Shelia Young, Deane Young, Kennith Defoor

[Demosthenes]

FOR IMMEDIATE RELEASE TAX
TUESDAY, MAY 24, 2011 (202) 514-2007
WWW.JUSTICE.GOV TDD (202) 514-1888

FEDERAL COURT BARS ARIZONA FAMILY FROM PREPARING FEDERAL TAX RETURNS

Family of Tax Preparers Allegedly Sought Exorbitant Refunds on Fraudulent Tax Returns

WASHINGTON – A federal court has barred a family of tax preparers in Overgaard, Ariz., from preparing federal tax returns for others, the Justice Department announced today. The court’s preliminary injunction order against Shelia Young, Deane Young and Kennith Defoor will remain in effect while a related criminal case against the defendants proceeds in court.

The government complaint in the civil injunction case alleged that the Youngs and Defoor promoted fraudulent tax schemes through their companies, Accurate Consulting LLC, and D4 Accounting, Consulting, Tax Services Inc. According to the complaint, these schemes included manipulating the amount of income and federal tax withholdings claimed on their customers’ tax returns, resulting in bogus claims for tax refunds. The complaint further states that, since 2001, the Youngs and Defoor prepared at least 337 federal tax returns requesting fraudulent tax refunds, often in amounts exceeding $100,000.

The three family members allegedly prepared frivolous tax returns that cumulatively claimed more than $24 million in fraudulent refunds and resulted in the Internal Revenue Service (IRS) issuing approximately $2.3 million in erroneous refunds. The complaint alleged that the Youngs and Defoor asserted fraudulent “zero income” and “commercial redemption” tax schemes and regularly submitted false IRS forms on behalf of their customers that reported both fictitious interest income and tax withholdings.

The IRS described the zero income and commercial redemption schemes as frivolous in its publication The Truth About Frivolous Tax Arguments. Return preparer fraud, bogus refund claims based on frivolous arguments, and claims of zero wages are also three of the “Dirty Dozen” tax scams identified by the IRS for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department’s website.

[Lambkin]

We've heard of these folks before, over on this thread: viewtopic.php?f=8&t=6410&p=104640

Do they also engage in sovereign citizen scams?

[Demosthenes]

We've heard of these folks before, over on this thread: viewtopic.php?f=8&t=6410&p=104640

Do they also engage in sovereign citizen scams?

From the Order:

During the pendency of this stay, Defendants and their representatives, agents, servants, employees, and anyone in active concert or participation with them are enjoined, pursuant to I.R.C. §§ 7402, 7407, and 7408, from engaging in any of the following activities, either directly or indirectly:

[...]

5. Directly or indirectly organizing, promoting, marketing, or selling any plan or arrangement that advises or encourages taxpayers to attempt to violate internal revenue laws or unlawfully evade the assessment or collection of their federal tax liabilities, including promoting, selling, or assisting with respect to a scheme in which taxpayers overstate federal income tax withholding and misuse IRS Forms 1040 and 1099 or other IRS forms under claims that:

i. Taxpayers have an account with the Treasury Department which they can use to pay their debts and tax liabilities or which they can draw on for refunds through a process that is often called “redemption” or “commercial redemption”;

ii. Taxpayers can name the U.S. Treasury Secretary as their fiduciary or can draw on the U.S. Treasury to pay their debt or tax liabilities using IRS Forms 1099, bonded promissory notes, sight drafts or other documents;

iii. Taxpayers can issue IRS Forms 1099-OID to a creditor and report the amount on the form as federal income tax withheld on their behalf;

iv. Taxpayers can issue other IRS forms that overstate income withholding or purport to appoint US government officials as their fiduciaries;

v. Taxpayers can use the Uniform Commercial Code (UCC) or other methods to “accept for value” a document dealing with a debt, and that stamping a document with “accept for value” or similar wording will somehow satisfy that debt, including tax debt;

vi. Taxpayers may file false IRS Forms 4852 to reduce or eliminate income; and

vii. Taxpayers may report bogus itemized deductions under I.R.C. §§165(g) and 1001, claiming they are entitled to such deductions because they received worthless securities and, thus, never received money for income, or based on the theory that labor is property.