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CA - Possible tax evader

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  • CA - Possible tax evader

    How can someone report a possible tax evader to the IRS?

    Someone I know has set up several LLCs and Incs in Nevada but he lives and transacts business in CA. (He is the sole owner, director, manager, etc. for the companies he has set up.) He then diverts all his money to the LLCs but has not filed any taxes for any of the companies, since 2000 (or even earlier), until this year when the 2003 tax returns for two of his LLCs were mistakenly filed with the IRS. He has sold a property in 2002 for several millions of dollars and was deposited in an account for one of his LLCs. Never paid taxes for this sale.

    Is this a case of tax evasion?

  • #2
    Since these are sole member LLC's, the owner is possibly electing to pay taxes at the personal income tax level, as if he was a Sole Proprietor--the taxes flow through the LLC to the owner. Also, If the corporations are
    S corps, again, the taxes are not paid at corporation level, but the shareholders (in this case the owner) would receive dividends and possibly distributions and pay capital gains tax. If the owner pays himself a wage or salary from the proceeds of the companies, he would owe income taxes.

    If there are additional employees of the companies, the employer is responsible for collecting and depositing employment taxes, such as FUTA, SUTA, FICA (medicaid and SS).

    What type of property, where was his property located and did he make any capital gain on the sale?
    "What would a reasonable person do?"

    aryels
    A.S. Paralegal
    Criminal Justice Student--B.S.

    "Give this guy 15 cents and tell him to go to hell."

    Comment


    • #3
      You do not have enough information to really know if this person is a tax evader so you probably need to mind ytour own business because there are a few different ways that things can go and I suspect the shifting to NV has more to do with there is no state sales tax there and there is state sales tax in CA, but lots of entities do this too. It is a reason many entities incorporate in NV.

      Comment


      • #4
        Thanks for all your comments. I know everything that is going on because I worked for this person and I'm privy to everything that has been going on for the last five years. This person only works for himself. He refuses to issue a 1099 for his supposedly independent contractors (secretaries), he only has one regular secretary, because he contends that if the IRS finds out that he has not done so, he's only liable to pay a fine of $50. And this person I am talking about has several lawsuits filed against him for money that he owes people/companies. He's been advised to file the tax returns and extensions were filed for the LLCs but he refuses to do so because he thinks he is above the law. He's a believer of Irwin Schiff and has most of his books. And he believes that he can get away with breaking the law.

        Comment


        • #5
          well, there is sometimes some confusion when determining if a person is an employee or a contractor. It sounds as if these secretaries are employees, temps or perhaps casual labor, who are possibly issued W-2's instead of 1099's.
          "What would a reasonable person do?"

          aryels
          A.S. Paralegal
          Criminal Justice Student--B.S.

          "Give this guy 15 cents and tell him to go to hell."

          Comment


          • #6
            I've been told that these secretaries, there's only been one permanent secretary, are regular employees because they observe regular working hours and days, 8-5, Mon.-Fri. However, the boss does not want to pay for social security, medicare, etc. that he wants to classify them as independent contractors. He's been audited by the IRS a few times and the last time was two years ago. Instead of letting them look at his books, which will eventually tip off the IRS of his LLCs, he paid more than $90,000 for disallowed deductions, etc. But of course, he gave the IRS a hard time at first before eventually paying off what was due. This is also the same person who has been impersonating his dead father for several years.

            Comment


            • #7
              Originally posted by MadisonRose337
              I've been told that these secretaries, there's only been one permanent secretary, are regular employees because they observe regular working hours and days, 8-5, Mon.-Fri. However, the boss does not want to pay for social security, medicare, etc. that he wants to classify them as independent contractors. He's been audited by the IRS a few times and the last time was two years ago. Instead of letting them look at his books, which will eventually tip off the IRS of his LLCs, he paid more than $90,000 for disallowed deductions, etc. But of course, he gave the IRS a hard time at first before eventually paying off what was due. This is also the same person who has been impersonating his dead father for several years.
              So, what does all of this have to do with you?
              The employer is possibly committing tax evasion, fraud, forgery, etc. The secretaries might owe taxes and penalties. However, each of those LLC's and corps are probably operating as separate entities with their own Employer Identification Numbers. The IRS might ask if you know those numbers and might need that information before investigating a case.

              To report suspected tax fraud, contact the IRS
              http://www.irs.gov/compliance/enforc...106778,00.html
              Last edited by aryels; 11-28-2005, 04:47 PM.
              "What would a reasonable person do?"

              aryels
              A.S. Paralegal
              Criminal Justice Student--B.S.

              "Give this guy 15 cents and tell him to go to hell."

              Comment

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