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|FOR IMMEDIATE RELEASE
THURSDAY, MARCH 14, 2002
TDD (202) 514-1888
JUSTICE DEPARTMENT SUES PREPARER OF
BOGUS TAX REFUND CLAIMS
One Refund Claim Exceeded $7 Million
WASHINGTON, D.C. – The Justice Department filed suit in federal court
in Tampa today seeking to stop a Florida man, Douglas P. Rosile, Sr., from
promoting a tax refund scheme that allegedly has been used to under-report
tens of millions of dollars of tax liability for nearly 200 clients in 32 states.
The civil suit, filed in the U.S. District Court for the Middle District of
Florida, alleges that Rosile's licenses to practice as a certified public accountant
were revoked by Florida and Ohio.
The complaint alleges that all the bogus refund claims prepared by Rosile
were based on the erroneous assertion that only income from foreign sources
is subject to U.S. income tax. According to the complaint filed today, the "foreign
sources" argument Rosile uses is based on an absurd misreading of Section
861 of the Internal Revenue Code. A federal appellate court recently upheld
a $25,000 penalty against a taxpayer who asserted the argument before the U.S.
Tax Court. The government brought injunction suits against three other promoters
of the Section 861 scheme last November. In one of those cases, a federal court
on January 29, 2002 enjoined Harold Hearn, an Atlanta accountant, from continuing
to assert the argument. Two other cases—in federal courts in Florida
and Pennsylvania—are pending.
"The argument that only foreign sources of income are subject to income
tax has been rejected out of hand by every judge who has examined it," said
Eileen J. O=Connor, Assistant Attorney General in charge of the Justice Department's
Tax Division. "Taxpayers who participate in this and other patently frivolous
schemes risk substantial civil and criminal penalties. The Justice Department
is committed to stopping abusive promoters who seek to bilk the U.S. Treasury."
The government complaint states that Rosile's bogus claims, had the IRS not
detected them, would have resulted in a loss of over $36 million to the Treasury.
The complaint refers to one refund claim for $7.3 million. In its complaint,
the Government asks the court to order Rosile to turn over his clients' identities
and all related records.
People hearing about tax benefits that sound "too good to be true" should
check them out with a trusted tax professional or the IRS. Anyone with information
about suspected tax fraud should report it to the IRS tip line at 1-800-829-0433.