August 29 - Criminal Tax Cases, New Rules & Tax Tips

CRIMINAL TAX CASES

Greene County man sentenced for tax evasion conspiracy

Joseph D. Radcliffe, of Elka Park, New York, was sentenced today to three years of probation, and to spend four consecutive weekends in jail as a condition of his probation, for conspiring with others to evade taxes on income earned from stock sales.

District Judge Glenn T. Suddaby also ordered Radcliffe to pay $109,106 in restitution to the IRS. Radcliffe, a former Wall Street stockbroker, pled guilty in December 2021 and admitted that from at least 2013 through 2019, he conspired with two family members to receive hundreds of thousands of dollars in personal income that went unreported to the IRS, allowing him to defraud the IRS and evade the assessment and payment of taxes on approximately $500,000 in unreported income. At the time he was evading the payment of taxes, Radcliffe also owed more than $1 million to the U.S. Securities and Exchange Commission (SEC), after settling fraud allegations with the SEC in 2011. Radcliffe has also failed to repay the SEC. In imposing sentence, Chief Judge Suddaby called Radcliffe's conduct "outrageous" and said Radcliffe had "doubled down" after his SEC fraud settlement in 2011, by subsequently defrauding the IRS. Radcliffe's unreported income originated from capital gains earned in brokerage accounts standing in the names of Crackerjack Classics LLC and Universal Consulting LLC. These companies made payments to Radcliffe, and for his benefit, including the following: $128,147 in mortgage payments and interest that the companies paid, from 2014 through 2019, to the bank that held the mortgage on Radcliffe's house in Elka Park; $109,022 that the companies paid to a New Jersey law firm, in 2014, 2015 and 2017, to settle Radcliffe's unpaid bills; and $99,675 that the companies paid, in 2015 and 2016, in checks made out to "Cash" and which Radcliffe negotiated for himself or had others negotiate for his benefit.

Radcliffe and his co-conspirators did not report Radcliffe's income to the IRS. Radcliffe further admitted that he did not file a tax return for himself, or otherwise report his income to the IRS, for the tax years 2013 through 2019. He did not maintain any bank or brokerage accounts in his name, and he did not hold or trade any securities in his own name. This case was investigated by IRS-CI and prosecuted by Assistant U.S. Attorney Michael Barnett.

Former senior executive of defense contractor pleads guilty to federal tax evasion charge

Concealed more than 530,000 dollars in income. A former senior executive for a defense contractor pleaded guilty in the District of Columbia today to tax evasion. According to court documents and statements made in court, from 2013 through 2015, Zachary A. Friedman, of New York, New York, worked in the United Arab Emirates as a senior executive for a U.S. Department of Defense contracting company. From 2013 to 2015 Friedman evaded taxes he owed to the IRS by providing false information to his tax preparer that underreported the income he earned for each of those years. In total, Friedman concealed approximately $530,000 in income, causing a tax loss to the government of more than $207,000. Friedman is the fourth defendant associated with the defense contracting company to plead guilty. Charles Squires (February 2022), James Robar (March 2022), and Ronald Thomas (April 2022) all pleaded guilty to tax evasion. Friedman is scheduled to be sentenced at a later date. He faces a maximum penalty of five years in prison for tax evasion. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department's Tax Division and U.S. Attorney Matthew M. Graves for the District of Columbia made the announcement. IRS-Criminal Investigation and the Special Inspector General for Afghanistan Reconstruction are investigating the case. Assistance was provided by the Joint Chiefs of Global Tax Enforcement (J5), which brings together the taxing authorities of Australia, Canada, Netherlands, United Kingdom, and the United States. Senior Litigation Counsel Nanette Davis and Trial Attorneys Sarah Ranney and Ezra Spiro of the Tax Division, and Assistant U.S. Attorney Leslie Goemaat of the U.S. Attorney's Office for the District of Columbia are prosecuting the case.

NEW RULES AND PUBLICATIONS

• Administrative Announcement 2022-17. The Office of Professional Responsibility (OPR) announces recent disciplinary sanctions involving attorneys, certified public accountants, enrolled agents, enrolled actuaries, enrolled retirement plan agents, and appraisers. These individuals are subject to the regulations governing practice before the Internal Revenue Service (IRS), which are set out in Title 31, Code of Federal Regulations, Part 10, and which are published in pamphlet form as Treasury Department Circular No. 230. The regulations prescribe the duties and restrictions relating to such practice and prescribe the disciplinary sanctions for violating the regulations.

• Rev. Rul. 2022-15, page 152. Interest rates: underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning October 1, 2022, will be 6 percent for overpayments (5 percent in the case of a corporation), 6 percent for underpayments, and 8 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 3.5 percent.

• ESTATE TAX Rev. Rul. 2022-16, page 171. Special Use Value: Farms: Interest Rates. The 2022 interest rates to be used in computing the special use value of farm real property for which an election is made under section 2032A of the Code are listed for estate of decedents.

• EXEMPT ORGANIZATIONS. T.D. 9964, page 172. These regulations provide guidance to state officials regarding the process by which they may obtain or inspect certain returns and return information (including information about final and proposed denials and
  revocations of tax-exempt status) for the purpose of administering state laws governing certain tax-exempt organizations and their activities. These regulations indirectly affect tax-exempt charitable organizations, applicants for exemption as charitable organizations, and certain other tax-exempt organizations

TAX TIPS

1. Tax Relief. COVID tax relief: IRS provides broad-based penalty relief for certain 2019 and 2020 returns due to the pandemic; $1.2 billion in penalties being refunded to 1.6 million taxpayers. To help struggling taxpayers affected by the COVID-19 pandemic, the IRS issued Notice 2022-36, which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late. Nearly 1.6 million taxpayers will automatically receive more than $1.2 billion in refunds or credits. Many of these payments will be completed by the end of September. Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season. "Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways," said IRS Commissioner Chuck Rettig. "The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time. This penalty relief will be automatic for people or businesses who qualify; there's no need to call." "Penalty relief is a complex issue for the IRS to administer," Rettig said. "We've been working on this initiative for months following concerns we've heard from taxpayers, the tax community and others, including Congress. This is another major step to help taxpayers, and we encourage those affected by this to review the guidelines."

2.  ICYMI: Op-ed by IRS Commissioner Chuck Rettig. In case you missed it, IRS Commissioner Chuck Rettig published an op-ed on Yahoo Finance: IRS sets the record straight: We’re going after tax-evaders, not honest Americans (yahoo.com).

3.  File Early.  It’s important for taxpayers to have all their information readily available before meeting with a tax professional. To ensure your clients are prepared, the IRS has developed a list of tax information and documents taxpayers may need, as well as tips on what to do if they’re missing important documents. This information is also available in Spanish. In addition, the IRS has created an e-poster outlining where to find the necessary information to file a 2021 tax return. The IRS also recently issued a special edition of A Closer Look by IRS Deputy Commissioner for Services and Enforcement Doug O’Donnell that encourages people to file as soon as possible and not wait for the October extension deadline."

4.  News from the Justice Department’s Tax Division. A Florida tax preparer was sentenced to one year and one day in prison for criminal contempt for continuing to prepare and file tax returns with the IRS in violation of a federal court order barring him from doing so. In addition to the term of imprisonment, the court ordered Guy Telfort to serve three years of supervised release and pay $762,338.88 in restitution to the United States.

5.  Technical Guidance. Notice 2022-35 specifies the current values for the corporate bond monthly yield curve and other interest rates that are used to determine minimum required contributions and minimum present values for qualified defined benefit pension plans.

Notice 2022-37 announces that Treasury and the IRS intend to amend the section 871(m) regulations to delay the effective/applicability date of certain rules in those final regulations and extends the phase-in period provided in Notice 2020-2, 2020-3 I.R.B. 327, for certain provisions of the section 871(m) regulations.