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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