New York Federal Court Orders Halt to Nationwide “Tax Termination” Scheme

WASHINGTON -- A federal court in Binghamton, N.Y., today permanently barred Robert L. Schulz of Queensbury, N.Y., and his organizations, We the People Congress and We the People Foundation, from promoting a tax scheme that helped employers and employees improperly stop tax withholding from wages, the Justice Department announced. Schulz and his organizations called the scheme the Tax Termination Package.

In his decision entering the civil injunction order, U.S. District Judge Thomas J. McAvoy, found that Schulz “knew or had reason to know” that his statements in promoting the scheme were false. The court said that in promoting the scheme, Schulz and the We the People organizations “relied on fringe opinions of known tax protestors whose theories have repeatedly been rejected by courts across the country.” The court further noted that several of those tax protestors have been convicted of tax crimes.

The court said that promotion of the Tax Termination Package caused an estimated harm to the U.S. Treasury of more than $4 million, and ordered Schulz to give a copy of the court order to all people who bought or otherwise obtained the tax scheme materials. Schulz must also give the Justice Department a list of the names, addresses, telephone numbers, and Social Security numbers of all people and businesses to whom Schulz and his organizations distributed the tax scheme materials.

More information about this case is available at http://www.usdoj.gov/tax/txdv07214.htm.

Richard T. Morrison, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Thomas Newman, a Justice Department trial attorney who represented the government in the case, and David Gordon, a revenue agent with the Internal Revenue Service’s Small Business/Self Employed Division, whose investigation led to the IRS’s referral of the case to the Justice Department.

Since 2001, the Justice Department’s Tax Division has obtained injunctions against more than 245 tax preparers and tax-fraud promoters. More information about the Justice Department’s efforts against tax scam promoters 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.