Taxable Talk

Suppose you’re a tax “professional” and a client comes in who needs to file back tax returns. He presents his record of income for those years. You look at it and realize your client is going to owe a lot of tax. Do you (a) try to find every possible legal deduction for your client; (b) work with your client and the tax agencies to obtain a payment plan (or plans); or (c) tell him that if he shows that much income and he should just lower the amount—after all, he’ll never be caught?

Of course, since I headlined this as two from the Bozo preparer front, you know where this is heading. And yes, there are allegedly tax preparers who will do this. From Clarence, New York comes the story of Dara Lis. Ms. Lis’ client was an undercover investigator from the New York Department of Tax and Finance. Allegedly, Ms. Lis told the client (on tape), “As long as there’s no way for them to trace this income, you know, I would just lower it…real (income) numbers [are] going to kill you.”

Helpful tax hint: If your preparer tells you this, make a u-turn and find someone else.

The second story comes from Elm City, North Carolina. Raymond Renfrow used to be a professional tax preparer. He’s been barred from preparing future returns by a federal court. He promoted trusts that allegedly hid income without having any economic benefit. He used to be involved with Concept Marketing International. One of the founders of that entity was convicted of tax fraud, and a court order is prominently noted on their website. Mr. Renfrow allegedly started promoting similar trusts on his own.

Helpful tax hint #2: If your tax professional has a court order on his website that bars him from promoting tax fraud schemes, you may want to find someone else.

In any case, not only has Mr. Renfrow been barred, he’s also required to send a list of his customers to the Department of Justice. If you happen to be on that list you can expect a “Dear Valued Taxpayer” letter in your mailbox from the IRS very soon.

I try hard to help my clients pay the lowest tax possible—legitimately. These Bozos skip that last word.

Let’s start in Valdosta, Georgia. Back in November I reported on the scheme of Pamela and Clinton Hughes to claim fraudulent tax refunds for using diesel fuel off the highways. There’s a federal tax on diesel fuel, and if you use it off the highways (they claimed they used the fuel in logging) you can get a tax refund. The only problem was that it was a lie. And not a small lie; this was a $5.2 million scheme. Pamela Hughes got 33 months at ClubFed; her husband got 48 months. Each also has to make restitution of just under $4 million.

We next head to Rockford, Illinois. Angelique Tinder, aka Angelique Howen, used to operate Your Tax Master. She catered to a niche: Bosnian immigrants. The price was right; she only charged $35 to $40 a return. And she got her clients refunds, calling money sent to the families back home in Bosnia as ‘charitable contributions.’ Unfortunately, that public service has a problem—you can’t take a charitable contribution deduction on money not given to charities. And when the total of the attempted fraud adds up to $2.5 million, you’re in trouble. She was found guilty of multiple counts of tax evasion, and must make restitution of $1,085 to her clients…and serve 63 months at ClubFed. If the judge had a sense of humor and announced the sentence in that order….

Next, we head to Omaha, Nebraska. Siyad Ali also specialized in preparing tax returns for immigrants; he specialized in Sudanese immigrants. He was a generous individual, and added foster children to his clients’ returns. Throw in some phony fuel tax credits, earned income credits, and incorrect filing statuses (Head of Household), and you end up with $67,000 of fraudulent refunds. Mr. Ali was found guilty; his clients have already had to pay back the refunds with interest and penalties. Mr. Ali will be sentenced in June.

Here in Irvine I’m a member of the Exchange Club of Irvine. One of the events we put on is the Teacher of the Year Banquet; this past week the Teachers of the Year were announced. That story headlines some of the good that teachers do.

Unfortunately, sometimes we get stories that aren’t so good. Georgia Gaines is a high school math teacher in Lake Worth, Florida. She’s been charged with 32 counts of preparing phony tax returns. Additionally, she allegedly didn’t include her income from her side job on her own tax returns. Allegedly, Ms. Gaines’ returns included $1.1 million of phony deductions. She’s looking at a lengthy stay at ClubFed if found guilty.

Remember our usual warning: If it sounds too good to be true, it probably is.