Tax Minute for 14 Sept

IRS Deadlines:

Deposit payroll tax for payments on Sep 7-9 if the semiweekly deposit rule applies.

TAX TIPS

• People who still haven’t filed a 2021 tax return should file electronically to avoid these common mistakes

Summer is winding down and the filing deadline for people who requested an extension is quickly approaching. Everyone who still needs to file a 2021 tax return should do so as soon as possible. Don't wait until the deadline to electronically file a complete — and accurate — return.

• Extension filers have until October 17 to file but filing electronically helps reduce processing time and correct errors.
  Mistakes on a tax return can also lead to longer processing time or cause the return to be rejected. Filing electronically can help taxpayers avoid many mistakes. Tax software does the math, flags common errors and prompts taxpayers for missing information. It can also help eligible taxpayers claim overlooked credits and deductions. Another way taxpayers can avoid mistakes is by using a reputable tax preparer, including certified public accountants, enrolled agents or other knowledgeable tax professionals.

• Here are some of the most common errors taxpayers should avoid:

  • Missing or inaccurate Social Security numbers. Each SSN on a tax return should appear exactly as printed on the Social Security card.

  • Misspelled names. Likewise, a name listed on a tax return should match the name on that person's Social Security card.

  • Entering information inaccurately. Taxpayers should carefully enter wages, dividends, bank interest, and other income received and reported on an information return. This includes any information needed to calculated credits and deductions. Using tax software should help prevent math errors, but individuals should always review their tax return for accuracy.

  • Incorrect filing status. Some taxpayers choose the wrong filing status. The Interactive Tax Assistant on IRS.gov can help taxpayers choose the correct status, especially if more than one filing status applies. Tax software also helps prevent mistakes with filing status.

  • Math mistakes. Math errors are some of the most common mistakes. They range from simple addition and subtraction errors to more complex calculation mistakes. Taxpayers should always double check their math.

  • Figuring credits or deductions Taxpayers can make mistakes figuring things like their earned income tax credit, child and dependent care credit, child tax credit, and recovery rebate credit. The Interactive Tax Assistant can help determine if a taxpayer is eligible for tax credits or deductions. Tax software will calculate these credits and deductions and include any required forms and schedules. Taxpayers should double check where items appear on the final return before clicking the submit button.

  • Incorrect bank account numbers. Taxpayers who are due a refund should choose direct deposit. This is the fastest way for a taxpayer to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax return.

  • Unsigned forms. An unsigned tax return isn't valid. In most cases, both spouses must sign a joint return. Exceptions may apply for members of the armed forces or other taxpayers who have a valid power of attorney. Taxpayers can avoid this error by filing their return electronically and digitally signing it before sending it to the IRS.

  • Taxpayers who file electronically and choose direct deposit get their refund faster. IRS Free File offers online tax preparation, direct deposit of refunds, and electronic filing —all for free to qualified individuals. Some options are available in Spanish. Many taxpayers also qualify for free tax return preparation from IRS-certified volunteers.

NEW FORMS:

Form 2350
Application for Extension of Time to File U.S. Income Tax Return

Form 990 (Schedule R)
Related Organizations and Unrelated Partnerships

NEW PUBLICATIONS

Publication 5101 (SP)
Intake/Interview and Quality Review Training (Spanish Version)

NEW CRIMINAL PROSECUTIONS

• Syracuse man sentenced to 51 months for committing wire fraud and filing false tax returns

  Syracuse, NY — Glen Zinszer, of Liverpool, New York was sentenced today to serve 51 months in federal prison for committing wire fraud and filing false tax returns, announced United States Attorney Carla B. Freedman, Thomas Fattorusso, Special Agent in Charge, New York Field Office, Internal Revenue Service – Criminal Investigation ("IRS-CI"), and Janeen DiGuiseppi, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI).

  As part of his previous guilty plea, Zinszer admitted that he began operating the Brazzlebox company in 2012, which he represented to investors would be like Facebook for business. Beginning in April 2013 and continuing until approximately the summer of 2016, Zinszer made false representations to investors about how Brazzlebox was doing to cause them to invest more money and stay invested. For example, Zinszer inflated Brazzlebox's user numbers and told employees to create fake user accounts to inflate those numbers, misrepresented purportedly revenue-generating strategic partnerships, forged documents to effectuate those falsehoods, and forged a letter of intent to purchase Brazzlebox for millions of dollars.

  From 2012 through 2016, Zinszer used a substantial portion of the money invested in Brazzlebox to finance his lifestyle rather than to operate the business, including paying mortgages on his homes and purchasing concert tickets and jewelry. Although Zinszer used money from Brazzlebox to finance his lifestyle, he willfully filed false tax returns underreporting his income in tax years 2013-2016.

  Senior United States District Judge Frederick J. Scullin, Jr. also imposed a 3 year term of supervised release, which will start after Zinszer is released from prison, and ordered him to pay restitution in the amount of $3,049,933 to his victims including the government, forfeiture in the amount of $2,763,811, and a $200 special assessment.

  Zinszer's case was investigated by the Internal Revenue Service – Criminal Investigation ("IRS-CI") and the Federal Bureau of Investigation, and was prosecuted by Assistant United States Attorneys Michael D. Gadarian and Geoffrey J.L. Brown.

• Former Utica tax preparer indicted for tax fraud

  Syracuse, NY — Dianna Nolan, formerly of Utica, New York, has been charged by indictment with two counts of filing false income tax returns and 15 counts of aiding and assisting the filing of false income tax returns. The indictment was announced by United States Attorney Carla B. Freedman and Thomas Fattorusso, Executive Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI), New York Field Office.

  The indictment alleges that Nolan worked as a professional tax return preparer in Oneida County, New York, between at least 2014 through 2018. Nolan is charged with filing false income tax returns on behalf of various clients during those years by falsely claiming losses for rental properties. Nolan is also charged with filing false tax returns on her own behalf for tax years 2017 and 2018 by failing to report all of the income she received from her tax preparation business.

  The charges filed against Nolan carry a maximum sentence of 3 years in prison, a fine of up to $250,000, a term of supervised release of up to 1 year, and a special assessment of $100 per count of conviction. A defendant's sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.

  The defendant, who recently moved to Florida, was arraigned today by videoconference before United States Magistrate Judge Miroslav Lovric and released pending a trial to be scheduled before Senior United States District Court Judge Norman A. Mordue.
  The charges in the indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty.

  This case is being investigated by Internal Revenue Service-Criminal Investigation Division (IRS-CI), and it is being prosecuted by Assistant U.S. Attorney Michael F. Perry.

• Keene woman pleads guilty to operating an unlicensed money transmitting business

  CONCORD — Aria DiMezzo, of Keene, New Hampshire, pleaded guilty in federal court on Monday to one count of operating an unlicensed money transmitting business, United States Attorney Jane E. Young announced today.
  According to court documents and statements made in court, between June 2020 and January 2021, DiMezzo operated a business in New Hampshire through which she exchanged fiat currency (mostly United States dollars) for virtual currency for a fee. DiMezzo recruited customers on websites, including localbitcoins.com, who sent money to her through bank accounts opened in her name and in the name of the Reformed Satanic Church, an organization she created. DiMezzo then sent customers bitcoin or other virtual currency in return. DiMezzo sold more than $1.5 million worth of virtual currency through the bank accounts that she operated as part of the business. DiMezzo did not register her business as a money transmitting business and she did not comply with any of the various regulations imposed on money transmitting businesses. For example, at no time did DiMezzo file currency transaction reports for transactions over $10,000, or suspicious activity reports for transactions over $2,000 that may involve funds derived from illegal activity, among other things.

  DiMezzo is scheduled to be sentenced on December 20, 2022.

NEW COURT OPINIONS

Kroner v. Comm'r, No. 20-13902, 2022 BL 321179 (11th Cir. Sept. 13, 2022)

This appeal is about the IRS's process for assessing tax penalties. By statute, the IRS cannot assess certain penalties against a delinquent taxpayer "unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination . . . ." 26 U.S.C. § 6751(b) . That statute tells us who must approve—the immediate supervisor—and how that approval must be made—in writing. This appeal presents the questions of what the supervisor must approve and when the supervisor must approve it. We have previously avoided deciding these questions, see TOT Prop. Holdings, LLC v. Comm'r, 1 F. 4th 1354 , 1372 n.25 (11th Cir. 2021), but must answer them now because they control
the resolution of this appeal. Burt Kroner failed to report millions of dollars in income. After an audit, an IRS examiner sent him a letter that said Kroner owed penalties on top of his back taxes. See 26 U.S.C. § 6662 . Kroner tried to negotiate without success; the examiner's direct supervisor signed a second letter, which proposed the same penalties, as well as a form approving those penalties. Eventually, after more failed negotiation, the IRS issued Kroner a statutory notice of deficiency, which triggered his right to petition the Tax Court for review. The Tax Court disallowed the penalties, holding that the supervisor's approval came too late because she had not approved the penalties at the time of the first letter. The IRS appealed, arguing that the Tax Court misinterpreted Section 6751(b)'s requirements. We agree with the IRS. Section 6751(b) says that "[n]o penalty . . . shall be assessed unless the initial determination of such assessment is personally approved. . . ." The statute prohibits assessing a penalty unless a condition has been met—supervisory approval of the initial determination of assessment. But the statute regulates assessments; it does not regulate communications to the taxpayer. Because the IRS did not assess Kroner's penalties without a supervisor approving an "initial determination of such assessment," we hold that the IRS has not violated Section 6751(b). Thus, we reverse the Tax Court.