In last week’s “You Can’t Do That”, I referenced a preparer who practiced only minutes away from my hometown in New Jersey. This week, we kick things off with two individuals who carried out a scheme only a few miles away from my office in Las Vegas. Wayne Reeves and Diana Vaoga ran an illegal tax scheme that involved setting up false trusts to reduce tax liability. The two would tell their clients to name them as the legal trustee, then charge them a small fee any time they wished to withdraw money from the trust. The two then told clients that these arrangements did not require a tax return and that it was a legal loophole allowed by the IRS. After being discovered, Wayne and Diana are no longer allowed to prepare federal returns for others.
This next preparer, Raul Kelley, made it painstakingly easy for the IRS to realize there was an issue with a return. Kelley, an unregistered preparer, was hired and paid to file a federal and state tax return for two clients. Instead of deducting $1,500 of unreimbursed business expenses as the clients stated, Kelley deducted a whopping $97,120! The taxpayer only showed gross income of $98,212. Needless to say, the IRS flagged the return and Kelly now faces up to four years in jail for fraudulent reporting.
Finally, Doyle Blevins followed his state’s motto, everything’s bigger in Texas, even tax fraud. Mr. Blevins thought it would be a good idea to generate hundreds of thousands in false returns by claiming losses on businesses that did not exist. It amazes me that preparers try to pull these schemes off and expect to get away with it. The IRS knows exactly what to look for in these scenarios. Mr. Blevins, like the countless individuals before him, will be taking a nice 1-3 year vacation for his actions.