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Department of justice fights tax fraud

April 08, 2010

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The United States Justice Department had a busy year battling tax fraud around the country and overseas. The Tax Division of the Department of Justice along with the Internal Revenue Service have spent 2009 tracking and prosecuting individuals alleged to have committed tax fraud. Specifically, they have targeted individuals using off-shore accounts to hide assets, using and maintaining abusive tax shelters and shutting down other various tax schemes to defraud. Criminal lawyers specializing in defending tax fraud cases have kept busy during the past year representing their clients in federal court. The acting assistant attorney for the tax division issued a statement promising to promote compliance with the federal tax law and threatened prosecution for all those engaged in tax fraud.
While the Tax Division prosecutors obtained 135 tax fraud convictions either by plea or jury trials in federal court during 2009, their responsibilities extend to other areas in an effort to combat fraud. The division obtained hundreds of injunctions in an effort to stop fraudulent tax schemes in their tracks. They also successfully defended hundreds of tax refund lawsuits saving the federal government in excess of $665 million. The division also collected in excess of $200 million in taxes owed the federal government. These are impressive numbers considering the fact that the operating budget for the Tax Division is a meager $102 million.

While the Tax Division over the past decade have gone after individuals who fail to pay taxes, understate income and capital gains, and file fraudulent tax documents, they have now taken their operations overseas in an effort to prosecute individuals who are allegedly hiding assets in overseas accounts. In 2009, the Justice Department prosecuted Switzerland's largest bank for impeding an investigation being conducted by the Internal Revenue Service. The government allowed the bank to enter into a deferred prosecution agreement which means if the bank complies with the demands set forth by the federal government, the charges will be dismissed at a later date. A deferred prosecution agreement is similar to the pre-trial diversion program available to first time offenders in Miami and throughout the State of Florida. To have the indictment dismissed, the bank is required to provide names and account number of certain customers accused of tax fraud.

The Tax Division has made strides in halting the promotion of tax schemes to defraud and fraudulent tax return preparation. The Justice Department has issued warnings to tax fraud promoters and has promised heavy fines and significant jail time to all violators. The scams lure unwitting taxpayers to use their services and in the end it costs the taxpayers back taxes, interest and other civil penalties. The division is proactive in protecting taxpayers by filing injunctions against these unscrupulous organizations. The injunctions prohibit the organizations from continuing their unlawful practices disseminated through the use of the internet or seminars. When the division deems it appropriate, they will file charges and criminally prosecute the scammers for solicitation to commit tax fraud.

Justice Department Highlights Tax Enforcement Results, PR, April 7, 2010.
Categories: Tax Fraud
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