Lerma Aquino, the business manager of TGI Friday’s on Guam, was indicted for allegedly under-reporting employee’s tips and service charges and cheating the IRS of money owed to them. It’s alleged that Aquino avoided paying hundreds of thousands of dollars in employment taxes.
Some of the examples in the indictment include: In the fourth quarter of 2010, Aquino reported that her employees received approximately $30,800 in tips when they actually received over $167,000 in tips and service charges. For the first quarter of 2011, the amount of reported tips received was $33,600 instead of the actual amount of $216,600. And again in the second quarter of 2011, the correct amount of tips was $157,000 but reported as only $34,300. In total, the underreporting caused a loss to the United States over $225,000.
Aquino allegedly directed her employees to report a flat $1-$2 an hour as tip income instead of the actual amount early. She also either modified or refused to accept truthful tip reports.
In February, 2016, Internal Revenue Commissioner John Koskinen spoke to the Senate Finance Committee and assured lawmakers that the problem of rehiring employees behind on their taxes, had past conduct or performance problems would be addressed.
But despite these promises, auditors found that the IRS rehired 200 former employees that were terminated for issues ranging from falsifying employment forms, unauthorized use of taxpayer accounts, misuse of email or property, workplace disruption, and violations of the Internal Revenue Code. Four of the rehired employees cheated on their own taxes and another four were found to have improperly accessing taxpayer records. In addition, one employee had several misdemeanors for theft and a felony for possession of a forgery device.
The Treasury Inspector General for Tax Administration has recommended to the IRS Human Capital Officer to increase the amount of hiring officials and give them increased access to job candidates’ past performance records and require that the basis for rehiring them be clearly documented.
Anthony Gosha, aka Boo Boo, of Phoenix City, Alabama, was arrested by federal agents in July 2017 on charges of filing fraudulent tax returns, conspiring to commit mail fraud, wire fraud and aggravated identity theft.
The indictment alleges that Gosha stole over 7,000 ID’s and used those to file phony tax returns with refunds totaling over $19 million.
Some of the ID’s were stolen from an Alabama state agency, and Gosha also used Electronic Filing Identification Numbers in the name of a fake tax prep business in which they used to file the returns.
On those returns, they instructed the IRS to either issue prepaid debit cards or U.S. Treasury checks. Gosha recruited several postal carriers to provide addresses on their mail routes to which the refund checks could be sent. The checks were then cashed at various check cashing businesses in Alabama and Georgia.
If convicted on all charges, Gosha faces up to a maximum of 30 years in prison plus a minimum of 2 years for each count of identity theft, supervised release, restitution, forfeiture and monetary penalties.
Commercial fisherman from Alaska, Archie and Roseann Demmert were charged in federal court with four counts of willful failure to pay individual income tax. Information obtained by the court shows a long history of not paying their taxes, going back over 13 years, in which they owed the IRS over $400,000, not including penalties and interest.
The arraignment has not been scheduled yet, but the couple faces a maximum sentence of one year in prison on each count, as well as supervised release, restitution and
DMX, the recording star and actor, whose real name is Earl Simmons, surrendered to federal authorities after being charged with 14 counts of tax-related criminal charges totaling $1.7 million in tax liabilities.
It’s alleged that Simmons avoided using his personal bank accounts, and instead used the accounts of other individuals, including his business manager and lived mostly on cash. According to the indictment, Simmons earnings from 2002 through 2005 went unpaid. Authorities say he listed his income in 2011 and 2012 as “unknown”, when he actually made $353,000 in 2011 and
$542,000 in 2012. On his 2013 tax return, he reported earning $10,000 of income when in reality he earned $250,000 that year. In total for the years 2010 to 2015 Simmons earned over $2.3 million.
Simmons appeared on the TV show “Celebrity Couples Therapy” and was paid $125,000, but refused the first installment check as taxes were withheld. He went to the producer of the show and demanded a new check for the full amount, which he got.
If convicted on all counts, Simmons could face a maximum of 44 years in prison, plus monetary penalties and restitution to the IRS.
David J. Simard, of Maryland, pled guilty in the U.S. District Court of one count of obstructing the lawful functions of the Internal Revenue Service and four counts of failing to file personal and corporate income tax returns.
Simard, a real estate flipper, received a notice from the IRS that he needed to supply documents in connection with an audit of his personal tax returns. In less than one month after receiving this notice, Simard formed the Pegasus Home Corporation and started buying and selling houses in the name of the corporation instead of his own. Simard claimed that the ownership and control of Pegasus was his relative and had this relative apply for an employer identification number for Pegasus. Simard also had this relative open a bank account in the name of the Pegasus Corporation. Despite earning income, Simard did not file personal or corporate tax returns for 2009 and 2010.
Simard will be sentenced on October 12 th and faces a maximum of three years in prison for obstructing the IRS and one year in prison for each count of failure to file tax return, as well as restitution and monetary penalties.
On September 29, 2017, President Trump signed the Disaster Tax Relief and Airport and Airway Extension Act of 2017 into law. This tax relief initiative is designed to provide certain tax benefits for victims of Hurricanes Harvey, Irma and Maria. The legislation also contains provisions extending the funding authorizations for the Federal Aviation Administration, the Teaching Health Center Graduate Medical Education Program and the Special Diabetes Program for Indians.
Targeted Tax Relief for Those Hardest Hit
Hurricanes Harvey, Irma and Maria caused hundreds of deaths either directly or indirectly and are estimated to cost hundreds of billions of dollars in economic impact and rebuilding costs. The most important tax provisions of the new law include the following:
• Taxpayers no longer must itemize deductions to take advantage of tax relief initiatives.
• The Disaster Tax Relief legislation also eliminates the requirement that losses must constitute 10 percent of the adjusted gross income of victims of these hurricanes.
• Taxpayers will be allowed to use their earned income from 2016 to figure their Earned Income Tax Credit and Child Tax Credit for 2017.
• Victims of these hurricanes will be allowed to access funds in their retirement accounts to pay for disaster-related expenses without tax penalties.
• Charitable contributions related to hurricane relief before December 31, 2017, will not be subject to the current limits on tax deductions for these donations.
• Employers in hard-hit areas will receive a tax credit of up to 40 percent of the wages paid to employees during the duration of the crisis. This can add up to as much as $6,000 per employee for companies affected by these serious storms.
The new law is expected to provide significant tax relief for those most severely affected by the hurricanes and to provide economic support for families and businesses rebuilding in the aftermath of these natural disasters.
The Law Offices of Daniel M. Silvershein can help families determine their tax liabilities and can provide expert advice and guidance on the financial implications of this new legislation. We have more than two decades of experience in the federal and state tax field and can ensure that your case is resolved quickly and to your satisfaction. If you are currently facing financial difficulties or problems with the IRS, call us today at 888-382-7880 to schedule a free initial consultation. We are here to help you and your family.
A North Carolina resident is facing serious penalties for filing fraudulent tax returns with the Internal Revenue Service. Hassie Demond Nowlin was sentenced to 37 months in prison on November 16, 2017, by the United States District Court for the Middle District of North Carolina. Nowlin was charged with obstruction of the IRS, falsification of tax returns and bankruptcy fraud for the years of 2008 and 2009. According to court documents, Nowlin also worked as a tax preparer from 2011 to 2017 and filed hundreds of returns on behalf of clients that contained false information intended to increase the amount of their refunds. He then collected the fees and deposited them into bank accounts that he controlled but on which his name did not appear.
A Wide Range of Offenses
Along with the fraudulent tax activities conducted by Nowlin, the court also alleged that he filed false personal bankruptcy petitions in an effort to evade or cheat his creditors. Nowlin’s tax returns included false information both about his earned income and the amount of withholding for federal taxes. Additionally, Nowlin attempted to renounce his U.S. citizenship by proclaiming himself a sovereign citizen in paperwork filed with the Guilford County Register of Deeds.
Harsh Penalties Assessed for Fraudulent Activities
In August 2017, Nowlin pled guilty to obstructing the IRS, filing fraudulent returns and committing bankruptcy fraud. Along with 37 months in prison, Nowlin will be required to pay restitution of more than $188,000 and to serve three years on supervised release. According to federal law, the statutory maximum for income tax fraud cases is three years in prison. Bankruptcy fraud can lead to up to five years in jail.
Criminal Prosecutions Are Rare
While Nowlin’s case is not typical, it highlights the need to stay on the right side of IRS regulations when filing and paying taxes. Working with a qualified IRS and state tax attorney can be a solid step toward preventing serious penalties that could damage you financially and, in some cases, could lead to criminal prosecution.
The Law Offices of Daniel M. Silvershein can help you manage your IRS problems proactively and effectively. We have more than 20 years of experience in tax issues and can deliver the right solutions for your specific situation. To set up a free consultation with us, call 1-888-382-7880. We look forward to helping you resolve your tax problems quickly and in the most positive way possible.
Todd Coontz, a North Carolina televangelist was indicted on charges of tax fraud for non-payment of income taxes for a 10 year period as well as filing false returns for 2010 through 2013. The amount of the tax liability owing is more than $326,000.
Coontz, who “promised financial miracles for people who sent money to his ministry” with such claims as “You need to plant the $273 recovery seed. I’m only going to give you two or three minutes to respond.”
Coontz also purchased a 2011 BMW, a 2011 Regal 2500 boat, a 2012 BMW convertible, a 2011 Lexus, a 2011 Land Rover, a 2006 Ferrari, a 2012 Maserati, a 2013 BMW, a 2013 Land Rover and a 2012 Ferrari with funds through his corporation. The payments for these vehicles were treated as business expenses on the corporation and ministry’s accounting records even though they were driven by family members and no records were kept about the business use of the cars.
The ministry also purchased a $1.5 million condominium and claimed $200,000 for clothing purchases as a business expense.
The indictment also states that Coontz hid income from the IRS by claiming travel as a business expense while at the same time, receiving travel reimbursement that he kept as personal income, and billing the church for first-class airfare that he did not actually purchase.
Coontz could face up to 15 years in prison if convicted on all counts.
Adrian Benitez and Jose Ramirez, co-owners of a Great Neck, NY flower business, pled guilty in U.S. District Court to charges of corruptly endeavoring to obstruct and impede the internal revenue laws.
Between 2007 and 2012, the pair diverted more than $1 million in sales to their personal bank accounts instead of their business account. They directed their customers to pay in cash, or had them pay with a check made payable to cash or themselves personally. Benitez and Ramirez hid these assets from their tax preparer so the returns filed did not disclose any of the funds they diverted on both their personal and business income tax returns. The loss to the IRS is approximately $235,805.
No sentencing date has been set, but Benitez and Ramirez each face a maximum sentence of three years in prison, a period of supervised release, restitution and monetary penalties.