Five Awesome Tax Scams

Paying taxes stinks, but most of us realize that we have obligations to our country that must be fulfilled, and so we pay them.

For some people, however, it’s simply too painful to part with their money, and they try to cheat the government out of what they fully owe. Some are smart about it, and some…aren’t.

In fact, they’re stupid about it. From claiming absurd deductions to embracing bizarre theories on why they don’t have to pay taxes to begin with, people who try to avoid paying income taxes (the ones who get caught, that is) end up spending far more than they would have if they’d just played it straight.

Go Banking Rates highlights a few of these tales of taxation tomfoolery:

God Doesn’t Pay a Living Wage

In 2002, Kent Hovind and his wife Jo were arrested on 58 federal charges, 12 of which included tax fraud.

Hovind’s excuse? As a minister, he worked for God, and hence had no income. While it’s disillusioning to hear that God pays so little – we assume no health insurance benefits, either – it’s not clear where Hovind got the $431,000 he withdrew from his bank when he realized he was under investigation. In 2006, Hovind was sentenced to 12 years in prison.

Those aren’t tips, they’re just savings

Minnesota stripper Stephanie Antes hid $80,000 in tip income from the IRS. She got busted by an anonymous caller, and when the IRS examined her bank records it showed balances far in excess of what she’d claimed on her tax returns. What’s more, she had claimed her kids as dependents  – getting a big state refund – even though their father had already claimed them.

The moral of the story? Be nice to everyone, bury your money in the backyard and don’t claim your kids as dependents if you can’t.

Pot and Taxes

Santa Cruz, Calif. pot-grower and dealer Ed Hoey got busted with 100 pounds of pot in his house and $500,000 in a storage locker.

Hoey had been mailing his cash crop to friends around the country – through the mail. Selling green on the black market may be lucrative, but if you’re caught, you’ve now got tax issues to deal with as well. Talk about a buzz killer.

Bar the Doors, the Tax Man is Coming

Although not technically scammers – Ed and Elaine Brown basically just refused to pay taxes – their story is too awesome to exclude.

The feisty Browns, both in their 70s, got a lot of media attention when they refused to come out of their New Hampshire home and face the tax man’s music. On June 7, 2007 SWAT teams and other people you don’t mess with surrounded their home. They didn’t emerge until October 4.

The Rich

“Let me tell you about the very rich. They are different from you and me,” wrote F. Scott Fitzgerald, and one big difference is that many of them like to hide their money in incredibly complicated off-shore tax havens.

The Feds have long been wise to this – it doesn’t take a tax expert to know the whole set-up reeked – but now they’re finally doing something about it with the Global High Wealth Industry Group.