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Government sends man to prison for filing “false” deductions then years later determines he owed no taxes

 DUBLIN, OH October , 2004 – Most people get upset with the Internal Revenue Service at some time in their lives. But after a decade of harassment by the government, Chuck Ewing of Dublin, Ohio is really upset with the IRS, he’s not too happy with the Department of Justice either.

Why?  Because four years after he served a year in a federal prison for filing “false” deductions on his tax returns, the IRS has confirmed that those deductions were entirely proper and that he owed no tax.  But instead of simply admitting they made a huge mistake, the government continues to stall his efforts for a fair and just resolution.

Ewing, 62 was convicted of two counts of filing “false” deductions on his law office tax returns for the years 1992 and 1993.  He spent a year of his life in the Ashland, Kentucky, Federal Prison from September 1999 to August 2000.  He has received confirmation from the IRS Civil Appeals Office in Cincinnati, Ohio that the Internal Revenue Service now agrees that those deductions were not false and that they were entirely deductible. That means that Ewing, who received the confirmation four years after his release from prison, served a year in prison for doing nothing wrong!

The IRS did not audit Ewing’s  1991, 1992, 1993 and 1994 law office tax returns prior to trial, so there never was any discussion or finding that Ewing owed any taxes.  After an unrelated multiyear investigation by the IRS found no wrongdoing, Ewing was indicted on four counts, one for each year of the tax returns.  Ewing repeatedly offered to answer questions regarding tax returns to no avail.  Ewing, who represented himself during a weeklong jury trial in Columbus, Ohio, in April of 1999, maintained to the jury that his deductions were completely disclosed on his returns and that they were proper and legitimate in all respects.  Prior to the trial, the government issued a subpoena for Ewing’s attorney which disqualified him from representing Ewing.  The government did not call the attorney to testify despite their subpoena.

After all the evidence was presented to the jury, Federal Judge James Graham determined that 22 of the 26 “false deduction” claims made by the IRS were so weak that “no reasonable person could find in favor of the government’s claim that they were false” and dismissed two counts of the indictment. Nevertheless, Graham instructed the jury that they did not need to determine any tax was due in order to convict Ewing.  The judge refused Ewing’s request that he instruct the jury on the law surrounding the four remaining deductions.  Instead, he  ordered the jury not to consider the “evidence” they had heard concerning the 22 claims that Graham had dismissed.  The jury found Ewing guilty on two counts of “signing a false statement,” translation: he signed his tax returns as every American must do.

At the sentencing hearing, Judge Graham ignored a recommendation by the probation department that Ewing spend ten months in a halfway house in Columbus, Ohio.  The judge ordered Ewing to serve a one-year sentence in the Federal Prison in Ashland, Kentucky.  Graham based his ruling on sentencing guidelines dictated by the IRS Criminal Investigation Division’s assertions that Ewing’s law office owed taxes over $32,000.  He also ordered that Ewing serve a one-year supervised release after leaving prison and ordered Ewing to either pay all taxes “due and owing” or “enter into a compromise agreement with the IRS.”

Ewing refused to offer or agree to any compromises with the IRS arguing that there could be no taxes “due and owing” until after the IRS had issued an assessment and, more importantly, until the civil appeals process was completed.  In order to offer a compromise, a taxpayer must agree that taxes are owed.

The IRS initially refused to assess the taxes based on its assertion that Judge Graham had already done so.  As a result, Ewing could not file a civil appeal.  Judge Graham sided with the IRS and threatened Mr. Ewing with another year of imprisonment for his refusal to agree that any taxes were due

After hearing Ewing’s assertions regarding the law, however, both the IRS and Graham eventually backed off and acknowledged that the civil appeals process must be allowed to proceed–and be finalized–before any further action could be taken against Mr. Ewing.  But Judge Graham ordered Ewing to serve an additional year of supervised release and forced him to make payments to the Justice Department to hold until the completion of the civil process.

In the spring of 2003, Ewing was advised that the IRS Civil Appeals Office had determined that no tax was due, but that the attorneys were reviewing its determination.  In September he received confirmation that counsel had approved the determination.  He has waited seventeen months for a mailed notification by the IRS.

Before going to prison, Ewing asked trial Judge Graham and the Sixth Circuit Court of Appeals to allow him to remain free pending the outcome of his appeal. Both Graham and the Appeals Court refused his request.  The Clerk of the Court of Appeals instructed him to file his appeal “informally” since he was representing himself.

Ewing filed several briefs while in prison and protested that he did not have access to “an adequate library” while in prison.  The Trial Court and the Appeals Court responded that Ewing had waived his right to a library by representing himself. Then, astonishingly, the Appeals Court Clerk ignored the briefs Ewing had filed and dismissed his appeal because he “had not filed a formal appeal.”

Ewing filed a motion with the court to overturn the dismissal issued by the Clerk.  After being released from prison, he filed a formal appellate brief supporting his appeal.  To date, the court has not responded to either the motion or the formal appeal.

Ewing’s law practice was heavily involved in bankruptcy reorganization for farmers who fell on hard times back in the 80’s and 90’s.  He won several significant victories against the government.  Ewing accuses the IRS and the Justice Department of severe bias against him because of this representation.  Ewing claims that attorneys for the Justice Department and IRS agents have repeatedly advised him that “he did not know who he was messing with.”

Considering all that Ewing and his family have suffered throughout his decade-long ordeal with the IRS and the government–being wrongly accused, being unfairly imprisoned, being disbarred (and thus prohibited from earning a living), and being totally and completely financially eviscerated for having done nothing wrong-a reasonable person could conclude that those lawyers and agents were right.

And that, Ewing believes, should scare the heck out of all of us.

Chuck Ewing, Dublin, OH 

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