IRS audit of Greenpeace confirms non-profit status

In 2003, Public Interest Watch (a group that calls itself a watchdog of non-profit groups) wrote a letter to the Internal Revenue Service accusing Greenpeace of money laundering and other crimes. The letter accused Greenpeace of laundering $24 million in tax-deductible contributions by diverting them to a related entity that held protests against the Iraq war, an oil tanker and a nuclear-power station.

In September 2005, the IRS finally began an audit of the U.S. division of Greenpeace. Greenpeace has just received a notice from the IRS, indicating that they still qualify for exemption from federal income taxes as a non-profit.

PIW has received funding from Exxon Mobil Corp, among others. Greenpeace is known for blocking the path of oil tankers, and now the speculation about the ties between the audit and the oil giant begins.

Exxon Mobil denies any involvement in the report to the IRS.

Accounting Problems at GM; Last Year’s Losses Increase

The board of directors of General Motors Corp is asking for an investigation into newly revealed accounting errors which have delayed the filing of its annual report. The SEC filing of its 10-K will be delayed because of accounting errors found in the residential mortgage business of GM’s finance arm, General Motors Acceptance Corp. In addition, other accounting mistakes have been found, and these will cause the company to restate earnings from 2000 to 2005.

Texas and Oklahoma wildfires and financial statement fraud

The Oklahoma CPA Society recently asked me to pen a piece about the potential for financial statement fraud related to the recent wildfires. They printed it in their newsletter, OSCPA Wire.

Any natural disaster creates opportunities for fraud and that’s exactly what recent wildfires have done. Dishonest executives have a chance to manipulate their financial statements following fire losses and no one may detect it.

You can read the full article here.

Parents and Son Indicted on Federal Money Laundering Charges

Christopher Vnuk and his parents, Stephen Vnuk and Sharon Vnuk have been indicted by a federal grand jury on money laundering charges. Money from trafficking high-grade marijuana was allegedly laundered through purchases of vehicles. The parents are also alleged to have purchased items on credit cards, and used drug money to pay the credit card bills and home equity loans.

One particular incident allegedly includes a home equity loan to purchase a $66,685 Mercedes Benz for the son’s use. The bulk of that loan was paid off with drug money.

Waste and Abuse Related to Hurricane Katrina

The Government Accountability Office (GAO) released a short report about the millions of dollars wasted in the government’s award of post-Katrina contracts. Included is at least $3 million spent for 4,000 beds that were never used. ($750 per bed!)

The report also speaks to the non-competitive contracts awarded and how the incompetence of FEMA contributed to waste and abuse.

Surviving a Tax Audit

It’s the time of year when tax audits are being started en masse. The IRS has the ability to put the fear of God into people.

Cooperation and documentation are the key. First, the taxpayer can and should pull together any documentation that proves the numbers on the tax return. But ONLY the numbers that the auditor is questioning. (You never want to produce documentation about other items that aren’t being questioned!)

Second, attitude is everything. Appearing cooperative can help your case quite a bit. Remember, the auditors don’t have the easiest job in the world, and they probably deal with a lot of negative reactions. They want the audit done just as soon as you do. Being cooperative helps the audit go much more smoothly.

Read more about how to get through an audit.

Attorney General Fles Suit Against H&R Block

New York Attorney General Eliot Spitzer has filed suit against H&R Block Inc. for alleged fraudulent marketing of individual retirement accounts (IRAs). It is alleged that over the last four years, H&R Block has opened over 500,000 “Express IRA” accounts for tax clients, but 85% of those customers paid more in fees than they earned in interest.

Spitzer claims that management knew that the Express IRA customers were losing money. The suit includes charges that H&R Block didn’t disclose the fees associated with the accounts or that clients would incur tax penalties if they closed the IRAs early.

IRS Starts Using Private Companies to Collect Taxes

This is a first! The IRS has started using private companies to collect overdue taxes. If the program is successful, it will be expanded next year.

The IRS claims the “tax gap” has grown to $290 billion. The tax gap is the difference between taxes collected versus taxes the IRS believes SHOULD be collected.

Three private companies are expected to collect about $1.4 billion. The cases assigned to them are ones in which the tax bills are not in dispute, but are merely unpaid. The firms will not be allowed to take enforcement actions such as liens, levies, or seizures, and they won’t be able to cut deals to settle the outstanding debts.

The IRS is using the firms so that IRS personnel will be free to pursue more difficult cases. The authority to hire outside firms was granted to the IRS in 2004, but unions slowed the implementation.

Spending limits would have saved Wisconsin taxpayers billions

A study conducted by Wisconsin’s Legislative Fiscal Bureau shows that taxpayers could have saved $1.9 billion over 20 years if the Taxpayer Protection Amendment had been law.

The amendment would force government officials to consolidate or work more efficiently to better utilize taxpayer money.

According to Jim Pugh, a spokesman for business lobby Wisconsin Manufacturers & Commerce, the amendment allows reasonable increases in government wile protecting taxpayers.

The Taxpayer Protection Amendment would limit annual tax increases to inflation or the increase in the state’s personal income. Allowances for population growth and new construction would also be included.

Data Theft From Verizon

Two laptop computers containing personal data on an undisclosed number of Verizon employees, were recently stolen.

The laptops were supposedly part of a “random theft” from a Verizon building, and the data is supposedly password-protected. The affected employees were notified by the company on March 1.

This follows problems at Verizon Wireless, where a software problem allowed millions of customer records to be viewed by other customers.

Read the whole story here.

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