U.S. Targets Tax Scam Involving Websites

Rhett Pardon
LAS VEGAS – Attention adult webmasters: Have you finished computing your taxes yet?

Did you hear about the latest scheme?

Well, the Justice Department is filing suit to stop a Las Vegas company that allegedly helps its customers claim to have a business with a website, and then improperly claim tax deductions and credits for supposedly "modifying" the site to comply with the Americans with Disabilities Act.

Papers filed in U.S. District Court allege the National Audit Defense Network (www.awayirs.com), known as NADN, charges customers $2,495 to make sham website modifications, but also adds a sham $7,980 promissory note as part of the purchase price; then allegedly tells prospective purchasers that they can use that inflated cost to claim a $5,000 ADA income-tax credit and a $5,475 business tax deduction.

The agency, which is seeking a temporary restraining order, alleges one website was sold 17,000 times.

“People ought to use their common sense,” Justice Department Eileen J. O’Connor told XBiz. “The [agency] is striving to bring people who sell fraudulent tax schemes the response they deserve with injunctions, penalties, and – where warranted – criminal prosecutions.”

In voluminous papers filed in the case, Justice says the firm, which also advertises home-based businesses and incorporation packages to dodge taxes, has 100,000 customers and was responsible for $324 million in lost Treasury Department revenue.

The 13 individuals named in the suit are Las Vegas-area residents Robert Bennington, Weston J. Coolidge, Alan L. Rodrigues, Adam Mangabang, Lee Panelli, Christine Reid, Jeffrey Klingenberg, Rich Klingenberg and Marie Orie, as well as California residents Daniel W. Porter of Chino, Robert Goetsch of Hayward, Michelle M. Hernandez of Upland and Joseph Prokop of Mt. Baldy.

More information on scams facing webmasters and home-based professionals is available at www.irs.gov/pub/irs-news/ir-02-13.pdf