A federal court has permanently barred David Champion from promoting a tax fraud scheme designed to assist his customers evade federal taxes. The civil injunction was signed by Judge Percy Anderson of the U.S. District Court for the Central District of California.
The court determined that Champion promotes a tax fraud scheme based on the frivolous claim that U.S. citizens can choose to opt out of federal income taxation by declaring themselves to be “non-taxpayers.”
The court found that Champion promotes the scheme through websites, a radio program and a self-published work entitled Income Tax: Shattering the Myths. According to the government complaint, Champion, who currently resides in Nevada, repeatedly helped his customers evade taxes by establishing sham “pure trusts” to which they transferred their business and personal assets, and he falsely informed his customers that their purported trusts did not need to file income tax returns or pay taxes.
Judge Anderson held that Champion’s theories concerning the government’s taxing authority are wrong. Among other things, the injunction order bars Champion from instructing people that they may become “non-taxpayers,” from offering his services to assist others in taking advantage of this false status, and from forming trusts for others.
The government alleged that Champion’s misconduct led to civil and criminal penalties against his customers. The complaint states that Internal Revenue Service (IRS) inquiries into eight of Champion’s customers revealed that he had assisted them in evading payment of approximately $1.4 million in income taxes.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax-fraud promoters and unscrupulous tax-return preparers.