IRS Obtains More Than 100 Injunctions Against Tax Scheme Promoters

IRS Obtains More Than 100 Injunctions Against Tax Scheme Promoters

The IRS has obtained civil injunctions against more than 100 promoters of illegal tax avoidance schemes and fraudulent return preparers in an ongoing crackdown that began in 2001. Many of the injunctions, obtained in cooperation with the Department of Justice, also order the promoters to turn over client lists and to cease preparing federal income tax returns for others.

Signaling a renewed fight against tax fraud, the federal government stepped up the use of civil power four years ago. Civil injunctions have subsequently been used to stop:

1. Abusive trusts that shift assets out of a taxpayers name but retain that taxpayers control over the assets.

2. The misuse of Corporation sole laws to establish phony religious organizations.

3. Frivolous Section 861 arguments used to evade employment taxes.

4. Claims of personal housing and living expenses as business deductions.

5. “Zero income tax returns.

6. Abuse of the Disabled Access Credit.

7. The claim that only foreign-source income is taxable.

The IRS identifies abusive tax promoters...