A Tax Story: Money Laundering Victim
A few years ago, a gentleman by the name of Jeff reached out to us with a very serious tax problem. Jeff had just received a notice from the IRS claiming that he owed them $63K.
When he received the notice, he panicked and sat on it for 3 months. The following happened:
• The IRS issued a public tax lien against him, ruining his credit.
• The IRS garnished his wages, resulting in his employer laying him off as it was a condition of his employment that he pay his taxes.
• Already suffering from heart problems, the stress was taking a toll on his well-being.
Needless to say, Jeff was in bad shape when he came to our office, in need of some help.
After speaking with Jeff and trying to understand how this happened, we were able to figure out the following:
• Two years prior to receiving the notice, Jeff found a Craigslist ad from somebody seeking a business partner. The “Partner” needed somebody willing to help him open a bank account and sign some paperwork to allow them to start their business together. The applicant would not need to do any real work outside of helping open the bank account. The Partner would do all the serious heavy lifting. The payoff to Jeff would be $25,000 per year.
• Jeff went to the bank with the Partner and opened a bank account and a credit card merchant account in his name and under his own SSN.
• For the next several months, Jeff waited for his payoff from the Partner. Unsurprisingly, Jeff never heard from the Partner again and wrote off the ordeal as a waste of his time.
It became clear to us that Jeff was manipulated in a money laundering scheme by the Partner. The Partner opened a credit card and deposit account under Jeff’s name and SSN. The Partner would funnel illicit earnings through these merchant accounts, then withdraw them as cash to himself. The IRS would think that the money was earned under Jeff’s SSN, thus passing the problem off to Jeff to deal with. Jeff was essentially the pawn of a money laundering scheme.
In 15 minutes, we were able to help Jeff draw up a letter that he would then send to the IRS, explaining the ordeal. After some wordsmithing and helping him organize his evidence, the package was postmarked and sent away to the IRS.
About 6 months later, Jeff received a notice from the IRS, explaining that there was no tax due on his account. Jeff also got his job back after bringing the notice into the office and explaining the issue. We also agreed not to bill him for our help, because it took so little of our time and effort to figure out the issue and help him resolve it. Helping set things right for Jeff in his life is what mattered the most to us.
Some takeaways from this article:
• If you receive a notice from the IRS, do not panic and pay. Seek out professional tax advice first and do so immediately.
• Craigslist can be useful and equally terrible. Do not fall for “too good to be true” schemes.
• If you have an opportunity to change somebody’s life without expecting payment in return, there’s a certain type of joy that comes with that. A joy that can’t really be described in words.
• A successful business will always put people first, money second. Both are necessary to the formula, but one is the mission and the other is the method.
• Some businesses identify money as their mission and people as their method. Your average consumer will figure this out pretty quickly. Sustainable businesses will always put people first and use money as their means to help people.
If you’re in need of tax help or service, please do not hesitate to reach out to a qualified tax professional. While we can’t guarantee certain results and we can’t offer free advice or help to everybody in every circumstance, we can ensure you’ll be in a better position after meeting with us, than when you started.
Nathaniel Busch, CPA
Busch Tax Company, LLC
nate@buschtax.com
614-600-3777
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