Search This Blog

Showing posts with label IRS. Show all posts
Showing posts with label IRS. Show all posts

Wednesday, March 28, 2012

All IRS Tax Audits Not Created Equal

All IRS Tax Audits Not Created Equal
H&R Block advises compliance contacts don’t have to be costly
FOR RELEASE MAR 26, 2012
Data for last year shows the IRS audited the tax returns of approximately 1 percent (1.6 million) of taxpayers. However, further inspection indicates that the tax returns of an additional 6.5 percent (9.2 million) of taxpayers were subjected to recently defined type of compliance contact. The National Taxpayer Advocate called these compliance contacts “unreal” audits in a recent blog post1.

No matter what an IRS notification or compliance contact is called, H&R Block advises on the benefits of having professional assistance when responding to an IRS notification. 
The 9.2 million taxpayers who were notified the IRS had recalculated their taxes due, also could have been assessed added penalties and late fees. The notifications happened for the following reasons:
  • 4.7 million returns were corrected for math errors
  • 3.9 million returns were determined to have underreported income based on third-party reporting, which is done by employers, banks, etc.
  • 600,000 substitute returns were filed by the IRS on behalf of taxpayers based solely on income reported by third parties, perhaps resulting in taxpayers not claiming the tax credits and deductions to which they are entitled.

 “While it might seem the only appropriate response to an IRS notification is to pull out the checkbook, it’s important to understand the request,” said Elaine Smith, H&R Block tax professional and enrolled agent. “The IRS has several ways it corresponds with taxpayers to correct underreporting errors. So, not all audits are created equal.”
H&R Block, which prepares approximately 1 in 7 tax returns nationally, also provides audit services to current and new clients. Only enrolled agents, certified public accountants and lawyers may represent taxpayers through the entire IRS audit process. H&R Block employs the nation’s largest single staffing of enrolled agents, who have experience with audits involving hundreds to millions of dollars. In fact, in an audit situation H&R Block is able to reduce the overall tax liability for 3 out of 5 taxpayers whose returns were not prepared by H&R Block.
Audits hit all income levels
The primary targets of audits are no longer small business owners and those whose income exceeded $1 million; 64 percent of the 1.5 million taxpayers audited in 2010 earned $50,000 or less, including taxpayers who claimed the Earned Income Tax Credit, but were not eligible. This means an overwhelming majority of taxpayers subjected to audits and other forms of compliance contact are low- and middle-income taxpayers. Following are other factors that may make taxpayers attractive audit candidates:
  • Handwritten returns
    • Miscalculations and omissions that could be avoided by using tax preparation software and e-filing can cause even the most straightforward returns to be audited
  • Unreported income and inconsistencies
    • A document-matching program makes it easy for the IRS to check income stated on a tax return against what is reported on forms W-2 (wages), 1099-MISC (self-employment income),1099-INT (interest paid), 1099-B (sale of stock), etc.
    • The IRS also uses a program to compare taxpayers’ deductions (e.g., mileage and charitable contributions) with others in the same tax bracket to check for inconsistencies
  • Schedule C (self-employment form)
    • Returns are more likely to be audited if they include claims for expenses not within the IRS’s guidelines and include a majority of cash business transactions.
Like audits, not all tax preparation companies are created equal. Only H&R Block’s guarantee provides free audit support for returns prepared by its tax professionals in tax offices, and free, full audit representation for returns filed by taxpayers who used its digital, online and mobile filing solutions. IRS notifications are sent year-round, and these services are available year-round.
“Avoiding errors on tax returns starts with choosing the right tax prep method based on individual needs, and it can help a taxpayer avoid an audit situation,” Smith said. “Taxpayers shouldn’t panic or ignore IRS notices. Instead, they should seek professional assistance to make sure the changes the IRS made to their return are accurate. H&R Block may find you actually owe less than what the IRS indicated.”
H&R Block tax professionals are offering free Second Look® reviews on 2008-2011 tax returns not prepared by H&R Block to identify overlooked tax breaks, such as the Earned Income Tax Credit. Free Second Look reviews are available at participating H&R Block retail tax offices through April 30 to new and existing clients. To find the nearest H&R Block office, visitwww.hrblock.com or call 800-HRBLOCK.
H&R Block’s tax professionals provide guaranteed tax return preparation services in-person at retail tax offices open year-round and through Block LiveSM, the only face-to-face online tax preparation experience available in the industry. Do-it-yourself filers benefit from the expertise and guidance of The Tax Institute at H&R Block when using H&R Block At Home™ on their computers, tablets and smartphones. Because understanding taxes is an integral part of managing personal finances, H&R Block keeps the conversation going with clients all year via blogstweets and Facebook status updates.
###

Friday, February 24, 2012

News Release from the FBI, Charlotte Division

Four Hedge Fund Managers Indicted in $40 Million Ponzi Scheme 
Defendants Join Seven Others and CommunityONE Bank Charged in Connection with the Scheme

U.S. Attorney’s OfficeFebruary 23, 2012
  • Western District of North Carolina(704) 344-6222
CHARLOTTE, NC—A federal grand jury sitting in Charlotte returned an indictment against Jonathan D. Davey, 47, of Newark, Ohio, Jeffrey M. Toft, 49, of Oviedo, Fla., Chad A. Sloat, 33, of Kansas City, Mo., and Michael J. Murphy, 51, of Deep Haven, Minn., on February 22, 2012, on four criminal charges relating to an investment fraud conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
Joining U.S. Attorney Tompkins in making today’s announcement are Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI).
According to the criminal indictment, the defendants operated “hedge funds” as part of a conspiracy that took in $40 million from victims for a Ponzi scheme operating under the name Black Diamond Capital Solutions (Black Diamond). The indictment alleges that the conspiracy lasted from about October 2007 through about April 2010. The indictment alleges that the defendants lied to get money from their victims by claiming, among other things, that they had done due diligence on Black Diamond and were operating legitimate hedge funds with significant safeguards, when in reality, neither claim was true. The indictment also alleges that, as Black Diamond began collapsing, the defendants and others created a new Ponzi scheme and with a separate Ponzi account that Davey administered. Thereafter, new victim money was deposited into the Ponzi account and used to make Ponzi payments to other victims and to fund the defendants’ lifestyles.
The indictment also charges Davey with tax evasion for claiming to the IRS on his 2008 tax return that $810,000 that Davey stole from victims was a “loan.” In reality, the indictment charges, Davey stole that $810,000, plus approximately $500,000 in 2009, from victims to build Davey’s personal mansion. Davey attempted to evade the taxes due and owing in 2008 by calling the money a “loan” from his investors to “Sovereign Grace, Inc.,” a Belizian corporation that Davey created as a diversion for his victims and the IRS.
The first charge against all four defendants, alleging conspiracy to commit securities fraud, carries a maximum sentence of five years’ imprisonment and a fine of up to $250,000. The second charge against all four defendants, alleging conspiracy to commit wire fraud, carries a maximum sentence of 20 years’ imprisonment and a fine of up to $250,000. The third charge against all four defendants, alleging a money laundering conspiracy, carries a maximum sentence of 20 years’ imprisonment and a fine of $250,000 or twice the amount of criminally derived proceeds. The final charge against Davey only, alleging tax evasion, carries a maximum sentence of five years’ imprisonment and a fine of up to $250,000.
The defendants will be making their initial appearances in U.S. District Court in the coming weeks.
This indictment follows a series of convictions and other charges in this matter. On December 16, 2010, Keith Simmons was convicted following a jury trial of securities fraud, wire fraud, and money laundering. Simmons is in custody awaiting sentencing.
On April 27, 2011, a criminal bill of information and a Deferred Prosecution Agreement were filed against CommunityONE Bank, N.A., for its failure to maintain an effective anti-money laundering program. As alleged in that bill of information, Simmons was a customer of CommunityONE, and used various accounts with the Bank in furtherance of the Ponzi scheme. However, as alleged in that bill of information, the Bank did not file any suspicious activity reports on Simmons, despite the hundreds of suspicious transactions that took place in his accounts.
Other defendants convicted in this case are set forth below. It should be noted that those defendants already sentenced had their sentences reduced by the Court to reflect their cooperation with the United States in its investigation and prosecution of others.
  • Bryan Keith Coats, 51, of Clayton, N.C., pled guilty on October 24, 2011, to conspiracy to commit securities fraud and money laundering conspiracy. Coats is awaiting sentencing.
  • Deanna Ray Salazar, 54, of Yucca Valley, Calif., pled guilty on December 7, 2010, to conspiracy to commit securities fraud and tax evasion. Salazar is awaiting sentencing.
  • Jeffrey M. Muyres, 36, of Matthews, N.C., pled guilty on May 17, 2011, to conspiracy to commit securities fraud and money laundering conspiracy. Muyres was sentenced to 23 months’ imprisonment by Chief Judge Robert Conrad, Jr., on January 18, 2012.
  • Roy E. Scarboro, 47, of Archdale, N.C., pled guilty on December 3, 2010, to securities fraud, money laundering, and making false statements to the FBI. Scarboro was sentenced to 26 months’ imprisonment by Chief Judge Robert Conrad, Jr., on May 4, 2011.
  • James D. Jordan, 49, of El Paso, Texas, pled guilty on September 14, 2010, to conspiracy to commit securities fraud. Jordan was sentenced to 18 months’ imprisonment by Chief Judge Robert Conrad, Jr., on June 29, 2011.
  • Stephen D. Lacy, 52, of Pawleys Island, S.C., pled guilty on December 9, 2010, to conspiracy to commit securities fraud. Lacy was sentenced to six months’ imprisonment by Chief Judge Robert Conrad, Jr., on May 4, 2011.
The details contained in this indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. The conviction or guilty plea of any other person is not evidence of the guilt of any of the defendants.
This matter is being prosecuted by Assistant United States Attorneys Kurt W. Meyers and Mark T. Odulio of the Western District of North Carolina, and the case against Jeffrey Muyres was prosecuted by Assistant United States Attorney Mark T. Odulio. The investigation is being handled by the FBI and the IRS.

Wednesday, February 15, 2012

e-News from the IRS

e-News for Small Business from the IRS:


Issue Number:  2012-4

Inside This Issue


  1. Worker classification webinar
  2. VOW to Hire Heroes Act
  3. Upcoming phone forum from Employee Plans
  4. Retirement news for employers
  5. Updated audit technique guide
  6. Guidance on employee tool and equipment plans
  7. Recent IRS announcements  

  1.  Worker classification webinar
The Feb. 15 webinar will cover employee and independent contractor issues and the Voluntary Classification Settlement Program.

  2.  VOW to Hire Heroes Act
Additional guidance on the expanded Work Opportunity Tax Credit is now available on IRS.gov.

  3.  Upcoming phone forum from Employee Plans
IRS is offering a free phone forum, Governmental Plan Proposed Guidance, on  May 15.

  4.  Retirement news for employers
The winter 2012 edition of Retirement News for Employersincludes articles on:
  • Using the IRA required minimum distribution rules for SEP, SIMPLE IRA and SARSEP plans
  • Reporting 2010 Roth rollovers and conversions on 2011 returns
  • Contributing to an IRA and claiming the Saver’s Credit for 2011

  5.  Updated audit technique guide
The Artists and Art Galleries ATG includes potential audit issues, definitions for artists and art galleries, and charitable donation issues.

  6.  Guidance on employee tool and equipment plans
IRS.gov has guidance about “tool plans” marketed in various industries that require employees to provide their own tools.

  7.  Recent IRS announcements
  • IR-2012-21, IRS Issues Rules for Providing K-1s Electronically
  • IR-2012-17, IRS Releases Guidance on How to Claim Expanded Veterans Tax Credit; Certification Requirements Streamlined
  • IR-2012-16, IRS Unveils New Version of Smartphone App; IRS2Go 2.0 Offers Videos, Tax Help

Wednesday, February 8, 2012

Smartphone App from IRS

News from the IRS:


IRS Unveils New Version of Smartphone App; IRS2Go 2.0 Offers Videos, Tax Help 

IRS YouTube Video: IRS2Go 2.0
Podcast: IRS2Go 2.0

WASHINGTON — The Internal Revenue Service announced today the availability of IRS2Go 2.0, an expanded version of its smartphone application designed to provide taxpayers easier access to practical tools and information.

The new app, available on the Apple and Android platforms, adds a new YouTube feature, news feed and tax transcript service in addition to existing tools, such as checking on the status of a tax refund.

“The new smartphone app provides an easy way for people to get helpful information about their taxes,” said IRS Commissioner Doug Shulman. “IRS2Go reflects a wider commitment at the IRS to find innovative ways to serve taxpayers in a rapidly changing world.”

The IRS released the first version of IRS2Go in 2011, and had more than 350,000 downloads. The phone app offers taxpayers a number of safe and secure ways to access information and keep current on practical tax information. 

The 2.0 version of the phone app includes three new tools:
  • Watch Us. People can view IRS YouTube videos on their smartphones. The videos provide short, informative features on a variety of tax topics. The channel ranks as the fourth most viewed channel among more than 125 federal government YouTube channels. IRS also has YouTube channels available in multilingual and American Sign Language. 
  • Get the Latest News. With this tool, users can have the latest IRS news releases delivered to their phones as it becomes available.  
  • Get My Tax Record. Taxpayers can now order their tax return transcript from the IRS2Go app. The transcript will be delivered via the U.S. Postal Service to their address of record.
The free IRS2Go app will continue giving taxpayers access to the tools offered last year:
  • Get Your Refund Status. Taxpayers can check the status of their federal tax refund through the phone app with a few basic pieces of information. An updated refund status is available about three days after the IRS acknowledges receipt of an e-filed return, or four weeks after mailing a paper return.
  • Get Tax Updates. Phone app users enter their e-mail address to automatically receive simple, straightforward tips and reminders to help with tax planning and preparation. Tax Tips are issued daily during the filing season and periodically throughout the rest of the year.
  • Follow the IRS. Taxpayers can sign up to follow the IRS Twitter newsfeed, @IRSnews, which provides easy-to-use information, including updates on tax law changes and important IRS programs.
Apple users can update or download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

For more information on IRS2Go and other products and services through social media channels, visit www.IRS.gov.

Monday, February 6, 2012

Tax Evasion Allegations

From the FBI, Chicago Division:


Operators of Elgin Adult Entertainment Club and Alleged Internet Gambling Business Charged with Concealing More Than $4 Million of Income from the IRS

U.S. Attorney’s Office February 02, 2012
  • Northern District of Illinois (312) 353-5300

CHICAGO—The operators of an adult entertainment club in Elgin were charged today with conspiracy to impede the Internal Revenue Service in the collection of federal taxes, as well as separately operating an illegal Internet gambling business, in connection with allegedly diverting more than $4 million in unreported income to themselves from the two businesses. The defendants, Anthony Buttitta and his father, Dominic Buttitta, were charged in a two-count criminal information filed in U.S. District Court, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Alvin Patton, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

Anthony Buttitta, 42, of St. Charles, and Dominic Buttitta, 69, of South Barrington, were each charged with one count of conspiracy to defraud the United States by obstructing the IRS in the collection of taxes and one count of operating an illegal gambling business. They will be ordered to appear for arraignment at a later date in U.S. District Court. The Buttittas operate Blackjacks Gentlemen’s Club in Elgin through Elgin Entertainment Enterprises, Inc., which manages Blackjacks. Between 2005 and 2009, they also ran an Internet gambling business, including the websites Skybook.com, Largejoe.com, and Theredhotel.com.

According to the charges, both Buttittas filed false federal corporate tax returns for calendar years 2002 through 2009, and false federal individual income tax returns for calendar years 2002 through 2008 that substantially under-reported the total income they received from the operation of Blackjacks and the gambling business. They allegedly concealed the diverted funds from their tax preparers and the IRS and used the unreported income to acquire personal property and to pay personal expenses.

The charges allege that the defendants received approximately $3,704,959 from “house” fees they collected from women for each shift they worked as dancers at Blackjacks. Anthony Buttitta directed club employees to maintain logs of the house fee collections, and both defendants later destroyed and caused the destruction of the log sheets, the charges allege. They also placed agents of their Internet gambling business on the payroll of another company to provide the employees with the appearance of a legitimate source of income and benefits. In return, the charges allege that they solicited and received kickbacks in the form of cash from the agents and concealed the payments from their tax preparers, bookkeepers and the IRS.

The defendants allegedly received approximately $1 million in gross wagers from the gambling business between 2005 and 2009, and made approximately $400,000 in net profits. The charges seek forfeiture of $400,000 as illegal proceeds.

At various times between 2005 and 2008, the defendants allegedly obtained unreported income from individuals as payment of losing wagers in the form of direct payments toward the purchase of a $2.9 million condominium in Las Vegas and a condominium in Costa Rica, as well as personal credit card payments. In 2005 and 2006, Anthony Buttitta used approximately $400,000 in cash to pay for building and acquiring his home in St. Charles, according to the charges.

Each count carries a maximum penalty of five years in prison and a $250,000 fine, and restitution is mandatory. In addition, defendants convicted of tax offenses must pay the costs of prosecution and remain liable for any and all back taxes, as well as a civil fraud penalty of 75 percent of the underpayment plus interest. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Patrick King.

The public is reminded that an information contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Wednesday, February 1, 2012

IRS e-News for Small Business; Feb 1, 2012

Issue Number:  2012-3

Inside This Issue


  1. Reporting 1099-K income for 2011
  2. IRS compliance directors discuss top priorities and challenges
  3. Upcoming phone forums from Employee Plan phones
  4. Recent IRS announcements  

  1.  Reporting 1099-K income for 2011
IRS.gov has information for reporting the amount from Forms 1099-K, Merchant Card and Third-Party Network Payments, on tax returns including Form 1040 Sch. C, Sch. E and Sch. F; and Forms 1065, 1120 and 1120-S.
Report all gross receipts on the line indicated in the instructionsand enter zero on the "Merchant card and third party payments" line.
Related links:

  2.  IRS compliance directors discuss top priorities and challenges
The recent webinar, Small Business Tax Compliance Priorities for 2012, is now available on the IRS Video Portal.

  3.  Upcoming phone forums from Employee Plans
IRS is offering two free phone forums on retirement plan topics:
  • Feb. 23, Funding-Based Benefit Restrictions
  • March 6, 401(k) Questionnaire Interim Report

  4.  Recent IRS announcements
  • Tax Tip 2012-16, Tax Tips for the Self-employed
  • Tax Tip 2012-17, Online Tax Center Offers Tools and Resources for Small Businesses and Self-Employed
  • IR-2012-13, Identity Theft Crackdown Sweeps Across the Nation; More than 200 Actions Taken in Past Week in 23 States
  • IR-2012-11, On Earned Income Tax Credit Awareness Day, IRS and Partners Launch Outreach Campaign to Low- and Moderate-Income Workers

Wednesday, January 4, 2012

How to Contact the IRS

Link to e-mail received from IRS Jan. 4, 2012


How to Contact the IRS

Call Us With Your Tax Questions
Live assistance is available Monday through Friday. There is also a 24 hour recorded assistance line for your convenience.

Contact Your Local IRS Office
IRS Taxpayer Assistance Centers for when you believe your issue is best handled face-to-face. Hours of service and other local information is provided on a per state basis.

IRS Mailing Addresses ("Where to File")
For those who don't file their federal tax returns electronically, the "Where to File" pages provide mailing addresses for filing all paper tax returns. You may also use your appropriate "Where to File" address for other written correspondence with the IRS.

Contact Us for Status of Your Refund
Want to check on the status of your refund? You can check online with the Where's My Refund application, or call 1-800-829-4477. (Please wait at least four weeks before calling.)

Contact Your Taxpayer Advocate
If you have an ongoing issue with the IRS that has not been resolved through normal processes, or you have suffered, or are about to suffer a significant hardship/economic burden as a result of the administration of the tax laws, contact the Taxpayer Advocate Service. We have offices in all 50 states, the District of Columbia, and Puerto Rico.

How to Make an Offshore Voluntary Disclosure 
Taxpayers wanting to report undisclosed income or assets should come in through the IRS Voluntary Disclosure Program.

Call the Health Coverage Tax Credit (HCTC) Customer Contact Center
The Health Coverage Tax Credit (HCTC) pays 80% of a qualified health plan premium for eligible individuals, either monthly as their health plan premium becomes due or yearly as a credit on their federal tax return. If you have questions about HCTC, give us a call.

Contact IRS Internationally
International Services: IRS contact information for taxpayers who live outside the United States.

Suspicious e-Mails, Phishing, and Identity Theft
The IRS does not send out unsolicited e-mails asking for personal information. An electronic mailbox has been established for you to report suspicious e-mails claiming to have been sent by the IRS.

How Do You Report Suspected Tax Fraud Activity?
If you have information about an individual or company you suspect is not complying with the tax law, report this activity.

Contact the IRS.gov Web Site Help Desk
If you need help finding something on the site, understanding our different file formats, printing files you've downloaded, installing or using the tax products CD-ROM, or any similar technical problem, here is the place to seek assistance.

Send Us A Comment About the Web Site
This is NOT the place for tax law questions or questions regarding your specific tax return, but you can give us some constructive feedback regarding the web site if you like. Give us your email address if you want a response, but don't include any social security numbers or other personal tax account information.