Tax Law Blog | IRS Tax Attorneys

A Florida yacht broker who admitted filing a false federal tax return and concealing millions of dollars in a secret account at the Swiss bank UBS was sentenced Friday to two months in prison.

Judge James I. Cohn of Federal District Court in Fort Lauderdale, Fla., gave the broker, Robert Moran, credit for immediately confessing his crime and for assisting a broad federal investigation of tax evasion at UBS and other offshore banks. Judge Cohn also noted that Mr. Moran, a British-born United States citizen, had paid the $1.9 million in penalties and back taxes he owed.

But the judge said “the public is weary” of people trying to hide wealth from the Internal Revenue Service and rejected Mr. Moran’s request for a sentence of probation only.

Mr. Moran is scheduled to report to prison Jan. 4. The United States Bureau of Prisons has not yet determined where he will serve his sentence, but Judge Cohn recommended that he be held in southern Florida.

In April, Mr. Moran became the first UBS client in the United States to plead guilty after the bank gave federal prosecutors about 150 names of Americans suspected of tax evasion. The bank later reached a second agreement that calls for disclosure of 4,450 additional United States taxpayers to the I.R.S.

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Excerpt from: Informant in UBS Tax Evasion Case Sentenced to 40 Months in Prison

If not for banker Bradley Birkenfeld, “a massive tax fraud scheme” by Switzerland’s UBS bank to hide the assets of wealthy Americans from U.S. tax collectors would never have been uncovered, prosecutors told a Fort Lauderdale, Fla., federal judge.

Birkenfeld’s attorney said his client is responsible for revamping international banking laws to make it easier to prosecute people who squirrel away money in foreign tax havens.

But it’s Birkenfeld who is going to prison.

Not the California real estate mogul who hid $200 million with Birkenfeld’s help. And not his boss, who remains a fugitive from U.S. justice in Switzerland.

U.S. District Court Judge William Zloch sentenced the former UBS banker Friday to three years and four months in prison for failing to disclose his UBS client list when he went to the Justice Department in June 2007 with details of widespread tax evasion coordinated by high-level UBS bankers. Prosecutors asked for a 2 1/2-year sentence, and the defense sought probation.

“Without Mr. Birkenfield walking through the door of the U.S. Department of Justice in summer of 2007, I doubt this massive fraud scheme would have been discovered by the United States government,” Assistant U.S. Attorney Kevin M. Downing, a tax division prosecutor in Washington, told Zloch.

Anthony L. Jinwright, a native of Wilmington, NC (just outside my hometown) was indicted this week on charges of tax evasion for the years 2001-2005. A federal grand jury in Charlotte, NC indicted Jinwright on 14 counts, including tax evasion, filing false tax returns, mail fraud and making false statements to federal agents. He allegedly evaded more than $200,000 and $400,000 in federal and state taxes by not reporting over $875,000 in income.

So, just another tax evasion case, right?

Not really. What sets Jinwright apart from many other tax evaders is his occupation: he claims to be a man of God. Specifically, Jinwright - who goes by the designation of Bishop - pastors Greater Salem City of God Church in Charlotte and a church in Cornelius, NC. The congregations of the two churches total about 2,000.

Jinwright has been pastor of the church since 1981. In 2001, he incorporated A.L. Jinwright Ministries, which has been a springboard for his radio show and book activities. Jinwright also leads the Pastors International Consortium.

The indictment lays out a pattern of spending that far exceeded income which was reported on Jinwright’s tax returns from 2001-2006. And Jinwright received a lot of income from the church including, for 2006:

* $303,000 in salary
* $151,000 in housing allowances
* $54,000 in car allowances

That’s quite a bit of compensation. And let me be clear… I don’t for a minute believe that it says anywhere in the Bible that all pastors have to be poor. And I don’t think that being the leader of any charitable organization - whether through a church or a more “traditional” nonprofit like the Red Cross - means that you should be compensated less than a similarly sized organization. So this isn’t about his income (and keep reading, there’s a lot of it). It’s more about the lifestyle that he flaunted, all while crying poor to the IRS, claiming taxable income of as little as $15,000.

In addition to traditional compensation, Jinwright also received annual bonuses, Christmas bonuses, the use of a $83,000 Mercedes owned by the church and the use of a credit card to pay personal expenses. The church also paid for Jinwright’s daughter’s education.

All total, Jinwright received about $3.1 million from the church from 2001-2006. This doesn’t include gifts made to Jinwright, speaking fees (at least $437,000 for Jinwright and his wife) and salary paid by the church to Jinwright’s wife as Co-Paster (about $835,000), all of which push Jinwright’s income, together with his wife, to about $1 million per year. By comparison, the median income for a family in NC is about $55,000.

Jinwright spent some of the money on cars. Lots and lots of cars. The indictment lists ownership in a BMW 530i, a Mercedes-Benz S550V, five (yes, five) Lexus vehicles, a Bentley GT and a Maybach 57 (worth $250,000). Leases during that same time included a Cadillac, an Acura, a Volkswagen, a Maxima, a Durango, a Neon and a Toyota. No doubt the Neon boasted a “My other car is a Maybach” bumper sticker.

Jinwright also owned a million dollar residence in Charlotte and a second home worth about $200,000. Maintenance expenses alone for the homes totaled about $100,000, not including the cost to take care of his three new horses, worth about $25,000.

And it didn’t stop there.

Once Jinwright became aware of the investigation into his finances, he continued to flaunt his cash. He leased two more expensive cars, including a $350,000 Rolls Royce and a 2009 Lexus LX570, as well as a new house worth $3.7 million.

Federal officials allege that Jinwright lied about his income not only to the IRS (where he reportedly deflated his income) but on several loan applications (where he reportedly inflated his income). Three of the federal charges against him involve mail fraud for making false statements to banks on loan applications.

If convicted, Jinwright faces five years on each count of tax evasion, three years on each count of filing false tax returns, five years for making false statements to federal agents and up to 30 years for each count of mail fraud. I’m guessing he was planning on seeing pearly gates before he saw iron bars.

Source

Tax avoidance is the legal utilization of the tax regime to one’s own advantage, in order to reduce the amount of tax that is payable by means that are within the law. By contrast tax evasion is the general term for efforts to not pay taxes by illegal means. The term tax mitigation is a synonym for tax avoidance. Its original use was by tax advisors as an alternative to the pejorative term of tax avoidance. Latterly the term has also been used in the tax regulations of some jurisdictions to distinguish tax avoidance foreseen by the lawmakers from tax avoidance which exploits loopholes in the law.

Some of those attempting not to pay tax believe that they have discovered interpretations of the law that show that they are not subject to being taxed: these individuals and groups are sometimes called tax protesters. An unsuccessful tax protestor has been attempting openly to evade tax, while a successful one avoids tax.

Tax resistance is the declared refusal to pay a tax for conscientious reasons (because the resister does not want to support the government or some of its activities). Tax resistors typically do not take the position that the tax laws are themselves illegal or do not apply to them (as tax protesters do) and they are more concerned with not paying for particular government policies that they oppose.