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The IRS pays individuals an average of $6,200/yr for operating imaginary businesses. According to a report issued by the Treasury Inspector General for Tax Administration, the IRS is defrauded up to $16 billion annually by tax filers claiming Earned Income Tax Credits on their tax return.  Randall Sorensen, CPA has developed technology that will identify one million phantom businesses and recover $960 million for the U.S. Treasury.

Technology called the Phantom Business Identifier (PBI) developed by Randall C. Sorensen, CPA, will identify one million imaginary businesses that cost’s honest Americans $7 billion annually.  

Statistics reported on www.irs.org show that during the Great Recession 500,000 business owners without children permanently closed.  In contrast, at the worst possible time to launch a business, taxpayers with children and no money started 800,000 new businesses.  Why would anyone want to jeopardize the security of their family when their odds for success are only 50%?  The answer is simple…. they didn’t!

Here is how tax frauds have been pulling the wool over the eyes of the IRS.  Jane Doe the mother of two, claims income of $14,700 from an imaginary cleaning business.  Since she doesn’t really have a business, Jane doesn’t need to purchase any brooms, dust pans, cleaning supplies of mops.  For Jane’s efforts she will qualify for federal tax credits of $7,100.  Before the US Treasury deposits a tax refund of $5,000 into her bank account, they make a deposit into Jane Doe’s social security retirement account for $2,100. From start to finish, Jane can complete her phantom tax return using phantom income in 15 minutes!

Randall Sorensen, CPA has practiced as a financial forensic expert for over 25 years. Three years ago Mr. Sorensen pitched his idea to the IRS.  The IRS literally tore apart the proposal and expressed a high level of interest.  One month after kicking the tires the IRS rejected the software by explaining that they already had a prototype and they didn’t have any money.  Thanks to the congressional hearings on targeting tax exempt entities, Congress confirmed the IRS wasn’t being truthful.  Specifically, the IRS entered into a software agreement with Strong Castle to spend up to $500 million at the same time they told Sorensen they didn’t have any resources.

Mr. Sorensen stated “a double standard exists within the walls of the IRS.  They severely punish taxpayers who lie but fail miserably when IRS employees fail to tell the truth”.   

Due to severe IRS budget cuts, Mr. Sorensen has offered to test 30 million tax returns for free.  Sorensen states, “The IRS won’t be able to use the excuse of being broke.  Rather than terrorizing honest taxpayers, the IRS needs to send a clear message to tax criminals that they will be caught and could face prosecution by the Department of Justice. Further, tax software companies must be vigilante in identifying fraud being committed at the kitchen table”.

Randall Sorensen, CPA has been practicing accounting for over 30 years and has specialized in forensic accounting for over 25 years. Randall Sorensen’s accounting practice is located in Phoenix, Arizona. Mr. Sorensen can be reached at 602-320-3183.

Dear Senator Cruz:

Long before the American public became aware of the current IRS scandal, I witnessed firsthand the corruption taking place each and every day between the walls of the Whistleblower Office under the direction of Stephen Whitlock. 

Last November I demanded his resignation on behalf of all honest American taxpayers.  Subsequently I have accumulated evidence that I’ve turned over to the Department of Justice that shows Director Whitlock willfully violated federal laws that warrant his removal from office.

Honest Services Fraud 

Internal Revenue Service violated Federal law by failing to provide the public they serve with the intangible right of honest service. The law makes it a crime for government officials to deny the public of honest service.  Violating the HSF statute is a federal felony punishable by five years in prison and a $250,000 fine.

IRS Violated RRA Section 1203

IRS Director Whitlock violated section 1203 of the Internal Revenue Service Restructuring and Reform Act (RRA) when he failed to respond to Senator Jon Kyl’s Congressional Inquiry. In addition he willfully misused section 6103 in response to the CI made by Congressman Schweikert. Director Whitlock failed to answer the following question: “Did ABC Tax Co engage in tax fraud?” Instead of answering the question Director Whitlock said “disclosure laws that protect the tax information of all taxpayers prevent us from providing information to a third party on the outcome”.  This is a false statement.  Former Acting Commissioner Steven T. Miller issued a memo on June 20^th, 2012, that stated “with appropriate controls, interaction with a whistleblower during an examination can assist in timely and correct resolution of issues”.  Director Whitlock provided false information to Congressman Schweikert. 

IRS Hid Behind Abused Power

I contacted the IRS on August 17^th, 2012, to obtain a debriefing as promised by dismissed Acting Director Stephen T. Miller.  To-date I had blown the whistle on $934 million in earned income credit fraud committed by ABC Tax Co clients.   Listed below are questions I asked IRS employee Dale Cundiff before he hung up the phone on me.

Sorensen: “I submitted Part I of my claim against ABC Tax Co for $5,323,100 on February 6^th 2012.  According to Deputy Commissioner Miller the initial evaluation of my case would have been completed approximately May 6^th, 2012.  The Commissioner indicated that I would receive a debriefing and may be asked to provide my expertise as an informant.  Could you brief me on the results of the Whistleblower initial evaluation?”

IRS: Your claim is still open and I cannot comment on its status. That’s all that I’m legally required to say.

Sorensen: “The Whistleblower Office has a fiduciary duty to provide Randall Sorensen with the intangible right of honest service. Would you agree with that statement?”

IRS: I don’t understand

Sorensen: “I submitted Part II of my claim against ABC Tax Co for $12,015,000 on Feb 6^th 2012.  Could you brief me on the results of the initial evaluation/”

IRS: No sir

Sorensen: “I submitted Part III of my claim against ABC Tax Co for $74,400,000 on Mar 6^th 2012.  According to Deputy Commissioner Steven T. Miller the initial evaluation of my case would have been completed approximately June 6^th 2012. Commissioner Miller indicated that I would be receiving a debriefing.  Could you brief me on the results of the initial evaluation?’

IRS: No sir claim is still open

Sorensen: “Deputy Commissioner Steven T. Miller stated in a July 25^th, 2012 letter to Senator Grassley “collection function also has steps to obtain information from informants to assist in the collection efforts. On February 6^th, 2012, I offered to test 5.4 million ABC Tax Co earned income tax filers for tax year 2011 in 5 minutes.  Can you tell me why the Whistleblower Office didn’t ask me for my assistance?”

IRS: Ahh   Ahh. I’m not sure of that one, it’s one or the other.

Based on the dysfunction I witnessed in the Whistleblower Office from February, 2012 through August, 2012, I knew the Whistleblower Office lacked the necessary competency and work ethic to conduct a billion dollar investigation. Therefore, I set up a sting operation. Below is a timeline of the trap I set to catch corrupt IRS officials:  

Sting Operation Timeline

 08/17/12 Sorensen called IRS to receive a debriefing on $1 billion claim

08/17/12 IRS Refused to provide answers after being on file 180 days

09/06/12 Sorensen filed client’s amended tax returns to obtain 2010 refund of $1,550 and 2011 refund of $6,788. The ex-husband was guilty of tax fraud for falsely filing head-of-household and daughter as a dependent

09/13/13 Sorensen submitted form 211 to WO to claim reward on ex-husband tax fraud of $6,515

11/22/12 IRS agreed and issued ex-wife 2010 refund of $1,550

11/07/12 Whistleblower Office set up claim #2012-001101 and sent letter stating it could take several years to resolve tax matters as well as several years to collect

11/19/12 IRS agreed and issued ex-wife 2011 refund of $6,778

11/21/12 IRS Friday before Christmas WO closed claim #2012-001101 one month after informing Sorensen it would be years and years

01/08/13 IRS prepared letter to Sorensen stating that information provided “did not result in any proceed”

04/02/13 Sorensen obtained transcript showing IRS never attempted to collect taxes from husband

04/02/13 Confirms IRS committed honest services fraud when they lied about phantom investigation and lied about phantom results

04/02/13 IRS embezzled funds from US taxpayers by cashing paychecks for work never performed

IRS Defrauded Sorensen $2,000

The Whistleblower Office sent a letter dated November 7^th, 2012 indicating that it could take several years until final resolution of all tax matters.  In addition, the WO said that before we can pay a reward we must collect any taxes, penalties or fines and this could also take several years.  The Whistleblower Office prepared me to wait as long as six years or 2,000 days.  Instead the WO miraculously wrapped up its investigation in 44 days.  According to IRS employee S. Newton, badge number 100091224, my claim was closed December 21^st, 2012 which was the Friday before Christmas.  If the IRS was willing to defraud Randall Sorensen of $2,000 then one could surmise that the IRS would NEVER consider a whistleblower claim against ABC Tax Co for $300,000,000. 

Internal Revenue Service employee Director Whitlock committed a federal felony. His office took credit for conducting phantom investigations, issuing false results of investigations that never took place and for denying Randall Sorensen with the government mandated right of honest service. Further, the IRS defrauded every American by failing to investigate blatant earned income credit tax fraud totaling $1 billion dollars.  I’m requesting that Congress hire a Big Four accounting firm to perform an independent investigation regarding malfeasance, misconduct and honest services fraud committed by the Internal Revenue Service.  Thank you for your anticipated cooperation and I will look forward to hearing from you.

Randall Sorensen CPA CFF

Most congressional observers believe Congress will address the issue of empowering states to collect sales tax on the purchases of goods bought on the Internet.  The issue is not typical of other tax issues as it finds conservatives like Steve King (R-Iowa), Virginia Gov. Bob McDonnell and others supporting the states ability to collect their sales taxes for online purchases.  A strong argument can be made that they have embraced the conservative position.

Make no mistake about it; there is deep division about this issue.  Mom-and-pop small businesses hate the disparity that was created when the Supreme Court ruled that businesses needed a "nexus" within a state for sales taxes to be collected.  That ruling allowed companies like Amazon to avoid sales taxes while small business are forced to collect them.  They argue that the decision, especially in a poor economy, creates economic incentives that hurt their bottom line.  Why should consumers shop in more expensive local stores when shopping online creates built-in no sales tax savings?

Others argue that allowing states to collect sales taxes for Internet purchases is tantamount to a tax increase.  As opponents have noted, America's budget problems are not revenue problems but spending problems.  Government's bring in enough revenue but can't get their spending in control. 

There is tacit acknowledgement of this argument as many supporters of the "Marketplace Equity Act" are governors who are struggling to balance their state budgets.  Billions of dollars in sales are made every year online that have escaped the reaches of the state tax collectors. 

But there is a bigger issue at stake -- federalism.

Allowing online merchants to charge, collect and remit sales taxes based on their physical location would level the playing field with Main Street small businesses and, perhaps most importantly, restore federalism to the issue.  The government should treat merchants equally.  It should not be making it harder for small businesses to compete.  In addition, the federal government should not bar states from enforcing their laws as long as they don't interfere with interstate commerce.

In some ways this is a complicated issue.  But in others it's clear that fairness and federalism should play a role in the final deliberations.