|
We help real people with real tax issues - successfully.
TOP NEWS
-
 IRS
Holiday Gift: Tax-Scheme Debunker - Tax season isn’t far
away, and as Americans put gifts under their trees this year,
the Internal Revenue Service released a gift of its own: the
newly updated tax-scheme debunker.
If you’re reading this column, the fun has likely begun
to wear off. You’re beginning to see something else came with
the 2008: an all-new tax season.
As Americans were exchanging gifts, the Internal
Revenue Service released a newly updated, 74-page “The Truth
about Frivolous Tax Arguments.”
If you’re like most Americans, you’re looking for ways
to save here and there on your tax returns. But around this time
of year, it’s all too easy to fall prey to an unscrupulous
company or salesman pitching tax schemes that just aren’t legal.
“Too good to be true schemes are exactly that — too good to be
true,” said IRS Chief Counsel Donald L. Korb. “Taxpayers should
be careful in making frivolous arguments since courts have
routinely rejected them.”
In 2006, U.S. Congress increased the amount of the penalty for
frivolous tax returns from $500 to $5,000. The increased penalty
amount applies when a person submits a tax return or other
specified submission, and any portion of the submission is based
on a position the IRS identifies as frivolous.
Among those positions:
- The filing of a tax return is voluntary: Courts have
consistently struck down this argument, and in fact, one
businessman who sold a tax scheme based on the argument received
156 months in prison.
- Payment of tax is voluntary: Just like the above argument,
this argument too has been consistently rejected by the courts.
- Taxpayers can reduce their federal income tax liability by
filing a “zero return”: Simply, though this is becoming a more
common scheme, no current law allows for it.
- The IRS must prepare federal tax returns for a person who
fails to file: Wrong. The IRS is not obligated by law to do
this, and as such, the taxpayer’s responsibility to file still
exists.
- Compliance with an administrative summons issued by the IRS
is voluntary: The IRS is authorized by law to inquire about any
person who may be liable to pay any tax and to call witnesses to
testify or to produce books, papers, records or other data that
may be relevant or material to an investigation.
Keep this in mind when trying to
find creative ways to avoid paying taxes: If you’ve thought of
it, chances are someone else has already and the IRS has seen it
and dealt with it. Living under the shadow of IRS debt or
tax charges is no way to spend your time. Instead of
handing your taxes over to a street-corner tax huckster, the
best thing you can do in 2008 is consult a qualified tax
professional.
- Yankees’ Aide Didn’t Report Players’ Tips
The traveling secretary for the New York Yankees
pleaded guilty in New Haven, Conn., to one count of filing a
false tax return. The federal government charged David
Szen, 56, of Brookfield, Conn., with failing to report tips from
players and coaches as income.
Those tips ranged from a few hundred dollars to
$10,000. In pleading guilty, Szen admitted that he failed to
report approximately $53,350 in additional income in his
individual income tax returns for the tax periods 2001 through
2005.
Szen faces up to three years in prison and a fine of up to
$100,000. He will also be required to pay about $10,285 in back
taxes, plus penalties and interest.
- Forest Service Employee Jailed
A former U.S. Forest Service employee has been
sentenced to 21 months in prison for embezzlement and tax fraud
charges. Debra Kay Durfey, 50, of Echo, Ore., previously
pleaded guilty in June to single counts of embezzlement and
theft of public money or property and preparing a false tax
document. She was also ordered to pay $642,319 in restitution to
the U. S. Forest Service.
In Durfey’s plea, she admitted she stole money from the
Forest Service’s account by depositing the Forest Service checks
into her personal account. She then used the money to gamble,
shop and make payments on her car and mortgage. After Durfey’s
embezzlement was discovered, she admitted to federal agents that
she knowingly embezzled the funds and knew it was wrong.
Durfey also caused a false Form 1099 to be filed with
the IRS on behalf of Hollinger, attributing around $137,000 of
the embezzled funds to him in an attempt to hide her
embezzlement.
- Fire Safety Manager Gets Prison Time
After admitting to defrauded the Rhode Island School of
Design out of nearly $1 million in a fraudulent billing scheme,
Patrick Clyne was sentenced to 27 months in months in prison for
mail and tax fraud.
Clyne, who was fire safety manager for RISD, set up a
shell company that billed RISD for work that was never
performed. Clyne admitted to filing a false income tax return
for 2003, conceding a total tax loss to the government of
$162,743 between 2001 and 2005. As a condition of supervised
release when he finishes his prison term, Clyne must file
accurate income tax returns and pay all due taxes, plus interest
and penalties.
- Mich. Tax-Shelter Promoters Indicted
A federal grand jury in Grand Rapids, Mich., returned a
five-count indictment charging three tax shelter promoters with
conspiring to promote, market and sell fraudulent tax shelters
over a 10-year period. Two of the promoters were also charged
with the attempted income tax evasion of a Michigan client, who
purchased the fraudulent tax shelter.
According to the indictments, beginning in 1995 Peter
J. Peggs of Prides Crossing, Mass., and Robert D. Larsen of
Winter Park, Colo., were involved in a criminal conspiracy,
along with Craig M. Stone, 63, of Fort Pierce, Fla., to defraud
the United States by promoting, marketing and selling a
fraudulent tax shelter called a loss-of-income (LOI) insurance
policy.
Peggs and Larsen, both officers and directors of
Security Trust, promoted and sold LOI policies to wealthy
clients in order to generate illegal tax deductions. The
indictment alleges that Peggs and Larson took steps to conceal
from the IRS the fact that these policies were fraudulent.
During the duration of the conspiracy, the defendants sold LOI
policies for more than $12 million in premiums but directed the
premiums, minus their fees, back to the purchasers in a manner
concealed from the IRS.
Conspiracy to impede the IRS and tax evasion each carry
a maximum punishment of five years imprisonment and a fine of up
to $250,000.
- FEDS: GA. Businessman Skimmed More than $500,000 from Company
After federal prosecutors in filed a criminal complaint
against a businessman that alleges he skimmed more than $500,000
from his company, the Dawsonville, Ga., man pleaded guilty to
evasion but disputed the amount of taxes evaded.
Robert Merickle, 59, allegedly filed a false tax return
in 2001, which failed to report substantial amounts of income
from a company he owned and operated, Blue Haven Pools.
According to court records, Merickle spent more than
$200,000 in 2001 from his company’s account for personal
expenses, such as a 55-foot luxury yacht, but treated those
items as business expenses. He also accepted tens of thousands
of dollars in cash from customers, which he kept off the books
and tax returns.
Although not charged in the information, the government
alleges Merickle engaged in similar conduct from 2002 to 2003,
which resulted in more than $500,000 in unreported income.
Merickle has agreed that the 2000, 2002 and 2003
conduct and unreported income will be used to determine his
sentence, but disputes the exact amount of the unreported income
in those years. He faces up to three years in prison and a fine
of up to $250,000.
- Tenn. Man Jailed for 20 False Tax Returns
Rodney F. Harris, 39, of Memphis, Tenn., has been
sentenced to serve 15 months in prison and ordered to pay
restitution of $14,479.00 to the Internal Revenue Service.
Harris was charged with 20 counts of aiding and
assisting in the preparation of false income tax returns.
According to the indictment, Harris prepared 20 federal income
tax returns for various people in 2002, 2003 and 2004, that
contained partially fraudulent Schedule A Itemized Deductions
that those taxpayers were not entitled to claim. Harris pleaded
guilty to three of those counts.
- Tenn. Man Jailed for 20 False Tax Returns
After pleading guilty to tax evasion, Ermino S.
Barbalunga, 58, of Dalton, Mass., was sentenced to nine months
of community confinement, nine months of home confinement, an
additional 18-month term of probation and a $200,000 fine.
According to government evidence, from 1999 to 2003,
Barbalunga used more than $440,000 in business income to pay for
personal expenditures. Additionally, Barbalunga failed to
declare these payments as income on his personal federal tax
returns. Barbalunga’s total unpaid federal income tax, plus
penalties and interest for the years 1999 to 2003, was
$622,355.14.
- Mass. Man Gets Confinement for Tax Evasion Guilty Plea
Attorney Joseph Richichi, 61, of Stamford, Conn., was
sentenced to 16 months in prison for tax evasion. According to
court records, Richichi evaded paying taxes on more than $1.8
million he earned from 2000 to 2005. Richichi admitted that he
failed to pay more than $600,000 in taxes that were due for
those tax years. He has paid full restitution of $614,231 to the
IRS and an additional $763,076.37 in civil fraud penalties and
interest.
ASK THE EXPERTS
Question:
I’ve heard a lot of inconsistent information, so give it to me straight, please: What is the Offer in Compromise program and would I qualify for it?
Answer: To answer your question, let me first give some
background: For decades agents with the Internal Revenue Service
chased deadbeat taxpayers, literally banging on doors to try to
collect revenue for the U.S. government. In some cases, that
hard-line tactic worked, but in many cases, it did not.
Over time, the IRS discovered that a
kinder, gentler collection tactic can be just as effective, if not
more effective. Enter the Offer in Compromise program. Many
taxpayers were running from the IRS not because they didn’t want to
pay but because they couldn’t pay.
The Offer in Compromise program is for these taxpayers.
If for whatever reason you have amassed a substantial amount of tax
debt but are not in a position — and likely will not be in a
position in the future — to pay that tax debt, then you may qualify
for the program.
Here’s how it works: The first thing you should do is
consult a qualified tax professional. He or she will analyze your
returns to make sure you are not obligating yourself to pay the IRS
even a penny more than you owe. Once you and your qualified tax
professional have determined the exact amount of your tax debt, you
will meet with an IRS agent and negotiate a settlement agreement.
This settlement agreement will be an amount you will pay that will
eliminate your tax debt once and for all — and this agreement
oftentimes amounts to pennies on the dollar. For taxpayers who
qualify for the Offer in Compromise program, it can mean the end of
all of their IRS nightmares.
We deal with problems like yours every day. We are IRS
Problem Solvers. For a free, no-risk consultation, please call
our office at 1-877-590-2500.
|
