DOJ Launches Nationwide Crackdown on #1 Tax Scam

The Department of Justice has announced that it has launched a nationwide crackdown against the #1 tax-fraud scheme in the country.

According to the government complaints, filed in seven lawsuits across the country, the nine people—including [Peter Eric] Hendrickson and his wife Doreen M. Hendrickson—have received a total of nearly $150,000 in erroneous tax refunds by submitting false forms with their federal tax returns to replace W-2 and 1099 forms that correctly reported their income.

In seven suits filed in U.S. district courts in California, Nevada, Michigan, Alabama, Florida and Kansas, the Justice Department seeks to recover the erroneous refunds. In addition, the suit against Hendrickson, filed in the Eastern District of Michigan, asks the court to enjoin him from filing false tax forms and returns. A violation of the injunction would be punishable as contempt of court.

According to the complaint, Hendrickson claims that only government workers are subject to income taxes. Hendrickson tells people to not submit their W-2 and 1099 forms with their tax returns, and in their place submit substitute or corrected W-2 and 1099 forms that they create on which they change their reported income to zero. Under the scheme, people then submit the falsified forms with a tax return falsely reporting no income and request a refund of all taxes withheld from wages....

The suit against Hendrickson alleges that he was convicted in 1992 on federal criminal charges for failing to file a federal income tax return and for a conspiracy involving a firebomb placed in a bin at a U.S. Post Office in Royal Oak, Mich. on April 16, 1990, the last day on which tax returns could be postmarked that year. Hendrickson testified at a co-conspirator’s trial that he wrapped a tea bag around the bomb’s tubing as a reference to the Boston Tea Party tax protest.

For press coverage, see:

• David Cay Johnston, U.S. Seeks Order to End What It Calls a Tax Scheme, New York Times
• Associated Press, Michigan Couple Sued in Nationwide Tax-Fraud Crackdown

For copies of the seven complaints, see:

• Artman Complaint
• Dowling Complaint
• Ferguson Complaint
• Gerstenkorn Complaint
• Hendrickson Complaint
• Golson Complaint
• Spitzer Complaint