COURT BARS MICHIGAN MAN FROM PROMOTING TAX FRAUD SCHEMES

Twin Lake Man Sold “Corporation Sole” and “Strategic Withdrawal” Schemes

WASHINGTON, D.C. - A federal court in Grand Rapids, Mich., has permanently barred Daniel Doyle Benham of Twin Lake, Mich., from selling “corporation sole” and “strategic withdrawal” tax schemes, the Justice Department announced today. Judge Gordon J. Quist of the Western District of Michigan signed the civil injunction order, to which Benham agreed without admitting wrongdoing.

According to the government’s complaint, Benham is alleged to have falsely advised customers that they could withdraw from the federal tax system by declaring bankruptcy, purportedly revoking their Social Security Numbers, surrendering licenses and permits, and transferring their assets to a so-called “corporation sole.” The complaint further alleged that Benham offered products and services related to his schemes for amounts ranging from $200 to $5,000. His customers underpaid their federal taxes by more than $2 million, according to an Internal Revenue Service (IRS) estimate contained in the complaint.

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 alleged that Benham falsely told customers they could treat their corporations sole as a “church” with no tax return filing requirement, and yet control and use its assets and income for their personal benefit.

The court’s order requires Benham to provide copies of the injunction to his customers and to give the government a list of customers’ names, addresses, phone numbers, and Social Security Numbers.

Corporation sole tax 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 a number of people who sell corporation-sole scams. Examples are found at http://www.usdoj.gov/tax/txdv06587.htm, http://www.usdoj.gov/tax/txdv05657 and http://www.usdoj.gov/tax/txdv05030.htm.

Since 2001 the Justice Department’s Tax Division has obtained more than 210 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm. Information about the Justice Department’s Tax Division is available at http://www.usdoj.gov/tax/index.html.