Tax Refund Fraud Committed by Prisoners Has IRS Baffled

Tax fraud is a crime that has always been a challenge for the IRS to detect and prosecute. It is even more complicated when prisoners get involved, as is the case with fraudulent tax refund schemes. The United States v. Turturro, 06-12033 (11th Cir. 2007) case is an example of this type of fraud, where…

No Criminal Fraud, But Civil Fraud Penalty Applies

Tax fraud is a serious crime that carries severe penalties, including substantial fines and imprisonment. But what happens when a criminal court finds that the conduct in question does not rise to the level of tax fraud, yet a civil court later determines that it does? This was the dilemma faced in Maciel v. Commissioner,…

Tax Evasion & Evidence of No Tax Due

Tax evasion is a complex legal issue that can carry severe consequences, including hefty fines and imprisonment. Unlike other crimes where the act is either committed or not, taxes can be owed in varying degrees, making it difficult to determine whether a violation of the law has occurred. Can a defendant avoid a tax evasion…

IRS Collections for Payroll Taxes & Single Member LLC Owners

The IRS has broad collection powers. These powers generally trump state law. This is even true of state Limited Liability Company (“LLC”) rules that prevent parties from suing or reaching the LLC’s assets. There are nuances to these rules when it comes to income and payroll taxes. The payroll tax rules have changed completely. Many…

Tax on Real Estate Purchase Price Reduction

The term “income” is broad. It includes just about any money or gains that a person receives. There are exceptions, however. Take the purchase price reduction. Assume Party A sells a property to Party B for $100. Party A will likely have a gain on the sale. The gain is income and may trigger income…

Substantial Compliance: Finding Acceptance With the IRS

A professor can increase overall class scores for extra credit. A police officer is authorized to issue warnings for minor traffic infractions. A judge can allow a defendant to plead guilty to a lesser charge when justice warrants it. These situations involve individuals who have a certain level of authority or power in a particular…

Strategy for Paying Employment Taxes Late

Employers are generally required to withhold employment taxes from employee wages.  The employer then remits these withheld employment taxes to the IRS.  These are referred to as trust fund taxes, as they are held in trust pending payment to the IRS. Employers are also required to pay employment taxes for employees based on the wages…

One Ex-Spouse Void the Other’s Alimony Deduction: Tax on Alimony

Assume that a divorce decree says that a payment is to be made to an ex-spouse. Does that mean that it is alimony the ex-spouse has to report as income for Federal income tax purposes?  And if not, can the ex-spouse who receives the payment request a ruling from the IRS to say that the…

Taxation of Employee Donated Sick Leave

Even simple acts of kindness, such as donating paid sick leave to co-workers in need, can trigger complex tax requirements. The IRS recently released Private Letter Ruling 200720017 that sheds light on the federal tax consequences of such donations, highlighting the importance of following specific requirements such as employer-sponsored medical leave-sharing arrangements or qualified employer-sponsored…