Posts Tagged ‘ID theft’

Tax Roundup, 10/11/12: Don’t let the door hit you edition.

Thursday, October 11th, 2012 by Joe Kristan

Hey, everybody, those extended 1040s are due Monday!  

Doug Shulman shows how much he cares.

Doug Shulman steps down November 9.   (TaxProf). Meanwhile, his legacy lives on:

Federal authorities Wednesday stepped up their assault on the viral-like crime of identity theft and tax fraud, arresting dozens of South Florida suspects on charges of filing fake returns totaling millions of dollars.

  Three homes were raided Wednesday in an effort to crack down on rampant tax fraud in the Tampa Bay area.

Under Commissioner Shulman’s watch, identity theft tax refund fraud has reached epidemic proportions.  The IRS mails perhaps $5 billion of your hard-earned tax dollars to thieves annually, while creating nightmares for taxpayers whose tax lives are disrupted and refunds held up.

Meanwhile, Commissioner Shulman has spent his time terrifying innocent Americans who have foot-faulted their obscure information reporting responsibilities and imposing a useless but expensive preparer regulation regime.  Way to go, Commissioner.

 

Attorney for West Des Moines payroll service says firm will catch up on unremitted client taxes (West Des Moines Patch)

No. If Europe Adds a Financial Transactions Tax, Will We Follow? (Linda Beale)

Martin Sullivan,  Don’t Count on Dynamic Scoring (Tax.com).  Meanwhile, William McBride, in How Far we are from the Enlightenment (Tax Policy Blog), doesn’t seem to fully agree with Mr. Sullivan.

Patrick Temple-West,  Essential reading: Romney pledges to keep tax deductions for mortgages, and more

Peter Reilly,  Three Candidates And Carried Interest:

I sometimes think that I am the only person who writes about taxes in a non-technical publication, really understands what “carried interest” is all about and does not find it particularly upsetting. 

I guess that makes the Tax Update a technical publication.  I don’t think carried interests — profits interests in partnerships — are bad things, and I think the proffered “cures” are.

Daniel Shaviro,  1986-style tax reform: a good idea whose time has passed

Anthony Nitti,  Tax Court: In Order to Take A Worthless Debt Deduction, the Debt Need Actually Be Worthless

Kay Bell,  5 tax-saving deductions & credits

Ain’t that the truth:  Return Still Not Done (Trish McIntire)

Paul Neiffer,  Is the True US Deficit $76 Trillion Instead of $16 Trillion

Need continuing education?  Registration is open for this year’s fall tax schools at the ISU Center for Agricultural Law and Taxation.  I’m on the Day 1 teaching schedule.  Yes, there’s farm stuff, but there’s plenty for us city folk too.

News you can use: If You Equate Long Hours with Hard Work Then You Aren’t “Committed” But You May Be a Dumbass (Going Concern)

 

This won’t work out well.  From Post-Gazette.com

Joseph E. Gump’s trial for evading taxes from 2003 through 2006 had been set to start Tuesday. But Mr. Gump told the court last week that he would plead guilty, prompting the judge to cancel a call for 50 prospective jurors.
Then Mr. Gump wrote to U.S. Judge Terrence F. McVerry’s staff saying that a guilty plea “would be a lie” and demanding a trial.
Why?
He said he understood that any prison sentence will likely be less if he pleads guilty, but said he did not believe he engaged in any evasion.

Mr. Gump was accused in a 2011 indictment of indicating “none” as his taxable income for four years during which he earned a total of $250,333 and owed a total of $49,370. He has argued in court filings that the income tax can only be legally levied on federal lands.

Good luck convincing a jury that files returns every April of that.
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Tax Roundup, 10/1/2012: the thin blue line of sales tax scofflaws. Plus: the dangers of finding your roots.

Monday, October 1st, 2012 by Joe Kristan

Keeping your drunk cousin from starting a fight at the wedding reception: a taxable service?  From globegazette.com:

The state Department of Revenue is demanding that 46 Iowa police officers pay back sales taxes from years of working off-duty assignments such as wedding receptions and business security.

Department spokeswoman Victoria Daniels said the plan is to pursue back sales taxes for up to 10 years for those officers who have never filed tax returns for off-duty jobs.

Iowa only requires service providers to collect sales tax for “enumerated services.” CPA services and legal services are not “enumerated,” but “security and detective services” is, along with, for example, reflexology.  The thin blue line is not pleased.

Iowa law enforcement groups have tried for years to convince the Revenue Department not to require police officers to collect sales tax from businesses and individuals who hire them for off-duty gigs. Revenue officials considered drafting a change to the state’s administrative code to exempt officers, but ultimately decided the law clearly required officers to pay up.

So this obviously isn’t news to the officers, who blew off the tax collection requirement anyway.  Next time you get pulled over, try to convince the officer not to require you to slow down.

 

Aegis trust promoters sentences upheld.  The Seventh Circuit has upheld long sentences for the masterminds behind a sham trust scheme that operated out of the Chicago suburb of Palos Hills in the 1990s.  From the opinion:

     The Aegis trusts were typically marketed to wealthy, self-employed individuals whose income could not be easily traced through the W-2 forms that are issued to ordinary taxpayers. Aegis representatives, including the defendants, conducted seminars promoting the Aegis trusts in cities around the country. Attendance at these seminars was by invitation only, and guests were charged between $150 and $500 to participate. Attendees were told at such seminars that use of the Aegis trust system would reduce if not eliminate their federal income taxes. They were often given materials that purported to document the legitimacy of the system with seemingly thorough and impressive citations to the various legal authorities that supported the trusts. But as one lawyer wrote to a client who sought his advice as to the legitimacy of the system:

      “This material is full of errors, irrelevancies and partial truths followed by non sequiturs. I know that I must resist the temptation to follow every line or I could spend the rest of my life on this. I will concentrate on how, even if it were 99 percent correct, the claimed tax effects fail. In doing so, I’m not implying that that 99 percent is correct. I’m just skipping over the errors.”

The longest sentence is 223 months, which works out to over 18 years.  Under federal sentencing rules, the sentence can be reduced by only about 10% for good time; there is no early out.

The Aegis clients learned the hard way that there is no magical trust formula to get out of taxes.  There is no tax fairy.  Tax Attorney Jack Townsend finds the decision worth three posts (1, 2, 3).

Cite: USA v. Michael Vallone, CA-7, No. 08-3690

 

When genealogists go bad.  From Billings, Montana via SFGate.com:

 A Billings woman who said she filed false tax returns using the Social Security numbers and birth dates of deceased people she found while doing genealogy research online has been sentenced to more than four years in prison and ordered to pay nearly $130,000 in restitution to the IRS.

Maybe she was doing genealogy research, maybe she wasn’t.  While the “Death Master File,” the list of dead people published by the government, is prized by those researching their ancestry, identity thieves love using it to file refund claims for the recently deceasedThis report on the Billings woman from the Billings Gazette makes me wonder if the genealogy was an excuse of some sort:

I am so sorry for my bad behavior. I have so many amends to make,” said Shannon Kathlina Grimm, 41.

Crying as she apologized to the court and to family members and friends, Grimm said, “I know I can be a good person. You will not see me again. I will not be in trouble again, I promise you.”

But Chief U.S. District Judge Richard Cebull told Grimm she deserved more time on top of what she has already spent locked up while the case was pending and sentenced her to four years and three months. The term was at the high end of the guideline range, which started at 41 months.

Cebull also ordered her to pay $129,498 restitution to the IRS.

“Obviously, Ms. Grimm has little, if any, respect for the law,” Cebull said. He noted Grimm’s state conviction for issuing bad checks and her violation of a deferred sentence. She was on probation when she committed the federal fraud crimes, he said.

Maybe it’s genealogy gone bad.  Right, because ancestry research is notorious as a gateway to a life of crime.

For a good view of the fiscal cliff, Check out Roger McEowen’s List of Expired and Expiring Provisions.

Martin Sullivan,  Wrong Turns At the Fiscal Cliff  (Tax.com)

Jana Luttenegger,   Cashing in on a Life Insurance Policy (Davis Brown Tax Law Blog)

Kay Bell,  Bank forgiveness of phantom debt could create tax problems for former debtors.  Of course, so does forgivenes of real debt.

Jason Dinesen,  The Difficulties of Tax Planning with an Inept Congress.   Of course, we keep sending them back.

Irwin Schiff loses motion to vacate conviction.  Not a great surprise(Jack Townsend)

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Tax Roundup, 8/10/12: Herbert Hoover birthday edition!

Friday, August 10th, 2012 by Joe Kristan

Herbert Hoover was born 138 years ago in West Branch, Iowa.  They haven’t elected another Iowan as President since for some reason.  Arnold Kling ponders the Hoover presidency:

Price V. Fishback and John Joseph Wallis write,

Federal budget outlays in real dollars rose 88 percent under Hoover between 1929 and 1932, faster than the growth in the first three years under Roosevelt (although starting from a lower base). Budget deficits under Hoover look more Keynesian than Roosevelt’s deficits, although likely not by Hoover’s design.

The conventional wisdom is that Herbert Hoover sat back and did nothing, and then Roosevelt cured the Depression with the New Deal.  In fact, I think that economic historians tend to see both Presidents making similar mistakes.  The most common view among economists today is that going off the gold standard was President Roosevelt’s best policy move, while many of the other New Deal policies, most especially the National Recovery Administration, were a hindrance.

President Hoover will always be linked to the depression.  That’s fair, though the story is much more interesting than the comic-book version of popular history.

 

State rejects Windsor Heights’ bid for revenue cameras (Des Moines Register):

The portion of I-235 that goes through Windsor Heights has the highest crash rate in the county, according to the city’s proposal.

(Windsor Heights Police Chief) McDaniel said that while the cameras will likely pay for themselves, the city wasn’t thinking about additional revenue when they proposed the project. Any potential revenue would go toward equipment purchases for public safety entities, he said.

Windsor Heights has long been notorious as an incorporated speed trap.  Why would anyone think that the cameras would be there just for revenue?  They are also there to award special favors to other government agencies!

Yes, that stretch has a lot of accidents — because of the design of the road, where having one too few lanes to accommodate three exits in a short stretch causes daily traffic backups.  Why are there too few lanes?  If my memory serves, it’s because Windsor Heights objected to an extra lane through their fair city.

 

Yes, government programs require government regulation.  The Quad City Times concludes an editorial on the film program this way:

Iowa, like many states, wheels and deals with tens of millions of dollars in tax credits every year to encourage senior housing, economic development, energy efficient homes and businesses and countless other initiatives. Witter’s jury acquitted a professional, degreed and licensed accountant of any criminal culpability for submitting expenses the state auditor later documented as unfounded.

So without extensive government regulation, Iowa’s tax credit programs seem ripe for the picking.

So what government is supposed to regulate a state government program?

It came out in the most recent film credit trial that the man who brokered 2/3 of the $36 million of tax credits issued — 80% of them improperlyreceived over $400,000 in commissions for his efforts.  So while the programs are advertised as benefiting “senior housing, economic development, energy efficient homes and businesses and countless other initiatives,”  remember that the real beneficiaries are well-connected fixers and middlemen.

 

Josh Barro asks, “Is Iowa Necessary?”

What’s so great about the wind credit? Well, according to Branstad, it has encouraged the construction of wind turbines all over Iowa, which means jobs for Iowans and rental income for Iowa farmers. If that sounds to you a lot like the arguments for subsidizing solar power — and the arguments for every industrial subsidy ever — you’re not alone.

Of course, the really important difference between wind subsidies and solar subsidies is that Iowa is windy and not especially sunny. If the purpose of the federal government is to do nice things for Iowa, then obviously it should prioritize wind over solar.

His solution for the problem of Iowa extortion:

 We could reduce Iowan tyranny by taking away its status as the first state to hold presidential caucuses. But Iowa would remain a swing state with outsized influence in the general election. The only way to really be safe is to revoke Iowa’s statehood, returning it to a territory whose representatives in Washington, D.C., would play a purely advisory role — and whose residents would have no part in choosing the president.

OK, we have our faults here, but put California and Illinois in receivership first, then we can talk about Iowa.  Update: Josh Barro Declares War on Iowa (Reihan Salam)

 

Kay Bell: IRS ignored fake tax ID numbers, potentially costing Treasury billions.  Good thing we have open-book competency exams for tax preparers.  More from Peter Pappas.  Meanwhile, Jason Dinesen has a new installment of the saga of how IRS negligence on the refund fraud front led to a nightmare for a widowed client.  A Ways and Means Republican has called for the resignation of IRS Commissioner Shulman to resign in the wake of the new revelations of IRS malfeasance.  It’s long overdue.

Russ Fox, What a Drag:

Write a business plan, have a separate bank account, and keep good records!  Trust me, you’ll be happy you did

If you want to deduct your expenses, that is.

Howard Gleckman, The Bowles-Simpson and Romney Tax Plans Have Almost Nothing in Common (TaxVox)

Jim Maule, You Get What You Vote For.  The good professor just can’t imagine why voters would distrust the government to spend more money wisely.

But you still have to pay the rent somehow. It Is Never Unreasonable to Quit a “Good Job” If You Hate Your Life   (Going Concern)

News you can use: Strippers of America, Get Your W-4s Ready. You’re Employees Now(Anthony Nitti)

 

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Tax Roundup, 8/9/12: IRS scolded for carelessly issuing ID numbers. Plus stupid vs. criminal, hitting bottom and digging.

Thursday, August 9th, 2012 by Joe Kristan

IRS Commissioner Douglas Shulman

IRS discouraged fraud detection in ID program (Huffington Post):

The Internal Revenue Service has been looking the other way instead of rooting out fraud when people apply for taxpayer identification numbers, Treasury Department investigators said Wednesday, exposing a shortfall with both financial and national security implications.

A member of Congress who sits on the House’s tax-writing committee responded to the report by calling on IRS Commissioner Douglas Shulman to resign, claiming the IRS is helping illegal immigrants defraud the government.

He wants the Commissioner to resign for that?  Considering that the Commissioner oversees the mailing of $5 billion annually to thieves, that he has terrorized and financially ruined otherwise law abiding Americans for footfault paperwork violations, and that he has, with questionable authority, imposed an expensive and futile preparer regulation scheme, this new outrage needs to take a number.

More coverage from the Wall Street Journal, Linda Beale and the TaxProf; read the TIGTA report here and a TIGTA press release here.

Instapundit on state film tax credits:

REPEAL THE HOLLYWOOD TAX CUTS!  (LOCAL EDITION):  La. film tax break program needs limits, budget group says.   “Louisiana has spent more than $1 billion over the past decade to attract movie productions to the state, but hasn’t received much in return besides the prestige of hosting big-name Hollywood actors, according to a report released today.  The left-leaning Louisiana Budget Project suggests state lawmakers should put tighter limits on the generous film tax break program, lessening the credits offered and capping the amount of money it can cost the state each year.”  Actually, it should be abolished, as should similar programs in almost every other state.  And this is something state Tea Party groups might even make common cause with lefties on.

A sadder-but-wiser Iowa repealed its version of the film credits this year after it collapsed in scandal and disgrace and the State Auditor reported that 80% of the credits were issued improperly or lacked documentation.  But in defense of the program, two filmmakers are moving to Iowa for up to ten years thanks to the film tax credit!

It’s time to register for this year’s ISU Center for Agricultural law and Taxation Farm Tax Schools!  I will be on the Day 1 panel at all eight sessions, starting with the October 29 school in Mason City.

We’re vacationing in the mountains this year, kids. The Plot Thickens for Swiss Bankers Involved In U.S. Evasion: (Jack Townsend):

Swiss bankers whose names were delivered to the United States in April as part of the crackdown on US tax evaders face the risk of arrest while travelling in some European countries, not just on US soil.

Well, the Alps are nice…

Stupidity is no crime: Were Reid’s Remarks About Romney’s Returns Unlawful? (TaxGrrrl)

We’re just getting started!  Have We Reached the Nadir of Tax Policy Discourse? (Going Concern)

“Bipartisan” means they’re ganging up on us: Wind energy tax breaks are bipartisan in Iowa (Ames Tribune)

Kay Bell has a new Carnival of Taxes for State Fair week!

Tax Policy Blog:  Misunderstanding Tax Reform: The Case of The Olympic Tax Elimination Act

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