Background
Joseph R. Banister is a bit of a puzzle, because he is (or has been) a certified public accountant, and did work for the Internal Revenue Service, so he should know something about tax law, and yet he ended up buying into the tax protester craziness and quitting the IRS in 1999. He has since become one of the darlings of the tax protester cult and has frequently spoken at tax protester seminars and other events.
Theories Advocated/Promoted
There is no law making anyone liable for the federal income tax.
Court Actions
Banister advised Walter "Al" Thompson and apparently encouraged him not to file tax returns or pay employment taxes, as a result of which Banister was indicted for conspiring with Thompson to evade taxes. Banister's trial was separated from Thompson's and Banister was acquitted after a jury trial. (Interestingly enough, Thompson was also acquitted of the charge that he conspired with Banister even though Thompson was convicted on all other charges, so two different juries in two separate trials agreed that the government's evidence of conspiracy was insufficient to convict either of the alleged conspirators.)
Although Banister escaped criminal liability for his advice to Walter Thompson, the Office of Professional Responsibility of the U.S. Treasury moved to bar Banister from practice before the Internal Revenue Service because of his advice to Thompson and others. A hearing was held before an Administrative Law Judge, and Banister was disbarred from IRS practice, the ALJ finding that Banister had violated the rules for practice before the IRS by his "absolutely wrong" advice to his clients and by failing to file personal tax returns for 1999 through 2002. See IR-2004-5 (1/12/2004). Banister appealed the disbarment to the Secretary of the Treasury, who upheld the disbarment for the advice given to clients but held that there was insufficient evidence introduced at the hearing that Banister had enough income to require income tax returns for the years for which he failed to file returns. Banister could have filed a further appeal to federal District Court, but chose not to.
Based on the Treasury action, the California Board of Accountancy revoked Banister's CPA license effective March 7, 2007. Banister publicly stated that he intends to appeal that decision, but whether he did or not is unconfirmed.
The IRS has assessed a deficiency against Banister for the year 2002, and the Tax Court has affirmed the deficiency, along with a penalty for failing to file a timely return. Joseph R. Banister v. Commissioner, T.C. Memo. 2008-201, No. 1356-06 (8/27/2008). This decision confirms the claim during the IRS disbarment hearings (see above) that Banister had failed to file an income tax return for 2002 (among other years). Banister has appealed to the 9th Circuit (No. 09-70775), which appeal is still pending.
According to a petition filed in federal district court on June 18, 2008, Banister is being investigated by the IRS to determine if he has been promoting false or abusive tax schemes. According to the petition, a "substantial" part of Banister's income over the last few years has been payments to Banister by Robert Bernhoft, the lawyer who represented Banister in his criminal trial. Bernhoft himself was enjoined against promoting a tax protester scheme in 1999. The court has issued an order directing Berhnoft to turn over to the IRS "[a]ny form, document or letter prepared by Joseph Banister" for Bernhoft, and "[a]ny correspondence (including e-mails)" between Banister and Bernhoft. United States v. Robert Bernhoft, 2009 TNT 208-18, No. 2:08-cv-00515-RTR (U.S.D.C. E.D. Wis. 10/28/2009).
Students/Disciples/Associates
Banister's known clients have not fared well in court. As noted above, Banister advised Walter "Al" Thompson and apparently encouraged him not to file tax returns or pay employment taxes, as a result of which Thompson was indicted and convicted and is now in prison. In Banister's own criminal trial, he was represented by Robert Bernhoft, who also represented him in the IRS disbarment proceedings.
