This week was a busy one in tax related news. The stories ranged from celebrity tax woes, collection of billions in tax debt, tax fraud and a new IRS report that outlines improvements to the entire tax-exempt process. Here is a recap of those stories:
Fashion Moguls Dolce & Gabbana Convicted of Tax Evasion – According to a Reuters article, both Domenico Dolce and Stefano Gabbana were given a 20-month suspended prison sentence and required to pay restitution of $10 million euros $13.4 million U.S dollars for hiding hundreds of millions of euros from Italian tax authorities. This case shows how not only the U.S. Government but also global taxing authorities are going after the wealthy to collect back taxes for their struggling economies.
Rapper Fat Joe Goes to Prison on Tax Charges – The Daily Mail Celeb reported that on Monday, 42-year-old rapper Fat Joe (aka Joseph Cartegena) was sentenced to four months in prison and given a $15,000 fine for failing to file and pay taxes on more than $1 million dollars in income for tax years 2007-2008. Back in January, Fat Joe, facing these same charges, pledged to file his tax returns and pay all the taxes and IRS penalties owed. Sadly, it didn’t happen.
A story relating to the tax problems of the rich and famous surrounds the estate of the late billionaire William Davidson and the IRS. The post: Davidson Estate Battles IRS over Massive $1.9 Billion Tax Debt, reports that attorneys for the estate of the late William Davidson are taking the IRS to court claiming the agency is wrongly trying collect about $2 billion in taxes out of the estate. It’s hard to know if the IRS has a case, but given the size of the estate and potential revenue to the government, no doubt it will get tied up in litigation for some time.
Danny Werfel, the IRS Principal Deputy Commissioner, has pledged to restore the IRS’ reputation and image. Just week, the IRS Released Report Outlining Changes for Non-Profits outlining new actions and steps to fix problems with the IRS’ review of tax-exempt applications and to improve the processes and operations that already exist at the IRS. The report highlights three key points of discussion:
- Who was responsible and assurances that this does not happen in the future
Fixing the Problems with the Review of Applications for Tax-Exempt Status
- A new voluntary process to speed the application times, additional staff to help and the suspension of lists that target specific groups.
Review of IRS Operations and Risks
- Establish an Enterprise Risk Management Program and Initiate a comprehensive, agency-wide review of compliance selection criteria
Other tax news stories featured people getting caught for attempting to cheat the tax man.
Tax-Related Offenses Charged to Nonprofit Director in Ohio – Edward G. Kramer, 62, director of a Cleveland nonprofit organization was charged with allegedly avoiding paying taxes on approximately $500,000 in income for the years 2007 through 2010 and not filing a tax return for two other years. Kramer also withheld taxes from employees that he did not pay to the government.
Tax Fraud by Florida Woman Earns Prison Sentence – Plant City, Florida resident, Rhonda Yvette Brooks, was sentenced to three years and six months in federal prison and ordered to forfeit $23,096 on tax fraud and aggravated identity theft charges. Using Turbo Tax, Brooks submitted fraudulent tax returns totaling more than $70,000 in bogus tax refunds.
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