Taxpayer Sentenced for Deducting Tuition Payments as Charitable Gifts

Taxpayer Sentenced for Deducting Tuition Payments as Charitable Gifts

News story posted in U.S. District Court on 27 June 2003| 1 comments
audience: National Publication | last updated: 18 May 2011
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Summary

In a press release from the United States Attorney's Office for the Northern District of California, Tim Mosley of San Rafael, California has been sentenced to five months in prison followed by five months home detention and two years supervised release after pleading guilty to five counts of tax evasion and one count of filing a false corporate return. The taxpayer established a donor advised fund at the National Heritage Foundation and then instructed NHF to issue checks from his foundation account to the San Domenico Convent in San Anselmo, California. The gifts to NHF were reported by Mosley as charitable contributions; however, they were ultimately used to pay his children's tuition at a primary school run by the convent.

PGDC Summary:

In a press release from the United States Attorney's Office for the Northern District of California, Tim Mosley of San Rafael, California has been sentenced to five months in prison followed by five months home detention and two years supervised release after pleading guilty to five counts of tax evasion and one count of filing a false corporate return. The taxpayer established a donor advised fund at the National Heritage Foundation and then instructed NHF to issue checks from his foundation account to the San Domenico Convent in San Anselmo, California. The gifts to NHF were reported by Mosley as charitable contributions; however, they were ultimately used to pay his children's tuition at a primary school run by the convent.

Following are press releases from the United States Attorney's Office for the Northern District of California from December 5, 2002 (annoucing plea agreement) and June 20, 2003 (announcing sentencing):

FULL TEXT:

FOR IMMEDIATE RELEASE

Press Release

December 5, 2002

The United States Attorney's Office for the Northern District of California announced that Tim Mosley of San Rafael, California pled guilty today before U.S. District Court Judge Martin J. Jenkins in San Francisco to all counts of an Information filed by the U.S. Attorney's Office on October 23, 2002. The Information charged Mr. Mosley with five counts of tax evasion in violation of 26 U.S.C. § 7201 and one count of filing a false corporate return in violation of 26 U.S.C. § 7206(1).

Mr. Mosley resides in San Rafael California and is in the insurance business under the name Mosley and Associates, LTD. In pleading guilty, Mr. Mosley admitted filing personal income tax returns for the years 1995 through 1999 knowing them to be false with the intent to evade the payment of income tax that he owed. He also admitted filing a corporate return for Mosley Associates, LTD for the year 1999 knowing it to be false as to a material matter.

According to the plea agreement, Mr. Mosley created a foundation in 1995 at the National Heritage Foundation ("NHF") called The Tim and Carol Mosley Family Foundation ("Mosley Family Foundation"). In each of the years 1995 through 1999, Mr. Mosley admitted he sent payments to NHF and earmarked them for the account of the family foundation. He further admitted he informed his return preparer that the payments to NHF were charitable donations. Rather than being bona fide charitable contributions to NHF, however, Mr. Mosley admitted using the proceeds of the family foundation account to pay for the school tuition for his children at the San Domenico Primary School in San Anselmo, California.

According to the plea agreement, to make it appear that the tuition payments were bona fide charitable contributions, Mr. Mosley made payments to NHF, which credited the payments to his account under the name of the Mosley Family Foundation. Thereafter, pursuant to his instructions, NHF issued checks to San Domenico Convent, which were used, not as donations, but to pay for the tuition of his children at the Primary School.

Despite the fact that the NHF payments were ultimately used to pay for his childrens' tuition, Mr. Mosley admitted he improperly claimed as a charitable contribution deduction in each year the payments he made to the NHF. In addition, for the years 1996 through 1999, Mr. Mosley admitted claiming false business expenses on his Forms 1040, Schedules C and the corporate return of Mosley Associates, LTD., for the year 1999.

The sentencing of Tim Mosley is scheduled for March 13, 2003 at 2 pm before Judge Jenkins in San Francisco. The maximum statutory penalty for each count of tax evasion in violation of 26 U.S.C. § 7201 is 5 years and/or a fine of $100,000 and for filing the false corporate return in violation of 26 U.S.C. § 7206(1) is 3 years and/or a fine of $100,000. However, the actual sentence be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed in the discretion of the Court.

The prosecution is the result of an investigation by agents of the Criminal Investigation Division of the IRS. Jay R. Weill, Chief, Tax Division is the Assistant U.S. Attorney who prosecuted the case.

A copy of this press release may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can. Related court documents and information may be found on the District Court website at www.cand.uscourts.gov or on http://pacer.cand.uscourts/gov

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.


FOR IMMEDIATE RELEASE

Press Release

June 20, 2003

The United States Attorney's Office for the Northern District of California announced that Tim Mosley of San Rafael, California was sentenced yesterday June 19, 2003 to five months in prison followed by five months of home detention and two years of supervised release. The defendant has been ordered to surrender on or before September 26, 2003. The sentence was handed down by U.S. District Court Judge Martin J. Jenkins following a guilty plea on all six counts of the Information filed October 23, 2001 which charged him with tax evasion.

Mr. Mosley resides in San Rafael California and is in the insurance business under the name Mosley and Associates, LTD. Mr. Mosley admitted filing personal income tax returns for the years 1995 through 1999 knowing them to be false with the intent to evade the payment of income tax that he owed. He also admitted filing a corporate return for Mosley Associates, LTD for the year 1999 knowing it to be false as to a material matter.

In 1995, Mr. Mosley created a foundation at the National Heritage Foundation (NHF) called The Tim and Carol Mosley Family Foundation (Mosley Family Foundation). In each of the years 1995 through 1999, Mr. Mosley sent payments to NHF and earmarked them for the account of the family foundation. Mr. Mosley informed his return preparer that the payments to NHF were charitable donations. Rather than being bona fide charitable contributions to NHF, however, Mr. Mosley admitted using the proceeds of the family foundation account to pay for the school tuition for his children at the San Domenico Primary School in San Anselmo, California.

To make it appear that the tuition payments were bona fide charitable contributions, Mr. Mosley made payments to NHF, which credited the payments to his account under the name of the Mosley Family Foundation. Thereafter, pursuant to his instructions, NHF issued checks to San Domenico Convent, which were used, not as donations, but to pay for the tuition of his children at the Primary School.

Despite the fact that the NHF payments were ultimately used to pay for his childrens' tuition, Mr. Mosley improperly claimed as a charitable contribution deduction in each year the payments he made to the NHF. In addition, for the years 1996 through 1999, Mr. Mosley admitted claiming false business expenses on his Forms 1040, Schedules C and the corporate return of Mosley Associates, LTD., for the year 1999.

The government requested at the sentencing hearing that the defendant be ordered to pay restitution to the United States in the amount of $274,326.57, which included $165,326.57 in interest and penalties. The defendant paid $109,000 to the United States IRS on the eve of sentencing. The Court will decide on July 31, 2003 whether the defendant shall be ordered to pay as restitution the additional interest and penalties.

The prosecution is the result of an investigation by agents of the Criminal Investigation Division of the IRS. Jay R. Weill, Chief, Tax Division is the Assistant U.S. Attorney who prosecuted the case.

A copy of this press release may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can. Related court documents and information may be found on the District Court website at www.cand.uscourts.gov or on http://pacer.cand.uscourts/gov

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.

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Comments

Moseley/Tuition as Gifts

Interesting that the press release(s) make no mention of the National Heritage Foundation's role or lack of role in the issue. NHF has surfaced in connection with several questionable DAF issues over the past few years.

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