Abusive Home-Based Business Tax Schemes - Related News, Court Cases and Tax Law
General information
Revenue Ruling 2004-32 (PDF) - This revenue ruling emphasizes to taxpayers, and to promoters and return preparers who assist taxpayers with home-based business schemes, that they cannot avoid income tax by claiming otherwise nondeductible personal, living or family expenses as business deductions that supposedly relate to a purported home-based business that is not a bona fide trade or business.
News Release – IR-2002-13 (PDF) – IRS Warns Taxpayers to be Aware of Home-based Business Tax Avoidance Schemes
Peete v. Commissioner (PDF) – Home-based business case upholds accuracy penalty.
Information about legal actions against promoters and return preparers
The IRS and Department of Justice have been taking vigorous enforcement action against promoters and return preparers who assist taxpayers in taking these frivolous positions. The Department of Justice has brought actions against the following promoters:
Daniel Gleason – On August 25, 2004, Daniel Gleason, individually and doing business as Tax Toolbox Inc. and My Taxman Inc. based in Nashville, TN, was ordered to stop promoting, marketing or selling the Tax Toolbox or similar false and fraudulent schemes. It was determined that Mr. Gleason made numerous false statements regarding tax deductions that can purportedly be derived from a home-based business. He was also ordered to turn over records identifying persons who have purchased the Tax Toolbox.
Previously, on March 2, 2004, a federal judge issued an order to stop Mr. Gleason from falsely claiming that he is a lawyer and making other false claims about his education and experience. The injunction also barred Mr. Gleason from guaranteeing that customers will receive tax refunds.
Harry Anderson – On April 20, 2004, a federal court permanently barred Harry F. Anderson of Plano, Texas, a Daniel Gleason associate, from promoting a home-based business tax scheme. The order also requires him to turn over his customer list to the Justice Department. The complaint in the case alleged that Anderson falsely told customers that they could create purported home-based businesses, using a "Tax Toolbox" system as a "magic wand" that can make "taxes disappear."
Linda Borden – On April 28, 2004, Linda Borden, of Celebration, Florida, was barred from promoting abusive tax schemes, including those involving home-based businesses used to claim improper deductions, and from preparing Federal income tax returns. Linda Borden promoted her scheme in 22 states using various businesses, including B&B Consulting, Inc; Nex, Inc.; Nexclick, LLC; and New Innovations of Central Florida, Inc. She was also required to provide a list of her customers to the Justice Department.
Renaissance, The Tax People, Inc. – This company specialized in the sale and service of home-based business packages. As a result of action taken by the State of Kansas, Renaissance, TTP, Inc. was prohibited from further promoting its multi-level marketing scheme. On August 13, 2004, a federal grand jury indicted Michael Craig Cooper, Jesse Ayala Cota, Todd Eugene Strand, Daniel Joel Gleason, and Renaissance, The Tax People Inc., with conspiracy to defraud the United States by impeding the Internal Revenue Service.
Elizabeth Crotts (PDF) – An Affiliated Tax Professional with Renaissance, The Tax People, Inc. Pled guilty to assisting in the filing of a false federal income tax return.
Alexander Federico (PDF) – An Affiliated Tax Professional with Renaissance, The Tax People, Inc., pled guilty to assisting in the filing of a false federal income tax return.
James Kevin Foster (PDF) – An Affiliated Tax Professional with Renaissance, The Tax People, Inc., pled guilty to assisting in the filing of a false federal income tax return.
