Funny Tax Quote

“The U.S. Senate is considering a bill that would tax Botox. When Botox users heard this, they were horrified. Well, I think they were horrified. It’s difficult to tell.”

– Craig Ferguson

Your IRS Questions Answered Here…

Question: I owe a lot in back taxes. I’m constantly getting threatening letters from the IRS. This has become a big problem that I have no idea how to solve.  Can you help me?

Answer:  For what it’s worth, take some comfort in knowing that you are not alone. There are millions of Americans in similar situations, dealing with debt hanging over their heads and concerned about how it will affect their future.

The good news: You have many options.  To fully understand and take advantage of your options, we urge you to see a qualified tax resolution professional. He or she will take a close look at your previous returns, looking for mistakes that may have resulted in an inflated tax debt amount.  This process alone can substantially lower your IRS debt.

Once you and your qualified tax professional have analyzed your previous returns, the next step is to negotiate a resolution with the IRS.  You will most likely be looking at one of two options – the Offer in Compromise or the Installment Agreement.

The Offer in Compromise was created for people who owe a substantial amount to the IRS but who, for whatever reason, are unable to pay their tax debt off, even over time. The Offer in Compromise allows taxpayers to negotiate a settlement amount that will take care of the entire tax debt once and for all. This settlement agreement can lower the tax debt by a significant amount.  If you do not qualify for the Offer in Compromise – and to do so you must be able to prove eligibility – then you may consider the Installment Agreement, which allows you to pay off your debt by making manageable monthly payments.

Top Tax Crime Prison Sentences for 2017

  •  In July 2017, a Watertown, NY restaurateur was sentenced to 150 months in prison for tax evasion and investment fraud. He engaged in a scheme to evade more than $4 million in taxes and obstruct the IRS.
  •  In October 2017, a Grand Junction, CO business owner was sentenced to 88 months in prison for tax evasion and failing to file corporate and individual tax returns.  He had not filed a personal tax return since 1992 and had not paid individual income taxes since 1993.
  •  In July 2017, a Potomac, MD doctor and entrepreneur was sentenced to 119 months and 29 days in prison for defrauding his former company’s shareholders and for failing to pay more than $7.5 million in employment taxes.
  •  In October 2017, a Boynton Beach, FL resident was sentenced to 30 months in prison for obstructing the IRS.  He filed fraudulent personal tax returns with the IRS that sought more than $5.6 million in fraudulent refunds, of which the IRS paid more than $485,000.
  • In January 2017, a St. Louis, MO tax return preparation business owner was sentenced to 27 months in prison for tax evasion.  He underreported his businesses’ gross receipts by over $1.5 million and evaded over $580,000 in tax.
  • In July 2017, a Fort Meyers, FL businessman was sentenced to 57 months in prison for conspiring with investment advisors to hide money in offshore bank accounts. He used secret numbered bank accounts and foreign shell companies to hide millions of dollars in order to evade more than $728,000 in U.S. taxes.
  • In July 2017, a Loveland, CO businessman and delicatessen owner was sentenced to 24 months in prison for conspiring to file fraudulent claims for tax refunds. He conspired with his return preparer to file three tax returns that claimed more than $1 million in bogus refunds, of which the IRS paid $350,765.  He spent the funds on precious metals and coins, jewelry and luxury travel.

Escort Service Business Owner Tries to “Trick” the IRS

Dennis Zarudny of Miami, FL pled guilty to filing a false tax return in court for the Southern District of Florida.

Zarundy, owner of Denzar, Inc, which operated under the business name of “Elite Escort Service”, advertised his business on the internet as a “prestigious escort agency providing 24-hour outcall escort services & adult entertainment for upscale gentlemen and couples in South Florida.”

Zarudny not only filed a false individual tax return for 2012, but also filed false corporate and personal returns for the tax years 2011 through 2014.  Customers of the escort service were allowed to pay by credit card, checks or cash.  Zarudny reported all of the credit card transactions but did not report income received by cash or check.

Sentencing is scheduled for this month, where he faces a statutory maximum sentence of three years in prison, supervised release, monetary penalties and restitution.

The IRS Reports a Surge in Email Phishing Schemes

Phishing is a scam where fraudsters send email-messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victim’s identity. To trick taxpayers into thinking the emails come from the IRS, they use the actual logo, so victims think it’s an official communication.  These emails contain various scare tactics, and they ask the person to confirm personal information and verify their PIN information.

According to a recent press release the scammers are at it again. The IRS is advising Taxpayers to be weary of a new scam aimed at obtaining taxpayer banking information. See the press release below:

IRS warns of variation of Form W-8BEN scam; crooks impersonate IRS to get banking and other information

Washington – The Internal Revenue Service today warned of a new twist tied to an old scam aimed at international taxpayers and non-resident aliens. In this scam, criminals use a fake IRS Form W-8BEN to solicit detailed personal identification and bank account information from victims.

Here’s how the scam works. Criminals mail or fax a letter indicating that although individuals are exempt from withholding and reporting income tax, they need to authenticate their information by filling out a phony version of Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting. Recipients are requested to fax the information back.

The Form W-8BEN is a legitimate U.S. tax exemption document, however, it can only be submitted through a withholding agent. In the past, fraudsters have targeted non-residents of the U.S. using the form as a lure to get personal details such as passport numbers and PIN codes. The legitimate IRS Form W-8BEN does not ask for any of that information. The phony letter or fax also refers to a Form W9095, which does not exist. Furthermore, the IRS doesn’t require a recertification of foreign status.

Scam variations

Be alert to bogus letters, emails and letters that appear to come from the IRS or your tax professional requesting information. Scam letters, forms and e-mails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes may seek personal information, including mother’s maiden name, passport and account information in order steal the victim’s identity and their assets.

Note that the IRS does not:

  • Demand that people use a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS will not ask for debit or credit card numbers over the phone. For people who owe taxes, make payments to the United States Treasury or review IRS.gov/payments for IRS online options.
  • Demand immediate tax payment. Normal correspondence is a letter in the mail and taxpayers can appeal or question what they owe. All taxpayers are advised to know their rights as a taxpayer.
  • Threaten to bring in local police, immigration officers or other law enforcement to arrest people for not paying. The IRS also cannot revoke a license or immigration status. Threats like these are common tactics scam artists use to trick victims into believing their schemes.
    Taxpayers who receive the IRS phone scam or any IRS impersonation scam should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing phishing@irs.gov with the subject line “IRS Impersonation Scam.”

Taxpayers who receive the IRS phone scam or any IRS impersonation scam should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing phishing@irs.gov with the subject line “IRS Impersonation Scam.”

Your IRS Questions Answered Here…

Question:  I received a notice from the IRS because I did not have the funds to pay the taxes I owed on my 2016 income tax return.  I also was late in filing my tax return. Not only is the IRS demanding the tax I owe, but they have slapped on these huge amounts for penalties and interest.  I had extenuating circumstances that caused all of this. This isn’t fair…what can I do?

Answer:  Your Tax Resolution Specialist can request a removal (abatement) of penalties 2 ways:  1) “First Time” Penalty Abatement and 2) a Reasonable Cause Argument. The IRS writes off billions of dollars in penalties each and every year, but you must know how to do it correctly.

A First Time Penalty Abatement  (FTPA) can be requested if you have a “clean” compliance record, meaning you have not incurred a Failure to File or Failure to Pay penalty for the 3 years preceding the year you are requesting the first time penalty abatement on.  FTBA is generally granted in most cases, regardless of what the underlying reason is, if you are eligible.

There are 9 main “Reasonable Cause” arguments to get your penalties removed.  They are: 1) Death, Serious Illness or Unavoidable Absence 2) Fire, Casualty or Natural Disaster  3) Unable to Obtain Records (common issue with couples going through a divorce)  4)  Mistake was made by the taxpayer or tax preparer  5)  Erroneous Advice or Reliance on a tax preparer  6)  Written/Oral Advice from the IRS  7)  Ignorance of Tax Laws  8)  Reasonable Cause/Ordinary Business Care and Prudence  9)  Undue Economic Hardship.

When using a “Reasonable Cause” argument, the event that caused you to file late or prevented you from paying the tax when due must correlate to the tax years involved and supporting documentation is essential.  Your Tax Resolution Specialist will guide through which documents are needed and submit a formal request in writing.  For instance, let’s say you were going through a divorce and you ex-spouse withheld records from you needed to file a complete and accurate income tax return and you filed your return last because of this.  You could request abatement of these penalties using one of the above reasonable cause arguments, specifically #3 above.

IRS Reels in Fisherman—Hook, Line & Sinker

Billie Schofield of Scituate, RI was indicted by a federal grand jury in March, 2018 on charges of corruptly endeavoring to impede the internal revenue laws, tax evasion and perjury.

Schofield, who worked for several fishing companies from 2005 to 2016, earned several hundreds of thousands of dollars in income during that time, but in an effort to evade paying taxes, hid his incomes by depositing the funds in nominee’s accounts and filing false income tax returns.

The IRS placed a lien on his house in which Schofield attempted to pay off with bogus checks, and prevented the delivery of levy notices to his employers.  In February, 2018, Schofield gave false testimony before a grand jury in response to questions about checks that were drawn on a closed bank account and submitted to the IRS.

If convicted, Schofield faces a maximum sentence of five years on the tax evasion and perjury charge, with an additional three years for obstruction of the internal revenue code, a period of supervised release, restitution and monetary penalties.

Attorney Gets Barred in Tax Scheme

An attorney from Southwest Ranches, FL , Michael Meyer, has been handed a civil complaint filed by the US to permanently bar him from providing federal tax advice because of his alleged tax scheme that he marketed to financial planners and CPAs.

It’s alleged that Meyer, an attorney licensed in Kentucky and Indiana, advised participants to claim unwarranted charitable donations to three bogus charities that he controls.  The donations are made on paper only and no money was ever donated.  Some of the “contributions” were backdated promissory notes and fabricated intellectual property.  It’s also alleged that Meyer prepared baseless appraisals and false federal tax forms to facilitate the scheme.

The complaint also alleges that Meyer misrepresented himself as a licensed CPA and Certified Valuation Analyst.

The United States Treasury is seeking to recover the more than $35 million it claims to have lost in Meyer’s scheme

Interesting Facts From the IRS

 

  •  The IRS has instructions for employees on how to collect taxes after a nuclear war.
  •  According to the IRS Rules, hair donations to organizations such as Locks of Love are not tax deductible as hair is considered to be a bodypart and just like blood donations, they are not tax deductible.
  •   If you rob a bank, the IRS requires you to pay taxes on the stolen money.
  •   The lowest number ZIP code is 00501, which is for an IRS center in NY.
  •   There is an Atari 2600 game called Tax Avoiders and it was conceived by a former IRS Revenue Agent.
  •   The goodie or “swag” bags given to the guests at the Academy Awards are so expensive that the IRS categorizes them as taxable income.
  •   The IRS ranks higher than Comcast in terms of customer satisfaction.

Willie Nelson released an album in 1992 specifically to pay off his debts to the IRS, entitled, ‘The IRS Tapes:  Who’ll Buy My Memories?