Posts Tagged ‘aegis’

Tax Roundup, 10/1/2012: the thin blue line of sales tax scofflaws. Plus: the dangers of finding your roots.

Monday, October 1st, 2012 by Joe Kristan

Keeping your drunk cousin from starting a fight at the wedding reception: a taxable service?  From globegazette.com:

The state Department of Revenue is demanding that 46 Iowa police officers pay back sales taxes from years of working off-duty assignments such as wedding receptions and business security.

Department spokeswoman Victoria Daniels said the plan is to pursue back sales taxes for up to 10 years for those officers who have never filed tax returns for off-duty jobs.

Iowa only requires service providers to collect sales tax for “enumerated services.” CPA services and legal services are not “enumerated,” but “security and detective services” is, along with, for example, reflexology.  The thin blue line is not pleased.

Iowa law enforcement groups have tried for years to convince the Revenue Department not to require police officers to collect sales tax from businesses and individuals who hire them for off-duty gigs. Revenue officials considered drafting a change to the state’s administrative code to exempt officers, but ultimately decided the law clearly required officers to pay up.

So this obviously isn’t news to the officers, who blew off the tax collection requirement anyway.  Next time you get pulled over, try to convince the officer not to require you to slow down.

 

Aegis trust promoters sentences upheld.  The Seventh Circuit has upheld long sentences for the masterminds behind a sham trust scheme that operated out of the Chicago suburb of Palos Hills in the 1990s.  From the opinion:

     The Aegis trusts were typically marketed to wealthy, self-employed individuals whose income could not be easily traced through the W-2 forms that are issued to ordinary taxpayers. Aegis representatives, including the defendants, conducted seminars promoting the Aegis trusts in cities around the country. Attendance at these seminars was by invitation only, and guests were charged between $150 and $500 to participate. Attendees were told at such seminars that use of the Aegis trust system would reduce if not eliminate their federal income taxes. They were often given materials that purported to document the legitimacy of the system with seemingly thorough and impressive citations to the various legal authorities that supported the trusts. But as one lawyer wrote to a client who sought his advice as to the legitimacy of the system:

      “This material is full of errors, irrelevancies and partial truths followed by non sequiturs. I know that I must resist the temptation to follow every line or I could spend the rest of my life on this. I will concentrate on how, even if it were 99 percent correct, the claimed tax effects fail. In doing so, I’m not implying that that 99 percent is correct. I’m just skipping over the errors.”

The longest sentence is 223 months, which works out to over 18 years.  Under federal sentencing rules, the sentence can be reduced by only about 10% for good time; there is no early out.

The Aegis clients learned the hard way that there is no magical trust formula to get out of taxes.  There is no tax fairy.  Tax Attorney Jack Townsend finds the decision worth three posts (1, 2, 3).

Cite: USA v. Michael Vallone, CA-7, No. 08-3690

 

When genealogists go bad.  From Billings, Montana via SFGate.com:

 A Billings woman who said she filed false tax returns using the Social Security numbers and birth dates of deceased people she found while doing genealogy research online has been sentenced to more than four years in prison and ordered to pay nearly $130,000 in restitution to the IRS.

Maybe she was doing genealogy research, maybe she wasn’t.  While the “Death Master File,” the list of dead people published by the government, is prized by those researching their ancestry, identity thieves love using it to file refund claims for the recently deceasedThis report on the Billings woman from the Billings Gazette makes me wonder if the genealogy was an excuse of some sort:

I am so sorry for my bad behavior. I have so many amends to make,” said Shannon Kathlina Grimm, 41.

Crying as she apologized to the court and to family members and friends, Grimm said, “I know I can be a good person. You will not see me again. I will not be in trouble again, I promise you.”

But Chief U.S. District Judge Richard Cebull told Grimm she deserved more time on top of what she has already spent locked up while the case was pending and sentenced her to four years and three months. The term was at the high end of the guideline range, which started at 41 months.

Cebull also ordered her to pay $129,498 restitution to the IRS.

“Obviously, Ms. Grimm has little, if any, respect for the law,” Cebull said. He noted Grimm’s state conviction for issuing bad checks and her violation of a deferred sentence. She was on probation when she committed the federal fraud crimes, he said.

Maybe it’s genealogy gone bad.  Right, because ancestry research is notorious as a gateway to a life of crime.

For a good view of the fiscal cliff, Check out Roger McEowen’s List of Expired and Expiring Provisions.

Martin Sullivan,  Wrong Turns At the Fiscal Cliff  (Tax.com)

Jana Luttenegger,   Cashing in on a Life Insurance Policy (Davis Brown Tax Law Blog)

Kay Bell,  Bank forgiveness of phantom debt could create tax problems for former debtors.  Of course, so does forgivenes of real debt.

Jason Dinesen,  The Difficulties of Tax Planning with an Inept Congress.   Of course, we keep sending them back.

Irwin Schiff loses motion to vacate conviction.  Not a great surprise(Jack Townsend)

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Another Aegis trust customer to be reunited with Aegis promoters

Friday, August 6th, 2010 by Joe Kristan

Funnelling medical practice income to an offshore trust through bogus “management fees” may have seemed like a great idea to Brian Ellefsen, a Carthage, Missouri surgeon, when the nice people from The Aegis Company brought it up. After Mr. Ellefsen was sentenced yesterday to 22 months in prison for evading taxes on $1.6 million of income, the plan looks much less attractive.
His brother Mark, who was the office manager for his medical practice, received a 14-month sentence.
According to a government sentencing memorandum, those Aegis people could be persuasive:

Mark Ellefsen blames his conduct on everyone, but himself. He blames the Aegis
promoters for tricking him. He was fooled by their “fancy offices,” “limousines,” “inches-thick
manuals packed with faux legalities,” the “tax and trust expert,” and claims that Aegis system
was what

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Will the cash ever come back to Peoria after it’s seen the Caymans?

Thursday, May 13th, 2010 by Joe Kristan

An Illinois doctor must have been very happy with his tax planning. After signing on with an outfit that set him up with a fancy trust arrangement, he made up to $1 million annually from 1996 through 2000 without paying any taxes (as described here). But like the guy falling off a tall building might say on his way down, “so far, so good.”
Dr. David Kindred was a customer of the Aegis system, an offshore tax and trust scam that has sent its founders to prison, some for a very long time. It has also resulted in prison terms for some of its customers, which must result in awkward moments in the prison cafeteria.
When Aegis blew up, the Feds seized millions of dollars in “invested” funds, including accounts for Dr. Kindred. Today the Tax Court ruled that the doctor cannot apply the seized funds against his back taxes:

Moreover, there is no merit to petitioner

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Another Aegis customer gets a free vacation

Tuesday, September 1st, 2009 by Joe Kristan

The Chicago-bases “Aegis” trust outfit has had bad outcomes all around. The promoters of the offshore tax evasion program got prison sentences ranging from ten to eighteen years. That may be long enough to have some awkward encounters with their former clients, like Donald Sikma:

Donald Sikma, a businessman from Dyer, Ind., was sentenced to 24 months in prison by U.S. District Court Judge Theresa L. Springmann in Fort Wayne, Ind., the Justice Department and Internal Revenue Service (IRS) announced.
In June 2009, Sikma pleaded guilty to one count of filing false tax returns for the 1998 tax year. According to court records, Sikma sheltered millions of dollars of income using a tax avoidance scheme promoted by the now-defunct Aegis Company. As part of this scheme, Sikma transferred portions of his income to an offshore trust. Sikma failed to report this income on his individual income tax returns. Using the offshore Aegis trust and other sham trusts, Sikma fraudulently avoided paying at least $1.13 million in federal income taxes.

The Moral: There’s no magic way to manipulate trusts to make your taxes disappear legally.
Related: TWO MORE ‘AEGIS’ CUSTOMERS WIN VACATION AT CLUB FED

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Ten years for Aegis figure

Wednesday, March 25th, 2009 by Joe Kristan

A former attorney who was a founder of the Aegis tax scam scheme out of Chicago has been sentenced to ten years in federal prison.
The Aegis system used networks of trusts to conceal income from the IRS. Other figures in the scheme have received sentences from 13 to 18 1/2 years. Two defendants who cooperated with prosecutors await sentencing.
It’s not just the promoters who ran into trouble from the Aegis scheme. Their customers have also had unhappy results.
The Moral: if somebody tells you about a trust scheme that makes your taxes go away, be extremely skeptical. If you think they are convincing, run it by a tax pro who isn’t affiliated with the promoters.

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