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If a tax plan really works, you don't have to hide your assets

March 10, 2010

When somebody tells you that a tax avoidance plan is legal at the same time he tells you how to hide your assets from the IRS, you might wonder: If this works, why do I need to hide my assets? Many people blow right by that logical dilemma, including this retired FBI agent:

Jan Lindsey, 67, of Henderson pleaded guilty before U.S. District Judge James C. Mahan to one count of felony tax evasion and is scheduled to be sentenced July 9.

According to the plea agreement, Lindsey worked as an FBI agent for 26 years and retired from the agency in 1995. For the next 10 years, Lindsey worked for the FBI as a contractor performing background investigations. Prior to 1999, Lindsey timely filed tax returns with the IRS.

Beginning in 1999, Lindsey started using illegal tax avoidance methods to file his and his wife’s joint tax returns. Lindsey failed to timely file or pay federal income tax for the years 1999 through 2006, and committed various acts that were designed to hide his income and assets from the IRS. He placed assets in nominee names, presented or recorded fraudulent documents in an attempt to obtain lien and levy releases on his property, filed false returns after liabilities were assessed in an attempt to reduce or eliminate his unpaid liability, and presented frivolous financial or negotiable instruments to the Treasury Department in claimed payment of his outstanding tax liability.

If the only way a tax scheme works is if the IRS can't reach your assets, it doesn't really work.