Indy 500 champion Castroneves indicted on income tax fraud

Helio Castroneves, a two-time winner of the Indianapolis 500, was indicted by a grand jury today on charges of income tax fraud conspiracy and with six separate counts of income tax evasion for tax years 1999 through 2004, the Justice Department announced today.

The indictment said one way Castroneves-- a U.S. resident who achieved additional celebrity by winning the champion title in the 2007 season of the TV show, "Dancing with the Stars" -- had hidden income was by creating an offshore Panamanian shell corporation.

For details about the alleged income tax fraud scheme, see the Justice Department press release.

Lead defendant in $60 million tax fraud case sentenced to 18 years

A founder and executive director of the now-defunct Aegis Co., which marketed and sold sham domestic and foreign trust packages to hundreds of wealthy U.S. clients, was sentenced to 18 years in prison.

The company official, Michael A. Vallone, and five co-defendants were convicted in May of participating in a nearly decade-long scheme to divert income from businesses into sham trusts for clients, hiding hundreds of millions of dollars in income for those clients and resulting in a $60 million tax loss to the United States. The government said the case is one of the largest of its kind.

Lawyer pleads guilty to charges related to setting up tax shelters

An attorney with the law firm Arnold & Porter pleaded guilty today to criminal tax fraud charges related to the design, marketing and implementing of tax shelters as a way for rich clients to avoid taxes, the Justice Department said.

The lawyer, Peter Cinquegrani, admitted in court that he had helped submit to the Internal Revenue Service false documentation about the tax shelters and taken other steps to support the tax evasion scheme.

At the same time, the IRS announced it had reached a settlement with Arnold & Porter related to charges that the law firm had failed to comply with tax shelter organization requirements and that it had marketed fraudulent tax shelters to clients.

IRS Whistleblower Office inundated with claims

The Internal Revenue Service has received more than 600 reports of tax violations from whistleblowers since the Whistleblower Office was established last year, Tax Notes Today reported Sept. 2.

The Whistleblower Office so far has pursued 80 "high-value" cases out of those whistleblower claims, the trade publication says.

The Tax Notes Today article (subscription required) explores the reason for the skyrocketing number of whistleblower reports. It also examines the tax evasion and tax fraud case against Joseph Francis, whose company was behind the "Girls Gone Wild" videos. His former accountant blew the whistle on him with the IRS.

Many corporations don't pay taxes, government report finds

Almost one-fourth of large corporations don't pay federal income taxes in a given year and roughly 60 percent of all corporations studied reported no federal income-tax liability, according to a study by the U.S. General Accounting Office.

The report, requested by the U.S. Senate Finance Committee, is entitled, "U.S. Multinational Corporations: Effective Tax Rates Are Correlated with Where Income Is Reported."

"The average U.S. effective tax rate on the domestic income of large corporations with positive domestic income in 2004 was an estimated 25.2 percent," according to the GAO.

"This is a reminder that the reporting is a broken system as far as corporations are reporting one set to the tax authorities and another to the capital markets," Mihir Desai, a Harvard Business School professor, told The Wall Street Journal.

IHT op-ed advocates whistleblower programs overseas

Phillips & Cohen attorney Erika A. Kelton argues in today's International Herald Tribune that other countries would be wise to follow the example of the U.S. and offer whistleblowers a reward for information that results in the recovery of tax revenues.

"Other governments elsewhere are beginning to recognize the value of paying an insider for information about tax evasion," she says. She noted that Germany and Great Britain both paid a former employee of a Liechtenstein bank for information about their citizens who held secret accounts at the bank to avoid taxes.

"Such payments make sound business sense when considering that already more than €110 million has been recovered as a result of this inside information," said Kelton, who represents whistleblowers with information about federal tax violations under the new IRS whistleblower program.

World's richest tax cheats

With attention focused on European and U.S. investigations of individuals suspected of dodging taxes by hiding assets in Liechtenstein, Forbes magazine has compiled a list of the the world's richest tax cheats.

"To be included, an individual had to be convicted of tax evasion, or had to accept responsibility for the charges levied against him (as former Samsung Group Chairman Lee Kun-Hee did in April when he was indicted on charges of tax evasion and breach of trust)," says the article.