18 Dec SFS Tax Problem Solutions Newsletter
Inside this edition of the December SFS Tax Problem Solutions Newsletter you can read about: Easy come, Easy go, With a Middle Name Like Prosper, This Isn’t Child’s Play – Baltimore Mayor Didn’t Go by the Book, Temp Agency Owner May Find Himself Temporarily in Jail, The ABCs of Tax Resolution Explained, Credit Union CEO Credited with Shutting Down CBS Credit Union, Question and Answer, What Folks Have to Say About Us, For the foodies Instant Pot Korean Short Ribs, A Bit of Tax Humor
December 12, 2019
Inside this edition:
In the News…
- Easy come, Easy go
- With a Middle Name Like Prosper
- This Isn’t Child’s Play – Baltimore Mayor Didn’t Go by the Book
- Temp Agency Owner May Find Himself Temporarily in Jail
- The ABCs of Tax Resolution Explained
- Credit Union CEO Credited with Shutting Down CBS Credit Union
- Question and Answer
- What Folks Have to Say About Us
- For the foodies…Instant Pot Korean Short Ribs
- A Bit of Tax Humor
Call 877-355-8010 for more information about our services
In the News!
Easy come, Easy go!
A 29-year-old Florida man submitted a false tax return to the IRS in 2016 and got a refund check for $980,000. Ramon Christopher Barnett claimed $18,497 in income, $47,357 in deductions, and one million dollars in income tax credit withholding. His return included a fictitious attachment that contained information on wages and taxes withheld from a nursing home. Thinking ahead, he requested the IRS withhold $20,000 from the refund for the following year’s estimated taxes.
In reality, Blanchett had barely made $4,000 that year and had paid no taxes.
When the $980,000 check arrived, he deposited it in his account at SunTrust Bank. The bank promptly contacted the IRS, put the check in a vault, and closed the account. A year later, the check was cleared, and Blanchett asked that the check be reissued. He took the new check to a new bank and claimed the money came from an inheritance.
Blanchett bought a Lexus with the money for $51,617, and by the time the IRS came a knockin’, he still had $917,641 in the bank. The car was confiscated, and in a plea agreement Blanchett agreed to pay the IRS $59,768 in restitution plus any taxes, fees, penalties, and interest accrued over the last three years. He faces up to 10 years in prison.
Questions? Contact me: Jeffrey Schneider, EA, CTRS ACT-E, NTPIF at 855-355-8010 or firstname.lastname@example.org.
With a Middle Name Like Prosper…
A Nigerian national living in Missouri was sentenced to four years and three months in prison without parole for filing false tax returns. He was also charged for his part in various Internet scams that defrauded victims.
Segun Prosper Otaru, 27, was ordered to pay $26,056 in restitution and the same amount to the government. He entered the US on a student visa in 2013 but never took any classes. Since arriving in the US, he has worked with an organized crime network, has had 13 aliases and numerous bank accounts with fake identities. Otaru admitted to fraud through various Internet scams. Among them were listings on Craigslist for a rental property that Otaru and his co-conspirators did not control. When victims responded, they were told to send a deposit to hold the property.
He also filed as many as 167 false income tax returns that included stolen identities, false employers, wages, and employment taxes paid. He and a partner received $24,356 in illegal tax refunds.
This Isn’t Child’s Play Baltimore Mayor Didn’t Go by the Book
Former Baltimore Mayor Catherine Pugh was indicted for committing fraud, evading federal taxes, and illegally boosting her political campaign in association with a series of children’s books she self-published.
Pugh, 69, is alleged to have sold hundreds of thousands of dollars worth of her Healthy Holly books to a health-care company whose board she sat on while a state senator. After she was paid, thousands of books were never delivered.
The eleven-count federal indictment alleges that Pugh formed a company whose sole mission was to accept kickbacks disguised as sales of the books. The books feature a young African American girl who promotes the benefits of a healthy diet and exercise program.
The money from the non-existent books was illegally funneled to her political campaign through a straw company, and used for personal items, including a house. For the tax year 2016, Pugh claimed her taxable income was $31,020, and the tax due was $4,168. In reality, her taxable income was $322,365, and she approximately owed $102,444.
The federal government is hoping to seize a house owned by Pugh worth $770,000. Meanwhile, Pugh’s attorney claims that she is so fragile physically and mentally; she is unable to make “major decisions.” If convicted, she could serve up to 100 years in prison.
The ABCs of Tax Resolution Explained
One of the most common questions I hear is, “I owe the IRS years of back taxes, what are my options?” The good news is the IRS has many other options available to alleviate an individual or business’s delinquent back taxes.
When you have a tax problem, your best bet is to work with a Certified Tax Resolution Specialist (CTRS), and Enrolled Agent (EA). During the process, there are many terms that you are likely to hear that are unfamiliar to you and IRS notices that you will probably receive from the federal government or state.
We have begun a series of blogs, “The ABCs of Tax Resolution” that will provide you with a brief overview of many of these terms and concepts. Currently we have A-F. G is coming soon.
(For a complete explanation about the notices read my book, Now What I Got a Notice from the IRS. Help! available on Amazon, http://amzn.to/2phfdQE.)
Credit Union CEO Credited with Shutting Down CBS Credit Union .
Longtime CEO of the CBS Employee Credit Union, Edward Rostohar, was sentenced to 14 years in prison for embezzling 40 million dollars over 20 years. Rostohar left the credit union insolvent, and it was absorbed by University Credit Union, which took over all 2,800 accounts.
He claimed that most of the money was either gambled away or put into failed business ventures. Prosecutors painted a different picture and said that Rostohar also spent a large sum on luxury cars and watches. He jetted off to exotic locations on private jets. The married Rostohar wined and dined women who were half his age.
The fraud was perpetrated in two ways: through online payments, he set up, which directed money into his accounts. Or by forging the signature of an employee at the credit union on checks payable to himself. An employee discovered the fraud when she saw a check made out to Rostohar for $35,000. The employee then went back a few months and uncovered payments made to Rostohar for nearly four million dollars in that time frame.
Before joining the CBS Credit Union, Rostohar was an administrator for the National Credit Union Administration. He says the position enabled him to avoid detection for a long time because he knew what examiners look for when studying a credit union’s finances. The judge gave Rostohar a longer sentence than both the government and the defense had requested.canva
Temp Agency Owner May Find Himself Temporarily in Jail
California business owner, Luis Perez, has been charged with tax evasion for failing to pay almost 30 million dollars in wages he withheld from employee paychecks. Perez, the owner of four staffing agencies, deducted the taxes from his employees’ paychecks but failed to pay the money to the IRS. These taxes are often called ‘trust fund taxes’ and include income taxes and FICA taxes that fund Social Security and Medicare. Perez did not pay the taxes for seven years, and the money he owes includes interest and the Trust Fund Recovery Penalty.
The IRS came to collect in 2007. Perez kept them in the dark for almost a decade by concealing the purchase of luxury items, including several cars and a boat. He did this by placing the ownership titles in the names of other individuals or his companies. His purchases included a $135,000 Ferrari, a $224,000 Rolls Royce Phantom, and a $340,000 Lamborghini Aventador.
Perez is also accused of underreporting his income and making other false statements to the IRS to evade their collection efforts.
This is not the first time Perez has been charged with a crime. Last year the Orange County District Attorney filed charges against Perez and two associates for workers comp fraud for failing to report wages to the Employment Development Department, withhold payroll taxes or pay employment taxes for 36 employees.
If convicted on the tax evasion charges, Perez could face up to five years in federal prison.
I received a notice from the IRS because I did not have the funds to pay the tax I owed on my 2017 income tax return and I was also late in filing my tax return. Not only is the IRS demanding the tax I owe, but they have slapped on these enormous amounts for penalties and interest. I had extenuating circumstances that caused all of this. This isn’t fair…what, can I do?
A Tax Resolution Specialist can request a removal (abatement) of penalties in two ways: 1) “First Time” Penalty Abatement and 2) a Reasonable Cause Argument.
The IRS writes off billions of dollars in penalties every year, but you must know how to do it correctly.
A First Time Penalty Abatement (FTA) can be requested if you have a “clean” compliance record, meaning you have not incurred a Failure to File or Failure to Pay penalty for the three years preceding the year you are requesting abatement on.
If you don’t qualify for FTA, there are another 9 “Reasonable Cause” arguments to get your penalties removed.
However, if you think your reason(s) or excuse falls within a reasonable cause, let us know so we can see to it that the IRS reduces or removes these penalties in full once and for all.
Our clients generally NEVER meet or speak with the IRS. We handle everything for you, so you don’t have to take time away from your job or business to deal with all of the IRS’s paperwork.
We know the law, we know your rights, we can help!
The Now What Help! Series
Thank you for your kind words
“Jeff Schneider was the professional we needed. He has a wealth of experience and understands both the letter of the law and the practicalities of dealing with the IRS.
In our case, Jeff very successfully resolved the conflict our business had with the IRS.
Jeff is extraordinarily detailed and constantly followed-through with us.
If you have a business or personal issue with the IRS, I’d strongly recommend Jeff Schneider and his team at SFS.”
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.
Instant Pot – Korean Style Short Ribs
I’m cheap! (but not about everything!) Just check with my family. To give you a good example – I have been using the same $19.99 slow cooker for the past 15 years that was a gift from my sister. Over the past year, I have seen ads for the instant pot and on occasion, mentioned that I grow up with my Grandma, my Mom, and me using a pressure cooker. I never said that I wanted to buy one. I had a slow cooker, and that seemed fine. Yes, I know, the slow cooker is the exact opposite of the instant pot. I decided I was going to buy one after speaking with some folks I know that were cooking these wonderfully quick meals.
I dragged Jeff to Walmart to check out the pot that was going to sell for $49.00, reduced from $99.00. That was a heads up from my daughter.
Then the Black Friday ads hit my kitchen table and low and behold there are numerous ads for various models of the pot. Who knew there were so many! So Thanksgiving Day, I spent a great deal of time with Mr. Google comparing brands and models until my brain was going to explode. After an hour or so of this utter madness, I finally decided on the model and the store. Thursday evening, we ran out, and I bought the pot. It really is everything it is advertised to be.
The recipe this month was the very first meal I cooked. Jeff deemed it excellent, and I believe it took a mere 15 minutes to cook. The pot was well worth the money. Even for the hard-boiled eggs, I made in five minutes last night.
I hope you enjoy the ribs.
A Bit of Tax Humor…
If you love something, set it free.
If it comes back, it will always be yours.
If it doesn’t come back, it was never yours to begin with.
If it just sits in your living room, messes up your stuff, eats your food, uses your telephone, takes your money, and doesn’t appear to realize that you actually set it free in the first place, you either married it or gave birth to it.
Either of which is probably tax deductible.