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WASHINGTON, D.C. - Notorious tax protestor Larken Rose of Hollywood, Pennsylvania was sentenced in federal district court to 15 months imprisonment for failing to file tax returns for the years 1998 -2002, the Justice Department and Internal Revenue Service (IRS) announced today. In compliance with Judge Michael M. Baylson’s admonition following Rose’s conviction in August, Rose submitted delinquent tax returns for the years 1997-2004 and paid a substantial deposit to the IRS toward his outstanding tax liability. The court sentenced Rose to one year of supervised release following his prison term and ordered Rose to pay a fine of $10,000 and all taxes, interest, and penalties he owes to the IRS.

“People who intentionally fail to file returns or pay taxes as required by law can expect to face criminal prosecution, conviction and imprisonment,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “And they will still be required to pay the taxes they tried to avoid, plus interest and penalties.”

Rose, a former co-owner of a medical transcription business, was convicted by a jury in August 2005 of five counts of willfully failing to file federal income tax returns. The evidence at trial established that Rose did not file returns for 1998-2002 despite earning $500,000 in income during those years. Rose claimed that he did not file returns for those five years because he believed that income he earned in the U.S. was not taxable according to Internal Revenue Code (IRC) Section 861. The evidence, however, showed that Rose received more than a dozen notices from the IRS rejecting his Section 861 argument and that he received more than ten letters from members of Congress notifying him that his Section 861 argument was invalid. In addition, Rose admitted that he was aware of two court cases rejecting his Section 861 argument.

Courts have consistently held that IRC Section 861 does not excuse U.S. citizens from filing tax returns and reporting income they earn in the U.S. At trial, Judge Baylson instructed the jury that Rose’s Section 861 argument was incorrect as a matter of law. In convicting Rose, the jury rejected Rose’s claim that he held a good faith belief that he was not required to file federal income tax returns or pay federal income tax.

“The conviction of individuals who intentionally conceal income and evade taxes is a vital element in maintaining public confidence in our tax system,” stated Nancy Jardini, Chief, IRS Criminal Investigation. “Mr. Rose’s sentencing today reminds us that fulfilling individual tax obligations is a legal requirement and those who willfully evade that responsibility will be prosecuted.”

“It’s simply not fair to honest taxpayers if we don’t hold those who refuse to pay their fair share accountable,” said Pat Meehan, U.S. Attorney for the Eastern District of Pennsylvania. “This sentence is a reminder that every citizen must pay what he or she owes. Honest, hard-working people who pay their taxes have no time for those who scheme to evade their responsibilities and neither does the law.”

On November 9, 2005, in a separate trial, a jury found Rose’s wife and business partner, Tessa David, guilty of willfully failing to file tax returns for 1998-2002. David’s sentencing is scheduled for February 15, 2006.

Assistant Attorney General O’Connor and U.S. Attorney Meehan thanked Assistant U.S. Attorney Floyd J. Miller, and Tax Division Trial Attorney, Shawn T. Noud, who prosecuted the case. They also thanked the special agents of the IRS, whose assistance was essential to the successful investigation and prosecution of the case.

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at