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.”
Tuesday, March 25, 2008
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.
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.
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.
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.
Wednesday, February 27, 2008
IRS pursues U.S. citizens with Liechtenstein accounts for tax avoidance
The Internal Revenue Service announced that it has begun enforcement actions against more than 100 taxpayers who are avoiding taxes through accounts in Liechtenstein.
Australia, Canada, France, Italy, New Zealand, Sweden, the United Kingdom and the U.S. are working together to investigate their citizens using accounts in Liechtenstein for tax evasion and avoidance, the IRS said.
Australia, Canada, France, Italy, New Zealand, Sweden, the United Kingdom and the U.S. are working together to investigate their citizens using accounts in Liechtenstein for tax evasion and avoidance, the IRS said.
Monday, February 25, 2008
Stolen Liechtenstein data used in tax-evasion investigations
Data stolen from a unit of Liechtenstein's largest financial group, LGT Group Inc., apparently is being used for a tax-evasion probe by Germany, the Wall Street Journal reported today.
The Journal said that tax authorities in at least five other countries -- the U.S., U.K., France, Canada and Australia -- also are investigating client data tied to LGT. The newspaper quoted U.S. Sen. Carl Levin as saying the bank "apparently harbored numerous secret accounts which hid the taxable assets of thousands" of people around the globe.
Germany paid a former LGT employee about $6.2 million for the data, the Journal said, and hopes to use the data to recover hundreds of millions of dollars in back taxes.
The Journal said that tax authorities in at least five other countries -- the U.S., U.K., France, Canada and Australia -- also are investigating client data tied to LGT. The newspaper quoted U.S. Sen. Carl Levin as saying the bank "apparently harbored numerous secret accounts which hid the taxable assets of thousands" of people around the globe.
Germany paid a former LGT employee about $6.2 million for the data, the Journal said, and hopes to use the data to recover hundreds of millions of dollars in back taxes.
Monday, February 11, 2008
IRS reviews common tax strategy
The Internal Revenue Service has asked agency staff to scrutinize the tax returns of wealthy people who use a strategy known as a variable prepaid forward contract, The New York Times reported.
The IRS published on its website a technical paper about the use of variable prepaid forward contracts, which corporate executives use to turn their stock holdings into cash and defer tax payments on them for several years.
The IRS concludes that the transactions are true sales and thus taxable to the executive. A corporate tax consultant told the Times that the unpaid taxes associated with variable prepaid forward contracts probably total billions of dollars annually.
The IRS published on its website a technical paper about the use of variable prepaid forward contracts, which corporate executives use to turn their stock holdings into cash and defer tax payments on them for several years.
The IRS concludes that the transactions are true sales and thus taxable to the executive. A corporate tax consultant told the Times that the unpaid taxes associated with variable prepaid forward contracts probably total billions of dollars annually.
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