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Monday, March 9th, 2009
Last week, Sen. Carl Levin, chairman of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, examined the recent deferred prosecution agreement between the Department of Justice and UBS AG Bank of Switzerland, as well as the DOJ’s ongoing attempts to force the bank to identify its U.S. customers with secret Swiss bank accounts.
Recently, a senior executive of a large Swiss bank was charged with conspiring with other executives, managers, private bankers and clients to defraud the United States by concealing $20 billion in assets from the IRS.
Levin reintroduced his “Stop Tax Haven Abuse Bill” to “fight back and end the abuses inflicted on us by those tax havens.” IRS Commissioner Douglas H. Shulman testified at the hearing and responded to Levin’s suggestions for putting pressure on taxpayers using Swiss banks’ secrecy to avoid paying U.S. tax.
Another sign of the times: IRS enforcement is of rise.
If you are in trouble with the IRS, our specialized staff of attorneys, CPAs, EAs and tax professionals can help. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-477-7762.
Tags: carl levin, IRS audits, IRS debt, IRS enforcement, IRS help, irs news, IRS problem solver, irs problems, IRS tax problems, Michael Rozbruch, offshore asset, shulman, tax cheat, tax evasion, tax expert, tax haven, tax help, tax news, tax resolution, tax resolution expert, tax resolution services, Tax Tips
Posted in Tax news and tips | 1 Comment »
Monday, February 23rd, 2009
Though slightly down from 2007, tax enforcement number in 2008 were among the highest in a decade.
By Michael Rozbruch
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The large number of tax evasion and audit cases you’re hearing about today isn’t a symptom of yellow journalism.
In fact, the fiscal-year 2008 tax enforcement numbers released by the Internal Revenue Service are among the highest in a decade.
In fiscal-year 2008, the IRS collected $56.4 billion through collection, examination and document-matching efforts. That figure is a slight decrease from 2007’s $59.2 billion but a dramatic increase from 1999, when the government had $32.9 billion in enforcement collections.
But the most dramatic figure in the recent numbers comes in the staffing column. Even as the IRS collected nearly twice as much last year as it did in 1999, the agency accomplished this with fewer enforcement staff members — 20,722 in 2008, compared to 22,543 in 2007 — suggesting the government is becoming more efficient even as it becomes more aggressive.
Last year, the IRS stepped up its investigations of offshore accounts used to hide income and evade taxes. The agency has begun to examine these accounts — and the taxpayers who use them — using the same tools criminal investigators use in looking at those headline-grabbing cases you see in the newspapers.
In fact, these days, IRS agents are doing more than just following the money. They’re building sources.
“Using informants is another part of our toolkit,” IRS Commissioner Douglas Shulman said during a December tax conference.
“Since the inception of the Whistleblower Office in 2007, the IRS has received hundreds of tips on financial institutions and individuals with foreign accounts and international compliance issues. Some of these have become big money cases.
“Dozens of these tips involve the names of individuals with offshore accounts; others involve the names and practices of financial institutions in those countries that typically have strict bank secrecy laws. And keep in mind the value here is far greater than just the names of specific individuals,” Schulman continued.
“With work, these tips provide the information the IRS needs to pursue John Doe summonses – our next important tool.
“The IRS generally uses the John Doe summons authority to identify individuals, groups or classes of US taxpayers whose member identities are unknown, who are involved in specific areas of tax noncompliance and who cannot be identified through other means.”
For taxpayers, the implications of these recently released numbers and Commissioner Schulman’s statements are obvious: The IRS is doing everything and anything it can in its considerable power to investigate and curb tax evasion, from simple audits to examinations of complex, multinational tax shelter programs.
This situation isn’t likely to change. With the economy down and tax revenues decreased, Uncle Sam’s tax-collecting agency is going to take every step it can to collect what’s due. Be warned.
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Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact him at 866-477-7762 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
Tags: Douglas Shulman, IRS audits, offshore accounts, tax audits, tax enforcement, tax evasion, tax noncompliance, tax shelters, Whistleblower Office
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Tuesday, November 25th, 2008
The IRS has is reportedly going after the relatives of Holocaust survivors and refugees who hid money in Switzerland before World War II broke out.
Reports out of Zurich indicate the Swiss government has agreed to give the IRS information about some overseas accounts for people trying to avoid U.S. banking laws. The development stems from a U.S. Justice Department investigation of UBS’ alleged courting of wealthy Americans for such offshore tax evasion. As the Justice Department expands its investigation to include other overseas banking entities, some owners of Holocaust-era accounts have sought legal help in “coming clean” with the IRS.
Among the 20,000 or so accounts currently being targeted by the IRS, it’s estimated, perhaps a thousand or so involve Holocaust-era funds. The amounts in the accounts range from as little as $25,000 to complete hidden fortunes in the millions.
The clients of the Swiss banks are being advised that that voluntary disclosure can help mitigate legal problems later. The IRS offers leniency for voluntary disclosure and it is good advice for any American with IRS tax problems to take advantage of this policy.
A timely disclosure of a substantial unreported tax liability shows that the taxpayer is willing to cooperate with the IRS in determining his or her correct tax liability. This is an important factor in deciding whether the taxpayer’s case should ultimately be referred for criminal prosecution.
Tags: offshore tax evasion, tax evasion, tax expert, vountary disclosure
Posted in Tax news and tips, Voluntary Disclosure | No Comments »
Thursday, October 9th, 2008
Arnold & Porter the latest to be effected in IRS’s continued push against tax cheats and tax shelters as the government continues to press on.
By Michael Rozbruch
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The onslaught continues.
The Internal Revenue Service’s latest victim: Arnold & Porter, an international law firm and a heavyweight in the corporate world.
The IRS reached a settlement agreement with Arnold & Porter in September which required the law firm to pay a civil tax promoter penalty.
The settlement relates to the firm’s failure in 2000, 2001 and 2002 to comply with tax shelter registration requirements and its participation in the organization of the following listed transactions that were sold to high-net worth individuals and corporations: Partnership Option Portfolio Securities (POPS), Personal Investment Corporation (PICO), and Family Office Customized Partnerships (FOCUS).
According to the IRS, Arnold & Porter cooperated with the government’s examination. The firm has put into place a compliance program designed to assure ongoing adherence to all tax shelter disclosure and list maintenance requirements of the Internal Revenue Code and related laws.
“Today a former Arnold & Porter partner pled guilty to charges that arose in connection with a government investigation of certain tax shelter transactions that took place in the time period 2000 to 2002,” the firm said in a prepared statement distributed to the news media.
“We have cooperated fully with the government. The firm previously entered a civil settlement with the Internal Revenue Service in connection with these transactions, and has resolved all related private civil claims.”
The settlement with Arnold & Porter comes after several years of highly aggressive IRS action toward tax cheats, tax promoters and institutions that help taxpayers avoid their obligations.
Recent actions have included:
• Requiring all U.S. citizens to report to the IRS any offshore bank accounts they use.
• The U.S. government announced it was taking action against more than 100 U.S. taxpayers who used bank accounts in Liechtenstein to evade taxes here at home.
• One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.
• The IRS launched an audit program that randomly selected 13,000 taxpayers.
• Mellon Bank entered into a civil settlement agreement with the United States and agreed to pay $16.5 million for civil damages and penalties under the federal False Claims Act.
Of course, these are just a few examples of recent actions.
But if you’re considering cheating on your taxes, you might want to keep these in mind.
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Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact him at 866-IRS-PROBLEMS to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
Tags: tax shelters
Posted in IRS Tax Cases, IRS Times and Inquirer | 2 Comments »
Friday, July 25th, 2008
Tax-collecting agency is questioning how many Americans have offshore accounts and how they’re being used
By Michael Rozbruch
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Have a bank account overseas?
Be sure to tell the IRS about it.
The U.S. tax-collecting agency asked Americans with overseas accounts to report them by June 30. If you haven’t done so, you could be in trouble.
Owing to globalization, more people in the United States have foreign financial accounts. There is nothing improper about setting up or maintaining such accounts. However, IRS officials are concerned U.S. citizen may overlook that their accounts are large enough to trigger reporting obligations.
“There are responsibilities that go along with owning such foreign bank and financial accounts,” said IRS Commissioner Doug Shulman in a statement. “Foreign account owners must remember that they may have to report their accounts to the government, even if the accounts do not generate any taxable income.”
Since 2000, the number of Report of Foreign Bank and Financial Accounts (FBAR) forms received by the Treasury has increased by nearly 85 percent, from 174,528 in 2000 to 322,414 in 2007. Despite this significant increase in filings, concern remains about the degree of reporting compliance for those who are required to file.
U.S. citizen are required to file a Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1, each year if they have a financial interest in or signature authority or other authority over any financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.
Civil and criminal penalties for non-compliance with the FBAR filing requirements are severe. Civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. Civil and criminal penalties may be imposed together.
That the IRS is aggressively asking for such information should come as no surprise to those who read enforcement news closely.
For several years, the IRS kept a close eye on overseas accounts and their use in tax-avoidance schemes.
Until a recent crackdown, many Americans used overseas accounts to hide money and then linked those accounts to Visa and MasterCard accounts, allowing them to pay for expenses in the United States using money that was tax sheltered overseas.
That worked marvelously — until the IRS was able to get the credit card companies’ records.
Since then, the IRS has been keeping closer tabs on offshore accounts.
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Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact him at 1-866-477-7762 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
Tags: Foreign Bank and Financial Accounts (FBAR), Offshore Banking, Overseas Banking
Posted in Tax Problem FAQs | 1 Comment »
Monday, April 7th, 2008
The tax deadline is looming. But to remind readers how easy is to get in tax trouble, here’s the IRS’s annual “Dirty Dozen” list.
By Michael Rozbruch
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It’s become an annual tradition for the IRS. And it isn’t Tax Day.
It’s the “Dirty Dozen.” Every year, auditors and investigators at the IRS compile the most frequently employed scams peddled to American taxpayers as ways to avoid income tax. Fall victim to one, and you can find yourself in a tax world of trouble:
1. Phishing: Phishing is a trick used by Internet thieves to trick taxpayers into revealing personal information they can then use to access the victims’ financial accounts. This form of identity theft often takes the form of an e-mail that appears to come from a legitimate source. To date, the IRS has documented 33,000 versions of this e-mail scam.
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 related to the economic stimulus payment, often called a “rebate.”
3. Frivolous Arguments: Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe.
4. Fuel Tax Credit Scams: The IRS is receiving claims for the fuel tax credit that are unreasonable or frivolous.
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.
6. Abusive Retirement Plans: 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.
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.
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.”
9. Return Preparer Fraud: Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes.
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.
11. Misuse of Trusts: Unscrupulous promoters urge taxpayers to transfer assets into fraudulent trusts.
12. Abuse of Charitable Organizations and Deductions: The IRS continues to observe misuse of tax-exempt organizations.
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Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact him at 1-866-IRS-PROBLEMS to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
Tags: economic stimuls payment, Identity Theft, misuse of trust, phishing, tax credit scam, tax expert, tax help, tax resolution, tax scam, Working with the IRS, zero wages
Posted in IRS Times and Inquirer, Identity Theft, Penalty Abatement, Working with the IRS | No Comments »
Tuesday, March 18th, 2008
The IRS is becoming more and more aggressive with tax cheats. The agency will hunt you down, even in … Liechtenstein
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It’s March, and Tax Day nears.
It’s also time to heed some warnings: The Internal Revenue Service is searching far and high for tax cheats.
Literally far and high.
The U.S. government recently announced it was taking action against more than 100 U.S. taxpayers who used bank accounts in Liechtenstein to evade taxes here at home.
That’s right — Liechtenstein, a tiny principality in the Alps.
The national tax administrations of Australia, Canada, France, Italy, New Zealand, Sweden, United Kingdom and the United States — all member countries of the OECD’s Forum on Tax Administration — are now working together following revelations that Liechtenstein accounts are being used for tax avoidance and evasion.
“Combating offshore tax avoidance and evasion are high priorities for the IRS,” IRS Acting Commissioner Linda Stiff said in a statement. “We are determined to protect the United States tax system from abuse and ensure that taxpayers pay what they owe. We will use all our authority to fairly and effectively enforce our tax laws. It should be clear from recent events that there is no safe hiding place for the proceeds of tax avoidance and evasion. Anyone with hidden income and gains would be well-advised to make a prompt and complete disclosure to the Internal Revenue Service.”
It’s becoming harder and harder for tax cheats to find places to stash their money. Keep in mind: Liechtenstein doesn’t even have an airport, and the IRS still tracked down more than 100 U.S. tax cheats who were using bank accounts there.
The news should be sobering, particularly in light of the 2007 enforcement numbers that were recently distributed by the IRS.
During 2007, the IRS audited 84 percent more returns of individuals with incomes of $1 million or more than during 2006. Overall, enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006 and nearly $34.1 billion in 2002.
Still don’t believe the IRS is becoming more aggressive? Consider these headlines from last year:
• Drug giant Merck paid $2.3 billion in federal taxes, net interest and penalties to resolve a dispute regarding tax years 1993 to 2001.
• The IRS reached an agreement with the Hollywood Foreign Press Association, which organizes the Golden Globe Awards, regarding the taxability of gift bags and promotional items.
• The IRS effectively shut down the once-powerful law firm J&G after the firm promoted illegal tax shelters.
• Law firm Sidley Austin paid $39.4 million in penalties for promoting abusive tax shelters and failing to comply with tax shelter registration requirements.
Now are you ready to file your tax return?
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Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact him toll free at 1-866-477-7762 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
Tags: IRS becoming more aggressive, tax cheats, tax evasion, Tax Resolution Specialist
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Saturday, February 2nd, 2008
A California banker is facing a stiff prison sentence after not declaring a six-figure income derived from a prime bank scheme.
Mary J. Clagg, 60, of Fresno, was indicted on federal income tax charges stemming from the scheme. She has pleaded not guilty.
According to the government, from approximately January 1999 to December 2002, CLAGG received commissions from Resource Development International (RDI), a scheme that raised nearly $98 million. RDI was in fact a fraudulent investment scheme that offered and sold unregistered prime bank securities, mainly targeting people seeking to invest retirement funds. Instead, investors’ funds were misappropriated and dispensed for personal and unauthorized business uses. Tens of millions of dollars were diverted from the RDI bank account to offshore accounts in the Bank of Nevis, West Indies.
Over about three years, more than $802,000 was deposited into Clagg’s Bank of Nevis account. From approximately November 1999 to June 2003, CLAGG repatriated thousands of dollars from her Bank of Nevis account into the United States and failed to declare on her tax returns the more than $634,000 of income derived from paid commissions received to her Bank of Nevis account.
She faces up to three years in prison and a fine of up to $250,000 for each count.
Tags: Banker Did Not Report Income, Mary J. Clagg
Posted in IRS Tax Cases, IRS Times and Inquirer | No Comments »
Monday, January 7th, 2008
As 2007 comes to an end, it’s a good time to consider whether you need to turn your tax life around. Are you cheating? Could you be facing jail time?
Ken Jenne was once one of the most powerful politicians in Florida.
An influential Democrat, Jenne was a longtime commissioner in Broward County, a former state senator, and sheriff of the Fort Lauderdale-based Broward County Sheriff’s Office.
But Jenne experienced a hard fall from grace: This year, federal authorities indicted Jenne for mail fraud and tax evasion for a scheme to enrich himself by obtaining money from two vendors who were doing business with the Broward County Sheriff’s Office.
After pleading guilty to the charge, Jenne will spend the next year behind bars.
In the end, tax charges took down the powerful politician and lawman.
Another powerful man, former New York City police commissioner Bernard B. Kerik, a protégé of presidential candidate Rudolph W. Giuliani, also faces tax charges.
It’s no secret: The Internal Revenue Service and U.S. Attorney’s Office are particularly aggressive in prosecuting tax violators.
As the year comes to end, perhaps you should be asking yourself two questions: Am I cheating on taxes? Will I be next?
And remember, the powerful are not the only targets of tax investigations and prosecutions.
Consider:
• Robert Frank Hanna, the owner and operator of Newport Tux and Uniform in Newport Beach, Calif., pleaded guilty to evading the payment of his federal taxes. He owed the IRS $356,459.
• Leroy Albert Lewis, a doctor in Danville, Calif., pleaded guilty to concealing $900,000 in income in offshore banks as a way to evade taxes.
• Nuclear engineer Mark M. Kaushansky, 56, of Monroeville, Penn., received 15 months in prison and was fined $20,000 after pleading guilty to eight counts of personal and corporate tax
evasion, resulting in a tax loss of $63,000.
• Snezana Berbic, 39, of Wethersfield, Conn., was sentenced to 12 months and one day of in prison after she pleaded guilty to one count of making a false statement on a federal individual income tax return and one count of assisting another person in the preparation of a false federal individual income tax return.
Enforcement is up. Prosecutions are up. Jail time is up.
The government has been aggressively cracking down for several years on tax crimes and will continue to prosecute those taxpayers who are devising ways to avoid their obligations to Uncle Sam.
If you are engaging in illegal behavior — underreporting your income, using trusts, sending money to offshore accounts — you could be next on the list. Happy New Year!
About the Author:
Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact him at 866-IRS-PROBLEMS to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
Tags: tax help, tax resolution, taxpayers
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Sunday, August 5th, 2007
A doctor in Northern California pleaded guilty to tax evasion and has agreed to pay the United States $900,000 in back taxes.Leroy Albert Lewis, of Danville, Calif., was charged with one count of conspiracy to defraud the United States and four counts of tax evasion. Under the plea agreement, Lewis pleaded guilty to one count of conspiracy.
According to the indictment, for more than 10 years, Lewis, an oral surgeon, attempted to evade taxes on income he earned from his medical practice. Around 1995, he joined an organization in Denver called Tower Executive Resources. Tower assisted its members in evading federal income taxes, in part by providing a false invoicing scheme to offset income the members’ earned. Lewis’ medical practice paid funds to Tower in exchange for bogus Tower invoices to substantiate huge false business expenses Lewis deducted on the medical practice’s returns. Tower then deposited the bulk of those funds into an offshore bank account, which Lewis controlled.
Lewis faces up to five years in prison and a fine of up to $250,000. Lewis’ son, Roy Lewis, a dentist and also a member of Tower, was also charged in the same indictment. He was sentenced to serve 24 months.
Tags: Back Taxes, conspiracy to defraud, tax evasion
Posted in IRS Tax Cases, IRS Times and Inquirer | No Comments »
