United States District Judge Stephen G. Larson ordered Matthew Carl Berry, of Rialto, to pay $15,418,393 in restitution to the Internal Revenue Service, according to IRS officials.

Berry was sentenced in United States District Court in Riverside. He will spend three years on supervised release following his release from prison.

Berry’s daughters, Karen Denise Berry of San Bernardino and Carla Denine Berry of Rialto, as well as Ivan Taylor Johnson of San Bernardino and Valerie Madel Dixon of Rialto were also convicted in the case.

At trial, Matthew Berry was convicted on charges that he conspired with others to defraud the IRS and filed false personal income tax returns for the years 2001, 2002, and 2004.

The IRS will continue to aggressively investigate tax return preparers who knowingly prepare false tax returns, said Leslie P. DeMarco, Special Agent in Charge, IRS Criminal Investigation, Los Angeles Field Office.

“These dishonest preparers undermine the integrity of our tax system and must be held accountable,” DeMarco said. “This nine-year sentence serves as a reminder to all tax return preparers who intentionally prepare fraudulent tax returns. Their disregard for our tax system can lead them to prison.”

The false tax returns prepared by Berry for clients, when combined with the returns prepared by the other defendants, created losses of more than $45,000,000 in tax revenue to the IRS, according to court documents.

Karen Berry and Carla Berry pleaded guilty before trial to various charges including conspiracy to defraud the IRS, aiding and assisting in the preparation of false tax returns and subscribing to a false tax return.

Johnson and Dixon also previously pleaded guilty to charges contained in the indictment.

Court documents state Matthew Berry operated the tax business out of his Rialto residence from 1995 through 2003, according to IRS officials.

In early 2000, the daughters, Karen and Carla Berry, began preparing false income tax returns at the business. Two years later, Johnson and Dixon started preparing false income tax returns as well.

In 2004, the business relocated to a commercial building in Rialto. Matthew Berry and his daughters formed N.C.K. Services, Inc., to operate the tax business.

According to the plea agreements of the Berry sisters, Matthew Berry controlled the cash paid by the tax preparation businesses clients. He typically paid each return preparer weekly, in cash, based upon the number of returns the preparer had prepared during the preceding week.

Further, Berry deposited large amounts of cash received from his clients into bank accounts, in a way to avoid arousing the suspicions of bank employees, the IRS said.

Berry and his co-conspirators also bought cashier’s checks using the profits earned from their fraudulent business in their own names and the names of third-parties. They then deposited those checks into bank accounts which they controlled.

Karen Berry and Carla Berry face a statutory maximum of 11 years in federal prison, fines totaling $750,000, and restitution when sentenced Aug. 31, according to IRS officials.

Johnson was sentenced to nearly three years in federal prison, followed by three years of supervised release. He was also ordered to pay $19,034,901 in restitution to the IRS.

Dixon was sentenced to five years probation, including 10 months home detention, and she was ordered to pay $19,034,901 in restitution to the IRS.

A new report by the Treasury Inspector General for Tax Administration found, however, that some IRS collection function activities and results declined during 2008 after several years of improved results. The use of liens continued to increase, but the use of levies and seizures decreased during the year. Enforcement revenue collected also decreased, and the total dollar amount of uncollected liabilities increased.

J. Russell George

“Continued effort to improve compliance is important for reducing the estimated $345 billion tax gap and maintaining the integrity of the voluntary compliance system,” said TIGTA Inspector General J. Russell George in a statement.

The overall percentage of tax returns examined decreased by almost 3 percent; however, the overall percentage of tax returns examined was almost 12 percent higher than in 1999.

The number of tax returns of individuals examined increased, with almost 82 percent conducted via correspondence examinations. The number of corporate tax returns examined increased by just over 1 percent, a decline of almost 23 percent since 1999.

The administration’s proposal, to be announced Wednesday, comes in several stages.

In January, when next year’s form goes online, about 20 percent of the questions will be eliminated, mostly by avoiding redundancies. For example, students who are at least 24, or married, will automatically be able to skip the 11 questions about their parents’ financial information, and low-income students will be able to skip the questions about assets, which are not used to determine their aid eligibility.

The administration will also seek legislation to simplify the form further.

“The Fafsa improvements will reduce the burden on the 16 million students and families who apply for federal financial aid every year,” Arne Duncan, the secretary of education, said, “and are designed to help increase college enrollment among low-income and middle-income students by making it easier to apply for financial aid.”

Every year, millions of students and families must fill out the Fafsa form to apply for Pell grants, Stafford loans, Perkins loans, work-study programs and much state aid. But many are scared off by the form. Federal authorities estimate that 1.5 million students eligible for Pell grants did not apply.

And because the form is so complicated, a growing industry of paid consultants has sprung up to help families complete it.

Secretary Duncan plans to create an easy process for families to click on their online application to automatically fill in the financial data they have already filed with the Internal Revenue Service as part of their tax returns.

That process, which has long been under discussion, had been expected to take several years. But in recent months, when Education Department officials discussed it with I.R.S. officials, it seemed to be something that could be started in January, for students going into the spring or summer college semester.

Those applying for aid to start college next fall will not be able to have the I.R.S. import their information, because the tax returns that determine their eligibility will not be filed in time.

While the Education Department can proceed with some of the changes, Congressional approval will be required for Mr. Duncan’s plan to eliminate more than half of the form’s financial questions, which often seek data not on the federal tax form.

The department said most of the questions to be eliminated, like one regarding untaxed income earned by members of the clergy, would affect applications.

Indeed, officials say, the six questions about assets affect aid to only 3 percent of Pell grant recipients, while penalizing families saving for college and opening loopholes for sophisticated applicants to game the system.

Margaret Spellings, the secretary of education in the Bush administration, had proposed bigger changes, seeking to eliminate all financial data except adjusted gross income and the number of tax exemptions. Department officials say the Obama administration’s more moderate proposal may be more palatable to Congress.

“Confusing paperwork shouldn’t stand between qualified students and a college degree,” said Representative George Miller, Democrat of California and chairman of the House Committee on Education and Labor. “Secretary Duncan has put forth common-sense proposals for streamlining the Fafsa.”

The Higher Education Opportunity Act, passed in the last Congress, made some progress toward simplifying the Fafsa form, by, among other things, creating a two-page EZ form for some low-income families, and streamlining the reapplication process.

But some critics argue that the proposed simplification does not go far enough. “The whole form should be able to fit on the back of a postcard,” said Mark Kantrowitz, publisher of FinAid, an online guide to student aid. “And they need to simplify not just the form but the formula for determining aid.”

Others, meanwhile, argue that the form does not get enough information to measure financial worth adequately because it excludes assets like cars, homes and some family businesses and does not factor in the high cost of living in areas like New York.

The New York Times cited an “unidentified U.S. official briefed on the matter” in reporting a “reversal” after a “fierce lobbying campaign” by UBS and the Swiss government to persuade the Justice Department to drop the case.

“There is no basis for the report in the New York Times,” the Justice Department said in an e-mailed statement. “While the department is always willing to consider settlement in any case, the suggestion that the department is planning to drop this suit is simply untrue. The department is continuing with the case against UBS.”

The government sued UBS Feb. 19 in federal court in Miami, a day after the bank avoided U.S. prosecution for helping wealthy Americans evade taxes. UBS agreed to pay $780 million in penalties, admitted it helped taxpayers hide money in Swiss accounts and gave the IRS more than 250 clients’ names.

Two UBS clients in the U.S. have since been prosecuted for tax crimes, and the IRS is encouraging others to avoid criminal charges by disclosing offshore accounts voluntarily.

The Justice Department will make its next court filing on June 30, according to the e-mailed statement. U.S. District Judge Alan Gold has scheduled a hearing for July 13 on the case.

Treaty Imperiled

The U.S. needs to resolve the lawsuit before Swiss voters are likely to approve a loosening of bank secrecy rules, Finance Minister Hans-Rudolf Merz said today.

“I can’t imagine that we in Switzerland agree to a double- taxation agreement in a popular vote if this problem isn’t solved before,” Merz told reporters in Berlin today, according to a recording on the Web site of Swiss radio DRS.

The two countries last week signed a draft accord to improve the exchange of information on suspected tax evaders.

In court filings and a diplomatic note, the Swiss government has said the lawsuit would “seriously jeopardize” efforts to revise a 1996 tax treaty.

Under that treaty, Switzerland can turn over account data only on a reasonable suspicion of “tax fraud or the like,” according to a UBS court filing. Unlike the U.S., the Swiss don’t view tax evasion as a crime.

‘Direct Challenge’

In an April 29 note to the U.S. government, the Swiss government said the lawsuit is a “direct challenge” to its sovereignty. The action threatens negotiations to revise the treaty to share information with the U.S. on “not only tax fraud, but also tax evasion,” according to the note.

An IRS voluntary-disclosure program, which requires taxpayers to pay taxes and interest for six years on offshore accounts, will better serve the agency’s goals, UBS wrote in a court filing.

UBS has offered to provide clients with documentation for voluntary disclosures and “many thousands of clients have requested the necessary documentation or transferred their assets” to the U.S., according to the filing.

As part of its deferred-prosecution agreement, UBS admitted Feb. 18 that from 2000 to 2007 its Swiss private bankers helped Americans evade U.S. taxes through sham offshore companies in tax havens including Panama, Hong Kong and the British Virgin Islands. UBS said it created misleading forms saying those companies, not taxpayers, were the beneficial account owners.

UBS also admitted that its private bankers marketed securities and banking services in the U.S., even though it didn’t have the required license from the Securities and Exchange Commission. Those bankers, UBS admitted, met with clients in the U.S. and communicated with them regularly as they traded securities in their accounts or transferred assets.

The case is U.S. v. UBS AG, 09-cv-20423, U.S. District Court, Southern District of Florida (Miami).

The First Time Homebuyer’s Tax Credit is for a maximum of $8,000.

In other words, Uncle Sam will give you $8,000 to buy a home if you meet the following qualifications:

You must be a first-time homebuyer. The definition of a first-time homebuyer is anyone who has not owned a principal residence for the last three years.

So a first-time homebuyer does not necessarily have to be a first-time homebuyer.

In order to qualify for the full $8,000 tax credit, the home being purchased must be at least $80,000 and purchased no later than December 1, 2009. Time is running out.

The most significant difference between this tax credit and the one U.S. Congress passed in 2008 is that it does not have to be repaid as long as the owner lives in the home a minimum of three years.

If the home is sold prior to three years of occupancy, the tax credit is repaid to the government.

To obtain the maximum tax credit, a single homebuyer may have an adjusted gross income no greater than $75,000, and a couple no greater than $150,000.

Adjusted gross income may be more, but the tax credit benefit will be decreased.

Single-family homes, mobile homes, townhouses, condominiums and manufactured homes all qualify for the tax credit.

This may surprise you, but even houseboats qualify for the credit if they are purchased and lived on as a primary residence.

A very important feature of this tax credit is that the credit may be claimed against your 2008 IRS tax return.

This allows a qualifying homebuyer to get their $8,000 within approximately 60 days of closing on the home.

It is important to restate that, at the time of this writing, this benefit will expire on December 1, 2009.

To realistically close on a home before that date, a person should be under contract no later than October 1, 2009 in order to meet a closing date of December 1.

Mortgage interest rates are showing an uptick, therefore, if you are thinking of buying and you qualify for this program, it would be wise not to procrastinate.

“Liberty Tax Service lured cash-strapped Californians into paying for high-cost loans, when they could obtain tax refunds free from the IRS just weeks later,” Brown said. “This ruling bars Liberty from deceptive advertising that blurs the line between IRS tax refunds and pricey loans.”

Liberty Tax Service’s print and television ads misled customers by promising “Most Refunds in 24 Hours.” In reality, Liberty was selling refund anticipation loans, not a tax refund. Customers had to pay an upfront fee of about $30 plus interest, at a rate that could be as high as 395% annually. By contrast, tax refunds are available at no charge from the IRS and generally arrive anywhere from 8 days to 4 weeks after returns are filed.

In February 2007, Brown filed suit in San Francisco Superior Court against Liberty Tax Service as part of an effort to stop deceptive marketing associated with Refund Anticipation Loans. Brown reached settlements with Jackson Hewitt in 2007 and with H&R Block in 2009 over similar claims.

Monday’s ruling holds Liberty Tax Service responsible for its deceptive marketing, which also included print ads that failed to include disclaimers mandated by law and television ads that included those disclaimers, but so briefly and in such faint type that the Court said they were “plainly designed to be overlooked by consumers.”

According to the IRS, refund anticipation loans target low-income taxpayers, especially those who receive the Earned Income Tax Credit. Approximately 70% of Liberty Tax Service’s refund anticipation loan customers in 2006 and 2007 received this credit.

The ruling:

• Bars Liberty Tax Service from using false or misleading advertising to sell tax refund loans;
• Requires the company to review and monitor the ads run by its California franchisees;
• Requires the company to discipline franchisees that fail to receive approval of their ads from Liberty and report those franchisees to the Attorney General; and
• Requires the company to pay $1.16 million in civil penalties, $135,886 in restitution, and the Attorney General’s costs.

Two violations of the advertising provisions of the injunction by a single franchisee will result in a $15,000 fine; a third violation requires the termination of the franchisee.

The injunction also imposes limitations on Liberty’s ability to collect, on behalf of itself or others, money supposedly due from its customers for previous years’ tax refund loans.

The judgment requires Liberty Tax Service to inform these alleged debtors of supposed debts before the consumers takes any step that would commit them to having any amount of the alleged debt deducted or withheld even temporarily from their refund. This is a significant modification of Liberty Tax Service’s past collection practices.

Consumer advocates and policy makers, including the U.S. Taxpayer Advocate, have sharply criticized such practices for years.

About 15.3 percent of returns filed by corporations with $10 million or more in assets were examined by the Internal Revenue Service last fiscal year, down from about 16.8 percent in 2007, the Inspector General for Tax Administration for the U.S. Treasury Department said in its annual report.

In 1999, about 19 percent of tax returns for the group were examined by tax collectors. The rate of examination ranged between 15 and 19 percent in the intervening years, with the exception of a 20 percent rate in 2005.

The IRS’s enforcement staff has been whittled down in recent years, a response to fervent complaints by some U.S. lawmakers critical of what was characterized as aggressive tax collection.

“After several years of improved results, many collection function activities and results declined during FY 2008,” the report said.

The enforcement staff shrank 20 percent to 14,900 at the end of 2008, down from 18,700 in 1999, the report said.

President Barack Obama has proposed doubling the agency’s enforcement budget for 2010, including hiring about 800 new staffers just to enforce international tax law. That is part of a wider effort by the administration to crack down on what it calls the abusive use of tax loopholes and outright tax evasion.

Enforcement revenue fell in 2008, though that interrupted a steady rise in the past decade or so, the report said.

The IRS collected $2.75 trillion in fiscal year 2008, a record.

The report did not make any specific recommendations, but noted the enforcement of tax laws is among the key “high-risk” areas consistently cited by the Government Accountability Office.

The tax gap — the difference between what is owed and what is collected — was about $345 billion in 2001, the last year it was examined, according to the government.

Don’t delay; file your prior year return now! The failure to file a federal tax return can be costly — whether you end up owing more or missing out on a refund.

If you owe taxes, a delay in filing may result in a failure-to-file penalty and interest charges. The longer you delay, the larger these charges grow.

If you are due a refund and don’t file you could lose your refund. There is no penalty for failure to file if you are due a refund. However, you cannot obtain a refund without filing a tax return. If you wait too long to file, you may risk losing the refund altogether. The deadline for claiming refunds is generally three years after the return due date.

There are several reasons taxpayers don’t file their taxes.  Perhaps you didn’t know you were required to file. Maybe, you just keep putting it off or simply forgot. Whatever the reason, it’s best to file your return as soon as possible. If you need help, even with a late return, the IRS is ready to assist you.

Here are some steps for filing your prior year return:

1. Gather prior year tax return information. You will need Social Security numbers, income information and records for expenses, deductions and credits.

2. Determine if you have a filing requirement.  Whether or not you must file a tax return will depend upon a number of factors, including your filing status, age, and gross income. Individuals who are entitled to the Earned Income Tax Credit must file their return to claim the credit even if they are not otherwise required to file.

3. Get forms and publications. Make sure you get the forms and publications for the year of the tax return you are filing.

4. Prepare your tax return. Complete, sign and date your tax return. Be sure to attach any required schedules and forms.

5. Mail the completed and signed prior year return to the correct address. Mailing a return to an incorrect address can delay the processing of the return.

If your income was $42,000 or less, your local Taxpayer Assistance Center may be able to assist you in preparing your prior year return. You can locate your nearest center at http://www/irs.gov/localcontacts/index.html.  For more information on how to file a tax return for a prior year, visit the IRS Web site at IRS.gov or call the IRS Tax Help Line for Individuals at 800-829-1040.

Create a Backup Set of Records Electronically

Taxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set.

Keeping a backup set of records –– including, for example, bank statements, tax returns, insurance policies home, etc. –– is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them to a CD or DVD.

Document Valuables

Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.

A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area.

Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

Check on Fiduciary Bonds

Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

IRS Ready to Help

If disaster strikes, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.

Back copies of tax returns and all attachments, including Forms W-2, can be requested by filing Form 4506, Request for Copy of Tax Return. Likewise, transcripts can be ordered using Form 4506-T, Request for Transcript of Tax Return. Returns or transcripts can also be ordered by calling 1-800-829-1040.

There is no fee for a transcript or tax return copy for a taxpayer located in a federal disaster area qualifying for individual assistance. Taxpayers should put the assigned Disaster Designation in red ink at the top of the request form.

Vehicles Purchased or Placed in Service

The Energy Policy Act of 2005 replaced the clean-fuel burning deduction with a tax credit. A tax credit is subtracted directly from the total amount of federal tax owed, thus reducing or even eliminating the taxpayer’s tax obligation. The tax credit for hybrid vehicles applies to vehicles purchased or placed in service on or after January 1, 2006.

The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.

Hybrid vehicles have drive trains powered by both an internal combustion engine and a rechargeable battery. Many currently available hybrid vehicles may qualify for the tax credit.

These models have been certified for the credit in the following amounts:

† This reflects a decrease in the credit amount as of Oct. 1, 2006, due to the manufacturers meeting quarterly sales of 60,000 qualified hybrid cars — See Quarterly Sales, below.

†† This credit amount does not phase out. The full amount of the altenative fuel vehicle credit would be available for vehicles purchased on or before December 31, 2010.

Qualifed Cars and Credit Amounts

• Model Year 2009
• Model Year 2008
• Model Year 2007
• Model Year 2006
• Model Year 2005

Quarterly Sales

Consumers seeking the credit may want to buy early since the full credit is only available for a limited time. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th hybrid passenger automobile or light truck or advance lean burn technology motor vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

More information on the latest hybrid quarterly sales is available.

For example, F Company is a manufacturer of hybrid motor vehicles, but not advanced lean burn technology motor vehicles. F Company sells its 60,000th hybrid car on March 31, 2007.

• Ms. Smith buys an F Company hybrid car on June 30, 2007, and claims the full credit.
• Ms. Maple buys an F Company hybrid car on Dec. 31, 2007, and claims 50 percent of the credit.
• Mr. Grey buys an F Company hybrid car on June 30, 2008, and claims 25 percent of the credit.
• Mr. Green buys an F Company hybrid car on July 1, 2008, and is unable to claim the credit, because the credit has phased out for F Company vehicles.

Toyota Motor Sales, U.S.A., Inc., has submitted quarterly reports indicating that its cumulative sales of qualified vehicles to retail dealiers has reached the 60,000-vehicle limit during the calendar quarter ending June 30, 2006. Effective Oct. 1, 2006, the tax credit amounts for certified Toyota models will be reduced. The models and allowable credits may be found in news releases IR-2006-145, Toyota Hybrids Begins Phaseout on October 1and IR-2006-154, Additional Toyota and Lexus Vehicles Certified for the Energy Tax Credit.

More detailed information may be found in the Summary of the Credit for Qualified Hybrid Vehicles

Advanced Lean Burn Technology Vehicles

Purchasers of advanced lean burn technology motor vehicles may claim a credit of $1,300 per vehicle.