WASHINGTON – A California-based tax scam promoter, Steven Hempfling, has been permanently barred by a federal court in Fresno, Calif., from selling a tax fraud scheme that falsely claims to give customers a legal defense against criminal prosecutions for income tax evasion, the Justice Department announced today.
In selling the scheme, Hempfling falsely advised customers that the federal income tax is invalid because the 16th Amendment to the Constitution was never ratified. For many years, federal courts have repeatedly held that such claims are legally frivolous and imposed fines and other sanctions against those who continue to assert them.
The court found that Hempfling sold a “16th Amendment Reliance Program” that falsely promised customers they could rely on the opinion of an Illinois tax defier, Bill Benson, to stop filing tax returns and to stop paying federal taxes, and avoid being convicted of federal tax crimes. A federal court in Illinois recently entered a permanent injunction against Benson, barring him from selling his own similar “Reliance Defense Program” as well as a “16th Amendment Reliance Program.”
In entering the civil injunction order, Judge Lawrence J. O’Neill of the U.S. District Court for the Eastern District of California called Hempfling’s behavior in refusing to obey court-ordered requests for information about his products “blatantly egregious.”
The court order also bars Hempfling from selling “how-to” manuals that falsely tell customers that Internal Revenue Service tax liens and levies are invalid and that employers are not required to withhold federal income taxes from employees’ pay. The court required Hempfling to provide the government with his customers’ names, addresses, Social Security numbers and telephone numbers.
“Tax defiers who sell bogus schemes based on stale arguments that the income tax doesn’t exist, or is unconstitutional, are modern-day snake-oil salesmen,” said Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. “We are committed to working with the Internal Revenue Service to stop these illegal schemes.”
Since 2001, the Justice Department’s Tax Division has obtained more than 315 injunctions against tax-fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website, as is information about the Justice Department’s Tax Division.