FOR IMMEDIATE RELEASE|
TUESDAY, FEBRUARY 6, 2007
TDD (202) 514-1888
FEDERAL COURT BARS TAX FRAUD SCHEME INVOLVING BOGUS CORPORATIONS
Northern California Man Ordered to Stop Selling Fraudulent “Corporation Sole” Program
WASHINGTON, D.C. - A federal judge has ordered that William J. Kennedy, of Livermore, Calif., be barred from selling corporation sole tax fraud schemes, the Justice Department announced today. The preliminary injunction order was entered following a hearing before Judge Jeffrey White of the U.S. District Court for the Northern District of California.
Some states authorize corporations sole to enable religious leaders to hold property and conduct business, the government complaint in the case states. But tax benefits are available to a corporation sole (or any other organization) only if the organization qualifies as a tax-exempt religious or charitable organization under federal tax laws. The court order states that Kennedy falsely advised customers that corporations sole used for their personal benefit can qualify as tax-exempt religious organizations.
According to papers filed in the case, Kennedy charged customers $25,000 to participate in the scheme. The courts order requires Kennedy to give the government a list with his customers names, addresses, and to notify them of the injunction. More information related to this case can be found at http://www.usdoj.gov/tax/txdv06587.htm.
Corporation-sole scams are listed in the IRSs annual list of the Dirty Dozen tax scams at http://www.irs.gov/newsroom/article/0,,id=136337,00.html. The Justice Department has obtained permanent injunctions against a number of people who sell corporation-sole scams. Two examples are found at http://www.usdoj.gov/tax/txdv05657.htm and http://www.usdoj.gov/tax/txdv05030.htm.
Since 2001, the Justice Departments Tax Division has obtained injunctions against more than 220 tax preparers and tax-fraud promoters. More information about the Justice Department's efforts against tax-scam promoters can be found at http://www.usdoj.gov/tax/taxpress2007.htm. Information about the Justice Department's Tax Division can be found at http://www.usdoj.gov/tax.