COURT BARS NADN FROM SELLING TAX SCAMS, GIVES DOJ ACCESS TO CLIENT LIST: The Justice Department scored another victory in its war on tax scams when a federal bankruptcy court barred a Las Vegas-based telemarketing firm from selling abusive tax schemes and preparing federal tax returns, and granted the Justice Department access to the company’s records, including its customer information.
The Justice Department’s lawsuit, filed in April, alleged that the National Audit Defense Network, known as NADN, sold fraudulent tax schemes to an estimated 100,000 customers that bilked the government out of $324 million in federal income taxes over the past three years. The suit, which also named 13 individuals and three other companies, alleged that NADN ran a “tax-scam boiler room” that sold bogus Web sites, home-based businesses and “incorporation” packages designed to help customers claim improper tax deductions and credits.
The Justice Department, which noted that the company’s database had more than 640,000 customers, said that court papers showed that NADN ceased operations last month and filed a petition to liquidate its operations under Chapter 7 of the bankruptcy code.
The Justice Department, in cooperation with the bankruptcy trustee and the Internal Revenue Service, said that it intends to contact customers who purchased NADN’s tax schemes or to whom NADN may have given false tax advice to alert them about the injunction and to provide information about amending tax returns containing erroneous NADN-initiated credits and deductions.
The Justice Department is still seeking permanent injunctions against 10 other defendants in the lawsuit, including NADN’s former president and its former general manager. Six other defendants named in the lawsuit agreed last month to a permanent injunction barring them from organizing or selling abusive tax shelters and from preparing federal income tax returns. It also required them to give copies of the orders to their customers and to give the Justice Department lists of their customers’ names, addresses and Social Security numbers.
IRS WARNS CHURCHES TO STAY OUT OF POLITICS: The major political parties are on notice that tax-exempt organizations, including churches, are prohibited from directly or indirectly participating in any political campaign. In a letter to the Democratic National Committee, the Republican National Committee, and the national leadership of the America First, Constitution, Green, Libertarian and Natural Law parties, the Internal Revenue Service said that it would enforce existing rules in the area despite the possibility of changes in the law.
“While there is pending legislation that may modify the rules in this area, the Internal Revenue Service is charged by Congress with policing current law and will take whatever actions are necessary to stem abusive behavior,” according to the letter.
“We are sending the letters because we want to ensure that the political committees and the candidates they support understand the rules,” said Commissioner Mark W. Everson. “As Congress considers changes to the law in this area, it is important that political organizations keep in mind the requirements of existing law. Today’s guidance does not represent a change in the rules or a change in how the IRS will administer the law in this area.”
If the IRS finds a Section 501(c)(3) organization engaged in prohibited campaign activity, the organization could lose its tax-exempt status and be subject to an excise tax on the amount of money spent in that activity.
FISHER TO HEAD CCH TAX AND ACCOUNTING SALES UNIT: CCH Tax and Accounting has named Dave Fisher director of sales for the CCH Tax and Accounting publishing sales organization. He succeeds David Campion.
Fisher, who joined CCH in 1995, most recently served as the national sales manager for CCH’s Sales and Use Tax Software Group. He previously served as a division sales manager in the Great Lakes and Mid-Atlantic regions, and as a field sales representative in the Maryland area. Prior to joining CCH, Fisher was president and chief executive of ADI, an electronic security and process monitoring company in the Washington area.
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