Your IRS Questions Answered Here…

Question: I just received a letter form the IRS informing me they want to audit my 2017 income tax return. I really didn’t need this right now. What should I do?

Answer: First, take a deep breath knowing there is expert help available to you. As part of the IRS’s audit process they’ll ask you dozens of very innocent sounding questions, however many of these can be invasive as well as intrusive.  The answers to which can “seal” your fate with the IRS auditor. But there is a “right way” to answers these questions. The IRS’s mission is to determine the accuracy of your tax return and they will leave no stone unturned to accomplish this.  We have found that many taxpayers who decide to handle an IRS audit themselves wind up with a substantial bill owing the IRS thousands of dollars. Auditors are trained to obtain information from you that in a lot of cases is not required under the law. They get away with this because most people fear them and don’t know their rights.

Our clients generally NEVER meet or speak with the IRS. We handle everything for you so you don’t have to take time away from your job or business to deal with all of the IRS’s paperwork.  Don’t let them walk all over you. We know the law.  We know your rights. We can help!

Couple Could Face a Whopping 261 Years in Prison

A federal grand jury issued a 34-count indictment against a Louisiana couple, Denis and Donna Joachim and their company, The Total Financial Group, Inc. In addition to 14 counts of aiding or assisting in the preparation of false statements on federal income tax returns, one count of conspiracy to defraud the IRS, the remaining charges ranged from wire fraud to money laundering.

Court records indicate that the couple operated a fraudulent medical reimbursement program that resulted in a $40 million loss to the IRS and participants in the program.   The program was marketed to employers as a supplemental benefits plan for their employees to reimburse them for medical expenses such as co-pays and deductibles. Total Financial charged employees a fee of between $150 and $250 per month and the employer a fee of 5% of each employee’s contribution amount.

The company never obtained an insurance policy as promised, and Total Financial took in $21 million in fees, spent on luxury cars and homes.

Besides facing up to 261 years in prison, the IRS has seized more than $6 million of assets to date.

Arkansas State Senator Gets Caught With His Hands in his Campaign Funds Cookie Jar

Arkansas Senator Jeremy Hutchinson resigned after being indicted on eight counts of wire fraud and four counts of filing false tax returns.

The indictment alleges that Hutchinson received $366,220 in campaign contributions from 2010-2017 and converted more than $200,000 for his personal use during that time by withdrawing $78,000 in cash, transferring $41,000 by wire transfer, and depositing $42,000 of contributions to his personal account.  He also cashed 5 checks totaling $6,400.  Hutchinson used the funds for a Caribbean cruise, a New Orleans vacation, tuition payments for his children, shopping sprees at jewelry and clothing stores as well as paying for everyday household expenses including groceries, gym memberships and Netflix fees.

To conceal his misuse of campaign funds, Hutchinson underreported the amount received in his campaign filings with the Secretary of State.  He also failed to report the funds he converted from his campaign to his personal accounts on his income tax returns.  Hutchinson is the sixth lawmaker in Arkansas to have pleaded guilty or been convicted of federal charges in the past year.

The wire fraud charges carry a maximum sentence of 20 years in prison for each count, and the tax fraud charges have a maximum penalty of 3 years in prison, plus restitution, monetary penalties and a period of supervised release.

Former Justice of the Peace at War with the IRS

Keith Bee, a former Justice of the Peace, in Pima County, AZ, faces three counts of making a false tax return and one count of corruptly endeavoring to impede the administration of internal revenue laws.

Bee was also the owner of Bee Line Transportation, a bus company, and from 2011 to 2013, claimed business expenses for his bus company which included the purchase of six Ford Mustangs, a Porsche 911 Carrera, a swimming pool, spa, landscaping and custom concrete work at his residences in Tucson and Washington State. In addition, for those tax years, Bee claimed depreciation of personal assets as business expenses and in 2012, failed to report $178,000 in capital gains.

The IRS began an audit of Bee’s 2011 tax returns and it was expanded to include the 2012 and 2013 tax years.  Bee met with IRS agents during the course of the audit and provided the IRS with vendor invoices which did not match the invoices obtained from the vendors.

According to Bee’s attorney, Michael Piccarreta, he said, “The evidence will show, reasonable, good-faith disputes over what is deductible but no ill intent.  I certainly don’t think there was any criminal behavior.”

A trial date is set for November, 2018.

The IRS by the Numbers

-The Gettysburg address is 269 words, the Declaration of Independence is 1,337 words, and the Bible is only 773,000 words. However, the tax law has grown from 11,400 words in 1913 to 7 million words today.

-The IRS sends out 8 billion pages of forms and instructions each year.  Laid end to end, they would stretch 28 times around the earth.

-Nearly 300,000 trees are cut down yearly to produce the paper for all the IRS forms and instructions.

-American taxpayers spend over $200 billion, and 5.4 billion hours working to comply with federal taxes each year, more than it takes to produce every car, truck and van in the U.S.

-The amount of effort needed to calculate and pay federal income for individuals and businesses in the United States is the equivalent of a staff of 3 million people working full-time for a year.


Some Real and Really Bad Excuses for Not Filing Taxes

  •   I couldn’t complete my tax return, because my husband left me and took our accountant with him.  I am currently trying to find another accountant.
  •   I work for myself, but a colleague borrowed my tax return to photocopy it and lost it.
  •   My tax return was on my yacht, which caught fire.
  •   A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed.
  •   I suffer from late filing syndrome.
  •   My child scribbled all over my tax return, so I wasn’t able to send it in.
  •   My religious beliefs preclude my income from being taxable.

Spa Owner Must Like Prison Better Than his Resorts

William Whittington of Scottsdale, AZ, who was previously sent to prison in 1987 for evading income tax and importing multiple tons of marijuana, was sentenced to prison again in October, 2018.

The former owner and director of the Springs Resort & Spa was given a term of 18 months in prison for filing a false individual tax returns.  During his trial, court documents revealed that Whittington underreported his income for the tax years 2010-2012 by paying personal expenses from the business account totaling over $1 million.  In addition, from 2003-2010, Whittington failed to report $9.7 million in investment income generated from two offshore bank accounts in Liechtenstein.

The total loss to the IRS for these fraudulent returns is over $1.8 million, which he is ordered to pay as restitution to the IRS, and given a period of supervised release for one year.

Previously, Whittington was a competitive racecar driver whose team won the 1979 24 Hours of Le Mans.

Your IRS Questions Answered Here…

Question: I’m currently separated from my spouse, who owns his own business, and we are in the process of getting a divorce.  I have always filed jointly with my spouse and now the IRS is sending me notices stating I owe $35,000.  I have no idea how they are coming up with this amount as my spouse said he was paying the IRS.

Answer:  You may be able to avoid this liability entirely under the IRS’s Innocent Spouse Relief rules.  Under federal law if an income tax return is signed by both husband and wife, both spouses are 100% responsible for the taxes owed.  However, the law permits special consideration where a spouse cannot be held responsible for mistakes that are attributable to the other spouse.

If you meet the following criteria you may be able to apply for innocent spouse relief:  Your spouse didn’t report all their income; and you were not aware of it and no reason to know about it when you signed the tax return; and it would be unfair to hold you liable for the taxes owed due to your spouse’s error. If you feel you were deceived by your spouse or tricked into signing a return you thought was correct this will help your case too.  There are many other ways you may be eligible for relief under the IRS’s innocent spouse rules and we can help sort this out and determine the proper path for resolution.

October Tax Joke

A nervous taxpayer was unhappily conversing with the IRS auditor who had come to review his records. At one point the auditor exclaimed, “We feel it is a great privilege to be allowed to live and work in the USA. As a citizen you have an obligation to pay taxes, and we expect you to eagerly pay them with a smile.” “Thank God,” returned the taxpayer. “I thought you were going to want cash.”