Aug 31, 2012

Tax Preparers' Hall of Shame: Feds Shuts Down Instant Tax Service Preparer

New Inductee of the National Tax Preparers' Hall of Shame goes to..... Ahferom Goitom
A federal court in Kansas City, Kan., has permanently barred Ahferom Goitom from preparing federal tax returns.

The case is one of five similar lawsuits -- in Indianapolis, Las Vegas, Chicago and Dayton, Ohio -- to shutter four of the largest Instant Tax Service franchise owners, as well as the Dayton-based corporate franchisor of the Instant Tax Service brand, ITS Financial LLC.

The government complaint in the Kansas case alleges that Goitom managed an Instant Tax Service store in Kansas City, Kan., where he prepared false and fraudulent income tax returns for others.

He was accused of forging W-2s; filing returns improperly based on paycheck stubs, rather than W-2s; fabricating income for phony businesses to obtain larger tax credits; claiming false education tax credits; and filing returns without customer authorization. The complaint also alleges that Goitom sold false and deceptive loan products to Instant Tax Service customers.

According to the complaint, the Instant Tax Service store Goitom managed in Kansas City is owned by his brother and co-defendant Semere Tsehaye, against whom a suit is still pending.

Goitom consented to the civil injunction order without admitting to the allegations.

Aug 30, 2012

We Are The World: Six Tips for Charitable Taxpayers

Here is a word from the Goodfellas the IRS

Contributing money and property are ways that you can support a charitable cause, but in order for your donation to be tax-deductible, certain conditions must be met. Read on for six things the IRS wants taxpayers to know about deductibility of donations.

1. Tax-exempt status. Contributions must be made to qualified charitable organizations to be deductible. Ask the charity about its tax-exempt status, or look for it on in the Exempt Organizations Select Check, an online search tool that allows users to select an exempt organization and check certain information about its federal tax status as well as information about tax forms an organization may file that are available for public review. This search tool can also be used to find which charities have had their exempt status automatically revoked.

2. Itemizing. Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.

3. Fair market value. Cash contributions and the fair market value of most property you donate to a qualified organization are usually deductible. Special rules apply to several types of donated property, including cars, boats, clothing and household items. If you receive something in return for your donation, such as merchandise, goods, services, admission to a charity banquet or sporting event only the amount exceeding the fair market value of the benefit received can be deducted.

4. Records to keep. You should keep good records of any donation you make, regardless of the amount. All cash contributions must be documented to be deductible – even donations of small amounts. A cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity that includes the charity’s name, contribution date and amount usually fulfill this record-keeping requirement.

5. Large donations. All contributions valued at $250 and above require additional documentation to be deductible. For these, you should receive a written statement from the charity acknowledging your donation. The statement should specify the amount of cash donated and/or provide a description and fair market value of the property donated. It should also say whether the charity provided any goods or services in exchange for your donation. If you donate non-cash items valued at $500 or more, you must also complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a contribution of noncash property worth more than $5,000, you typically must obtain a property appraisal and attach it to your return along with Form 8283.

6. Timing. If you pledge to donate to a qualified charity, keep in mind that for most taxpayers contributions are only deductible in the tax year they are actually made. For example, if you pledged $500 in September but paid the charity just $200 by Dec. 31 of that same year, only $200 of the pledged amount may qualify as tax-deductible for that tax year. End-of-year donations by check or credit card usually qualify as tax-deductible for that tax year, even though you may not pay the credit card bill or have your bank account debited until after Dec. 31.

Aug 29, 2012

I'm In Love With A Stripper: Illinois Strip Club 'Skin Tax'

Illinois has passed a "skin tax" for strip clubs, which backers say will raise up to $1 million a year to fund rape crisis centers in the state.

Illinois Governor Pat Quinn signed a law creating the Sexual Assault Services and Prevention Fund, sponsored by Democratic State Senators Toi Hutchinson and Sara Feigenholtz. The state senate passed the bill by unanimous vote in May; a similar bill has already passed in Texas.

Created in response to declining state funding for rape crisis centers, the new law allows the Illinois Department of Human Services to administer the fund to centers, which will be supported through the Live Adult Entertainment Facility Surcharge. Strip club operators will pay a charge on gross receipts on a tiered basis, or a $3 surcharge for each patron. The law takes effect Jan. 1, 2013

Aug 28, 2012

Let's Get Married: IRS Tax Tips for Recently Married Taxpayers‏

Here is a message brought to you by the Goodfellas at the IRS:

If you’ve recently updated your status from single to married, you’re not alone – late spring and summertime is a popular period for weddings. Marriage also brings about some changes with your taxes. Here are several tips for newlyweds from the IRS.
  • Notify the Social Security Administration It’s important that your name and Social Security number match on your next tax return, so if you’ve taken on a new name, report the change to the Social Security Administration. File Form SS-5, Application for a Social Security Card. The form is available on SSA’s website at, by calling 800-772-1213, or visiting a local SSA office.
  • Notify the IRS if you move IRS Form 8822, Change of Address, is the official way to update the IRS of your address change. Download Form 8822 from or order it by calling 800-TAX-FORM
  • Notify the U.S. Postal Service To ensure your mail – including mail from the IRS – is forwarded to your new address, you’ll need to notify the U.S. Postal Service. Submit a forwarding request online at or visit your local post office.
  • Notify your employer Report your name and/or address change to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
  • Check your withholding If you both work, keep in mind that you and your spouse’s combined income may move you into a higher tax bracket. You can use Publication 505, Tax Withholding and Estimated Tax, to help determine the correct amount of withholding for your marital status, and it will also help you complete a new Form W-4, Employee's Withholding Allowance Certificate. Fill out and print Form W-4 online and give it to your employer(s) so the correct amount will be withheld from your pay.
  • Select the right tax form Choose your individual income tax form wisely because it can help save you money. Newlywed taxpayers may find that they now have enough deductions to itemize on their tax returns rather than taking the standard deduction. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ.
  • Choose the best filing status A person’s marital status on Dec. 31 determines whether the person is considered married for that year for tax purposes. Tax law generally allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax, but filing jointly is usually more beneficial.
Bottom line: planning for your wedding may be over, but don’t forget about planning for the tax-related changes that marriage brings. More information about changing your name, address and income tax withholding is available on IRS forms and publications can be obtained from or by calling 800-TAX-FORM (800-829-3676).

Aug 27, 2012

How to Get a Transcript or Copy of a Prior Year’s Tax Return from the IRS

Here is a word from the Goodfellas at the IRS:

Taxpayers should keep copies of their tax returns, but if they cannot be located or have been destroyed during natural disasters or by fire, the IRS can help. Whether you need your prior year’s tax return to apply for a loan or for legal reasons, you can obtain copies or transcripts from the IRS.

Here are 10 things to know if you need federal tax return information from a previously filed tax return.

1. Get copies of your federal tax return via the web, phone or by mail.

2. Transcripts are free and are available for the current and past three tax years.

3. A tax return transcript shows most line items from your tax return as it was originally filed, including any accompanying forms and schedules. It does not reflect any changes made after the return was filed.

4. A tax account transcript shows any later adjustments either you or the IRS made after you filed your tax return. This transcript shows basic data including marital status, type of return filed, adjusted gross income and taxable income.

5. To request either type of transcript online, go to and use the online tool called Order A Transcript. To order by phone, call 800-908-9946 and follow the prompts in the recorded message.

6. To request a 1040, 1040A or 1040EZ tax return transcript through the mail, complete IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses, partnerships and individuals who need transcript information from other forms or need a tax account transcript must use Form 4506-T, Request for Transcript of Tax Return.

7. If you order online or by phone, you should receive your tax return transcript within five to 10 days from the time the IRS receives your request. Allow 30 calendar days for delivery of a tax account transcript if you order by mail.

8. If you need an actual copy of a previously filed and processed tax return, it will cost $57 for each tax year you order. Complete Form 4506, Request for Copy of Tax Return, and mail it to the IRS address listed on the form for your area. Copies are generally available for the current year and past six years. Please allow 60 days for delivery.

9. The fee for copies of tax returns may be waived if you are in an area that is declared a federal disaster by the President. Visit, keyword “disaster,” for more guidance on disaster relief.

10. Forms 4506, 4506-T and 4506T-EZ are available at or by calling 800-TAX-FORM (800-829-3676).

Aug 24, 2012

Mailroom Hustler: Former IRS Employee Charged With Stealing Taxpayer's Identity

  A former mail-room worker at a Philadelphia IRS office admitted in federal court on August 14th that she used a database at work to steal her landlord's identity and open credit-card accounts - and got caught when she tried to pay a $1,003 utility bill with a fraudulent Capital One card.  Domeen Flowers, 48, a Philadelphia native now living in Winter Park, Fla., was hired in 2007 to work at the IRS, authorities said. She was renting a house from the landlord, identified only as "E.R.," on Hale Street near Brous Avenue in Mayfair, when she tapped into the system in June 2009. Capital One placed a hold on one of the cards when Flowers tried to pay the large utility bill, and the company mailed a letter to E.R. at the Hale Street address saying it needed additional information to remove the hold. Several days later Flowers drafted a bogus letter on IRS letterhead and sent it to E.R.'s residence to obtain more identifying information so she could get the hold removed. The letter said the IRS would audit her unless she faxed copies of her driver's license and Social Security card to the IRS. The letter instructed E.R. to fax the documents to Flowers' work area. Flowers subsequently was transferred to IRS offices in Maitland, Fla., before authorities informed her that she was a target of the investigation, Assistant U.S. Attorney Floyd Miller said. The prosecutor said Flowers quit the IRS last year.  Flowers, who is free on personal-recognizance bond, pleaded guilty to aggravated identity theft, mail fraud and multiple counts of unauthorized inspection and disclosure of tax returns. She faces a mandatory minimum two years in a federal lockup. Her sentencing is Dec. 10.

Aug 23, 2012

Can't Do Nuttin' for Ya Man: Flavor Flav's Huge Tax Bill

Yeeeeeeaaaaaah, booooooyyyyyeeeee....I owe what?!

Rapper Flavor Flav has found himself in trouble with tax authorities after allegedly wracking up debts of nearly $1 million.

Documents filed by officials at the Department of the Treasury suggest the Public Enemy star owes payments dating back to 2004 and 2005, according to

Flavor Flav – real name William Drayton, Jr. – previously had a tax lien filed against him in 2009 by officials in California. The bill was for over $183,000.

Documents recently filed by the Department of the Treasury claim that Flav owes back taxes from 2004-2006. Specifically, $52,243.47 for 2004, $303,035.93 for 2005, and $550,971.16 for 2006.

The total comes out to $906,250.56.....and counting (interest and penalties is a monster).

Aug 22, 2012

Ski Mask Way: Three ex-Chase bank workers involve in tax scheme

Warning: Video contains alot of profanity. Don't click on video if you know that you don't like  rap, 50 Cent and curses. You have been warned!

Here is a reminder that robbery doesn't always happen with a gun:

Three former employees at JPMorgan Chase & Co branches in New York pleaded guilty on August 13th to using the identities of Puerto Rican customers to file fraudulent tax returns, U.S. authorities said.

In the first scheme, Katherine Torres, a former Chase branch manager, and Rosalind Smith, a former employee at the same branch, pled guilty to participating in a scheme that defrauded the Internal Revenue Service and New York State out of over $1 million. In the second scheme, Judith Fulgencio, a former personal banker at another Chase bank branch, pled guilty to participating in a scheme that also defrauded the IRS and New York State out of more than $1 million.

The Manhattan US Attorney’s Office said the refunds were obtained by filing phony tax returns using identities stolen from Puerto Rican residents, who are generally exempt from paying federal income tax and don’t have to file.

Aug 21, 2012

Don’t Overlook the Benefits of Miscellaneous Deductions

Here is a message from the Goodfellas at the IRS

If you are able to itemize your deductions on your tax return instead of claiming the standard deduction, you may be able to claim certain miscellaneous deductions. A tax deduction reduces the amount of your taxable income and generally reduces the amount of taxes you may have to pay.
Here are some things you should know about miscellaneous tax deductions:

Deductions Subject to the 2 Percent Limit. You can deduct the amount of certain miscellaneous expenses that exceed 2 percent of your adjusted gross income. Deductions subject to the 2 percent limit include:
  • Unreimbursed employee expenses such as searching for a new job in the same profession, certain work clothes and uniforms, work tools, union dues, and work-related travel and transportation.
  • Tax preparation fees.
  • Other expenses that you pay to:
– Produce or collect taxable income,
– Manage, conserve, or maintain property held to produce taxable income, or
– Determine, contest, pay, or claim a refund of any tax.

Examples of other expenses include certain investment fees and expenses, some legal fees, hobby expenses that are not more than your hobby income and rental fees for a safe deposit box if it is not used to store jewelry and other personal effects.

Deductions Not Subject to the 2 Percent Limit. The list of deductions not subject to the 2 percent limit of adjusted gross income includes:
  • Casualty and theft losses from income-producing property such as damage or theft of stocks, bonds, gold, silver, vacant lots, and works of art.
  • Gambling losses up to the amount of gambling winnings.
  • Impairment-related work expenses of persons with disabilities.
  • Losses from Ponzi-type investment schemes.
Qualified miscellaneous deductions are reported on Schedule A, Itemized Deductions. Keep records of your miscellaneous deductions to make it easier for you to prepare your tax return when the filing season arrives.

There are also many expenses that you cannot deduct such as personal living or family expenses. You can find more information and examples in IRS Publication 529, Miscellaneous Deductions, which is available on or by calling 800-TAX-FORM (800-829-3676).

Aug 20, 2012

Tax Preparers Hall of Shame: Inmate Pleads Guilty in Prison Tax Fraud Scheme

New Inductee of the National Tax Preparers Hall of Shame goes to..... inmate #F1040 Kevin Dunham
Kevin D. Dunham, 45, an inmate at the Western Missouri Correctional Center in Cameron, Mo., pleaded guilty on August 6th before U.S. District Judge Brian C. Wimes to a charge contained in a Feb. 21, 2012, federal indictment.

By pleading guilty, Dunham admitted that he prepared false tax returns for inmates in 2008 and 2009 while incarcerated at the Farmington Correctional Center in Farmington, Mo., and the Western Missouri Correctional Center.

Dunham obtained inmates’ names and Social Security numbers and created false Form 1040EZs. Dunham also prepared false Form W2s on a typewriter he had in his cell, and filed those false Form W2s along with the false Form 1040EZs, which were handwritten. The returns were mailed to inmates’ families outside the prison, who forwarded them to the IRS. The refund checks were then sent to the inmates’ families, who divided the money between themselves, the inmates and Dunham.

Dunham received approximately $200 to $300 per return, which was paid to his mother. She then deposited some of the money into his prison account.

Dunham filed false tax returns totaling $139,644 in false claims, according to the indictment. The IRS actually paid $54,814 in fraudulent refunds.

Crime doesn't pay, especially when you are doing the crime as an inmate!

Aug 17, 2012

Leaving Here: Ten Tax Tips for Individuals Selling Their Home

Here is a message brought to you by the Goodfellas at the IRS

The Internal Revenue Service has some important information for those who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may be able to exclude all or part of that gain from your income.

Here are some tips from the IRS to keep in mind when selling your home:

In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

You are not eligible for the full exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

If you can exclude all of the gain, you do not need to report the sale of your home on your tax return.

If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

You cannot deduct a loss from the sale of your main home.

Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude. Most tax software can also help with
this calculation.

If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523, Selling Your Home, for details.

When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at or by calling 800-TAX-FORM

Aug 16, 2012

Gone: Moving Expense Tax Deduction

Warning: If you don't like curses or Kanye West, don't view video. You have been warned!

Here is a message brought to you by the Goodfellas at the IRS.

School’s out for the summer, and summer is a popular time for people to move - especially families with children. If you are moving to start a new job or even the same job at a new job location, the IRS offers 10 tax tips on expenses you may be able to deduct on your tax return.

1. Expenses must be close to the time you start work Generally, you can consider moving expenses that you incurred within one year of the date you first report to work at a new job location.

2. Distance Test Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous main job location was from your former home. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from that former home.

3. Time Test Upon arriving in the general area of your new job location, you must work full time for at least 39 weeks during the first year at your new job location. Self-employed individuals must meet this test, and they must also work full time for a total of at least 78 weeks during the first 24 months upon arriving in the general area of their new job location. If your income tax return is due before you have satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test. There are some special rules and exceptions to these general rules, so see Publication 521, Moving Expenses for more information.

4. Travel You can deduct lodging expenses (but not meals) for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay, but you can only deduct one trip per person.

5. Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property, including the cost of shipping household pets. You may be able to include the cost of storing and insuring these items while in transit.

6. Utilities You can deduct the costs of connecting or disconnecting utilities.

7. Nondeductible expenses You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, a drivers license renewal, costs of buying or selling a home, expenses of entering into or breaking a lease, or security deposits and storage charges, except those incurred in transit and for foreign moves.

8. Form You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your deduction for moving expenses, use Form 3903, Moving Expenses.

9. Reimbursed expenses If your employer reimburses you for the costs of a move for which you took a deduction, the reimbursement may have to be included as income on your tax return.

10. Update your address When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS

Aug 15, 2012

Weed: The IRS vs. The Medical Marijuana Industry

Warning: If you don't have a sense of humor or don't like curses, don't view this video. You have been warned!

I hope you saved your money if you own a medical marijuana dispensary.

Medical marijuana dispensaries that have taken federal tax deductions are about to be gut-checked by the Internal Revenue Service (IRS), thanks to a recent ruling by the U.S. Tax Court in Washington, D.C.

In Olive v. Commissioner (PDF), judges unanimously found that the owner of the Vapor Room Herbal Center, one of San Francisco’s largest and most profitable dispensaries, was not allowed to take business deductions because the business was trafficking in a controlled substance.

The tactic has been increasingly favored by the IRS since 2008, when the U.S. tax agency began conducting audits of major California dispensaries. One of the first businesses targeted by the IRS was the Martin Alliance for Medical Marijuana, which was forced to shut its doors after the IRS cited § 280E of the federal tax code, which prohibits deductions on sales of controlled substances, and demanded millions of dollars in back taxes.

Aug 14, 2012

Tax Preparers' Hall of Shame: N.J. Tax Preparer Pleads Guilty to Filing Bogus Tax Returns

New Inductee of the National Tax Preparers Hall of Shame goes to..... Alicia Barnes.

A New Jersey corrections officer who is also sole owner and operator of a tax preparation business in Orange, N.J., has pleaded guilty to filing false tax returns.

Alicia Barnes, of Irvington, N.J., admitted Wednesday to one count of aiding and assisting in the preparation and filing of false personal federal tax returns. She also pled guilty to one count of knowingly subscribing to false personal federal income tax returns.

Each count carries a maximum of three years in prison and a fine of $250,000. Barnes is scheduled to be sentenced on Nov. 9, 2012.

According to court statements, Barnes filed 42 false tax returns between 2006 and 2008 on behalf of clients at her tax prep business, Just Taxes Unlimited LLC. She fabricated deductions for charitable contributions and unreimbursed employee expenses. During the same time frame, Barnes failed to report income she earned through her tax preparation business.

Barnes collectively racked up a tax loss of roughly $200,000. She has agreed to make full restitution to the IRS.

Congrats Alicia Barnes and leave the tax returns to the real tax professionals.

Aug 13, 2012

The Nanny Called Fran: Why Paying Your Nanny Through Your Business Books is Illegal

You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done. If the worker is your employee, it does not matter whether the work is full time or part time or that you hired the worker through an agency or from a list provided by an agency or association. It also does not matter whether you pay the worker on an hourly, daily, or weekly basis, or by the job.

To learn more about the infamous Nanny Tax, be sure to check out the Household Employer's Tax Guide, Publication 926. This guide takes you through all the information you need about nanny taxes. It's well organized and includes helpful tips, explanations, and a Household Employer's Checklist

I received a link from Sandra McAubre at and thought it would be an interesting to share. The article is called  “Why Paying Your Nanny Through Your Business Books is Illegal". I love how the article talks about how deducting nanny expenses as a business tax deduction is illegal. We all know that IRS audits can lead to penalties, back taxes, divorce (hopefully you didn't marry for money) and alot of headaches. Divorce is a joke but audits still suck. Therefore, don't think you are smarter than the IRS and try to do it.

Here is the link from the Goodfellas at

Thank you Sandra!!!

Aug 10, 2012

Stop Being Greedy: IRS Investigator Concealed Timecards from Labor Dept.

An Internal Revenue Service employee who owned a Sears Hometown Store on the side has pleaded guilty to concealing records in a U.S. Department of Labor investigation of his retail employees’ wages and hours.

The U.S. Attorney for the District of Vermont said that Richard Andersen, 46, of Franklin, Vt., pleaded guilty Monday in U.S. District Court in Burlington to a charge of concealing records in a federal Department of Labor Investigation. U.S. District Judge William K. Sessions III released Andersen on conditions pending sentencing, which has been set for Nov. 26, 2012.

A federal grand jury in Burlington returned a four-count indictment in February charging Andersen with various crimes relating to obstructing a Department of Labor Wage and Hour investigation in early 2011 focused on Andersen’s business, a Sears Hometown Store in St. Albans.

According to court records, Andersen worked full-time in Burlington for the IRS as an investigator in connection with the IRS’s fuel tax program. He was allowed to own the Sears Hometown store outside of his IRS employment. He has been suspended from the IRS since the charges were brought.

In early 2011, investigators from the Department of Labor in Vermont began an administrative investigation concerning the store’s compliance wage and hour regulations. As part of the investigation, DOL investigators requested and then subpoenaed store records, including timecards for employees. Andersen admitted in court that he concealed the existence of the store timecards, failing to disclose them during the investigation, which was resolved by DOL in 2011. Andersen faces up to 20 years of imprisonment and fines of up to $250,000.

Moral of the story: STOP BEING GREEDY!!!

Aug 9, 2012

Protect Your Neck: IRS may have refunded $5 billion or more to identity thieves

More depressing news brought to you by the Goodfellas at The IRS

The Internal Revenue Service may have delivered more than $5 billion in refund checks to identity thieves who filed fraudulent tax returns for 2011, Treasury Department investigators said on August 2nd. They estimate another $21 billion could make its way to ID thieves over the next five years.

The IRS is detecting far fewer fraudulent tax refund claims than actually occur, according to a government audit that warned the widespread problem could undermine public trust in the U.S. tax system.

Although the IRS detected about 940,000 fraudulent returns for last year claiming $6.5 billion in refunds, there were potentially another 1.5 million undetected cases of thieves seeking refunds after assuming the identity of a dead person, a child or someone who normally wouldn't file a tax return.

In one example, investigators found a single address in Lansing, Mich., that was used to file 2,137 tax returns. The IRS issued more than $3.3 million in refunds to that address. Three addresses in Florida, the center of the identity theft crisis, filed more than 500 returns totaling more than $1 million in refunds for each address.

In another troubling scenario, hundreds of refunds were deposited into the same bank account — a red flag for investigators searching for ID thieves who may be filing for refunds for multiple people. In one instance, the IRS deposited 590 refunds totaling more than $900,000 into one account.

Aug 8, 2012

Senator Rubio to IRS: Lay off Olympic medalists

Olympic athletes have enough to worry about without the IRS showing up to claim their piece of the prize. However, they are taxpaying citizens like the rest of us.

When an athlete wins a medal, they also receive a cash prize as part of their earnings -- $25,000 for gold, $15,000 for silver and $10,000 for bronze. All of which can be taxed by the Internal Revenue Service.

Since it is election season, of course politicans will make a big deal of this issue. Sen. Marco Rubio has introduced legislation that would stop the IRS from taxing American Olympic medalists on their winnings at the games.

Rubio, thought to be on the short-list to be Mitt Romney's running mate, called it a "ridiculous tax law."

"Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness," Rubio said in a statement.

"Athletes representing our nation overseas in the Olympics shouldn't have to worry about an extra tax bill waiting for them back home."

"We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it," Rubio added.

My questions are the following:
  1. Athletes are independent contractors, what make them more special than the average citizen getting paid as an independent contractor?
  2. There are many people working aboard representing our country, what about exempting their taxes?
  3. I wonder if doctors or tax accountants dedicate their lives to excellence?
I'm a big time sports fan. I did organized sports from my elementary to college days. I just don't believe that money for medals should be tax exempt. There are alot of hard-working citizens that are struggling because taxes are kicking their butts. Winning a medal is special but there are thousands of other heroes that don't get media attention. In that case, why don't we exempt educators, firefighters, and nurses' wages. They are American heroes in my eyes too.

Aug 7, 2012

Do Good: House Approves Firing of Tax-Delinquent Federal Workers

The House approved legislation on July 31 that would require the federal government to terminate workers with "seriously delinquent" tax debts. The Federal Employee Tax Accountability Act of 2011 passed on a motion to suspend the rules, which requires a two-thirds majority vote. The bill, sponsored by Representative Jason Chaffetz (R-Utah) received 263 Republican votes and 114 votes from Democrats.
The bill also prohibits the government from hiring individuals with a tax debt on which a public lien notice has been filed. The measure now goes to the Senate for approval.
The vote on the measure comes after Republicans and Democrats, especially those from the Washington, DC, area, have sparred for months over proposals dealing with the federal workforce.
Under current law, only IRS employees can be fired for income tax delinquency.
The Federal Employees Tax Accountability Bill requires the Office of Personnel Management to put in place procedures ensuring due process. The government would be required to give workers 180 days to show their debt is being paid off.
Moral of the story for government workers: Do good and pay your damn taxes like the rest of us!

Aug 6, 2012

What a Combination: The IRS and Social Media

Ok, no more excuse about not knowing about the IRS. The IRS uses a variety of technologies to help you get the tax information you need. Here are six ways the IRS uses social media to share information on tax changes, initiatives, products and services:

1. IRS2Go 2.0 IRS’s smartphone application allows you to check your refund status, get tax updates and follow the IRS via Twitter. IRS2Go 2.0 is available in the Apple App store for iPhone or iPod touch devices and in the GooglePlay store for Android devices.

2. YouTube IRSvideos YouTube Channel offers short, informative clips on various tax-related topics. The videos are available in English, American Sign Language and Spanish.

3. Twitter IRS tweets include tax-related announcements, news for tax professionals and updates for job seekers. Follow them @IRSnews.

4. Facebook IRS has Facebook pages that post tax information for individuals, tax professionals, and for those needing help resolving long-standing tax issues with the IRS.

5. Audio files for Podcasts These short audio recordings provide information on tax-related topics -- one per podcast. The audio files (along with transcripts) are available on iTunes or through the Multimedia Center on

6. Widgets These tools, which can be placed on websites, blogs or social media networks, direct people to visit for information. The widgets feature the latest tax initiatives and programs and can be found on Marketing Express, the marketing site that allows IRS partners and tax preparers to customize their IRS communications products.

As a reminder, the IRS uses these tools to share information with you. Do not post any personal information on social media sites, especially your Social Security number or other confidential information. The IRS will not be able to answer personal tax or account questions on any of these platforms.

Aug 3, 2012

Get'em Buck: IRS auctions off Young Buck’s personal items

I'm a big fan of rap music but these artists need to call me before filing taxes!
The IRS auctioned off Young Buck’s personal items from his Tennessee home, while the rapper watched from prison.  He is currently serving an 18-month sentence for gun possession.  The auction brought in $53,000 and will be put towards the reported $200,000 he owes in back taxes.
Along with awards, jewelery, and studio equipment, Hip Hop DX also reports that the rapper’s trademarked name is for sale as well.
Young Buck is said to have purchased several items back, including his 615 Cashville chain, which sold at auction for $12,600, but is actually worth $20,000.
If you really want to see something both sad and funny, check out Young Buck's YouTube response about the auction. The response is too crazy for me to post on my blog.

Aug 2, 2012

My Attorney Bernie: Vegas lawyer pleads guilty to income tax evasion

A Las Vegas lawyer is facing prison time after pleading guilty in federal court to income tax evasion.
U.S. Attorney Daniel Bogden says Charles LoBello pleaded guilty on July 23rd to one charge of a 10-count indictment alleging he falsified his personal income tax returns from 2001 through 2005.

LoBello could face up to five years in prison and a $250,000 fine. U.S. District Judge James Mahan set sentencing Oct. 23.

LoBello was accused of concealing more than $900,000 in income from the Internal Revenue Service.

Good luck in jail Mr. LoBello! I would recommend keeping your profession a secret in jail.

Aug 1, 2012

Shop Around: List of 2012 Summer Sales Tax Holidays

States holding “tax holidays” temporarily drop state sales tax collections on back-to-school items such as clothing, footwear, school supplies, computers and certain other products. However, local sales taxes may still be imposed in some communities.

Check out what these states are offering this summer:
Alabama: On Aug. 3-5, the following are exempt: clothing (not accessories or protective or recreational equipment) with a sales price of $100 or less per item; single purchases, with a sales price of $750 or less, of computers, computer software, school computer equipment; noncommercial purchases of school supplies, school art supplies and school instructional materials with a sales price of $50 or less per item; and noncommercial book purchases with a sales price of $30 or less per book.

Arkansas: On Aug. 4-5, the following are exempt: sales of clothing items under $100, clothing accessories or equipment under $50, school art supplies, school instructional materials and school supplies.

Connecticut: On Aug. 19-25, clothing and footwear costing less than $300 per item are exempt. Not included are accessories or athletic or protective clothing.

Florida: On Aug. 3-5, the following are exempt: clothing with a sales price of $75 or less per item and school supplies with a sales price of $15 or less per item. The holiday exemption is inapplicable to sales of such items made within a theme park, entertainment complex, public lodging establishment or airport.

Iowa: On Aug. 3-4, clothing and footwear with a sales price of less than $100 per item is exempt. However, the exemption does not include any special clothing or footwear that is primarily designed for athletic activity or protective use and that is not normally worn except when used for the athletic activity or protective use for which it is designed. The exemption also excludes accessories or the rental of any clothing or footwear.

Louisiana: On Aug. 3-4, the first $2,500 of the sales price of noncommercial purchases (not leases) of items of tangible personal property (not vehicles or meals). Although the holiday exemption does not apply to local taxes, St. Charles Parish will waive its local sales tax during the same weekend as the state holiday.

Maryland: On Aug. 12-18, items of clothing and footwear with a taxable price of $100 or less are exempt. Accessories are not included.

Missouri: On August 3-5 the following items are exempt: noncommercial purchases of clothing (but not accessories) with a taxable value of $100 or less per item; school supplies up to $50 per purchase; computer software with a taxable value of $350 or less; and computers and computer peripherals up to $3,500. Localities may opt out. The tax holiday does not apply to any retailer when less than two percent of their merchandise offered for sale qualifies for the holiday. In such a case, the retailer must offer a sales tax refund in lieu of the holiday.

New Mexico: On Aug. 3-5, the following are exempt: footwear and clothing (not accessories or athletic or protective clothing) with a sales price of less than $100 per item; school supplies with a sales price of less than $30 per item; computers with a sales price of $1,000 or less per item; computer peripherals with a sales price of $500 or less per item; book bags, backpacks, maps and globes with a sales price less than $100 per item; and handheld calculators with a sales price of less than $200 per item. Retailers are not required to participate.

New York: Although the state does not provide a sales tax holiday per se, the state does provide a sales and use tax exemption for clothing and footwear. Items of clothing and footwear sold for less than $110 are exempt from the state’s sales and use tax.

North Carolina: On August 3-5, the following are exempt: clothing and school supplies with a sales price of $100 or less per item; school instructional materials with a sales price of $300 or less per item; sport/recreational equipment with a sales price of $50 or less per item; computers with a sales price of $3,500 or less; and computer supplies with a sales price of $250 or less per item. The exemption does not apply to clothing accessories, any item sold for use in a trade or business, educational software, furniture, luggage, stereo equipment, DVD players, and similar equipment, or protective equipment.

Oklahoma: On Aug. 3-5, items of clothing and footwear with a sales price of less than $100 are exempt. The holiday does not apply to the rental of clothing or footwear, the sale of special clothing or footwear primarily designed for athletic or protective use, or the sale of accessories.

South Carolina: On Aug, 3-5, clothing (but not rentals), clothing accessories, footwear, school supplies, computers, printers, printer supplies, computer software, bath wash clothes, bed linens, pillows, bath towels, shower curtains and bath rugs are exempt.

Tennessee: On Aug. 3-5, clothing (but not accessories), school supplies and school art supplies with a sales price of $100 or less per item; and computers with a sales price of $1,500 or less per item are exempt.

Texas: On Aug. 17-19, clothing and footwear and school backpacks with a sales price of less than $100 per item are exempt. The exemption does not include accessories, athletic or protective clothing or rentals.

Virginia: On Aug. 3-5, clothing and footwear with a sales price of $100 or less per item and school supplies with a sales price of $20 or less per item are exempt.