IRS Cracking Down on Fraudulent Trusts
Associated Press (12/11/00) Vol. 35, No. 3 p.A1; Anderson, Curt

Tax evasion schemes involving fraudulent trusts can be found on some 300 Internet sites, in magazine ads, and in seminars coast-to-coast these days. After one fraudster was able to hide some taxable income through a trust, the scheme has taken off since 1998. Fraudsters often use offshore bank accounts to hide the taxable income. One of the more high-profile cases involved a California accountant who kept $2.5 million from the government through a bogus trust. The accountant was sentenced to 87 months in prison in May 1999. The income of a trust is subject to taxes, although the amount is reduced when money is distributed to named beneficiaries. The IRS Criminal Investigation Division is currently looking into more than 125 cases involving abusive trusts.

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