Thursday, April 19, 2018

Owner of Debt Collection Company Did Not Pay His Tax Debt

According to DoJ Dorian Wills, 52, of Buffalo, NY, pleaded guilty to tax evasion before U.S. District Judge Elizabeth A. Wolford. The charge carries a maximum penalty of 5 years in prison and a $250,000 fine
 
According to court documents, between April 2010 and October 2013, the defendant operated a debt collection business under various names, including: 
  • Heritage Capital Services LLC;
  • Performance Payment Processing LLC;
  • Performance Payment Service LLC;
  • Pinnacle Payment Service LLC; and
  • Velocity Payment Solutions LLC.
Wills resided in the Western District of New York but spent significant time in Cleveland, Ohio, and Atlanta, Georgia, where the debt collection companies were located. From approximately November 2010 through approximately October 2013, the defendant operated a business called Freestar World LLC, through which he did work for the debt collection companies.

The debt collection companies engaged in illegal debt collection practices such as making threatening and harassing phone calls, and collecting on debt that did not exist or debt to which the debt collection companies did not have title.
To Avoid Detection by State and Federal Law Enforcement Authorities, Wills Solicited Two Individuals to Assist Him
with His Businesses. 
 
The defendant had these individuals incorporate several debt collection companies in Georgia and Ohio, open dozens of bank accounts in the names of the debt collection companies, and submit applications for merchant accounts in the names of the debt collection companies.

  • Between 2010 and 2013, none of the debt collection companies filed a tax return.  
  • In addition, Wills failed to file his 2011 and 2013 personal income tax returns, despite some of the debt collection companies earning approximately $4,000,000 in gross receipts. 
For the tax year 2012, the defendant filed a personal income tax return but the return did not include income information from any businesses, some of which earned nearly $5,000,000 in gross receipts in 2012, except for Freestar.

As a result of unreported income and the unpaid 2012 taxes, the defendant owes $1,209,537.88 in federal income taxes for tax years 2011 through 2013.

Previously, Wills and the debt collection companies were the subject of a civil investigation by the Federal Trade Commission, with the defendant and the FTC stipulating to a final order for permanent injunction on August 8, 2014.
         
U.S. District Judge Elizabeth A. Wolford scheduled sentencing for Aug. 23, 2018. Wills faces a statutory maximum sentence of 5 years in prison.  He also faces a period of supervised release, restitution and monetary penalties.


Have a Criminal Tax Problem?
 
 
Contact the Tax Lawyers at
Marini & Associates, P.A. 
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243). 



 

Saturday, April 14, 2018

This is No Way to Practice Accounting

 
According to the DoJ a federal grand jury sitting in Miami, Florida, returned an indictment on Tuesday, April 10 charging a Miami, Florida, certified public accountant with tax evasion, failing to file tax returns and failing to pay over payroll taxes to the Internal Revenue Service (IRS).

According to the indictment, Darryl Sharpton owned The Sharpton Group, a Miami-based public accounting firm that specialized in financial and management consulting, audit and attestation, and tax and wealth planning.  Sharpton allegedly filed personal income tax returns for the years 2004 through 2008 and 2010, but failed to pay the reported taxes.  Sharpton is further alleged to have failed to file personal income tax returns for years 2011 through 2016 despite his obligation to do so.

The indictment charges that after Sharpton failed to pay his taxes, the IRS audited and assessed additional taxes against him and issued levies and liens in further effort to collect the unpaid taxes.  Sharpton allegedly responded by removing himself from his company’s payroll, paying his personal expenses through the corporate bank accounts, and lying to an IRS collections official.

In addition, the indictment alleges that Sharpton failed to timely pay over to the IRS payroll taxes that
he withheld from the paychecks of The Sharpton Group’s employees.

If convicted, Sharpton faces a statutory maximum sentence of 5 years in prison for the tax evasion charge, five years in prison for each count of failing to pay over payroll taxes, and one year in prison for each count of failing to file tax returns.  He also faces a period of supervised release, restitution and monetary penalties.  An indictment merely alleges that a crime has been committed.  A defendant is presumed innocent until proven guilty beyond a reasonable doubt.

 Have a Criminal Tax Problem?
 
 
Contact the Tax Lawyers at
Marini & Associates, P.A. 
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243). 


Thursday, April 12, 2018

The ABA Asks Congress To Adequately Fund the IRS

According to Law360  the chairwoman of the American Bar Association’s tax section on January 16, 2018 urged Congress to provide adequate funding for the IRS, cautioning that in light of the Tax Cuts and Jobs Act, P.L. 115-97, the agency will face difficulties effectively administering and collecting tax revenues without additional funds.

In a letter to the chairs and ranking members of the Senate and House subcommittees on financial services and general government, Karen Hawkins reiterated concerns that chronic Internal Revenue Service underfunding has caused taxpayers to lose trust in the nation’s tax authorities, reduced service quality, hampered recruitment and retention of experienced personnel, and stymied investment in modernizing taxpayer services.

“This erosion in confidence is reaching a point where it could become irreversible,” Hawkins warned. “In light of the daunting tasks of providing sufficient guidance and ensuring compliance with the new and complex tax legislation, we believe that the case for providing increased and adequate funding to enable the service to meet these challenges is compelling.”

While it is unclear whether Congress will act to increase IRS funding, Treasury Secretary Steven Mnuchin assured attendees at an Economic Club of Washington, D.C., event on Jan. 12 that more IRS personnel would be hired to deal with implementation of tax reform.

“This touches every single aspect of the IRS,”
Mnuchin said of the bill's implementation.
“We are speaking with Congress about getting Additional Funding for the implementation so we would expect that we would Hire a Significant Number of People
to Help With the Implementation.”
 
The personnel issue is further exacerbated by the positions of commissioner and chief counsel being filled by acting personnel, Hawkins noted, asking Congress to work with the Trump administration to nominate and confirm individuals to those positions.

According to a National Taxpayer Advocate report published Jan. 10, the IRS has estimated it will need $495 million over the next two years to implement the new legislation, but it has lost more than $1 billion to budget cuts since 2010. A Republican-controlled Congress fuming over controversies surrounding the agency's treatment of conservative social-welfare groups has been unwilling to give the IRS the funding it says it needs to adequately serve taxpayers and guard the nation’s coffers.

The tide may be changing, however, in light of the advocate’s report. The chairman of the House Ways and Means Committee, Rep. Kevin Brady, R-Texas, told reporters last week that while the IRS still has to prove why it needs more money, lawmakers should be open now to the idea of granting the agency’s requests for additional funding to implement the new law.

Hawkins made clear she was aware of the “budgetary challenges facing Congress,” and that “increased spending on the service may not be popular.” Nevertheless, she pointedly explained that without appropriate funding for the IRS, the government’s ability to function effectively is diminished.

“The Service has been required to operate for Too Long without adequate funding; its mission will be
Irreparably Compromised if this is Allowed to Continue,”
the letter concluded.

The letter was addressed to Sen. Shelley Capito, R-W.Va., chairwoman of the Senate Subcommittee on Financial Services and General Government, and ranking member Christopher Coons, D-Del., as well as Chairman Tom Graves, R-Ga., and ranking member Mike Quigley, D-Ill., of the House Subcommittee on Financial Services and General Government.
 
Have a Tax Problem?
 


Contact the Tax Lawyers at
Marini & Associates, P.A. 
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243). 




 
 
 

Pennsylvania Nurse Anesthetist Indicted for Tax Evasion

A federal grand jury sitting in Pittsburgh, Pennsylvania, returned an indictment yesterday charging a Pittsburgh-area certified registered nurse anesthetist with 5 counts of tax evasion and 4 counts of failure to file federal income tax returns and pay federal income tax.

According to the indictment, Loren Pulliam earned over $500,000 in income between 2002 and 2005, and over $1.2 million in additional income between 2008 and 2016, working as a nurse anesthetist at medical facilities in the Pittsburgh area. 

Pulliam allegedly evaded her tax obligations for the years 2002 through 2005 and 2011 through 2014 by establishing a nominee entity and directing her employers to pay compensation to that entity and then using a bank account opened in the nominee’s name to pay personal expenses.

The indictment further alleges that Pulliam failed to timely file federal income tax returns and pay the taxes due for the years 2011 through 2014, despite having an obligation to do so.

If convicted, Pulliam faces a statutory maximum sentence of five years in prison for each count of tax evasion and one year in prison for each failure to file count.  Pulliam also faces a period of supervised release, restitution and monetary penalties.  An indictment merely alleges that crimes have been committed.  A defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Have a Criminal Tax Problem?
 
 
Contact the Tax Lawyers at
Marini & Associates, P.A
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243). 









 

Return Preparer Sentenced to Over 10 Years in Jail for Filing Fraudulent Returns

According to the DoJ, a Durham, North Carolina, tax return preparer was sentenced today to 121 months in prison for conspiring to defraud the United States and preparing fraudulent tax returns for herself and her clients.
        
According to documents and information presented to the court, Keesha Frye, owned and operated KEF Professional Tax Services, a Durham tax preparation business. 

From 2012 through 2014, Frye and other KEF employees falsified their clients’ tax returns by including fake and inflated sources of income to qualify for and maximize the earned income tax credit and increase the refunds claimed on the returns. 

Frye also filed false personal income tax returns that claimed bogus childcare expenses and business losses.  In total, Frye’s scheme caused a tax loss of more than $1.7 million.

In addition to the prison term imposed, Frye was ordered to serve three years of supervised release and to pay $1,742,823 in restitution to the IRS.

Have a Criminal Tax Problem?
 
 
Contact the Tax Lawyers at
Marini & Associates, P.A
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243). 



 

IRS Issues Pub 5292 Explaining How to Calculate & Report the "965 Transition Tax" on your 2017 Return

IRS has released Publication 5292 - How to Calculate Section 965 Amounts and Elections Available to Taxpayers. Code Sec. 965, which was amended by the Tax Cuts and Job Act, requires certain foreign corporations to increase their subpart F income for their last tax year that begins before Jan. 1, 2018, by the amount of their deferred foreign income.

The Publication provides a workbook and instructions to assist in calculating "section 965 amounts," and also includes worksheets for taxpayers who may be able to make certain elections with respect to Code Sec. 965.

Publication 5292 includes:
  • Worksheet 1.1, the 965 Workbook (Worksheets to Calculate Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System),
  • Worksheet A (U.S. Shareholder's Section 965(a) Inclusion Amount);
  • Worksheet B (Deferred Foreign Income Corporation's Earnings & Profits);
  • Worksheet C (U.S. Shareholder's Aggregate Foreign Earnings & Profits Deficit);
  • Worksheet D (U.S. Shareholder's Aggregate Foreign Cash Position);
  • Worksheet E (U.S. Shareholder's Aggregate Cash Position - Detail);
  • Worksheet G (Foreign Taxes Deemed Paid by Domestic Corporation for 2017 Tax Year); and
  • Worksheet H (Section 1 Disallowance of Foreign Tax Credit and Amounts Reported on Forms 1116 and 1118).
Elections. A U.S. shareholder of a DFIC may elect to pay the Code Sec. 965 net tax liability in eight installments. In addition, owners and beneficiaries of U.S. shareholder pass-through entities may also make elections. Publication 5292 also includes worksheet for taxpayers who may be able to make these elections with respect to Code Sec. 965:
  1. an election to pay the Code Sec. 965 net tax liability over eight years;
  2. (ii) an election by S corporation shareholders to defer payment of the Code Sec. 965 net tax liability with respect to such S corporation until a triggering event;
  3. (iii) an election by real estate investments trusts to take both Code Sec. 965(a) inclusions and the corresponding Code Sec. 965(c) deductions into account over eight years;
  4. (iv) an election not to apply a net operating loss; and
  5. (v) an election to use an alternative method to calculate post-'86 earnings and profits (post-'86 E&P).
Publication 5292 provides:
  • Worksheet 2.1 and 2.2,
  • 965 Deferral Worksheet for Individuals (Calculation of Net 965 Tax Liability to be Paid in Installments); and
  • Worksheet 3.1, 965 Deferral Worksheet for Corporations (Corporate Report of Net 965 Tax Liability, Election to Pay Net 965 Tax Liability in Installments Under Subsection 965(h) and Real Estate Investment Trust Deferral of Section 965(a) Inclusion Under Subsection 965(m)).
Need Tax Help?
 


Contact the Tax Lawyers at
Marini & Associates, P.A.
 
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243). 




 

Tuesday, April 10, 2018

IRS Reminds Those with Foreign Assets about U.S. Tax Obligations

The Internal Revenue Service in IR-2018-87 reminded U.S. citizens and resident aliens, including those with dual citizenship, to check if they have a U.S. tax liability and a filing requirement. At the same time, the agency advised anyone with a foreign bank or financial account to remember the upcoming deadline that applies to reports for these accounts, often referred to as FBARs.

Here is a rundown of key points to keep in mind:

1. Deadline for Reporting Foreign Accounts

The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is the same as for a federal income tax return. This means that the 2017 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 17, 2018. FinCEN grants filers missing the April 17 deadline an automatic extension until Oct. 15, 2018, to file the FBAR. Specific extension requests are not required. In the past, the FBAR deadline was June 30 and no extensions were available.

In general, the filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2017. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-Filing System website.

2. Reminder: IRS to End Offshore Voluntary Disclosure Program

The Offshore Voluntary Disclosure Program will close on Sept. 28, 2018. Taxpayers with undisclosed foreign financial assets still have time to use OVDP before the deadline.

The IRS noted it will continue to use tools besides voluntary disclosure to combat offshore tax avoidance, including taxpayer education, whistleblower leads, civil examination and criminal prosecution.

The IRS continues to use streamlined filing compliance procedures that will remain in place and be available to eligible taxpayers. But, as with OVDP, the IRS said it may end the streamlined filing compliance procedures at some point.

3. Most People Abroad Need to File

An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income exclusion or the Foreign Tax credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

A special extended filing and payment deadline applies to U.S. citizens and resident aliens who live and work abroad. For U.S. citizens and resident aliens whose tax home and abode are outside the United States and Puerto Rico, the income tax filing and payment deadline is June 15, 2018. The same applies for those serving in the military outside the U.S. and Puerto Rico.


Interest, currently at the rate of five percent per year, compounded daily, will apply to any payment received after the regular April 17 deadline.

Nonresident aliens who received income from U.S. sources in 2017 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens is April 17.



4. Special Income Tax Return Reporting for Foreign Accounts and Assets

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

5. Specified Domestic Entity Reporting

For tax year 2017, certain domestic corporations, partnerships and trusts that are considered formed for the purpose of holding (directly or indirectly) specified foreign financial assets must file Form 8938 if the total value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year.

For more information on domestic corporations, partnerships and trusts that are specified domestic entities and must file Form 8938, as well as the types of specified foreign financial assets that must be reported, see Do I need to file Form 8938, “Statement of Specified Foreign Financial Assets”? and Form 8938 instructions.

6. Report in U.S. dollars

Any income received or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.


Both FinCen Form 114 and IRS Form 8938 require the use of a Dec. 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.

7. Expatriate Reporting

Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the United States during 2017 must file a dual-status alien return, attaching Form 8854, Initial and Annual Expatriation Statement. A copy of the Form 8854 must also be filed with Internal Revenue Service, Philadelphia, PA 19255-0049, by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.
 
 

Need Tax Help?
 


Contact the Tax Lawyers at
Marini & Associates, P.A.
 
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243).