criminal prosecution | TaxConnections

24 Apr 2019

The Difference Between An Eggshell Audit, Criminal Investigation And Criminal Prosecution

Most people dread IRS audits even when they are not guilty of a tax offense. After all, the IRS would rarely audit you if there is no suspicion of foul play when filing taxes. For those being audited by the IRS, it is prudent to get a tax controversy attorney or a qualified CPA. Before this, however, it is also crucial for you to understand the different types of audits and the reasons behind them. You may or may not have come across those three statements (eggshell audit, criminal investigation, and criminal prosecution) as a taxpayer. Either way the purpose of this article is enlighten you further on their differences as well as their correlation to each other.

So, What Is An Eggshell Audit?

An eggshell audit is a civil examination conducted by the IRS in situations where the taxpayer’s returns contain information that show sufficient indications of fraud. These issues include; an understatement on the record information pertaining to a taxpayer’s income, or an overstatement of the taxpayer’s credits or deductions which he or she was otherwise not entitled to. Both of these situations, though unique to each other, all conclude to a tax liability recorded by the taxpayer that is less than what is actually owed to the IRS. This would be against the fundamental requirement by the IRS to file accurate and correct returns.

Written by Kat Jennings | Posted in Criminal Investigation • Criminal Prosecution • Eggshell Tax Audit

09 May 2018

Virtual Currency Transactions Must Be Properly Reported For Tax Purposes

Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest.

In more extreme situations, taxpayers could be subject to criminal prosecution for failing to properly report the income tax consequences of virtual currency transactions. Criminal charges could include tax evasion and filing a false tax return. Anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000. Read More

Written by Kat Jennings | Posted in IRS • Tax Evasion • Virtual Currency

31 Jan 2013

Beware, US Citizens Using their Other Passport to Open Foreign Bank Accounts

FATCA requires foreign banks to conduct due diligence to see if there are US persons with foreign bank accounts. The fact you did not give a foreign bank your US passport still does not mean they might not report your foreign bank, financial and other accounts to the US and IRS.

FATCA was enacted to expose those US citizens and green card holders who are trying various tricks such as dual passports, etc. to avoid reporting and paying taxes on their foreign financial accounts.

Under the FATCA law in order to stay in good graces of the IRS, the foreign banks must put into place procedures to weed out account holders who are Americans and US green card holders even though the passport they opened the account with said otherwise. These are the questions you need to ask yourself before you take the HUGH risk of not reporting those accounts on form TDF 90-22.1 (FBAR form).

Are there any US address associates with your account?
Are there any US phone numbers with your account?
Is your birthplace listed as somewhere in the US?
Have you made more than one wire in or out form the US?
Any other item that may make the bank suspicious you are a US person. Read More