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July 23, 2003
Justice Targets Firms That Don't Withhold Taxes
The Department of Justice filed three lawsuits Monday asking federal judges to order three businesses to withhold taxes from employees' paychecks, the New York Times reports.

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The newspaper notes that the requests for injunctions are a new tactic against firms that contend the tax code requires only a small number of employees, primarily those who work for foreign-owned businesses, to pay taxes on their wages. Advocates of this position cite the section of the tax code with the number 861.

One case involves Cencal Aviation in Lake Shasta, Calif., and owner Al Thompson, who told his 25 employees that no federal law requires payment of taxes, the newspaper reports. He also claimed that the federal government had no authority over his business.

Since July 2000, the company should have withheld $429,400 from paychecks, according to court papers.

The DOJ says that the company's policy harms employees by forcing them to calculate their taxes and pay them on a quarterly basis in order to comply with the law.

Another case involves Touch of Class Florist in Chico, Calif., and its owners, James O. Molen and Sandra L. Molen. The Justice Department contends that $110,927, including a $30,698 refund that the department says the Internal Revenue Service issued in error, should have been withheld since 1999.

James Molen tells the newspaper he would not comply with an order to withhold taxes.

"They can take a hike," says James Molen. "I do not intend to abide by any command of me, flesh and blood, to do anything."

In Denver, the Justice Department requested an injunction against Richard D. Rudd Sr.; his wife, Dolores; their children and spouses; and their company, Colorado Mufflers Unlimited, the newspaper reports.

They owe more than $210,000 for taxes not withheld, according to court papers.



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