WASHINGTON – The Justice Department brought suit against a Bakersfield, Calif., CPA to stop him from promoting two alleged tax fraud schemes and to bar him from preparing federal tax returns for others. The civil complaint, filed in U.S. District Court for the Eastern District of California, alleges that Lowell Baisden sold the scheme to several physicians in Nebraska, one of whom also helped to promote the scheme to others. The suit also alleges that Baisden has sold the scheme to customers in California.
According to the suit, Baisden helps customers form sham corporations in Nevada and uses them to claim improper tax deductions for customers’ non-deductible personal expenses such as utilities, medical bills, vacations, and personal vehicles. Baisden allegedly also prepares tax returns for customers that falsely report their employment income as royalties or rent in order to evade Social Security and self-employment taxes. Additionally, it is alleged that Baisden promotes a second tax scam in which customers divert income to a corporation that he operates.
The suit alleges that Baisden prepared more than 130 returns for tax years 2001 to 2003. According to the government’s complaint, the tax understatements for 12 of the customers that the IRS has audited (five of whom were Nebraska physicians) totaled more than $3 million.
In addition to seeking to stop Baisden’s alleged promotions and to bar him permanently from tax preparation, the suit seeks to require Baisden to provide the government with a list of his customers’ names, addresses, e-mail addresses, phone numbers and Social Security numbers.
Since 2001 the Justice Department has obtained injunctions against more than 200 tax preparers and tax-fraud promoters. Information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm. Information on the Justice Department’s Tax Division is available at http://www.usdoj.gov/tax/index.html.