Seasoned Octopus Most of the Internal Revenue Services 90,000 employees are financial bureaucrats, working to collect the taxes that finance our government. But the Criminal Investigations unit, or IRS-CI, is an elite division of 3,700 financial crimefighters dedicated to protecting those taxes. Last month, they released their Fiscal 2013 annual report. And business sure is booming! In 2013, IRS special agents initiated 5,314 investigations (up 3.7% from 5,125 in 2012) and recommended 4,364 prosecutions (up 17.9% from 3,710 in 2012). There were 3,865 indictments and 3,311 convictions (the IRS doesnt take someone to criminal court unless theyre pretty sure they can win). And 2,812 miscreants won themselves the proverbial three hots and a cot for terms averaging 25 months. Most of IRS-CIs targets are plain old crooks. But some of them are just so awkwardly entertaining, we had to share their stories: • Every time you pump a gallon of gas, you pay 18.3 cents in tax to build and repair federal roads. But theres a little-known exemption that lets off-road users like drag racers apply for a refund. Evan Knoll, the King of Drag Racing and owner of Torco Racing Fuels in Grand Rapids, Michigan, saw that exemption and smelled opportunity. (Maybe it was something in the fumes?) Knoll claimed $83 million in refunds over nine years from 1999-2008 before pleading guilty to nine counts of fraud and drawing a 14-year sentence. Now thats some high-octane cheating! • Edward Picardi was a surgeon in South Dakota, who spent way too much time performing liposuction on his tax bill. First, he ran his income through a series of entities organized in Ireland, Hungary, Cyprus, the Isle of Man, Jersey, and Guernsey. (Really? Hungary? Were the Cayman Islands just too obvious?) Then he deposited it into various foreign accounts he controlled through a New Zealand trust, in the name of one last corporation established on the delightfully sunny island of Nevis. After several weeks in trial, the judge in Picardis trial surgically removed five years of freedom from the good doctors future. Without anesthesia. Ouch. • Michael Chen owned the Fune Ya Japanese Restaurant in Richmond, California, just north of Berkeley. (Apparently the fried banana dessert was a hit.) Chen kept detailed records of his daily sales in 26 boxes marked Seasoned Octopus. But he never reported his cash sales to the IRS. Oops. He also paid his employees $548,919 in cash without sending the IRS any payroll tax on their income. Another mistake. Now the long tentacle of the law has got him for 33 months, enjoying his meals in a place where they dont serve octopus at all. • You might think that if youre already stuck in jail, you cant commit tax fraud. Well, you would be wrong. Michael Joseph III was feeling underemployed at the Apalachee Correctional Institution in the Florida panhandle when he hit upon one of those brilliant ideas we all wish we had thought of. Why not while away those idle hours filing false tax returns using other inmates names and social security numbers? Yeah! And while were at it, why not have the IRS mail the refunds to mommas house? Unfortunately for our enterprising would-be accountant, prison officials discovered the scheme during a routine mail search. Joseph pled guilty to 41 various offenses and drew another 63 months behind bars. At least now hes doing time in a classy federal joint instead of some loser state can. We all know taxes have gone up this past year, and we all know nobody enjoys paying. Thats the bad news. The good news is you dont have to risk a visit from the tax cops to pay less. You just need a plan. Theres no shortage of court-tested, IRS-approved strategies for paying less. So if youre still worried about April 15, and you havent asked us about our planning service, what are you waiting for?
Posted on: Wed, 19 Mar 2014 23:51:51 +0000
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