One of the biggest tax scams discovered in the past few years was a scheme carried out by Donna Guerin, a Jenkens & Gilchrist licensed tax professional. Guerin pled guilty to helping her clients avoid taxes through tax shelters, totalling in $7 billion in fraudulent tax deductions and $1.5 billion in phony losses, resulting in a loss of $92 million to the U.S. Treasury through tax evasion.
A district judge has ordered Guerin to pay a $200,000 fine for her malpractices and sentenced her to 8 years in prison. The judge also ordered that she turn over 20 percent of her gross income after she is released from prison.
Guerin’s tax fraud is serious because as an licensed tax professional, her job was to uphold the law and help taxpayers comply with tax laws. Guerin’s defense lawyer said that her part in the conspiracy was minor and she was only following others at her firm who were pushing an aggressive tax shelter strategy. The judge, however, did not entertain those claims.
Most of Guerin’s clients were wealthy and wanted to avoid paying their entire tax liability by placing some of their income in tax havens. Guerin and other lawyers and accountants within her firm assisted them in hiding their earnings, and were paid a share of the unaccounted money.
According to the judge, Guerin “became a criminal for two reasons: the lure of the money and because she believed that she was never going to be brought to justice.” The same can be said about most tax scammers.
Tax fraud is a major concern for the IRS. Billions of dollars are lost to tax fraud annually because of unscrupulous individuals, such as Ms. Guerin. Tax evasion, tax avoidance or stealing tax money from the IRS through fraudulent means, leads to an increased tax burden on taxpayers who comply with tax laws. Taxpayers are encouraged to file their complaints against an errant tax professional if they feel abused.