Demetrius J. Karos, Ltd. Tax Representation From A Former IRS Employee

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Alleged college admission fraud could mean tax trouble

As many people who follow the news know, a large group of well-connected and wealthy people face multiple criminal charges for their role in a scheme to get their children in top schools.

The point of the scheme, according to federal prosecutors, was to get their students in to the best schools in this country by paying out bribes and kickbacks rather than navigating through the system honestly.

Interestingly, at the center of the scheme was a non-profit organization called Key Worldwide Foundation. At least at the time, Key appeared to be in good standing with the Internal Revenue Service as a tax-exempt organization.

According to the indictment, many employees with the charity used their time and energy to pass along the bribes of rich donors to various people who would then help the donors' children get in to the college of their choice.

Some people thought that the scheme was able to grow and fester in part because the IRS was lax in its enforcement of its rules about not-for-profits, in large part because the agency has been through several rounds of budget cuts.

In any event, though, those who are facing these allegations, as well as the charity itself, may be looking at some serious repercussions from the IRS now their conduct has come to light. They may even be accused of tax evasion at the criminal or civil level.

If anything, this case illustrates the importance of playing by the rules when making or receiving charitable donations in the hopes of getting favorable tax treatment. However, it also important to note that many other families used the Foundation, seemingly to get their children in to schools legitimately. These people may also face heightened scrutiny, and they should consider securing the help of experienced legal counsel.

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