On May 10, 2017, Attorney General Sessions issued a Memorandum titled Department Charging and Sentencing Policy. Prosecutors were instructed to “charge and pursue the most serious, readily provable offense” and “disclose to the sentencing court all facts that impact the sentencing guidelines or mandatory minimum sentences.”
On July 10, 2017, the U.S. District Court for the District of Columbia issued a permanent injunction prohibiting the IRS from charging a fee for the issuance and renewal of preparer tax identification numbers (PTINs), after concluding that the IRS lacked statutory authority to charge such user fees. Steele, et al. v. United States of America, No. 14-cv-1523 (D. D.C. June 1, June 10, 2017). The Court also ordered the IRS to refund all PTIN user and renewal fees paid since the inception of the PTIN program. In response to the Court’s order, the IRS suspended its collection of PTIN user fees and issued a statement indicating it is working with the Department of Justice to determine how to proceed regarding the Court’s order to refund past PTIN fees paid.
In January, the IRS announced a rollout of its compliance campaigns targeting certain issues on which the IRS Large Business & International (LB&I) will focus its examinations. It is part of LB&I’s shift to issue-focused examinations in light of a diminished IRS budget. Since the announcement, LB&I has been conducting a series of webinars on its 13 new campaigns. On June 6, LB&I executives provided information on its Related-Party Transactions (RPT) campaign, which is one of the 13 campaigns.
Michael Sorrentino, better known as “The Situation” on MTV’s popular reality show The Jersey Shore, was recently hit with a superseding indictment issued by the grand jury on April 7, 2017. The Situation had previously been charged, along with his brother, on September 24, 2014 with tax evasion and conspiracy to defraud the IRS. Prosecutors allege that Sorrentino and his brother set up multiple businesses to profit from The Situation’s celebrity status during the heyday of The Jersey Shore phenomenon, and that they conspired to avoid paying tax on nearly $9 million earned just in the 2010-2012 period. According to the indictment, The Situation and his brother filed false returns claiming fraudulent deductions and underreporting business income, particularly by using S-corporations and non-issuance of 1099s to hide income, all the while using income from those businesses to fund their extravagant lifestyles, including the purchase of luxury vehicles.
The IRS is distancing itself from the advice it offers to taxpayers on its OWN website. The IRS announced on May 18th in Memorandum SBSE-04-0517-0030, that “FAQs that appear on IRS.gov but that have not been published in the Internal Revenue Bulletin (IRB) are not legal authority and should not be used to sustain a position.” Essentially the IRS has told its examiners that if a taxpayer relies on an FAQ on the IRS’s website, the examiner need not follow that authority and can find against the taxpayer unless the advice in the FAQ have been published in something that is “legal authority.” Many taxpayers might find it surprising that they can’t rely on what the IRS posts on its own website. We certainly did. Accordingly, before any taxpayer relies on the IRS website, the taxpayer should be sure there is other “legal authority.”
