Category Archives: IRS

Baltimore’s police commissioner resigns after charges for not paying federal taxes

darryl de sousa and catherine pugh

Mayor Pugh and her hand-picked tax evader De Sousa

The IRS doesn’t care about your oversights and inability to prioritize your own affairs. Quit it with the excuses.

From Star-Telegram: When Baltimore’s mayor hand-picked Darryl De Sousa as her choice for police commissioner, heralding his experience and the respect he commanded in the city’s force, he proudly described himself as a chess player who uses strategic thinking to avoid pitfalls.

Now just a few months later, De Sousa is out of the game, resigning in embarrassment for failing to file his taxes, a key test of Adulthood 101.

De Sousa’s path from the corner office to the revolving door was speedy, even for a city accustomed to leadership instability in a scandal-plagued police force. De Sousa resigned on Tuesday, less than four months into the job, after being charged with failing to file three years of taxes.

Tuesday also was the deadline federal prosecutors gave the city for producing years of De Sousa’s financial records.

Rising through the Baltimore force’s ranks since the 1980s, De Sousa was the third commissioner in three years and the ninth since 2000. His downfall was a blow to Mayor Catherine Pugh and the City Council, which nearly unanimously authorized his promotion in February.

Law enforcement needs to follow the law. It is critically important that the citizens of Baltimore have complete faith in their police department. I am deeply disappointed by Mr. De Sousa’s actions that leave us in this place,” City Councilman Zeke Cohen said.

Pugh had portrayed her choice of the veteran police commander as the right person to lead the force as the violent crime rate continued to soar. She said his resignation shouldn’t derail the department’s recent successes, and she’s already begun a national search to find his successor.

“I want to reassure all Baltimoreans that this development in no way alters our strategic efforts to reduce crime by addressing its root causes in our most neglected neighborhoods,” said Pugh, who fired De Sousa’s predecessor, Kevin Davis, in January after roughly 2 ½ years on the job.

In the meantime, the force is being led by Deputy Commissioner Gary Tuggle. He was named as acting leader Friday.

The U.S. Attorney’s office announced last week that De Sousa “willfully failed to file a federal return for tax years 2013, 2014, and 2015, despite having been a salaried employee of the Baltimore Police Department in each of those years.”

If proven, each of three misdemeanor counts carries up to one year in prison and a $25,000 fine. But his ongoing case has the potential to get a whole lot worse for De Sousa: Federal prosecutors have issued grand jury subpoenas to the city’s finance and police departments, seeking specifics about his pay, taxes, travel, and second jobs dating back years, according to a Tuesday report by The Baltimore Sun.

De Sousa himself could not immediately be reached Tuesday. His attorney, Steven Silverman, said he did not wish to comment. Last week, Silverman said federal prosecutors didn’t give his client a chance to explain himself or file late returns before bringing criminal charges.

De Sousa’s twin brother, Jason, described his brother’s resignation as “a loss for Baltimore City.”

“This is not the end. He has a very bright future, he’s very talented,” he said, adding that his brother was taking care of his parents, who had Alzheimer’s, during the period when he didn’t file his taxes.

Last week, De Sousa issued a statement admitting his failure to file federal and state taxes for those three years. He called it an oversight, and said he did file his 2016 taxes and got an extension for 2017 with the help of a “registered tax adviser.”

“My only explanation is that I failed to sufficiently prioritize my personal affairs,” De Sousa said.

The U.S. Attorney’s office did not immediately comment on De Sousa’s resignation. His case is being handled by the same federal prosecutors who recently prosecuted eight members of a rogue Baltimore police unit called the Gun Trace Task Force. All but one await sentencing after pleading guilty or being convicted at trial of corruption charges.

The city’s police union, which applauded De Sousa’s promotion earlier this year, said it was “anxious to put these events behind us” and hoped Pugh would find a suitable replacement fast. “Our members deserve consistency in their leadership,” said Gene Ryan, union president.

DCG

Saturday funnies!

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h/t @CloydRivers

DCG

Cheapskate: Tax returns show de Blasio paid more for tax preparation than he gave to charities in 2017

bill de blasio

Shocker, not.

The mayor has a net worth of $1.5 million.

From NY Post: Charity starts at home, but not if that home is Gracie Mansion.

Mayor Bill de Blasio and his wife gave a grand total of $350 to charity in 2017 on an adjusted gross income of $223,449, according to tax returns they released Tuesday.

It marked a significant drop from the first couple’s charitable giving in 2016 — when de Blasio was up for re-election — of $2,088 to charity.

Asked about the donation gap, mayoral spokesman Austin Finan responded that “the mayor is not a rich man.”

“He and the first lady help their son pay tuition to one of the most expensive schools in the country,” Finan added. The couple listed the tuition payments at Yale University for their son, Dante, as $51,400 in 2017.

They also listed their two Park Slope rental properties as generating tax losses of more than $12,000, despite collecting a combined $104,000 in rent last year.

The fee for their tax preparer was $500.

DCG

Owner of “Obama gas station” in SC faces tax evasion charges

Appropriate. The owner thought he could fool people, too.

From Fox News: The owner of a South Carolina gas station named in honor of former President Barack Obama was arrested and charged Tuesday with tax evasion.  

Murad A. Alhanik, 39, the owner of the Obama Store and gas station in Columbia, S.C., was charged with “four counts of sales tax evasion,” WISTV reported.

The South Carolina Department of Revenue said Alhanik filed $971,935 in sales tax returns in the period between 2013 and 2016, but after an investigation the agency found the store’s sales was $2.6 million, according to a press release. Alhanik dodged paying more than $136,000 in sales taxes during that four-year period, the department said.

Alhanik was booked into the Alvin S. Glenn Detention Center, arrest records show. He could face up to five years in prison and fines nearing $10,000.

The owner renamed the gas station to honor the 44th president during Obama’s first term. Alhanik told WISTV he saw more business after the name change. “I see more people come in,” Alhanik said then. “Excited with the name.”

In January 2017, Alhanik told the Post and Courier that he would never change the name of the store despite Obama not being president anymore because “it’s still history.”

DCG

Big rate hikes for health insurance will slam Washingtonians

O laughs

Obamacare going as planned…

This is not happening just in Washington. I have health insurance with BCBS OK and pay $550/month – up from $380/month last year. I have no co-pays (I pay the full contracted price when I walk through the doctor’s door) and a $6,800 annual deductible. BCBS informed me that my wonderful plan is being eliminated and I will soon receive my options for next year. I can hardly wait to see how much I get slammed.

From MyNorthwest.com: Open enrollment for health insurance in 2018 starts on Nov. 1 and thousands of people in Washington state will see big increases in their premiums.

The state’s insurance commissioner will officially release rates next week, and his office is warning that hundreds of thousands of people who do not get their insurance through an employer, will see a rate hike in the double digits.

Some 330,000 Washingtonians don’t get health insurance through an employer.

“I’m one of the folks who has to go out and get insurance on my own,” said Edward Weatherly, who is currently working a temp job. His monthly premiums?  “It costs me about $430 a month,” Weatherly said.

And the state’s insurance commissioner, Mike Kreidler, says rates for 2018 will go up – by a lot. “We’re looking at rate increases that are going to be in the 20s (percentage). We haven’t seen that, except going back before the Affordable Care Act,” Kreidler said.

The ones hardest hit will be the middle class – people who don’t qualify for a subsidy.

“It’s that person who doesn’t receive any help that I’m worried about. That’s going (to) say, ‘I’m going to hit the wall and I can’t afford this any longer,’” Kriedler said.

Weatherly is one of those individuals. He says it’s already difficult to make ends meet. “In addition to the rent, it’s pretty tough every month,” Weatherly said. “And there have been a couple of times I’ve thought about letting the insurance go.”

It gets worse – the insurance commissioner says people who are not subsidized with the most popular “Silver Plan” could see even more dramatic rate hikes. “On top of the mid-20 percent rate increase, they could see a 9 to 27 percent (increase) on top of that,” Kreidler said.

He says one reason for the steep increases is the uncertainty coming out of Washington, D.C. “I don’t care if they call it ‘Trumpcare’ whatever it is. But you’ve got to do something to make sure you’re taking care of the people. Access to affordable quality health insurance,” he said.

Weatherly says he’s hoping for a change.

I’m hoping we just get to a point where it becomes a right. So many things that we argue about, at both the national and the state level, that to me in the overall scheme of things don’t mean anything. It’s not life and death. Whereas health insurance, to me, is life and death,” Weatherly said.

The state insurance commissioner plans to release official rate hikes Thursday. Where you live could also impact how much your rates will go up, and the rates will be broken down by region, insurer and plan.

DCG

Insane: IRS awards $7.25M fraud-prevention contract to Equifax

Equifax is a consumer credit reporting firm based in Atlanta, Georgia, the oldest of the three largest U.S. credit agencies (the other two are Experian and TransUnion). Founded in 1899, Equifax gathers and maintains information on over 800 million consumers and more than 88 million businesses worldwide.

On July 29, 2017, Equifax discovered that some time in May, someone(s) hacked into its online databases and stole the names, birth dates, Social Security numbers, addresses and driver’s license numbers of 143 million consumers in the United States — data that security experts have described as the crown jewels for identity thieves.

But Equifax kept this discovery quiet for 39 days before finally informing the public about it on September 7, 2017, admitting that 209,000 U.S. credit card numbers are also breached, as well as “certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.”

After the company made known the breach, Equifax issued confusing instructions to consumers, which contained language that appeared aimed at limiting customers’ ability to sue. The company also tweeted out a link to a fake website instead of its own security site.

The Justice Department has also opened a criminal investigation into three Equifax executives — John Gamble, Rodolfo Ploder and Joseph Loughran — who sold almost $1.8 million of their company stock before the breach was publicly disclosed. See “Equifax executives sold $2M of their company shares 37 days before informing public of data breach“.

And yet, the IRS has seen fit to award Equifax a $7.25 million fraud-prevention contract — $7.25 million of taxpayers’ money!

Steven Overly and Nancy Scola report for Politico, Oct. 3, 2017, that a contract award for Equifax’s data services was posted to the Federal Business Opportunities database Sept. 30 — the final day of the fiscal year.

According to the no-bid contract, the IRS will pay Equifax $7.25 million to help prevent fraud at the IRS by assisting in verifying taxpayer identity even as Congress is investigating Equifax for its massive security breach that exposed the personal information of as many as 145.5 million Americans.

A no-bid contract means that the IRS deems Equifax to be a “sole source order” — the only company capable of providing the service. The contract award was issued to prevent a lapse in identity checks while IRS officials resolve a dispute over a separate contract.

The IRS, which has suffered its own embarrassing data breaches as well as a tidal wave of tax-identity fraud, has taken steps to improve its outdated information technology with the help of $106.4 million that Congress earmarked for cybersecurity upgrades and identity theft prevention efforts. In a letter to IRS Commissioner John Koskinen, Senate Finance Chairman Orrin Hatch (R-Utah) questioned the agency’s security systems and said he was concerned that the IRS lacked the technology necessary “to safeguard the integrity of our tax administration system.”

Why is this Obama appointee still the IRS Commissioner?

Lawmakers on both sides of the aisle blasted the IRS decision:

  • Senate Finance Chairman Orrin Hatch (R-Utah) said in a statement: “In the wake of one of the most massive data breaches in a decade, it’s irresponsible for the IRS to turn over millions in taxpayer dollars to a company that has yet to offer a succinct answer on how at least 145 million Americans had personally identifiable information exposed,”
  • Senate Finance Comittee ranking member Ron Wyden (D-Ore.) said: “The Finance Committee will be looking into why Equifax was the only company to apply for and be rewarded with this. I will continue to take every measure possible to prevent taxpayer data from being compromised as this arrangement moves forward.”

The IRS defended its decision in a statement:

“Following an internal review and an on-site visit with Equifax, the IRS believes the service Equifax provided does not pose a risk to IRS data or systems. At this time, we have seen no indications of tax fraud related to the Equifax breach, but we will continue to closely monitor the situation.”

~Eowyn

Washington state’s health-exchange rates to jump 24 percent

Shocker, not.

From Seattle Times: Washingtonians buying insurance through the state’s health-insurance exchange will see the largest premium increases next year since the exchange was created in 2013.

The Washington Health Benefit Exchange board this week approved rate increases averaging 24 percent. The rates, first approved by the state’s Office of the Insurance Commissioner, will impact about 180,000 customers.

“We at the exchange understand that, yes, this is going to create a challenging environment that is going to be difficult” for customers, said Michael Marchand, chief marketing officer and spokesman for the Washington Health Benefit Exchange, which was created after the Affordable Care Act (ACA) passed in 2010.

Customers of the exchange will also have fewer insurance providers to choose from in 2018. In King and Pierce counties the number drops from seven to four, Snohomish County goes from six to three and Kitsap County from four to three.

Rate increases averaged 11 percent last year, 4 percent in 2016 and 1 percent in 2015.

Read the rest of the story here.

DCG