if someone owns a company but hasn't filled 06 tax return yet, how do you verify thier income?

Question

I think someone is commiting tax fraud and a child support scam. He owns his own construction company and is claiming he is goingunder financially. On the contrary, his company was able to build him his personal 4 bdroom home, purchase a 2007 dodge heavy duty deisel truck when his last truck was only an 05 running fine, paid $10,000 for a trip to Mexico from company funds, and paid $25,000 of his companies money for criminal lawyers for a child molest case against him. How do I prove his company is being used as his personal piggy bank and that its actually turning over a profit and not in debt. It may be in debt but ony because he spends it. any suggestions?

Answer 1

Absent his tax return, only a full audit of the company records can be used to verify income. However, what you are not understanding here is that every one of the expenses you are claiming he incurred MAY be a valid business expense, as far as the IRS is concerned. The truck certainly is deductible without question. There is no regulation that one must run a vehicle into the ground before replacing it. Perhaps there was a business related convention in Mexico ? If he is the principal of the firm and the molestation charge occurred during the course of business activity, the legal fees are a company business expense. And just how DO you know the source of the funds used to pay these expenses ?

I think you might want to rethink this situation a bit. If this man can justify all of these expenses to the IRS as company related, they are NOT a part of his income.

Answer 2

Why not hire a private detective? That's what I did with my son's low life father and sure enough assets that I had no idea about came up! End result I reported him to the IRS and State Attorney General's office, and of course to the family court at my next appearance. It cost me about $1,500.00 but it was well worth the money!! He is serving 5 to 8 years (this is year 2) -- the court appointed attorney who was selected to oversee the liquidation of assets, etc... Sent me a check for all past child support due after the IRS debt was paid, and although a few measley bucks a month I am getting my child support. Best part. HE'S IN JAIL.

Answer 3

You have already received several good observations from others. I would add the following: It is obvious to me that you are not in any position to know whether the '06 return was filed. He may be lying to you. The best way to gain access to his financial records is to sue him and his company (under the alter-ego doctrine) in court for any sums owed to you. The discovery rules will compel production of the records, but the filing of the suit may be enough to get him to "find" your money so he doesn't have people going through his records. If you have actual knowledge that he is making personal use of corportate funds you could be entitled to a reward from IRS for providing original information they can use to nail this guy to a wall.