Even though I got this in my feed as an ad, It's been very interesting and educational. Not in any trouble myself and don't see why I would ever be. But I like having law and process explained to me. It may never come in useful. But having a less Hollywood idea of how things work is probably a good thing by itself. I also see you have a lot more videos on other subjects. So I'm definitely subscribing. Channels like this deserve more attention than they often receive.
The “Spies evasion” doctrine is a legal theory that finds a taxpayer criminally liable when he willfully Spies v. United States , 317 U.S. 492, 499 (1943). (1) fails to file a tax return, and (2) his action is coupled with an “affirmative act of evasion,” like actively concealing taxable income or otherwise misleading the government. The Court stated: [We] “think [the] affirmative willful attempt may be inferred from conduct such as [1] keeping a double set of books, [2] making false entries of alterations, [3] or false invoices or documents, [4] destruction of books or records, [5] concealment of assets or covering up sources of income, [6] handling of one’s affairs to avoid making the records usual in transactions of the kind, and [7] any conduct, the likely effect of which would be to mislead or to conceal.” An affirmative act of evasion may be any number of things, including but not limited to, making a false statement to the IRS, either oral or written. Importantly, the statement could be made before, after, or at the same time as filing the tax return. Thus, for example, a taxpayer makes an “affirmative” act of evasion after failing to file his income tax return when he lies to the IRS about how much income he earned. Accordingly, a taxpayer’s lying about earnings could also earn him jail time-and heavy penalties. Tax Crimes are investigated by the Criminal Investigation Division (CID) of the Internal Revenue Service. CID uses a variety of criteria in selecting cases for investigation, the heaviest weight placed on how likely a prosecution is to result in a conviction. Any recommendations by CID to prosecute an alleged tax crime are reviewed by the District Counsel of the IRS. If the IRS District Counsel approves the recommendation, the case is referred to the Tax Division of the Department of Justice. If after reviewing the case the Tax Division makes a recommendation to prosecute, the case is finally referred to a local U.S. Attorney for possible prosecution if accepted by the U.S. Attorney’s office in D.C. A federal grand jury must vote in favor of issuing an indictment for a taxpayer to be charged with a tax felony. A grand jury is granted substantial investigatory powers, including the power to compel testimony and require production of physical evidence to facilitate this process. Tax misdemeanors need not be approved by grand juries, but prosecuting attorneys usually elect to present misdemeanors to the grand jury for investigation and vote when accompanied by a Felony Tax Crime charge. The grand jury’s is asked to weigh if it is more likely than not that a federal crime has been committed and is to weigh whether there is probable cause to believe that the crime was committed by a particular person under the same standard. A grand jury is composed of from 16 to 23 persons chosen at the direction of the appropriate U.S. District Court. In all cases, at least 12 jurors must vote to return an indictment. In cases where a grand jury declines to charge a person, a decision called a no true bill or a no bill is recorded. The work of the grand jury is required by law to proceed in secret and therefore only the grand jurors, the government attorneys, the court reporter, and witnesses may be present during the Grand Jury investigation. Grand jury investigation is usually chosen as an alternative to administrative investigation when the IRS is informed that an existing nontax motivated criminal investigation has uncovered evidence of tax crimes and the U.S. Attorney desires to combine all criminal charges, including tax crimes, into one indictment. Other common reasons for the use of grand jury investigation are the need to investigate quickly, and the need to grant use immunity to reluctant witnesses. Since grand jury investigations occasionally begin without a definite target, a defendant’s counsel is wise to assess if a client has potential exposure to prosecution at the earliest practicable time within the course of the Grand Jury Investigation. If defense counsel determines it is in the client’s best interest to negotiate a plea to potential criminal offenses or to secure use immunity, defense counsel’s leverage in the associated negotiations is strongest at the start of the grand jury investigation. If defense counsel’s timing in the negotiation is off, other potential defendants could strike a deal with the prosecutor first, leaving little new material to offer in a plea negotiation, and worse yet, leaving open the possibility of the other potential defendants obtaining immunity in exchange for becoming a key witness in the government Criminal Tax Case against the defense counsel’s client. 1. Defeat willfulness 2. Cooperate with the investigation and plea-bargain Cold hard truth of the matter Government will stack up criminal charges and hold 10 - 15 years in jail over your head and then offer you 1 - 3 (on average) if they don’t have to go to court to prove it. 80% conviction rate if CID begins an investigation Inadvertence and Negligence Because willfulness requires an intentional violation of a known legal duty, the element of willfulness can be negated by a producing evidence to show that the defendant’s conduct was inadvertent, careless, or otherwise negligent. The government will attempt to refute this defense by showing that the defendant’s conduct is inconsistent with the claimed inadvertence or neglect. For example, in failure to file cases, the government usually relies on multiple, consecutive failures to file to negate any claimed inadvertence or neglect. (Uncertain Legal Duty) Willfulness requires that there be a legal duty with which the taxpayer fails to comply. The courts have consistently held that where the state of the law is uncertain as to whether there is a legal duty, criminal liability will not be imposed. Moreover, the weight of legal authority in this area is that the taxpayer’s actual knowledge regarding the unsettled state of the law is irrelevant. The bottom line here is that if the law is in fact uncertain, the taxpayer has not committed a crime. (Mistake) Since the government’s burden in establishing willfulness requires that the taxpayer violate a known legal duty, it is a viable defense to offer evidence that the taxpayer did not know of the specific duty at issue. The Supreme Court itself has held that willfulness may be negated by a good faith claim of ignorance or misunderstanding of the law or a good faith belief that there was no violation of the law, regardless of whether the belief was objectively reasonable. One rationale for this “good faith” defense is the criminal tax provisions were not drafted with the intention of penalizing a taxpayer for innocent mistakes caused by the inherent complexities of the Tax Code. The Supreme Court’s line of decisions in the area have held that a taxpayer is not guilty of willful failure to file if he honestly believed his income was too low to require him to file a return or if the taxpayer believed that he was not required to file a return if he was unable to pay. The defense of mistake is not limited solely to mistakes of law. A defendant who, through a mistake of fact, unknowingly violates a statute also does not act willfully. (Reliance on Others) Evidence establishing that a taxpayer relied on the advice of counsel or an accountant may successfully be used to negate willfulness if it can be shown that the taxpayer acted in good faith and that he or she provided the preparer with full and accurate information at the time the advice was sought. This defense may not be successful if the government can establish that full disclosure to the attorney or accountant was not made at the time the advice was rendered. Reliance on a lawyer’s advice has occasionally been held a valid defense, even where such reliance was objectively unreasonable. (Mental Disease or Defect) Because the government’s burden in proving willfulness requires a showing of a specific intent to disobey the law, the courts have consistently permitted expert medical testimony to establish that the defendant has developed a delusion about the tax laws that interfered with the mental ability to form the specific intent to disobey the law. Under the government’s voluntary disclosure policy published in the Internal Revenue Manual, a taxpayer who, in essence admits to a potential tax crime by filing an amended or delinquent return may avoid prosecution, provided the disclosure was voluntary and made before the taxpayer was first contacted by the IRS regarding a potential problem with the tax liability. However, amended or delinquent returns filed after a taxpayer has been contacted by the IRS do not qualify for the voluntary disclosure policy, even thought the courts tend to hold that the filing of delinquent or amended returns or the late payment of tax is admissible by a defendant on the issue of willfulness. The filing of amended returns after notice by the IRS that a particular return is under investigation is a patently bad idea. Case law shows that in numerous instances, the very act of filing of a delinquent or amended return during the course of an IRS investigation has been presented as a key piece of evidence that eventually led directly to a taxpayer’s indictment. Case law also shows that the government routinely relies on delinquent and amended returns as the very admission that establishes the existence of an understatement in tax liability of the original return.
This is all bull shit! It is the very definition of tyranny,extortion and fraud. The fraud is committed by this professional lier. He should be hanged by the neck until dead. Except death is to good for him and the other tax law-whores. They should have all their property seized and then put them in prison for life. Ask this criminal for the law that requires you to give up your fifth amendment right to remain silent and file a 1040 confection. Do you think the fifth amendment is why there is no law that requires anyone to file a ten forty confession. He will tell you it's a known duty to file. The income tax is a fraud and destroying America and the world. It is the original victory tax illegally imposed right after Peril Harbour because we were at war. This guy is a criminal because he knows the truth. If we the people knew the truth, this dirty peace of dog shit would have to get a real job. But even worse, he wouldn't be able to bully people. I haven't filed or paid in 18 years. All they do is dup third parties into handing over your money to the IRS without your permission or any legal documents with any signature of someone with authority to seize property for an unpaid tax liability. I will go toe to toe with this ass hole any day of the week. There is plenty of reasonable doubt of the very existence of an incomtax liability. People are so ignorant of the law they actually believe that the IRS has authority to make rulings about the law or even make law. Get it? An agency of a branch of the government can make LAW! The income tax law is like the Peter Pan ferry tail. It's only real if you believe in it. You as a juror in a court of law in a incomtax case, or any other criminal case is the law. You have the right, duty and patriotic responsibility to not only judge the accused, but to judge the law itself. But in a incomtax case there is NO LAW to judge. Only the fraud and intimidation of tax lawyers and the IRS.
Paulette i read that "the IRS" not even a person at the IRS, like the IRS is a branch of the government like the Senate or House of Representatives "rule that cryptocurrency is taxable"! So there you have it. Not only can the courts now "make law" just like elected law makers. The "IRS" (an agency of a "branch" of the government) can make law. The only way this is possible is that the "incomtax law" is like the Peter Pan ferry tail. It's only real if you believe in it. James Madison said "for one branch of the government to acquire the authority of another is the very definition of tyranny. Supreme court chief justice John Marshall said the power to tax is the power to destroy. Look what's happened since The Day Of Deceit, (a fact and title of a book) 1942. That's when it became a privileg to earn a living and you had to have a SS number to get a job.
@@abledbrown1348 That's nothing new. Few Americans realize that the old "the House and the Senate and the President (Executive Branch) signs it into law is NONSENSE. There are TENS of THOUSANDS of laws that have civil (fines) and criminal (prison) penalties that are written by unelected bureaucrats. Don't believe me? That's what the IRS does, as well as the FDA, EPA, BLM, ATF and many more. The alphabet soup agencies in government are out of control.
The hardest element of the a government’s case to prove in charging a taxpayer with a tax crime is usually the element of willfulness because of the lack of direct evidence on this element in the absence of a confession on the taxpayer’s part. Because of the usual lack of direct evidence on willfulness, (testimony or admissions on the part of the defendant taxpayer or his counsel), the government is left to prove willfulness through the use of circumstantial evidence, such as a taxpayer’s act of keeping a double set of books or concealing assets. To attempt to prevent the government from establishing that the defendant taxpayer’s acts were willful, he or she may try to show that the defendant’s actions were merely inadvertent or that the current state of the law is uncertain as whether the taxpayer’s actions were willful. However, showing that a taxpayer disagreed with a law, was a tax protester, objects to taxes on religious grounds, or has personal problems are generally not effective defenses to willfulness. An intentional violation of a known legal duty can be shown by a taxpayer’s reckless disregard for the law. Courts have held that a taxpayer’s knowledge of the law is not limited to his actual knowledge but includes a reckless disregard of a legal obligation that the defendant can be shown he or she was aware of in some manner. For example, to prove that a taxpayer attempted to evade taxes the government needs only show that the taxpayer had the specific intent to evade a tax that the taxpayer knew was owing. Similarly, to prove that a taxpayer willfully failed to file a return, all that need be shown is that the taxpayer knew of the obligation to file the return and intentionally failed to do so. In defining willfulness, Federal Courts have consistently stated that, despite their earlier references to “bad faith and evil intent”, a current finding that a defendant acted willfully does not require any proof of motive other than an intentional violation of a known legal duty. The difference between tax evasion and tax avoidance is an important one because “tax evasion” is criminal, but “tax avoidance” is not. There are cases where the difference between these is clear; but there are other, more subtle cases where things are not so cut-and-dry. The Supreme Court Gregory v. Helvering, 293 U.S. 465 (1935) defined permissible tax avoidance as actions that “reduce, avoid, minimize, or alleviate taxes through wholly legitimate means.” The Court elaborated that “[t]he legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.” Judge Learned Hand stated, we may “arrange [our] affairs so that [our] taxes shall be as low as possible; [we are] not bound to choose that pattern which best pays the treasury. [We do not even have] a patriotic duty to increase [our] taxes.” Proof of willfulness is both the criminal and civil contexts can also be very effectively established by through the use of objective facts that indicate willfulness on the part of a defendant. These objective facts are commonly referred to in the tax profession as “badges of fraud”. The government has relied on the following circumstances to meet is burden of proof as to willfulness surrounding tax crimes: The withholding of financial information from accountants The keeping a safe deposit box under an assumed name The consist overstatement of deductions The claiming of excess withholding exemptions The claiming of false or overstated charitable deductions for property The false claiming of exemption from income taxes Leaving the United States with valuable assets in the face of or following an audit Engaging in a pattern of tax evasion in previous and subsequent years The supplying of false information to a return preparer (underreporting income or overstating deductions) The prematurely destroying of records The failure to keep adequate books or records The concealing assets or sources of income while in collections The handling one’s affairs so as to avoid making the usual records in transactions of the kind (excessive cash transactions) The failure or refusal to cooperate with, (including lying to), investigating agents The participation in illegal activities The taking of business deductions for personal expenses The withholding of relevant information from tax preparer Failing to file tax returns where a filing requirement existed The filing of objectively false tax returns The making of false journal entries or alterations to the books to lower taxable income The creating of false documents (such as receipts to support fictitious deductions) Providing implausible or inconsistent explanations during civil examination Displaying belligerent, rude, or disrespectful behavior to an IRS agent Excessive dealing in cash Filing false returns Intentionally underreporting or omitting income Overstating deductions or claiming false deductions Hiding or transferring income with relatives or related entities Keeping false records of your income or "second set of books" Falsifying records "forgery" Claiming fake dependents Falsely claiming credits Arranging affairs for the sole purpose of tax avoidance in a manner that lacks economic substance Taking positions on a return that are "more likely than not" to be disallowed if discovered without sufficient disclosure While the understatement of income in a single tax year in and of itself is usually insufficient to establish willfulness, a proven pattern (usually 3 years minimum - 5 years investigated) of substantial understatement can successfully be used by the government to establish the element of willfulness. When a taxpayer’s state of mind on a particular date is critical to the government’s case on willfulness, as in willful failure to file cases, the government will present evidence of events that occurred after that particular date as evidence of the taxpayer’s earlier state of mind. For example, evidence of a taxpayer’s previous noncompliance with the filing rules and requirements in a year immediately subsequent to the tax year or years at issue has been deemed relevant by the court’s to show the taxpayer’s willfulness and absence of mistake in filing false returns during the tax years at issue. Evidence concerning a taxpayer’s education or degree of sophistication has been deemed by the courts to be relevant in determining willfulness. Thus, the government will present evidence to show that a taxpayer was a professional or a sophisticated businessperson for its circumstantial effect on proving willfulness. (should have known better) On the other hand evidence establishing that a particular taxpayer was poorly educated or unsophisticated would tend to negate the government’s case as to willfulness. Tax evasion involves tax avoidance that is ordinarily accomplished via an element of deceit or concealment-and at times is patently illegal means. The analysis of when a means-a tax plan, transaction, or a structuring of one’s affairs-is illegal will depend on whether it complies with the totality of the tax laws as currently enacted. That totality includes the Internal Revenue Code, Revenue Rulings, Revenue Procedures, Treasury Regulations, case law, etc. Indeed, the body of tax law is one of the largest areas of law, if not the largest.
Los Angeles Tax Attorney when you say "tax" you don't specify "what tax". Is it the "harbor maintenance tax"? Or the "manufacturers excise tax "? I can't find a incomtax liability in title 26. Look at the index for liability for tax. Its not there! This guy is putting the fear of the IRS in my nightmares! Holly shite! That's actually all they have, fear and intimadation. That's all this video has. Did anyone notice this guy is NOT a tax lawyer? He is a CPA! Why not a tax lawyer? That is the question! I will give you the answer. But you will have to prove it is wrong because you will mot like finding out the trith. The truth is that the incomtax is a fraud and destroying America and the world. You, your parents and grandparents were duped by the professional liars in expensive suits and cheep black robes. Tax lawyers think they are safe from criminal indictments. That is one reason tax lawyers willfully sercomvent the law and collude with the IRS to "dup" you into handing your money over to them to pay a tax that does not exist in law! You will never get a tax lawyer to show you the law that requires anyone to file a 1040 confession or imposes an "income tax liability "under penalty of perjury!
Usually, the government will try to infer the “mental state” element of the crime by pointing to circumstantial evidence. In the majority of criminal cases, the element of intent is inferred from circumstantial evidence.” These are indirect facts that, when weighed together, suggest that the taxpayer attempted to commit tax fraud. Circumstantial evidence need not consist of “slam dunk” type facts. For example, a business engaged is all-cash transactions is not, in itself, a fraudulent action. But, when it is combined together with other facts it could become a “negative” one, in the government’s favor. Negative facts are called Badges of Fraud, or facts that the IRS, FTB, other taxing authorities, and the Courts tend to find equate to fraud or run with fraud. For example in U.S. v. Voigt, the taxpayer (i) decided against purchasing some jewelry with cash when he discovered that a report to the IRS would be required; (ii) he required his clients to fill out certain confidentiality agreements that forbade them from disclosing details of the transaction; and (iii) he maintained an overseas bank account. Taken individually, each of these facts is, strictly speaking, “equally consistent with innocent activity.” But the court found them to be legally significant in finding that the taxpayer had the intent to evade his taxes. The court stated that it had “no difficulty concluding” that based on his actions, when taken together, that they may “provide the jury with sufficient evidence from which it could infer that they were ‘designed’ to evade the payment of admitted tax deficiencies, even if such actions otherwise might constitute wholly innocent conduct.” U.S. v. Voigt, 89 F.3d 1050, 1090 (3d. Cir. 1996). The strongest evidence of a taxpayer’s willfulness is typically the size of taxpayer’s tax deficiencies that can be proven to occur over a number of years. Experience has shown the Government that a greater amount of tax deficiency can usually be established by including the use of circumstantial evidence than by the use of direct evidence of omitted income alone. Net Worth Method Under the net worth method, the taxpayer’s net worth (total assets minus total liabilities) at the end of one year is compared with his or her net worth at the end of the next year. The method calculates net income for a year by measuring the increase in net worth over a particular year which is reduced by any nontaxable sources of income received by the taxpayer such as loan proceeds or inheritances. The agent then compares the taxable income reported for the year being tested with the results of the net worth computation and thereby identifying any unexplained increase in net worth for the year tested as unreported income. Expenditures Method The expenditures method for uncovering omitted income is similar to the net worth method and is sometimes referred to as the cost-of-living test. This method focuses on the amount of income needed to cover the taxpayer’s identified personal expenditures for the year being tested. The agent totals all the identified personal expenditures of the taxpayer for the year tested and reduces the total by any nontaxable sources of income used to pay for the expenditures. Since one possible source of nontaxable income for the expenditures tested is wealth acquired and taxed in previous years, the agent must take into consideration all of the taxpayer’s assets and liabilities at the start of the prosecution period, in the same manner as in a net worth case. Commonly the IRS combines the net worth and personal expenditures methods to assure that its computations reflect the income used to purchase assets as well as the income used for personal expenditures. Bank Deposits Method (BDA) Taxpayers who run Schedule C businesses and make periodic deposits to at best, a business bank account, and at worst, a commingled personal account, are typically investigated by the IRS using the bank deposits method. The agent totals deposits to all accounts (bank and brokerage) under the taxpayer’s control and then eliminates any deposits from identified nontaxable sources, such as gifts, loans, and transfers between accounts. The adjusted total of deposits is considered income. The IRS uses these methods to establish an income-producing business which allows the jury to infer how the unreported taxable income was generated. This method is also commonly used for businesses run through entities such as LLCs, S and C Corporations, and Partnerships. Under the specific item method of proof, the government attempts to show that the taxpayer’s return at issue inaccurately reflects a specific transaction, or set of transactions, such that income is omitted, deductions are inflated or a source of income is falsified. The government is not burdened with having to prove an exact amount of unreported income to prevail but rather must prove that a substantial amount of income was unreported. Where appropriate, CID special agents employ surveillance, issue search warrants, implant undercover agents and utilize scientific experts to aid in a criminal investigation. For example, CID Agents have been known to go so far as to sift through a suspect’s trash to secure evidence. Note: Courts have held that you generally have no expectation of privacy in your trash and thus you were not subjected to an unreasonable search. Good defense attorney’s can sometimes suppress evidence obtained by the IRS using these extraordinary techniques. In one reported case, the IRS obtained a search warrant to search a taxpayer’s real estate office and seized all the documents contained therein. At trial, none of the documents seized were allowed to be introduced because defense counsel successfully argued that the search warrant was overbroad. Defense Counsel can also exploit the detailed restrictions on the use of these extraordinary techniques as contained in the Internal Revenue Manual. First, one attempts to commit tax evasion when he files a false return. One of the leading cases in California making this point is United States v. Boulware , 384 F.3d 794 (2004), 470 F.3d 931, 934 (9th Cir. 2006). Second, one attempts to commit tax evasion when he files a false amended return. A lead case in California on this point is Norwitt v. United States , 195 F.2d 127, 133-34 (9th Cir. 1952), cert. denied , 344 U.S. 817 (1952). Third, one attempts to commit tax evasion when (1) he fails to file a return and (2) his action is coupled with an “affirmative act of evasion,” like making an affirmative act to conceal or mislead the government. The name for this third kind of evasion is “Spies evasion” after the case bearing that name. Spies v. United States , 317 U.S. 492, 498-99 (1943).
I used to work for chinese, korean, indians, middle easters and they cheat taxes left and right most of them charge the customer without ringing it in the cash register, others own mechanic shops and do the same even not giving receipts to the customers, indian restaurants charging and not ringing in the cash register plus they always round the amount and never giving receipt. Some own small businesses, they have two or three cash registers one is recording the sales for a day and the other two are not recording the sales and just giving the receipt to the customers, is there is a place and number where I can report these tax eviders? Please reply. 🍀
Nicoletta Ciccone misery loves company. You! Yes you are committing treason by paying the fraudulent incomtax imposed not by law but by treasonous income tax law-whores colluding with THE IRS to dup third-parties into illegally handing your money over to them without your permission or any legal documents with any signature of someone with authority to seize property for an unpaid tax liability. Supreme court chief justice John Marshall said the power to tax is the power to destroy. You have a patriotic duty to protect and preserve the rule of law. If you go visit your local friendly IRS office and ask them to show you the law that requires anyone to file a ten forty confession or imposes an income tax liability. Better yet, ask to see the law that imposes a wage tax liability they will run away as soon as you show them the Code, title 26. The IRC! The internal revenue code. Income is a corporat profit. A wage is compensation for providing a personal service. They are as different as apples and road apples. If you get hit in the back of the head with a apple it will hurt like he'll. If you get hit in the back of the head with a road apple you will smell like horse shit.
Able D Brown The minute I find out how crooks they were, I quit I did not stay for a long time plus I found out through customers and ex workers and of course I know they will get in trouble and they can get you in trouble too.
He even said it's volentary . Sorry for spelling. Challenge the jurisdiction. The government is a corporation. There laws and tax code are only for those in the corporation. Since most aren't in the corporation of the government the laws and tax codes don't apply. Want to learn more go to marcstevens.net
Sounds Like Marc Stevens is ripe for criminal prosecution for aiding and abetting income tax evasion. Yes we have a voluntary income tax system enforced with criminal prosecution if you do not comply with tax law. You wont even be able to claim reasonable reliance on a tax professional if listening to his advice is deemed non reasonable. What you state is patently incorrect.
It is not just black-and-white Code provisions that one must comply with; in addition, the taxpayer must navigate his or her way through various legal doctrines. The IRS and the courts subject one’s tax plan to various tests or legal doctrines, which have names like the “Economic Substance Test,” the “Sham Transaction Doctrine,” and they ask whether the tax strategy has “substance over form,” is done for a “business purpose,” and whether the transaction taken a whole may be collapsed into one “step” violating the “Step Transaction Doctrine.” Economic Substance Test - which basically dictates that any transaction where the economic substance doctrine is applicable shall be treated as having economic substance only where: (A) Entering into the transaction changes in a meaningful way the taxpayer’s economic position, (apart from its Federal income tax effects) and (B) The taxpayer has a substantial business purpose for entering into such transaction (apart from its Federal income tax effects). Sham Transaction Doctrine - “judge made law” which will deny advantageous tax treatment where transactions are carried out primarily for tax avoidance purposes and they lack a bona fide business purpose. Substance over Form - maintains that the “substance,” rather than the form, of a transaction is what governs the tax consequences of a transaction. Business Purposes Test - requires that a transaction, to be respected, must have a business purpose separate and apart from any associated tax advantages. Step Transaction Doctrine - the IRS will collapse a series of separate “steps” into a single transaction in order for the government to obtain a clear view of what the separate steps are accomplishing. When the IRS collapses these steps, one of the factors considers is the time interval between them (although this factor is not determinative). Bottom line - avoid to good to be true transactions like the plague. The Tax Court has consistently disallowed losses, deductions, and credits from transactions it deems to be “tax shelters.” A tax shelter is, among other things, any investment that has a “tax shelter ratio” exceeding 2 to 1. The tax shelter ratio is the aggregate amount of deductions to the amount invested. The courts attack such sheltered transactions using the judicial doctrines or by disregarding the form the transaction takes to determine the “true” associated income tax consequences. To be respected, transactions are required to be motivated by business considerations, rather than by attractive tax avoidance benefits obtained via the use of meaningless labels. Transactions that are identified as generic tax shelters in the past have included investments in the cable television industry, master music recordings, inventions, mining activities, films rights, art packages, videotape recordings, and luxury yacht leasing arrangements. The Criminal Investigation Division (CID) trains the rest of the IRS’s employees to be alert for, and to report any indication of, fraud. Each service center has a CID office that assists employees in spotting and reporting suspicious activities. Consequently, the most important source within the IRS of criminal tax investigations is fraud discovered during routine civil audits. When an audit examiner discovers firm indications of fraud, the audit is suspended and CID is informed by means of Form 2797, Referral Report for Potential Fraud Cases. The taxpayer often is not notified that there has been a referral to CID until a special agent from CID contacts him. Other sources that provide leads for CID include informants and state and local law enforcement agencies (Most often the Franchise Tax Board (FTB) in California). CID also receives data regarding potential criminal cases from other divisions of the IRS, the public, the news media, state courts hearing matrimonial cases, state offices, and its own intelligence-gathering sources. One of the most important sources of information outside the IRS that leads to Tax Crime investigation leads for CI is the Financial Crimes Enforcement Network (FinCEN) a government-wide, multisource intelligence and database network. The IRS must prove three elements to find you guilty of felony tax evasion. First, you owed tax. (no de minimis rule) Second, you acted willfully in your actions. Third, you made an affirmative act of evasion or affirmative attempt to evade. The question being asked here relates to the third element: how serious must the “affirmative” act be? The answer is that it need not be “serious” at all. Tax law does not overlook “minor” acts of evasion. The Ninth Circuit clarified that Congress did not intend “to establish a hierarchy of attempts or evasions and limit [the offense] to those of a more deceitful or troublesome character.” U.S. v. Carlson, 235 F.3d 466, 469, (9th Cir. 2000) There is no certain, mathematical threshold that must be crossed. Rather, most courts hold that the taxpayer understated his tax liability by a “substantial amount.” Again, not all courts agree. For example, if you live in California, the government need only show that “some tax deficiency” existed. In United States v. Marashi, 913 F.2d 724, 735-736 (9th Cir. 1990), for example, the Ninth Circuit only required that a reasonable “trier of fact could have found some tax deficiency beyond a reasonable doubt”. It is a crime, tax evasion, to willfully attempt to evade the assessment or payment of a tax. I.R.C. Section 7201. Case law has explained that it is a crime when someone opens two bank accounts using false social security numbers, and transfers funds into those accounts after learning that the IRS was attempting to levy on his other account (at a different bank). The Ninth Circuit, which is binding law for most California lower courts, calls this felony tax evasion because the taxpayer’s conduct could have misled the IRS and thwarted the government’s collection of tax, in violation of Section 7201 of the Internal Revenue Code. U.S. v. Carlson, 235 F.3d 466, 469 (9th Cir. 2000). Thus, the answer to the question whether your concealing a bank account results in tax evasion turns on whether the government can prove you willfully attempted to defeat a tax or its payment. (lying on a collection information statement) (Selling or gifting away assets to avoid collections) hiding assets) The short answer is Yes, it may be a crime. 7201 Evasion The Eight Circuit in, Zacher v. U.S., 227 F.2d 219, 224 (8th Cir. 1955)explained that a “consistent pattern of overstating deductions” is tax evasion. Such a “consistent pattern” exists when, for example, the taxpayer “overstate[s] casualty losses, . . . the sales tax deduction claimed exceeded the amount of sales tax paid” and he “overstate[s] [his] repair costs.” Id. Understate Income, Claim Credits not Entitled too ect. Spies Evasion (non filing)
How can ANYONE be prosecuted for "criminal tax evasion when....."THERE IS NO TAX YO EVADE!". Google 26 CFR 1.0-1 paragraph (d) from the IRC of 1954 clearly says TAXABLE YEARS began December 31 1953 and ENDED....and ENDED...AND ENDED AUGUST 16 1954 passed into LAW by the 83rd Congress AS LAW and published as VOLUME 68A of the United States Statutes at Large and Federal Register....as LAW. Any Subtitle F compliant enforcement provisions took place the day AFTER the date of ENACTMENT; AUGUST 17 1954 but on that day there was NO TAX TO ENFORCE AS the tax died expired the day before... August 16 1954!!!! There has NOT BEEN AN ENFORCEABLE LEGAL INCOME TAX in this country for....70 YEARS!!!
Even though I got this in my feed as an ad, It's been very interesting and educational. Not in any trouble myself and don't see why I would ever be. But I like having law and process explained to me. It may never come in useful. But having a less Hollywood idea of how things work is probably a good thing by itself. I also see you have a lot more videos on other subjects. So I'm definitely subscribing. Channels like this deserve more attention than they often receive.
I'm glad you found value in the video... Thanks for subscribing
He just stated that almost everything you do will lead to jail unless you call him. Lawyers are crooks. He is playing on the fear
Wow! Your reaction is not quite was I was going for... But yes... Fear is a good thing - Being criminally prosecuted is no Joke.
Taxation is a criminal act.No one is a criminal who does not pay.
The “Spies evasion” doctrine is a legal theory that finds a taxpayer criminally liable when he willfully Spies v. United States , 317 U.S. 492, 499 (1943).
(1) fails to file a tax return, and
(2) his action is coupled with an “affirmative act of evasion,” like actively concealing taxable income or otherwise misleading the government.
The Court stated: [We] “think [the] affirmative willful attempt may be inferred from conduct such as [1] keeping a double set of books, [2] making false entries of alterations, [3] or false invoices or documents, [4] destruction of books or records, [5] concealment of assets or covering up sources of income, [6] handling of one’s affairs to avoid making the records usual in transactions of the kind, and [7] any conduct, the likely effect of which would be to mislead or to conceal.”
An affirmative act of evasion may be any number of things, including but not limited to, making a false statement to the IRS, either oral or written. Importantly, the statement could be made before, after, or at the same time as filing the tax return. Thus, for example, a taxpayer makes an “affirmative” act of evasion after failing to file his income tax return when he lies to the IRS about how much income he earned. Accordingly, a taxpayer’s lying about earnings could also earn him jail time-and heavy penalties.
Tax Crimes are investigated by the Criminal Investigation Division (CID) of the Internal Revenue Service.
CID uses a variety of criteria in selecting cases for investigation, the heaviest weight placed on how likely a prosecution is to result in a conviction.
Any recommendations by CID to prosecute an alleged tax crime are reviewed by the District Counsel of the IRS.
If the IRS District Counsel approves the recommendation, the case is referred to the Tax Division of the Department of Justice.
If after reviewing the case the Tax Division makes a recommendation to prosecute, the case is finally referred to a local U.S. Attorney for possible prosecution if accepted by the U.S. Attorney’s office in D.C.
A federal grand jury must vote in favor of issuing an indictment for a taxpayer to be charged with a tax felony.
A grand jury is granted substantial investigatory powers, including the power to compel testimony and require production of physical evidence to facilitate this process.
Tax misdemeanors need not be approved by grand juries, but prosecuting attorneys usually elect to present misdemeanors to the grand jury for investigation and vote when accompanied by a Felony Tax Crime charge.
The grand jury’s is asked to weigh if it is more likely than not that a federal crime has been committed and is to weigh whether there is probable cause to believe that the crime was committed by a particular person under the same standard.
A grand jury is composed of from 16 to 23 persons chosen at the direction of the appropriate U.S. District Court.
In all cases, at least 12 jurors must vote to return an indictment.
In cases where a grand jury declines to charge a person, a decision called a no true bill or a no bill is recorded.
The work of the grand jury is required by law to proceed in secret and therefore only the grand jurors, the government attorneys, the court reporter, and witnesses may be present during the Grand Jury investigation.
Grand jury investigation is usually chosen as an alternative to administrative investigation when the IRS is informed that an existing nontax motivated criminal investigation has uncovered evidence of tax crimes and the U.S. Attorney desires to combine all criminal charges, including tax crimes, into one indictment.
Other common reasons for the use of grand jury investigation are the need to investigate quickly, and the need to grant use immunity to reluctant witnesses.
Since grand jury investigations occasionally begin without a definite target, a defendant’s counsel is wise to assess if a client has potential exposure to prosecution at the earliest practicable time within the course of the Grand Jury Investigation.
If defense counsel determines it is in the client’s best interest to negotiate a plea to potential criminal offenses or to secure use immunity, defense counsel’s leverage in the associated negotiations is strongest at the start of the grand jury investigation.
If defense counsel’s timing in the negotiation is off, other potential defendants could strike a deal with the prosecutor first, leaving little new material to offer in a plea negotiation, and worse yet, leaving open the possibility of the other potential defendants obtaining immunity in exchange for becoming a key witness in the government Criminal Tax Case against the defense counsel’s client.
1. Defeat willfulness
2. Cooperate with the investigation and plea-bargain
Cold hard truth of the matter
Government will stack up criminal charges and hold 10 - 15 years in jail over your head and then offer you 1 - 3 (on average) if they don’t have to go to court to prove it.
80% conviction rate if CID begins an investigation
Inadvertence and Negligence
Because willfulness requires an intentional violation of a known legal duty, the element of willfulness can be negated by a producing evidence to show that the defendant’s conduct was inadvertent, careless, or otherwise negligent.
The government will attempt to refute this defense by showing that the defendant’s conduct is inconsistent with the claimed inadvertence or neglect.
For example, in failure to file cases, the government usually relies on multiple, consecutive failures to file to negate any claimed inadvertence or neglect.
(Uncertain Legal Duty) Willfulness requires that there be a legal duty with which the taxpayer fails to comply. The courts have consistently held that where the state of the law is uncertain as to whether there is a legal duty, criminal liability will not be imposed.
Moreover, the weight of legal authority in this area is that the taxpayer’s actual knowledge regarding the unsettled state of the law is irrelevant.
The bottom line here is that if the law is in fact uncertain, the taxpayer has not committed a crime.
(Mistake) Since the government’s burden in establishing willfulness requires that the taxpayer violate a known legal duty, it is a viable defense to offer evidence that the taxpayer did not know of the specific duty at issue.
The Supreme Court itself has held that willfulness may be negated by a good faith claim of ignorance or misunderstanding of the law or a good faith belief that there was no violation of the law, regardless of whether the belief was objectively reasonable.
One rationale for this “good faith” defense is the criminal tax provisions were not drafted with the intention of penalizing a taxpayer for innocent mistakes caused by the inherent complexities of the Tax Code.
The Supreme Court’s line of decisions in the area have held that a taxpayer is not guilty of willful failure to file if he honestly believed his income was too low to require him to file a return or if the taxpayer believed that he was not required to file a return if he was unable to pay.
The defense of mistake is not limited solely to mistakes of law. A defendant who, through a mistake of fact, unknowingly violates a statute also does not act willfully.
(Reliance on Others) Evidence establishing that a taxpayer relied on the advice of counsel or an accountant may successfully be used to negate willfulness if it can be shown that the taxpayer acted in good faith and that he or she provided the preparer with full and accurate information at the time the advice was sought.
This defense may not be successful if the government can establish that full disclosure to the attorney or accountant was not made at the time the advice was rendered.
Reliance on a lawyer’s advice has occasionally been held a valid defense, even where such reliance was objectively unreasonable.
(Mental Disease or Defect) Because the government’s burden in proving willfulness requires a showing of a specific intent to disobey the law, the courts have consistently permitted expert medical testimony to establish that the defendant has developed a delusion about the tax laws that interfered with the mental ability to form the specific intent to disobey the law.
Under the government’s voluntary disclosure policy published in the Internal Revenue Manual, a taxpayer who, in essence admits to a potential tax crime by filing an amended or delinquent return may avoid prosecution, provided the disclosure was voluntary and made before the taxpayer was first contacted by the IRS regarding a potential problem with the tax liability.
However, amended or delinquent returns filed after a taxpayer has been contacted by the IRS do not qualify for the voluntary disclosure policy, even thought the courts tend to hold that the filing of delinquent or amended returns or the late payment of tax is admissible by a defendant on the issue of willfulness.
The filing of amended returns after notice by the IRS that a particular return is under investigation is a patently bad idea.
Case law shows that in numerous instances, the very act of filing of a delinquent or amended return during the course of an IRS investigation has been presented as a key piece of evidence that eventually led directly to a taxpayer’s indictment.
Case law also shows that the government routinely relies on delinquent and amended returns as the very admission that establishes the existence of an understatement in tax liability of the original return.
Los Angeles Tax Attorney
Los Angeles Tax Attorney
I'M been in the in a froud by my ex. wife attorney6 please held me
This is all bull shit! It is the very definition of tyranny,extortion and fraud.
The fraud is committed by this professional lier.
He should be hanged by the neck until dead.
Except death is to good for him and the other tax law-whores. They should have all their property seized and then put them in prison for life.
Ask this criminal for the law that requires you to give up your fifth amendment right to remain silent and file a 1040 confection.
Do you think the fifth amendment is why there is no law that requires anyone to file a ten forty confession.
He will tell you it's a known duty to file.
The income tax is a fraud and destroying America and the world. It is the original victory tax illegally imposed right after Peril Harbour because we were at war.
This guy is a criminal because he knows the truth.
If we the people knew the truth, this dirty peace of dog shit would have to get a real job. But even worse, he wouldn't be able to bully people.
I haven't filed or paid in 18 years. All they do is dup third parties into handing over your money to the IRS without your permission or any legal documents with any signature of someone with authority to seize property for an unpaid tax liability.
I will go toe to toe with this ass hole any day of the week.
There is plenty of reasonable doubt of the very existence of an incomtax liability.
People are so ignorant of the law they actually believe that the IRS has authority to make rulings about the law or even make law.
Get it?
An agency of a branch of the government can make LAW!
The income tax law is like the Peter Pan ferry tail.
It's only real if you believe in it.
You as a juror in a court of law in a incomtax case, or any other criminal case is the law.
You have the right, duty and patriotic responsibility to not only judge the accused, but to judge the law itself.
But in a incomtax case there is NO LAW to judge. Only the fraud and intimidation of tax lawyers and the IRS.
I do not have to report earning on Bitcion. Am I commeting tax fraud if I don't claim I own any cryptocurrency?
Yes all cryptocurrency should be taxed. Please visit klasing-associates.com to schedule an appointment.
See this...
klasing-associates.com/bitcoin-virtual-currency/
Paulette i read that "the IRS" not even a person at the IRS, like the IRS is a branch of the government like the Senate or House of Representatives "rule that cryptocurrency is taxable"!
So there you have it. Not only can the courts now "make law" just like elected law makers. The "IRS" (an agency of a "branch" of the government) can make law.
The only way this is possible is that the "incomtax law" is like the Peter Pan ferry tail.
It's only real if you believe in it.
James Madison said "for one branch of the government to acquire the authority of another is the very definition of tyranny.
Supreme court chief justice John Marshall said the power to tax is the power to destroy.
Look what's happened since The Day Of Deceit, (a fact and title of a book) 1942. That's when it became a privileg to earn a living and you had to have a SS number to get a job.
@@abledbrown1348 That's nothing new. Few Americans realize that the old "the House and the Senate and the President (Executive Branch) signs it into law is NONSENSE.
There are TENS of THOUSANDS of laws that have civil (fines) and criminal (prison) penalties that are written by unelected bureaucrats. Don't believe me? That's what the IRS does, as well as the FDA, EPA, BLM, ATF and many more. The alphabet soup agencies in government are out of control.
The hardest element of the a government’s case to prove in charging a taxpayer with a tax crime is usually the element of willfulness because of the lack of direct evidence on this element in the absence of a confession on the taxpayer’s part.
Because of the usual lack of direct evidence on willfulness, (testimony or admissions on the part of the defendant taxpayer or his counsel), the government is left to prove willfulness through the use of circumstantial evidence, such as a taxpayer’s act of keeping a double set of books or concealing assets.
To attempt to prevent the government from establishing that the defendant taxpayer’s acts were willful, he or she may try to show that the defendant’s actions were merely inadvertent or that the current state of the law is uncertain as whether the taxpayer’s actions were willful.
However, showing that a taxpayer disagreed with a law, was a tax protester, objects to taxes on religious grounds, or has personal problems are generally not effective defenses to willfulness.
An intentional violation of a known legal duty can be shown by a taxpayer’s reckless disregard for the law.
Courts have held that a taxpayer’s knowledge of the law is not limited to his actual knowledge but includes a reckless disregard of a legal obligation that the defendant can be shown he or she was aware of in some manner.
For example, to prove that a taxpayer attempted to evade taxes the government needs only show that the taxpayer had the specific intent to evade a tax that the taxpayer knew was owing.
Similarly, to prove that a taxpayer willfully failed to file a return, all that need be shown is that the taxpayer knew of the obligation to file the return and intentionally failed to do so.
In defining willfulness, Federal Courts have consistently stated that, despite their earlier references to “bad faith and evil intent”, a current finding that a defendant acted willfully does not require any proof of motive other than an intentional violation of a known legal duty.
The difference between tax evasion and tax avoidance is an important one because “tax evasion” is criminal, but “tax avoidance” is not. There are cases where the difference between these is clear; but there are other, more subtle cases where things are not so cut-and-dry.
The Supreme Court Gregory v. Helvering, 293 U.S. 465 (1935) defined permissible tax avoidance as actions that “reduce, avoid, minimize, or alleviate taxes through wholly legitimate means.”
The Court elaborated that “[t]he legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.”
Judge Learned Hand stated, we may “arrange [our] affairs so that [our] taxes shall be as low as possible; [we are] not bound to choose that pattern which best pays the treasury. [We do not even have] a patriotic duty to increase [our] taxes.”
Proof of willfulness is both the criminal and civil contexts can also be very effectively established by through the use of objective facts that indicate willfulness on the part of a defendant.
These objective facts are commonly referred to in the tax profession as “badges of fraud”.
The government has relied on the following circumstances to meet is burden of proof as to willfulness surrounding tax crimes:
The withholding of financial information from accountants
The keeping a safe deposit box under an assumed name
The consist overstatement of deductions
The claiming of excess withholding exemptions
The claiming of false or overstated charitable deductions for property
The false claiming of exemption from income taxes
Leaving the United States with valuable assets in the face of or following an audit
Engaging in a pattern of tax evasion in previous and subsequent years
The supplying of false information to a return preparer (underreporting income or overstating deductions)
The prematurely destroying of records
The failure to keep adequate books or records
The concealing assets or sources of income while in collections
The handling one’s affairs so as to avoid making the usual records in transactions of the kind (excessive cash transactions)
The failure or refusal to cooperate with, (including lying to), investigating agents
The participation in illegal activities
The taking of business deductions for personal expenses
The withholding of relevant information from tax preparer
Failing to file tax returns where a filing requirement existed
The filing of objectively false tax returns
The making of false journal entries or alterations to the books to lower taxable income
The creating of false documents (such as receipts to support fictitious deductions)
Providing implausible or inconsistent explanations during civil examination
Displaying belligerent, rude, or disrespectful behavior to an IRS agent
Excessive dealing in cash
Filing false returns
Intentionally underreporting or omitting income
Overstating deductions or claiming false deductions
Hiding or transferring income with relatives or related entities
Keeping false records of your income or "second set of books"
Falsifying records "forgery"
Claiming fake dependents
Falsely claiming credits
Arranging affairs for the sole purpose of tax avoidance in a manner that lacks economic substance
Taking positions on a return that are "more likely than not" to be disallowed if discovered without sufficient disclosure
While the understatement of income in a single tax year in and of itself is usually insufficient to establish willfulness, a proven pattern (usually 3 years minimum - 5 years investigated) of substantial understatement can successfully be used by the government to establish the element of willfulness.
When a taxpayer’s state of mind on a particular date is critical to the government’s case on willfulness, as in willful failure to file cases, the government will present evidence of events that occurred after that particular date as evidence of the taxpayer’s earlier state of mind.
For example, evidence of a taxpayer’s previous noncompliance with the filing rules and requirements in a year immediately subsequent to the tax year or years at issue has been deemed relevant by the court’s to show the taxpayer’s willfulness and absence of mistake in filing false returns during the tax years at issue.
Evidence concerning a taxpayer’s education or degree of sophistication has been deemed by the courts to be relevant in determining willfulness.
Thus, the government will present evidence to show that a taxpayer was a professional or a sophisticated businessperson for its circumstantial effect on proving willfulness. (should have known better)
On the other hand evidence establishing that a particular taxpayer was poorly educated or unsophisticated would tend to negate the government’s case as to willfulness.
Tax evasion involves tax avoidance that is ordinarily accomplished via an element of deceit or concealment-and at times is patently illegal means.
The analysis of when a means-a tax plan, transaction, or a structuring of one’s affairs-is illegal will depend on whether it complies with the totality of the tax laws as currently enacted.
That totality includes the Internal Revenue Code, Revenue Rulings, Revenue Procedures, Treasury Regulations, case law, etc.
Indeed, the body of tax law is one of the largest areas of law, if not the largest.
Los Angeles Tax Attorney when you say "tax" you don't specify "what tax".
Is it the "harbor maintenance tax"? Or the "manufacturers excise tax "?
I can't find a incomtax liability in title 26. Look at the index for liability for tax. Its not there!
This guy is putting the fear of the IRS in my nightmares!
Holly shite!
That's actually all they have, fear and intimadation. That's all this video has.
Did anyone notice this guy is NOT a tax lawyer?
He is a CPA!
Why not a tax lawyer?
That is the question!
I will give you the answer.
But you will have to prove it is wrong because you will mot like finding out the trith.
The truth is that the incomtax is a fraud and destroying America and the world.
You, your parents and grandparents were duped by the professional liars in expensive suits and cheep black robes.
Tax lawyers think they are safe from criminal indictments.
That is one reason tax lawyers willfully sercomvent the law and collude with the IRS to "dup" you into handing your money over to them to pay a tax that does not exist in law!
You will never get a tax lawyer to show you the law that requires anyone to file a 1040 confession or imposes an "income tax liability "under penalty of perjury!
We zeta v/ vG but n g I
,,,,
Usually, the government will try to infer the “mental state” element of the crime by pointing to circumstantial evidence.
In the majority of criminal cases, the element of intent is inferred from circumstantial evidence.”
These are indirect facts that, when weighed together, suggest that the taxpayer attempted to commit tax fraud.
Circumstantial evidence need not consist of “slam dunk” type facts. For example, a business engaged is all-cash transactions is not, in itself, a fraudulent action.
But, when it is combined together with other facts it could become a “negative” one, in the government’s favor.
Negative facts are called Badges of Fraud, or facts that the IRS, FTB, other taxing authorities, and the Courts tend to find equate to fraud or run with fraud.
For example in U.S. v. Voigt, the taxpayer (i) decided against purchasing some jewelry with cash when he discovered that a report to the IRS would be required; (ii) he required his clients to fill out certain confidentiality agreements that forbade them from disclosing details of the transaction; and (iii) he maintained an overseas bank account.
Taken individually, each of these facts is, strictly speaking, “equally consistent with innocent activity.”
But the court found them to be legally significant in finding that the taxpayer had the intent to evade his taxes.
The court stated that it had “no difficulty concluding” that based on his actions, when taken together, that they may “provide the jury with sufficient evidence from which it could infer that they were ‘designed’ to evade the payment of admitted tax deficiencies, even if such actions otherwise might constitute wholly innocent conduct.” U.S. v. Voigt, 89 F.3d 1050, 1090 (3d. Cir. 1996).
The strongest evidence of a taxpayer’s willfulness is typically the size of taxpayer’s tax deficiencies that can be proven to occur over a number of years.
Experience has shown the Government that a greater amount of tax deficiency can usually be established by including the use of circumstantial evidence than by the use of direct evidence of omitted income alone.
Net Worth Method
Under the net worth method, the taxpayer’s net worth (total assets minus total liabilities) at the end of one year is compared with his or her net worth at the end of the next year.
The method calculates net income for a year by measuring the increase in net worth over a particular year which is reduced by any nontaxable sources of income received by the taxpayer such as loan proceeds or inheritances.
The agent then compares the taxable income reported for the year being tested with the results of the net worth computation and thereby identifying any unexplained increase in net worth for the year tested as unreported income.
Expenditures Method
The expenditures method for uncovering omitted income is similar to the net worth method and is sometimes referred to as the cost-of-living test.
This method focuses on the amount of income needed to cover the taxpayer’s identified personal expenditures for the year being tested.
The agent totals all the identified personal expenditures of the taxpayer for the year tested and reduces the total by any nontaxable sources of income used to pay for the expenditures.
Since one possible source of nontaxable income for the expenditures tested is wealth acquired and taxed in previous years, the agent must take into consideration all of the taxpayer’s assets and liabilities at the start of the prosecution period, in the same manner as in a net worth case.
Commonly the IRS combines the net worth and personal expenditures methods to assure that its computations reflect the income used to purchase assets as well as the income used for personal expenditures.
Bank Deposits Method (BDA)
Taxpayers who run Schedule C businesses and make periodic deposits to at best, a business bank account, and at worst, a commingled personal account, are typically investigated by the IRS using the bank deposits method.
The agent totals deposits to all accounts (bank and brokerage) under the taxpayer’s control and then eliminates any deposits from identified nontaxable sources, such as gifts, loans, and transfers between accounts.
The adjusted total of deposits is considered income.
The IRS uses these methods to establish an income-producing business which allows the jury to infer how the unreported taxable income was generated.
This method is also commonly used for businesses run through entities such as LLCs, S and C Corporations, and Partnerships.
Under the specific item method of proof, the government attempts to show that the taxpayer’s return at issue inaccurately reflects a specific transaction, or set of transactions, such that income is omitted, deductions are inflated or a source of income is falsified.
The government is not burdened with having to prove an exact amount of unreported income to prevail but rather must prove that a substantial amount of income was unreported.
Where appropriate, CID special agents employ surveillance, issue search warrants, implant undercover agents and utilize scientific experts to aid in a criminal investigation.
For example, CID Agents have been known to go so far as to sift through a suspect’s trash to secure evidence.
Note: Courts have held that you generally have no expectation of privacy in your trash and thus you were not subjected to an unreasonable search.
Good defense attorney’s can sometimes suppress evidence obtained by the IRS using these extraordinary techniques.
In one reported case, the IRS obtained a search warrant to search a taxpayer’s real estate office and seized all the documents contained therein.
At trial, none of the documents seized were allowed to be introduced because defense counsel successfully argued that the search warrant was overbroad.
Defense Counsel can also exploit the detailed restrictions on the use of these extraordinary techniques as contained in the Internal Revenue Manual.
First, one attempts to commit tax evasion when he files a false return.
One of the leading cases in California making this point is United States v. Boulware , 384 F.3d 794 (2004), 470 F.3d 931, 934 (9th Cir. 2006).
Second, one attempts to commit tax evasion when he files a false amended return.
A lead case in California on this point is Norwitt v. United States , 195 F.2d 127, 133-34 (9th Cir. 1952), cert. denied , 344 U.S. 817 (1952).
Third, one attempts to commit tax evasion when (1) he fails to file a return and (2) his action is coupled with an “affirmative act of evasion,” like making an affirmative act to conceal or mislead the government.
The name for this third kind of evasion is “Spies evasion” after the case bearing that name. Spies v. United States , 317 U.S. 492, 498-99 (1943).
I used to work for chinese, korean, indians, middle easters and they cheat taxes left and right most of them charge the customer without ringing it in the cash register, others own mechanic shops and do the same even not giving receipts to the customers, indian restaurants charging and not ringing in the cash register plus they always round the amount and never giving receipt. Some own small businesses, they have two or three cash registers one is recording the sales for a day and the other two are not recording the sales and just giving the receipt to the customers, is there is a place and number where I can report these tax eviders? Please reply. 🍀
www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity
Los Angeles Tax Attorney Thank you very much.
Men in black Are you a CROOK? I will report you too. Pay your taxes, fool.
Nicoletta Ciccone misery loves company.
You! Yes you are committing treason by paying the fraudulent incomtax imposed not by law but by treasonous income tax law-whores colluding with THE IRS to dup third-parties into illegally handing your money over to them without your permission or any legal documents with any signature of someone with authority to seize property for an unpaid tax liability.
Supreme court chief justice John Marshall said the power to tax is the power to destroy.
You have a patriotic duty to protect and preserve the rule of law.
If you go visit your local friendly IRS office and ask them to show you the law that requires anyone to file a ten forty confession or imposes an income tax liability.
Better yet, ask to see the law that imposes a wage tax liability they will run away as soon as you show them the Code, title 26. The IRC! The internal revenue code.
Income is a corporat profit.
A wage is compensation for providing a personal service.
They are as different as apples and road apples.
If you get hit in the back of the head with a apple it will hurt like he'll.
If you get hit in the back of the head with a road apple you will smell like horse shit.
Able D Brown The minute I find out how crooks they were, I quit I did not stay for a long time plus I found out through customers and ex workers and of course I know they will get in trouble and they can get you in trouble too.
He even said it's volentary . Sorry for spelling. Challenge the jurisdiction. The government is a corporation. There laws and tax code are only for those in the corporation. Since most aren't in the corporation of the government the laws and tax codes don't apply. Want to learn more go to marcstevens.net
Sounds Like Marc Stevens is ripe for criminal prosecution for aiding and abetting income tax evasion. Yes we have a voluntary income tax system enforced with criminal prosecution if you do not comply with tax law. You wont even be able to claim reasonable reliance on a tax professional if listening to his advice is deemed non reasonable. What you state is patently incorrect.
klasing-associates.com/question/tax-laws-constitutional-valid-defense/
klasing-associates.com/question/what-can-happen-if-the-government-thinks-i-committed-tax-crimes/
It is not just black-and-white Code provisions that one must comply with; in addition, the taxpayer must navigate his or her way through various legal doctrines.
The IRS and the courts subject one’s tax plan to various tests or legal doctrines, which have names like the “Economic Substance Test,” the “Sham Transaction Doctrine,” and they ask whether the tax strategy has “substance over form,” is done for a “business purpose,” and whether the transaction taken a whole may be collapsed into one “step” violating the “Step Transaction Doctrine.”
Economic Substance Test - which basically dictates that any transaction where the economic substance doctrine is applicable shall be treated as having economic substance only where:
(A) Entering into the transaction changes in a meaningful way the taxpayer’s economic position, (apart from its Federal income tax effects) and
(B) The taxpayer has a substantial business purpose for entering into such transaction (apart from its Federal income tax effects).
Sham Transaction Doctrine - “judge made law” which will deny advantageous tax treatment where transactions are carried out primarily for tax avoidance purposes and they lack a bona fide business purpose.
Substance over Form - maintains that the “substance,” rather than the form, of a transaction is what governs the tax consequences of a transaction.
Business Purposes Test - requires that a transaction, to be respected, must have a business purpose separate and apart from any associated tax advantages.
Step Transaction Doctrine - the IRS will collapse a series of separate “steps” into a single transaction in order for the government to obtain a clear view of what the separate steps are accomplishing.
When the IRS collapses these steps, one of the factors considers is the time interval between them (although this factor is not determinative).
Bottom line - avoid to good to be true transactions like the plague.
The Tax Court has consistently disallowed losses, deductions, and credits from transactions it deems to be “tax shelters.”
A tax shelter is, among other things, any investment that has a “tax shelter ratio” exceeding 2 to 1.
The tax shelter ratio is the aggregate amount of deductions to the amount invested.
The courts attack such sheltered transactions using the judicial doctrines or by disregarding the form the transaction takes to determine the “true” associated income tax consequences.
To be respected, transactions are required to be motivated by business considerations, rather than by attractive tax avoidance benefits obtained via the use of meaningless labels.
Transactions that are identified as generic tax shelters in the past have included investments in the cable television industry, master music recordings, inventions, mining activities, films rights, art packages, videotape recordings, and luxury yacht leasing arrangements.
The Criminal Investigation Division (CID) trains the rest of the IRS’s employees to be alert for, and to report any indication of, fraud.
Each service center has a CID office that assists employees in spotting and reporting suspicious activities.
Consequently, the most important source within the IRS of criminal tax investigations is fraud discovered during routine civil audits.
When an audit examiner discovers firm indications of fraud, the audit is suspended and CID is informed by means of Form 2797, Referral Report for Potential Fraud Cases.
The taxpayer often is not notified that there has been a referral to CID until a special agent from CID contacts him.
Other sources that provide leads for CID include informants and state and local law enforcement agencies (Most often the Franchise Tax Board (FTB) in California).
CID also receives data regarding potential criminal cases from other divisions of the IRS, the public, the news media, state courts hearing matrimonial cases, state offices, and its own intelligence-gathering sources.
One of the most important sources of information outside the IRS that leads to Tax Crime investigation leads for CI is the Financial Crimes Enforcement Network (FinCEN) a government-wide, multisource intelligence and database network.
The IRS must prove three elements to find you guilty of felony tax evasion.
First, you owed tax. (no de minimis rule)
Second, you acted willfully in your actions.
Third, you made an affirmative act of evasion or affirmative attempt to evade.
The question being asked here relates to the third element: how serious must the “affirmative” act be? The answer is that it need not be “serious” at all. Tax law does not overlook “minor” acts of evasion.
The Ninth Circuit clarified that Congress did not intend “to establish a hierarchy of attempts or evasions and limit [the offense] to those of a more deceitful or troublesome character.” U.S. v. Carlson, 235 F.3d 466, 469, (9th Cir. 2000)
There is no certain, mathematical threshold that must be crossed. Rather, most courts hold that the taxpayer understated his tax liability by a “substantial amount.” Again, not all courts agree. For example, if you live in California, the government need only show that “some tax deficiency” existed. In United States v. Marashi, 913 F.2d 724, 735-736 (9th Cir. 1990), for example, the Ninth Circuit only required that a reasonable “trier of fact could have found some tax deficiency beyond a reasonable doubt”.
It is a crime, tax evasion, to willfully attempt to evade the assessment or payment of a tax. I.R.C. Section 7201.
Case law has explained that it is a crime when someone opens two bank accounts using false social security numbers, and transfers funds into those accounts after learning that the IRS was attempting to levy on his other account (at a different bank).
The Ninth Circuit, which is binding law for most California lower courts, calls this felony tax evasion because the taxpayer’s conduct could have misled the IRS and thwarted the government’s collection of tax, in violation of Section 7201 of the Internal Revenue Code. U.S. v. Carlson, 235 F.3d 466, 469 (9th Cir. 2000).
Thus, the answer to the question whether your concealing a bank account results in tax evasion turns on whether the government can prove you willfully attempted to defeat a tax or its payment. (lying on a collection information statement) (Selling or gifting away assets to avoid collections) hiding assets)
The short answer is Yes, it may be a crime. 7201 Evasion
The Eight Circuit in, Zacher v. U.S., 227 F.2d 219, 224 (8th Cir. 1955)explained that a “consistent pattern of overstating deductions” is tax evasion.
Such a “consistent pattern” exists when, for example, the taxpayer “overstate[s] casualty losses, . . . the sales tax deduction claimed exceeded the amount of sales tax paid” and he “overstate[s] [his] repair costs.” Id.
Understate Income, Claim Credits not Entitled too ect. Spies Evasion (non filing)
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How can ANYONE be prosecuted for "criminal tax evasion when....."THERE IS NO TAX YO EVADE!". Google 26 CFR 1.0-1 paragraph (d) from the IRC of 1954 clearly says TAXABLE YEARS began December 31 1953 and ENDED....and ENDED...AND ENDED AUGUST 16 1954 passed into LAW by the 83rd Congress AS LAW and published as VOLUME 68A of the United States Statutes at Large and Federal Register....as LAW. Any Subtitle F compliant enforcement provisions took place the day AFTER the date of ENACTMENT; AUGUST 17 1954 but on that day there was NO TAX TO ENFORCE AS the tax died expired the day before... August 16 1954!!!! There has NOT BEEN AN ENFORCEABLE LEGAL INCOME TAX in this country for....70 YEARS!!!
If you follow this gentleman’s advice, you will soon after need my criminal tax defense services but he is free to have his own opinions. DWK
Respected sir very good video and information but some English words hard
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