In The News Archives...

News stories about taxpayers in trouble with the IRS or state taxing authorities as well as the news regarding IRS about enforcement issues.

In The News

Solving Your Tax Problems: Confirming A Tax Lien Has Been Released

The news that a Braintree lawyer has gotten into trouble for filing false and fraudulent tax lien releases has raised concerns for some Massachusetts residents who have or have had tax problems with the Massachusetts Department of Revenue or the IRS.

“I’d hate to think we went through all the work of having our tax problems resolved only to discover it was a scam,” said John M., who lives in Framingham. “If someone tells you that they’ve fixed your tax problem, how can you check to make sure they’re telling the truth?”

Experience Matters: Find the Right Professional To Solve Your Tax Problems

There are only three groups of people who are legally allowed to talk to the IRS or MA DOR on your behalf in order to fix your tax problems: Certified Public Accountants (CPA), Attorneys, and Enrolled Agents (EA). These professionals have to be licensed. If someone tells you that they can fix your tax problems, and they’re not a CPA, Attorney, or EA, run – don’t walk! – away. Make sure that anyone you hire to help you fix your tax problems is licensed.

Next, make sure that the person you hire to fix your tax problems is experienced in resolving IRS and MA DOR tax problems. Having a federal tax lien released or withdrawn is not an easy process. The same thing is true for state tax liens. Someone who’s brand new to the tax world may have the best intentions – they really want to help you out! – but if everything’s not done properly, it’s you that winds up in hot water with the IRS or MA DOR.  

Be aware that not all CPAs, EAs, or attorneys are familiar with tax problems. You want to choose a tax professional who specializes exclusively in solving tax problems. Choose a tax professional who has a proven track record of getting the job done right.

Your Tax Problems Solved: Making Sure A Tax Lien Has Been Released or Withdrawn

If the IRS has placed a tax lien on your property, it’s very difficult to sell and your credit takes a major hit.  If you’ve hired someone to solve your tax problems, and you want to make sure that they’ve actually had your tax lien released or withdrawn, there are steps you can take to double-check their work.

Contact the tax authority – either the IRS  or MA DOR – and, using your Social Security number or Federal Employer ID number, request a literal transcript. This transcript will show all of the official activity on your account, including when the lien was issued and when it was released or withdrawn.

Be aware that it can take some time for a tax lien release or withdrawal to appear on your transcript.  If you don’t see the lien release or withdrawal on your transcript, ask your tax professional for a copy of the release or withdrawal. On the release or withdrawal, you’ll find the identifying information of the official who issued the release or withdrawal. On a federal release or withdrawal, you will see the IRS employee’s name and badge number, as well as the location it was filed and recorded. On a MA DOR  release, you will see the employee’s name and Registry of Deeds where it was filed and recorded. You can call the IRS or MA DOR directly to confirm that the lien release or withdrawal has, in fact, been issued in accordance with what you’ve been told.

Don’t Be Afraid To Double-Check!

You know how stressful it can be to have tax problems. The collection letters, the calls or visits to your home or workplace, the constant wait for the bad situation to get even worse…these things all add up. That’s why people get help to solve their tax problems.

Enjoy the peace of mind that comes with resolving your tax problems. Don’t be afraid to double-check  your professional’s work. You’re entitled to this information, and the tax authorities will give it to you. 

Getting a tax lien released or withdrawn allows you to sell your property and repair your credit.  These are important considerations in getting your life back on track. If you need more information about getting a tax lien released or withdrawn, give us a call. We’ll be glad to help!

JK Harris Locks Doors

By David Slade, December 29, 2011, Post & Courier, Charleston SC

GOOSE CREEK — Bankrupt tax-preparation firm JK Harris suspended all operations late this afternoon and is bracing for a likely liquidation of the firm’s assets, according to founder and Chief Operating Officer John K. Harris.

As of the end of November, the company still employed about 135 people in Goose Creek. They were told late today that they would be locked out of the building at 5 p.m. and could return Friday to pack up their personal belongings.

The company was unable to secure additional funding after filing for Chapter 11 bankruptcy protection in October, and will ask the court to convert the case to a Chapter 7, Harris said, which means that instead of restructuring, the company could be shut down and its assets sold.

“This is truly the most devastating event I have been forced to deal with in my 58 years on this earth,” Harris said in an email to employees. “I am not sure it will reach that level for all of you, but I know that for some of you it will be as personally devastating for you as it is for me.”

JK Harris & Co. once advertised that it could resolve people’s tax debts for “pennies on the dollar,” but the nationwide company was dogged by cash-flow problems and the cost of large settlements related to multiple claims that it misled consumers

The company sought bankruptcy protection in October to head off an attempt by the Texas attorney general’s office, related to consumer claims, to force the company into receivership. Harris, in emails to employees, vendors and clients, blamed today’s shutdown on the refusal of the company’s largest creditor, RAI Credit of New Jersey, to provide additional financing.

Employees who were previously laid off are among the creditors owed wages. Money is also owed to vendors, and to consumers who were to get millions of dollars in compensation from previously agreed-upon settlements, from a class-action suit and from complaints by multiple attorneys general.

 

IRS identity theft keeps innocent taxpayers waiting months to receive their refund

By: Jenn Strathman, newsnet5.com

CLEVELAND – The IRS said there’s been a five fold increase in identity theft from 2008 to 2010. While the IRS said the breach is not happening at their offices, they are stuck finding a solution to this costly problem that leaves legitimate taxpayers waiting months for their refund check.

Despite a year of hard work, Sarah Madunicky’s financial future is up in the air.

“It’s very frustrating because you work for something and it’s owed to you and someone else can go right under there and take it from you,” Madunicky said.

The IRS rejected Madunicky’s tax return this year. She said the IRS told her someone else already used her social security number to file a return.

An IRS Tax Return Transcript shows a return with Madunicky’s social security number using a Cleveland Heights, Ohio, mailing address, but Madunicky lives in a different city.

The Cleveland Heights home used in the fraudulent filing sold this spring, and the new owners said they have nothing to do with this case.

There was another red flag on the return for Madunicky. The dependent listed on the return would have been born when Madunicky was just two years old.

“It doesn’t really add up,” Madunicky explained.

The return still went through. Five months later, Madunicky is still trying to get answers and her tax refund from the IRS.

“They are not very cooperative and not helping me with any of this,. Madunicky said.

IRS identity theft victims wait months for help

Madunicky is not alone. Testimony from three other identity theft victims at a Congressional subcommittee led the IRS Commissioner to issue an apology.

“We obviously need to do better,” Commissioner Douglas Shulman said.

The IRS told the Government Accountability Office that it’s difficult to screen every return for fraud, and said there are “trade-offs” if it adds more restrictive screening.

It’s expected there would be delays in processing, and could overwhelm the IRS’ capacity to issue refunds in a timely manner.

The GAO report also discussed additional screening mechanisms for known identity theft victims. Returns that fail screenings require a manual review and contact with your employer. The IRS said it feels even this type of screening for ID theft victims would pose delays and a burden for employers.

While improvements would help, the Ohio IRS spokeswoman, Jennifer Jenkins, told NewsChannel5 that the IRS stopped nearly 117,000 ID theft returns just this year. Those measures protected more than $582 million from ending up in the wrong hands.

IRS wants to use PIN system to reduce fraud

“I think the PIN is really the solution,” Commissioner Shulman explained.

Taxpayers would need a six digit Identity Protection Personal Identification Number (PIN) to file a return.

It’s only a pilot program used by 56,000 previous identity theft victims. During the pilot program, the taxpayers will get a new PIN each year for 3 years following ID theft.

“Anything would make it better, especially with a PIN that only certain people would have,” Madunicky said.

Once someone else has your social it takes years to unravel the mess leaving Madunicky to continue to wonder how her social security number was stolen and when the thief will use it again.

“It’s going to be something that haunts me,” Madunicky said.

We called the IRS and Congresswoman Betty Sutton’s office (D-Ohio, 13th District). Sutton’s office said the IRS was just finishing the investigation and the check was immediately issued.

While the case is resolved, this may never go any farther. The IRS told the GAO a “small number of cases” lead to criminal investigations. Privacy laws prohibit them from sharing information with other government agencies and local investigators. So, protection is key.

Protecting yourself from ID theft

If you suspect IRS identity theft, call the IRS Identity Protection Specialized Unit at 1-800-908-4490.

Checking your credit report is the best way to keep tabs on your identity. ” Annual Credit Report ” is the official free site that allows you to check your report. There are three credit reporting agencies, and you can check each agency’s report once a year for free. To keep tabs on your credit year round, check one report every four months.

If you notice anything unusual, call the credit reporting agency. The steps to dispute a record on your report are contained in the back of the credit report.

Repairing your credit and identity can take a long time. The Federal Trade Commission outlines all the steps you can take to fight back once you’re victimized. It outlines how to place a fraud alert on your account.

You may also explore a credit freeze. This freezes your credit to reduce the damage. Nobody will be allowed to open another line of credit with your social without proving they are who they say they are. This will make it more difficult for you to get credit, but will reduce the damage to your identity. To obtain a freeze, call Experian , Equifax , and TransUnion .

Finally, don’t give your social security number to anyone unless it’s absolutely essential. Many companies ask for your social, but they don’t really need it. Don’t give it out to anyone unless it’s absolutely necesary.

‘Tax Lady’ Roni Deutch Pleads Not Guilty

Sacramento, Calif. (June 20, 2011)
By Michael Cohn, Accounting Today

Roni Deutch, the tax attorney who heavily advertised her IRS tax resolution services before she was forced out of business, has pleaded not guilty to contempt of court charges.

Deutch billed herself as the “Tax Lady” in her infomercials before she closed down her law firm and surrendered her law license last month (see ‘Tax Lady’ Roni Deutch Closes Firm amid Allegations). She was sued for $34 million last August by the California Attorney General’s Office, which accused her of swindling clients who had gone to her firm seeking help resolving their outstanding tax debts with the IRS (see California AG Sues ‘Tax Lady’ Roni Deutch for $34M). In April, a California judge froze her assets after the Attorney General asked the court to hold her in contempt for shredding millions of documents and diverting hundreds of thousands of dollars in funds from her clients (see ‘Tax Lady’ Roni Deutch’s Assets Frozen by Judge).

During her arraignment Friday in Sacramento Superior Court, Deutch’s attorney registered a not guilty plea on her behalf to the contempt of court charges, according to The Sacramento Bee.

Deutch herself did not speak during the court hearing. Outside the courthouse, a small group of supporters, including several of her relatives, demonstrated on her behalf, holding up signs and yelling, “Justice for Deutch.”

‘Tax Lady’ Roni Deutch Closes Firm Amid Allegations

North Highlands, Calif. (May 16, 2011)
By Michael Cohn, Accounting Today

Roni Deutch, who heavily advertised her tax problem resolution services on television, has closed her law firm and surrendered her legal license after a California judge froze her assets.

Deutch was sued last August by the California Attorney General for $34 million, charging her with swindling thousands of people who came to her for help with fixing their tax problems with the Internal Revenue Service (see California AG Sues ‘Tax Lady’ Roni Deutch for $34M). Last month, a California judge froze her assets after the Attorney General asked the court to hold her in contempt for shredding millions of documents and diverting hundreds of thousands of dollars in funds from her clients.

The State Bar of California said Thursday that it has initiated disciplinary proceedings against her. Deutch held a press conference last Thursday at the headquarters of her law firm in North Highlands, Calif., to announce the closure of her firm and her financial difficulties, but sounded a note of defiance.

“I am letting you know right now that I am turning in my state bar license after 20 years,” she said. “So I say this to you, State Bar of California, ‘Are you going to come to my building and help my 4,000 active clients? Are you going to do that, State Bar of California? Will you now come and pick up my 45,000 debt files? Will you come and pick those up? Do you really care about my clients, State Bar of California? Never disciplined me for 20 years, approving my policies, practices and procedures. Are you now going to show up and help my clients? The last time I checked, you were unwilling to help any of my clients unless I was dead or in a mental hospital. Those were the only conditions that you were going to show up and help my clients, dead or in a mental hospital.’”

Deutch said her firm had run out of money and owed $10 million. She said she personally owed $5 million and did not have enough money to defend herself in court, according to the Sacramento Bee. Her own attorney has asked to be removed from the case because he hasn’t been paid.

‘Tax Lady’ Roni Deutch’s Assets Frozen by Judge

accountingtoday.com
Sacramento, Calif. (April 21, 2011)

A California judge has frozen the assets of “Tax Lady” Roni Deutch after the state attorney general asked the court to hold her in contempt for shredding millions of documents and wrongfully diverting funds from clients of her tax law firm.

Sacramento Superior Court Judge Shellyanne W.L. Chang signed an order Wednesday freezing Deutch’s assets and appointed a receiver who will take over the financial aspects of her business. Deutch heavily advertises her services for helping clients resolve their problems with the Internal Revenue Service, but has been the subject of a $34 million lawsuit by the California Attorney General’s Office accusing her of swindling clients (see California AG Sues ‘Tax Lady’ Roni Deutch for $34M).

Attorney General Kamala D. Harris asked the court on Wednesday to hold Deutch in contempt of court, imprison her for five days on each violation, and fine her thousands of dollars for shredding millions of pages of documents and failing to pay refunds to her clients in violation of a court order.

“Deutch showed herself to be a predator for profit, preying on innocent, hard-working people who were simply hoping to settle their accounts with the IRS,” Harris said in a statement. “By defrauding these victims, and then pleading poverty, she created a real danger that her clients will never receive their advance fees back.”

In August, the attorney general filed suit against Deutch for swindling thousands of people facing serious and expensive tax collection problems with the IRS. On August 31, the court issued an order that prohibited Deutch from destroying evidence.

“Despite this order,” the attorney general said, “Deutch has been routinely shredding documents on an almost a weekly basis.” The Attorney General estimates that to date Deutch has shredded some 1,643,000 to 2,708,600 pages of documents. Deutch’s shredding campaign has permanently deprived the attorney general of evidence needed to fully prosecute the action against her.

Deutch’s law firm, based in Sacramento County, had revenues of at least $25 million a year. She spent $3 million a year on advertising, much of it on late-night cable TV, and frequently offered tax advice on popular TV shows. In her pitches, she promised to significantly reduce the IRS tax debts of people who signed up with her firm. Instead, she took thousands of dollars in up-front fees from clients but offered little or no help in lowering their tax bills. Hundreds of clients complained to the Attorney General and other government agencies.

In addition to shredding documents, the Attorney General also charged that Deutch violated a November 17 preliminary injunction by failing to issue some $435,000 in refunds to her clients within 60 days. Instead she “decided to disperse funds to friends, family and other creditors. By draining her estate and that of the law firm, Deutch has placed her clients at serious risk of never receiving their refunds.”

For instance, Deutch opted to transfer hundreds of thousands of dollars in equity from the sale of her home to a media firm. She also personally withdrew $241,000 from the law firm’s accounts and her personal accounts at just one bank. In addition, since the preliminary injunction order was issued, Deutch made more than $21,000 in unnecessary expenditures, including gifts to family and friends, and a payment to a NASCAR racing team.

The attorney general asked the court to fine Deutch $1,000 and imprison her for five days for each count of contempt, to immediately freeze Deutch’s personal assets, and to appoint a receiver to manage her law firm’s business operations.

A spokesperson for Deutch’s firm did not respond to a request for comment.

Man Indicted for Falsifying Charitable Deductions

accountingtoday.com
Los Angeles (June 21, 2011)

A Santa Monica man was arrested Friday morning on charges that he committed tax fraud and attempted to interfere with the administration of the Internal Revenue laws.

Howard Hal Berger, 51, appeared Monday morning before U.S. District Court Judge John F. Walter. Berger previously pleaded not guilty to the charges specified in an indictment returned by a federal grand jury late last week.

According to the indictment, Berger filed a partnership income tax return for Lab Holdings LLC for the 2006 tax year which falsely reported a contribution of $1 million, substantially reducing his income tax liability.

In addition, Berger filed an individual income tax return for the 2006 tax year which falsely reported gifts to charity of $991,700 on the attached schedule of itemized deductions.

While under audit by the Internal Revenue Service, Berger submitted a false charitable donation letter in an attempt to substantiate the deduction for gifts to charity taken on the 2006 individual income tax return.

If convicted of all charges specified in the indictment, Berger faces up to nine years in prison and fines totaling $750,000. Berger is currently free on bond pending trial. A trial is scheduled for Aug. 9, 2011, before Judge Walter.

The investigation of Berger was conducted by IRS-Criminal Investigation in conjunction with the U.S. Attorney’s Office in Los Angeles.

IRS Increases Number of Audits

Tommy Williams CFP
schreveporttimes.com
June 18, 2011

Now that most of you have completed your tax returns for 2010, perhaps we might reflect on the most dreaded of tax consequences, the IRS audit.

We spend a considerable amount of time in an effort to be tax efficient. Defer taxes, avoid them and use every tool and technique offered by the Internal Revenue Code to legally limit our tax cost. Given the financial struggles of our federal government, it shouldn’t surprise you to know that the IRS has nearly doubled its examinations of returns from the richest taxpayers.

IRS audits are up nearly 8 percent for the wealthiest Americans. This spring, the Internal Revenue Service released the 2010 IRS Data Book. Journalists and tax professionals looked inside and noticed a couple of eyebrow-raising statistics. The first is that the IRS audited 18.4 percent of 2010 tax returns filed by taxpayers with adjusted gross incomes above $10 million. That’s up from 10.6 percent for 2009. The second is that taxpayers with adjusted gross incomes between $5 million and $10 million were also targets. Audits increased by 55 percent for this group in 2010 with the percentage of audited returns jumping from 7.5 percent to 11.6 percent. So what’s going on here? The IRS has ramped up its efforts to investigate offshore bank accounts and tax shelters, and it appears to be acting on its newfound knowledge. It started a Global High Wealth Industry Group in 2010 to “centralize and focus IRS compliance expertise involving high net worth individuals.”

As IRS Commissioner Doug Shulman said at a meeting of the New York State Bar Association Taxation Section, “We’re looking for and finding points of leverage, also called ‘nodes’ of activity, where multiple people not paying taxes can be detected. Financial institutions are one such potential node of activity. Promoters of evasion schemes are another.”

Now the IRS has started an Offshore Voluntary Disclosure Initiative, providing information in eight languages to reach taxpayers and preparers who are non-native English speakers. By coming forward about undisclosed offshore accounts, they stand a chance of avoiding criminal prosecution.

Audit rates increased across the board last year. The overall IRS audit rate was 1.11 percent in 2010, up from 1 percent in 2009. The taxpayers least likely to face an audit were within the $75,000 to $100,000 adjusted gross income range with 0.64 percent of their returns being audited.

Experts tell me to do your part to look good. Most audits are not purely attributable to bad luck. Why not do the little things that may help to decrease the odds? Some of the basics are to document all expenses relatable to your business, report every bit of income, claim sensible but not outlandish deductions, avoid portraying a hobby as a business venture, sign your return and work with a really good tax preparer.
If you do find yourself with a tax problem, I’d suggest you invest in some professional guidance.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial adviser prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Former Louisianna Sheriff’s deputy, wife plead guilty to fraud

By Littice Bacon-Blood
The Times-Picayune, June 21, 2011

A former St. Charles Parish Sheriff’s lieutenant and his wife, who owned an accounting service company, pleaded guilty to fraud in federal court on Monday for filing false federal tax returns and collecting more than $800,000 using the names of inmates held in the parish jail, according to U.S. Attorney Jim Letten’s office.

The Times-Picayune archiveHale Boggs Federal Building, 500 Poydras Street, U.S. District Court, Eastern District of Louisiana
The couple is said to have filed false tax returns over a 10-month period from about April 8, 2005 to about Feb. 20, 2006.

Lt. Warren LeBeauf Jr., 42, and his wife, Tamara Scott-Landry, 37, entered the guilty plea the morning of their trial before U. S. District Judge Carl Barbier, authorities said.

The two were charged May 6, 2010 in an 88-count indictment and are set for sentencing on the charges on Sept. 22 before Barbier.

They face a maximum of 10 years on the conspiracy to commit fraud charge, a fine of $250,000 and up to three years of probation.

Scott-Landry, who also pleaded guilty to wire fraud and aggravated identity theft, faces a maximum 20 years on the wire fraud charge and a mandatory two years added to any sentence she receives for the aggravated identity theft charge.

LeBeauf, who had been employed by the Sheriff’s Office since 1989 and worked as a resource officer at Destrehan High School, was terminated July 30, 2010 for violating department policies, said St. Charles Sheriff’s Office spokesman Capt. Pat Yoes.

According to federal authorities, LeBeauf used a law enforcement data base to obtain personal information on inmates such as Social Security number and birth date and passed it along to Scott-Landry to make fraudulent income tax refund claims.

Authorities say that LeBeauf met a St. Charles Sheriff’s Office 911 call center operator at a park and paid $100 for more than 4,000 pages of print outs from that law enforcement database which was used to fraudulently collect approximately $810,183 in income tax refunds.

Yoes said the operator, who had worked for the department for nearly 30 years, resigned July 2, 2010 before disciplinary action could be taken against her.

The tax forms filed electronically with the IRS made the returns payable to cashiers checks and stored valued cards. The money was then deposited into bank accounts controlled by LeBeauf and Scott-Landry, authorities said.

According to the indictment, the individual tax return amounts ranged from $1,577 to $3,525.

At one point authorities say Scott-Landry withdrew $26,000 in cash over a three-day period from an ATM and the couple went to a Chevrolet dealership and bought a 2004 Chevrolet Suburban “with a paper bag full” of cash.

It was in that SUV, parked in the drive way of Scott-Landry’s house, that authorities say they found inmate names and other items used in the scam.

During the execution of a search warrant, and “in the presence of almost a dozen armed IRS agents,” authorities say LeBeauf arrived at the house with an unknown person and attempted to leave with the SUV.

The case was investigated by the Internal Revenue Service, Criminal Investigation Division which has made investigatin refund fraud and identity theft a top priority said James C. Lee, special agent in charge, IRS criminal investigation.

CA Man Arrested After IRS Mistakenly Deposits $110K In His Account

The Huffington Post
James Sunshine, 06/19/11

Last September, Laguna Beach resident Stephen McDow found $110,000 deposited in his bank account, courtesy of the IRS. That same deposit has now landed him in hot water, according to CBS Los Angeles.

The IRS mistakenly sent the tax refund money, meant for a 67-year-old woman, to McDow, instead, reports local news station KCAL. The Los Angeles woman reportedly failed to inform the IRS that she had closed the bank account she had filed with them, and the account number was subsequently assigned to McDow.

When the woman discovered that McDow had been the recipient of her refund, she called him and demanded her money back. McDow, in turn, offered to pay back the balance in monthly payments, as he had already spent $60,000 paying off student loans and his home mortgage. Unsatisfied with the suggested size of the monthly payment, the woman declined the offer, according to KCAL.

McDow was subsequently arrested and charged with one felony of grand theft by misappropriation of lost property. He reportedly faces four years imprisonment and is currently being held on bail for the exact amount he first received: $110,000.