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A Yeadon, Pennsylvania man was convicted by a federal jury today in the U.S. District Court for the Eastern District of Pennsylvania of one count of conspiring to defraud the United States by filing false tax returns and preparing false tax returns that generated inflated refunds for his clients and 11 counts of aiding and assisting in the filing of false tax returns announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney William M. McSwain.
According to court documents and evidence presented at trial, Deron Joe co-owned and operated a tax return preparation business. From 2007 through 2010, Joe along with his co-conspirator co-owned a tax return preparation business that prepared tax returns for clients which claimed false business expenses and other false deductions. Joe made up false Forms 2106, Unreimbursed Employee Business Expenses, and placed the false deductions on the tax returns to inflate clients’ refunds by thousands of dollars. Joe prepared false tax returns with inflated refunds in order to grow his tax preparation business.
U.S. District Judge Petrese B. Tucker for the Eastern District of Pennsylvania set sentencing for January 3, 2019. The defendant faces a statutory maximum possible sentence of 36 years in prison and a maximum fine of $1.35 million for all counts.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney McSwain commended agents of the Internal Revenue Service Criminal Investigation, who investigated the case, and Department of Justice Tax Division Trial Attorneys Christopher P. O’Donnell and Kathryn D. Sparks, who prosecuted the case.
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I saw this article in 6 August 2018 online edition of AGENCY EQUITY.
"It is common for an insurance agency to have some very long-term employees. With relatively few young people entering the industry, agencies increasingly rely on customer service representatives and other employees with several years or even decades of service there. Not all of these employees hold producer licenses, but they have gained a wealth of knowledge during their careers and agencies trust them. However, an unlicensed employee’s interactions with customers can cause complications or even legal actions, as a [redacted] insurance agency found out.
A woman bought a new car and contacted the agency for insurance quotes. She already had a policy; the court’s opinion described her as “a long-time customer.” Her communications about the insurance quote were with the office receptionist, who was not a licensed agent. The customer asked the receptionist questions about the various quotes the agency obtained and complained that the prices seemed high. She did not accept any of the quotes right away.
The following month, someone tried to steal something out of the new car and broke the windshield. The woman incurred repair expenses of $12,535.05 and lost the use of the car for a time. Even after the loss occurred, she continued to communicate with the agency about insurance for it. In the meantime, she submitted a claim to her incumbent insurance carrier. However, their policy provided automatic coverage for new cars for up to 20 days. She never told them about the new car and was well past the deadline, so they denied coverage.
The woman then sued the insurance agency, charging that:
The receptionist represented herself as a licensed insurance agent
The receptionist failed to obtain coverage on the car in a timely manner
The receptionist assumed that the customer’s existing insurance policy would cover the car
The agency was negligent and breached its contract with her.
The insured and the receptionist filed affidavits with the court. The receptionist’s affidavit stated that she thought the insured had been misled, but the agency was successful in having parts of both affidavits stricken from the record. The trial court then ruled that the law did not impose any liability on the agency for the loss. The insured subsequently requested a new trial and permission to amend her arguments, but the trial court did not rule on these requests, so she appealed to a higher court.
The appellate court agreed with the trial court. The insured had argued that the receptionist’s unlicensed status, combined with evidence that she assumed the existing policy would cover the car, was proof that the misrepresentation about the receptionist’s licensing status was a cause of the loss. However, the appellate court noted that any evidence of the receptionist’s assumptions had been stricken from the record, so there was no evidence of what she thought.
The court also found no evidence that the lack of a license caused the receptionist to fail to timely bind coverage. The record showed that she was out of the office on sick leave when the insured requested coverage.
Ultimately, the court found no relationship between the insured’s lack of insurance and the receptionist’s lack of a license. It further found no reason to conclude that the agency was negligent, since it offered several quotes and the insured did not accept any of them. It also found no reason to believe a contract between the insured and agency existed, so there were no grounds for the breach-of-contract claim.
This case appears to be a situation where the insured tried to blame the agency for her own mistake. However, it also appears that the receptionist may have been discussing matters that should have been off limits. An unlicensed employee is not an agent of an insurer and has no authority to bind coverage. According to the court’s opinion, this employee spoke as if she had that authority.
While the misrepresentation about her abilities did not cause this uncovered loss, it certainly could have caused one with a much larger price tag. An unlicensed employee should never give the impression that he or she can bind, or even discuss, coverage. Every agency should ensure that only licensed staff discuss coverage options and the binding of insurance.
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We Solve Serious Tax Problems QuicklyIncluding Tax Crimes, Tax Evasion, Failure to File a Tax Return, Criminal Non-Filing, Filing False Tax Returns, Installment Agreements, Partial Payment Agreements, Audits, Sales Tax Controversies, Wage Garnishments, Bank Levies, Seizure of Property, Innocent Spouse Relief, Trust Fund Recovery Penalty, Payroll Taxes, Offers in Compromise, Administrative Appeals, Collection Due Process Hearings, Asset Protection Trusts, Tax Liability Settlement Trusts, and most other tax matters. To schedule a FREE face-to-face consultation call (212) 974-3435 or contact us through our confidential Contact Form.
Majortax reformwas approved by Congress in theTax Cuts and Jobs Act(TCJA) on December 22, 2017. The IRS is working on implementing this major tax legislation that will affect both individuals and businesses. We will provide information and guidance to taxpayers, businesses and the tax community as it becomes available. Check this page for updates and resources.
IR-2018-149, July 12, 2018 — Before starting a summer job, taking a vacation or sending the kids off to camp, the IRS wants taxpayers to know that some summertime activities may qualify for tax credits or deductions.
IR-2018-145, June 28, 2018 — Taxpayers who owed additional tax when they filed their 2017 federal tax return earlier this year can avoid another unexpected tax bill next year by doing a “paycheck checkup” as soon as possible, according to the IRS.
IR-2018-139, June 15, 2018 – People with disabilities can now put more money into their tax-favored Achieving a Better Life Experience (ABLE) accounts and may, for the first time, qualify for the Saver’s Credit for low- and moderate-income workers, according to the Internal Revenue Service.
IR-2018-138, June 14, 2018 — With tax reform bringing major changes for the year ahead, the IRS today reminded self-employed individuals, retirees, investors and others who need to pay their taxes quarterly that the second estimated tax payment for 2018 is due on Friday, June 15, 2018.
IR-2018-137, June 14, 2018 — With more than 2 million Individual Taxpayer Identification Numbers (ITINs) set to expire at the end of 2018, the IRS today urged affected taxpayers to submit their renewal applications soon to beat the rush and avoid refund delays next year.
IR-2018-134, June 8, 2018 — A private college or university, subject to the new 1.4 percent excise tax on net investment income, that sells property at a gain generally may use the property’s fair market value at the end of 2017 as its basis for figuring the tax on any resulting gain, the IRS said today.
IR-2018-131, June 4, 2018 — The Internal Revenue Service (IRS) today announced that it will waive certain late-payment penalties relating to the section 965 transition tax, and provided additional information for individuals subject to the section 965 transition tax regarding the due date for relevant elections.
IR-2018-127, May 25, 2018 – The Internal Revenue Service today provided information to taxpayers and employers about changes from the Tax Cuts and Jobs Act that affect: move related vehicle expenses; un-reimbursed employee expenses; and, vehicle expensing.
IR-2018-126, May 25, 2018 — Individuals and businesses have additional time to file an administrative claim or to bring a civil action for wrongful levy or seizure, according to the Internal Revenue Service.
IR-2018-124, May 24, 2018 – The Internal Revenue Service urges two-income families and those who work multiple jobs to complete a “paycheck checkup” to verify they are having the right amount of tax withheld from their paychecks.
IR-2018-122, May 23, 2018 — The U.S. Department of the Treasury and the Internal Revenue Service issued a notice today stating that proposed regulations will be issued addressing the deductibility of state and local tax payments for federal income tax purposes.
IR-2018-120, May 16, 2018 — The IRS encourages taxpayers who typically itemized their deductions on Schedule A of the Form 1040 to use the Withholding Calculator this year to perform a “paycheck checkup.”
IR-2018-118, May 9, 2018 – The Internal Revenue Service today encouraged taxpayers who work seasonal jobs or are employed part of the year to visit the Withholding Calculator and perform a “paycheck checkup.”
IR-2018-110, May 2, 2018 — The IRS is highlighting a variety of online resources to help small business owners and self-employed individuals as part of National Small Business Week from April 29 to May 5.
IR-2018-109, May 2, 2018 — In recognition of National Small Business Week, April 29 to May 5, the IRS is highlighting several resources to help small business owners and self-employed individuals understand and meet their tax obligations.
IR-2018-107, April 26, 2018 – The Internal Revenue Service today announced relief for taxpayers with family coverage under a High Deductible Health Plan (HDHP) who contribute to a Health Savings Account (HSA).
IR-2018-104, April 26, 2018 – The Internal Revenue Service today described the new information reporting requirements for certain life insurance contracts under new IRC 6050Y, which was added by the Tax Cuts and Jobs Act (TCJA).
IR-2018-99, April 16, 2018 – Many U.S. corporations elect to use a fiscal year end and not a calendar year end for federal income tax reporting purposes.
IR-2018-95, April 13, 2018 – U.S. Armed Forces members who served in the Sinai Peninsula of Egypt may qualify for combat zone tax benefits retroactive to June 2015, according to the Internal Revenue Service.
IR-2018-94, April 13, 2018 — The Internal Revenue Service has updated the tax year 2018 annual inflation adjustments to reflect changes from the Tax Cuts and Jobs Act (TCJA). The tax year 2018 adjustments are generally used on tax returns filed in 2019.
IR-2018-93, April 13, 2018 — With tax reform bringing major changes for the year ahead, the Internal Revenue Service today reminded the many self-employed individuals, retirees, investors and others who need to pay their taxes quarterly that the first estimated tax payment for 2018 is due on Tuesday, April 17, 2018.
IR-2018-82, April 2, 2018 ― The Treasury Department and the IRS today issued Notice 2018-28, which provides guidance for computing the business interest expense limitation under recent tax legislation enacted on Dec. 22, 2017.
IR-2018-81, April 2, 2018 ―The Treasury Department and the IRS today issued guidance regarding the withholding on the transfer of non-publicly traded partnership interests under the recently enacted Tax Cuts and Jobs Act.
IR-2018-80, April 2, 2018 — The IRS today encouraged several key groups of taxpayers to perform a “paycheck checkup” to check if they are having the right amount of tax withholding following recent tax-law changes.
IR-2018-79, April 2, 2018 — The Treasury Department and the Internal Revenue Service today provided additional guidance (Notice 2018-26) for computing the “transition tax” on the untaxed foreign earnings of foreign subsidiaries of U.S. companies under the Tax Cuts and Jobs Act enacted on Dec. 22, 2017.
IR-2018-73, March 26, 2018 — Launching a special week of activities, the IRS today continued its effort to encourage taxpayers to do a “paycheck checkup” to make sure they have the right amount of tax taken out of their paychecks for their personal situation.
IR-2018-53, March 13, 2018 — The Internal Revenue Service today provided additional information to help taxpayers meet their filing and payment requirements for the section 965 transition tax.
IR-2018-37, March 1, 2018 — The IRS announced today that S corporations are subject to the extended three year holding period for applicable partnership interests and that regulations will be issued soon.
IR-2018-36, Feb. 28, 2018 — The IRS today released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.
IR-2018-25, Feb. 13, 2018 — The Treasury Department and the IRS today announced modifications to the procedures for changing the accounting period of foreign corporations owned by U.S. shareholders that are subject to the transition tax under the Tax Cuts and Jobs Act.
IR-2018-19, Feb. 6, 2018 - The Internal Revenue Service today announced that the Tax Cuts and Jobs Act of 2017 does not affect the tax year 2018 dollar limitations for retirement plans announced in IR 2017-177 and detailed in Notice 2017-64.
IR-2018-16, Jan. 30, 2018 — The Internal Revenue Service today reminds Alaska Native Corporations and Alaska Native Settlement Trusts that they may be able to take advantage of certain benefits in the recently enacted tax reform legislation.
IR-2018-09, Jan. 19, 2018 — The Treasury Department and the Internal Revenue Service (IRS) today provided additional guidance (Notice 2018-13) for computing the “transition tax” on the untaxed foreign earnings of foreign subsidiaries of U.S. companies under the Tax Cuts and Jobs Act.
IR-2018-05, Jan. 11, 2018 — The Internal Revenue Service today released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month.
IR-2017-212, Dec. 29, 2017 — The Treasury Department and the Internal Revenue Service today issued Notice 2018-07, which provides guidance for computing the “transition tax” under recent tax legislation enacted on Dec 22, 2017.
IR-2017-210, Dec. 27, 2017 — The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.
Publication 5292, How to Calculate Section 965 Amounts and Elections Available to Taxpayers
Guidance
Rev. Proc. 2018-35, Changes in accounting periods and in methods of accounting (Expensing of certain cost of replanting citrus plants lost by reason of casualty.)
Rev. Proc. 2018-29,New automatic method changes to conform with FASB Topic 606 (Provides new automatic method changes and requests comments on those new changes and on future guidance for taxpayers changing their method of accounting to comply with amended § 451.)
Rev. Proc. 2018-27, Modifies the annual limitation on deductions for contributions to Health Savings Accounts (HSAs) allowed for individuals with family coverage under a high deductible health plan (HDHP)
Rev. Proc. 2018-26, 601 Rules and regulations - certain remedial actions that issuers of State and local tax-exempt bonds and other tax-advantaged bonds may take
Rev. Proc. 2018-25, Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability (Depreciation of passenger automobiles under 280F.)
Rev. Rul. 2018-13, Section 807 — Rules for Certain Reserves (This information is to be used by insurance companies in computing reserves.)
Rev. Rul. 2018-11, Section 1274A — Special Rules for Certain Transactions Where Stated Principal Amount Does Not Exceed $2,800,000 (2018 adjustment for inflation under § 1274A for qualified and cash method debt instruments.)
Notice 2018-61, Clarification Concerning the Effect of Section 67(g) on Trusts and Estates
Notice 2018-55, Guidance on the Calculation of Net Investment Income for Purposes of the Section 4968 Excise Tax Applicable to Certain Private Colleges and Universities
Notice 2018-54, Guidance on Certain Payments Made in Exchange for State and Local Tax Credits
Notice 2018-48, Designated Qualified Opportunity Zones under Internal Revenue Code § 1400Z-2
Notice 2018-43, Public Comment Invited on Recommendations for 2018-2019 Priority Guidance Plan
Notice 2018-42, Update of 2018 Standard Mileage Rates Notice
Notice 2018-41, Information Reporting for Certain Life Insurance Contract Transactions and a Modification to the Transfer for Valuable Consideration Rules
Notice 2018-38, 2018 Fiscal-year Blended Tax Rates for Corporations
Notice 2018-37, Guidance in Connection with the Repeal of Section 682 (Tax Treatment of alimony and separate maintenance payments.)
Notice 2018-35, Changes in accounting periods and method of accounting (Transitional guidance under sec. 451 related to inclusion of income associated with advance payments.)
Notice 2018-30, Modification of Notice 2003-65 (Effect of first year depreciation on recognized built-in gains and recognized built-in losses.)
Notice 2018-29, Guidance Regarding the Implementation of New Section 1446(f) for Partnership Interests That Are Not Publicly Traded (Withholding on dispositions.)
Notice 2018-28, Initial Guidance Under Section 163(j) as Applicable to Taxable Years Beginning After December 31, 2017 (Limitation on deduction of business interest expense.)
Notice 2018-26, Additional Guidance Under Section 965; Guidance Under Sections 62, 962, and 6081 in Connection With Section 965; and Penalty Relief Under Sections 6654 and 6655 in Connection with Section 965 and Repeal of Section 958(b)(4) (Treatment of deferred foreign income including relief from estimated tax penalties.)
Notice 2018-23, Transitional Guidance Under§§162(f) and 6050X with Respect to Certain Fines, Penalties, and Other Amounts (Denial of deduction for fines or penalties for violation of the law.)
Notice 2018-18, Guidance Under Section 1061, Partnership Interests Held in Connection with Performance of Services
Notice 2018-13, Additional Guidance Under Section 965 and Guidance Under Sections 863 and 6038 in Connection with the Repeal of Section 958(b)(4) (Guidance regarding deferred foreign income.)
Notice 2018-08, Revised Timeline and Other Guidance Regarding the Implementation of New Section 1446(f)
Notice 2018-07, Guidance under Section 965 (Deferred Foreign Income Corporations)
The Tax Cut and Jobs Act, Pub. Law No. 115-97, made the following change: - effective December 23, 2017, certain payments made by an aircraft owner (or, in certain cases, a lessee) related to the management of private aircraft are exempt from the excise taxes imposed on taxable transportation by air.
The Tax Cut and Jobs Act, Pub. L. No. 115-97, made the following change - the basic exclusion amount for an estate tax return for a 2018 date of death increases to $10,000,000, before taking into account the necessary inflation adjustment.
The Tax Cuts and Jobs Act, Section 1031 changed like-kind exchanges and now it applies only to exchanges of real property and not to exchanges of personal or intangible property. An exchange of real property held primarily for sale still does not qualify as a like-kind exchange.
The Tax Cuts and Jobs Act, signed December 22, 2017, affects the Rehabilitation Tax Credit for amounts that taxpayers pay or incur for qualified expenditures after December 31, 2017.
Taxpayers other than corporations may be entitled to a deduction of up to 20 percent of their qualified business income from a qualified trade or business under the Tax Cuts and Jobs Act.
Refund payments and credit elect and refund offset transactions processed on or after Oct. 1, 2017 and on or before Sept. 30, 2018 will be reduced by the fiscal year 6.6 percent sequestration rate, irrespective of when the IRS received the original or amended tax return.
The Achieving a Better Life Experience (ABLE) Act of 2014 allows states to create tax-advantaged savings programs for eligible people with disabilities (designated beneficiaries). Funds from these 529A ABLE accounts can help designated beneficiaries pay for qualified disability expenses. Distributions are tax-free if used for qualified disability expenses.
The Tax Cuts and Jobs Act of 2017 increases the amount of contributions allowed to an ABLE account, allows the beneficiary to claim the saver’s credit and allows rollovers in limited amounts from a 529 qualified tuition program.
Historic tax reform was passed by Congress in the Tax Cuts and Jobs Act on Dec. 22, 2017. The IRS is working to educate taxpayers about important changes included in this legislation. One change significant for certain state legislators is the suspension of miscellaneous itemized deductions, which include unreimbursed travel expenses.
Additional Information for Tax Professionals and Partners
The IRS is working to update its tax forms to reflect Public Law 115-97, Tax Cuts and Jobs Act. Additional information and updates will be posted on the Legislative Impact on Tax Forms page.
The 2017-2018 Priority Guidance Plan contains guidance projects that we hope to complete during the twelve-month period from July 1, 2017, through June 30, 2018 (the plan year).
New York City Tax AdvocatesWe Keep Our Clients Out of Court and Out of Prison. We practice before the Internal Revenue Service, the New York State Department of Taxation and Finance, the Department of Justice Tax Division and the Defense Office of Hearings and Appeals.To speak with a Federal Tax Practitioner and licensed Attorney call (212) 974-3435.
We Solve Serious Tax Problems Including Tax Crimes, Tax Evasion, Failure to File a Tax Return, Criminal Non-Filing, Filing False Tax Returns, Installment Agreements, Partial Payment Agreements, Audits, Sales Tax Controversies, Wage Garnishments, Bank Levies, Seizure of Property, Innocent Spouse Relief, Trust Fund Recovery Penalty, Payroll Taxes, Offers in Compromise, Administrative Appeals, Collection Due Process Hearings, Asset Protection Trusts, Tax Liability Settlement Trusts, and most other tax matters.
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