On Febuary 11, 2022 we posted IRS CONTINUES to Criminally Prosecutes Employers For Failure To Pay Withheld Payroll Taxes - As Promised! which lists multiple recent cases where the IRS Criminally prosecutes Employers for Failure To Pay Withheld Payroll Taxes.

Now According To The DoJ, A N.Y. Man Plead Guilty To
Willful Failing To Collect And Pay Over Employment Taxes
on Behalf Of His Spa Companies.

According to court documents and statements made in court, Sung Soo Chon, 63, aka Steve Chon, was the CEO, president and majority owner of Spa Castle Queens in College Point, New York, and Spa Castle Texas, in Carrolton, Texas. 

Chon oversaw daily operations at the two spas and related businesses, and directed subordinates to pay cash wages to some employees, many of whom were not legally permitted to work in the United States.

From the first quarter of 2014 through the first quarter of 2017, Chon did not withhold all of the legally required federal payroll taxes from the wages of some of the spa employees and filed false employment tax returns with the IRS. 

Chon is scheduled to be sentenced on Dec. 6. He faces a maximum penalty of five (5) years in prison, as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

  Thinking of Borrowing From Your Company's
Payroll Tax Withholdings?

Read more at: Tax Times blog

On May 19, 2022 we posted IRS Audits Have Plummeted in the Last Decade - According to GAO, where we discussed that the GAO published a report on trends in IRS audit rates, audit results, and resources used for audits across individual taxpayer income levels. (GAO-22-104960) and that IRS examining or auditing a decreasing proportion of individual tax returns, concern has been raised over "the potential for declining taxpayer compliance, as well as whether IRS is equitably selecting taxpayers for audit, as audit rates for higher-income taxpayers have decreased more than audit rates for lower-income taxpayers." 

Now according to Law360, IRS Commissioner Chuck Rettig said on Thursday, June 23, 2022, that claims the agency audits more poor people than wealthy ones are wrong and harmful to tax administration, renewing his pushback against criticism of the agency's audit rates.

When Audit Rates Of Earned Income Tax Credit Claims
Are Compared Against Those For Taxpayers With Incomes
Over $1 Million, 

Audit Rates For The Wealthy Are In Fact Higher,

Rettig said during the New York University School of Professional Studies Tax Controversy Forum held in New York City and online. Claims to the contrary are damaging to tax administration, he said.

He also said anyone looking at data objectively and "not with a narrative trying to take down the IRS or tax administration" would see the agency historically audits about 7% to 8% of taxpayers with incomes over $10 million. 

Rettig's Comments Follow The IRS Saying In May
That It Audited 5.8% Of Returns Reporting $10 Million
Or More In Income For The 2017 Tax Year, 
Compared With 21.5% Of Such Returns For 2010. 

The agency said at the time that resource constraints hindered its ability to monitor the wealthy. 

The Transactional Records Access Clearinghouse, a data research organization based at Syracuse University, also said in a report that the IRS audits low-income taxpayers five times higher than everyone else based on fiscal year 2021 data. 

Rettig Was Asked About That Research During A
House Ways And Means Subcommittee Hearing In
March And Called The Findings Completely False.

The data research organization asked Rettig to retract his statement that the organization's findings were totally false, and said the organization bases its reporting on data the agency provides. 

Just as Rettig blasted criticism of the agency's audit rates Thursday, he ripped people who say the agency doesn't need more money.

"Those who say IRS doesn't need additional funding, they have a different agenda," he said. "Their agenda should be for this country."

The agency needs sustained multiyear funding, Rettig said. Although lawmakers passed legislation that provided the agency a $675 million increase through September, about $350 million of that will be used for "maintaining current status" for the agency and contracts, he said.

"So we got let's say a $375 million boost, try to take $375 million and fill the holes in a ship that have existed for more than 10 years because there was not adequate funding," he said. "Why do we have trouble providing consistent, significant multiyear flexible funding to the Internal Revenue Service?" 

 

Read more at: Tax Times blog

According to Law360, the author of several tax-dodging guides agreed to pay more than half a million dollars in penalties for failing to report overseas bank accounts he maintained in Asia, according to documents filed in federal court in the case of U.S. v. Kelly, case number 3:21-cv-03043, in the U.S. District Court for the Northern District of Texas.

The author, Nickolas J. Kelly, will pay $540,000 plus
late payment penalties, collection costs and interest for his willful failure to report at least five (5) accounts under his
company's name, Superdrive Publishing Ltd.,

In 2014, Kelly maintained interest in three accounts at HSBC in Hong Kong, one account at Kasikorn Bank in Thailand and one at the Bank of China in mainland China that had an aggregate balance exceeding $10,000, the government alleged in court documents. 

By January 2021, Kelly Owed Nearly $540,000 In
FBAR Penalties, According To The Complaint.

On Superdrive's website, articles written by Kelly advise on how to avoid reporting assets to the government, with titles including "The Hong Kong Offshore Business Guide," "How to Own Your House and Car Anonymously" and "How to Be a Free Man," according to court documents.

Read more at: Tax Times blog

The U.S. Tax Court held in Chavis, 158 TC No. 8, that an IRS appeals officer correctly determined, after a collection due process (CDP) hearing, that the petitioner wasn’t eligible for “innocent spouse” relief because her Trust Fund Recovery Penalty (TFRP) didn’t arise from any liability shown on a joint federal income tax return. 

Read more at: Tax Times blog