18 Apr Newsletter – April 18, 2019
Inside this edition: Accountant Steals NBA Client’s Identity and Gets Slam Dunked by the IRS, Landscaper Hedges His Bet and Loses with the IRS, How the Stars Avoided the 90% Tax Rate in the 1950s, IRS Question & SFS Answer, For the foodies… The best Low Carb Chocolate Chip Cookie!
April 19, 2019
Inside this edition:
- Accountant Steals NBA Client’s Identity and Gets Slam Dunked by the IRS
- Landscaper Hedges His Bet and Loses with the IRS
- How the Stars Avoided the 90% Tax Rate in the 1950s
- IRS Question and Answer
- For the Foodies…The Best Low Carb Chocolate Chip Cookies
Where in the US is Jeffrey?
IRSAC Meeting – Washington DC – April 29th – May 3rd
What do you mean by back taxes?
Back taxes are taxes that have been partially or fully unpaid in the year that they were due. Taxpayers can have unpaid taxes at the federal, state, and/or local levels. Back taxes accumulate interest and penalties.
How many years do you have to file back taxes?
If you were owed a refund on any of those prior years tax returns, you can only collect that if you file the return within 3 years of the original tax deadline. Keep in mind that the IRS will expect you to pay any amount you owe.
1923 – U.S.A. Yankee Stadium – The first home game was played at the Yankee Stadium home of the New York Yankees between the New York Yankees and the Boston Red Sox, at the time it had the largest number of seats of any ballpark in America.
The first game ended with the Yankees beating the Boston Red Sox, by a score of 4-1, with Babe Ruth hitting a three-run home run into the right-field stands. The Stadium’s nicknames included “The House That Ruth Built” and “The Cathedral of Baseball,” and was hailed as a one-of-a-kind facility in the country for its size. Throughout its history, it became one of the most famous venues in the United States.
Image courtsey of By Severin St. Martin – Originally posted to Flickr as Yankee Stadium Over-flight, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=11497944
In the News!
Accountant Steals NBA Client’s Identity and
Gets Slam Dunked by the IRS!
Randy Usow, an accountant from Mequon, WI. was sentenced to 30 months in prison after defrauding the IRS by using his client’s identity to file bogus tax returns.
Usow used former Milwaukee Bucks center Zaza Pachulia’s personal information to file false tax returns that generated inflated refunds, much of which Usow pocketed by opening a bank account in Pachulia’s name without the player’s knowledge.
In a refund filed for 2014, Usow’s false return netted him a $463,867 refund. The tax return given to Pachulia for review showed a refund of approximately $164,000. Usow opened another bank account under the name of US Government LLC, where he transferred the large refund and then wired Pachulia the amount he was expecting to make it look as though the refund came from the IRS.
Prosecutors recommended the federal sentencing guideline of 54 to 61 months, but due to a plea deal, urged the judge to issue a prison term of three years. U.S. District Judge Pamela Pepper gave the reduced sentenced and credited Usow for his generally good character and support of his family and friends. However, she also noted that unlike most tax refund fraud cases in which she sees poorly trained people getting poor people to let them do their returns, Usow has post-graduate training and no real need for the money he stole. “You were someone everybody had the right to put their confidence in,” she said. Judge Pepper said Usow didn’t have to report to prison until after April 30th — so he could have time to finish tax returns for his remaining clients!
How the Stars Avoided
the 90% Tax Rate
in the 1950s
Jimmy Stewart, Gene Autry, Don Ameche, and Frank Sinatra were among the stars who purchased oil wells. Bing Crosby and Bob Hope each paid a successful oilman (and golf partner), Monty Moncrief $40,000 for a 25% share in an oil venture in West Texas, which earned them $5 million each. Because of the depletion allowance, $1.375 million of their profit was tax-free.
Another loophole which many took advantage of was the collapsible corporation. Hollywood stars would set up a corporation and have the producer pay their salary to the corporation, of which they would use it to pay all of their expenses and take a small percentage as compensation. The tax on corporations was only 50%. As soon as all the money was paid out, they dissolved the corporation. Some of the stars would sell stock in their corporation to the movie company, so they could take their fee in the form of capital gains, which only had a tax rate of 25%.
Congress passed a law in the mid-1950s aimed at closing the loophole. The law stated that if 25% of the corporation’s income came from a different industry, then it was a legitimate corporation. So the stars just combined their oil business with their movie business into one corporation.
Landscaper Hedges His Bet
and Loses with the IRS
Joseph Ferry III, from Port Saint Lucie, FL was indicted after his arrest on five counts each of filing false corporate and individual tax returns.
Ferry was the owner of Ferry Enterprises, Inc., which provided residential and commercial landscaping services.
The indictment alleges that Ferry understated his personal income on his individual tax returns and on the business revenue for Ferry Enterprises for the tax years 2012-2016. According to the indictment, Ferry deposited business income into his corporate bank account, but Ferry used the money to pay personal expenses, including payments on his mortgage and loans, purchased firearms, home renovations, and jewelry. It’s also alleged that he withdrew more than $2.9 million in cash from the corporation’s account.
If convicted, Ferry could face a maximum of three years in prison for each of the ten counts of filing a false tax return with the IRS, as well as monetary penalties and restitution.
Question: I received a notice from the IRS because I did not have the funds to pay the taxes I owed on my 2017 income tax return. I also was late in filing my tax return. Not only is the IRS demanding the tax I owe, but they have slapped on huge penalties and interest. I had extenuating circumstances that caused all of this. It’s not fair… what can I do?
Answer: Your Certified Tax Resolution Specialist can request an abatement of penalties in two ways: “First Time” Penalty Abatement and a Reasonable Cause Argument. The IRS writes off billions of dollars in penalties every year, but it must be done correctly.
The Now What Help! Series
Thank you for your kind words
I have been a client of SFS Tax Problem Solutions for a little over a year. Jeffrey and his staff are helpful and were very professional when dealing with my tax problem.
They removed the worry I was always feeling and finally I have peace of mind and I am getting a good night’s sleep.
After Jeff resolved my tax issue I stayed with the company and he is now my tax preparer. I know I can count on SFS to keep me on the straight and narrow and tax compliant.
Michael H. Troesken
How can I help you?
If you have a state or federal tax problem or just want to refer a friend, relative or client, I’d love to hear from you.
I can provide a no-obligation, confidential consultation to help you solve your IRS problems.
The Best Low Carb Chocolate Chip Cookies
What could be better than a cold glass of milk and warm chocolate chip cookies? Nothing!!
Jeff and I both are “reasonably” careful with our food during the day, but after dinner, we need a sweet. Until I found this recipe we were having a pita with butter, brown sugar (palm) and cinnamon. It satisfied but wasn’t quite what we craved. Now, we can truly indulge in a late night snack that fulfills our chocolate urges.
Enjoy the treat!