Promoters
of trust scams are claiming
that if you make use
of their trust, you would
be able to eliminate
all of your taxes. This
is not true!
Here
are the titles of trusts
being touted over the
Internet and by other
means:
Pure
Trusts
Constitutional
Trusts
Contract
Trusts
Freedom
Trusts
Business
Trust
Unincorporated
Business Trust
Equipment
Trust
Service
Trust
Final
Trust
Common
Law Trust Organizations
Foreign
Common Law Trust Organizations
Everyone
should be aware of
the fact that no legitimate
Federal or state court
recognizes these trusts.
They are a nothing
more then a scam, a
con, a "rip off." And we hope that we are getting our point across. Furthermore, none of these "trusts" have ever held up in court.
The
premise of these scam
trusts is based upon
the clause in the U.S.
Constitution which
in essence says that
no state will impair
the "obligation of contracts." Therefore the argument is that because it’s in the Constitution, you can basically
make a contract to
do anything you want!
However,
you may ask what about
the case law and the
Internal Revenue Service
rulings that uphold
such trusts? Here are
what makes a fraud
a fraud because, if
it were too obvious,
these scammers wouldn’t
be able to get away
with it. Here are the
true facts:
Constitutional
and Pure Trusts do
not pay taxes!
Yes,
it’s true that these
trusts do not pay taxes.
This is because these
trusts don’t exist!
. In other words, they
aren’t recognized as
entities under U.S.
Constitutional
or Pure Trusts do not
pay taxes, because
the taxes are paid
by the persons who
created them under
their own income tax.
This means that if
you conveyed property
or income to a Constitutional
or Pure Trust, both
the Courts and the
IRS will simply treat
that property or income
as if it hadn’t been
given away, and you
have to pay taxes on
it just like you would
have in the first place.
Note
the asset protection
problem here: if you
have creditors and
have tried to avoid
them by using scam
Trusts, then you haven’t
done anything because
a U.S. court will not
recognize these as
existing trusts. Therefore,
creditors can collect
from your trust as
easily as they could
from you personally!
Pure
Trusts - disregarded
entities
There
have been letters issued
by the IRS that state
the following: "Pure Trust organization has no tax requirements." However, these letters do NOT say that income to the Pure Trust is not taxable,
nor do they say that
income earned by a
Pure Trust can be retained
in the Pure Trust.
In fact, in none of
these letters is it
said that a Pure Trust
exists!
Furthermore,
the IRS treat Pure
Trust organizations
as if they do not exist,
and the individuals
involved with them
are responsible for
the tax. Which means
that, if you transfer
your business earnings
to a Pure Trust and
it makes $50,000 in
a year, then you and
not the Pure Trust
is responsible for
having to pay the taxes
on the $50,000. If
you fail to pay the
tax, you will be liable
for the tax, the penalties,
and the interest.
Repeated
warnings from the IRS
The
Internal Revenue Service
has repeatedly warned
about these trusts.
In 1997, the IRS started
their own "Abusive Trust Department" to go after these trusts, along with their owners and promoters.
So,
how do you deal with
the scam artists selling
these trusts? Very
simple: Ask to get
a tax opinion for your
own situation from
the IRS, a reputable
law firm or one of
the big five accounting
firms.
If
you have already been
conned into forming
a Pure or Constitutional
Trust, then you should
immediately contact
your local tax attorney.
If
you would like more
information regarding
asset protection, trusts,
family limited partnerships
or the subject of this
article please call
or email our office.
