Forbes - Inside The Crimes And Scams The IRS Criminal Investigation Unit Investigates
The video covers several topics related to tax issues and IRS activities. It begins with a discussion on IRS criminal investigations, highlighting a case involving a fake cancer scam. The IRS's role in financial crime investigations is emphasized, particularly in cases like tax fraud and money laundering. The video also addresses the slow start to the tax filing season, noting a decrease in tax return submissions and IRS website visits compared to the previous year. Despite this, tax refunds have increased. Concerns about IRS staffing and budget implications are raised, with potential impacts on tax administration. Legislative updates include discussions on extending the Tax Cuts and Jobs Act, changes to cannabis taxation, and a bill to delay beneficial ownership reporting requirements. The video concludes with a trivia question about tax filing requirements for foreign accounts and a brief mention of tax newsmakers, including a letter from the AICPA to Congress and a tax evasion investigation involving Amazon.
Key Points:
- IRS criminal investigations focus on financial crimes like tax fraud and money laundering.
- Tax filing season shows an 8% drop in submissions, but refunds have increased by 18.6%.
- Concerns about IRS staffing and budget cuts could affect tax administration.
- Legislative updates include potential extensions of the Tax Cuts and Jobs Act and changes to cannabis taxation.
- AICPA recommends broadening the qualified business income deduction.
Details:
1. 📊 Tax Season Updates and IRS Challenges
- The IRS received 23,589,000 individual tax returns so far in 2025, a decrease of about 8% from the 25,553,000 received at the same time in 2024.
- Visits to the IRS website have decreased by 40%, indicating a potential shift in taxpayer behavior or satisfaction with digital services.
- The IRS has issued 8,054,000 tax refunds with an average refund of $2,065, marking an increase of 18.6% from the previous year, which could influence consumer spending patterns.
- Concerns are rising regarding Federal hiring freezes and potential staff reductions at the IRS, which could lead to delays in processing and increased taxpayer frustration.
- Budget discussions propose extending the Tax Cuts and Jobs Act and eliminating taxes on overtime pay, tips, and Social Security benefits, potentially costing $4 trillion to $11 trillion over the next decade, raising questions about fiscal sustainability.
- The House passed a bill to extend the deadline for beneficial ownership information reporting by one year, with a unanimous vote of 48 to 0, reflecting bipartisan agreement on the need for more preparatory time.
2. 🇺🇸 Tax Filing Penalties and Personal Updates
- Failure to file a tax return can result in a penalty of 5% of the tax due for each month or part of a month the return is late, up to a maximum of 25%.
- If a tax return is filed more than 60 days after the due date, the minimum penalty is the lesser of $510 or 100% of the unpaid tax.
- The IRS can file a substitute tax return on behalf of those who do not file, which may not include deductions or exemptions the taxpayer is entitled to.
- Willful failure to file can lead to criminal prosecution, typically resulting in a misdemeanor charge with fines up to $25,000 and possible prison time up to a year.
- Exceptions to filing requirements exist if one does not meet the filing criteria based on filing status and income, but failing to file as a protest can have serious consequences.
3. 🌿 Cannabis Legislation and Federal Challenges
- In 2024, legal cannabis sales reached record-breaking levels, indicating significant industry growth.
- Despite state-level legalization in most of the U.S., cannabis remains a Schedule I drug federally, aligning it with heroin and LSD.
- Nine states have not legalized any form of cannabis: Idaho, Indiana, Kansas, North Carolina, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.
- A proposal from the Biden Administration seeks to reclassify cannabis as a Schedule III drug, potentially allowing cannabis businesses tax deductions for business expenses.
- Reclassification impacts: It would ease financial burdens on cannabis businesses by allowing them to deduct expenses, potentially leading to industry expansion.
- Republican Senators Pete Rickets and James Lankford introduced a bill to prevent cannabis businesses from deducting business expenses on Federal Tax Returns.
- Senator Rickets argues against federal subsidies for an industry he claims profits from addiction and threatens public safety.
4. 🔍 IRS Criminal Investigation and Notable Cases
- The requirement for taxpayers with a financial interest in or signature authority over foreign financial accounts to file an FBAR (Report of Foreign Bank and Financial Accounts) was signed into law by President Richard Nixon in 1970 as part of the Bank Secrecy Act (BSA).
- The Bank Secrecy Act was designed to identify transactions related to money laundering, tax evasion, and other criminal activities.
- In recent years, the IRS has intensified its focus on international tax compliance, including ensuring that U.S. taxpayers report their foreign financial activities.
- Notable IRS criminal cases in recent years include [specific case example], demonstrating the IRS's commitment to curbing tax evasion and money laundering.
5. 📰 Tax and Accounting News Highlights
- President Trump suggested reallocating IRS employees to the Border to address immigration issues, in light of the IRS hiring 88,000 workers for its operations.
- The Department of Homeland Security requested the Treasury to deputize IRS agents to audit employers hiring illegal immigrants, illustrating the multifaceted role of IRS agents.
- The IRS's Criminal Investigation (CI) division, the sixth-largest law enforcement agency in the US, plays a crucial role in investigating complex financial crimes such as tax fraud and money laundering.
- A notable example of the IRS CI division's work is the Amanda Riley case, where Riley faked having cancer to solicit over $100,000 in donations, which was uncovered through CI's meticulous investigation.
- Riley was sentenced to five years in prison for wire fraud, demonstrating the effectiveness of the IRS CI in handling sophisticated fraud cases.
6. 📢 Closing Remarks and Audience Engagement
- The American Institute of CPA (AICPA) sent a letter to Congress requesting amendments to the Section 199A qualified business income deduction, aiming to broaden it by increasing phase-in amounts and adjusting them for inflation. This could potentially expand tax relief for small businesses and pass-through entities, impacting a significant portion of the economy.
- Italian prosecutors are investigating Amazon and three executives for alleged tax evasion of 1.2 billion EUR (approximately $1.26 billion), involving the evasion of Italian VAT by channeling sales from non-EU sellers. This investigation could have sizable implications for Amazon's operations in Europe and its compliance policies.
- The IRS began accepting tax returns on January 27, but taxpayers in Colorado face delays as the state's tax season opening is still pending, according to the Colorado Department of Revenue's website. This delay may affect taxpayers' ability to file timely returns and receive refunds.
- The state of Maryland mistakenly sent approximately 6,000 form 1099Gs to the wrong taxpayers due to a printing error, and replacement forms have been dispatched. This error could lead to taxpayer confusion and potential filing errors.
- Audience engagement is encouraged by soliciting feedback via email and promoting the sharing of the show. The next episode will cover additional content on scams and privacy issues, indicating a commitment to addressing current concerns.