it amounts to nothing more than a bribe by taxpayers to give small, impoverished nations a few dollars in exchange for protection from the IRS. The “crime,” however, is encouraged by the federal tax code itself.

Among the riskiest tax avoidance schemes are those that involve the failure to report income — which is consistent with the general maxim that it is better to flaunt the law than to hide from it. Those who hide their loot are called tax evaders. They are usually punished most severely by the IRS. Notable evasion cases in included:

  • Val Marino, a former construction and engineering director of Avis, Inc., the car rental company that always tries harder, for failing to report $40,000 in kickbacks received from H.L. Lazar, Inc., a construction subcontracting company in New York. He was not indicted for the bribery itself.
  • Andrew Tsanas, manager of maintenance and operation at J.C. Penney headquarters in New York City, for failing to pay taxes on $1.4 million in kickbacks he received from H.L. Lazar, Inc. IRS claims he owed $880,000 in taxes on the kickback. U.S. District Judge Jacob Mishler labeled Tsanas “the biggest shakedown artist to come before me.”
  • Edmund O. Matzal, a New Jersey psychiatrist active nationally in Lester Maddox’s Presidential campaign on the American Independent party ticket, who refused to pay taxes because they represented “involuntary servitude” and because he opposed U.S. foreign aid to countries supporting North Vietnam.
  • Leo Kornblath, a New York architect who “laundered” $36,000 in corporate money by paying it to “Happy Hooker” Xaviera Hollander for so-called interior decorating services. Hollander, a Dutch citizen and reputed brothel owner who needed to show a legitimate income to remain in the United States, returned the full amount of these checks to Kornblath, and enabled him to escape paying $13,000 taxes.
  • Alleged organized crime figure Anthony “Fat Tony” Salerno, freed in a mistrial on charges of failing to report a large part of his income . Salerno, the IRS contended, reported a $40,000 annual income during those years but spent “literally hundreds of thousands of dollars more.” Salerno claimed he made up the difference from accumulated cash savings.
  • Anthony T. Ulasewicz, the private investigator, sentenced to a year’s probation for failing to report $45,000 he earned as the conduit for $200,000 paid to the Watergate burglars. Ulasewicz won his light sentence because he filed an amended return in on which he did pay the proper taxes and penalties.

If any general conclusion can be derived from the records of tax indictments, convications, and sentences, it is that very, very few people need worry about getting slapped by the harsh hand of the government, especially if they exercise common sense in avoiding taxes and do not become public martyrs. One IRS official in the Midwest estimates conservatively that there are about 1.6 million tax cheats in the United States. Last year a total of only 247 people were convicted after trial of tax fraud and another 1229 pleaded guilty. In short, the odds of being hit with a criminal conviction are 6639 to 1. Indeed, since fraud is the principal crime on which tax evaders and resisters are convicted, the question of intent is often far more important to the IRS prosecutors than the failure to pay taxes alone. Fraud convictions require that a jury believe the taxpayer intended to evade taxes.

So long as the independent entrepreneur records all his income, the tax authorities seem to lend an understanding ear to some very unusual expenses encountered in the process of making a profit. Witness the U.S. Tax Court’s cool acceptance last year of a convicted dope dealer’s “legitimate” business deductions. Bill Holt, convicted in El Paso, Texas, of smuggling marijuana, was sentenced to five years and ordered to pay a $30,000 fine. Holt admitted to the IRS that he had made $780,000 from dope dealing in , but, he claimed, he should be allowed tax deductions for the lost marijuana and trucks seized from him by the police. No, said the tax court. Contraband and the equipment used to smuggle it could not be allowed as deductions because that would imply the court condoned illegal activity. Instead, without comment, the court did allow him to deduct $320,000 for “sales commissions,” $280,000 for “cost of goods sold (marijuana),” and $40,000 marked “driver’s expenses.” After all, the last thing the government wants to do is discourage new business opportunities.

Well, that was interesting. But let’s try to bring it up to date…

  • The federal government is stricter now about allowing deductions for people whose business involves drugs prohibited by federal law — something that is making tax time difficult for medical marijuana dispensaries, for instance.
  • Edward O. Matzal was sentenced to probation and eight hours of community service for not paying his taxes for three years. He died in .
  • Harry Margolis died of brain cancer not long after winning yet another criminal tax case against him in .
  • In , Congress cracked down on bearer bonds (called “honor bonds” in this article).
  • Stephen Angell died at 91. He was active with the Alternatives to Violence Project.
  • I’d really like to know what ever became of “Nick Panagi” — his technique is kind of a crazy topsy-turvy version of mine and I’d be curious as to how it worked out in the long run. But he remains cloaked by pseudonym.
  • Ed Guinan has been working to help poor and other disadvantaged groups in Washington, D.C. He founded the Community for Creative Non-Violence.
  • I’m not sure what became of Mike and Jane Tecton. I don’t see much reference to them after this time, except one article from the 1990s in which Mike Tecton is serving as an informal legal advisor to someone representing himself in court on a firearms law violation.
  • Martin Beckman is the co-author of the “show me the law” tax protester bible The Law That Never Was. The IRS seized and sold his home in ; the Beckmans challenged this in court, filing multiple appeals at least through , but failed to convince the courts of their legal theories. He claimed to still not be filing income tax returns as late as , when he was running a long-shot campaign for U.S. president.

Another now-defunct libertarian magazine, The Libertarian Review also covered the constitutionalist tax protester scene in their issue.

One thing I noticed from that article was a coda of sorts to the Vivien Kellems story, bits and pieces of which I’ve noted here before. Kellems was an ornery libertarian sort back in the day, and her legal battles against the federal income tax make her a sort of founder or at least distinguished ancestor in the Constitutionalist sect.

Here’s how the story ends, apparently:

In , she finally became an overt tax rebel by refusing to surrender her records to the IRS when they questioned her deductions. In retaliation, the IRS merely disallowed all of the deductions claimed for the years in question and assessed her thousands of dollars in additional taxes, which she refused to pay. From the time of this confrontation until she died , she filed no returns and she paid no taxes.

According to a book which encourages such anti-tax actions, The Continuing Tax Rebellion: What Millions of Americans are Doing to Restore Constitutional Government, by Martin A. Larson (Devin-Adair, ), she had become so sensitive a case that the IRS had decided she must not be prosecuted, and no action was taken against her. Mr. Larson goes on to state, “Shortly after her death, I received a letter from the firm of attorneys who handled her $1.8 million estate and who stated that only $265,000 had been paid the government in the complete settlement. Thus no income taxes were paid even after her death.”

In other words, Vivien Kellems, even though she never got the constitutional test case she was seeking, nevertheless made the IRS back down. Or did she? A story on tax rebels in Barron’s by James Grant, dated , reported, “, it was disclosed that the government had recovered some $816,949.97 from Miss Kellems’ estate.” So whatever was “settled” shortly after Kellems’s death was not really settled until the IRS had taken what it wanted.