Apparently, not all IRS employees believe in proper tax planning and tax preparation.
A former IRS supervisory and group manager has been fined $20,000 and sentenced to a year in prison, followed by 12 months of supervised release, after she was convicted of accessing IRS computers on behalf of a commercial tax preparation business that she operated while employed by the IRS. She was found to have exceeded her authorized access to IRS computers and engaging in a criminal act of interest. Not only did she access the IRS computers, but she had her IRS subordinates access the IRS databases over 2,000 times for the benefit of her business. The court found that this employee of the IRS for over 34 years had compromised the public’s trust in the IRS. As an aside, did the judge really believe that the public trusts the IRS?
Then there is the case of an individual who worked 28 years for the IRS with 20 of those years as a revenue agent (an auditor). She graduated from college with two majors and a minor in accounting, finance, and economics, and had completed some graduate work in forensic accounting. She also had passed some parts of the CPA exam and was working to pass the remaining parts. She seemingly was an intelligent person . . . but may have lacked street smarts. When filing her 2008 and 2009 tax returns, she claimed $12,025 and $25,140 of charitable contributions, respectively. She was audited by the IRS and upon request, she produced letters on the purported letterhead of the church to which she claimed the donations were made. When the pastor of the church was contacted to collaborate the donations, he told the IRS that she was not a member of his congregation, he did not know her, and that she had made no donations. Furthermore, he said that the letters produced by the IRS were not signed by him which he always did for his congregation’s members, that the letters were a “cut and paste” job, and that his name was misspelled on both letters. The pastor was apparently upset about this event and shared with his congregation at a Sunday service that the IRS had conducted an audit and asked if anyone in the congregation knew the donor (IRS agent #1).
The saga gets better. A parishioner of the church knew the IRS agent, and in fact, also worked for the IRS at the same location as the donor. We will refer to this person as IRS agent #2. The parishioner (IRS agent #2) spoke with the pastor and then the donor (IRS agent #1) contacted the pastor. After these two meetings, the pastor wrote a letter to the IRS and recanted the statements that he had previously made to the IRS. The pastor then told the IRS that the donor (IRS agent #1) and the parishioner (IRS agent #2) were the same person, the parishioner had asked for and received his forgiveness, and that he had not given anyone permission to sign his name. The court found that the pastor provided three contradictory statements to the IRS. These included that the donations were from the parishioner, IRS Agent #2, and not the donor, IRS Agent #1, that he may have confused the donor and the parishioner (IRS Agents 1 & 2), and that the donor (IRS agent #1) had promised to make a contribution at some later point in return for the letters. The court found that the pastor, the parishioner and donor contradicted each other’s stories and their own stories. The court believed that the two IRS employees consorted to create the cut and pasted stationery and denied the charitable contributions in dispute and held the donor liable for the accuracy related penalties. I wonder why the IRS did not charge any of these parties with tax fraud.
Interesting is that the purported letter signed by the pastor was dated May 11, 2011. Since the date of this letter was after the due date of the returns, the letter did not meet the contemporaneous requirement and would not have met the IRS’s substantiation requirements. It demonstrates that these two IRS employees were not even good tax cheats.
To learn more about the IRS’s requirements to claim a charitable contribution, you should read our blogs dated October 8, 2012 and June 5, 2012.
Note: Because each individual’s tax situation is different, if you want to learn more about the IRS’s substantiation and documentation requirements to protect your tax deductions, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation.
You can also schedule a consultation at Click Here. To learn more about various tax and business services, visit Tax Preparation Services and Small Business Accounting Services
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