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From IRS Files:Criminal InvestigationMinnesota Chiropractor Sentenced For Tax EvasionOn April 19, 2017, in Minneapolis, Minnesota, Donald Gibson was sentenced to 33 months in prison for tax evasion and for presenting a fake financial instrument to the U.S. Department of Treasury. Gibson failed to file his 2004 through 2014 individual income tax returns and attempted to evade his income tax liabilities for these years by diverting money to a warehouse bank called MYICIS, cashing over $800,000 in business checks at a check-cashing facility and submitting fake money orders and bogus financial instruments to the IRS. Gibson also formed Sovereign Christian Mission (SCM), a purported religious organization, as a way to further hide his chiropractic income and pay for his personal expenses. Gibson used SCM to pay for his groceries, entertainment, dinners, and car repairs. While the IRS was auditing his tax returns and later during the criminal investigation, Gibson presented a fake financial instrument purporting to be worth $300 million to the IRS and claimed that it paid off his income tax liabilities.Louisiana Criminal Defense Attorney Sentenced for Tax EvasionOn April 19, 2017, in Baton Rouge, Louisiana, Michael Thiel, of Baton Rouge, was sentenced to 30 months in prison for tax evasion, two years of supervised release and ordered to pay $998,352 in restitution to the IRS. Thiel operated a criminal defense practice in Hammond and, from 2003 through 2013, did not file income or employment tax returns and didn’t pay taxes he owed. Thiel concealed his income and assets creating three trust and nominees. Thiel used these three trusts to evade the payment of federal income and employment taxes. In January 2007, Thiel used nominees to purchase his primary residence for $435,000 and entered into a phony lease agreement with the nominees to conceal his ownership of the property and shield it from IRS collection efforts. Between January 2007 and January 2014, Thiel deposited $416,283 into the nominee account that was used to secure and pay the mortgage on the property.Former Company President Sentenced for Wire Fraud and Income Tax EvasionOn December 29, 2016, in Rockford, Illinois, Christopher A. Jansen, of St. Charles, was sentenced to 70 months in prison, three years of supervised release, and ordered to pay $269,978 in restitution. Jansen was President of Baytree Investors Inc., an Illinois corporation engaged in acquiring trucking companies. In 2001 Jansen learned DFC Transportation was for sale, created a Delaware corporation, DFCTC Holding Inc., and arranged for DFCTC to purchase DFC with money Jansen borrowed using DFC receivables as collateral. Jansen arranged for other individuals to be the owners of DFCTC, some of whom were previous investors in failed Baytree business acquisitions. With appointment or authority, Jansen represented to others that he was the corporate secretary and controlled both DFCTC and DFC to avoid having shareholder or director meetings. Jansen then arranged for DFC to use its receivables to borrow from a bank and, without authorization, ordered employees to transfer money from DFC to DFCTC. Jansen then distributed the money to himself and others for their personal use and benefit. In addition, in 2002 Jansen used a bank account in the name of a dissolved corporation to receive his income and disburse his expenditures. He intentionally failed to have the dissolved corporation file informational forms with the IRS for taxable income distributed to him from the account. Jansen also failed to have Baytree and DFCTC file informational forms with the IRS regarding distributions of taxable income to him. In addition, Jansen did not have a bank account in his name in order to avoid reporting any income to the IRS.Virginia Resident Sentenced for Fraudulent “Savvy Bag” Investment SchemeOn December19, 2016, in Alexandria, Virginia, Patricia Means of Richmond, was sentenced to 60 months in prison, three years of supervised release and ordered to pay restitution of $1,136,862, including $201,065 to the IRS for defrauding investors. Means was a licensed investment broker from 1983 until prior to moving to Virginia in 2006. Around February 2009, Means developed a scheme to defraud investors by creating a product called “Savvy Bag,” a purported handbag organizer and solicited investments in the product. Between 2009 and 2014, Means obtained over $1.1 million from victims and spent less than $3,000 to develop, produce or sell the product. In addition, between 2010 and 2014, Means received taxable income more than than $907,000 that she failed to report on her income tax returns.North Carolina Man Sentenced for Tax Evasion and Possession of an Unregistered FirearmOn December 16, 2016, in Charlotte, North Carolina, Reuben T. DeHaan, of Kings Mountain, was sentenced to 24 months in prison for tax evasion and possession of an unregistered firearm. DeHaan owned a holistic medicine business, which he operated out of his residence under the names Health Care Ministries International Inc. and Get Well Stay Well. DeHaan admitted that, from 2008 through 2014, he earned more than $2.7 million in gross receipts, but failed to file income tax returns for those years and evaded the payment of approximately $678,000 in income tax. He did this with the help of Richard H. Campbell Jr. and others, by setting up straw companies and opening bank accounts in the name of the straw companies to hide his income and assets from the Internal Revenue Service. DeHaan also claimed he was exempt from the payment of taxes because he was an ordained “medicine man” whose earnings were exempt from taxation. In addition, DeHaan also admitted to the possession of unlicensed firearms.Florida Man Sentenced for Tax EvasionOn November 28, 2016 in Tampa, Florida, Steven Headden Young, of St. Petersburg, was sentenced to 21 months in prison, ordered to pay restitution in the amount of $509,455 to the IRS and ordered to file his corrected tax returns for tax years 2007 through 2011. Young evaded a substantial portion of his personal federal income taxes for the years 2007 through 2011 by falsifying expenses to negate his income. Young, who prepared and filed his own tax returns, created bogus business expenditures and deducted them from his Schedule C income. He provided the IRS with a false lease agreement and false invoices between his real estate company and a sham corporation, purportedly based in the Dominican Republic. Young also falsely filed as head-of-household (HOH) to take advantage of the tax benefits of the HOH filing status when he was indeed married. HOH provides for less taxes and higher credits than when filing as single, married and filing jointly, or married and filing separately. Young made false statements to the IRS claiming he was single, when he was married and living with his wife. Young also interfered with the IRS audit and tax assessment of his personal federal income taxes by attempting to intercept third-party records that had been subpoenaed by the IRS from Bank of America (BOA). Young fabricated a letter from the IRS to BOA in an attempt to redirect bank records that had been intended for the IRS to another address, which had been opened by Young in the name of an IRS employee.Ohio Psychiatrist Sentenced for Tax EvasionOn November 21, 2016, in Cleveland, Ohio, Sandra Vonderembse, an Oregon, Ohio psychiatrist was sentenced to 18 months in prison, one year of supervised release and ordered to pay $565,128 in restitution to the IRS for tax evasion. From as early as 2005, Vonderembse failed to pay taxes and filed, and caused to be filed, with the Internal Revenue Service (IRS) false and fraudulent tax returns that included false statements regarding her income and the amount of tax due and owing. From 2009 through 2011, Vonderembse falsely claimed to have no taxable income and to owe no taxes, despite earning more than $240,000 each year while working as a psychiatrist. Vonderembse used nominee entities to conceal income from the IRS, and sent fake financial instruments to the IRS in purported payment of her taxes. In total, from 2005 through 2011, she attempted to evade more than $360,000 in income tax liabilities.Hawaii Couple Sentenced for Failure to Pay Income TaxOn November 17, 2016, in Honolulu, Hawaii, Calvin Kim and Chun Cha Kim, husband and wife, were sentenced to 36 and 12 months in prison, respectively, for violations of federal tax laws. In addition, Calvin Kim and Chun Cha Kim were ordered to pay restitution in the amounts of $1,969,463 and $1,937,267, respectively, which represent all back taxes and penalties. Criminal fines of $250,000 and $100,000 were also imposed on Calvin Kim and Chun Cha Kim, respectively. In addition, both defendants agreed to the imposition of a fraud assessment by the IRS, which may amount to an additional civil penalty of $3 million. The Kims already have paid more than $4 million in back taxes and interest. The Kims were the sole shareowners of businesses that sold heating pads and other products. In October 2000, they became followers of so-called "tax protestors" and decided not to file a valid tax return from then till May 2014. From 2005 to 2012 alone, the tax returns of the Kims’ businesses showed payments ranging from $418,238 to $971,983 for Calvin Kim for each year, and $271,564 to $1,000,562 for Chun Cha Kim, resulting in taxes owed for each of those years ranging from $133,009 to $325,375 for him and $83,828 to $335,378 for her.Tax Defier Sentenced for $1 Million Tax EvasionOn November 16, 2016, in Kansas City, Missouri, Harold R. Stanley, of Peculiar, was sentenced to 60 months in prison, which includes a sentencing enhancement for obstruction of justice. Stanley, an electrical engineer, was hired by companies as a consultant and received $971,604 from self-employment from 2005 to 2009 as an independent contractor. However, Stanley failed to file any tax returns for 2005 and 2006. For tax years 2007 through 2009, Stanley filed substantially correct returns but left the tax line entry blank and failed to submit any payment. Stanley submitted fake money orders for payment to the Internal Revenue Service, returned documents to the Internal Revenue Service claiming that the tax assessments were satisfied because they were “Accepted for Value,” filled out payment vouchers with his name in all capital letters but didn’t submit payment and submitted a false criminal referral to IRS – Criminal Investigation. From 2005 through 2009, Stanley had taxable income of $686,829; the criminal tax loss is $259,900.Wisconsin Embezzler Sentenced for Fraud and Tax EvasionOn November 3, 2016, in Madison, Wisconsin, Lisa Buchholz, of Luck, was sentenced to 36 months in prison, three years of supervised release and ordered to pay restitution of $193,909 to the victim of her fraud scheme. While employed as a bookkeeper for Four Seasons Wood Products (FSWP) in Frederic, from May 2008 until June 2012, Buchholz devised a scheme to defraud the company. In addition, Buchholz failed to file income tax returns for 2008, 2009, 2010 and 2011, and committed income tax evasion in 2011 by making false statements to an IRS criminal investigator during an interview in 2013. Buchholz’s actions caused a fraud loss of $172,176 to FSWP and a tax loss of $111,553 to the IRS.Texas Man Sentenced for Filing False Tax Returns and Corruptly Endeavoring to Impede the Internal Revenue LawsOn October 28, 2016, in Austin, Texas, Victor Antolik was sentenced to 72 months in prison following his conviction on filing false tax returns and corruptly endeavoring to impede the due administration of the internal revenue laws. Antolik owned and operated a commercial janitorial business with locations in Austin, San Antonio and Houston, Texas, under a variety of business names, including Diversified Building Services Inc., DBS Services Inc., Partners in Cleaning, PIC Building Services and BSI Industries. Antolik also earned income as a real estate agent, real estate broker and property manager. Antolik earned a portion of his real estate income through his companies SGN Realty Inc. and Signature Realty Services. Antolik submitted to the Internal Revenue Service (IRS) false individual income tax returns on which he underreported his income for tax years 2004, 2007 and 2008. In addition, between 1998 and 2014, Antolik attempted to obstruct the due administration of the internal revenue laws by, among other things, attaching altered Forms W-2 and 1099 to his tax returns, providing false information to his accountant that was used to prepare corporate and individual income tax returns on his behalf, and using nominees to conceal income and assets. In addition to the prison term imposed, Antolik was also ordered to serve one year of supervised release and to pay restitution to the IRS in the amount of $916,358.

If you've owned or used bitcoin, you may owe taxes — no matter how you acquired or used it. Here’s how using bitcoin can affect your tax situation.With bitcoin, you can run afoul of the IRS in a few surprising ways, so it pays to learn the rules.The big picture? Bitcoin and other cryptocurrencies that you buy, sell, mine or use to pay for things can be taxable. Also, if your employer or client pays you in bitcoin or other cryptocurrency, that money is taxable income. You report your transactions in U.S. dollars, which generally means converting the value of your cryptocurrency to dollars when you buy, sell, mine or use it.Here’s more how using bitcoin can affect your taxes:1. Bitcoin and other cryptocurrencies are propertyIn 2014, the IRS issued a notice declaring that for tax purposes, cryptocurrency is property, not currency. That may sound like a trivial distinction, but in this case it’s the basis for when the IRS decides whether individuals owe taxes.These bitcoin tax consequences revolve around what the government agency calls a “realization event.” Here's how it boils down:If you acquired a bitcoin (or part of one) from mining, that value is taxable immediately; no need to sell the currency to create a tax liability.If you disposed of or used bitcoin by cashing it on an exchange or buying goods and services, you will owe taxes if the realized value (the sale price of bitcoin, for example) is greater than the price at which you acquired the bitcoin. You may have a capital gain that’s taxable at either short-term or long-term rates.“Many people think that there’s no tax consequences when they sell an object — it’s for personal use and they’re expecting to lose money on it anyway, whether it be a car, an appliance or another piece of property,” says Brian R. Harris, a tax attorney at law firm Akerman LLP in Tampa, Florida. “Many people aren’t in the mind-set of holding tangible objects for investment and then recognizing gains when they ultimately sell them.”“But if there’s been a gain from the bitcoin owner’s cost basis, there’s a tax liability,” he says.2. Record-keeping is keyTo make sure you stay on the right side of the rules, keep careful track of your cryptocurrency activity.You'll need records of what the fair market value of your bitcoin was when you mined it or bought it, as well as records of its fair market value when you used it or sold it. That information will help you calculate your bitcoin taxes.That information may not be easily available. If you were buying and selling stocks, for example, your broker would send you a Form 1099-B that would show the cost basis of your transaction. But with bitcoin you might not receive one — part of the reason many people have no idea they’re liable for bitcoin taxes. “It’s a potential way to run afoul of IRS laws,” Harris says. “You’re conditioned with the receipt of the 1099 to know that you have a taxable event and what that taxable gain is. You don’t always get that with bitcoin. So many people just aren’t being informed from the exchange in a manner that they’re used to.”A Form 1099-K might be issued if you’re transacting more than $20,000 in payments and 200 transactions a year. But both conditions have to be met, and many people may not be using bitcoin 200 times in a year. Whether you cross these thresholds or not, however, you still owe tax on any gains.While not paying taxes on your gains might be an honest mistake, don’t expect the IRS to take pity. The agency has already sued at least one cryptocurrency broker for the records of people who might not have reported their bitcoin gains.3. If your bitcoin is stolen, toughBeing robbed is bad enough, and previously if you’d been swindled of your bitcoins, you might have been able to deduct it as a theft loss on your taxes. However, the new tax rules do away with the deduction for personal theft losses.Another tax rule doesn’t look favorable for owners of digital currency, either. The IRS allows owners to trade many kinds of property for a similar kind of property without immediately incurring a tax liability — it’s called a like-kind exchange.Before the tax law changes, bitcoin owners wanted to know whether they could engage in like-kind transactions with other cryptocurrencies. “The answer was unclear,” Harris says. “What was unclear was whether one crypto was like-kind to another. Now the new tax reform has limited like-kind exchanges to real property, not personal goods.”4. There is a bit of relief for bitcoin taxesBitcoin taxes can be a bummer, but at least you can deduct capital losses on bitcoin, just as you would for losses on stocks or bonds. These losses can offset other capital gains on sales. When you’re done tallying your winners and losers, you can’t write off a loss of more than $3,000.With drastic fluctuations in bitcoin’s price happening all the time, many bitcoin speculators will have losses. If you have losses on bitcoin or any other cryptocurrency, make sure you declare them on your tax return and see if you can reduce your tax liability.