I spent the last couple of days relaxing (along with printing tax returns). Unsurprisingly there’s some fraud to report on in just those last few days.
First, I have to look at a Bozo tax preparer. From nearby Rialto, California comes the story of Matthew Carl Berry. Mr. Berry was a partner in a tax preparation business. He definitely wanted his clients to get lots of deductions. In fact, if you used his services you didn’t need to own a house to get the mortgage interest deduction. There’s only one problem with that, and it’s called tax fraud. The IRS audited about 4,500 returns and found an average tax loss of $3,150 per return. That’s $14,175,000.
But that wasn’t all. Mr. Berry and other members of his firm created false documents for audits and he didn’t pay taxes on the income they received out of this scheme. Other members of his family have already been barred from preparing tax returns, too. He and his family are also facing a civil lawsuit from the IRS. Mr. Berry will almost certainly be spending some time at ClubFed.
Suppose you are audited by the IRS, and you lose, and are ordered to pay an additional $238,800 in taxes. Would you (a) pay the bill, (b) file an appeal and, if necessary, take the case to Tax Court, or (c) ignore the notices sent by the IRS to pay the bill and stop filing tax returns? Since I’m writing this it’s clear which course Edward Barrier of Wildwood, Missouri took.
Back in 1995 Mr. Barrier was audited for 1987 through 1994. He lost, and the bills started coming. He got his revenge by ignoring those and not filing any more tax returns. He also decided to begin “structuring” his financial transactions. He apparently structured around $700,000 of transactions.
Unfortunately for Mr. Barrier eventually the IRS caught up to him. He had done business in cash, lived with his mother, and not owned assets in his own name. He did have a good job from 2002 – 2005—He was a project manager in high-end real estate in the St. Louis area. He had income of $2.4 million, but didn’t pay the nearly $800,000 in taxes he owed.
Last week he pleaded guilty to one count of felony tax evasion in St. Louis. Mr. Barrier will be sentenced July 3rd and is looking at a maximum of five years at ClubFed, a fine of $250,000 and restitution. His bill is at $1.03 million…and that’s before interest.
As I usually state, it’s a lot easier in the long-run to pay the taxes you owe than to commit Bozo acts.