The New York Times reports that Federal agents yesterday raided the headquarters of the Tax People in Topeka, Kansas. More than 20 armed agents of the Internal Revenue Service and the United States Postal Service surrounded the company's two buildings early yesterday morning. The agents used dollies to remove files and load them into a truck.
The United States attorney for Kansas, Jackie Williams, who led the raid, said there were no arrests.
Tax People has been selling tax-avoidance techniques to middle-class Americans, and says that it has signed up 50,000 Americans who pay $300 down and $100 a month for advice on how to cut their taxes, basically by setting up a home business and claiming expenses for running it. A variety of experienced tax professionals say that much of the advice is dubious at best.
Perhaps worse, the business people are recommended to set up is that of selling Tax People's advice onwards. The company's clients are encouraged to recruit other customers from among their circle of friends and rewarded for doing so - a practice that has the hallmarks of pyramid selling.
Michael Cooper, 46, the owner of the company, acknowledged last month that his operation was under investigation by Kansas and Missouri authorities, but denied that he was running a pyramid scheme. Mr. Cooper could not be reached yesterday for comment.
Last night agents were still combing through the company's headquarters and removing files, said Sgt. Kirby Lester, a watch commander with the Topeka Police Department.
The Tax People system calls for taxpayers to set up a home business to sell the group's "tax relief" system to others and then deduct many living costs as business expenses.
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