Tennessee regulators are taking action against a company that has been offering to trade what it calls a “tax-deductible installment plan” for a variety of financial assets.
Leslie Newman, commissioner of the Tennessee Department of Commerce and Insurance, says she has filed a petition in a Tennessee state court for permission to place National Foundation of America, Franklin, Tenn., in receivership.
Representatives for National Foundation were not immediately available for comment on the Tennessee action.
Alabama, Texas and Washington officials also taken action against National Foundation, Tennessee officials say.
The company has contested cease-and-desist order notices issued in Iowa and Florida, officials say.
National Foundation says on its Web site that the installment plan it offers is based on Section 453 of the Internal Revenue Code and can be used to replace annuities, real estate, bonds, securities and cash with an arrangement that can produce “guaranteed income that grows each year” while lowering taxable income by up to 50%.
The Tennessee secretary of state Web site shows that National Foundation was incorporated as a nonprofit corporation in Tennessee in January 2006 and filed an annual report April 1.
Although National Foundation is registered as a nonprofit in Tennessee, the Tennessee department has learned from the Internal Revenue Service that the organization has not received IRS 501(c)(3) designation, Tennessee officials say.
Officials say in their receivership petition that National Foundation is an unauthorized insurance entity that has been doing business with consumers in Tennessee and in other parts of the country.
A Tennessee department investigation indicates that National Foundation arranged 3 transactions in Tennessee and about 230 transactions elsewhere in the United States, officials say.
“We acted expeditiously in an attempt to ensure that those elderly persons who invested with NFOA will have the best chance of having their investments returned to them,” Newman says in a statement about the receivership petition.