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TAX ARK HITS ICEBERG

December 13, 2002

Truth is stranger than fiction. Consider this can't miss tax plan:

1. Invest in an offshore partnership with a friendly promoter named Anderson's Ark & Associates; the partnership also has a cool name - "Sawtooth."
2. Give the partnership a bunch of your money.
3. Let tax preparers with the partnership prepare tax returns calling your payments to the partnership business deductions - say, "management fees." Yeah, management fees, that's the ticket.
4. Use an offshore credit card issued by the promoter to draw down the money you gave the partnership - net of a very reasonable fee off the top to the promoter.

Of course, when we invest in a great opportunity like this, we need to perform due diligence. That means we visit their website. There we learn that they are "made up of Attorneys, CPAs, Tax Planners, Information Officers, and other professionals," so we know they must be legitimate. We find further assurance in the lavish use of animation in the website, bolstered by their FREQUENT USE OF CAPITAL LETTERS TO MAKE POINTS.

Just to be extra safe, we'll Google "Anderson's Ark." Hmm, the Google search engine is turning up some interesting results; maybe we'd better think about this some more:

"Anderson's Ark Accountants Convicted"
"Global Prosperity Crooks Arrested - Anderson's Ark"
"Global Prosperity Scam and Scumbags"
"LEADER OF ANTI-TAX ORGANIZATION EXTRADITED FROM COSTA RICA"

Then there's "SACRAMENTO ACCOUNTANT PLEADS GUILTY TO PARTICIPATION IN INTERNATIONAL TAX FRAUD SCHEME."

And there's this little item from the December 11 Tax Notes: "Ten persons from Anderson's Ark & Associates have been indicted by a Seattle federal grand jury on charges of conspiracy, filing false tax returns, wire fraud, and mail fraud, according to a Justice Department release."

WHAT DOES THIS MEAN? Any offshore plan that promises to eliminate taxes by management fees, consulting fees, or the like deserves the most profound scepticism. If you have a golfing buddy who swears it works, and that he has wiped out his taxes with this kind of great plan, be sure to collect all of your bets before he leaves the course, because your golf winnings will be behind the IRS at collection time.

If it sounds too good to be true, it almost always is. Your buddy will have a plausible explanation why his plan is different. The difference won't matter as much as the similarity: doom. Your buddy might even say that your accountant is just too wimpy to take the deductions. Call us what you will, just remember that you don't have to call us during visiting hours at Leavenworth.

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