Taxable Talk

The tiny principality of Liechtenstein is known as a tax haven. A few months ago an ex-employee at a bank in Liechtenstein apparently leaked details of some bank accounts held by Germans. The German finance ministry has said that they paid €4 million to get details of German accounts held in the tiny country.

To date one German, Klaus Zumwinkel, the former head of Deutche Post, has been hit by the scandal. He resigned from Deutche Post. AFP reports that Germany believes that there are 45,000 trusts with accounts in Liechtenstein and the German tax authorities would like details. Liechtenstein has, so far refused.

Germany might give an ultimatum to Liechtenstein. The German government would like a deal similar to the one that the principality has with the US (and the IRS). Crown Prince Alois told AFP, "Does a state have the right to obtain information by breaking the law in a friendly state and probably also contravening its own laws? Spying on our clients is unthinkable...We are going to see what we can do to protect our citizens and also our investors, who trust us, against such methods of investigation. The principle of confidentiality also applies to our foreign clients."

Anthony Pendleton ran Payless Tax Services of Inglewood, California. Mr. Pendleton allegedly had an interesting way to ensure that his clients got refunds: He allegedly invented employers for his clients, generated phony W-2s, and fabricated educational expenses. It's a trifecta of trouble, and it's surprising that a former IRS employee wouldn't realize that phony W-2s would certainly be investigated. Mr. Pendleton was arrested on charges of conspiring to defraud the government on claims (for tax refunds). Also under indictment but not yet arrested are two employees of Payless, Christopher Michael Edwards, Sr., and Asha Delilah.

IRS special agents interviewed found 21 witnesses (or almost certainly, clients of Payless) who hadn't worked for the employers noted on their returns. The IRS also found eight 'clients' who, "...disclaimed any knowledge that Payless Tax Services and defendants Pendleton, Edwards, and Lenard were filing tax returns on their behalf with the IRS and stated that did not sign any of the documents relevant to the investigation, indicating that the defendants had stolen their identities."

The defendants are alleged to have filed 185 false claims totaling $609,000. If found guilty, they're looking at significant stays at ClubFed. Not surprisingly, when the Associated Press called Payless, "Staff at Payless could not be reached for comment, as the service's phone had been disconnected."

AP News Story
Government Press Release

Wesley Snipes was acquitted of conspiracy to defraud the IRS but found guilty on three of six counts of not filing a tax return (tax evasion) according to news reports. Snipes faces up to one year at ClubFed on each of the three misdemeanor counts, plus restitution to the IRS.

Snipes was acquitted of the more serious count of conspiracy to defraud the IRS. I think this is the best that Snipes could have hoped for as the evidence of him not filing and paying taxes was quite clear.

It will be interesting to hear what the jury's reasoning was in acquitting Snipes.

Update: Snipes' co-defendants, Eddie Ray Kahn, who founded a tax protest group, and Douglas P. Rosile, a former accountant, were convicted of tax fraud and conspiracy by the same jury.