Couple gets probation
in tax-avoidance caseThe pair were clients of a
tax preparer, now in jail, who
holds that wages are not taxable
Two state corrections officers have been placed on probation after pleading no contest to charges of filing false tax returns.
Circuit Judge Sandra Simms granted motions to defer the pleas of Louis and Sonia Tapu, who pleaded no contest to a single count each of filing a false or fraudulent tax returns.
Louis Tapu's plea involved a tax return for 2000, while his wife's plea was for a 2001 return. Each was ordered to pay $3,312 in restitution to the state and make special contributions to the state general fund of $1,000 and $500 respectively.
If the Tapus comply with the terms and conditions of the deferral order, the charges against them will be dismissed at the end of the probation period and they will not have a permanent criminal record, according to a statement from the Attorney General's Office.
An investigation by the state Tax Department revealed that the Tapus, both 46, filed fraudulent tax returns that were prepared by an employee of RB Tax Service, according to the statement.
The returns took the position that wages are not taxable by the state or federal governments, the statement said.
"That is a position that has been debunked by the courts as frivolous everywhere else in the country," said Deputy Attorney General Rick Damerville.
Even though the couple was advised by the Internal Revenue Service that their position was frivolous, they continued going to RB Tax Service and filing false state income tax returns representing that they were entitled to a refund of all of their withholding taxes for calendar years 2000 and 2001, the statement said.
The owner of the tax preparation service, Richard Basuel, was convicted in July 2002 for filing false tax returns for his clients and was sentenced to six months in prison.
Basuel, 60, was indicted last December by an Oahu grand jury on 23 new tax fraud charges. He was found in contempt of court and his bail was revoked on Thursday after he refused to sit at the defense table when his trial began.
