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.