A St. Louis-area tax advisor who more or less successfully fought an IRS attempt to close down his practice has been more effectively taken out of the 1040 business, reports stltoday.com:
A Wildwood tax advisor, Frank L. “Tiger” Zerjav Jr., was sentenced to 18 months in federal prison Thursday for evading his own taxes.
Prosecutors say that Zerjav, 40, of Wildwood, used multiple companies to collect more than $850,000 in income and then deducted personal expenses from those companies in a bid to dodge taxes from 2001-2004.
The IRS attempted to shut down the Zerjav tax practice in 2008 on the basis of spectacular allegations that the practice helped clients form S corporations to hold personal possessions and to deduct personal expenses. Mr. Zerjav and his father fought the IRS and ended up getting a favorable settlement, considering the initial allegations.
Mr. Zerjav pleaded guilty to reporting much less taxable income than he incurred. For example, he pleaded guilty to reporting taxable income of $43,124 in 2001 when his taxable income was actually $210,268. The indictment also said he altered Quickbooks records to conceal his taxable income when they were subpoenaed by a grand jury. He pleaded guilty to counts 1-4 of the indictment.
So while the IRS didn’t get what they wanted when they first tried to shut down the Zerjav practice, this might do the trick.
Update, 7/3/13. From the U.S. Attorney’s tax release (my emphasis):
According to court documents, during 2000-2007, Frank L. “Tiger” Zerjav, Jr., and his father, Frank L. Zerjav, Sr., who is a CPA, were the principals in two entities: Zerjav & Company, PC, a full service accounting firm that primarily prepared business and personal tax returns, and the Advisory Group USA, LC, which offered tax planning and asset protection strategies to clients. Tiger Zerjav managed the activities of the ccountants working at the firm and advised existing clients. Through 2003 he also prepared returns and reviewed the returns prepared by firm ccountants. Clients of the Advisory Group included many small business owners and self-employed individuals. They were typically advised to create S-corporations into which the income from their businesses would be funneled. Since the net income from an S-Corporation flows through to the owner for inclusion on the owner’s personal income tax return, there is an obvious incentive to maximize deductions on the S-corporation return. Tiger Zerjav used this strategy in preparing his tax returns for the years 2001 through 2004.
Just because the man in the patent medicine wagon drinks a lot of what he sells, that doesn’t mean it works.