Category Archives: criminal tax law

According to Law360, the U.S. Tax Court on April 8, 2024, upheld  $11 million in foreign reporting penalties against a man who admitted he hid money overseas, but the court declined to overturn its ruling that the IRS lacks authority to assess certain Form 3520 & Form 3520 A foreign reporting penalties in Mukhi v. Commissioner, docket number 4329-22L, in the U.S. Tax Court.

The Internal Revenue Service didn't abuse its authority in assessing $5 million in penalties against Raju J. Mukhi for failing to report foreign trusts for 2005 to 2008 and another $5.9 million for 2005 to 2010, according to the Tax Court, finding that penalties imposed under I.R.C. § 6677 are not fines and therefore do not implicate the Excessive Fines Clause.

But the IRS lacked authority to issue $120,000 in penalties against Mukhi under Internal Revenue Code Section 6038(b) for failing to timely submit a Form 5471, regarding information reporting for foreign corporations, for 2002 through 2013, the Tax Court said.

While Mukhi's challenge to the penalties was still pending in the Tax Court, it decided in April 2023 in Farhy v. Commissioner that the IRS lacked authority to make assessments under IRC Section 6038(b). After the decision, the IRS asked the court in Mukhi's case to overrule its decision in Farhy, saying it was incorrectly decided, according to Monday's ruling.

But the court said it wanted to give the weight of precedent to its previous decision in Farhy. Furthermore, even though Farhy is on appeal in the D.C. Circuit, Mukhi's case, if appealed, would go to the Eighth Circuit, meaning any ruling from the D.C. Circuit wouldn't be binding for Mukhi, the court said.

Mukhi pled guilty to one count each of filing a false return and failure to file a report of a foreign bank account following his indictment in 2014, according to the opinion. The IRS audited him and issued the penalties in 2017.

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 DoJ, A New Jersey man was arrested on April 5, 2024 on an indictment returned by a federal grand jury in Trenton, New Jersey, charging him with tax evasion and obstructing the IRS. 

According to the indictment, in 2015 and 2016, Matthew Tucci, of West Long Branch, received millions of dollars in income from purported refunds by the Customs and Tax Administration of the Kingdom of Denmark. 

Tucci allegedly filed federal tax returns for those years that reported he owed over $2 million in taxes, but included no payment with his returns. 

Instead, Tucci allegedly sought to evade IRS efforts to collect the taxes due. 

• He allegedly purchased more than $7.6 million-worth of real estate and attempted to conceal his ownership of these assets from the IRS by, among other things, transferring title to some of these properties to nominees. 
• He also allegedly made false statements to the IRS and withheld important facts from the IRS concerning his financial resources and his ability and intent to pay.

If convicted, Tucci faces a maximum penalty of five (5) years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. IRS Criminal Investigation and the FBI are investigating the case.

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 DoJ, federal district court accepted a Texas man’s guilty plea to evading taxes on income he earned from his business, on April 5, 2024.

According to court documents, John L. Petrone owned and operated a business that sold an herbal extract known as “kratom,” along with other related products. 

1. Petrone did not file individual income tax returns for 2014 through 2019, 
2. Nor did he pay income taxes for those years, despite earning hundreds of thousands of dollars from his business. 
3. During that time, Petrone attempted to evade his income taxes by 
• opting not to withhold federal taxes from his paychecks, 
• operating the business under different names, 
• dealing in cash, 
• using business bank accounts to pay for personal expenses and 
• lying to the IRS during an audit. 
• In addition, Petrone did not pay his business’s employment taxes. 

Through his actions, Petrone caused a tax loss to the IRS of over $529,000. 

Petrone is scheduled to be sentenced on June 14. He faces a maximum penalty of five (5) years in prison. 

A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

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

The Internal Revenue Service is ramping up enforcement against 125,000 high-income taxpayers who haven't filed returns since 2017 as a part of its ongoing efforts to increase tax compliance, the agency's chief told reporters Thursday.

The IRS will begin mailing compliance letters this week to more than 125,000 taxpayers who have failed to file a tax return between 2017 and 2021, IRS Commissioner Daniel Werfel said. The notices will be sent to about 25,000 taxpayers with more than $1 million in income, and the remaining will go to taxpayers with incomes between $400,000 and $1 million, the agency said in a statement. The agency expects to send about 20,000 to 40,000 letters each week, beginning with filers in the highest income categories, Werfel said.

The amount of revenue the agency might be able to recover is uncertain, Werfel said, adding that the agency isn't aware of potential credits and deductions the involved taxpayers might be entitled to receive.

"The Third-Party Information on These Taxpayers
Indicates Financial Activity of More Than $100 Billion,"

Werfel told reporters, though he later noted that it's unclear how much of that is taxable income. "But even with a conservative estimate, the IRS believes hundreds of millions of dollars of unpaid taxes are involved in these cases," Werfel said.

The agency will also be taking steps to update nonfilers who are entitled to a refund, Werfel said. Last year, taxpayers, many with lower incomes, were entitled to a potential refund of nearly $900 because they hadn't filed a 2019 tax return, he said, adding that those taxpayers will be updated later in the tax season.

Werfel urged taxpayers who haven't filed to do so voluntarily and as quickly as possible, saying that failure to act can lead to IRS compliance activities, including audits, as well as criminal prosecution. Typically, when taxpayers are issued a letter, there is an eight-week window between the time the letter is received and when taxpayers need to contact the IRS with a filing, he said.

Since 2016, the IRS nonfiler program has only run sporadically because the agency hasn't had the resources to pursue nonfiler cases, Werfel told reporters. The Inflation Reduction Act's major investment has given the agency the capacity to restart the nonfiler program, he added.

The program has been updated, Werfel said, adding that the agency used to identify nonfilers as a global group, send the notices out and get follow-up from taxpayers in the form of phone calls, incoming letters of dispute and incoming tax returns.

The IRS now has the staffing and technology to efficiently follow up on those notices, Werfel said. Another is that the agency is prioritizing high-income taxpayers, he said.

"We are establishing that our resources will be focused first and foremost on those taxpayers that are of higher means," Werfel said. "For taxpayers that are of lower means, our emphasis will be on working with them around making sure that they file because, in many cases, taxpayers at a lower income range are actually owed a refund or owed some type of credit."

It's outrageous that so many high-income individuals have routinely gotten away with failing to file tax returns, Senate Finance Committee Chairman Ron Wyden, D-Ore., said Thursday, adding that it's great that the IRS is going after them.

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