Editor’s Note: I’ve given a lot of thought to whether I believe this post is appropriate. I’ve decided that it is. History is important. Context is important. If we don’t expose lies and hatred for what they are, they grow, kind of like a fungus. Ignorance leads to more intolerance.
So below the fold is a story about James von Brunn, the white supremacist who, today, killed a man and terrorized others inside the US Holocaust Memorial Museum and how he believed that the Jewish population is responsible for our income tax. If you don’t want to read it, that’s okay. Just stop by tomorrow for more taxgirl goodness.
But for today, I think it needed to be said.
[click to continue…]
I know, I know. This doesn’t even feel like news. We’ve seen it coming for awhile now, ever since this little gem appeared on the Jenkens & Gilchrist web site in 2007:
At the time of the closing, Jenkens agreed to pay a civil penalty of $76 million and cooperate with the IRS and the feds in exchange for the firm not being prosecuted. The firm. We all knew what that meant: individual members of the firm were going down. We just weren’t sure who, though we had a pretty good idea.
Now, we have the official word. Seven tax professionals were charged yesterday in a massive tax evasion scheme. The Jenkens attorneys who were indicted are Paul Daugerdas, Erwin Mayer and Donna Guerin. Also indicted were Denis Field and Robert Greisman, originally from BDO Seidman and Raymond Craig Brubaker and David Parse, formerly of “Bank A.” Though no one is naming “Bank A” in the indictment, where it is identified only as a “foreign bank with U.S. headquarters in New York”, most believe the bank to be Deutsche Bank.
The indictment charges all defendants with conspiracy to defraud the IRS and to evade taxes. Additionally, each of the defendants but Parse is charged with multiple counts of tax evasion in connection with tax shelters. Daugerdas and Mayer are also accused of using these tax shelters to illegal reduce their personal income taxes.
Why these tax professionals? Why now? Lev L. Dassin, the acting U.S. Attorney for the Southern District of New York, has written:
We are dedicated to holding accountable tax and financial professionals whose deceit and fraud cost this country millions in tax revenues. The allegations contained in the indictment reflect a brazen disregard for the law.
In other words, the feds want to use these guys as an example. And considering the amount of money thought to be at stake, they’re pretty high profile examples.
My guess is that the timing of the indictment stems from mistakes made in the KPMG case. I am sure that the feds are determined not to let that happen again.
If you’re curious (admit it, you are), you can read the entire indictment here. It downloads as a pdf – and it’s 78 pages long. You’ve been warned.
It turns out that May was a pretty good month for Helio Castroneves.
On last Friday, the last remaining criminal charge against Castroneves – for conspiracy – was dropped. The month before, Castroneves was acquitted of six counts of tax evasion; the jury did not reach a verdict on the conspiracy charge. The feds initially indicated that they might pursue the remaining charge but in the end, decided against it.
Two days later, Castroneves won the Indianapolis 500 for the third time in his career. His winning speed? 150.318 mph. He remained near the top of the leaderboard for most of the race.
“Once I got in the front, it was, ‘Never look back,’” Castroneves said.
Now, with a historic win #4 looming before him – and his tax woes behind him – Castroneves has reason to keep looking ahead.
Those Housewives of New Jersey better brace themselves: the IRS has announced that it’s focusing its audits on wealthy individuals and corporations as part of a broader effort to crack down on international tax cheats.
IRS Commish Doug Shulman, a Bush appointee, has declared international compliance his “top priority.” He told the US House of Representatives, “Our long-term investment is to have a trend where wealthy individuals, large corporations, (those) who have really benefited from being in the United States, we’re going to make sure that they pay their taxes.”
Shulman’s comments came in response to a criticism by Representative Jose Serrano that reports indicate that the IRS audit rate for millionaires fell 19% between fiscal 2007 and 2008. That same report by Syracuse University claims that audits of corporations with more than $250 million in assets tumbled to 26% from 43% between 2005 and 2007.
Shulman has acknowledged that the percentage of audits for high wealth individuals has declined even as the number of audits has increased. The IRS audited about 5.6% of individuals making more than $1 million in fiscal year 2008, an 18% drop from the prior year. But, he noted, the average taxpayer still has a 1% chance of being audited compared with a 5.5% chance among millionaires.
Despite bickering about the size and reasons of the decrease, Shulman conceded that increased emphasis on compliance was necessary. Even as the feds continue to pound away at UBS and other banks that may be assisting with hiding assets for tax avoidance purposes, the IRS has announced that it is stepping up efforts to encourage compliance. The message from IRS to wealthy individuals who may be shielding assets is clear: show me the money.
