Even when companies try to comply with employment tax law, things can go awry. That's why many businesses hire third-party providers to handle those filings. The key here, detailed later in this post, is to hire the correct and reputable service. A Portland area construction company operator was sentenced to federal prison last week for his role in a multiyear scheme to evade the payment of payroll and income taxes on his workers' wages. The Aloha, Oregon, businessman was one of six men indicted last December by a Portland federal grand jury on charges of conspiring to defraud the United... Read more →
Tax evasion
Two enterprising women packing up items they sold for shipping. (Photo by Kampus Production) A major contributor to the Tax Gap is unreported taxable income. The Internal Revenue Service thought it was going to be able to collect more when Congress new reporting rules were included in American Rescue Plan Act (ARPA) of 2021. ARPA dramatically reduced the income level at which third-party, e-commerce payment platforms — such as eBay, PayPal, Etsy, CashApp, and Venmo, — must issue 1099-K forms to sellers who got money through them. It was set to drop from $20,000 to $600 beginning in 2023. That... Read more →
U.S. crypto fans are not happy with the White House proposal to institute a 30 percent crypto mining tax. They are not alone. European Union (EU) members have agreed to crack down on crypto tax evasion by having member states share digital holdings data. The Directive on Administrative Cooperation (DAC8) introduced last December is a crypto-tax framework that would increase surveillance of crypto exchanges, marketplaces, and other crypto-related services. This latest EU crypto effort aims to increase tax transparency in crypto assets and to combat tax evasion and avoidance. Approval of DAC8 which could generate additional tax revenue of around... Read more →
Young woman getting ready to record an online video. (Photo by George Milton) Being an influencer apparently isn't all it's cracked up to be, especially when the tax collector gets involved. Sure, some of those ubiquitous TikTok videos are just for fun. Others, however, can make big bucks for their online creators. That happens when the viral stars are paid influencers. In most cases, the influencers work as independent contractors for the companies they endorse. SE and income tax due: This self-employed status, reminds the Internal Revenue Service, means the online promoters must pay self-employment (SE) tax in addition to... Read more →
Scammers tend to use tried and true techniques to con people out of their identities and money. One of the most popular schemes involves crooks pretending to be real-life officials. And the Internal Revenue Service is near the top of government agencies that con artists impersonate. CloudFlare, a company which provides security for many companies' online operations, says that the IRS ranks sixth in the 50 top brands when it comes to phishing attempts that use fake sites. The example given by CloudFlare included "IRS" along with the words "contact" and "payment." A big tip-off that the URL is fake... Read more →
Click image to read full indictment. April 4, 2023, is one of those "where were you when…" days. Many of us were in front of our televisions or computer screens watching the formal criminal arraignment of a former U.S. president. Donald J. Trump pleaded not guilty today to 34 felony counts of falsifying business records. "True and accurate business records are important everywhere, to be sure. They are all the more important in Manhattan, the financial center of the world," said Manhattan District Attorney Alvin Bragg at an afternoon press conference in which he discussed why his office brought the... Read more →
Photo by Brett Jordan on Unsplash Turnabout, it seems, is fair tax play. The Internal Revenue Service expects preciseness from us taxpayers. Now, says a government watchdog, the tax agency itself needs to do a better job of collecting and calculating Tax Gap numbers. The Tax Gap is the amount of money the IRS estimates the U.S. Treasury is legally owed but which the agency has been unable to collect. The IRS' most estimates, released last October, found an average annual gross Tax Gap of $496 billion from 2014 to 2016. In that report, the IRS also projected an average... Read more →
As a true crime junkie (I blame my first newspaper reporting job covering the police beat) and tax geek, the headline about a senior bank official's guilty pleas to embezzlement and tax evasion immediately caught my eye. The Michigan man, a bank senior vice president, confessed in court on March 6 to embezzling $870,000 from the financial institution between 2014 and 2021. Then he compounded his troubles by involving the Internal Revenue Service. Specifically, according to the press release issued by the U.S. Attorney's Office for the Western District of Michigan, the 56-year-old Grand Rapids man — "… generated taxable... Read more →
Photo by RODNAE Productions Welcome to the continuation of the ol' blog's Tax Crime Weekend! Yesterday's post featured efforts to end abusive tax schemes and bring their promoters to justice. Today's post expands on the legal reckoning theme. The Internal Revenue Service's Criminal Investigation division, known as IRS-CI, recently revealed its top 10 cases of 2022. Wide variety of schemes, one outcome: The tax evasion attempts included Ponzi pyramid schemes, fake businesses, COVID-19 fraud, bogus tax credit, and even a reality TV couple. And more. Despite the diversity of their criminal tax acts, they shared one thing. They got caught.... Read more →
One of the forms in the long list of tax documents you need to file your 2022 return is the 1099-K. This form has been used for years for third-party payment processors — for example, PayPal, Amazon, eBay, Facebook Marketplace, rideshare companies, and many more — to report to fund recipients the money they got during the year. The Internal Revenue Service also gets a copy so it can check the amounts that the earners report on their tax returns. Taxpayers have been getting 1099-K forms since 2012, with this initial reporting coving third-party amounts in 2011. The factors that... Read more →
Are you worried about getting a slew of 1099-K forms next year in connection with your side gig earnings? The Internal Revenue Service has an early Christmas present for you. The tax agency today announced that it was going to delay the requirement that third-party settlement organizations — places like Venmo, PayPal, CashApp, and similar payment mechanisms — issue the 1099-Ks to earners who in 2022 received at least $600 in a single payment or in aggregate, regardless of the number of transactions, for their goods or services. Instead, the new lower earnings level that triggers issuance of 1099-Ks will... Read more →
Nothing ever disappears on the internet. Even, or especially, tax related posts. Take the bad legal take on taxes that tops this post. It was retweeted on Sunday (Dec. 11) by, you guessed it, Bad Legal Takes. But there's no indication of when Dave Champion originally blasted out his bad tax advice. It might have been before he was barred by a federal court in 2012 from promoting a tax fraud scheme. Or maybe he's back, since this Tweet apparently went up in October. His books also are still for sale online. Either way, that item this weekend spurred a... Read more →
Photo by cottonbro studio Italian retailers prefer cash transactions. That helps explain why the country ranks near the bottom in Europe in digital payment adoption, and is among the 30 most "cash dependent" major economies in the world, according to the latest Cash Intensity Index (ICC). This ranking, measures the effect of cash usage on the Gross Domestic Product in 95 countries around the world. The currency preference also is why Italian business owners are cheering the 2023 draft budget proposed by new far-right Prime Minister Giorgia Meloni. The new government's fiscal plan includes a measure to permit stores, taxis... Read more →
Some taxpayers might not be this happy in 2023 with their federal tax refund. (Image via Giphy) Many folks are already eagerly anticipating the 2023 tax filing season because they expect to get a refund from Uncle Sam. They might be disappointed. In a recent news release encouraging taxpayers to get ready for the upcoming filing season, the Internal Revenue Service slipped in this warning: Refunds may be smaller in 2023. There are three tax issues in 2022 that contribute to why the IRS will be sending some taxpayers smaller refunds when they file next year. No extra coronavirus funds:... Read more →
Not all foreign tax havens are tropical islands, but the idyllic getaways do conjure images of tax crooks enjoying isolated beaches at Internal Revenue Service's expense. (Photo by Asad Photo Maldives) Correlation does not imply causation, but in a couple of high-profile offshore tax evasion cases, it's starting to look like trying to allegedly put one over on the U.S. tax collector is not a healthy move. For the second time in four months, a defendant in an offshore tax evasion case has died. Carlos Kepke, a Houston-based tax attorney who was indicted on charges that he helped hide $225... Read more →
Some of my grandmother's paintings, known as the main Vera Gallery in our house. (Photo by Kay Bell) The hubby and I are art fans, primarily of painted works. That's why almost all of our vacations include a visit to our destinations' museums. Our appreciation of a piece hanging on a wall is why most of our rooms are adorned by framed artworks. Most are signed limited edition print versions of our favorite painters' works. But we also have some originals of a few notable artists, as well as works that are more sentimental but just as lovely, like the... Read more →
Right now, a lot of folks are thinking they should have been like Larry. The Larry they wished they'd emulated is Larry David, known for his curmudgeonly television character. He tweaked that persona to become a naysayer on several inventions that, per the commercial's Super Bowl debut, changed the world. The television ad for FTX crypto exchange advised viewers, "Don't be like Larry" and instead invest in digital currency via the company. On Friday, Nov. 11, FTX filed for bankruptcy following reports that between $1 billion to $2 billion of FTX customer funds disappeared. Continuing crypto troubles: This is just... Read more →
The Internal Revenue Service's Criminal Investigation (IRS-CI) division is doing its part to close the Tax Gap, which now sits at $496 billion in uncollected tax. The IRS' law enforcement group's recently released annual report notes that its agents initiated more than 2,550 criminal investigations, identified more than $31 billion from tax and financial crimes, and obtained a 90.6 percent conviction rate on cases that were prosecuted. Much of IRS-CI's success during the 2022 fiscal year, which ended on Sept. 30, was due to its increased cooperation and partnership with its global counterparts to combat tax and financial crimes worldwide.... Read more →
The Tax Gap is the amount the Internal Revenue Service says it is owed, but which it's been unable to collect. That amount now is $496 billion. The figure, which was reached after the IRS analyzed tax activity from 2014 through 2016, is an increase of $58 billion from the agency's last estimate. The IRS also did some Tax Gap forecasting. The agency's projections for tax years 2017 through 2019 show an estimated $540 billion per year. Both those Tax Gap amounts are huge, and disturbing. That's why they earn this weekend's dual By the Numbers recognition. Tax Gap components:... Read more →
The October filing extension deadline, which falls on Oct. 17 this year since the 15th is Saturday, is less than a week away. The Internal Revenue Service is waiting on the uber procrastinators to get their filings in by next Monday. But the IRS isn't the only federal financial office awaiting postponed documents. FinCEN also demands extended FBAR filings be in by Oct. 17. Taxable money, but not an IRS issue: FBAR, or Report of Foreign Bank and Financial Accounts, is how FBAR information is the federal government's way of tracking foreign bank and financial accounts owned by U.S. taxpayers.... Read more →