April 29, 2004 | Read Time: 1 minute
The U.S. Department of Justice has filed civil lawsuits in eight states to stop what it said is the nationwide promotion of a tax-avoidance scheme in which people are allegedly advised to claim bogus church status by creating a certain type of organization.
The lawsuits take aim at abuse of what are known as “corporation sole” laws, which allow religious leaders, typically bishops or parsons, to incorporate as individuals and separate themselves legally from the control and ownership of church assets.
The Justice Department said that a California man, his organization, and his associates allegedly sell a plan to customers over the Internet, in telephone conference calls, and at seminars. The government said that customers, who allegedly follow the plan to pay for personal living expenses rather than for church-related expenses, are falsely told that they need not file tax returns or pay taxes.
The Internal Revenue Service last month issued a consumer alert warning the public about abuse of corporation sole laws, stating: “Scheme promoters typically exploit legitimate laws to establish sham one-person, nonprofit religious corporations.”
The 14 people who were accused by the government have denied the charges, have not commented, or have not been reached for a reaction.
For more information on the lawsuits, go to the Justice Department’s Web site at http://www.usdoj.gov/opa.
