CERTAIN TAX RETURNS WILL HEAD TO DIFFERENT CENTERS: As taxpayers begin to prepare their tax returns, the Internal Revenue Service noted that some may be sending their returns to a different service center than last year. Those who received a tax instruction booklet from the IRS in the mail and use the labels included with the booklet can be assured that their tax returns will go to the correct address. Taxpayers who e-file are not affected by these changes.For tax year 2005, the mailing changes affect returns, with or without payments, from the District of Columbia and 11 states - Colorado, Delaware, Kansas, Maryland, Mississippi, Nebraska, New Mexico, Ohio, South Dakota, Virginia and West Virginia.
Taxpayers should send:
* Returns from Delaware and Virginia to the IRS Center in Atlanta;
* Returns from the District of Columbia and Maryland to the IRS Center in Andover, Mass.;
* Returns from Ohio to the IRS Center in Kansas City, Mo.;
* Returns from Kansas, Mississippi and West Virginia to the IRS Center in Austin, Texas; and,
* Returns from Colorado, Nebraska, New Mexico and South Dakota to the IRS Center in Fresno, Calif.
FREE FILE OPENS WITH NEW SERVICES: The Internal Revenue Service announced the opening of Free File, the free tax preparation and free electronic filing initiative now in its fourth year. More than 70 percent of the nation's taxpayers - over 92 million people - qualify for Free File this year.
A new agreement between the IRS and the Free File Alliance, the private-sector consortium of tax preparation software companies, will mean improved services and more information for taxpayers who use the free services. Free File must be accessed through www.irs.gov.
Among the improvements this year:
* The 3 million taxpayers who used to file their income tax return through TeleFile, an option no longer available, automatically qualify for Free File this year.
* Seventy percent of the nation's taxpayers - those with an adjusted gross income of $50,000 or less - will be eligible for the program.
* Alliance members' Web sites will display whether state online tax preparation and filing services are available and the associated fees, if any.
* Taxpayers with access to a computer and the Internet may check online at www.irs.gov to determine if they qualify for Free File.
More than 5.14 million taxpayers used Free File last year, almost a 47 percent increase over the 3.5 million users in 2004. Free File debuted in 2003 with nearly 2.8 million users.
TAX SCHEMER SENTENCED TO 5 YEARS: Tax fraud promoter Paul D. Harris was sentenced in U.S. District Court in Denver to five-and-one-half years in prison, followed by three years of supervised release, the Department of Justice and the Internal Revenue Service said. Harris was also ordered to pay more than $10,000 towards the costs of prosecution in connection with his role in an offshore tax scheme, marketed as Tower Executive Resources in Colorado.
In April 2005, a federal jury convicted Harris of conspiring to defraud the United States and willfully aiding and assisting in the preparation of a fraudulent income tax return, after a six-week trial. Co-defendant Lester R. Retherford was sentenced in December to four years in prison. According to prosecutors, wealthy taxpayers paid initiation fees of up to $50,000 to join Tower Executive Resources, and thousands more in annual fees to maintain their membership. Harris and Retherford set up shell corporations for their clients that were used to conceal nearly $9 million in taxable income. The clients transferred millions of dollars to secret bank accounts in the Turks and Caicos Islands and other foreign countries.
Harris and Retherford made it appear as though the offshore transfers were payments for consulting services, which the clients then falsely deducted on their businesses' tax returns. The clients then used debit cards and bogus loans to bring the money they had transferred offshore back into the United States for their own personal benefit. Nine clients of Tower Executive Resources from across the country have been convicted of tax offenses, and three additional clients are currently under indictment.
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