JUSTICE DEPARTMENT SUES TO BLOCK ARIZONA COUPLE’S ALLEGED TAX-FRAUD SCHEME

Dewey Couple Allegedly Sold “Corporation Sole” Program Over the Internet

WASHINGTON, D.C. - The Justice Department today filed a civil injunction complaint seeking to bar Elizabeth A. Gardner and her husband, Frederic A. Gardner-both of Dewey, Arizona-from marketing an alleged tax-fraud scheme. The complaint, filed in the U.S. District Court for the District of Arizona in Phoenix, alleges that the Gardners, conducting business as Bethel Aram Ministries, falsely advise prospective customers that they can use a so-called “corporation sole” to avoid paying federal income taxes. The complaint also seeks an order directing the Gardners to provide the government a list of their customers’ names, mailing and e-mail addresses and telephone and Social Security numbers.

The complaint alleges that some states authorize corporations sole as a means of allowing religious leaders to hold property and conduct business, but that tax benefits to a corporation sole are only available to organizations qualifying as religious or charitable organizations under the Internal Revenue Code. The complaint alleges that more than 80 persons may have purchased the Gardners’ corporation sole program, at a cost between $1,200 and $1,600. The complaint alleges that the Gardners market the program through seminars, booklets, and on the Internet.

“Law-abiding taxpayers deserve the assurance that their competitors and neighbors are also paying what the law requires,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Justice Department and the IRS are working diligently to stop the promotion of tax fraud.”

Corporation sole scams are listed in the IRS’s annual list of the “Dirty Dozen” tax scams, available at http://www.irs.gov/newsroom/article/0,,id=136337,00.html. More information about the Justice Department’s efforts against tax-scam promoters can be found at http://www.usdoj.gov/tax/taxpress2005.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.