California CPA Temporarily Barred from Giving Legal Advice and Promoting Illegal Conduct
WASHINGTON – The U.S. District Court for the Eastern District of California has issued a preliminary injunction against Lowell Baisden, a Bakersfield, Calif., Certified Public Accountant, the Justice Department announced today. The injunction prevents him from promoting his tax scheme and was issued after a two-day evidentiary hearing in Fresno, Calif.
The court issued the injunction after it found that Baisden had promoted a plan which encourages and assists customers to create corporations into which they allegedly had their incomes deposited for the primary purpose of decreasing their tax liability.
Several of Baisden’s customers are physicians and nurse anesthetists from North Platte, Neb., many of whom have not filed past-due tax returns. According to Baisden’s plan, the customers created real estate and forestry corporations, but almost all of the income reported by the corporations was derived from the customers’ income from their jobs in the medical profession. Baisden reported deductions for the corporations for customers’ lawn care expenses, expenses related to their personal residences, car expenses, and for one customer, the purchase cost and storage fees for an airplane. Baisden also prepared tax returns in California which characterized wages as rent, which is not subject to self-employment or employment taxes.
The court found that Baisden prepared tax returns that identified customers as investors when they were actually physicians or nurses and claimed business deductions for non-deductible personal expenses of customers or for which he and his customers did not provide supporting documentation. The tax returns he prepared also failed to report a reasonable compensation to owners of such corporations and otherwise mischaracterized their income. Finally, the court found that Baisden engaged in misconduct related to his representation of customers by falsely advising them not to comply with IRS document and meeting requests, filing meritless requests to delay civil audits, advising clients to make insufficient estimated tax payments, and advising customers not to file lawfully due returns. More information about this case is available at http://www.usdoj.gov/tax/txdv06670.htm.
Since 2001, the Justice Department has obtained injunctions against more than 230 tax preparers and tax-fraud promoters. More information about these cases is available on the Justice Department Web site at www.usdoj.gov/tax/taxpress2007.htm. More information about the Justice Department’s Tax Division can be found at www.usdoj.gov/tax.
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