Michigan Chiropractor Gets Two Years for Tax Evasion

Posted on Dec 27, 2012

Keeping two sets of books is a tried-and-true tax avoidance strategy: keep one accounting ledger which shows your true assets and liabilities, and show the government a made-up one in which your expenses magically offset almost your entire income. This was essentially the scheme employed by Grand Rapids chiropractor Paul Kelly, who operated a clinic for seven years (between 1999 and 2006) while paying the rock-bottom minimum in taxes.

According to UpNorthLive.com, Kelly earned a little over $2 million from his practice during that seven-year stretch, but paid exactly $23,601 in taxes (a figure which should have amounted to at least $250,000). To quote from the story: “The Department of Justice says Kelly maintained two sets of books and records. He only provided his tax preparers with records that did not accurately reflect his total business receipts. He also regularly claimed personal expenses, such as collectible toys, private school tuition, and snowmobile and hunting gear as an off-set to his business receipts.”

As with most cooking-the-books frauds, this one landed its perpetrator in jail. Kelly wound up pleading guilty to one count of tax evasion, and was sentenced by a judge to two years in prison. He's also on the hook for a $279,145 tax bill, which presumably includes penalties and interest payments on his original tax debt.

Are you an Oklahoma business owner who is in trouble with the IRS for back taxes? Call the Oklahoma tax experts at Travis W. Watkins, PC (800-721-7054) to learn what we can do for you!

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