Creative Tax Strategy
A Florida attorney has pleaded guilty to conspiracy to defraud the United States and tax evasion in connection with promoting an illegal tax shelter scheme involving fraudulent charitable deductions. The U.S. Department of Justice (DOJ) has secured a permanent injunction against Mr. Meyer that prevents him from selling his “Ultimate Tax Plan”, a creative tax strategy scheme which targeted high-income individuals looking for creative ways to reduce their taxes.
The scheme involved setting up Charitable LLCs and Charitable LPs for clients and inflating the value of purported donations to these entities. These entities were treated as “donor advised funds” (DAFs) linked to charities controlled by Meyer. He created transaction paperwork that made it seem like clients donated valuable property to charities under his control, but his clients actually retained full control over the assets. Sometimes Meyer backdated these documents so clients could file amended returns and claim donations on previous years’ tax returns.
The “creative” tax strategy allowed clients to overstate their charitable deductions, grow their assets tax-free, access funds through tax-free loans or bogus service compensation, and eventually pass money to heirs while defrauding the government on taxes. The scheme further promoted a so-called “exit strategy” that Meyer claimed would allow participants to repurchase donations at discounted rates. When subpoenaed by the DOJ during a 2018 civil suit, Meyer provided false, backdated documents in response. (The lawsuit itself didn’t seem to make him aware that future forgeries might be a bad idea.)
It’s highly likely that the DOJ and IRS have obtained a list of Meyer’s clients, who may face denied deductions, stiff penalties, and potential criminal proceedings for Federal tax evasion. Furthermore, the IRS will notify state tax authorities, who may also pursue back taxes and penalties against Meyer’s clients.
Meyer reportedly earned over $10 million from the scheme, using the proceeds to purchase luxury assets, including a multi-million dollar estate and a collection of high-end vehicles. Now that luxury lifestyle is in his rear view mirror, as Meyer faces a maximum of 5 years in prison for each charge, supervised, release, restitution, and monetary penalties. His sentence is still pending. This case highlights the legal consequences of promoting fraudulent tax schemes and attempting to obstruct IRS investigations.
Meyer’s “Ultimate Tax Plan” is just one example of similar, “creative” tax strategy schemes that have emerged over the years, abusing charitable giving deductions through LLC and LP arrangements. Taxpayers are advised to be cautious of any tax schemes (especially those on TikTok) that promise substantial deductions or tax benefits. (If it sounds too good to be true, it probably is.) Always seek guidance from qualified tax professionals to ensure compliance with tax laws.