Category Archives: criminal tax law

According to the DoJ, as tax filing season continues, the Department of Justice's Tax Division reminds taxpayers to pay careful attention to their reporting and filing obligations and to timely pay all taxes due. Willfully filing false tax returns or deliberately evading paying taxes are serious criminal offenses. 

“Our criminal prosecutors are prepared for tax filing season too,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Tax Division. “Honest, law abiding taxpayers should know that the Tax Division is aggressively using its resources and expertise to identify, investigate, and prosecute those attempting to defraud and obstruct the IRS.” 

Throughout the past year, the Tax Division, in collaboration with U.S. Attorney’s Offices, other Justice Department litigating offices and the IRS, has investigated and prosecuted a broad array of tax offenses from businesses and white-collar professionals underreporting income to employment tax fraud to identity theft. Enforcement efforts are continually ongoing. Here are a few recent examples: 

Prosecution of Business Owners 

• 

  On Dec. 1, 2020, a New York City restaurateur was sentenced to 24 months in prison for tax
  evasion. Adel Kellel, the owner of Raffles Bistro, diverted business income for personal expenses, including rent for a high-end Manhattan apartment, college tuition payments for his children, and purchases from luxury retailers. As part of his sentence, Kellel was ordered to pay $613,478 to the IRS. 

• On Oct. 20, 2020, two biofuel company owners were sentenced to prison for conspiracy to defraud the IRS and preparing a false tax claim, among other offenses. Ben Wootton, 55 of Savannah, Georgia, was sentenced to 70 months and Race Miner, 51, of Marco Island, Florida, was sentenced to 66 months, after a jury convicted both defendants and their company, Keystone Biofuels Inc., in April 2019. 

Prosecution of White-Collar Professionals & Individuals 

• On Dec. 21, 2020, two Atlanta-area tax professionals pleaded guilty to promoting a syndicated conservation easement tax scheme involving more than $1.2 billion in fraudulent charitable deductions. Stein Agee of Canton, Georgia, and Corey Agee of Atlanta, Georgia, are currently awaiting sentencing for their role in the scheme. 
• On Nov. 2, 2020, a New Jersey man was sentenced to 78 months in prison for conspiring to defraud the United States, filing false claims, and obstructing the internal revenue laws, following his conviction at trial. According to evidence presented at trial, between 2015 and 2016, Kenneth Crawford Jr. and his co-conspirators promoted and sold a “mortgage recovery” tax fraud scheme in which they obtained fraudulent refunds from the IRS for their clients. As a result of Crawford’s scheme, more than $2.5 million in fraudulent refunds were sought from the IRS. 
• On Aug. 21, 2020, a North Carolina risk consultant pleaded guilty to filing a false tax return and illegally possessing a firearm. From 2011 through 2017, Charles Atkins underreported income from several risk consulting businesses, causing a tax loss of more than $800,000 to the IRS. Atkins is currently awaiting sentencing. 4/8/2021 Justice Department Tax Enforcement Already in Gear | OPA | Department of Justice https://www.justice.gov/opa/pr/justice-department-tax-enforcement-already-gear 2/2 Employment Tax Prosecutions 
• On April 7, 2021, the manager of the San Diego Home Cooking restaurant chain was sentenced to 30 months in prison for employment tax fraud. According to court records, from the last quarter of 2014 through 2017, Aleksandar Sreckovic did not file employment tax returns nor pay employment taxes for San Diego Home Cooking, causing a tax loss of over $1.5 million. Instead of paying employment taxes, Sreckovic paid other creditors and his own personal expenses. 
• On March 24, 2021, A Montana businessman pleaded guilty today to employment tax fraud. According to court documents, Thomas O’Connell owned and operated three plumbing businesses, Quality Plumbing and Heating, Orbit Plumbing and Heating, and Orbit PHC, each based in Great Falls. From at least 2005 through 2016, O’Connell did not pay employment taxes for several quarters, despite being obligated to ensure such taxes were paid to the IRS. Instead, he directed payments to other creditors and to his own personal expenses. The total tax loss to the IRS from O’Connell’s conduct is more than $550,000. 

Identity Theft Prosecutions 

• On Oct. 7, 2020, a Las Vegas, Nevada, man was sentenced to 70 months in prison for mail and wire fraud conspiracy, following his jury trial convictions. The trial evidence proved that from January 2009 through April 2011, Terry Williamson and his co-conspirators filed false tax returns with the IRS to fraudulently obtain tax refunds. To facilitate the fraud, they used the names and social security numbers of deceased taxpayers. More than 480 fraudulent tax refund checks totaling almost $2 million were deposited into Williamson’s account. More information about the Tax Division’s enforcement efforts in these and other areas can be found on the division’s website.

Have as 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

The IRS Independent Office of Appeals (“Appeals”) has issued a procedural memo,  AP-08-0321-0009: Memorandum for Required Use of Virtual Conferences, that requires Appeals employees to offer a virtual conference to taxpayers who request an in-person conference that can't be accommodated. Offering a virtual Appeals conference previously wasn't required in this situation. 

Most taxpayers with an active tax controversy can request a conference with Appeals to try to settle their tax controversy. (Code Sec. 7803(e)(4))

This new procedural memo requires Appeals employees to offer taxpayers a “virtual conference” in certain circumstances. 

For example, an Appeals employee is required to offer and conduct a virtual conference if the taxpayer (or their representative) has requested one. In addition, the Appeals employee should offer a virtual conference if the taxpayer (or their representative) has requested an in-person conference, but that request can’t be accommodated by Appeals.

Prior to COVID, Appeals would generally hold an in-person conference if a taxpayer requests one. However, Appeals stopped conducting in-person conferences at the beginning of the COVID-19 pandemic and has not yet resumed holding them. 

Appeals employees are not required to offer a virtual conference when a taxpayer (or their representative) has requested a phone or correspondence conference. In this case, the Appeals employee should use their judgment and experience to determine whether to voluntarily offer a virtual conference to that taxpayer. 

If the taxpayer declines the offer of a virtual conference, then the Appeals employee should continue with normal case processing procedures.

The Memo notes that this procedural deviation doesn't replace in-person conferences when Appeals begins holding them again. Appeals will still hold in-person conferences when Appeals can accommodate them and such conferences are appropriate. 

This guidance is effective as of March 22, 2021and will be incorporated into IRM 8.6.1 within two years of this date.

                                                                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

Internal Revenue Service officials on April 9, 2021 urged participants in abusive micro-captive insurance arrangements to exit these transactions as soon as possible (IR-2021-82). 

On March 10, 2021, the U.S. Tax Court held in Caylor Land & Dev. v. Commissioner, T.C. Memo. 2021-30 (2021), that yet another micro-captive arrangement failed to qualify as insurance for federal tax purposes. This decision follows several earlier Tax Court decisions that also confirmed the IRS’s determinations that certain micro-captive arrangements were not eligible for the claimed federal tax benefits. In Caylor, the Tax Court also sustained the IRS’s determination of accuracy-related penalties and rejected the taxpayer’s claim of reliance on tax advice.

Taxpayers who engaged in abusive micro-captive transactions are once again encouraged to consult an independent tax advisor prior to filing their 2020 tax returns. Taxpayers should consider exiting the transaction and not reporting deductions associated with abusive micro-captive insurance transactions.

“In multiple cases before the courts, judges have held that these ‘fanciful’ and ‘unreasonable’ arrangements don’t add up to insurance in the commonly accepted sense,” said IRS Commissioner Chuck Rettig. “I strongly urge participants in these arrangements to get independent legal advice separate from those who helped steer them into these abusive arrangements.”. 

In Notice 2016-66, the IRS advised that micro-captive insurance transactions have the potential for tax avoidance or evasion. The notice designated transactions that are the same as or substantially similar to transactions that are described in the notice as “Transactions of Interest.” The notice established reporting requirements for those entering into such transactions on or after Nov. 2, 2006 and created disclosure and list maintenance obligations for material advisors.

In March and July 2020, IRS issued letters to taxpayers who participated in a Notice 2016-66 transaction alerting them that IRS enforcement activity in this area will be expanding significantly and providing them with the opportunity to tell the IRS if they've discontinued their participation in this transaction before the IRS initiates examinations. Early responses indicate that a significant number of taxpayers who participated in these transactions have exited the transaction.

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

In the latest issue of A Closer Look, Andrew Keyso, Chief of the Independent Office of Appeals, discusses what taxpayers can do if they disagree with an IRS audit or collection decision. 

“I’d Like To Remind Taxpayers That They Can Have Their Case Reviewed By An Appeals Officer Who Is Independent Of The IRS Compliance Function That Made The Initial Determination In Their Case. I’m A Big Believer In A Strong Appeals Function Within The IRS,” Said Keyso.

Appeals is an independent function within the IRS, completely separate from the compliance functions responsible for collecting and assessing taxes. Appeals provides an informal forum for taxpayers who disagree with an IRS determination. Our job is to resolve tax disputes without litigation, where possible, consider each case fairly and impartially and improve public confidence in the integrity and efficiency of the IRS.

We do this by listening to taxpayers, understanding both sides (taxpayers and IRS compliance), independently evaluating all arguments and available information and identifying appropriate settlement options. 

We Have An Overall Staff Of Approximately
1,240 Employees, Mostly Appeals Officers
And Settlement Officers.

An Appeals Officer typically handles matters involving audit-related issues like penalties or additions to tax. For some complex matters, Appeals Officers may work as a team with other Appeals Officers. A Settlement Officer typically handles matters involving collection matters like whether the IRS followed proper procedures when imposing a lien or proposing a levy for unpaid taxes.

In Appeals, we work with taxpayers informally to settle tax disputes without a formal court hearing and, in most cases, without the need to hire someone to represent them. We provide taxpayers a meaningful opportunity to be heard, regardless of their educational or economic status, background or English language proficiency. In fact, the Taxpayer First Act of 2019 gives taxpayers the right to come to Appeals to dispute most IRS Compliance determinations.

Appeals is unique within tax administration, because we have the authority to compromise the amount of tax owed to resolve a dispute. 

How to Request an Appeal

Typically, appeal rights become available following a compliance action by IRS that could include an audit, penalty assessment or notice of a collection action. If you receive an IRS notice and your case is eligible for an appeal, the notice will explain your appeal rights. At that point, if you disagree with the IRS determination, you can request an appeal. The next step is to write down, either in a formal protest or simple statement, the issues with which you disagree and why. 

It’s important to remember that you should make your appeal request with the IRS compliance person who worked your case. That employee then will be able to send your appeal request, along with your case file, to Appeals. Taxpayers can also come to appeals after filing a petition in the United States Tax Court to dispute the IRS compliance action.

The Appeals Process

Once your case arrives in Appeals, we will assign it to an Appeals Officer or Settlement Officer depending on the type of case. Our goal is to have the assigned Appeals employee contact you by mail or telephone within approximately 30 days of receiving your case; however, it is taking longer these days due to pandemic-related delays and other resource constraints. 

To evaluate your case, the Appeals Officer will fully consider your position and arguments along with the administrative case file from the IRS compliance person who worked your case. You may request to view the non-privileged part of the Compliance file prior to meeting with Appeals. One of the most helpful things you can do is provide all relevant facts, documents and other information supporting your position to the IRS compliance person working your case before it comes to Appeals. 

Appeals Officers and Settlement Officers try to resolve cases after holding a taxpayer conference or by correspondence. But, some complex cases may take more than one conference to resolve. As mentioned earlier, Appeals may also consider the "hazards of litigation" or the probable outcome if your case were to go to court.

The scope and nature of our review depends on the type of case. But in all cases, the Appeals Officer or Settlement Officer will listen to your concerns and review any information or comments you present before making a final decision. 

If your case results in a decision you feel is unfavorable, we will explain the reasons for our decision and any additional options you may have. If you agree to settle your case in Appeals, we may provide you with an agreement form to sign. If you are unable to settle your case in Appeals, you may be entitled to dispute the IRS determination in the Tax Court or another Federal court. 

Recently, for non-docketed examination or collection appeals, the entire process, from the time your case is received in Appeals to the time it is resolved or closed in Appeals, takes on average 7 or 8 months.

                                                                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