‘Tax Lady’ Roni Deutch’s Assets Frozen by Judge

June 21, 2011 by

accountingtoday.com
Sacramento, Calif. (April 21, 2011)

A California judge has frozen the assets of “Tax Lady” Roni Deutch after the state attorney general asked the court to hold her in contempt for shredding millions of documents and wrongfully diverting funds from clients of her tax law firm.

Sacramento Superior Court Judge Shellyanne W.L. Chang signed an order Wednesday freezing Deutch’s assets and appointed a receiver who will take over the financial aspects of her business. Deutch heavily advertises her services for helping clients resolve their problems with the Internal Revenue Service, but has been the subject of a $34 million lawsuit by the California Attorney General’s Office accusing her of swindling clients (see California AG Sues ‘Tax Lady’ Roni Deutch for $34M).

Attorney General Kamala D. Harris asked the court on Wednesday to hold Deutch in contempt of court, imprison her for five days on each violation, and fine her thousands of dollars for shredding millions of pages of documents and failing to pay refunds to her clients in violation of a court order.

“Deutch showed herself to be a predator for profit, preying on innocent, hard-working people who were simply hoping to settle their accounts with the IRS,” Harris said in a statement. “By defrauding these victims, and then pleading poverty, she created a real danger that her clients will never receive their advance fees back.”

In August, the attorney general filed suit against Deutch for swindling thousands of people facing serious and expensive tax collection problems with the IRS. On August 31, the court issued an order that prohibited Deutch from destroying evidence.

“Despite this order,” the attorney general said, “Deutch has been routinely shredding documents on an almost a weekly basis.” The Attorney General estimates that to date Deutch has shredded some 1,643,000 to 2,708,600 pages of documents. Deutch’s shredding campaign has permanently deprived the attorney general of evidence needed to fully prosecute the action against her.

Deutch’s law firm, based in Sacramento County, had revenues of at least $25 million a year. She spent $3 million a year on advertising, much of it on late-night cable TV, and frequently offered tax advice on popular TV shows. In her pitches, she promised to significantly reduce the IRS tax debts of people who signed up with her firm. Instead, she took thousands of dollars in up-front fees from clients but offered little or no help in lowering their tax bills. Hundreds of clients complained to the Attorney General and other government agencies.

In addition to shredding documents, the Attorney General also charged that Deutch violated a November 17 preliminary injunction by failing to issue some $435,000 in refunds to her clients within 60 days. Instead she “decided to disperse funds to friends, family and other creditors. By draining her estate and that of the law firm, Deutch has placed her clients at serious risk of never receiving their refunds.”

For instance, Deutch opted to transfer hundreds of thousands of dollars in equity from the sale of her home to a media firm. She also personally withdrew $241,000 from the law firm’s accounts and her personal accounts at just one bank. In addition, since the preliminary injunction order was issued, Deutch made more than $21,000 in unnecessary expenditures, including gifts to family and friends, and a payment to a NASCAR racing team.

The attorney general asked the court to fine Deutch $1,000 and imprison her for five days for each count of contempt, to immediately freeze Deutch’s personal assets, and to appoint a receiver to manage her law firm’s business operations.

A spokesperson for Deutch’s firm did not respond to a request for comment.

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Man Indicted for Falsifying Charitable Deductions

June 21, 2011 by

accountingtoday.com
Los Angeles (June 21, 2011)

A Santa Monica man was arrested Friday morning on charges that he committed tax fraud and attempted to interfere with the administration of the Internal Revenue laws.

Howard Hal Berger, 51, appeared Monday morning before U.S. District Court Judge John F. Walter. Berger previously pleaded not guilty to the charges specified in an indictment returned by a federal grand jury late last week.

According to the indictment, Berger filed a partnership income tax return for Lab Holdings LLC for the 2006 tax year which falsely reported a contribution of $1 million, substantially reducing his income tax liability.

In addition, Berger filed an individual income tax return for the 2006 tax year which falsely reported gifts to charity of $991,700 on the attached schedule of itemized deductions.

While under audit by the Internal Revenue Service, Berger submitted a false charitable donation letter in an attempt to substantiate the deduction for gifts to charity taken on the 2006 individual income tax return.

If convicted of all charges specified in the indictment, Berger faces up to nine years in prison and fines totaling $750,000. Berger is currently free on bond pending trial. A trial is scheduled for Aug. 9, 2011, before Judge Walter.

The investigation of Berger was conducted by IRS-Criminal Investigation in conjunction with the U.S. Attorney’s Office in Los Angeles.

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IRS Increases Number of Audits

June 21, 2011 by

Tommy Williams CFP
schreveporttimes.com
June 18, 2011

Now that most of you have completed your tax returns for 2010, perhaps we might reflect on the most dreaded of tax consequences, the IRS audit.

We spend a considerable amount of time in an effort to be tax efficient. Defer taxes, avoid them and use every tool and technique offered by the Internal Revenue Code to legally limit our tax cost. Given the financial struggles of our federal government, it shouldn’t surprise you to know that the IRS has nearly doubled its examinations of returns from the richest taxpayers.

IRS audits are up nearly 8 percent for the wealthiest Americans. This spring, the Internal Revenue Service released the 2010 IRS Data Book. Journalists and tax professionals looked inside and noticed a couple of eyebrow-raising statistics. The first is that the IRS audited 18.4 percent of 2010 tax returns filed by taxpayers with adjusted gross incomes above $10 million. That’s up from 10.6 percent for 2009. The second is that taxpayers with adjusted gross incomes between $5 million and $10 million were also targets. Audits increased by 55 percent for this group in 2010 with the percentage of audited returns jumping from 7.5 percent to 11.6 percent. So what’s going on here? The IRS has ramped up its efforts to investigate offshore bank accounts and tax shelters, and it appears to be acting on its newfound knowledge. It started a Global High Wealth Industry Group in 2010 to “centralize and focus IRS compliance expertise involving high net worth individuals.”

As IRS Commissioner Doug Shulman said at a meeting of the New York State Bar Association Taxation Section, “We’re looking for and finding points of leverage, also called ‘nodes’ of activity, where multiple people not paying taxes can be detected. Financial institutions are one such potential node of activity. Promoters of evasion schemes are another.”

Now the IRS has started an Offshore Voluntary Disclosure Initiative, providing information in eight languages to reach taxpayers and preparers who are non-native English speakers. By coming forward about undisclosed offshore accounts, they stand a chance of avoiding criminal prosecution.

Audit rates increased across the board last year. The overall IRS audit rate was 1.11 percent in 2010, up from 1 percent in 2009. The taxpayers least likely to face an audit were within the $75,000 to $100,000 adjusted gross income range with 0.64 percent of their returns being audited.

Experts tell me to do your part to look good. Most audits are not purely attributable to bad luck. Why not do the little things that may help to decrease the odds? Some of the basics are to document all expenses relatable to your business, report every bit of income, claim sensible but not outlandish deductions, avoid portraying a hobby as a business venture, sign your return and work with a really good tax preparer.
If you do find yourself with a tax problem, I’d suggest you invest in some professional guidance.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial adviser prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

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Inviting IRS to audit you

June 21, 2011 by

By John Bullis
The Nevada Appeal
June 21, 2011

IRS does not have the people and resources to audit every individual income tax return. It varies, but about 1 percent of all returns are audited each year.

IRS has a good computer “matching” program. They record information from banks and companies that pay you under your Social Security number. Then, when you file your return, the computer looks to see if you reported all of the income the IRS has knowledge of.

You are inviting IRS to audit or at least send a notice if you don’t report all of the forms 1099 on your return.

Now, some forms — 1099 — are issued in error or by mistake. If you get a form that is not correct, contact the folks that sent it to you. Ask for a corrected form.

The forms are sent to you about the end of January or so, but IRS is not sent the forms until later — the end of February or so.

Some forms are from stock brokers about sales of stock, bonds, etc. The information sent to IRS only covers the sale part of the transaction. Your cost is not sent to IRS. You have to claim it on your return.

By the way, the original cost of the stock plus dividends you received in the form of more shares is the tax basis you can claim. We suggest a “spreadsheet” listing is best to show the total cost and dividends reinvested and show the total number of shares.

The problem with a form 1099 that is not correct is it is time consuming and no fun to get a corrected form. On the other hand, it is easier to correct than to deal with the IRS audit or Notice.

Just like we suggest every IRS Notice should be responded to in a timely manner, it is important to work on getting the corrected form 1099 as quickly as possible.

That means you need to keep your own records in most cases, to know if the form 1099 you received is correct.

All returns are open for audit or you can amend (correct) your return for three years from the filing date (as a general rule). Save all of your tax records for at least four years. IRS doesn’t start the matching program, doesn’t send Notices, etc. until about a year or so after you file the return, sometimes later than that.

Don’t get upset if you get an IRS Notice or audit. Just deal with it in a timely manner or get help to respond correctly.

Did you hear “You are not responsible for the thoughts that pass your door. You are responsible for those you admit and entertain.”

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Former Louisianna Sheriff’s deputy, wife plead guilty to fraud

June 21, 2011 by

By Littice Bacon-Blood
The Times-Picayune, June 21, 2011

A former St. Charles Parish Sheriff’s lieutenant and his wife, who owned an accounting service company, pleaded guilty to fraud in federal court on Monday for filing false federal tax returns and collecting more than $800,000 using the names of inmates held in the parish jail, according to U.S. Attorney Jim Letten’s office.

The Times-Picayune archiveHale Boggs Federal Building, 500 Poydras Street, U.S. District Court, Eastern District of Louisiana
The couple is said to have filed false tax returns over a 10-month period from about April 8, 2005 to about Feb. 20, 2006.

Lt. Warren LeBeauf Jr., 42, and his wife, Tamara Scott-Landry, 37, entered the guilty plea the morning of their trial before U. S. District Judge Carl Barbier, authorities said.

The two were charged May 6, 2010 in an 88-count indictment and are set for sentencing on the charges on Sept. 22 before Barbier.

They face a maximum of 10 years on the conspiracy to commit fraud charge, a fine of $250,000 and up to three years of probation.

Scott-Landry, who also pleaded guilty to wire fraud and aggravated identity theft, faces a maximum 20 years on the wire fraud charge and a mandatory two years added to any sentence she receives for the aggravated identity theft charge.

LeBeauf, who had been employed by the Sheriff’s Office since 1989 and worked as a resource officer at Destrehan High School, was terminated July 30, 2010 for violating department policies, said St. Charles Sheriff’s Office spokesman Capt. Pat Yoes.

According to federal authorities, LeBeauf used a law enforcement data base to obtain personal information on inmates such as Social Security number and birth date and passed it along to Scott-Landry to make fraudulent income tax refund claims.

Authorities say that LeBeauf met a St. Charles Sheriff’s Office 911 call center operator at a park and paid $100 for more than 4,000 pages of print outs from that law enforcement database which was used to fraudulently collect approximately $810,183 in income tax refunds.

Yoes said the operator, who had worked for the department for nearly 30 years, resigned July 2, 2010 before disciplinary action could be taken against her.

The tax forms filed electronically with the IRS made the returns payable to cashiers checks and stored valued cards. The money was then deposited into bank accounts controlled by LeBeauf and Scott-Landry, authorities said.

According to the indictment, the individual tax return amounts ranged from $1,577 to $3,525.

At one point authorities say Scott-Landry withdrew $26,000 in cash over a three-day period from an ATM and the couple went to a Chevrolet dealership and bought a 2004 Chevrolet Suburban “with a paper bag full” of cash.

It was in that SUV, parked in the drive way of Scott-Landry’s house, that authorities say they found inmate names and other items used in the scam.

During the execution of a search warrant, and “in the presence of almost a dozen armed IRS agents,” authorities say LeBeauf arrived at the house with an unknown person and attempted to leave with the SUV.

The case was investigated by the Internal Revenue Service, Criminal Investigation Division which has made investigatin refund fraud and identity theft a top priority said James C. Lee, special agent in charge, IRS criminal investigation.

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CA Man Arrested After IRS Mistakenly Deposits $110K In His Account

June 21, 2011 by

The Huffington Post
James Sunshine, 06/19/11

Last September, Laguna Beach resident Stephen McDow found $110,000 deposited in his bank account, courtesy of the IRS. That same deposit has now landed him in hot water, according to CBS Los Angeles.

The IRS mistakenly sent the tax refund money, meant for a 67-year-old woman, to McDow, instead, reports local news station KCAL. The Los Angeles woman reportedly failed to inform the IRS that she had closed the bank account she had filed with them, and the account number was subsequently assigned to McDow.

When the woman discovered that McDow had been the recipient of her refund, she called him and demanded her money back. McDow, in turn, offered to pay back the balance in monthly payments, as he had already spent $60,000 paying off student loans and his home mortgage. Unsatisfied with the suggested size of the monthly payment, the woman declined the offer, according to KCAL.

McDow was subsequently arrested and charged with one felony of grand theft by misappropriation of lost property. He reportedly faces four years imprisonment and is currently being held on bail for the exact amount he first received: $110,000.

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Some tax cheats work at the IRS

June 21, 2011 by

Almost 3% of IRS workers caught cheating but some slip through cracks

By Andrea Coombes, MarketWatch.com
June 21, 2011, 5:35 p.m. EDT

SAN FRANCISCO (MarketWatch) — The IRS catches almost 3,000 tax scofflaws in its own ranks each year, but some employees still dodge the system, according to a new Treasury Department report.

The Internal Revenue Service’s internal program caught on average about 3,000 incidents of noncompliance on employee tax returns each year from 2004 through 2008 — that’s about 3% of its workforce — but 133 employees who may have violated tax law avoided that program’s net in 2006 and 2007, according to the report from the Treasury Inspector General for Tax Administration, or TIGTA, which monitors the IRS.

The potential violations include failure to file a tax return, filing late, failure to report income and failure to pay taxes due.

While the report found that only a tiny portion of the IRS’s some 107,000 employees (in 2007) slipped through the cracks, TIGTA called on the tax agency to root out any and all workers who may be trying to game the system.

“In the inspector-general community, we have a zero-tolerance policy for any incidence of fraud, waste or abuse,” a TIGTA spokeswoman said.

“As the agency of the federal government whose chief mission is to administer the federal tax system, IRS employees are particularly expected to comply with all tax laws,” the TIGTA report said. “The IRS risks an erosion of public confidence in the American voluntary tax system if it does not appropriately address employees who are not complying with their tax obligations.”

For its part, the IRS said in a statement that it imposes harsh penalties for tax fraud within its ranks. “Ensuring that IRS employees comply with the tax law is a top priority for the IRS… Employees who are judged to have willful tax-compliance problems are terminated, in addition to other potential sanctions.”

Also, the IRS said that it investigated the 133 problem cases and most did not constitute fraud. “In 44% of the cases, employees filed a tax return late but were due a refund. And over half the cases have already been reviewed and closed because the facts did not merit further review. We are analyzing the rest of the cases, and if there are problems they will be addressed,” the IRS said.

Inside job

While the scope of the problem appears to be small, examples of IRS workers committing fraud are not hard to find. An IRS agent in Santa Clarita, Calif., in May was sentenced to three years in prison for filing fraudulent returns “for himself and innocent relatives that claimed, among other things, bogus deductions for alimony and mortgage payments,” according to a U.S. Justice Department release.
In April, a part-time data-entry clerk at an IRS office in Fresno, Calif., was charged with filing false tax returns and committing wire fraud and identity theft after allegedly stealing 68 tax returns from an IRS office, filing fraudulent returns using taxpayers’ personal information and claiming excessive federal tax withholding, presumably to generate tax refunds.

Separately, another IRS employee in Fresno in April pleaded guilty to filing false income-tax returns in the names of her husband, who was in state prison at the time, and other prisoners. The tax returns claimed federal tax withholding on wages the prisoners had never earned, to generate tax refunds. The IRS issued tax refunds totaling more than $13,000 based on the false returns, according to Justice Department statement.

And a separate TIGTA report in 2009 found that 128 IRS employees claimed the first-time home-buyer tax credit, even though they might not have been eligible. TIGTA simply identifies potential problems that require further investigation by the IRS.

Andrea Coombes is MarketWatch’s personal finance editor, based in San Francisco.

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Seizure on Restaurant Released, But Tax Problems Still Loom

June 21, 2011 by

By Jarret Bencks
Medford Patch, June 2, 2011

The bright orange seized sign on the front door of Il Faro restaurant has been taken down, but the Medford Square restaurant is still in hot water with the state’s Department of Revenue.

The seizure on the business was lifted after revenue officials determined nearly all of the restaurant equipment belonged to the landlord at 21 Main St. and could not be auctioned off to pay some of the back taxes, said revenue spokesman Bob Bliss.

The Italian eatery, owned by Giuseppe Longo, still owes $142,784.20 in taxes and penalty fees dating back to 2006, and has made no efforts to create a plan to start paying the debt off, Bliss said.

“The taxpayer clearly is not taking any steps to work anything out with DOR,” Bliss said.

Nearly all of the back taxes, which date back to 2006, stemmed from failing to pay the meals tax, Bliss previously said.

Before being taken down, the sign, dated May 11, read: “The Business Property of Il Faro, Inc. had been seized for nonpayment of taxes, and is now in possession of the Commonwealth of Massachusetts…Any person who attempts to tamper or interfere with this property will be prosecuted to the full extent of the law.”

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Medford Square Restaurant Seized By MA DOR

June 21, 2011 by

By Jarret Bencks
Medford Patch, May 18, 2011

A seized Medford Square restaurant charged patrons a meals tax but didn’t pay what they collected to the state, a Department of Revenue Spokesman said Thursday.

Il Faro, an Italian eatery located at 21 Main St., was seized by the Department of Revenue last week because it owes the state a total of $142,784.20 in taxes and penalty fees, department spokesman Bob Bliss said. Nearly all of the back taxes, which date back to 2006, stemmed from the meals tax, he said.

“Patrons paid the meals tax, but the restaurant didn’t forward that to DOR,” Bliss said.

Seizing a business is the last thing the Department of Revenue will do in their efforts to collect unpaid taxes, Bliss said.

“You only get to this point when everything else DOR tries to collect has failed,” he said. “This is sort of the last stop.”

The restaurant had an orange sign on its door Tuesday, reading “SEIZED.” Several florescent signs remained lit inside the windows of the Italian eatery Tuesday afternoon.

If Giuseppe Longo, the owner of the restaurant, can come up with a reasonable down payment and payment plan going forward, the business could be reopened, Bliss said.

“We always hope that’s the case, because it’s a lot easier for us,” Bliss said. “We get the money, the business opens back up and the jobs don’t get lost.”

The business, not the building, was seized. If a payment plan isn’t agreed upon, the property of the restaurant will go to auction in about 4 to 6 weeks, Bliss said.

A call to the restaurant Tuesday was unanswered.

Original Story:

A restaurant in Medford Square has been seized by the Massachusetts Department of Revenue for nonpayment of taxes, according to a sign on its door.

Il Faro, an Italian restaurant located at 21 Main St. in Medford, had an orange sign on its door Tuesday, reading “SEIZED.” The sign was dated May 11, 2011.

Several florescent signs remained lit inside the windows of the Italian eatery Tuesday afternoon.

According to filings with the Massachusetts Secretary of State, the owner of the business is Giuseppe Longo. Il Faro first filed as a business with the Secretary of State in 1996, according to state records.

The business was seized but not the building.

The sign on the door read, “The Business Property of Il Faro, Inc. had been seized for nonpayment of taxes, and is now in possession of the Commonwealth of Massachusetts…Any person who attempts to tamper or interfere with this property will be prosecuted to the full extent of the law.”

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Lawyer for North Highlands ‘tax lady’ wants out, says he’s not getting paid

May 11, 2011 by

By Andy Furillo
The Sacromento Bee (sacbee.com)
Published: Friday, May. 6, 2011 – 12:00 am | Page 6B
Last Modified: Sunday, May. 8, 2011 – 12:35 pm

Embattled tax attorney Roni Deutch hasn’t been paying her legal bills in the state’s effort to shut her down, according to the lawyer representing her, who now says he wants out of the case.

In papers filed in Sacramento Superior Court, attorney James J. Banks said Deutch and her North Highlands law firm are “seriously delinquent and have not paid accrued fees and costs for representation in this matter.”

Banks’ declaration filed Monday also suggested he’s afraid the so-called “tax lady” who advertises heavily on late-night TV might blame him for at least some of her legal problems. Banks cited the concern as another reason he wants to be relieved as Deutch’s counsel.

Under the California Rules of Professional Conduct, Banks said in his filing that it is mandatory for him to bail out on the case as a result of his firm’s “understanding that the clients may assert ‘advice of counsel’ as a defense in a contempt proceeding initiated in this case.”

Sacramento Superior Court Judge Shellyanne W.L. Chang last month froze Deutch’s assets and appointed a receiver to oversee her accounts after the state attorney general’s office sought to have Deutch jailed for violation of court orders in the case.

The state lawyers contended Deutch shredded between 1.6 million and 2.7 million documents and refused to refund payments to her clients, both of which were ordered from the bench in Sacramento. The state sued her in August on charges that she has swindled her clients out of $34 million.

In a news release last month, state Attorney General Kamala Harris called Deutch “a predator for profit.”

Neither Banks nor Deutch returned telephone calls Thursday.

A spokeswoman for the attorney general’s office declined to comment.

Court-appointed receiver Scott M. Sackett confirmed Thursday that Banks’ law firm has not been getting paid by Deutch but did not know how much she owes.

Sackett is scheduled to file his report next week on Deutch’s finances.

A hearing on Banks’ effort to drop out of the case has been scheduled for May 13. A hearing on the contempt of court allegations is slated for July 22.

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