Another Untrustworthy Trust Promoter Finds ClubFed

Posted on July 5, 2010 by Russ

I, like many individuals and families, have a revocable living trust. It’s useful for avoiding probate if something should happen to me. There are many other kinds of useful trusts, too.

Of course, if there are useful trusts, there are usually purveyors of useless trusts. These are the ones that in theory let you avoid taxes but aren’t worth the paper they’re printed on. I’ve written about Aegis Corporation, a former promoter of these trusts, on several occasions (here’s one example). Many of the owners and other lead individuals at Aegis have found their way to ClubFed.

But a good fraud scheme needs help and others to promote it so a fresh group of suckers customers can be found. One such business was Midwest Alternative Planning in Danville, Illinois. Brian Wasson ran the business, and he liked the Aegis products. The trouble is that selling products that are intended to defraud the IRS is a bad idea (and a felony). Mr. Wasson was convicted earlier this year of just that: The trusts he sold cost the US Treasury over $6 million.

Last week he was sentenced. He must make restitution of just over $600,000. He’ll also spend 15 years at ClubFed.

If someone offers you a foolproof way of avoiding taxes by taking out a trust, run (don’t walk) in the other direction. Such foolproof schemes are usually foolhardy to the extreme.

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The Ending Was the Denemout of a Novel, Too

Posted on July 5, 2010 by Russ

Two months ago I wrote about the trial of Columbus homebuilder Thomas Parenteau. Mr. Parenteau was accused of 13 counts of fraud, money laundering, obstruction, and witness tampering. The jury reached a verdict last week and Mr. Parenteau did receive a slight amount of good news. He was found not guilty of two counts of money laundering.

Unfortunately for Mr. Parenteau, there were 11 convictions, too. Mr. Parenteau’s co-defendants in the scheme had earlier pleaded guilty. Mr. Parenteau, when sentenced, could find himself at ClubFed for 130 years.

I earlier wrote,

So far we’ve found out that the mistress, Pamela McCarty, is the mother of Mr. Parenteau’s two daughters; that all three lived in the same mansion; phony jobs and phony paychecks; allegations of $18 million in fraudulent loans…and the trial should last a couple more weeks.

This might be one trial transcript that could be made into a novel.

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FBAR Deadline Is Today

Posted on June 30, 2010 by Russ

Almost all tax deadlines are on the fifteenth day of the month. However, there’s one that falls on June 30th: The filing deadline for the Report of Foreign Bank and Financial Accounts (FBAR, Form TD F 90-22.1).

This is the form that must be sent in each year to note that you have bank, securities, and/or other financial accounts outside of the United States. This is a reporting requirement; no tax is due with the filing of the form. However, the penalties can be extremely large for neglecting to file the form. Non-willful violations are subject to fines of up to $10,000 per account; willful violations have a minimum fine of $100,000 per account. And it’s a felony punishable by possible time at ClubFed.

You must file the report if you have $10,000 or more in one or more foreign accounts. To determine whether you meet the filing requirement, take the maximum balance of each account at any time during 2009. Sum the maximums and compare the total to $10,000. If the sum is $10,000 or more, you must report all of your accounts, even an account with just $1 in it.

So if you have that credit card from the Bank of Liechtenstein, or you have some online gambling accounts (yes, those are considered foreign financial accounts) today is a deadline day for you. (For those with online gambling accounts, you can find a list of addresses of online gambling sites here.) And make sure you mail the form using certified mail, return receipt requested, so that you have proof of filing.

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A Method to the Evasion

Posted on June 29, 2010 by Russ

I am not into hip hop music. I had never heard of the individual mentioned below. But “Method Man” is apparently really, really big, so on we go.

Clifford Smith, aka Method Man, is just your typical hip hop artist. He earned a nice living from 2004 – 2007, at least if you looked at his federal tax return. His state return told a different story, though. He forgot to file his New York tax returns. That became more than an “oops” when the New York State Department of Taxation and Finance discovered the omission.

Mr. Smith pleaded guilty to a misdemeanor charge of attempted tax evasion. If he stays on the good side of the state tax authorities his conviction will be wiped off the books in a few years (he received a conditional discharge).

Mr. Smith’s attorney told the New York Daily News that it’s unfair to call Mr. Smith a tax cheat. I agree completely. Mr. Smith is an attempted tax cheat. He has made restitution of the $106,000 he owed and, if all goes well in about four years there will be no record of this.

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California Heading to the Abyss

Posted on June 22, 2010 by Russ

Usually, the Democrats and the Republicans in the California legislature at least realize the problems that exist with the budget. In past years, the Democrats will propose raising all sorts of taxes knowing they’ll only get a little of what they want (with a Republican governor); the Republicans will say there won’t be any new taxes but will know they’ll give a little.

This year is going to be different. The Democrats are anything but united according to this report from Dan Walters of the Sacramento Bee. Senate Democrats want to raise taxes. Assembly Democrats want to borrow their way out of the $19 billion deficit. The Senate and Assembly Democrats are not in agreement at this point.

There are major problems with both Democratic proposals. Attorney General and Democratic candidate for governor Jerry Brown has said the borrowing proposal probably violates a balanced budget measure passed in 2004. Additionally, the Assembly plan contains an oil severance tax that supposedly could pass by a simple majority vote (tax increases require a 2/3 vote under the California constitution). That would almost certainly be challenged in the California courts.

Meanwhile, the Senate proposal has lots of new taxes, and shifts major programs to local government…without funding the programs. This proposal has no chance of winning Republican votes (a budget requires a 2/3 vote, necessitating some Republican support) and no chance of being signed by Governor Schwarzenegger.

It’s just another episode of the unstoppable force meeting the immovable object.

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Posting Light This Week

Posted on June 21, 2010 by Russ

I’m traveling this week (to Las Vegas and Rohnert Park, California) so posting will be light this week. If Congress does take action on the S-Corp tax increase I’ll definitely be posting about that.

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Sales Tax Collections Drop $4.7 Billion in California

Posted on June 19, 2010 by Russ

Well, that’s the amount that California sales tax collections dropped in the 2008-2009 fiscal year according to the Board of Equalization. Readers of Taxable Talk already know that income tax collections have fallen, so this unsurprising news is a double whammy to the Bronze Golden State. The report (the full report is available here) also notes that property values fell by $106.6 billion; that has and will continue to impact local governments in California.

Taxable sales fell 12% ($68.5 billion decrease); the only reason that sales tax collections to California didn’t fall by the same amount is that the sales tax rate was increased in April 2009 by 1% (from 7.75% to 8.75% in Orange County).

Prospects for increased revenue to California are bleak in the near term. California continues to impose numerous regulations and costs to businesses; it’s as if the Democrats in the legislature want businesses to leave. There is no driving force in California for job creation (this is true to a lesser extent nationally). Tax increases that will hit in 2011 are likely to cause even more economic troubles. And it may take a miracle for the legislature to finalize a balanced budget this year–they are running out of gimmicks and mirrors to use to balance the budget.

Yes, I have those pessimism blues on a Saturday morning.

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Another Nominee for Tax Offender of the Year!

Posted on June 16, 2010 by Russ

In January I reported on Bozo tax protesters Tony & Micaela Dutson. Back then it was alleged that the Dutsons “tried to obstruct the IRS by filing baseless liens against four IRS workers.” Additionally, the Dutsons allegedly filed a lawsuit that the government characterizes as “frivolous” against one of the IRS investigators and allegedly lied about making payments in the millions to the individuals investigating them. The original indictment claimed that they were allegedly marketing an illegal tax avoidance program. They were barred back in 2006 from selling the program.

Well, we can change alleged to convicted on nine counts. Via the TaxProfBlog:

A married couple was convicted of running an elaborate tax shelter scheme for over a decade in which they marketed tax trusts to clients, filed lawsuits against IRS employees, and prepared a $108 million tax lien against former Treasury Secretary John Snow.

Oregon attorney Micaela Renee Dutson, 48, and her husband Tony Dutson, 53, were convicted of nine counts for various criminal tax violations, defrauding the U.S. government out of approximately $7 million. The couple were convicted of conspiring to defraud the IRS, obstructing the IRS, causing clients to use bogus financial instruments in an attempt to pay their taxes, failing to file tax returns, and aiding and advising a client to file a false tax return.

I also need to mention that the Dutson filed a lien against then Treasury Secretary John Snow for $108 million.

Well, the Dutsons won’t be getting that $108 million or the $1 trillion from IRS employees in California. However, they will likely get a lengthy stay at ClubFed where they’ll earn roughly $1.00 an hour.

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Las Vegas Looks to SoCal…Again

Posted on June 15, 2010 by Russ

The Nevada Development Authority is once again looking to move businesses in Southern California to Las Vegas. A series of new advertisements will feature talking primates; here’s one of the ads:

Personally, I liked the lipstick pig advertisements better. No matter what the ad, though, the case that Las Vegas makes is real. California is high tax, and high regulations. Nevada isn’t. What I’d like to see is the California legislature looking toward small business. Unfortunately, for that we might need one of these:

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One Good Fraud Deserves Some Evasion

Posted on June 13, 2010 by Russ

My mother has always told me that for real estate the most important thing is location, location, and location. For the Bozo tax crooks out there, location definitely matters. Of course, when you sell real estate you do need to actually own the property. And that was where our Bozo went wrong…the first time.

Back in 2007, John Greerty found a nice winery in Yountville, California. He decided to sell the winery. He didn’t own the property, but that was just a trivial problem for him. Mr. Greerty changed his name and even got a new driver’s license. He was able to bilk one potential purchaser. However, the second prospective buyer used Google to find out the true owner of the winery and contacted the authorities. Mr. Greerty is serving nine years for that fraud.

Well, he’s facing new charges: state tax evasion. He’s accused of not paying the state income tax on the over $500,000 he earned from committing real estate fraud. Yes, illegal income is just as taxable as legal income. And yes, you can be prosecuted for not paying taxes on illegal income.

In the end, it’s a lot easier to just pay your taxes…but that rarely occurs to the Bozos out there.

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