There's never been a better time to cheat on your taxes. Or a better way.
As
millions of Americans rush to file their tax returns on time, trying to
be ever-so-careful in hopes of avoiding an audit or, far worse,
prosecution, they will find it instructive, and infuriating, to learn
about Jerry Curnutt.
Curnutt
can show people how to cheat on their taxes and not get caught. His
trick won't work if you are a wage earner, but those rich enough to
invest in real estate partnerships have escaped paying billions of
dollars in the past decade by using this technique.
Now Curnutt's mission in life, at age 76, is to get states and the IRS to go after these cheats. ...
[T]he
tax-cheat ploy Curnutt uncovered is remarkably easy. On Form 1065, the
one partnerships file, just leave Line 10 on Schedule K blank, or report
a smaller figure than the real one.
Why
does that one line go unnoticed when the IRS selects tax returns for
audit? IRS software scans only for what it is told to look for. (Think
of those Star Trek episodes in which the Enterprise scans a
planet for life, detects none and then discovers life forms the scanners
were not tuned to notice.)
This
week, news broke that the IRS effectively fails to audit massive
partnerships, like hedge funds and private equity funds, even though
corporations of the same size are under constant IRS audit. A short
video, "Tax Analysts Video Examines Audit-Proof Businesses," explains
how partnerships escape audits.
Curnutt
knows this because he is a tax detective. He retired from the Internal
Revenue Service in 2000 as one of its top snoops, overseeing all
investment partnerships. Using his desktop computer, Curnutt discovered a
simple way to cheat that no one at the IRS had noticed. Call it Curnutt
cheating.
For
his brilliant sleuthing, the IRS gave Curnutt commendations and
multiple cash awards, each for about $1,000. It sent him around the
country to conduct 64 training sessions so IRS auditors could learn how
to efficiently spot these cheats. He also trained state tax auditors
from California, Indiana, New Jersey and New York.
But
the IRS never put Curnutt's insights into practice and never cracked
down on the cheaters, allowing them to escape paying tens of billions of
dollars in federal and state taxes.
The
odds for taxpayers overall, according to IRS data analyzed by Syracuse
University's Transactional Records Access Clearinghouse for 2013 and
1993, per million taxpayers:
|
2013
|
1993
|
|
|
13
|
20
|
Recommended for Prosecution as Tax Cheat
|
|
6
|
11
|
Indicted
|
|
4
|
8
|
Convicted
|
|
3
|
4
|
Sentenced to Prison
|
|
0
|
0
|
Caught for “Curnutt Cheating” in Real Estate Partnerships
|
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