San Francisco judge swoops on unlawful tax schemes

A federal judge in San Francisco has ordered an insurance salesman, Edwin Lichtig, and his company GSL Advisory Solutions, to stop promoting unlawful tax schemes, said to have helped his customers avoid more than $25m (£16.5m) in tax though an insurance and individual retirement account (IRA) scheme.

The defendants agreed to the permanent injunction order without admitting fault. The US government sued Lichtig and GSL, alleging they promoted tax fraud schemes involving IRAs which helped customers improperly avoid federal income tax on more than $25m.

The US government claimed, Lichtig promoted a scheme called PAT (Pension Asset Transfer), which helped customers improperly avoid income tax on untaxed assets held in their IRAs through transactions with sham businesses, self-employed retirement accounts and understatements of the value of life insurance policies.

'Stopping tax fraud schemes involving misuse of retirement accounts is a high priority for the Justice Department's Tax Division,' Nathan Hochman, assistant attorney general for the tax division, said. 'Since 2001, the division has obtained injunctions against more than 360 tax return preparers and tax-fraud promoters.'

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