Don Gray, Pete Hendrickson promoter, enjoined

[Demosthenes]

FOR IMMEDIATE RELEASE
TAX
TUESDAY, MARCH 20, 2007

FEDERAL COURT BARS MICHIGAN MAN FROM PREPARING
TAX RETURNS FOR OTHERS

Prepared Returns Based on False Theory That Wages Are Not Income for Federal Tax Purposes for Non-Government Employees

WASHINGTON - A federal court in Grand Rapids, Mich., has issued a temporary restraining order barring Donald A. Gray from preparing federal income tax returns for others, the Justice Department announced today. The order was entered after a hearing before Chief Judge Robert Holmes Bell of the U.S. District Court for the Western District of Michigan. The government is seeking to permanently bar Gray from preparing returns.

The court found that the Portage, Mich., man has been preparing income tax returns for customers based on the frivolous theory that wages are not income for federal tax purposes unless the wage earner works for the government. The court found that in preparing the returns Gray followed a scheme promoted by Peter Eric Hendrickson of Commerce Township, Mich. Hendrickson describes the frivolous theory in a self-published book entitled “Cracking the Code, The Fascinating Truth About Taxation in America.”

The court also found that Gray misrepresented his qualifications, falsely claiming to be a Certified Public Account (CPA) even though he is no longer licensed as a CPA in Michigan. The government separately sued Hendrickson and several of his followers last year to recover erroneous refunds they allegedly received after filing tax forms and returns similar to Gray’s. In that case a federal judge in Detroit recently ordered Hendrickson and his wife to repay an erroneous tax refund they received after filing a tax return falsely claiming that Hendrickson’s wages from his employer were not taxable income.

More about this case can be found at http://www.usdoj.gov/tax/txdv07024.htm . Since 2001, the Justice Department’s Tax Division has obtained 230 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns.

Additional information about the Justice Department’s efforts to stop tax scams can be located at http://www.usdoj.gov/tax/taxpress2007.htm . Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax .