IRS Head Says College Admission Scandal Parents May Face Hefty Tax Bills

(Bloomberg) -- Some of the parents charged with paying bribes to get their offspring into college could end up owing a lot more to the Internal Revenue Service.

IRS Commissioner Chuck Rettig told the Senate Finance Committee his agency anticipates that “numerous other individuals” will be charged with criminal tax violations as a result of the investigation into alleged bribes paid to test examiners and college sports coaches to guarantee spots for students at elite U.S. universities.

People charged with criminal tax violations could be required to correct their tax returns and pay back taxes, plus interest and penalties, Rettig told the panel Wednesday. Many tax crimes carry a maximum five-year prison term and a fine of $100,000. Fines for civil tax violations can run as high as 75 percent of the unpaid tax, plus interest.

Last month, 33 parents were charged with conspiring with college admissions strategist and confessed ringleader William Rick Singer to pay $25 million in bribes to entrance exam administrators, a surrogate test-taker and university sports coaches to get their children into Yale, Georgetown, Stanford and other exclusive schools.

The U.S. alleges that some parents made payments to Singer through the nonprofit Key Worldwide Foundation, which they claimed as charitable contributions to get a tax deduction.

Among the parents charged in the case were actors Felicity Huffman and Lori Loughlin, and lawyer Gordon Caplan, the former co-chairman of Willkie Farr & Gallagher. Huffman and Caplan are among at least 13 parents who have said they will admit guilt. Loughlin declined a plea deal and now faces new charges of money laundering and asset forfeiture counts.

Singer also pleaded guilty and agreed to cooperate with the government, secretly recording conversations he had with the parents to help prosecutors build their case.

The IRS’s criminal investigations unit initiated about 3,000 cases in 2017, according to agency statistics. About 66 percent of the cases it completed that year resulted in jail time for the defendant.

To contact the reporter on this story: Laura Davison in Washington at ldavison4@bloomberg.net

To contact the editors responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net, Laurie Asséo, Joe Sobczyk

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