Georgia resident, Donus R. Sroufe received a four year prison sentence after he was found guilty at trial for interfering with the administration of the revenue laws and of making a false claim for a $1.7 million tax refund.
Court records provide a timeline and some details of Mr. Sroufe’s case:
- Mr. Sroufe filed a tax return for 2008 that claimed a refund of $1.7 million. On the tax return, he falsely claimed to have received $2.5 million from a U.S. Treasury bond (which turned out to be a fake) and also claimed he had paid $2.6 million in federal taxes which also was not true.
- In April 2009, the IRS notified Sroufe that his 2008 tax return was “frivolous.”
- In June 2009, two IRS agents met with Sroufe and notified him that the $2.5 million bond appeared to be a fake.
- Despite the warnings, Sroufe in August 2009 mailed an identical copy of the 2008 tax return to the Treasury Department, including a copy of the fake $2.5 million bond, and demanded a $1.7 million tax refund.
Special Agent in Charge of IRS Criminal Investigation, Veronica Hyman-Pillot, was not very sympathetic to Mr. Sroufe and others like him who think they can outsmart the IRS. Hyman-Pillot was quoted as saying on behalf of the agency, “the prison time received by Mr. Sroufe should serve as a strong warning that tough punishment awaits those who embark on a similar criminal path.”
This is not an understatement – the trend shows tax cheats are in trouble.
In a previous Tax Resolution University post, I wrote that enforcement, investigations and prosecutions are all up significantly at the IRS. Here are some figures from the IRS Criminal Investigation annual report to back that up:
- In fiscal year 2012, the Internal Revenue Service launched 5,125 investigations, recommended 3,701 prosecutions, and convicted 2,634 on tax charges, according to the annual report from IRS Criminal Investigation.
- The number of investigations per year rose 8 percent over the previous year, despite having 2.7 percent fewer IRS special agents compared to the previous year.
- The IRS is becoming more efficient even as the number of people working for the tax-collecting agency decreases.
- The IRS’s increased use of technology to identify potential tax cheats then refers suspicious tax returns to agents for close review.
So the bottom line is this: not only is the IRS getting better at spotting potential tax cheats, they are getting more aggressive in pursuing and prosecuting people just like Mr. Sroufe. If you are facing IRS tax issues due to “questionable” tax reporting or have received an IRS audit letter you will need to consult a qualified tax professional with success negotiating an IRS tax settlement to help resolve your tax issues for good.
