Tuesday, March 25, 2008

Fuel tax credits, offshore accounts at top of IRS "dirty dozen" list

The Internal Revenue Service recently released its annual list of "Dirty Dozen" tax scams that included improperly claiming fuel tax credits, using offshore accounts to hide income and disguising ownership of a business through shell companies.

The list also noted other areas of IRS concern, such as the mis-use of tax-exempt organizations to shield income or assets from taxation and the misuse of trusts to reduce taxes.

“There is no secret formula that can eliminate a person’s tax obligations, " said Acting IRS Commissioner Linda Stiff in a statement. "People should be wary of anyone peddling any of these scams.”

Thursday, March 13, 2008

Men charged with setting up fake companies for clients to avoid millions in taxes

Federal prosecutors have accused two Kansas City-area men of setting up bogus corporations to help their clients evade millions of dollars in federal taxes.

The men are thought to have acted independently of each other and were charged in separate complaints, but the tax evasion schemes are similar, according to the Kansas City Business Journal.

The government said the stock in the fake corporations was illegally owned by the clients' Roth Individual Retirement Accounts. "These corporations allegedly took payments from the customers' businesses for so-called management services, which were then distributed to the customers' IRAs to enable them to get out of reporting and paying income tax on business income," the Journal said.

Tobacco stores owners sentenced for tax fraud

A federal tax-fraud scheme involving 14 owners of tobacco stores in the Minneapolis-St. Paul area essentially was wrapped up last week with the sentencing of two defendants.

Most of the defendants belonged to four groups of brothers with the last name Wazwaz who owned 52 tobacco stores, the Star Tribune said. The Minneapolis newspaper reported that the owners "made numerous attempts to conceal earnings and wealth through fraudulent bookkeeping and tax returns, as well as property transfers and large cash transactions."

As a result of the scheme, Minnesota lost $2.5 million in cigarette tax revenues. The stiffest sentence was meted out to Sabry Mohamed Wazwaz, who was ordered to serve 42 months in prison followed by three years of supervised release plus pay $1.2 million in restitution.

Sunday, March 9, 2008

Nursing home executive found guilty of tax evasion

A former nursing home executive was found guilty of conspiring to evade $34 million in taxes and other crimes, the Ft. Worth Star-Telegram reported March 8.

For some of the crimes involved in the tax evasion scheme, Stephen Michael Ewing could be sentenced to up to 20 years in prison per charge and ordered to pay fines of up to $250,000 per charge. Ewing and two associates at one time controlled 70 nursing homes in Texas, Iowa, Kansas, Virginia and Oklahoma. To cover their tracks and their ownership of the nursing homes, the men created about 150 sham payroll companies.

The other two men involved in the scheme, Larry May and attorney Gary R. Trebert, pleaded guilty to two charges and are awaiting sentencing.