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Miami Tax Law Blog

What Florida residents should know about tax fraud

Each year, the IRS estimates that 17 percent of taxpayers do not comply with the tax code in some manner. However, only .0022 percent of taxpayers are convicted of fraud in a given year. This is because the IRS typically gives the benefit of the doubt to those who make mistakes on a tax return. What does the IRS consider fraud as opposed to a simple error on a tax return?

Tax fraud ranges from failure to pay taxes to failure to file an income tax return. Fraud also occurs when a taxpayer willfully fails to report some or all of his or her income. If a false tax return is submitted or the return contains a fraudulent social security number, the IRS may assume that someone is attempting to commit fraud.

Florida man pleads guilty to charges related to tax fraud

As the result of a plea deal, a 34-year-old Jacksonville man pleaded guilty in early August to charges of stealing government property. The charges were related to refund checks issued by the IRS as the result of filing false and fraudulent income tax returns. According to reports, the U.S. Treasury checks were mailed to bogus addresses in New York in 2011 and 2012.

The first seven checks were deposited into a business account owned by a co-defendant. The remaining 104 checks were later deposited into the co-defendant's business account from which the co-defendant wrote checks to the defendant and other related parties. According to the indictment, the checks totaled more than $227,000. The co-defendant pleaded guilty in July to conspiracy and is facing a prison term up to five years.

How does the government define and punish computer fraud?

Readers in Florida may be interested to learn about federal statutes regarding a variety of computer-based activities that are considered illegal under federal law. According to sections of the U.S. Code, a number of unauthorized computer activities that involve knowingly accessing protected information or causing damage and loss is illegal and punishable upon conviction.

Some of the sections of the statutes concern the access of information without authorization. For example, a person who exceeds his or her authorization and gains information that might injure the U.S. or provide an advantage to another country might be prosecuted at the federal level.

A person who is convicted of such a violation might be subjected to a fine and a period of incarceration. The maximum prison sentence varies between 10 and 20 years depending on the defendant's criminal history. The law also states that unauthorized access to information from any department of the U.S. using a computer is also illegal.

2 brothers plead guilty to $6 million food stamp scam

On July 24, two brothers in South Florida were sentenced to spend more than five years in prison for using government-issued food stamps fraudulently. The 42-year-old and 52-year-old brothers were also ordered to pay $4 million in restitution after pleading guilty to conspiracy, bankruptcy fraud and other charges.

Court documents allege that the two brothers operated a storefront where they regularly allowed food stamp recipients to exchange their food benefits for cash. The transactions reportedly involved the brothers taking substantial fees from the food stamp debit cards. Many of the charges that they made were admittedly fraudulent.

Defining tax fraud

The IRS reported that a small amount of tax offenses in Florida result in convictions every year. However, an estimated 17 percent of taxpayers do not follow tax laws, and about three-fourths of these are individuals who commit tax fraud. Even so, the IRS has strict definitions of tax fraud, defining the act as intentional and not just an oversight.

Tax fraud includes the following: intentional failure to pay taxes, failure to file taxes, failing to report all earnings, false reporting of taxes and false claims on taxes. However, the IRS has decided that the tax code is difficult to understand, so they usually believe the best about a taxpayer unless they find that a person intentionally evaded their agency. They attribute most mistakes to negligence and label them as unintentional although the taxpayer could still be penalized. The IRS has a separate unit called the IRS Criminal Investigation to research all types of tax offenses with the technology to research computer records. In addition, an offender might need to pay civil consequences as well.

Man accused of personal and corporate tax fraud

A former Florida business owner was indicted for allegedly filing fraudulent individual and corporate tax returns in 2010 and 2011. The alleged tax fraud took place while he was a resident of Niceville and the owner of at least seven different businesses. The 62-year-old man is accused of underreporting both his corporate and personal income during those two years. He now lives in Laughlin, Nevada but will be required to return to Florida for the trial.

Before his Sept. 2 trial date in Pensacola, the accused man is legally barred from having any sort of contact with any person involved in his former businesses. The stipulation is a condition of his release from custody and includes both employees and customers of the man's former businesses. Some of the businesses involved in the alleged tax fraud include Haight Ashbury LLC, Woodstock Navarre and Woodstock Niceville.

Money laundering leads to felony charges

According to the state of Florida, money laundering occurs when criminal activity generates proceeds which a person or group then attempts to conceal or process through one or more financial transactions. Money laundering activities are usually thought to be done concurrently with organized crime or racketeering, and they can lead to charges that range in severity from third-degree felonies to first-degree felonies.

Transactions that range in value from $300 to $20,000 in a single year can lead to a third-degree felony charge, which carries a penalty of up to five years' imprisonment upon a conviction. A second-degree felony charge can lead to a prison sentence of up to 15 years and results from transactions that range in value from $20,000 to $100,000 in a single year. A third-degree felony charge would result from transactions that exceed $100,000 in a single year and can lead to 30 years' imprisonment.

Florida women sentenced to 2 years in prison for tax fraud

A Florida woman who was found guilty of tax fraud was sentenced on July 18. According to the report, the 41-year-old Gibsonton woman pleaded guilty on April 25 to receiving more than $43,000 in income tax refunds by filing fraudulent tax returns using the names of other people in 2011.

The prosecution stated that she would deposit the refund checks into her account. She would then withdraw the funds as soon as possible. She was sentenced to two years in federal prison. Once she is released, she faces one year of supervision. In addition, she also must repay more than $34,000 in restitution to the IRS.

One woman's case may be a warning to Florida residents

A 37-year-old woman was sentenced to 12 years in prison for her role in a tax fraud scheme that netted her $135,000. An investigation on the scheme, named Operation Zig Zag, was launched after VyStar Credit Union contacted authorities about irregularities in refund checks that had been cashed at the institution. The investigation began in May of 2012 and was a collaboration between the Secret Service, the IRS and the State Attorney's Office.

The Jacksonville Sheriff's Office was also involved in the case that spanned from Florida to New York. The scheme was named Operation Zig Zag because of the number of states where victims were impacted. According to reports, the woman would steal personal identification information from her victims and use that information to file phony tax returns. Bank and credit card accounts were also opened in the names of her victims.

Florida man agrees to plea agreement in alleged day trading fraud

A plea agreement in the case of a Tampa man accused of defrauding would-be investors holds that the man will pay restitution to his alleged victims; the man is the defendant in three pending federal cases in both criminal and civil court. The 34-year-old man and a conspirator allegedly offered investors the services of a day trading firm, attempting to attract investors with the promise of low fees. Federal authorities accuse the pair of defrauding customers out of $473,742, of which some $181,000 was withdrawn in cash.

According to prosecutors, the man and his conspirator would use social media to find potential day traders. The man would allegedly falsely represent himself as being in compliance with securities law and allegedly lied to potential traders about the success of his company. According to an SEC complaint, the man's conspirator told one customer that the firm had $15 million in day trading accounts on its books at time when the firm actually had less than $400,000 in accounts.

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