JUSTICE DEPARTMENT SUES TO STOP HOME-BASED BUSINESS TAX SCAM

Tennessee Man Allegedly Marketed the Scam by Falsely Claiming to Be a Lawyer

WASHINGTON, D.C. - The Justice Department filed suit in federal court in the Middle District of Tennessee today to stop Daniel J. Gleason of Franklin, Tenn., from promoting a tax scam based on the use of bogus, home-based businesses to claim deductions for non-deductible personal expenses. According to papers filed by the Justice Department, Gleason falsely advises customers that, by using his "Tax Toolbox" system to set up a business out of the home, they can automatically deduct personal expenses, including expenses for travel, commuting, vacations, meals, golf outings, weddings, college education, all medical care, children's allowances and other items.

"The law does not permit taxpayers to deduct personal expenses because they conduct businesses based in the home," said Eileen J. O'Connor, Assistant Attorney General in charge of the Justice Department's Tax Division. "The Justice Department will take the steps necessary to shut down tax scam promoters who falsely promise taxpayers that they can write off personal expenses in this way."

Gleason allegedly fails to tell customers that, in order to deduct expenses for a home-based business, a taxpayer must show an actual and honest profit objective and that, even then, only business-related expenses are deductible. He allegedly markets the scam by falsely claiming to be a lawyer with a "doctorate in tax law."

According to Justice Department papers, the Internal Revenue Service estimates that Gleason's scam costs the Treasury over $3 million per year. The agency has recently identified the home-based business scam as one of the "Dirty Dozen" that it has specifically urged taxpayers to avoid. The whole list can be found at:

Tax scams cost taxpayers billions of dollars every year. According to a General Accounting Office report (GAO-02-733) issued last year, however, stepped-up efforts by the IRS and Justice Department to crack down on these scams have led to increasing numbers of convictions of tax fraud promoters. The report can be found online at http://www.gao.gov/new.items/d02733.pdf.

# # #

03-225