Tax Fraud Promoters Convicted in Conspiracy to Defraud the Internal Revenue Service
SALT LAKE CITY - A Midvale, Utah, man and a Henderson, Nevada, woman were convicted by a jury late Thursday afternoon in the U.S. District Court in Salt Lake City of tax crimes, announced U.S. Attorney Carlie Christensen of the District of Utah and Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Gerrit Timmerman, of Midvale, and Carol Jean Sing, of Henderson, were convicted of conspiracy to defraud the United States related to their promotion of a tax fraud scheme.
According to the evidence introduced at trial, between April 23, 2004, and March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing “corporations sole” as part of their scheme to evade the assessment and payment of federal income taxes. Timmerman and Sing falsely told their clients that corporations sole were exempt from United States income tax laws, had no obligation to file tax returns and had no obligation to apply for tax exempt status. They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from Internal Revenue Service (IRS) collection activity by transferring property to the corporation sole.
According to evidence presented at trial, Sing used Trioid International Group Inc. as a resident agent for corporations sole and other business entities for their clients. Sing and Timmerman also utilized a website to list the tax benefits of corporations sole and to post articles about the supposed tax benefits of corporations sole. At the same time, Timmerman was actively assisting others in evading their state and federal income tax liabilities, and recommended the corporation sole to his clients as another way to impair the IRS. Both defendants referred customers to one another and paid each other referral fees.
A corporation sole is a form of incorporation allowed by some states, primarily for use by religious leaders to hold title to property. Several states, including Utah in 2004 and Nevada in 2009, have disallowed the creation of new corporations sole. The IRS has publicized the fact that corporations sole have been abused by promoters in Revenue Ruling 2004-27, and even included corporations sole on their “dirty dozen” tax scams in 2004.
“Individuals who enrich themselves by promoting tax avoidance schemes and assist others in evading state and federal taxes are defrauding American taxpayers,” said U.S. Attorney Christensen. “They should expect to be prosecuted and convicted for this conduct, as this verdict demonstrates.”
“Yesterday’s convictions send a clear message that individuals who willfully violate our nation’s tax laws through the promotion of abusive tax schemes and the creation of sham entities will be investigated and prosecuted to the fullest extent of the law,” said Principal Deputy Acting Assistant Attorney General Ciraolo. “The Tax Division is committed to working with its law enforcement partners to disrupt and dismantle these criminal enterprises.”
“Designing tax shelter transactions intended to conceal the true facts from the IRS isn't tax planning; it's criminal activity,” said Special Agent in Charge John G. Collins of IRS-Criminal Investigation in Utah. “This verdict reinforces our commitment to every American taxpayer to identify and prosecute those who devise illegal tax shelters under the guise of religion or charities to assist their clients in evading their tax obligations.”
Sentencing is scheduled for May 20. Sing and Timmerman each face a statutory maximum sentence of five years in prison and a fine of $250,000.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Christensen commended the special agents of IRS–Criminal Investigation who investigated this case, as well as Trial Attorneys Dennis R. Kihm and Andrea A. Kafka of the Tax Division, who are prosecuting the case.