Child support fraud via tax evasion

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Latest post 03-19-2013 9:34 AM by Jezzy. 6 replies.
  • 02-27-2012 11:51 PM

    Child support fraud via tax evasion

    My sister's exhusband is 5000 dollars behind in child support and only has to pay 160.00 a month in child support.  They both live in state of Ohio.  My sister and her child live with me (her brother) as she is working full time and going to school, I cover my nieces needs financially, as let's face it 160 a month does not cover the expenses for a child.  My sister's ex drives a new BMW, a Denali, a Hummer, and a Jeep Wrangler.  He also has a speed boat.  He has a gorgeous thee bedroom home and his belongings are owned by a business, which has been set up in his Grandmother's name. Moreover, he has not filed personal taxes in several years.  What gives and how can I advise my sister how to fix this situation?  It is truly rediculous and I do not understand how he gets away with it.  I know she cannot be the only person going thru this.  Please help!

  • 02-28-2012 7:51 AM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,335

    Re: Child support fraud via tax evasion

    It is possible to structure your life so as to have very modest income --its not that easy to structure it at that level so that no return is required.   IRS is less than amused at folks who fail to file reurns --but it can be done--and forgivness sought later.

    1. The IRS has a reward program for people who turn in tax cheats--and apparently the reward is factored on how good the information is  --in short the IRS values good solid input!

    1.1 Keep in mind that if he stopped working and is living off grandmothers "gifts" or a trust fund --while distasteful, it may be legal.

    2. If the EX's apparent life style income would warrant a major change in his  CS based on the state formula  then it may be prudent for Sis to petition for  more CS and that probably opens to doors to examination of all the EX's relevant financial information.

        This is NOT going to be a cheap adventure--depending on how well the EX has masked his activities --its going to take probably a skilled attorney PLUS a forensic accountant/tax attorney to dig in.

    3. Failure of EX to pay as ordered opens up the door to seek dragging him to court to explain it to the court --now true impossibility to pay may get him off, but refusal to pay  --postured in light of a luxury lifestyle  might find the judge less than amused and get him hit with sanctions such as her costs and possibly loss of his various drivers/operators licenses and even time as a guest of the county jail.

       Again, I suggest Sis is likley to be outgunned and she is smarter to use counsel.

    4. Assuming you charge Sis fair market cost for dwelling space and child care --would Sis and her child qualify for any welfare -public assistance?  Think seriously about seeking same if the facts fit---as an aside the welfare agency also has a cpacity to go back after Dad...now I doubt they have the  forensic accounting talent skills on call  --but it adds tothe grey cloud over Dads head.

    5. If I were Sis I'd have a beautiful photo record of all the toys and cars and dwelling Dad has available for his use



  • 02-28-2012 9:07 AM In reply to

    Re: Child support fraud via tax evasion

    If he's ordered to pay $160/month and he's not paying it, your sister needs to take him to court about it.

    If she can prove he's making more than he says he is, then do that and see about raising the child support number.

    The car he is driving and things like that aren't really proof in my opinion.  I can telll you my ex wife thinks I'm loaded and hiding money also.  I have computers and electronics all over the place.  My company pays for it all.  They also pay for all my phones, internet, etc.

    I'm only telling you that because sometimes, things are not always as they appear.

    Maybe someone is letting him use all these cars.  Maybe he's up to his eyeballs in debt.  You arleady know he is stiffing your sister on child support.

    Anyway good luck!

     

  • 02-28-2012 9:40 AM In reply to

    Re: Child support fraud via tax evasion

    Child support is based off income, not assets. People that are self employed are good at hiding money and not being truthful about their bottom line profit. also if these assets are in someone elses name, and the business, that makes it tough. Mom though should be complaining to child support enforcement and filing contempt..and asking for legal fees. if Dad is ordered to pay 160/mo and is over 5k in arrears, he hasnt paid i a few years. They can suspend his license or put him in jail. I am not sure how Ohio guidelines work but mom must have a decent documented icome if Dad is only ordered to pay 160/mo. Dads earning capability is obviously much higher than moms, the problem is proving it. Mom should see an attorney to see if there is anything that can be done. Also i hope mom gets to clai the kid on taxes..no way should Dad be claming esp. since he is in arrears. Good luck

  • 02-28-2012 1:09 PM In reply to

    Re: Child support fraud via tax evasion

    bigbrother83:
    My sister's ex drives a new BMW, a Denali, a Hummer, and a Jeep Wrangler.  He also has a speed boat.  He has a gorgeous thee bedroom home and his belongings are owned by a business, which has been set up in his Grandmother's name.

    The problem is that the fact that he uses these assets does not itself prove that he's the true owner of them or that he's earning more income than he claimed he was earning in the child support proceeding. She'd need to show that the grandmother is not really the owner and isn't deriving the income from the business — that it is really her ex that is the real person who effectively owns the business and gets the income from it. That can be done under the right facts, but she'd have to dig to get them.

    All the details matter. For example, how is the business organized—corporation, LLC, or something else? If it is a corporation, has the corporation filed its returns for each year? If it is a S-corporation, have the shareholders paid their tax on their share of the business income? What is the supposed arrangement under which the company makes these various assets available to him to use? Is that arrangement reasonable under the circumstances? When and how did the grandmother end up owning the business? What is her role in the business, if any?

    She might consider hiring a private investigator who specializes in financial investigations to see if she can uncover the evidence of what is really going on. Of course, that may not be cheap. She might try hiring an attorney familiar with corporate and business financial matters to participate in drafting the discovery for the next child support modification hearing to help her dig up the kind of facts needed to prove that the grandmother is simply a straw for her ex (not all family law attorneys are knowledgeable enough to do that). Again though, that will cost her some money to pursue.

    It's unfortunate, but in this kind if circumstance she'll probably have to expend some money on some kind of financial expert, whether it's a financial investigator, an attorney with a finance background, or whatever, to dig up the facts and unravel what is really going on if she really wants a good shot at a significant increase in support.

    bigbrother83:
    Moreover, he has not filed personal taxes in several years.

    How does she know he hasn't filed his returns? And does she have enough information to know how much income he had to know he was required to file? Note that simply a failure to file a return by itself is not tax evasion. There is a separate crime of willful failure to file a return, a misdemeanor offense that the IRS does not often pursue, but will under the right facts. If she suspects some kind of tax fraud is taking place, she can report that to the IRS following the instructions here: reporting tax fraud. If the IRS pursues it and collects some tax out of it, she might get a reward of up to 15% of what the IRS collects. But unless she has some reasonably good information on what his income is and how he's committing tax fraud it may not go anywhere. The IRS gets a huge number of tips from ex-spouses, many of them with vague, generalized claims like "I know my ex is cheating on his taxes because he drives expensive cars and lives in a nice house." Few of those, if investigated, would turn out to actually be good cases to pursue, so the IRS only puts resources into investigating those with some reasonably good SPECIFIC information about unreported income, inflated deductions, or other tax fraud activity.

    And, of course, even if the IRS does take the case, it doesn't help your sister much since the results of any audit or criminal investigation won't be made available to her. She might get a reward a few years down the line (those most tips don't result in rewards), but that doesn't help her now. If she wants increased support now, a report to the IRS or the state tax agency isn't going to be a huge help to her. She'll need to tackle this herself, and will likely need the help of some sort of hired financial expert to do it.

  • 02-28-2012 11:01 PM In reply to

    Re: Child support fraud via tax evasion

    Thank you for taking the time to reply!

     

  • 03-19-2013 9:34 AM In reply to

    • Jezzy
      Consumer
    • Not Ranked
    • Joined on 03-19-2013
    • MA
    • Posts 1

    Re: Child support fraud via tax evasion

    I'm in the same boat per'say my oldest sons dad owes 20,000 in back child support and his fathers mother claims him on her taxes and still I haven't received anything. He isn't disabled and he doesn't live under her roof. How can I get help?

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