U.S. Cracks Down on Tax Fraud

Federal tax authorities took further steps Thursday against individuals and companies that the government believes are partly responsible for rampant tax cheating.

In separate actions, the Justice Department filed suit against a Las Vegas book publisher, pressed seven lawsuits in various parts of the country to force production of documents about offshore bank accounts and announced that a Georgia-based doctor was convicted of tax evasion.

“Taxpayers who don’t pay their fair share undermine the faith of honest taxpayers in our system,” said Pam Olson, the Treasury Department’s assistant secretary for tax policy.

“The IRS has focused resources on identifying and weeding out the threats to our tax system posed by tax avoidance activities, such as hiding income offshore.”

The agency previously has estimated that about $200 billion in federal income taxes go uncollected each year. The estimate, which includes underpayment, errors and fraud, is based on data compiled more than a decade ago.

Many tax experts believe that the actual amount of uncollected taxes is considerably higher. The Internal Revenue Service is attempting to improve its collection record by focusing on areas of known noncompliance, including tax protesters and offshore accounts.

On Thursday:

* Government lawyers filed suit in Las Vegas to permanently stop Irwin Schiff, Cynthia Neun and Lawrence N. Cohen, who publish and disseminate books that maintain that Americans do not need to pay income tax, from preparing returns or documents that hinder the enforcement of tax laws.

All three individuals, who work for Freedom Books in Las Vegas, denied violating any laws and maintain that the income tax system is completely voluntary.

* Tax officials pressed their offshore tax fraud initiative by filing legal petitions in California, Florida, Tennessee, North Dakota, Maryland and Nevada seeking to force 10 individuals to turn over records about their offshore accounts with Leadenhall Bank & Trust Co. in Nassau, Bahamas. Each of the 10 individuals had failed to turn over records in the IRS’ ongoing effort to collect data about money stored in offshore accounts. Some of the defendants had asserted 5th Amendment rights against self-incrimination.

* Bradford G. Brown of Athens, Ga., was convicted Thursday of two counts of tax evasion. According to evidence presented at trial, Brown used unreported income to buy real estate, a radio station, a BMW convertible and other personal assets, costing the government about $500,000 in lost tax revenue, Justice Department officials said. Brown awaits sentencing.

Meanwhile, the IRS suffered a setback in its case against Western Tax Services of Anaheim and five of its current and former officers and preparers.

The IRS sued Western and the five Tuesday, alleging that the firm and its principals consistently fabricated deductions, causing their clients to significantly underpay their tax.

Attorneys representing several of the defendants were able to block the IRS’ effort to get a temporary restraining order that would have immediately stopped Western and the named individuals from filing additional tax returns for pay. A hearing is set for early April.