Archive for April, 2007
Monday, April 30th, 2007
The country’s second-largest tax preparer needs someone to stand by them. The Department of Justice has filed suit against five companies that operate Jackson Hewitt Tax Services, Inc. (JTX) franchises, stating that the firms contributed to tax fraud that cheated the U.S. Treasury out of more than $70 million. Further, the Government is attempting to shut down more than 125 of the Jackson Hewitt tax preparation stores for engaging in pervasive “tax fraud schemes.”
“Preparing federal income tax returns based on falsehood and fabrication is a serious violation of the law,” Assistant Attorney General Eileen O’Connor stated. An example of the scheme was the case of a barber whose tax return prepared by Jackson Hweill claimed entitlement to a fuel tax credit for 25,000 gallons of gasoline. According to the complaint filed by the Government, in order to consume that much fuel, the barber would have had to drive over 1,000 miles every day, seven days a week for a year. Further the lawsuit claims that these franchises created an environment in which “fraudulent tax return preparation is encouraged and flourishes,” together with the fact that some employees received kickbacks for preparing false tax returns for clients.
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Monday, April 16th, 2007
The Department of Justice and the IRS on April 3, 2007 have highlighted their 2006 enforcement efforts. Abusive Tax Shelter have been a priority which includes the prosecution of those who designed, facilitated or otherwise accommodated such tax shelter transactions. “…People who pay what the law requires deserve the assurance that those who don’t, and those who promote or facilitate tax evasion will not get away with it,” said Eileen J. O’Connor, Assistant Attorney General for the Tax Division.
The investigation and prosecution of hidden offshore accounts are also a priority for the IRS enforcement program. Their 2006 enforcement efforts in this area was a 34% increase over 2001. The priorities in this area include but are not limited to hidden offshore accounts, failing to pay payroll and income taxes, failing to report income on individual and corporate returns.
Among the government’s highlighted cases for 2006 are:
“In May 2006, David Carroll Stephenson was sentenced to eight years in prison in connection with his promotion of a tax evasion scheme using “pure equity trust” organizations.
In June 2006, a federal judge sentenced five defendants, Dennis Poseley (seven years), David Trepas (five years), Patricia Ensign (18 months), Rachel McElhinney (16 months), and Keith Priest (18 months), to prison terms for their respective roles in promoting a tax evasion scheme that used offshore trusts and bank accounts.
On June 22, 2006, District Judge Elizabeth Kovachevich issued an injunction permanently barring Douglas Rosile, a former certified public accountant whose clients included Wesley Snipes, from preparing federal income tax returns for others and from promoting a frivolous tax argument based on Section 861 of the Internal Revenue Code. Among the documents the government filed in court was a return submitted to the IRS on behalf of Snipes claiming a bogus $7.3 million tax refund.
In November 2006, a federal judge sentenced Milton H. Baxley II to 18 months in prison and fined him $10,000 for contempt of court. On August 9, a jury convicted Baxley on two counts of violating an injunction order barring him from promoting a tax fraud scheme.
In December 2006, a federal judge sentenced Thomas Miller to nearly four years in prison for conspiring to defraud the United States in connection with a “pure trust” tax fraud scheme. Miller operated Freedom Education Center, a business in California that sold anti-tax literature and helped people create bogus trusts.
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