FEDERAL COURT BARS MICHIGAN AUTHOR OF TAX BOOK FROM FILING FALSE TAX RETURNS AND FORMS

Commerce Township Couple Must Repay More Than $20,000 in Erroneous Tax Refunds

WASHINGTON, D.C. - A federal court in Detroit has permanently barred Peter and Doreen Hendrickson of Commerce Township, Mich., from filing tax returns and forms on which they falsely report their income as zero, the Justice Department announced today. The injunction order, signed by U.S. District Judge Nancy G. Edmunds, also requires the couple to repay more than $20,000 in federal income, Social Security and Medicare taxes that they had obtained by filing false tax returns with the IRS.

The order notes that the couple based their improper conduct on a book Peter Hendrickson wrote called Cracking the Code. The book states that federal tax withholding and income taxes on wages are applicable only for a limited class of people, primarily government employees. The court found that position to be “false and frivolous,” and cited an earlier court decision holding the position to be “preposterous.”

Based on advice in Hendrickson’s book, individuals have unlawfully filed tax returns with false substitute W-2 wage statements they prepare reporting little or no wage income. They also fail to submit the correct W-2 wage statement they receive from their employers. Hendrickson’s scheme is number five on the IRS’s 2007 list of the “Dirty Dozen” tax scams, posted at http://apps.irs.gov/newsroom/article/0,,id=167983,00.html.

The Justice Department sued the Hendricksons and seven others last year in suits filed in California, Nevada, Michigan, Alabama, Kansas and Florida, seeking to recover erroneous tax refunds that the nine defendants had received as a result of acting on the advice in Hendrickson’s book. The government has now prevailed against all nine defendants. Information on those suits is available at http://www.usdoj.gov/tax/txdv06219.htm.

Peter Hendrickson 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.

Since 2001, the Justice Department has obtained injunctions against more than 235 tax fraud promoters and fraudulent return preparers. More information about the Justice Department’s efforts to stop tax scams can be found at http://www.usdoj.gov/tax/taxpress2007.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.