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Federal Court Shuts Down Washington State Bogus "Decoding" Tax Scheme


Sharon Kukhahn of Tacoma Falsely Claimed to Decode IRS Records

WASHINGTON – A federal court has barred a Tacoma, Wash., woman from selling a tax scam, the Justice Department announced today. The civil injunction order, entered against Sharon Kukhahn, will remain in effect indefinitely.

Kukhahn operates businesses called IMF Decoder, Paralegal Research Advocates and Advocates for Justice, Liberty and Freedom. The Tacoma court found that Kukhahn’s IMF Decoder scheme falsely purported to “decode” Internal Revenue Service (IRS) computer transcripts of customers’ taxpayer accounts to show that the customers were not liable for federal income tax.

The case is one of three civil injunction complaints filed last month in federal courts on the east and west coats, seeking to halt tax-fraud schemes related to Pinnacle Quest International (PQI). A federal court in Florida enjoined PQI from promoting tax-fraud schemes earlier this month.

The court found that Kukhahn falsely represented to potential customers that they were not required to pay federal income taxes unless they live in a United States territory, and that United States residents may be taxed only by a federal excise tax and only if they are involved in an excise-taxable enterprise.

U.S. District Judge Benjamin Settle held that Kukhahn knew or had reason to know that her decoding scheme was false. The court found that Kukhahn charges her customers between $1,750 and $3,195 for her decoding services. According to the court order, the IRS has determined that Kukhahn’s scheme caused revenue losses of approximately $4.9 million as a result of her customers’ failure to file tax returns and pay taxes. The court ordered Kukhahn to give the Justice Department a list of her customers.

“There is no magic way to make federal income taxes disappear,” said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. “Those who pay for and implement frivolous scams like the one enjoined by the court here are wasting their money.”

Since 2001, the Justice Department’s Tax Division has obtained injunctions against more than 340 tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department Web site.


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