Taxing Times by US Tax Resolutions

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TAX criminals!

Creative Accounting Could be Worth Prison and Fine
Tax consultants can give incorrect advice as well as the IRS. Donald Stuart Fletcher, 66, of San Bruno, Calif., conducted tax seminars in Arkansas and elsewhere where he suggested "creative accounting" techniques to reduce his clients’ tax burden.

A Little Rock Arkansas jury found that Fletcher made several suggestions that wound up on tax returns. These included:

• Deductions for a year’s worth of cat food and veterinarian expenses listed as "rodent control."

• Calling a crippled German Shepherd a "mobile security system" and deducting a year’s worth of expenses for the care of the dog.

• Deducting mileage for tending to rental property that was 200 yards from the owners home. The owner’s mother-in-law lived there.

• Writing off 100 percent of the cost of bedsheets, a microwave oven and a dining room table after a client spent one night in the taxpayer’s home.

• Writing off half the cost of a family’s groceries on the grounds that the food constituted business meal expenses.

A federal jury convicted Fletcher May 29, 2001, on one count of conspiracy and two counts of aiding in the 1994 filing of a couple’s false tax return. The jury deadlocked on 13 other tax fraud charges.

A sentencing date has not been set, but Fletcher faces a maximum penalty of 5 years in prison and a $250,000 fine. Similar charges await him when he goes on trial in Billings, Mont., in July the IRS said. Remember: neither talk nor suggestions may be cheap.

Creamery Gets Creamed with $7.2 Million Fine
It sounds like a nice little scheme. Sell your dairy products to Dunkin’ Donuts franchisees and other customers at inflated prices. Then give the customers rebates which they don’t report as income. This will keep them loyal.

This is how the Lynn Creamery, Inc., a New England company, operated for about 5 years. Dallas-based Suiza Foods Corp., the nation’s largest milk processor, acquired West Lynn Creamery in 1998. Unfortunately, the false invoice scheme was uncovered and West Lynn pleaded guilty to one count of conspiracy to impede the collection of taxes by the IRS. This will cost the parent company $7.2 million. The largest criminal tax fine in New England history according to the U.S. Attorney’s Office.

Between 1992 and December 1997, West Lynn paid out approximately $14.2 million in rebates to mostly small-business customers, according to prosecutors. The customers did not report the rebates as income, which cost the government approximately $4 million in uncollected taxes.

"The assessment of the largest criminal tax fine in New England history sends a clear message to all business owners to think twice about hiding income, therefore jeopardizing their profitability at the expense of gaining a business advantage," said Michael P. Lahey, Special Agent in Charge for the IRS, Criminal Investigation.