Joe Bannister, a former IRS criminal investigator, details his 1993 career trajectory and resignation in February 1999 after discovering what he terms fundamental flaws in the federal income tax system. Asserting that the 16th Amendment was fraudulently ratified due to altered state language and a 1916 Supreme Court ruling limiting federal taxing power, Bannister submitted a 95-page report leading to his administrative leave and badge confiscation. Although indicted in 2004 on four felony counts for allegedly providing fraudulent counsel, he was acquitted in June 2005 after a jury rejected the government's case, which failed to produce evidence of false tax entries. Now affiliated with Freedom Law School, Bannister advocates for independent research into alleged IRS computer fraud, encouraging citizens to overcome their fear of government overreach through legal education. [Automatically generated summary]
Tax Day is fast approaching, but what significance does that have for us?
Do we owe the government money?
I'm talking today to Joe Bannister.
This is a man who has, well, he's feared by the IRS.
A funny thing to say, because most of us fear the IRS, Joe Bannister has gone up against the IRS and prevailed.
We'll talk about that in a moment.
He is an accountant.
He is a former criminal investigator for the IRS.
And Joe, welcome.
Thank you for joining me.
I appreciate it.
You are also the author of a book about the IRS, kind of exposing the IRS, and you are affiliated with Freedom Law School founded by Peyman Motehede, whom I interviewed a few days ago.
I think a good way to begin is just to ask you about Tax Day, because all these Americans are filled with anxiety.
They all believe that they owe a lot of money to the government.
They are afraid that whatever they put on their tax return, the IRS can always come back for more.
And what is your message to those Americans?
Well, I guess the main message is to lose the fear as much as possible.
I think that the IRS has always capitalized on fear, intimidation, deceit.
You know, it is an 800-pound gorilla.
And if you don't know what you're doing, even if you know what you're doing, like in my case, you know, they can really try to rock your world.
But I think that with education, the fear lessens and can dissipate altogether.
It's kind of what happened with me.
Of course, I worked in the belly of the beast, as you mentioned.
So the main thing is education in this day and age.
You know, you and I are a little older than some, and we have the internet, the ability to search and do research with a cup of coffee in our hand.
You know, back in the day, you have to go down to the law library and spend several hours, and your family's wondering where are you?
It's so much easier now.
And so basically, I'm just trying to share information with my fellow Americans, let them make up their own minds.
But in my case, it changed my life forever.
I think part of what you're saying is that the IRS is this gorilla.
They arrogate to themselves these enforcement powers.
They can radio bank accounts.
They can do this and they can do that.
But I think what you're saying is that this power rests on a shaky or fragile foundation.
And the discovery of that was one of the transforming events of your life.
So let's sort of begin at the beginning.
It's the 1990s.
You are a young criminal investigator with the IRS.
You have a badge, you have a gun, you have a bulletproof vest, you have handcuffs, you have all the sort of roughneck police enforcement tools, if you will.
And you went in kind of believing in the system, right?
You had a law enforcement background.
You also had an accounting background, and you wanted to be one of the good guys.
You couldn't have said it better, Dinesh.
Really intended to spend a full 20-year career.
And, you know, nice thing about the law enforcement and the feds, it's 20 years and you're out on the beach retired.
So, you know, it wasn't the reason I took the job, but it was a nice benefit.
But absolutely, my entire professional life revolved around the income tax.
I got a degree from San Jose State University in accounting, worked in public accounting, KPMG, an international accounting firm.
I was a controller for a venture capital firm, and then decided to spice up my life a little bit by marrying my accounting finance background with law enforcement.
And so I applied to both the FBI and the IRS.
And in the 90s, you know, the FBI still had a little bit of a good reputation, although it was rapidly disintegrating.
But FBI was kind of my first choice, and they had a hiring freeze at the time.
You know, this is back when Newt Gingrich was the Speaker of the House and Bill Clinton was in the White House.
And so there was a hiring freeze with the FBI.
I'm waiting, and the IRS calls.
And I'm thinking, well, do I really want to work for the IRS?
But we had a family friend who had actually spent a whole career with the IRS Criminal Investigation Division.
And so I thought, well, actually, he advised, you should take whatever job is offered to get in the door.
And then if you want to transition over to another agency, you can certainly do that.
So it was November of 1993 that I was sworn in as an IRS special agent, the Criminal Investigation Division in San Francisco, California.
I was born and raised in San Jose, you know, about 50 miles to the south.
And I expected from November of 93 for the next 20 years to spend a full career serving my government, protecting the treasury, and doing the right thing, wearing the white hat.
And about three years into my career at the IRS, I was listening to a talk radio show on KSFO out in San Francisco, still there, the station.
And this lady was on the show talking about the income tax and that most Americans weren't actually required to pay it.
There was no law ever passed by Congress signed by a president that required the average American to pay the income tax.
And I'm thinking, well, as you mentioned, handcuffs and bulletproof vest and gun.
And it's like, no, lady, Americans are required to pay this, and I'm here to make sure of it.
But it turned out that after two years of off-duty research, while I would still go to work every day as an IRS criminal investigator, I slowly gathered evidence.
I didn't make anything up.
I just looked at Supreme Court case law, the Internal Revenue Code, the Code of Federal Regulations, and more details than I ever saw on the CPA exam or at San Jose State or in the IRS training.
But these were details that were incontrovertible.
I mean, the Supreme Court isn't supposed to be the Supreme law of the land once they make a decision.
And so over this two-year period, driving my wife crazy and not being able to be soccer coach to my kids as much as I would have wanted, after my 50-hour a week job, I'm investigating whether this income tax, you know, there's a problem with it.
It seems that, Joe, it seems that even a little earlier, you describe how you were a young agent and you picked up the IRS sort of manual, the kind of Bible of tax enforcement.
And you thought, hey, I'm this, you know, I'm new in the agency.
Let me familiarize myself with the underlying laws and the rules that I'm going to be investigating and enforcing.
And you were approached by one of your managers who basically said, and this is the, well, I shouldn't say humorous part because it's only humorous in a dark sense.
Put that book down.
You shouldn't be reading that book.
Almost word for word.
You're right.
First day on the job, you know, literally show up, get your key card and go in, and you're sitting at your desk, and you don't have no cases to work on.
Your desk is empty, but there's some reference materials.
And among those reference materials was the internal revenue code.
So, you know, far be it from me to decide to be productive that the government's paying me and with nothing to do.
So I pulled down the internal revenue code and look up at this former Marine who was my boss, an IRS supervisor, and he said that.
What are you doing?
You're no longer a CPA.
You're an IRS special agent.
You don't need to be looking in those books.
I was just, I was flummoxed.
I couldn't believe it.
Now, when you did this deep dive, this is a little bit later.
You had heard the talk show in San Francisco.
You initially thought this is absurdity, but as you dug into it, what did you discover?
I mean, the United States was founded in the 18th century.
You could almost say based on the tax revolt, right?
The founders were rebelling against taxes and other impositions by the crown, the British Crown.
And the federal income tax did not go into effect until 1913.
Did you discover that the foundation for imposing this tax, which has now been in a sense enforced over more than a century, that this foundation was built on quicksand?
Fraudulent Ratification of the 16th Amendment00:02:47
It absolutely was.
You know, being the CPA at the time and an IRS special agent, I was kind of biased towards the status quo.
And there were just facts that were just never taught to us.
And, you know, for obvious reasons, that would kind of make the House of Cards fall.
But you're absolutely right.
The 16th Amendment was fraudulently ratified.
Okay.
And there's been the IRS will claim that these claims are false.
But I actually spoke to the man who traveled to all of the contiguous United States.
Okay.
It wasn't Alaska and Hawaii at the time.
But traveled to each of their own state archives to gather the evidence because as you know, Dinesh, being the historian, three-fourths of the states have to ratify an amendment.
And so those states have their own ratification evidence in their own archives.
And so this gentleman, Bill Benson, traveled to every state and he determined that over and over again, states either change the language, which according to the federal government, their own advisors and lawyers, it can't be done.
They have to ratify down to the comma and the period what the Congress has put out for ratification.
So multiple states changed the language, sometimes minor, sometimes major.
And a state like Kentucky actually voted to reject the 16th Amendment.
It's in their own archives, yet the federal government checked Kentucky off as having ratified the 16th Amendment.
So anyway, the courts have not wanted to touch this with a 10-foot poll.
But what's interesting is, okay, so let's just pretend the 16th Amendment was ratified.
That's how the government treats it.
Well, in 1916, the Supreme Court ruled that the 16th Amendment did not expand federal taxing power.
The Supreme Court ruled that over and over again.
And so whatever power the government had from the very beginning in the Constitution remained the same power after the 16th Amendment came into being, came into existence.
So, and this isn't Joe Bannister's opinion.
It's the Supreme Court saying so.
So facts like that showed me that even from the very beginning, there was this, let's fit this square peg into a round hole.
We're going to get this income tax come hell or high water.
And so that's how it began.
Got some other facts in history, but I'll take a breath.
Documenting the Truth After Leave00:03:16
So, Joe, what you do is you take this research, and I think people can see you're a sober, meticulous guy, and you lay it out in a kind of document, a document that later perhaps became your book.
But you present it to your superiors at the IRS and say, look, I have made some very interesting findings.
I would like you to take a look, see if I'm right.
If I'm wrong, kind of show me where I'm wrong.
And so you present this document to the IRS, and then what happens?
Well, it was a gut punch to get to that point of like, well, I think I need to speak up about this.
I took an oath to support and defend the Constitution.
All of the Treasury regulations prompted me to speak up about any fraud, waste, or abuse.
Even the IRS commissioner at the time had sent out a memo to every IRS employee urging us to report fraud, waste, and abuse.
And the timing was interesting because it was around when I was thinking, wow, there's really a problem here.
I need to speak up.
So I did.
It was February of 1999.
And I basically wrote a very long transmittal letter to accompany a 95-page report, as you mentioned.
And I gave it to my immediate supervisor, the same guy who actually suggested I sign in with the IRS because he was a career IRS special agent.
And I said, look, I've gone to bat for the agency, the income tax.
I really have no bias.
If anything, I guess for the status quo, can you help me figure out what's going on here?
I mean, I've got a duty to figure out what's going on here.
And so it took about a week of digestion for my boss to hand it up the chain of command.
And then I was called into the chief, they recall him now, special agent in charge, into the San Jose office.
He sits me down and he says, What I'm about to say, I've been instructed to say.
We're not going to be answering any of your questions.
He provided me with a letter, you know, which is available on my website, a memo, actually saying, We're not going to be responding to any of your questions or concerns.
We're going to provide you with the paperwork necessary to tender your resignation.
We're going to send you home for a week of administrative leave for you to decide what to do next.
And so, they took your badge.
Badge and gun were taken, left me with a pager.
We're talking the 90s, right?
Left me with a pager, like, you know, don't call us, we'll call you, but in a week, let us know what your decision is.
So, I went home, and after, you know, my wife and family had endured pay cuts to come into the IRS, 16 weeks of training in Glencoe, Georgia, lots of late nights doing, you know, executing search warrants and kicking in doors, and all to come home and tell my wife I don't think I'm going to have this job much longer.
Representing Clients Against Felony Charges00:11:35
So, during that week, I basically thought to myself, you know, I've seen what the IRS can do to people.
And one of them, of course, is destroy reputations.
And so, I decided since I've, you know, earned a good reputation here, I want to keep that.
So, when I'm speaking after I leave, people might believe me.
And so, I did resign actually on my birthday, February 25th, 1999.
February 25th is actually the day that the Secretary of State proclaimed the 16th Amendment to be ratified back in 1913.
So, I share the same birthday as the income tax, believe it or not.
Were you in some ways relieved in the sense that you had thought you were on the side of the angels and your research had convinced you, hey, guess what?
You know, all this kicking in of doors, all of this putting people in handcuffs, all of this is based on the assumption that this whole tax business is a legitimate enterprise.
But if it is, after all, built on a shaky foundation, then why do I want to be a part of that?
Right?
In other words, I am in part, I am playing the role of somebody enforcing a dubious or fraudulent grab by the federal government of the hard-earned savings of American citizens.
Yes.
I mean, you know, I was a CPA at the time.
The ethics that you're required to adhere to as a CPA or the background checks that the IRS and the FBI did on me to make sure that I had integrity and could be trusted.
I mean, you know, all of the things that the government has in place are to make sure that trust and integrity, you know, and people bucking up and taking responsibility and accountability are there.
And yet, when I speak up about the income tax and just questioning, like, hey, could you help me out here?
All those special agents also took an oath, just like I did.
They were all governed by the same treasury regulations.
You know, like, I know this is a bitter pill, but you know, I think we can get it down our throat.
Let's just have a discussion.
And they showed me the door instead.
Very suspicious.
Let's fast forward to a sort of a rare opportunity.
I'm sure it wasn't pleasant in its own way because you were representing, I believe, as an accountant, an aviation company, and the IRS came after you, basically saying that you had given Felonious or fraudulent counsel to this company, advising them that they don't need to file income taxes.
And this makes you a knowing bad guy.
And we're going to go after you with all the tools at our disposal.
Now, I have to confess that anyone getting that kind of letter is going to quake a little bit in their boots.
I don't know what your reaction was, but you decided to fight.
And I'd like to hear your brief account of how it went and what the outcome was.
With having crossed swords with a monster that is much bigger than you are, right?
Yes, yes.
Anyway, so I've always felt for you, and you didn't know it.
Anyway, sorry.
Yeah, it was a crazy thing.
So this client approached me and said, you know, I want to sue the IRS for money I've already paid to them.
And you have an opportunity to do that for the past three years generally because of the three-year statute of limitations.
And so he asked me, you know, I want a CPA who can help me follow the rules.
So I naively thought, well, that's what I'm supposed to do, right?
If a client needs me to help them follow the rules, I know what the rules are, or at least I can look them up and make sure that we follow them.
So that's naively why I agreed to help the man.
And so it came down to three, he wanted to amend three of his tax returns that he had already filed in the past.
And I, as a CPA, prepared the amended tax returns to begin the process of seeking to get his money back.
And so as the preparer of the tax returns, I had to sign as the preparer.
You know, the person who files the return, the client, they sign it.
But if you prepare the tax return for a fee, you have to sign it too, under penalty of perjury.
So I did that.
And then also, at the same time, but unbeknownst to me, he began to stop withholding from his employees paychecks.
And there was a New York Times article by this guy, David K. Johnston, who I won't go into my feelings about him and his reporting, but anyway, he basically reported that I was the Pied Piper leading this man to make all these decisions, when in fact, it was him making all of his decisions and then just asking me after the fact, hey, you know, can you help me follow the rules?
And so I don't know if it's the DOJ deciding, well, we're going to believe the New York Times or what, but they sent criminal investigators, you know, special agents that I used to work with to criminally investigate me over this relationship that I had with the client.
And so ultimately, in November of 2004, so about five years after I had resigned from the IRS, I was indicted on four felony counts.
One count was a conspiracy to defraud the United States of America, and then three counts of preparing three false federal amended income tax returns.
And so my trial was about seven months later in June of 2005.
And, you know, I was, having done the job, I was really incredulous.
Like, what's the crime here?
I mean, everything that I put on those amended tax returns was absolutely copied and pasted right out of the regulations and the statutes and court cases.
There's nothing false or fraudulent.
Why would this be turned into a criminal thing?
Later, much later, I learned that you probably know a guy named Rod Rosenstein with all of your research and his critical in the Trump in opening up the Trump Mueller investigation, as I recall.
Yes.
So, in fact, Rod Rosenstein was the chief of the tax division of the DOJ at the time that I was indicted.
And I also found out much later that the special agent who investigated me actually recommended that I not be prosecuted.
You know, any police report or criminal investigator report, you end it with a recommendation.
And typically, if you're going to spend two, three years on a criminal investigation, you're going to recommend prosecution.
But I was told by a very reliable source that he actually couldn't recommend prosecution because he couldn't find any evidence of criminal wrongdoing.
But, you know, Rosenstein and his tax division apparently decided, well, we're going to prosecute Bannister anyway.
Normally, in these cases, Joe, what they do is they come up with, they pile up charges, one on top of the other.
They did that.
They add them all up and say, Joe, you're looking at a large number of years in prison, but if you agree to sign here and take a plea bargain, we'll lock you up for 90 days or we'll lock you up for six months and you'll be back out on the street and you can have your life back.
We just need you to plead guilty and sign here.
Did they offer you this kind of a strong arm plea deal, which I have to say is attractive to people, whether innocent or guilty, because very often you don't want to play Russian roulette with your life, right?
You don't want to take the chance of being incarcerated for a long period of time, wrecking your life, your relationship with your family.
Talk a little bit about how you decided: no, I'm going to put this before a jury and we're going to let it play out.
I guess just because I'm not throwing shade on anyone that is facing that kind of a situation, Dinesh.
I mean, not one bit.
But in my case, they never offered me a plea deal.
They were trying to make an example of you, it looks like.
Yeah, maybe I'm sure.
Yeah, I can't expect that their agenda had anything good to it, but I really don't know why.
But my attorney said, Look, we're required to communicate a plea deal, a plea offer to you, and the government's never given one.
And I go, well, I never asked for one.
So I guess we're even.
And, you know, I don't want to sound arrogant or anything.
I mean, I was, you know, I was scared to death.
Like, what's going on here?
You know, I was arrested by agents that I used to work with, taken from San Jose to Sacramento.
They cuffed me in front.
I guess they broke protocol being kind to me.
You know, having the photo taken by the U.S. Marshals.
I was out within three hours because the prosecutor said, Your Honor, Bannister is a former law enforcement.
He's going to be afraid to go into jail.
He's a flight risk.
And the judge just looks at him like, Are you nuts?
You know, because they get the report, as you know, showing that you're not going anywhere.
You own a house, you have jobs, no criminal record.
So I was out on a $30,000 signature bond.
Sign this and you promise to reappear in court.
You pay $30,000 if you don't, and that's it.
And I was out.
And then I had seven months to prepare.
So I guess I just didn't, I just wasn't going to, well, for one thing, these tax charges, maybe that if I was convicted, maybe three years, maybe four or five years, I don't know, maybe six, I don't know.
I guess I just, you know, if there was a punishment of life or something like that, maybe I would have had to edge towards just giving in and saying, hey, this just ain't going to work for me.
But, you know, I thought, I just, this is the punishment is nowhere near compared to what our founders faced, the men and women who had to go and die in wars.
I mean, I just have to sit here and express my innocence and let them lie about me.
You know, I've got the right to a jury.
Let's roll.
Let's just roll the dice.
And so I got a really good defense team, Jeffrey Dickstein and Robert Bernhoft.
Robert Bernhoft actually ended up representing Wesley Snipes later on down the line.
Winning the Trial on Videotape Proof00:06:23
And Snipes was acquitted of all felonies.
There's a longer story about why he was convicted of the misdemeanors.
But anyway, so I had a really good defense team.
The weekend before the trial, the IRS and the DOJ attempted to eject one of my two defense attorneys, Robert Bernhoff, claiming that they were doing it for my benefit, that Mr. Bernhoff wasn't competent to represent me.
And, you know, what a nice DOJ to look out for my best interest.
So anyway, that didn't work, thankfully.
And so we had the trial and we had a videotape.
The client, Al Thompson, had actually given the IRS agents who investigated him a videotape of a speech that I did to his employees.
And so the government, you know, their case was so poor that they ended up using this videotape as exhibit A about what a bad guy I was.
And the jury didn't see it that way.
They saw, you know, kind of like I'm talking to you, I mean, a guy who appears sincere.
He's showing us a bunch of evidence as to why he decided that this income tax is a scam.
And so the jury actually wanted to see the videotape a second time.
So they had to be brought back into the courtroom and watch the video a second time.
And it turned out that, well, one other anecdote, a couple more, the IRS agent, a 30-year veteran who was testifying for the government, couldn't find a single false or fraudulent entry in those three tax returns that I prepared.
And believe me, my defense attorneys walked him through every page, every section, paragraphs, you know, sentences.
Is there anything wrong here on page two?
Anything wrong on page six?
Anything fraudulent?
No, So, you know, the jury's scratching their heads like, what are we doing here?
The special agent who testified, who I used to work with, investigated me.
Did you find any evidence of a conspiracy?
No.
So the jury is just like crazy.
Like, okay, you claim somebody's murdered someone with a knife, but you don't have a knife and you don't have a dead body.
And you don't have a motive.
I think the great news is that, and I think we've gone into this a little bit in some detail because this is a case where the IRS had a chance to try to expose the fact that your counsel and your ideas are wrong and that their enforcement is based on a solid foundation.
What you did was sort of put the IRS on trial in a sense, and you won.
I mean, you were acquitted of all charges.
I even saw some brief clips with the jurors, and they were like, this guy's on the up and up.
And so this was a big win for you over the IRS.
Let me fast forward a little bit to the present because even though you won, this was a little bit, I mean, this was a harrowing experience, right?
And so I can envision people listening to this conversation and they're going to say, well, Joe, what do you want me to do?
Do you want me to go to Freedom Law School?
Do you want me to begin a process of self-education?
Do you want me to read and educate myself and then come to my own decision about whether or not this federal income tax is a kind of illegal grab by the federal government?
Is that your counsel to people listening to this conversation?
Yeah, I mean, I've known Paymon, the founder of Freedom Law School, for 30 years.
And he, in fact, when I had a hotel bill that was about $30,000 after my trial for all the lawyers and staff and everyone, he paid it.
He's there.
He knows this issue really well.
So absolutely, people should go to livefreenow.org and at least take a look.
My website's agentfortruth.com.
We really are sincere people.
We've come across evidence that makes you really question whether the IRS has been lying to us for over 100 years.
And so I want people to educate themselves.
And as we said at the outset, you educate yourself, you become more aware, and the fear will dissipate.
And it just happened for me.
It's happened for everyone I know.
And it's a recipe for success.
Lose the fear, gain the trust through your own eyeballs and your ears, and you'll be much better off.
And so if people lose the fear, and then collectively we decide we don't want the IRS ganging up on us one by one anymore.
You know, we're going to gang up as we, the people, and say we've had enough of this.
You know, I even have a blog post in particular about what I call the 1040A scam.
The IRS is actually defrauding their own computer systems in order to get income tax assessments.
They did it to me.
I have the proof of how they did it to me.
And Freedom Law School even has the proof of hundreds of people over 30 years where the same kind of fraud has also been perpetrated.
So, you know, people can claim in the government that I'm wrong or I'm trying to BS people, but how is it that the IRS has to lie to their own computer systems to get assessments if indeed they're legit?
I mean, it's so clear to me that one of the things we've learned just over the last few years is that so many of the agencies that we took for granted, we trusted.
I'm thinking here of the NIH, you know, the health authorities, the CDC, the FBI, the DOJ, that these governmental institutions are not above unscrupulous lying, unscrupulous propaganda, unscrupulous censorship.
Investigate Freedom Law School Today00:00:14
So it seems to me at the minimum that this is something that each of us should really investigate for ourselves.
And Freedom Law School is a great way to do that.
Joe Bannister, thank you very much for joining me.