A Dinosaur Won’t Help (Nor Will Phony Trusts)

If all we had to do to avoid paying taxes was form our own church, with just our own family as the congregation, wouldn’t we do it? And if we could just declare that John and Jane form a “trust” that is exempt from taxation, we’d do that too, right?

There’s a problem with this, of course: such schemes are illegal. A church needs to be real; a trust needs to have a reason for existence. Purveyors of phony trusts are regular targets of IRS enforcement activities, and the Tax Court is not amused by their activities.

Today, the Tax Court looked at Kent Hovind, who allegedly formed a religious ministry in Florida. He also formed Dinosaur Adventure Land, a theme park in Florida. According to its website, “It is run by Creation Science Evangelism, the world-changing ministry of Dr. Kent Hovind who travels internationally speaking (and debating) on the Creation vs. Evolution controversy.”

Mr. Hovind did not file or pay income tax in 1995, 1996, or 1997. His organizational structure is, according to the Tax Court, “…based on various questionable trust documents purchased from Glenn Stoll, a known promoter of tax avoidance schemes.” Mr. Stoll was barred in 2005 from promoting his scheme.

In any case, the IRS sent demand notices to Mr. Hovind. They served him through certified mail, and even in person. The IRS made jeopardy assessments against Mr. Hovind. Mr. Hovind didn’t contest them. The IRS served Mr. Hovind with a lien notice; Mr. Hovind didn’t contest it. And when the IRS sent Mr. Hovind the notice of the filing of the tax lien, Mr. Hovind returned it, writing on the notice, “Refused for fraud.” The Tax Court case decided today was whether the IRS’s levy actions were appropriate given the jeopardy assessments.

Unfortunately for Mr. Hovind, he didn’t contest either the original demand notice or the notice of the filing of a tax lien. And that’s a big problem, because:

Petitioner actually had two opportunities (upon receipt of the Lien Notice — which receipt petitioner does not dispute — and upon receipt of the notice of deficiency) to challenge the existence and amount of his 1995, 1996, and 1997 Federal income tax liabilities. Under section 6330(c)(2)(B) petitioner may not now, in this proceeding involving respondent’s proposed levy action, dispute the amounts of his underlying Federal income taxes and additions to tax for 1995, 1996, and 1997.

So Mr. Hovind’s trusts join the dinosaurs, relics of the past. But his tax liabilities aren’t relics, as interest keeps accruing. And the levy goes forward.

Case: Hovind v. Commissioner, T.C. Memo 2006-143


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