IRS Offers in Compromise “FOOLS RUSH IN”

If accepted, an IRS Offer in Compromise will let you to settle your tax debts for less than you actually owe. Sounds good? Of course it does! And if you’re in trouble with the IRS (or more apropos, if you just don’t want to pay one-hundred cents on the dollar) those nonstop radio and television commercials can get pretty tempting. 

So with a swelling tsunami of false hope and enthusiasm PT Barnum smiles and a sucker is born. You pick up the telephone and call an out-of-state company, and like two ships that collide in the night, two fraudsters find each other. In other words, you sell an unseen salesman your bill of goods - and he reciprocates by selling you on a bogus Offer in Compromise. 

Never mind that it won’t work, you forge foolishly ahead telling yourself that “it’s worth a try” and other silly sentiments. Conversely, if you’re serious about an offer in compromise, you should find out if you even qualify – Say what? That’s right Sunshine. There are certain “carved in stone” requirements that you must satisfy prior to filing an offer in compromise. And all of this information is readily available on the IRS’s website (as is an online pre-qualification test to determine if you’re even eligible or just wasting everyone’s time).    

At Selig & Associates, we do things differently. That is to say, we meet with each and every client personally. We’re committed to helping our clients, says Attorney Bradley Dorin. And unlike those out of state companies, our fees are reasonable, agreed David Selig. If you’re in trouble with the IRS or New York State, call Selig & Associates to schedule a FREE face-to-face, legally privileged consultation. 

Owner of Company Sent to Prison for Employment Tax Fraud

In a nutshell, the Disgruntled defendant withheld taxes from his employees and kept it. Accordingly, the defendant didn’t pay the IRS $1,000,000 (ONE MILLION DOLLARS) in Withholdings and Payroll Taxes andwas sentenced to 24 months in prison for failing to account for and pay over employment taxes withheld from his employees’ wages, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney R. Trent Shores. 

When they dragged him from the Courtroom, I thought I heard him say: 

“I should have hired Selig & Associates” 

(said a Bailiff under the terms of confidentiality)

According to documents and information provided to the Court, the business-owner was responsible for withholding, and paying over to the Internal Revenue Service (IRS) payroll taxes on the wages paid to his employees. For the period January 2014 through June of 2016  he caused a tax loss of approximately $1 million by intentionally not paying to the IRS income and social security taxes withheld from employees’ wages and the employer portion of social security taxes due from on those wages. In addition to prison, the business-owner was ordered to pay restitution to the IRS in the amount of $904,091, and to serve three years of supervised release. 

Our mission is to win every tax case and practice our chosen professions with integrity ingenuity and thrift

(212) 974-3435

FREE CONSULTATION We provide our Clients with effective tax representation before the IRS and State. By addressing difficult tax controversies with intelligence and positive energy, our Clients are able to solve their tax problems and get on with their lives. 

IRS and State tax representation includes unpaid income, sales and payroll taxes, unfiled tax returns, monthly installment agreements, offer in compromise, audits, suspended drivers’ license, suspended passport, tax evasion, tax crimes and most other tax issues. 

To schedule a legally privileged consultation with David P. Selig, CPCU, Federal Tax Practitioner and Attorney Bradley H. Dorin, Esq. call (212) 974-3435 directly or contact us through our Online Action Form. 

We strive to obtain the best possible outcome for our clients

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Female Psychiatrist Sent to Slammer for Tax Evasion

A prominent psychiatrist was sentenced to 18 months in prison, one year of supervised release, and ordered to pay a whopping $565,128 in restitution to the IRS for tax evasion. In 2005 the curvaceous counselor failed to pay taxes and filed a false and fraudulent tax return with the IRS. And if that wasn't enough,  from 2009 through 2011, the disingenuous doctor falsely claimed to have no taxable income, and as such, claimed that she owed no taxes. In reality, the red hot head shrinker was pocketing a cool $240,000+ each and every year. 

Selig & Associates

We take a practical approach to problem solving and strive to obtain the best possible outcome for our clients

212-974-3435

We successfully solve IRS and New York State Tax problems, including suspended Drivers Licenses and Passports. Specializing in large dollar Payroll, Sales and Income Tax Representation for Individuals, Professional Practices and Businesses. 

We negotiate excellent Payment Plans, Audits, Offers in Compromise, Payroll & Trust Fund Recovery Penalties, and most other tax issues. Do you have Unfiled Tax Returns? We can have them prepared and filed for you within 48 hours, guaranteed. Same day and emergency appointments are available Monday through Friday in our New York City office. `

To schedule a Free and Legally Privileged Consultation with a Federal Tax Practitioner and Attorney contact us Online

or Call (212) 974-3435

Four Family Members and a very unhappy Businessmen Sentenced for Tax Fraud

Four family members and a businessmen were sentenced to prison for their participation in  a long-term, complex and concerted effort to avoid taxation. In October 2010, Chester A. Bitterman Jr. and his sons, Craig L. Bitterman, C. Grant Bitterman and Curtis L. Bitterman, were convicted of conspiracy to defraud the United States. Craig Bitterman was additionally convicted of obstruction of justice. Prior to sentencing, the defendants paid $437,000 in restitution to the IRS. The four were sentenced as follows: Chester A. Bitterman Jr. was sentenced to three years’ probation and ordered to pay a $5,000 fine; Craig L. Bitterman was sentenced to 36 months in prison and ordered to pay a $10,000 fine; C. Grant Bitterman was sentenced to 21 months in prison and ordered to pay a $7,500 fine; an Curtis L. Bitterman was sentenced to 21 months in prison and ordered to pay a $7,500 fine. From 1996 to 2005 the Bittermans owned and operated the Bitterman Scale Company. To conceal their income and assets from the IRS, the Bittermans used aliases, offshore bank accounts and a complex series of sham paper transactions to disguise income. The defendants transferred their personal and business assets to sham trusts purchased from the Commonwealth Trust Company, a tax protester organization that marketed trust products to clients for the purpose of avoiding federal income tax payment. The trusts were used to make it appear as though the defendants had little or no assets or income. In reality, the defendants retained complete access and control over their funds.

New York City Tax Accountant and Tax Attorney Our New York City offices are conveniently located and easily accessible by car, train and subway. Civil and criminal tax consultations are confidential and legally privileged. Same day and emergency appointments scheduled Monday through Friday. For immediate assistance call (212) 974-3435 or contact us Online. 

Restaurant Tax Accountant and Tax Attorney We negotiate excellent installment agreements and provide restaurant owners with effective sales tax and audit representation, including unfiled tax returns and all Department of Labor issues. For a no-obligation consultation call us directly at (212) 974-3435 or contact us Online.

Business Tax Accountant and Tax Attorney We negotiate affordable repayment plans and provide our business clients with effective payroll tax and audit representation, obtaining government contracts with a tax lien, compliance checks, missing tax returns and Workers Compensation audits. For immediate assistance call (212) 974-3435 or contact us Online. 

Tax Representation and Marijuana

The Hells Angels chapter of the province of Quebec has filed a lawsuit against the attorney general of Quebec, seeking more than $2 billion in potential loss of revenue that legalization of marijuana will cost the biker organization.

The illegal production and consumption of non-medical cannabis was worth about $400 million last year in the province of Quebec alone, according to a Statistics Canada analysis of the underground economy.

“We estimate that Prime minister Justin Trudeau’s radical action of legalizing marijuana could cost my client’s organization a potential loss of $2 billion dollars in the next decade,” acknowledged Hells Angels’ lawyer, Brandon Tuggs.

“From growing operations to trimming, packaging, transportation, and selling, this new legislation will threaten the livelihood of hundreds of thousands of Canadian workers” he warns.

Prime minister Justin Trudeau’s nationwide legalization of marijuana on October 17 has enraged members of the Quebec chapter of the Hells Angels who believe legalization could destroy “hundreds of thousands of Canadian jobs”

“Many members of our organization fear they will lose their way of life if legalization is sustained,” said Quebec Hells Angels’ spokesman, Jean-Roch Fournier.

“I’ve been selling weed since I’m 12 years old” admits Gino Ouellet, 56, a Hells Angels member for the past 36 years.

“Do you think I’m going to want to go work at Walmart or McDonald’s at minimal wage? I don’t think so” he told reporters.

“Who’s going to want to give me a job? I’ve got tattoos all over my body and all over my face” asks another HA member, Gaetan ‘Lucky 3’ Leclerc, condemned in 1977 for triple homicide.

“It’s not the job of the federal government to regulate illegal drugs, they should take care of their own business and leave that to us” he argues.

Canada is the first country among developed nations to legalize marijuana.

In the United States, a number of states have currently legalized or decriminalized marijuana, but it is still illegal at the federal level.

New York City Tax Accountant and Tax Attorney Consult with an experienced Tax Accountant and Tax Attorney today. Our New York City offices are conveniently located and easily accessible by car, train and subway. Civil and criminal tax consultations are confidential and legally privileged. Same day and emergency appointments may be scheduled Monday through Friday. For immediate assistance call (212) 974-3435 or contact us online. 

Restaurant Tax Accountant and Tax Attorney We negotiate excellent installment agreements and provide restaurants with effective sales tax and audit representation, including unfiled tax returns and all Department of Labor issues. For a no-obligation consultation call us directly at (212) 974-3435 or contact us online.

Business Tax Accountant and Tax Attorney We negotiate affordable repayment plans and provide our business clients with effective payroll tax and audit representation, obtaining government contracts with a tax lien, compliance checks, missing tax returns and Workers Compensation audits. For immediate assistance call (212) 974-3435 or contact us online. 

Commercial Insurance Consultant and Attorney We assist businesses, nightclubs, schools and religious institutions with their specialty insurance needs including: Active Shooter and Workplace Violence Insurance Protection; Cyber Insurance, Sexual Harassment and Employment Practices Liability Insurance. For more information call us directly at (212) 974-3435. 

Property Insurance Claims We settle large property insurance claims, including business interruption, burglary, fire, windstorm and water damage for top dollar. To discuss your insurance claim with a Public Adjuster and Attorney call (212) 974-3435 today. 

Just the Facts: Felony Charges in Criminal Tax - Attempt to Evade or Defeat Tax (26 U.S.C §7201)

Tax evasion is when a taxpayer willfully (meaning voluntarily and intentionally) uses illegal means to avoid paying their taxes. This charge can apply to an individual or corporation and carries a punishment of up to $100,000 in fines ($500,000 for a corporation), or five years of imprisonment, or both. Examples of tax evasion include claiming a dependent when you do not have one, keeping two sets of books with unreported income, or concealing assets by placing them in someone else’s name. The statute of limitations for tax evasion is six years from the last act of evasion. It is important to note that while criminal tax evasion is a felony, this is different than failing to file your tax returns.

Fraud and false statements (26 U.S.C. §7206 part 1)

When a taxpayer signs their tax returns or other documents under penalty of perjury they are attesting to the fact that they have examined the return or documents and all accompanying schedules and attachments, and to the best of the their knowledge and belief, it is true, correct, and complete. Therefore, anyone submitting a tax return or other document that they know to be false can be found guilty of a false statement tax crime. Every false document that is signed by the taxpayer could result in a separate count of the offense and each count is a felony that carries a maximum three (3) year prison sentence and a fine of up to two hundred and fifty thousand dollars ($250,000 USD). In order for the government to secure a conviction, they must prove beyond a reasonable doubt that:

There is at least one incorrect item, the misstatement was material, AND the taxpayer signed the false document willfully.
Examples of Perjury include:

1. Underreporting income on your tax return
2. Overstating deductions
3. Improperly calculating capital expenditures and depreciation deductions
4. Reporting a false source of income, even though the amount was correct
5. Giving a false answer on the foreign bank account question on the tax return
6. Failing to list all assets on a 433-a
7. Providing false information on form 656
Aiding or assisting the planning of a false or fraudulent document (26 U.S.C. §7206 part 2)

In addition to perjury, any person who willfully aids or assists in, counsels, or advises the planning of a tax return or other IRS document that is fraudulent or false as to any material matter can be found guilty of the aiding and abetting prong of the statute. This is a three year felony that carries a maximum three (3) year prison sentence and a fine of up to two hundred and fifty thousand dollars ($250,000 USD). An individual does not need to sign the document in question to be found guilty of this crime and this statute is often is used to catch tax planners, accountants, or lawyers who help taxpayers cheat on their taxes. This happens when a tax planner and a taxpayer work together in agreement to plan a false tax return, or when a tax planner falsifies a taxpayer’s documents and that taxpayer is unaware of the falsifications. In these cases, the tax planner will be prosecuted heavily because they likely have done this with other taxpayers.

Willful failure to collect or pay over taxes (26 U.S.C §7202)

This pertains to any person with a legal duty to collect tax and willfully fails to collect or pay these taxes owed. This will often apply to a taxpayer who owns a business and does not pay their payroll taxes.

Laundering of monetary instruments (18 U.S.C. §1956)

This charge will be brought against anyone who attempts to make money which was obtained through an illegal act, look legitimate. For example, if a taxpayer makes money as a drug dealer but funnels that money through a business bank account owned by this same taxpayer, then withdrawals that money to pay his employees, this is considered money laundering. Money laundering can also be any financial transaction whose principal purpose is violating laws, including tax evasion or making false statements to the IRS. This felony carries a prison sentence of not more than 20 years.

False, fictitious, or fraudulent claims (18 U.S.C. §287)

If you make a false claim to the government on your taxes, especially in order to receive a refund, you may be charged with a felony.

Attempts to interfere with administration of internal revenue laws (26 U.S.C §7212)

Any attempt to interfere with the administration of the laws set in place by the IRS, or any agent acting under the U.S. tax code. For example, if a taxpayer sends a letter to a revenue agent threatening them, that is considered obstruction.

Conspiracy to commit offense or to defraud United States (18 U.S.C. §371)

This involves two people who knowingly or voluntarily agree to either commit a tax offense or to defraud the government out of tax money.

Misdemeanor charges in criminal tax

Willful Failure to file a return, supply information, or pay a tax (26 U.S.C. §7203)

Any person who is required to file a tax return or pay a tax due and willfully fails to do either of these things may face misdemeanor charges. Generally there are two types of non-filers: those who filed in the past and have since stopped, or those who are in protest of tax laws. If you have filed your tax returns previously and then stop, the IRS will likely prosecute. If you are protesting tax due, you will likely only face a misdemeanor, as long as there is not a large amount of press surrounding your protest and you are not acting aggressively and the dollar amount is very little.

Offenses with respect to collected taxes (26 U.S.C. §7215)

This pertains to any person who willfully delivers or discloses a document they know to be false or fraudulent. For example, if a taxpayer is undergoing an audit and provides a false document to the auditor, they are subject to being charged with a misdemeanor.

Man Sentenced to Prison for Filing False Retaliatory Lien & Making a False Tax Refund Claim (torn from the pages of the Tax Protestor’s Playbook)

Falsely Claimed Federal Judge, Prosecutor, IRS Employees and Others Owed Him Millions 

A man was sentenced to 30 months in prison for filing a fraudulent multi-million dollar lien against a government employee and filing a false claim for a tax refund, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. 

According to court documents, Brian Leo Snow failed to pay his federal tax liabilities for the years 2000 - 2008 and then became the subject of collection activity by the Internal Revenue Service (IRS). After being held in contempt of court for failing to provide documents and records to the IRS, Snow filed false retaliatory liens claiming that various government officials, including an IRS revenue officer, an Assistant United States Attorney, a United States District Court Judge, and the Clerk of Court for the Eastern District, owed him millions of dollars. Each of these government officials had been involved in attempts to collect Snow’s back taxes.  Snow also filed three false claims with the IRS claiming over $144 million in tax refunds to which he was not entitled.  Snow owes the IRS over $150,000 in taxes for tax years 2000-2008 and 2014-2015.

In addition to the term of imprisonment imposed, Snow was ordered to serve three years of supervised release and pay $154,025 in restitution to the IRS. 

Principal Deputy Assistant Attorney General Zuckerman commended special agents of the offices of the Treasury Inspector General for Tax Administration and IRS Criminal Investigation, who conducted the investigation, and Tax Division Senior Litigation Counsel Jen E. Ihlo, who prosecuted the case.

Aggressive New York City Tax Advocates We Solve IRS and New York State Tax Problems, Guaranteed. Specializing in Income, Payroll and Sales Tax Issues. IRS Audits, Sales Tax Audits, Unpaid Payroll Taxes, Trust Fund Penalties, Criminal Tax Investigations and Tax Crimes, Installment Agreements and Payment Plans, Offers in Compromise and most other Tax Matters. For a Legally Privileged Consultation with a Federal Tax Practitioner and Licensed Attorney Call (212) 974-3435 or Contact Us Online. 

Income, Payroll and Sales Taxes. 

Suspended Passport and Drivers License. 

Missing Tax Returns Prepared and Filed within 48 Hours. 

IRS Liens, Levies and Wage Garnishments. 

NYS Tax Warrants. 

Income and Sales Tax Audits. 

Payroll and Trust Fund Recovery Penalties. 

Criminal Investigations and Tax Crimes including Tax Evasion. 

Offers in Compromise and all other Tax Matters. 

We Negotiate Excellent Installment Agreements and Monthly Payment Plans. 

Man Pleads Guilty to Filing a False Tax Return That Failed to Report Over $2 Million Held in Offshore Israeli Bank Account

A man pleaded guilty to filing a false tax return that failed to report millions of dollars in foreign bank accounts and the resulting income, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to court documents, Elie Waknine held millions of dollars in an offshore account in Israel at Bank Leumi Le-Israel B.M. from approximately 1994 to 2011.  Despite having this account, Waknine filed a tax return for 2007 that falsely claimed he did not have financial interest in or signature authority over any foreign financial accounts.  In an effort to further hide his money, Waknine instructed Bank Leumi to hold bank mail from delivery to the United States, and obtained access to his offshore funds through the use of “back-to-back” loans, which were designed to enable borrowers to tap their concealed accounts.  

These lending arrangements permitted Waknine to have funds issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared accounts in Israel.  In 2011, Waknine closed his Bank Leumi Israel account, but used the $2.4 million he received from closing the account to open a new undisclosed foreign bank account at another bank in Israel.  Over the period 1994-2015, Waknine held undisclosed foreign bank accounts in four banks in three countries, each with assets of at least $1 million. 

In December 2014, Bank Leumi entered into a deferred prosecution agreement, in which the bank admitted to conspiring from at least 2000 until early 2011 to aid and assist U.S. taxpayers to prepare and present false tax returns by hiding income and assets in offshore bank accounts in Israel and other foreign locations.  Under the terms of the deferred prosecution agreement, Bank Leumi paid the United States a total of $270 million and continues to cooperate with respect to civil and criminal tax investigations.

U.S. citizens, resident aliens, and permanent legal residents with a foreign financial interest in or signatory authority over a foreign financial account worth more than $10,000 are required to file an FBAR each year disclosing the account, and are required to report the account and any resulting income on their annual tax returns.

Waknine faces a maximum sentence of three years in prison, as well as a period of supervised release, restitution and monetary penalties. District Court Judge David O. Carter set Waknine’s sentencing for January 28, 2019.

Principal Deputy Assistant Attorney General Zuckerman commended special agents from IRS-Criminal Investigation, who investigated the case, and Tax Division Assistant Chief Elizabeth Hadden and Trial Attorney Eric Schmale, who are prosecuting the case.  The Tax Division thanks the U.S. Attorney’s Office for its assistance.


Selig & Associates. NYC's Most Effective Tax Advocates We Solve Income, Payroll and Sales Tax Problems. IRS and New York State Tax Representation includes Sales Tax Audits, Unpaid Payroll Taxes, Criminal Investigations, Installment Agreements and other Tax Matters. For a Legally Privileged Consultation with a Federal Tax Practitioner and Licensed Attorney call (212) 974-3435 or Contact Us Online. 

Alec Baldwin Was Set Up For A Financial Shake Down - I May Not Agree With Baldwin’s Politics, But I Defend His Right To Express His Views

I heard about what happened with Alec Baldwin, and initially I felt the smug satisfaction of shandenfreud. But after these feelings subsided, I began to question the story and quickly came to reject the entire narrative. In fact, the incident that’s become fodder for so many talk shows, bloggers and haters of every stripe appears to have been a wholly manufactured event - and I suspect the entire peccadillo was staged by a crafty, conniving coterie of self-serving saboteurs and leftwing political operatives. Alec Baldwin is a devoted family man, a ferocious adversary and a fantastic actor, says David Selig of Selig & Associates.

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We Solve Serious Tax Problems. For a Free Legally Privileged Consultation with a Federal Tax Practitioner and Licensed Attorney call (212) 974-3435 or Contact Us Online. 

WATCH THIS VIDEO!!!

SELIG & ASSOCIATES 

The Most Effective Tax Advocates in New York City  

We Solve Serious Tax Problems. For a Free Legally Privileged Consultation with a Federal Tax Practitioner and Licensed Attorney call (212) 974-3435 or Contact Us Online. 

Everything You Wanted to know about the New Jersey Tax Amnesty Program but were too Stupid to Ask

On July 1, Gov. Phil Murphy signed into law a tax amnesty measure that offers relief to many taxpayers in a variety of situations and will help bridge the revenue shortfall in the state budget. It requires the Director of the Division of Taxation to establish a period not exceeding 90 days in duration, which shall end no later than Jan. 15, 2019. Anyone behind on taxes owed for the time period between Feb. 1, 2009, and Sept. 1, 2017, would be eligible to participate, as long as they are not under criminal investigation.

Similar to New Jersey’s prior six amnesty initiatives, the new law provides for complete forgiveness of all penalties and one-half of the balance of accrued interest that is due as of Nov. 1, 2018, in return for non-refundable payment of the tax and remaining one-half of accrued interest due, and a waiver of the right to appeal any liability paid under amnesty.

Additionally, a significant aspect of this amnesty law is that it not only applies to un-assessed amounts, but also to amounts currently under audit or being contested with the Division of Taxation, either at its Conference Branch or in the New Jersey Tax Court.

The new law applies to all state taxes administered by the Division of Taxation (e.g., gross income, sales and use tax, corporate business tax, motor fuels and so on) but does not apply to unemployment-type taxes administered by the Department of Labor.

Specifically, it applies to state tax liabilities for tax returns due on and after Feb. 1, 2009, and prior to Sept. 1, 2017. Consequently, for example, it can be used to obtain relief for a taxpayer’s 2009 through 2016 gross income tax, corporate business tax returns, and for all sales and use tax quarters ending Dec. 31, 2009, through June 30, 2017.

The Division of Taxation has not yet announced starting date for the amnesty period, which must end by Jan. 15, 2019. Thus, the taxpayers will have to make an amnesty payment within the time period established by the Director to take advantage of amnesty relief.

SELIG & Associates. Aggressive Tax Advocates We Solve Serious Tax Problems. For a FREE legally privileged consultation with a Federal Tax Practitioner and licensed Attorney call (212) 974-3435

Claiming You’re Not a U.S. Citizen (so you don't have to pay Federal Taxes) and other bad ideas

David ("The Gifted One") Selig

Some individuals argue that they have rejected citizenship in the United States in favor of state citizenship; therefore, they are relieved of their federal income tax obligations. A variation of this argument is that a person is a free born citizen of a particular state and thus was never a citizen of the United States. The underlying theme of these arguments is the same: the person is not a United States citizen and is not subject to federal tax laws because only United States citizens are subject to these laws.

The Law: The Fourteenth Amendment to the United States Constitution defines the basis for United States citizenship, stating that “[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” The Fourteenth Amendment therefore establishes simultaneous state and federal citizenship. Claims that individuals are not citizens of the United States but are solely citizens of a sovereign state and not subject to federal taxation have been uniformly rejected by the courts. The IRS has warned taxpayers of the consequences of making this frivolous argument. Rev. Rul. 2007-22, 2007-1 C.B. 866; Notice 2010-33, 2010-17 I.R.B. 609.

In a variation of this argument, taxpayers argue that although they are citizens of the United States, for the purposes of the Internal Revenue Code they are non-resident aliens and are subject to taxation only on income that is connected with the conduct of a trade or business. The 11th Circuit rejected this contention as frivolous.

Relevant Case Law:

Taliaferro v. Freeman, 595 F.App’x 961, 962-63 (11th Cir. 2014) – the 11th Circuit upheld the lower court’s dismissal of Mr. Taliaferro’s complaint seeking to enjoin the IRS from collecting taxes assessed against him. The court rejected as meritless his argument that, despite his U.S. citizenship, he is, for purposes of the tax code, a nonresident alien who is subject to taxation only on income that is connected with the conduct of a trade or business.

United States v. Bowden, 402 F. App’x 967 (5th Cir. 2010) – in denying an appeal of a sentence for tax evasion, the 5th Circuit rejected the taxpayer’s argument that he was a sovereign and not subject to the laws of the United States.

United States v. Drachenberg, 623 F.3d 122 (2d Cir. 2010) – the 2nd Circuit affirmed Drachenberg’s conviction for tax evasion and conspiracy to defraud the United States and rejected his argument that the federal courts lacked jurisdiction because he was not a citizen of the United States.

United States v. Hilgeford, 7 F.3d 1340, 1342 (7th Cir. 1993) – the 7th Circuit rejected "shop worn" argument that defendant is a citizen of the "Indiana State Republic" and therefore an alien beyond the jurisdictional reach of the federal courts.

United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993) – the 8th Circuit rejected the Gerads’ contention that they were “not citizens of the United States, but rather ‘Free Citizens of the Republic of Minnesota’ and, consequently, not subject to taxation” and imposed sanctions “for bringing this frivolous appeal based on discredited, tax-protester arguments.”

United States v. Sloan, 939 F.2d 499, 500 (7th Cir. 1991) – the 7th Circuit affirmed a tax evasion conviction and rejected Sloan’s argument that the federal tax laws did not apply to him because he was a “freeborn, natural individual, a citizen of the State of Indiana, and a ‘master’ – not ‘servant’ – of his government.”

United States v. Ward, 833 F.2d 1538, 1539 (11th Cir. 1987) – the 11th Circuit found Ward’s contention that he was not an “individual” located within the jurisdiction of the United States to be “utterly without merit” and affirmed his conviction for tax evasion.

Waltner v. Commissioner, T.C. Memo. 2014-35, 107 T.C.M. (CCH) 1189 (2014) – the court dismissed the possibility of being a citizen of a state but not the United States as “nonsensical” and “backwards; one cannot be a citizen of a State without also being a citizen of the United States. Indeed, citizenship in the United States is “paramount and dominant” over State citizenship.”

Kay v. Commissioner, T.C. Memo. 2010-59, 99 T.C.M. (CCH) 1236 (2010) – the court imposed a $500 penalty under section 6673(a) against James Kay for raising frivolous arguments in the proceeding, including that he “was not born a [U.S.] taxpayer” and that the United States may not tax him because “the United States is a corporation” to which he holds no “allegiance.”  

Other Cases: United States v. Sileven, 985 F.2d 962 (8th Cir. 1993); Nevius v. Tomlinson, 113 A.F.T.R.2d 2014-1872 (W.D. Miss. 2014); O'Driscoll v. IRS, 1991 U.S. Dist. LEXIS 9829 (E.D. Pa. Jul. 16, 1991); Bruhwiler v. Commissioner, T.C. Memo. 2016-18, 111 T.C.M. (CCH) 1071 (2016); Carlson v. Commissioner, T.C. Memo. 2012-76, 103 T.C.M. (CCH) 1408 (2012); Callahan v. Commissioner, T.C. Memo. 2010-201, 100 T.C.M. (CCH) 225 (2010); Rice v. Commissioner, T.C. Memo. 2009-169, 98 T.C.M. (CCH) 40 (2009); Knittel v. Commissioner, T.C. Memo. 2009-149, 97 T.C.M. (CCH) 1837 (2009); BlandBarclay v. Commissioner, T.C. Memo. 2002-20, 83 T.C.M. (CCH) 1119, 1121 (2002); Marsh v. Commissioner, T.C. Memo 2000-11, 79 T.C.M. (CCH) 1327 (2000); Solomon v. Commissioner, T.C. Memo. 1993-509, 66 T.C.M. (CCH) 1201, 1202-03 (1993).

Honest Tax Advocates To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435

Successful Tax Representation We practice before the Internal Revenue Service (“IRS”) the New York State Department of Taxation and Finance (“NYSDTF”) the Department of Justice Tax Division (“DOJ”) and the Defense Office of Hearings and Appeals (“DOHA”). *To schedule a legally privileged consultation call Selig & Associates directly (212) 974-3435 

Proven Results  We successfully resolve: Tax Crimes; Tax Evasion; Failure to File a Tax Return and Criminal Non-Filing; Filing False Tax Returns; Installment Agreements; Partial Payment Agreements; IRS Audits; Sales Tax Audits; Sales Tax Controversies; Wage Garnishments; Bank Levies; Seizure of Real Property; Innocent Spouse Relief; Trust Fund Recovery Penalty; Payroll Taxes; Workers Compensation Insurance Audits ("Workers Comp"); Statute of Limitations; Offer in Compromise ("OIC"); Administrative Appeals; Collection Due Process Hearings ("CDP") and most other tax matters. *To schedule a legally privileged consultation call Selig & Associates directly (212) 974-3435

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IRS Attorney & Accountant: Fraud is not a necessary element for the application of the alter ego doctrine.

The doctrine by which a court of law holds individual shareholders liable for a corporation’s debts if the corporation is deemed to be nothing more than an “alter ego” of the corporation’s owners.

“In a nutshell, the nominee and alter ego theory holds that when a taxpayer retains the benefit, use, or control of transferred assets, the IRS may seize those assets – and quite literally, put the financial boots to you!” says David Selig of Selig and Associates.

At Selig and Associates, all tax representation is provided by a Federal Tax Practitioner and Licensed Attorney. To schedule a FREE face-to-face consultation, contact  Selig & Associates directly at (212) 974-3435. Offices at: 147 West 35th Street, Suite 1602, New York, NY 10001.

FYI Fraud is not a necessary element for the application of the alter ego doctrine. Ragan v. Ragan v. Tri-County Excavating, Inc., 62 F.3d at 508 (Under Pennsylvania law, “no finding of fraud or illegality is required before the corporate veil may be pierced, but rather the corporate entity may be disregarded ‘whenever it is necessary to avoid injustice.’”)  DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 684 (4th Cir. 1976) (non-tax case) (“[P]roof of plain fraud is not a necessary element in a finding to disregard the corporate entity.”) (citing, among other cases, Anderson v. Abbott, 321 U.S. 349, 362 (1944); National Marine Service, Inc. v. C.J. Thibodeaux & Co., 501 F.2d 940, 942 (5th Cir. 1974)). The Eighth Circuit in Scherping, supra, also noted that “proof of strict common law fraud was not required” to apply the reverse piercing branch of the alter ego doctrine, and affirmed the district court’s holding that the trusts were “sham entities created on behalf of and used by the taxpayers to evade payment of their federal income tax liabilities.” 187 F.3d at 802 (citations omitted).