Cleveland Tax Law Attorney Blog

Woman's personal freedoms and beliefs trumped by tax laws

2013-05-22T16:46:02Z

Death and taxes are often referred to as the two constants in life. Under U.S. law, there are very definite circumstances which require an individual to file a tax return. Even individuals who are retired or not employed must file tax returns if they had federal funds withheld from a pension, receive Social Security income, or have retirement accounts such as a 401(k) or IRA. In some cases, U.S. citizens falsely believe they are not required to file or pay taxes. In other cases, U.S. citizens wrongly believe they are entitled to monies held in imaginary government-backed bonds and trusts.

One 69-year-old woman was recently found guilty of several tax crimes in relation to falsely claiming $3 million in federal tax refunds. The 69-year-old was affiliated with an organization known as the Mid-Atlantic Trustees and Administrators or MATA. The group encourages U.S. citizens to claim income related to imaginary U.S. bonds and trusts.

]]> After a three-day trial, a jury convicted the 69-year-old woman on charges related to filing false tax returns as well as other fraudulent tax documents. In total, the 69-year-old was accused of falsely claiming $3 million in federal tax refunds. She is currently being held in police custody and is awaiting sentencing. She was found guilty of seven felony counts of tax crimes and could face years in prison.

This case is an example of how radical organizations often prey on vulnerable U.S. citizens to further their own financial gain and to promote personal ideologies. While every U.S. citizen has the right to practice and preach their own beliefs, tax laws often trump these personal freedoms.

Source: St. Louis Dispatch, "Kirkwood woman convicted of 'mumbo-jumbo' tax crimes," Robert Patrick, May 15, 2013

Two arrested in identify theft and tax fraud scheme

2013-05-17T20:05:03Z

In recent years, much has been written in the U.S. media warning citizens about financial schemes and crimes involving identity theft. Such crimes are often carried out by individuals who obtain the social security numbers and other personal identifying information of unsuspecting and elderly citizens. In some cases, individuals accused of identity theft have been linked to elaborate tax fraud crimes in which fraudulent tax returns are filed.

Two women were recently indicted on charges related to tax fraud and identity theft. The women, ages 32 and 27, are accused of stealing identifying information from hospital patients which they then used to file roughly 60 fraudulent tax returns. In all, the women are accused of requesting funds in excess of $300,000 and receiving more than $174,000 from the IRS via falsified tax returns.

]]> Once the money was issued, the women then deposited funds onto stolen prepaid debit cards. Prosecutors allege teh women planned to split the tax return money. The women, who face serious criminal charges including identify theft, tax fraud and conspiracy are currently awaiting sentencing.

Such criminal charges are extremely serious in nature and can result in those individuals charged receiving sentences of up to 15 years in prision and hefty restitution fees. In most cases, however, a criminal attorney who handles tax matters can assist in providing for the best possible legal outcome. Reduced sentences and fines as well as possible alternative sentences are options a criminal attorney may pursue. Ohio residents facing criminal charges related to tax fraud or tax evasion would be wise to contact a criminal attorney today.

Source: Sun Sentinel, "Broward women admit using Boca Raton hospital patients' IDs in tax fraud," Paula McMahon, May 14, 2013

How to rebound from tax debt and tax troubles

2013-05-15T15:14:05Z

Most Ohio residents can likely relate to procrastinating at home or work at some point. While cleaning the house or submitting a monthly expense report are important, putting such tasks off likely won't lead to hefty fines or criminal charges. When it comes to procrastination and taxes, however, failing to file or pay taxes can result in just that.

In recent years, many Americans lost jobs and fell on difficult financial times. These types of difficult life circumstances often have a way of snowballing. A job loss leads to credit card debt which results in a home foreclosure. An impacted individual starts to drink more or turns to drugs to escape the everyday burdens and memories of how life once was. Paying taxes is likely one of the last things on the mind of an individual facing this type of dire financial and personal situation.

]]> Individuals who failed to file taxes or owe back taxes often feel overwhelmed and ashamed. In many cases, individuals who fail to file tax returns one year think they can never rectify the situation or file a tax return again without effectively getting "caught". The fact is that most individuals who fail to file tax returns or pay back taxes do indeed get caught. Individuals who are facing this type of situation would therefore be wise to consult with a tax attorney who can provide advice on how to proceed.

In many cases, the IRS is willing to work with delinquent tax filers and payers who come forward and admit errors. The first step is often filing all tax returns, calculating tax debt and working with the IRS to determine a payment plan. In some cases, individuals in dire financial situations may be able to negotiate the total amount of tax debt owed.

Source: Reuters, "Coming clean on your taxes," Amy Feldman, May 14, 2013

Don't throw away those tax-related receipts just yet

2013-05-10T20:53:02Z

As the April 15 tax deadline has come and passed many Ohio residents can breathe a sigh of relief. Many may also be tempted to toss all those receipts and other tax-related documents right into the trash. Before taking such action, however, it's important to know what the legal statute of limitations is should an IRS audit occur.

For authentic tax returns, the general statute of limitations is three years. It's important, therefore to tuck away the shoebox full of receipts, invoices and credit card statements for at least another few years before deciding to send them through the shredder.

]]> In cases where information listed on a tax return may not be 100 percent valid, individuals would be wise to keep all supporting tax-related documentation basically forever. Should an IRS audit happen down the road, it's critical that an individual is able to present financial information such as W-2 forms, cancelled checks, bills and old statements upon request.

Oh, and it's actually advisable not to store important tax documents in a shoe box or any box for that matter. Ensuring tax returns and supporting documents are organized by year and type of expenditure can be of great help when and if the IRS comes knocking. Another option is to actually scan important documents and organize and store them on a computer.

Individuals who find themselves facing an IRS audit often feel a sense of dread and panic. While an IRS audit is not typically a fun process, it does not need to be a dreaded one. Having the necessary documentation in a neat and organized manner can greatly help.

Source: Forbes, "How Long Should You Keep Records After Tax Day?," Kelly Phillips Erb, April 19, 2013

Singapore to crack down on suspected tax evaders

2013-05-08T14:16:02Z

Singapore is a small island nation situated in the Pacific Ocean near Malaysia and Indonesia. While once occupied by various foreign rulers, today Singapore is an independent and sovereign city-state. In an effort to protect the financial interests of businesses and individuals, Singapore has some of the world's most structured policies with regard to banking privacy and secrecy.

While such secrecy rules have helped Singapore grow into the fourth largest offshore financial center, such rules have also helped the city-state become a haven for individuals and businesses hoping to evade taxes in their home countries.

]]> In response to growing pressure and criticism from other countries, Singapore is taking steps to crack down on tax evasion. Prior to July 1, banks and financial institutions throughout Singapore are required to notify officials of those accounts believed to hold fraudulent funds or by entities and individuals engaging in tax evasion.

The government has faced criticism from some who fear the dismantling of banking secrecy rules may ultimately hurt Singapore's economy. Currently, residents of Singapore enjoy a high standard of living and the small city-state boasts the highest number of millionaires per capita.

Once the suspect accounts have been identified, the holders of named accounts could potentially face criminal charges. Criminal charges related to tax crimes such as tax fraud and tax evasion are serious and can potentially result in hefty fines and time behind bars. For these reasons, individuals or businesses facing charges related to tax crimes would be wise to seek the counsel and guidance of a tax attorney.

Source: The Chicago Tribune, "Banks in Singapore agonize over rich clients in tax evasion clampdown," May 5, 2013

Willie Nelson's tax woes foster unique agreement

2013-05-06T11:09:00Z

Country crooner and musical legend Willie Nelson is known for many things. Among them is his well-publicized trouble with the Internal Revenue Service stemming from tax debt. Recently, Nelson turned 80 and reminiscent about his career, life and financial woes.

Even individuals who claim to dislike country music likely know who Willie Nelson is and would also be just as likely to hum along with one of his famous tunes. While Nelson has sold millions of albums and received awards and accolades for his musical accomplishments, he made headlines for a very different reason during the early 1990s.

]]> Upon receiving poor financial advice, Nelson was accused of owning roughly $16.7 million to the IRS. While Nelson's defense attorney was able to negotiate terms which reduced the amount he owed to just $6 million, the country star still did not have the means to repay the back taxes, penalties and fines.

Seeking to recover monies owed to the federal government, IRS officials raided Nelson's home taking anything and nearly everything of value. Once the dust settled, all that remained in Nelson's possession were the clothes on his back and his guitar which the star fittingly named Trigger.

Upon selling off property, memorabilia and personal belongings to recover the $6 million debt, a large portion of the debt remained. Rather than spend time in jail for tax evasion, Nelson's defense attorney brokered a deal with the IRS in which the country star would use a portion of profits from a new album to repay his debt.

The album, entitled "The IRS Tapes: Who Will Buy My Memories?" enjoyed modest success and yielded $3.6 million to the IRS. Nelson was then able to repay the remainder of his tax debt after a lawsuit against his former financial advisor was settled.

While this case may be as unique as Nelson himself, it illustrates the importance of having a criminal defense attorney. Nelson's attorney was able to negotiate unique terms to repay the IRS debt and help Nelson avoid additional penalities and time behind bars.

Source: Forbs, "Willie Nelson, Who Saved His Career And His House With The IRS Tapes, Turns 80," Kelly Phillips, Erb, April 29, 2013

Wesley Snipes a free man after serving sentence for tax crimes

2013-04-30T15:40:00Z

After having a number of small roles in television and films, action Wesley Snipes burst onto the Hollywood scene winning starring roles in successful movies such as New Jack City, Jungle Fever, White Men Can't Jump and Blade. While the fame of the Bronx-raised actor grew, so too did his bank account.

For years, Snipes was a commercially successful Hollywood actor who was paid handsomely for his talent. In fact, Snipes earned a reported $40 million from 1999 to 2005 alone. Despite his success and fame during 2006, the actor found himself facing criminal charges related to tax fraud.

]]> Snipes vowed to fight the criminal tax charges which stemmed from allegations he attempted to claim more than $12 million in fraudulent tax returns and failed to pay taxes for several years. Speaking at the actor's trial in 2008, Snipe's defense attorney contended the actor was a victim of "unscrupulous tax advice". The defense team, however, rested on the belief that the prosecution would not be able to prove their case and, as such, failed to convince the jury of Snipe's innocence in the criminal tax matters.

Despite being acquitted of more serious charges including conspiracy and felony tax fraud, Snipes was eventually convicted for failing to file tax returns for five years. He was sentenced to the maximum of three years in prison. Despite several appeals, the actor began serving his sentence in June of 2011.

The actor was recently released from prison after serving the majority of his sentence. Many believe he will soon be back to acting and earning an impressive income.

The Snipes case proves that no one is immune when it comes to criminal tax charges. It also illustrates the importance of having an aggressive criminal defense attorney who has a proven track record of presenting and winning similar cases.

Source: Forbes, "Wesley Snipes Walks Our Of Prison Just Before Tax Day," Kelly Phillips Erb, April 5, 2013

Advice when facing an IRS audit

2013-04-26T16:54:28Z

While most Ohio residents can breathe a sigh of relief now that the April 15 tax deadline has come and gone, some aren't as lucky. Roughly 10 percent of the U.S. population will receive a notice from the Internal Revenue Service that they are being audited. While an IRS audit can be a scary and intimidating process, there are steps those facing an audit can take to make the process less arduous.

]]> In most cases, news of an IRS audit is relayed via written correspondence. It's important, therefore, that individuals who are notified of an impending audit respond accordingly. Throwing away the letter and claiming ignorance will neither absolve an individual of responsibility nor be appreciated by the IRS agent assigned to the case.

Once notice of an IRS audit has been received, an individual taxpayer should do their best to provide supporting evidence and documentation related to those parts of a tax return that are in question. In many cases, an IRS audit is carried out solely through a series of written correspondence. In the event an IRS agent requests an in person meeting, it's wise for those being audited to remain courteous and cooperative.

There may be instances where an individual facing an IRS audit realizes a mistake was made. If so, it's often best to admit the mistake in deduction or income amounts and work with an individual case agent to rectify. In some cases, however, the IRS may disallow a claim or deduction and issue fines and penalties. Individuals facing such situations may choose to discuss the matter and their options with a tax attorney.

In cases where an individual is facing criminal charges related to tax evasion or tax fraud, it's important to seek legal advice. A tax attorney who is adept at handling such matters can help provide for the best possible legal outcome.

Source: CNN, "How to survive a tax audit," Blake Ellis, April 24, 2013

Lauryn Hill given second chance to repay total restitution amount

2013-04-24T16:11:03Z

We recently reported in this blog about singer Lauryn Hill's tax woes. The award-winning singing artist currently faces criminal charges related to tax evasion. In a recent hearing before a federal judge, it was revealed that the singer had promised to pay a restitution fine of $554,000. To date, however, the controversial artist has only repaid roughly $50,000.

]]> The federal judge overseeing the matter chastised Hill for failing to make good on her promise to pay the full restitution amount. While Hill did not speak at the hearing, her attorney disputed the total amount of taxes Hill allegedly owes contending the amount is less than $1 million dollars. Federal prosecutors in the case, however, contend the amount is in excess of $1 million dollars. The distinction is important as federal sentencing guidelines are increased for individuals who are convicted of evading taxes for amounts in excess of $1 million.

Hill is next scheduled to appear before the federal judge on May 3. Her attorney relayed that the singer and mother of six is in the process of taking out a loan against two properties she owns to repay the remaining amount of restitution payment, or $504,000, she previously promised the court she would to repay.

Individuals who are facing federal criminal charges related to tax crimes such as tax evasion may be given the opportunity to repay a portion of the total amount owed to avoid prison time. A tax attorney who is experienced in handling matters related to tax crimes such as tax evasion is an invaluable resource and advocate in helping to ensure the best possible outcome in such serious legal matters.

Source: The Associated Press, "Lauryn Hill Tax Evasion Sentencing Delayed," David Porter, April 22, 2013

Tips for individuals who missed the tax deadline

2013-04-19T14:30:53Z

Each year, millions of Americans race to meet the April 16 deadline by which to file and pay their taxes. Each year, many individuals around the country and in states like Ohio, miss the deadline. There are a number of reasons why an individual may fail to file and pay their taxes on time. Medical emergencies, national disasters and computer errors are all possible reasons why taxes may not be top of mind. Regardless of the reason, individuals who failed to meet the tax deadline would be wise to follow certain steps to avoid being charged with potential tax crimes and paying additional fines.

]]> First and foremost, it's wise to file a tax return as soon as possible. Many individuals wrongly assume that if they miss the April 16 deadline they are better off just foregoing this year and waiting until next year. This logic, however, is flawed and can result in an individual facing criminal charges related to tax evasion. Therefore, even those individuals who are not able to pay their taxes should still file. The Internal Revenue Service issues separate fines for late filing and payment so it's best to get at least one out of the way as soon as possible.

Second, be honest. If an unforeseen event such as medical emergency or national tragedy is truly to cause of a missed tax deadline it's best to relay such to the IRS. In some cases, extensions will be granted and penalties and fines waived for those who were impacted by events beyond their control.

Lastly, regardless of why, individuals who fail to meet the deadline would be wise to enlist the assistance of a tax professional. In many cases, a reputable tax professional has experience dealing with delinquent tax matters and can provide for the best possible outcome with regard to fines and penalties.

Individuals who find themselves the subjects of criminal tax charges would be wise to seek the advice of a legal professional. A tax attorney can help provide for the best possible outcome in matters related to tax evasion, tax fraud and tax debt.

Source: Forbes, "So You Missed Tax Day, What Next?" Kelly Phillips Erb, April 17, 2013

Singer-rapper Lauryn Hill faces sentencing for tax evasion

2013-04-17T23:18:12Z

Grammy award winning artist Lauryn Hill is scheduled to appear in a federal courtroom on the East Coast Monday for sentencing on tax evasion allegations. The singer-songwriter pled guilty nearly a year ago to intentionally and willingly failing to file tax returns for three years in the mid-2000s. Authorities say that the rapper and singer failed to pay federal taxes for her four corporations from 2005 through 2007.

Hill faces several years of potential prison time related to her guilty pleas in the tax evasion case. In preparation for her hearing, sources say that the singer has filed papers indicating that she intends to seek leniency for the alleged tax evasion. Hill reportedly has made roughly $1.8 million since the mid-2000s. She hopes to receive probation when she is sentenced April 22. She says that she will be in a better position to pay her tax debts if she is allowed to remain out of prison.

]]> In addition to the federal tax evasion charges, a civil judgment reportedly was entered for $446,386 in state court related to New Jersey state income taxes.

However, the financial issues are not the only basis that Hill is expected to argue in her request for leniency. The rapper reportedly dropped out of the spotlight in the early 2000s. She says that she dropped out of the limelight due to personal issue. But sources say that the rapper and her family were subjected to serious threats. The court records do not specify the nature of the threats that Hill experienced. But, she says that her failure to file tax returns was related to the threats and other forms of manipulation that she was experienced during those years.

Let's face it-- few Americans want to deal with the Internal Revenue Service. However, when agents from the Internal Revenue Service suspect a person has failed to file a tax return, it is important for that person to consider seeking the advice of legal counsel.

As allegations increase to a failure to file returns for more than one year, the situation only becomes more dire. A person suspected of a crime has the right to representation even before any criminal charges are filed, and a defense lawyer may be able to resolve issues before a case is referred to prosecutors.

Source: Newsday, "Lauryn Hill says blame tax evasion on threats," Frank Lovece, April 16, 2013

Tax audits will be reduced in 2013

2013-04-12T19:35:50Z

When individuals receive IRS audit notifications, it is common for stress levels to rise. The fear can be very real for both individuals and business owners. Several questions of panic come to mind. Was all income accounted for? Were deductions completed in accordance with the law? This is because if an audit is handled improperly, it could result in significant consequences, including criminal prosecution.

Some may be relieved to learn that U.S. tax collectors plan to reduce auditing by 18 percent for the largest U.S. companies in 2013. This is a significant reduction in comparison to the two previous years, the Chicago Tribune reports. Moreover, according to recent data from the Transactional Records Access Clearinghouse (TRAC), auditing for individual taxpayers is also slowing down. IRS audits dropped 5.3 percent in 2012. However, while the audits for individuals were in smaller number, tax reviews of those with incomes over $200, 000 and $1 million increased in this same year.

]]> As reductions in tax inspection continue, large corporate audits are still relatively high, historically speaking. In fact, 17 percent of these larger companies faced audits in 2012. Nevertheless, as IRS employees reduce in number due to budget issues in the struggling economy, audits will fall.

Few individuals or businesses intentionally misreport their taxes; yet, simple mistakes could create weighty repercussions. After all, tax law is very complex and multifaceted. If you are at odds with the IRS after an audit, you may benefit from the assistance of an experienced criminal tax attorney.

Source: Chicago Tribune, "Tax audits less likely this year, group suggests," April 10, 2013

NBA and NFL sports agent indicted on tax crimes

2013-04-10T17:57:44Z

Individuals who are accused of criminal activities related to tax crimes face serious punishment. In many cases, individuals charged in crimes such as tax evasion, tax fraud and money laundering face several years in prison as well as hefty fines.

]]> Federal prosecutors recently indicted an NBA and NFL sports agent on charges related to allegedly evading more than $2 million in taxes. Criminal charges filed against the well-known sports agent include tax evasion and embezzlement.

According to the indictment, the sports agent is accused of underreporting income for tax years 2005 through 2009. He currently faces criminal charges related to tax evasion and could potentially be sentenced to five years in federal prison. Additionally, the man faces additional criminal charges related to filing false tax returns for a total of five years. Such tax crimes carry a penalty of up to three years in prison for each year or a total of 15 years for the accused agent.

Additionally, the agent is accused of embezzling funds from a former NBA client and failing to report roughly $600,000 in gambling profits.

Individuals who are accused of criminal activity related to tax evasion or filing false tax returns would be wise to seek legal advice. A criminal defense attorney who handles matters related to tax crimes can be an invaluable resource in helping ensure a client's rights are protected. Additionally, in many cases a criminal defense attorney is able to secure reduced charges or a reduced sentence should a client be found guilty.

Source: San Antonio Express-News, "NBA sports agent from S.A. accused of dodging taxes," Guillermo Contreras, April 8, 2013

Courts heavy-handed when it comes to criminal tax matters

2013-04-05T17:02:48Z

With tax season in full swing, the Internal Revenue Service is working overtime to both process and investigate tax records. If inconsistencies or other red flags alert the IRS, a tax payer may face an audit. In some cases, such audits can lead to fines and other penalties as well as potential criminal charges.

]]> Individuals who are facing charges related to tax crimes would be wise to consult with a tax attorney. While an individual or small business owner may dismiss the charges as being related to an honest error or simple mistake, it's likely that investigators and attorneys at the IRS will not agree. Tax crimes are serious and often result in individuals paying sizable fines and facing time behind bars.

Some of the more common tax crimes include failing to file a tax return. Individuals found guilty of not filing a tax return could spend up to one year in prison and fines up to $100,000. Those who are charged with filing false or fraudulent tax refunds could spend 10 years in prison and be forced to pay fines in excess of $200,000. Additionally, charges related to both tax evasion and failure to pay taxes carry with them a prison sentence of up to five years and fines of $250,000.

In many cases, even individuals who admit to failing to pay taxes or filing false tax returns do not reap financial gains in excess of federal penalties. The above-referenced tax crimes penalties prove the importance of hiring a reputable and knowledgeable attorney. An attorney who is well-versed in criminal tax matters can help provide for the best possible legal outcome with regard to sentencing and fines.

Source: Times-News, "Tax crimes result in prison sentences, fines," April 4, 2013

Fashion duo charged with tax evasion face hefty fines

2013-04-03T20:17:18Z

Nearly 30 years ago two friends who shared a dream and vision decided to form a partnership. Together Stefano Gabbana and Domenico Dolce founded and grew the fashion empire known as Dolce & Gabbana. While the fashion duo has enjoyed a tremendous amount of success, with Hollywood elite and royalty often donning their label, today the two Italian citizens may soon find themselves behind bars.

]]> An Italian judge recently announced that both Gabbana and Dolce were guilty of criminal charges related to tax evasion. They have been ordered to pay fines in excess of $439 million and face up to five years in prison for their alleged crimes.

The criminal charges stem from a 2004 business deal in which the fashion duo sold their business to another business entity which they control. At the time of the business deal, they faced scrutiny for allegedly undervaluing their business in an effort to avoid paying higher taxes on the transaction.

Supporters of Dolce & Gabbana question the Italian court's motives and have urged the two to appeal the decision. An appeal would allow the two to delay paying any fines and as well as avoid sentencing related to potential jail time.

It's not only the rich and famous who face criminal charges such as tax evasion. Many Ohio residents also face increased scrutiny and potential criminal action by the Internal Revenue Service. As the deadline to file both personal and business-related income tax returns nears, Ohio residents who have tax-related questions or concerns would be wise to consult with a tax attorney. Taking the appropriate action now can help avoid future tax problems and potential criminal charges.

Source: Forbes, "Dolce & Gabbana Fined For Tax Evasion," Kelly Phillips Erb, April 3, 2013