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Unpaid Taxes Tough to Recover
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· Konstantinos "Gus" Stamoulis and three of his children pleaded guilty to skimming hundreds of thousands of dollars off daily receipts at a restaurant four blocks from the White House. Stamoulis was sentenced this month to two years probation.
· Mike Hogan Jr., was indicted on charges of concealing income from a mattress shop, a restaurant and two other West Texas establishments, in part by depositing nearly $400,000 in bank accounts he allegedly opened in the names of his sister-in-law and ex-wife.
· Joseph Francis, creator of the "Girls Gone Wild" videos, was indicted last week on charges that his companies claimed more than $20 million in phony business expenses, using offshore bank accounts to conceal income.
Then there is Huynh (pronounced HWIN), the nail salon owner. Prosecutors say Huyhn's taxable income in 2000 was $273,000 -- 36 times what he reported. The IRS won't say how it caught him. His attorney suspects a snitch, but IRS officials say that is rare. Cases like Huynh's typically start with a red flag during a routine tax review.
Prosecuting a tax cheat can be hugely labor intensive. IRS agents dug through Huynh's garbage and monitored his house and salons for days, logging license plate numbers and identifying associates, according to court records. A 2003 search warrant finally turned up critical documents.
Last year, Huynh pleaded guilty and began serving 18 months in prison. His wife is to be sentenced later this month. So far, they have been ordered to pay $365,000 in back taxes.
The IRS audited 1.3 million taxpayers last year, just under 1 percent of returns filed. The White House has requested more money for enforcement and Congress is inclined to grant it. But audits alone can't close the tax gap.
"We'd have to have every other person [in America] working for Internal Revenue," said Steve Burgess, a director of IRS examinations. "Nobody wants that."
Still, experts say closer scrutiny of American life will be necessary if the government wants to make serious inroads.
"Unless we want to do something much more drastic than we've done in the past, you're really talking about . . . incremental increases in compliance," said former IRS commissioner Lawrence Gibbs. "There is no low-hanging fruit in this area."
