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St. Petersburg Man Alleged to Promote Frivolous “Section 861” Scheme

WASHINGTON, D.C. – The Department of Justice today filed a lawsuit against Everte C. Farnell of St. Petersburg, Fla., alleging that he is promoting an illegal tax scheme. The lawsuit, filed in federal court in Tampa, is part of the Justice Department’s continuing crackdown against a nationwide tax scam in which promoters falsely claim that income from sources in the United States is not subject to federal income tax. The scam is known as the “Section 861 argument,” after the tax code provision it misinterprets.

“The courts have uniformly rejected the Section 861 argument, penalized those who assert it, and enjoined those who promote it,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department's Tax Division. “Promoters of this scam line their pockets, while getting their customers in serious trouble.”

The government’s complaint states that Farnell touts himself as the “Chief Tax Consultant” of the “Problem Resolution Group” of the so-called “National Institute for Taxation Education” or “NITE.” According to court papers filed in a government suit against NITE’s owner, Thurston Bell, NITE and Bell operate a website promoting the Section 861 argument. The complaint also states that Farnell prepares tax returns for clients who declare their income is zero, regardless of how much money they earned.

The Justice Department has already obtained injunctions against three other promoters of the bogus “Section 861 argument” - Harold Hearn of Atlanta, David Bosset of Spring Hill, Fla., and Douglas Rosile of Venice, Fla.

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