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Tax Collections after Shutdown-a Major Priority

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For the 16 day government shut down, tax enforcement and collections came to a halt. With the IRS now operating at full steam, should you be concerned?

The government shutdown from October 1 to October 16 closed critical U.S. government offices and furloughed the most essential federal employees. For those 16 days, the business of tax collections: analyzing returns, auditing taxpayers, and filing tax liens, stopped. Those targeted by the Internal Revenue Service, may have breathed a sigh of relief.

However, now that the government shutdown is over, the IRS is fully back up and running as normal with investigations, tax audits and collections resumed. So have federal prosecutions of cheating taxpayers.

The U.S. Department of Justice also experienced temporary furloughs during the shutdown that delayed prosecutions. Now that tax collectors and prosecutors are back to work, however, we’re beginning to see tax investigations and prosecutions return to the robust levels that existed before the shutdown.

In late October, for example, just a week after the government shutdown ended, federal prosecutors in Florida announced the closure of one of the most significant tax evasion cases in recent months. Here are some of the details of the case:

Dr. Patricia Lynn Hough, of Englewood, Florida, was convicted at trial of conspiring to defraud the IRS by concealing millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks. They also filed false individual income tax returns that did not report the existence of those foreign accounts or the income earned in those accounts.

Hough and her husband, who is awaiting trial, used nominee entities, including a foundation, and undeclared accounts at UBS and other foreign banks to conceal assets and income from the IRS. The couple also owned two medical schools in the Caribbean, and in 2007, sold the schools and the associated real estate for more than $35 million. Most of that money was not reported to the IRS, and the couple used the proceeds to purchase an airplane, two homes in North Carolina and a condominium in Sarasota, Florida.

Most tax evasion cases involve smaller five and six figure amounts not the enormous $35 million amount reported here. Many of the cases being prosecuted have the same theme:

  • Tax scammers trying to claim refunds to which they aren’t entitled.
  • Businessman skimming unreported proceeds or claiming expenses that aren’t valid.
  • Ordinary folks claiming that they earned much less than they really did just to pay a less in taxes.

The IRS is after all of them, and the government shutdown did little to stop the IRS’s pursuit of tax cheats.

Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA.  You can contact him at 866-829-3333 to obtain a free subscription of his newsletter titled The IRS Times & Inquirer.


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