San Diego tax attorney Scott Waage was enjoined from preparing tax returns or giving tax advice pursuant to an injunction entered by a federal district court. The injunction had been sought by the Department of Justice in a complaint filed in the Southern District of California pursuant to Internal Revenue Codes Sections 7401, 7402 and 7408.
In its complaint the Department of Justice alleged that tax lawyer Waage along with CPA Robert O. Jensen promoted tax fraud schemes to clients that illegally reduced the client’s reported income by, among other things, using sham consulting companies, and illegally structured employee benefit and pension plans. According to the complaint, Waage operated under the names of “The Tax Advisors Group, Inc.” and “Pensions by Design.” Apparently in his promotional materials tax lawyer Waage referred to himself as a “visionary tax attorney,” and a seasoned tax litigator. Currently if you try to click on Waage’s website at www.strategiclawgrouppc.com a message pops up that the site has been “disabled.”
According to the Department of Justice press release CPA Jensen had been enjoined in March from preparing tax returns that understate income. It makes one wonder why the Department of Justice needed an injunction to prevent CPA Jensen from preparing tax returns that understate income! I always assumed that CPAs (as well as tax lawyers and enrolled agents for that matter) were already not supposed to understate income. Still the IRS uses the injunction process as a convenient, and relatively quick method of putting a tax preparer out of business; and sometimes as an alternative to a criminal tax prosecution. However, in some cases the IRS uses an injunction as a stop gap measure while it puts together its criminal tax case.
Tax attorney Waage is apparently no stranger to IRS tax problems. According to a summons action filed against him in 2008, Waage’s law firm was under investigation for its federal income tax liabilities. U.S. v. Waage.
The injunction order against Waage also requires him to provide the IRS a list of his clients that have used his services since 2001. It is likely that those clients will be receiving tax audit notices from the IRS in the not too distant future. Even though the normal statute of limitations for income tax returns is only 3 years, in the case of tax fraud the statute of limitations is open indefinitely, and there is case law supporting the view that tax fraud includes tax fraud by the tax return preparer, nor merely the taxpayer.