According to DoJ, a Michigan real estate consultant and accountant was sentenced On July 21, 2022 to 18 months in prison for filing false tax returns with the IRS that omitted more than $800,000 in income, most of which he earned from a kickback scheme.

According to court documents and statements made in court, Steven A. Mills, currently of Harbor Springs and formerly of East Lansing, operated Mills Real Estate Consulting LLC. Through his consulting business, Mills was retained by a corporation to supervise several outside real estate agents hired by the corporation and paid substantial commissions. 

From 2012 to 2015, Mills demanded and received approximately $577,000 in kickbacks from one of these agents, which he did not report as income on his tax returns. 

Mills also did not report all of the income he received from the corporation, nor did he report $100,000 in compensation he received from a real estate developer for the years 2013 to 2015.

In addition to the term of imprisonment, U.S. District Judge Paul L. Maloney ordered Mills to serve one year of supervised release and to pay $297,858 in restitution to the United States.

Read more at: Tax Times blog

According to Law360, an infectious diseases doctor must pay penalties for tax fraud based on clear evidence that she and her husband lied about their income and expenses, among other things, the Ninth Circuit ruled Thursday, July 21, 2022 in Mojdeh Najle-Rahim v. Commissioner of Internal Revenue, case number 20-72031, in the U.S. Court of Appeals for the Ninth Circuit. 

Mojdeh Najle-Rahim and her husband understated their income, overstated their expenses, hid information from their tax preparer and failed to keep records and cooperate with the Internal Revenue Service, a three-judge panel ruled, upholding a 2019 U.S. Tax Court decision.

Najle-Rahim had argued that testimony from her tax preparer before the Tax Court had been misleading, but the panel found the tax preparer's testimony was credible. It was Najle-Rahim and her husband who lacked credibility when they tried to blame their tax preparer for the fraud, the panel said.

The couple were "educated and sophisticated professionals who had demonstrated their ability to pay careful attention to detail," the panel said.

Read more at: Tax Times blog

 

One of the most pressing audit issues for large taxpayers today centers on the Internal Revenue Code (Code) Section 965 transition tax. The Internal Revenue Service (IRS) has designated Code Section 965 as a campaign issue and is actively auditing taxpayers’ transition tax calculations and positions, along with other tax reform items. The stakes are high, particularly given the potential to pay this tax over a period of eight years.

On March 23, 2021, the IRS released a Practice Unit that provides an overview of the Code Section 965 transition tax with references to relevant resources. Unfortunately, unlike some other Practice Units, guidance is not provided as to the type of information revenue agents should be requesting from taxpayers.

 

 

 

As IRC 965(k) provides a six (6) year statute of limitations on assessment for returns with an IRC 965 transition tax, this results in the IRS having to make any IRC 965 assessment on or before March 15, 2024 for corporations and April 15, 2024 for individuals or September 15, 2024 or October 15, 2024 for corporations or individuals respectively. who filed valid extensions in 2018.

Practice Units are presentation-type materials compiled by the IRS as a means for collaborating and sharing knowledge among IRS employees. They provide helpful guidance to revenue agents in the form of an overview of the law in a specific area, examination tips and guidance and references to relevant resources. 

Although the Code Section 965 transition tax Practice Unit does not provide insights into the types of questions and information that revenue agents may seek on audit, it is still useful for taxpayers to review to understand the IRS’s perspective in this area.

 

Read more at: Tax Times blog

The House of Representatives on July 20, 2022 approved a fiscal year 2023 budget for the IRS and the Treasury Department that includes $13.6 billion for the revenue agency, an increase of $1 billion from the year's enacted level. 

The legislation was approved as part of the Financial Services Appropriations bill and was one of six spending measures passed by the House. 

The Senate Has Yet To Complete Any
Of Its 12 Appropriations Bills.
Current Funding Levels For The Federal
Government Expire With The End Of Fiscal
Year 2022 on September 30.

The largest increase in the IRS budget will go for taxpayer services: $3.4 billion, up $630 million from this year. This includes support for the Volunteer Income Tax Assistance and Matching Grants programs, Low Income Taxpayer Clinics, the National Taxpayer Advocate, Tax Counseling for the Elderly, and hiring of additional personnel to improve IRS customer service. 

The IRS' tax enforcement function received an appropriation of $6.1 billion, up $682 million from the level enacted this year. The funds support stepped-up enforcement and hiring of personnel. The agency's business systems modernization program, which aims to update technology and improve online applications and tax filing processing, received $310 million, an increase of $35 million above the current enacted amount. Another $3.8 billion went for overhead in the IRS' operations support area.

Read more at: Tax Times blog