Category Archives: criminal tax law

On July 21, 2020, The Internal Revenue Service announced the creation of the new Enterprise Digitalization and Case Management office, which will spearhead IRS efforts to empower taxpayers and IRS employees to rapidly resolve issues in a simplified digital environment.

The office's efforts will support overall IRS modernization and implementation of long-term changes stemming from the Taxpayer First Act.

Serving as co-directors of the new office will be Hampden "Harrison" Smith, IV, currently the agency's Deputy Chief Procurement Officer, and Justin Lewis Abold-LaBreche, who is the Director of Enterprise Case Management.

The new stand-alone office will focus on enhancing the taxpayer experience by improving business processes and modernizing systems. The office will apply agile, customer-centered thinking and draw on leading industry test-and-learn practices to rapidly identify what combination of business process and technology works best for the IRS's customers and employees. In the digitalization space, a portfolio-based approach will be utilized for the challenges the IRS faces, in the form of multiple small pilot projects for business process changes and technology solutions. The pilots will be focused on a desired outcome instead of a prescriptive approach, and they will be scaled and funded as they demonstrate value and return on investment. In the case management space, the office procured a commercial-off-the-shelf platform earlier this year from Pegasystems Inc., and its first release is well underway.

Now according to accountingTODAY The Internal Revenue Service is gearing up to deploy a more modern taxpayer case management system in December, starting with the customer support area of its Exempt Organizations unit and eventually more widely across the IRS, in the hope of making it easier for taxpayers and IRS employees to get access to information more quickly and efficiently.

The effort is in line with the Taxpayer First Act that Congress passed last year, which includes a number of IRS reforms, including modernizing the aging technology at the agency. The IRS has been relying on decades-old systems, some of which date back to the Kennedy administration. Last month, the IRS announced a new Enterprise Digitalization and Case Management office, and it’s in charge of the effort to create the Enterprise Case Management system. But the IRS has been working on modernizing its systems for many years, with a number of problems along the way, especially in the Modernized e-File system, which frequently needs to go offline for maintenance.

The initial release of the new system will allow EO case workers to scan and copy documents, research case records, and send requests for publicly available documents such as applications for tax-exempt status and exemption letters, while also helping resolve problems involving determination requests for tax-exempt status.

“This really supports our overall IRS modernization efforts and puts us on a really great path with the Taxpayer First Act because it’s helping us consolidate aging systems and create that taxpayer experience that we are working hard to deliver,” said Justin Lewis Abold-LaBreche, co-director of the Enterprise Digitalization and Case Management office, during a conference call Wednesday with reporters. 

“At the top level, we are working on things like consolidating aging systems and migrating people over to a common platform, creating electronic case files, increasing digital channels and self-service, and streamlining our employees’ access to data so they can resolve issues quickly. 

The taxpayers are going to see this right away with faster service, and IRS employees are going to benefit because they’re more comprehensively going to be able to resolve issues that taxpayers bring to them. It’s really a positive framework for helping the IRS modernize quickly and deliver value to the taxpayer.”

He Noted That The IRS Currently Has 60 Aging Case Management Systems That Often Can’t Talk To Each Other 
Because They Were Built At Different Times 
Over The Past 20 Or More Years.

So that’s our challenge, to really take this opportunity to modernize the underlying business processes and then migrate upwards of 200 business processes and 45,000 users onto a common case management platform, so we can deliver that outstanding service to the taxpayer.”

The IRS signed the contract with Pegasystems in April after going through a procurement process with due diligence. “There was thorough market research and evaluation, and we selected Pegasystems,” said Abold-LaBreche. “It’s a proven piece of technology. It has wide adoption in the private sector and the government, and we’ve made huge progress since April 2020, which was just a handful of months ago. We’re already up in the cloud. We’ve got foundational technology functionality in place, and we’re now finishing up the configuration of Pegasystems for our first business process.”

“Today the process for our correspondence workstream is very paper based and manual,” said Killen. “Taxpayers mail in letters and forms. We handle their requests manually in a paper format, and after research, which often means an employee has to search a number of IRS systems, we respond by sending them a letter in the mail. 

We will take that request digitally, or if the taxpayer has to send a letter, we will scan it in and then do that work within the ECM platform. 

Employees also will be able to conduct almost all of their research right from the ECM platform. Now, with these requests being handled digitally, the IRS employees performing this work will be able to provide a faster, more complete response. I think this is a great example of how we are not only spinning out this new platform, the ECM, but we are doing it in a way that allows us to take the opportunity to modernize and create new digital channels. This is the model for how we are going to move forward as an enterprise.”

Abold-LaBreche said more information would be released in the next 30 to 60 days about those plans. He denied that the December rollout was timed to coincide after the November election. In 2013, the IRS’s Exempt Organizations unit ran into trouble amid revelations that it had been using terms such as “Tea Party,” “Patriot” and “Progressive” to filter out applications for 501(c)4 tax-exempt status from political groups ahead of the 2012 elections, which led to the ouster of the director of the EO unit, Lois Lerner, and several other top IRS officials.

He said his office has a strong commitment from the IRS leadership for the new technology initiative and they are still working out what that will look like in the future. He pointed as well to other recent technology initiatives, such as the ability to file amended 1040-X tax returns electronically and added that it would be the first of many good things happening at the IRS.

Have IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

Read more at: Tax Times blog

The Tax Court has held that an IRS settlement officer (SO) did not abuse their discretion by denying an individual’s request for a collection alternative because she failed to meet her estimated tax payment obligations and, therefore, she was not eligible for an installment agreement (IA). Further, the SO's rejection of the individual’s offer in compromise (OIC) was justified because the individual failed to propose specific terms for her OIC.

During a collection due process (CDP) hearing, an IRS settlement officer (SO) should: (1) verify that the requirements of applicable law or administrative procedure were met; (2) consider any relevant issues raised by the taxpayer, including collection alternatives; and (3) consider whether the proposed collection action balanced the need for the efficient collection of taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. (Code Sec. 6330(c)(3))

It is not an abuse of discretion for an SO to reject a taxpayer's collection alternative when the taxpayer does not propose any terms for an IA or OIC. (Walker, TC Memo 2014-187) 

It is not an abuse of discretion when an SO rejects a collection alternative for a taxpayer who fails to comply with current estimated tax obligations. (Ransom, TC Memo 2018-211)

Carol Biggs-Owen owned two home healthcare businesses during 2013 and 2014. She failed to pay all of the tax due, and IRS assessed the reported tax, additions to tax for failure to timely pay and failure to pay estimated tax, and interest. Biggs-Owen entered into an IA with IRS, but it was terminated six months later. 

When IRS filed a notice of federal tax lien, Biggs-Owen requested a CDP hearing, checking the box for “installment agreement” but identifying no further issues.

At the hearing, Biggs-Owen inquired about an OIC, and the SO gave her 14 days to submit an OIC and supporting financial information. She submitted some financial information but not an actual OIC.

After reviewing Biggs-Owen's financial information, the SO found that that Biggs-Owen had over $17,000 per month to pay her tax obligations. Further, the SO explained to Biggs-Owen she was not eligible for an IA because she was not in compliance with her estimated tax payment obligations. On July 5, 2017, the SO sustained IRS's lien filing. 

The Tax Court found that Biggs-Owen’s noncompliance with her estimated tax payment obligations justified the SO's rejection of her proposed IA. Also, the SO did not abuse their discretion by refusing Biggs-Owen's OIC because Biggs-Owen failed to propose specific terms for the OIC.  

 

 

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We previously posted On February 19, 2020, Former U.S. Taxpayer Pleads Guilty in Panama Papers Investigation, where we discussed that a former U.S. resident and taxpayer who was charged along with three others in connection with a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (Mossack Fonseca), a Panamanian-based global law firm, and its related entities, pleaded guilty on February 18, 2020 to wire and tax fraud, money laundering, false statements and other charges. 

Harald Joachim von der Goltz, aka “H.J von der Goltz,” “Johan von der Goltz,” “Jochen von der Goltz,” “Tica,” and “Tika,” 82, a citizen of Germany and Guatemala who last resided in Needham, Massachusetts, and Key Biscayne, Florida, pleaded guilty to one count of conspiracy to commit tax evasion, one count of wire fraud, one count of money laundering conspiracy, four counts of willful failure to file reports of foreign bank and financial accounts (Financial Crimes Enforcement Network Reports 114) and two counts of false statements. 

A Manhattan federal judge on September 21, 2020 sentenced Harald Joachim von der Goltz to Four (4) Years In Prison for his long-standing efforts to evade U.S. taxes, which were exposed by the "Panama Papers" document leak from the Mossack Fonseca law firm.

U.S. District Judge Richard M. Berman also fined him $30,000 and ordered him to pay $3.4 million in restitution to the U.S. after the 83-year-old admitted in February to nine criminal counts, including tax evasion from 2000 to 2016, fraud and making false statements.

"These are very serious offenses," said Judge Berman, noting that von der Goltz began breaking the law in his 60s. "The crimes occurred here over a very long period of time. We can't lose sight of that."

"I am Here Before you Humbled and Disgraced with a
Broken Heart," said von der Goltz.

He also faces a potentially significant IRS penalty of about $2.5 million. "The simple truth is I broke the law."

But prosecutor Nathan Rehn said von der Goltz should not derive any "advantage" at sentencing for an "egregious" crime as a result of his advanced age, because he turned up his nose at an IRS amnesty offer and kept lying before he was arrested in the U.K. and extradited to the U.S. in 2018.

Judge Berman's sentence came in below official guidelines that called for one in the range of nine years. Prosecutors had said a sentence of that length wasn't necessary, but asked for a significant period of incarceration.

Toward the end of the 2½-hour sentencing, which was conducted via videoconference, Judge Berman said the sentence came in "remarkably below" guidelines, but a home confinement sentence was not possible.

Having Then Been Given An Opportunity To Say A Final Word, Von Der Goltz Called The Prison Term "Devastating.
I Do Think I'll Die In Jail," He Said.

"At least I was able to have 83 years of the things that I did in life that I'm proud of. I'm sorry it ended up this way. But it is what it is."

Unless the defense prevails on a request to delay his surrender, von der Goltz will report to custody in 60 days, Judge Berman said.

In a statement, acting Manhattan U.S. Attorney Audrey Strauss said von der Goltz was "abetted by the specialized criminal services of the law firm Mossack Fonseca" to rip off the IRS.

Read more at: Tax Times blog

According to Accounting Today, the Sept. 15 tax filing deadline is causing worries among taxpayers and tax practitioners in the midst of the pandemic, but the American Institute of CPAs believes that taxpayers will be able to avoid tax penalties if they write “COVID-19” at the top of their tax return.

AICPA officials have had some conversations with IRS officials about penalty relief and been told informally that practitioners who have made a good-faith effort to meet the filing deadlines on behalf of their clients but are unable to do so because of the coronavirus pandemic can write “COVID-19” at the top of the tax return to indicate the need for penalty relief. 

“Based on our conversations, the IRS does not want to penalize people who are making a good faith effort,” said Melanie Lauridsen, senior manager for tax policy and advocacy at the AICPA. 

“I Think The IRS Truly Does Understand That People
Are Impacted By Coronavirus, And Unfortunately
 Some People Are Impacted To The Point
Where They Just Can’t Meet The Tax Deadlines."

"They don’t want to penalize people who are really trying to do what’s right, trying to meet their compliance, but for whatever reason due to coronavirus they are unable to do so. I think the IRS wants to work with those people and not penalize them.”

She isn’t sure whether the IRS will offer formal relief or guidance, but she pointed to the other forms of disaster relief the IRS has offered in response to the pandemic as well as natural disasters. 

“At any given point in time with disaster relief, it actually ties in with reasonable cause,” she said. “Whether a disaster is deemed to get an extension or not, there will always be people who can’t meet the deadlines and, under reasonable cause, they are able to work with the IRS to see if they can not be penalized. This is more in line with that.” 

An IRS Spokesperson Contacted By Accounting Today
Pointed To The Penalty Relief Due To Reasonable Cause
Page on IRS.gov.

“As always, facts and circumstances are important in any penalty determination,” said a statement from the IRS spokesperson. “We understand the challenges faced by taxpayers due to the pandemic, and IRS remains flexible in granting penalty relief where taxpayers can demonstrate good-faith efforts in filing their returns.” 

Where every other aspect of the taxpayer's business administratively operated unaffected by the coronavirus, then don't be surprised that the IRS does not accept that the coronavirus resulted in reasonable cause for the late filing, as may be the case with other natural disasters or other disturbances.

Lauridsen noted those reasonable cause provisions are also a part of the Internal Revenue Manual used by the IRS. “If you look at the reasonable cause standards, it’s very clear,” she said. “The reasonable cause standards are found within the IRM, which is the IRS’s Internal Revenue Manual, and in it they say that any matter that establishes a taxpayer exercised ordinary business care and prudence but that nevertheless failed to comply with the tax law may be considered for relief. So if that’s the case, and coronavirus is definitely something that is impacting millions of Americans, and the taxpayer is making a good faith effort, but they still failed to meet the tax laws, then yes, the IRS will work with them.” 

“Reasonable cause is not a blanket like, ‘Oh, hey, I’ve been a little stressed and I don’t feel like doing the tax return so therefore I’m going to fill out COVID-19.’ But if they are impacted by coronavirus, then yes the IRS will work with them,” said Lauridsen.

She believes this will help relieve some of the stress on taxpayers and practitioners. “When you talk with people who are devastated by coronavirus, it’s heartbreaking,” she said. “I spoke with one member who said it affected five or six people [in his office]. One of his staff got coronavirus and gave it to two or three other people within the office. Then on top of that the spouse of one of the partners or staff passed away during this whole thing. You’re looking at a business that is impacted at such deep levels. How can they manage? This is relief that is absolutely necessary. It’s not even relief to alleviate the burden. They’re working around the clock and there’s no way they can meet these deadlines.” 

Taxpayers and firms who are filing electronically may need to check with their tax software provider to make sure they can add the COVID-19 note to the top of the form. It will probably be an option as the IRS has already allowed taxpayers to append that note as part of the relief it offered earlier during the pandemic, in conjunction with what was offered by the Federal Emergency Management Agency. 

“With coronavirus, the relief was provided for the April to the July 15 deadline, so FEMA did put out COVID-19 relief already,” said Lauridsen. “I would recommend to the practitioners for whatever software you’re working with to give them a call, because some of the software companies are already coded for COVID-19, not specifically for this scenario. However if they connect with their software provider and their e-filer, they can get COVID-19 written at the top of the return, and that will indicate to the IRS that they do need some relief.”

 Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at: 

www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog