JUSTICE DEPARTMENT SUES CALIFORNIA MAN TO HALT ALLEGED TAX-FRAUD SCHEME

The following press release was published by the US Department of Justice on May 3, 2005. It is reproduced in full below.

FOR IMMEDIATE RELEASE TUESDAY, MAY 3, 2005 WWW.USDOJ.GOV TAX (202) 514-2007 TDD (202) 514-1888 WASHINGTON, D.C. - The Justice Department announced today that it has asked a federal court to stop Steve Hempfling, a California resident who operates a business in Fresno, California, from selling alleged tax-fraud schemes. The civil injunction complaint, filed yesterday in the U.S. District Court for the Eastern District of California, alleges that Hempfling and his business, Free Enterprise Society, sell a “Reliance 2000” package that he falsely claims will give buyers a legal defense to criminal prosecution for not filing federal income tax returns. The lawsuit also asks the court to order Hempfling to give the Justice Department his customers’ names, mail and e-mail addresses, and telephone and Social Security numbers.

Court papers state that Hempfling’s defense is entirely fraudulent and based on false claims that there is no requirement to file income tax returns or pay taxes. This argument has been repeatedly rejected by courts across the country. Hempfling allegedly charges hundreds of dollars for the Reliance 2000 package and for legal brief-writing services and a “legal defense fund” for customers who stop filing tax returns.

“People who buy into tax-fraud schemes are exchanging good money for bad prospects: past due tax bills with interest and penalties, along with the possibility of criminal prosecution,” said Eileen J. O’Connor, Assistant Attorney General for the Tax Division. “The Justice Department and the IRS are committed to stopping the promotion of tax fraud.” The complaint states that Hempfling’s Reliance 2000 package includes materials prepared by William “Bill” Benson. The Justice Department sued Benson in 2004, seeking a permanent injunction against him for selling his “Reliance Defense Package.” Information on the Benson lawsuit is available at .

This case is part of the Justice Department’s initiative to enjoin promoters of tax-fraud schemes. Information about cases involved in this initiative is available at http://www.usdoj.gov/tax/taxpress2005.htm. Frivolous tax arguments are part of the IRS’s list of the Dirty Dozen tax scams, the full list of which is available at . Information about the Tax Division is available at http://www.usdoj.gov/tax/index.html. 05-236

Source: US Department of Justice