Monthly Archives: January 2018

The Treasury Department has updated the contingency plans for the Internal Revenue Service to handle the expected federal government shutdown.

The updated document describes how the IRS will handle the filing season, which is supposed to begin on Monday, January 29. The IRS is already under pressure to implement the provisions of the Tax Cuts and Jobs Act, which Congress passed last month, and it is dealing with a series of budget cuts in recent years that have led to staffing shortages.

“If the IRS is confronted by a lapse in appropriations during the 2018 Tax Filing Season (Jan. 1–April 30, 2018) the IRS will need to continue return processing activities to the extent necessary to protect government property, which includes tax revenue, and maintain the integrity of the federal tax collection process, along with certain other activities authorized under the Anti-Deficiency Act,” said the updated contingency plan.

“Accordingly, in a shutdown during the filing season, the IRS must except additional positions beyond those identified in the Non-Filing Season Plan. In the event the lapse extends beyond five (5) business days, the Deputy Commissioner for Operations Support will direct the Human Capital Officer to reassess ongoing activities and identify necessary adjustments of excepted positions and personnel.”

The National Treasury Employees Union, which represents IRS and Treasury employees, pointed out that the IRS has lost $900 million in funding and nearly 21,000 full-time employees since 2010. It noted that the largest overhaul to the Tax Code in three decades needs implementation, but many IRS employees would be sent home in a shutdown. The Treasury estimates that 56 percent of the workforce would be furloughed, though the NTEU pointed to the government shutdown in 2013, when 87 percent of the IRS workforce was sent home, albeit not during tax season.

About 1,000 employees will stay in place to manage debt, monitor domestic and international financial markets and policy coordination. Another 2,800 workers are exempt from the shutdown to avoid any disruptions with debt borrowing functions, debt collection, investment, debt accounting and Social Security disbursements.

Any government shutdown could result in tax refund delays, depending how long the shutdown lasts.
The agency lists work related to issuing refunds among tasks that won’t be excepted from the shutdown.

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Starting this month, the IRS will start implementing new procedures required under a 2015 law to crack down on individuals with “seriously delinquent tax debts.”

The IRS issued Notice 2018-1 on January 16, 2018, which provides guidance for implementation of the new IRC 7345, added by Section 32101 of the FAST Act. Upon receipt of section 7345 certification, the State Department is generally required to deny a passport application for individuals with seriously delinquent tax debts and may also revoke or limit passports previously issued to those individuals. The notice also describes some exceptions to certification and taxpayer remedies.

This comes in the face of the January 10, 2018 Report of The National Taxpayer Advocate advising the Internal Revenue Service (IRS) to stop abusing its new power to revoke the passports of US citizens who owe it more than USD50,000.

According to Notice 2018-1  starting January 2018, the IRS will start implementing new procedures required under a 2015 law to crack down on individuals with “seriously delinquent tax debts.” The Fixing America’s Surface Transportation (FAST) Act, which was signed into law in December 2015, requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. “Seriously delinquent tax debt” is an individual's unpaid, legally enforceable federal tax debt totaling more than $51,000 (including interest and penalties) for which a notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted or a levy has been issued.

If you face this problem, you should consult with Experienced Tax Attorneys, as there are several ways taxpayers can avoid having the IRS request that the State Department revoke your passport.

 

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According to Law360 “Jersey Shore” star Michael “The Situation” Sorrentino and his brother Marc Sorrentino have agreed to plead guilty in their criminal case over tax-related charges instead of going to trial next month, according to a government letter on January 17, 2018 to a New Jersey federal judge.

The parties told the court Tuesday that the Sorrentinos had agreed to plead guilty, and U.S. District Judge Susan D. Wigenton scheduled a hearing for Friday for the defendants to enter their guilty pleas, according to a one-page letter prosecutors sent the judge Wednesday. The parties thus asked Judge Wigenton in the letter to stay a Wednesday deadline outlined in parts of a scheduling order entered in connection with the brothers' upcoming trial.

The terms of the proposed plea deals were not immediately available.

The anticipated guilty pleas come after both brothers told Judge Wigenton during a Jan. 9 hearing that each had declined a written plea deal dated Dec. 19 without stating the specific terms of the proposed agreement.

Jury selection in the matter had been scheduled for Feb. 8, and opening statements were expected to occur the following week. The trial was slated to last about three weeks.

In September 2014, Michael and Marc Sorrentino were indicted on one count each of conspiracy to defraud the United States, and three and two counts, respectively, of filing false tax returns for 2010 through 2012. Michael Sorrentino was also charged with allegedly failing to file a tax return for 2011.

A superseding indictment, handed down in April, added charges of tax evasion and structuring funds to evade currency transaction reports against Michael Sorrentino and a charge of falsifying records to obstruct a grand jury investigation against Marc Sorrentino.

The Sorrentinos allegedly created businesses, such as MPS Entertainment LLC and Situation Nation Inc., and failed to pay all of the federal income tax owed on about $8.9 million that Michael Sorrentino earned between 2010 and 2012, according to the superseding indictment. Those businesses earned money from setting up promotional appearances, selling merchandise and arranging book and video deals.

The brothers allegedly filed false tax returns with the Internal Revenue Service that understated gross receipts, claimed fraudulent business deductions, disguised income payments made to them and others, and underreported net business income, authorities said. They also allegedly commingled their business and personal funds and used the money from the business bank accounts to pay for personal items, such as expensive luxury cars and clothing, authorities said.

Michael Sorrentino is accused of evading his 2011 income taxes by failing to file a personal return, filing a false corporate return for Situation Nation and concealing his cash income, authorities said.

According to the superseding indictment, he made multiple cash deposits on the same day in amounts less than $10,000 into different bank accounts, a practice known as structuring, in an effort to evade the banks’ reporting requirements, authorities said.

Authorities also assert that after being served with grand jury subpoenas seeking books and records of MPS and Situation Nation, but prior to producing them to the grand jury, Marc Sorrentino falsified those documents by altering and reclassifying taxable payments to himself as nontaxable payments and as legitimate business deductions.

The brothers' former accountant, Gregg Mark, has admitted to filing false tax returns on their behalf. Mark pled guilty in December 2015 to one count of conspiracy to defraud the United States, admitting that he prepared fraudulent tax returns for the Sorrentinos for tax years 2010 and 2011. He is awaiting sentencing.

The case is U.S. v. Sorrentino et al., case number 2:14-cr-00558, in the U.S. District Court for the District of New Jersey.

  

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