Wealthy Client Avoids Paying $20 Million In Taxes

Wall Street Journal:

The debate over taxing the rich tends to focus too much on changing the official tax rates. The real issue is getting the wealthy to pay their official taxes in the first place.

This article, by David Twiddy of the Associated Press, mentions two attorneys in Kansas City, Mo., who have been accused of helping wealthy clients avoid millions of dollars in taxes. They allegedly did it through setting up sham companies in Nevada.

The sham companies "would receive payments for bogus management services to the clients' companies, which were then claimed as tax deductions. Other bogus corporations distributed the management fees as stock to the customers' Roth Individual Retirement Accounts, which are not taxable."

The most-shocking part of this story, however, is the example of one wealthy client who allegedly avoided reporting or paying taxes on more than $57.6 million, saving $20 million.

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Read the original AP article here.

Read the whole story: Wall Street Journal

Comments

[swift goat pet for truth]

A little off topic, since we are talking about individual tax. However, Exxon pays at a 13% rate.

Halliburton used to pay taxes. But Cheney set up more off shore subsidiaries, booked the profits overseas, booked the losses in the US and so now Halliburton gets a tax rebate. Money BACK from the US taxpayer. Ain't patriotism GREAT?

[vippy]

Wrong, johnnyjust, per IRS Website of 2003 the rich pay 1/5 of the total taxes collected. Yep, we pay the rest and that is the whopper.
That is why we never get a tax break. The shear number of people, which the middle class
represents the majority, has to pay for the rich so they can re-invest. Read the other story on Huffpo where one rich guy did not pay his 20 million in taxes but set up phone companies. And when it comes to jobs, the rich don't give you jobs either, look around and see!

[johnnyjust]

Here's some tax facts from the IRS:

The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes.

[drkazmd65]

And your point jonny?

It's not like they (the ultra rich) are hurting in the after-tax income bracket.

The poor are though - and don't use nearly as much of the Federal resources and spending as do the rich.

[olephart]

Now for the rest of the story.

The bottom 90% also pay 80% of the payroll taxes and 80% of the sales taxes. They pay 60% of the property taxes on residential housing. Renters pay the property taxes of their landlords through their rents. The top 1% also use a disproportionate share of the Nation's infrastructure and defense. Their Corporations rely on educated workers, highways for transport of their goods and if defense were apportioned directly to wealth they'd pay 50% of it. If the National Debt were apportioned as the ratio of the tax cuts that created it they'd owe $4,500,000,000,000. That would be $1,500,000 for each of them and $15,000 for everyone else.

[swift goat pet for truth]

Nice. thanks. I am tired of reading the garbage to which you responded.

The rich really do benefit disproportionately from the infrastructure the rest of the US provides. They should also pay for that benefit.

[mrcontinental]

Don't mess with olephart, unless you have some bulletproof data.

This is the real No-Spin Zone here folks. The trollz stay the hell away from here for the most part because you will get called on your bullshit. Plus it gives them a headache.

[VictorLudorum]

why does fedora let politicians tax public when they want to run the term in lump sum..the dems challenged they would find 2.2 trillion usd enough for 44th or a term.....



he he the rich and filthy have something to correct and reconsider everytime the admine moves the coins balance ...revisio­n and consideration create corrections and improve things....­the question will still remain with judiciary about concessions it is in for/towards the former reigns information concession for reigns trade and concessions for reigns afrodasiacs and clearance side for the regins baggage check at airports and body check at banks...th­e dominos roll turn dribble fall fall and twist and roll and slide then fall,.....­untill the sun goes down at hollywood boulevard.­...

[VictorLudorum]

why does fedora let politicians tax public when they want to run the term in lump sum..the dems challenged they would find 2.2 trillion usd enough for 44th or a term.....

[TheJibreelaMonsters]

More of my hard earn money going to save someone ells ass. Yay America, yay Socialism

[jerrypenguin]

If I'm not mistaken, the "taxpayer" has limited responsibility for an "error" made by a tax attorney. In any case, at the moment, I'm not going to research my assumption.

I strongly recommend two books on this subject. These books, by Pulitzer Prize winner David Kay Johnson, provide insight regarding the antics of our "social betters." The titles are: PERFECTLY LEGAL - THE COVERT CAMPAIGN TO RIG OUR TAX SYSTEM TO BENEFIT THE SUPER RICH AND CHEAT EVERYBODY ELSE and FREE LUNCH - HOW THE WEALTHIEST AMERICANS ENRICH THEMSELVES AT GOVERNMENT EXPENSE (AND STICK YOU WITH THE BILL)

I remain amazed regarding the passivity of US citizens. Most seem to believe that emotional engagement with a year or more long, media sponsored, national presidential campaign means that they are actively engaged in some political process. Nothing is further from reality. The best a grunt can do is learn the reality of big global players. Secondly, ACTIVELY PARTICIPATE IN ISSUES ON A LOCAL LEVEL.

Wake up people! Don't passively accept this pure crap. Follow the history, power, money, families, and individuals. Sui Bono?

[incontempt]

Or..they work under the table to get ahead and further short the system knowing the rich do it so why not, and so crumbles america...­unpaid war bills and bridges falling, not to mention people falling

[Tom95134]

Your understanding is wrong.

YOU, the taxpayer are fully responsible for errors or actions on your behalf.

YOU, the taxpayer are the one that signs your return and YOU WILL ATONE for any errors.

If the attorney signs it it is based on a Power Of Attorney and hye is signing it with your legal permission.

[speakingtruth2power]

Ever since I found out that Governor Reagan paid no taxes because he kept a few

head of cattle on his 'ranch', I realized that loopholes were created for the filthy rich.

Any wealthy person that pays over ten percent of their true income in taxes is doing

their own taxes and just like a lawyer who represents himself, has a fool for a client.

ST2P

[speakingtruth2power]

Ever since I found out that Governor Reagan paid no taxes because he kept a few

head of cattle on his 'ranch', I realized that loopholes were created for the filthy rich.

Any wealthy person that pays over ten percent of their true income in taxes is doing

their own taxes and just like a lawyer who represents himself, has a fool for a client.

ST2P

[fact finder]

And to think my 22 year old made $18,000 last year and had over $3.000 taken out in tax's yet he still owes $168.00 extra. When he ask if he could make payments he was told to pay it all at once or take a chance of going to jail. Fork the IRS. 1776

[mrcontinental]

It's a shame isn't it.

[WIpatriot]

Well, not to be callous, ff, I hope your son has learned his lesson when dealing with the IRS: Your ass is owned.

He'd better learn to OVERPAY his taxes like a good citizen and when he gets his refund to jump for joy like he hit the lottery, and go out and SPEND it.

[fact finder]

WiPatriot: he has he now claims zero dependents + $20.00 extra every pay check. .He will take home less every pay day but next year,Unless the IRS changes the rules, He will have a very hefty refund which he plans to use to buy gold and silver jewelery at pawn shops and resale during the year.

[swift goat pet for truth]

Well, the lesson here is that your son needs to start a dummy company in Nevada. I thought that was obvious...­.

[lvogt]

This isn't my forte so I'm just guessing here but... Why not just mandate the elimination of late fees for applicable homeowners incurred between certain dates and mandate allowing them to refinance at reasonable fixed rates? People get to keep their homes, and the banks may make less now but they'll end up getting money back they wouldn't otherwise see.

[incontempt]

You want to Fix a problem? prosecute and jail criminals, why do we have to live by the law if they don't> This time ANARCHY will come from the top.

[askmeificare]

The FairTax would eliminate any type of tax shelters and loopholes. Therefore, everybody would pay taxes.

http://www.fairtax.org

[Jeff1958]

From what I've heard, the "fair tax" is a horrible idea, which would, in fact, increase taxes for poorer people and reduce taxes for richer people.

Isn't the concept of the "fair tax" that you don't pay tax on income, only on purchases? That way, people payed "under the table" would pay taxes when they buy things. However, rich people don't spend all that they make (they save and invest some of their income - apparently tax free), so they won't pay taxes based on all their income. Since the poor will spend every penny they earn, they will pay taxes on 100% of their income. The poor will be in a higher "tax rate" than the rich.

[speakingtruth2power]

The Fair Tax is yet, another Bizarro World joke

where things are named for what they are not.

[atlantajoe]

wrong, the fair tax cuts the payroll tax out so the poor pay nothing for Social security. Then they get a sales tax prebate to cover sales tax on basics. The fair tax would bring investment to America where as now people hide money in off shore accounts.

[WIpatriot]

Dump the "fair tax" crap. This is another Frank Luntz phrase-spinning hoax. Close the tax loopholes and make the filthy rich who buy $25M boats and $64M condos pay for the infastructure that makes it possible for them to lie, cheat and steal their way to the top.

[DRaymond]

That the fair tax would eliminate tax shelters and loopholes is nothing but a fairy tale.

When sales taxes hit an effective 30 percent ratethere will be incentives to disguize purchases just like income is disguized now. A few simple possibilities that come to mind are barter, offshore transactions, bundled services, black-market cash transactions, long-term leases and who knows what truly creative accountants will dream up.

[fact finder]

askmeificare: Here in New Mexico they are consider, very seriously, a flat rate state income tax for every one. they estimate that a flat rate of 12% would increase state income by over $100 million per year.

[lisakaz]

Is this cheat related to Bu$h or if caught when can we expect a pardon?

[WIpatriot]

If he's a Ranger or Pioneer, you betcha.

[beekeeper]

What a surprise, the wealthy never want to pay their share. Take take take....gr­eed greed greed.

[WIpatriot]

Crooks everywhere, is this any news?

[mrcontinental]

Nope. This is normal. I thought everybody knew this.