September 18, 2018

Bogus refunds

A Prison Guard Is Now Equally as Effective at Busting Tax Cheats as the IRS

As we have learned, residents of our prison system have proven to be quite savvy at obtaining tax credits, including those intended for first-time homebuyers, alternative-fuel vehicles as well as filing bogus tax returns in order to receive refunds. These scams go along swimmingly until the IRS gets wind of it (anywhere from months to years later), at which time local (and sometimes national) media have some nice filler.


In the latest case of a prisoner tax schemed sniffed out, Troy Fears – who is enjoying a life’s stay in an Arizona prison for rape – spent 2005 to 2009 filing fake tax returns and obtained $119k in the process. He was using “fake W-2’s and apparently said he was filing other inmates’ taxes. He convinced other prisoners he was applying for grants on their behalf so he could get their Social Security numbers.” According to court papers, the IRS was missing this particular scam because “IRS routes [direct deposits] without making sure the name on the account matches the return.” The jig was up when a prison guard intercepted his mail, presumably figured out the tax returns were fakes, and called the authorities. Fears got four years tacked on to his sentence and the guard responsible for catching him can probably expect a “Deputy IRS Agent” certificate (signed by Doug Shulman, natch) in the mail any day now.

Jailed Rapist Gets $119K From Fake Tax Returns [KPHO via TaxProf]

The IRS Isn’t Interested in Delaying the Issuance of Potentially Bogus Refund Checks

The Treasury Inspector General of Tax Administration sole purpose is giving the IRS shit about anything and everything under the sun. This is known.

We here at Going Concern have a tendency to find the more ridiculous feedback that IG digs up and share it with you. Today however, the TIGTA might be on to something:

WASHINGTON- The Internal Revenue Service (IRS) should make better use of the third-party data it receives from employers, government agencies and financial institutions to reduce erroneous refunds, increase revenues and promote voluntary compliance, according to a new audit report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA found that the IRS:

• Could make better use of available third-party data to identify and prevent more than $1 billion in potentially erroneous refunds;
• Does not have a centralized control point for third-party data requested or received from outside sources; and,
• Lacks a standardized procedure for validating data.
• The report also found that additional validation of taxpayer information using third-party data is needed to validate claims for the Earned Income Tax Credit (EITC) and other credits.

“These problems allow a substantial number of erroneous refunds and credits to be granted that are not allowable by law,” said J. Russell George, the Treasury Inspector General for Tax Administration. “For example, I am troubled that we found a lack of adequate corrective action by the IRS to address improper claims in the EITC Program, which is particularly vulnerable to fraud.”

TIGTA recommended that the IRS freeze refunds for those taxpayers with potentially invalid EITC claims, require valid responses before allowing the EITC claims, and adjust the returns if taxpayers do not respond within a specific time period.

The IRS disagreed with TIGTA’s recommendations to freeze potentially invalid refunds and to create a centralized control point for all third-party data.

Apparently the IRS can’t handle the flood of angry calls from washed up models, degenerate gamblers and dead people demanding their refunds RFN.

Full Report [TIGTA]
TIGTA: IRS Refuses to Stop Issuing $1 Billion in Erroneous Refund Checks [TaxProf Blog]

No, the IRS Will Not Be Cool with Your Request for Bogus Refunds in Order to Pay Your Gambling Debts

If you find yourself in a bit of tax trouble, the IRS is more than happy to work with you. They gave all those UBS tax evaders all the chances one could ask for. They are giving small nonprofits a break on submitting their 990s. Hell, they are opening regularly on Saturdays.

The best thing to do if you find yourself in a pinch is call them, explain the sitch and we’ll bet you dollars to vegan donuts that Doug Shulman and Co. will work it out with you.


Having said all that, it’s extremely unlikely that the Service will work with you if, say, you attempt to obtain a couple million in bogus refunds to pay off your gambling debts. You do this under the assumption that the U.S. Government will gladly take an IOU until you get around to scraping it together. Who hasn’t gotten a little careless during football season a time or two and needed to commit a federal crime to make things, amiright?

Federal authorities this week arrested a former Los Angeles County worker who allegedly used the personal information of more than 150 welfare applicants to file nearly $2 million in fraudulent claims for tax refunds.

Trang Van Dinh, a 62-year-old resident of Glendale, worked for the county for a decade and filed the returns in a desperate attempt to pay gambling debts, county auditors said.

[…]

His arrest comes months after Dinh was fired from his county job after acknowledging wrongdoing in an interview with county investigators, said Guy Zelenski, chief investigator for the county auditor-controller. County officials spoke to Dinh after IRS investigators notified them of their suspicions.

“He thought he could pay the IRS back and he would have no problems,” Zelenski said.

No problems, like facing 220 years in FPMITA prison problems?

Fired L.A. County worker arrested in tax fraud case [Los Angeles Times]

Accounting News Roundup: Grant Thornton Moves DC Office; CPAs Are Less Clueless on IFRS; The IRS Wins Twice | 05.25.10

Grant Thornton moves D.C. office [Washington Business Journal]
GT DC is moving from its cushy confines of 19,450-square-feet at 1900 M St. NW to 15,190-square-feet at 1250 Connecticut Ave. NW.

Mary Moore Hamrick, the company’s national managing principal of public policy thinks this move is crucial saying, “Grant Thornton’s public policy group is taking a more proactive role in shaping the dialogue on accounting issues. This move will support the public policy group’s expansion as we seek to do our part in restoring confidence in the capital markets.” Better feng shui probably.


AICPA Survey Shows US CPAs Gaining in Awareness of International Financial Reporting Standards [AICPA Press Release]
CPAs are less clueless on IFRS, sayeth the AICPA:

The latest AICPA tracking survey shows a sustained shift toward greater awareness of International Financial Reporting Standards (IFRS) among U.S. accountants. Nearly half, 47 percent, of CPAs in the survey conducted April 20 to May 7 said that they already have basic knowledge of IFRS, an advancement from 39 percent who had basic knowledge in October 2008. At the same time, there has been a continuing decline in the number of CPAs who say they have no knowledge of IFRS; 16 percent in the latest survey, down from 30 percent in October 2008.

U.S. Supreme Court upholds IRS power in tax case [Reuters]
Those super secret corporate legal documents that discuss contingent liabilities? The IRS may be able to request them whenever they like, as the Supreme Court upheld a First Circuit ruling by denying certiorarit in the case.

In U.S. v. Textron, Inc., the company claimed that such documentation was privileged. The First Circuit disagreed:

[I]n its ruling against Textron, set a new test, under which every party in commercial litigation whose opponents file financial statements with contingent liabilities for litigation will be able to obtain documents detailing such exposure, according to Douglas Stransky, an attorney at Sullivan and Worchester in Boston who represents corporate clients.

“The First Circuit’s decision has eviscerated the work product protection that exists to protect exactly the type of attorney analysis that was present in this case,” he said. “It’s surprising that the Supreme Court did not recognize this.”

Florida Keys inmate pleads guilty in IRS scam [Miami Herald]
Shawn Clarke, an inmate at a Florida prison, pleaded guilty to conspiracy yesterday as the ringleader to a tax fraud scam in which he requested bogus refunds from the IRS in the amount of $115,000. It wasn’t exactly a complicated scam, as the inmates and their family members submitted 1040EZ forms along with Form 4852 to request the refunds, all for around $5,000.

Clarke was convinced that this was the best idea ever, allegedly saying, “I’m through with the street crime. I’m strictly white collar from now on. I love the IRS.” He’s looking at an additional 10 years.