Injunctive Relief Granted Against Head Minister of Church for Promoting Abusive Tax Shelter (Hartshorn, DC Utah)

The government was entitled to an injunction under Code Sec. 7408 against the head minister of a church who was promoting an abusive tax shelter. The head minister organized the church and prescribed the practices under which the income of the junior ministers, who took a vow of poverty, was claimed to be not taxable. The IRS demonstrated that under the anticipatory assignment of income doctrine a contractual relationship did not exist between the secular employers of the ministers and the church. The head minister’s statements that the junior minister was exempt from paying taxes due to his relationship with the church were false or fraudulent. Moreover, the head minister knew or should have known that the statements he made were false because under Rev. Rul. 77-290, assignment or transfer of compensation for personal services to the church did not relieve a taxpayer of his federal income tax liability. Therefore, the head minister was permanently enjoined from engaging in activities subject to penalties under Code Sec. 6700.

K. Hartshorn, DC Utah, 2012-1 USTC ¶50,241

Other References:

Code Sec. 6700

CCH Reference – 2012FED ¶40,030.14

CCH Reference – 2012FED ¶40,030.36

Code Sec. 7408

CCH Reference – 2012FED ¶41,673.10

Tax Research Consultant

CCH Reference – TRC PENALTY: 3,256.05

CCH Reference – TRC PENALTY: 3,256.20

CCH Reference –
TRC LITIG: 9,256


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