WASHINGTON, D.C. – A federal court in Georgia has enjoined Derrick Sanders, of Atlanta, from promoting a tax-fraud scheme involving false claims that his customers were members of a fictitious tribal organization—the so-called Yamassee Native American Tribe—and further that his clients were exempt from federal income tax. Native Americans living in the United States generally are not exempt from federal income tax, and the court found that Sanders is or should be aware that the Yamassee Native Americans are not recognized as an Indian tribe by the federal government. Sanders is required to post a copy of the court’s order on the website where he promotes the scheme. The order also requires Sanders to give the Justice Department a list with his customers’ names, mailing and e-mail addresses, and telephone and Social Security numbers.
According to the court, Sanders, in promoting the scheme, repeatedly made false statements that so-called Yamassee Native Americans are an indigenous Native American tribe whose members are nonresident aliens exempt from federal income taxation. Sanders also prepared forms for customers to use to instruct their employers to stop withholding taxes from their wages on the bogus ground that Yamassee members are not subject to federal income taxes.
“People who peddle tax scams and those who participate in them cheat all law-abiding taxpayers,” said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. “The Department of Justice and the Internal Revenue Service are working diligently to stop the promotion of fraudulent tax schemes.”
This injunction suit is part of an effort to stop the promotion of tax scams and the preparation and filing of fraudulent tax returns. The Justice Department has obtained injunctions against more than 130 promoters since 2001. More information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm. More information about the Tax Division is available at http://www.usdoj.gov/tax/index.html.
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06-095