Tag: Tax Fraud

The IRS Would Like to Remind You That They are Not Spammers

With tax season over, scam season has begun and the IRS wants to be sure that you know they will never send you unsolicited e-mails or request identifying information about you a la PayPal scams. Because, you know, they’re helpful like that. Since many of you are waiting patiently by your mailbox (or bank statement if you E-filed for direct deposit) for your refund checks, it’s all that much more important to be on the lookout for these kinds of tricks hitting your inbox.

Protect yourself, little taxpayer, and know that the IRS is here to help make sure you don’t get scammed by unscrupulous impersonators:

The IRS does not send taxpayers unsolicited e-mails about their tax accounts, tax situations or personal tax issues. If you receive such an e-mail, most likely it’s a scam.

IRS impersonation schemes flourish during filing season. These schemes may take place via phone, fax, Internet sites, social networking sites and particularly e-mail.

Many impersonations are identity theft scams that try to trick victims into revealing personal and financial information that can be used to access their financial accounts. Some e-mail scams contain attachments or links that, when clicked, download malicous code (virus) that infects your computer or direct you to a bogus form or site posing as a genuine IRS form or Web site.

Some impersonations may be commercial Internet sites that consumers unknowingly visit, thinking they’re accessing the genuine IRS Web site, IRS.gov. However, such sites have no connection to the IRS.

IRS Spokesperson Jennifer Henrie-Brown gave us a few tips for avoiding scams and reporting sketchy e-mails to the Service to combat the spamming problem: “The IRS does not initiate taxpayer communications through e-mail and does not request detailed personal or financial information through email. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site, you should not reply. Do not open any attachments or click on any links. Doing so may download malware that can damage your computer or allow remote access to your hard drive,” she told us.

What do you do if you get one of these weird, misspelled, bad-grammar-infested fake e-mails claiming to be from the IRS? “If you receive a suspicious email claiming to be from the IRS, or Web addresses that do not begin with http://www.irs.gov, you can relay that email to IRS mailbox phishing@irs.gov. IRS can use the information URLs and links in the suspcious emails you sent to trace the hosting Web site and alert authorities to help shut down the fraudulent sites.”

Suggested reading: Online Scams that Impersonate the IRS [IRS]

Utah Accountant Who Filed $393 Million in Fake Tax Refunds Can Never Ever Ever Do Taxes Again

Dick Jenkins is a bad, bad tax accountant; the Justice Department says so.

“Given the sheer brazenness of Jenkins’s conduct, he is essentially stealing … from the U.S. Treasury,” said U.S. District Judge Dale A. Kimball, who entered the civil injuction against him last week. Jenkins was accused of filing $393 million in fraudulent tax refunds, including a single $210 million dollar refund for one customer and $402,920 for himself that he didn’t have coming (I don’t care how good you think you are at deductions, that’s BS).


Jenkins was not barred by the court from doing taxes forever because he screwed his clients (they received $294,292 in fake refunds) but because “Jenkins’s conduct results in irreparable harm to the United States.” You heard right, the Salt Lake Federal Court is pissed because he tried to remove $393 million from the Treasury through tax fraud, who cares about the clients?

Maybe this is what the PCAOB was talking about when they mentioned unusual transactions without giving specifics. I’d say it qualifies.

Salt Lake Federal Court Bars CPA from Preparing Tax Returns for Others [Media Newswire]

Former NFL Player Avoids Prison…for Tax Fraud

Typically when current or former NFL player gets into trouble with the law it usually consists of 1) drugs/alcohol 2) assault 3) the occasional (or shockingly frequent?) homicide.


Former Buffalo Bills running back Darick Holmes pleaded guilty last year to 15 counts of tax fraud and order to pay $53k in restitution to the IRS. He had been running a scam in Buffalo showing people how to file bogus tax returns, “Holmes admitted that, while spending time in Buffalo in 2004 and 2005, he helped people file tax returns that listed false information about where they had worked and how much they paid in taxes. When the tax filers received refunds, Holmes got a cut of the money.”

Holmes was sentenced to one year of home confinement which had the prosecutor all bent out of shape since Holmes’ co-defendant, Darryle Buckner, was sentenced to a year in prison and wasn’t found to be as “culpable” as Holmes. The judge felt that Holmes was remorseful (that’s a new one for a tax crime) and was impressed with his work with troubled teens.

Holmes has had a rough go of it, he was shot seven times right after his arrest in 2008, according to the prosecutor it was during an $80,000 marijuana deal. Yeesh, This prosecutor guy is really pissed about this sentence.

The real moral of the story is you’re probably better off listening to Joe Biden (?) than an ex-NFL player when it comes getting tax advice.

Ex-Bill Holmes avoids prison in tax fraud case [Buffalo News]

Lesson of the Day: When Requesting a Bogus Tax Refund, Avoid an Excessive Amount

It makes sense that financial crimes increase during a recession. People get desperate and they start taking crazy-ass chances. Crazy-ass chances like, let’s request a tax refund for a couple hundred million dollars.
Justice.gov:

Papers filed in the cases say the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. One defendant – Dick Jenkins, of Heber City, Utah – allegedly holds himself out as a CPA and requested a $210 million fraudulent refund for one customer. The Internal Revenue Service (IRS) catches the vast majority of the bogus tax returns and blocks the claimed refunds…Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in the seven lawsuits filed this week) have requested a total of $3.3 trillion in fraudulent refunds.

According to the AP, “Officials say the tax preparers often falsely tell customers the government maintains secrets accounts of money for its citizens that can be accessed by filing false returns.”
So your tax preparer tells you that by filing a fake tax return you’ll be able access a secret pile of money. Is this remotely believable? Believable to the point of saying, “Excuse me, Internal Revenue Service, you owe me $210 million”?
Some discretion, people.
DOJ Charges Seven With Seeking $562m of Bogus Tax Refunds [TaxProf Blog]
Feds file suits over $562 million bogus tax claims [AP]

KPMG Partner Named in $240 Million Tax Fraud

This is getting awkward, KPMG. Tax shelters continue to be a problem for some of your partners.


Fairfax Times:

Three local businessmen have been indicted on a charge of conspiracy to defraud the Internal Revenue Service of more than $240 million.
According to the indictment filed in federal court on Oct. 22, two of the men allegedly attempted to defraud the IRS by making several “false and misleading statements” concerning a corporate tax shelter that was implemented by them.
Daryl J. Haynor, a partner in KPMG’s federal tax practice for the mid-Atlantic Area, based in Tysons Corner; and Jon Flask, a Vienna-based attorney, are both named in the suit.
“Mr. Haynor has been placed on administrative leave pending a review of the situation,” said George Ledwith, a spokesman for KPMG, on Monday.

Obviously our little warning concerning tax shelters was way too late.

According to the federal indictment, Flask, Haynor and Parker implemented and marketed a tax shelter named “Sale Leaseback of Tenant Improvements Strategy (SLOTS),” from 1998 through 2006.
The shelter enabled various U.S. corporations to claim tax deductions totaling more than $240 million on corporate income tax returns.
The indictment alleges that Flask, along with Haynor and Parker, misled and deceived the IRS by misrepresenting facts concerning the SLOTS tax shelter during IRS audits of companies claiming tax losses generated by the shelter in the years 2002 through 2004.

Mr. Haynor has been with KPMG for over 25 years. He and Mr. Flask face up to eight years in prison and $500,000 in fines. If you know any details, shoot us an email or discuss in the comments.

Needed: Honest CPA’s for New York State

thumbs down col.gifAs if the State of New York doesn’t have enough trouble with half of the citizens think their legislature is the worst in the country, annoying artwork, and a budget crisis. Come to find out, part of this whole budget nightmare might be due to an unusual amount of bogus tax returns.
This is a quote from a profile of the NYS Deputy Commissioner of Tax Enforcement (our bolding):
The rest, after the jump

This year, we’ve done a little project on tax preparers. We go out pretending to be tax preparers … we’ve done it at 170 different tax preparers. Fifty-one of them have prepared bad returns that are just horribly fraudulent. I have some transcripts … here’s one: a tax prepared describes how he’s gonna do a ‘ho-hum, no muss, no fuss, simple [expletive] return that’s gonna get through the system’ and he’ll never get audited and never get caught. He underreports income then for two years of about $80,000. That he knows. Do you think he knew what he was doing? He was selling our investigator as a taxpayer, ‘I know how to cheat without getting caught.’ … We’ve arrested about 20 this year so far. And there’s lots more in the wings.”

Horribly fraudulent? God help us.
Capital Profile of William Comiskey [Albany Times Union via TaxProf Blog]

The IRS Should Really Reconsider Their Employee Screening Process

IRS_logo-thumb-150x140.jpgIn another case of former a IRS Agent having reckless disregard for their old employer (i.e. the Federal Govt.), a 76 year-old former agent was sentenced to nearly four years in prison for his part in a fraudulent tax scheme that went on from 1998 to 2000. Thomas Steelman was also ordered to pay more than $10 mil back to the Service.
The old guy really worked hard at his craft too:

He took part in promotional meetings, conferences, rallies and telephone conference calls to promote Renaissance’s services and recruit clients, according to prosecutors. Steelman was also a featured speaker on Renaissance’s promotional videotapes.

From the sound of it, this guy Steelman was the Peter Olinto Tim Gearty Rick Duffy of Renaissance, The Tax People, the defunct company he worked for. It disappoints us how the pleasure of serving your country, as crusader for tax compliance, would eventually lead to a life of a scofflaw and tax avoidance. We are truly saddened that there continues to be very few true tax heroes among us.
Ex-IRS Agent Sentenced to 46 Months for Tax Fraud [Web CPA via TaxProf Blog]