Recent Actions by Department of Justice Makes It Clear That Taxpayers Must Be Aware Of Tax Fraud Issues Before Reliance On Tax Attorneys

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Tax Attorney Alvin S. Brown Provides Guidance On Tax Fraud Issues To Prevent Taxpayers From Being Caught Up In Tax Schemes

If is sounds to be good to be true, it probably is!

The Department of Justice, Tax Division web page provides news releases of taxpayers, tax attorneys and other tax professionals who are arrested, indicted or convicted of tax fraud. Very ofter the fraudulent activities of a tax professional include taxpayer clients of the tax professionsals. See, for example and

Taxpayers cannot be protected merely because they are using a “tax attorney.”    Taxpayers must be alert to any situation involving tax fraud. If it sounds too good to be true, it probably is!" Don't become a victim to any scheme that offers instant wealth or exemption from your obligation as a United States citizen to file tax returns and/or pay taxes. Some of these schemes can literally cost you your life savings. Others can result in your prosecution and imprisonment if you knowingly participate in them.

Tax Attorney Alvin Brown notes that abusive tax scheme originally took the structure of fraudulent domestic and foreign trust arrangements. These schemes have evolved into sophisticated arrangements to give the appearance that taxpayers are not in control of their money. Taxpayers receive their funds through debit/credit cards or fictitious loans. These schemes often involve offshore banking and sometimes establish scam corporations or entities. Abusive tax schemes have evolved from simple structuring of abusive domestic and foreign trust arrangements into sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit/debit cards issued from offshore financial institutions.

There have always been individuals who, for a variety of reasons, argue taxes are voluntary or illegal. The courts have repeatedly rejected their arguments as frivolous and routinely impose financial penalties for raising such frivolous arguments.

Tax Attorney Alvin Brown advices that “form” prevails over the “substance” of a transaction. These are the most important words to remember before buying into any arrangements that promise to "eliminate" or "substantially reduce" your tax liability. The promoters of abusive tax schemes often employ financial instruments such as trusts in their schemes. However, the instruments are used for improper purposes including the facilitation of tax evasion. Tax attorney Brown notes that abusive tax schemes encompass violations of the Internal Revenue Code (IRC) and related statutes where multiple flow-through entities are used as an integral part of the taxpayer's scheme to evade taxes. These schemes are characterized by the use of trusts, Limited Liability Companies (LLCs), Limited Liability Partnerships (LLPs), International Business Companies (IBCs), foreign financial accounts, offshore credit/debit cards and other similar instruments. The schemes are usually complex involving multi-layer transactions for the purpose of concealing the true nature and ownership of the taxable income and/or assets.

Taxpayers should be very careful when choosing a tax preparer or a “tax attorney”. While most preparers provide excellent service to their clients, a few unscrupulous return preparers file false and fraudulent tax returns and ultimately defraud their clients. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.

Violations of the Internal Revenue Code (IRC) and related statutes committed by large, publicly traded (or private) corporations, and/or by their senior executives may also be fraudulent, according to Tax Attorney Brown. These schemes are characterized by their scope, complexity, and the magnitude of the negative economic consequences for communities, employees, lenders, investors, and financial markets. Most corporate fraud investigations are joint efforts involving many federal agencies.

As financial investigators, IRS Criminal Investigation (CI) special agents are involved in most corporate fraud investigations. Tax Attorney Alvin Brown observes that today's sophisticated corporate fraud schemes are, notwithstanding, subject to the analytical ability of CI financial investigators to wade through complex paper and computerized financial records. Due to the increase in the automation of financial records, CI special agents possess computer investigative skills that enable them to recover financial data that may have been encrypted, password protected, or hidden by other electronic means.

The Sarbanes-Oxley Act provides additional investigative tools to help combat corporate fraud. This Act made provisions in the law, which hold corporate officers accountable for the content of their corporation’s income tax returns, financial statements, and their conduct relating to the manipulation of corporate records. The Act imposes stiffer sentences of up to 20 years in prison for the destruction, alteration or falsification of records in order to impede federal investigations and bankruptcies. Additional information on “tax fraud” can be found at

Tax Attorney Alvin S. Brown
575 Madison Ave., 8th Floor
New York, New York 10022-8511
(212) 588-1113

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