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Fraud > Financial
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Protection Scams > Corporation
The corporation sole is an entity recognized in some states
and is an entity designed basically to allow religious groups to operate
without the strict formalities of the typical business corporation. However,
are now touting it as a vehicle that provides asset protection and tax freedom
to ordinary citizens. In the words of Colonel Potter, "Horsehockey".
To debunk some of the scam babble contained in the e-mail
you may receive from corporation sole scammers:
(1) Corporations sole provide NO (i.e., zero, zip, nada)
asset protection over and above what a typical corporation provides, which
(2) Corporations sole provide NO asset protection to the
owners of the corporation sole other than possibility containing the liability
of the church -- and mind you it is difficult to see how a church could have
liability -- within the entity.
(3) Corporations provide NO asset protection to the non-church
of the owners, i.e., tort liability, debt liability, whatever.
(4) The Crown of England is NOT a corporation sole. I don't
know who came up with this lie, but it is a whopper.
(5) The Governor of Tennessee is also NOT a corporation
sole. Another whopper.
(6) The corporation sole does NOT save taxes. The IRS does
NOT recognize a corporation sole differently from any other entity. To obtain
non-profit status, it MUST qualify under 501(c)(3) like every similar entity.
(7) The corporation sole does NOT help its owners save
taxes. Claims to the contrary are totally bogus.
(8) A corporation sole MUST report the movement of funds
just like any other taxpayer; the failure to report foreign accounts or transfers
will in most cases subject those affiliated with the corporation sole to
felony criminal penalties.
(9) Any money that the corporation sole pays out to you
personally must be reported to the IRS by you personally, and taxes paid
on those money. The claim below basically solicits tax evasion, and is wrong.
The below e-mail seems to be the typical claims of the scam
artists who sell these things. You'll find that none of the promoters of the
corporation sole have any legal or accounting experience or education, or otherwise
be qualified to know even 1% of what they are talking about. Usually, they
are just repeating the fraudulent statements of some other seller of this scam
that they have met.
Very little written materials are in print and available about Corporation
Soles and yet they are one of the oldest and safest creations in the
world for asset protection, individual privacy, and legal tax avoidance.
Americans are discovering they are not in control of their own assets
and lives. Over time, both our property and us have become property
of the world bankers and leaders that are pushing us into the one-
world government and socialism. I'd like to introduce you to the best
product money can buy today for asset protection and freedom from government
control. Corporation Soles are by far the best protection for you and
your properties against taxation, or seizures. The Crown of England
is a Corporation Sole. Can you imagine the Queen/King of England being
subject to any rules or regulations over their personal business or
property? The Governor of Tennessee is considered a Corporation Sole.
Corporation Soles are superior to any other offshore and or on-shore
structures in every way imaginable when it comes to privacy and asset
protection. The IRS is on a rampage to destroy onshore and offshore
Trusts, IBCs, UBOs, etc., no matter where they are. If you've set up
a trust anywhere in the world they want to know what you're hiding,
you are automatically suspect of tax evasion. I have been down this
path, and I recommend dispensing with these entities in lieu of one
or more Corporation Soles over which the IRS has no jurisdiction. The
rich and powerful say, "Own nothing and manage everything." This
is exactly what you do with a Corporation Sole. They've stood the tests
of time for centuries. If you expect to earn funds off-shore bring
them into the US to a corporation sole bank account and there will
be no reporting or tax liability. Corporation soles pay for themselves
over and over in a very short time.
Here are just some of the benefits of a Corporation Sole:
As titular head, YOU are in complete control of everything at
all times, assets, operations, banking, etc. [and if you are in
total control then the doctrine of "Alter Ego" takes
over and makes you responsible for all debts too]
Corporation Soles have NO tax liability [utterly bogus as although
a corporation sole can qualify for 501(c)(3) status it can still
be subject to UBTI and a host of other taxes]
No tax liens, or levies can occur against property owned by a
CS [this claim comes out of thin air and is not supported by law]
Bank transfers of up to $10 million can be made without bank reporting
to the IRS [utterly bogus assertion as the CS must report and pay
taxes on financial transactions like any other corporation]
They are perpetual, meaning they have no ending date and can last
for generations [which is nonsensical since they only benefit true
churches and cannot by law be used by familes]
They have only "successors" no beneficiaries [which
doesn't eliminate tax liability to the extent these are used for
personal purposes or to transfer wealth to children, etc.]
You can use CS funds for your livelihood, as priests and nuns
of the Catholic church do [and pay income tax on it]
No reporting or specific recording is required by any taxing agency
[totally wrong, unless felony tax evasion is your name]
There are no large "annual" fees to pay ever [because
you're not getting much]
Changes to a CS can be done with only "minutes" to your
own private document [not in most states which require filing like
any other corporation although slightly cheaper]
The IRS furnishes a special EIN# that they do not track for ease
of opening bank accounts. [totally false as a CS reports taxes
like any other corporation or non-profit]
There is no government interference as long as no "laws" are
broken [totally bogus as CS are formed under state law and can
be regulated by the state like any other corporation]
A CS can own multiple businesses, and bank accounts [but if it
conducts any other business than being a church, it will be hit
with what is known as UBTI which will probably be passed to the
owners of the CS, along with interest and penalties]
Most business owners can direct business profits to a CS without
taxation. Instead of taking a `salary" just spend the
money in the CS bank accounts. [and go to jail for tax evasion
. . .]
|FOR IMMEDIATE RELEASE
MONDAY, MARCH 29, 2004
TDD (202) 514-1888
JUSTICE DEPARTMENT SUES TO STOP
TAX SHELTER INVOLVING FALSE CHURCH STATUS
Suits Filed In California, Colorado,
Oklahoma, Missouri And North Carolina
WASHINGTON, D.C. - The Department of Justice today filed suits in
federal courts in California, Colorado, Oklahoma, Missouri, and North
Carolina to stop a nationwide abusive tax scheme in which customers
are advised to create, and claim church status for, a company known
as a corporation sole.
“As con artists continue to press their tax scam promotions
on the public, the Department of Justice continues to work with the
IRS to shut them down.” said Eileen J. O’Connor, Assistant
Attorney General for the Justice Department’s Tax Division.
Named in the suits were:
lead promoter Joseph O. Saladino of Palmdale, California;
his organization, Freedom & Privacy Committee;
Jason A. Whitney of Tarzana, California;
Thomas and Charlene Chapin of Denver, Colorado;
Richard M. Blackstock of Broken Arrow, Oklahoma;
Janis E. Greehey of Branson, Missouri;
Nancy E. Lloyd of Greensboro, North Carolina; and
Frank D. Perkinson of Garner, North Carolina.
According to papers filed in the cases, it is alleged that Saladino
and the other defendants advise and assist customers to establish and
claim church status for a corporation sole, to which the customers
transfer assets and income that they continue to control. The government
alleges the corporations sole are used merely to fund a person’s
lifestyle, and not for church purposes. The complaint alleges that
Saladino and his sales organization falsely state that customers who
use corporations sole do not need to file tax returns or pay taxes.
It is further alleged that in another part of the scheme, the defendants
help their customers file false returns seeking refunds from the government
for past taxes paid, based on the bogus argument that compensation
for personal labor is nontaxable. Defendants call this the “claim
of right” doctrine.
The Justice Department has asked the courts to order Saladino and
the other defendants--and anyone working with them--to stop promoting
these schemes and to provide the government with their customer lists.
More than 700 customers, located in nearly every state and several
foreign countries, are alleged to be in the program.
According to court papers filed by the Justice Department, Saladino
and his cronies market their scheme on the Internet, in conference
calls and at seminars. In its court papers, the Justice Department
alleges that customers are charged from $200 to $2,295 to participate
in the schemes.
Corporation sole and claim of right promotions are named in the IRS’s
annual consumer alert of the “Dirty Dozen” as tax scams
taxpayers are urged to avoid. A complete list of the “Dirty Dozen” can
be found http://www.irs.gov/newsroom/
|IRS Warns of "Corporation Sole" Tax
IR-2004-42, March 29, 2004
WASHINGTON - The Internal Revenue Service today issued a consumer
alert advising taxpayers to be wary of promoters offering a tax evasion
scheme that misuses "Corporation Sole" laws. Promoters of
the scheme misrepresent state and federal laws intended only for bona-fide
churches, religious institutions and church leaders.
"This scheme shamelessly tries to take advantage of special tax
benefits available to legitimate religious groups and church leaders," said
IRS Commissioner Mark W. Everson. "Unscrupulous tax promoters
always look for ways to game the system and prey on unsuspecting victims.
Taxpayers should be on the look-out for these and other scams."
Scheme promoters typically exploit legitimate laws to establish sham
one-person, nonprofit religious corporations. Participants in the scam
apply for incorporation under the pretext of being a "bishop" or "overseer" of
the phony religious organization or society. The idea promoted is that
the arrangement entitles the individual to exemption from federal income
taxes as an organization described in Section 501(c)(3) laws.
The scheme is currently being marketed through seminars with fees
of up to $1,000 or more per person. Would-be participants purportedly
are told that Corporation Sole laws provide a "legal" way
to escape paying federal income taxes, child support and other personal
debts by hiding assets in a tax exempt entity.
While fraudulent Corporation Sole filings have happened sporadically
for many years, the IRS has recently seen signs the scam could be starting
to spread with multiple cases seen recently in states such as Utah
and Washington. The IRS is concerned about this increase and is taking
steps to pursue Corporation Sole promoters and participants.
Used as intended, Corporation Sole statutes enable religious leaders
- typically bishops or parsons - to be incorporated for the purpose
of insuring the continuation of ownership of property dedicated to
the benefit of a legitimate religious organization. Generally, creditors
of a Corporation Sole may not look to the assets of the individual
holding the office nor may the creditors of the individual look to
the assets held by the Corporation Sole. Currently, 16 states permit
Corporation Sole incorporations. The IRS suggests that individuals
considering becoming involved in any kind of tax avoidance arrangement
obtain expert advice from a competent tax advisor not involved in selling
the arrangement. Do not rely on legal opinions obtained or provided
by the arrangement's promoter. Start by asking the following questions:
Answering "yes," or even "maybe," to either of
these questions should raise red flags for taxpayers.
Additional information on Corporate Sole and the rest of the "Dirty
Dozen" tax scams and schemes is available on IRS.gov.
Tax guidelines for churches and religious institutions can be found
in Publication 1828, "Tax Guide for Churches and Religious Organizations".
Taxpayers with specific questions on a tax scheme or who wish to report
a possible scheme can call (866) 775-7474 or send an e-mail to firstname.lastname@example.org.
Links on IRS.gov:
Attached: Statement from Utah and Washington Officials
Statement from State Officials
Director, Corporations Division
Secretary of State's Office
State of Washington
"During the last few years, corporation sole filings have increased
dramatically. Unfortunately, many appear to be submitted by the same,
small group of people. They're filed on behalf of as many as 20 others
at a time, over and over again. These filers are very reluctant to
provide any address or identifying information to our staff. When we
contact individual filers, we find they often operate under the mistaken
impression that simply by filing a corporation sole, they are exempt
from taxation and other kinds of debt collection. It's a shame people
spend hard earned money on these filings in the belief they will become
tax exempt even though they're not legitimate churches."
Director, Division of Corporations and Commercial Code
State of Utah
"Scheme promoters are telling people that by filing a corporation
sole they are creating a church or a religious organization. This information
is false. A religious organization must already exist before the authority
for the organization files the articles of incorporation for the corporation
sole. Any legitimate religious organization filing a corporation sole
would have no fear of IRS scrutiny or any regulatory filing associated
with the corporation sole.
During the last three years, the Utah Division of Corporations/UCC
has seen an unprecedented growth in corporation sole filings. It appears
that many of the filings are mass-produced, as there are only a few
variations in the document content and verbiage. These recent filings
are an abuse of the legislative intent of the Corporation Sole Act.
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