Boston Tax Law Blog

A man who ran a Malden chiropractic clinic was charged in federal court on multiple counts of impeding the Internal Revenue Service and tax evasion. The investigation into the clinic was organized and announced by the U.S. attorney's economic crimes unit and the Boston IRS criminal investigation field division.

According to the indictment, the owner-operator allegedly used the names and tax identification numbers of subcontracted chiropractors to file bogus insurance claims for payment. While the chiropractors worked at the clinic, the owner had the payments mailed directly to him and deposited into his personal bank accounts. He got caught because the IRS received income reports submitted by the insurance companies as payments and income to the chiropractors. But of course, they never saw that money.

Allegedly, between 2003 and 2007, the owner billed and banked more than $3 million in fake insurance claim payments. However, he did not report any of it as taxable income nor did he pay federal income taxes on those fraudulent insurance payments.

Closing your foreign bank account does not excuse you from disclosing it. With the end of the offshore bank account amnesty program called the Offshore Voluntary Disclosure Initiative, the consequences for not disclosing your foreign bank accounts is even greater. Transparency is truly the best policy. Those who do not follow these 10 rules may face at least five years in prison, three years of supervised probation and up to $250,000 in fines and fees.

1. Worldwide income must be reported on your U.S. IRS tax return. Even if you live outside the U.S. you must check "yes" on your Schedule B.

2. If your foreign bank accounts exceed $10,000 for any amount of time during the year, you must file your Report of Foreign Bank and Financial Accounts by June 30.

3. Find out if you must also file an IRS Form 8938 along with your regular tax return to report your foreign accounts and assets.

4. Tax evasion and tax fraud carry not only federal and state criminal charges, but civil charges as well. The statute of limitation on civil tax fraud never expires.

5. The failure to file your FBAR is separate and great. Each non-willful violation carries a $10,000 fine. Each willful violation carries a $100,000 fine. Each year you do not file is a separate violation.

Three people, including a Norwood man, were sentenced in Worcester federal district court for conspiracies to defraud the U.S. using several tax fraud schemes. Released wearing electronic monitoring devices, they are awaiting sentencing in June. All three were found guilty of participating in an "under the table" payroll scam and the use of "underground warehouse banking." Both charges are defined by conspiracy and fraud and were used to hide income and assets from the Internal Revenue Service. The Norwood man was also convicted of tax evasion.

Evidence presented described tax crimes including a plan to pay participating employees without following proper accounting or tax withholding procedures. Under their scheme, they helped nearly 150 people avoid paying employer and individual payroll taxes to the tune of more than $2.5 million in unreported compensation and wages. Additional evidence described the scheme that they ran and promoted allowing people to conceal assets and income from the IRS. They were able to do so by maintaining several accounts at different banking locations where they would comingle receipts from the participants to hide the true ownership of the funds. Both schemes were funded by participants who subscribed to their services under at least six different business names.

A Woburn man and his female co-conspirator were indicted in Boston's federal court Wednesday with fraud and conspiracy charges. The allegations were presented after the two were investigated by the Internal Revenue Service's Criminal Investigation Unit and the U.S. Attorney's Economic Crimes Unit. The IRS has infinite authority to investigate financial records and recommend cases for federal criminal prosecution based on their alleged tax crimes conclusions.

The man was accused of filtering $2.7 in commissions from insurance and investment product sales between 2003 and 2007. The IRS said he turned over the commission money to corporations controlled by the woman. Supposedly, she would then pay the man from the corporate accounts, thereby avoiding reporting that money as income in his tax returns. The two were also accused of reporting inaccurate business expenses on corporate returns.