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.

A Newark political consultant faced tax evasion charges with a potential five-year prison term and $250,000 fine sought Robert Stahl for her criminal defense. With Robert Stahl defending her, the sentence in federal court was limited to three years of probation, eight months of which will be spent in home confinement, after pleading guilty.

Citing her past work for the city of Newark, and noting her “dedication and devotion” to help support underprivileged women, Robert Stahl had asked the court for leniency. Mr. Stahl described his client’s response to the authorities in the proceedings as honest and forthright, as well as having remorse and exhibiting a genuine acceptance of responsibility.

Mr. Stahl advocated for his client, describing her as “a woman of great promise and compassion.” He argued that incarceration would make it more difficult for her to repay her IRS debt, and fines. He described how his client overcame her very humble background to become an entrepreneur and community organizer.

In fact, Mr. Stahl noted the respect his client earned for her work from community leaders, including the former New Jersey Governor Jim McGreevey who currently serves as executive director of Jersey City’s Employment and Training Program (JCETP), an organization that provides re-entry coaching for newly liberated prisoners.

Defense attorney Robert Stahl explained how the case’s publicity took a toll on his client, who is seeking full-time employment to enable her to make restitution.

Coverage of this high profile case has been covered by:

• NJ.com: Mayor’s friend gets slap on the wrist in tax fraud scheme
• Tap Online: Tax Evasion Sentence Limited to Probation and Home Confinement

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.

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.

Violations of any number of federal statutes have the potential to jeopardize a business and can, in many cases, result in individuals going to prison. In addition, restitution and forfeiture may be applicable. Below, we delve into some of the most commonly encountered federal business fraud statutes.

The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act applies to any company that must file a report with the SEC, including companies based in the United States, their subsidiaries and those listed on the stock exchanges. This Act bars payments to foreign governments or officials to obtain a competitive advantage.

Wire Fraud and Mail Fraud

Mail fraud and wire fraud are used extensively by federal authorities. Mail fraud involves the use of the mail in a scheme to defraud another person or entity. This broad-based statute includes any mailing of a document that contains a materially false statement. “Mail” is defined as documents sent via public or private carriers. The document is not required to cross state lines to qualify as mail fraud. Wire fraud is similar to mail fraud except it includes just about all forms of media including e-mail, telephone, TV, radio, Internet, telex and facsimile.

Bankruptcy Fraud

This type of business fraud involves defrauding through a document, petition or representation tied to a bankruptcy proceeding. It includes material misrepresentations as to assets and ownership interests in assets.

Health Care Fraud

Health care fraud is the defrauding of any private or public health care benefit program. The definition encompasses the payment for/delivery of services. This a very active area of investigation for federal and state authorities. It includes paying others for patient referrals, upcoding, over billing, ordering unnecessary tests or procedures and submitting false claims. False statements made to procure payment from a federal health care program also qualifies as health care fraud.

Securities Fraud

This type of fraud refers to the sale or purchase of an investment where the return is based on the effort of a third party. An example of such an offense is the trading of stocks with insider information. The fraudulent marking of prices or material false statements in the prospectus are also forms of securities fraud.

The False Claims Act

Those who knowingly make or conspire to produce erroneous financial claims to the government can be found guilty of this type of fraud. It commonly applies to Medicaid and Medicare. False statements made on a bill can qualify as separate offenses. The operative word in this statute’s definition is “knowingly”. “Knowingly” is defined as actual knowledge, intentional ignorance or a “reckless” disregard for what is true. Examples of false claims include false affirmative certifications of compliance with federal regulations, billing and claims that stand for compliance with regulations, statutes or contract terms.

Material False Statements

An individual who makes a materially false statement to an official of the federal government or makes a false record of entry is committing a criminal offense. Though individuals certainly have the right to remain silent, they do not have the right to lie.

The Dodd-Frank Act of 2010

Passed into law as a result of the last recession, this Act is meant to spur improved transparency and accountability on Wall Street, protect investors and reform mortgages. However, its Constitutionality is currently being challenged in federal court. Stay tuned for developments.

Bank Fraud

Bank fraud is an attempt (or the actual execution) to defraud a federally insured financial institution. Bank fraud encompasses securities, funds and property owned or possessed by the institution that has been victimized. Bank fraud can still apply even if the institution does not suffer an actual loss. It also includes submitting materially false statements on loan applications, whether the loan is for a car, car lease, home mortgage, or revolving line of credit.

Uniform Fraudulent Transfer Act

Fraudulent conveyances that occur in various contexts, such as bankruptcy, have tripped up numerous individuals and businesses in the past. The language of these statutes is broad enough to include activity that is meant to defraud, delay or disrupt a creditor. Courts can go back as far as six years to uncover evidence of this style of fraud. An example in the context of the private sector is a leveraged buyout in which a company borrows against its assets and acquires stock. Such an action can be scrutinized as a fraudulent conveyance.

The Computer Fraud and Abuse Act

This Act bars the procurement of national security information, infiltrating confidential information stored on computers, password trafficking, damaging transmissions/access and any extortion involving threats to damage computing devices. It is worth noting that cell phones qualify as “computing devices”.

Immigration Fraud

Those who fraudulently use immigration documents such as border crossing cards, permits and visas can be found guilty of immigration fraud.

The Sarbanes-Oxley Act of 2002

This Act has eleven unique “Titles”, each with a section that has been written in response to corporate wrong-doings. Its purpose is to prevent future corporate scandals by requiring in-depth financial disclosures and auditor independence.

The experienced attorneys at 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 us to discuss your case, call 908.301.9001 for our NJ office and 212.755.3300 for our NYC office or email us at rgs@sgdefenselaw.com.

Although the case is not being brought in the state of New Jersey, the issue of immune witness testimony is relevant to many federal crimes and state criminal prosecutions in every state. Prosecutors in trials across the country often rely on such testimony when seeking to establish the existence of alleged conspiracies or other crimes in which the intent of the defendants is something that the government must prove.

In the case at hand, the government’s contention is that the former governor and his wife accepted gifts and other items with a value of at least $165,000 from a business owner in exchange for helping him to promote his business; an exchange which the prosecution alleges was made with corrupt intent.

For the prosecution to be able to prove corrupt intent on the part of the defendants, however, it will need the testimony of the same businessman who allegedly offered them the corrupt quid pro quo. So it has offered him immunity for his testimony against them.

Although the immune witness strategy can be successful, it is not without risks. Defense attorneys will routinely question the veracity of any witness who testifies under a grant of immunity, and the question of that testimony effectively being “purchased” by the government can sometimes cause jurors to turn against the witness.

There is also the risk of the immune witness inadvertently becoming the “main event” at trial, with his or her own behaviors and motivations possibly overshadowing those of the defendants.

Any time the government uses immune witness testimony in a criminal case, it is an important task of the defense attorney or attorneys to thoroughly investigate the background of such witnesses, so that any weaknesses in their reasons for testifying or the testimony itself can be brought to the attention of the jury. Immune testimony can be powerful for the prosecution, but it is not always decisive in its effect.

Source: Stafford County Sun, ” U.S. granted ex-Star Scientific CEO rare blanket immunity,” Frank Green, July 14, 2014