Anthony Sykes & Company

        The Criminal Investigations unit of the Internal Revenue Service ( IRS ) had a 91.2% conviction rate last year. This is impressive, but at the same time, Criminal Investigations has been prosecuting fewer cases each year for the past few years. This is because IRS Special Agents are retiring faster than they can be hired and trained. Looking forward, IRS leaders feel they are in a prime position to hire and change this trend.           By adding employees and investing in technology to have a more data driven approach to different investigations, IRS Criminal Investigations looks to grow their investigations, indictments, and overall prison sentences going forward. While cryptocurrency is a new area the IRS is focusing on, they are continuing to give their attention to employment tax. This will be a point of emphasis considering that it is a large part of what funds the federal government. The abusive retu...

          Whistleblowers have certainly made the news in recent months, for a variety of reasons. Did you know that the Internal Revenue Service ( IRS ) is always willing to listen to individuals if they have information about potential tax cheats? It’s true. They have a dedicated office that open to those who have “ specific and credible information ” to provide.           The process starts by filling out an official form. This can lead to an award between 15-30% of the total liability collected, including penalties and interest. Before going off to point the finger at companies or individuals, remember that these awards are discretionary and cannot be challenged. If the IRS does decide to start a case, it will take years before it will be resolved. They will only move ahead if certain thresholds are met. They want to make sure that the Criminal Investigations unit is not being used as a tool to solve perso...

       When starting a new job, every employee gets a Form W-4 . This will tell the employer how much money to withhold from the paycheck. These withholding amounts can lead to owing taxes after filing or getting a refund. As a result of the Tax Cuts and Jobs Act ( TCJA ) from 2017, this form has been changed.           Instead of checking off “allowances” to be used, it will ask for actual dollar amounts. This means that new employees will need to consider outside sources of income to make sure that the right amount is withheld in the eyes of the Internal Revenue Service ( IRS ). This is a controversial point for some because it may allow an employer to see if their employees have a second job. It will also require coordination with married couples to make sure that neither spouse under-withholds, which will lead to a tax bill the next year. The instructions must be read very carefully. Taking your time and filing the...

        An ever-present threat that we must all deal with is Identity Theft . Despite our best efforts, we may become a victim to one of these schemes. Going through this ordeal is challenging and stressful, however immediate action is necessary. Contact the Franchise Tax Board ( FTB ) and Internal Revenue Service ( IRS ) to stop the use of your personal information in fraudulent tax returns. But you must live your life, which includes continuing to file tax returns. How does this event change the way a Taxpayer files their taxes?           Moving forward, the FTB will manually review your tax returns. This is to confirm the tax return is valid and will continue for years after the report of Identity Theft. A situation like this can delay a tax refund from the FTB up to 60 days. If a fraudulent tax return is filed before a valid one, the taxpayer will have to use paper forms and submit them to the FTB for process...

         Much has been made about the Internal Revenue Service ( IRS ) and its efforts to increase enforcement of tax law, especially after the passing of the Tax Cuts and Jobs Act ( TCJA ). According to a report released in December 2019, the results of these changes have been significant. This is because the IRS has now adopted an aggressive strategy to combat tax fraud.           You may have heard of the over 10,000 letters that were sent to individuals who had not properly documented their digital currency transactions. Many of those cases will be recommended for criminal prosecution . It is the view of the IRS that this is the new frontier for tax evasion, and they want to stop these crimes as soon as possible. In 2019, the IRS had a 91% conviction rate . It identified $1.8 billion in tax fraud. Prison sentences averaged over 3 years. With all this success, the IRS only sees room for improvement. They ...

        One of the well-received parts of the Tax Cuts and Jobs Act ( TCJA ) of 2017, was that it encouraged corporations to bring their overseas profits back to the US. Often, companies will keep their foreign profits in other countries, or try to minimize them, to reduce their tax responsibilities. The new rules set in place by the TCJA lowered the tax rate on cash to 15.5%. Before this change, the tax rate was 35%.           After a full year of the TCJA in effect, the Internal Revenue Service ( IRS ) is taking an active interest in companies that owe taxes on offshore profits. Auditors know that this is an area of tax law that can be easily abused. Currently, many companies who had taken advantage of the cut in the offshore tax rate are being audited to make sure they are following this aspect of the TCJA . If irregularities are found, the audits could expand to look to see what overall changes companies made to...

         For the 2018 tax year, almost 94% of individual tax returns were filed electronically ( E-File ). From the point of view of the Internal Revenue Service ( IRS ), using E-File is faster, easier, and more accurate than paper tax returns. However, there is always a human element involved. So, what happens when a tax return is e-filed with a mistake.           This was the subject of an IRS determination made late last year. This determination was the result of a mistake made by the person who signed a Partnership return. The IRS said that if this was the only mistake , the return is valid . The person was determined to be authorized, even though they did not sign it under their authority of Chief Financial Officer. The act of signing this tax return was enough.           This brings up a common problem that comes up every Tax Season, once a tax return is e...

         Every year, the Internal Revenue Service ( IRS ) publishes a list of the 12 most common tax scams. It is called the “Dirty Dozen”. While these scams may peak at the beginning of the year, they can be found at any time so we must always be vigilant to avoid these situations. It seems that a few large organizations with a Tax-Exempt status may be involved in some land investments with inflated values. The details of why this scheme makes the “Dirty Dozen” list can be read here .           In this latest example, land appraisers, tax preparers, and others may be involved in billions of dollars of inflated deductions. These land deals, called syndicated conservation easements, make it possible for more than 1 person to claim a charitable deduction of property. The legitimate reason to donate these properties is to protect them from future development. The concern from the IRS is that this provision is being...