August 19, 2013 — The Tax Relief and Health Care Act of 2006 set up an IRS Whistleblower Office to allow tipsters with unique information about tax fraud to collaborate with the IRS and receive compensation. Under the Act, whistleblowers may retain anywhere from 15 to 30 percent of the funds collected by the IRS based on a tipster’s information. Rewards for information about a private individual’s tax violations are available only when the taxpayer’s gross income exceeds $200,000 for each taxable year at issue and the government’s recovery tops $2 million. Rewards for information about a corporation’s tax violations may be available regardless of the size of the recovery.
Happy’s Pizza Executives Indicted on Tax Fraud and Obstruction Charges
Five Happy’s Pizza executives in Michigan have been charged by the Department of Justice (DOJ) with failing to report $2.1 million in wages to employees and shareholders between 2004 and 2011. Happy Asker, founder of Happy’s Pizza, along with Maher Bashi, Tom Yaldo, Arkan Summa and Tagrid Summa Bashi were charged by the U.S. Attorney for tax fraud and obstruction charges. Happy’s Pizza is a franchise pizza company headquartered in suburban Detroit, Michigan. The Happy’s Pizza executives have vowed to fight the charges involving fewer than 10 of the 100 Happy’s Pizza franchise locations.
In August 2010, agents from the Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and Internal Revenue Service (IRS) roared into Happy’s Pizza headquarters, seizing business and personal records. The DEA and ATF have not made any public statements or charges following the 2010 raid. But the IRS has filed a multi-count indictment against Happy’s executives.
The charges against Asker include multiple counts of:
- filing false individual tax returns;
- aiding the filing of false payroll returns; and
- conspiring with Maher Bashi and Tom Yaldo to underreport income.
The others have been charged with multiple counts of aiding the filing of false payroll returns and/or false corporate tax returns for Happy’s Pizza franchises.
If convicted, the Happy’s Pizza executives face various prison terms. In addition, the offenses carry a maximum fine of $250,000 per count. In a case like this one where the defendants face multiple counts on a number of charges, the fines could easily add up to millions of dollars.
Inside Employees Notify IRS About Tax Fraud
When business executives participate in or sanction tax fraud, including payroll tax fraud, it is likely that someone in the business will eventually come forward and notify the authorities. Before collaborating with the IRS, however, conscientious informants need to understand how the process works. The IRS tax fraud lawyers with Waters & Kraus provide insider employees with the legal counsel they deserve. Contact us by email or call our whistleblower attorneys at 855.784.0268 to discuss how we can safeguard your interests.