FOR IMMEDIATE RELEASETAX
SEPTEMBER 7, 2001(202) 514-2007
WWW.USDOJ.GOVTDD (202) 514-1888
JUSTICE DEPARTMENT SUES TO HALT SALES
OF ILLEGAL TRUST SCHEMES Potential Loss of Revenue to Treasury Estimated to Exceed $4.5 Million
WASHINGTON, D.C. The Department of Justice today filed a civil suit to stop Louis R. Ratfield of West Palm Beach, Florida, and his company, LWR Financial Services, from selling trusts that falsely reduce or substantially eliminate the purchasers' reported federal tax liabilities. The lawsuit also seeks to bar Ratfield permanently from preparing federal income tax returns.
"The IRS is closely scrutinizing the improper use of trusts. It is a priority of the Tax Division to stop the marketing of these tax-evasion schemes. People should be aware that these abusive trust schemes, which sound too good to be true, are in fact improper and can lead to substantial penalties," said, Eileen J. O'Connor, Assistant Attorney General for the Department of Justice's Tax Division.
According to the complaint--filed in the United States District Court in West Palm Beach-- Ratfield and LWR advise or encourage taxpayers to violate the tax laws by transferring their businesses to bogus trusts and hiring themselves to be "General Managers" of the trusts. Afterwards, Ratfield's customers paid themselves a nominal salary of about $12,000 in order to improperly reduce their federal income and social security taxes.
Ratfield allegedly recruits customers, whom he charges $5,995 for preparing the "trusts," from brochures handed out at his accounting business, and from a book entitled "The Constitutional Common-Law Trust," which identifies him as "an accountant who specializes in Common-Law Trusts." The lawsuit alleges that Ratfield has been selling the trusts throughout the United States since 1997.
The complaint also alleges that Ratfield prepared federal tax returns--for fees ranging between $800 and $1,200--for his customers and their purported trusts. The Government alleges that the trust tax returns improperly claimed deductions for customers' personal living expenses, such as food, clothing, mortgage payments, and other items that are not deductible. A preliminary IRS projection cited in the complaint estimates the revenue loss from Ratfield's activities at more than $4.5 million.