FOR IMMEDIATE RELEASE|
FRIDAY, NOVEMBER 8, 2002
TDD (202) 514-1888
JUSTICE DEPARTMENT SEEKS INJUNCTION AGAINST TENNESSEE ATTORNEY
Tennessee-Based Tax Scam the Target of Law Suit
WASHINGTON, D.C. - The Department of Justice today filed a lawsuit in federal court in Nashville, Tennessee, to stop a tax scam promoted by a local attorney. The government's lawsuit states that Thomas Edward Settles, a Murfreesboro, Tenn.-based attorney, markets a tax program that falsely reduces or eliminates customers' federal income taxes by creating sham partnerships and corporations. In the lawsuit, the government requests that the court issue an order directing Settles to stop promoting his tax scheme and to provide the government with a list of his customers.
"The Department of Justice is working systematically to shut down tax scam operations," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "People should be suspicious of any tax plan that sounds too good to be true: participating in them can lead not only to substantial penalties but also to criminal prosecution for tax evasion."
According to the complaint, Settles advises and encourages customers to violate federal tax laws by transferring their property to a sham partnership and claiming false tax deductions for the cost of renting back the property. The complaint also alleges that the scam involves establishing a bogus corporation and claiming false tax deductions related to a purported flow of funds between the customer, the partnership, and the corporation. The government asserts in the lawsuit that Settles falsely advises customers that his program will allow them to spread their income among the entities and allow them to deduct the cost of otherwise non-deductible personal expenses.
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