Be careful what you brag about, especially if taxes are at stake.
Naturalized U.S. citizen Oliver Wang gushes to the Chinese-language media about his outdoor furniture manufacturing business, which includes the big Agio brand. "Starting from 1997, I have been opening up one new manufactory plant every year, in total of six," the People's Daily quoted Wang, also known as Wang Ping Sheng, in 2007. An Agio Web site puts 2008 sales at $450 million and reports that Agio recently added a "Yacht Club" line to its Disney ( DIS - news - people ) Resort Collection, which already includes "Grand Floridian" and "Animal Kingdom" lines.
But to the Internal Revenue Service, Wang tells a different tale: He insists he is just a hired gun working for others, with no equity stake in the many corporations, plants and offices in Hong Kong, the rest of China and his native Taiwan that he seems to direct with the intensity of an owner. Somewhat doubtful, the IRS is taking a close look.
Since June, Wang and his wife, Li-Hwa Wang, also a naturalized U.S. citizen, have filed nearly identical federal lawsuits in four states seeking to block the IRS from compelling information about Wang to be produced by big Agio customers Home Depot ( HD - news - people ), Wal-Mart ( WMT - news - people ), Target ( TGT - news - people ) and Costco ( COST - news - people ). So far, two judges have given the go-ahead to the IRS, which said in court papers it was auditing the Wangs' 2006 tax return looking for foreign ownership stakes and income "that the Wangs should have reported." The U.S. generally taxes its citizens on their worldwide personal income.
Their San Francisco lawyer, David B. Porter, says the legal fight will continue. But he said that despite the tax issues, the Wangs don't regret taking U.S. citizenship.
Is Wang another Igor Olenicoff? He's the naturalized Orange County, Calif., businessman who Forbes in 2006 dubbed "The Billionaire with the Empty Pockets" because he disclaimed ownership of the large real estate empire he ran. In 2007 Olenicoff admitted his deception, acknowledged hiding $200 million in offshore accounts, paid $52 million in back taxes, interest and penalties, and pleaded guilty to filing a false tax return. But thanks in part to smart lawyering, Olenicoff avoided jail time and remains on the Forbes 400 list.
The feds are a well-publicized campaign to root out unreported offshore assets and income. Besides criminal prosecutions, their weapons include extensive use of richly paid tax informants, most notably Bradley C. Birkenfeld, who brought documents to the IRS that led Swiss giant UBS AG ( UBS - news - people )to admit helping U.S. citizens to hide money offshore.
The IRS says it isn't currently building a criminal case against the Wangs, who maintain a home in Millbrae, Calif. But according to filings in the quash-the-summons cases, the Wangs have been on the IRS radar scope for some time.
In the early 2000s, IRS auditors concluded the Wangs had omitted disclosure of $80 million of foreign income--not necessarily all taxable--from their tax returns for 1995 to 1998. The Wangs replied they were straws for a non-U.S. business associate, sued and, according to U.S. Tax Court records, settled the IRS claims for $1 million.
Now, IRS filings--put together in large part by a Chinese-speaking revenue agent--tie Wang with top positions in such companies as Agio International Co. Ltd., Dimension Industries Co. Ltd., Shian Industry Co. Ltd., Shianco Industry Ltd., and Shunde Shian Furniture Co. Ltd. Some of the firms seem to own stock in others and share common addresses. Several recent U.S. patents for furniture design listing Wang as a co-inventor have been assigned to a foreign Agio unit.
According to the IRS, Wang claims he hasn't held an ownership interest in any foreign corporation in years. The IRS says Wang's 2001 tax return listed $1.7 million from the sale of his stake in two offshore companies but that Wang now denies ever having ownership. Moreover, the IRS says the 2001 sale was an insider transaction that "may not have been legitimate" anyway.
In an April 2009 interview with IRS agents, parts of which have been filed in court, Wang acknowledged he was chief executive of Dimension--which the IRS says paid him upwards of $150,000--but insisted that his role consisted of "troubleshooting" rather than managing.
Wang, who agreed that his operations "do very good business," adamantly stuck to his assertion he's just an employee laboring for others. "Yeah, I work for," he said. "I don't own for, but I work for, yes."