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April 4, 2017 By Michael

Don’t Invite IRS Tax Problems at Filing Time!

Don’t Invite IRS Tax Problems at Filing Time!

Last time, we introduced you to some IRS tax problems called the IRS Dirty Dozen list. This is an annual collection of DON’Ts to consider when you, or a tax pro, is filing your IRS tax return. We discussed two of the biggest tax problems on the list, falsifying income and using fake forms. And we warned you that, no matter who dreamed up the scheme, YOU are ultimately responsible when the IRS discovers the problem.

Today, let’s look at some of the other IRS tax problems on the list.

  • Fake Charities: The main culprit here are charities that use names that sound similar to names you know and trust. They prey on your generosity, taking money from you AND the legitimate charities. Avoid IRS tax problems by using the internet to thoroughly investigate every charity you support! Also, the IRS has a helpful list to identify the known offenders.
  • Inflated Refund Claims: Red flags should pop up whenever: a tax preparer “promises” or “guarantees” you a bigger tax refund before they even take a look at your records. Be wary when a tax preparer bases their fees on a percentage of your tax refund. Be suspicious when a tax preparer asks you to sign a blank return before they get started.
  • Frivolous Tax Arguments: These days, people are full of passionate opinions about the way our government conducts business. One way to invite IRS tax problems? Use your tax return as a forum for protest to avoid tax responsibility. Know that the IRS has heard every argument, and penalties are high. Check out this IRS rundown of frivolous tax arguments.
  • Falsely Padding Deductions on Returns: In the midst of a tax panic, Homer Simpson once declared that “Lisa is now a clergyman, Maggie is seven people and Bart was wounded in Vietnam.” Avoid IRS tax problems – don’t be like Homer! Also, check out these IRS FAQs on proper Earned Income Tax Credits and child tax credits.

IRS Tax Problems? Contact IRS Away!

It bears repeating: whether you have you committed tax fraud knowingly, or an unscrupulous tax preparer led you astray, YOU are ultimately responsible. The time to address your IRS tax problems is NOW. But you don’t have to go it alone. The IRS Away team offers you the peace of mind knowing that your tax problems are being dealt with effectively and professionally. Contact tax attorney Joseph M. Arndt III at (803) 771-4037 for a free consultation.

Filed Under: Income Tax Law, Tax Evasion, Tax Fraud, Tax Problems

February 14, 2017 By Tax Attorney

IRS Includes Falsifying Income Scam in 2017 List of “Dirty Dozen”

IRS Includes Falsifying Income Scam in 2017 List of “Dirty Dozen”

from the irs.gov website:

WASHINGTON — The Internal Revenue Service today continued issuing its annual list of common tax scams by warning taxpayers to avoid schemes to erroneously claim tax credits. This year’s “Dirty Dozen” includes falsifying income to claim tax credits.

“Taxpayers should ensure all the information they provide on their tax return is accurate,” said IRS Commissioner John Koskinen. “Falsifying income to claim tax credits is against the law. Taxpayers are legally responsible for all the information reported on their tax returns.”

The “Dirty Dozen,” a list compiled annually by the IRS, describes a variety of common scams that taxpayers may encounter. Many of these schemes peak during filing season as people prepare their returns or hire others to help them.

Scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

Don’t Make Up Income

Some people falsely increase the income they report to the IRS. This scam involves inflating or including income on a tax return that was never earned, either as wages or self-employment income, usually to maximize refundable credits.

Much like falsely claiming an expense or deduction you did not pay is not right, claiming income you did not earn is also inappropriate. Unscrupulous people do this to secure larger refundable credits such as the Earned Income Tax Credit and it can have serious repercussions. Taxpayers can face a large bill to repay the erroneous refunds, including interest and penalties. In some cases, they may even face criminal prosecution.

Fake Forms 1099-MISC

The IRS cautions taxpayers to avoid getting caught up in scheme disguised as a debt payment option for credit cards or mortgage debt. It involves the filing of a Form 1099-MISC, Miscellaneous Income, and/or bogus financial instruments such as bonds, bonded promissory notes or worthless checks.

Con artists often argue that the proper way to redeem or draw on a fictitious held-aside account is to use some form of made-up financial instrument such as a bonded promissory note that purports to be a debt payment method for credit cards or mortgage debt. Scammers provide fraudulent Form(s) 1099-MISC that appear to be issued by a large bank, loan service and/or mortgage company with which the taxpayer may have had a prior relationship, to further perpetrate the scheme. Form 56, Notice Concerning Fiduciary Relationship, may also be used by participants in this scam to assign fiduciary responsibilities to the lenders.

Taxpayers may encounter unethical return preparers who make them aware of these scams. Remember: Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else.

Choose Return Preparers Carefully

It is important to choose carefully when hiring an individual or firm to prepare your return. Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee. Every year, these types of tax preparers face everything from penalties to jail time for defrauding their clients.

To find tips about choosing a preparer, better understand the differences in credentials and qualifications, research the IRS preparer directory, and learn how to submit a complaint regarding a tax return preparer, visit www.irs.gov/chooseataxpro.

Filed Under: Employment Tax Fraud, IRS Criminal Investigation, Tax Evasion, Tax Fraud Tagged With: false tax credits, tax evasion, tax fraud

February 2, 2016 By Tax Attorney

North Carolina Man Sentenced for Tax Evasion

North Carolina Man Sentenced for Tax Evasion

From the Triad Business Journal (article)

Jan 31, 2016, 10:59pm EST

A Greensboro, North Carolina man has been sentenced to 18 months behind bars on charges of tax evasion.

Douglas Michael Lang, 50, will also have to pay more than $600,000 in restitution and a $5,000 fine and spend three years on supervised release, according to U.S. Attorney Ripley Rand of the Middle District of North Carolina.

Lang pleaded guilty to the charges. He was sentenced by Senior U.S. District Judge James A. Beaty Jr.

Lang was accused of failing to file income tax returns, failing to pay income tax, and committing acts of tax evasion.

According to a court filing by the prosecution, Lang owned “numerous businesses that sold and serviced vending machines and coin-operated air compressors.”

Rand said the acts included the payment of personal expenses from Protocol LLC and R & J Vending LLC, two companies that Lang controlled and owned.

According to Rand:

Lang also retitled his interest in Protocol LLC, of which he was the sole owner, in the name of House of Psalms, an ostensibly religious non-profit entity controlled by Lang. Lang was also charged with opening a bank account in the name Spirit of Angels, another ostensibly religious non-profit entity controlled by Lang. Each of these acts represented conduct Lang undertook to evade the assessment of tax liability.

The case was investigated by the Internal Revenue Service’s Criminal Investigation Division. The case was prosecuted by Assistant U.S. Attorney Robert M. Hamilton.

If you find yourself under criminal investigation, contact the Law Offices Joseph Arndt immediately.

Filed Under: IRS Criminal Investigation, IRS Tax Collections, Tax Evasion

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