FOR IMMEDIATE RELEASE JULY 22, 2003 WWW.USDOJ.GOV TAX (202) 514-2007 TDD (202) 514-1888 WASHINGTON, D.C. - Late today, the United States Department of Justice filed three lawsuits to enjoin employers from failing to withhold payroll taxes. The suits are against * Walter Al Thompson, owner of Cencal Sales Co., d/b/a Cencal Aviation Products, a Shasta Lake, California business; * James O. and Sandra L. Molen, who operate Touch of Class Florist, a Chico, California business; and * Colorado Mufflers, Inc., a Northglenn, Colorado corporation.
Employers who refuse to withhold and pay federal employment taxes hurt not only their employees but the public at large, said Eileen J. OConnor, Assistant Attorney General for the Justice Departments Tax Division. Stopping this unlawful practice is a high priority for the Justice Department. Todays court filings assert that the three employers are refusing to withhold federal taxes from their employees paychecks and pay federal employment taxes based on an argument that courts have repeatedly rejected. Known as the Section 861 argument, after the tax code section it misinterprets, the argument claims that all income from sources within the United States is not subject to federal income taxes. Labeling the argument as frivolous, a number of federal courts have recently enjoined people who promote it and penalized taxpayers who assert it in court cases. Information on some of these court cases can be found at: http://www.usdoj.gov/tax/03_tax_267.htm http://www.usdoj.gov/tax/03_tax_128.htm http://www.usdoj.gov/tax/03_tax_036.htm http://www.usdoj.gov/tax/03_tax_015.htm http://www.usdoj.gov/archive/opa/pr/2002/February/02_tax_055.htm 03-412
Source: US Department of Justice
