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How not to handle your taxes

If you have a professional practice, such as medicine, law or finance, you may have considerable income. This level of income will generate significant taxes, both from the Internal Revenue Service (IRS) and from the Minnesota Department of Revenue. Tax planning and advice from a knowledgeable accountant or tax attorney would be helpful to reduce or minimize your tax burden. However, you know that it is unlikely that you will be able to reduce it to where it they are negligible.

Apparently, for one couple in New York, that just wasn't good enough. So they engaged in somewhat more unconventional tax planning strategies. Ok, not really tax planning so much as outright tax avoidance and fraud.

And as you may imagine, this did not turn out well for the couple, who we imagine eventually met with members of the IRS-Criminal Investigation division and attorneys from the U.S. Department of Justice.

In addition to not paying their taxes by creating an elaborate set of deductions and business expenses from his surgical practice and her law practice, they employed additional creativity when notified of an audit from the IRS. They proceeded to figuratively burn the house of cards they had built around their fraud by fabricating "supporting" documents for their business expenses.

This included identify theft, some of whom were patients he had encountered and their domestic help. They also paid their household help in cash, failed to pay employment taxes and help her avoid her personal income tax.

Needless to say, this may not work to further their careers in medicine or law, as they are facing eight and three years respectively in federal prison with their guilty pleas.

Forbes.com, "Wealthy Couple Pleads Guilty To Cheating On Taxes - And Lying To Cover It Up," Kelly Phillips Erb, April 14, 2015

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