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Tuesday, September 3, 2013

Married Tax Preparers Sentenced to 5 Years in Prison

Phoenix (August 30, 2013)

By Michael Cohn

A husband and wife pair of tax preparers have each been sentenced to five years in prison for filing false tax returns.

Shelia Young, 49, and Deane Young, 49, of Overgaard, Ariz., were sentenced Tuesday by U.S. District Judge David G. Campbell to five years of imprisonment for submitting false tax returns to the Internal Revenue Service. The Youngs were found guilty by a federal jury on Feb. 21, 2013, of conspiring to defraud the United States and submitting false claims for tax refunds.

The Youngs owned and operated Accurate Consulting LLC, an accounting and tax preparation business in Heber-Overgaard, Ariz. In addition to preparing lawful tax returns, the Youngs prepared and filed fraudulent tax returns on behalf of some of their clients that claimed false refunds ranging from $12,405 to $368,102 per return.

In total, the Youngs filed 122 false returns claiming nearly $10 million in fraudulent refunds. To make the false claims appear legitimate, the Youngs filed tax forms with the IRS, including the Form 1099-OID, that reported false income and tax withholding for the clients. Evidence also showed that the Youngs lied to their clients, telling them that the refund claims were based on tax loopholes unknown to the general public. They also bolstered their credentials, falsely claiming over 86 years of combined experience and assuring their clients that a federal judge had approved the filing method.

"Tax fraud is an insult to all honest, taxpaying citizens in this country," said U.S. Attorney John S. Leonardo. "Hopefully the sentences imposed will discourage others from engaging in similar conduct."

Another family member, Kenneth Defoor, also worked at the tax prep business, and was barred along with the Youngs in May 2011 from preparing tax returns.

"The Youngs stole money from the taxpayers of the United States through their fraudulent tax return scheme," said Dawn Mertz, special agent in charge of the Phoenix Field Office of Internal Revenue Service's Criminal Investigation unit. "In addition, their clients are now responsible for paying back the taxes, penalties, and interest associated with these bogus tax returns and potentially will be prosecuted. Be wary of any tax return preparer who promises a refund that sounds too good to be true."

The investigation was conducted by the IRS's Criminal Investigation unit, and the prosecution was handled by Assistant U.S. Attorneys James R. Knapp and Michael T. Morrissey of the District of Arizona in Phoenix.

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IRS Aims to Raise Fees for Offers in Compromise and Installment Agreements

IRS Aims to Raise Fees for Offers in Compromise and Installment Agreements
Washington, D.C. (August 30, 2013)

By Michael Cohn

The Internal Revenue Service has released proposed regulations that would increase the user fees for both offers in compromise and installment agreements for the first time since 2007.

The proposal comes after years of successive budget cuts for the embattled agency, but the IRS has nevertheless managed to hold down the fees for paying off outstanding tax debts. Back in 2011, then-commissioner Doug Shulman announced the IRS Fresh Start program, which aimed to help individual taxpayers and small businesses struggling with tax liens and other collection tactics (see IRS Overhauls Tax Lien System). The effort included easier access to installment agreements and a streamlined offer in compromise program.

Agencies such as the IRS are allowed to charge user fees, but the fees need to be fair and must be based on the costs to the government, the value of the service to the recipient, the public policy or interest served, and other relevant facts. The federal Office of Management and Budget encourages agencies to charge user fees for government-provided services that confer benefits on identifiable recipients over and above those benefits received by the general public. According to an OMG regulatory circular, an agency that seeks to impose a user fee for government-provided services must calculate the full cost of providing those services. In general, the amount of a user fee should recover the cost of providing the service, unless the OMB grants an exception.

The IRS currently charges $105 for entering into an installment agreement, except that the fee is $52 for a direct debit installment agreement, in which the taxpayer authorizes the IRS to request the monthly electronic transfer of funds from the taxpayer's bank account to the IRS. The fee is $43 if the taxpayer is a low-income taxpayer. The IRS currently charges $45 for restructuring or reinstating an installment agreement that is in default. The fees have not changed since 2007.

The IRS said it recently completed a routine review of the installment agreement program and determined that the full cost of an installment agreement is $282, except that the cost is only $122 for a direct debit installment agreement. The IRS also determined that the full cost of restructuring or reinstating an installment agreement is $85.

After discussions with the OMB, the IRS has proposed to raise the fee for entering into an installment agreement to $120, and to increase the proposed fee for restructuring or reinstating an installment agreement to $50. The fee for a direct debit installment agreement would remain $52, and low-income taxpayers would continue to pay $43 for any new installment agreement, including a direct debit installment agreement.

The proposed regulations would not increase the fee for direct debit installment agreements because these agreements have a significantly higher completion rate, the IRS pointed out. The proposed fee hikes aim to balance the need to recover costs with the goals of encouraging the use of installment agreements in general and direct debit installment agreements in particular.

The IRS currently charges $150 for processing an offer to compromise, except that no fee is charged if an offer is based solely on doubt as to liability, or made by a low-income taxpayer. The fee is generally applied to the unpaid taxes if the offer is accepted to promote effective tax administration or accepted based on doubt as to collectability. In the latter case, a determination must be made that collection of an amount greater than the amount offered would create economic hardship. The amount of the fee has not changed since 2003, the IRS noted. As required by the OMB Circular, the IRS recently completed a routine review of the offer to compromise program and determined that the full cost of an offer to compromise is $2,718.

After discussions with OMB, the IRS has proposed to raise the fee for processing an offer to compromise to $186. Low-income taxpayers and taxpayers making offers based solely on doubt as to liability would continue to pay no fee. As now, the fee is generally applied to the unpaid taxes if the offer is accepted to promote effective tax administration or accepted based on doubt as to collectability. In the latter case, a determination must be made that collection of an amount greater than the amount offered would create economic hardship. "The proposed fee balances the need to recover costs with the goal of encouraging offers in compromise," said the IRS.

The new fee rate for both installment agreements and offers in compromise would take effect on Jan. 1, 2014.

ParrottCPA.com
ParrottCPA@gmail.com

Morning Bell: Countdown to Obamacare Exchanges

Shared via feedly // published on The Foundry: Conservative Policy News Blog from The Heritage Foundation // visit site

While America was resting from its labors, the countdown to Obamacare began.

In just 27 days, the Obamacare exchanges are scheduled to open, and people who don't get health insurance through their employers (or through the government already) will start buying coverage.

Sixteen states are doing their own insurance exchanges, while the federal government is running exchanges in 34 states.

Many states have been aggressively advertising and promoting their exchanges. But there is still a lot we don't know. Several questions we're still asking:

How many insurers will participate?

So far, the number of insurance companies offering plans through the exchanges varies widely from state to state. And in some, it's nearly chaotic. Consider Mississippi. Heritage expert Alyene Senger details that state's woes: Initially, only two insurers applied to offer coverage in the exchange—and they weren't even going to provide coverage for the entire state. Humana later said it would provide coverage to the uncovered counties. But it remains that the vast majority of Mississippians in the exchange will only be able to do business with one insurer.

Which doctors and hospitals will be covered?

Exchange customers may not have access to the same doctors and hospitals that other patients have. Senger writes that "limited networks have resulted in major hospitals being excluded in California's exchange."

How much will coverage cost?

Most people probably don't know yet how much their exchange insurance plans will cost. Senger warns that premiums aren't the only cost—people could also see co-pays and deductibles go up.

For example, Ohio announced that premiums in their exchange will increase on average by 41 percent compared to the premiums that Ohio companies reported at the end of 2012. In addition to premium projections, the Ohio Department of Insurance also provided a projection for the increase in the total cost of coverage, called the average index rate, which is projected to be a dramatic 83 percent increase.

How safe will your personal information be?

Obamacare "navigators" will be helping people sign up for the exchanges—and they don't have to go through background checks to get those jobs. Security of the data hub that will house Americans' tax filings, Social Security reports, and other government data has been delayed, and there have been reports that the Administration is cutting corners on data privacy.

Lawmakers could prevent this convoluted, unpopular, unworkable law from wreaking havoc on the health care system if they would defund Obamacare.

Read the Morning Bell and more en español every day at Heritage Libertad.

Quick Hits:

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Obamacare turned this Tennessee liberal to the right because of its impact on his small business.
This 64-year-old woman swam all the way from Cuba to Florida.
Does texting someone who is driving make you "electronically present" and culpable in the case of an accident?

The post Morning Bell: Countdown to Obamacare Exchanges appeared first on The Foundry: Conservative Policy News Blog from The Heritage Foundation.

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