IRS Investigates Flurry of Threats Against its Workers and Facilities

According to the Washington Post, the number of threats being made against Internal Revenue Service employees has been rapidly climbing since the incident last month when a plane flew into an IRS office. The pilot and one IRS employee died in the crash, and since then the IRS has investigated more then 70 reported instances of a threats being made by taxpayers to IRS workers.

Workers have received a mix of inappropriate verbal comments -- including jokes or statements of support for pilot A. Joseph Stack -- and more serious threats, claimed National Treasury Employees Union President Colleen M. Kelley.

Kelley said she learned of the threats from the Treasury Inspector General for Tax Administration, which tracks threats against IRS workers. Neither TIGTA nor the IRS would confirm the number of threats or share details of the probe.

"TIGTA is actively and aggressively investigating all threats made against IRS employees, infrastructure and property," said J. Russell George, the treasury inspector general for tax administration. His office and the IRS have instructed workers to report threats immediately. "It would be a little naive to think that we don't get some threats over the course of doing business," said IRS Communications Director Terry Lemons.

Attacks and threats against IRS workers and facilities are nothing new and are not confined to the annual spring tax filing season, Lemons said. People have rammed cars into offices as well as set them on fire. And some people have taken out hits on agency employees, he said.

Fraudulent First-Time Homebuyer Credit Leads to Prosecution

As I have mentioned before, the IRS has been aggressive in going after people who are falsely claiming the first-time homebuyer credit. In fact, yesterday they announced their first successful prosecution related to the fraud. They are hoping that in doing so they can send out a warning message to taxpayers across the country.

According to the IRS, on Thursday July 23, 2009, a Jacksonville, Fla.-tax preparer, James Otto Price III, pled guilty to falsely claiming the first-time homebuyer credit on a client’s federal tax return. Price faces the possibility of up to three years in jail, a fine of as much as $250,000, or both.

To date, the IRS has executed seven search warrants and currently has 24 open criminal investigations in pursuit of potential instances of fraud involving the credit. The agency has a number of sophisticated computer screening tools to quickly identify returns that may contain fraudulent claims for the first-time homebuyer credit.

“We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction,” said Eileen Mayer, Chief, IRS Criminal Investigation. “The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund.”

Whether a taxpayer prepares his or her own return or uses the services of a paid preparer, it is the taxpayer who is ultimately responsible for the accuracy of the return. Fraudulent returns may result not only in the required payment of back taxes but also in penalties and interest.

Cage & Diamond: Two More Celebrity Tax Offenders

The IRS must be getting more aggressive in their collection of taxes from celebrities. Last week I made two posts about half a dozen new celebrities who had their tax delinquencies made public, and over the weekend two more offenders were identified.

Nicholas Cage

Cage, who ironically starred in a movie where unpaid taxes was a major part of the plotline (National Treasure: Book of Secrets), reportedly owes the IRS more then $6.2 million in unpaid taxes 2007. The IRS even issued a lien on Cage's $3.55 million haunted mansion in New Orleans.

Dustin Diamond

Saved by the Bell star Dustin Diamond has also been accused of neglecting to pay his taxes. According to gossip site TMZ, Diamond owes $21,015.62 in unpaid taxes to the state of Wisconsin. Apparently a lien was filed against his property, and the courts claim that no settlement has been reached.

Fraudulent Homebuyer Tax Credits Being Eyed by the IRS, Fines “Steep”

From Inman News:

The Internal Revenue Service says a Jacksonville, Fla.-based tax preparer is the first to be convicted of fraud related to the federal first-time homebuyer tax credit.

James Otto Price III, 47, pleaded guilty on July 23 to falsely claiming the first-time homebuyer credit on a client’s federal tax return, the IRS said. He faces up to three years in jail and a fine of up to $250,000 when he is sentenced.

Price was indicted in May on 35 tax-fraud counts, including 15 involving the first-time homebuyer tax credit, The Florida Times-Union reported. Most of Price's clients were unaware he was claiming the credit on their behalf and paying himself a $1,000 fee from their electronic refunds, a prosecutor told the paper.

In announcing Price's conviction, the IRS claimed to have "a number of sophisticated computer screening tools" to identify tax returns that may contain fraudulent claims for the tax credit. The IRS says it has executed seven search warrants and currently has 24 open criminal investigations of potential instances of fraud involving the credit.

Foxy Brown Owes the IRS Too

It seems like nearly every week I come across a new story about a celebrity or professional athlete who some how forgot to pay their full tax bill. Well it seems like the latest addition to the list is pop music artist Foxy Brown, who has been charged with evading taxes for over 6 years. According to Contact Music Brown owes the IRS over $640,000. Check out a clip of their story below.

Rapper Foxy Brown has been hit with a lawsuit from U.S. tax officials after running up debts of $641,558 (£427,705). The star is accused of failing to keep up with her taxes since 2003, and Internal Revenue Service (IRS) agents have taken their case to a court in New York to try to recoup the cash. IRS officials have filed tax lien documents against Brown for allegedly missing payments between 2003 and 2006, reports AllHipHop.com.

Guilty Plea in Tax Shelter Fraud

From the New York Times.com:

A former vice chairman of the accounting firm BDO Seidman pleaded guilty on Wednesday to federal charges that he helped clients evade more than $200 million in taxes through illegal tax shelters.

The executive, Charles W. Bee Jr., and another executive, working with the law firm Jenkens & Gilchrist, sold illegal shelters to wealthy clients, said Lev Dassin, acting United States attorney.

Mr. Dassin said Mr. Bee knew that the transactions would be disallowed by the Internal Revenue Service.

Adam Abensohn, a lawyer for Mr. Bee, declined to comment. Mr. Bee, 63, agreed to forfeit $20 million and two homes. He faces up to 15 years in prison on three fraud counts, prosecutors said.

BDO Seidman said in a statement that the tax shelter group was dissolved several years ago.

IRS Says Set To Pursue "Other Banks" On Tax Evasion

From Reuters.com:

The U.S. Internal Revenue Service (IRS) is poised to pursue "other offshore banks" for allegedly facilitating tax evasion by wealthy Americans following its high-profile case against Switzerland's UBS AG (UBSN.VX) (UBS.N), an IRS official said on Monday.

"We have identified other offshore banks that are engaged in similar activities," David Reeves, an agent with the IRS' Offshore Compliance division, told a conference in Miami on offshore finance centers.

2 Ex-KPMG Managers Sentenced Over Tax Shelters

From The New York Times:

Two former managers at KPMG were sentenced on Wednesday after being convicted by a federal jury last December on several counts of tax evasion using illegal tax shelters.

John Larson, a former senior tax manager, was sentenced to more than 10 years and ordered to pay a fine of $6 million by Judge Lewis A. Kaplan in United States District Court in Manhattan.

Robert Pfaff, a former tax partner at KPMG, was sentenced to more than eight years and fined $3 million.

A third person convicted in the case, Raymond J. Ruble, a former partner at the law firm Sidley Austin, was sentenced to six years and six months.

Upon handing down the sentence, Judge Kaplan called the men’s behavior “extremely offensive” and said their fraudulent tax shelter scheme, which focused on clients who earned more than $20 million a year, was “a brazen act.”

“These defendants knew they were on the wrong side of the line,” he said, adding later they had cooked up “this mass-produced scheme to cheat the government out of taxes for the purposes of enriching themselves.” The losses through the scheme were estimated at more than $100 million.

Mr. Larson, 57, and Mr. Pfaff, 58, were immediately remanded into custody but might later be granted bail pending an appeal of their convictions. Mr. Ruble was granted bail pending his appeal.

After a two-month trial, Mr. Larson and Mr. Pfaff were convicted on 12 counts of tax evasion and Mr. Ruble on 10 counts of tax evasion. The jury acquitted David Greenberg, a former KPMG tax partner.

The case was called the largest criminal tax prosecution when the charges were filed in 2005, but it became much smaller after Judge Kaplan dismissed charges against 13 former KPMG executives, ruling that the government had interfered with their right to counsel.

Mr. Larson’s lawyer, Steven Bauer, said his client had been singled out by overzealous prosecutors looking for a scapegoat. “He was not trying to pull the wool over anyone’s eyes,” he said.

None of the men admitted responsibility.

At the trial, the government argued that from 1996 to 2005 the defendants put together tax shelters known as FLIP, OPIS, BLIPS and SOS that were intended to generate phony tax losses. But defense lawyers argued that their clients acted with good faith in their dealings.

KPMG was not a defendant. It agreed in 2005 to pay $456 million to settle a federal investigation.

IRS Agent Pleads Guilty In Tax Fraud

From The Los Angeles Times:

An IRS agent whose job entailed conducting audits of taxpayers agreed to plead guilty Monday to a federal charge of cheating on his own taxes, authorities said.

Jim H. Liu, 43, of Diamond Bar signed court papers admitting that he filed a false tax return for 2002 that cheated the government out of nearly $15,000, according to the U.S. attorney's office in Los Angeles.

According to a plea agreement filed in U.S. District Court in Santa Ana, Liu sold a property in Pomona for a profit of more than $48,000 that year. But he claimed on his taxes that the transaction resulted in a loss of $4,200.

Liu agreed to plead guilty to a tax fraud charge that carries a penalty of up to three years in federal prison.

He also promised to file an amended tax return for 2002 and agreed to pay $36,000 in unpaid taxes, penalties and restitution, according to the plea agreement.

"This case serves as a reminder that tax laws apply to all people," said Assistant U.S. Atty. Bayron T. Gilchrist, who prosecuted the case.

"It's especially egregious when you have somebody who's supposed to enforce those laws who instead willfully violates them."

Some of the wording in the plea agreement reinforced the notion that, despite his employment with the IRS, Liu was being treated like just another taxpayer. For example, it reminded Liu that nothing in the agreement prevented the IRS from further scrutinizing his amended return after it was filed.

Neither Liu nor his attorney could be reached for comment. His job status with the IRS was not immediately available.