Tax Minute - August 31st

CRIMINAL TAX

Shelbyville woman sentenced to 30 months in federal prison for embezzlement and tax fraud.

A Shelbyville, Kentucky woman was sentenced yesterday to 30 months in prison for embezzling funds from her employer and including false information on her tax returns. According to court documents, Kimberly F. Jones was employed as an office manager at Guardian Retention Systems, LLC in Bullitt County, Kentucky. As office manager, she handled accounts payable and receivable, petty cash, payroll, and taxes. She also had electronic access to the bank accounts to pay bills. During her time as officer manger, Jones took several actions to embezzle from her employer. She used company credit cards in her name and the names of other employees to make unauthorized personal purchases. She directed unauthorized transfers from the company bank account and diverted customer revenue received by the company's electronic payment account. Jones also set up a business called KAB Enterprises, LLC to issue false invoices to Guardian Retention Systems. Jones would use the company credit cards and bank account to pay the fraudulent invoices from KAB Enterprises, LLC. Jones also failed to report her embezzled funds as income on her tax returns for tax years 2016 through 2018. "Outstanding work by the FBI and IRS during the investigation and prosecution of this case," stated U.S. Attorney Michael A. Bennett. "Along with the FBI and IRS, we will continue to aggressively investigate and prosecute fraudsters who abuse corporate positions of trust and pilfer company funds." "Jones betrayed the trust placed in her by her employer, and criminal conduct like this undermines the financial health of honest businesses and can threaten jobs held by honest employees," said Special Agent in Charge Jodi Cohen of the FBI's Louisville Field Office. "As a result, FBI Louisville, the IRS, and the United States Attorney's Office will continue our work to hold corrupt insiders accountable for their crimes." A United States District Judge for the Western District of Kentucky sentenced Jones to 30 months imprisonment and ordered her to pay $260,034 in restitution. There is no parole in the federal system.

NEW FORMS & PUBLICATIONS

• Form 12153 (sp) Request for a Collection Due Process or Equivalent Hearing (Spanish Version)

• Form 14234-A Compliance Assurance Process (CAP) Research Credit Questionnaire (CRCQ)

• Publication 5248 IRS Form 990-N Electronic Filing System (e-Postcard) User Guide

• Form 990 (Schedule D) Supplemental Financial Statements

TODAY’S TAX DEADLINES

• EMPLOYERS. Deposit payroll tax for payments on Aug 24-26 if the semiweekly deposit rule applies.

• WAGERS. File Form 730 and pay tax on wagers accepted during July.

• TRUCKERS. File Form 2290 and pay the tax for vehicles first used during July.
  PROCEDURE: EFTPS users: Payments must be scheduled by 8 PM ET at least one calendar day before the tax due date.

TAX TIPS AND NEWS

Understanding federal tax obligations during Chapter 13 bankruptcy.

Bankruptcy is a last resort for taxpayers to get out of debts. For individuals, the most common type of bankruptcy is a Chapter 13. This section of the bankruptcy law allows individuals and small business owners in financial difficulty to repay their creditors. Chapter 13 bankruptcy is only available to wage earners, the self-employed and sole proprietor businesses. Tax obligations while filing Chapter 13 bankruptcy:

• Taxpayers must file all required tax returns for tax periods ending within four years of their bankruptcy filing.

• During a bankruptcy taxpayers must continue to file, or get an extension of time to file, all required returns.

• During a bankruptcy case taxpayers should pay all current taxes as they come due.

• Failure to file returns and pay current taxes during a bankruptcy may result in a case being dismissed, converted to a liquidating bankruptcy chapter 7, or the chapter 13 plan may not be confirmed.

Other things to know:
- If the IRS is listed as a creditor in their bankruptcy, the IRS will receive electronic notice about their case from the

U.S. Bankruptcy Courts. People can check by calling the IRS’ Centralized Insolvency Operation at 800-973-0424 and giving them the bankruptcy case number.

• If one of the reasons a taxpayer is filing bankruptcy is overdue federal tax debts, they may need to increase their withholding or their estimated tax payments. The Tax Withholding Estimator can help people determine the proper withholding. The IRS.gov Estimated Taxes page has more information on estimated taxes. \

• People can receive tax refunds while in bankruptcy. However, refunds may be subject to delay or used to pay down their tax debts. Taxpayers can see if their refund has been delayed or offset against their tax debts by going to the Where’s My Refund tool or by contacting the Centralized Insolvency Operations Unit.

Other types of bankruptcy:
Partnerships and corporations file bankruptcy under Chapter 7 or Chapter 11 of the bankruptcy code. Individuals may also file under Chapter 7 or Chapter 11. Other types of bankruptcy include Chapters 9, 12 and 15. Cases under these chapters of the bankruptcy code involve municipalities, family farmers and fisherman, and international cases.

Parents can boost their back-to-school budget by claiming tax credits and refunds

Summer is slipping away, and another school year is starting. As kids head back to the classroom, parents are ticking items off the school supply list. If they want to boost their back-to-school budgets, parents and guardians should make sure they aren’t missing out on their 2021 refunds and tax credits. Many people don’t get their tax refund because they didn’t file a federal tax return. Some people choose not to file a tax return because they didn't earn enough money to be required to file. Generally, they won't receive a failure to file penalty if they are owed a refund – but they won’t receive their refund either. A refund isn’t the only money people might be missing out on when they don’t file. If they’re eligible for tax credits, like the child tax credit and the earned income tax credit, they’re leaving that money on the table as well.

• -  The child tax credit. The child tax credit helps families with qualifying children get a tax break. People may be able to claim the credit even if they don't normally file a tax return. Taxpayers qualify for the full amount of the 2021 child tax credit for each qualifying child if they meet all eligibility factors and their annual income isn’t more than:

  o $150,000 if they’re married and filing a joint return, or if they’re filing as a qualifying widow or widower. o $112,500 if they’re filing as a head of household.
  o $75,000ifthey’reasinglefileroraremarriedandfilingaseparatereturn.
  o Parents and guardians with higher incomes may be eligible to claim a partial credit. The Interactive Tax

  Assistant can help people check if they qualify.

• -  The earned income tax credit. The earned income tax credit helps low- to moderate-income workers and families

  get a tax break. If someone qualifies, they can use the credit to reduce the taxes they owe – and maybe increase their refund. Low- to moderate-income workers with qualifying children may be eligible to claim the earned income tax credit if certain qualifying rules apply to them. People may qualify for the EITC even if they can’t claim children on their tax return. Visit IRS.gov to learn how to claim the EITC without a qualifying child. People who qualify for the EITC, may also qualify for other tax credits, including:

  o Child tax credit and the credit for other dependents o Child and dependent care credit
  o Education credits
  o Recoveryrebatecredit