A prominent tax professional was recently implicated in a significant tax fraud scheme, marking a stark warning for taxpayers everywhere. Responsible for filing over 500 returns from 2017 to 2023, the tax preparer managed accounts for 60 clients, collectively sheltering more than $60 million in income and causing an estimated $17 million tax loss to the government.
The scheme primarily involved the misuse of trusts and private family foundations. Clients were advised to "donate" their income to these entities rather than declaring it as personal income. However, in reality, the individuals retained full control over the funds within these trusts and foundations, effectively utilizing them for personal expenses.
The tax preparer further manipulated the situation by preparing trust returns that offset any income with expenses paid by the trust, which included personal living expenses. It’s crucial to note that personal expenses are never deductible for tax purposes.
As a result of these fraudulent activities, the tax preparer is now facing up to six years in prison.
Avoid Tax Fraud: Know the Rules
Tax laws can be complex, and it's easy to get caught up in schemes that promise big savings but are illegal. Always consult with a reputable CPA to ensure your tax strategies are legitimate and compliant with the law.
For expert advice and trustworthy tax services, contact Verity CPAs at info@verity.cpa or call 808.546.5026. Stay informed, stay compliant, and avoid the pitfalls of tax fraud.
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