Tax Season 2019: December 2012

Thursday, December 20, 2012

DOJ – Tax News: FLORIDA MAN CHARGED WITH FILING FALSE CLAIMS FOR TAX REFUNDS

A federal grand jury in Fort Lauderdale, Fla., returned an indictment charging Paul F. Wrubleski with corruptly impeding the due administration of the internal revenue laws and four counts of filing false claims for tax refunds, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to the indictment, Wrubleski impeded the IRS by filing False W-4s that claimed he was exempt from income tax withholding, and filing false tax returns, including four tax returns that requested over $1.5 million in federal refunds. Wrubleski also sent obstructive letters, tax returns and other false documents to the IRS between 1999 and 2010. In addition, the indictment alleges that Wrubleski filed for bankruptcy in 2006 to impede IRS collection actions.

An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted on all counts, Wrubleski faces a maximum potential sentence of 23 years in prison and faces a fine of up to $1.2 million.

This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles Edgar, Jr. and Jed Silversmith of the Justice Department’s Tax Division and Assistant U.S. Attorney Bertha Mitrani are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

DOJ – Tax News: UTAH WOMAN PLEADS GUILTY TO TAX FRAUD

Gillette Barton, a resident of Taylorsville, Utah, pleaded guilty Monday to presenting a false claim to the United States, the Justice Department and Internal Revenue Service (IRS) announced. Barton appeared before U.S. Magistrate Judge Evelyn J. Furse in Salt Lake City.

According to the plea agreement, in October of 2009, Barton filed a false 2008 U.S. Individual Income Tax Return claiming an income tax refund of $58,299. Barton’s false claim was based on the use of false Forms 1099-OID, Original Issue Discount.

Barton faces a potential maximum sentence of five years in prison and a fine of up to $250,000.

This case was investigated by IRS-Criminal Investigation. Trial Attorneys Michael Romano and Stuart Wexler of the Justice Department’s Tax Division handled the prosecution.

Sentencing is tentatively scheduled for Feb. 19, 2013, before U.S. District Court Chief Judge Ted Stewart in Salt Lake City.

DOJ – Tax News: JUSTICE DEPARTMENT SEEKS TO SHUT DOWN NASHVILLE, TENNESSEE MO’ MONEY TAXES LICENSEE

Tax Return Preparers Allegedly Claim Improper Tax Credits and Prepare Fake W-2 Wage Forms for Customers

The United States has asked a federal court to shut down a Mo’ Money Taxes tax preparation office in Nashville, the Justice Department announced today. The civil injunction suit, filed against Mo’ Money licensee Toney Fields and co-defendant Trumekia Shaw in U.S. District Court in Nashville, alleges that the two defendants intentionally prepare and file fraudulent federal income tax returns to obtain improper tax refunds for customers.

According to the complaint, Fields and Shaw get an improper jump on their competition by opening Mo’ Money Taxes in Nashville in late December and before the tax year ends. The defendants allegedly use customers’ end-of-year pay stubs to prepare tax returns, before employers have issued Internal Revenue Service (IRS) W-2 wage-statement forms to employees. Preparing tax returns based on pay stubs rather than proper W-2 Forms violates IRS rules. Fields and Shaw allegedly use the pay stubs to create fake W-2 Forms to include with the returns. End-of-the-year pay stubs frequently omit income and distributions that are shown on employer-issued W-2 Forms. This inevitably results in errors on federal tax returns.

The lawsuit further alleges that Fields and Shaw inflate or claim false tax credits on customers’ tax returns. According to the complaint, Fields and Shaw frequently claim improper dependent exemptions in order to claim inflated earned-income credits or child tax credits for their customers. The suit also alleges that the defendants include false filing statuses and bogus claims for charitable contributions on customers’ returns. The complaint says the government estimates that the defendants’ misconduct may have caused revenue losses of more than $5 million from the more than 1,100 tax returns they prepared in 2011.

The IRS lists return preparer fraud as one of its “Dirty Dozen” tax scams.

In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.

DOJ – Tax News: VIRGINIA ANESTHESIOLOGIST SENTENCED FOR FILING FALSE TAX RETURNS

Dr. George Anderson, 57, of Farmville, Va., was sentenced today to 33 months in prison, followed by one year of supervised release, for criminal tax fraud, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Judge Henry Hudson, sitting in Richmond, Va., also ordered Anderson to pay $471,919 of restitution to the IRS.

Anderson had earlier pleaded guilty to two counts of willfully filing false tax returns. According to the statement of facts filed with the court, Anderson was the sole owner of Farmville Anesthesia Associates Inc. Beginning in 2001, Anderson attempted to reduce his business’s tax liability to zero by diverting income to sham and nominee entities. Specifically, Anderson paid hundreds of thousands of dollars worth of bogus expenses out of Farmville Anesthesia’s bank accounts to other accounts held in the names of nominee trusts and limited liability companies Anderson himself controlled. He then falsely reported these payments on Farmville Anesthesia’s corporate income tax returns as legitimate business expenses. Later, Anderson spent substantial funds out of the nominee bank accounts for his personal benefit, including for the construction of his personal residence, and did not report the expenditures as income on his personal tax returns.

In his guilty plea, Anderson admitted that he filed a false 2007 corporate income tax return on behalf of Farmville Anesthesia Associates. That return was false because it reported the bogus expenses paid to Anderson-controlled sham entities. Anderson also admitted to filing a false 2005 personal income tax return. That return was false because it did not report the income Anderson spent for his benefit out of the bank accounts held in the names of the nominee trusts and LLCs.

This case was investigated by IRS Criminal Investigation and was prosecuted by Trial Attorney Jonathan Marx of the Justice Department’s Tax Division and Assistant U.S. Attorney David Maguire of the U.S. Attorney’s Office for the Eastern District of Virginia.

DOJ – Tax News: FEDERAL COURT PERMANENTLY BARS BATON ROUGE TAX SERVICE FROM PREPARING TAX RETURNS

Baton Rouge, La.-Area Tax Service’s Preparers Allegedly Fabricated and Inflated Business Expenses on Tax Returns

A federal court has permanently barred Larry Carnell Dixon Sr., a Louisiana tax return preparer, and his business, Dixon’s Tax Service, LLC from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Dixon and Dixon’s Tax Service LLC, consented without admitting the allegations against them, was signed by Judge James Brady of the U.S. District Court for the Middle District of Louisiana.

The government amended complaint alleged that Dixon and the preparers at Dixon’s Tax Service, which has offices in Baton Rouge and Gonzales, La., prepared returns for customers that reported false deductions which generated higher refunds and/or the Earned Income Tax Credit (EITC), a refundable credit that can generate a refund exceeding the amount of income tax paid by an individual taxpayer.

The amended complaint alleged that Dixon and the preparers at Dixon’s Tax Service fabricated and inflated business expense deductions reported on many of their taxpayers’ Schedule Cs (Forms 1040) for existing and fictional businesses. By allegedly fabricating and inflating these deductions, Dixon and Dixon’s Tax Service reduced a client’s taxable income, which resulted in a reduced tax liability and possibly a higher refund. In addition, Dixon and his preparers have allegedly repeatedly prepared returns that claim the EITC for customers who did not qualify for it. The complaint alleges that Dixon’s alleged misconduct may have cost the United States as much as $39 million.

The IRS lists tax-preparer fraud as one of the “Dirty Dozen” tax scams. The Justice Department has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website.