IRS is Cracking Down on International Travel – Notice CP508C

In an effort to put new pressure on taxpayers with tax delinquencies, the Internal Revenue Service (IRS) is leveraging its ability to block international travel—even in the absence of any flight risk.  Delinquent taxpayers may receive a Notice CP508C from the IRS if they’ve been certified to the US Department of State and had their passports revoked.  Please note, in some instances the Power of Attorney on file is not receiving this notice.  Fortunately, there are a few ways to deal with this matter which are described below.  That said, these are somewhat time consumptive; note that while even if you pay out liability in full, the revocation is not immediately released.

On February 27, 2019, the IRS issued an information notice reiterating a prior warning that taxpayers with “seriously delinquent tax debts” (a relatively low $52,000 or more) will be reported to the State Department and may have their passports revoked and applications for new and renewed passports denied or significantly delayed.

Initially, working with the IRS, a taxpayer’s options are the ones you’d expect—paying in full, entering into installment agreements or offers in compromise, requesting a collection due process appeal or requesting innocent spouse relief (yes, your spouse may get to take that trip without you).  But keep in mind, the IRS will usually reverse a certification within 30 days after resolution of your issue and provide notification to the State Department “as soon as practicable.”

Fortunately, according to the IRS, there is also a long list of taxpayers who, even if seriously delinquent, will not be certified to the State Department.  Most of these exceptions, if not already in place, will take time to be put in place, and include taxpayers:  in bankruptcy, who are already deceased, identified by the IRS as victims of tax-related identity theft, who the IRS has already determined are not currently collectible due to hardship, located within a federally-declared disaster area, with pending IRS requests for an installment agreement, with pending IRS offers in compromise, currently serving in a combat zone, or who already have an IRS accepted adjustment that will satisfy the debt in full.

A notice of certification to the State Department may create a heightened urgency and significance to your tax matter, especially if you’re dealing with the Department of Justice.  If your case has become more urgent on account of a notice, we’re here to help—it’s what we do.

Where in the World is John McAfee? The IRS Wants to Know!

John McAfee, the millionaire founder of the anti-virus software bearing his name, has fled the country to elude the IRS and conduct his 2020 presidential campaign from his boat in international waters.

An outspoken critic of the IRS, McAfee claims that “The IRS has convened a grand jury in the state of Tennessee to charge myself, my wife and four of my campaign workers with unspecified IRS crimes of a felonious nature.”

McAfee took to Twitter recently to state that taxation is illegal and publicly declare that he hasn’t filed a return for 8 years. He recently told CNN that his constant criticism of the IRS is what has provoked the indictment. McAfee states, “I have been speaking out more and more against the IRS, both in state when I keynote and also on my social media.  I think they just had enough.”

Confident that he can conduct his presidential campaign while in exile, McAfee says that he will continue to sail in international waters as long as he’s not convicted of charges by the IRS.

First Indictments in the Panama Papers Revelations

“Panama Papers” is the name given to a leak of more than 11 million documents in 2015, which detailed financial and attorney/client information from a Panamanian law firm and the wealth management firm of Mossack Fonseca showing possible tax evasion and money laundering throughout the world.

Four individuals have been indicted on charges that include wire fraud, money laundering, conspiracy and conspiracy to defraud the United States.

The names of the four charged are: Ramses Owens, a lawyer who worked for Mossack Fonseca, who remains at large; Dirk Brauer an asset manager for Mossfon Asset Management, a division of Mossack Fonseca, who was arrested in Paris; Richard Gaffey, an accountant residing in Massachusetts; and Harald Von Der Goltz, a former U.S. resident living in London, who was arrested in December, 2018 along with Gaffey.

In the unsealed indictment, it charges that Owens, Brauer and Gaffey set-up complex entities which allowed their clients to hide and invest millions of dollars which was not disclosed to the IRS.  In addition, the trio created additional schemes to cover their client’s secret offshore bank accounts in Switzerland and other countries.

Evidence was obtained in early 2017, when one of their clients decided to cooperate with the Justice Department and a meeting was set-up between Brauer and an undercover agent posing as a financial advisor.  During the meeting, Brauer proposed to have the undercover agent send his U.S. client’s money overseas and set-up a fake investment for them. Brauer then advised them to report the investment took a loss, and then after the undercover agent could move the money back to the United States without the IRS discovering it.

Your IRS Questions Answered Here…

Question: I owe a several years of back taxes but do not have the money to pay the IRS.  I want to get them off my back and heard of something called an Offer in Compromise.  What is it and how can it help me?

Answer:  An Offer in Compromise is the IRS’ tax resolution debt settlement program.  It’s a program for taxpayers who owe the IRS more money than they can afford to pay. It’s the IRS’s version of a “fresh start” when it comes to tax debt.  If approved, the IRS accepts a lesser amount (sometimes a fraction of what’s owed) to settle your debt.  However, it isn’t always easy to gain approval due to its strict criteria.

The IRS considers your income, assets, expenses, ability to pay, and whether paying the full amount would cause financial hardship. It’s important to remember that the IRS wants its money and will only accept an Offer in Compromise if it thinks it wouldn’t receive any money otherwise.

Your odds for acceptance increase significantly when you have experience in negotiating with the IRS.

Strange Historical Taxes in England

-As early as the 16th century, the English Government taxed playing cards. In 1710, dice and playing cards received a dramatic tax increase, which led to the widespread forgery of playing cards.  The tax was not removed until 1960.

-In 1660, England placed a tax on fireplaces.  To avoid paying taxes, people would cover their fireplaces with bricks.  The tax was repealed in 1689.

-In 1696, England placed a tax on windows, taxing houses bases on the number of windows they had.  The tax lead to houses being built with very few windows, and the tax was repealed in 1851 as it was deemed to cause health problems.

-England placed a tax on printed wallpaper in 1712.  In order to avoid the tax, builders hung plain wallpaper and then painted patterns on the walls.

-In 1789, England introduced a tax on hats.  Hat-makers stopped calling their creations “hats”, so the tax was changed to include any headgear.  The tax was repealed in 1811.

-England has a tax on televisions.  If you own a TV, you must pay an annual fee which is used to finance BBC programming. Color TV’s are taxed at a higher rate than black & white.  If a blind person owns a TV, their tax rate is half.  Failure to pay is subject to criminal penalties.

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.