Tax Fraud United States

As the Internal Revenue Service has expanded its role in the federal war on drugs, it has begun subjecting ordinary American taxpayers to the same heavy-handed enforcement techniques used on drug lords and money launderers, a Senate committee was told. Several taxpayers described how they became the targets of raids by dozens of armed IRS agents--searches that ultimately failed to result in prosecutions for tax fraud but did manage to financially devastate the taxpayers.

The U.S. government sued three men Thursday, claiming they gave faulty advice on how to avoid paying taxes as part of a "nationwide bogus tax refund scheme." The suits, filed in federal courts in Georgia, Florida and Pennsylvania, allege the three men wrongly told clients, one of them a Huntington Beach firm, that Section 861 of the Internal Revenue Code exempted them from taxation on all domestic income.

Evangelist Tony Alamo's stepdaughter testified Tuesday that he raped her, and a former wife said he beat and sexually assaulted her, but a federal magistrate said that was not enough to keep Alamo behind bars pending trial on tax evasion charges and set bail at $50,000. In an extraordinary hearing that lasted well into the night in U. S. District Court in Los Angeles, Alamo's stepdaughter made public for the first time her claim that he raped her in 1966, when she was a teen-ager.

Tax cheats be warned: The Internal Revenue Service has launched a crackdown on the use of offshore bank accounts to evade income taxes. The federal government loses an estimated $70 billion annually to illegal offshore tax schemes, IRS Commissioner Charles O. Rossotti told Congress last week. "Today, in a wide range of guises, there are individuals and organized groups attempting to mislead or entice taxpayers into believing that there is a way out of paying taxes," Rossotti testified.

Americans voluntarily hand over most of the $1.3 trillion owed to the Internal Revenue Service each year, but a tiny fraction of tax collections depends on an obscure and increasingly controversial IRS program of using paid informants. Motivated by a combination of greed and revenge, informants are typically business associates, employees, acquaintances, neighbors or ex-spouses of tax cheats. Many experts say the program is one of the most unseemly parts of the U.S. tax system.

Lawyers for evangelist Tony Alamo on Friday won a two-week delay of his sentencing in Memphis for federal tax violations. Alamo, 59, is the flamboyant leader of the Holy Alamo Christian Church, which started as a street ministry in the 1960s and earned millions of dollars in later years through communes and businesses. On June 8, he was convicted of falsifying his 1985 income-tax returns and failing to file returns for the next three years.

With a dozen supporters lining the back row of a courtroom, evangelist Tony Alamo appeared Monday in jail-issue blues for an initial hearing on federal tax charges and was ordered to return today for a ruling on whether he deserves to be freed on bail. U. S. Magistrate Kirtland L. Mahlum said Monday from the bench that Alamo, arrested Friday on the tax evasion charges, apparently is not eligible for release because a judge in Tennessee had issued a no-bail warrant for the religious leader.

Democratic fund-raiser Gene K.H. Lum changed his plea in a tax fraud case to guilty Thursday as part of an agreement that seeks his cooperation in other investigations. Lum, who pleaded guilty in 1997 to making illegal donations to Democratic campaigns, admitted that he filed tax returns that claimed more than $7.1 million in false deductions for him and his wife. Lum, 59, faces as much as six years in prison and $500,000 in fines at sentencing Nov. 23.

Tax cheats be warned: The Internal Revenue Service has launched a crackdown on the use of offshore bank accounts to evade income taxes. The federal government loses an estimated $70 billion annually to illegal offshore tax schemes, IRS Commissioner Charles O. Rossotti told Congress last week. "Today, in a wide range of guises, there are individuals and organized groups attempting to mislead or entice taxpayers into believing that there is a way out of paying taxes," Rossotti testified.

With a dozen supporters lining the back row of a courtroom, evangelist Tony Alamo appeared Monday in jail-issue blues for an initial hearing on federal tax charges and was ordered to return today for a ruling on whether he deserves to be freed on bail. U. S. Magistrate Kirtland L. Mahlum said Monday from the bench that Alamo, arrested Friday on the tax charges, apparently is not eligible for release because a judge in Tennessee had issued a no-bail warrant for the religious leader.

Former state Assembly speaker Brian Setencich was ordered Tuesday to spend seven months at a halfway house for cheating on his taxes. Setencich, a special assistant to San Francisco Mayor Willie Brown, was convicted by a federal jury in June of looting his campaign account and understating his 1996 income by $19,300.

Democratic fund-raiser Gene K.H. Lum changed his plea in a tax fraud case to guilty Thursday as part of an agreement that seeks his cooperation in other investigations. Lum, who pleaded guilty in 1997 to making illegal donations to Democratic campaigns, admitted that he filed tax returns that claimed more than $7.1 million in false deductions for him and his wife. Lum, 59, faces as much as six years in prison and $500,000 in fines at sentencing Nov. 23.

Internal Revenue Service Commissioner Charles O. Rossotti disclosed Friday that Americans are failing to pay $195 billion annually in taxes owed to the federal government, the highest estimate ever of the so-called tax gap. The disclosure--coming on the fourth day of Senate hearings marked by sharp criticism of the IRS and its tactics--served as a potent reminder that the agency's much-maligned enforcement efforts serve an important function.

As the Internal Revenue Service has expanded its role in the federal war on drugs, it has begun subjecting ordinary American taxpayers to the same heavy-handed enforcement techniques used on drug lords and money launderers, a Senate committee was told. Several taxpayers described how they became the targets of raids by dozens of armed IRS agents--searches that ultimately failed to result in prosecutions for tax fraud but did manage to financially devastate the taxpayers.

Americans voluntarily hand over most of the $1.3 trillion owed to the Internal Revenue Service each year, but a tiny fraction of tax collections depends on an obscure and increasingly controversial IRS program of using paid informants. Motivated by a combination of greed and revenge, informants are typically business associates, employees, acquaintances, neighbors or ex-spouses of tax cheats. Many experts say the program is one of the most unseemly parts of the U.S. tax system.

Nothing strikes fear in Americans so much as a knock on the door from a federal revenue agent. But panic was oddly absent when Internal Revenue Service Agent Louis Johnson III went to Laguna Beach last year to audit the 1992 tax return of Bruce Birkett, a financial-planning consultant who said he owed no taxes despite $40,000 in revenue.

Ordinarily, Marvin Mitchelson would be the man parading before a judge or jury, playing advocate for one celebrity or another. The famed attorney would not be the one found sitting quietly at the defense table, writing advisory notes to his lawyer. But that's where the white-haired Mitchelson was Thursday, in U. S. District Court as closing arguments began in the 8-week-old trial in which he is accused of federal tax fraud.

For the first time in his years of trouble with the law, flamboyant evangelist Tony Alamo was sentenced to prison Friday, a six-year federal tax-evasion term that has Los Angeles prosecutors wondering whether they need to follow through on his scheduled child abuse trial. Alamo, winding up a three-day hearing in a federal court in Memphis, asked for probation or some other alternative to prison. "As far as I'm concerned, you could deport me to Israel and that would be just fine," he said.

The Internal Revenue Service has delayed 1.5 million refund claims so far this year and millions more will be slow in arriving because of the agency's anti-fraud crackdown, congressional investigators said Monday. Among the returns subject to the delays are those with Social Security number discrepancies and those that claim the earned-income tax credit for the working poor, the General Accounting Office said.

Six weeks into this year's tax filing season, the Internal Revenue Service's anti-fraud efforts have held up refunds to more than 800,000 people and caused filing problems for hundreds of thousands, perhaps millions, of others, according to the agency and angry tax preparers around the country.