In a fascinating recent case the U.S. Tax Court taught another lesson on how taxpayers can entangle themselves in the tax web. 

In this case a father cheated the IRS, went to prison for the crime and was ordered to pay the IRS the taxes father had evaded.  After release from prison father went to work in son’s business, but did not repay the IRS.  During Dad’s employment, the son allowed son’s business to help Dad conceal assets, used corporate checks to make payments at Dad’s direction, titled assets in the name of Dad’s nominees and permitted Dad to charge personal expenses to the corporate credit card.

Son pleaded guilty to aiding and abetting Dad’s evasion of the liability to repay Dad’s tax debt; son was ordered by the Court to spend one year in prison and repay 10% of Dad’s tax debt.

The obligation to repay part of Dad’s taxes is a surprising result.  Certainly one expects liability for his own taxes – but someone else’s?

The vital takeaway is that aiding a third party to evade taxes is a crime on its own, and it can result in a tax liability of unknown, possibly immense, proportions just for “helping” a friend or relative.

As if you did not already know this … CRIME DOES NOT PAY!

This post was written by LeRoy Metz.

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