Category Archives: criminal tax law

I attended the 35th Civil and Criminal Penalties Conference in Las Vegas last week where one of the panels gave the Deputy Commissioner for SBSE (Collection), Darren Guillot, the opportunity to discuss the things happening in Collection. I also had the opportunity to meet Keith Fogg, former professor at Villanova University School of Law, my alma mater, who recounts in Procedurally Taxing the following regarding Darren Guillo’s discussion: 

• In 2019 there were approximately 9.5 million non-filers – meaning individuals who failed to file a federal income tax return despite having a filing obligation. While it is a little hard to be precise, the information available to the IRS for that year suggests this many individuals (I think Darren was only talking about individual non-filers at this point) had enough income to have a filing requirement. Certainly, a decent number of these non-filers probably are due a refund but it was assumed the majority would owe.
• Collection is looking to Artificial Intelligence for help in responding to taxpayers. Starting in the summer of 2022 an authenticated voice bot will answer questions and let taxpayers set up an installment agreement. Going live now is a chat bot which will allow taxpayers to get answers and to make a one-time payment. Darren called this the unauthenticated version, but it can still be helpful. There will be essentially no wait time to talk to the chat bot. 
• He is hopeful that the nearly 3 million people who qualify for a streamlined installment agreement each year will find this service helpful and that having people use it will take some of the pressure off of the Automated Call Sites (ACS).
• He described something called the Case Creation Non-filer Identification Program which is a system for identifying non-filers and specifically high dollar non-filers. Individuals identified through this program will receive a CP 59 letter (CP stands for Computer Paragraph) alerting them of the need to file. Darren said that in the tests taxpayers have responded favorably to this letter.
• He said that ACS is now working high dollar cases up to $1 million. Collection is identifying the types of cases where even though the amount of income earned by the individual is high, the likely collection action is the type that ACS supports. In the past the cut off for ACS handling a case was much lower but the cut off doesn’t reflect the type of collection action necessary to bring a taxpayer into compliance. Though he did not frame it in this manner, I expect that a high dollar delinquent account in which the taxpayer is a wage earner or someone who otherwise has assets that would be easy to levy will end up in this program.
• In 2019, 843,000 of the 9.5 million non-filers were considered high income. For this purpose, the taxpayer was considered high dollar if more than $100,000 in income was reported to the IRS.
• Revenue Officers (ROs) are the front-line collection employees in the field and generally maintain an inventory of about 50 to 70 cases. Now, there are less than 2,000 ROs working for the IRS. This is the lowest number of ROs since 1970. Darren said they had dwindled in size from about 4,000 in 2010. 
• He said there is enough work for several thousand more ROs and collection representatives (the individuals who work in ACS.) The IRS is hiring now, and if legislation passes with funds for the IRS it will be hiring a large number of new ROs and collection representatives.
• Finding new employees to hire is an issue. The IRS found high interest by well qualified individuals in collection representative positions in Puerto Rico. It has hired 400 people and is about to open its largest ACS site which will be located in Puerto Rico. It is in the process of hiring another 400 for a second site in Puerto Rico which will open by the end of the summer of 2022.
• Darren said the IRS has gotten better at identifying individuals who owe money. In 2019 it was collecting about $430 per return. In 2021 it has collected an average of $686 per return. It has shifted ROs from working on delinquent returns to balance due returns.
• Because the IRS has lost so many ROs its presence has diminished. Many smaller cities that previously had an RO presence no longer have one. To reach communities it might not otherwise easily reach given the current location of its staff, Collection is sending ROs out in “sweeps.” It will send 12-13 ROs into a community for a week to knock on doors and confront delinquent taxpayers who otherwise might not see an IRS field presence. The purpose is not to create criminal cases but to drive filing and payment. 
• Collection did sweeps virtually during the pandemic. Darren said that these sweeps have been very effective, and he expects to continue them not only in the US but also overseas with an upcoming sweep in Australia. 
• It is also going to conduct a sweep of high dollar return preparers who have not filed their own return. Collection’s name for the sweeps is Revenue Officer Collection Sweeps or ROCS.
• Darren described another operation called Surround Sound run by the office of fraud enforcement seeking high dollar cases and the prospect of criminal referrals.
• Related to this discussion, he said that the IRS is getting much better at finding taxpayers who own digital currency and pursuing those individuals who have not filed and paid.

Darren closed his remarks with a plea to practitioners to assist taxpayers in understanding the importance of timely filing even if they cannot pay at the time of filing, because the penalty for late filing is 5% per month which is much greater in comparison to the penalty for late payment which is 0.5% per month.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

According to Law360, the Internal Revenue Service could add 25,000 positions in the next 18 months if Congress comes through with the money needed t
o expand the workforce, Commissioner Chuck Rettig said.

Increased funding would go toward Rettig's goal of filling positions in all parts of the IRS, he said during a University of Texas School of Law conference held in Austin, Texas.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

According to Law360, a former chiropractor failed to shave 374 days from his five-year sentence for evading taxes over $500,000 and failing to report over $1.5 million in foreign accounts when a federal court refused to credit his time served on other charges.

Carlo Amato Understood That His Plea Deal Barred Sentence Reductions When He Entered Into It The Court Said.

His court documents made clear multiple times that he should not expect an opportunity to shorten his five-year term, according to the court.

The court sentenced Amato in 2019 following his guilty plea to one count of tax evasion and one count of failing to file a Foreign Bank and Financial Accounts report, according to court documents.

Amato, who operated a chiropractic office through two entities, failed to report income earned from one of the office's bank accounts, listing his income in 2014 as zero despite having earned more than $550,000 that year, court documents said. He admitted failing to report $1.5 million stowed in Russian accounts even though he knew he was required to do so, the U.S. Department of Justice said.

Amato also admitted to evading more than $300,000 in taxes for 2012, 2013 and 2015 and overbilling at least six insurance companies by more than $1 million for services that were never performed, the DOJ said.

The government agreed that it would not pursue further charges. As part of the deal, Amato agreed he would not try to adjust his sentencing guidelines of five to 10 years. He also would waive his right to appeal if sentenced within the guidelines.

Before sentencing, Amato's counsel filed a motion to reduce his sentence by the 374 days he served in pretrial detention for two state law charges, one of which was related to his federal charges. The U.S. government objected, arguing the motion sought a reduction in his sentence, and Amato's counsel withdrew it. The court subsequently sentenced Amato to five years in jail.

Amato filed a motion to vacate his sentence. He argued his counsel had been ineffective by advising that the sentence could be reduced. Amato told the court he never would have entered a guilty plea if he knew a reduction was impossible. The attorney also should have secured a better plea bargain agreement, one that did not prohibit reductions in sentencing and should not have withdrawn the motion, he said.

The court disagreed, saying Amato had been fully informed of the plea agreement before entering it. He was aware of the maximum penalties he could face and the court's discretion in sentencing, and aware that he could not rely on any predictions or promises made by counsel outside the proposed agreement, according to the court. The agreement also plainly stated that Amato could not reduce his sentence once he agreed to the deal, the court said.

Amato also mistakenly believed his attorney could secure a better deal, the court said, but failed to show that the government would have accepted one. He had no right to a more favorable sentence, the court added. Withdrawing the motion was not evidence of poor legal service, the court said; rather, it was meritless from the start.

Have a Criminal Tax Problem?

 Contact the Tax Lawyers at 

Marini & Associates, P.A.  

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid (888-882-9243) 

Read more at: Tax Times blog

On March 30, 2021 we posted Appeals Court Rules That Non-Willful FBAR Penalty Applies Per Form, Not Per Account, where we discuss that the Court of Appeals for the Ninth Circuit, reversed the district court decision and has held that the $10,000 non-willful FBAR penalty (for failure to file the FBAR) applies per FBAR form, not per the number of financial accounts (e.g., bank accounts) required to be reported on the form in 

Now according to Law360, in U.S. v. Alexandru Bittner, ,case number 20-40597, in the U.S. Court of Appeals for the Fifth Circuit, the court ruled on that the $10,000 maximum penalty for a nonwillful failure to file a foreign bank account report applies to each account, not each year, reversing a lower court's decision and diverging from the Ninth Circuit.

The lower court's decision that the penalty applied for each failure to file an annual FBAR was inconsistent with the Bank Secrecy Act and corresponding regulations, the three-judge panel said.

The opinion noted the panel's disagreement with a Ninth Circuit decision in March that found a California woman was liable for only one Internal Revenue Service-assessed penalty for each annual, nonwillful failure to file an FBAR. Earlier in November, the federal government accepted her undisclosed settlement offer. 

The IRS Had Levied The Penalties For Each Of Bittner's Unreported Accounts Every Year From 2007 To 2011.

The IRS assessed the penalties in 2017 and sued him in 2019 over the late forms, according to court documents. A Texas federal judge in June 2020 lowered the assessed penalties to $50,000, saying the $10,000 cap on penalties applied to each year.

The Fifth Circuit, however, disagreed with the district court's view that a violation of Section 5314 of Title 31 is directly tied to the obligation the statute imposes, which is the filing of a single report per year. Further, the lower court's view would lead to a result unattached from the statute, the appeals court said.

Bittner was born in Romania, immigrated to the U.S. and became a naturalized citizen, and then returned to Romania, where he became a successful businessperson and investor, according to the Fifth Circuit opinion. While there, he earned millions of dollars and bought interests in companies, including in real estate, construction and manufacturing, the opinion said.

Bittner's business abilities were a factor in the Fifth Circuit's rejection of his claim that the lower court was wrong to deny his defense that he had reasonable cause for failing to report his foreign accounts.

"Bittner's business savvy makes his failure to inquire about his reporting obligations even more unreasonable," Judge Duncan said.

Judge Duncan also said Bittner failed to demonstrate he had exercised ordinary business care and prudence regarding reporting requirements, noting he admitted to doing nothing to comply with them.

The Fifth Circuit affirmed the lower court's decision that Bittner was liable for failing to report accounts, and its rejection of his reasonable cause defense. The panel vacated and remanded the case for further proceedings.

Read more at: Tax Times blog