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Heiress' estate may be in jeopardy after tax fraud allegations

As many people in Texas know, paying taxes can be confusing, especially as more and more people try to save money by doing their own taxes. There is plenty of room for errors. However, the IRS is not usually sympathetic to people they suspect of committing tax fraud. In a current case, the two men who handled a famous heiress' estate have been accused of committing tax fraud.

Heiress Huguette Clark, whose estate is valued at $400 million, died recently at the age of 104. She is the daughter of former U.S. Senator William Andrews Clark, who made his fortune mining copper. Clark had been living in seclusion in a hospital for more than 20 years before her death, and now her attorney and accountant have been accused of committing tax fraud when dealing with the heiress' finances.

According to the public administrator of New York County, Clark's estate could be charged $50 million in IRS penalties for the alleged tax crimes. The public administrator said that the two men neglected to file federal gift tax returns over a six-year period, during which she gifted about $56 million to various people. While the taxes due on that amount would be around $41.5 million, the public administrator says only $7.5 million was paid.

The two men have also been accused of filing false tax returns by severely understating Clark's tax liabilities. The public administrator also says the men failed to inform Clark of her tax liabilities. According to her, the heiress' tax bill rose at a rate of $9,000 each day.

The two men who were in charge of Clark's estate have denied the accusations. A defense attorney for one of the men said her client acted professionally and in the best interest of Clark the entire time he worked for her. So far, no charges have been filed, but the Manhattan district attorney is investigating the situation.

It's no secret that the federal and state tax codes are complex. While no charges have been filed yet, these men have clearly taken the time to speak with an attorney. Others who have been accused of tax fraud may find it helpful to do the same. Understanding your rights and options can go a long way toward protecting your freedom when you are facing criminal charges.

Source: MSNBC, "Tax fraud alleged in estate of heiress Hugeuette Clark; accountant resigns," Bill Dedman, Dec. 22, 2011

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