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Malden chiropractic clinic fronted tax evasion scam

On Behalf of | May 1, 2012 | Tax Evasion

A man who ran a Malden chiropractic clinic was charged in federal court on multiple counts of impeding the Internal Revenue Service and tax evasion. The investigation into the clinic was organized and announced by the U.S. attorney’s economic crimes unit and the Boston IRS criminal investigation field division.

According to the indictment, the owner-operator allegedly used the names and tax identification numbers of subcontracted chiropractors to file bogus insurance claims for payment. While the chiropractors worked at the clinic, the owner had the payments mailed directly to him and deposited into his personal bank accounts. He got caught because the IRS received income reports submitted by the insurance companies as payments and income to the chiropractors. But of course, they never saw that money.

Allegedly, between 2003 and 2007, the owner billed and banked more than $3 million in fake insurance claim payments. However, he did not report any of it as taxable income nor did he pay federal income taxes on those fraudulent insurance payments.

The clinic owner-operator faces a $250,000 fine and a maximum of five years in prison followed by three years of supervised release if convicted.

According to the IRS, there were nearly seven million math errors made on tax returns last year. About half were due to the two-year Making Work Pay Tax Credit that proved terribly confusing to many. The other most common math mistakes made on returns included tax calculations, exemption numbers, itemized deductions, the earned income tax credit, adjusted gross income amounts and child tax credits.

Source: Eagle-Tribune, “Salem man indicted on tax charges,” Jim Patten, April 14, 2012


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