Tax Debt Solutions Blog

Schemes of Wealthy Individuals

 

Complex Schemes of Wealthy Individuals under Uncle Sam’s Magnifying Glass

The IRS is determined to bring in the money owed to Uncle Sam.  This means more audits.  The IRS is aiming for the wealthy not regular citizens.  It was due to the IRS Voluntary Compliance program that many holders of offshore accounts disclosed harbored tax money.  According to Douglas Shulman, the IRS Commissioner, it was just the start of things to come.

The objective of the amnesty time period was to encourage holders of foreign bank accounts with funds from $10 000 to more than $100 million to come clean.  The IRS let it be known they would carefully search the 7,500 bank accounts handed over by the Swiss powers.  Special US examiners will determine which financial establishments and consultants are implicated.

The IRS Commissioner has made it very clear they are specifically looking for people who conceal assets offshore.  He is fully aware this is practiced by large numbers.  The IRS is going to target many areas across the globe.  There are already eight stations intent on investigating criminal activities in Australia, Sydney and Beijing, Panama City.  An additional staff will be located to these operations.

Shulman wants people who fall into the higher income bracket.  He confirmed this at the AICPA National Tax Conference.  The Global High Wealth Industry Group was formed for this reason.  Uncle Sam will scrutinize those with many millions of dollars in earnings and assets.  They will pay particular attention to complicated financial, investment and business modes with the potential to hide potential unlawful tax conspiracies.

Unlike ordinary people, Shulman knows the wealthy have the means to pay for elaborate schemes to hide their assets.  It takes time and effort to unravel overly complex strategies for this purpose but the IRS is determined to reveal any irregularities in order for Uncle Sam to his dues from the wealthy. 

Tax Relief: Prison Inmates Stealing Tax Money

People go to jail for many different reasons. The objective of a jail sentence is to reprimand and provide an opportunity for the offender to change his or her ways. The tax payer is responsible for providing the finances required to run prisons and manage programs for the benefit of serving offenders. However, it has been alleged tax payers' money is paying for much more.

It is certain society does not expect a jail to be a location where more crimes are hatched. It seems this is going on all around the US. Inmates serving time commit tax relief fraud by simply filling out a 4852 form that is meant to notify of wages if your W-2 form is misplaced. Once forms and tax returns go through the system, inmates get refunds that are false. False refunds are mailed either to family, friends or straight to the prison address in question. These refunds go to participating inmates and a share is held by ringleaders.

A special inquiry involving a jail in Key West, Florida has been undertaken by CNN. It was found inmates tried to steal in excess of $1 million by means of tax fraud. This is done by the use of false businesses, social security numbers and tax forms in order to get refund checks.

The IRS has provided inmates with cheat sheets and instructions on how to complete genuine forms so refunds are mainly under $5,000.

The IRS has known about this type of tax fraud for years. They identified false refunds from inmates as a priority five years previously. The IRS observed there were 118,000 fake tax returns filed by inmates i.e. an enormous 15 percent or $14 million dollars in tax claims that were entirely false. Uncle Sam did manage to prevent an extra $53 million.

The ever changing population of inmates coupled with the IRS' stand to give refunds and audit afterwards, presents problems. The later audit is because honest tax payers want their refunds in a matter of days. The IRS is not disclosing their plan to curb false claims from jail inmates but they are aware of who is doing it.

Tax Relief: Are US Taxpayers Cheaters?

According to the outcome of the 2009 IRS Oversight Board survey about taxpayer attitudes, a higher percentage of people consider cheating Uncle Sam to be okay.  To be accurate, they believe its okay to cheat just a little.  It was also confirmed that a small number of people cheat compared to those who don’t.  Of the respondents, only 13% were okay with misleading filing.  The bottom line is 4% more people are currently cheating compared to 2008.      

 

There is little doubt that a tough economy contributes to taxpayers trimming their taxes as much as they can.  Finding tax relief legitimately is acceptable as opposed to tax avoidance.  The harder it is to survive in a difficult economy the more tempted people are to cheat.  This can happen to even the most well intentioned taxpayer.  Often, this happens because of the complicated procedures that exist.  There are laws that do allow tax relief.  However, many of these laws are not only complicated but they also take up a lot of time.  (Examples of such tax relief procedures are Schedules L and also Homebuyer Credit.)   Such complications not only lead to the unpopularity of lawmakers but to taxpayers giving up and taking the easier and quicker option i.e. cheating.  User-friendly procedures could help to lower instances of cheating.

 

To cut a long tax story short, 9% of survey participants were happy with cheating ‘a little here and there’ while 4% were blatantly supportive of cheating ‘as much as possible’ when filing tax returns.  Uncle Sam should be pleased to know that 84% of survey participants expressed that it is ‘not at all okay’ to be a tax cheat.  In a harsh financial climate this speaks volumes about the positive attitude of taxpayers experiencing difficulty coming up with the means to pay their taxes.

Tax Relief: Don’t Get ‘Fished’ Out By A Phishing Tax Scam

The I.R.S. wants "phishers of men" BADLY. Phishing tax scams for just ONE YEAR totaled over 33,000. The dirty criminals used more than 1,500 different tax scams to cheat innocent tax payers out of their money, identity and basically, their most valued information. Phishing is a tactic used over the internet and is usually done through e-mail. Scammers send e-mails out to unsuspecting victims claiming to be almost any person, business or agency just to get vital information. And it works too! Phishing Scammers have even used the name of the I.R.S. to obtain information they then use to take money from account and numerous other ‘evil deeds.' The I.R.S. does not send e-mail to anyone for ANY reason! So just ‘don't' fall prey to anyone claiming to be anyone by internet e-mail unless you call and verify the authenticity for yourself!

Don't be ‘Hooked'

One BIG phishing scam involves telling people about the economic stimulus plan and its rebate. Nothing draws out the fool in a person more than thinking they have some free money coming! But don't fall for it...getting the stimulus payment is as easy as filing a simple return and going directly to the source, the I.R.S. The I.R.S. has a special website for forwarding any communication that is allegedly from them. You may really have a stimulus rebate coming, but if you fall for these tricksters e-mails you will pay more than you will ever get.

Another phishing scam that can get you into hot water involves believing certain e-mail or phone solicitors can lower your taxes owed or eliminate them completely...usually by making you believe certain facts are true that aren't. BEWARE...these ‘scams' can cost YOU $5,000 in penalties from the I.R.S itself!

Tax Relief: BEWARE of "The Dirty Dozen”

It’s human nature (good excuse) to try to ‘beat’ taxes! As time goes on the argument for this practice becomes more convincing. After all isn’t it ‘We the People’ who can put our own money to best use? The government DOES NOT have a solid reputation for spending money wisely. Blood boils within America every time we hear about $200 toilet seats! So beating the tax man has become an ego game of “catch me if you can...and if you don’t...I WIN!” But BEWARE...not only does our federal government NEED more cash than ever, but they are stepping up investigations to get the cheaters! If you can beat an audit...no problem! But then have you ever heard of anyone who actually beat an audit?

Here is a list of the top 12 cheaters (aka "The Dirty Dozen"):

• Phishing scams
• Scams relating to the economic stimulus
• Frivolous arguments (people who use unusual constitutional based or ‘off the given path’ ways to take credits or lower their income)
• Fuel Tax Credit Scams (fuel purchase tax credit given mostly to farmers and others who use fuel off of highways for farming equipment etc...)
• Hiding Income By Keeping It Off Shore...(you know, like the Swiss Bank Account thing)
• Abuse of Roth Individual Retirement Plans (trying to hide valuable assets by transferring them at below market price to other places)
• Zero Wages (claiming zero income when an employer provides a W-2 for you)
• False Claims for Refunds or ‘Income Abatement’ (trying to get all income considered null and void due to false claims)
• Tax Preparer Fraud (using forms and unethical and illegal credits to take more fee or gain more refund for the tax payer)
• Disguised Corporate Ownership (setting up a corporation that is illegitimate and sometimes used for money laundering for ‘ill gotten gain’)
• Misuse of Trust Accounts
• Abuse of Charitable Organizations and Deductions.

 If you are involved in any cheater games, be aware that Uncle Sam IS WATCHING and red flagging the Dirty Dozen! Getting caught means an automatic $5,000 penalty...not to mention jail