In a merciful opinion written by retired Supreme Court Associate Justice Sandra Day O’Conner (sitting by designation pursuant to 28 USC §294(a)), the US Court of Appeals for the 11th Circuit ruled that Abelardo Ernest Cruz should not be prohibited from preparing tax returns as a penalty for his participation in a fraudulent tax return preparation scheme. The IRS proved that Cruz and others intentionally overstated deductions and credits on tax returns they prepared in order to increase refunds for their customers.
The Internal Revenue Code, at 26 USC §7407, permits a Federal District Court to prohibit a tax return preparer from taking an unreasonable position on future tax returns. [click to continue…]
A bankruptcy preference is a transfer made shortly before the case is filed that the trustee can take back from one creditor and share with all the other creditors. The transfer must be of money or property in which the debtor has an interest. It must be made to a creditor owed money by the debtor. The transfer must be more than the creditor would receive in a Chapter 7 distribution. Finally, it must be made within a certain period of time. 11 USC §547 governs the preference rules under federal law.
The preference period is 90 days before filing unless the debtor has a special relationship with the creditor and is considered an insider. Insiders are close family members, business partners, or a corporation of which the debtor is a person in control such as an officer or director. The preference period for transfer to an insider is expanded by law to one year instead of 90 days. [click to continue…]
In a merciful opinion written by retired Supreme Court Associate Justice Sandra Day O’Conner (sitting by designation pursuant to 28 USC §294(a)), the US Court of Appeals for the 11th Circuit ruled that Abelardo Ernest Cruz should not be prohibited from preparing tax returns as a penalty for his participation in a fraudulent tax return preparation scheme. The IRS proved that Cruz and others intentionally overstated deductions and credits on tax returns they prepared in order to increase refunds for their customers.