Parents involved in yesterday largely reported scam college admissions could have even more bad news coming their way in the in the form of tax penalties and charges of civil tax evasion, Parents involved in this program were able to take tax deductions for so-called "donations" that were used as bribes to get their kids into elite colleges like Stanford and Yale.
The Key Worldwide Foundation has been declared a tax-exempt organization and has presented / negotiated numerous bribes paid to university administrators. The Internal Revenue Service declared the foundation exempt from tax under Section 501 (c) (3) of the code by 2013. If parents decided to "double their deductions" and cancel their bribes, they could possibly be charged with tax offenses.
According to Sam Brunson, a law professor at Loyola University in Chicago, as long as the statute of limitations has not expired, the IRS has the opportunity to verify the parents involved in the scheme, which could result in the publication of notices of deficiency.
If the IRS discovers deductions from false charitable contributions, parents may be subject to "heavy penalties" under "sections 6601 and 6662 of the Tax Code", which cover interest payments and penalties for underpayment of taxes. The charity's audit by the IRS was one of the key elements of the federal investigation that uncovered the scandal.
The IRS has the choice of imposing a penalty of 20% of the less-paid, in addition to the initial payment of the tax owing. Some parents who pay up to $ 75,000 to the foundation may have to pay an additional $ 15,000 plus interest. The IRS also has the option of imposing penalties for tax evasion, according to Lloyd Hitoshi Mayer, a professor at the Faculty of Law of the University of Notre Dame.
The tax fraud that occurred was a key part of the government's case. One family told the court that it had reported charitable donations of more than a million dollars, which included a payment to the Key Worldwide Foundation.
"You can send a donation / write-off to my foundation or, if you have your own business, we can charge you a consulting fee from our for-profit company and write you off an expense," said Rick Singer. a family in an e-mail. We recently profiled singer as "the man behind the biggest college admission scam ever".