Category Archives: criminal tax law

According to Law360, a California licensed tax return preparer committed fraud in underreporting income from his marijuana business, and a U.S. Tax Court ruling holding him liable for penalties should be affirmed, the U.S. told the Ninth Circuit.

Raymond Chico, who founded the marijuana cigarette container company Doobtubes, was uncooperative with the Internal Revenue Service during its audit of his income tax returns, (not recommended and probably resulted in the fraud penalty assessment) and the Tax Court rightly held him liable for fraud penalties related to his overstating of business expenses and understating of income, the government said in a brief Wednesday.

Chico, whom the government described as a "serial entrepreneur," had plenty of tax preparing experience and should have recognized his mistakes on his tax returns, the government said.

"Based On This Court's Precedent, Chico's Understatement Of His And His Wife's Income By More Than $640,000 Over
The Course Of Three Years, Coupled With His
Inadequate Record-Keeping, Is Sufficient To Establish
 His Fraudulent Intent," The Government Said.

In December, Chico told the appeals court that the IRS failed to clearly prove he knowingly avoided paying taxes on Doobtubes' income. Chico said that the Tax Court's ruling should be reversed because he had properly filed his personal income tax returns and at most made mistakes in his business tax filings, according to the brief.

The Tax Court ruled in September 2019 that Chico underreported Doobtubes' receipts by $180,000 and ordered him to pay fraud penalties. Chico, despite being a licensed tax return preparer, also didn't file corporate returns for Colorado marijuana dispensary Lakewood Patient Resource Center Inc., for which he was chief financial officer and half-owner, according to the Tax Court.

Chico Was Also Said To Be Uncooperative During A Revenue Agent's Examination of His Tax Compliance, Failing To Respond Adequately and Provide Requested Paperwork Related
To His Tax Returns Between 2010 And 2012,
According To The Tax Court Opinion. 

Most Likely This Lack of Cooperation Inspired
the Revenue Agent to Assess the Fraud Penalty!

But Chico said in his brief that he had only limited experience as a tax return preparer and during the Tax Court proceedings he initially relied on an attorney who failed to cooperate with the IRS in its audit and was later disbarred from practicing law in California.

Despite Chico's arguments, the government said in its brief there is more than enough evidence showing that he committed fraud and Chico was responsible for the actions of his first legal representative.

In addition to Chico's understatement of income, he also kept inadequate records and failed to file business tax returns for Lakewood Patient Resource Center, the government said. Taken together, the "badges of fraud" make clear that Chico's tax position was fraudulent, the U.S. said.

The government also told the appeals court that even though the Tax Court judge who presided over Chico's trial didn't issue the opinion in his case, the factual record is more than sufficient to support the imposition of fraud penalties. The case didn't require the new judge to make any credibility determinations on witness testimony, as Chico has argued, the U.S. said.

It is too late for Chico to raise arguments in the appeals court that a retrial should be held in his case, the government said.

"[Chico] consented to a decision in the Tax Court by a successor judge based on the record developed at trial, expressly declining the opportunity afforded by the court to seek a new trial or supplement the record," the government said.

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

According to the Miami Hearld Magic Johnson is one of a cavalcade of rich and famous, including golfer Tiger Woods, actors Angelina Jolie and Brad Pitt, soccer star Cristiano Ronaldo, among them, listed as the owners of registered businesses in the Grand Duchy of Luxembourg.

There is nothing illegal about owning Luxembourg Companies and there are legitimate reasons for a company to hide the identify of its owners. But the benefits, as well as the secrecy, are being stripped away. Up until recently, it was a way to minimize taxes and maintain a high level of confidentiality.

Now, thanks to a law that took effect in 2019 requiring Luxembourg companies to list their beneficial owners, those who have an actual financial stake in the company, are now public.

The double whammy of the new transparency law and the 2020 expiration of the special tax perks documented in the 2014 Luxembourg Leaks investigation, appear to have made a dent on the country’s popularity as a destination for global wealth: 2020 was the first year in the registry’s history that more existing companies left Luxembourg than new companies entered.

The Miami Herald and its parent McClatchy partnered with 17 media outlets, including Le Monde in France, Süddeutsche Zeitung in Germany and the Organized Crime and Corruption Reporting Project, as well as the nonpartisan Anti-Corruption Data Collective to analyze Luxembourg’s corporate registry, which contains more than 140,000 active companies, as part of a project called OpenLux. 

Need International Tax Advice?

Contact the Tax Lawyers at

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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 coming criminal tax investigation coordinated among the U.S. and other countries won't necessarily limit its focus to cryptocurrency and the financial technology industry, the chief of the Internal Revenue Service's Criminal Investigation arm said Thursday.

A coming investigation by the five-nation Joint Chiefs of Global Tax Enforcement will concentrate on cryptocurrency and financial technology but will not be confined to those areas, an Internal Revenue Service official said Thursday. 

While the investigation will concentrate on tax evasion related to cryptocurrency and fintech, enforcement officials won't ignore any other findings that emerge, Jim Lee said during a virtual call with reporters. Known as the challenge, the investigation is the third of its kind from a collaborative tax enforcement effort that was formed in 2018 among five nations: the Netherlands, the U.S., the U.K., Canada and Australia.

Lee noted that this latest investigation will bring in experts from the five countries to develop leads for the organization, called the Joint Chiefs of Global Tax Enforcement, or J5. 

Lee noted that he'd seen people dealing with cryptocurrency, both domestically and internationally, who think that using the virtual currency makes them anonymous. But that's not the case, he said, citing results of previous J5 investigations.

"We're Out There," Lee Said. "We're Watching Everybody In This Space Internationally, And Domestically As Well."

The J5's first installment of the challenge focused on enablers of tax evasion, and the second phase focused on cryptocurrency, according to a statement from the IRS. As part of each phase, experts optimize data from the five countries, including offshore account information, to "make connections where current individual efforts would take years to make those same connections," the agency said.

Tax officials from the J5 countries declined Thursday to provide additional details about the organization's ongoing investigations.

The IRS announced in January 2020 what it called "the first major operational activity" by the J5. A series of investigations in multiple countries led to warrants and subpoenas issued to an unnamed financial institution in Central America, which was believed to be "facilitating money laundering and tax evasion for customers across the globe," according to the agency.

Investigators in IRS Criminal Investigation also worked on a case under the J5's umbrella involving the BitClub Network, a scheme that sought investor funds in return for shares of supposed cryptocurrency mining pools and rewarded investors for recruiting new investors, according to a statement in July.

In the years since the J5 was formed, the organization has seen departures by tax enforcement heads in Canada, the Netherlands and the U.S. Don Fort, then the chief of Criminal Investigation, told Law360 in September that despite these changes, the J5 had room to expand.

 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 Internal Revenue Service reminds taxpayers to avoid “ghost” tax return preparers whose refusal to sign returns can cause a frightening array of problems. It is important to file a valid, accurate tax return because the taxpayer is ultimately responsible for it.

Ghost preparers get their scary name because they don’t sign tax returns they prepare. Like a ghost, they try to be invisible to the fact they’ve prepared the return and will print the return and get the taxpayer to sign and mail it. For e-filed returns, the ghost preparer will prepare but refuse to digitally sign it as the paid preparer.

By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.

Unscrupulous tax return preparers may also:

• Require payment in cash only and not provide a receipt.
• Invent income to qualify their clients for tax credits.
• Claim fake deductions to boost the size of the refund.
• Direct refunds into their bank account, not the taxpayer’s account.

The IRS urges taxpayers to choose a tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for preparers putting their bank account information onto the returns.

Taxpayers can report preparer misconduct to the IRS using IRS Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

 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