Archive for the ‘Tax Evasion’ Category

The 2021 Tax Offender of the Year

Friday, December 31st, 2021

It’s time once more for that (not really) most prestigious of prestigious awards, the Tax Offender of the Year.  One year I’ll find that I don’t have many deserving winners (probably the year after I retire); however, there were plenty of individuals, businesses, and organizations that strove to take down the top prize.

We’ll start with the runners-up.  Dinesh Sah of Coppell, Texas saw the Paycheck Protection Plan loans as a wonderful thing.  Let’s not take out one; let’s do 15.  And let’s make up phony employees, payroll expenses, and tax returns to get $24.8 million in loans.  He pleaded guilty in March and was sentenced in July to more than 11 years at ClubFed.

Mustafa Shalash of Hilliard, Ohio didn’t commit huge fraud.  Rather, it’s the scope and what he did that is at issue.  Mr. Shalash won a Powerball jackpot in 2015 for $1 million.  He felt that the $290,000 withheld for taxes should come back to him, so he invented $1 million of gambling losses for his 2015 tax return.  Additionally, he had foreign bank accounts, and transferred $440,000 of his winnings to one in Jordan.  Yes, he ignored the FBAR (Report of Foreign Bank and Financial Accounts).  If you are lucky enough to win a prize in the lottery, your luck will likely become public information.  It would have been a lot easier for Mr. Shalash to simply have paid the additional tax.  Instead, he’ll be paying restitution of over $250,000 and could find himself at ClubFed for up to three years.

Aaron Aqueron of Clermont, Florida is a very good promoter.  He convinced numerous individuals that just by having a mortgage (or other debt) you’re entitled to a tax refund!  Sounds great.  But what he did was state that the financial institutions withheld tax when they hadn’t.  His clients filed tax returns claiming $14.6 million in refunds, and the IRS issued $7.6 million before catching on.  Yes, mortgage interest is an itemized deduction and, yes, if you have tax withheld you get to claim that on a tax return.  But the tax must actually be withheld—a minor step that was missed.  And Mr. Aqueron only charged between $10,000 and $15,000 to his soon-to-be-audited clients.  (If it sounds too good to be true, it probably is.)  Mr. Aqueron pleaded guilty earlier this month and will likely be residing at ClubFed in the near future.  Mr. Aqueron’s alleged co-conspirators will be tried in January.

Our last runners-up are a rap duo out of Detroit.  Sameerah Marrel and Noelle Brown were the “Deuces Wild” rap group.  Their rap career apparently didn’t take off, so they needed a different source of income.  They allegedly turned to tax fraud, inventing a number of trusts and purportedly noting that there was tax withheld on the trusts’ returns.  This allowed the duo to ask for $13.6 million in refunds (they received $5,539.049.28) when the actual amount of withholding was $0.  They’re facing years at ClubFed if convicted.


Coming in third place this year is Gary Hunsche of Troy, Illinois.  Mr. Hunsche owned and operated two employee leasing companies called Unique Personal Consultants and Unique Risk Management.  Mr. Hunsche faced a dilemma: How would he pay for his indoor basketball court on his new home (and other improvements to his home)?  He came up with the decidedly illegal answer: he would withhold payroll taxes but not remit $9.4 million.  It’s a wonderful scheme while it’s working, but it’s the one kind of tax fraud that will always be caught.  Sooner or later one of the employees’ returns gets looked at by the IRS, and the IRS wonders where the payroll taxes are.  He was sentenced to four years at ClubFed.

I really, really wanted to put the IRS as this year’s winner but they’re in second place.  The issues with the IRS this year are legion.  Good luck calling the IRS for assistance (you have a less than 10% chance of getting through).  Or you could be like my call earlier this week: You get in the queue, and after two hours waiting on the Practitioner line you hear, “We’re having technical difficulties.  You will be transferred back to the main number….We’re sorry, but due to extremely high call volume in the topic you’ve chosen, we cannot take your call at the present time.  Goodbye.”

Each year many returns filed with the IRS ‘fall out of processing.’  Normally, that means a one to four day delay in processing.  This year, it means at least four months.  The IRS Operations Status Page shows that as of December 18th there were 6.3 million unprocessed individual returns.  Clients are complaining, and there’s nothing I (or any other tax professional) can do.

If you filed an amended return, maybe your return will be processed within twelve months, but I wouldn’t bet on that.  The IRS Operations Page was changed to note, “The current timeframe can be more than 20 weeks instead of up to 16.”  I’m quoting 18 months (average) to my clients who have to paper-file amended returns, and I think that’s realistic.  If you can electronically file your amended return, you will shave off a few months (you’re likely looking at one year).

And then there are the IRS notices.  I had two clients receive notices stating their 2018 returns hadn’t been filed (both were electronically filed and accepted).  I called the IRS and found out that for one, it was a processing issue and my client should have received a new notice this past week (it didn’t come, so another call to the IRS is needed).  The other client never received a notice that he had to call the Identity Theft Unit.  He hasn’t been able to get through yet.

Many of my clients received notices and timely responded.  Unfortunately, while there are deadlines on taxpayers, there are no deadlines on the IRS.  I had one matter that took three years for the IRS to actually respond to our communication.  (The understaffed Taxpayer Advocate Service agreed to take the case, but the next day we received a letter from the IRS resolving the issue.)  I have another matter that has now exceeded three years (the IRS keeps sending it back and forth between their Cincinnati and Ogden offices).

I have had at least ten clients file Tax Court petitions with the IRS in 2021.  (These are the clients I know about–there could be others.)  Two of the cases involve genuine disputes related to Automated Underreporting Unit (AUR) notices and were destined to get to Tax Court.  Filing the petitions is the means to get these disputes to IRS Appeals.  The other eight are matters where the IRS never read my clients’ timely filed responses.  The IRS simply issued Notices of Deficiency, so the only method available for the taxpayers to dispute the matters was filing Tax Court Petitions.  In all of these cases, had someone read the response it is likely that the matter could have been resolved.

This is just a sampling of the disastrous status of “service” within the IRS today.  I do want to point out that I am not complaining about any of the employees I have dealt with this year.  In almost every case, the IRS employees I speak with are professional, courteous, and honestly want to resolve the matters.  The problems relate to (a) IRS top management refusing to admit to all of the problems, (b) the IRS drowning in paper (partially caused by the pandemic), (c) the Biden Administration refusing to order staff back to work at IRS Service Centers, and (d) Congress not properly funding the IRS.  Unfortunately, it will take several years for the IRS to work its way out of its current hole.  It’s time for the IRS to give accurate time-frames, extend response times to taxpayers, and for Congress to fund the IRS appropriately.


Oleg Tinkov is a Russian entrepreneur.  Like me, he is a graduate of the University of California, Berkeley.  By any standard he’s successful.  He founded Tinkoff Credit Systems in 2006  It’s now the second largest provider of credit cards in Russia.  In 2013, the bank went through an Initial Public Offering (IPO) on the London Stock Exchange; the IPO raised $1.1 billion (coincidentally, his net worth became $1.1 billion at that time).  TCS Group, the holder of Tinkoff Bank, is officially based in Limassol, Cyprus.  Mr. Tinkov earlier formed a wholesale electronics business he later sold, a food company, a brewery, and a cycling team.  His net worth is estimated by Bloomberg at $6.9 billion and by Forbes at $7 billion.

In 1996 Mr. Tinkov became a naturalized US citizen.  In 2013, three days after the IPO Mr. Tinkov relinquished his US citizenship at the US embassy in Moscow.  When you relinquish your citizenship, you must have filed all your tax returns and complete IRS Form 8854 (Initial and Annual Expatriation Statement).  If you renounce your citizenship and your net worth is more than $2 million, you owe the expatriation tax.  The fair market value is based on you hypothetically selling all your assets the day prior to your expatriation.

Mr. Tinkov was asked about his net worth by his US-based accountant, and he told him it was less than $2 million.  Rather than admitting the truth, he used $300,000 instead of the true net worth of $1.1 billion.  There is no extradition treaty between the US and Russia, so he likely felt safe.

Two things I’ve repeatedly said over the years are, “It’s always easier to simply pay what you owe,” and, “If you’re a celebrity or someone else who is a public figure, you want to make sure your tax returns are squeaky clean.”  While Mr. Tinkov isn’t a household name, Forbes annually publishes a list of billionaires and his name has been on it.  It wouldn’t take long for someone at the IRS to wonder why only 0.027% of his net worth was noted on his Form 8854.

Unbeknownst to him, an investigation was begun.  In September 2019 he was indicted.  In February 2020 he went to London; the United Kingdom does have an extradition treaty with the US.  Mr. Tinkov was arrested.  The US sought extradition; Mr. Tinkov contested on medical grounds (he was undergoing treatment for leukemia).

On October 1, 2021, Mr. Tinkov pleaded guilty to one count of filing a false tax return.  He paid the $248,525,339 of tax he would have had to pay back in 2013.  He also paid a $100 million fraud penalty, interest, and other penalties; the total penalties and interest added $260,415,845 to his total tax bill of $508,936,184.  Yes, he didn’t have to pay his taxes for eight years but it would have been far less costly to simply have prepared the tax returns correctly in the first place.  And half a billion in tax evasion gives Mr. Tinkov the 2021 award as Tax Offender of the Year.


That’s a wrap on 2021.  May all of you have a Happy and Healthy New Year.

Nominations Due for 2021 Tax Offender of the Year!

Tuesday, December 14th, 2021

In just over two weeks it will be time for me to hand out the annual Tax Offender of the Year award.  I suspect that once again there are too many deserving nominees.  If you have a suggestion, feel free to email it to me at rcfox at claytontax dot com.  Our previous winners:

2020: Robert Brockman
2019: Lawrence R. Gazdick, Jr.
2018: California’s Train to Nowhere
2017: State and Local Pension Crisis
2016: Judge Diane Kroupa
2015: Kenneth Harycki
2014: Mauricio Warner
2013: U.S. Department of Justice
2012: Steven Martinez
2011: United States Congress
2010: Tony and Micaela Dutson
2009: Mark Anderson
2008: Robert Beale
2007: Gene Haas
2005: Sharon Lee Caulder

Ignoring W-2Gs and $482,000 of Income Led to a Sub-Optimal Result

Monday, December 14th, 2020

Bluffing in poker can work quite well. However, if your opponent will always call, bluffing cannot work. One poker player learned that the IRS always call your bluffs (especially when they have evidence).

Guy Smith owns an interior construction business in Connecticut. He also enjoys playing poker, and had some success. With that success comes W-2Gs: They’re issued if you have a cash of $5,000 or more (net of the buy-in). Mr. Smith has had many, winning a poker tournament in Connecticut and finishing fifth in another in Florida.

Mr. Smith apparently didn’t tell his tax professional about those winnings. The IRS computer would, of course, send notices noting the discrepancies on the returns. Given the tournament winnings were more than $1 million, this is a big issue. Ignoring tax forms that are sent to the IRS has about a 0% chance of long-term success.

But like a bid informercial, that’s not all. Mr. Smith ignored $482,000 of income from his business (and didn’t tell his tax professional about that, either). Unfortunately for Mr. Smith, the IRS discovered this. With nearly $1.5 Million of unreported income and over $800,000 of unpaid federal income taxes, IRS criminal investigation was interested.

Mr. Smith pleaded guilty to one count of tax evasion last week; he is scheduled to be sentenced in March and faces up to five years at ClubFed. Given he has agreed to cooperate with the IRS and pay all outstanding taxes (and the penalties and interest), his actual sentence will likely be far less.


In just over two weeks I’ll be announcing this year’s winner of the “Tax Offender of the Year” award. To win this coveted award [1] it takes more than simply evading taxes. It has to be special; it really needs to be a Bozo-like action or actions. If you have any ‘deserving’ nominees, let me know.

[1] I’m not sure anyone really covets receiving this award, but given the actions of some of the previous winners it may be that some were actually trying to win the award.

Taking Some Bites Out of Tax Crime

Saturday, July 25th, 2020

Many cities have cuisines that they are noted for. New Orleans is famous for the excellent Cajun food. I think of seafood and lobster with Boston. And cheesesteaks–a mixture of chopped steak with grilled onions and cheese on a roll–goes with Philadelphia. One cheesesteak restaurant allegedly had a unique (and illegal) way of making a profit.

Tony Luke’s is one of the 21 best cheesesteak restaurants per Eater of Philadelphia. Its flagship location is in South Philly, near the stadiums. But that’s not why I’m writing this post. Instead, let’s look at some not-so-good ideas on ways of improving profitability.

First, we can deposit just some of the daily receipts into the bank account and use the other cash for paying employees off the books and using the money for personal expenses. Second, paying our employees off the books saves on payroll taxes. Third, when you think the scheme may be caught we’ll amend the prior tax returns to correct the income but we’ll add phony expenses to keep the profitability low. Sure, these methods are illegal but no one will know.

And that’s what the owners of Tony Luke allegedly did. And we’re talking millions of dollars of income ($8 million was allegedly hid from the IRS), and a long-running scheme that ran for 11 years. As I’ve mentioned in the past, if you want to head to ClubFed one of the easiest methods is to deliberately defraud the US on payroll taxes. It appears that’s what happened hear, along with major tax evasion. If the owners are found guilty, they’re looking at plenty of time to reconsider their actions.

Phony Donations Yield Real Tax Evasion and Tax Fraud

Thursday, July 23rd, 2020

Have I got a deal for you! You can give me a donation of, say, $500,000, and I’ll give you $450,000 back! Yet get a write-off on your tax return for all $500,000 but you really only spent $50,000. Isn’t that great?

Yes, if it were legal it would be super. But it’s not, and the story here is one that apparently spans decades, involves an unrelated shooting incident that stunned the nation, and a still ongoing investigation into others.

Yisroel Goldstein is the former director at Chabad of Poway (California). You may remember that name from the horrible shooting that occurred at his synagogue in April 2019. Rabbi Goldstein lost parts of his hand in the shooting. One congregant was killed and two others were injured in the attack. After the shooting Rabbi Goldstein met with President Trump at the White House and Vice President Pence visited the synagogue.

But what we didn’t know was that the IRS and Department of Justice had been investigating the rabbi for two years preceding the shooting. So what was the fraud?

It’s a scheme known as the 90-10 fraud. Rabbi Goldtein collected $6.2 million in donations. He returned 90% of that to the donors with phony receipts; meanwhile, he kept 10% (or around $620,000) for himself. That resulted in a tax loss of $1.5 million over the last 8 years. That’s bad, but the scheme actually dates back decades: One taxpayer began participating in this scheme in the 1980s!

Rabbi Goldstein pleaded guilty last week, along with five other individuals. Given that at least 20 taxpayers total were involved in this (and only six have pleaded), it’s quite possible more indictments are coming. Rabbi Goldstein is cooperating with the IRS and Department of Justice in the ongoing investigation.

The DOJ is expected to recommend that Rabbi Goldstein be sentenced to probation because of his work in the shooting. The five others benefited with phony deductions and one conducted his own Ponzi scheme. All six have agreed to pay restitution.

There is no free lunch as far as making donations. If you donate to a church or synagogue, you actually have to donate the funds; kickback of the money is not allowed.

This Name Looks Vaguely Familiar

Thursday, November 1st, 2018

I’m a tax nerd. I read Tax Court decisions. Today, one caught my eye: W.T. Snipes v. Commissioner. This name looks vaguely familiar.

Yes, it’s the Wesley Snipes. Mr. Snipes, for those who don’t remember, visited ClubFed for failing to file tax returns in the early 2000s. Today’s decision begins,

P[etitioner] has Federal income tax liabilities of approximately $23.5 million for tax years 2001-06. These liabilities are largely a result of P’s failure to file Federal income tax returns. R[espondent] assessed these deficiencies, filed a notice of Federal tax lien (NFTL), and issued notice and demand for payment of the liabilities, and, when P did not pay, issued to P a notice of the filing. P timely requested a collection due process hearing under I.R.C. sec. 6330(d) and stated that he wanted a collection alternative–i.e., an offer-in-compromise (OIC) or currently not collectible status–and wanted the NFTL withdrawn. P did not challenge his underlying tax liabilities. P made a cash OIC of $842,061, less than 4% of his total underlying liability.

The tax liability is now about $23.5 million. Interestingly, back in 2008 (when Mr. Snipes was tried for failing to file) he and his then-attorney, Robert Bernhoft, said he would pay his taxes. That apparently didn’t happen.

The Tax Court dispute is over Mr. Snipes’ having a Federal tax lien being put on him. Mr. Snipes submitted an Offer In Compromise (OIC) stating there was doubt as to whether the $23.5 million could be collected. When an OIC is submitted, the taxpayer must provide a complete listing of all of his assets and liabilities. In many cases an OIC is justified. Mr. Snipes alleged that a former financial advisor of his took out loans and disposed of assets and income on his behalf without his knowledge or benefit. Indeed, the advisor signed affidavits. The Tax Court had an issue, though: “However, petitioner did not provide any definitive or otherwise bona fide documentation showing the dissipation or diversion of his assets or income.”

Something I’ve said before in discussing the Tax Court, you need to provide absolute proof and documentation. It appears that didn’t happen in this case. But I digress….

Following review of petitioner’s case the settlement officer reduced petitioner’s [reasonable collection potential (RCP)] to $9,581,027 in an effort to compromise for settlement purposes. Petitioner maintained his original OIC of $842,061. The settlement officer ultimately concluded that it was not in the best interest of the Government to accept petitioner’s OIC. The settlement officer’s manager reviewed the settlement officer’s actions regarding petitioner’s case and her rejection of petitioner’s OIC.

Mr. Snipes didn’t accept the ruling, so the case went to Tax Court.

Petitioner contends that the settlement officer abused her discretion in refusing his OIC by failing to (1) calculate petitioner’s exact RCP, (2) exclude dissipated assets, (3) conduct an expedited transferee investigation into Mr. Johnson, (4) consider whether the NFTL would cause petitioner economic hardship, and (5) satisfy the review obligations of section 7122(e)(1).

The Court did not give Mr. Snipes good news. The exact RCP isn’t required. The petitioner asked for $842,061; the settlement officer calculated $9,581,027; that’s a big difference. Without, in the view of the Tax Court, credible documentation of his assets, Mr. Snipes lost his first argument.

The argument regarding dissipated assets is more interesting. Here’s what the Court said:

Even though the settlement officer included potentially dissipated assets in petitioner’s RCP, she did not abuse her discretion. She was properly following published guidance that directs settlement officers to reject an OIC where issues of transferee liability are present unless the taxpayer includes the transferee amount in his offer. Petitioner had multiple entities in which his multiple assets, particularly his real estate properties, were held. The settlement officer could not determine petitioner’s assets clearly. Moreover, petitioner did not provide bona fide or definitive documentation showing that he no longer owned the assets in question or to what extent, if any, he had benefited from their dissipation. He provided only affidavits by [his financial advisor]. The settlement officer was justified in her calculation of petitioner’s RCP. [internal citation omitted]

I can see some basis for an appeal here. Given that the financial advisor was willing to sign affidavits saying he disposed of assets, there’s likely proof that those assets were disposed. On the other hand, you shouldn’t assume with the Tax Court. Consider that if Mr. Snipes had included proof of disposition he might have won this argument (and he might have won at Appeals, too).

The argument on transferee issues was a loser. The Internal Revenue Manual pt. 5.8.5.6(7) states,

It is not necessary to actually seek or obtain any specific legal remedy in order to address * * * [transferee/nominee/alter ego] issues in an offer. However, the offer file must be clearly documented with the basis for including the value of a transferred asset in the RCP. Care should be taken so that the determination to include assets held by others is reasonable.

This was a losing argument.

The next argument was economic hardship.

Economic hardship is considered a “special circumstance” under which a settlement officer can accept an OIC that is considered significantly below a taxpayer’s RCP…Factors indicating “economic hardship” include: (1) a long-term illness, medical condition, or disability that renders the taxpayer incapable of earning a living, where it is “reasonably foreseeable that taxpayer’s financial resources will be exhausted providing for care and support during the course of the condition”; (2) a situation where the taxpayer’s monthly income is exhausted by providing for care of dependents without other means of support; and (3) a situation where, although the taxpayer has certain assets, the taxpayer is unable to borrow against the equity in those assets and the liquidation of the assets would render the taxpayer unable to meet basic living expenses…Petitioner contends that payment of his RCP as calculated by the IRS would render him unable to meet basic living expenses. [internal citations omitted]

If you can prove that paying the RCP would cause you to be unable to pay your living expenses, you normally do qualify for an OIC based on economic hardship. There’s just one problem here:

The taxpayer must submit complete and current financial documentation to the Commissioner to prove economic hardship. Petitioner has not submitted complete and current financial data to respondent, as he did not provide definitive or bona fide documentation of his assets. Accordingly, petitioner’s settlement officer could not determine that he could not borrow against the equity of his real property interests or other assets, or that the liquidation of these interests would render him unable to meet basic living expenses. Petitioner did not make a showing of economic hardship necessary to qualify for special circumstances.

The final argument was that the review obligations of Section 7122(e)(1) were not met. Petitioner stated that the Appeals Office manager was not an ‘independent’ reviewer. The Court rejected that argument, noting that this is exactly how the proposed rejection of an offer is reviewed.

While I do expect this case to be appealed, for now the tax lien stands. As I said years ago, it would have been far, far easier (and far, far less expensive) for Mr. Snipes to have simply paid his taxes in the first place. Of course, I would have missed out on years of great blog materials but it would have saved Mr. Snipes millions of dollars.

Case:

W.T. Snipes v. Commissioner, T.C. Memo 2018-184

Bozo Tax Tip #7: Only Income Earned Outside the US Is Taxable

Thursday, April 5th, 2018

A few days ago I was explaining to a client the basics of the US Tax Code: All income is taxable unless Congress exempts it; nothing is deducible unless Congress allows it. That’s the basics.

My office is in Las Vegas, Nevada. I’m a US citizen. So I owe US income tax on my earnings, right? Of course I do. But where few willingly go the Bozo contingent jumps in. Here’s a method of avoiding tax on all your income. It’s been used by celebrities such as Wesley Snipes. So let’s use Section 861 of the Tax Code to avoid tax!

Section 861 states that certain items are always considered as income from within the United States. It does not say that income earned in the US is exempt from tax. But tax protesters claim that’s the case; courts, though, basically state, ‘You must be kidding.’ This argument has never been used successfully. In an audit or in court, if you use the Section 861 argument you have no chance of success.

The US taxes its citizens on their worldwide income. That includes the United States. Indeed, if that weren’t the case I’d be out of a job. Mr. Snipes received three years at ClubFed. In the long-run it’s far, far easier to simply pay your tax.

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

Sunday, July 30th, 2017

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.

“I Ain’t Got It, So You Can’t Get It” Doesn’t Generally Apply to the IRS

Saturday, July 15th, 2017

Ain’t never gave nothin to me
But everytime I turn around
Cats got they hands out wantin something from me
I ain’t go it so you can’t get it…

So goes part of the lyrics of “X Gon’ Give It To Ya” by DMX. The IRS and the Department of Justice allege that these lyrics by Earl Simmons (aka DMX) were taken literally by him. Mr. Simmons is accused of engaging in a multi-year scheme to conceal millions of dollars of income from the IRS to not pay $1.7 million in taxes.

Mr. Simmons is accused of not paying his income taxes from 2000 through 2005 of $1.7 Million. That’s his first problem. His second problem was apparently not filing his 2010 through 2015 tax returns. The Department of Justice is accusing him of earning $2.3 million during that period; it would be hard not to have some tax liability with that amount of income.

The third problem was what he supposedly did to avoid taxes. From the DOJ press release:

Instead, [SIMMONS] orchestrated a scheme to evade payment of his outstanding tax liabilities, largely by maintaining a cash lifestyle, avoiding the use of a personal bank account, and using the bank accounts of nominees, including his business managers, to pay personal expenses. For example, SIMMONS received hundreds of thousands of dollars of royalty income from his music recordings. SIMMONS caused that income to be deposited into the bank accounts of his managers, who then disbursed it to him in cash or used it to pay his personal expenses. SIMMONS also participated in the “Celebrity Couples Therapy” television show in 2011 and 2012 and was paid $125,000 for his participation. When taxes were withheld from the check for the first installment of that fee by the producer, SIMMONS refused to tape the remainder of the television show until the check was reissued without withholding taxes.

SIMMONS took other steps to conceal his income from the IRS and others, including by filing a false affidavit in U.S. Bankruptcy Court that listed his income as “unknown” for 2011 and 2012, and as $10,000 for 2013. In fact, SIMMONS received hundreds of thousands of dollars of income in each of those years.

Mr. Simmons faces 14 counts of tax evasion, obstructions, and failing to file tax returns. He faces a maximum of 44 years at ClubFed. He’s been released on bond of $500,000 pending his trial. I’ll point out something I have many times in the past: If you’re a celebrity, it pays to just pay your taxes.

Helping the Las Vegas Economy Isn’t a Good Excuse for Not Paying Employment Taxes

Sunday, July 9th, 2017

I’m a resident of Las Vegas, so things that help the local economy are generally good. Of course, I have a bias: A good Nevada economy will help keep taxes down. Richard Tatum, Jr. of Houston helped the Las Vegas economy so I suppose I should be thankful for him. The Internal Revenue Service and the US Department of Justice have a different view.

Mr. Tatum owned an industrial staffing business. It was a large business, with about a thousand individuals working for it both internally and at other businesses. Between March 2008 and the end of 2012 the business withheld $12 million in payroll taxes. And there were $6 million of social security and Medicare taxes (the employer’s share) during the same period. However, those funds didn’t make it to the IRS. The good news is that some if helped my local economy: “[Tatum] used the money for his personal benefit, including making payments on his ranch and traveling to Las Vegas, Hawaii and France. Tatum admitted that he caused a tax loss of more than $18 million.”

As I’ve said in the past many times, if you want to go to ClubFed one of the easiest ways is to withhold trust fund (employment) taxes and not remit them. Mr. Tatum will have three years at ClubFed to think things over after pleading guilty to one count of failing to pay over employment taxes; he’ll also have to make restitution of $18,298,604. As usual, it’s a lot easier to simply pay your taxes in the first place….