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U.S. Investigates Swiss Bank Rahn Bodner for Secret Accounts

Tuesday, September 17th, 2013

Another Swiss bank is experiencing the wrath of the U.S. Government’s focus on offshore tax cheats and revenue collection. A Reuters article titled: Another historic Swiss bank under U.S. tax spotlight reports that Swiss private bank Rahn & Bodmer is under investigation by U.S. authorities as part of a lengthy U.S. Swiss dispute over tax evasion.

The article provides a brief history of Rahn & Bodmer:

  • It is an old line Swiss bank based in Zurich, Switzerland that was set up as a silk trader in 1750.
  • At the end of 2012, the bank managed client assets of 12.5 billion Swiss francs ($13.4 billion) and employs around 200 people.
  • The bank had also stopped accepting undeclared U.S. assets in 2008 and advised clients with such assets to make voluntary disclosures to the U.S. authorities.

Just last month, I wrote a blog post about the U.S. and Swiss and their compromise deal for how Swiss banks will report account data on their American clients to the IRS without compromising Swiss banking secrecy laws.

It looks like Rahn & Bodmer is under investigation in spite of the deal because the agreement did not cover a first group of banks already under U.S. criminal investigation including Credit Suisse, Julius Baer and state-backed regional bank Zuercher Kantonalbank.

According to the Reuters article, officials at Rahn & Bodner knew they would have to meet with U.S. authorities and had already begun the documentation concerning U.S. clients some months ago. They also thought they would be in the second group.

Rahn & Bodner is the oldest bank remaining in the German-speaking part of Switzerland after the venerable Wegelin & Co., shut its doors earlier this year after being indicted and fined by U.S. authorities for conspiring to help U.S. clients evade taxes.

If the U.S. government is this determined to throw to book at some of the most established foreign banks they believe to be secretly sheltering the assets of wealthy Americans, imagine what they will do to average taxpayers with undisclosed offshore bank accounts?

If you have unreported offshore accounts, you need to be proactive about disclosing your foreign funds immediately. Your best defense is to hire a certified tax resolution specialist with extensive experience handling offshore tax compliance cases. Here is a short list of what these tax pros can help you do:

  • Reduce your chances of criminal prosecution (criminal sanctions can be as much as up to 5 years in prison.)
  • Take over all IRS communication.
  • Make the required disclosures, file FBAR reports and amend your tax returns.
  • Minimize severe IRS penalties that can exceed 100% of the value of the asset, plus tax penalties and interest.
  • Negotiate an offshore tax settlement that gets you back into tax compliance.

But it’s important to act now and meet with a qualified tax professional to disclose your accounts and get more favorable treatment from the IRS.

Tax Relief Weekly News Round Up

Friday, August 23rd, 2013

Happy Friday!

This week we featured tax relief stories about the following subjects: how tax resolution can help struggling taxpayers, turning financial failures into success, ways to pay off a large tax debt. We also covered stories about tax evasion, filing false tax liens and tax fraud.

Here’s the tax news recap:

The post How Tax Resolution Services Helps People Find Tax Relief was inspired by a video interview I had in February with KTLA Channel 5’s Alan Mendelson host of “Best Buys with Alan Mendelson.” The video gives consumers a true understanding of the tax resolution process and that reputable firms like Tax Defense Partners (TDP) can help them. Here are the three main points I wanted to make:

  • The Recession Hit Good People Really Hard – Many of the clients that come to TRS have had life-altering events happen to them generally an extended job loss and the loss of income.
  • Taxpayers Have More Tax Relief Options Than Ever Before – Struggling taxpayers have more options than ever to take care of their IRS tax problems such as Offer in Compromise, Installment Agreement, innocent spouse relief and other IRS payment plans (if they qualify).
  • Tax Resolution Begins with Compliance – Since half of our clients have an average of 4-11 years of unfiled tax returns, our first objective is to prepare and file their previous returns. We also make sure their W-4 withholdings are correct and get them into withholding compliance. The IRS is more willing to make a deal if you are not digging a deeper hole.

Tax Relief Tips-Turning Financial Failures into Tax Success – I read an informative article from Kay Bell titled: “Turning financial failures into tax-saving successes” celebrating August 15 – National Failures Day by telling consumers how they may be able to turn some of their financial losses into tax gains. Here are some of the instances where taxpayers can do this:

  • Stock Losses – if you don’t have gains, you can still deduct up to $3,000 of your capital losses against ordinary income for the tax year.
  • Investment Fraud Losses – If you were a victim of a fraudulent investment scheme or “Ponzi” Scheme, you could be eligible to recoup 30% to 40% of your losses.
  • Schedule C Losses – it’s ok to have a bad year especially if the business is a side operation and there is other income to help pay the bills.

Important note: Before taking any losses, make sure you consult a qualified tax professional to assess your unique financial situation.

In the post IRS Question Corner: How Can I Pay Off Tax Debt? I help answer a few questions for a reader who owes back taxes and is looking for a way out. Here are my suggestions:

1. First and foremost, consult a qualified tax professional to assist you in determining the best IRS payment plan for your financial situation.

2. Whether the Offer in Compromise or Installment Agreement is right for you depends on your circumstances. If you can’t pay it off over time (and you can prove it), the OIC program may be for you.

3. If you can pay off that your IRS debt if given time, the Installment Agreement is most like your best option.

Trustee Faces Five Years for Tax Evasion – Randy Lynn White, of Lubbock, Texas, the sole trustee of the Frank F. McMordie Jr. Family Trust, pleaded guilty to tax evasion and faces up to five years in prison and a fine of up to $250,000. Court records show that White took advantage of his control of the trust spending most of the trust’s money on personal expenditures such as making his mortgage payments, buying cars, motorcycles, diamonds and gold jewelry.

White attempted to conceal his extravagant expenditures by trying to make them look like business expenditures and by paying a relatively small amount of the trust’s income to the trust’s beneficiary.

Three Californians Indicted for False Tax Liens and Fraud – The Imperial Valley News (IVN) recently published a story about three shameless criminals who foolishly thought they could outsmart the U.S. Government. According to the IVN article, three Placerville, California residents; Teresa Marie Marty, Charles Tingler and Victoria Tingler, were indicted for conspiracy to defraud the United States and filing multi-million dollar tax liens against government officials.

Their lawless actions also had them unlawfully using the social security numbers of the government employees in the liens filed with the California Secretary of State. To add insult to injury, according to the article, Marty, was previously indicted in June 2013 for a large-scale tax fraud scheme that falsely claimed more than $60 million in false federal income tax refunds.

Have a great weekend!

Three Californians Indicted for False Tax Liens and Fraud

Thursday, August 22nd, 2013

The Imperial Valley News (IVN) recently published an article titled: “California Residents Indicted for Filing False Tax Liens Against IRS Employees and Tax Fraud” highlighting an incredible story of three brazen and foolish people who thought they could outsmart the IRS. According to IVN, the Justice Department announced the unsealing of a superseding indictment that charged three Placerville, California residents: Teresa Marie Marty, Charles Tingler and Victoria Tingler, with conspiracy to defraud the United States and filing multi-million dollar tax liens against government officials.

Here are some details about the players in this case the article highlights:

Teresa Marie Marty is charged with the following:

  • Filing liens against the property of three Internal Revenue Service (IRS) employees involved in the collection of taxes she owed the IRS.
  • Filing liens of at least $84 million against the property of two Justice Department attorneys involved in a lawsuit filed against her in 2009 and her business Advanced Financial Services (AFS).
  • Filing a false tax return for the Tinglers that fraudulently claimed a refund of $358,415.
  • Unlawfully using the social security numbers of the government employees in the liens filed with the California Secretary of State. (The liens disclosed the social security numbers of the respective government employees).
  • Conspiracy to defraud the IRS with Marty engaged a commercial collection agency to collect one of the three false liens that Mr. Tingler had filed, one of which was in the amount of $500,000. (AFS office manager Pamela Harris, of Placerville was also named in the indictment).

Mr. and Mrs. Tingler are charged with the following:

  • Filling a false tax return in 2008 (with Marty) that fraudulently claimed a refund of $358,415.
  • Filing multiple liens against the IRS revenue officer who tried to collect the fraudulently obtained refund.
  • Unlawfully using the social security numbers of the government employees in liens filed with the California Secretary of State. (The liens disclosed the social security numbers of the respective government employees).
  • Conspiracy to defraud the IRS – Mr. Tingler and Marty engaged a commercial collection agency to collect one of the three false liens that Mr. Tingler had filed – one of which was in the amount of $500,000.

Wait, Wait There’s More…

According to the IVN article, Marty, Harris, and Marty’s daughter, Rebecca Bandera-Marty were previously indicted in June 2013 for a large-scale tax fraud scheme. According to the superseding indictment, in 2008 and 2009 Marty, Bandera-Marty, and Harris conspired to file at least 250 false individual federal income tax returns on behalf of individuals residing in twenty-six states – falsely claiming more than $60 million in false federal income tax refunds.

If convicted, the defendants face up to five years in prison for the conspiracy charge as well as each charge of filing a false claim and unlawfully disclosing a social security number.  Each retaliatory lien count carries a maximum penalty of 10 years in prison.

IRS Enforcement, Investigations and Prosecutions Are on the Rise

In a previous Tax Resolution University post, I wrote about IRS enforcement, investigations and prosecution increases taken from the IRS Criminal Investigation annual report of 2012:

  • The number of investigations per year rose 8 percent over the previous year, despite having 2.7 percent fewer IRS special agents compared to the previous year.
  • The IRS is becoming more efficient even as the number of people working for the tax-collecting agency decreases.
  • The IRS’s increased use of technology to identify potential tax cheats. After identification, the suspicious tax returns are referred to agents for close review.

This means the IRS is not only getting better at spotting potential tax cheats, it’s also getting more aggressive in pursuing prosecution.

If you are facing IRS tax issues due to “questionable” tax reporting or have received an IRS audit letter you will need to consult a certified tax resolution specialist who can help you negotiate an IRS tax settlement that resolves your tax problem once and for all.

Tax Defense Partners Weekly Tax News Round Up

Friday, August 9th, 2013

Happy Friday!

The tax relief news that sparked our interest this week was quite varied. The stories ranged from tax delinquent New Yorkers losing their driving privileges to another “Real Housewife” star in trouble with Uncle Sam, to avoiding tax relief scams and schemes to Twitter tax news about IRS agency challenges including struggles with efforts to curb identity theft and tax refund fraud.

New York State-Getting Tough on Tax Cheats – The post “New York State Revokes Driver’s License for Tax Debt,” reports that beginning this year, New York state drivers who owe more than $10,000 in state taxes face losing their license until the tax debt is paid. The information was provided in Forbes article by contributor Kelly Phillips Erb who also reported that the crackdown on tax deadbeats reflected a state budget revenue raising measure that lawmakers approved in March of this year. The article also mentions that the NY Tax Department estimates collections will be increased by $26 million this fiscal year alone and collecting about $6 million each year thereafter.

Last week, I reported on another “Real Housewife” Teresa Giudice who was indicted on fraud charges. This week, in Even Real Housewives Get Tax Bills it’s Lynne Curtin’s turn. From Capistrano Beach, California, Curtin is best known for her two season stint on the Real Housewives of Orange County. According to celebrity news website TMZ, the IRS filed a tax lien against Curtin for $32,006.24 – a small amount compared to other celebrities. The point of mentioning Lynne Curtin’s tax woes is to highlight the fact that every year the IRS files 1 million tax liens against taxpayers for back taxes. If you are ignoring your tax troubles, beware: you could be next!

Tax Help Tips-How to Avoid Tax Relief Scams – For fifteen years, I have seen my share of tax scams and schemes. Some of the worst have been from people calling themselves “tax resolution experts” who then prey on vulnerable taxpayers seeking IRS tax relief. But not all tax resolution firms or experts are created equal. After reading a recent article by Fox Business titled: “Don’t Become a Victim of a Tax-Relief Scam,” I felt the need to set the tax resolution record straight for legitimate practitioners. After pointing out the three major tax scams to avoid – I share my thoughts on when taxpayers should hire representation and what to look for in a tax resolution professional.

From Twitter

  • An article in @Forbes by Robert W. Wood titled: IRS as Rebellious Teenager caught my eye for its informative and humorous content. Wood explains how the impetuous IRS, like a teenager, has made a mess of things. He also mentions that also like a teenager, we need to coexist. Even with a capable grown up in charge, retired corporate and government official, John Koskinen, the damage of the last few years will take time and huge effort to repair the public’s confidence in the tax system.
  • Identity theft and tax refund fraud – are the biggest tax problems facing the IRS. A recent article by CPA Practice Advisor @cpapracadvisor titled: IRS failing in efforts to curb ID theft tax fraud claims that the IRS is having a hard time getting control over these crimes. The article also cited two recent watchdog reports that show the need for the IRS to get better at helping identity theft victims and stop issuing refunds to thieves. Perhaps most disturbing is a Government Accountability Office (GAO) report that says the IRS still doesn’t know the total extent of the fraud.

Enjoy your weekend!

Real Housewife Teresa Giudice Indicted on Fraud Charges

Tuesday, July 30th, 2013

Seemingly overnight, Teresa Giudice made a name for herself on the Bravo reality show, Real Housewives of New Jersey. However, it appears her ongoing tax problems may take away the glamor of her celebrity lifestyle and place her behind bars. TMZ reports in an article titled: “Real Housewives’ Stars Facing 50+ Years in Prison for Money Fraud” that Giudice and her husband Joe, have just been slapped with a “laundry list” of criminal charges — from bank fraud to tax evasion that could result in the couple facing more than 50 years in prison and more than $600,000 in fines if found guilty.

Here are some of the details the article mentions from U.S. Attorney Paul J. Fishman’s case against the Guidice’s:

  • The 39-count indictment claims that between 2001 through 2008, Teresa and husband Joe massively defrauded the IRS as well as several banks.
  • They conspired to illegally obtain mortgages and other loans from multiple banks by intentionally overestimating their incomes in order to get more money.
  • They withheld vital information about their net worth from a U.S. bankruptcy trustee after filing for Chapter 7 in 2009 — including Teresa’s true income from the Bravo reality show.
  • Regarding tax evasion charges, Joe is accused of failing to file income tax returns for the years 2004-2008, during which he allegedly earned $1 million.
  • Included in the 39 charges were conspiracy to commit mail and wire fraud, which can carry a maximum prison sentence of 20 years and bank fraud, which has a maximum sentence of 30 years. The remaining charges carry the possibility of even more prison time.
  • Neither Teresa nor Joe has been arrested, but they’re both due in court Tuesday morning in Jersey.

Weighing in on the subject, online women’s blog, Jezebel shared an example of the type of fraud Teresa Giudice committed. According to U.S. Attorney Fishman, in September 2001, Teresa applied for a $121,500 mortgage loan indicating on the application that she was working as an executive assistant. She submitted fake W-2 forms and pay stubs, acting as if they were from her employer, and she and her husband also used false information on bank loan applications.

A Fox News article quotes US Attorney Fishman as saying, “Everyone has an obligation to tell the truth when dealing with the courts, paying their taxes and applying for loans or mortgages. That’s reality.”

Nothing is more “real” than stepped up IRS collection enforcement or which it does not discriminate – it goes after celebrities and average taxpayers equally if they believe them to be cheating or not paying taxes. It’s just when it comes to celebrities, we hear about it.

If you are saddled with significant tax debt, have underreported your income, or are under audit for “less than perfect” tax reporting, you will want to be proactive and come forward to deal with your tax debt issues. Taking this step may actually help your case.

Your first line of defense will be to consult with a certified tax resolution specialist who has experience handling cases like yours. These IRS problem solvers can help to unwind your tax mess, keep you out of prison and get you back on better financial footing.

Tax Fraud Charges for Georgia State Representative

Thursday, June 20th, 2013

A Georgia state representative was charged in federal court with fraud and tax charges.

Tyrone Brooks Sr., 67, of Atlanta, was indicted on charges that he misappropriated almost $1 million in charitable funds from Universal Humanities, a charity he founded in 1990, and the Georgia Association of Black Elected Officials.

Brooks’ indictment charges that, from the mid-1990s through 2012, Brooks solicited contributions from individuals and corporate donors to combat illiteracy and fund other charitable causes, but then used the money to pay personal expenses for himself and his family.

“Mr. Brooks defrauded not only the donors but also the American taxpayer by evading his tax obligations. Tax compliance should and must be equally shared among all Americans,” said Veronica Hyman-Pillot, Special Agent in Charge, IRS Criminal Investigation, in a statement.

Brooks has pleaded not guilty. In a press conference, his lawyer, former Georgia Governor Roy Barnes, said Brooks did not break the law.

$6.2 Million Tax Refund Scheme by Alabama Man

Friday, May 24th, 2013

An Alabama man was indicted for his part in a scheme to collect millions of dollars from the Internal Revenue Service using false tax returns.

Douglas Ervin Dent, 66, of Birmingham, Alabama, allegedly filed 20 false income tax returns in his own name and on behalf of others between April 2008 and October 2009. Dent knew that he and the other taxpayers were not entitled to the $6.2 million in refunds he claimed, according to the indictment. Each false tax return contained a claim that money had been earned by the taxpayer and withheld by various financial institutions on behalf of the taxpayer during the tax year and that the taxpayer was entitled to refunds of those withholdings from the IRS when, in truth, no such earnings and withholdings had occurred, according to the indictment.

Among the 20 false returns, Dent filed four in his name and one in the name of his deceased mother. The requested refunds on these five returns totaled more than $2.6 million.

“Criminals who scheme to avoid paying taxes or to steal money from the U.S. Treasury will be prosecuted,” U.S. Attorney Joyce White Vance said in a statement.

If convicted, Dent faces up to five years in prison and a $250,000 fine.

Feds Still Coming After Unreported Offshore Account Holders

Thursday, March 7th, 2013

A recent Wall Street Journal article titled “Offshore Tax Probe Picks Up” shows the Feds continuing to go after Swiss banks both big and small. The government has also expanded their search for U.S. tax cheats in countries such as Israel, India, Singapore, China and elsewhere they believe citizens might be sheltering their secret accounts to evade paying taxes on them.

The article reports that on Monday Switzerland’s oldest private bank, Wegelin & Co. pleaded guilty to violating U.S. tax laws and was ordered to pay a total of $74 million. Federal investigators believe the leads gathered from interviews with confessed tax cheats associated with this case and others has given them new momentum to “aggressively” pursue those who do not comply with U.S. tax laws. The article outlines the U.S. Government’s focus on the following:

  • Banks in Switzerland, both big and small
  • Other countries such as Israel, India, Singapore, China and elsewhere
  • Sprawling giant banks
  • Niche banks who provide offshore accounts
  • Taxpayers with dual citizenship

In a previous post, I wrote about Former IRS Commissioner, Douglas Schulman’s offshore tax strategy which essentially brought Swiss Banks to the bargaining table (reluctantly). This was only after the U.S. Department of Justice (DOJ) leaned really hard on them beginning in 2009 with United Bank of Switzerland (UBS). Here are some important statistics from the Wall Street Journal article:

  • To avoid criminal charges, UBS paid $780 million and turned over the names of about 4,500 U.S. taxpayers with secret accounts.
  • Since 2009, the IRS offered limited amnesty programs to encourage more people to come forward.
  • In those four years, U.S. officials have been able to claw back $5.5 billion in unpaid taxes and penalties.
  • It is estimated that another $5 billion could be collected based for the continuing cases with banks in Switzerland, India, Israel, Hong Kong, Singapore and elsewhere.
  • Total confessions are currently 38,000 but that number is expected to increase considerably.

Other Banks under Scrutiny:

  • According to the article, HSBC Holdings PLC is under scrutiny for how it catered to wealthy Indians born or living in the U.S., and if these folks were offered clandestine accounts by HSBC in India.
  • Three Israeli-American tax preparers were indicted last year for allegedly helping clients hide money in two unidentified Israeli banks. According to the article, lawyers involved in tax-evasion cases saw these criminal charges as a sign of growing interest in Israeli banks by U.S. investigators.

I mention this Wall Street Journal article because it demonstrates the lengths the U.S. Government is willing to go to collect back taxes from its citizens and established banking entities worldwide.

If you have unreported offshore accounts, you need to be proactive about disclosing your foreign funds immediately. Hire an IRS tax attorney or certified tax resolution specialist who can provide some experienced tax relief. Being proactive can work to your advantage for the following reasons:

  • It may help reduce your chances of criminal prosecution (criminal sanctions can be as much as up to 5 years in prison.)
  • It can minimize severe IRS penalties that can exceed 100% of the value of the asset, plus tax penalties and interest.
  • It can help when working out an offshore tax settlement.

An expert tax professional will take over all communications with the IRS, make the required disclosures, file FBAR reports and amend your tax returns typically for 2003 through 2008. But you must act now to get more favorable treatment from the IRS.

Failing to File Tax Returns Gets New Mexico Woman Prison Time

Friday, February 22nd, 2013

Delilah S. Haller, 56, of Albuquerque, New Mexico, was sentenced to a month in prison followed by a year of supervised release, which will include four months of location monitoring, for her misdemeanor conviction for willfully failing to file a federal tax return. She was also ordered to pay $125,776.54 in restitution. Indicted in March 2011, Haller was charged with failing to file tax returns for the years 2005, 2006 and 2007.

Tax Relief Weekly News Round Up

Friday, November 2nd, 2012

Happy Friday! Here’s a look at the top tax relief stories of the week:

Tax Scams, Tax Schemes and Identity Theft

  • New tax scams are appearing all the time these days – this week was no exception. The latest IRS announcement warns consumers NOT to fall for phony IRS websites including a new one that mimics the IRS e-Services online registration page and looks official. The tipoff: This email asks for personal financial information which is something the IRS never does online. Ever.
  • From Twitter - Identity Theft issues continue to make headlines: reports that an Alabama woman was indicted in a massive identity theft scheme involving 1,000 False Tax Returns.

Tax Evasion and Filing False Tax Returns

  • Mark S. Holpe, 61, of Midlothian, Virginia is sentenced to 18 months in prison and fined $40,000 for tax evasion $326,196 of employment taxes.  Holpe worked for Nature’s Way, a landscaping business, as a Treasurer and part owner.
  • Ahmad “Mike” Rahiminejad, 56, from Helena, Alabama, owner of Mike’s Crossroads strip club, was sentenced to 21 months in prison for filing a false tax return and underreporting his income by $446,693 for tax years 2006 through 2009. Not only is Rahiminejad forced to pay $446,693 in restitution plus interest, he is required to one year of supervised release when he gets out.

Tax Help News

  • The IRS announced Wednesday it was granting business owners and tax preparers whose payroll and excise tax returns were due on October 31 and who were affected by Hurricane Sandy some IRS tax relief; a one week extension until November 7 to file returns payments normally due on October 31. This IRS relief is automatic; no action is required by the taxpayer.
  • Recently laid-off employees who collected severance pay will want to make sure they understand their tax obligations to prevent any payroll tax problems from occurring. A recent Wall Street Journal article by Laura Saunders titled “When Severance Pay Is Subject to Payroll Tax” discusses whether severance pay should be subject to payroll taxes and if both employee and employer are entitled to claim a tax refund. Those who collected severance are encouraged to be proactive and 1) file a claim with the IRS for a payroll tax or FICA refund and 2) pursue the matter further if the initial claim is denied.

Tax Relief News

This week, I felt the need to defend the tax resolution industry after reading a Forbes article by Stephen J. Dunn titled Tax Resolution Schemes Persist. In this article, Mr. Dunn essentially labels the whole industry as a “scheme” to be avoided at all costs by narrowly focusing on bad business practices of unscrupulous tax resolution firms and painting all firms together with one broad brush stroke.

As someone who has helped thousands of taxpayers achieve permanent tax relief since 1998, I naturally took issue with Mr. Dunn’s, one-sided, limited view of the entire tax problem resolution industry. It seemed necessary to set the record straight not only for the experienced tax team I employ, but also for the other ethical tax resolution professionals who might be offended by Dunn’s unfair and inaccurate dismissal about the tax help work they do on a daily basis.

The Tax Man returns next week with a new tax help video.  For additional tax help news and information, visit the Tax Resolution Services You Tube Channel.

Enjoy your weekend!

Tax Relief News Weekly Round-Up

Friday, August 24th, 2012

Let’s recap recent IRS tax relief stories that made news headlines:

The IRS Offer in Compromise Program can help taxpayers get their financial footing back

Our post this week highlighted the fact that many Americans are struggling to pay their bills much less their tax debt. However, no matter bleak the tax situation, taxpayers need to know they have options beginning with consulting a qualified tax professional. Our tax expert analyzes previous returns and current financial status to determine the exact tax debt due. Based on this information, they will access if you are a good candidate for the Offer in Compromise Program to eliminate your tax debt with an IRS settlement often equating to a significant discount! Note: Taxpayers must qualify for the Offer in Compromise and not all requests are granted. However, even if you do not qualify, there still are other tax relief options available for you.

Tax Evasion

Several cases involving tax evasion made news headlines this week demonstrating a willingness from some taxpayers to take a risk and attempt to cheat the IRS. This week’s stories included:

  • After pleading guilty to willful failure to pay withheld federal income taxes, Michael R. Tucker, 46, of Canton, Ohio, was sentenced to 15 months in prison.
  • A New Jersey lawyer Lee Gottesman, 56, of Toms River, N.J., was indicted on four counts of personal income tax evasion and 15 counts of willful failure to pay payroll taxes. Gottesman’s charges include:
    • evading federal income taxes
    • failure to pay payroll taxes for his law firm employee from 2006 through 2009.

From Twitter: FL Man Arrested for Evading Taxes on More Than $1.4 Million in Income. Article via

Tax Fraud

A former IRS inspector/tax preparer, Robert Martinez, of San Diego is the subject of a recent bizarre tax fraud case and is facing criminal prosecution for his involvement in money laundering, identity theft, filing false returns and attempted murder ; he tried to “silence” his ex-clients who were set to testify against him in a major tax fraud case. This case shows extreme abuses by a trusted tax professional against his clients and shows how easy financial confidence can be betrayed if taxpayers do not know their credentials.

From Twitter via @sfgate – another IRS employee found guilty of tax fraud-sentenced for filing false tax returns

Certified Tax Resolution Specialists at Tax Resolution Services Recognized

Our Tax Resolution Specialists back ups their title with credentials – certifications! All tax resolution experts at Tax Resolution Services, Co., are required to meet the educational, experience, and examination requirements prescribed by the American Society of Tax Problem Solvers (ASTPS) giving them the Certified Tax Resolution Specialist (CTRS) designation. This extra layer of expertise and legitimacy goes a long way to helping taxpayers find the best tax relief options to settle their case.  We announced our newest employee tax resolution specialist certifications this week on the blog.  Read the full post here.

Enjoy Your Weekend and the last days of summer!

Tax Evasion Charged to New Jersey Lawyer

Monday, August 20th, 2012

IRS agents arrested a New Jersey lawyer on charges that he evaded federal income taxes and failed to pay payroll taxes for his law firm employee from 2006 through 2009.

Lee Gottesman, 56, of Toms River, N.J., was indicted on four counts of personal income tax evasion and 15 counts of willful failure to pay payroll taxes.

During the tax years covered by the indictment, Gottesman allegedly earned more than $440,000 in taxable income and incurred more than $110,000 in income tax liability. He allegedly did not pay any personal income tax for this period and did he file any personal tax returns.

If convicted, Gottesman faces up to five years in prison and a $250,000 fine for each tax evasion count. He also faces up to five years in prison and a $10,000 fine for each of the payroll tax charges.

IRS Tax Audit, Prosecution Can Happen to Anyone

Monday, August 13th, 2012

Many people assume that the IRS only goes after celebrities and the rich. But most tax audits and prosecutions involve everyday consumers, not pop stars.


It can’t happen to me.

I hear that line a lot from my potential clients.

There is a strange perception in the United States that the Internal Revenue Service only goes after millionaires and celebrities.

That perception is dead wrong, of course. But I understand where it comes. When people read the newspapers or watch television, they only hear about celebrities getting in trouble over hundreds of thousands in unpaid taxes. Of course, these celebrity tax stories make for great reading.

The most recent example is singer Lauryn Hill, the former front woman for hip-hop group Fugees. Hill pleaded guilty in New Jersey to not filing tax returns for three years and not paying taxes on $1.8 million in income.

After she was initially charged with tax offenses, Hill posted a rant online in which she criticized America’s “climate of hostility, false entitlement, manipulation, racial prejudice, sexism and ageism.” Hill, who had dropped out of society, said she hadn’t reported her taxes to guarantee her family’s anonymity and safety.

Of course, that’s no excuse. Hill faces possible prison time for not filing taxes.

We hear about cases like hers, because as a culture, we love stories of celebrities in hot water. But that doesn’t mean that the IRS isn’t going after Joe Sixpacks — your friends and neighbors and coworkers.

In fact, the IRS is going after everyday people more aggressively than ever now that Congress has increased the IRS’s budget for enforcement. Every day, average U.S. consumers who are cheating or not paying their taxes are being indicted. Some are being sentenced to years in prison.

The problem is that these cases are not easily found in the news media.

Lauryn Hill’s tax troubles make for great headlines. Your neighbor’s tax troubles? Not so much.

And this fuels the perception that only celebrities and the very wealthy are facing IRS scrutiny.

I think this is a very dangerous perception, because people should realize that if they are cheating on their taxes or not filing their tax returns, they are at significant risk of IRS audit and possible criminal prosecution.

Just take quick review of recent cases.

In Pennsylvania, for example, a woman faces up to three years in prison because she submitted tax returns that significantly under reported the income of her husband’s lawn care business.

In Ohio, a businessman is going to prison for 15 months because he did not pay to the IRS more than $263,000 in taxes his company had withheld from employees.

In New Jersey, the chief of staff of a member of the Municipal Council was sentenced to six months in prison for not filing tax returns.

Perception is not reality.


I am Michael Rozbruch, a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA.  You can contact my office – Tax Resolution Services – at 866-477-7762 to obtain a free subscription to our tax newsletter titled The IRS Times & Inquirer.

Senator Rand Paul Challenges U.S. and Swiss Banking Treaty

Monday, April 30th, 2012

In another chapter of the IRS versus the Swiss Banks saga, Republican Senator Rand Paul from Kentucky has recently blocked an amendment to a U.S.-Swiss tax treaty that provides the IRS data on Americans with hidden offshore bank accounts. Paul believes the protocol is too “sweeping” and would threaten taxpayers’ Fourth Amendment rights that guard against unreasonable search and seizure.

Bloomberg’s article Rand Paul Seeks to Block Tax Treaty Change on Swiss Accounts reports that the Senators’ concerns regard “the due process of whether or not people have any kind of process before their records are looked at” and their “constitutional protections and privacy of banking records.”

Under the current treaty, when the U.S. requests taxpayer data from Swiss banks, it typically involves false documents or third parties who disguise account ownership thus protecting banking secrecy laws. The new U.S.-Swiss protocol offers the following:

  • Language that prevents Swiss officials from denying an information request due to banking secrecy laws.
  • Allows the U.S. to request account data without specifying taxpayers by name.

The Swiss government won’t agree to the protocol until both countries agree to a solution that ends negotiations on the investigation of Swiss banks. In a recent blog post, I highlighted the Swiss banker’s request to protect their most prized asset: Swiss banking secrecy laws.

While the Senator’s motives appear to have American taxpayers best interests in mind, critics believe his treaty blocking actions will impair the U.S. crackdown on offshore tax evasion by giving tax help to those who may have committed criminal tax fraud. Paul’s critics, including Senator John Kerry believe that the U.S. loses global credibility and accountability by not ratifying the protocol especially after working with the Swiss to come up with it.

Rand’s actions to block the protocol may be due to the administration’s desire to implement the Foreign Account Tax Compliance Act, or FATCA which accomplishes the following:

  • Bypasses other governments.
  • Applies to non-U.S. banks.
  • Requires banks to report identities of U.S. clients to the IRS.
  • Withhold money from client accounts that don’t provide enough information.

FATCA is estimated to generate $8.7 billion over 10 years, according to data gathered by Bloomberg. Tax revenue projections such as these, as well as IRS figures showing a collection of approximately $2.7 billion in tax revenues resulting from the 2009 and 2011 Offshore Voluntary Disclosure Initiatives demonstrate why the IRS does not want to lose billions in tax revenues from non-reported offshore accounts and is willing to put up a fight.

If you have unreported assets, being proactive about disclosing your foreign funds immediately will work in your favor. But have experts on your side to advise you like a tax attorney or tax resolution specialist to proceed in your best interest and help negotiate an offshore tax settlement.

Offshore Banking-Swiss Tax Evasion Advisors Indicted

Friday, March 30th, 2012

The latest chapter of the IRS versus the Swiss bank saga shows just how far some Swiss bankers are willing to go to protect assets of their wealthy American clients from IRS detection. A Bloomberg article Swiss “Tax Evasion Advisers” Hid Assets, Used Kids reports on two recently indicted Swiss tax evasion advisors and their role in helping U.S. clients hide hundreds of millions of dollars from tax authorities using extreme methods such as delivering cash in hotels and using a child couriers.

Hans Thomann and Josef Beck, who provided tax help as independent financial advisers, were charged in a Manhattan federal court for conspiring to help Americans defraud the IRS and for running an unlicensed business that moved cash for clients. The indictment reports Thomann helped clients hide $138 million in assets while Beck helped to conceal $129 million. Working separately, the two used tactics that are novel worthy and included the following:

  • Helped clients move cash across borders without a trace and carefully hid income overseas
  • Used street corners and hotel rooms for money exchanges to evade detection
  • Used young children “to make a cash drop”
  • Instructed clients to withdraw and deposit cash without advisors having to carrying money to the U.S.
  • Associated with indicted Swiss lawyer to help keep client accounts a secret
  • Helped former UBS clients transfer assets to other Swiss banks including Weglin & Co. to avoid paying US taxes

Both Thomann and Beck would meet clients in Manhattan hotels and hand off cash to them (which they would have needed to visit Switzerland to withdraw) and to received money to deposit into clients’ undeclared Swiss accounts.  Also, Beck would arrange client “drop off” addresses to US and Israeli clients. In one case, a client arrived at the correct address at the stipulated time and was met at his car by a five year old child with a brown paper bag containing $150,000 in cash!

Prosecutors contend that the two tax evasion advisers are employees of Wegelin & Co. who last month became the first Swiss lender to be indicted by U.S. Prosecutors for its client tax evasion policies. Thomann and Beck could be facing 10 years in prison and are among at least 21 bankers, advisers or lawyers outside the U.S. charged in American courts who have yet to appear.

Successes with such indictments can be traced to the voluntary disclosure programs that began in 2009. The information taxpayers have provided prosecutors (to stay out of prison) has helped build strong criminal cases against bankers and advisers including the Swiss. Recent IRS figures show it has collected an estimated $2.7 billion in tax revenues as a result of the 2009 and 2011 Offshore Voluntary Disclosure Initiative.

This latest government indictment of Swiss banking executives demonstrates the determination of the IRS to go after wealthy individuals to collect taxes due, both at home and overseas.

If you are still burdened with undeclared funds in offshore bank accounts and owe back taxes, at this point, you will need to hire expert representation such as a certified tax resolution specialist or tax attorney to handle your case. They will to take over all IRS communications, bring you into FBAR compliance, minimize severe IRS penalties and work out a structured offshore tax settlement that brings you out in the open and your accounts tax compliant.