Death and Taxes

In the murky underground of patriots, tax resisters, and cash-strapped working stiffs, Karl Granse's basement is Law Central. Now he's about to watch his most famous

As a young man, Granse says he worked briefly for KSTP and for small local newspapers as a reporter, but gave up the craft when he figured out his bosses weren't interested in "the truth." In the '80s he ran a photo studio in Roseville and in 1984 made an unsuccessful bid for the Republican nomination for the House of Representatives. He lost, he says, because the "Red Tribune" painted him as an anti-Semite.

What the Star Tribune actually reported was that in 1984, a staff member at the Chicago offices of Lyndon LaRouche (himself an anti-Semite) described Granse as the "LaRouche candidate" in that year's primary. Granse responds that LaRouche organizers asked him to run on the DFL ticket, but that he had become disenchanted with LaRouche, an ultraconservative who advocated quarantining AIDS victims and who was eventually imprisoned for tax evasion.

The Strib's 1984 voters' guide contained this quote from Granse describing his positions: "I want to help Congressman Vin Weber neutralize [then-Speaker of the U.S. House] Tip O'Neill's domineering influence and join a new Republican majority in the House to replace Tip O'Neill. I would work to protect people's jobs and develop new ones, reduce the tax burden. [I am] for legislation to strengthen families, for a strong defense, and for a voluntary school-prayer amendment." He talked about running again in 1986, but his name never appeared on the ballot.

Granse's anti-tax crusade appears to have begun in 1980, when he was charged with a misdemeanor count of operating a business without a sales permit. Then in 1985, the state revoked his sales-tax permit, reportedly because Granse refused to turn over sales taxes collected from customers.

In 1987, Roseville police raided Granse's portrait studio, KG Photo, and seized his records and equipment. In court, Granse argued that while taxes should be levied on tangible items, such as pictures, his services--his real business--were exempt. The state disagreed, and the following year Granse was convicted of failing to pay some $10,000 in sales taxes. The state auctioned off the seized studio equipment to pay his tax bill, and Granse spent 90 days in jail.

It wasn't Granse's only legal entanglement. His name appears on at least a dozen files in area courthouses. From 1987 to 1993, the records show, he failed to file Minnesota income-tax returns. In 1994, the state commissioner of revenue went ahead and prepared returns for Granse. His Minnesota taxes, with interest and penalties, eventually totaled almost $79,000. He could either pay that amount, the commissioner said, or file his own returns. Rather than appeal, Granse sued the Department of Revenue alleging that he was not subject to taxation and that the taxing statutes were illegal. He eventually settled with the state attorney general's office for $12,000 worth of gold and silver coins. The rest of his Minnesota tax burden was dismissed.

The fact that his argument went nowhere in court didn't dissuade Granse from shopping it around. Soon he was hosting tax-law seminars across the country. And when his protégés ran afoul of the authorities, he was there to help. In September 1993, he acted as a spokesman for a Ramsey woman twice convicted of failing to pay taxes. Each time, she spent 90 days in jail.

His own anti-tax crusade, meanwhile, continued to founder. He was frequently in court wangling with the IRS, which eventually dunned him for failing to pay more than $166,000. In November 1994, court records show, Granse deposited more than 600 checks totaling about $155,000 into a bank in St. Louis Park. The IRS quickly froze his account, but Granse had already withdrawn the cash. So the agency seized a $150,000 house he owned in Burnsville. Granse had only recently purchased the house and did not live there. Earlier, he had filed for bankruptcy protection in Ramsey County, presumably to save the house, but his petition was dismissed when he failed to show up for court.

Enraged that the real-estate partnership that bought his seized house from the IRS tried to sell it back to him, Granse last year took the IRS to court. "The plaintiff agrees with the United States of America that funds are greatly necessary to run the government, especially when so many people depend upon the government for a handout," he wrote in the last of the voluminous pleadings stuffed into his file. "Yet it would have been better for the government to approach the plaintiff for the amount of money in his bank account of $152,000. The plaintiff with good reason from the government would have been most happy to hand the entire amount to the government.

"Instead, the plaintiff rails against government action without authority of law, but if the government would ask for money this plaintiff would not argue, but give freely. It is not the plaintiff's desire to withhold. Yet to give freely when asked, they did not ask. They took without authority or procedure of law."

Again, Granse lost, although he's currently appealing. "I've been in jail 43 times over this stuff. I've been wiped out financially four times," he says. "We have to be fair, but they [the government and IRS] don't have to be fair. They have huge, humungous rights. We have nothing."

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