IRS Criminal Investigation Releases 2020 Annual Report & Identifies $2.3 Billion in Tax Fraud

The Internal Revenue Service today released the Criminal Investigation Division's annual report, highlighting the agency’s successes and criminal enforcement actions taken in fiscal year 2020, the majority of which occurred during COVID-19. 

A Key Achievement Was The Identification of
Over $10 Billion In Tax Fraud and Other Financial Crimes. 

"The special agents and professional staff who make up Criminal Investigation continue to perform at an incredibly high-level year after year," said IRS Commissioner Chuck Rettig. "Even in the face of a global pandemic, the CI workforce initiated nearly 1,600 investigations and identified $2.3 billion in tax fraud schemes. This is no small feat during a challenging year, and their work is critical to protecting taxpayers and the integrity of our tax system."

Key focuses of CI in fiscal year 2020 included COVID-19 related fraud, cybercrimes, with an emphasis on virtual and cryptocurrencies, traditional tax investigations, international tax enforcement, employment tax, refund fraud and tax-related identity theft.

In response to COVID-19 related crimes, CI special agents quickly adapted their investigative techniques to initiate cases into fraudulent claims for Economic Impact Payments, Paycheck Protection Program loans, and refundable payroll tax credits from the Coronavirus Aid, Relief, and Economic Security Act.

In fiscal year 2020, CI initiated 1,598 cases, applying 73% of its time to tax related investigations. 

• The number of CI special agents increased by one percent, following special agent hiring to offset planned retirements. 
• CI continued increasing its usage of data analytics and strengthening its international partnerships to assist in finding the most impactful cases. 
• One important partnership remained the Joint Chiefs of Global Tax Enforcement (J5); a transnational committee comprised of tax organizations from five countries. In FY 2020 alone, more information was shared regarding cryptocurrency, tax crimes, and related enforcement, than in the previous ten years combined. 
• CI also saw the first guilty pleas for a case under the J5 umbrella. 

As The Only Federal Law Enforcement Agency
With Jurisdiction Over Federal Tax Crimes,
CI Has One of the Highest Conviction Rates
In Federal Law Enforcement − At 90.4%.

The high conviction rate reflects the thoroughness of CI investigations and the high caliber of CI agents. CI is routinely called upon by prosecutors and partner agencies across the country to lead financial investigations on a wide variety of financial crimes.

The 2020 report is interactive, summarizes a wide variety of CI activity during the year and features examples of cases from each field office on a wide range of financial crimes. The federal fiscal year begins Oct. 1 and ends on Sept. 30.

Have a Criminal Tax Problem?

 Contact the Tax Lawyers at 

Marini & Associates, P.A.  

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid

Interest on Exam Changes Properly Assessed Because Taxpayer Applied Overpayments To Future Years

A federal district court in Goldring, (DC LA 9/28/2020) 126 AFTR 2d ¶2020-6254, has held that the IRS properly assessed interest on a taxpayer’s underpayment. The couple elected to apply an overpayment to future years, so that overpayment wasn’t available to apply to the underpayment for the year at issue. 

The IRS is authorized to credit any overpayment of tax against any outstanding tax liability owed by the taxpayer making the overpayment and refund any balance of the overpayment to that taxpayer. (Code Sec. 6402(a); Reg. §301.6402-1)

However, a taxpayer’s election to apply an overpayment to a subsequent year is irrevocable and binds both the taxpayer and the IRS. (Code Sec. 6513(d))

Once The Taxpayer Makes The Election To Apply An Overpayment To A Subsequent Year, IRS Cannot Offset
The Overpayment Against Any Additional Tax For The Year
Of The Overpayment. (Rev Rul 77-339, 1977-2 CB 475; Rev Rul 55-448, 1955-2 CB 595)

On her 2010 return, taxpayer Goldring reported a lawsuit settlement as capital gain, overpaid her tax liability and elected to carry the overpayment forward to future tax years. The IRS disputed Goldring’s characterization of part of the lawsuit settlement ("disputed amount") as capital gain.  

In 2020, a federal district court determined that the disputed amount was interest and, therefore, was taxable as ordinary income. (Goldring, (DC LA 4/13/2020) 125 AFTR 2d 2020-1701)

After the district court determined that the disputed amount was ordinary income, the IRS assessed Goldring with additional tax for 2010 and accrued interest from the due date of her 2010 return. 

Goldring argued that she shouldn't owe interest because she had enough of an overpayment in 2010 to cover the additional tax; therefore, interest did not accrue on her underpayment from the due date of her 2010 return.

The district court determined that the IRS properly assessed interest on Goldring’s 2010 underpayment.

Contrary to Goldring’s argument, the IRS could not use her 2010 overpayment to offset the additional tax assessed for 2010 because Goldring elected to carry over to a subsequent year that overpayment, and the IRS was bound by her election. Since the IRS had no funds it could use to offset the additional tax for 2010, interest began to accrue on the underpayment on the due date of Goldring’s 2010 return.

Have an IRS Tax Problem?

Contact the Tax Lawyers at 

Marini & Associates, P.A.   

for a FREE Tax Consultation contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

IRS Eliminates Separate Delinquent International Information Return Program

The IRS recently changed its' procedure for handling delinquent information returns. The 2012 OVDP FAQ# 18 originally provided automatic penalty relief, but was only available to taxpayers who were fully tax compliant. 

Then the IRS modified the Delinquent International Information Return Submission Procedures and clarified how taxpayers may file delinquent international information returns in cases where there was reasonable cause for the delinquency. Taxpayers who had unreported income or unpaid tax were not precluded from filing delinquent international information returns. However, unlike the procedures described in OVDP FAQ#18, penalties may have been imposed under the Delinquent International Information Return Submission Procedures if the Service does not accept the explanation of reasonable cause. 

Now the IRS has recently changed their website on Delinquent International Information Return Submission Procedures (DIIRSP) which now provides:

Taxpayers who have identified the need to file delinquent international information returns who are not under a civil examination or a criminal investigation by the IRS and have not already been contacted by the IRS about the delinquent information returns should file the delinquent information returns through normal filing procedures.

Penalties may be assessed in accordance with existing procedures.

• All delinquent international information returns other than Forms 3520 and 3520-A should be attached to an amended return and filed according to the applicable instructions for the amended return.
• All delinquent Forms 3520 and 3520-A should be filed according to the applicable instructions for those forms.
• Taxpayers may attach a reasonable cause statement to each delinquent information return filed for which reasonable cause is being asserted. 
• During processing of the delinquent information return, penalties may be assessed without considering the attached reasonable cause statement. 
• It may be necessary for taxpayers to respond to specific correspondence and submit or resubmit reasonable cause information.

Information returns filed with amended returns will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns.

These procedures now clearly provide for normal filing of late delinquent returns, with a reasonable cause statement, which may be considered after the filing and after the automatic assessment of penalties. 

This Procedure Is No Different Than Filing Any Late Return
and is Evidence that the DIIRSP Has Been Eliminated.

What Does This Mean For Streamlined Offshore And Domestic Procedures?

We previously posted Comm'r Warns Taxpayers - Streamlined Offshore Procedures Won't Last Forever! where we discussed that while there is still a trickle of non-willful taxpayers cleaning up under the Streamlined Offshore Procedures, the IRS has made it clear that this the Streamlined Offshore Procedures won't last forever and this may be non-willful taxpayer's last chance to report previously undisclosed foreign accounts under this program. 

These IRS' ending the OVDP program, the Delinquent Information Return Program  and the proposed ending of the Streamlined Offshore Procedures, reflect an ongoing efforts by the U.S. government to make offshore tax compliance a priority.

Have Undeclared Offshore Income?

  

Want to Know if the OVDP Program is Right for You? 

Contact the Tax Lawyers at 

Marini & Associates, P.A.   

for a FREE Tax Consultation contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

 

IRS SB/SE is Hiring Both Full Time & Seasonal!

The IRS’s Small Business/Self-Employed division wants to fill more than 150 collection representative vacancies throughout the country. The pay scale ranges from GS-5 to GS-8.

Small businesses are encouraged to share the external announcements with interested friends, family or clients that might be interested in applying.

Collection representatives provide a full range of administrative and technical assistance for taxpayers and their representatives. 

The job announcements list the responsibilities and closing dates:

• External announcement 21PHI-SBX0008-0962-05 
• External announcement 21PHI-SBX0036-0962-05 (seasonal)

Have an IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888) 882-9243

Updated IRS Website Provides That in Person Appeals Hearings Are Suspended Until Further Notice

IRS has updated its "IRS Operations During COVID-19: Mission critical" website with updates on how it is functioning during Covid 19 including information about changes to procedures in its Appeals Office and information about its resumed issuance of balance due notices.

The IRS has had to curtail some operations due to COVID-19, but its mission-critical functions, including accepting tax returns and sending refunds, continue. It has set up a website (the "IRS Operations During COVID-19: Mission critical") detailing what functions are and are not currently operating.

Appeals Office changes.  

The IRS removed language from the website that said that in-person Appeals conferences had been suspended “until at least August 31, 2020.” 

The Website Now Say That Appeals In Person

Meetings Are Suspended “Until Further Notice.”

The updated website still states that IRS is offering telephone and videoconference Appeals conferences. But it changes IRS’s position on Appeals conferences for cases that haven’t been docketed in the Tax Court. 

Appeals Will No Longer Suspend Cases Due To A Taxpayer's Request For An In-Person Conference. 

“In the interests of providing a timely Appeals conference, Appeals will now begin contacting taxpayers and scheduling a conference, either over the telephone or through WebEx.”  

The website reflects IRS's previously posted information that it resumed sending the 500 series balance due notices to taxpayers in October.

Have an IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888) 882-9243

IRS SB/SE Announced Their Compliance Strategies for 2021, Including Expanding The Use Of Civil Penalties

The IRS Small Business and Self-Employed business unit released its Fiscal 2021 Focus Guide -- It’s Still the Time -- laying out the compliance and service strategies for the coming year.

OUR CORE MISSION

Help small business and self-employed taxpayers understand and meet their tax obligations, while applying the tax law with integrity and fairness to all.

Our mission promotes voluntary compliance by focusing on renewed presence, ensuring public transparency, taking enforcement action every time it’s appropriate, and informing and empowering taxpayers.

STRENGTHEN COMPLIANCE ACTIVITIES

Take enforcement action every time it is appropriate (consider COVID-19 impact). 

• Take action to mitigate risks of non-compliance and evolving threats. 
• Expand use of all civil penalties including those used infrequently. 
• Use the badges of fraud to identify and develop civil and criminal fraud cases.

LEVERAGE TECHNOLOGY AND DATA ANALYTICS

Use research and data analytics to propose solutions for non-compliance, emerging issues, and better serve and understand the public.

Expand SB/SE digital and virtual service options to improve the taxpayer experience and foster voluntary compliance.

DEVELOP OUR WORKFORCE

Hire a diverse workforce with the skills and abilities necessary to meet our business goals. Supply all employees with the training necessary for a highly skilled workforce reducing the chances of business disruption. Safeguard the health and safety of employees while still delivering mission-critical functions.

Have an IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243

We Can Help You Eliminate Your $25,000 Late Form 5472 Penalties for $5000 Per Penalty!

On April 10, 2019, we posted US Taxpayers Are Receiving Automated Penalty Assessments For Late Filed Form 5471's & 5472's - We Can Help!  where we discussed that we have been receiving a many calls from businesses who have received penalty notices regarding late filed or non-filed Form 5471 & 5472's and that we discussed ways to defend against these automatic assessments and request penalty abatement including the Reasonable Cause Defense and First-Time Offender Abatement (FTA) Defense.

On November 3, 2020 we posted, New $25,000 Penalty for Not Reporting SMLLC with Foreign Owner Now Being Assessed by the IRS, we where we discussed that the IRS has now issued final regulations and they treat a domestic disregarded entity wholly owned by a foreign person as a domestic corporation separate from its owner, but only for the reporting, record maintenance and associated compliance requirements that apply to 25% foreign-owned domestic corporations under Code Sec. 6038A. and that for Tax Years beginning after December 31, 2017, the TCJA Act increased the late filed Form 5472 penalty to $25,000 From $10,000 for Each Return that must be filed.

We have had great success in requesting penalty abatements for these automatic late filed Form 5472 $25,000 penalty assessments!

We Can Help You Eliminate Your
$25,000 Late Filed Form 5472 Penalties
for $5,000 Per Penalty!

Contact the Tax Lawyers at 

Marini & Associates, P.A.

 

for a FREE Tax Consultation

at www.TaxAid.us or www.TaxLaw.ms

or Toll Free at 888-8TaxAid (888 882-9243)