The flower tax

Chico’s Touch of Class Florist on The Esplanade is probably best known among longtime Chicoans for its offering every December of Santa Claus sitting in a sleigh and waving to passing motorists.

What’s not so well known is that owners Sandra and James Molen had long been under scrutiny of the federal government for allegedly playing fast and loose with tax laws.

The shop closed last year after 35 years in business, and Sandra died on Valentine’s Day.

According to court documents, three civil cases between the United States and Molen were filed since 2003 “concerning his noncompliance with his tax obligations, frivolous tax arguments, and history of filing false liens against federal judges and employees of the Executive Branch.”

On July 16 the 68-year-old Molen was arraigned on an indictment charging him, according to a U.S. Department of Justice press release, with “recording false liens to retaliate against federal officers, contempt of court, and interference with tax administration.”

Molen pleaded not guilty to the charges and was detained. The next day the court ordered him released on a $100,000 bond.

A July 2003 New York Times story by David Kay Johnson reported the Molens sought a refund of all taxes withheld between 1997 and 1999, and the IRS mistakenly sent them a check for $30,698. The Justice Department said the amount in taxes that should have been withheld during that periond was $110,927.

“They can take a hike,” Molen was quoted in the story. “I do not intend to abide by any command of me, flesh and blood, to do anything.”

Johnson reported that “Molen is part of a movement that contends that court actions in which names are typed in all capital letters, as the case filed yesterday was, are not valid.”

More recent court documents say the Molens, who employed four workers, failed to report federal income taxes on their IRS forms, and did not withhold such taxes from their employees’ pay checks. They argued that the what they paid their employees was not subject to Social Security or Medicare taxes and that “federal courts cannot enforce federal tax laws outside of the District of Columbia.”

Both arguments, the court document says, have been rejected by numerous courts, which have found that “[a]rguments by tax protesters that ‘only residents of Washington, D.C., and other federal enclaves are subject to the federal tax laws because they alone are citizens of the United States and that wages are not income because they are compensation for working rather than a pure economic rent” are “no longer merely frivolous, but frivolous squared.”

The court also argued, “The ‘International Bill of Exchange’ that the Molens submitted to the IRS in July 2005 in purported payment of taxes does not constitute valid legal tender and does not decrease the Molens’ tax liability as they claimed.”

The Molens also tried to use the tax code “§ 861 argument in which proponents say that ‘U.S.-source income is not subject to federal income taxation.’”

The latest press release says the “indictment alleges that Molen continued in his defiance of tax laws and again recorded false liens against two different federal employees. The case is the product of an investigation by the IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration. Assistant United States Attorney Matthew D. Segal is prosecuting the case.

“The charges are only allegations, and the defendant is presumed innocent, unless and until proven guilty.” Molen will return to court on Aug. 10.

The Times’ Johnson had written another story in 2000 that appeared on the front page about a Shasta Lake businessman who’d practiced the same lack of tax withholding.

According to the story, “Al Thompson, owner of Cencal Aviation Products, had announced to his two dozen employees that he would no longer withhold taxes and boasted that he would not be arrested because the tax laws were a hoax.”

He went to show “thousands of others how to do the same,” the story said. Thompson, according to the court, should have withheld $429,400 from paychecks since July 2000.

In April 2005 Thompson was sentenced to six years in prison.

“Judge William Shubb,” Johnson wrote, “took note of the claims, saying that ‘people looking at Mr. Thompson need to know you do go to jail’ for not paying taxes.”