Taxing Fantasy: Letter Reports Secret Refunds

WASHINGTON - A wondrous letter written on a letterhead of the Internal Revenue Service says the federal income tax is unconstitutional, and anyone who has paid the tax can get a full refund.

Alas, the letter is a fake.

Several people, however, have tried to use the letter as if it were legitimate. When the IRS demanded that they pay more taxes, the individuals appealed to U.S. Tax Court, submitting copies of the letter as proof that federal income taxes are illegal and cannot be collected.

The letter is dated April 4, 1985, and purports to be from Roscoe Egger Jr., who was head of the IRS from 1981 to 1986.

The letter, even as fantasy, should thrill all harried taxpayers. It solemnly asserts that a defendant in U.S. District Court in Indianapolis on March 5, 1985, presented "irrefutable evidence" that the constitutional amendment to authorize income taxes is invalid because it never was ratified by individual states, as required.

"We will not publish or advertise this finding," says the letter, in the form of a directive to all IRS district supervisors. "For those citizens who become aware of this finding and apply for a total refund, expedite their refund documents as quickly and as quietly as possible."

Egger, now living in St. Michaels, Md., hadn't heard about the letter until informed by reporters. He said the letter was "phony, totally bogus."

That will disappoint Charles Michael Signon of Claremont, N.C., and others who included the text of the letter in petitions to Tax Court.

The IRS asked Signon to pay $19,803 in additional taxes and penalties for 1990-91. In reply, he took his cue from the letter and asked the IRS to refund $19,803. The IRS, however, isn't making any refund "as quickly and as quietly as possible" or in any other fashion.