Ronnie Deutch, the infamous “Tax Lady” is a great example of why you should think twice before hiring a large, out of state Tax Law Firm to handle your IRS Problems.  Ronnie Deutch ran the largest tax resolution firm or “Tax Mill” in the country.  Spending $12 Million+ in advertising over the last four years, her constant tv commercials, the Tax Lady was hard to miss.

Unfortunately, the Tax Lady Tax Mill empire recently came crashing down.  In May, “Roni Deutch, A Professional Tax Corporation” closed after having assets seized when Deutch was found in contempt of court pertaining to the  $34 million lawsuit filed by the California Attorney General.  The Attorney General charged Deutch in August of 2010 with fraudulent and misleading business practices.  Her successful Tax Law Firm operated in a call center like manner, transferring potential clients to sales agents (with no legal or tax background) for a free tax consultation.  The sales pitch involved false promises of significantly reducing the client’s IRS tax liability.

In reality, the Deutch Tax Firm swindled clients out of Millions of dollars while rarely taking care of their IRS Tax issues.  According to the California Attorney General, each year about 3/4ths of Deutch’s clients canceled the law firm’s services or were terminated as clients for failure to pay

As irony would have it, the IRS subsequently filed a tax lien against Deutch for $183,000.

Unfortunately, the Tax Lady is just one of the many companies swindling financially troubled people by making fraudulent promises of IRS Tax Settlements.   Just to name a few, Tax Masters, American Tax Relief, Progressive Tax Group, Innovative Tax Relief , Guardian Tax Resolutions, Urgent Tax Care, Tax Group Center, Blue Tax, Associated Tax Relief, ratings of “F” with the Better Business Bureau (bbb.org) and have dealt with a slew of charges relating to their fraudulent business practices.

Most taxpayers that fall victim to a Tax Mill operation are left in a worse position than they were in prior to seeking the companies’ services. Not only are many – if not most – of them still liable for the original amount of IRS debt, but they also are out-of-pocket substantial sums of money paid for the services of these companies. So before dialing that toll-free number because an animated promise you relief of your tax debt, beware of getting “more than you bargained for.”Don’t let this happen to you. If you are having IRS tax problems, keep this in mind:  You as a taxpayer are ultimately responsible for your tax liability and ONLY the IRS has the ability to reduce that tax liability.  Although it is wise to seek the counsel of a tax attorney when dealing with the IRS, beware of anyone that makes particular claims or guarantees as to what they can do and claims to be able to “quickly” resolve the matter.

Having Friends in High Places Won't Get You That Far with the IRS!

Knowing the chances of the IRS auditing your Income Tax Return is relatively slim, are you willing to take that gamble and “modify” the figures on your return to maximize your refund or minimize the taxes owed?  If so, you are definitely not alone!

But before you turn in that return, you might want to consider this – even the smallest misrepresentation on your return is TAX FRAUD! Mistakes are one thing, but knowingly changing items on your return for your financial gain is another.

So you might be wondering, how will the IRS really know if I fudge on my expenses at my rental houses or the amount I donated to the Humane Society?

Recognizing the frequency of these misrepresentations, the IRS has taken an initiative this year to crack down on those Taxpayers making “little white lies” that have flown under the radar in prior years.  And it is not just the “rich” who are subject to the new scrutiny. With the increasing number of IRS “busts” at tax preparation companies – much like the one we reported right here in Gainesville, Florida just weeks ago http://taxattorneyflorida.com/tax-scammers/ – the IRS isn’t taking anything for granted.  

Last night CNBC aired a special broadcast “The American Tax Cheat,” which highlighted the IRS crackdown on taxpayers.  Find out more here: http://www.cnbc.com/id/42154647/THE_AMERICAN_TAX_CHEAT_WILL_PREMIERE_ON_APRIL_14TH

Looks like the IRS has upped the ante – Still want to take the audit gamble?

ANSWER:  Depending on your particular situation, there are several options.  If you are going through a financial hardship, the IRS may be willing to suspend collection activity to allow you the opportunity to get back on your feet.  This process is explained below.

Economic Hardships

You may have the funds to pay the tax you owe the IRS, but if you used those funds to pay your income taxes you may not be able to afford your necessary living expenses and other bills. If you can show that collection of the taxes would cause you or your family financial hardship, the IRS may classify your account as “currently not collectible” and not pursue collection against you. This will allow you to improve your financial condition so that paying income taxes is not an economic hardship. In order to request this status, you must file IRS Form 433-A (employees and self-employed individuals) and/or 433-B (for businesses). Note the following aspects which apply to the suspension for economic hardship:

• Collectability Reviewed Every Year. “Currently not collectible” accounts are reviewed each year. If your financial situation improves during the year, the IRS may remove the suspension and initiate collection of payments. The IRS then may also enter into a compromise agreement with you to satisfy your full tax liability.
• Penalties and Interest Continue. During the period that collection on your account with the IRS is suspended, penalties and interest continue to accrue on the amount of the tax. Even though you do not have to make payments toward the tax liability during the suspended period, it is costing you money in penalties and interest to keep collection at bay during the period.

Keep in mind, the IRS is the most powerful creditor in the United States. If you owe the IRS taxes, as a creditor they can levy on almost any asset or account that you have.  You do NOT want to give the IRS reason to use this power against you, therefore you must report all assets and property to the IRS.  Failure to report all assets may even expose you to liability for tax fraud, which is a CRIMINAL OFFENSE you do not want to defend against!

The most important advice I can give, is urge you to stay in contact with the IRS and keep them informed with your situation and your intent to pay your tax liability.

Another Dissatisfied IRS Customer

As a tax attorney, I have the pleasure of routine interaction with the IRS.  However, I must confess my dealings with the IRS are not as efficient and streamlined as I would like.  Therefore, it came as no surprise to find that the IRS’s customer satisfaction is far from stellar.  Surprisingly I did not expect to see social icon, Facebook,  vying so competitively with the IRS for the most unsatisfied customer service award…

Wall Street Journal, Users Rate Facebook Slightly Above the Tax Man:

Facebook plans to announce it has reached a milestone 500 million users this week — but that doesn’t mean the masses are happy customers.  The American Customer Satisfaction Index, developed by the University of Michigan’s Business School, included Facebook in its regular survey of consumer satisfaction with companies.

The result: Facebook came out with one of the lowest ranks of any company measured by the Index – a 64 out of 100. That puts Facebook in the bottom 5% of all private sector companies, and in the same range as the IRS tax e-filing system, airlines and cable companies.

Keep Prayin' Wesley, Prison is Scary... Just ask Lindsay Lohan

With the US Court of Appeals recent decision to affirm Wesley Snipes’ criminal tax conviction, it looks like Wesley Snipes may have to rely on the royalties from his cheesy “Total Gym” Infomercials to pay off his substantial legal fees and restitution incurred from his long battle with the IRS.  I wonder if the Federal Prison has a Total Gym??  Maybe he can shoot an updated Total Gym infomercial from prison…

This affirmation strikes close to home.  Not only was Snipes born in Orlando, Florida, on July 31, 1962, graduating from Jones High School in Orlando, but it was the Federal District Court out of Ocala, Florida that secured Snipes’ guilty verdict.

Despite residing in Windermere, Florida, Snipes filed multiple unsuccessfully motions in an attempt to move the trial location from the Federal District Court in Ocala, Florida to New York.  Snipes argued that Ocala, Florida was the “most racially discriminatory venue available, with the best possibility of an all-white jury,” and that the Ocala area was a “hotbed of Klan activity.”

Snipes was charged with multiple counts of criminal tax fraud.  Count One charged Snipes and his two co-defendents, Eddie Kahn and Douglas Sosile with conspiracy to defraud the Government by impeding the IRS and its collection of Income Taxes.  Count Two charged all three defendants with filing false claims of refund for income taxes Snipes paid in previous tax years.  Count Three through Eight charged Snipes alone with six counts of willfully failing to file his income tax return for years 1999 through 2004.

Snipes became involved with co-defendents Kahn and Sosile sometime in 2000 when he joined Kahn’s shady organization, “American Rights Litigators” (ARL), a subsidiary of Kahn’s other organization, “The Guiding Light of God Ministries.”  Despite having no legal training, Kahn, through ARL, taught Snipes how to could avoid paying taxes via Constitutional and Statutory arguments challenging the IRS’s authority to collect tax. With ARL assistance, Snipes sent voluminous letters to the IRS, challenging their authority to collect tax by asserting the “861 Argument.”

The 861 Argument (from IRC Section 861(a)) basically says that domestic earnings of Americans do not qualify as “taxable US income” because such is not specifically listed as a source of taxable income.  This is a horrible argument seeing that IRC Section 61 is the broad provision for income INCLUSION.  Without a specific provision EXCLUDING income from tax, the income will be included in taxable income.  Despite one of his arguments asserting his Constitutional rights as an US citizen, Snipes conversely argued that he was not and had never been a US citizen, therefore was a non-resident alien whose sole source of income came from sources wholly outside of the US.

Snipes did not stop at merely refusing to pay income taxes in 1999-2004 despite earning over $37 million, but he also sent multiple altered 1040X Forms to the IRS in an attempt to collect a refund for over $20 million from income taxes he paid in prior years.

On February 1, 2008, the District Court’s Jury found Snipes guilty on Counts Three through Five for willful failure to file individual income tax returns for years 1999-2001, sentencing him to 36 months of incarceration.  Although the convicted charges were only misdemeanors, the court was able to enhance Snipes’ sentence by the aggravating factors, including Snipes obstruction of justice (destroying evidence and hiding money in foreign accounts) and the substantial financial loss to the government (over $41 million in loss taxes).

Instead of his frivolous 861 Argument, Snipes should have claimed insanity for letting Kahn and  his “Guiding Light of God Ministries” brainwash him into thinking that he was never a US citizen.  Seriously, if he’s not a citizen of the US, where the heck does he reside…the “Guiding Light” in the sky?