What would you do if someone said he had a plan to make a lot of money, it's not quite legal but no one would get hurt, and all it took was mailing some forms and waiting for the money to start rolling in? And, by the way, for it to work, you had to get around the US Department of Justice (DOJ) and the IRS (IRS).

If you could ask two California men they'd likely say it's not such a good idea.

The Plan

Back in 2002 and 2003, Ather Ali and Haroon Amin, who live in Upland, California, prepared and filed at least 250 fraudulent federal tax returns. They used social security numbers and other personal identification information of deceased people. They also used made-up W-2 Forms and tax statements declaring that the deceased people earned income from working.

The fake W-2's were created with employer identification numbers (EINs) they got from a certified public accountant who was Amin's friend. Ali used fake ID's to open mailboxes in the names of deceased people where IRS refund checks were sent.

The false returns claimed more than $2 million in income tax refunds. The IRS caught and rejected most of the refunds, but a few were delivered to the phony mailboxes and collected by Ali and Amin.

In 2008, the two were indicted by a federal grand jury for several crimes - that means a panel of ordinary citizens found there was enough evidence to take them to trial. Ultimately, both men pleaded guilty to conspiracy to defraud the US, which carries a sentence of five years in prison and a $250,000 fine.

Tax Fraud and Other Crimes

Ali and Amin could've been charged and taken to trial for tax fraud. They were indicted for filing false tax returns, the classic form of tax fraud. They intentionally filed returns they knew were false in an effort to get tax refunds they weren't entitled to.

They were also indicted for making false claims against the US, meaning they tried to get money from the US government they weren't entitled to.

Each of those crimes carry sentences of $250,000 fines and five year prison terms. So, they avoided more fines and prison time by pleading guilty to conspiracy.

There are other forms of tax fraud to be aware of. Tax evasion is when a taxpayer knows he owes taxes but takes steps to avoid paying. A good example is when a taxpayer keeps two sets of accounting books, or tries to hide money or assets in offshore accounts.

And don't forget about tax scams. Even if you truly, honestly believe that taxes are illegal or a friend has a fool proof, legal plan to reduce taxes by using a trust, you can get into trouble for not paying taxes.

Simple Advice

Don't try to cheat the IRS or US government. The odds are against you getting away with it. Pay your taxes, too. You may not like it, but it needs to be done.

And help the rest of us. Tax fraud costs us all. It means all of our taxes may go up, and there's less money for government-funded programs we may need and use. If you suspect tax fraud, report it to the IRS or to your state tax agency.

Questions For Your Attorney

  • If I report tax fraud about a scheme I unknowingly participated in, can't I get into trouble?
  • What should I do if I think someone's using my deceased father's social security number to file tax returns?
  • Why does the government make plea bargains instead of prosecuting someone to the fullest extent possible?