RALEIGH, N.C. – A painter, musician and a nurse are among dozens of private individuals encouraged by a North Carolina man to dodge taxes by declaring themselves to be churches, federal prosecutors said Friday in a court filing that seeks to shut down the scheme.
The government argued in filings that Andrew DeDominicis of Dallas, N.C., got payments to help people in 34 states create organizations known as "corporation soles" for themselves. That type of entity is traditionally used by the Catholic church and other religious organizations to hold church assets.
"DeDominicis organizes, promotes, and sells a tax-fraud scheme that improperly uses the corporation sole to shield assets from creditors, to earn income tax-free, and to avoid filing tax returns," U.S. attorney Anne Tompkins wrote in a civil complaint. The government is asking a judge for an injunction to halt his activities.
DeDominicis has earned more than $290,000 over eight years by helping people with the tax structure, according to court documents. He has not been charged with a crime.
Prosecutors said DeDominicis improperly encouraged individuals create a corporation sole to protect for-profit income. DeDominicis forms the corporation soles in Nevada because he says there are so many of them there, according to court documents filed by prosecutors. While DeDominicis believed a corporation sole could accept tax-deductible donations, prosecutors contend there is a different process to be recognized as a tax-exempt religious organization.
DeDominicis did not return a call seeking comment Friday. He operates his own corporation sole, Impact Ministries International, which touts the tax structure. He argues on his website that "every individual, every family and every church should be utilizing this type of organizational structure." He argues that individuals can be considered a church.
"You will find that throughout the entire New Testament God's people have always been referred to as the church," he says in one section of the website.
The IRS has identified 163 people who have formed corporation soles with DeDominicis' assistance. The government says it has closely examined the returns of nine of those participants and found that their tax adjustments based on the corporation sole have totaled nearly $28,000.
The IRS has for years warned about corporation sole scams. The IRS says the statute is intended so religious leaders can be incorporated to ensure the continuation of ownership of religious property.
Prosecutors said DeDominicis urged participants to keep some of his materials private and discouraged them from consulting an attorney or a tax professional.
"DeDominicis undoubtedly knows that a licensed professional would quickly recognize his corporation sole scheme as a scam," prosecutors wrote.