An Omaha man went through a lot of trouble to hide his financial life from the IRS. It didn’t work. From WOWT.com:
United States Attorney Deborah R. Gilg says 50-year-old Michael Haffke participated in a conspiracy with fraudulent tax planners and others designed to hide or remove his name from income producing assets for the purpose of evading personal tax liabilities.
Haffke created in excess of 40 nominee entities purporting to claim ownership of assets that were actually owned and controlled by Haffke.
According to court documents, things started out with a big lie to a tax preparer:
1. On or about January 1, 2000, the defendant, MICHAEL D. HAFFKE, falsely advised his tax return preparer that he had sold his business, Haffke ‘s Landscape and Stone, and all related assets when, in fact, the defendant still owned and controlled the business and its assets.
2. On or about January 5, 2000, the defendant purported to transfer all ofthe business assets of Haffke’s Landscape and Stone, including vehicles, equipment and real estate, to entities called Fortress Management, Ideal Enterprises, and Black Lab Enterprises. The defendant thereafter provided copies of bills of sale to his tax return preparer.
The taxpayer set up nominee partnerships and LLCs. At least one of the entities filed partnership tax returns, but with false numbers that were apparently never reported on individual tax returns. He also stopped filing personal tax returns for six years.
The court documents don’t indicate how the IRS caught on to things. I suspect it was a combination of the taxpayer not filing 1040s and partnership returns whose income went nowhere that made the IRS curious.
The Moral? This taxpayer went to a lot of trouble to hide his stuff. Each fake entity created another thread for the IRS to follow back to him. It would have been a lot easier to just report his income and pay taxes in the first place — and no doubt cheaper, too.
Oh, and don’t lie to your preparer.