Legal issues

Former Cendant Controller to Pay $100K Fine

Anne Pember, controller of CUC International Inc. before that company merged with HFS Inc. to form Cendant in 1997, has agreed to pay $100,000 and cancel her stock options at the company to settle accusations that she played an important role in an accounting fraud at the company now known as Avis Budget Group Inc. The Securities and Exchange Commission filed civil charges against her almost seven years ago, alleging that, in 1998 alone, Pember was responsible for implementing directives that inflated the company's annual income by more than $100 million.
Tax

IRS Tax Fraud Prosecutions Decrease

A USA TODAY analysis reveals that the Internal Revenue Service is seeking fewer criminal prosecutions of tax fraud suspect, calling into question the agency's claims of renewed enforcement success. A review of IRS data reveals the agency's referrals of tax fraud and other financial cases to the Justice Department fell for the last two years.The decline appears even greater when measured by prosecution referrals in which the Justice Department designated the IRS as the lead investigative agency.

NYC Comptroller Seeks Wal-Mart Spy Investigation

The comptroller of New York City has asked the Securities and Exchange Commission and the Justice Department to investigate allegations that Wal-Mart illegally spied on some of its shareholders. TNew York City Comptroller William C. Thompson's request follows a series of allegations by a fired Wal-Mart security operative that the giant retailer performed surveillance operations against employees, critics, suppliers, consultants and shareholders expected to challenge some of the company's policies at an annual meeting.
Tax

Fired Accountant Goes on Shooting Spree

A fired accountant bought a shotgun the day after he lost his job, then returned to the office the following week and opened fire on his bosses, wounding both and killing a receptionist, the Associated Press reported.Troy, Mich. police said Anthony LaCalamita III, 38, targeted two managers and also may have intended to shoot another one."There is a suspicion that there might have been a third upper management official he was seeking," said Troy police Lt. Gerry Scherlinck.
Tax

Jackson Hewitt Begins Internal Review

Jackson Hewitt Tax Service Inc. reports an internal review has begun in the wake of Internal Revenue Service allegations that five franchisees defrauded it out of more than $70 million. "Jackson Hewitt takes allegations against our franchisees seriously," Chief Executive Officer Michael Lister said. Jackson Hewitt, the second-largest U.S. tax preparer, intends to "identify all of the facts related to these allegations and address them appropriately," Lister said.
Tax

Section 987 Regulations Concern AICPA

The American Institute of Certified Public Accountants (AICPA) recommended to the Department of the Treasury and the IRS that they “reconsider the approach of the proposed regulations” relating to Internal Revenue Code section 987 and offered to discuss with government officials other proposals for determining section 987 gain and loss.The AICPA said it is “concerned that the 2006 proposed regulations will frustrate the currency reforms made by The Tax Reform Act of 1986 and will pose an unreasonable compliance burden on taxpayers.”If Treasury and IRS decide to continue the appro
Tax

Renaissance Promoter Pleads Guilty to $75 M Fraud

Todd Eugene Strand of Murrieta, Calif., pleaded guilty in a Kansas City, Kan., federal court to conspiracy to defraud the United States in the assessment and computation of taxes and mail fraud charges for his involvement in a tax fraud scheme, the Justice Department and the U.S.
Tax

Illinois Tax Scam Promoters Indicted

A prominent Southern Illinois automobile dealer and three promoters of a tax fraud scheme in the U.S. Virgin Islands were charged with a variety of tax and wire fraud-related charges in an indictment returned last Friday and made public today, the Justice Department and the Internal Revenue Service (IRS) announced.A federal grand jury in East St. Louis, Ill. returned the 21-count indictment, which charges James A. Auffenberg Jr. of Swansea, Ill., Peter G. Fagan of De Leon, Texas, James W. Ferguson III of Amarillo, Texas, and J. David Jackson of St. Croix, U.S.
Tax

Govt. Sues to Shut Down 125 Jackson Hewitt Franchises

The Justice Department has sued to shut down 125 franchises of No. 2 U.S. tax preparer Jackson Hewitt Tax Service Inc. after the IRS accused the outlets of submitting thousands of fraudulent returns that cost the government more than $70 million. The Justice Department said the franchises' fraudulent practices included using phony W-2 forms, bogus deductions and fuel tax credits and false claims regarding the earned income tax credit. Jackson Hewitt Tax Services Inc. is the nation's second largest tax preparer.
Tax

Justice Dept. Levies $75M Tax Shelter Fine

The Justice Department last week announced that, as part of an agreement with the Texas-based law firm, Jenkens & Gilchrist, it will not seek a criminal indictment of the firm for its involvement in the creation and sale of aggressive tax shelters and that the firm will pay a fine of $75 million to the Internal Revenue Service.One former partner in Jenkens & Gilchrist’s Chicago office, Paul Daugerdas, earned $93 million in fees from tax shelter work, making him one of the single wealthiest participants in the tax shelter business, according to the New York Times.Jenkens & Gilchrist, wh
Tax

Tax Cheat Avoids $100 Million Penalty

Incorrectly worded Justice Department documents filed as part of the biggest tax prosecution ever will cause the federal government to miss out on $100 million.Telecommunications entrepreneur Walter Anderson, who admitted hiding hundreds of millions of dollars from the IRS and District of Columbia tax collectors, was sentenced Tuesday to nine years in prison and ordered to repay about $23 million to the city. But U.S.
Community News

SEC Sanctions Ernst & Young

Federal regulators censured Ernst & Young LLP on Monday and ordered the accounting firm to pay $1.6 million to settle charges of compromising its independence and contributing to faulty accounting by a client in 2001.Advertisement

Court Throws Out PCAOB Lawsuit

A federal judge has dismissed a lawsuit seeking to invalidate the Public Company Accounting Oversight Board (PCAOB) on constitutional grounds.The Free Enterprise Fund said in a statement that it will appeal the decision. The 2006 suit, which was also brought by the Competitive Enterprise Institute and a small audit firm, contends that the PCAOB violates the appointments clause of the U.S. Constitution because the Securities and Exchange Commission does not have the power to appoint PCAOB members.U.S.
Tax

IRS’ OIC Changes Affect Delinquent Taxpayers

The Offers in Compromise (OIC) program, through which thousands of delinquent taxpayers negotiate down their debt to the IRS each year, has been revised and the new application package is now available, NAEA E@lert reports. While negotiating an OIC has never been an option for the majority of taxpayers, key features of the program have changed dramatically enough that it will no longer be feasible for some and will be available to others for the first time.
Tax

40 Frivolous Tax Positions to Avoid

The IRS issued guidance identifying 40 frivolous positions to avoid when filing tax returns. They have no basis for validity in existing law or have been deemed frivolous by the United States Tax Court or other federal court. If these or other frivolous positions are contained in a tax return, taxpayers could face a $5,000 penalty – 10 times the previous maximum.
Community News

Florida Bill Proposes Tax Tribunal

The Florida Legislature is considering a bill establishing a tax tribunal. The tribunal would settle all disputes sought under the state’s tax laws while holding the powers of an administrative court. The bill, FL HB 1369, would allow licensed accountants, enrolled agents and attorneys would be allowed to represent taxpayers before the tribunal.
Technology

Dangers of BlackBerry Addiction

Washington may be the first state in the country to outlaw DWT.Never heard of it? It’s driving while texting, and the Washington State House has voted to ban it. The move was prompted in part by a December pileup that shut down a stretch of Interstate 5 outside Seattle for more than an hour. Police say the accident was caused by the driver of a Dodge Caravan, who admitted that he was checking e-mail on his BlackBerry.The bill now makes its way to the Senate in Washington, and Oregon and Arizona are considering similar bills.
Tax

U.S. Business Leaders Seek Reg. Reductions

A all-star panel of American business and government leaders pushed Tuesday for a rollback in regulations they say are necessary to keep U.S.
A&A

Wisconsin Proposes Privacy Protection for Tax Preparers

The Wisconsin Legislature is considering a bill designed to prohibit a tax preparer or an entity that employs tax preparers from disclosing information obtained in the preparation of a client's tax return unless the tax preparer or entity discloses the parties to whom the tax preparer or entity intends to disclose the information, and the client consents in writing.The Bill, WI SB 69, has been referred to the committee of jurisdiction.
Tax

IRS Guidance on Car Value Treatment

The Internal Revenue Service and the Treasury Department announced that they will work to publish guidance for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, last-in, first out (LIFO) inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars, reports IRS e-News for Small Businesses.“The accounting issue confronting the automobile industry has been selected for the Industry Issue Resolution (IIR) Program, which provides guidance to help clarify complex tax issues.

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