Jurors Acquit Ex-IRS Agent

A former IRS special agent who has become a prominent leader among challengers of the U.S. income tax was acquitted this week on federal charges that he had helped file false tax returns.

Joseph Banister, 42, of San Jose quit the Internal Revenue Service in 1999 after delivering a 95-page memo to his bosses questioning the legality of the income tax law. He has since become a lecturer and expert witness on the tax protest circuit.

A U.S. District Court jury in Sacramento found Banister not guilty Thursday on criminal charges, officials said.

The case revolved around tax returns that Banister, a certified public accountant, prepared for Walter Thompson, the owner of a small aviation company in Lake Shasta, Calif.

Thompson claimed he owed no taxes and sought a refund for taxes he’d paid in previous years. Thompson, who also did not withhold taxes from worker paychecks, was convicted of tax fraud in January and sentenced to six years in prison.

In Banister’s trial, however, the government must prove that the defendant intended to defraud, said Robert Bernhoft, Banister’s lawyer.

“The jury recognized that Joe Banister was a man of integrity -- both personal and professional,” Bernhoft said. “They delivered not-guilty verdicts on all counts.”

Both the IRS and the U.S. attorney’s office declined to comment.

“It’s the Joe Banisters of the world that the IRS wants to make an example of to deter other people who might be thinking about doing what he did,” said Elliott Kajan, a tax attorney in Beverly Hills. “The fact that he was a former special agent gives him more credibility with those who want to believe what he’s preaching. This loss could interfere with the IRS’ attack on tax shelters and tax protesters.”