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Monthly Archives: September 2019

TIGTA Identified Some Improvements Necessary in CDP Appeals.



Final Report issued on September 6, 2019. Highlights of Reference Number:  2019-10-058 to the Commissioner of Internal Revenue.
The Collection Due Process hearing provisions are designed to give taxpayers an opportunity for an independent review to ensure that the levy action that has been proposed or the Notice of Federal Tax Lien that has been filed is warranted and appropriate.  An effective process is necessary to ensure that statutory requirements are met and taxpayers’ rights are protected.
This audit was initiated because TIGTA is statutorily required to determine whether the IRS complied with the required procedures under 26 United States Code Sections 6320 and 6330 when taxpayers exercised their rights to appeal the filing of a Notice of Federal Tax Lien or the issuance of a Notice of Intent to Levy.
Appeals properly informed taxpayers that Collection Due Process and Equivalent Hearings were conducted by an impartial hearing officer with no prior involvement with the tax or tax periods covered by the hearing.  However, TIGTA identified some errors that were similar to errors identified in prior reports.  Specifically, the Office of Appeals did not always classify taxpayer requests properly, and as a result, some taxpayers received the wrong type of hearing.  TIGTA reviewed a statistically valid stratified sample of 140 cases and identified nine taxpayer cases that were misclassified.  This is approximately the same number of misclassified cases that were identified in the prior year’s review.
Based on the same stratified sample, TIGTA determined that the Collection function did not timely process the hearing requests for an additional five taxpayers.  When taxpayers mail or fax their hearing request to the wrong Collection function location, Collection function procedures require employees to fax the taxpayer’s request to the appropriate Collection Due Process Coordinator at the correct location on the same day.  While the Office of Appeals provided taxpayers with the correct hearing type in these cases, the Collection function did not follow procedures.  As a result, the IRS may not have adequately protected the taxpayers’ rights due to the untimely processing of the misdirected hearing requests.
In addition, TIGTA continued to identify errors related to the determination of the Collection Statute Expiration Date (CSED) on taxpayer accounts.  TIGTA identified eight taxpayer cases that had an incorrect CSED.  For five taxpayer cases, the IRS incorrectly extended the time period, allowing the IRS additional time to collect delinquent taxes.  In the remaining three taxpayer cases, the IRS incorrectly decreased the time to collect the delinquent taxes.  Overall, this is approximately the same number of CSED errors that were identified in the prior year’s review.
TIGTA recommended that the Director, Collection, take action to provide reasonable assurance that Collection function personnel forward misdirected Collection Due Process and Equivalent Hearing requests to the correct location on the same day the requests are received.  TIGTA also recommended that the Chief, Appeals, update the inaccurate CSEDs for the eight taxpayer accounts that TIGTA identified with CSED errors.  IRS management agreed with both recommendations and plans to take appropriate corrective actions.
To view the report, including the scope, methodology, and full IRS response, go to:
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IRS Not Agree with Chiropractic Adjustments – Chiropractor Sentenced to Prison for Tax Evasion

According to DoJ, the owner of a chiropractic business was sentenced to Six (6) months in prison for tax evasion after pleading guilty to the charge in June 2019.

Richard Rogers, a Northborough, Massachusetts chiropractor, operated his practice from his residence. According to court documents, Rogers evaded his taxes from 2012 through 2016 by concealing his income from the Internal Revenue Service (IRS).

  • Rogers encouraged his clients to pay in cash and used a nominee bank account to negotiate check payments when he was not paid in cash.
  • He paid creditors using postal money orders, and
  • used credit card accounts opened with a fictitious social security number.
  • Rogers also concealed the ownership of his residence by titling the property in the name of a trust.
  • Rogers did not file federal tax returns from at least 2008 through 2016, despite his obligation to do so.
United States District Judge Timothy S. Hillman also ordered Rogers to pay $155,164 in restitution to the IRS.
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According to DoJ, a Houston Attorney Convicted of Offshore Tax Evasion Scheme Conspired to Repatriate More Than $18 Million in Untaxed Money Held in Foreign Banks

A Houston, Texas, attorney was convicted on September 6, 2019 of one count of conspiracy to defraud the United States and three counts of tax evasion.

According to the evidence presented at trial, Jack Stephen Pursley, also known as Steve Pursley, conspired with a former client to repatriate more than $18 million in untaxed income that the client had earned through his company, Southeastern Shipping.

Knowing that his client had never paid taxes on these funds, Pursley designed and implemented a scheme whereby the untaxed funds were transferred from Southeastern Shipping’s business bank account, located in the Isle of Man, to the United States.

Pursley helped to conceal the movement of funds from the Internal Revenue Service (IRS) by disguising the transfers as stock purchases in United States corporations owned and controlled by Pursley and his client.

At trial, the government proved that Pursley received more than $4.8 million and a 25% ownership interest in the coconspirator’s ongoing business for his role in the fraudulent scheme.

For tax years 2009 and 2010, Pursley evaded the assessment of and failed to pay the income taxes he owed on these payments by, among other means, withdrawing the funds as purported non-taxable loans and returns of capital.

The government showed at trial that Pursley used the money he garnered from the fraudulent scheme for personal investments, and to purchase assets for himself, including a vacation home in Vail, Colorado and property in Houston, Texas.

Judge Lynn Hughes has set sentencing for Dec. 9. Pursley faces a statutory maximum sentence of five years (5) in prison for the conspiracy count, and five (5) additional years in prison for each count of tax evasion. He also faces a period of supervised release, monetary penalties, and restitution.

Have an IRS Criminal Tax Problem? 

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Keeping 2 Sets of Books Gets Business Owner Jail Time!

According to DoJ, Long Island Business Owner Pleads Guilty to Obstructing Tax Laws Provided False Business Records to Impede an Internal Revenue Service Investigation.

In Central Islip, New York, a Brentwood, New York, business owner pleaded guilty to corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws,

According to court filings and facts presented at the plea proceeding, Jose Cerritos (Cerritos) owned and operated La Centro Americana Corp. (La Centro), a wholesale food distribution business based in Bay Shore, New York, that sold imported food products for resale to New York metropolitan area customers.

Cerritos diverted cash receipts from the business bank accounts, which caused La Centro’s tax returns for 2011 and 2012 to significantly underreport the size of the business - and its profits - to the Internal Revenue Service (IRS). He also filed his own individual income tax returns, falsely understating the income he received from La Centro.

Cerritos Also Gave The IRS False Business Records,
Which Purported To Show La Centro’s Yearly Sales For 2011 And 2012, But Omitted Millions Of Dollars
In Gross Receipts For Each Year. 

United States District Court Judge Joanna Seybert, who accepted Cerritos’ guilty plea, scheduled sentencing for March 6, 2020. Cerritos faces a statutory maximum sentence of three (3) years in prison. He also faces a period of supervised release, restitution, and monetary penalties.

Do You Want to Legally Reduce Your Taxes?

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Toll Free at 888-8TaxAid (888)882-9243.

Read more at: Tax Times blog