California CPA Cleared of Tax Fraud

A federal jury has cleared Joseph Banister of charges of federal criminal tax fraud and conspiracy. Banister, a CPA and former Internal Revenue Service Criminal Investigative Division special agent, was indicted for preparing false income tax returns and conspiring to defraud the United States. Banister advised Al Thomson, a California business owner, that the IRS lacked the authority to impose income taxes on his workers, and that there was no legal requirement for the business to withhold any taxes from the workers' paychecks. He also prepared corrected tax returns for Thompson claiming that his taxable income was zero. Banister himself reports and pays income tax, and was not charged with failure to do so. However, courts have routinely rejected his position that paying tax is voluntary, and Thompson is currently serving a six-year sentence for failure to withhold.