Recently in Tax Fraud Category

February 7, 2012

Series of Tax Fraud Cases to be Filed in Federal Court

A South Florida couple is being charged with tax fraud for their alleged role in stealing millions of dollars worth of income tax return checks that were stolen or fraudulently obtained by third parties. The defendants owned and operated American Quick Cash Depot in Oakland Park, Florida. The indictment alleges that the couple conspired by charging fees in exchange for cashing stolen or fraudulently obtained tax refund checks. The defendants appeared with their criminal defense lawyer at their arraignment in a Fort Lauderdale federal court. At the arraignment, federal investigators from the Secret Service and the Internal Revenue Service testified regarding two specific checks in the amounts of $5,415 and another for $9,391. Both checks were stolen and cashed using forged endorsements and signatures.

According to the investigators, the defendants were involved in the cashing of hundreds of checks amounting to $5.26 million. The defendants are not only charged with tax fraud, but also with aggravated identity theft. In federal court, aggravated identity theft carries a two year minimum mandatory sentence. The defendants are alleged to have conspired with third parties to steal social security numbers to take tax payers refunds prior to their filing. Federal authorities are focusing on crimes involving identity theft as the number of prosecutions have quadrupled since 2007. Tax return rackets will be specifically targeted because there are two victims involved in crime, private citizens and the federal government.

According to the special agent in charge of the IRS's criminal investigation division, the electronic filing system has a defect. The IRS fails to match tax returns to an individuals's W-2 forms until long after tax filing season is over. By that time, it is too late to catch the identity theft. Until the IRS corrects the problem, fairly sophisticated people are using computers and on-line tax software to steal from citizens and the government. The number of identity theft fraud cases involving stolen or fraudulent tax returns has skyrocketed to 248,000 in 2010. The number of criminal investigations involving fraud has increased in part due to the larger number of people filing electronic returns.

While the aggravated identity theft charge the defendants are facing is serious enough, the real problem lies with the amount of loss caused to private citizens and the federal government through their actions. Tax fraud in and of itself is fairly low scoring offense under the federal sentencing guidelines. The significant portion of incarceration occurs as a result in the increased levels, not only for millions allegedly stolen, but also for the level increases the couple is likely to receive as being the managers/operators of the criminal enterprise. If the federal government's evidence is as good as they would have you believe, the defendants may have no choice but to cooperate with the federal government which would certainly significantly reduce the prison sentences each is currently facing.

Broward Couple Charged in Tax-fraud Case that Will Be the First of Many to Come, Feds Say, Miami, January 23, 2012.

April 8, 2010

Department of Justice Fights Tax Fraud

The United States Justice Department had a busy year battling tax fraud around the country and overseas. The Tax Division of the Department of Justice along with the Internal Revenue Service have spent 2009 tracking and prosecuting individuals alleged to have committed tax fraud. Specifically, they have targeted individuals using off-shore accounts to hide assets, using and maintaining abusive tax shelters and shutting down other various tax schemes to defraud. Criminal lawyers specializing in defending tax fraud cases have kept busy during the past year representing their clients in federal court. The acting assistant attorney for the tax division issued a statement promising to promote compliance with the federal tax law and threatened prosecution for all those engaged in tax fraud.

While the Tax Division prosecutors obtained 135 tax fraud convictions either by plea or jury trials in federal court during 2009, their responsibilities extend to other areas in an effort to combat fraud. The division obtained hundreds of injunctions in an effort to stop fraudulent tax schemes in theirr tracks. They also successfully defended hundreds of tax refund lawsuits saving the federal government in excess of $665 million. The division also collected in excess of $200 million in taxes owed the federal government. These are impressive numbers considering the fact that the operating budget for the Tax Division is a meager $102 million.

While the Tax Division over the past decade have gone after individuals who fail to pay taxes, understate income and capital gains, and file fraudulent tax documents, they have now taken their operations overseas in an effort to prosecute individuals who are allegedly hiding assets in overseas accounts. In 2009, the Justice Department prosecuted Switzerland's largest bank for impeding an investigation being conducted by the Internal Revenue Service. The government allowed the bank to enter into a deferred prosecution agreement which means if the bank complies with the demands set forth by the federal government, the charges will be dismissed at a later date. A deferred prosecution agreement is similar to the pre-trial diversion program available to first time offenders in Miami and throughout the State of Florida. To have the indictment dismissed, the bank is required to provide names and account number of certain customers accused of tax fraud.

The Tax Division has made strides in halting the promotion of tax schemes to defraud and fraudulent tax return preparation. The Justice Department has issued warnings to tax fraud promoters and has promised heavy fines and significant jail time to all violators. The scams lure unwitting taxpayers to use their services and in the end it costs the taxpayers back taxes, interest and other civil penalties. The division is proactive in protecting taxpayers by filing injunctions against these unscrupulous organizations. The injunctions prohibit the organizations from continuing their unlawful practices disseminated through the use of the internet or seminars. When the division deems it appropriate, they will file charges and criminally prosecute the scammers for solicitation to commit tax fraud.

Justice Department Highlights Tax Enforcement Results, PR, April 7, 2010.