IRS says fake tax filings on the rise

The IRS says that identity thieves are not only stealing people’s identities, they are filing fake tax returns using those identities.

The IRS says identity thieves came up with the scam around 2008 and they have been having a hard time stopping it. In fact the practice has tripled in the last 5 years.

The IRS estimates that it sent out nearly three million fraudulent refunds to the tune of $1.68 billion last year.

But the agency has been trying ways to cut down on the fraud. They now require employers submit W-2s earlier and had they hold refunds for those claiming certain tax credits. Those changes gave the IRS more time to work on identifying discrepancies before issuing refunds

The Treasury Department believes the numbers are much higher than that $1.68 billion number.  In January of this year, the General Accounting Office (GAO) issue a 50-page report with suggestions as to how the IRS can combat this problem. Here are three of their recommendations

  • The Acting Commissioner of Internal Revenue should collect data to track late W-2 filing penalty notices and the extent to which they are associated with fraud and non-compliant returns. (Recommendation 1)
  • Recommendation: The Acting Commissioner of Internal Revenue should assess options for improving enforcement of late W-2 filing penalties, for example, by mailing notices before the next filing deadline. (Recommendation 2)
  • Recommendation: The Acting Commissioner of Internal Revenue should develop an evaluation plan to fully assess the benefits and costs, including taxpayer burden, of modifying the February 15 refund hold, and determine how this effort informs IRS’s overall compliance strategy for refundable tax credits and fraud risk management. (Recommendation 3)

 

 

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Michigan Probate Court hires attorney under criminal investigation

Last year we wrote about the scandal in Michigan’s probate system; about how some attorneys and real estate brokers were working together to cheat heirs out their inheritances, legally. Now another scandal has emerged with the news that Oakland County Probate Judges in Michigan have hired an attorney who is under criminal investigation.

We posted the WXYZ video story about this scandal last year.  Probate public administrator in Michigan cashes in on other people’s estates…legally

Barbara Andruccioli was one of the lawyers exposed by Detriot’s WXYZ 7 News investigation into collusion between probate attorneys and estate brokers to cheat heirs. She was recently hired by the Oakland County Probate Court at a taxpayer cost of $102,000/year. Channel 7 investigator asked Anruccioli,  “How can the taxpayers have any confidence with you working here?” Andruccioli answered, “Really, I think you probably need to talk to the judges.”

Andruccioli was a partner at Kemp Klein law firm and an Attorney General-appointed Public Administrator:  a public official with the authority to open probate estates after someone dies if there are no heirs available.

WXYZ reports

Andruccioli was a partner at Kemp Klein law firm. She was also an Attorney General-appointed Public Administrator, a public official with the authority to open probate estates after someone dies if there are no heirs available.

Court records show Andruccioli teamed up with real estate broker Ralph Roberts and his companies to open those estates, sell the homes, and cash in.

WXYZ uncovered court filings showing “Andruccioli and one of Roberts’ companies, Probate Asset Recovery, were billing for thousands of dollars, while the actual heirs ended up with very little.”

After the station’s investigation, Attorney General Bill Schuette terminated Andruccioli as a Public Administrator and the FBI and Oakland County Sheriff’s detectives raided Ralph Roberts offices, and launched a criminal probe into the Public Administrators.

Oakland County Clerk Lisa Brown told the station that her reaction when she first heard of the hiring was “Shock, absolute shock and bewilderment…  So out of having a wonderful pool of applicants, why would you choose this person who has a cloud over them?”

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Ultra rich and Dynasty trusts

The new tax law doubles the amount that can be passed to heirs without them having to worry about estate and gift taxes. The amount works out to about $22 million for a married couple, but is only in place until 2025. Due to this, the uber-rich are turning to what are called dynasty trusts, which secures inheritances of their grandchildren, great-grandchildren and beyond.

 Joan Antoniello, of Mazurs USA Wealth Advisors told Bloomberg News, ““For the mega wealthy, it’s really a window of opportunity that’s limited.”
Dynasty trusts let the richest Americans protect and preserve wealth for generations, while minimizing tax bills. Treasury Secretary Steven Mnuchin appears to have used one prior to assuming his government role. They can be funded tax-free with assets up to the exemption limit, which was $10.98 million in 2017 for couples, even though complex tax-planning techniques can get around that threshold.
  

Blloomberg reports that about a dozen of the nation’s top wealth planners say they’re seeing “increased interest in the trusts as clients look to capitalize on the additional $11 million they can now easily shift over. Some families want to transfer money out of their estates into the trusts in case Democrats take back control of Congress and pull the limits back down before 2025, while others say it’s best to move assets before they appreciate even more.”

Estimates are the new rules affect fewer than 2,000 families per year, but billions of dollars are at stake. A University of California, Berkeley study found that 0.1% of families control a growing share of U.S. wealth, from an estimated 7 percent in 1978 to 22 percent in 2012. The net worth of the wealthy has zoomed even higher in recent years as values of stocks, real estate and private businesses have climbed.

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Trump aide Manafort sued by California bankruptcy trustee

As if former Trump aide didn’t have enough problems being federally indicted on money laundering charges. A California bankruptcy trustee filed suit against him claiming he falsely claimed he was a creditor owed $2.7 million in failed real estate deal involving his former son-in-law.

Trustee Thomas Casey filed the lawsuit on Thursday in the federal bankruptcy court in Santa Ana, California. The suit adds yet more legal headaches facing Manafort, who was Trump’s campaign manager for Donald Trump’s presidential campaign for a few months in 2016.

The lawsuit relates to a $2.7 million deed of trust Manafort recorded in Los Angeles County that positioned himself as a secured creditor in a luxury property he was developing in partnership with his former son-in-law, Jeffrey Yohai.

A deed of trust was recorded Dec. 20, 2016, one day before the company that owned the property filed for bankruptcy protection to stave off foreclosure by its lender Genesis Capital LLC, according to property and court records.

Casey, whose job as trustee is to liquidate the assets of the bankruptcy estate for the benefit of creditors, alleges in the suit the money Manafort put into the property was equity and not a loan as Manafort claimed.

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Gibson Guitars files for bankruptcy

After over 100 years of being in the mucil instrument business, famed Gibson Guitars has filed fo bankruptcy.

The company filed for bankruptcy protection in Delaware, an action many have for some time. The company owes as much as $500 million and that debt has burdened it over the years. According to Bloomberg News, a $135 million loan should help keep Gibson in business after its debt is restructured. The report also states that several dozen companies were contacted about a purchase, but no deal was finalized in time.

Gibson has been in the music business since 1894, and throughout that time has sold millions of guitars to some of the greatest artists who have ever recorded music, like Elvis Presley. The company still sells over 150,000 units every year, and through the decades has diversified and moved into other areas of the music industry. The guitar giant also owns a dozen other brands like Epiphone, Steinberger and Kramer. it sells audio equipment such as amplifiers, tuners an headphones

.According to a number of experts, its this diversification is one of the reasons Gibson is in financial trouble is because it tried to expand and diversify and make the company more of a lifestyle brand, instead of just a guitar seller.

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