You’ve probably seen splashy ads on social media that shout messages like, “Never pay taxes again! Keep your money!” These ads are far from the truth, though, and they’re meant to trick you out of your money while selling you a blatant lie.
Unlike most scams that steal your money, though, this one can even land the victims in hot water. One of the many manifestations of this kind of “no taxes” scam is the Corporation Sole scam. It’s intended as a way to exempt religious organizations from various forms of taxation while also ensuring that the individual religious leader couldn’t have his personal assets seized by creditors of the organization.
The Corporation Sole is being marketed to individuals as a way to avoid paying any income taxes, and as a way to “hide” their assets from creditors, ex-spouses, and more. Unsuspecting victims of this kind of scam are promised insider information on how to take advantage of “legal” loopholes in order to avoid reporting their income, having to pay child support, and other shady dealings. Unfortunately, there’s a double-edged sword to this kind of crime. Citizens are being scammed out of their money to learn how to dodge the tax system either in the form of “exclusive” high-priced live seminars or through expensive online course materials. The problem is, paying someone for the information does not absolve them of the crime if they do go on to attempt to avoid paying their taxes. They’re not only the victims of a scam, they’re also now criminals themselves.
One recent court case actually ended in a guilty verdict and jail time for two such scammers. Gerrit Timmerman, III of Utah and Carol Jean Sing of Nevada were both found guilty of setting up Corporation Sole entities for a fee for their clients; they were sentenced to four years and three years in jail, respectively. Fortunately, the defendants in this case were not able to claim innocence on the grounds that they were not the ones responsible for not paying the taxes. In this instance, simply saying, “I only told people about the plan, I didn’t say they SHOULD do it,” does not cover them.
The IRS publishes information routinely on the top tax fraud scams, which can be found on its annual “Dirty Dozen” list. The Corporation Sole scam has long been on that list for scammers telling individuals they can impersonate a charitable organization. If you’re ever approached with information on how to skirt the system or avoid having to participate in any process that is regulated under the law, seek reliable help immediately from someone who has not only expert knowledge of the subject, but who also doesn’t stand to gain financially from convincing you to break the law.