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June 20, 2002

Auditors Selling Tax Fraud Advice

What's the difference between corporate America and the mafia? Mob leaders are held accountable for failing to pay taxes. The Times reports that auditors are selling tax avoidance schemes that help corporations massively conceal income.
...The key to the plans are the multiple corproate forms, partnerships, and shell games used by Enron. People have concentrated on the fraud on investors involved in such schemes, but the other major effect of such plans has been to defraud the IRS.
...Given all this fraud, you'd expect the returns of the wealthy would be getting special scrutiny. But tax audits of the rich have been declining. Back in 1990, the wealthy were more than 10 times as likely as low-income taxpayers to be audited. By the year 2000, those making less than $25,000 per year were MORE LIKELY TO BE AUDITED than the wealthy, largely because the GOP Congress in 1997 passed regulations directing the IRS away from investigating the wealthy.
...No wonder the auditors have been selling tax scam advice; they know no one is looking at their clients.

Posted by Nathan at June 20, 2002 08:26 AM

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