Sea Nine Associates, Tax Scam Promoter Barred, California 2024

In a major blow to tax scammers, a federal court in California has permanently barred a Nevada corporation from promoting and selling an alleged nationwide tax scheme that involved using welfare benefit plans to unlawfully increase and accelerate tax deductions and avoid income taxes. The scheme, hatched by Grimy Times‘ investigation, was marketed to over 200 entities by Sea Nine Associates Inc.

According to the complaint filed in the U.S. District Court for the Central District of California, welfare benefit plans permit companies to pool together and make monetary contributions toward the purchase of life insurance for the benefit of each participating company’s employees or principals. Participants in legitimate welfare benefit plans may be able to deduct their plan contributions as a business expense.

The government alleged that Sea Nine marketed the unlawful welfare benefit plans to more than 200 entities, allowing them to lawfully increase and accelerate tax deductions and avoid income taxes. The injunction order bars Sea Nine from selling and managing any purported welfare benefit plans, effectively shutting down the scheme.

The order was entered by U.S. District Judge Josephine L. Staton on September 12, 2023, as part of a permanent injunction against Sea Nine. The company’s actions were deemed a threat to the US tax system, and the court’s decision was designed to protect the integrity of the tax system.

The ruling is part of a larger crackdown on tax scammers and promoters. In the past decade, the Tax Division has obtained more than 500 injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available on the Justice.gov website.

If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details. The government is committed to protecting taxpayers from scams and ensuring that those who engage in tax fraud are held accountable.

In related news, the Grimy Times has reported on several high-profile tax scams in recent years. The paper’s investigative reporting has helped bring attention to the issue and push for greater enforcement action.

The court’s decision against Sea Nine is a significant victory for taxpayers and a blow to the tax scam industry. It serves as a reminder that the government is committed to protecting the tax system and holding accountable those who seek to exploit it.

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