The parents involved in yesterday’s widely reported college admission reported could have even more bad news coming their way in the form of tax penalties and civil tax fraud charges, as the parents involved in the scheme were able to take tax deductions on purported “donations” that were doubling as bribes in order to get their children into elite colleges like Stanford and Yale.
The Key Worldwide Foundation has been declared a tax exempt organization and fronted/brokered many of the bribes that were paid out to University administrators. The Internal Revenue Service declared the foundation tax-exempt under code Section 501(c)(3) around 2013. If parents decided to “double dip” and write their bribes off, they could eventually be charged with tax crimes.
As long as the statute of limitations has not expired, the IRS has the option to audit the parents involved in the scheme, potentially resulting in deficiency notices, according to Sam Brunson, a professor of law at Loyola University Chicago.
If the IRS then finds out they took deductions on fake charitable contributions, parents could be hit with “large penalties” under “tax code Section 6601 and Section 6662, which cover interest payments and penalties for underpayment of taxes.” The IRS’s audit of the charity was one of the key parts of the Federal investigation that uncovered the scandal.
The IRS has the option to impose a penalty of 20% of the underpayment, on top of the original tax payment owed. Some parents that paid as much as $75,000 to the foundation could wind up having to pay an additional $15,000, plus interest. The IRS also has the option to impose penalties for civil tax fraud, according to Lloyd Hitoshi Mayer, a professor at the University of Notre Dame law school.
The tax fraud that occurred was a key part of the government’s case. One family said in court documents that they had reported charitable gifts of more than $1 million, which included a payment to the Key Worldwide Foundation.
“You can send to my foundation as a donation/write off or if you have your own company we can invoice you as a business consulting fee from our profit business and you write off as an expense,” William Rick Singer is reported to have told a family in an e-mail. We recently profiled Singer as the “man behind the largest college admissions scam ever”.
via ZeroHedge News https://ift.tt/2TDs6pq Tyler Durden