Joe Banister

In 2004, Banister was charged with one count of conspiracy to defraud the United States[1] and various counts of willfully aiding, assisting counseling and procuring the filing of a false amended income tax return[2] in connection with his alleged assistance of a client, Walter Allen Thompson.[3] Thompson owned and operated Cencal, an aviation and flight bag manufacturing business. Cencal employed a number of hourly wage workers who were predominantly seamstresses, production workers and office workers. In July 2000, Thompson removed all of the employees from the taxpayer rolls by no longer withholding employment taxes from wages and salaries, by not filing Forms 941, and by not providing employees or the IRS with annual wage or other income statements, Forms W-2 or 1099.

Thompson was charged numerous tax-related offenses. On January 28, 2005, he was found guilty of two counts of knowingly filing false claims against the United States under 18 U.S.C. § 287, ten counts of willful failure to collect and turn over taxes under 26 U.S.C. § 7202, and one count of willfully filing a false income tax return under 26 U.S.C. § 7206.[4] Thompson was acquitted on one count of conspiracy to defraud the United States under 18 U.S.C. § 371.[5] Thompson was sentenced to serve 72 months in prison and was fined $7,500.[6] The case against Banister continued, and Banister was eventually acquitted of the charges against him.[7]

Banister's license as a Certified Public Accountant was revoked by the California Board of Accountancy, effective March 7, 2007.[8]

The web site for the California Board of Accountancy notes that in December 2003, the U.S. Department of the Treasury ordered Banister disbarred from practice before the Internal Revenue Service (IRS),[9] and that the disbarment was finalized in June 2004. The California Board of Accountancy also states:

On December 24, 2003, a decision in United States Department of Treasury Complaint No. 2003-2, Director, Office of Professional Responsibility v. Joseph R. Banister, ordered Mr. Banister disbarred from practice before the Internal Revenue Service (IRS). Mr. Banister appealed the decision. In a June 25, 2004, decision, the Department of Treasury denied Mr. Banister's appeal and adopted as its final agency action the underlying decision disbarring Mr. Banister from practice before the IRS. The Department of Treasury found that Mr. Banister provided erroneous advice to taxpayers, including improperly advising them that tax returns were not required because IRS Code sections 861 through 856 define "source of income" in a manner that excluded the income of United States citizens residing in the United States from United States tax.[10]

The revocation of Banister's California CPA license was affirmed by the Court of Appeals of California.[11]

The Internal Revenue Service was investigating Joseph Banister "to determine whether Banister promotes abusive tax schemes that would subject him to penalties under 26 U.S.C. § 6700 or subject him to injunction under 26 U.S.C. § 7408," and issued a summons to an attorney named Robert Bernhoft in connection with the investigation.[12]

On August 27, 2008, the United States Tax Court ruled that Banister was liable for federal income taxes and penalties for failure to file his 2002 federal income tax return and report, as income, $23,000 in a distribution from a retirement plan and other income.[13] Banister appealed, and the United States Court of Appeals ruled against him.[14]

In a later case, the Internal Revenue Service determined that for tax years 2003 through 2006, Banister had tax deficiencies of $179,786.00, plus section 6651(a)(2) penalties for failure to timely pay of $44,946.50, plus section 6651(f) penalties for fraudulent failure to file of $130,344.86, plus penalties of $6,022.84 for failure to timely pay installments of estimated income tax. In that case, the Tax Court ruled that Banister was liable for a penalty of $25,000 under Internal Revenue Code section 6673(a)(1), for engaging in frivolous litigation.[15] Banister appealed, but the decision was upheld by the Court of Appeals for the Ninth Circuit on November 21, 2016. The Court of Appeals added a penalty of $8,000 against Banister (under Rule 38 of the Federal Rules of Appellate Procedure) for filing a frivolous appeal.[16] Banister then filed a petition U.S. Supreme Court, but the Supreme Court denied his request in October 2017.[17]

• Joe Banister's Homepage
• Internal Revenue Code
• e-CFR - Government Printing Office, income tax regulations search engine
• Daniel B. Evans et al., "Joseph R. Banister," from Tax Protester Dossiers: Gurus and Other Big Fish