International Automated Systems (fka IAUS)

[scion]

As a direct result of Defendant’s abusive solar energy scheme and Defendants’ false or fraudulent statements, their customers claimed and received tax benefits that they were not entitled to receive.

78. In reliance on Defendants’ claims, and as a result of buying into Defendants’ abusive solar energy scheme, their customers have failed to file proper federal income tax returns. This has deprived the United States of tax revenue owed by Defendants’ customers.

79. The tax returns filed by Defendants’ customers Person H and Person I, Utah residents and a married couple who filed jointly each year described below, provide an example of the abusive nature of Defendants’ solar energy scheme and the harm to the government that it causes.

Person H and Person I participated in Defendants’ solar energy scheme during tax years 2010, 2011, 2012, and 2013.

80. For Person H and Person I’s tax return for tax year 2012:

a. Person H purportedly purchased at least 160 lenses from RaPower-3 in tax year 2012.

b. Shepard, on behalf of RaPower-3, sent Person H a letter stating that these lenses were placed in service in tax year 2012 and that this would “qualify [Person H] for the. . . solar energy tax credit.” [1]

c. Person H and Person I reported $161,963 in wages, salaries, and tips from W-2s on their tax return.

d. On their tax return, Person H and Person I claimed a Schedule C business loss of $281,692 from Person H’s purported business involving “utilities” and called “Ra Power 3.” The total amount of the claimed loss from the “utilities” business resulted from $0 in income, but more than $281,692 in “expenses” including more than $280,000 in so-called depreciation due to the lenses Person H purportedly purchased through Defendants’ solar energy scheme.

e. This claimed loss reduced Person H and Person I’s adjusted gross income by $281,692.

f. Due to this false business loss, and in light of other income and deductions Person H and Person I applied, they claimed on their return that their taxable income was $57,646.

g. Person H and Person I’s claimed tax on $57,646 in taxable income was $7,774, according to their return.

h. Person H and Person I claimed $7,774 in bogus § 48 energy credits to “zero out” their taxes on their return, as Defendants asserted that that they could.

[1] RaPower-3, under Shepard’s signature, routinely sends such letters to Defendants’ customers. Before Shepard began sending these letters, Johnson sent identical (or nearly identical) letters on IAS letterhead.

i. Due to the false claims on their 2012 income tax return, Person H and Person I stated that they owed $0 in taxes.

j. Because Person H and Person I had federal income tax withholdings of $43,857 during tax year 2012, they claimed a refund for that amount. The IRS erroneously paid the refund.

k. But Person H and Person I were not entitled to the tax benefits that they claimed for tax year 2012 for the reasons described herein.

81. For Person H and Person I’s tax return for tax year 2013:

a. Person H and Person I reported $144,309 in wages, salaries, and tips from W-2s on their tax return.

b. On their tax return, Person H and Person I claimed a Schedule C business loss of $89,852 from Person H’s purported business involving “equipment leasing” and called “Ra Power 3.” The total amount of the claimed loss from the “equipment leasing” business resulted from $0 in income and $89,852 in so-called depreciation on lenses Person H purportedly purchased.

c. This purported loss offset the $51,806 in business income from Person H’s “healthcare” business and resulted in a total reported Schedule C business loss for Person H and Person I in the amount of $38,046.

d. Due to this false business loss, and in light of other income and deductions Person H and Person I applied, they claimed on their return that their taxable income was $200,468.

e. Person H and Person I’s claimed tax on $200,468 in taxable income was $43,597, according to their return.

f. Person H and Person I claimed $38,945 in bogus §48 energy credits to greatly reduce their tax liability on their return, as Defendants asserted that they could.

g. Due to the false claims on their 2013 income tax return, and in light of other taxes they applied, Person H and Person I claimed that they owed $6,236 in taxes.

h. Because Person H and Person I had federal income tax withholdings of $43,800 during tax year 2013, they claimed a refund for $37,564. The IRS erroneously paid the refund.

i. But Person H and Person I were not entitled to the tax benefits that they claimed for tax year 2013 for the reasons described herein.

Extract -
Doc 2 PDF file
https://www.scribd.com/doc/291081416/USA-v-RaPower-3-Et-Al-Doc-2-Filed-23-Nov-15