Virginia Couple Tries to Outsmart the IRS and Gets Caught

Barry and Joan Edwards, from Concord, VA, who were convicted on one count of filing a fraudulent tax return, and one count of conspiring to structure cash transactions, were sentenced to prison time.

Joanne Edwards was previously sentenced in May, 2018 and received a sentence of 18 months in prison and 3 years supervised release.  Barry Edwards was sentenced to 36 months in prison and ordered to pay $7,929 in restitution to the IRS for unpaid taxes.

It was shown in court that the Edwards created two false religious missions in 2006, which they used as nominees to receive income from nutritional supplement sales. The earnings were deposited into bank accounts held in the nominee’s name. The couple withdrew more than $475,000 in increments of less than $10,000 to evade bank-reporting requirements. The Edwards used the funds to pay personal expenses such as car payments, tuition and paid cash for a five-acre farm.  They also filed fraudulent tax returns from 2013 to 2015 in which they did not fully report their income.

Presidential Tax Facts

  • Our modern day-federal income tax system was created by the Revenue Act of 1913, which was signed into law by President Woodrow Wilson on October 3, 1913.
  • Social Security numbers were first issued by the Social Security Administration in 1935. The numbers were created to help administer Franklin Roosevelt’s New Deal Social Security Program, officially called the Social Security Act.
  • President Ronald Reagan paid tax in 1981 at an effective rate of 40%, the highest paid by any president.
  • President Richard Nixon’s infamous “I am not a crook” comment wasn’t directed at Watergate; he was referring to allegations that he had not paid his taxes.

 

Source: Forbes

The IRS Will End Offshore Voluntary Disclosure Program This Month – Miss Out and You Could Face Jail

The Offshore Voluntary Disclosure Program, which has been in effect since March, 2009, will close September 28th.  For those taxpayers who have unreported offshore accounts and assets, the programs offers a chance to pay substantially less in back taxes, interest and penalties and more importantly, to avoid criminal prosecution.

The benefit of the program allows taxpayers who failed to file a Report of Foreign Bank and Financial Accounts, or FBAR, to amend their tax returns only going back 8 years and pay the tax, interest and reduced penalties ranging from 20%-27.5%, as opposed to 50% and going back 15 years if the taxpayer does not go through the program and is caught failing to file an FBAR.  The biggest benefit is that they will also not face jail time, which could be up to 5 years imprisonment per violation and a felony conviction on their record.

In the last 9 years, more than 56,000 taxpayers have entered the program and paid a total of $11.1 billion in back taxes.

Couple Finds the Purrrfect Tax Deduction

A couple operating a family business known as Columbia North East Used Parts, a junkyard, deducted the cost of cat food for a bunch of stray cats as an ordinary and necessary business expense.  The junkyard would feed the cats to control the rats and snakes and other rodent issues.

The IRS disallowed the deduction but it was taken to tax court and the court agreed with the taxpayers, stating that it a necessary expense, defined as appropriate and helpful and allowed the cost to be deductible.

Creator of “Fitwall” Can’t Use His Product to Scale the Fence in Prison

Douglas Brendle, of Cheyenne, WY, pled guilty in federal court on two counts of willfully failing to file his income tax returns and one count of making a fraudulent application for health care benefits.

Brendle was the owner and operator of Brendle Climbing Systems, LLC which sold the “Fitwall” exercise equipment he created. In January, 2013, Brendle sold the rights to Fitwall to investors and received $1.5 million in payments during 2013-2014.  During that time, Brendle failed to file individual income tax returns or pay income tax, for a loss to the IRS of $404,501.

Additionally, in December 2013, Brendle filed a false application for Wyoming Medicaid claiming he made no income. Claims filed with the Medicaid office during 2013-2014 totaled over $20,000.

Sentencing will be on September 24, 2018 where he faces a statutory maximum sentence of three years in prison, restitution, monetary penalties and a period of supervised release.

Your IRS Questions Answered Here…

Question: I was self-employed and haven’t been able to pay my taxes for 3 years.  Now I’m a W-2 employee but I’m getting letters from the IRS demanding payment and threatening to garnish my paycheck. What should I do?

Answer:  The IRS doesn’t like being ignored and they want you to know they won’t go away. They have a lot of power over your life. They have 10 years to collect from the date you filed your return. Not only can they freeze your bank accounts 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!  The IRS can and will slap a lien on your house and other property as well. If you sell your house the IRS gets their money first before you do. Federal Tax Liens will damage your credit, making it harder to rent an apartment, get a car, obtain credit, and even get a job.  The IRS can even show up at your door!  Interest and penalties continue to accrue on a daily basis. You need professional expert help to deal with the IRS!  You can’t do this on your own. We offer immediate relief by protecting you from the long arm of the IRS. This is what we do on a daily basis. Don’t let the IRS take what you worked so hard for to earn.

Tax Joke of the Month

“Today is April 1, April Fools’ Day, a day that people try to fool their friends and relatives. Don’t confuse that with April 15, when people try to fool the IRS.”

 

–Jay Leno

Tax Facts from the IRS

  • The IRS closed almost 3.3 million cases under the Automated Underreporter Program, resulting in nearly $6.7 billion in additional assessments.
  • The IRS assessed more than $12.5 billion in additional taxes for returns not filed timely and collected more than $1.6 billion with delinquent returns.
  •  The IRS assessed $26.5 billion in civil penalties.  More than $11 billion was assessed in civil penalties on individual and estate and trust income tax returns.
  •  The IRS filed 446,378 notices of Federal Tax Liens and 590,249 notices of levy requested on third parties (i.e. employers)
  •  In 2016, the IRS initiated 3,395 criminal investigations and recommended 2,744 for prosecution.  The conviction rate was 96.7% and of those, 79.9% received prison time.
  •  For Tax Year 2016, individual income tax returns processed in 2017, the IRS sent more than 2 million notices to taxpayers for about 2.5 million math errors identified on their returns.

Source:  2017 IRS Data Book

You’d Think She Would Know Better…Former IRS Special Agent Convicted on Tax Charges

A former special agent for the Internal Revenue Service Criminal Investigation Division, Alena Aleykina was convicted by a jury on charges of filing false tax returns, obstruction of justice and stealing government money.

In the evidence shown at trial, it was shown that Aleykina, filed six false tax returns: three personal tax returns for 2009, 2010, 2011 and three in the names of trusts she created. Aleykina fraudulently claimed head of household filing status, false dependents and deductions for expenses in which she was not entitled to on her personal returns, as well as claiming false wages paid to her mother and sister, while not reporting rental income on her trust tax returns.

While the government was investigating her false claim on her returns from Tuition Assistance, receiving $4,000 for tuition reimbursement for classes she did not take, Aleykina lied to the agents requesting her laptop by claiming she did not know where it was but began deleting files from the computer after the agents left.

It’s estimated that the loss to the IRS is more than $60,000.  Sentencing will be in September 2018 where she could face three years in prison for each count of filing a false return, 10 years in prison for theft of government funds, 20 years for obstruction of justice as well as restitution and monetary penalties.

Pharmacist Will Need Excedrin after Indictment

Jerry Harper Jr., a pharmacist from Collinsville, VA, was indicted by a grand jury on charges of failing to account and pay for employment taxes to the IRS.

Harper owned and operated Family Discount Pharmacy, Inc, which had multiple locations throughout Virginia. As the owner, it was Harper’s responsibility to collect and pay employment taxes.  Although Harper did withhold the taxes from his employees, he failed to pay those amounts withheld to the IRS from 2000 to 2014 and the indictment alleges that Harper only filed one employment tax return with the IRS in 15 years.  It’s estimated the amount of tax liability is more than $1.2 million.

Instead, Harper used the money to pay personal expenses, including investments in the stock market, payments for his son’s pharmacy school tuition, real property purchases in Virginia and North Carolina and several automobiles.

The statutory prison sentence is five years on each count, a period of supervised release, restitution and monetary penalties.  A trial date is pending.