Two brothers operated two businesses: a fruit market and a car wash. Two sets of books and skimming lead to a likely term at ClubFed. Halfway across the country we also have a story of an alleged Bozo tax preparer.
Let’s start in Harrison, Michigan. Timothy and William Walraven owned and operated the Country Garden Fruit Market and Walraven’s Car Wash. They also had other business interests in Clare County, Michigan. The Walravens operated their business similar to the way the mob ran Las Vegas: They skimmed cash from the businesses and stored it in their homes. That’s not a problem if you declare the cash on your tax returns (well, it’s not a tax problem but banks and safety deposit boxes are far better places to store cash) but the Walravens kept two sets of books; they evaded reporting about $580,000 in income to the IRS.
All went well for apparently 15 years. Somehow, the IRS discovered the scheme, executed search warrants at the Walravens’ homes, found $1.3 million in cash, and charged the brothers with tax evasion. They each pleaded guilty to one count of tax evasion and one count of conspiracy to defraud the IRS; they’ll be sentenced in April and will likely spend some time at ClubFed.
Meanwhile, Ernest Barreda of Tucson has been indicted on 12 counts of tax fraud. Mr. Barreda allegedly followed the Western Tax Service method of preparing tax returns; he allegedly told undercover IRS agents that they could take deductions and credits that they weren’t qualified for. He also allegedly partook in what the Walravens did. The IRS accuses Mr. Barreda of not reporting $250,000 of the gross receipts of his tax practice between 2001 and 2004. Mr. Barreda is looking at a term at ClubFed if he’s found guilty.
If you’re tempted to try either of these methods of tax evasion I suggest that instead you try the legal methods of lowering your taxes. There’s still plenty of time to contribute to an IRA (or a SEP IRA). Your tax professional may be able to identify legal deductions you qualify for. The Bozo methods in the above stories just lead to ClubFed.
It would be really interesting for a CPA to market a tax service that <i>sounds</i> shady, but is actually legitimate. In fact, that could be a great public service: over time, the actual crooks would be weeded out, so this tax preparer would get everyone who 1) had an urge to cheat on their taxes, but 2) needed someone else to do the heavy lifting.
Wouldn’t be much fun, of course.