Category Archives: criminal tax law

An accountant blamed by federal prosecutors for pioneering the use of conservation easements as illegal tax shelters was sentenced to 25 years in prison January 9, 2024 following his conviction on all counts of a $1.3 billion tax fraud scheme that drew the first criminal prosecution of its kind.

Jack Fisher, a 71-year-old certified public accountant who once worked for the Internal Revenue Service and PwC, would be 96 by the time he is released under the sentence announced by the U.S. Department of Justice. Fisher's co-conspirator, attorney James Sinnott, 52, was also sentenced Tuesday and will serve 23 years in prison, the DOJ said.

The sentencing judge, U.S. District Judge Timothy C. Batten Sr., gave each man five years less than federal prosecutors asked for, but far more than Fisher and Sinnott requested. Fisher who told the court that his health was so poor any sentence meant life in prison said he deserved no more than five years behind bars.

Fisher Illegally Sheltered $450 Million In Taxes
While Eluding Numerous IRS Civil Audits And A Senate
Finance Committee Investigation Into So-Called
Syndicated Conservation Easement Tax Schemes.

"He was the face of these tax shelters and spearheaded the growth of an industry saturated with fraud," prosecutors said Friday in their sentencing memo for Fisher.

For more than a decade starting in 2007, Fisher used his training as a CPA to create and sell tax deductions for conservation easement donations, netting wealthy clients $4 in deductions for every $1 they invested in partnerships he created to donate the easements, mostly to environmental charities, prosecutors said.

He aggressively marketed the shelters and hand-picked real estate appraisers who inflated values to drive up the amount of the deductions, prosecutors said. 

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According to Law360, the U.S. government told a Pennsylvania federal court on January 8, 2024, that it should be allowed to collect on $903,000 in unpaid tax liabilities of the "Empire" television show actor Terrence Howard. 

Howard has yet to formally respond to a December 2022 complaint, the U.S. government argued in a motion for default judgment, with his lone attempt being leaving a voicemail for government counsel.

According to the complaint, Howard owes more than $550,000 in unpaid income taxes alone after failing to fulfill his liabilities for the 2010, 2011, 2016, 2017 and 2019 tax years, plus applicable penalties and interest.

Initial attempts to serve the complaint were unsuccessful until it was personally received by Howard's spouse at his California residence in July after multiple extensions, according to court records. 

Howard was again served in October, but failed to respond by the court-imposed deadline. Default was ultimately entered against the actor in December.

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According to Law360, the U.S. Supreme Court declined on January 8, 2024 to review the Internal Revenue Service's rejection of a partnership's $35.5 million tax loss, letting stand a Ninth Circuit ruling that the partnership never properly filed its delinquent tax return at a service center.

The justices denied an August petition by Seaview Trading LLC to review the circuit court's 10-1 finding that Seaview never filed a return for 2001 because the partnership didn't file it at an IRS service center.

Seaview argued in its petition that the Ninth Circuit's March ruling incorrectly allowed the IRS to bypass a three-year statute of limitations and reject Seaview's loss in 2010. The government has only three years to issue a partnership adjustment, but the clock doesn't start ticking until a return is considered filed, a designation the Ninth Circuit misconstrued, Seaview said, when it ruled that Seaview's repeated submissions directly to IRS agents starting in 2004 didn't count.

If the Ninth Circuit's decision were allowed to stand, Seaview told the justices, the ruling "would produce Kafkaesque madness throughout the tax system" by allowing the IRS to pursue taxpayers "no matter how many times taxpayers hand their returns to IRS agents at the IRS' direction."

Seaview Gave Copies Of Its Partnership Return For 2001 To
An IRS Agent In 2005 And An IRS Lawyer In 2007 Does Not Constitute "Filing" A Return, The Government Argued.

Those transmissions failed to comply with the regulation specifying that partnership returns must be filed at an IRS service center, Treasury Regulation Section 1.6031(1)-1(a)(1), the government said.

The government also rejected Seaview's claim that the appellate ruling bucked years of IRS advice to taxpayers that delinquent returns should be filed with the IRS agent who requests the return. The IRS has never endorsed the view that partnerships are not required to file their taxes at service centers, even if they are filed late, the government said. Seaview based its argument for Supreme Court review on a misreading of agency guidance documents, the government said.

Even the top of the IRS' webpage on late-filed returns instructs filers to "file your past due return the same way and to the same location where you would file an on-time return," the government said.

PRACTICE TIP: When representing a taxpayer who is being audited for an unfiled tax year, file the late return with the service center first and then provide the Revenue Agent with a copy of the same.

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Previously agreed upon cuts from the IRS' Inflation Reduction Act (PL 117-169) funds across fiscal years 2024 and 2025 would be front-loaded in 2024, as part of a bipartisan, bicameral agreement between congressional lawmakers reached over the weekend that sets a spending topline for fiscal 2024 appropriations.

Congress is tasked with taking action before a January 19 partial government shutdown deadline, and a February 2 full shutdown deadline. Agencies impacted by the earlier date include the departments of Agriculture, Transportation, Energy, Veterans Affairs, and Health and Human Services.

According to a January 7 letter from House Speaker Mike Johnson (R-LA), refers to debt ceiling negotiations between Republicans, Democrats, and the Biden administration. 

Last summer, Biden and then-Speaker Mike McCarthy struck a hand-shake deal to redirect portions of the once-$80 billion appropriation to the IRS under the Inflation Reduction Act beyond the $1.4 billion rescinded by the Fiscal Responsibility Act. The plan was to trim another $10 billion out of the enforcement bucket in fiscal 2024, and again an additional $10 billion the next year.

Under The Latest Agreement From The Hill, The
Fiscal 2025 $10 Billion Would Be Accelerated, Meaning
All $20 Billion Would Be Clawed Back This Year!

$6.1 billion would also be cut from the Biden administration's "continued COVID-era slush funds," the letter read, but Johnson acknowledged the final spending levels "will not satisfy everyone," nor will the cuts go as far "as many of us would like."

All of Those Aspirational Objectives to Guarantee Fairness in The Tax System Through Enforcement Are ALL GONE as a Result of this 2nd Debt Limit Bill!

Vice President for Federal Tax Policy Chuck Marr took issue with the proposal, also commenting on X in a thread that "[c]utting IRS funding is a bad idea overall."

"The IRS funding reduces wealthy tax cheating and raises revenue," said Marr. "We're already seeing great results. And remember: cutting IRS funding does not save money. It loses money. Lots of it. Congress should protect IRS funding to improve customer service and ensure wealthy taxpayers and corporations pay the taxes they legally owe, i.e. deliver what honest taxpayers deserve."

The White House, however, gave its stamp of approval to the deal, which the president said "moves us one step closer to preventing a needless government shutdown and protecting important national priorities."

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