Pimping Isn’t Easy When the IRS is Watching You

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You usually hear about the IRS wielding its power to criminally prosecute tax offenders in those cases where the dollar amount involved is great or the notoriety from the case will make lawful taxpayers think twice before fudging the numbers on their tax returns. I was a little surprised when I read about Johnny Ray Taylor, who recently pled guilty to tax evasion in U.S. District Court in Las Vegas earlier this week, until I read-on.

At first glance, the headlines capture you about a panderer and pimp, needing to cut a deal with the IRS. How much could such a “profession” really bring in? Surely not enough to catch the attention of the IRS; wrong! According to Taylor’s plea agreement, he copped receiving gross income in excess of $230,000 for tax year 2010. Although he didn’t file tax returns for tax years 2008, 2009, and 2010, he agreed to pay restitution in the amount of $117,559.82 to the IRS for those tax years. He’s presently awaiting sentencing. I’m still curious as to how much money he really “earned” since he cut a deal admitting that he earned in excess of $230,000 for just one tax year alone.

Fighting the IRS Alone? You May Have a Fool For a Client

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Nancy Cicero had a fool for a client in her fight with the Internal Revenue Service (IRS); she represented herself. Rather than seeking the advice of a tax attorney with the tools and experience needed to successfully fight the IRS; she went it alone, saved a few bucks, and is now a felon awaiting sentencing.

Cicero was found guilty on four counts for illegally claiming more than $3 million in tax refunds on her tax returns for tax years 2005 – 2008. Each count of filing false claims with the IRS carries a maximum penalty of five years in prison and/or fines up to $250,000.

According to the St. Louis Post-Dispatch, while self-represented, Cicero made no real opening statement or closing argument, and asked no questions of witnesses. When the judge would ask her if she wanted to object to the admission of evidence against her, she provided indecisive answers, such as, “I object. It is not my wish. Let the record show it is my wish.”

She should have wished for sound legal advice from her tax attorney. While saving a buck by representing yourself in a fight with the government is a legal right, common sense and Cicero’s predicament is proof positive that not all rights should be exercised. If you find yourself having to fight the IRS, don’t fight them alone, the tax attorneys at Montgomery & Wetenkamp are available to take your call and offer a free consultation.

You’re not paranoid if you think you’re being targeted by the IRS for tax purposes.

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According to CBS and Reuters, the Treasury Inspector General for Tax Administration (TIGTA) is expected to publish an investigative report this week detailing that Internal Revenue Service (IRS) agents specifically targeted conservative groups for review and consideration of their tax exempt status.

According to Reuters, director of exempt organizations for the IRS, Lois Lerner apologized Friday for what she called the “inappropriate” targeting of conservative groups for closer scrutiny, something the agency had long denied. She said the screening practice was confined to an IRS office in Cincinnati; that it was “absolutely not” influenced by the Obama administration; and that none of the targeted groups were denied tax-free status.

The TIGTA findings detail that the names and purposes of groups were used to scrutinize applications. Name scrutiny included organizations such as Tea Party, Patriot, and 9/12. Scrutiny was also being improperly given to references to government spending, government debt, taxes, education of the public via advocacy/lobbying to make America a better place to live; and statements that criticize how the country is being run.

IRS employees are presently prohibited from targeting anyone for their political or religious beliefs. However, under current law such conduct would only be grounds for termination. Wasting no time to ride the coattails of a juicy scandal, Congressman Mike Turner of Ohio already unveiled a bill to make such actions a felony. Considering that nobody seems to know anything in these types of cases, and that the portions of the report available so far appears to be no different, it will be interesting if anyone is ever prosecuted criminally if the bill were to pass.

IRS Records Prove AROD is a Bad Guy in Boston

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According to a recent Boston Globe review of Internal Revenue Service (IRS) filings New York Yankee Alex Rodriguez is a bad guy. A Boston news source depicting a Yankee as a bad guy is hardly surprising. What interests me, as a tax attorney, is that the basis for hatred for Rodriguez this time is not baseball related; it is based on IRS records. According to the Boston Globe, nonprofit organizations are generally expected to donate 65 to 75 percent of their revenues to their designated charitable causes. The remainder of their revenues are supposed to be used to pay their necessary expenses and reasonable salaries of nonprofit employees. This was not the case for Rodriguez’s non-profit organization, according to the Globe.

In 2006, Rodriguez hosted a charity poker tournament that helped the A-Rod Family Foundation raise $403,862 for charity. How nice! However, according to IRS reports, barely 1 percent of the money raised were actually paid to charity. Specifically, only $5,000 was paid to Jay-Z’s Shawn Carter Scholarship Fund and only $90 was paid to a Little League baseball team in Miami; how charitable. The not for profit organization subsequently stopped submitting financial reports to the IRS, and was then stripped of its tax-exempt status. Again, AROD is a bad guy … no shocker … just surprised the revelation was tax based.

Only Tax Debt Blues For Utah Jazz Assistant Coach

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Probably not a front page nab, but the North Carolina Department of Revenue recently set their crosshairs on Utah Jazz Assistant Coach and Former North Carolina State basketball head coach Sidney Lowe. The North Carolina Department of Revenue probably has more publicity to gain by seeking criminal charges against Lowe than the Internal Revenue Services does against Bubba (click here to read about the tax charges against Bubba Paris).

Lowe has been criminally charged with failing to file his North Carolina state income taxes for three years; 2009, 2010, and 2011. Lowe was booked at the Wake County jail Monday and released on a $10,000 unsecured bond. Lowe was a player for North Carolina State in the early 1980s and coached the Wolfpack for five seasons before resigning in 2011.

Currently an assistant coach for the Utah Jazz, this is a case where the tax local tax authorities may garner that infamous publicity tax authorities are notorious for. However, outside the devoted basketball fan or North Carolina booster fan, Lowe is likely an unknown. Reports on the alleged income earned bu Lowe for the years in question vary. If the case goes to trial we will likely learn if the government’s prosecution will cost more than the delinquent taxes to be gained, as is likely the case in the IRS’s criminal prosecution against Bubba Paris; or whether the criminal prosecution was worth the expense and deters the public from committing tax crimes. Again, this story proves that seeking the early help of a tax relief attorney may save you from doing hard time down the line.

United States Files Criminal Tax Charges Against Bubba

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According to the associated press, three time Super Bowl champion and former San Francisco 49er Bubba Paris has been charged with failing to file his federal income tax returns over a three year period.

The U.S. Department of Justice announced that Paris has been charged with three misdemeanor charges of failing to file tax returns in 2006, 2007 and 2008. Prosecutors allege that Paris received gross income of more than $57,000, nearly $84,000 and almost $42,000, respectively, in each of those years.

What interests me about this case, besides the 49er who was one of my favorites in the 1980’s, is the amount of money involved and Paris’ lack of true notoriety. While there are exceptions, the government generally prosecutes criminally for non-filing or non-payment of taxes only in cases of extreme income or evasion, or major notoriety i.e. the press garnered from the prosecution will warn the general public to timely file and pay their taxes. Here, the income levels alleged, if correct, are hardly kingpin status. In regards to Paris’ notoriety, the government missed their mark by about 25 years. Even in the Bay Area, most 49er fans may not know the difference between Bubba Paris and Bubba Gump.

Nonetheless, Paris now needs a tax attorney to get him tax relief. I suppose the government’s purpose would be to warn those with smaller incomes, that they too may be the subject of criminal prosecution for otherwise minor tax crimes. Be warned … if you earn approximately $45,000 a year and you miss a tax deadline … you may be doing hard time.

 

IRS to Sell Drug Cartel Horses at Auction

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photo via regardinghorses.com

The Zeta drug cartel has a little IRS problem, and it’s no ordinary tax debt.

Zeta had been laundering drug money under the cover of a race horse ranch run by one Miguel Angel Treviño Morales near Oklahoma City.  The Criminal Investigation division of the IRS (CI) went in with other law enforcement to seize the property and arrest the suspects back in May, and now a judge has decided that the property will be sold.  Hopefully CI did not have to brandish any weapons in the raid.  Probably not, since it appears the bust went smoothly and without incident.  The IRS plans to sell 379 horses at auction November 1-3.

CI is a special division of the IRS responsible for investigating financial crimes and criminal violations of the Internal Revenue Code.  CI targets both “legal source” and “illegal source” financial crimes, including narcotics related financial crimes.  That’s why CI would be involved in the activities of drug cartels that occur on US soil.

These Mexican cartel families are so arrogant; they think they are invincible.  They just couldn’t resist using drug references in the names of some of their prominent horses.  Also, they do not appear to have been trying to keep a low profile since their horses were winning major races (and prize money) left and right.

Ironically, the last time I blogged about CI, I quipped (in reference to the fact that they don’t have many opportunities to use their weapons) that they aren’t chasing down drug dealers.  Well, I stand corrected.

Maryland Man gets 10 Months Prison Sentence in IRS Tax Fraud Case

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Who got busted:    Patrick McLaughlin, age 43, of Ocean City, Maryland

Who busted him:

  • Rick A. Raven, Special Agent in Charge, IRS, Criminal Investigation
  • Rod J. Rosenstein, United States Attorney for the District of Maryland
  • Mark W. Crooks and Harry M. Gruber, Assistant United States Attorneys
  • Catherine C. Blake, U.S. District Judge

What did he do:

  • Failure to file corporate tax returns for tax years 2003-2009
  • Failure to pay corporate taxes from 2007-2009
  • Failure to pay employment taxes from 2006-2008 (total $135,348)
  • Failure to file and pay individual income taxes from 2005-2009
  • Grand total: $296,701

What are the consequences:

  • 10 months in prison
  • 12 months of supervised release

Mr. McLaughlin did plead guilty to the above charges in the tax evasion case. I find it interesting that the prison sentence was not also accompanied by some kind of restitution.  Usually the tax evader is also ordered to pay back what is owed. Maybe this part of the tax evasion court case was just left out of the press release.

These are difficult times that we live in, especially for business owners who experience the same cash-flow problems as others, but company tax evasion cases are often on a bigger scale. Some are tempted to cut corners on their taxes, but taking tax relief into their own hands often has tragic results.

California Attorney Failed to File Tax Returns – Sentenced to 6 Months in Prison

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California attorney Kevin Mirecki has been sentenced to six months in federal prison after pleading guilty to three counts of failing to file his tax returns and will not obtain tax relief. Mirecki was also ordered to pay more than $225,000 in restitution and fines. Mirecki entered his guilty plea in 2009 and admitted he failed to report more than $1.3 million in income over a three-year period.

Mirecki also founded Genesis Fund Ltd., which investigators say was a foreign-currency Ponzi scheme that bilked at least $80 million from hundreds of investors. Eight people pleaded guilty and another was convicted at trial in connection with the scam.

According to the indictment related to Genesis Fund Ltd., the defendants falsely claimed that investors received monthly returns of four percent, when investments were actually used to make “profit” distributions to defendants and early investors. The defendants promoted the Genesis Fund as having no reporting obligations to the IRS. Bank accounts in the names of trusts and offshore bank accounts were allegedly used to receive distributions from the Genesis Fund that were not reported to the IRS. Some of the defendants allegedly created “disclosed” and “undisclosed” Genesis Fund accounts for themselves and certain fund investors in order to conceal from the IRS all but a small portion of the fund’s distributions. In addition, some Genesis Fund investors were allegedly advised to create nominee offshore corporations and bank accounts to receive distributions from the fund.

The indictment further alleged that to obscure the operations of the fund and to limit scrutiny of its operations by investors and the government, the defendants caused the Genesis Fund to maintain no financial statements or other statements of operation. Additionally, in or about April 2000, to conceal the true nature of its operations from investors and the government, Genesis Fund’s administrative operations were relocated from Anaheim, Calif., to Costa Rica. At about the same time, paper records were moved to Costa Rica and electronic data on computers was destroyed.

A Former IRS Agent’s Witness Tampering Fail

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image via movies.ign.com

I don’t understand how anyone could think that witness tampering would work, at least not where you plan to kill unfriendly witnesses.  Its one thing to bribe witnesses, or threaten them so that you get just what you want from them on the witness stand, or even to ensure (somehow) that they are not available to testify.  But its quite another thing to actually murder them.

Former IRS agent, Steven Martinez, was picked up by the FBI recently for plotting to kill four witnesses that were going to testify against him in a criminal trial that involved defrauding clients to the tune of $11 million.  Martinez’ poor decision-making skills followed him all the way to trial where he decided he would have not one, but four witnesses, killed — and he didn’t think that would appear suspect (all four of them dropping off at about the same time)?  Even his hitman selection demonstrated poor judgment because the guy he picked had a conscience and turned Martinez in.

There must be something about the repetitive harrassing of taxpayers, denying tax relief, and blindly following procedure that saps all the common sense out of IRS employees.  If Steve Martinez is any example at all, they certainly make very bad criminals.