Sunday, March 20, 2005
As we get closer and closer to April 15th, tax day, it is common to find an increased number of tax indictments in the news. So it is not surprising to see a press release issued by the Department of Justice titled, "Utah Corporate Executives and Legal Counsel convicted of Tax Fraud." It is also not surprising to see an IRS Chief from the Criminal Investigation Division, Nancy J. Jardini, stating that “[t]oday's conviction sends a clear message that the IRS is committed to vigorously enforcing the tax laws.” To a large extent the IRS aims for compliance based on the general deterrence that comes from prosecutions, such as this latest one.
The press release tells us that in this case, two of the individuals convicted "founded, co-owned and controlled Neways, Inc., an international multi-level marketing company based in Salem, Utah" and that they served as the CEO, CFO, and directors of the company. The additional conviction shows the latest trend in Justice to also indict the lawyer, as corporate counsel "from the fall of 1995 through the summer of 1997" was also convicted in this case.
The press release states that "[t]he defendants devised and executed a scheme to conceal from the IRS more than $1 million of Neways, Inc.’s gross receipts received from Neways Australia, as well as more than $3 million of commission income the" CEO and CFO "received from distributorships in the multi-level marketing structure of their United States, Australian and Malaysian companies." The press release states that "[i]n furtherance of the scheme," the lawyer "created and presented a false and fraudulent loan document and made false and fraudulent statements to an IRS Special Agent to hide the [ ] commission income."
In addition to the fact that the lawyer was also indicted and convicted here, is the fact that international issues can present unique problems for those handling tax matters.