COURT BARS PROMOTION OF “CORPORATION SOLE” TAX FRAUD SCHEME

Rhode Island Man Allegedly Sold Scheme Nationwide

WASHINGTON, D.C. - Eric Messier of Providence, Rhode Island has consented to a federal court order permanently barring him from marketing a tax fraud scheme, the Justice Department announced today. According to the complaint filed by the Department’s Tax Division, Messier falsely advised customers that, by using a so-called “corporation sole,” they could avoid paying federal income taxes. Messier was conducting business through the Liberty Fellowship and the Liberty Holdings Trust.

According to the government’s complaint filed in U.S. District Court in Rhode Island, customers paid Messier between $2,500 and $10,000 to participate in the corporation sole scheme. Some states authorize religious leaders to hold property and conduct their activities in what is known as a corporation sole, but tax benefits are available only for organizations that qualify as religious or charitable organizations under the Internal Revenue Code. The complaint alleges that Messier falsely tells customers that they can treat their corporations sole as a “church” with no tax-return filing requirement, and yet control and use its assets and income for their own personal benefit.

The court’s order requires Messier to remove from his website all information advertising the corporation sole scheme, to prominently display on his website for at least one year a copy of the permanent injunction entered against him, and to give the government a list of his customers’ names, addresses, phone numbers, and taxpayer identification numbers. Messier must comply with the court’s order within 15 days. Within 60 days, he must certify to the court that he has, at his own expense, notified all customers who bought the corporation sole scheme and became members of the Liberty Fellowship and provided each of them with a copy of the permanent injunction and stipulated settlement.

Corporation sole scams are included in IRS’s annual list of the “Dirty Dozen” tax scams http://www.irs.gov/newsroom/article/0,,id=136337,00.html. The Justice Department has obtained permanent injunctions against numerous individuals who sell corporation sole scams. Examples are found at http://www.usdoj.gov/tax/txdv06587.htm, http://www.usdoj.gov/tax/txdv05657.htm and http://www.usdoj.gov/tax/txdv05030.htm.

Since 2001, the Justice Department has obtained injunctions against more than 200 tax-fraud promoters and return preparers More information about the Justice Department’s efforts against tax-scam promoters and fraudulent return preparers can be found at http://www.usdoj.gov/tax/taxpress2006.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.