State tries to restrain The state attorney general is warning the public against tax preparers who are giving incorrect or frivolous advice that could get taxpayers into serious trouble.
frivolous tax filings
Some claim they owe no taxes
Tax tips, tax offenses
because Hawaii is not a stateBy Debra Barayuga
dbarayuga@starbulletin.comSome tax protesters have been asserting that they do not have to pay taxes on wages earned in the state of Hawaii.
Five individuals charged with tax crimes have recently changed their pleas and agreed to testify against tax preparer Richard Basuel, of RB Tax Service, at one time one of the state's largest income tax preparation companies with offices in Kalihi and Waipahu.
Basuel, who served six months in prison after he was convicted in July 2001 of filing false tax returns by claiming Hawaii as a foreign country and overstating his clients' itemized deductions, is facing new charges of tax evasion, preparing fraudulent tax returns and theft.
Among those who allegedly espoused Basuel's views and were indicted recently were Eugene Miranda of Hawaii Kai and public school teacher Victor Jeffries, also of Hawaii Kai. Neither could be reached for comment.
Miranda, 60, was charged with two counts of attempted tax evasion, two counts of filing fraudulent state income tax returns and two counts of theft in the second degree.
When told by the Internal Revenue Service that his tax return was frivolous, Miranda responded that he did not have to accept their letter because it was not addressed to him, said Deputy Attorney General Rick Damerville at a recent hearing.
The letter spelled Miranda's name in capital letters, but he argued he did not spell his name that way. Miranda, however, did not refuse the tax refund check, which was addressed to him all in capital letters, Damerville said.
Jeffries, 48, and wife Elizabeth Aguirre-Jeffries, 45, were charged with five counts of attempted tax evasion, four counts of filing fraudulent tax returns, two counts of second-degree theft and willful failure to file an annual income tax return for 1997 through 2001.
Jeffries, a Gulf War veteran and a member of the U.S. Naval Reserve and Navy SEALs, had notified the Internal Revenue Service that the tax code speaks of the United States, and he does not live in the United States and did not pledge allegiance to the United States, Damerville said. "He pledged allegiance to the United States of America."
Taxpayers and tax return preparers who use similar and other arguments to avoid their income tax obligations could face criminal prosecution and severe penalties, according to Mark Bennett, state attorney general.
It is up to the taxpayers to ensure the returns they are filing contain true and accurate information, Bennett noted.
Among those who agreed to give statements or testify against Basuel are:
>> Andrew Tung, 27, of Honolulu, a salesman who pleaded no contest to filing a false or fraudulent state income tax return for 2000 and second-degree theft for obtaining a state income tax refund for $1,449. He will be sentenced May 14.>> Douglas Abarca, 60, a Matson employee who pleaded no contest on Feb. 19 to one count of filing a false or fraudulent state income tax return for 2000 and second-degree theft for obtaining a state income tax refund of $5,677. He will be sentenced April 30.
>> Dale Keama, 40, of Hawaii Kai, a bus driver who pleaded no contest to filing a false state tax return for 2000 and second-degree theft for fraudulently obtaining a state refund for $2,775. He will be sentenced May 14.
>> James Faria, 29, of Waimanalo, a bus driver who pleaded no contest to filing a false state income tax return for 2000 and second-degree theft for obtaining a tax refund of $3,743. He will be sentenced April 15.
>> Jeffrey Yano, formerly of Honolulu, a salesman who pleaded no contest to filing a false or fraudulent income tax return for 2000. He will be sentenced April 9.
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State Attorney General Mark Bennett offered some tips for tax filers: Tips on taxes
>> Read the return.
>> Be wary if a tax preparer offers to prepare your return for a percentage of any refund. It gives the preparer an incentive to prepare a fraudulent return.
>> Contact law enforcement if a tax preparer offers to prepare your return for a fee but refuses to sign it as the paid preparer.
>> Beware of tax preparers who tell you wages earned in Hawaii are not taxable because Hawaii is not a state. You could face possible indictment.
>> If you question whether something on a return is legal and the preparer begins reciting the Uniform Commercial Code, be careful. The Uniform Commercial Code concerns commercial transactions and does not apply in tax cases or prosecution of tax crimes.
>> Contact a licensed attorney or certified public accountant as soon as possible if you receive a letter from the state or federal government saying your return is frivolous. The state Tax Department usually does not prosecute cases if a taxpayer takes reasonable steps to resolve a problem before it is turned over to an investigator.
>> Attempted tax evasion is punishable by up to $100,000 in fines and up to five years in prison. Tax offenses
>> Filing false or fraudulent returns is punishable by fines of up to $100,000 and up to three years in prison.
>> Second-degree theft carries penalties of up to five years in prison and up to $10,000 in fines.
>> Willful failure to file a tax return is punishable by a fine of up to $25,000 and up to one year in jail for each offense.
State Department of Taxation
