Create Church to Avoid Paying Taxes?

May 18, 2006

An interesting story on tax fraud comes to us from Nevada courtesy of the Reno-Gazette Journal:

An Incline Village man was indicted Wednesday on felony charges that he created a church, with himself as its minister, to hide his income and avoid paying taxes, the U.S. attorney’s office said.

A federal grand jury indicted Paul S. Jensen on three counts of making false claims and three counts of tax evasion, said Natalie Collins, spokeswoman for the office.

According to the indictment, Jensen filed for tax refunds with the IRS in 2001 and 2002 for $117,956, claiming he and his wife had no income during that period. Collins said they actually had an income of $534,206.

He also was charged with failing to pay the tax he owed for 2000 through 2002, she said.

The line with churches, charities, and taxes often becomes tricky given the complicated nature of the income tax code. And the more complicated the code becomes and the higher the tax rates you have, the more attempts at fraud will appear, thereby requiring an ever-increasing IRS enforcement staff.

For more on the complexity of the tax code, visit our section on the topic.

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