Budget cuts and a significant drop in Special Agents that investigate criminal tax crimes has led the IRS to use Artificial Intelligence (AI) to uncover criminal tax activities. In a recent webcast hosted by the American Bar Association, the IRS revealed that research and investigative techniques that used to take weeks or months may now be accomplished in minutes with technology the IRS is rolling out to detect taxpayer noncompliance.

These computer tools are able to detect fraud, identity theft, money laundering and hidden assets that Revenue Agents and Special Agents typically look for manually. The speed and sophistication of these computer data mining programs has greatly increased the IRS’ efficiency.

The program started with the signing of a seven-year, $99 million deal with Palantir Technologies this past September. The project uses machine learning algorithms and artificial intelligence to examine and analyze filed tax returns, bank reports, property records and social media posts. It analyzes various patterns of conduct and activities that might indicate noncompliance.

Since 2010, the IRS has suffered budget cuts totaling $1 billion and loses about 150 agents every year to attrition. That leaves around 2,100 Special Agents working on a population of 250 million taxpayers.

On the administrative/civil enforcement side, the IRS is also beginning to use AI to detect noncompliance. In-house development of these techniques is supported by a Compliance Data Warehouse. CDW was built in the 1990s to collect data from several databases and using forward-looking data analysis to uncover or prevent fraud. CDW has approximately 40 data sets on taxpayers going back more than 30 years. Using algorithms, like those used by online retailers, the IRS can use predictive software to examine gaps in data or tax returns that may reveal noncompliance. That translates to an enormous amount of data collected on taxpayers for decades.

As technology continues to advance, computer driven analysis will lead to increased discovery of potential fraud and noncompliance. Revenue and Special agents will still be needed to complete the investigations, but the IRS’ limited manpower will become significantly more efficient. Of course, with the advance of technology to analyze disparate data points, the margin for error and false conclusions can increase as well leading to enhanced scrutiny of potentially innocent taxpayers.

Robert Stahl, and his firm, Stahl Gasiorowski Criminal Defense Lawyers aggressively defend individuals charged with complex federal and state crimes. Founder Robert G. Stahl is recognized as one of the top criminal defense attorneys in the NY/NJ area for his skills, knowledge and success. To contact the firm, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com.

With Tuesday’s convictions in the criminal trial of President Trump’s former campaign chairman Paul Manafort, Special Counsel Robert S. Mueller III, has garnered five guilty pleas and 32 indicted individuals still pending. In addition, yesterday’s guilty plea in the S.D.N.Y., by Michael Cohen, the president’s former lawyer and self-styled fixer, admitting to making payments to two women who allegedly had affairs with President Trump in violation of campaign finance laws at the direction of the President along with other charges, demonstrate that our system of justice is working as it should.

The President’s repeated irresponsible tweets attacking the system, calling it a witch hunt – before, during and after the jury deliberations in the Manafort trial – is a sad commentary on the President’s attempt to obfuscate and confuse the public. Rather than focusing on his stated defense – that these prosecutions are not based on Russian collusion, that the Manafort charges pre-date his role in the campaign and that the President did not violate the law – the President continues to slander our entire system of justice. And by tweeting during the Manafort trial and during the jury deliberations, he risked affecting the outcome.

The day after the jury convicted Manafort based on overwhelming documentary evidence, the President tweeted that he felt bad for Manafort being convicted on an “old tax case”, and lauded Manafort’s courage in not “breaking” or making up stories to get a deal, an obvious referral to Trump’s former lawyer Cohen who may be looking to cooperate with the Special Counsel. Trump also added that since Manafort’s jury couldn’t reach a verdict on 10 of the 18 counts in the indictment, it was a witch hunt.

The charges against Manafort, however, were no different than those brought against any one that commits the types of crimes he was convicted of. Every day across the country the Department of Justice investigates and charges individuals who blatantly failed to report their full income, materially lied to obtain bank loans or failed to report monies held in overseas bank accounts. The charges against Manafort were run-of-the-mill, only sensationalized by his connection to the President and the President’s own continuing comments on the case. The fact that the jury could not unanimously agree on some charges is meaningless as it happens in many cases for a variety of reasons. The important fact is that the jury unanimously agreed that Manafort was guilty on 8 serious counts that potentially expose him to decades in prison.

While my colleagues and I on the defense side fight hard every day for our clients accused of similar offenses, we do so based upon the facts and the law. We vigorously attack the charges through the evidence, pretrial motions and trial. It pains those of us involved in the criminal justice system to see the President attack the rule of law and falsely accuse the system of being a rigged witch hunt. These oft-repeated and highly publicized statements unfortunately have the ability to undermine the average citizen’s faith in our system of justice. And while it is certainly not perfect, it is on balance a fair system of laws and procedures that protect the rights of the accused in the United States – whether they are a celebrity, a politician, a friend or foe of the President, or just an “average citizen”.

Robert Stahl, and his firm, Stahl Gasiorowski Criminal Defense Lawyers aggressively defend individuals charged with complex federal and state crimes. Founder Robert G. Stahl is recognized as one of the top criminal defense attorneys in the NY/NJ area for his skills, knowledge and success. To contact the firm, call 908.301.9001 for the NJ office and 212.755.3300 for the NYC office, or email Mr. Stahl at rgs@sgdefenselaw.com.

In the real world, of course, hearing from the IRS is seldom an occasion for amusement; especially when the subject of its communication with you is to accuse you of tax fraud.

Tax fraud is a criminal matter. If you are convicted of an activity like failing to report income or earnings, or violations of sales or payroll tax withholdings, or even money laundering, you could face heavy financial penalties and even jail time.

Unless you are already a tax expert — and probably even then — the one thing that you should not do if the IRS is threatening you with tax fraud is to take it on by yourself. The Internal Revenue Code is lengthy and extraordinarily complex.

When the IRS accuses you of violating that code, it is not only playing on its home field, but can also call upon the considerable resources of the federal government in pressing its case against you.

It’s a classic mismatch, Goliath versus David without his sling. In such a situation, you will almost certainly need an attorney as your advocate.

But not just any attorney will do. You need a law firm that has intimate awareness not only of the Internal Revenue Code and tax court decisions interpreting it, but also of how the IRS operates. What its strengths are — and its possible weak points. A good way to benefit from this kind of knowledge is to find an attorney who has worked as a federal prosecutor.

That is where we come in. Our firm includes attorneys with experience in federal prosecutions and we have defended against IRS tax fraud charges in the past. We can help you to defend against the same thing. If you want to know more about our firm, start with our tax fraud webpage.

An audit of a New Jersey resident’s tax return that discloses under reported income or deductions to which the filer is not entitled may not be the result of an attempt to commit tax fraud. The complexity of the tax code and the tax laws can result in mistakes being made by taxpayers, accountants and tax preparers.

Negligence in preparing a return might result failing to report income because you misplaced a 1099 for commissions earned early in the year. Criminal charges of failure to report earnings and income could result if you falsify payroll records to show that you earned less income than you actually earned.

Common activities that could trigger FBI and state investigations of tax fraud include:

• Claiming personal expenses as business deductions
• Listing fake dependents on your tax return
• Knowingly concealing income
• Maintaining two sets of books
• Submitting false documents to the IRS
• Using fake Social Security numbers

Penalties can be severe if you are charged and convicted of committing tax fraud. Evading the payment of taxes is a felony punishable by fines up to $250,000 and up to five years in prison. Filing a false tax return could result in a prison sentence of up to three years. Refusing to file a tax return or to provide information about your income and other financial information to the IRS could lead to criminal felony charges and up to a year in prison.

If you suspect that IRS, FBI and state tax investigations of tax fraud may be focusing on you as a target, a criminal defense attorney familiar with federal criminal violations might of assistance to you.

Fortunately, the folks at the IRS realize how complex federal tax laws and regulations can be for the average person. The use of a professional tax preparer does not guarantee that a taxpayer’s return will be error-free. An honest mistake, or even a mistake caused by the negligent preparation of a tax return, might lead to the imposition of interest and penalties, but it does usually does not result in allegations of tax fraud.

What distinguishes tax fraud cases from a mistake or negligence in preparing a return or interpreting the tax code is the intent of the taxpayer. An intentional effort on the part of a taxpayer to not pay taxes, or to pay less than what the taxpayer would actually owe, might lead to felony charges of tax fraud.

The government treats allegations of tax fraud seriously, with a conviction subjecting a person to penalties that could include fines up to $250,000 and up to five years in prison. The harsh sentences that courts impose are intended to deter others from engaging in the same type of conduct while punishing those who willfully fail to comply with the law.

It is not always clear whether a particular form of conduct supports criminal tax fraud charges. Determining whether taking advantage of loopholes in the tax laws to reduce the taxes a person may owe is a legitimate tax strategy or tax fraud may involve complex legal issues.

This posting is an overview of a complex area of the law and is not offered as legal advice. A person with questions about tax fraud charges should seek legal advice from a criminal defense attorney.

FBI and state investigations of tax fraud or involvement from the IRS could mean that you will have tax fraud charges or other felony charges filed against you for which you will need to attend a hearing or go to court. It is important to find an experienced lawyer or legal team to represent you.

The Law Offices of Robert G. Stahl can help you defend against money laundering charges, payroll and sales tax fraud, and charges of failure to report earnings and income. We have worked on numerous tax fraud cases in New Jersey to ensure that those facing tax fraud cases are given a fair opportunity to argue the allegations.

It is actually the government’s responsibility to prove that you are guilty. If there is not enough evidence to press charges, tax fraud cases may be dropped. We can help you develop a defense in the beginning stages so you have a better chance of preparing yourself against investigations into allegations of tax fraud.

You need a lawyer or legal team that is on your side and will work with you to fight tax fraud charges. Robert G. Stahl and his team offer useful advice, support and their experience to ensure that you are fairly represented if necessary in a hearing or court.

Federal laws that seek to discourage hiding money overseas as a tax evasion technique can subject not only the overseas bank customers but the bankers themselves to criminal legal liability. In the story at hand, two of eight former employees of a Swiss bank that was itself convicted of helping U.S. taxpayers illegally avoid more than $2 billion in tax obligations pled guilty in federal court for their involvement in that activity.

Both men could have been sentenced to prison terms of four years or more, but the court accepted the recommendation of the prosecution to impose monetary penalties and probation instead. Possible reasons for the leniency were that both defendants chose to come to the U.S. voluntarily, and at least one of the two men had in recent years been advising his U.S. clients to make use of IRS amnesty offers, which resulted in tens of millions of dollars of back taxes being paid by those clients.

The scale of the use of Swiss and other foreign bank accounts to evade taxes can be understood from the fact that since 2009 about 45,000 U.S. taxpayers, including, almost certainly, some in New Jersey, have taken advantage of IRS tax amnesty programs to pay more than $6 billion in back taxes and related penalties.

Avoiding taxes by legal means is understandable, but evading taxes is something that the federal and state governments take seriously. Before sending money to overseas accounts, even if they claim to be tax shelters, seek the advice of an accountant and a tax lawyer to make sure that the arrangement is legitimate. And if you have been accused of tax evasion in connection with such an overseas arrangement, retaining a criminal defense law firm experienced with tax cases can make the difference between keeping your freedom or going to federal prison.

Source: New Jersey Herald, ” Swiss bankers avoid prison, get probation instead,” Matthew Barakat, March 27, 2015

Essentially, tax fraud comes down to the taxpayer’s intent. In other words, the IRS looks at whether the taxpayer willfully attempted to defraud the government by not paying taxes that he or she knows are due.

Tax fraud can take a number of different forms, including filing a false income tax return and intentionally failing to file a return. No matter the form, tax fraud is a very serious crime. A person convicted of committing tax fraud faces severe criminal and civil penalties. The penalties depend on the type of tax fraud.

Below are a few examples of possible penalties for tax fraud:

• Attempting to evade or defeat taxes is punishable by a prison sentence of up to five years, a fine of up to $250,000 for individuals, or both plus the cost of prosecution.
• Willfully failing to file an income tax return, supply information, or pay a tax is punishable by a prison sentence of up to one year, a fine of up to $100,000 for individuals, or both plus the cost of prosecution.
• Making fraud and false statements is punishable by a prison sentence of up to three years, a fine of up to $250,000 for individuals, or both plus the cost of prosecution.
• Attempting to interfere with the administration of tax laws is punishable by a prison sentence of up to three years, a fine of up to $250,000 for individuals, or both.

If you have been charged with tax fraud, you should speak with an experienced criminal defense attorney as soon as possible.

But what constitutes “tax evasion?”

To begin with, we need to distinguish between tax avoidance and tax evasion. Tax avoidance describes a legal means to protect income and assets. It encompasses methods such as charitable contributions or participation in certain retirement savings plans.

Tax evasion, on the other hand, is illegal. The IRS divides tax evasion into two subcategories: evasion of assessment and evasion of payment.

• Evasion of assessment refers to attempts to fool the IRS into thinking that you do not owe as much as you really do. Typically, this behavior manifests itself in efforts to not declare income or to claim deductions and credits to which you are not entitled. Examples include filing false tax returns, concealing sources of income, keeping false bookkeeping records and unlawfully destroying financial records.
• Evasion of payment means an illegal attempt to hide funds and assets from which your tax obligations can be paid. This can result from things like transferring money into accounts held by relatives or friends or transferring taxable assets under the names of others. If its main purpose is to try to avoid paying taxes, even the otherwise legal act of declaring bankruptcy can be a form of tax evasion under this definition.

The IRS has dealt with many individuals’ attempts to use creative means to argue against accusations of tax evasion; it has taken an attitude of “we’ve heard it all before” to the point where it has prepared a guide for tax defense attorneys specifically illustrating arguments that do not work.

This is not to say, however, that there are not plausible and reasonable defenses that you can raise if the IRS accuses you of tax evasion. What you need in such an event is a law firm that not only has experience defending tax cases, but one that is also savvy enough not to fall into the trap of arguments guaranteed to fail in court.

A tax fraud/ charge is extremely serious for a Westfield business person. They stand to lose freedom and relationships along with assets, a reputation, and customers or clients. A conviction can wipe out the efforts of a lifetime, which is why tax crime suspects require early, expert criminal defense.

A Toms River man will be sentenced in late summer for federal income tax evasion. The 57-year-old was accused of keeping money hidden in a business subaccount under his spouse’s name. The defendant also pleaded guilty to payroll tax violations.

Unfortunately, the businessman was already in debt to the Internal Revenue Service at the time of his alleged misdeeds. The government filed a levy against the man’s assets for 2002 federal taxes that were overdue.

Federal prosecutors in New Jersey said the asset seizure prompted the small business owner to start hiding money. A trust account in the name of the defendant’s wife allegedly became the repository for all other business and personal accounts.

Records showed the defendant used the account to pay tens of thousands of dollars in mortgage, credit card and insurance payments. The IRS said the defendant never declared or paid taxes on the secret income.

The accused man had three employees and deducted taxes properly from the workers’ paychecks; however, the money was never sent to the federal government.

A prison term of up to five years and a $250,000 fine are possible. Between now and sentencing, a defense attorney may be able to negotiate a last-minute reduction of penalties. The earlier an attorney is notified that IRS tax problems are possible, the more time a criminal lawyer has to build a formidable defense.

Source: app.com, ” Toms River attorney admits tax evasion” Anthony Panissidi, May. 01, 2013

White collar crime and tax evasion are gentle terms for what the Internal Revenue Service considers fraud. Taxpayers who try to hide or keep money that governments believe belongs to them can face hard punishments — fines, penalties and even imprisonment. Sometimes the IRS cannot tell whether a tax return contains a deliberate or innocent mistake.

Tax laws are complicated, which is why many individuals trust tax preparation services. Most professional tax preparers are reliable. When taxes are inaccurate, it is not usually the tax preparer who suffers penalties. The blame is placed upon the taxpayer who signs the return.

The IRS’s Newark office recently publicized several criminal prosecutions, including the case of a Jersey City man who ran a tax preparation business. The tax preparer found all sorts of deductions for his clients. Unfortunately, the deductions were falsely inflated. The man also admitted he never reported his business income.

IRS audits strike fear in the hearts of taxpayers, not necessarily because they are guilty of a serious crime. It is frightening to be suspected or accused of a felony. It is also costly for an individual to defend a tax position when he or she had no part in preparing a tax return.

The IRS wants to prosecute “willful” tax violators, not taxpayers who make mistakes. Government officials recommend that taxpayers thoroughly review tax returns before signing and filing them, whether the returns are personally prepared or handled by a third party.

To ensure that a tax return is correct, many New Jersey taxpayers take the extra step to have the form reviewed by a tax attorney before filing the document.

Source: accountingtoday.com, “IRS Criminal Investigation Warns about Tax Preparer Fraudsters,” Michael Cohn, April 5, 2013