The Experts below are selected from a list of 48 Experts worldwide ranked by ideXlab platform

James H. Schlesser - One of the best experts on this subject based on the ideXlab platform.

  • Client Tax Fraud and the CPA: Take the Right Steps to Advise Your Client and to Protect Yourself during a Tax Fraud Investigation
    Journal of accountancy, 2011
    Co-Authors: James H. Schlesser
    Abstract:

    EXECUTIVE SUMMARY * Taxpayers may be subject to criminal prosecution for felonies including tax evasion under IRC [section] 7201 and filing false returns under section 7906. CPAs with clients with a possible exposure to criminal fraud allegations require appropriate advising and consultation, usually including a referral to an attorney experienced in such matters. * In addition to criminal investigation, the IRS may also pursue civil penalties, including the section 6663 fraud penalty. The penalty amount is 75% of the portion of a tax understatement attributable to fraud, with the taxpayer bearing the burden of proving that any part of an underpayment is not attributable to fraud. * Criminal cases are typically investigated by the IRS' Criminal Investigation Division. Cases are reviewed by the Department of Justice's Tax Division, which may authorize a prosecution by a local U.S. attorney's office or grand jury investigation. * Criminal investigations often begin as civil examinations in which omission of sources of income or substantial personal expenditures claimed as business expenses are "red flags" that may trigger a criminal referral. IRS field agents conducting a civil examination are not obligated to inform the taxpayer when a case has been referred for criminal investigation, and incriminating statements from a civil examination can be used in a criminal prosecution. * The tax practitioner privilege of client confidentiality does not extend to criminal matters, and at least one court has held admissible in a criminal case taxpayer statements made before a civil examination became a criminal investigation, even though examiners should have made the criminal referral sooner. * CPAs should have a Document Retention Policy to preserve evidence helpful to a criminal defense. CPAs may also assist an attorney representing a client through a Kovel arrangement, interpreting technical tax issues to better inform the attorney's legal advice. * Through their client acceptance policies and procedures, CPAs should screen new clients for any possibility of criminal exposure. The AICPA Statements on Standards for Tax Services provide guidance for AICPA members in such situations. In some situations, the CPA may also need legal representation. ********** [ILLUSTRATION OMITTED] Your client just called and left the following message: "I answered the door at my home today, and an agent who said he was from the IRS Criminal Investigation Division wanted to ask me some questions. What should I do?" While you may never get a call from a client exactly like this, it is important to know that taxpayers may reach out to their adviser, such as a CPA, during the initial stages of an IRS investigation that could result in allegations of criminal misconduct. How you handle this call and other situations like it is important in providing your client with quality service and defining your role in a tax fraud investigation. As a practicing CPA, you should be alert to a taxpayer's possible exposure to allegations of fraud or other criminal misconduct. The consequences to the taxpayer from conviction are generally imprisonment and substantial monetary penalties. While CPAs may provide valuable advice concerning tax liability and IRS administrative procedures, once a client's actions appear potentially to constitute fraud or another crime (see sidebar, "How the IRS Defines and Prosecutes Tax Fraud") CPAs should refer that client to an attorney experienced and skilled in this area. If the CPA is not also an attorney, he or she must avoid acting in a way that could be considered practicing law. However, knowing criminal tax fraud legal definitions and IRS investigative procedures can help CPAs avoid inadvertently complicating or hampering legal representation of the client. SOURCES OF CRIMINAL INVESTIGATIONS Investigations conducted by the IRS' Criminal Investigation Division (CI) are generated from various sources, but the largest source is IRS civil examinations. …

John A Martin - One of the best experts on this subject based on the ideXlab platform.

Christopher R. Chase - One of the best experts on this subject based on the ideXlab platform.

  • To Shred or Not to Shred: Document Retention Policies and Federal Obstruction of Justice Statutes
    Fordham Journal of Corporate & Financial Law, 2011
    Co-Authors: Christopher R. Chase
    Abstract:

    INTRODUCTION For numerous business and legal reasons, business entities, both large and small, are developing complex Document Retention policies1 in order to protect themselves and their bottom line.2 While these policies may have both economic and legal benefits, a poorly developed or mismanaged Policy may lead to violations of or eliminate protection from the obstruction of justice laws of the United States, particularly 18 U.S.C. sections 1503, 1505, 1512, and the newly enacted sections 1519 and 1520, legislating the procedure for destruction of Documents.3 Such was the case for Arthur Andersen LLP ("Andersen"), formerly one of the Big Five4 accounting firms of the United States, after the firm was indicted on March 14, 2002, and subsequently convicted on June 15, 2002,5 on one count of obstruction of justice for destroying Documents related to the firm's work for the Enron Corporation ("Enron").6 Wrongful destruction of Documents can lead to penalties in both civil and criminal cases. In civil litigation, Document destructioncan lead to an adverse inference before the jury as a penalty for spoliation.7 In the criminal context, and pertinent for the present discussion, destroying Documents can lead to a charge of obstruction of justice.8 Penalties in both the civil and criminal contexts can have harsh effects on the party who destroys Documents: losing a jury trial because of the adverse inference or being fined and imprisoned as a criminal punishment. Corporate senior management must deal with many questions regarding whether the company may destroy Documents, when the corporation is allowed to destroy the Documents and how the destruction should occur. To avoid legal problems resulting from the destruction of Documents, a Document Retention Policy must be routinely followed and diligently maintained.9 All employees must know what to do with their Documents and how to eliminate unnecessary Documents. Likewise, all supervisors must clearly state and remind their employees of how the Policy works. These techniques will ensure that a properly designed Policy will be consistently applied. In Andersen's case, the accounting firm's Document Retention Policy states that their employees are only required to retain final work papers supporting client audits and should destroy drafts, notes and memos.10 If litigation is anticipated, however, all Documents related to such litigation are to be retained.11 Possible factors leading to the obstruction charge against the firm include the fact that the firm's employees did not adhere to this Policy correctly, this Policy's ambiguity or the employees simply chose to ignore it.12 Part I of this Article will discuss Document Retention policies and how they are established. Part II of this Article will present an overview of the three older federal obstruction of justice laws that are applicable to Document destruction-sections 1503, 1505 and 1512(13)-and the two new obstruction laws that were drafted to combat Document destruction itself.14 Part III will focus on Andersen's Document Retention Policy and the firm's trouble due to the Enron bankruptcy. Part IV will analyze the competing purposes of Document Retention policies and federal obstruction of justice laws. Finally, this Article will conclude that Document Retention policies are necessary for business purposes and can be reconciled with the federal laws as long as the Policy is clear, consistently applied, well maintained and suspended when the potential for litigation or a federal investigation arises. I. Document Retention POLICIES Companies, firms, and partnerships produce a multitude of Documents during their ordinary course of business. It is impossible to keep all of these Documents because of space limitations and storage costs.15 Therefore in an effort to manage their paperwork and to deal with excess and unnecessary Documents, companies have turned to Document Retention policies. …

Maria Perez Crist - One of the best experts on this subject based on the ideXlab platform.

  • Preserving the Duty to Preserve: The Increasing Vulnerability of Electronic Information
    2006
    Co-Authors: Maria Perez Crist
    Abstract:

    This article addresses the increasing vulnerability of electronic information, particularly in light of proposed electronic discovery rules, which are likely to go into effect December 1, 2006. Under the new Federal Rules of Civil Procedure, electronically stored information deemed "inaccessible" is subject to a reduced discovery obligation, and a new safe harbor excuses the destruction of electronic information pursuant to a Document Retention Policy. As organizational information migrates to an electronic form, legal disputes involving such topics as employment discrimination, product liability, and securities fraud, will rest upon evidence in an increasingly fragile state. The extent to which crucial information such as email and metadata is accessible is entirely in the hands of its keepers. As developing case law and the Federal Rules of Civil Procedure combine to send the message that organizations should not be burdened with the need to preserve or retrieve inaccessible electronic data, electronically stored information may gravitate towards Retention policies that insure an organizational "Alzheimer's." In response to the growing vulnerability of electronic information, the article suggests ways that litigants and the courts can and should take a proactive role in preserving the duty to preserve electronic evidence in anticipation of litigation.

Bob Burton - One of the best experts on this subject based on the ideXlab platform.

  • Judge slams BAT's shredding Policy as part of "a fraud".
    BMJ, 2006
    Co-Authors: Bob Burton
    Abstract:

    The “Document Retention Policy” of British American Tobacco Australia Services (BATAS), under which sensitive Documents were shredded, had been developed “for the purpose of a fraud,” Justice Jim Curtis of the Dust Diseases Tribunal of New South Wales has found, in a damning ruling. In the case before the tribunal, the transport services company Brambles Australia is seeking to recover part of $A200 000 (£79 800; €116 000; $150 300) in compensation costs paid to the family of Mr Alan Mowbray, who died from lung cancer in 2002. Mr Mowbray, a motor mechanic, was exposed to asbestos …