Here’s a Step-by-Step Manual of How to Go to Prison for Taxes

Do note that I absolutely, positively, do not recommend you follow the procedures done below. But if you want to go to ClubFed for a tax crime, it’s a superb illustration.

You start a home health care business. (The business could be in anything, but I’ll use the actual example.) Your business grows and you hire employees. You correctly withhold employment taxes from your employees. So far, all is well.

You then keep the employment taxes you withhold rather than remitting them to the IRS. You do this not for one month, nor two, but for years. As I’ve said before and will doubtless say again, this scheme has as close to a zero percent chance of success. The problem is that sooner or later an employee will note the withholding on his tax returns, and the IRS will investigate why they don’t have the money. In any case, that was only the first thing done wrong.

Next, after the IRS starts snooping around you can change the business’s name and have nominees start running the business. That will deter the IRS, right? A helpful hint: This won’t deter the IRS. That was the second error.

Meanwhile, let’s not admit that the business is making money, and not report the income on your personal tax return. That will show the IRS! It will, in one sense: It will help cement an indictment for tax evasion. After all, three strikes and you’re out.

This is what was done by Dinorah Stoll-Weaver of St. Joseph, Missouri. She pleaded guilty to failing to pay over employee payroll taxes to the IRS. Given that the criminal tax loss from this scheme (it ran twelve years) is $1,459,727, a trip to ClubFed is likely in her future.

One Response to “Here’s a Step-by-Step Manual of How to Go to Prison for Taxes”

  1. Steve says:

    What is disturbing for us honest tax preparers and taxpayers is that she got away with it FOR 12 YEARS! The IRS needs to do a much better job with obvious tax evasions. They had to know they were not receiving the money when the employees filed their tax returns the following year. Why it took so long to detect and prosecute is beyond my comprehension.

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