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3 03, 2010

Dare to Compare: T-men v. G-men

By |2020-02-12T14:20:18+00:00March 3rd, 2010|IRS News, IRS Power|0 Comments

Where are those scarce government resources going?

The Internal Revenue Service employs approximately 88,000 full time staff. This is two and a half times as many as the FBI.

Then, what about Spies v. Bean counters? Incomparable! The number of the CIA’s staff cannot “at present, be publicly disclosed.”   So says cia.gov.

22 09, 2009

IRS Extends Voluntary Disclosure Deadline for Secret Offshore Accounts

By |2020-02-12T14:20:19+00:00September 22nd, 2009|IRS Collection, IRS Enforcement, IRS News, IRS Power, Tax Crimes, Uncategorized|1 Comment

With 48 hours left before the final deadline to participate in a voluntary disclosure program designed get taxpayers with unreported foreign bank accounts to come back into the system and report their foreign income, the IRS has announced that it is extending the deadline from Wednesday September 23, 2009 until October 15, 2009.

The IRS reports that this extension was made in response to repeated requests from attorneys and other tax practitioners from all over the country.

In addition, an IRS agent working on a team evaluating the disclosures being submitted by taxpayers trying to participate in this program told me that there was a huge volume of submissions.

Within the guidelines of this program, taxpayers are given an opportunity to avoid criminal prosecution for tax crimes such as tax evasion and tax fraud.

Also, as part of this program, a taxpayer is subject to paying penalties on previously unreported income in foreign bank accounts under guidelines defined earlier this year, in March 2009. These guidelines are tough and expensive, but not nearly as tough or expensive as the sort of penalties a taxpayer would be facing if not working within this program.

23 05, 2009

IRS Auditor Caught Faking Own Tax Return

By |2020-02-12T14:20:20+00:00May 23rd, 2009|IRS Enforcement, IRS News, IRS Power, Tax Crimes|0 Comments

A revenue agent with the Internal Revenue Service has agreed to plead guilty to a federal tax fraud charge for filing a personal income tax return that claimed he suffered a loss in a real estate transaction when in fact he realized a substantial profit. (“Revenue agent” is the official title for the people at the IRS who audit tax returns.)

In a plea agreement, Jim H. Liu, 43, of Diamond Bar, Calif., agreed to plead guilty to subscribing to a false tax return — a charge that carries a penalty of up to three years in federal prison.

‘My Gain is Your Loss’ Shenanigan Uncovered and Confessed

Liu admitted he filed a false tax return for the 2002 tax year that improperly claimed a loss on his sale of a property in Pomona. Liu sold the property for a profit of more than $48,000, but he instead claimed a loss of more than $4,200.

The tax loss to the government, as a result of Liu’s filing, was approximately $14,642.88.

10 05, 2009

Dentist’s Pyramid of Unpaid Payroll Taxes and Unfiled Returns Bring Indictment

By |2020-02-12T14:20:20+00:00May 10th, 2009|100% Penalty, IRS Enforcement, IRS News, IRS Power, Payroll Tax, Tax Crimes, Trust Fund Recovery Penalty, Withholding Tax|2 Comments

If dentist Arlan R. Turley treated his teeth the way the Government alleges he’s treated his tax-filing obligations, he’d have cavities and one heck of a case of bloody, bad gums.

This 60-year-old Arizona man was indicted on two counts of willful failure to file a tax return and 20 counts of willful failure to pay over taxes. Turley operated the East Valley Dental Service in Mesa, Ariz.

The indictment alleges that the charges for failure to file are the result of Turley’s non-filing of his 2002 and 2003 income tax returns. In addition, Turley has not filed an individual tax return for a whole decade: 1997 to 2007.

The charges for failure to pay over taxes arise from Turley allegedly not turning over his employees’ payroll taxes to the government, again and again. (See https://arpearlmanlaw.com/not-just-for-bernie-madoff-or-king-tut-business-owners-build-devastating-pyramids-of-withholding-tax-debt-deducted-from-paychecks-but-not-sent-to-irs/ .)

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

6 05, 2009

Not Just for Bernie Madoff or King Tut, Business Owners Build Devastating Pyramids of Withholding Tax Debt Deducted From Paychecks But Not Sent to IRS

By |2020-02-12T14:20:20+00:00May 6th, 2009|100% Penalty, IRS Collection, IRS Enforcement, IRS Power, Payroll Tax, Pierce the Corporate Veil, Pyramiding, Trust Fund Recovery Penalty, Withholding Tax|1 Comment

What do they call it when a business owner withholds payroll taxes from his or her employees’ paychecks, spends that money on other expenses, doesn’t send the withholding tax payment to the IRS, then, does the same thing again, and then again, and then again?

The “again and again” part is called “pyramiding”: the employer is pyramiding its failure to pay one payment period after another, growing the company’s debt to the government astronomically.

Another way to describe it is digging the hole deeper, and deeper. (Recall Bill Clinton’s sensible advice: If you’re in a hole, first thing: stop digging.)

The act of failing to pay to the IRS (actually the U.S. Treasury) is a way to live especially dangerously for business owners, managers, and decision makers at the company. James Bond thinks he’s living dangerously? Feh!

The reason it is so dangerous is: The IRS has the power to hold the owners, managers, and decision-makers at the company personally responsible for the unpaid withholding tax with little more than the stroke of a pen. (This is called the “Trust Fund Recovery Penalty.”)

With this extraordinary power, the IRS can “pierce the corporate veil” with an ease unknown to ordinary creditors. Once it does, this liability is NOT deductible and it is NOT dischargable in bankruptcy. So there is a triple-whammy which can be devastating, and “pyramiding” the debt multiplies the problem.

This triple-whammy is then magnified further by the state tax dept, if the business is in a state which has an income tax; States have similarly huge, extraordinary powers and often the state is even tougher than the IRS.

25 03, 2009

The House (Probably) Can Tell Us Which Bailout Recipients Owe the IRS — And Should

By |2020-02-12T14:20:21+00:00March 25th, 2009|Bailout, Federal Tax Lien, IRS Collection, IRS Enforcement, IRS Power, Tax Policy, Tax Privacy|0 Comments

One has to wonder if the House Ways and Means Committee’s subcommittee on oversight got it right when it told reporters that it could not legally release the names of the companies who received bailout money while owing back taxes, two of which owe more than $100 million each. (See Associated Press article, “Some Getting Bailout Cash Owe Millions In Back Taxes,” in the New York Times on 3/20/2009 A19 col. 6.)

Ordinarily, a taxpayer’s tax information, whether it is an individual or a business, is treated as very private, very secret. In fact, IRS employees can be, and are, fired, criminally charged, convicted, and sentenced for the Unauthorized Inspection of Tax Return Information or Accessing of Tax Account Information.

But, when a taxpayer is late in paying a tax bill, these super-strong privacy rules don’t fully apply anymore.

(more…)

18 03, 2009

IRS Clarifies Position on Tax Consquences of Ponzi Schemes

By |2020-02-12T14:20:21+00:00March 18th, 2009|IRS Power, Ponzi Scheme, Tax Policy, Tax Problem Solving|0 Comments

In the wake of the unravelling of uber-Ponzi schemer Bernard Madoff’s scam, the IRS has announced new guidance on how it will handle the tax consequences of being a victim of a Ponzi scheme — whether Madoff’s or any one else’s.

Yesterday, March 17th, IRS Commissioner Doug Shulman described the agency’s position in testimony before the Senate Finance Committee:

  • The investor is entitled to a theft loss, which is not a capital loss. In other words, a theft loss from a Ponzi-type investment scheme is not subject to the normal limits on losses from investments, which typically limit the loss deduction to $3,000 per year when it exceeds capital gains from investments.
  • The revenue ruling clarifies that “investment” theft losses are not subject to limitations that are applicable to “personal” casualty and theft losses. The loss is deductible as an itemized deduction, but is not subject to the 10 percent of AGI reduction or the $100 reduction that applies to many casualty and theft loss deductions (more…)
12 03, 2009

IRS Commissioner to Taxpayers: Come Get Your 2005 Refund Money Before it’s Gone!

By |2020-02-12T14:20:21+00:00March 12th, 2009|IRS Power, Limits on IRS Power, Statute of Limitations, Tax Refund|0 Comments

In what appears to be a continuing bid to tell taxpayers that in the current economic downturn the IRS “feels our pain,” has become a kinder, gentler government agency and tax collector, and even perhaps that the days of being a “no more Mr. Niceguy” government agency have passed into the days of “No more ‘no more Mr. Niceguy,'” IRS Commissioner Doug Shulman recently reminded taxpayers who may be owed a refund for 2005, but have not yet filed their income tax returns for 2005, to claim that refund by filing their return and to do so quickly to avoid losing it.

This may qualify as a continuing effort in light of Commissioner Shulman’s “I feel your pain” comments, published by the IRS in early January, 2009. See Feb 5, 2009 post in this blog, “IRS to Bail Out Taxpayers?” below.

IRS estimates that there is roughly $1.3 billion in unclaimed refunds for tax year 2005 awaiting more than a million taxpayers around the country. (more…)