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Sunday, August 16th, 2009
Robert Henry Anderson, 59, of Bloomington, Ill., pleaded guilty to conspiracy to defraud the United States and to commit mail fraud.
According to the plea agreement, Anderson conspired with others to defraud the IRS through a fraudulent tax-credit scheme. The Internal Revenue Code permits producers of certain fuels from non-conventional sources to claim a tax credit if the fuels are sold to unrelated third parties. From 2003 through 2006, Anderson and his co-conspirators promoted a tax-credit scheme involving the sale of such fraudulent tax credits.
The conspirators identified landfills from which they purported to secure rights to the methane gas generated. Anderson, fraudulently claiming to be a professional engineer, created bogus engineering reports containing baseless findings that the landfills identified by conspirators qualified for tax credits. The conspirators then recruited a network of tax-return preparers to whom they promoted their tax-credit scheme, referencing their purported rights in the landfills as well as the bogus engineering reports.
Anderson faces up to five years in prison.
As a certified tax specialist, I would strongly advise you not to involve yourself in any tax scams. You will not find tax relief through fraudulent tax scams, only jail time. If you feel that you have a tax problem that is over your head, there is help! Calling Tax Resolution Services is the first step to tax relief. Read our Tax Help Testimonials, then pick up the phone! 866-IRS-PROBLEMS (866-477-7742).
Tags: certified tax specialist, conspiracy to defraud the US, fraudulent tax scheme, irs problems, mail fraud, tax help, tax problems, tax relief, tax resolution, tax resolution services, tax scam, tax specialists, tax-credit scheme
Posted in IRS Tax Cases, IRS Times and Inquirer, Tax Scams | No Comments »
Thursday, August 6th, 2009
The Internal Revenue Service has begun sending out refund checks to victims of Bernie Madoff’s scheme who’ve taken advantage of a special IRS rule for Ponzi victims. The IRS is now repaying investors who’ve paid taxes on money they thought they made on investments with Madoff’s firm.
I’ve blogged about how Ponzi victims can get expert tax help for maximizing their tax benefits to help them regain their financial welfare. Taxpayers can recover 30-40% of their losses by filing tax theft loss deductions and filing amended tax returns to recover some of their financial losses. For instance, if you’ve lost $100,00 million in this scheme, you can recoup $30 to $40 million of that in taxes.
Our tax resolution firm is handling several Madoff-related cases. The only way for these folks who lost out and got caught up in investment fraud to get some of their money back is to get specialized investment fraud representation. Madoff victims will have to amend their tax returns – which is a complicated and technical process.
The IRS has also denied tax refunds in some cases. If you don’t get specialized tax help to assist you in recovering your investment fraud losses, you could be leaving money behind on the table.
If you’re a victim of investment fraud, you need the help of a highly specialized tax attorney and/or tax resolution professional. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
The Wall Street Journal reports:
An early trickle of refunds includes checks for substantial amounts, nearly half a million dollars in some cases. The very biggest sums haven’t materialized, however, according to certified public accountants. By some estimates, these could be for tens of millions of dollars.
The Madoff-related tax refunds are arriving after a lot of uncertainty over how the IRS would handle returns filed by burned investors. Tax advisers clashed over how best to retrieve money for clients as the scandal emerged. Some urged people to file amended returns, while others counseled them to hold off.
In March the IRS set the stage for large refunds with a generous reading of rules that let investors take a theft loss on their 2008 tax returns.
Those suing third parties get less-generous treatment because they have a better prospect of recovering money.
Tags: Bernard Madoff, investment fraud, investment fraud recovery, investment fraud representation, IRS refunds, Madoff Victims, Michael Rozbruch, ponzi victims, tax attorney, tax break for madoff victims, theft loss deductions
Posted in IRS Tax Cases, Tax Resolution Options and Alternatives, Tax news and tips, Working with the IRS | 1 Comment »
Friday, July 24th, 2009
Many people are skeptical about hiring professional tax attorneys to help resolve their IRS tax problems–some are concerned about saving service fees and others are downright skeptical about their chances of winning.
There has been a lot of misinformation going around about tax resolution scams. There have been stories of official looking IRS snail mail or email that not only steal your identity but also tricks some victims into writing big checks to the “tax resolution firm.” Naturally, horror stories like this will breed a defensive level of skepticism towards tax resolution attorneys. However, going against the IRS without a tax lawyer is like riding buck naked in a motocross race, you probably won’t win and if you crash, the results could be fatal.
You can ensure the professional quality of your tax representation by doing your research. If you proactively seek out as much information as you can on a tax attorney (success rate, areas of expertise, professional record…etc.), you will be much more confident in your decisions. Learn how you can pick the best tax attorney for you.
As a tax resolution specialist for the past 10+ years, I have my obvious bias. At TRS, we are a team of highly specialized tax resolution experts including tax attorneys, CPAs, EAs (enrolled agent tax experts) and others who have been providing income tax help for a combined 150 years of experience. We have helped provide IRS tax relief for people who have tax problems with back taxes, late filing, tax fraud, theft (from Madoff and other Ponzi schemes) and more. We have seen the substantial tax relief success our team can bring. We’ve also seen the disasters that strike those who dare to go solo.
Contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
Tags: IRS audits, IRS debt, IRS help, IRS problem solver, Michael Rozbruch, tax advice, tax attorney, tax audit, tax audits, tax lawyer, tax resolution services, Tax Tips
Posted in Seeking Professional Tax Help, Taxpayer Rights | No Comments »
Thursday, July 23rd, 2009
As part of recent efforts to collect unpaid taxes, the Senate Finance Committee has held a confirmation hearing on July 14 to consider the nomination of William Wilkins to be IRS Chief Counsel. Wilkins is expected to spearhead IRS efforts to close the $345 billion a year tax gap.
In this recession, the government feels more hard-pressed than ever to collect unpaid tax revenue in order to fund economically beneficial projects that will ultimately contribute to long-term economic stability.
CCH (http://tax.cchgroup.com) reports:
IRS Chief Counsel Nominee Tells Senate Finance Committee of Plans to Reduce the “Tax Gap”
The Senate Finance Committee (SFC) held a confirmation hearing on July 14 to consider the nomination of William Wilkins to be IRS Chief Counsel. “In this role … you will lead, with the help of more than 1,400 attorneys in that office. And, you will lead the IRS on critical issues. You will have influence over the resolution of tax issues that affect individuals, businesses, and tax-exempt organizations,” Committee Chairman Max Baucus, D-Mont., emphasized to Wilkins in opening remarks.
CCH Comment: The hearing also included consideration of the nomination of Dan Tangherlini to be Assistant Secretary of Treasury for Financial Management and Chief Financial Officer.
Former SFC Staffer
Wilkins is currently a partner with Wilmer Cutler Pickering Hale and Dorr (WilmerHale), Washington, D.C., where he has been a member of the firm since 1988. Prior to joining WilmerHale, Wilkins had been a member of the SFC staff since 1981, culminating in his serving as staff director and chief counsel from 1987 to 1988. Currently, Wilkins also serves as the chairman of the American Bar Association’s Section of Taxation.
Tax Gap
During the hearing, Baucus voiced his concerns about the tax gap –the difference between what taxpayers owe and what they pay –and asked Wilkins how he would address the tax gap. “Taxpayers have a right to expect the IRS to act tenaciously to shut down scams and schemes that undermine the health of our voluntary tax system. A $345-billion annual tax gap is simply not acceptable,” said Baucus. He also underscored the importance of narrowing the tax gap to pay for health care reform.
CCH Comment: Baucus has emphasized the role that the IRS Chief Counsel must play in dealing with the tax gap before. At the nomination hearing of former IRS Chief Counsel Donald Korb on March 8, 2004, Baucus pointedly asked Korb what he would do to lower the tax gap and restore faith in the tax system. Korb served as IRS Chief Counsel from April 14, 2004, until December 19, 2008.
Wilkins responded to Baucus’ questions on the tax gap in two parts. First, he stated that he “shared his concerns” about the tax gap and raising revenue for health care reform. Next, rather than focus on enforcement efforts, Wilkins directed his tax-gap response toward “taxpayer education.” According to Wilkins, a part of the tax gap “deals with educating those who want to comply” and making it more easy and efficient for them to do so. He underscored that “multiple tax programs addressing the same policy area offer a chance for simplification,” which can help educate taxpayers and contribute to closing the tax gap.
Baucus is expecting the next chief counsel to help close the tax gap and made this mission clear at the hearing. “It [the tax gap] is just wrong, and I look to you to help address it,” Baucus told Wilkins.
The committee is expected to approve the nominees for a full Senate vote soon.
IRS Chief Counsel
The IRS Chief Counsel’s office consists of approximately 2,300 employees, including about 1,600 attorneys. The office provides legal advice to the IRS Commissioner and IRS operating divisions.
By H. Goehausen, CCH News Staff
The IRS is working very hard to collect unpaid taxes in order to meet new collection goals. Judith Burns from Dow Jones Newswires reports that “The IRS estimates current taxes paid account for 83.7% of taxes owed, a level Baucus wants to see increase to 90% by 2017.” See full article.
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Tags: Back Taxes, delinquent tax returns, delinquent taxes, failing to file federal tax return, failure to file, FALSE TAX RETURNS, filing false federal tax return, i need tax help, IRS audits, IRS debt, IRS payment plan, IRS problem solver, IRS tax deficit, Michael Rozbruch, tax attorney, tax gap, tax resolution
Posted in Tax news and tips | 8 Comments »
Monday, June 29th, 2009
Bernard Madoff was sentenced to 150 years in prison today. According to MSNBC, the disgraced investor received the maximum sentence for his massive Ponzi scheme and apologized to victims for the multibillion-dollar fraud scheme that the judge called “extraordinarily evil.” An investigation has found that in reality, Madoff never made any investments, instead using the money from new investors to pay returns to existing clients — and to finance a lavish lifestyle for his family.
Victims of the $50 billion scam include banking institutions, various charities and a long list of celebrities including Steven Spielberg. While it’s one of the biggest Ponzi schemes in the history of Wall Street, many people may not be aware that victims of investment fraud can take advantage of tax benefits that can help them recover their financial losses.
I handle IRS cases for victims of investment fraud – including those scammed by Madoff’s Ponzi scheme. Taxpayers can recover 30-40% of their losses by filing tax theft loss deductions. To qualify for this IRS tax break, fraud victims but will need to go back and amend their tax returns to recoup their losses. And although the IRS has released Safe Harbor Guidelines to help taxpayers recoup their financial losses, they will still need a specialized investment fraud help to successfully navigate the complicated and highly technical tax code.
**For more advice and information on investment fraud representation, visit the Tax Resolution Services web site for a free tax relief consultation or call 866-IRS-PROBLEMS.
Tags: Bernard Madoff, Bernie Madoff, investment fraud help, investment fraud representation, irs problems, IRS safe harbor guidelines, Michael Rozbruch, ponzi scheme, tax attorney, tax expert, tax help, tax resolution services, theft loss deductions
Posted in Tax news and tips, Working with the IRS | No Comments »
Friday, June 5th, 2009
Return preparer fraud made this year’s IRS Dirty Dozen list of common scams taxpayers should avoid. In this down economy, the promise of large refunds may seem tempting to taxpayers, but victims of tax schemes will end up facing more tax problems in the long run.
Dishonest tax return preparers are scam artists that skim money from their clients’ refunds and charge inflated fees for return preparation services. They attract new clients by promising large refunds.
While 80% of taxpayers use a paid preparer or third-party software for tax prep, IRS says only a few states regulate unenrolled agents. So taxpayers should choose carefully when hiring a tax preparer – especially if they are promising something that seems too good to be true. And if you owe the IRS more than you can afford to pay, know that there are ways to resolve your tax debt!
CCH (http://tax.cchgroup.com/) reports:
IRS Commissioner to Make Recommendations on Regulation of Tax Return Preparers by Year End; Plans Nationwide Review (IR-2009-57)
The IRS announced that it will propose a comprehensive set of recommendations to help increase taxpayer compliance and ensure uniform and high ethical standards of conduct for tax preparers. Some of the potential recommendations could focus on 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. The recommendations are expected to be submitted by the end of the year. According to IRS Commissioner Doug Shulman, who commented on the announcement an IRS conference call on June 4, over 80 percent of taxpayers either use a paid preparer or third-party software to complete their tax return. In light of this huge number, “it’s time we take a serious look at this issue.” He added that “it’s been years since the IRS had undertaken a wide review of issues involving tax preparation.”
Only a few states regulate unenrolled agents. Shulman pointed out that “no national framework exists; there is a large number of unenrolled preparers not operating under any standards at this point.”
Recommendations by Year End
Shulman reported that the first of the IRS’s review of the tax preparation community will involve “fact-finding and receiving input” from a large a diverse constituent community that includes individuals such as enrolled agents, lawyers, accountants and other licensed tax professionals, as well as unlicensed preparers and software vendors. The IRS will also hold meetings in Washington, D.C. and around the country to review and discuss issues associated with the tax preparation community.
“This review will look at issues surrounding the regulation of tax preparers,” Shulman said, since “right now there is no clear national standard of regulation for paid tax return preparers.” The review group “will explore the options and practicality of a new model of regulation.”
According to Shulman, the review will also look at:
–Options and methods for service and outreach to preparers; and
–Approaches for timely/appropriate enforcement related to preparers.
Although Shulman said that the “IRS can’t do the review without taking into account software and software providers,” the “focus of review is preparers.”. However, both preparers and software providers need to become a more integral part of the tax administration system. “The review and resulting recommendations will help on that path,” Shulman said.
No Numbers for Preparers
According to Shulman, estimates of return preparers doing business in the U.S. have ranged from 600,000 to 900,000 but there are “no good estimates.” Testifying before the House Ways and Means Subcommittee on Oversight earlier in the day, Shulman admitted that the IRS could not say how many income tax preparers are currently doing business in the U.S. (TAXDAY, 2009/06/05, C.1)
Possible End Game
Shulman said that nothing was “off the table” in terms of the results of its recommendations to President Obama and Treasury Secretary Timothy F. Geithner. The “obvious range includes from standards of ethical conduct to training and education requirements, to licensing and registration requirements,” he said, adding that the Office of Professional Responsibility (OPR) will be part of the review. He forecasted that, based on some findings, “there very well may need to be legislation.” However, he emphasized in his predictions that the IRS would likely to be able to more forward on many recommendations under its current administrative powers, without further legislation.
Long-Standing Problem
As to why such action regarding the tax preparer community has taken so long, Shulman was less clear. The lack of regulation of unenrolled return preparers has been a long-standing problem. The National Taxpayer Advocate has cited the lack of regulation for unenrolled preparers in its annual reports to Congress and, as recently as 2008, listed it as one of the most serious problems encountered by taxpayers.
TIGTA Applauds Move
Following Shulman’s announcement, Deputy Inspector General for Audit at the Treasury Inspector General for Tax Administration (TIGTA) stated that “we are encouraged by the Commissioner’s proposal to review the IRS’s existing oversight of tax preparers and to include the preparer community in the review process.” TIGTA has issued three separate reports over the past 10 months making recommendations of immediate steps the IRS could take to improve oversight of the tax return preparer community. These recommendations include:
–Requiring preparers to use a single identification number when filing tax returns to allow the IRS to control and track preparer activities;
–Determine the actual number of paid tax preparers;
–Improve IRS processes for handling complaints filed by the taxpayers regarding tax preparers; and
–Establishing written procedures for controlling and reviewing referrals of licensed preparers who have been penalized for abusive tax shelter violations.
By H. Goehausen, CCH News Staff
Tags: doug shulman, IRS disputes, tax debt, tax expert, tax preparation, tax pret, tax problems, tax relief, tax resolution, tax resolution expert, tax resolution services, tax return preparer fraud, unenrolled agents
Posted in Tax news and tips | No Comments »
Sunday, May 31st, 2009
With people looking for ways to save money this year, the tax-scam artists are having a field day. But here are the 12 tax scams you are most likely to encounter
By Michael Rozbruch
———————————-
April 15 has come and gone. You can check off one more line in the Death and Taxes column.
But that doesn’t mean you should relax. With identity theft on the rise and scamsters preying on taxpayers looking for a break in these hard economic times, it can be a scary, scary taxpaying world.
For that reason, the IRS is continuing in its annual tradition of releasing a “Dirty Dozen” list — the 12 most common tax scams that could put you in a world of financial hurt. I blogged about the Dirty Dozen list when the year started, and feel it is important to mention it again to prevent you from getting caught in a tax scam.
Whether perusing your e-mail inbox or the local classifieds, beware of these 12 tax scams in 2009:
1. Phishing:Internet-based scam artists use phishing to trick victims into revealing personal or financial information for the purposes of identity theft. Phishing scams often take the form of an e-mail that appears to come from a legitimate company or government entity, such as the IRS. The IRS never initiates unsolicited e-mail contact with taxpayers.
2. Hiding Income Offshore: This is a time-honored tax evasion scam. But don’t fall for it. Today, even Swiss banks are opening up records to the IRS. Using this scam could land you in prison.
3. Filing False or Misleading Forms: Some scam artists promote frivolous information returns, such as Form 1099-Original Issue Discount (OID), claiming false withholding credits are used to legitimize erroneous refund claims.
4. Abuse of Charitable Organizations and Deductions: Watch out for people claiming you can shield income form taxes using tax-exempt organizations.
5. Return Preparer Fraud: Be skeptical of tax return preparers who guarantee large refunds. They aren’t working magic; they’re cheating.
6. Frivolous Arguments: A number of tax-shelter promoters nationwide use frivolous arguments that do not withstand court scrutiny. You can find a list of legal arguments taxpayers should avoid at www.irs.gov.
7. False Claims for Refund and Requests for Abatement: This scam involves a request for abatement of previously assessed taxes using Form 843, Claim for Refund and Request for Abatement.
8. Abusive Retirement Plans: Be wary of anyone encouraging you to shift large assets into IRAs or companies owned by IRAs.
9. Disguised Corporate Ownership:The IRS actively investigates the use of corporations to facilitate the underreporting of income.
10. Zero Wages: Some scam artists advocate simply filing your taxpayer income as $0.
11. Misuse of Trusts: Although there are legitimate uses of trusts, scam artists employ them as tax shelters.
12. Fuel Tax Credit Scams: This tax credit was largely intended for commercial farmers, but some individual taxpayers are abusing it by submitting frivolous credit claims.
I am a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact me at 866-477-7762 to obtain a free subscription to the IRS Times & Inquirer newsletter.
Tags: false tax claims for refunds, filing false tax returns, hiding income offshore, most common tax scams, phishing, Phishing Tax Scams, requests for abatment, tax attorney, tax resolution, tax scam, Tax Scams
Posted in IRS Times and Inquirer, Tax Problem FAQs, Tax Scams | 2 Comments »
Wednesday, April 29th, 2009
Danny Pang, and Orange County money manager, was arrested on suspicion of evading currency reporting laws. According to the Los Angeles Times, Pang is accused of bilking investors of hundreds of millions of dollars and has allegedly sought to hide more than $300,000 in cash from the government.
On Monday, Pang’s assets and those of his Irvine company, Private Equity Management Group Inc., were frozen at the request of the SEC. He was asked to surrender his passports, return any “ill-gotten gains” and any money that might have been sent overseas.
The SEC said in a complaint that Pang had used money from newer investors to make interest payments to earlier investors, a tactic often used in Ponzi schemes.
I’ve helped victims of investment fraud – including those scammed by Madoff’s Ponzi scheme - recoup 30-40% of their losses from the IRS. By filing tax theft loss deductions, fraud victims can qualify for an IRS tax break to recover taxes paid on phantom income — profits that appeared on their annual account statements but didn’t actually exist and were never paid to the investor — from the last five years.
The IRS has released Safe Harbor Guidelines for helping taxpayers recoup fraud losses, but I recommend that fraud victims get a specialized tax expert to navigate the tax code and assist them through the highly complicated and technical process.
For more advice and information on investment fraud representation, visit the Tax Resolution Services web site for a free tax relief consultation or call 866-IRS-PROBLEMS.
Tags: danny pang, investment fraud, investment fraud representation, Offer in Compromise, orange county tax resolution, ponzi scheme, safe harbor guidelines, tax evasion, tax expert, tax help, tax resolution, tax resolution expert, tax resolution services, theft loss deductions
Posted in Tax news and tips | No Comments »
Monday, April 27th, 2009
I’ve blogged before about the investment fraud loss and deductibility rules outlined in Internal Revenue Code 165, and how the tax code can help victims of investment fraud recoup their losses. Now Madoff victims are hoping to get refunds on past state taxes paid on income from Madoff that they might never have received.
The Los Angeles Times reports that hundreds of Californians, many of them elderly and nearly broke, are pressing legislators for help in getting compensation for some of the money they lost in a Ponzi scheme run by confessed swindler Bernard Madoff.
Madoff pleaded guilty in March to 11 securities-related fraud counts. He is in jail awaiting a June 16 sentencing hearing.
Now, more than 400 of his victims who live in California are seeking passage of a bill that would give them the right to get back tax payments on so-called phantom income — profits that appeared on their annual account statements but didn’t actually exist and were never paid to the investor — from the last five years. The group represents about a tenth of all victims nationwide of the $65-billion fraud.
Such refunds on amended prior tax returns currently are allowed by the U.S. Internal Revenue Service but not by the California Franchise Tax Board, which collects state income taxes.
The state is refusing to make its income tax rules conform with federal law. Some of the Madoff victims who lost millions of dollars in the investment scam feel like this is inherently unfair and that they are being victimized a second time by the state of California.
I handle IRS cases for victims of investment fraud – especially those scammed by Madoff’s Ponzi scheme – who a are looking to recover 30-40% of their losses by filing tax theft loss deductions. Fraud victims qualify for this IRS tax break, but will need to go back and amend their tax returns to recoup their losses. Even though the IRS has released Safe Harbor Guidelines for recouping their fraud losses, taxpayers will still need a specialized tax expert to help them navigate the tax code and assist them through this process.
**For more advice and information on investment fraud representation, visit the Tax Resolution Services web site for a free tax relief consultation or call 866-477-7762.
Tags: Bernard Madoff, Bernie Madoff, california tax refunds, investment fraud victims, los angeles times, Michael Rozbruch, ponzi scheme, safe harbor guidelines, tax expert, tax resolution, tax resolution services, theft loss deductions
Posted in Tax news and tips | No Comments »
Tuesday, April 21st, 2009
Victims of dishonest tax return preparers can end up in a world of tax trouble – it’s no wonder return preparer fraud made this year’s IRS Dirty Dozen list of common scams taxpayers should avoid. The promise of large refunds may be all too tempting in this challenging economy – but taxpayers should still choose their tax preparer wisely.
With IRS enforcement on the rise, struggling taxpayers do not want to fall victim to tax scams – as they are certain to land in serious trouble with the IRS.
And tax preparers who take part in these tax schemes (claiming false deductions, submitting fraudulent returns, etc.) should beware. A sentence was recently imposed on an individual for aiding and assisting the preparation of fraudulent returns.
CCH (http://tax.cchgroup.com/) reports:
A sentence of incarceration and supervised release imposed on an individual following his conviction for aiding and assisting in the preparation of fraudulent income tax returns was proper. The individual committed substantial fraud over a span of several years by claiming false deductions for himself and obtaining income from a tax preparation business that submitted fraudulent returns on behalf of many other taxpayers. The trial court properly considered the sentencing guidelines, the individual’s medical and mental health requirements, the scale of the offenses and the length of time over which they took place, the interests of general and specific deterrence, the individual’s failure to take advantage of previous drug treatment opportunities, the need for just punishment and the option of imposing a probationary sentence as requested by the individual.
Tags: claiming false deductions, fraudulent returns, IRS dirty dozen, Michael Rozbruch, return preparer fraud, tax cheats, tax expert, tax resolution expert, Tax Scams, tax schemes
Posted in Tax news and tips | 2 Comments »
Friday, April 17th, 2009
I recently blogged about how frivolous arguments topped the IRS Dirty Dozen list of most common tax schemes. And in this bad economy, there will be more individuals maintaining frivolous arguments for not paying their taxes.
While many Americans were paying their taxes on April 15, there’s a group of citizens known as tax defiers, deniers or protesters who cite many different reasons refusing to pay their income taxes.
Their frivolous arguments include:
* Income tax is illegal
* The 16th Amendment, which allowed Congress to collect income taxes, was never ratified.
* Paying taxes should be voluntary.
* Only D.C. residents or federal employees are subject to the tax laws.
Defiers often refuse to submit tax returns or file them with bogus information about their earnings (sometimes listing their income as zero.
A recent Washington Post article highlighted a revered Washingon D.C. detective who claimed exemption from his income taxes.
While protesters call the tax system illegal, the IRS disagrees and tax enforcement and convictions are on he rise year over year. And in this recession, individuals will find adopting arguments to not pay their taxes more enticing than ever.
According to the Washington Post, the IRS received more than 10,000 frivolous arguments last year and more than 90,000 pieces of related correspondence. The Justice Department has stepped up enforcement against tax defiers, and the IRS has referred more cases for criminal prosecution: 132 cases in fiscal 2008, up from 74 the previous year and 80 in 2006. The Justice Department also has filed about 100 civil lawsuits since 2001 asking judges to block defiers from promoting or selling related tax-preparation products.
Even though April 15 is behind us, it is important to keep in mind the consequences of not filing your tax returns. It’s not to late to file your delinquent taxes!
** If you have unfiled tax returns or other IRS problems, contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
Tags: Back Taxes, delinquent tax returns, delinquent taxes, failing to file federal tax return, IRS enforcement, irs problems, Michael Rozbruch, tax cheats, tax defier, tax evasion, tax expert, tax help, tax resolution, tax resolution expert, tax resolution services, unfiled tax returns
Posted in Tax news and tips, Unfiled Returns - Delinquent Tax Returns | No Comments »
Tuesday, April 14th, 2009
According to the IRS annual Dirty Dozen list of most common tax schemes, phishing “expeditions” are on the rise this year along with frivolous tax arguments. I even got a phishy email the other day. These scam email look real too.. on IRS simulated letterhead complete with the logo and all.
It’s no surprise that these tax scams are being peddled to Americans in full force - as IRS enforcement is on the rise and struggling taxpayers may be desperate for any way out of paying their taxes in this down economy.
But fall victim to one of these scams, and you are certain to find yourself in serious trouble with the IRS.
“Taxpayers should be wary of scams and promises to avoid paying taxes that seem too good to be true,” Acting IRS Commissioner Linda Stiff said. “There is no secret formula that can eliminate a person’s tax obligations. People should be wary of anyone peddling any of these scams.”
With the tax deadline looming, this annual list from the IRS is an important reminder that it’s real easy to get in tax trouble. But it’s also possible to resolve your tax problems, if you help from certified tax resolution experts.
Here are the common tax scams taxpayers need to avoid:
1. Phishing
Phishing is a tactic used by Internet-based thieves to trick unsuspecting victims into revealing personal information they can then use to access the victims’ financial accounts. These criminals use the information obtained to empty the victims’ bank accounts, run up credit card charges and apply for loans or credit in the victims’ names. Phishing scams often take the form of an e-mail that appears to come from a legitimate source. Some scam e-mails falsely claim to come from the IRS. To date, taxpayers have forwarded more than 33,000 of these scam e-mails, reflecting more than 1,500 different schemes, to the IRS. The IRS never uses e-mail to contact taxpayers about their tax issues. Taxpayers who receive unsolicited e-mail that claims to be from the IRS can forward the message to a special electronic mailbox, phishing@irs.gov, using instructions contained in an article titled “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes.” Remember: the only official IRS Web site is located at www.irs.gov.
2. Scams Related to the Economic Stimulus Payment
Some scam artists are trying to trick individuals into revealing personal financial information that can be used to access their financial accounts by making promises relating to the economic stimulus payment, often called a “rebate.” To obtain the payment, eligible individuals in most cases will not have to do anything more than file a 2007 federal tax return. But some criminals posing as IRS representatives are trying to trick taxpayers into revealing their personal financial information by falsely telling them they must provide information to get a payment. For instance, a potential victim is told by phone or e-mail that he or she is eligible for a rebate but must provide a bank account number (or similar information) to get the payment. If the target is unwilling, the victim is then told that he cannot receive the rebate unless the information is provided. Individuals should remember that the only way to get a stimulus payment is to file a 2007 tax return. The IRS urges taxpayers to be extra-vigilant. The IRS will not contact taxpayers by phone or e-mail about their stimulus payment.
3. Frivolous Arguments
Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe. Most recently, the IRS expanded its list of frivolous legal positions that taxpayers should stay away from. Taxpayers who file a tax return or make a submission based on one of these positions on the list are subject to a $5,000 penalty. The most recent update of the list of frivolous positions includes: misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending, erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States, a nonexistent “Mariner’s Tax Deduction” related to invalid deductions for meals and the misuse of the fuel tax credit (see below). The complete list of frivolous arguments is on the IRS Web site at IRS.gov.
4. Fuel Tax Credit Scams
The IRS is receiving claims for the fuel tax credit that are unreasonable. Some taxpayers, such as farmers who use fuel for off-highway business purposes, may be eligible for the fuel tax credit. But some individuals are claiming the tax credit for nontaxable uses of fuel when their occupation or income level makes the claim unreasonable. Fraud involving the fuel tax credit was recently added to the list of frivolous tax claims, potentially subjecting those who improperly claim the credit to a $5,000 penalty.
5. Hiding Income Offshore
Individuals continue to try to avoid paying U.S.taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans. The IRS and the tax agencies of U.S. states and possessions continue to aggressively pursue taxpayers and promoters involved in such abusive transactions.
6. Abusive Retirement Plans
The IRS continues to uncover abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). The IRS is looking for transactions that taxpayers are using to avoid the limitations on contributions to Roth IRAs. Taxpayers should be wary of advisers who encourage them to shift appreciated assets into Roth IRAs or companies owned by their Roth IRAs at less than fair market value. In one variation of the scheme, a promoter has the taxpayer move a highly appreciated asset into a Roth IRA at cost value, which is below annual contribution limits even though the fair market value far exceeds the amount allowed.
7. Zero Wages
Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer also may submit a statement rebutting wages and taxes reported by a payer to the IRS. Sometimes fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any of the variations of this scheme.
8. False Claims for Refund and Requests for Abatement
This scam involves a request for abatement of previously assessed tax using Form 843, “Claim for Refund and Request for Abatement.” Many individuals who try this have not previously filed tax returns. The tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses Form 843 to list reasons for the request. Often, one of the reasons given is “Failed to properly compute and/or calculate Section 83-Property Transferred in Connection with Performance of Service.”
9. Return Preparer Fraud
Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes. These scam artists make their money by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote the filing of fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer, especially one who promises something that seems too good to be true.
10. Disguised Corporate Ownership
Some people are going as far as forming domestic shell corporations in certain states for the purpose of disguising the ownership of a business or financial activity. Once formed, these anonymous entities can be used to facilitate underreporting of income, non-filing of tax returns, engaging in listed transactions, money laundering, financial crimes and even terrorist financing. The IRS is working with state authorities to identify these entities and to bring the owners of these entities into compliance.
11. Misuse of Trusts
For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.
12. Abuse of Charitable Organizations and Deductions
The IRS continues to observe the misuse of tax-exempt organizations. Misuse includes arrangements to improperly shield income or assets from taxation, attempts by donors to maintain control over donated assets or income from donated property and overvaluation of contributed property. In addition, IRS examiners are seeing an upturn in instances where taxpayers try to disguise private tuition payments as contributions to charitable or religious organizations.
** If you are in trouble with the IRS and need tax help, contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
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Posted in Tax news and tips | 3 Comments »
Thursday, February 5th, 2009
Today Bernie Madoff’s client list was made public revealing even more high-profile individuals defrauded by the $50 billion Ponzi scheme. Among the names disclosed today are John Malkovich, Barbara Bach (Ringo Starr’s wife), Kevin Bacon and Dodgers great Sandy Koufax.
What these fraud victims need to know is that they can recoup 30-40% of their losses if they take advantage of Internal Revenue Code Section 165. So if you’ve paid taxes on investment gains that turned out to be false, you can recover some of their money back in the form of tax deductions or possibly even refunds.
This can be accomplished by converting capital stock losses into “ordinary” losses and offseting them against prior, current and future ordinary taxable income, thereby reducing the taxes paid in those years, and receiving a refund with interest.
But anyone attempting this should know that they will need specialized tax help because this is an incredibly technical, time consuming and complex process. Additionally, to recuperate any previously paid taxes, you will need to go back and amend your tax returns, which means you will inevitably be audited.
And in our current economic recession, the IRS is even more reluctant to bail out Madoff victims.
Therefore, investors seeking relief from fraud should know that while there are clear tax benefits to deducting a fraud loss, but they should be prepared to come under IRS scrutiny and have expert tax representation in place to help them successfully defend their claims.
For more advice and information on investment fraud representation, visit the Tax Resolution Services web site for a free tax relief consultation or call 866-477-7762.
Tags: amending tax returns, Barbara Bach, Bernard Madoff, Bernie Madoff, fraud loss, fraud loss deduction, fraud relief, investment fraud, investment fraud recovery, investment fraud representation, IRC 165, IRS 165, John Malkovish, Kevin Bacon, Madoff Victims, Michael Rozbruch, sandy Koufax, tax audit, tax relief, tax resolution, tax resolution expert, tax resolution services
Posted in Tax news and tips | 4 Comments »
Thursday, December 18th, 2008
The list of investors reportedly defrauded by Bernie Madoff’s Ponzi scheme continues to grow. Victims of the $50 billion scam include banking institutions, various charities and a long list of celebrities including Steven Spielberg, Jeffrey Katzenberg, and screenwriter Eric Roth.
Experts are saying it’s one of the biggest Ponzi schemes in the history of Wall Street. But what many people may not know is that these victims of investment fraud can take advantage of tax benefits that can help them recover their financial losses.
Under IRC section 165(c)(2), victims of this scam may qualify for a little known tax break that until now, not many people have been eligible for. They can claim an “ordinary” (versus a “capital”) loss deduction that can help them recoup their money.
To maximize tax benefits, taxpayers can offset their ordinary income, up to the amount of the fraud loss (in the year of discovery) and carry back their losses to previous years. This helps recuperate any previously paid taxes while minimizing their future tax obligations. For instance, if you’ve lost $100,00 million in this scheme, you can recoup $30 to $40 million of that in taxes. I’ve helped people in this situation before and it’s incredibly rewarding to help fraud victims regain their financial welfare.
While there are clear tax benefits to deducting a fraud loss, it is critical to note that this is an incredibly technical and a complicated process that will certainly put taxpayers under IRS scrutiny.
To recover your losses, you will need to go back and amend your tax returns, which means you will inevitably be audited. My best advice is to have experienced tax professionals help you through the process so you can successfully turn your financial life back around.
For more advice and information on investment fraud representation, visit the Tax Resolution Services web site for a free tax relief consultation or call 866-477-7762.
Tags: Bernard Madoff, Bernie Madoff, fraud loss, investment fraud, IRC 165, IRS 165, Jeffrey Katzenbery, loss deduction, Michael Rozbruch, ordinary loss deduction, Ponzi, pyramid scheme, Steven Spielberg, tax expert, tax resolution expert, tax resolution services, tax settlement, Tax Tips
Posted in Tax news and tips | 7 Comments »
Monday, December 8th, 2008
I want to warn everyone about a new email tax scam that has been circulating. It is targeted at “non-resident aliens” who are asked to fill out 2 official-looking IRS forms that are attached and fax them back to a 646 area code number.
The email header reads:
From: Internal Revenue Service [mailto:nonereply@irs.gov]
Subject: please see the attachment
According to the IRS web site:
A bogus IRS letter and Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) asked non-residents to provide personal information such as account numbers, PINs, mother’s maiden name and passport number. The legitimate IRS Form W-8BEN, which is used by financial institutions to establish appropriate tax withholding for foreign individuals, does not ask for any of this information.
If you do receive suspicious looking email, simply delete it from your inbox. You can also report phishing schemes or the fraudulent misuse of the IRS name, logo, forms or other IRS property by calling 1-800-366-4484 or visiting the Treasure Inspector General for Tax Administration web site.
Tags: Identity Theft, phishing, tax expert, tax help, Tax Scams
Posted in Identity Theft, Tax Scams | No Comments »
