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Showing posts with label return. Show all posts
Showing posts with label return. 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.
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Saturday, March 17, 2012

Sprint ends accord with LightSquared - KansasCity.com

Overland Park-based Sprint Nextel Corp. canceled a network-sharing agreement with LightSquared Inc. on Friday, dealing billionaire Philip Falcone his biggest setback since regulators grounded the wireless venture last month.
Sprint said Friday it would return $65 million in payments it had received from LightSquared. In a separate statement, LightSquared said the return of cash gave it “more flexibility” to push toward creating a national wireless network.

For more, click the link below:


Sprint ends accord with LightSquared - KansasCity.com

UK Citizen & 2 Americans Charged for Conspiring to Defraud US Govt.

United Kingdom Citizen and Two Americans Charged in Alabama for Allegedly Conspiring to Defraud the United States Government 

U.S. Department of JusticeMarch 13, 2012
  • Office of Public Affairs(202) 514-2007/TDD (202) 514-1888
WASHINGTON—United Kingdom citizen Ahmed Sarchil Kazzaz and his company, Leadstay Company, were charged in an indictment unsealed today in the Northern District of Alabama for their roles in a conspiracy to defraud the United States and pay kickbacks in exchange for receiving subcontracts for a Department of Defense program in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joyce White Vance of the Northern District of Alabama.
Kazzaz, 45, and Leadstay were charged with one count of conspiracy to defraud and commit offenses against the United States; six counts of unlawful kickbacks; one count of wire fraud; and three counts of mail fraud. Kazzaz was arrested on February 14, 2012 in Los Angeles. In addition, two informations filed in the Northern District of Alabama were unsealed today, charging Gaines R. Newell Jr., 52, and Billy Joe Hunt, 57, with conspiracy to commit the federal offenses of kickbacks, wire fraud, and mail fraud, and with filing false tax returns.
According to the indictment, Kazzaz paid more than $947,500 in unlawful kickbacks to two employees of a prime contractor to the United States government in order to obtain lucrative subcontracts for himself and Leadstay, in connection with the Coalition Munitions Clearance Program (CMCP). CMCP is operated in Iraq by the U.S. Army Corps of Engineers, Huntsville Engineering and Support Center (HESC). HESC, located in the Northern District of Alabama, operated the CMCP to clear out, store, and dispose of weapons that were seized or abandoned in Iraq since the 2003 invasion. HESC awarded a contract to perform this work to an international engineering and construction firm headquartered in Pasadena, California.
The indictment alleges that beginning in about March 2006, Kazzaz entered into a kickback agreement with the California prime contractor’s program manager and deputy program manager, who arranged for the award of subcontracts to Kazzaz and Leadstay to provide materials, heavy equipment and operators for equipment for the CMCP. Kazzaz also allegedly obtained multiple funding increases to those subcontracts. From April 2006 through August 2008, Kazzaz and Leadstay received more than $23 million in U.S. funds for services under the CMCP.
According to the two informations unsealed today, Newell was the program manager in Iraq for the California-based prime contractor to HESC, and Hunt was the deputy program manager. Both are charged with conspiring to solicit and accept kickbacks to award subcontracts under the CMCP program and to commit mail and wire fraud by knowingly and intentionally devising a scheme to defraud the United States. In addition, both are charged with failing to report the kickback income on their federal tax returns.
“Mr. Kazzaz allegedly paid kickbacks to two employees of a California-based contractor in order to secure subcontracts for Department of Defense programs in Iraq,” said Assistant Attorney General Breuer. “Federal contracts must be won or lost based on the merits of the bid, and we will continue to take aggressive steps to hold accountable anyone who tries to play by their own set of rules instead.”
“Government contracts fraud is an insult to all law-abiding taxpayers,” said U.S. Attorney Vance. “These defendants’ conduct was even worse in that they tried to illegally profit from defense contracts in Iraq, where American men and women were willing to put their lives on the line for freedom.”
“These charges clearly demonstrate that we will take firm action against those who make illegal payments while engaged in wartime contracting,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and its investigative partners will continue our vigorous pursuit of those whose illegal acts undermined the U.S. government’s management of the stabilization and reconstruction effort in Iraq.”
“Individuals and businesses that illegally enrich themselves at the expense of the U.S. taxpayer, especially as wartime profiteers, or those who diminish the combat readiness or effectiveness of the U.S. military, will be aggressively investigated by DCIS and our investigative partners,” said Defense Criminal Investigative Service (DCIS) Special Agent in Charge Chris D. Hendrickson. “The combined investigative effort, the Department of Justice, and the U.S. Attorney’s Office’s work demonstrate the combined federal commitment to combating fraud, waste, and abuse.”
“IRS Criminal Investigation provides financial expertise with our law enforcement partners,” said Special Agent in Charge Leslie P. DeMarco of the Internal Revenue Service Criminal Investigations (IRS-CI) Los Angeles Field Office. “Today’s unsealing of these charges demonstrates our collective efforts in tracing illicit funds internationally to enforce the laws and ensure public trust.”
Kazzaz, Newell and Hunt are also facing criminal forfeiture proceedings.
The cases were investigated by the DCIS, IRS-CI, SIGIR, the FBI, and the U.S. Army Criminal Investigations Division. The cases are being prosecuted by Trial Attorney Catherine Votaw, on detail from SIGIR to the Fraud Section of the Justice Department’s Criminal Division, and Assistant U.S. Attorney David Estes of the Northern District of Alabama.
An indictment and information contain charges, and defendants are innocent until proven guilty.

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.

Sunday, February 5, 2012

Former RI Attorney Pleads Guilty to Bank Fraud, Tax Evasion Charges

From the FBI, Boston Division:


Former Rhode Island Attorney Pleads Guilty to Bank Fraud, Tax Evasion Charges

U.S. Attorney’s Office February 01, 2012
  • District of Rhode Island (401) 709-5000

PROVIDENCE, RI—Former R.I. attorney James D. Levitt, 66, pled guilty in federal court in Providence today to three counts of bank fraud and two counts of filing false tax returns for his role in a million-dollar mortgage fraud scheme. Levitt faces up to 96 years in federal prison and a fine of up to $3.3 million dollars when he is sentenced by U.S. District Court Judge John J. McConnell, Jr., on April 19, 2012.

Levitt’s guilty plea was announced by U.S. Attorney Peter F. Neronha; Cortez Richardson, Special Agent in Charge of the HUD Office of Inspector General; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; and William P. Offord, Special Agent in Charge of the Boston office of the Internal Revenue Service, Criminal Investigation.

At today’s change of plea hearing, Levitt admitted to the court that between July 2006 and November 2007 he applied for and received, based on fraudulent information, three mortgages totaling more than $1.1 million for two properties in Providence and one in East Providence. He used two of the mortgages to buy the Providence properties from an acquaintance that was experiencing financial problems and was facing foreclosure on the properties. Levitt admitted that he offered to assist his acquaintance by purporting to obtain a buyer for the properties who was qualified to obtain financing to purchase the properties.

In order to finance the purchases, Levitt admitted that he induced a business associate to apply for the mortgages by representing to him that they would be partners, would refurbish the properties as condominiums and sell them at a profit. Levitt admitted that the mortgage applications and settlement statements contained false information; including failing to identify the true purchaser of the property and falsely stating that the buyer was putting a down payment in excess of $100,000 for each property.

Levitt admitted to the court that he conducted the closings on the properties despite his financial interest and despite the fact that he was a disbarred attorney. After the closings, Levitt obtained and deposited the majority of the proceeds of the sale of the properties, approximately $270,000, into bank accounts which he controlled. He provided $25,000 of the proceeds to the seller of the properties shortly after the closing, and he later made periodic payments. However, Levitt admitted that he used the majority of the proceeds for his business and for personal expenses. The two properties eventually went into foreclosure.

Levitt admitted to the court that he used the third mortgage to buy a property from another company he controlled. He applied for the mortgage in his own name. The application also contained false statements and omissions, including an affirmation by Levitt that there were no outstanding judgments against him when, as he admitted to the court, he knew that there was an outstanding judgment against him of approximately $432,728 by the State of Rhode Island, which represented restitution owed to the State on a prior criminal conviction.

Levitt also admitted to the court that he failed to disclose to the Internal Revenue Service in tax filings in October 2007 and October 2008 derived income from the ventures as well as from other sources.
The case is being prosecuted by Assistant U.S. Attorney Luis M. Matos.

The matter was investigated by the U.S. Department of Housing and Urban Development Office of Inspector General, Federal Bureau of Investigation, and Internal Revenue Service-Criminal Investigation.

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

Man Indicted for $3 Million Ponzi Scheme

News release from the FBI, Kansas City:


Former Lee’s Summit Man Indicted for $3 Million Ponzi Scheme

U.S. Attorney’s Office February 01, 2012
  • Western District of Missouri (816) 426-3122

KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a former Lee’s Summit, Mo., man has been indicted by a federal grand jury for defrauding 39 investors in a $3 million Ponzi scheme.

Ronald W. Shepard, 72, formerly of Lee’s Summit, was charged in a 15-count indictment returned by a federal grand jury in Kansas City, Mo., on Tuesday, Jan. 31, 2012.

According to the indictment, Shepard’s company, Safety Solutions USA, LLC, in Lee’s Summit, developed and marketed a trailer hitch called Tow-Safe. A patent request for the trailer hitch safety device was filed, but rejected by the U.S. Patent Office. Shepard also operated a company called The Real Estate in Lee’s Summit.

Shepard received approximately $3,188,765 from approximately 39 investors from January 2006 through December 2009. Shepard returned approximately $1,235,853 to the investors, and lost or spent the rest, resulting in a minimum loss to investors of $1,825,883. Shephard is charged with 13 counts of mail fraud and two counts of money laundering related to the scheme.

Shepard, who prepared tax returns for individuals, discussed their investments and pitched his own companies as investments. Shepard allegedly claimed that investors would make anywhere from a 15 percent to 100 percent annual return on their investment. He allegedly failed to inform potential investors that the state had issued a cease and desist order that barred him from offering or selling any unregistered security.

Shepard allegedly told investors that their money was used to purchase property in Kansas City, the Lake of the Ozarks and Hawaii. Except for purchasing his own personal residence at the Lake of the Ozarks, the indictment says, Shepard did not purchase any real estate. Instead, the indictment alleges that Shepard used investor funds for personal living expenses, to pay other investors, to pay relatives, in disbursements of cash to himself and in real estate ventures.

According to the indictment, many investors liquidated their Individual Retirement accounts or 401(k) accounts and transferred the proceeds to Shepard for investment. Shepard allegedly told investors that if they liquidated retirement funds, thereby incurring penalties, he would refund their initial investment, plus the amount of penalty, plus interest.

The indictment also contains a forfeiture allegation, which would require Shepard to forfeit to the government any property derived from the proceeds of the alleged offenses, including $1,825,883.

Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.