North Carolina Business Owner Sentenced For Failing To Report Over $1 Million In Income

December 5, 2014 — The IRS Whistleblower Office was established as part of the Tax Relief and Health Care Act of 2006. The whistleblower program gives tipsters with information about tax fraud a way to notify the IRS and receive compensation. The Act provides informants with a percentage of 15 to 30 percent of the funds the IRS recoups based on the whistleblower’s unique information. To be eligible for compensation on a tip concerning a private individual’s IRS violations, the tax evader’s gross income must top $200,000 for every taxable year involved and the government’s recovery must exceed $2 million. To receive a reward for information about a corporation’s wrongdoing, no minimum recovery is required.

Owner Of Seafood Distribution Company Used Checks Drawn On Company Account To Pay For $2.1 Million Waterfront Family Residence

Jeffrey Wayne Scott, who owned Greenville Loop Seafood (GLS) in Wilmington, North Carolina, has been sentenced to prison for tax evasion. Scott entered a guilty plea for willfully attempting to evade paying personal income tax for the 2007 tax year.
According to the Justice Department, from 2006 to 2010, Scott and his wife filed joint individual income tax returns which declared taxable income ranging from $23,934 to $92,999 for each of the five tax years. During that time, the couple paid just $91,800 in federal income taxes even though they spent far more than that amount on personal expenditures. Indeed, the IRS estimated that Scott failed to report more than $1,270,000 in taxable income and that he owed more than $400,000 in unpaid federal income taxes.
To evade paying taxes, the Scotts used checks from the seafood distribution company to pay for most of their living expenses, including landscaping, utilities and school fees. GLS checks also paid the mortgage on the Scotts’ $2.1 million home and paid for five cars and a $100,000 boat. Even after learning that the IRS was investigating him for failure to pay taxes, Scott filed a phony GLS corporate income tax return for 2011, which listed business expenses that included painting repairs to the Scotts’ home and medical treatment for the family pooch.

Insiders Notify IRS About Tax Fraud

While Waters & Kraus is not handling this particular instance of tax fraud, we are representing whistleblowers with knowledge of similar types of tax scams. Before stepping forward, tipsters should understand how the process works. The IRS tax fraud lawyers with Waters & Kraus provide government collaborators with the legal counsel they deserve. email us or call our whistleblower attorneys at 855.784.0268 to learn how we can protect your interests. Our qui tam lawyers, like Paul Lawrence in our Washington D.C. area office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.

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