July 2009

Tax Times Newsletter - July 2009
	Whether you would like to avoid the IRS, contact the IRS, settle with the IRS, or just want to refer a friend, relative or client, I would be happy to provide you or that special person you refer a no-obligation confidential consultation to explain every option available to them to solve their IRS problem. - Jay Schlichting
*We help real people with real tax issues - successfully.* TOP NEWS Following Obama’s Orders, IRS Begins War on Cheats In a high-profile Tax Day press conference, President Obama announced an even more aggressive war on tax cheats. Now, the IRS is planning the assault. It was only a couple of months ago that President Barack Obama, still freshly inaugurated, stood in the White House and announced his plan to go after — and go after aggressively — tax cheats, no matter where they hide their money. His plan focused primarily on breaking down the network of banks and financial advisers that help U.S. taxpayers hide their money overseas, away from the watchful eye of the Internal Revenue Service. The president’s words were tough. “If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens, and act accordingly,” he told a nationally televised audience. But while the headlines focused on Obama’s mission to put an end to overseas tax shelters, his tax-collection plans were more far-reaching. The president isn’t just looking for millionaires with their fortunes stashed away in Swiss banks. No, he’s looking for what could be you — average Americans who are electing to cheat in order to avoid paying taxes. If that fact isn’t obvious in President Obama’s speeches, it’s clear in the actions of the agency now under his watch — the IRS. Last month, IRS Commissioner Doug Shulman announced a new recommendation that would place the government’s tax troops right on the front line of the tax-cheat war. That’s right, the IRS is focusing on tax return preparer community. It’s not the government suspects this community of cheating; it’s that the government suspects the clients of this community may be cheating. The government, in a sense, suspects you and is taking action. Schulman’s recommendations include a new model for the regulation of tax return preparers; service and outreach for return preparers; education and training of return preparers; and enforcement related to return preparer misconduct. “Tax return preparers help Americans with one of their biggest financial transactions each year,” Schulman said in a statement. “We must ensure that all preparers are ethical, provide good service and are qualified. At the end the day, tax preparers and the associated industry must be part of our overall game plan to strengthen the integrity of the tax system.” Focus on that last line: part of our overall game plan. The IRS realizes that it’s impossible to fully vet all of the millions of tax returns it receives every year. Getting the tax preparer community on board with enforcement will only help its tax collection efforts, the government has concluded. Here’s what this means for you: The government has decided that its war on tax cheats is a multi-front conflict, ranging from overseas banks to the tax preparer around the corner. Simply put, it’s a bad time to be a tax cheat. Staffing Business Owner Did Not Report $850k The owner of a California healthcare-staffing business was sentenced to 18 months in prison after filing tax returns that failed to report more than $850,000 in income. Nwadinaume Uba, 57, who was also fine $5,000 and ordered to pay $258,741 in restitution, pleaded guilty to three counts of filing false tax returns. According to the plea agreement, Uba owned and operated TLC Prostaffing and Evergreen Health Care Connection — staffing businesses for nursing care facilities located in San Jose, Calif. On her 2001, 2002 and 2003 personal income tax returns, Uba admitted that she omitted a significant amount of gross receipts on her Schedule C (Profit of Loss from Business). 22-Year Sentence for Tax, Other Charges A Florida businessman was sentenced 22 years and six months in federal prison for, among other charges, for conspiring to commit wire fraud, obstructing an agency proceeding and impeding the IRS, and failing to remit payroll taxes. Frank L. Amodeo, 48, of Orlando, pleaded guilty and was also ordered to forfeit more than $1 million seized from various accounts, three homes, several luxury automobiles, commercial real estate, a Lear Jet and his corporations. The court imposed a money judgment of approximately $181 million, which is amount of the stolen payroll tax funds. According to court documents, Amodeo, and his co-conspirators controlled several companies. They conspired to absolve themselves and the companies they controlled of the responsibility for existing payroll tax liabilities and to divert payroll tax funds paid by clients to the companies that Amodeo and his co-conspirators controlled. Ariz. Consultant Gets 12 Months for Not Filing An Arizona businessman has been sentenced to 12 months in federal prison for failure to file a federal income tax return. Mario Alexander Pino, 38, a self-employed consultant in Scottsdale, was indicted by a federal grand jury in August 2008 and entered a guilty plea in March 2009 to the crime of willful failure to file his 2003 tax return. Pino was also ordered to serve one year of supervised release upon leaving prison. Pino admitted that a reasonable estimate of his 2003 income was $602,933 and that his federal income tax liability on that income was approximately $192,244. In addition, Pino admitted as part of his guilty plea that he purposefully did not file his 2003 return by April 15, 2004, and that he knew that he had an obligation to do so. Despite not filing his return, Pino said that he used an unfiled 2003 return as supporting proof of his income in making applications for automobile and mortgage loans in 2004 and 2005. Investor Failed to Report $15 Million A California businessman pleaded guilty to not reporting $15 million in capital gains from the sale of real estate. Luke D. Brugnara was in the business of acquiring and renting real estate in the San Francisco area and elsewhere. In February 1998, the IRS requested copies of Brugnara’s individual income tax returns for the years 1990 to 1996, in addition to copies of tax returns for Brugnara Corporation. Brugnara returned those notices to the IRS with a notation indicating that the tax returns were already filed. At about the same time, Brugnara applied for a gaming license to operate a casino after acquiring the Silver City Casino in Las Vegas. The Nevada Gaming Control Board began an investigation as part of Brugnara’s application for a gaming license. The investigation included an inspection of his tax filings. During the check, investigators discovered Brugnara had not filed tax returns for the years 1991 to 1998. Brugnara further admitted that in January 2000, he sold two properties in San Francisco and did not list the sales of these properties on his 2000 federal income tax return, which he knew he was required to provide on the Form 1040 for 2000. As part of the plea agreement, Brugnara agreed to a prison term of between 18 and 24 months. He also agreed to pay a fine of $30,000 and restitution of $343,038. GEORGIA WOMEN PLEAD GUILTY TO TAX-REFUND CONSPIRACY; DEFRAUDED THE U.S. GOVERNMENT OF NEARLY $200,000 Georgia resident Yolanda Canty and Jacqueline Kier pleaded guilty to conspiracy to defraud the government following an IRS investigation that discovered their fraudulent tax-refund scheme. The pair was involved in a scheme to file false tax returns based on fabricated W-2 forms in their own names and in the names of others. Most of the “taxpayers” had no knowledge of the returns being filed in their names. They would persuade individuals to provide them with their names, Social Security numbers and dates of birth. The defendants would use this information to create false W-2 forms in the name of actual employers who did not employ the individuals. The tax returns would be electronically filed and requests made for refund-anticipation loans; then the refunds would be sent by direct deposit to a bank account which was controlled by the defendants. According to the IRS, the estimated loss from the conspiracy totaled $192,529. Canty and Kier face up to 10 years in prison and a fine of up to $250,000. FORMER STRIP CLUB OWNER SENTENCED on Dale Adams of Jackson, Miss., was sentenced to 18 months in prison, to be followed by one year of supervised release, for filing a false federal income tax return in 2000. Adams was also ordered to pay a $5,000 fine. The former owner of a strip club, Adams was indicted by a federal grand jury in February 2007. According to the indictment, Adams was charged with filing false returns that failed to report substantial gross receipts from his business for calendar years 1999 and 2000. “The prosecution of individuals who intentionally conceal income and evade taxes is a vital element in maintaining public confidence in our tax system,” said Michael J. De Palma, Special Agent in Charge of IRS Criminal Investigation, New Orleans Field Office. ORE. MAN SENTENCED FOR TAX CHARGE Mark Arthur Henriksen, of Monmouth, Ore., was sentenced to 12 months and a day in prison after pleading guilty to one count of income tax evasion for the 2001 tax year. Henriksen was a principal of Applied Technical Systems, a business in Lake Oswego. Henriksen evaded the assessment of his income taxes in 2001 by instructing employees of ATS to make his bonus checks payable not to him but instead to third parties. TENN. MAN GETS THREE YEARS OF PROBATION Jeremy S. Schmid, 31, of Sevierville, Tenn., was sentenced to three years of probation and six months of home detention. He was also ordered to pay $204,723.47 in restitution to the IRS. Schmid pleaded guilty to three counts of failing to file tax returns with the IRS. According to the stipulation of facts filed with the court at the time of his plea, Schmid admitted to willfully failing to file returns for the 2002, 2003 and 2004 tax years. ASK THE EXPERTS: Question: I owe a lot of money in back taxes to the IRS. I’d prefer not to go into details, but let’s just say it’s a mix of employment changes and some bad tax advice. There’s no way I can pay what I owe. What can I do? Answer: First of all, your situation isn’t altogether uncommon. Many taxpayers have been, and are, in your exact situation. So take some solace in knowing you are not alone. Now, what do you do next? The good news is that you have options, no matter the reasons why you got into this tax debt. Your first step should be to consult a qualified tax professional. He or she will deeply analyze your previous tax filings and records to make sure you have not obligated yourself to pay the IRS even a penny more than you owe. Once your qualified tax professional has come to an exact amount you owe, it will be time to meet with the IRS. Here you likely have two main options: The first is the Offer in Compromise. This program allows taxpayers who owe a substantial amount, but for whatever reason are unable to pay this debt, to negotiate with the IRS on a settlement— often resulting in a payoff amount of less than owed. After years of chasing deadbeat taxpayers with mixed results, the IRS realized that a kinder, gentler approach can often be more effective in tax collection. The result of this is the Offer in Compromise program. You must meet certain criteria to qualify, but if you do, it’s an excellent option. The second option is the Installment Agreement. This allows you to pay your debt down over time by making manageable monthly payments to the IRS. Think of this like taking out a car loan — payments large enough to pay down your debt but not so large as to change your lifestyle significantly. I solve IRS problems like yours every day. I’m an IRS Problem Solver. For a free, no-risk consultation, please call our office.
Tax Times Newsletter is an online Publication by The Schlichting Group Specialists in IRS Representation and Tax Preparation