St. Louis Lawyer Joins DOJ's List of Alleged Phony Tax Advis

[Dr. Caligari]

St. Louis Lawyer Joins DOJ's List of Alleged Phony Tax Advisers
Tresa Baldas

The National Law Journal

April 15, 2010

The federal government has named its latest suspect to a growing list of alleged phony tax advisers and preparers -- and this one's a lawyer.

On April 12, federal prosecutors asked a court to permanently bar tax attorney Philip A. Kaiser of The Kaiser Law Firm in St. Louis, Mo., from promoting several allegedly fraudulent tax schemes, most of them on behalf of wealthy clients. Kaiser joins a long list of tax advisers and preparers who have been the subject of government charges and investigations in recent months, just in time for tax season.

Since the start of the year, the U.S. Department of Justice has announced charges against more than two dozen tax preparers in multiple states, including California, Georgia, Idaho, Louisiana, Missouri, Nebraska and North Carolina.

In Kaiser's case, federal prosecutors are contending that he sold fraudulent schemes to clients such as two Missouri dentists, who, according to the Justice Department, allegedly used Kaiser's charitable-contribution plan to claim more than $750,000 in deductions for purported contributions to two St. Louis-area private schools when, in fact, the schools have received less than $2,000.

Kaiser, who practices with one associate, declined to comment. He is being represented by David Capes, a shareholder at St. Louis' Capes, Sokol, Goodman & Sarachan, who also declined to comment.

According to the Justice Department, Kaiser also allegedly helped clients evade Roth IRA contribution limits and later withdraw funds from their Roth IRAs without paying income tax. The department said a Missouri couple, who owned an executive search firm, participated in one such scheme. The IRS later audited the couple's tax returns, and they eventually agreed to pay additional tax, interest and penalties of $74,123 relating to their participation in that scheme.

The government's complaint says that the couple has sued Kaiser alleging legal malpractice. That case is set to go to trial on May 3 in state court.

The complaint also alleged that the IRS conducted an investigation of 75 Roth IRA accounts established under Kaiser's direction. The investigation revealed that, in 56 of those accounts, a total of $145,000 in initial contributions produced almost $10 million in purportedly tax-free gains. The other 19 customers were able to turn their initial contributions into gains of $35.5 million. The Justice Department alleged that Kaiser's clients improperly failed to pay federal income tax on these gains.

The Internal Revenue Service's recently announced list of the Dirty Dozen tax scams for 2010 includes abusive Roth IRA schemes.