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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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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California AG says ‘Tax Lady’ Roni Deutch Should Be Jailed For Contempt

May 11, 2011 by

By Darrell Smith and Mark Glover
The Sacramento Bee (sacbee.com)
Published: Wednesday, Apr. 20, 2011 – 4:34 pm
Last Modified: Sunday, May. 8, 2011 – 12:35 pm

Roni Deutch, the self-styled “Tax Lady,” could face jail time on contempt of court allegations after allegedly shredding millions of pages of documents and failing to pay clients refunds in violation of a court order.

Calling Deutch a “predator for profit,” State Attorney General Kamala Harris on Thursday asked a Sacramento County Superior Court judge to send Deutch to jail and levy thousands of dollars in fines connected to the allegations.

Harris, in a statement, alleged that Deutch destroyed as many as 2.7 million pages of documents, shredding evidence on which state’s attorneys hoped to prosecute their case.

Deutch has been in hot water with the AG’s office for nearly a year. In August 2010, the state’s top law enforcement officer filed a $34 million lawsuit against the Tax Lady accusing her of swindling her clients. Later that same month, a court order was issued preventing Deutch from destroying evidence, according to the attorney general’s statement.

“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 Wednesday afternoon.

Deutch’s law firm, based in North Highlands, posted revenues in excess of $25 million a year, according to the Attorney General’s office. Deutch is probably best-known for her brash style and television commercials that promise relief to tax payers who sign up for her firm’s services.

Attempts to reach Deutch were not immediately successful.

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What to Do If You Owe the IRS

May 5, 2011 by

By Princess Clark-Wendel
Published May 03, 2011, FOXBusiness.com

April 18 has come and gone, but many taxpayers are facing a large tax bill that they aren’t able to pay. But there are steps they can take to work with the International Revenue Service to develop a payment plan.

After the IRS has made an assessment on what you owe, you have 10 days to pay it in full or be subject to collection action.

Although an account is technically considered delinquent after 10 days, no one will show up at your door on the eleventh day. A series of threatening notices will be mailed to you, and eventually you will be contacted in person by a revenue officer.

What Power Does the IRS Have?

Dealing with the IRS is different than dealing with other debt collectors. Unlike other creditors that have to go to court to obtain a judgment against you and then go back to court to have that judgment enforced, the IRS doesn’t. The agency is vested with the power to seize your property without a court order; the only requirement is that it has a valid assessment, give notice with a demand for payment (which has to be sent to your last known address) and give notice of intent to seize.

In addition to seizing your property, the IRS can also place a levy on your bank accounts and on your salary. This means that both your bank and your employer must turn over all funds being held for you to the extent of the levy. (Note: Special rules apply to levies against salary.)

Certain types of property are exempt by law from levy including:

1. Apparel and schoolbooks (expensive items of apparel such as furs are luxuries and are not exempt from levy);

2. Fuel, provisions, furniture, and personal effects, not to exceed $1,500 in value (for the head of household);

3. Books and tools used in your trade, business or profession, not to exceed $1,000 in value;

4. Unemployment benefits;

5. Undelivered mail;

6. Certain annuity and pension payments (including Social Security benefits);

7. Workers’ compensation;

8. Salary, wages or other income subject to a prior judgment for court ordered child support payments;

9. A minimum amount of wages, salary, and other income – $75 per week – plus an additional $25 for each legal dependent.

The IRS has been seizing personal residences more frequently in recent years. After a “notice of seizure” is placed on the front door of your house, you have 10 days to come up with the owed money, or there is an excellent chance your home will be sold at auction to satisfy the tax bill. You can redeem the house at any time within 180 days after the sale by paying the purchaser the amount paid for the property plus interest; by law, the purchaser must sell.

Act Now

The IRS cannot put you in jail because you owe money, even if the debt has been outstanding for years, unless you fraudulently conceal your assets or otherwise conspire to beat the government out of its money. No crime has been committed merely because you cannot afford to pay your taxes.

But don’t burry your head in the sand if you can’t pay your tax bill, respond immediately to all notices sent requesting payment and make every attempt to speak to someone at the IRS and follow up the conversation with a confirmation letter.

Depending upon your circumstances, the IRS may be willing to enter into an installment agreement for payment of the outstanding taxes. Usually, such a partial-payment agreement requires a down payment, followed by monthly payments over a year or 18 months. If you fail to comply with the terms of the partial-payments agreement, which also requires that all current taxes be paid on time, the agreement becomes void and your property is then subject to levy seizure.

The beginning of the collection process is the best time to try to get the IRS to offer you an installment agreement. If you have ignored the IRS’ attempts to work out an arrangement and you now have a “notice of seizure” on your door, it is extremely unlikely that the agency will create a partial payment agreement with you.

How to Negotiate with the IRS

The first step in negotiating a settlement of taxes owed is to provide the IRS with a current financial statement. Without a statement verifying your financial situation, the IRS will not even consider a settlement. If you don’t want the IRS to know about certain assets, don’t furnish the financial statement, it is better to offer no statement than offer one that is misleading or fraudulent.

If the IRS already knows about all of your assets, and there is no disadvantage in providing a financial statement, then go ahead and submit the statement. The IRS will be interested in knowing how much money you receive each month, and how and where it is being spent. When you complete the personal living expense portion of the form, it is generally a good idea to arrange for some money to be left over each month to pay taxes. The IRS is more inclined to go along with a partial payment offer if it feels confident there is money available to make the agreement work.

If you have no assets and no income, there is nothing the IRS can levy. If you are in this predicament, the agency does provide an opportunity to discuss an “offer in compromise,” which is a little publicized procedure where the IRS will accept a one-time payment of as little as 10 cents for each $1 owed.

If IRS officials think they will receive more money from you in the long run by entering into an offer in compromise than a collateral agreement, (an agreement whereby you agree to pay a certain percentage of your income for five to 10 years), it may agree to the compromise.

The best chance of successfully agreeing to an offer in compromise is when the tax debt has been on the books for a number of years. The IRS must be convinced that conventional collection procedures will not work, so don’t expect a relatively-recent tax obligation to be settled this way.

However, if the IRS has had a chance to collect and has not succeeded, it is likely to accept your compromise offer.

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