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U.S. Court Permanently Bars Washington State Woman’s Bogus “Decoding” Tax Scheme
A federal court has permanently barred a Tacoma, Wash., woman from selling a tax scam, the Justice Department announced today. The court found that Sharon 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. Kukhahn operates businesses named IMF Decoder; Paralegal Research Advocates; and Advocates for Justice, Liberty and Freedom.
The case is one of three civil injunction suits filed in April 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 in May of this year.
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 U.S. territory, and that U.S. 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 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, the IRS determined that Kukhahn’s scheme caused revenue losses to the U.S. Treasury 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.
The court also found that after the Justice Department sued Kukhahn, she falsely told her customers that she had transferred funds to the Justice Department for it to use to compensate her customers for any harm they suffered from relying on Kukhahn’s services. Kukhahn also falsely stated that customers could collect their share of these funds by submitting a claim form to the Justice Department. A total of 328 Kukhahn customers filed claims with the Justice Department seeking payments from the bogus fund. The court ordered Kukhahn to notify all the claimants that there is no such fund.
"The Justice Department is committed to seeking and enforcing injunctions against those who promote or participate in tax-fraud schemes. Similarly, under the Tax Defier Initiative, the Tax Division will continue to take appropriate actions to stop those who promote and participate in tax defier conduct," said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. "Since 2001, the Justice Department’s Tax Division has obtained injunctions against more than 350 tax fraud promoters and unscrupulous tax preparers."
Hochman thanked Tax Division trial attorney John Monroe and IRS agents Terry Martin and Anne Rueter for their efforts in obtaining the injunction.
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