The government alleged in the complaint filed in this case that Drake and Sorenson devised and operated a scheme that helped some members of the Santa Ynez Band of Chumash Indians claim bogus deductions on their federal income tax returns to offset income the members receive from the Band’s casino operations at the Chumash Casino Resort in Santa Ynez, Calif. The complaint also stated that each Band member received over $300,000 in casino distributions in 2004 and over $400,000 last year.

The injunction order requires Drake and Sorenson to mail a copy of the injunction to all customers who participated in the scheme and to any other persons to whom they sold a similar scheme in the past five years.

A federal court in Tampa, Fla. has permanently barred David Marvin Swanson of Sarasota from promoting an illegal tax fraud scheme that involves sham trusts and limited liability companies, the Justice Department announced today. The court found that Swanson, who uses the business name Dynamic Monetary Strategies, promotes a system of sham trusts called “unincorporated business trust organizations” and limited liability companies on his Web site and in a manual he sells to customers.

According to the court, Swanson “falsely advises his customers that by placing the customers’ assets and income into these trusts the customers can avoid federal income tax.” The court concluded that “in organizing and selling his abusive tax schemes, Swanson made false or fraudulent statements regarding the excludibility of income.”

The order requires Swanson to notify his customers of the injunction and to give the Justice Department a list with his customers’ names, addresses, e-mail addresses, Social Security numbers and telephone numbers.

More information about this case is available at http://www.usdoj.gov/tax/txdv04111.htm

Jeff Castaldo
Staff Reporter

WASHINGTON — Personal exemptions and standard deductions will rise, tax brackets will widen and income limits for IRAs will increase in 2007, thanks to inflation adjustments announced today by the Internal Revenue Service.

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2007. Key changes affecting 2007 returns, filed by most taxpayers in early 2008, include the following:

• The value of each personal and dependency exemption, available to most taxpayers, will be $3,400, up $100 from 2006.
• The new standard deduction will be $10,700 for married couples filing a joint return (up $400), $5,350 for singles and married individuals filing separately (up $200) and $7,850 for heads of household (up $300). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
• Tax-bracket thresholds will increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket will be $63,700, up from $61,300 in 2006.

In 2007, for the first time, inflation adjustments will raise the income limits that apply to the retirement savings contributions credit, contributions to a Roth IRA and deductible contributions to a traditional IRA where the taxpayer or the taxpayer’s spouse is covered by a retirement plan at work.