Government takes on anti-tax scheme promoters

WASHINGTON (CNN) -- Federal authorities Tuesday filed new civil injunctions against what one official called "snake oil salesmen" who promote allegedly fraudulent income tax evasion schemes.

Justice Department lawyers went to federal court in Florida, Oregon and Washington state.

They are seeking to bar promotions by an organization selling the allegedly bogus tax fraud theories to taxpayers.

The injunctions seek to shut down Pinnacle Quest International -- which had taken in $54 million over a four-year period through conferences held at resorts and, in one case, aboard the Celebrity Cruise Line ship Galaxy.

At a Justice Department news conference in Washington, Assistant Attorney General Nathan Hochman, who heads the Tax Division, announced the legal action and vowed a beefed-up effort to halt such illegal practices.

"We want to pull back the curtain and show the public that the promoters of these schemes are not wizards imparting the secrets of a tax-free universe but are nothing more than garden variety hucksters and modern day snake oil salesmen peddling tax evasion schemes," Hochman said.

He said Justice Department tax lawyers have filed 320 civil injunctions to combat the promotion of such schemes since 2001.

The court actions have forced the promoters and their clients to pay more than $600 million in taxes, interest and penalties.

Hochman listed several phony legal theories concocted by what he termed "tax defiers" who take "concrete action to defy and deny the fundamental validity of the tax laws." While none of the theories are new, they continue to attract attention, largely through the Internet, he said.

One of the more popular theories is that the 16th Amendment -- which allowed the government to collect income taxes -- was never properly ratified by the states. However, the federal courts have consistently upheld the legality of the amendment.

Other common theories promoted to gullible tax protesters include assertions that income earned within the continental United States -- or within certain federal jurisdictions -- is exempt; that there is a Fifth Amendment right against self-incrimination and a Fourth Amendment right of privacy that override payment of taxes; and that payment of federal income taxes is voluntary.

Justice Department officials stressed that federal courts have uniformly rejected all such claims by tax defiers. E-mail to a friend

All About Tax Law