Articles Posted in Tax evasion

The Vanguard Group one of the world’s largest investment funds with $3 trillion under management illegally evaded taxes through transfer pricing, says whistleblower David Danon, a tax attorney at Vanguard for nearly five years.  He became aware of a transfer pricing arrangement while at Vanguard and its affect on corporate taxes. He filed a whistleblower action in 2013 under the New York False Claims Act. He alleges that Vanguard charges its own funds at cost prices for management services, which is below market pricing. Vanguard says that the Securities and Exchange Commission issued an order approving :joint participation arrangement. Danon says that order allowed the transactions for securities purposes not taxes. Continue reading

A Massachusetts businessman pleaded guilty to tax evasion for using nominee entities to hide ownership and control over his businesses and assets from the Internal Revenue Service (IRS), announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.

According to the indictment, Richard L. Furnelli, a former resident of Holyoke and South Hadley, Mass., evaded payment of his federal income taxes for 2006 through 2009, among other years, and also failed to file his federal individual income tax returns for those years.

The indictment alleges that from 2006 through 2009, Furnelli earned more than $2 million in income. Furnelli operated or held substantial interest in Solid Gold Inc. and Gold Club-SF LLC, which owned and operated the Gold Club, an adult entertainment venue in San Francisco. These corporations allegedly earned annual gross receipts ranging from $2.5 million to more than $10 million dollars. During that time period, the indictment also alleges that Furnelli directed the payment of his income to a nominee entity, RLF Ventures LLC, and utilized a bank account held in a nominee name.

New York State has the most advanced whistleblower law in the country which, among other things, allows for whistleblower claims against state tax cheats and for the whistleblowers to collect a percentage of the moneys reimbursed.  The question is, why is New York the only state to pass such a law? It is well established that millions in state taxes go unpaid each year due to tax evasion. Although the New York law has not been in existence very long, it has been very effective in catching tax cheats. To the benefit of the New York economy. It also gives incentives to whistleblowers who are entitled to up to 30% of the amounts collected by the state.

Note today’s announcement from New York Attorney General Eric T. Schneiderman that Topline Appliance Center and its principal owner, Michael Moretti, have agreed to pay $1.56 million to settle allegations that they knowingly failed to collect and pay sales taxes and corporate franchise taxes to New York over an almost 10-year period. Topline Appliance Center has multiple locations in New Jersey, and it sells and delivers high-end appliances to New York customers.

Attorney General Schneiderman alleges that over the course of almost 10 years, Topline Appliance Center and Moretti sold or delivered high-end appliances to New Yorkers from their New Jersey stores without collecting any New York State and local sales taxes.  Topline also failed to pay proper New York corporate franchise taxes despite doing business in New York.  Failing to collect and pay these taxes gave Topline an improper competitive advantage over appliance stores located in New York.

Recently Switzerland and Singapore agreed to share tax information about American tax evaders. On May 6, 34 members of the Organization for Economic Cooperation and Development (OECD) and 13 other nations signed an agreement on gathering tax-related information from financial institutions and will exchange it every year.

This means that for those trying to evade taxes, nations like Switzerland and Singapore will not longer allow them to hide behind secrecy laws.

However, certain countries in Central Asia and Africa will not abide by such agreements and some experts feel that tax evaders will shift their moneys to banks in those nations in order to keep from paying the tax man. This may include major international corporations.

Some American investors have concocted a scheme to evade U.S. taxes by sending their money offshore and then investing from there in U.S. stocks or bonds. A recent study says that this is costing our country billions in unpaid taxes.

In order to do the round tripping, an American citizen will set up a bank account in a foreign tax haven like the Cayman Islands. Then they place their moneys into those accounts and use it to purchase stocks and bonds back in the states. Continue reading

US tech giant Apple has shifted an estimated $8.9 billion in untaxed profits from its Australian operations to a tax haven structure in Ireland in the last decade, according to an investigation by The Australian Financial Review.

Last year Apple reported pretax earnings in Australia of only $88.5 million after it sent an estimated $2 billion of income from its Australian sales to Ireland via Singapore, where Apple negotiated a secret tax deal in 2009. Continue reading

New York State’s whistleblower law is the first in the nation to include a provision allowing whistleblowers to collect a reward for helping the state to recover moneys from tax evading companies and people.

The law works like this: a citizen can bring a lawsuit against a person or business that makes more than $1 million in annual income and defrauds the state of more than $350,000 by knowingly making a false claim. The whistleblower gets up to 30 percent of what the state collects. It is similar to the Federal False Claims Act. Continue reading

Attorney General Eric T. Schneiderman won a major victory today in the first of its kind lawsuit against Sprint-Nextel Corp for deliberately under-collecting and underpaying millions of dollars in New York State and local sales taxes on flat-rate access charges for wireless calling plans.

The case was brought under the New York False Claims Act and it seeks to require Sprint to pay three times the underpayment of approximately $130 million plus penalties. Continue reading

Tax authorities in France are are reviewing the company books there for possibly shifting its income to companies set up in Switzerland and Luxembourg for tax avoidance. Similar allegations have been brought against Prada and Dolce & Gabbana in Italy .  Similar allegations were also made against Apple Inc. in 2012.

McDonald’s denies wrongdoing. Continue reading

Florida psychiatrist Patricia Hough, who helped to building two Caribbean medical schools is accused of using accounts at UBS AG, the largest Swiss bank and elsewhere to hide income from the IRS to the tune of $34 million according to tax authorities.  The case, pending in federal court in Fort Meyers is the largest in dollar value of any case to reach trial since the offshore crackdown by the IRS began.

Dr. Hough is accused of conspiring  to use secret Swiss accounts to hide the millions made when they sold the schools.

Prosecutors accused her of conspiring with Swiss financial adviser Beda Singenberger and UBS banker Dieter Luetoff to hide the moneys.