In order to provide incentive to encourage use, exchange, provision, and development of alternative fuels, the Internal Revenue Service (IRS) offered a Biodiesel Mixture Credit. Two Colorado business entrepreneurs took advantage of the credit—and then some.
In 2017, the IRS offered a federal excise tax credit to blenders of biodiesel fuels. The incentive provided a $1.00 per gallon offset for “pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel.” The only entities eligible for the incentive were those that used the fuel in the business or industry.
For Martin Taylor and Matthew Fields, the incentive became a tax fraud and money laundering opportunity. According to a recently unsealed indictment, the two owned businesses in New Jersey and in Colorado. Through their own businesses and by drawing in the owner of a heating oil business in Colorado, the men are charged with filing for more than $7 million in fraudulent tax returns for fuel tax credits.
The scam went something like this. The pair filed a number of fraudulent claims for the Biodiesel Mixture Credit. They then used bank accounts that they controlled to launder the refunds that they received.
The government frequently provides tax incentives to encourage business owners and operators to grow the economy or invest in developing technology. In this case, Mr. Fields and Mr. Taylor appear to have used the incentive offering to fund a personal joyride with luxury goods and services.
As we discussed earlier, those who commit tax crimes have different motivations. While some are seeking to dig their businesses out of debt, others are simply looking for a way to enhance their personal income and boost their lifestyle opportunities. The criminal tax matter spawned by Mr. Fields and Mr. Taylor falls into the latter. Here are just some of the goods and services on which they used their ill-gotten gains:
- About $890,000 was used to place a down payment on a luxury home
- At a clothing store, the men rang up tab of approximately $16,000
- Through an electronics store, the duo purchased approximately $12,000 of goods
- About $24,000 was spent on luxe holiday rental locations
- Services offered by a landscaping company cost about $11,000 of the refund money
The fraudulent tax claims earned the pair charges of conspiring to defraud the US, money laundering, and conspiracy to commit money laundering, along with filing false tax returns. Each man faces up to five years in prison on the false claim counts, and up to 10 years in prison for the charges related to money laundering. Plus there will be probation, restitution, and penalties.
Were the $16,000 clothing spree and other frivolities worth it? Only the men involved in this incident know. Our tax attorneys are highly experienced with criminal tax defense, and we rarely find clients who look forward to time in prison. If you are aware of a tax controversy, or receive notice of an IRS criminal investigation, speak with a knowledgeable tax lawyer while there is still time to make a difference.
Trusted advice from experienced tax fraud defense attorneys in Cleveland
Whether you had prior knowledge, or you just discovered a false tax return or payroll tax issue, our tax attorneys can help. At Robert J. Fedor, Esq., LLC we provide confidential, appropriate solutions to tax litigation involving private wealth and corporate assets. Contact us or call 800-579-0997 today.
