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Pharmacists Wrights $5 Million Employment Tax Fraud Prescription Resulting in Jail Time

According to the DOJ a Collinsville, Virginia pharmacist pleaded guilty to failing to account for and pay over employment taxes, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Thomas T. Cullen for the Western District of Virginia.

According to court documents, Jerry R. Harper, Jr., 61, owned and operated Family Discount Pharmacy, Inc. (FDP) in Stanleytown, Virginia, with multiple locations in Stuart, Rocky Mount, Chatham, and Brosville, Virginia.  As owner of FDP, Harper was responsible for collecting and paying over FDP’s employment taxes. 

From 1998 through 2014, FDP Accrued Employment Tax Liabilities of More Than $5 Million.


Harper Withheld These Taxes from FDP Employees’ Wages, but Did Not Pay the Taxes to the Internal Revenue Service.


In over 15 years, Harper only filed one employment tax return with the IRS.
Harper admitted that instead of providing the employment taxes to the IRS, he caused FDP to pay his personal expenses.  For example, Harper wired over $1 million to his personal bank account, made over $500,000 in stock market investments, spent over $100,000 on his son’s pharmacy school tuition, and purchased over $370,000 of real property in Virginia and North Carolina.  Harper also used part of the money to purchase a Jeep Grand Cherokee and a jet ski.


“Today’s Guilty Plea Sends a Clear Message That This Type of Conduct Will Not Be Tolerated,”

Said Principal Deputy Assistant Attorney General Zuckerman.

“Employment tax violations represent tens of billions of dollars in lost revenue to the U.S. Treasury and the Justice Department is committed to prosecuting individuals involved in these tax frauds.”
On November 16, 2018 He Was Sentenced to 41 Months inPrison for Failing to Account for and Pay over Employment Taxes.

In addition to the term of imprisonment, he war ordered to serve 2 years of supervised release and to pay restitution in the amount of $5,069,555.73 and a fine of $25,000.00.
 Have a Criminal Tax Problem?
Contact the Tax Lawyers at 
Marini & Associates, P.A.
for a FREE Tax Consultation contact us at
or Toll Free at 888-8TaxAid (888 882-9243)


Read more at: Tax Times blog

Bank Leumi Hands Over Another US Depositor to the IRS

According to DoJ, Israel Birman pleaded guilty on November 14, 2018 in U.S. District Court for the Central District of California to filing a false federal tax return on which he failed to report interest income he earned from bank accounts at Bank Leumi Le-Israel B.M.
According to court documents, between 2006 and 2014, Israel Birman held offshore bank accounts in Israel at Bank Leumi and Israel Discount Bank.  The accounts had balances over $10,000 each year, which required the filing of Reports of Foreign Bank and Financial Accounts (FBARs) with the Department of the Treasury.

In 2013, Israel Birman’s bank accounts at Israel Discount Bank had a total value of over $3.4 million.

Israel Birman did not file FBARs for 2006-2014.

Israel Birman instructed Bank Leumi to hold bank mail from delivery to the United States, and obtained access to his offshore funds through the use of “back-to-back” loans from Bank Leumi USA collateralized by his undeclared Bank Leumi offshore funds.

In 2009 and 2010, Israel Birman earned taxable interest income on his Bank Leumi bank accounts totaling over $187,000. He failed to report that interest income on his 2009 and 2010 federal tax returns.

“The Department Of Justice Continues to Vigorously Investigate and Prosecute Offshore Account Holders

Who Maintain Undeclared Accounts and Willfully Ignore
Their US Reporting and Tax Obligations,”
Said Principal Deputy Assistant Attorney General Zuckerman.

In December 2014, Bank Leumi entered into a deferred prosecution agreement after the bank admitted to conspiring from at least 2000 until early 2011 to aid and assist U.S. taxpayers to prepare and present false tax returns by hiding income and assets in offshore bank accounts in Israel and other locations around the world. Under the terms of the deferred prosecution agreement, Bank Leumi paid the United States a total of $270 million and continues to cooperate with respect to civil and criminal tax investigations.

Sentencing is scheduled for January 28, 2019. Birman faces a maximum sentence of 3 years in prison, as well as a period of supervised release, restitution and monetary penalties.

As part of the plea agreement, Israel Birman has agreed to pay a civil penalty of not less than $1,709,883, representing 50% of the balance in his Israel Discount Bank account in 2013.

Do You Have Undeclared Offshore Income?
Is Your Name Being Handed Over to the IRS?
Want to Know Which Remaining OVDP Program is Right for You?
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
for a FREE Tax Consultation Contact us at:
or Toll Free at 888-8TaxAid (888) 882-9243


Read more at: Tax Times blog

Tax Returns & 5th Amendment Privilege? – Part I

According to Michael J. DeBlis III, if you’ve ever heard someone “plead the Fifth” on a crime-related television show, you’re aware of the power of the Fifth Amendment. A key part of the United States Constitution, the Fifth Amendment protects Americans from self-incrimination, meaning that if you are arrested for a crime, you are under no obligation to reveal information that may be used against you. While cases of pleading the Fifth are a little less common in real life than they are on Investigation Discovery, the Fifth Amendment does occasionally rear its head for ordinary individuals, particularly where taxes are concerned.

In cases potentially involving the Fifth Amendment, it’s important for taxpayers and attorneys alike to tread carefully. After all, anything you say or do can be held against you, whether you meant to reveal such information or not. As such, taxpayers may find themselves between a rock and a hard place, as the willingly-provided information gathered in an audit – personal information and details about potential wrongdoing that taxpayers would ordinarily never admit to in a court of law, for example – can then be used in a criminal proceeding, like in cases of fraud or tax evasion.
Facing the potential for criminal charges stemming from an IRS investigation is a slippery slope. In order to keep taxpayers as protected as possible in these proceedings, it’s critical to understand policies, procedures, and best practices to reduce the risk of penalty.

The Fifth Amendment and the Filing of Tax Returns

As the adage goes, there are only three absolutes in life birth, death, and taxes and pleading the Fifth isn’t always enough to send the IRS packing.

Under Code Sec. 6012, individuals in the U.S. are required to file annual income tax returns, and also to keep adequate records to support the gross income and expenses included with an annual filing. For those with a penchant for tax fraud, doing as such may seem as though it’s toeing the line of the Fifth Amendment, but the Supreme Court decided this isn’t the case; in United States v. Sullivan, the Court determined that preparing tax returns is not a violation of personal liberties. There may be some case for pleading the Fifth in cases in which the taxpayer is asked to disclose information that is otherwise privileged, but there is no defense for failing to file at all. Returns also cannot be substantially incomplete; they must provide enough information for the IRS to reasonably determine an individual’s tax liability.

If the IRS requests information the taxpayer feels should be privileged, a privilege claim can be made under select circumstances, on a case by case basis. In fact, the Tax Court recently ruled that the privilege against self-incrimination can be used to keep taxpayers from disclosing the source of certain forms of interest income if the return otherwise contains enough information for the IRS to accurately assess the correctness of the overall return.

Invoking the Fifth Amendment

Think invoking the Fifth Amendment may be enough to get the IRS off your case? It may be, but it also may not be.

Section 7602 grants the IRS fairly broad power to compel taxpayers into providing requested information in the course of a return examination. This power is not unlimited, however, and in the right occasion, the Fifth Amendment may indeed provide protection. However, before pleading the Fifth willy-nilly, it’s best to understand its exact role in the Constitution. It reads as follows: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” In essence, this protects against government abuse, helping to safeguard citizens from having to choose between following the law and self-incrimination or perjury.

These privileges don’t just stop at criminal cases, however; civil proceedings are also included. This means that taxpayers are indeed permitted to plead the Fifth in proceedings with the IRS, assuming there is a valid reason to do so. If a taxpayer is found to be “faced with hazards of self-incrimination that are real and appreciable, not merely imaginary and unsubstantial” the request will be upheld.
For those potentially facing IRS sanctions or penalties, it’s only natural to ask, “why not invoke the Fifth Amendment at all times when dealing with the IRS?” After all, confessing to tax fraud or other challenges that the IRS may investigate would be self-incrimination, would it not? This is certainly a valid question, but it’s also one that may stand in the way of resolving complex tax situations, particularly for those with an educated appointed representative, like a tax accountant or lawyer. With a qualified representative speaking on behalf of a taxpayer, it’s unlikely that a case will evolve into one in which pleading the Fifth becomes essential, even in cases concerning fraud or other potentially criminal charges. It is also important to understand the rights of a taxpayer and his representative; when asked, the IRS must produce a copy of their administrative file under code section 7803. Generally, reviewing files and workplaces indicates that pleading the Fifth isn’t necessary. However, if the IRS refuses to give up files based on the perceived influence to proper tax administration, the taxpayer may want to proceed with as many privileges invoked as possible.

In addition to the above, the burden of proving privilege falls on the one asserting privilege, which means that the taxpayer must be able to demonstrate why he is claiming privilege – and saying “because” isn’t a good reason at all. From there, it is up to the court to decide whether this choice is valid, and if it’s deemed to be unnecessary, the ability to plead the Fifth is essentially voided.
While the IRS occasionally issues threats, it’s highly unlikely that the results of an investigation will actually yield prosecution, making the need to invoke the Fifth essentially moot. Further, invoking the Fifth immediately colors the way a taxpayer looks to the IRS. Even if there’s nothing criminal to hide, simply bringing up privilege will lead to a presumption that there is. Doing this unnecessarily can send the IRS digging deeper than previously intended, and may also significantly delay the examination process and send legal costs soaring.

Have a Criminal Tax Problem?
Contact the Tax Lawyers at 
Marini & Associates, P.A.
for a FREE Tax Consultation contact us at
or Toll Free at 888-8TaxAid (888 882-9243)


Read more at: Tax Times blog

IRS Criminal Investigation releases Fiscal Year 2018 Annual Report

The Internal Revenue Service released on November 14, 2018 the Criminal Investigation Division’s (CI) annual report, reflecting significant accomplishments and criminal enforcement actions taken in fiscal year 2018.

"This Report Shows That As Financial Crime Has Evolved

and Proliferated around the World, so
 Have IRS Criminal Investigation Special Agents and
Their Abilities to Track the Proceeds of Financial Crime,"

Said IRS Commissioner Chuck Rettig. “CI uses cutting-edge technology combined with sophisticated investigative work to bring the most impactful cases that affect tax administration. I am extremely proud of our special agents and professional staff and their work serving the nation.”

A major focus of CI in fiscal 2018 was traditional tax cases, including international tax enforcement, employment tax, refund fraud and tax-related identity theft. Other areas of emphasis included public corruption, cybercrime, terrorist financing and money laundering.

"We Prioritized the Use of Data in Our Investigations in Fiscal 2018," Said Don Fort, Chief of CI.


“The future for CI must involve leveraging the vast amount of data we have to help drive case selection and make us more efficient in the critical work that we do. Data analytics is a powerful tool for identifying areas of tax non-compliance.”

CI initiated 2,886 cases in fiscal 2018, with traditional tax cases accounting for 73 percent of the total. The number of CI special agents dipped below 2,100 by the end of fiscal 2018, which is the lowest level since the early 1970’s. Consequently, CI turned to data analytics to assist in finding the most-impactful cases.

CI is the only federal law enforcement agency with jurisdiction over federal tax crimes. CI achieved a conviction rate of 91.7 percent in fiscal 2018, which is among the highest of all federal law enforcement agencies. The high conviction rate reflects the thoroughness of CI investigations and the high quality of CI agents. CI is routinely called upon by prosecutors across the country to lead financial investigations on a wide variety of financial crimes.

CI has published an annual report since 1920 to highlight the agency’s successes and provide a historical snapshot of the make-up and priorities of the organization. The 2018 report is interactive, summarizes a wide variety of CI activity during the year, and features examples of cases from each field office on a wide range of financial crimes.

The current year, fiscal 2019, marks the 100-year anniversary of CI as a law enforcement agency. CI’s crime-fighting techniques have come a long way in that time. The federal fiscal year begins Oct. 1 and ends on Sept. 30.

“As we begin our 100th year, I could not be prouder to lead this exceptional agency of dedicated women and men," Fort said. "We have never been more capable, better trained or more relevant to the financial crimes landscape."

Have a Criminal Tax Problem?
Contact the Tax Lawyers at 
Marini & Associates, P.A.
for a FREE Tax Consultation contact us at
or Toll Free at 888-8TaxAid (888 882-9243)

Read more at: Tax Times blog