Let’s assume I come up with a good idea: I’m going to buy diabetes test supplies at wholesale, and sell them to distribution companies. I find that there’s a market for this, and I’m suddenly making around $800,000 in sales a year. But I’m not a scrupulous business owner, so I’d prefer my after-tax income to be the same as my pre-tax income. What can I do?
Well, I can open lots of bank accounts. The government will never be able to trace the money. I can also just ignore the business on my tax returns. So I get a 1099 or two; no one will check on those.
Those were the apparent ideas of Yuxin Xie of Mountainside, New Jersey. His business (a sole proprietorship) was a success. However, his tax returns didn’t reflect that. The IRS, FBI, and Postal Inspectors discovered the evasion. Mr. Xie pleaded guilty to tax evasion last week. Given that Mr. Xie has apparently paid the taxes and has admitted guilt, he may spend less than two years at ClubFed.
As always, it’s a whole lot easier to just pay your taxes in the first place.
[…] you can use. How Not to Commit Tax Evasion (Russ […]