Category Archives:Not Filing Taxes

Mike ‘The Situation’ Sorrentino and Brother Marc Sorrentino Face IRS Tax Fraud Case

mike the situation tax fraudReality television personality from the Jersey Shore, Mike “The Situation” Sorrentino and his brother, Marc Sorrentino, are under arrest and are facing tax fraud charges because they did not properly pay income taxes on $8.9 million.  The $8.9 million was received from Mike’s promotional activities after he gained fame on the MTV reality series.

Marc Sorrentino, who is also Mike’s manager, and “The Situation” are being charged with filing false tax returns for the tax years 2010, 2011 and 2012. Additionally, Mike faces an added charge of failing to file his tax return for the year of 2011. The brothers also both face charges of conspiracy to defraud the United States government.

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Owe New Jersey Back Taxes? The NJ Division of Taxation Offers a Way to Resolve Unpaid Tax Debt with No Penalties

NJ Back Taxes ResolutionThe New Jersey Division of Taxation has offered businesses and individuals a way to resolve back taxes from 2005 through 2013 at a reduced cost.

The details of the plan are as follows:

  • Most of the penalties that were assessed to your account will be reduced to zero.  The Amnesty Penalty (5%) imposed on taxes due on or after 1/1/2002 and before 2/1/2009 is still applicable.
  • Interest will be calculated only on the tax and the reduced penalties.
  • The 10% recovery fee which is imposed on each tax liability that is forwarded to NJ’s outsourced, collection unit, Pioneer, is waived.
  • The 10% cost of collection fee charged for filing a Certificate of Debt (Judgment) may be eliminated.

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Ohio Lieutenant Governor Candidates Backs Out After Tax Questions Surface

dfgdfAs news broke by several Ohio newspapers that Lieutenant Government candidate Sen. Eric Kearney (D) and his wife owed significant back taxes to the Internal Revenue Service and to state taxing agencies, the candidate decided to pull out of the race.

Races Heats Up as Candidates Face Questions

The race is a heated one, with Cuyahoga County Executive Ed FitzGerald (D) picking the state senator as a running mate in November. And, with only a few weeks to go, this puts the democratic candidate on the line. 

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Thousands of Tax Delinquents have Security Clearances

gggThousands of people holding security clearances are also tax cheats — a major problem considering that financial troubles are frequently considered a threat to national security. The reason? The farther in debt a person is, the more likely it is that they will turn to illegal activity to obtain needed funds. Russia has shown repeatedly that it is willing to pay cash for national secrets and has previously bought off former CIA and FBI agents.

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Do You Have a NY Back Tax Problem? Resolve it or call a Cab

aIf you owe back taxes that exceed $10,000 in NY State, your driver’s license may be suspended.

The New York State Department of Taxation and Finance is sending 16,000 suspension notices to delinquent taxpayers. Delinquent taxpayers will then have 60 days from the mailing date to work out a payment plan. The failure to act will result in the NY Department of Motor Vehicles sending a warning letter. If the taxpayer fails to work out a tax payment plan, within 15 days from the date of the second letter, their driver’s license will be suspended. In order to reinstate their license, full payment or a plan to full pay is necessary.

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Dolce and Gabbana to go on Trial for Tax Evasion

Dolce & GabbanaIn December, co-founders of the famous high fashion label Dolce & Gabbana will go on trial for tax evasion in their native Italy.

Domenico Dolce and Stefano Gabbana are accused of selling their business to Gado Srl, a Luxembourg-based holding company, in 2004. The pair are said to have created the company in order to carry out a plan not to pay taxes, Women’s Wear Daily reports.

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Beanie Sigel Rapper Sentenced to 2 Years for Tax Evasion

Philadelphia rapper Beanie Sigel, born Dwight Grant, was sentenced to two years in federal prison stemming from charges that he failed to file income tax returns. The rapper began serving his sentence on September 12, 2012.

Sigel was accused and convicted of failing to file tax returns from 2003 to 2005. He was reported to have earned over $2.2 million dollars from 1999 to 2005 and owed a total of $728,536 to the federal government. He was ordered to pay all back taxes and penalties and will endure a year of supervised release once his sentence is completed.

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What to Do If You Get Audited... And Cannot Find Your Tax Files...

Help! I’m Getting Audited and Cannot I Find All of My Records!

General speaking the IRS has three years to audit a tax return.  It is not uncommon for the IRS to audit your return in the third and final year.  For many of my clients, this poses a problem because records relating to the tax audit are lost or destroyed.  Although receipts are the best, you must remember the Cohan rule if your receipts are lost or destroyed.

George Michael Cohan was a major American entertainer, playwright, composer, lyricist, actor, singer, dancer and producer.  He was known for songs such as “Give My Regards to Broadway,” “Yankee Doodle Dandy, and “You’re a Grand Old Flag.  Despite writing such patriot songs, the IRS decided nothing was more patriotic than a tax audit.

Cohan’s career required him to travel extensively. He spent large sums entertaining actors, employees, and critics. Cohan did not keep a record of his spending on entertainment and travel, although he estimated that he incurred $55,000 in expenses over several years. The Board of Tax Appeals (BTA) disallowed the deductions due to Cohan’s lack of documentation.

Cohan’s tax attorneys argued that the IRS was wrong because although his records were missing, George had presented other credible evidence of the amount of the expenses on which approximations of the true amounts could be made. On appeal, the court felt that the BTA had been too strict. The court felt that Cohan’s testimony established the fact that legitimate deductible expenses had been incurred. The disallowance of all deductions suggested that no expenses were incurred, an unjust result.  Although the Second Circuit allowed Cohan a deduction for his expenses, the court recognized that the problem originated with Cohan’s lack of documentation. The court stated…

“to allow nothing at all appears to us inconsistent with saying that something was spent. True, we do not know how many trips Cohan made, nor how large his entertainments were; yet there was obviously some basis for computation, if necessary by drawing upon the Board’s personal estimates of the minimum of such expenses. The amount may be trivial and unsatisfactory, but there was basis for some allowance, and it was wrong to refuse any, even though it were the traveling expenses of a single trip. It is not fatal that the result will inevitably be speculative; many important decisions must be such. We think that the Board was in error as to this and must reconsider the evidence.”

Therefore, the court permitted the BTA to estimate deductible expenses conservatively.

The Cohan rule stands for the proposition that a court will allow the taxpayer a deduction for an estimated amount of expenses where it is clear the taxpayer is entitled to a deduction but cannot establish the exact amount of the deduction.  Because this leniency has the potential for abuse by taxpayers, Congress codified stricter standards that require stronger documentation in some areas.  For example, the Cohan rule cannot be used for expenses for travel, entertainment, business gifts, or the use to depreciation records.  Furthermore, no charitable contribution deduction is allowed unless the taxpayer has (a) bank records, such as a cancelled check or bank statement; or (b) a written acknowledgement from the charity documenting the donation’s amount and date.

If you require help with a tax audit, then contact the Law Offices of Todd S. Unger, Esq., LLC. today.  The Law Offices of Todd S. Unger, Esq. LLC. is a law firm devoted exclusively to the resolution of sophisticated tax problems.  If you are currently in a dispute with the IRS or state of New Jersey and require representation by a tax attorney, then contact Todd Unger today.

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