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U.S. Seeks to Halt Floridian's Tax Scheme

Thursday, Oct 13 2011
Tax
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department-of-justice-logoThe United States has sued Judy Grace Sellers, a tax preparer based in Chipley, Fla., to bar her from promoting fraudulent tax refund claims. Her customers have filed for $6 billion in refunds based on the "Secured Party Creditor" agreement, which the Internal Revenue Service says is part of a frivolous tax return argument.
The federal complaint says that Sellers had already been barred from preparing federal tax returns for others in 2009 by the U.S. District Court for the Eastern District of California for the same scheme.

The suit alleges that Sellers utilizes a frivolous argument that maintains that the federal government has created a "strawman" for each U.S. citizen and an account exists at the Treasury Department for the strawman. Sellers is accused of assisting clients in preparing documents to obtain funds from these non-existent accounts.

Also called the "commercial redemption" scheme, this one involves taxpayers filing Forms 1099-OID to claim huge amounts of tax withholding and refunds based on those amounts.


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