by NFS | Mar 27, 2011 | Archives
Charitable contributions made to qualified organizations may help lower your tax bill. The IRS has put together the following eight tips to help ensure your contributions pay off on your tax return.
1. If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations and candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.
2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
3. If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible. Special rules apply to vehicle donations.
5. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.
7. To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
8. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
For more information on charitable contributions, refer to Form 8283 and its instructions, as well as Publication 526, Charitable Contributions. For information on determining value, refer to Publication 561, Determining the Value of Donated Property.
by NFS | Mar 25, 2011 | Archives
Boston – Fourteen individuals have been charged with committing various crimes in which they fraudulently claimed the First-Time Homebuyer Tax Credit, including one longtime IRS employee.
Seven individuals from Massachusetts were indicted separately for filing false tax returns with the IRS and obtaining tax refunds after falsely claiming the First-Time Home Buyer Tax Credit even though they had not in fact purchased a home. They include Celestino Alves, 43, of Brockton; John Davis, 32, of Dorchester; Trystin Johnson, 34, of Mattapan; Maxine Thevenin, 33 of Dorchester; Jerry Janvier, 32, of Hyde Park; Samuel Jean, 33, of Dorchester; and Theresa Finocchio, 38, of Canton. Each of them faces up to five years in prison, followed by three years of supervised release, and a $250,000 fine.
An eighth individual, Michael Doyle, 44, of Hudson, N.H., was also indicted for filing false, fictitious and fraudulent claims with the IRS and faces the same penalties. Doyle was a longtime employee of the IRS who falsely claimed to have purchased his home in 2008 in order to obtain a tax refund by claiming the First-Time Homebuyer Tax Credit, even though he allegedly had purchased his home in 2007 and therefore wasn’t eligible for the stimulus-related benefit.
“Congress created and modified the Homebuyer Credit to stimulate the economy and help taxpayers achieve the American Dream, not to line the pockets of wrongdoers,” said Treasury Inspector General for Tax Administration J. Russell George in a statement. “It is especially troubling when fraud is committed by IRS employees. Their actions damage the integrity of our nation’s tax system. TIGTA will continue to vigorously investigate allegations of wrongdoing by IRS employees.”
Two individuals, Christopher Proe, 27, of Michigan and Junior Lopez, 29, of Southbridge, Mass., were indicted together for conspiring to defraud the government by filing tax returns which falsely claimed the First-Time Homebuyer Tax Credit. The indictment alleges that Proe and Lopez filed these false tax returns after obtaining identity information from third parties under false pretenses and creating false W-2 forms for a fictitious company called Lawn Brothers Landscaping. The indictment further alleges that Proe and Lopez filed over 50 fraudulent tax returns for the tax year 2008 and obtained over $500,000 in tax refunds which they directed to bank accounts controlled by Proe and Lopez.
Proe and Lopez each face a maximum penalty of 10 years in prison, to be followed by three years of supervised release and a $250,000 fine on the conspiracy counts. On the substantive count, they each face up to five years in prison, to be followed by 3 years of supervised release and a $250,000 fine.Additionally, two brothers, George Saad, 32, and Elias Saad, 29, of Methuen, Mass., were charged in an information with conspiring to commit wire fraud and submitting false claims for tax refunds. Along with the brothers, George Saad’s wife, Harlene Grullon, 34, of Methuen, and Kristijan Katjna, 32, of Boston, were also charged with falsely claiming the First-Time Homebuyer Tax Credit and making false statements on mortgage applications to the Department of Housing and Urban Development and to the Federal Housing Administration.
The information alleges that George and Elias Saad conspired to commit wire fraud by recruiting people to purchase properties on their behalf and then claiming the First-Time Homebuyer Tax Credit on those falsely obtained properties. Frequently, those properties were obtained by lying on the mortgage application and falsely stating that the “straw” purchasers were buying the properties when, in fact, George and Elias Saad were the true purchasers.
If convicted of conspiracy, George and Elias Saad each face up to five years in prison, to be followed by three years of supervised release and a $250,000 fine. George Saad, Grullon, and Katjna each face up to five years in prison on the false statement counts, to be followed by three years of supervised release and a $250,000 fine. The false statement counts carry an additional maximum of two years imprisonment, to be followed by one year of supervised release and a $250,000 fine.
The cases were investigated by the Internal Revenue Service’s Criminal Investigation division, the U.S. Department of Housing and Urban Development, Office Inspector General, the Federal Bureau of Investigation – Boston Field Office and the Treasury Inspector General for Tax Administration. They are being prosecuted by Assistant U.S. Attorneys Fred M. Wyshak, Jeffrey M. Cohen and Robert Fisher of U.S. Attorney Carmen Ortiz’s Public Corruption Unit.
by NFS | Mar 24, 2011 | Archives
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by NFS | Mar 23, 2011 | Archives
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by NFS | Mar 23, 2011 | Archives
The Internal Revenue Service has been investigating and helping prosecute a number of tax preparers in Southern California who have been cheating the government and their clients.
As the tax filing season is in full swing, the IRS noted that it’s important for taxpayers to find honest, qualified tax professionals if they need tax preparation assistance. Taxpayers are legally responsible for what’s on their own tax returns even if prepared by someone else. Choosing a dishonest tax preparer can be costly as dishonest tax professionals may, for example, place fictitious information or false deductions on their client’s tax returns resulting in an inflated refund.
The IRS Web site at http://www.irs.gov/index.html provides various tips in what to look for—and what to look out for—when choosing a tax professional. Tax professionals must now have a Preparer Tax Identification Number. Use of the PTIN is required on all federal returns prepared by paid tax return preparers starting on Jan. 1, 2011.
“Return preparer fraud is a priority for IRS Criminal Investigation and we have committed many resources to investigating and prosecuting these types of cases,” said Leslie P. DeMarco, special agent-in-charge at the IRS Criminal Investigation division’s Los Angeles field office. “Taxpayers should be very careful when choosing a return preparer. You should be as careful as you would in choosing a doctor or lawyer. It is important to know that even if someone else preparers your return, you are ultimately responsible for all the information on the tax return.”
In addition to being on the alert for abusive return preparers, the IRS is encouraging taxpayers to visit the IRS Web site for the latest updates on tax schemes and scams and what to avoid. Some of these scams include fictitious emails supposedly from the IRS. The IRS does not send out unsolicited emails or ask for detailed personal and financial information via email.
Taxpayers should also be careful of employment tax schemes where an employer wrongfully classifies the employee to eliminate the withholding and payment of employment taxes. This scheme can affect the employee directly who may see future benefits such as social security, unemployment compensation and Medicare greatly reduced or eliminated.
In the greater Southern California area, IRS Criminal Investigation special agents are actively investigating those involved in alleged criminal violations of the tax laws and related federal offenses. Federal court records reveal the following recent legal actions pertaining to return preparer fraud:
Tax Preparer Serving Life Sentence Gets 37 Months – After receiving a life sentence for his involvement in attempting to overthrow the Cambodian government, Yasith Chhun was sentenced Monday afternoon in federal court to 37 months imprisonment, to be served concurrently, for tax fraud charges.
On Nov. 13, 2008, Chhun pleaded guilty to charges that he conspired to defraud the United States and that he aided and assisted in the preparation of false tax returns.
Chhun was the owner of CCC Professional Accounting Services in Long Beach, Calif., a tax preparation business. Chhun prepared federal income tax returns for members of the Cambodian community who were often on welfare or another form of government assistance.
Chhun assisted in the preparation of federal income tax returns for clients that falsely stated the clients earned between $8,000 and $10,000 as income for sewing work— and requested an Earned Income Tax Credit of between $2,000 and $3,000 per return— when, in fact, the clients did not earn such income and were not entitled to the requested EIC. In total, the improperly claimed credit from the numerous fraudulent federal income tax returns was more than $400,000.
San Bernardino Preparer Sentenced to Serve 5 ½ Years in Federal Prison – Robert Dean Larsen, a tax return preparer who operated a return preparation business in Apple Valley, was sentenced on Feb. 7, 2011 to spend 66 months in federal prison after pleading guilty to charges that he conspired to defraud the United States and that he aided and assisted in the preparation of false tax returns.
Larsen, who operated Larsen’s Tax Pros at various locations in San Bernardino County and operated Laza’s Tax Service in Apple Valley, admitted in his plea agreement that, from 2002 to 2006, tax return preparers at his businesses filed at least 1,162 tax returns with the IRS that were false claiming refunds totaling over $3.6 million.
El Segundo Tax Return Preparer Sentenced to 24 Months in Federal Prison – Gene S. Wong, who operated a tax return preparation and bookkeeping business known variously as “TaxLAX”, “Tax 4 Less”, and “GW Accounting & Bookkeeping Center” was sentenced on Aug. 9, 2010 to spend 24 months in federal prison after previously pleading guilty to charges that he willfully failed to file his personal income tax return for 2005 and that he filed false claims for tax refunds on behalf of his clients. Wong was further ordered by U.S. District Judge Christina A. Snyder to pay restitution totaling $255,236 to the IRS.
According to his plea agreement, Wong filed at least 92 false claims for tax refunds with the IRS on behalf of third parties claiming false refunds totaling over $255,000.
The false claims for refunds filed by Wong claimed fraudulent tax credits including general business tax credits, fuel tax credits, and alternative vehicle tax credits. In his plea agreement, Wong admitted that there was no basis for the tax credits claimed on the false returns he prepared.
West Covina Man Pleads Guilty to Preparing a False Tax Return Filed with the IRS – Nestor Bermudez pleaded guilty on Jan. 24, 2011 to preparing and submitting a false tax return in the name of another individual to the IRS.
In his plea agreement, Bermudez admitted that he agreed to prepare false and fraudulent tax returns in exchange for a fee of up to $500 per tax return. Thereafter, another individual provided Bermudez with the names, dates of birth and Social Security numbers for 127 persons in whose names Bermudez prepared tax returns. The returns were false in that they falsely reported filing status, income, and number of dependants and falsely claimed tax refunds based upon the earned income tax credit, child care credit and/or recovery rebate credit. The information reported on the tax returns, including filing status, amount of income, and number of dependants was necessary to determine whether any tax was due.
When sentenced on June 20th, Bermudez faces a statutory maximum three years in federal prison and fines totaling $250,000.
