It It Legal To Make Payroll Checks Payable To A Spouse To Help Someone Avoid An Irs Lien?
My former church hired a member to do some work. He has IRS tax liens filed against him and has worked under the table for years, so the pastor agreed to make the checks payable to the wife, who had nothing to do with the work for which the guy was being paid. This seems illegal (fraudulent conveyence?). Does anyone know which part of the tax code might be involved? Could the church’s assets be at risk? Everyone knows about this guy’s tax problems. His wife uses her maiden name because of this.
Besides being fraud and illegal, has the wife considered that the money going into her Social Security account isn’t hers?? On top of fraud, she’s risking losing her retirement if discovered. And YES, the pastor has implicated himself and the church, too.
It is not legal for the employee to assign his paycheck to another person. So, the employee has done nothing illegal.
The church is paying the wife for services not rendered. She will pay taxes on that money. I doubt that the IRS is very interested in this.
Yes the church is behaving unethically, they are paying the wife for services the husband performed. In the big picture, no great harm is being done. The husband is still going to owe what he owes, and the wife will pay taxes.
Of course the IRS could pursue this, I doubt that they will bother.
I believe it’s called “tax fraud”.
These are very serious offenses, and it is more then one count of fraud. Tax and social security. There is fraud for both the actual employee and the wife. Your religion is VERY unethical as well, what is it the Church of Greed?
The church is at risk, being a church does not excuse criminal activity.
I can’t believe a church would support a thief like this and that the pastor would risk everything.
I would say that the church could very well get in trouble with the irs for doing this. And yes, it is fraudulent. The church is paying the wife, who did not do any work for the church, instead of the guy, who did do the work, to circumvent the irs. Big trouble!!!!! I would say that the church could be in big legal trouble, and might have to pay the irs fines if they found out what the church is doing.
What kind of church is that? Wrong Wrong Wrong wrong wrong.
You obviously know the answer before you asked the question. Yes, it’s illegal – and tax fraud. And both the church that is paying the illegal payments and the pastor who ok’d this could be liable.
I don’t know what specific part of the tax code this would violate but it is definitely illegal. It’s tax evasion. And I would imagine that since the pastor is knowingly participating in this, the church could definitely be at risk. The wife can also get in trouble since she is also knowingly participating in the scam. You, as well as the other church members who know about the situation, should tell the pastor and the couple that it needs to stop immediately or you will report them to the IRS, the pastor will be out of job, and they will most likely all three end up in jail.
they will catch him
It’s probably best to contact a good “Criminal” attorney and ask these questions…..furthermore, the following press release that someone posted on here is incorrect:
Stagni was ordered to pay a $60,000 fine and pay approximately $200,000 in taxes owed.
(This is NOT TRUE – Stagni has never had a civil audit that states that he owes $200,000 in taxes).
Over $400,000 of Stagni’s $2 million salary and bonuses from Comtrol were paid to him through another sham company, “Rocket Promotions.”
(This is also NOT TRUE – Stagni’s charges were unrelated to his business called Rocket Promotions, and this company has never been proven through an audit to be a SHAM – and it’s not a sham company).
The Government does not like to loose in court – and likes to make up LIES to convince a jury that someone is guilty…which is what happened in this case.
This is probably referred to as General Tax Fraud and links contain links that speak about reporting such cases. Will they pursue, can they pursue? Well we are accountants, We never assume anything with this agency. There are cases, recent cases following that show similar events for attempting to hide income from the IRS and otherwise. Never assume this agency will not indict you even for lesser charges and for minimal amounts. Will they? Well, the real question is this, will they just say no big deal? Are you willing to take the chance? Remember the Federal Mandatory Minimum Guidelines. These are real laws for real crimes with real outcomes and the sentence is real and the minimum time served is as well.
Types of Fraud – General Tax Fraudhttp://www.irs.gov/compliance/enforcemen…
Types of Fraudulent Activities – General Tax Fraud
Although not all inclusive, listed below are some of the criminal activities in violations of the tax law:
* Deliberately underreporting or omitting income,
* Overstating the amount of deductions
* Keeping two sets of books
* Making false entries in books and records
* Claiming personal expenses as business expenses
* Claiming false deductions
* Hiding or transferring assets or income (this sounds as though you may have a winner.
Penalties and Fineshttp://www.irs.gov/compliance/enforcemen…
Tile 18 USC § 371 (Tile 18 United States Code, Section 371)
Conspiracy to commit offense or to defraud the United States
If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each:
*
Shall be imprisoned not more than 5 years
*
Or fined not more than $250,000 for individuals ($500,000 for corporations)
*
Or both
it falls under General Tax Fraud now based on that statement, above, is is legal or not. The key to your question, was, “is it legal to “avoid” it by doing so. Aka avoidance of taxes is a crime.
It is about this? What is the intent conveyed in such case it is to avoid the legal responsibility of the taxpayer to pay his or her obligatory taxes or to avoid for example, payment of those taxes. Is there a conspiracy to commit. Does it fall under the RICO statutes (organized crime collusion statutes). It is organized I would say. Involves at least 3 people. More if you include the accountant or payroll people perhaps.
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Former Comtrol President Sentenced for Conspiracy and Tax Evasion While Co-Defendant Remains a Fugitive
On April 11, 2007, in Minneapolis, MN, Lee D. Stagni, the former president of Comtrol Corporation was sentenced to 43 months in prison for conspiracy and tax evasion. He helped Comtrol’s owner and CEO, Robert Beale evade $2.5 million in federal and state taxes and he evaded more than $280,000 of his own taxes. Stagni was ordered to pay a $60,000 fine and pay approximately $200,000 in taxes owed. According to trial evidence, Stagni assisted Comtrol’s owner and CEO in a scheme to pay the CEO his salary through a sham company. The company, called “Chayil,” was used exclusively as a pass-through entity to avoid paying taxes by concealing the CEO’s salary income from the IRS and the Minnesota Department of Revenue. Stagni further aided Comtrol’s CEO in tax evasion by back-dating employment documents and by directing the company’s payroll department not to report the CEO’s income to the IRS through a W-2 form or a Form 1099. Over $400,000 of Stagni’s $2 million salary and bonuses from Comtrol were paid to him through another sham company, “Rocket Promotions.” On his income tax returns, Stagni characterized that money as “advertising income” to Rocket Promotions rather than personal salary income. Stagni evaded more than $200,000 in federal individual income taxes and over $45,000 in state taxes. Stagni’s co-defendant and the owner and CEO of Comtrol Corporation, Robert B. Beale, of North Oaks, Minnesota, remains a fugitive.
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Former Massachusetts Pharmacist Sentenced For Selling Recycled and Sample Drugs
On July 10, 2007, in Boston, MA, Monty Schwartz was sentenced to 20 months in prison, followed by two years of supervised release and ordered to pay $459,000 in restitution to the state Medicaid program. Schwartz earlier pleaded guilty to charges of mail fraud, health care fraud, sale of drug samples, sale of misbranded drugs and filing false tax returns. Schwartz was the owner and chief pharmacist at the former Shoppers Drug, Inc. in Springfield, MA. He re-sold drugs that had been returned by customers as well as not-for-resale drug samples. In this process, the lot numbers of the drugs were lost leaving the store without the ability to track the pills in the case of a recall. In addition, expiration dates were not tracked on the returned and sample pills. Schwartz also admitted to fraudulently billing Medicaid and private health insurers for these illegally dispensed drugs. With respect to the tax charges,
—- the prosecutor told the court that Schwartz carried a relative on Shopper’s payroll and deducted her wages as a business expense even though she did not work for the company. —– (similar situation in some aspects).
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and you mention under the table as well so I give you another one.
Former Korean Hostess Bar Operators Sentenced to Prison
On June 11, 2007, in San Jose, CA, Roger Li and Robert Kwong Wong were sentenced to 24 months in prison and 18 months in prison, respectively, for their involvement in separate conspiracies to harbor illegal aliens and commit extortion. In addition, Li was sentenced for his involvement in committing tax evasion and Wong was sentenced for his involvement in laundering proceeds derived from the business which employed the illegal aliens. Li pleaded guilty on February 13, 2006 to conspiracy to harbor aliens, conspiracy to commit extortion affecting interstate commerce and tax evasion. According to the plea agreement, Li admitted to participating in this criminal conduct while working with a co-defendant in arranging for the importation of illegal aliens to work at the Crystal Palace Club in Sunnyvale. Further, Li admitted to taking affirmative steps to evade taxes on the income earned from the Crystal Palace. Wong pleaded guilty on January 24, 2005 to conspiracy to harbor aliens, conspiracy to commit extortion affecting interstate commerce and conspiracy to commit money laundering. According to his plea agreement, Wong admitted to participating in this criminal conduct while working with Sang Ye Han in arranging for the importation of Korean women into the United States to work at a club that he and Han jointly operated in Sunnyvale.
————Wong also laundered the proceeds of the Ok Yeo Bong operation by writing checks to cash on a regular basis and then using the cash to pay the illegal alien employees “under the table” with cash payments rather than with payroll checks.—————- Sound familiar?
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Remember, the countries penal institutions are full of people who thought they could get away with it or thought the IRS didn’t care because it was so “minimal.” Don’t count on it because if they don’t will they turn it over to a state? Remember, in doing so, the State will not have as much to prove. “under the table” now with that mention does it seem to you illegal? You be the judge but someone who would do that certainly may also be doing other “illegal” things. Will it affect the church. Oh they may very well pursue I mean after all it is a church involved here.
My my my. Pray for the pastor and tell the others to leave that congregation. To avoid an IRS lien I mean honestly here people what is the real benefit to this one. Such a small amount paid by a church to avoid something as this. Why not just file a Settlement offer. We do it all the time. I am sorry this is a church.
Wayne Barney
President
BC Business Services, Inc.http://www.bcbsinc.com
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Call your accountant immediately. This is absolutely not legal.
yes it is against the law.
so against the law. The church will also be in trouble too.