The New York Times reports that Garry P. Webb-Bey of Brooklyn has obtained hundreds of thousands of dollars of tax refunds for clients by claiming that New York State is a sovereign nation, entitling taxpayers to exclude all of their wage income as foreign earned income:
Wages earned in the state, therefore, are “foreign” income, Mr. Webb-Bey claims, qualifying his clients for the foreign earned-income tax exclusion. The federal government, in civil court papers, disagreed, accusing Mr. Webb-Bey of fraud and interfering with the administration of the internal revenue laws.
For the record, the government has determined that New York State — admitted to the union in 1788 and the home of the nation’s first capital, at New York City — is not a foreign country within the meaning of the federal tax code.
Mr. Webb-Bey, 44, who was interviewed yesterday at his apartment building in the Bedford-Stuyvesant section of Brooklyn, said the government accusations were inaccurate. Mr. Webb-Bey describes himself as “self-taught in the law” and said he was puzzled by the government’s action. “If someone makes a claim that is inaccurate, they would audit you and it is rectified,” he said. In a complaint filed on Wednesday in Federal District Court in Brooklyn, the Justice Department sought the shutdown of Mr. Webb-Bey’s tax-preparation activities.
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