IRS Continues To Pursue Complex Arrangements To Evade Taxes

The IRS released IR 2024-223, 8/23/2024 which reports and highlighting significant improvements made in the second year of funding from the Inflation Reduction Act. The report showcases advancements in taxpayer service, technology upgrades, and compliance efforts. Other achievements include increased electronic filing and scanning capabilities, enhanced efforts to disrupt tax scams, and focusing on tax compliance for certain individuals and businesses. 

The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay tax bills, collecting over $1 billion so far. A new initiative focused on high-income non-filers, targeting over 125,000 instances of unfiled returns since 2017. The IRS' Strategic Operating Plan mentioned that the increased areas of enforcement includes areas where audit coverage declined, including employment taxes.

Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented IRS from keeping pace with the increasingly complicated set of devices that aggressive taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.

• The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay a tax bill. These high-end collection cases are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Out of a total of 1,600 of these cases, the IRS has assigned 1,500 to revenue officers, with over $1 billion collected so far.
• 
  
  The IRS announced a new effort focused on high-income individuals who have failed to file federal income tax returns in more than 125,000 instances since 2017. Non-filers receive IRS
  compliance letters alerting them that the IRS is aware of their missing return and encouraging them to file or contact the IRS. The new initiative involves more than 25,000 people with more than $1 million in income, and over 100,000 people with incomes between $400,000 and $1 million between tax years 2017 and 2021.
  
• Other elements of the agency’s renewed compliance focus include:
• Abusive use of partnerships. Last month, the IRS announced a new series of steps to combat abusive partnership transactions that allow aggressive taxpayers to avoid paying what they owe.
• Activities involving large corporations and partnerships. These efforts include opening examinations of 76 of the largest partnerships in the U.S., representing a cross section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms and other industries. Other activities include expanding the large corporate compliance (LCC) program.
• Aircraft use. In February, the IRS announced plans to begin dozens of audits involving personal use of business aircraft. The audits are focused on aircraft usage by large corporations, large partnerships and high-income taxpayers. The IRS are examining whether the use of jets is being properly allocated between business and personal use.

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Dentist Gets Drilled For Tax Evasion

According to the DoJ, a federal grand jury in Denver returned an indictment unsealed on August 23rd 2024, charging a Colorado dentist with six counts of tax evasion for his use of an illegal tax shelter.

According to the indictment, since 2014, Ryan Ulibarri, owned and operated Ulibarri Family Dentistry in Fort Collins. In 2016, Ulibarri allegedly purchased a tax shelter for $50,000. 

From 2017 Through 2022, Ulibarri Allegedly Used This Tax Shelter To Conceal From The IRS Over $3.5 Million In Income.

• To effectuate the tax shelter, Ulibarri allegedly signed trust instruments purporting to create three trusts and a private foundation and opened bank accounts in the name of each entity. 
• He also allegedly re-structured his dental practice so that the majority of it was purportedly owned by one of the trusts. 
• Ulibarri allegedly transferred nearly all the funds he earned from his dental practice to the bank accounts for the trusts and foundations he created. 
• He allegedly used those funds to pay personal expenses, such as the mortgage on his home and his credit card bills. 
• Finally, he allegedly filed false tax returns for himself and the trusts that assigned the income he earned and controlled from his practice to the trusts. 

In total, Ulibarri is alleged to have caused a tax loss to the IRS of over $1 million. 

If Convicted, Ulibarri Faces A Maximum Penalty of
Five (5) Years In Prison For Each Count Of Tax Evasion (Collectively 30 Years).

A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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Sen. Ossoff Launches Inquiry with IRS into Impacts of USPS Delays

 

U.S. Senator Jon Ossoff is fighting for Georgians facing unfair tax penalties due to mail delays. 

Sen. Ossoff launched an inquiry with the Internal Revenue Service (IRS) after receiving reports from Georgia constituents that they are being charged penalties and interest fees on late or missing filings and payments that they mailed to the IRS via USPS. 

As part of his inquiry, Sen. Ossoff is urging the IRS to waive penalties and interest fees incurred directly as a result of USPS delays.

Sen. Ossoff also urged the IRS to adjust taxpayer accounts in a timely manner so that interest and penalties do not accumulate and cause additional distress and confusion, and to escalate the processing of tax refunds for paper filers who have been impacted by USPS delays in Georgia. 

“Constituents have notified my office they are being charged penalties and interest fees on late or missing filings and payments that they mailed to the IRS via USPS,” Sen. Ossoff wrote to IRS Commissioner Daniel Werfel. “These tax filings are not arriving by statutory deadlines due to ongoing USPS performance issues and some filings even remain unaccounted for. Additionally, many of my constituents continue to experience financial hardship as a result of tax refund processing delays arising from ongoing problems with USPS management in Georgia.” 

For months, Sen. Ossoff has remained focused on applying maximum pressure on USPS leadership and conducting vigorous oversight of the USPS to resolve challenges Georgia families and businesses continue facing. 

In July, Sen. Ossoff met in Washington, D.C. with USPS Postmaster General Louis DeJoy to continue pressing for improved mail delivery service for Georgia families and businesses. 

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TIGTA Releases Report Regarding Virtual Currency Tax Compliance Enforcement and How it Can Be Improved

According to the Treasury Inspector General for Tax Administration (TIGTA) report, Virtual currency (or digital assets) has grown into a trillion-dollar industry that's been challenging for the IRS to enforce for tax compliance. 

TIGTA's Him himlatest report looks at the agency's efforts to identify income earned from virtual currency transactions. 

Between April 2020 and July 2023, the number of virtual currencies grew 420 percent. The anonymity of virtual currency and the fact that trading platforms don't consistently give reports to the IRS on virtual currency transactions complicates enforcement efforts. 

IRS Criminal Investigation has taken advantage of analytics tools to address virtual currency noncompliance. 

During Fiscal Years 2018 To 2023, They Investigated 390
Cases Involving Virtual Currency/Digital Assets, And
224 Were Recommended For Prosecution.

The IRS established “Operation Hidden Treasure” to identify taxpayers who omit digital assets from their tax returns. However, TIGTA found it's been limited to the acquisition of tools and training, rather than pursuing taxpayers. 

The project's charter did not include any specific enforcement deliverables pertaining to either criminal investigation or civil examination results and success statements identifying what it sought to achieve.

Passage of the Infrastructure Investment and Jobs Act in November 2021, requires brokers to file an information return for digital assets transactions in a calendar year. In response, the IRS created a new information form to report the information needed to calculate gains (or losses) on transactions. While the Infrastructure Investment and Jobs Act was effective for transactions after January 1, 2023, the proposed regulations are effective for transactions after January 1, 2025, for gross proceeds reporting and January 1, 2026, for basis reporting. The proposed two-year implementation delay will hinder efforts to regulate the digital asset industry and may result in lost revenue and taxpayer burden.

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Crypto Info Swap Planned For 58 Jurisdictions By 2027

According to Law360, Fifty-eight tax jurisdictions have pledged to implement the Organization for Economic Cooperation and Development's crypto-asset information exchange system by 2027, the OECD said Thursday.

Members of the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes are in position for "rapid implementation" of the crypto-asset reporting framework, or CARF, the forum said in a report. The framework has the potential to bring substantial tax benefits by ensuring taxpayers are properly declaring their holdings of cryptocurrency and other digital assets, the report said.

The report was created for finance ministers and central bank governors of the Group of 20 nations, who are meeting in Brazil through Friday, the forum said.

The Global Forum's CARF group is using the rollout of the common reporting standard, the OECD's broader global information exchange model, as a guide for the implementation of the CARF, the report said. For example, it borrowed the common timeline principle, which aims to have jurisdictions committed to establishing the standards by a certain date.

Ten of the jurisdictions that have agreed to implement the CARF are developing nations, the report said.

The CARF group is aiming to identify and engage with all potentially relevant jurisdictions in advance of the 2024 Global Forum plenary meeting, the report.

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The J5 Probes More Than 30 Cybercrime Cases

The Joint Chiefs of Global Tax Enforcement  (J5) released its first report, detailing  that the intergovernmental tax enforcement group is investigating more than 30 active cybercrime cases tied to financial and tax criminal activities all over the world.his link will download a file

During the J5’s first 6 years, it has generated more than a hundred leads, seized millions of dollars in criminal proceeds, issued notices to financial institutions and thwarted fraudulent investment and boiler-room schemes. 

Ten of those cases came from leads produced at a weeklong meeting in Ottawa last year with cryptocurrency experts and data scientists as part of a coordinated push to track down individuals and organizations committing tax-related crimes around the world, according to the report, documenting the group's successes, partnerships and initiatives since it formed in 2018.

The group, known as the J5, consists of tax law enforcement agencies from five countries: the Internal Revenue Service's Criminal Investigations from the U.S., the Australian Taxation Office, the Canada Revenue Agency, the Fiscal Information and Investigation Service from the Netherlands and HM Revenue & Customs from the U.K. The agencies, through their collaboration in J5, gather information, share intelligence and conduct coordinated operations against transnational financial crimes.

"Six years ago, our five countries took a chance and publicly joined together to root out tax crimes," IRS CI Chief Guy Ficco said in a statement. "We have learned a tremendous amount by working together and we are now an organization firing on all cylinders with real operational results — results that would not exist were it not for the J5." 

Have an IRS Tax Problem?

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