A religious leader in Vancouver, Washington has a lot of atoning to do for his less-than-spiritual relationship to material things and the lure of filthy lucre.

Until last September, Maximo Garza, 47, was the pastor for Victory Outreach Church of Portland, a non-denominational church which has operated in Portland, Oregon, for more than 15 years. Garza was sentenced to five months in prison for aiding the preparation of a false tax return.

During his plea hearing, Garza admitted he provided false expense invoices which purported to reflect public relations and other services provided by Victory Outreach Church to William Thompson, who was then operating a mail-order divorce service using the name Hallwood Inc.

Thompson used the false invoices to take expense deductions on tax returns filed by Hallwood in order to fraudulently reduce his tax liability. Thompson pled guilty to tax evasion and was sentenced to a prison term in 2007.

Between 2001 and 2003, Garza provided invoices reflecting a total of $735,441 in false business expenses. Thompson agreed to let Garza keep approximately 10% of the expense amounts.

Marketing experts say that there are few words as powerful to persuade as “free.” One enterprising scamster took that concept and ran with it to steal unsuspecting taxpayers’ tax refunds.

While living in sunny San Diego, Maxim Maltsev of Russia, blended the persuasive power of the word “free” with the fact that the IRS has a free electronic tax return filing program, and harnessed the awesome reach of the Internet, to steal tax refunds owed to ordinary taxpayers, looking to get their returns prepared and filed as quickly, easily and cheaply as possible.

Maltsev admitted in federal court in California that he was part of a conspiracy to obtain federal income tax returns requesting refunds before they were electronically filed with the IRS.

The success of the scheme depended upon taxpayers being fooled into using apparently free electronic tax return filing services which were, in fact, fake.

This was possible at all because the IRS sponsors a program called “Free File,” which allows taxpayers who are “eligible” to prepare and electronically file federal tax returns for free. And, most taxpayers are eligible to take advantage of the Free File program.

For example, in 2006, the time period when Maltsev carried out his scam, approximately 70% of all taxpayers were eligible to use the Free File program. Also at that time, there were 19 Free File affiliate companies formally approved by the IRS.

These approved affiliates linked to the IRS’s official website, making possible the electronic filing, and facilitating taxpayers taking advantage of this program.

Maltsev and coconspirators (three friends of his) created websites which appeared to be Free File affiliates. The Maltsev crew then advertised their bogus sites on the Internet and through email. Taxpayers taken in by the scam filled out their income tax returns online on the websites of the fake services Maltsev & company created.

Before actually filing the tax returns with the IRS, Maltsev’s fake services changed the taxpayers’ banking information so that refunds would be sent to one of Maltsev’s own bank accounts instead of the bank account belonging to the actual taxpayer.

Maltsev’s scheme then actually filed the modified tax returns with the IRS by submitting them through the real Free File affiliate websites – those 19 affiliate companies which were actually approved by the IRS.

Ultimately, Maltsev’s scam took in more than 65 taxpayers and it redirected (i.e., stole) approximately $136,000.

In 2009, Matsev was indicted for his 2006 crime, one count of conspiracy to defraud the United States. He pled guilty and was sentenced to 18 months in federal prison and ordered to repay $136,000 to the Internal Revenue Service.

The Associated Press reports that oral argument on Wesley Snipes’ appeal of his conviction on three misdemeanor charges of failure to file tax returns was heard by the United States Court of Appeals for the Eleventh Circuit, in Atlanta today. See Wesley Snipes Appeals 3 Tax Convictions in Georgia. (http://sn.im/tc2fn)

The almost-overnight sensation of the IRS offshore account voluntary disclosure program is about to close.

After the deadline was extended three weeks ago, from September 23rd to October 15th (see http://lifelawandtaxes.com/irs-extends-voluntary-disclosure-deadline-for-secret-offshore-account/), the final deadline is now only days away. See also the New York Times article, “Tax Evaders Face Choice: Pay or Pray” by Lynn Browning.

While touting itself as a program by which taxpayers with unreported income in foreign bank accounts can “come in from the cold,”  avoid criminal prosecution, and pay a penalty which is stiff, but not as severe as the penalties a taxpayer would be subject to outside the program, what seems to get lost in the discussion of this program is the fact that taxpayers who seek to participate are required to confess to a tax crime, waive their 5th Amendment right against self incrimination before knowing whether the Government will commit not to pursue criminal charges against them.

That is a danger of this program. Still, news accounts plus telephone conversations with IRS employees working in its criminal investigation division report that thousands of taxpayers are lining up to participate, submitting written disclosures in order to get that promise not to prosecute and the stiff but less horrible than otherwise penalty structure.

With 48 hours left before the final deadline to participate in a voluntary disclosure program designed get taxpayers with unreported foreign bank accounts to come back into the system and report their foreign income, the IRS has announced that it is extending the deadline from Wednesday September 23, 2009 until October 15, 2009.

The IRS reports that this extension was made in response to repeated requests from attorneys and other tax practitioners from all over the country.

In addition, an IRS agent working on a team evaluating the disclosures being submitted by taxpayers trying to participate in this program told me that there was a huge volume of submissions.

Within the guidelines of this program, taxpayers are given an opportunity to avoid criminal prosecution for tax crimes such as tax evasion and tax fraud.

Also, as part of this program, a taxpayer is subject to paying penalties on previously unreported income in foreign bank accounts under guidelines defined earlier this year, in March 2009. These guidelines are tough and expensive, but not nearly as tough or expensive as the sort of penalties a taxpayer would be facing if not working within this program.

A San Antonio, Texas, woman was sentenced to 41 months in federal prison and ordered to pay $1.5 million in restitution to the IRS for her role in a fraudulent tax scheme.

In addition to the prison term, United States District Judge Fred Biery ordered that Terrell Diamond be placed under supervised release for a period of three years after completing her prison term.

According to court records, Diamond, along with her now-ex-husband and co-defendant, William Diamond, conspired to defraud the IRS in the assessment and collection of more than $1.5 million in employment taxes due and owing from November 1996 to June 2003.

The employment taxes owed pertained to temporary employment agencies owned and operated by the Diamonds, including Ameriforce and Primo Labor.

Both Diamonds pleaded guilty to the same charge: one count of conspiracy to defraud the IRS.

A revenue agent with the Internal Revenue Service has agreed to plead guilty to a federal tax fraud charge for filing a personal income tax return that claimed he suffered a loss in a real estate transaction when in fact he realized a substantial profit. (“Revenue agent” is the official title for the people at the IRS who audit tax returns.)

In a plea agreement, Jim H. Liu, 43, of Diamond Bar, Calif., agreed to plead guilty to subscribing to a false tax return — a charge that carries a penalty of up to three years in federal prison.

‘My Gain is Your Loss’ Shenanigan Uncovered and Confessed

Liu admitted he filed a false tax return for the 2002 tax year that improperly claimed a loss on his sale of a property in Pomona. Liu sold the property for a profit of more than $48,000, but he instead claimed a loss of more than $4,200.

The tax loss to the government, as a result of Liu’s filing, was approximately $14,642.88.

Can this guy keep try to keep out of trouble for even a minute or two?

Prosecutors allege Washington, D.C., Council member and former Mayor Marion Barry has failed to pay more $277,000 in back taxes.

In a recent court filing, prosecutors told the court the politician had not made a tax payment during a period in which he took a Jamaican vacation and ran for re-election to the Ward 8 council seat.

“There is no excuse for the defendant’s failure to make payments to the District of Columbia because, during this six-month period, the defendant nevertheless had enough time and money, for instance, to take a six-day vacation in Jamaica in Sept. 2008 as well as to run for re-election as a council member,” prosecutors told the court.

In 2006, Barry received three years of probation for not filing tax returns from 1999 to 2004.

If dentist Arlan R. Turley treated his teeth the way the Government alleges he’s treated his tax-filing obligations, he’d have cavities and one heck of a case of bloody, bad gums.

This 60-year-old Arizona man was indicted on two counts of willful failure to file a tax return and 20 counts of willful failure to pay over taxes. Turley operated the East Valley Dental Service in Mesa, Ariz.

The indictment alleges that the charges for failure to file are the result of Turley’s non-filing of his 2002 and 2003 income tax returns. In addition, Turley has not filed an individual tax return for a whole decade: 1997 to 2007.

The charges for failure to pay over taxes arise from Turley allegedly not turning over his employees’ payroll taxes to the government, again and again. (See http://lifelawandtaxes.com/not-just-for-bernie-madoff-or-king-tut-business-owners-build-devastating-pyramids-of-withholding-tax-debt-deducted-from-paychecks-but-not-sent-to-irs/ .)

If convicted, Turley faces up to five years in prison and a fine of up to $250,000.

In the wake of master swindler and former NASDAQ chairman, Bernard Madoff’s $65-billion dollar, multi-decade, worldwide Ponzi scheme, it might seem like scams are popping up everywhere one looks..

In this context, in January, 2009, a U.S. Justice Department announcement reports that Ponzi-schemer-or-collaborator Shirley G. Graybill, 72, of North Haven, Conn., was sentenced to two years of probation — the first four months of which she must spend in home confinement. She had pleaded guilty in June, 2005 to one count of making and subscribing to a false 2002 tax return.

What happened between the June 2005 guilty plea and the three-and-a-half-year later sentencing announcement?

According to court records, the Triple Diamond Foundation was an entity created by Graybill and her husband, Dale L. Graybill, purportedly to fund cancer research, but which did not have tax-exempt status from the IRS. The Graybills controlled the Triple Diamond Foundation and its bank account. And apparently, they were quite adept at using that bank account.

During the 2002 tax year, the Graybills transferred about $350,000 from the Triple Diamond Foundation account, used those funds as income, but failed to pay federal taxes amounting to almost $93,300.

The Justice Department also reports that on October 13, 2003, Graybill filed a tax return with the IRS in which she failed to claim her actual taxable income, “when in fact she knew it to be approximately $316,519.79.”

Does anyone else find government-style reporting uniquely interesting in its departures from common sense? The Justice Department is reporting that schemer Graybill knew her taxable income was “approximately $316,519.79.”

“Approximately”?

When was the last time anyone you know has come up with a nice round number like “approximately” $316,519.79?

I know: approximately 4.7 people did roughly that just about 3.24 weeks ago.

Returning to the Graybills: they also must pay $93,293 to the Internal Revenue Service. In addition, Dale Graybill was sentenced to 48 months in prison following his conviction on one count of mail fraud stemming from his operation of a multimillion-dollar Ponzi scheme in which he solicited investments for fictitious investment programs.

Dale Graybill was also ordered to pay his victims restitution exceeding $10.6 Million dollars. And these consequences do not include what they will also owe in Connecticut state income tax.

So, leaving aside the unique style-book that the government uses, not only was the conduct of the Graybills illegal, for which they are now subject to the consequences (“the weed of crime bares bitter fruit” said The Shadow), but it also is double-plus-ungood.