US Court Barred Former Tax Manager from Promoting Tax Schemes

Jack Humphrey, Regulatory journalist
August 17, 2010 /

The US court has permanently barred a former Grant Thornton tax manager from promoting a number of inappropriate tax schemes. These improper transactions have cost the US exchequer over $100m as unrecovered taxes.

A. Balair Stover Junior have been found guilty by a Kansas federal court of having promoted schemes since several years in which business owners made use of fake companies and bogus transactions in order to evade their stated tax liabilities. The federal court was of the opinion that a very moderate estimate showed that at least there was a loss of over $100m as taxes. An agent of the Internal Revenue Service (IRS) estimated that the loss might be three times higher reaching $300m.

The federal court concentrated on randomly selected three schemes to arrive at the decision. Stover was found to be involved in at least two schemes which he promoted while he was working in the Grant Thornton’s Kansas City office. He was formerly a senior tax manager and principal. He left Grant Thornton’s Kansas City office and joined Kruse Mennillo, an accounting firm as an equity partner.

Business owners formed a separate business in the name of a management company to carry on the three tax arrangement schemes. This fake management company was later retained by the original company. The fake company was supposed to perform management services which never saw the light of the day but contrarily found to be involved in ghost payments.

Deference arguments put forth by Stover were found to be grossly implausible. The court was of the view that Stover’s reasoning was very much erroneous and that he himself was not looking convinced from the facts of the arguments. Stover’s clients had paid considerable money to professionals to make unscrupulous tax arrangement.

 

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