A Tale of Two Taxpayers - by Daniel L. O’Neil

by News Editor
in Blog
on 20 June 2016
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It was the best of times, it was the worst of times [Elaine Marie Benes voice] yada yada yada …

How do you know if these are the best of times or the worst of times when The Tax Man comes knockin’ at your back door? 

The Tale of Taxpayer One

Last night I received a frantic phone call from an acquaintance of an acquaintance, someone who had worked at one of those apocryphal R&D credit shops we have posted about before in such posts as this one, that one, this onein that one, and definitely in this one which gets a bunch of views from former employees of those churn and burn consulting shops. The IRS wanted to talk to this person in more detail. Sounds legit?

Probably legit. We actually focused on this specifically in this blog post here where the IRS Commissioner said in no uncertain terms that the IRS is committed to stopping the improper use of business credits and catching the promoters of erroneous claims – in the same breath that the improper claiming of business credits was announced as one of the “Dirty Dozen” tax schemes.

There is a wide spectrum of tax crimes (and the more generic white collar crimes) involved in promoting fraudulent tax shelters and reportable transactions (but not actually reporting them) among other things such as recommending a tax position be taken that a tax practitioner (e.g. someone that knows what they are doing) knows will not be upheld when challenged. If you give your bud tax advice (even though you are not a CPA, tax lawyer, or enrolled agent!) you can be on the hook. Same goes for these fancy consulting shops set up in the most expensive real estate in town that gets paid for their “advice” since they get paid nice up-front fees advocating for tax positions that increase the size of their check when they find deductions and credits “underneath a rock they kicked over” and by contract they agree to refund the portion of advance fees paid out if the IRS does not ultimately uphold the position – which is predicated on gaming the “audit lottery” reality than maybe two at best of every 100 amended returns will be challenged by the IRS. Yet it’s those two flagged by the algorithm that give criminal tax exposure when the audit turns from Southern Hospitality-friendly to the one where CI agents show up on your back porch not so subtly packing their heats.

You should always be sure who you are talking to and why you are talking to them. If you need help figuring that one out, mosey on down to our office. We’ll take real good care of you and let you know what you are looking at. Or talk to the agents without a trained lawyer, pop off at the mouth about the tax fascists, and let me know how those handcuffs fit and how the federal detention facility smells around 3am. A small expense in a lawyer can help avoid you digging your own eventual grave in an 8’x8’ prison cell since the IRS has better things to do than shake down every single taxpayer in the country because it seems like fun on a Tuesday. If they are looking at you it’s probably for a good reason and they mean to do something about it, so you probably shouldn’t help them do their job any more than you already have. And we might be able to figure out what’s going on before you say something damaging, unrepresented by counsel at the time because like most putative criminal defendants you think it will all blow over.

The Tale of Taxpayer Two

One of my clients a few months ago had received a voicemail on his work number from someone purportedly from the IRS who was threatening to have the Harris County Sheriff’s Office arrest him for unpaid federal taxes. Don’t scratch your head too long on that one, it was a scam. The federal government has their own enforcement mechanisms to collect on unpaid debts – liens, levies, and more oh my! And the HCSO has more important stuff to do than call tax cheats and sound threatening on the telephone.

The reality

Let me tell you that there are three visible tax lawyers as partners in established Houston firms that have experience in criminal tax defense and the companion white collar crimes – two of them taught me what I know, and only one of those two owns a Master of Laws (LL.M) in Taxation like I do. I would say that you are in pretty good hands at Frye, Oaks, Benavidez & O’Neil, PLLC when you have a tax crimes issue since the two preeminent (far older, near retirement) practitioners in town taught me the tricks of the trade, and I have the most useful degree in the field you can have (with the Tax LL.M) since it included focused, advanced academic coursework in Tax Crimes & Money Laundering, Tax Research, Tax Procedure, International Tax, Corporate Tax, and more.

Past results do not guarantee future outcomes! But let’s see what we can do (based on the facts and the law) to keep you out of Leavenworth when The Tax Man takes an interest in you and what you have allegedly done.


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