Phoenix Tax Law Blog


Tax preparer for Lemon Grove arrested in Arizona for submitting fraudulent federal income tax returns

31-years-old Cynthia Lozano, tax preparer from Lemon Grove, was arrested in Phoenix on Tax Day 15th of April, Monday. She is accused of filing false tax returns and using customer Social Security numbers to get $1 million in fraudulent refunds from the IRS.

According to the authorities, Lozano used her tax business to submit fraudulent federal income tax returns seeking false refunds and defraud the Internal Revenue Service. She collected approximately $1 million in tax refunds.

A statement was released from the U.S. Attorney’s office which said, “Frequently, the taxpayers were unaware that Lozano used their Social Security numbers thus also becoming victims of aggravated identity theft. As a result, Lozano improperly received over $1 million from the IRS in fraudulent refunds which she laundered through a bewildering maze of bank accounts. Using the proceeds of this fraud, Lozano, among other things, purchased 20 properties in and near Phoenix, Arizona”.

Lozano started her tax business with the name of “CLozano Income Taxes” in Spring Valley in 2010. She made false statements that prompted the IRS to issue refunds under EIC provisions, which allow for a refundable federal income-tax credit for low- to moderate-income individuals and families as a way to compensate the burden of Social Security taxes and to give an incentive to work. If a taxpayer’s EIC exceeds the amount of taxes actually owed, it results in the IRS paying a refund to the taxpayers, who claim and qualify for the credit.

According to charging documents, the number of victims targeted by Lozano was more than 200. She filed fraudulent IRS 1040 forms in their names.

Lozano purchased 20 properties in the Phoenix metro area with the money she received from the IRS.

The federal prosecutors said that Lozano was charged with 33 counts including aggravated identity theft, wire fraud, tax fraud and mail fraud. She faces up to 47 years in prison and $750,000 in fines if convicted on all charges. She also faces the loss of real estate she purchased with the fraud.

According to the U.S. Attorney’s Office in San Diego, she is summoned to federal court on 16th of April Tuesday.

A 33-count grand jury accusation seeks forfeiture of the real estate to pay back the government and to stop her from getting any financial benefit from her alleged crimes.

Author Bio:

Attorney Brian Douglas Sloan has spent his entire career focused on DUI & Vehicular Related offenses, having represented over 1,500 DUI clients in the past 8+ years.

Posted in Uncategorized |

Tax Issues for Marijuana Dispensary Operators

A small section of the tax code provision originally written for illegal drug dealers is causing issues for legitimate marijuana dispensaries in Colorado, California, Arizona, and 15 other states where marijuana or medical marijuana is legal.

In states like Colorado, where marijuana is legal, income tax rates for dispensaries can be as high as 70 percent because the tax code does not allow the businesses claim certain deductions. The tax code section that causes these issues is known as 280E and was originally penned for illegal drug traffickers.

The existing tax code could make Colorado’s expansion to the recreational marijuana and risky choice for business owners. These issues arise in the 18 state where some form of marijuana is legal because marijuana is still listed as a schedule-I drug federally.

The provision in the tax code does not allow for marijuana dispensary operates to make certain deductions on anything related to the sale of marijuana, like advertising costs. Dispensaries are allowed to make deductions on the costs associated with growing the plant.

The result? Many dispensaries have included the deductions they feel they rightly deserve on their tax forms. Doing this insures that these small businesses are in for an IRS audit. This legal balancing act can be resolved by congress or the court system.

 

Posted in Taxes |

Changes in Arizona Self-Employed Taxes

New tax benefits may be rolling out in the near future for self-employed residents of Arizona, a tax break designed to remedy a near $1000 increase in federal government payments. The tax break sounds as if it might prove to be a financial relief to self-employed Arizonans should it become official.

The State House recently approved legislation that allows for self-employed individuals to deduct upwards to 2% of what their earnings prior to calculating their payment on state income taxes. But while this may be welcomed news for the self-employed, it’s actually better news for the federal government. In actuality the savings could amount to as little as roughly $200 cash for many.

The original legislation was modeled differently, primarily dealing with only property tax breaks. Some financial analysts have considered Arizona’s property tax system as poorly befit to the economic development of the state overall. Reformatting the tax system is an attempt to put the local economy back on track.

Those close to the situation are indicating that the 2% deduction in earned income will adversely help the bounce rate of net earnings. It’s yet to be determined if the change will ultimately assuage the ailing state economy.

Posted in State Taxes |

Senate Committee Supports Arizona Sales Tax Reform

Arizona Governor Jan Brewer’s proposed plan of tweaking the state sales-tax system has received bipartisan support from a legislative panel, despite many Arizona residents raising strong objection.

In a vote measuring 6-1, the Senate Finance Committee voted almost unanimously to advance House Bill 211, a bill that outlines a new tax-collection system in an effort to remedy an old system viewed as highly convoluted. While the bill will not alter the general sales-tax rate, it will affect rates on construction sales tax.

Some cities worry the reformatting will end up costing them millions of dollars. With the current sales tax format, cities collect as much as 65% of the value of a project. The newly proposed tax will see that tax is collected where materials are purchased. Some cities maintain with a lack of construction-supply outlets in their immediate area, they’ll potentially lose out on huge sums of money.

The Senate Committee was clearly not in favor of delaying the reformat, passing the vote without heeding many of the objections from city representatives. While cities may not entirely agree with the numbers, the state legislation is confident the new measures will not spur a complete overhaul.

Posted in State Taxes |

IRS Yet to Issue $917 Million in Tax Returns for 2009

The IRS has recently stated they are holding nearly $917 million in potential tax returns for those that never filed an income tax return during 2009, a figure that encompasses an estimated 984,400 US residents. Many of those included in this figure are potentially residents of Arizona.

The IRS additionally estimates that nearly half of the potential refunds amount to or exceed $500, a handsome chunk of change many American families could undoubtedly use. The deadline for these late filers to collect their refund is however steadily approaching.

In order to receive a refund for the 2009 season, those eligible will be asked to file no later than the current approaching April deadline this year. Any money that is not redeemed this year for the 2009 season will transfer over to US Treasury property.

The US government generally provides tax filers with a three year window to complete these filings. Unfortunately, many of these people likely assume they were not eligible for a tax refund and are essentially forfeiting their refund checks as a result.

Did you ever file for a tax return for the 2009 season? Act now or forever hold your peace!

Posted in Taxes |

Arizona Taxes Hospitals Statewide to Benefit Medicaid

Arizona governor Jan Brewer made national headlines when she announced she would move to raise state taxes to benefit the Medicaid program in conjunction with the new federal health care law.

A notable Republican, Jan Brewer is being as the first governor to publicly devise a method to fund the newly instituted Medicaid expansion. In contrast, California Gov. Jerry Brown, one of many noted supporters of the new federal mandate, has yet to create a plan to support the boost in Medicaid.

Brewer intends to raise the funds by taxing hospitals. Her ‘provider tax’, once applied to hospitals statewide, would add about 300,000 low-income state citizens to the Medicaid program. This model is already instituted in nearly ¾ of the US, but no states are applying funds to similarly support Medicaid.

Arizona is in a unique situation, a situation that will feature large costs from the onset due to how the existing plan is modeled. Those close to the situation are indicating Arizona will require new funding immediately while many other states will not.

Brewer’s plan already has many supporters among Arizona hospital executives. Many hospitals statewide are left with millions of dollars in uncompensated care annually, providing a logical conclusion to increased taxation for Medicaid.

Posted in State Taxes |

Over 2 Million Arizonans File Taxes Online

Tax season is upon us and nearly 2.8 million Arizonans are expected to file this season. With the new season however brings new changes to the tax code, leaving more than a few average citizens scratching their head regarding their return.

It has been estimated that nearly 260,000 of those filing within Arizona will request an extension on their taxes this year. Many of these people will additionally be electing to file their taxes through an online service, an increasing trend in recent years.

The IRS is stressing that changes in the tax code may prevent certain individuals from receiving their full refund should they opt to casually file online. Changes in their marital, financial and parental status may affect the way you file.

Some individuals are eligible for EITC (earned income tax credit), good for a $6000 return in some cases. Nearly 2.2 million Arizona tax filers will opt to complete their taxes online, foregoing a maximum return in many cases.

These figures indicate perhaps there is something more to visiting a tax professional in person.

You can receive additional help from the IRS when it comes to filing your taxes by visiting their website or calling them directly.

Posted in State Taxes |

Ways Homeowners Can Save Money Through Taxes

Despite what some in the media and politics say, owning a home is still a great way to collect benefits through taxes. Regardless of your home-owning history, or lack thereof, the IRS has a list full of deductions which can save you money, which can make your investment much more favorable to renting. If a family claims tax breaks related to the house besides the standard deductions, it could help save a lot of money right off the bat. Make sure to acknowledge charitable deductions and other similarly applicable ways to get a tax break, even if it might require you to spend a bit more time on your tax return.

If you are refinancing, or have just bought a home, you may be able to save money from mortgage interest. Last year taxpayers received about $100 billion back in mortgage interest breaks, it is worth looking into alongside your mortgage insurance, which can also be deducted.

If you are a lower-income homeowner, you may also be entitled to special property taxes if applicable in your municipality. Many people of all incomes can also take advantage of deducting local and state property taxes from their federal return.

If you have done some renovations, such as installing solar power, home office projects, or medically necessary changes, you may be eligible for tax breaks. Even if your renovation does not count towards a tax break at this time though, should you decide to sell, you may be able to deduct your new renovations that boosted your home’s value, make sure to keep your receipts! If you moved because of a job relocation, or other important reason, you may also receive deductions for the costs of moving.

Posted in Deductions |

IRS Cracking Down on Identity Theft Related Tax Fraud

Hundreds of Americans are victimized by tax fraud when their identity is stolen. In these cases, stolen Social Security numbers are used by thieves to collect fraudulent tax returns. Now the IRS is promising aggressive action.

449,809 reported cases of tax fraud related to stolen identity occurred in 2012. In an alarming trend, this number was 80% higher than in 2011. Arizona is no stranger to identity theft itself, some of the highest reported cases occurring in the southern state every year.

Victims of tax fraud via identity theft routinely need to wait more than six months before their complaints are resolved. It’s a complicated process that involves speaking with several different IRS representatives, creating further headache for those unfortunate tax filers.

The IRS has been bogged down with the rising number of identity theft incidents. As such, in an effort to reduce this waiting time for a resolution, the IRS is increasing staff. The hope is to balance the situation by routing identity theft initially and handling the current surplus of cases with a broader inventory of employees. It could be redeeming news for individuals who find themselves in these unique circumstances.

Posted in Taxes |

Facebook to Pay No Taxes, Instead Receive $429 Million Dollar Refund

Mark Zuckerberg’s once minuscule social network has now grown so large that it generated approximately $1.1 billion dollars in 2012, according to their annual report. What is surprising, is the lack of taxes owed and instead a refund to the tune of $429 million dollars.

Part of the tax break came from Facebook going public last year; for some, including the Citizens for Tax Justice, it was no surprise that Facebook wouldn’t pay a dime. The social media juggernaut  is said to be cooperating to obtain further tax breaks for the future, which could equate to about $2.17 billion in the coming years.

Facebook has seen some losses throughout the years, but the absence of any federal or state taxes has sparked outrage throughout the internet and other media outlets. This news comes as politicians in Washington are in discussion about potentially lowering corporate tax rates as a pro-business incentive.

Much of the reason why Facebook is not paying taxes comes from their stock options and other compensation to employees and company investors. A tax break this large is relatively uncommon for most businesses of this size, something that Facebook wants to repeat for years to come.

If you are seeking a knowledgeable professional to assist you or your company, make sure to contact an experienced tax attorney. Tax law can be a complicated and stressful ordeal, make sure to trust someone who is dedicated to your case and has a thorough understanding of the subject matter.

Posted in Taxes |