J. Benson, is the co-author of a the book, The Law that
Never Was, a collaborative effort with “Red”
Beckman. To hear him tell it, this investigative research
masterpiece, and his $3500 "Reliance Package," (the
certified documents he sells in support thereof), are the
keys to freedom from taxation.
hear him tell it, Bill Benson is a Patriot, a former law enforcement
officer, previously employed by the Illinois Department of
Revenue as a Criminal Investigator, and fired for exposing
corruption. He paints himself as a modern day Samuel Adams,
leading the charge against unlawful taxation.
web site, www.thelawthatneverwas.com, has an introductory
paragraph that says:
authority of the federal government to collect its income
tax depends upon the 16th Amendment to the U.S. Constitution,
the federal income tax amendment, which was allegedly ratified
in 1913. After a year of extensive research, Bill Benson
discovered that the 16th Amendment was not ratified by the
required 3/4 of the states, but nevertheless Secretary of
State Philander Knox fraudulently announced ratification."
encourage your clients to take his word for that. The fact
is, this self professed guru of the 16th Amendment hasn't
got a clue what the 16th Amendment was all about. You probably
don't either, so let me address that first.
you must understand where the government actually gets the
authority to impose taxes, and why it has absolutely nothing
to do with the 16th Amendment. Article I, § 8, Clause
1 of the US Constitution says.
Congress shall have Power To lay and collect Taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the
common Defence and general Welfare of the United States;
. . ."
United States Constitution gives the Congress the power to
"lay" and "collect" taxes which means
that Congress can legislate the imposition of taxes and provide
for the enforcement mechanisms necessary to collect the tax.
you must understand the background that gives rise to tax
protester confusion. Article I, § 2, Clause 3 of the
US Constitution says:
and direct Taxes shall be apportioned among the several
States . . . , according to their respective Numbers . .
other words, the US Constitution provides that, just as Congressional
Representatives are distributed throughout the Country based
upon Census (apportioned), the revenues generated by "direct"
taxes must be distributed throughout the Country based on
Census as well. Direct taxes, by definition, are those taxes
related to real property - all other taxes are excise taxes
including taxes on "wages, tips and other compensation."
that sets the stage - in 1895, the Congress had the Constitutional
authority to impose and collect taxes with the stipulation
that all direct (property) tax revenue had to be distributed
according to census. Just as a small state with a huge population
gets more Congressional Representatives than a huge state
with a very small population, the Constitution provides that
they get more direct tax revenue as well.
all know this should not be a problem -- there is no federal
"property tax." You, I and everyone else, pay our
property tax to the county where we live, and the county spends
that money locally; but, and it was a very big BUT in 1895,
the federal government does consider income derived from property
to be taxable.
if someone argued that taxing income from property (rent,
for example) was the same as taxing the property itself? That
is precisely what happened.
1895, the United States Supreme Court held that the income
tax law, as it was then enacted was unconstitutional, because
it taxed income from property, which was the same as taxation
of the property itself (a direct tax) which made it unconstitutional
since federal tax dollars are not apportioned among the States.
See Pollock v. Farmers' Loan & Trust Co. (1895),
157 U.S. 429, 39 L. Ed. 759, 15 S. Ct. 673; Pollock v.
Farmers' Loan & Trust Co. (1895), 158 U.S. 601, 39
L. Ed. 1108, 15 S. Ct. 912.
taxing income from property was the same as taxing the property
itself (and it was, no matter what we think, since the Supreme
Court said so), the assertion that the system was unconconstitutional
was a "no brainer" because Article 1, § 9,
Clause 4, of the US Constitution says:
Capitation, or other direct, Tax shall be laid, unless in
Proportion to the Census or Enumeration herein before directed
to be taken."
this created a problem. Anytime the government finds itself
doing something the Supreme Court says is unconstitutional,
there are two options; stop doing it, or amend the Constitution.
In 1913, the 16th Amendment was ratified which says:
Congress shall have power to lay and collect taxes on incomes,
from whatever source derived, without apportionment among
the several States, and without regard to any census or
can understand how anyone who did not understand the history
of this Amendment could read it and interpret it as creating
a new power to tax. It didn't; instead, it removed the apportionment
requirement that caused the Supreme Court to decree the existing
tax laws relating to income derived of property
unconstitutional. All the 16th Amendment actually did was
allow the Congress to continue taxing all income, from whatever
source, without being concerned with apportionment issues.
expect your Clients to take your (or my) word for it. Many
of them are devout cult followers totally indoctrinated to
believe what some wannabe "Tax Moses" has told them.
Fortunately, the US Supreme Court has explained it quite nicely
in the case Stanton v. Baltic Mining Co., 240 U.S.
103, 112 (1916), appended as Exhibit
1, where they say:
Sixteenth Amendment conferred no new power of taxation but
simply prohibited the previous complete and plenary power
of income taxation possessed by Congress from the beginning
from being taken out of the category of indirect taxation
to which it inherently belonged."
therein lies the basis for two issues of concern. First, although
William J. Benson touts himself as the expert on the 16th
Amendment, and offers his diligent "research" in
support thereof, his statement that, "the authority
of the federal government to collect its income tax depends
upon the 16th Amendment . . ." reveals that he doesn't
even understand what the amendment was all about and, second,
since the 16th Amendment "conveyed no new power,"
Benson's 16th Amendment ratification related arguments are
irrelevant to the power and authority of the US government
that hardly makes him a monster - it is entirely possible
that a person could read the 16th Amendment and conclude that
it established the power to tax and therefore believe that
a successful assault upon the 16th Amendment could derail
the entire income tax system. Frankly, I think Benson genuinely
did conclude and believe precisely that - with the emphasis
on did. For now, let's reserve judgment
upon whether or not he's a monster.
go back to the good old days. To hear him tell it, William
J. Benson is a former Criminal Investigator, previously employed
by the Illinois Department of Revenue who was fired for exposing
corruption. In published reports, newspaper articles, etc.,
such as the one appended to this report as Exhibit
2, there are references to Benson’s
criminal investigator for the Illinois Department of Revenue
for approximately 10 years, William J. Benson of South Holland,
Illinois has been at the vanguard of debate and controversy
surround the 16th Amendment for almost two decades.
this same article, previously referenced as Exhibit
2 , Benson describes the facts and circumstances
that ended his, “ten year career as a Criminal Investigator.”
To hear him tell it, he was a noble crusader, fired as a consequence
of his efforts to expose corruption. Specifically, he says:
discovered a great deal of corruption within that department
and for that the Director fired me.”
Court records reflect that there are other sides to his stories.
to Judge Cudahy, Seventh Circuit Court of Appeals, Benson
was an employee of Bethlehem Steel Corporation during the
1960’s when he filed a claim with the Social Security
Administration alleging that he had contracted encephalitis
and developed a seizure disorder that rendered him completely
unable to work. He began receiving disability benefits, and
he continued to receive those benefits for approximately twenty
years, fraudulently representing that he was entirely unable
to perform any work at all. See Exhibit
according to the facts as stated by Judge Cudahy, Benson began
working for the Illinois Department of Revenue (IDOR) in 1971
as an informant. He is also alleged to have been contemporaneously
employed as a bartender in a bowling alley cocktail lounge.
may seem incredibly incongruous to his disciples that William
J. Benson, who currently plays the role of the noble knight
errant, and indefatigable supporter of those who seek to evade
their tax liabilities, actually began his tax related career
as a “snitch,” but that appears to be the case
according to Exhibit
4, where Judge Cudahy says:
in the early 1970's, however, Benson returned to work. He
apparently first began working as a bartender at a bowling
alley and cocktail lounge . . . In 1971, he joined forces
with IDOR as an informant.
Cudahy's characterization notwithstanding, Benson's job is
not entirely clear, but it is clear that it related to the
problem that Illinois was having related to their state taxes
on cigarettes. Evidently, people were circumventing the tax
by buying cigarettes in Indiana and trucking them in to Illinois.
Benson lived in South Holland, Illinois, which is not far
from the Indiana border, and worked out of a squad room on
LaSalle Street in Chicago.
the latter part of 1971, the IDOR apparently adopted an aggressive,
proactive policy; they established surveillance operations
where they monitored the activities at various Indiana cigarette
stands close to the Indiana/Illinois border.
March 1973, Robert Allphin became the Director of IDOR and
adopted a hard line “zero tolerance” policy. During
his administration, Tax Act violators were arrested and their
vehicles were confiscated. By all appearances, the IDOR was
outrageously overzealous in their enforcement activities resulting
in lawsuits and legislation intended to reign them in. Ironically,
the same William J. Benson that we now see preaching tax protestations
was named as a defendant in at least four of these lawsuits.
November 1, 1974, Benson matriculated from being a paid informant,
to being an independent contractor. He entered into a one-year
written employment contract with the Department to "undertake
projects requiring personal and technical services as assigned
by the Department of Revenue concerning pending investigations."
as evidenced by Exhibit
6, the contract provided that Benson was
to be paid $750 per month and further stated: "It is
expressly agreed that for liability insurance purposes only,
William Benson will be considered an employee rather than
an independent contractor.”
to Benson, he was later fired for trying to expose corruption;
the state told a different story. The state alleged that Benson
was terminated from employment because he attempted to extort
a Department of Revenue job from Allphin and they submitted
various affidavits asserting that Allphin, at the time he
decided to terminate Benson, did not know of Benson's disclosures
to the press and various law enforcement officials. They also
produced allegedly contemporaneous notes of Benson's attempts
to extort a permanent position with the Department of Revenue.
On July 21, 1976, after he was fired, Benson
filed an affidavit with the state trial-court judge. In the
affidavit, he stated that he had been told by his superiors
at the IDOR to disregard the April 1974 injunction, and to
distort his testimony at the contempt hearing. Benson claimed
further that IDOR records had been destroyed and that others
had been withheld or altered in violation of the state court's
production order. See
This seems curious. Benson paints a picture
in which he is a crusader who could not be stifled from exposing
corruption and was fired as a consequence. Yet, after he was
terminated, he filed an Affidavit alleging that at the behest
of his supervisors, he committed perjury upon direct examination
intended to uncover this very same corruption.
also alleges that in addition to firing him, his supervisors
(Allphin and Rummel) maintained a campaign of harassment against
him. For example, they caused information to be sent to the
Social Security Administration and the Internal Revenue Service
to encourage them to investigate and prosecute him.
this regard and in retrospect, Benson’s position suffers
from the fact that, whomever it was that turned him in, and
for whatever reason, he was guilty of fraudulently collecting
Social Security benefits and tax evasion as evidenced by the
fact that he was indicted and convicted.
trial court records reflect that Benson was fully aware that
he was perpetrating a fraud upon the Social Security Administration.
A co-worker testified that he had contacted the SSA anonymously
and determined that he would be required to pay back $20,000.
In addition, he was collecting disability benefits from Bethlehem
Steel and accepting a deferred payment disability benefit
from Metropolitan Life Insurance. When the SSA began investigating
Benson, he tried to convince SSA Investigators that his position
with IDOR was part of a rehabilitation program when he knew
it was not and ultimately sought refuge in the defense, "If
he was guilty of fraud, others were too." See Exhibit
December 1989, a jury in the federal criminal tax evasion
case convicted Benson of two misdemeanor counts of willful
failure to file a federal tax return, 26 U.S.C. § 7203,
and one felony count of willful tax evasion, 26 U.S.C. §
7206. Judge Paul E. Plunkett sentenced Benson to one-year
terms on counts I and II (misdemeanors), and a four-year term
on count III (felony). All three jail sentences were to run
concurrently. See Exhibit
Following his conviction, Benson filed a flurry of post-trial
motions in Case No. 87 CR 278, United States Of America
v. William J. Benson, Defendant, United States District
Court for the Northern District of Illinois, Eastern Division.
The Decision and Order, as reported at 1990 U.S. Dist. LEXIS
2631, is appended to this report as Exhibit
10. It provides a great deal of information
about the case, including the fact that on March 6, 1990,
all the motions were all denied.
May 29, 1990, Benson began serving his sentence. Fortunately
for him, he was sentenced before the current sentencing guidelines
went into effect so he was to become eligible for parole after
serving one third of his sentence, with credit for "good
time." Benson was scheduled to be paroled on September
27, 1991. See Exhibit
Following the denial of his post-trial motions, Benson filed
a Motion for Reconsideration in Case No. 87 CR 278, United
States Of America v. William J. Benson, Defendant, United
States District Court for the Northern District of Illinois,
Eastern Division. The Decision and Order, as reported at 1991
U.S. Dist. LEXIS 2178 is appended to this report as Exhibit
12 . This document provides further information
regarding the background of this situation, and establishes
that Benson’s Motion for Reconsideration was denied
on January 18, 1991, along with his renewed Motion for Bail
appealed his felony convictions related to tax evasion, see
Case 90-1572, reported at 941 F.2d 598, United States
of America, Plaintiff-Appellee, v. William J. Benson, Defendant-Appellant.
September 3, 1991, the Seventh Circuit reversed Benson's convictions
and remanded for a new trial on all charges. The Decision
and Order is appended to this report as Exhibit
September 4, 1991, the day after the opinion was issued, Benson
was released from prison on bond. At that point in time, Benson
had served 467 days in federal prison and was scheduled for
parole later that month.
February 1994, Benson was retried and convicted again on the
same three counts. Judge John F. Grady sentenced Benson to
the same concurrent terms of one year for his count II misdemeanor,
and four years for his count III felony conviction. For the
count I misdemeanor, Judge Grady sentenced Benson to five
years probation to run consecutive to the sentences imposed
on count II and III. Judge Grady also imposed a criminal fine
together with the costs of prosecution, the latter totaling
$ 4,083, pursuant to 26 U.S.C. §§ 7201, 7201. See
Benson and his criminal defense attorney never claimed during
his sentencing hearing before Judge Grady that because Benson
had already served more than 365 days in jail for his three
concurrent sentences, the double jeopardy clause precluded
the Judge Grady from entering a probation sentence on Count
I, a misdemeanor.
November 10, 1994, Benson began serving his second four-year
sentence. Because he had already served 467 days, and because
his sentence was imposed under pre-guideline rules, Benson
was only required to serve an additional 18 days in prison.
hear Benson tell it, the government is afraid to deal with
him, but it sure doesn't look that way to me. Now, I ask you
- those of you who have been feds, or been involved in fed
task forces - how many times have you seen the federal government
decline to prosecute serious offenders because they weren't
serious enough? It always comes down to, how many dollars
involved, or how many pounds/kilos. Can you imagine the federal
government going thru all the gyrations that accompany a criminal
prosecution just to make someone serve eighteen days?
On November 28, 1994, Benson was paroled again. William J.
Benson was 67 years old. Personally, I would have thought
that Benson would have had enough of this by now - I would
have been wrong.
once again appealed his felony convictions related to tax
evasion, even though he had already served his time. See Case
94-2214, reported at 67 F.3d 641, United States of America,
Plaintiff-Appellee, v. William J. Benson, Defendant-Appellant,
appended to this report as Exhibit
May 19, 1995, Benson’s appeal of his 1994 conviction
was heard by the US Court of Appeals for the 7th Circuit.
For some reason, neither Benson, nor his attorney, raised
the issue regarding the probation order entered by Judge Grady.
His second appeal was limited to his convictions on Counts
II and III.
October 6, 1995, The US Court of Appeals for the Seventh Circuit
affirmed his second conviction and sentence, rejecting Benson's
sufficiency of the evidence and jury instruction arguments.
See United States v. Benson, 67 F.3d 641, 642 (7th
Cir. 1995), previously referenced as Exhibit
responded to the affirmation of his 1994 conviction by filing
a Petition for Rehearing, see Case 94-2214, reported at 74
F.3d 152, United States of America, Plaintiff-Appellee,
v. William J. Benson, Defendant-Appellant, appended to
this report as Exhibit
On January 18, 1996, The US Court of Appeals for the Seventh
Circuit denied Bensons Petition for Rehearing as stated in
the previously referenced Exhibit
On July 30, 1997, Benson was released from parole for his
four-year sentence at which time the five-year probationary
period to which he had been sentenced by Judge Grady began.
In February 1998, less than seven months into Benson's probation,
Assistant U.S. Attorney Safford filed a motion to have Benson's
probation revoked for various probation violations according
this is the same William J. Benson who would have it believed
that the government fears meeting him in a courtroom.
October 1998, during the probation revocation hearing before
Judge Grady, Benson 's attorneys argued for the first time
that Judge Grady's earlier imposed probation sentence violated
Benson's Fifth Amendment double jeopardy rights. Specifically,
Benson argued that the probation sentence on count I was improper
because he had already served a one-year term associated with
Count I, while awaiting the resolution of his first appeal.
March 18, 1999, just a few days prior to Benson’s seventy-second
(72nd) birthday, and approximately twenty months into his
probation, Judge Grady agreed with Benson and vacated his
probation. See Exhibit
that this was the first time Benson actually “won”
in any criminal court proceeding he had been involved in.
While he could, perhaps, claim a victory in winning his appeal
of his initial three count criminal conviction, all he gained
was another trip through the system, and another three count
conviction resulting in the unlawful imposition of a four
thousand dollar fine and five year period of probation with
regard to an offense that he had previously been convicted
of, and served his time for.
fact, I am not sure that this could be viewed as much of a
“win” either. All he got was an acknowledgement
that he had been unlawfully fined and sentenced to an extended
period of probation. By that time, he had paid most of the
fine and served a twenty-month probationary period for nothing.
Armed with the foregoing information, as well as the corroborating
documents, you should have no trouble convincing your Clients
that there is another version of his story that differs rather
dramatically from the way in which he tells it. Nevertheless,
some might argue that this does not disprove his claim that
his 16th Amendment ratification issues are a viable defense
in tax cases. After all, William J. Benson assures everyone
that the courts have never considered his evidence that IRS
knows they cannot allow to see the light of day.
the best way to deal with this is to allow your Clients to
read for themselves, and see what has happened to those who
trusted William J. Benson to give them tax advice.
1 : Wayne Wojtas’ Experience with
“Reliance” on Benson (1985)
2: Kenneth L. Thomas’ Experience
with “Reliance” on Benson (1986)
3: Daniel T. Arthurs’ Experience
with “Reliance” on Benson (1986)
4: Mark & Laura Sato's Experience
with “Reliance” on Benson (1989)
5: Marvin D. Miller's Experience with
“Reliance” on Benson (1989)
Now, I suppose that someone, somewhere, may have a Client
of uncommon generosity, desperate to give their pal Benson
the benefit of the doubt. These are, after all, people who
were capable of believing that they could convince a federal
judge to declare our entire tax system unconstitutional just
because some huckster said so.
one such person might say, "the failures of William
J. Benson's arguments are unknown to him. Perhaps, nobody
who believed him, trusted him, and spent their money on his
package of worthless paperwork ever let him know what happened.
Maybe, just possibly, Benson honestly believes that his research
has never been presented to a court in a case of first impression."
that person, the William J. Benson true believer, I have saved
the best for last.
6: George and Marion House's Experience
with “Reliance” on Benson
evidenced by the House Appendix, it's been almost twenty years
since the 16th Amendment ratification issue was presented
in federal court. It was, in fact, certified as a case of
"first impression," and William J. Benson appeared
armed with the very documents that he claims have never been
considered. The record is clear - he personally introduced
and explained them and the Court was not persuaded.
have your Client's review Benson's experience relying on his
own documents. Benson attempted to argue his 16th Amendment
ratification issue in his own case. As evidenced by Exhibit
19, the Court was not persuaded.
then, time and time again, people have appeared before judges
to adamantly, vehemently, insist that they must consider the
"evidence" that they bought from William J. Benson,
assured that it had never seen the light of day. The cited
examples are only a few.
some sort of “Jim Jones” wannabe tax expert/evangelist,
William J. Benson preaches poison. He urges his cult following
to believe in him, have faith in him, pay him the $3500 he
charges for his “Reliance Package” and “drink
the Kool Aid,” depending upon his box of documents to
I welcome your comments,
questions and suggestions.