Hair stylist to the stars gains fame he never wanted
Posted by AccountingWEB in Tax, Watchdog, Income Tax, Celebrity News on 02/18/2010 - 13:45
- Celebrity hair stylist faces criminal charges for tax avoidance
- Cash was allegedly skimmed from daily receives over a three-year period
- If found guilty, defendant faces possible prison time and a hefty fine
He's not a national celebrity himself, but celebrities like Maya Angelou, Mary Tyler Moore, and Britain's former princess Sarah Fergusson depend on him for their beauty. Now, Teddie Kossof is getting some media attention he'd like to avoid. Kossof, age 64 is the president and sole owner of a well known salon and spa near Glenview, IL. On Friday, February 5, U.S. Attorney Patrick Fitzgerald filed a one-count criminal information document in a federal court in Chicago, stating that Kossof underreported his income by nearly $760,856 over a three year period in order to avoid paying federal taxes on the money.
The charges against Kossof include filing a false federal corporate income tax return for the high-end salon, Teddie's Hair Designers, Inc. According to the complaint against Kossof gross receipts for the salon were understated by nearly:
· $193,500 in 2002.
· $291,500 in 2003.
· $276,000 in 2004.
Kossof is accused of skimming cash from daily receipts before making bank deposits. The complaint alleges that this occurred on numerous occasions in the three years in question, and that Kossof used the funds for personal and business expenses. For those years, the IRS says he owes an additional $114,360 in federal income tax.
Prosecutors also stated that, at the end of every year, Kossof met with his CPA for the purpose of corporate tax preparation. But, they add, he represented that the financial records he provided were full and complete, and did not disclose to his accountant that any cash had been skimmed.
If convicted, Kossof could spend a maximum of three years in prison and pay a fine of $250,000, plus liens for any unpaid taxes, penalties, and interest, as well as the cost of prosecution that will be incurred by the government.
A spokesman for Fitzgerald's office said, "Through his attorney, Kossof authorized the government to disclose that he will be pleading guilty to the charges."
Employees at Kossof's salon say they were aware of the charges, but had no comment for reporters. No date has been set for the arraignment.
Kossof's salon occupies a three-story complex. The business employs 40 hair stylists and several make-up artists, masseuses, manicurists, colorists, and estheticians. Apart from hair care, the salon also offers everything from massage to facials, teeth whitening and hair removal. Media in the area say that Kossof has been a staple in the local spa industry for decades.
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Gail Perry, CPA