The IRS Criminal Investigation 2018 Annual Report

The Internal Revenue released its annual report of criminal enforcement actions taken in the fiscal year 2018.

A major focus of Criminal Investigation (CI) was traditional tax cases, including international tax enforcement, employment tax, refund fraud and tax-related identity theft.

CI initiated 2,886 cases in 2018, with traditional tax cases accounting for 73% of the total. CI is the only federal law enforcement agency with jurisdiction over federal tax crimes. CI achieved a conviction rate of 91.7% in fiscal 2018.

In 2018, CI established a new international tax and financial crime group.  This group works to identify, investigate and recommend prosecution of international offshore tax evasion schemes, looking at U.S. citizen account holders who move their money offshore to avoid detection, and at foreign banks and financial institutions that facilitate U.S. citizens to hide their money offshore.


Source:  IRS website

The IRS Sticks It to the Owners of Phlebotomy Services

Robert and Donna Poimboeuf, a couple from Shreveport, LA, were indicted in court in December, 2018 on charges of conspiring to defraud the Internal Revenue Service and on multiple counts of filing false tax returns.  The Poimboeufs owned and operated D & G Holdings, LLC, a company providing Laboratory and mobile phlebotomy services.

It’s alleged that for the tax years 2011 through 2015, the Poimboeufs underreported their income and gross receipts for D & G on their joint personal federal income tax returns.  Information provided in two separate tax returns, preparers omitted bank account information and Forms 1099. Charges also include that the couple classified business receipts as non-taxable loan proceeds to reduce their income.

If they are convicted, the Poimboeufs face a maximum sentence of five years in prison on the conspiracy count, and three years in prison for each count of filing false returns, as well as a period of supervised release and monetary penalties.

Owner of Inventax Lives up to the Name

Geoffrey Rotich, doing business in Shawnee, Kansas, pleaded guilty to aiding and assisting in the preparation of a false income tax return and making a false bankruptcy declaration in Federal Court.

Rotich owned and operated Inventax, a tax preparation business.  Court documents show that in March 2013, Rotich assisted in the preparation of an individual’s 2012 income tax return that he knew contained false claims for education expenses and other deductions.  Rotich also filed a bankruptcy petition for himself, which failed to disclose his interest in Inventax and completely identify all of his bank accounts.

Sentencing will be on March 21, 2019, where he could face a maximum sentence of 3 years in prison for the tax count, 3 years in prison for the bankruptcy count, as well as a period of supervised release, restitution and monetary penalties.

Aretha Franklin’s Estate Gets No Respect from the IRS

According to the IRS, Aretha Franklin’s estate owes $6.3 million in unpaid taxes and $1.5 million in penalties for the tax years 2012-2018.

The estate is being audited by the IRS, which filed a claim in probate court in December, 2018.

David Bennett, attorney for the estate says that they have already paid $3 million to the IRS and all returns have been filed.  Bennett told the Associated Press, “We have disputes with the IRS regarding what they claim was income.  We claim its double-dipping income because they don’t understand how the business works.”  He added that Franklin had a lot of expenses whenever she toured.

New Yorker editor David Remnick said in an April 2016 profile of Franklin, that the reason she carried her purse onstage is, “She collects on the spot or she does not sing.  The cash goes into her handbag and the handbag either stays with her security team or goes out onstage and resides, within eyeshot, on the piano.” Her attorney claims that she had a lot of paychecks lying around that she never cashed, and he had to have some of them reissued because they were so old.  It seems that the IRS figured some of it as undeclared income and are going after it.

Your IRS Questions Answered Here…

Question: I’ve been getting letters from the IRS saying I owe back taxes. This is taking over my life and I can’t sleep. What should I do?

Answer:  Owing money to the IRS or State can be intimidating and throw your life out of whack, but ignoring your back taxes will only make things worse. It’s important to take immediate action.  The IRS has over 148 types of penalties they can assess, and the worst part is they can also charge interest on the original penalties. Penalties can be a high percentage of the total amount owed to the IRS.

The IRS has 10 years to collect from the date you filed your return and they won’t go away.  Not only can they freeze your bank account and take the money, but they can garnish your wages and legally take as much as 75% of your net paycheck, without a court order!

You need a professional expert to help you deal with the IRS.  You can’t do this on your own. As a matter of fact, going or talking to the IRS without expert representation could be the worst thing you can do.  The taxpayer Bill of Rights allows you to be represented by a qualified practitioner who can negotiate a resolution to the IRS in your best interest.

Funny Tax Quote

It’s easy to find out who is going to become a tax collector.  In the nursery, give all the kids lemons.  The one who squeezes it dry is going to work for the IRS.

Marketer’s Key Performance Indicator Scores a Zero with the IRS

Craig Walcott of Monument, CO, pled guilty to one count of attempting to evade the payment of income taxes in court in November, 2018.

Walcott owned and operated a multi-level nutritional supplemental marketing business and also owned and leased residential real estate. The IRS notified Walcott in April, 2010 of an assessment of taxes and penalties of more than $450,000 for the tax years 2005, 2006 and 2007. Walcott tried to evade payment of his tax liability by transferring properties to nominee entities, using fictitious mortgages to encumber his property to conceal their equity and continuing to file false tax returns understating his income.  Walcott did not file any income tax returns for the years 2012, 2013 and 2014.

As part of the plea agreement, Walcott agreed to pay $628,733 in restitution to the IRS.  Sentencing is scheduled for February 25, 2019, where he could face a maximum sentence of five years in prison, supervised release and monetary penalties.

Interesting Tax Facts

  • Since 2001, there have been more than 4.500 changes to the tax code, not including the Tax Cuts and Jobs Act of 2017, signed into law December 22, 2017.
  • More than one-fifth of paper tax returns contain errors.  The IRS reports that while the error rate for electronically filed returns is less than 1%, paper filers are 21 times more likely to make a mistake.  Errors can cause tax returns to get audited or rejected, so you’re better off filing electronically and lowering your risk.
  • A good 17% of workers violate the tax code when filing their returns.  The majority of the violations are treated by the IRS as honest mistakes.
  • Only 30% of households itemize deductions, and that amount is anticipated to be lower because of the new tax laws taking effect with the 2018 tax filing.
  • IRS employees also break the law. A 2015 report showed that almost 1,600 IRS worker willfully evaded taxes over the course of 10 years.


Source:  The Motley Fool

Pharmacy Owner Will Need Sedatives After Sentencing

Jerry Harper, Jr., the owner of Family Discount Pharmacy with several locations in Virginia, was sentenced to 41 months in prison for failing to account for, and pay, employment taxes.

From 1998 to 2014, Harper was responsible for collecting and paying employment taxes for the pharmacy chain.  Although Harper withheld the taxes from his employee’s paychecks, he did not turn those taxes over to the IRS.  In 15 years, Harper only filed one quarterly employment return with the Internal Revenue Service.

The amount of employment tax liability was more than $5 million.  Harper admitted in court that he used that money to pay personal expenses, including $100,000 for his son’s pharmacy school tuition, $370,000 for real property in Virginia and North Carolina, made over $500,000 in stock investments and wired over $1 million to his personal bank account.

In addition to his prison time, Harper is ordered to serve 2 years supervised release, pay restitution in the amount of $5,069,555.73 and a fine of $25,000.

What Are the Panama Papers?

Leaked by an anonymous source in 2015, the Panama Papers as they are called today, contained 11.5 million documents detailing financial and attorney/client information taken from the Panamanian law firm and wealth management services of Mossack Fonseca, the fourth biggest offshore law firm worldwide.

The leaked documents contain identity information about the shareholders and directors of 214,000 shell companies set up by Mossack Fonseca as well as some of their financial transactions.  While having offshore accounts is not illegal, not reporting them to the IRS is a violation of the Foreign Bank and Financial Account (FBAR) in the US.

According to The Economist, “The most obvious use of offshore financial centers is to avoid taxes. Tax havens are at the core of a global system that allows large corporations and wealthy individuals to avoid paying their fair share.”

The list of names in the papers included heads of states from around the world, including Vladimir Putin, Mauricio Macri, President of Argentina and Petro Poroshenko, President of Ukraine, members of organized crime cartels, wealthy individuals including 9 from the US, and celebrities such as Stanley Kubrick, David Geffen, Emilio Estevez and Bobby Fischer.  Sports stars Tiger Woods and MBL player Alfonso Soriano.